Attached files

file filename
EX-32.2 - EXHIBIT 32.2 - Audax Credit BDC Inc.tm2029646d1_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - Audax Credit BDC Inc.tm2029646d1_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - Audax Credit BDC Inc.tm2029646d1_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Audax Credit BDC Inc.tm2029646d1_ex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

 

 

FORM 10-Q

 

 

(Mark One)

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

 

For the quarterly period ended September 30, 2020

 

OR

 

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

 

For the transition period from                      to                       

 

Commission file number: 814-01154

 

 

AUDAX CREDIT BDC INC.

(Exact name of registrant as specified in its charter)

 

 

DELAWARE 47-3039124

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

 

101 HUNTINGTON AVENUE  
BOSTON, MASSACHUSETTS 02199
(Address of principal executive office) (Zip Code)

 

(617) 859-1500

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

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

None. 

 

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

 

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

 

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

 

Large accelerated filer ¨ Accelerated filer ¨
       
Non-accelerated filer x Smaller reporting company ¨
       
Emerging growth company x    

 

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

 

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

 

The registrant had 38,343,577 shares of common stock, par value $0.001 per share, outstanding as of November 13, 2020.

 

 

 

 

 

 

AUDAX CREDIT BDC INC.

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION:  
     
Item 1. Financial Statements  
     
  Statements of Assets and Liabilities as of September 30, 2020 (unaudited) and December 31, 2019   2
  Statements of Operations for the three and nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) 3
  Statements of Changes in Net Assets for the nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) 4
  Statements of Cash Flows for the nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) 5
  Schedules of Investments as of September 30, 2020 (unaudited) and December 31, 2019 6
  Notes to Financial Statements (unaudited) 15
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34
     
  Overview 35
  Results of Operations 37
  Financial Condition, Liquidity and Capital Resources 39
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 46
     
Item 4. Controls and Procedures 47
     
PART II. OTHER INFORMATION: 47
     
Item 1. Legal Proceedings 47
     
Item 1A. Risk Factors 47
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 48
     
Item 3. Defaults Upon Senior Securities 48
     
Item 4. Mine Safety Disclosures 48
     
Item 5. Other Information 48
     
Item 6. Exhibits 49
   
SIGNATURES 50

 

 

 

 

Audax Credit BDC Inc.

Statements of Assets and Liabilities 

September 30, 2020 and December 31, 2019

(Expressed in U.S. Dollars)

 

   September 30, 2020   December 31, 2019 
   (unaudited)     
Assets          
Investments, at fair value          
Non-Control/Non-Affiliate investments (Cost of $350,068,000 and $332,722,006, respectively)  $341,488,783   $330,874,911 
Cash and cash equivalents   24,955,930    5,506,217 
Interest receivable   1,031,575    942,329 
Receivable from investments sold   -    1,993,379 
Receivable from bank loan repayment   21,569    80,161 
Other assets   49,265    - 
Total assets  $367,547,122   $339,396,997 
           
Liabilities          
Accrued expenses and other liabilities  $224,959   $297,938 
Fee due to administrator(a)   66,250    66,250 
Fees due to investment advisor, net of waivers(a)   603,868    688,136 
Payable for investments purchased   8,957,495    6,945,000 
Total liabilities  $9,852,572   $7,997,324 
Commitments and contingencies(b)          
           
Net Assets          
Common stock, $0.001 par value per share, 100,000,000 shares authorized,  38,343,577 and 35,109,246 shares issued and outstanding, respectively  $38,343   $35,110 
Capital in excess of par value   364,092,201    334,095,408 
Total distributable earnings   (6,435,994)   (2,730,845)
Total Net Assets  $357,694,550   $331,399,673 
Net Asset Value per Share of Common Stock at End of Period  $9.33   $9.44 
           
Shares Outstanding   38,343,577    35,109,246 

 

(a)Refer to Note 4-Related Party Transactions for additional information.
   
(b)Refer to Note 8-Commitments and Contingencies for additional information.

 

The accompanying notes are an integral part of these financial statements.

 

2

 

 

Audax Credit BDC Inc.

Statements of Operations 

(Expressed in U.S. Dollars)

(unaudited)

 

   Three Months Ended   Three Months Ended   Nine Months Ended   Nine Months Ended 
   September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019 
Investment Income                    
Interest income                    
Non-Control/Non-Affiliate  $4,721,470   $5,347,398   $14,885,290   $15,433,946 
Other   1,058    28,722    31,053    122,237 
Total interest income   4,722,528    5,376,120    14,916,343    15,556,183 
Other income                    
Non-Control/Non-Affiliate   14,577    5,214    153,950    38,364 
Total income   4,737,105    5,381,334    15,070,293    15,594,547 
                     
Expenses                    
Base management fee(a)  $874,188   $820,094   $2,697,570   $2,367,188 
Incentive fee(a)   356,461    680,250    1,641,419    1,939,486 
Administrative fee(a)   66,250    66,250    198,750    198,750 
Directors' fees   52,500    52,500    157,500    157,500 
Professional fees   132,514    136,660    369,572    524,791 
Other expenses   83,232    58,388    191,422    246,441 
                     
Expenses before waivers from investment adviser and administrator   1,565,145    1,814,142    5,256,233    5,434,156 
Base management fee waivers(a)   (305,966)   (287,033)   (944,150)   (828,516)
Incentive fee waivers(a)   (320,815)   (543,178)   (1,437,466)   (1,553,628)
Total expenses, net of waivers   938,364    983,931    2,874,617    3,052,012 
Net Investment Income   3,798,741    4,397,403    12,195,676    12,542,535 
                     
Realized and Unrealized Gain (Loss) on Investments                    
Net realized loss on investments   (1,039,704)   (826,185)   (1,043,096)   (724,454)
Net change in unrealized appreciation (depreciation) on investments   6,436,468    182,576    (6,732,122)   (479,160)
Net realized and unrealized gain (loss) on investments   5,396,764    (643,609)   (7,775,218)   (1,203,614)
                     
Net Increase in Net Assets Resulting from Operations  $9,195,505   $3,753,794   $4,420,458   $11,338,921 
                     
Basic and Diluted per Share of Common Stock:                    
Net investment income  $0.10   $0.13   $0.32   $0.39 
Net increase in net assets resulting from operations  $0.24   $0.11   $0.12   $0.36 
                     
Weighted average shares of common stock outstanding basic diluted   38,265,852    33,504,019    37,528,161    31,856,849 

 

(a)Refer to Note 4-Related Party Transactions for additional information

 

The accompanying notes are an integral part of these financial statements.

 

3

 

 

Audax Credit BDC Inc.

Statements of Changes in Net Assets

(Expressed in U.S. Dollars) 

(unaudited)

 

   Nine Months Ended
September 30, 2020
   Nine Months Ended
September 30, 2019
 
Operations          
Net investment income  $12,195,676   $12,542,535 
Net realized loss on investments   (1,043,096)   (724,454)
Net change in unrealized depreciation on investments   (6,732,122)   (479,160)
       Net increase in net assets resulting from operations   4,420,458    11,338,921 
           
Distributions:          
Distributions to common stockholders   (8,125,607)   (8,246,864)
Return of capital to common stockholders   -    (60,025)
       Total distributions   (8,125,607)   (8,306,889)
           
Capital Share Transactions:          
Issuance of common stock   30,000,000    50,000,000 
Reinvestment of common stock   26    30 
       Net increase in net assets from capital share transactions   30,000,026    50,000,030 
           
Net Increase in Net Assets   26,294,877    53,032,062 
           
Net Assets, Beginning of Period   331,399,673    267,423,235 
           
Net Assets, End of Period  $357,694,550   $320,455,297 

 

The accompanying notes are an integral part of these financial statements.

 

4

 

 

Audax Credit BDC Inc.

Statements of Cash Flows

(Expressed in U.S. Dollars)

(unaudited)

 

   Nine Months Ended   Nine Months Ended 
   September 30, 2020   September 30, 2019 
Cash flows from operating activities:          
Net increase in net assets resulting from operations  $4,420,458   $11,338,921 
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:      
Net realized loss on investments   1,043,096    724,452 
Net change in unrealized depreciation on investments   6,732,122    479,160 
Accretion of original issue discount interest and payment-in-kind interest   (357,873)   (199,813)
Decrease in receivable from investments sold   1,993,379    - 
Increase in interest receivable   (89,246)   (409,770)
Decrease (increase) in receivable from bank loan repayment   58,592    (34,133)
Increase in other assets   (49,265)   (45,000)
Decrease in accrued expenses and other liabilities   (72,979)   (89,937)
(Decrease) increase in fees due to investment advisor(a)   (84,268)   134,219 
Increase (decrease) in payable for investments purchased   2,012,495    (514,807)
Investment activity:          
Investments purchased   (52,376,341)   (110,656,983)
Proceeds from investments sold   6,437,456    5,017,964 
Repayment of bank loans   27,907,668    46,240,554 
Total investment activity   (18,031,217)   (59,398,465)
           
Net cash used in operating activities   (2,424,706)   (48,015,173)
           
Cash flows from financing activities:          
Issuance of shares of common stock   30,000,000    50,000,000 
Distributions paid to common stockholders   (8,125,581)   (8,306,859)
           
Net cash provided by financing activities   21,874,419    41,693,141 
           
Net increase (decrease) in cash and cash equivalents   19,449,713    (6,322,032)
           
Cash and cash equivalents:          
Cash and cash equivalents, beginning of period   5,506,217    17,715,145 
           
Cash and cash equivalents, end of period  $24,955,930   $11,393,113 
           
Supplemental non-cash information          
Issuance of common shares in connection with dividend reinvestment plan  $26   $30 
Payment-in-kind ("PIK") interest income  $75,144   $32,822 
           

 

(a)Refer to Note 4-Related Party Transactions for additional information

 

The accompanying notes are an integral part of these financial statements.

 

5

 

 

Audax Credit BDC Inc.

Schedule of Investments

As of September 30, 2020

(Expressed in U.S. Dollars)

(unaudited)

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS - (95.2%)(g)(h):               
                
Healthcare & Pharmaceuticals               
Radiology Partners, Senior Secured Term B Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/9/25(i)  $4,215,792   $4,345,712   $4,081,429 
Advarra, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/9/26   3,909,806    3,873,848    3,909,805 
Tecomet, Senior Secured 2017 Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 5/1/24(i)   3,928,827    3,914,207    3,860,072 
Young, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 11/7/24   3,804,669    3,795,542    3,757,109 
Specialty Care, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 9/1/23   3,317,371    3,320,262    3,309,076 
Veritext, Senior Secured Initial Term Loan (First Lien), 3.48% (Libor + 3.25%), maturity 8/1/25   3,161,388    3,147,073    3,113,966 
Zest Dental, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 3/14/25   3,247,592    3,265,442    2,955,308 
Confluent Health, Senior Secured Initial Term Loan, 5.23% (Libor + 5.00%), maturity 6/24/26   2,962,500    2,938,237    2,955,094 
Physicians Endoscopy, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 8/18/23   2,887,958    2,870,561    2,794,100 
Waystar, Senior Secured Term Loan B, 4.23% (Libor + 4.00%), maturity 10/22/26   2,487,500    2,477,839    2,487,500 
PharMedQuest, Senior Secured Initial Term Loan, 6.25% (Libor + 5.25%), maturity 10/31/24   2,481,250    2,452,364    2,481,250 
MedRisk, Senior Secured Initial Term Loan (First Lien), 2.98% (Libor + 2.75%), maturity 12/27/24   2,431,250    2,435,776    2,431,250 
Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 5.50% (Libor + 4.50%), maturity 9/23/24   2,427,643    2,410,238    2,415,505 
OB Hospitalist Group, Senior Secured Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 8/1/24   2,316,088    2,306,941    2,316,088 
Premise Health, Senior Secured Initial Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 7/10/25   2,312,092    2,318,760    2,312,092 
MedRisk, Senior Secured Initial Loan (Second Lien), 6.98% (Libor + 6.75%), maturity 12/29/25   2,100,000    2,077,798    2,100,000 
Packaging Coordinators, Senior Secured Term Loan, 9.75% (Libor + 8.75%), maturity 10/1/27(i)   2,000,000    1,992,500    2,000,000 
Zelis RedCard, Senior Secured Initial Term Loan, 4.98% (Libor + 4.75%), maturity 9/30/26(i)   1,950,004    1,935,858    1,943,542 
Avalign Technologies, Senior Secured Initial Term Loan (First Lien), 4.73% (Libor + 4.50%), maturity 12/22/25   1,965,000    1,950,929    1,930,613 
Press Ganey, Senior Secured Initial Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 7/24/26(i)   1,980,000    1,973,551    1,927,953 
CareCentrix, Senior Secured Initial Term Loan, 4.73% (Libor + 4.50%), maturity 4/3/25(i)   1,875,000    1,868,441    1,802,578 
Alpaca, Senior Secured Term Loan, 7.75% (Libor + 6.75%), maturity 4/19/24(j)   1,661,508    1,640,127    1,615,816 
Upstream Rehabilitation, Senior Secured Term Loan, 4.73% (Libor + 4.50%), maturity 11/20/26   1,492,500    1,490,402    1,481,306 
CPS, Unitranche, 6.50% (Libor + 5.50%), maturity 2/28/25   1,481,331    1,464,014    1,451,704 
Stepping Stones, Unitranche, 6.75% (Libor + 5.75%), maturity 12/12/24   1,472,873    1,466,532    1,450,780 
Ensemble, Senior Secured Closing Date Term Loan, 3.98% (Libor + 3.75%), maturity 8/3/26(i)   990,000    985,710    985,317 
Veritext, Senior Secured Initial Term Loan (Second Lien), 7.23% (Libor + 7.00%), maturity 7/31/26   1,000,000    995,998    985,000 
Athena, Senior Secured Term B Loan (First Lien), 4.73% (Libor + 4.50%), maturity 2/11/26(i)   989,956    981,393    982,969 
Packaging Coordinators, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 6/30/23(i)   977,041    981,570    977,041 
Alcami, Senior Secured Initial Term Loan (First Lien), 4.48% (Libor + 4.25%), maturity 7/14/25   980,000    976,396    948,150 
Dermatologists of Central States, Senior Secured Term Loan, 7.50% (Libor + 6.50%), maturity 4/20/22   969,861    969,861    943,190 
Aegis Sciences, Senior Secured Initial Term Loan (2018) (First Lien), 6.50% (Libor + 5.50%), maturity 5/9/25   980,000    969,429    940,800 
ATI Physical Therapy, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 5/10/23(i)   914,856    918,723    880,549 
Specialty Care, Senior Secured Initial Term Loan (Second Lien), 9.25% (Libor + 8.25%), maturity 9/1/24   850,000    844,216    850,000 
Waystar, Senior Secured 2020 Incremental Term Loan (First Lien), 4.75% (Libor + 4.00%), maturity 10/22/26(i)   500,000    498,750    498,750 
RMP & MedA/Rx, Senior Secured Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 2/6/25   433,366    432,651    433,366 
Alpaca, Senior Secured Revolver, 7.75% (Libor + 6.75%), maturity 4/19/24(j)   258,852    254,969    251,734 
Advarra, Senior Secured Initial Revolving Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/9/26   -    (7,619)   - 
                
High Tech Industries               
Qlik, Senior Secured 2019 Incremental Term Loan, 4.48% (Libor + 4.25%), maturity 4/26/24(i)   3,950,000    3,928,594    3,923,465 
Netsmart, Senior Secured Initial Term Loan (First Lien), 4.75% (Libor + 4.00%), maturity 10/1/27(i)   3,500,000    3,484,375    3,500,000 
Masergy, Senior Secured Initial Loan (Second Lien), 8.50% (Libor + 7.50%), maturity 12/16/24   3,428,571    3,421,397    3,428,571 
Barracuda, Senior Secured 2019 Incremental Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 2/12/25(i)   3,424,943    3,436,190    3,410,505 
Syncsort, Senior Secured 2018 Refinancing Term Loan (First Lien), 6.48% (Libor + 6.25%), maturity 8/16/24(i)   3,395,700    3,374,769    3,360,917 
EverCommerce, Senior Secured Initial Term Loan, 5.73% (Libor + 5.50%), maturity 8/23/25   3,130,180    3,084,621    3,130,180 
Jaggaer, Senior Secured Initial Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 8/14/26(i)   3,130,629    3,126,018    3,109,327 
McAfee, Senior Secured Term B USD Loan, 3.98% (Libor + 3.75%), maturity 9/30/24(i)   2,842,676    2,852,276    2,828,873 
Idera, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 6/28/24(i)   2,625,742    2,624,087    2,625,742 
Infogroup, Senior Secured Term Loan (First Lien), 6.00% (Libor + 5.00%), maturity 4/3/23(i)   2,897,419    2,878,026    2,567,475 
ECi Software, Senior Secured Initial Term Loan, 5.25% (Libor + 4.25%), maturity 9/27/24(i)   2,444,677    2,435,896    2,444,677 
ECi Software, Senior Secured Term Loan, 4.50% (Libor + 3.75%), maturity 9/30/27(i)   2,000,000    1,992,500    1,992,500 
Sophos, Senior Secured Dollar Tranche Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 3/5/27(i)(q)   1,995,000    1,878,459    1,963,707 
QuickBase, Senior Secured Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 4/2/26   1,975,000    1,966,886    1,960,188 
Intermedia , Senior Secured New Term Loan (First Lien), 7.00% (Libor + 6.00%), maturity 7/21/25   1,965,000    1,952,993    1,950,263 
Flexera Software, Senior Secured Initial Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 2/26/25(i)   1,950,000    1,955,844    1,945,125 
GlobalLogic, Senior Secured Initial Term Loan, 2.98% (Libor + 2.75%), maturity 8/1/25   1,719,688    1,712,086    1,719,688 
Bomgar, Senior Secured Initial Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 4/18/25(i)   1,710,625    1,719,334    1,697,795 
Corsair, Senior Secured Term Loan (First Lien), 4.75% (Libor + 3.75%), maturity 8/28/24   1,598,987    1,588,670    1,598,987 
Ultimate Software , Senior Secured Initial Term Loan (First Lien), 3.98% (Libor + 3.75%), maturity 5/4/26(i)   1,571,241    1,571,186    1,564,433 
OEConnection, Senior Secured Initial Term Loan, 5.00% (Libor + 4.00%), maturity 9/25/26(i)   1,530,207    1,523,837    1,518,730 
Liaison, Senior Secured Initial Term Loan, 5.50% (Libor + 4.50%), maturity 12/20/26   1,488,750    1,485,119    1,488,750 
Navex Global, Senior Secured Initial Term Loan (First Lien), 3.48% (Libor + 3.25%), maturity 9/5/25(i)   1,470,000    1,457,569    1,441,426 
Unison, Senior Secured 2020 Term Loan, 8.00% (Libor + 7.00%), maturity 6/25/26(j)   997,500    973,344    990,019 
Insurity, Senior Secured Closing Date Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 7/31/26   992,500    988,209    987,538 

 

The accompanying notes are an integral part of these financial statements.

 

6

 

 

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of September 30, 2020

(Expressed in U.S. Dollars)

(unaudited)

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS(h) (Continued):               
                
High Tech Industries (continued)               
LANDesk, Senior Secured Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 1/20/24(i)  $971,501   $964,055   $971,501 
Community Brands, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 12/2/22   827,884    824,687    817,536 
Sparta, Senior Secured New Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 8/21/24   789,937    790,250    780,062 
Global Knowledge, Senior Secured Initial Term Loan (Second Lien), 13.25% (Libor + 12.25%), maturity 1/20/22(i)(m)   1,000,000    996,979    600,000 
McAfee, Senior Secured Initial Loan (Second Lien), 9.50% (Libor + 8.50%), maturity 9/29/25(i)   500,000    492,791    505,805 
Idera, Senior Secured Loan (Second Lien), 10.00% (Libor + 9.00%), maturity 6/28/27   500,000    504,806    500,000 
MultiPlan, Senior Secured Initial Term Loan, 3.75% (Libor + 2.75%), maturity 6/7/23(i)   500,000    495,975    500,000 
HelpSystems, Senior Secured Initial Term Loan (First Lien), 5.75% (Libor + 4.75%), maturity 11/19/26(i)   497,500    496,297    497,500 
DigiCert, Senior Secured Initial Term Loan (First Lien), 4.00% (Libor + 4.00%), maturity 10/16/26(i)   497,500    469,866    495,013 
Imperva, Senior Secured Term Loan, 5.00% (Libor + 4.00%), maturity 1/12/26(i)   498,737    495,620    493,063 
Masergy, Senior Secured 2017 Replacement Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 12/15/23(i)   481,158    479,909    472,150 
Endurance Int'l Group, Senior Secured Refinancing Loan (2018), 4.75% (Libor + 3.75%), maturity 2/9/23(i)   397,529    396,977    397,070 
                
Services: Business               
CoAdvantage, Senior Secured Initial Term Loan (First Lien), 6.00% (Libor + 5.00%), maturity 9/23/25   3,960,000    3,927,931    3,950,100 
RevSpring, Senior Secured Initial Term Loan (First Lien), 4.48% (Libor + 4.25%), maturity 10/11/25(i)   3,930,000    3,926,168    3,851,400 
Addison, Senior Secured Initial Term Loan, 4.98% (Libor + 4.75%), maturity 4/15/26   2,962,500    2,915,513    2,955,094 
Fleetwash, Senior Secured Incremental Term Loan, 5.75% (Libor + 4.75%), maturity 10/1/24   2,940,281    2,919,253    2,918,229 
Service Logic, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 12/31/24(i)   2,914,675    2,905,911    2,914,675 
Aimbridge, Senior Secured Initial Term Loan (2019) (First Lien), 3.98% (Libor + 3.75%), maturity 2/2/26(i)   2,960,100    2,951,626    2,694,154 
Duff & Phelps, Senior Secured Initial Dollar Term Loan (First Lien), 4.75% (Libor + 3.75%), maturity 4/9/27(i)   2,493,750    2,469,721    2,490,774 
HireRight, Senior Secured Initial Term Loan (Second Lien), 7.48% (Libor + 7.25%), maturity 7/10/26   2,500,000    2,481,901    2,475,000 
Allied Universal, Senior Secured Initial Term Loan, 4.48% (Libor + 4.25%), maturity 7/10/26(i)   2,472,349    2,455,710    2,466,168 
Cast & Crew, Senior Secured Initial Term Loan (First Lien), 3.98% (Libor + 3.75%), maturity 2/9/26(i)   2,462,500    2,465,533    2,450,188 
Newport Group, Senior Secured Initial Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 9/12/25(i)   2,452,462    2,441,096    2,378,888 
Vistage, Senior Secured Term B Loan (First Lien), 5.00% (Libor + 4.00%), maturity 2/10/25   2,335,958    2,331,041    2,330,118 
Sterling Backcheck, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 6/19/24(i)   2,375,801    2,375,801    2,157,464 
Eliassen Group, Senior Secured Initial Term B Loan, 4.48% (Libor + 4.25%), maturity 11/5/24   1,487,495    1,481,968    1,487,495 
OSG Billing Services, Senior Secured Term B Loan (First Lien), 4.73% (Libor + 4.50%), maturity 3/27/24   1,463,141    1,459,225    1,446,681 
DBi Services, Senior Secured Term B Loan (Second Lien), 8.00% (Libor + 9.00%), maturity 2/2/26   1,268,604    1,268,604    1,268,604 
WCG, Senior Secured Term Loan, 5.00% (Libor + 4.00%), maturity 1/8/27(i)   997,500    987,877    997,500 
Diversified, Senior Secured Initial Term Loan, 5.75% (Libor + 4.75%), maturity 12/23/23   985,056    979,702    980,131 
First Advantage, Senior Secured Term Facility (First Lien), 3.48% (Libor + 3.25%), maturity 1/31/27(i)   997,500    992,694    978,797 
Franklin Energy, Senior Secured Term B Loan (First Lien), 4.23% (Libor + 4.00%), maturity 8/14/26   990,000    987,704    920,700 
Worley Claims Services, Senior Secured Initial Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 6/3/26   494,987    491,520    493,750 
                
Chemicals, Plastics & Rubber               
Plaskolite, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 12/15/25(i)   3,930,000    3,873,595    3,875,963 
Transcendia, Senior Secured 2017 Refinancing Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 5/30/24   3,401,368    3,390,285    3,316,334 
DuBois Chemicals, Senior Secured Term Loan (Second Lien), 8.73% (Libor + 8.50%), maturity 9/30/27   3,000,000    2,967,566    2,977,500 
Universal Fiber Systems, Senior Secured Initial Term Loan (First Lien), 5.75% (Libor + 4.75%), maturity 10/4/21   2,788,959    2,785,926    2,677,401 
Spectrum Plastics, Senior Secured Closing Date Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 1/31/25(i)   2,661,750    2,669,856    2,418,296 
Unifrax, Senior Secured USD Term Loan (First Lien), 3.98% (Libor + 3.75%), maturity 12/12/25(i)   2,457,481    2,437,202    2,184,320 
Q Holding, Senior Secured Term B Loan (2019), 6.00% (Libor + 5.00%), maturity 12/29/23   1,980,000    1,971,899    1,957,725 
DuBois Chemicals, Senior Secured Term Loan B (First Lien), 4.73% (Libor + 4.50%), maturity 9/30/26   1,799,928    1,760,713    1,786,428 
Zep, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 8/12/24(i)   1,941,216    1,939,534    1,832,327 
Boyd Corp, Senior Secured Initial Loan (Second Lien), 6.98% (Libor + 6.75%), maturity 9/6/26(i)   2,000,000    2,002,020    1,768,186 
Spartech, Senior Secured Term Loan, 5.50% (Libor + 4.50%), maturity 10/17/25   992,500    979,001    992,500 
Prince Minerals, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 3/31/25(i)   975,000    971,594    900,870 
Vantage Specialty Chemicals, Senior Secured Closing Date Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 10/28/24(i)   979,849    965,297    887,235 
Boyd Corp, Senior Secured Initial Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 9/6/25(i)   498,728    463,728    467,142 
                
Services: Consumer               
CIBT Holdings, Senior Secured Initial Term Loan (First Lien), 4.75% (Libor + 3.75%), maturity 6/3/24(i)   5,382,541    5,367,814    3,983,080 
A Place For Mom, Senior Secured Term Loan, 4.75% (Libor + 3.75%), maturity 8/10/24   2,645,687    2,645,188    2,586,159 
Cambium Learning, Senior Secured Initial Term Loan (First Lien), 4.73% (Libor + 4.50%), maturity 12/18/25   2,456,210    2,358,273    2,456,210 
Weld North, Senior Secured Initial Term Loan, 4.48% (Libor + 4.25%), maturity 2/15/25(i)   2,444,868    2,425,614    2,438,756 
Mister Car Wash, Senior Secured Initial Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 5/14/26(i)   2,074,250    2,070,043    1,977,290 
LegalShield, Senior Secured Initial Term Loan (First Lien), 3.48% (Libor + 3.25%), maturity 5/1/25(i)   1,927,000    1,915,817    1,876,187 
Ned Stevens, Senior Secured Term A Loan, 6.75% (Libor + 5.75%), maturity 9/30/25(j)   1,515,033    1,491,945    1,503,670 
Smart Start, Senior Secured Initial Term Loan, 5.75% (Libor + 4.75%), maturity 8/19/27   1,000,000    990,000    992,500 
Spring Education, Senior Secured Initial Term Loan (First Lien), 4.48% (Libor + 4.25%), maturity 7/30/25(i)   980,000    978,196    934,739 
LegalShield, Senior Secured Incremental Term Loan, 0.00%, maturity 5/1/25(i)   500,000    492,500    492,500 
StubHub, Senior Secured USD Term B Loan, 3.73% (Libor + 3.50%), maturity 2/12/27(i)   496,250    493,847    440,687 
LegalShield, Senior Secured Initial Term Loan (Second Lien), 7.73% (Libor + 7.50%), maturity 5/1/26   27,778    27,778    27,639 
Ned Stevens, Senior Secured Revolver, 5.75% (Libor + 4.75%), maturity 9/30/25(j)   -    (2,614)   - 

 

The accompanying notes are an integral part of these financial statements.

 

7

 

 

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of September 30, 2020

(Expressed in U.S. Dollars)

(unaudited)

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS(h) (Continued):               
Aerospace & Defense               
CPI International, Senior Secured Second Amendment Incremental Term Loan (First Lien), 5.75% (Libor + 4.75%), maturity 7/26/24  $5,288,580   $5,237,621   $5,275,359 
StandardAero, Senior Secured 2020 Term B-1 Loan, 3.73% (Libor + 3.50%), maturity 4/6/26(i)   3,541,154    3,531,095    3,182,096 
Whitcraft, Unitranche, 7.00% (Libor + 6.00%), maturity 4/3/23   1,987,466    1,977,854    1,962,623 
Consolidated Precision Products, Senior Secured Initial Term Loan (Second Lien), 8.75% (Libor + 7.75%), maturity 4/30/26   2,000,000    2,008,648    1,955,000 
StandardAero, Senior Secured 2020 Term B-2 Loan, 3.73% (Libor + 3.50%), maturity 4/6/26(i)   1,903,846    1,898,438    1,710,804 
Tronair, Senior Secured Initial Term Loan (First Lien), 5.75% (Libor + 4.75%), maturity 9/8/23   1,444,848    1,439,841    1,309,033 
Amentum, Senior Secured Initial Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 1/29/27(i)   997,500    966,227    990,604 
API Technologies, Senior Secured Initial Term Loan (First Lien), 4.48% (Libor + 4.25%), maturity 5/9/26   992,462    963,556    980,057 
Eton, Senior Secured Initial Term Loan (Second Lien), 8.23% (Libor + 8.00%), maturity 5/1/26   500,000    495,169    496,250 
Eton, Senior Secured Initial Term Loan (First Lien), 4.73% (Libor + 4.50%), maturity 5/1/25(i)   496,193    496,193    494,759 
Consolidated Precision Products, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 4/30/25   493,923    491,668    485,279 
Novaria Group, Senior Secured Initial Term Loan, 6.25% (Libor + 5.25%), maturity 1/27/27   481,818    477,007    478,205 
                
Banking, Finance, Insurance & Real Estate               
American Beacon Advisors, Senior Secured Tranche C Term Loan (Second Lien), 8.50% (Libor + 7.50%), maturity 4/30/23   2,500,000    2,506,203    2,493,750 
AmeriLife, Senior Secured Initial Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 3/18/27(i)   2,392,651    2,377,248    2,380,688 
Kestra Financial, Senior Secured Initial Term Loan, 4.48% (Libor + 4.25%), maturity 6/3/26(i)   1,980,000    1,963,363    1,965,150 
Integro Insurance Brokers, Senior Secured Initial Term Loan (First Lien), 6.75% (Libor + 5.75%), maturity 10/31/22   1,966,333    1,943,176    1,956,501 
Orion, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 9/24/27(i)   1,500,000    1,485,000    1,492,602 
Advisor Group, Senior Secured Initial Term B Loan, 5.23% (Libor + 5.00%), maturity 7/31/26(i)   1,488,750    1,475,807    1,450,891 
EPIC Insurance, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 9/6/24   1,458,750    1,456,670    1,444,163 
Mitchell International, Senior Secured Amendment No. 2 New Term Loan Facility (First Lien), 4.75% (Libor + 4.25%), maturity 11/29/24(i)   1,000,000    946,074    982,081 
Aperio, Senior Secured Initial Commitment, 5.23% (Libor + 5.00%), maturity 10/25/24   933,889    930,216    933,889 
Sedgwick Claims, Senior Secured Initial Term Loan, 3.48% (Libor + 3.25%), maturity 12/31/25(i)   496,212    495,611    481,834 
                
Capital Equipment               
MW Industries, Senior Secured 2018 New Term Loan (First Lien), 3.98% (Libor + 3.75%), maturity 9/30/24(i)   2,425,000    2,425,000    2,205,711 
BAS, Senior Secured Repricing Term Loan, 4.75% (Libor + 3.75%), maturity 5/21/24   1,954,438    1,956,545    1,949,551 
Excelitas, Senior Secured Initial Term Loan (Second Lien), 8.50% (Libor + 7.50%), maturity 12/1/25(i)   1,500,000    1,478,374    1,479,674 
Edward Don, Senior Secured Initial Term Loan, 5.25% (Libor + 4.25%), maturity 7/2/25   1,467,538    1,462,577    1,394,161 
Cole-Parmer, Senior Secured Closing Date Term Loan (First Lien), 4.48% (Libor + 4.25%), maturity 11/4/26(i)   995,000    990,968    992,513 
TriMark, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 8/28/24(i)   986,153    885,776    601,297 
Restaurant Technologies, Senior Secured Initial Loan (Second Lien), 6.73% (Libor + 6.50%), maturity 10/1/26   500,000    503,629    495,000 
Duravant, Senior Secured Incremental Amendment No. 2 Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/19/24   496,212    496,212    492,491 
Excelitas, Senior Secured Initial USD Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 12/2/24   489,924    493,185    486,250 
                
Construction & Building               
Tangent, Senior Secured Closing Date Term Loan (First Lien), 4.98% (Libor + 4.75%), maturity 11/30/24   1,815,789    1,803,401    1,802,171 
PlayPower, Senior Secured Initial Term Loan, 5.73% (Libor + 5.50%), maturity 5/8/26   1,863,667    1,863,667    1,733,210 
PlayCore, Senior Secured Initial Term Loan (Second Lien), 8.75% (Libor + 7.75%), maturity 9/29/25   1,500,000    1,468,498    1,492,500 
DiversiTech Corporation, Senior Secured Tranche B-1 Term Loan (First Lien), 4.00% (Libor + 3.00%), maturity 6/3/24(i)   1,463,492    1,453,459    1,448,857 
PlayCore, Senior Secured Initial Term Loan (First Lien), 4.75% (Libor + 3.75%), maturity 9/30/24   969,417    967,793    964,570 
CHI Overhead Doors, Senior Secured Initial Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 7/29/22   623,533    619,423    623,533 
Hoffman Southwest, Senior Secured Initial Term Loan, 6.00% (Libor + 5.00%), maturity 8/14/23   527,876    525,262    523,917 
DiversiTech Corporation, Senior Secured Initial Term Loan (Second Lien), 8.50% (Libor + 7.50%), maturity 6/2/25   500,000    489,324    497,500 
Acuren, Senior Secured Initial Term Loan, 4.48% (Libor + 4.25%), maturity 1/23/27(i)   497,500    495,097    496,878 
                
Containers, Packaging & Glass               
ProAmpac, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 11/20/23(i)   2,977,335    2,991,226    2,977,335 
Anchor Packaging, Senior Secured Initial Term Loan (First Lien), 3.98% (Libor + 3.75%), maturity 7/18/26   2,416,597    2,407,887    2,416,597 
Pregis Corporation, Senior Secured Initial Term Loan (First Lien), 3.98% (Libor + 3.75%), maturity 7/31/26(i)   992,500    990,395    982,575 
Tank Holding, Senior Secured 2020 Refinancing Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 3/26/26(i)   990,000    986,352    972,876 
Berlin Packaging, Senior Secured Initial Term Loan (First Lien), 3.00% (Libor + 3.00%), maturity 11/7/25(i)   496,193    474,701    484,221 
TricorBraun, Senior Secured Closing Date Term Loan (First Lien), 4.75% (Libor + 3.75%), maturity 11/30/23(i)   483,602    483,602    480,048 
Alpha Packaging, Senior Secured Tranche B-1 Term Loan, 7.00% (Libor + 6.00%), maturity 11/12/21   483,212    482,776    479,588 
                
Consumer Goods: Non-durable               
Manna Pro, Senior Secured Term Loan, 7.00% (Libor + 6.00%), maturity 12/8/23   3,412,500    3,378,463    3,395,438 
Augusta Sportswear Group, Senior Secured Initial Term Loan, 5.50% (Libor + 4.50%), maturity 10/26/23   2,209,019    2,197,476    1,988,118 
Badger Sportswear, Senior Secured Initial Term Loan (First Lien), 6.00% (Libor + 5.00%), maturity 9/11/23   1,906,766    1,897,523    1,863,864 
Varsity Brands, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 12/16/24(i)   979,869    985,476    831,872 
                
Automotive               
Mavis, Senior Secured Closing Date Term Loan (First Lien), 3.48% (Libor + 3.25%), maturity 3/20/25(i)   3,839,353    3,826,741    3,682,216 
Truck Hero, Senior Secured Initial Term Loan (Second Lien), 9.25% (Libor + 8.25%), maturity 4/21/25   1,800,000    1,798,681    1,800,000 
Safe Fleet, Senior Secured Tranche B-1 Term Loan (First Lien), 4.75% (Libor + 3.75%), maturity 2/3/25   975,849    954,599    963,651 
Safe Fleet, Senior Secured Initial Term Loan (Second Lien), 6.98% (Libor + 6.75%), maturity 2/2/26   500,000    489,187    492,500 
IXS, Senior Secured Initial Term Loan, 6.00% (Libor + 5.00%), maturity 3/5/27(i)   303,492    300,636    300,780 
                
Wholesale               
Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 4.00% (Libor + 3.00%), maturity 3/20/25   3,905,783    3,906,232    3,876,490 
PetroChoice, Senior Secured Initial Term Loan (First Lien), 6.00% (Libor + 5.00%), maturity 8/19/22   1,900,184    1,884,522    1,748,170 
ABB Optical, Senior Secured Initial Term Loan (First Lien), 6.00% (Libor + 5.00%), maturity 6/15/23   1,443,627    1,442,406    1,403,927 

 

The accompanying notes are an integral part of these financial statements.

 

8

 

 

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of September 30, 2020

(Expressed in U.S. Dollars)

(unaudited)

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS(h) (Continued):               
Transportation: Cargo               
Odyssey Logistics & Technology , Senior Secured New Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 10/12/24(i)  $3,614,314   $3,610,514   $3,425,590 
Transplace, Senior Secured Closing Date Term Loan (First Lien), 4.75% (Libor + 3.75%), maturity 10/7/24   2,448,360    2,442,858    2,442,239 
Capstone Logistics, Senior Secured Term Loan (First Lien), 5.50% (Libor + 4.50%), maturity 10/7/21(i)   1,160,469    1,160,608    1,160,469 
                
Forest Products & Paper               
Hoffmaster Group, Senior Secured Tranche B-1 Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 11/21/23(i)   2,904,644    2,894,898    2,488,009 
Loparex, Senior Secured Initial Term Loan (First Lien), 4.73% (Libor + 4.50%), maturity 7/31/26   1,485,000    1,472,127    1,473,863 
Hoffmaster Group, Senior Secured Initial Term Loan (Second Lien), 10.50% (Libor + 9.50%), maturity 11/21/24   1,250,000    1,250,000    1,209,375 
                
Beverage, Food & Tobacco               
Sovos Brands, Senior Secured Initial Term Loan (2018), 4.98% (Libor + 4.75%), maturity 11/20/25   1,965,000    1,949,614    1,965,000 
Kettle Cuisine, Senior Secured Initial Term Loan (First Lien) , 4.75% (Libor + 3.75%), maturity 8/25/25   1,960,000    1,953,448    1,945,300 
                
Media: Advertising, Printing & Publishing               
Ansira, Unitranche, 7.50% (Libor + 6.50%), maturity 12/20/24   1,976,306    1,966,499    1,581,046 
Northstar, Senior Secured Term Loan, 7.25% (Libor + 6.25%), maturity 6/7/22   1,402,843    1,402,843    1,385,308 
Vestcom International, Senior Secured L/C Collaterilized, 5.00% (Libor + 4.00%), maturity 12/19/23   781,751    784,077    773,933 
                
Consumer Goods: Durable               
Strategic Partners, Senior Secured Initial Term Loan, 4.75% (Libor + 3.75%), maturity 6/30/23(i)   2,291,799    2,289,275    2,280,340 
                
Retail               
Grocery Outlet, Senior Secured 2020 Term Loan (First Lien), 2.98% (Libor + 2.75%), maturity 10/22/25(i)   1,269,483    1,267,497    1,253,955 
                
Metals & Mining               
Dynatect, Senior Secured Term B Loan, 5.50% (Libor + 4.50%), maturity 9/30/22   990,317    989,788    972,987 
                
Hotel, Gaming & Leisure               
Auto Europe, Senior Secured Initial Dollar Term Loan, 6.00% (Libor + 5.00%), maturity 10/21/23   1,119,231    1,112,450    951,346 
                
Health Care Equipment & Services               
MyEyeDr, Senior Secured Initial Term Loan (First Lien), 4.48% (Libor + 4.25%), maturity 8/31/26(i)   581,851    576,553    556,479 
                
Total Bank Loans       $348,947,419   $340,683,844 

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
EQUITY AND PREFERRED SHARES:  NON-CONTROL/NON-AFFILIATE INVESTMENTS- (0.2%)(g)(h):               
                
Services: Business               
DBi Services, Class A-1 Preferred Units (800.53 units)(k)       $800,535   $576,385 
DBi Services, Class B Common Shares (169,362.31 shares)(l)(m)        -    - 
                
Services: Consumer               
Ned Stevens, Class B Common Units (261,438 Common B units, Fair value of $220,135)(j)(m)(n)(o)        261,438    220,135 
                
Healthcare & Pharmaceuticals               
Alpaca, Class A Units (33,300.04 Class A Units, Fair value of $8,419)(j)(m)(o)(p)        58,608    8,419 
                
Total Equity and Preferred Shares       $1,120,581   $804,939 
                
                
Total Portfolio Investments(r)       $350,068,000   $341,488,783 

 

(a)All companies are located in the United States of America, unless otherwise noted.
(b)Interest rate percentages represent actual interest rates which are indexed from then 30-day London Interbank Offered Rate ("LIBOR") unless otherwise noted. LIBOR rates are subject to interest rate floors which can vary based on the contractual agreement with the borrower.  Due dates represent the contractual maturity date.
(c)All loans are income-producing, unless otherwise noted.
(d)All investments are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act") unless otherwise noted.
(e)All investments are exempt from registration under the Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act.
(f)Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the FASB Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) fair value hierarchy. Refer to Note 3 – Investments in the accompanying Notes to Financial Statements for additional information.
(g)Percentages are calculated using fair value of investments over net assets.
(h)As defined in 1940 Act, the Company is not deemed to be an “Affiliated Person” of or “Control” this portfolio company because it neither owns 5% or  more of the portfolio company’s outstanding voting securities nor has the power to exercise control over the management or policies of such portfolio company (including through a management agreement).
(i)Investment was valued using Level 2 inputs within the ASC 820 fair value hierarchy.  Refer to Note 3 – Investments in the accompanying Notes to Financial Statements for additional information.
(j)Three of our affiliated funds, Audax Direct Lending Solutions Fund - A, L.P., Audax Direct Lending Solutions Fund - C, L.P., and Audax Direct Lending Solutions Fund - D, L.P., 'co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.
(k)Represents an investment owned by APD Dbi Preferred, Inc., a holding company for the investment in DBi.
(l)Represents an investment owned by APD Dbi Common, Inc., a holding company for the investment in DBi.

 

The accompanying notes are an integral part of these financial statements.

 

9

 

 

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of September 30, 2020

(Expressed in U.S. Dollars)

(unaudited)

 

(m)Investment is non-income producing.
(n)Represents an investment in APD NS Equity, L.P., a holding company, made through an affiliated equity aggregator vehicle.
(o)Other net assets of $0 at the aggregator levels are included in the fair value of the investments when using the net asset value as a practical expedient.
(p)Represents an investment in APD ALP Equity, L.P., a holding company, made through an affiliated equity aggregator vehicle.
(q)The borrower for Sophos, Surf Holdings S.a.r.l., is located in United Kingdom.
(r)At September 30, 2020, the cost of investments for income tax purposes was $350,068,000 the gross unrealized depreciation for federal tax purposes was $9,547,748, the gross unrealized appreciation for federal income tax purposes was $968,531, and the net unrealized depreciation was $8,579,217.

 

The accompanying notes are an integral part of these financial statements.

 

10

 

 

Audax Credit BDC Inc.

Schedule of Investments

As of December 31, 2019

(Expressed in U.S. Dollars)

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS - (99.6%)(g)(h):               
                
Healthcare & Pharmaceuticals               
Radiology Partners, Senior Secured Term B Loan (First Lien), 6.66% (Libor + 4.75%), maturity 7/9/25(i)  $5,187,469   $5,149,488   $5,211,316 
Pathway, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 12/20/24   4,956,161    4,911,269    4,943,769 
Tecomet, Senior Secured 2017 Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 5/1/24   3,959,391    3,942,690    3,949,491 
Advarra, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/9/26(j)   3,939,427    3,899,562    3,909,879 
Young, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 11/7/24   3,834,156    3,823,748    3,805,398 
Specialty Care, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 9/1/23   3,342,954    3,346,536    3,334,596 
Zest Dental, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 3/14/25(i)   3,333,213    3,356,177    3,199,884 
Veritext, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 8/1/25   3,187,891    3,173,500    3,171,951 
Confluent Health, Senior Secured Initial Term Loan, 6.91% (Libor + 5.00%), maturity 6/24/26   2,985,000    2,957,225    2,962,613 
Physicians Endoscopy, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 8/18/23   2,906,775    2,886,868    2,874,073 
PharMedQuest, Senior Secured Initial Term Loan, 7.41% (Libor + 5.50%), maturity 10/31/24   2,500,000    2,463,488    2,481,250 
Waystar, Senior Secured Term Loan B, 5.91% (Libor + 4.00%), maturity 10/22/26   2,500,000    2,487,836    2,481,250 
MedRisk, Senior Secured Initial Term Loan (First Lien), 4.66% (Libor + 2.75%), maturity 12/27/24   2,450,000    2,455,219    2,450,000 
Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 9/23/24   2,446,014    2,426,873    2,421,554 
OB Hospitalist Group, Senior Secured Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 8/1/24   2,316,088    2,305,375    2,316,088 
MedRisk, Senior Secured Initial Loan (Second Lien), 8.66% (Libor + 6.75%), maturity 12/29/25   2,100,000    2,074,832    2,100,000 
Zelis RedCard, Senior Secured Initial Term Loan, 6.66% (Libor + 4.75%), maturity 9/30/26(i)   2,000,000    1,980,688    2,014,889 
Press Ganey, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 7/24/26(i)   1,995,000    1,987,841    2,011,774 
Avalign Technologies, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 12/22/25   1,980,000    1,962,728    1,957,725 
CareCentrix, Senior Secured Initial Term Loan, 6.41% (Libor + 4.50%), maturity 4/3/25   1,912,500    1,904,900    1,912,500 
Premise Health, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 7/10/25   1,829,786    1,838,127    1,825,212 
Alpaca, Senior Secured Term Loan, 6.16% (Libor + 4.25%), maturity 4/19/24(j)   1,674,127    1,650,502    1,669,942 
CPS, Unitranche, 7.16% (Libor + 5.25%), maturity 2/28/25   1,492,500    1,472,625    1,488,769 
Stepping Stones, Unitranche, 7.41% (Libor + 5.50%), maturity 12/12/24   1,484,409    1,477,320    1,467,709 
Ensemble, Senior Secured Closing Date Term Loan, 5.66% (Libor + 3.75%), maturity 8/3/26(i)   997,500    992,719    1,006,949 
Veritext, Senior Secured Initial Term Loan (Second Lien), 8.91% (Libor + 7.00%), maturity 7/31/26   1,000,000    995,613    995,000 
Upstream Rehabilitation, Senior Secured Term Loan, 6.41% (Libor + 4.50%), maturity 11/20/26   1,000,000    995,045    992,500 
Packaging Coordinators, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 6/30/23(i)   984,694    990,391    978,540 
Alcami, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/14/25   987,500    983,389    972,688 
Aegis Sciences, Senior Secured Initial Term Loan (2018) (First Lien), 7.41% (Libor + 5.50%), maturity 5/9/25   987,500    975,453    960,344 
Dermatologists of Central States, Senior Secured Term Loan, 8.41% (Libor + 6.50%), maturity 4/20/22   977,310    970,785    960,207 
ATI Physical Therapy, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 5/10/23(i)   922,022    926,900    920,657 
Specialty Care, Senior Secured Initial Term Loan (Second Lien), 10.16% (Libor + 8.25%), maturity 9/1/24   850,000    843,325    850,000 
Athena, Senior Secured Term B Loan (First Lien), 6.41% (Libor + 4.50%), maturity 2/11/26(i)   497,494    495,129    500,973 
RMP & MedA/Rx, Senior Secured Term Loan, 6.41% (Libor + 4.50%), maturity 3/2/22   441,647    440,553    441,647 
Injured Workers Pharmacy, Senior Secured Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 7/22/20   378,724    375,038    375,883 
Alpaca, Senior Secured Revolver, 6.16% (Libor + 4.25%), maturity 4/19/24(j)   134,215    130,332    133,879 
Advarra, Senior Secured Initial Revolving Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/9/26(j)   -    (7,619)   - 
                
High Tech Industries               
Qlik, Senior Secured 2019 Incremental Term Loan, 6.16% (Libor + 4.25%), maturity 4/26/24   3,980,000    3,954,501    3,950,150 
Barracuda, Senior Secured 2019 Incremental Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 2/12/25(i)   3,451,222    3,464,246    3,477,852 
Masergy, Senior Secured Initial Loan (Second Lien), 9.41% (Libor + 7.50%), maturity 12/16/24   3,428,571    3,420,116    3,411,429 
Syncsort, Senior Secured 2018 Refinancing Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 8/16/24   3,421,688    3,397,118    3,387,471 
Sparta, Senior Secured New Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 8/21/24   3,421,250    3,423,008    3,344,272 
Jaggaer, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 8/14/26(i)   3,154,345    3,150,077    3,166,174 
Infogroup, Senior Secured Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 4/3/23   2,919,937    2,895,405    2,890,738 
McAfee, Senior Secured Term B USD Loan, 5.66% (Libor + 3.75%), maturity 9/30/24(i)   2,864,431    2,875,358    2,883,023 
eResearch (ERT), Senior Secured Initial Term Loan, 5.66% (Libor + 3.75%), maturity 5/2/23(i)   2,538,022    2,538,022    2,538,022 
ECi Software Solutions, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 9/27/24(i)   2,463,579    2,451,402    2,468,662 
EverCommerce, Senior Secured Initial Term Loan, 7.41% (Libor + 5.50%), maturity 8/23/25   2,184,679    2,142,420    2,179,217 
Idera, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 6/28/24   2,146,089    2,145,337    2,146,089 
Intermedia , Senior Secured New Term Loan (First Lien), 7.91% (Libor + 6.00%), maturity 7/21/25(i)   1,980,000    1,963,699    1,985,107 
Flexera Software, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 2/26/25(i)   1,965,000    1,970,591    1,973,626 
QuickBase, Senior Secured Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 4/2/26   1,990,000    1,981,139    1,970,100 
GlobalLogic, Senior Secured Initial Term Loan, 5.16% (Libor + 3.25%), maturity 8/1/25(i)   1,728,438    1,719,948    1,728,438 
Bomgar, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 4/18/25   1,723,750    1,733,891    1,702,203 
Liaison, Senior Secured Initial Term Loan, 6.41% (Libor + 4.50%), maturity 12/20/26(i)   1,500,000    1,496,250    1,496,250 
OEConnection, Senior Secured Initial Term Loan, 5.91% (Libor + 4.00%), maturity 9/25/26   1,496,250    1,488,267    1,485,028 
Navex Global, Senior Secured Initial Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 9/5/25(i)   1,481,250    1,467,074    1,484,310 
Compusearch Software Systems, Senior Secured Term Loan C, 6.16% (Libor + 4.25%), maturity 5/8/23   1,432,979    1,432,391    1,425,814 
Ultimate Software , Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 5/4/26(i)   1,080,625    1,082,379    1,089,829 
Insurity, Senior Secured Closing Date Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 7/31/26   1,000,000    995,219    997,500 
Global Knowledge, Senior Secured Initial Term Loan (Second Lien), 12.16% (Libor + 10.25%), maturity 1/20/22   1,000,000    995,441    988,750 
LANDesk, Senior Secured Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 1/20/24(i)   978,627    969,988    981,924 
Corsair, Senior Secured Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 8/28/24   982,444    978,622    967,707 
Community Brands, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 12/2/22   834,254    830,477    825,912 
HelpSystems, Senior Secured Initial Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 11/19/26(i)   500,000    498,750    498,750 
Masergy, Senior Secured 2017 Replacement Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 12/15/23   484,908    483,405    482,484 
Endurance Int'l Group, Senior Secured Refinancing Loan (2018), 5.66% (Libor + 3.75%), maturity 2/9/23(i)   404,507    403,788    401,013 

 

The accompanying notes are an integral part of these financial statements.

 

11

 

 

Audax Credit BDC Inc.

Schedule of Investments

As of December 31, 2019 (Continued)

(Expressed in U.S. Dollars)

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS(h) (Continued):               
                
Services: Business               
CoAdvantage, Senior Secured Initial Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 9/23/25  $3,990,000   $3,950,952   $3,970,050 
RevSpring, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 10/11/25   3,960,000    3,955,758    3,950,100 
Aimbridge, Senior Secured Initial Term Loan (2019) (First Lien), 5.66% (Libor + 3.75%), maturity 2/2/26   2,982,525    2,973,315    2,975,069 
Addison, Senior Secured Initial Term Loan, 6.91% (Libor + 5.00%), maturity 4/15/26   2,985,000    2,931,090    2,962,613 
Fleetwash, Senior Secured Incremental Term Loan, 6.66% (Libor + 4.75%), maturity 10/1/24   2,962,613    2,938,051    2,947,799 
Sterling Backcheck, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 6/19/24(i)   2,894,218    2,894,218    2,883,365 
Allied Universal, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 7/10/26(i)   2,613,149    2,591,810    2,635,788 
Cast & Crew, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 2/9/26(i)   2,481,250    2,484,662    2,497,618 
HireRight, Senior Secured Initial Term Loan (Second Lien), 9.16% (Libor + 7.25%), maturity 7/10/26   2,500,000    2,479,365    2,481,250 
Newport Group, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 9/12/25   2,471,231    2,458,304    2,452,697 
First Advantage, Senior Secured Term Loan (First Lien), 7.16% (Libor + 5.25%), maturity 6/30/22   2,000,000    1,996,094    1,990,000 
Vistage, Senior Secured Term B Loan (First Lien), 5.91% (Libor + 4.00%), maturity 2/10/25   1,965,000    1,961,739    1,960,088 
Service Logic, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 12/31/24   2,339,998    2,333,703    2,316,598 
Eliassen Group, Senior Secured Initial Term B Loan, 6.41% (Libor + 4.50%), maturity 11/5/24   1,493,123    1,486,683    1,489,390 
OSG Billing Services, Senior Secured Term B Loan (First Lien), 6.41% (Libor + 4.50%), maturity 3/27/24   1,474,855    1,470,192    1,467,481 
DBi Services, Senior Secured Term B Loan (Second Lien), 8.00% (Libor + 8.00%), maturity 2/2/26   1,268,869    1,268,869    1,268,869 
Diversified, Senior Secured Initial Term Loan, 6.66% (Libor + 4.75%), maturity 12/23/23   992,500    986,007    990,019 
WCG, Senior Secured Term Loan, 5.91% (Libor + 4.00%), maturity 1/8/27(i)   1,000,000    990,000    990,000 
Franklin Energy, Senior Secured Term B Loan (First Lien), 5.91% (Libor + 4.00%), maturity 8/14/26   997,500    995,123    987,525 
Worley Claims Services, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 6/3/26(i)   498,747    494,694    498,747 
                
Chemicals, Plastics & Rubber               
Plaskolite, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 12/15/25   3,960,000    3,896,852    3,920,400 
Transcendia, Senior Secured 2017 Refinancing Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 5/30/24   3,427,599    3,413,966    3,341,909 
Universal Fiber Systems, Senior Secured Initial Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 10/4/21   2,811,462    2,806,249    2,741,176 
Spectrum Plastics, Senior Secured Closing Date Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 1/31/25   2,682,225    2,691,463    2,615,169 
Unifrax, Senior Secured USD Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 12/12/25(i)   2,476,241    2,454,997    2,286,895 
Q Holding, Senior Secured Term B Loan (2019), 6.91% (Libor + 5.00%), maturity 12/29/23   1,995,000    1,985,388    1,985,025 
Boyd Corp, Senior Secured Initial Loan (Second Lien), 8.66% (Libor + 6.75%), maturity 9/6/26   2,000,000    2,002,217    1,985,000 
DuBois Chemicals 2019, Senior Secured Term Loan (Second Lien), 10.41% (Libor + 8.50%), maturity 9/30/27   2,000,000    1,950,862    1,985,000 
Borchers, Senior Secured Term Loan, 6.41% (Libor + 4.50%), maturity 11/1/24   1,910,136    1,905,332    1,900,585 
Zep, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 8/12/24   1,956,225    1,954,251    1,584,542 
DuBois Chemicals 2019, Senior Secured Term Loan B (First Lien), 6.41% (Libor + 4.50%), maturity 9/30/26   1,560,865    1,516,107    1,549,159 
Spartech, Senior Secured Term Loan, 6.91% (Libor + 5.00%), maturity 10/17/25   1,000,000    985,134    992,500 
Vantage Specialty Chemicals, Senior Secured Closing Date Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 10/28/24   987,406    970,460    967,657 
Prince Minerals, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 3/31/25(i)   982,500    978,584    892,145 
                
Services: Consumer               
CIBT Holdings, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 6/3/24   5,424,266    5,407,341    5,370,023 
A Place For Mom, Senior Secured Term Loan, 5.66% (Libor + 3.75%), maturity 8/10/24   2,666,144    2,665,484    2,599,490 
Weld North, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 2/15/25   2,463,674    2,441,530    2,463,674 
Cambium Learning, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 12/18/25   2,475,000    2,365,058    2,462,625 
Smart Start, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 2/21/22   2,417,625    2,417,625    2,399,493 
Mister Car Wash, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 5/14/26(i)   1,990,000    1,985,439    2,002,726 
SMG, Senior Secured Initial Term Loan (First Lien), 4.91% (Libor + 3.00%), maturity 1/23/25(i)   1,976,118    1,963,737    1,976,118 
Valet Living, Senior Secured Initial Term Loan, 5.91% (Libor + 4.00%), maturity 9/28/25   1,983,718    1,979,195    1,973,800 
LegalShield, Senior Secured Initial Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 5/1/25   1,940,510    1,927,273    1,935,659 
Ned Stevens, Senior Secured Term A Loan, 7.66% (Libor + 5.75%), maturity 9/30/25(j)   1,603,824    1,572,794    1,591,795 
Spring Education, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/30/25   987,500    985,450    982,563 
Ned Stevens, Senior Secured Revolver, 6.66% (Libor + 4.75%), maturity 9/30/25(j)   -    (2,614)   - 
                
Aerospace & Defense               
CPI International, Senior Secured TL, 6.66% (Libor + 4.75%), maturity 7/26/24   4,000,000    3,960,000    3,970,000 
StandardAero, Senior Secured Initial Term B-1 Loan, 5.91% (Libor + 4.00%), maturity 4/6/26(i)   3,567,981    3,556,378    3,599,650 
StandardAero, Senior Secured Initial Term B-2 Loan, 5.91% (Libor + 4.00%), maturity 4/6/26(i)   1,918,269    1,912,031    1,935,296 
Consolidated Precision Products, Senior Secured Initial Term Loan (Second Lien), 9.66% (Libor + 7.75%), maturity 4/30/26   1,500,000    1,514,877    1,485,000 
Tronair, Senior Secured Initial Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 9/8/23   1,459,899    1,453,639    1,427,051 
Consolidated Precision Products, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 4/30/25(i)   497,481    495,124    494,358 
                
Banking, Finance, Insurance & Real Estate               
American Beacon Advisors, Senior Secured Tranche C Term Loan (Second Lien), 9.41% (Libor + 7.50%), maturity 4/30/23   2,000,000    2,000,000    1,995,000 
Kestra Financial, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 6/3/26   1,995,000    1,976,368    1,990,013 
Integro Insurance Brokers, Senior Secured Initial Term Loan (First Lien), 7.66% (Libor + 5.75%), maturity 10/31/22   1,989,457    1,951,565    1,939,721 
Advisor Group, Senior Secured Initial Term B Loan, 6.91% (Libor + 5.00%), maturity 7/31/26(i)   1,490,625    1,465,245    1,478,349 
EPIC Insurance, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 9/6/24   1,470,000    1,467,280    1,458,975 
AmeriLife Group, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 6/12/26   978,070    973,369    970,735 
Aperio, Senior Secured Loan, 6.91% (Libor + 5.00%), maturity 10/25/24   933,889    929,619    933,889 
                
Consumer Goods: Non-durable               
Manna Pro, Senior Secured Term Loan, 7.91% (Libor + 6.00%), maturity 12/8/23   3,438,750    3,399,412    3,412,959 
Augusta Sportswear Group, Senior Secured Initial Term Loan, 6.41% (Libor + 4.50%), maturity 10/26/23   2,228,517    2,214,540    2,211,804 
Badger Sportswear, Senior Secured Initial Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 9/11/23   1,906,766    1,895,349    1,873,398 
Varsity Brands, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 12/16/24(i)   987,418    993,636    973,861 

 

The accompanying notes are an integral part of these financial statements.

 

12

 

 

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of December 31, 2019

(Expressed in U.S. Dollars)

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
BANK LOANS:  NON-CONTROL/NON-AFFILIATE INVESTMENTS(h) (Continued):               
                
Containers, Packaging & Glass               
ProAmpac, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 11/20/23(i)  $3,000,535   $3,017,391   $2,972,870 
Anchor Packaging, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 7/18/26   1,995,000    1,985,448    1,995,000 
Tank Holding, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 3/26/26(i)   997,500    993,032    1,003,416 
Pregis Corporation, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 7/31/26   1,000,000    997,605    995,000 
TricorBraun, Senior Secured Closing Date Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 11/30/23(i)   494,901    494,901    491,978 
Alpha Packaging, Senior Secured Tranche B-1 Term Loan, 6.16% (Libor + 4.25%), maturity 5/12/20   488,837    488,275    483,338 
                
Capital Equipment               
MW Industries, Senior Secured 2018 New Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 9/30/24   2,443,750    2,443,750    2,419,313 
BAS, Senior Secured Repricing Term Loan, 5.66% (Libor + 3.75%), maturity 5/21/24   1,969,661    1,971,159    1,959,812 
Edward Don, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 7/2/25   1,478,769    1,472,799    1,452,890 
Cole-Parmer, Senior Secured Closing Date Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 11/4/26   1,000,000    995,111    992,500 
Excelitas, Senior Secured Initial USD Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 12/2/24   493,703    497,366    490,000 
TriMark, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 8/28/24(i)   491,207    492,665    406,376 
                
Wholesale               
Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 4.91% (Libor + 3.00%), maturity 3/20/25   3,935,671    3,936,089    3,906,153 
PetroChoice, Senior Secured Initial Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 8/19/22   1,915,184    1,893,658    1,891,245 
ABB Optical, Senior Secured Initial Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 6/15/23   1,454,906    1,452,426    1,422,170 
                
Transportation: Cargo               
Odyssey Logistics & Technology , Senior Secured New Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 10/12/24   3,615,344    3,611,340    3,588,229 
Transplace, Senior Secured Closing Date Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 10/7/24(i)   2,466,458    2,459,768    2,460,292 
Capstone Logistics, Senior Secured Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 10/7/21   1,161,707    1,161,868    1,144,282 
                
Construction & Building               
PlayPower, Senior Secured Initial Term Loan, 7.41% (Libor + 5.50%), maturity 5/8/26   1,934,722    1,934,722    1,920,212 
Tangent, Senior Secured Closing Date Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 11/30/24   1,496,238    1,480,815    1,488,757 
DiversiTech Corporation, Senior Secured Tranche B-1 Term Loan (First Lien), 4.91% (Libor + 3.00%), maturity 6/3/24   1,474,832    1,462,983    1,460,084 
PlayCore, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 9/30/24(i)   976,912    975,059    964,701 
CHI Overhead Doors, Senior Secured Initial Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 7/29/22(i)   628,442    623,246    630,799 
Hoffman Southwest, Senior Secured Initial Term Loan, 6.41% (Libor + 4.50%), maturity 8/14/23   527,876    523,556    525,237 
                
Automotive               
Mavis, Senior Secured Closing Date Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 3/20/25(i)   3,592,566    3,578,510    3,516,090 
Truck Hero, Senior Secured Initial Term Loan (Second Lien), 10.16% (Libor + 8.25%), maturity 4/21/25   1,800,000    1,798,507    1,795,500 
Safe Fleet, Senior Secured Tranche B-1 Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 2/3/25   987,500    963,545    982,563 
                
Media: Advertising, Printing & Publishing               
Ansira, Unitranche, 7.66% (Libor + 5.75%), maturity 12/20/22   1,905,523    1,893,460    1,872,177 
Northstar, Senior Secured Term Loan, 8.16% (Libor + 6.25%), maturity 6/7/22   1,449,510    1,449,510    1,438,639 
Imagine! Print Solutions, Senior Secured Term B-1 Loan (First Lien), 6.66% (Libor + 4.75%), maturity 6/21/22   1,458,750    1,451,152    1,035,712 
Vestcom International, Senior Secured L/C Collaterilized, 5.91% (Libor + 4.00%), maturity 12/19/23   783,878    786,703    777,999 
                
Forest Products & Paper               
Hoffmaster Group, Senior Secured Tranche B-1 Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 11/21/23   2,927,277    2,915,319    2,898,005 
Loparex, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 7/31/26   1,496,250    1,481,906    1,481,288 
                
Beverage, Food & Tobacco               
Sovos Brands, Senior Secured Initial Term Loan (2018), 6.91% (Libor + 5.00%), maturity 11/20/25   1,980,000    1,962,677    1,960,200 
Kettle Cuisine, Senior Secured Initial Term Loan (First Lien) , 5.66% (Libor + 3.75%), maturity 8/25/25   1,975,000    1,966,820    1,970,063 
                
Hotel, Gaming & Leisure               
On Location, Senior Secured Second Amendment Term Loan, 6.91% (Libor + 5.00%), maturity 9/29/21   2,396,566    2,384,489    2,384,584 
Auto Europe, Senior Secured Initial Dollar Term Loan, 6.91% (Libor + 5.00%), maturity 10/21/23   1,119,231    1,110,756    1,119,231 
                
Consumer Goods: Durable               
Strategic Partners, Senior Secured Initial Term Loan, 5.66% (Libor + 3.75%), maturity 6/30/23   2,309,428    2,306,211    2,309,428 
                
Retail               
Grocery Outlet, Senior Secured 2019 Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 10/22/25(i)   1,269,483    1,266,905    1,286,070 
                
Metals & Mining               
Dynatect, Senior Secured Term B Loan, 6.41% (Libor + 4.50%), maturity 9/30/22   997,579    990,633    987,604 
                
Health Care Equipment & Services               
MyEyeDr, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 8/31/26(i)   525,311    519,256    526,851 
                
Total Bank Loans       $331,601,425   $330,155,654 

 

13

 

 

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of December 31, 2019

(Expressed in U.S. Dollars) 

 

Portfolio Investments (a) (b) (c) (d) (e) (f)  Par   Cost   Value 
EQUITY AND PREFERRED SHARES:  NON-CONTROL/NON-AFFILIATE INVESTMENTS- (0.2%)(g)(h):               
                
Services: Business               
DBi Services, Class A-1 Preferred Units (800.53 units)(k)       $800,535   $400,267 
DBi Services, Class B Common Shares (169,362.31 shares)(l)(m)        -    - 
                
Services: Consumer               
Ned Stevens, Class B Common Units (261,438 Common B units, Fair value of $261,438)(f)(j)(m)(n)(o)        261,438    261,438 
                
Healthcare & Pharmaceuticals               
Alpaca, Class A Units (33,300.04 Class A Units, Fair value of $57,552)(f)(i)(j)(m)(o)(p)        58,608    57,552 
                
Total Equity and Preferred Shares       $1,120,581   $719,257 
                
                
Total Portfolio Investments(q)       $332,722,006   $330,874,911 

 

(a)All companies are located in the United States of America, unless otherwise noted.
(b)Interest rate percentages represent actual interest rates which are indexed from then 30-day London Interbank Offered Rate ("LIBOR") unless otherwise noted. LIBOR rates are subject to interest rate floors which can vary based on the contractual agreement with the borrower.  Due dates represent the contractual maturity date.
(c)All loans are income-producing, unless otherwise noted.
(d)All investments are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act") unless otherwise noted.
(e)All investments are exempt from registration under the Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act.
(f)Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the FASB Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) fair value hierarchy. Refer to Note 3 – Investments in the accompanying Notes to Financial Statements for additional information.
(g)Percentages are calculated using fair value of investments over net assets.
(h)As defined in 1940 Act, the Company is not deemed to be an “Affiliated Person” of or “Control” this portfolio company because it neither owns 5% or  more of the portfolio company’s outstanding voting securities nor has the power to exercise control over the management or policies of such portfolio company (including through a management agreement).
(i)Investment was valued using Level 2 inputs within the ASC 820 fair value hierarchy.  Refer to Note 3 – Investments in the accompanying Notes to Financial Statements for additional information.
(j)Three of our affiliated funds, Audax Direct Lending Solutions Fund - A, L.P., Audax Direct Lending Solutions Fund - C, L.P., and Audax Direct Lending Solutions Fund - D, L.P., 'co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.
(k)Represents an investment owned by APD Dbi Preferred, Inc., a holding company for the investment in DBi.
(l)Represents an investment owned by APD Dbi Common, Inc., a holding company for the investment in DBi.
(m)Investment is non-income producing.
(n)Represents an investment in APD NS Equity, L.P., a holding company, made through an affiliated equity aggregator vehicle.
(o)Other net assets of $0 at the aggregator levels are included in the fair value of the investments when using the net asset value as a practical expedient.
(p)Represents an investment in APD ALP Equity, L.P., a holding company, made through an affiliated equity aggregator vehicle.
(q)At December 31, 2019, the cost of investments for income tax purposes was $332,722,006 the gross unrealized depreciation for federal tax purposes was $2,951,506, the gross unrealized appreciation for federal income tax purposes was $1,104,411, and the net unrealized depreciation was $1,847,095.

 

14

 

 

Audax Credit BDC Inc. 

Notes to Financial Statements 

September 30, 2020 

(unaudited) 

 

Note 1. Organization

 

Audax Credit BDC Inc. (the “Company”) is a Delaware corporation that was formed on January 29, 2015. The Company is an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, effective with the Company’s taxable year ended December 31, 2015, the Company has elected to be treated for federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended (the “Code”).

 

The Company commenced business operations on July 8, 2015, the date on which the Company made its first investment. The Company has been formed for the purpose of investing primarily in the debt of leveraged, non-investment grade middle market companies, with the principal objective of generating income and capital appreciation. The Company’s investment strategy is to invest primarily in first lien senior secured loans and selectively in second lien loans to middle market companies. During the period prior to July 8, 2015, the Company was a development stage company, as defined in Paragraph 915-10-05, Development Stage Entity, of the Financial Accounting Standards Board’s (“FASB’s”) Accounting Standards Codification, as amended (“ASC”). During this time, the Company was devoting substantially all of its efforts to establishing its business and its planned principal operations had not commenced. All losses incurred during the period prior to July 8, 2015 have been considered a part of the Company’s development stage activities.

 

Audax Management Company (NY), LLC (the “Adviser”) is the investment adviser of the Company. The Adviser is registered as an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended.

 

Note 2. Significant Accounting Policies

 

Basis of Presentation

 

As an investment company, the accompanying financial statements of the Company are prepared in accordance with the investment company accounting and reporting guidance of ASC Topic 946, “Financial Services – Investment Companies,” as amended (“ASC Topic 946”), which incorporates the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X, as well as generally accepted accounting principles in the United States of America (“GAAP”).

 

Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management of the Company, the unaudited financial results included herein contain all adjustments, consisting solely of normal accruals, considered necessary for the fair presentation of financial statements for the interim period included herein. The current period’s results of operations are not necessarily indicative of the operating results to be expected for future periods. The accounting records of the Company are maintained in U.S. dollars.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions that may affect the reported amounts and disclosures in the financial statements. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ, and these differences could be material.

 

15

 

 

Cash and Cash Equivalents

 

Cash and cash equivalents are stated at fair value. The Company considers all highly liquid investments purchased with maturities of three months or less and money market mutual funds to be cash equivalents. No cash equivalent balances were held at September 30, 2020 and December 31, 2019. At such dates, cash was not subject to any restrictions on withdrawal.

 

Expenses

 

The Company is responsible for investment expenses, legal expenses, auditing fees and other expenses related to the Company’s operations. Such fees and expenses, including expenses initially incurred by the Adviser, may be reimbursed by the Company.

 

Investment Valuation Policy

 

The Company conducts the valuation of the Company’s investments, pursuant to which the Company’s net asset value is determined, at all times consistent with GAAP and the 1940 Act. The Company’s Board of Directors (the “Board of Directors”), with the assistance of the Company’s Audit Committee (the “Audit Committee”), determines the fair value of the Company’s investments, for investments with a public market and for investments with no readily available public market, on at least a quarterly basis, in accordance with the terms of ASC Topic 820, “Fair Value Measurement,” (“ASC 820”). The Company’s valuation procedures are set forth in more detail below.

 

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

 

ASC 820 establishes a hierarchal disclosure framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

 

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

 

Level 1 Inputs to the valuation methodology are quoted prices available in active markets for identical financial instruments as of the measurement date. The types of financial instruments in this category include unrestricted securities, including equities and derivatives, listed in active markets. The Company does not adjust the quoted price for these instruments, even in situations where the Company holds a large position, and a sale could reasonably be expected to impact the quoted price.

 

Level 2 Inputs to the valuation methodology are quoted prices in markets that are not active or for which all significant inputs are either directly or indirectly observable as of the measurement date. The types of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in markets that are not active, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

 

Level3 Inputs to the valuation methodology are unobservable and significant to the overall fair value measurement, and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments in this category include investments in privately held entities, non-investment grade residual interests in securitizations, collateralized loan obligations, and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

 

16

 

 

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

 

Pursuant to the framework set forth above, the Company values securities traded in active markets on the measurement date by multiplying the exchange closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments from pricing services, brokers or dealers’ quotes, or counterparty marks in order to value liquid assets that are not traded in active markets.

 

Pricing services aggregate, evaluate and report pricing from a variety of sources including observed trades of identical or similar securities, broker or dealer quotes, model-based valuations and internal fundamental analysis and research. When doing so, the Company determines whether the quote obtained is sufficient in accordance with GAAP to determine the fair value of the security. If determined adequate, the Company uses the quote obtained.

 

Securities that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Board of Directors, does not represent fair value, are each valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data are available. These valuation techniques vary by investment but include comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses. Inputs for these valuation techniques include relative credit information, observed market movement, industry sector information, and other market data, which may include benchmarking of comparable securities, issuer spreads, reported trades, and reference data, such as market research publications, when available. The process used to determine the applicable value is as follows:

 

(i) Each portfolio company or investment is initially valued by the investment professionals of the Adviser responsible for the portfolio investment using a standardized template designed to approximate fair market value based on observable market inputs and updated credit statistics and unobservable inputs. Additionally, as a part of the Company’s valuation process, the Adviser may employ the services of one or more independent valuation firms engaged by the Company;

 

(ii) Preliminary valuation conclusions are documented and discussed with the Company’s senior management and members of the Adviser’s valuation team;

 

(iii) The Audit Committee reviews the assessments of the Adviser or independent valuation firm (to the extent applicable) and provides the Board of Directors with recommendations with respect to the fair value of the investments in the Company’s portfolio; and

 

(iv) The Board of Directors discusses the valuation recommendations of the Audit Committee and determines the fair value of the investments in the Company’s portfolio in good faith based on the input of the Adviser, the independent valuation firm (to the extent applicable) and in accordance with the Company’s valuation policy.

 

The Audit Committee’s recommendation of fair value is generally based on its assessment of the following factors, as relevant:

 

17

 

 

·the nature and realizable value of any collateral;

 

·call features, put features and other relevant terms of debt;

 

·the portfolio company’s ability to make payments;

 

·the portfolio company’s actual and expected earnings and discounted cash flow;

 

·prevailing interest rates for like securities and expected volatility in future interest rates;

 

·the markets in which the portfolio company does business and recent economic and/or market events; and

 

·comparisons to publicly traded securities.

 

Investment performance data utilized are the most recently available as of the measurement date, which in many cases may reflect up to a one quarter lag in information.

 

Securities for which market quotations are not readily available or for which a pricing source is not sufficient may include the following:

 

·private placements and restricted securities that do not have an active trading market;

 

·securities whose trading has been suspended or for which market quotes are no longer available;

 

·debt securities that have recently gone into default and for which there is no current market;

 

·securities whose prices are stale; and

 

·securities affected by significant events.

 

The Board of Directors is responsible for the determination, in good faith, of the fair value of the Company’s portfolio investments.

 

Determination of fair value involves subjective judgments and estimates. Accordingly, these notes to the Company’s financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the Company’s financial statements.

 

Security transactions are recorded on the trade date (the date the order to buy or sell is executed or, in the case of privately issued securities, the closing date, which is when all terms of the transactions have been defined).

 

Realized gains and losses on investments are determined based on the identified cost method.

 

Refer to Note 3 — Investments for additional information regarding fair value measurements and the Company’s application of ASC 820.

 

Interest Income Recognition

 

Interest income, adjusted for amortization of premium, acquisition costs, and amendment fees and the accretion of original issue discount (“OID”), are recorded on an accrual basis to the extent that such amounts are expected to be collected. Generally, when a loan becomes 120 days or more past due, or if the Company’s qualitative assessment indicates that the debtor is unable to service its debt or other obligations, the Company will place the loan on non-accrual status and cease recognizing interest income on that loan for financial reporting purposes until the borrower has demonstrated the ability and intent to pay contractual amounts due. However, the Company will remain contractually entitled to this interest. Interest payments received on non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current or, due to a restructuring, the interest income is deemed to be collectible. As of September 30, 2020, the Company had one investment on non-accrual which totaled 0.28% and 0.18% of its total portfolio at cost and fair market value, respectively. The Company did not have any investments on non-accrual as of December 31, 2019.

 

18

 

 

The Company currently holds loans in the portfolio that contain OID and expects to hold loans in the future that contain payment-in-kind (“PIK”) provisions. The Company recognizes OID for loans originally issued at a discount and recognizes the income over the life of the obligation based on an effective yield calculation. PIK interest, computed at the contractual rate specified in a loan agreement, is added to the principal balance of a loan and recorded as income over the life of the obligation. Therefore, the actual collection of PIK income may be deferred until the time of debt principal repayment. To maintain the ability to be taxed as a RIC, the Company may need to pay out of both OID and PIK non-cash income amounts in the form of distributions, even though the Company has not yet collected the cash on either.

 

As of September 30, 2020, the Company held 186 investments in loans with OID. The Company accrued OID income of $102,083 and $282,729 for the three and nine months ended September 30, 2020, respectively. The unamortized balance of OID on debt investments as of September 30, 2020, totaled $1,901,454. As of December 31, 2019, the Company held 162 investments in loans with OID. The Company accrued OID income of $64,494 and $199,813 for the three and nine months ended September 30, 2019, respectively. The unamortized balance of OID investments as of December 31, 2019, totaled $1,733,632.

 

As of September 30, 2020, the Company held three investments which had a PIK interest component. The Company recorded $39,222 and $75,145 of PIK interest income for the three and nine months ended September 30, 2020, respectively. As of September 30, 2019, the Company held one investment which had a PIK interest component. The Company recorded $0 and $32,822 of PIK interest income for the three and nine months ended September 30, 2019, respectively.

 

As of September 30, 2020 and December 31, 2019, the Company held $24,955,930 and $5,506,217 cash and cash equivalents, respectively. For the three and nine months ended September 30, 2020, the Company earned $1,058 and $31,053, respectively, of interest income related to cash, which is included in other interest income within the accompanying statement of operations. For the three and nine months ended September 30, 2019, the Company earned $28,722 and $122,237, respectively, of interest income related to cash, which is included in other interest income within the accompanying statement of operations.

 

Other Income Recognition

 

The Company generally records prepayment fees and amendment fees upon receipt of cash or as soon as the Company becomes aware of the prepayment or amendment.

 

Dividend income on equity investments is accrued to the extent that such amounts are expected to be collected and if the Company has the option to collect such amounts in cash.

 

Prepayment fees, amendment fees and dividend income are accrued in other income in the accompanying statements of operations.

 

For the three and nine months ended September 30, 2020, the Company accrued $14,577 and $153,950 of other income, respectively, related to amendment fees. For the three and nine months ended September 30, 2019, the Company accrued $5,214 and $38,364 of other income, respectively, related to amendment and documentation fees.

 

New Accounting Pronouncements

 

In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13") which introduces new fair value disclosure requirements as well as eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ASU 2018-13 did not have a material impact on the Company’s disclosures.

 

19

 

 

Note 3. Investments

 

Fair Value

 

In accordance with ASC 820, the fair value of the Company’s investments is determined to be the price that would be received for an investment in a current sale, assuming an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date as described in Note–2 – Significant Accounting Policies.

 

As of September 30, 2020, $182,630,994 of the Company’s investments were valued using unobservable inputs, and $158,857,789 were valued using observable inputs. During the nine months ended September 30, 2020, $15,434,694 transferred into Level 3 due to a decrease in observable prices in the market and $74,210,909 transferred out of Level 3 due to the liquidity in the market and transparency of inputs.

 

As of December 31, 2019, $249,452,590 of the Company’s investments were valued using unobservable inputs, and $81,422,321 were valued using observable inputs. During the nine months ended September 30, 2019, $61,185,683 into Level 3 due to a decrease in observable prices in the marker and $20,300,196 transferred out of Level 3 due to the liquidity in the market and transparency of inputs.

 

The following table presents the Company’s investments carried at fair value as of September 30, 2020 and December 31, 2019, by caption on the Company’s accompanying statements of assets and liabilities and by security type.

 

   Assets at Fair Value as of September 30, 2020 
   Level 1   Level 2   Level 3   Total 
First lien debt  $-   $154,504,124   $156,281,866   $310,785,990 
Second lien debt   -    4,353,665    25,544,189    29,897,854 
Equity and Preferred Shares   -    -    804,939    804,939 
Total  $-   $158,857,789   $182,630,994   $341,488,783 

 

   Assets at Fair Value as of December 31, 2019 
   Level 1   Level 2   Level 3   Total 
First lien debt  $-   $81,422,321   $227,392,535   $308,814,856 
Second lien debt   -    -    21,340,798    21,340,798 
Equity and Preferred Shares   -    -    719,257    719,257 
Total  $-   $81,422,321   $249,452,590   $330,874,911 

 

In accordance with ASC 820, the following table provides quantitative information about the Level 3 fair value measurements of the Company’s investments as of September 30, 2020. The weighted average calculations in the table below are based on the fair value balances for all debt related calculations for the particular input.

 

20

 

 

 

             As of September 30, 2020
   Fair   Valuation  Unobservable     Weighted
   Value   Technique  Inputs (1)  Range (2)  Average (3)
First lien debt  $143,094,935   Matrix Pricing   Senior Leverage  2.80x - 10.54x  5.12x
            Total Leverage  2.80x - 10.54x  6.20x
            Interest Coverage  0.87x - 5.22x  2.31x
            Debt Service Coverage  0.80x - 4.04x  1.93x
            TEV Coverage  0.78x - 6.88x  2.42x
            Liquidity  33.77% - 333.00%  154.79%
            Spread Comparison  275bps - 700bps  449bps
                  
    12,235,585   Market Analysis   Senior Leverage  5.39x - 18.12x  7.64x
            Total Leverage  5.70x - 19.75x  9.21x
            Interest Coverage  0.26x - 2.34x  1.57x
            Debt Service Coverage  0.26x - 2.34x  1.27x
            TEV Coverage  0.44x - 1.82x  1.47x
            Liquidity  33.06% - 226.94%  133.59%
            Spread Comparison  350bps - 650bps  478bps
                  
Second lien debt   24,275,585   Matrix Pricing   Senior Leverage  4.61x - 8.99x  6.10x
            Total Leverage  4.61x - 8.99x  6.10x
            Interest Coverage  1.17x - 3.19x  2.13x
            Debt Service Coverage  1.01x - 2.83x  1.82x
            TEV Coverage  0.87x - 2.51x  1.77x
            Liquidity  85.32% - 257.41%  151.86%
            Spread Comparison  650bps - 950bps  773bps
                  
Total  $179,606,105             

 

(1)For any portfolio company, the unobservable input "Liquidity" is a fraction, expressed as a percentage, the numerator of which is the sum of the company's undrawn revolving credit facility capacity plus cash, and the denominator of which is the total amount that may be borrowed under the company's revolving credit facility.  The unobservable input "Spread Comparison" is a comparison of the spread over LIBOR for each investment to the spread over LIBOR for general leveraged loan transactions.

 

(2)Each range represents the variance of outputs from calculating each statistic for each portfolio company within a specific credit seniority.  The range may be a single data point when there is only one company represented in a specific credit seniority.

 

(3)Inputs are weighted based on the fair value of the investments included in the range.

 

The table above does not include $3,024,889 of debt, equity and preferred shares which management values using other unobservable inputs, such as earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA multiples, as well as other qualitative information, including company specific information.

 

In accordance with ASC 820, the following table provides quantitative information about the Level 3 fair value measurements of the Company’s investments as of December 31, 2019. The weighted average calculations in the table below are based on the fair value balances for all debt related calculations for the particular input.

 

21

 

 

 

             As of December 31, 2019
   Fair   Valuation  Unobservable     Weighted
   Value   Technique    Inputs (1)    Range (2)    Average (3)
First lien debt  $224,772,281    Matrix Pricing   Senior Leverage  2.33x - 7.55x  4.89x
            Total Leverage  3.10x - 9.79x  6.07x
            Interest Coverage  1.14x - 4.80x  2.10x
            Debt Service Coverage  0.93x - 3.68x  1.76x
            TEV Coverage  1.27x - 5.70x  2.42x
            Liquidity  5.75% - 587.90%  141.43%
            Spread Comparison  275bps - 650bps  435bps
                  
Second lien debt   20,071,929    Matrix Pricing   Senior Leverage  4.60x - 7.06x  5.87x
            Total Leverage  4.60x - 7.06x  5.88x
            Interest Coverage  1.54x - 3.21x  2.17x
            Debt Service Coverage  1.38x - 2.86x  1.89x
            TEV Coverage  1.52x - 2.44x  1.98x
            Liquidity  52.00% - 347.60%  149.91%
            Spread Comparison  675bps - 1025bps  764bps
                  
Total  $244,844,210             

 

(1)For any portfolio company, the unobservable input "Liquidity" is a fraction, expressed as a percentage, the numerator of which is the sum of the company's undrawn revolving credit facility capacity plus cash, and the denominator of which is the total amount that may be borrowed under the company's revolving credit facility.  The unobservable input "Spread Comparison" is a comparison of the spread over LIBOR for each investment to the spread over LIBOR for general leveraged loan transactions.

 

(2)Each range represents the variance of outputs from calculating each statistic for each portfolio company within a specific credit seniority.  The range may be a single data point when there is only one company represented in a specific credit seniority.

 

(3)Inputs are weighted based on the fair value of the investments included in the range.

 

The table above does not include $4,608,380 of debt, equity and preferred shares which management values using other unobservable inputs, such as EBITDA and EBITDA multiples, as well as other qualitative information, including company specific information.

 

Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in market yields, discounts rate, leverage, EBITDA or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of the Company’s investments. Generally, an increase or decrease in market yields, discount rates or leverage or an increase/decrease in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a corresponding decrease or increase, respectively, in the fair value of certain of the Company’s investments.

 

The following tables provide the changes in fair value, broken out by security type, during the nine months ended September 30, 2020 and 2019 for all investments for which the Company determines fair value using unobservable (Level 3) factors.

 

22

 

 

 

Nine Months Ended September 30, 2020  First lien debt   Second lien
debt
   Equity and
Preferred
Shares
   Total 
Fair Value as of December 31, 2019  $227,392,535   $21,340,798   $719,257   $249,452,590 
         Transfers into Level 3   15,434,694    -    -    15,434,694 
         Transfers out of Level 3   (71,237,159)   (2,973,750)   -    (74,210,909)
         Total gains:                    
                   Net realized loss(a)    (1,221,555)   -    -    (1,221,555)
                   Net unrealized (depreciation) appreciation(b)   (1,110,239)   (76,159)   85,682    (1,100,716)
         New investments, repayments and settlements:(c)                    
                   Purchases   13,199,175    7,709,688    -    20,908,863 
                   Settlements/repayments   (21,689,548)   (472,222)   -    (22,161,770)
                   Net amortization of premiums, PIK, discounts and fees   253,400    15,834    -    269,234 
                   Sales   (4,739,437)   -    -    (4,739,437)
Fair Value as of September 30, 2020  $156,281,866   $25,544,189   $804,939   $182,630,994 

 

(a)Included in net realized loss on the accompanying Statement of Operations for the nine months ended September 30, 2020.
   
(b)Included in net change in unrealized depreciation on the accompanying Statement of Operations for the nine months ended September 30, 2020.
   

(c)Includes increases in the cost basis of investments resulting from portfolio investments, the amortization of discounts, and PIK, as well as decreases in the costs basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs and other cost-basis adjustments.

 

Nine Months Ended September 30, 2019  First lien debt   Second lien
debt
   Equity and
Preferred
Shares
   Total 
Fair Value as of December 31, 2018  $124,975,467   $17,044,607   $-   $142,020,074 
         Transfers into Level 3   59,681,933    1,503,750    -    61,185,683 
         Transfers out of Level 3   (18,817,071)   (1,483,125)   -    (20,300,196)
         Total gains:                    
                   Net realized gain(a)    99,771    5,476    -    105,247 
                   Net unrealized (depreciation) appreciation(b)   (267,439)   44,955    (400,268)   (622,752)
         New investments, repayments and settlements:(c)                    
                   Purchases   41,582,955    2,192,231    800,535    44,575,721 
                   Settlements/repayments   (26,036,040)   (2,000,000)   -    (28,036,040)
                   Net amortization of premiums, PIK, discounts and fees   170,738    7,891    -    178,629 
                   Sales   (499,500)   -    -    (499,500)
Fair Value as of September 30, 2019  $180,890,814   $17,315,785   $400,267   $198,606,866 

 

(a)Included in net realized gain on the accompanying Statement of Operations for the nine months ended September 30, 2019.
   
(b)Included in net change in unrealized depreciation on the accompanying Statement of Operations for the nine months ended September 30, 2019.
   

(c)Includes increases in the cost basis of investments resulting from portfolio investments, the amortization of discounts, and PIK, as well as decreases in the costs basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs and other cost-basis adjustments.

 

The change in unrealized value attributable to investments still held at September 30, 2020 and 2019 were $(1,542,355) and $(949,494), respectively.

 

Investment Activities

 

The Company held a total of 202 investments with an aggregate fair value of $341,488,783 as of September 30, 2020. During the nine months ended September 30, 2020, the Company invested in 40 new investments for a combined $39,542,336 and in existing investments for a combined $12,834,005. The Company also received $27,907,668 in repayments from investments and $6,437,456 from investments sold during the nine months ended September 30, 2020.

 

The Company held a total of 176 investments with an aggregate fair value of $330,874,911 as of December 31, 2019. During the nine months ended September 30, 2019, the Company invested in 54 new investments for a combined $90,412,665 and in existing investments for a combined $20,244,318. The Company also received $46,240,554 in repayments from investments and $5,017,964 from investments sold during the nine months ended September 30, 2019.

 

23

 

 

Investment Concentrations

 

As of September 30, 2020, the Company’s investment portfolio consisted of investments in 174 companies located in 35 states across 22 different industries, with an aggregate fair value of $341,488,783. The five largest investments at fair value as of September 30, 2020 totaled $21,213,433 or 6.21% of the Company’s total investment portfolio as of such date. As of September 30, 2020, the Company’s average investment was $1,733,010 at cost.

 

As of December 31, 2019, the Company’s investment portfolio consisted of investments in 164 companies located in 33 states across 22 different industries, with an aggregate fair value of $330,874,911. The five largest investments at fair value as of December 31, 2019 totaled $21,465,158 or 7.16% of the Company’s total investment portfolio as of such date. As of December 31, 2019, the Company’s average investment was $2,028,793 at cost.

 

The following table outlines the Company’s investments by security type as of September 30, 2020 and December 31, 2019:

 

   September 30, 2020   December 31, 2019 
       Percentage of       Percentage of       Percentage       Percentage 
       Total       Total       of Total       of Total 
   Cost   Investments   Fair Value   Investments   Cost   Investments   Fair Value   Investments 
First lien debt  $318,377,852    90.95%  $310,785,990    91.01%  $310,257,401    93.25%