TCW Direct Lending LLC - FORM 10-K

TCW Direct Lending LLC - FORM 10-K - March 22, 2021

Attached files

Attached files

TCW Direct Lending LLC Reports

file	filename
EX-31.1 - CERTIFICATION OF PRESIDENT PURSUANT TO RULE 13A-14(A) - TCW Direct Lending LLC	d150595dex311.htm
EX-99.1 - FINANCIAL STATEMENTS OF TCW DIRECT LENDING STRATEGIC VENTURES LLC - TCW Direct Lending LLC	d150595dex991.htm
EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 - TCW Direct Lending LLC	d150595dex322.htm
EX-32.1 - CERTIFICATION OF PRESIDENT PURSUANT TO SECTION 906 - TCW Direct Lending LLC	d150595dex321.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) - TCW Direct Lending LLC	d150595dex312.htm
EX-21.1 - SUBSIDIARIES OF THE REGISTRANT - TCW Direct Lending LLC	d150595dex211.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2020

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

For the transition period from to

Commission file number 814-01069

TCW DIRECT LENDING LLC

(Exact Name of Registrant as Specified in Its Charter)


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

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

Not applicable

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

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

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

None

Not applicable

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

Common Limited Liability Company Units

(Title of Class)

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

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

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

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

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

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

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

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

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

As of December 31, 2020, there was no established public market for the Registrant’s common units.

The number of the Registrant’s common units outstanding at March 22, 2021 was 20,134,698.

Documents Incorporated by Reference

TCW Direct Lending LLC will file with the Securities and Exchange Commission, not later than 120 days after the close of its fiscal year ended December 31, 2020, a definitive proxy statement containing the information required to be disclosed under Part III of Form 10-K.

TCW DIRECT LENDING LLC

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2020

Table of Contents


	INDEX	PAGE NO.

PART I.

Item 1.	Business		1

Item 1A.	Risk Factors		11

Item 1B.	Unresolved Staff Comments		23

Item 2.	Properties		23

Item 3.	Legal Proceedings		23

Item 4.	Mine Safety Disclosure		23

PART II.

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		24

Item 6.	Selected Financial Data		24

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26

Item 7A.	Quantitative and Qualitative Disclosures About Risk		35

Item 8.	Financial Statements and Supplementary Data		36

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		36

Item 9A.	Controls and Procedures		36

Item 9B.	Other Information		36

PART III.

Item 10.	Directors, Executive Officers and Corporate Governance		37

Item 11.	Executive Compensation		37

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters		37

Item 13.	Certain Relationships and Related Transactions, and Director Independence		37

Item 14.	Principal Accountant Fees and Services		37

PART IV.

Item 15.	Exhibits, Financial Statement Schedules		38

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward- looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation:

•

our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our and their respective objectives as a result of the current COVID-19 pandemic;

•

an economic downturn, including as a result of the current COVID-19 pandemic, could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

•

a contraction of available credit, including as a result of the current COVID-19 pandemic, could impair our lending and investment activities;

•

interest rate volatility could affect our results, particularly in light of our use of leverage as part of our investment strategy;

•

our future operating results;

•

our contractual arrangements and relationships with third parties;

•

the ability of our portfolio companies to achieve their financial and other business objectives and the impact of the COVID-19 pandemic thereon;

•

competition with other entities and our affiliates for investment opportunities;

•

the impact of changing market conditions and lending standards on our ability to compete with other industry participants, including other business development companies, private and public funds, individual and institutional investors, and financial institutions for investment opportunities;

•

uncertainty surrounding the impact of the current COVID-19 pandemic on the financial stability of the United States and global economies;

•

the social, geopolitical, financial, trade and legal implications of the trade and cooperation agreement arising from Brexit, as well as future agreements between the United Kingdom and various countries in the European Union;

•

pandemics or other serious public health events, such as the ongoing global outbreak of COVID-19;

•

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

•

the speculative and illiquid nature of our investments;

•

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

•

the adequacy of our financing sources and working capital;

•

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

•

the loss of key personnel;

•

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

•

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

•

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

•

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

•

the effect of legal, tax and regulatory changes; and

•

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

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

iii

PART I

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

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

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

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

Item 1.

Business

Our Company

We are a direct lending investment company that seeks to generate attractive risk-adjusted returns primarily through direct investments in senior secured loans to middle market companies or other issuers. We are managed by the direct lending team (the “Direct Lending Team”) of the Adviser, a group of investment professionals that will use the same investment strategy employed by the Direct Lending Team over the past 20 years.

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

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

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

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

In 2019, we established two wholly-owned subsidiaries, TCW DL CTH LLC and TCW DL ASH LLC, each a Delaware limited liability company and each designed to hold an equity investment of ours.

In 2020, we established TCW DL SSP LLC, also a Delaware limited liability company and also designed to hold an equity investment of ours.

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

The Adviser

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

The Adviser is a Delaware limited liability company registered with the Securities and Exchange Commission (the “SEC”) under the Advisers Act, and has been since 1970. The Adviser is a wholly owned subsidiary of The TCW Group, Inc. (the “TCW Group”); and together with its affiliated companies (“TCW”) manages or has committed to manage approximately $248 billion of assets as of December 31, 2020. Such assets are managed in various formats, including managed accounts, funds, structured products and other investment vehicles, including Regiment Capital Special Situations Fund V, L.P. (together with us and its four predecessor funds, the “Direct Lending Funds”).

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

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

Investment Strategy and Opportunity

We provide private capital to middle market companies operating in a broad range of industries primarily in the United States. As our investment period has ended, we will not originate new loans, but may increase credit facilities to existing borrowers or affiliates. Our highly negotiated, private investments include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities such as options and warrants. However, historically, our investment bias was towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments. We compensate for the inherent lack of liquidity in our private investments by seeking returns that are higher than those of similar, but more liquid, investments. We consider financings for many different purposes, including corporate acquisitions, growth opportunities, liquidity needs, rescue situations, recapitalizations, DIP loans, bridge loans and Chapter 11 exits. As a result, we may invest in companies that are experiencing, or are likely to experience, operational, capital structure, liquidity and/or other financial difficulties. These investments can be subject to greater credit and liquidity risks, and could be more prone to default.

Investment Strategy

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

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

Selective Origination

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

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

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

Due Diligence

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

The elements of the quantitative analysis may include:

•

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

•

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

•

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

•

Comparable analysis relative to companies and transactions in similar industries;

•

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

•

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

Qualitative analysis may include a review of:

•

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

•

Product and/or service quality;

•

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

•

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

•

Performance throughout the economic cycle;

•

Production cost drivers and sourcing alternatives;

•

Quality of information systems and financial infrastructure;

•

Diversity of customers and suppliers; and

•

Competition, including the impact of alternate technology.

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

Customized Structuring

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

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

Active Monitoring

The Adviser’s investment professionals actively monitor and manage our investment portfolio by thoroughly and continuously analyzing all outstanding investments. Specifically, the investment professionals monitor each portfolio company’s compliance with the terms and conditions of its financing agreement, including reporting requirements and financial covenants. The reported information is gathered, analyzed and used to measure the portfolio company’s performance and potential impact on the investment. The investment professionals also maintain ongoing contact with each portfolio company’s management in order to understand and anticipate opportunities and issues. Interaction with management may range from regular discussions of financial results, site visits, periodic company and industry reviews to daily liquidity monitoring. If the portfolio company violates any of the terms, conditions or covenants of the financing agreement or other investment documentation, we typically will be in a position to take action to attempt to protect the investment and influence the actions of the portfolio company, if necessary.

Types of Investments

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

•

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

•

unsecured fixed-rate or adjustable-rate loans;

•

subordinated or mezzanine debt obligations;

•

equity securities, including preferred and common stocks and warrants;

•

convertible securities; and

•

options or other derivative instruments.

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

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

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

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

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

Collateral

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

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

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

Covenants

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

Default

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

Investments

On June 5, 2015 the Company, together with an affiliate of Security Benefit Corporation and accounts managed by Oak Hill Advisors, L.P. entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) to become members of TCW Direct Lending Strategic Ventures (“TCW Strategic Ventures”). TCW Strategic Ventures focuses primarily on making senior secured floating rate loans to middle-market borrowers. The aggregate fair value of this controlled/affiliated investment was $138.9 million and $195.7 million as of December 31, 2020 and 2019, respectively.

Based on fair values as of December 31, 2020, our portfolio consisted of debt and equity investments in 11 and eight portfolio companies, respectively, including TCW Strategic Ventures. Our portfolio was comprised of 73.8% debt investments which were primarily senior secured, first lien term loans and 26.2% equity investments, which were primarily common and preferred stocks; warrants; and our common and preferred membership interests in TCW Strategic Ventures. Debt investments in three portfolio companies were on non-accrual status as of December 31, 2020, representing 12.7% and 20.1% of our portfolio’s fair value and cost, respectively.

Based on fair values as of December 31, 2019, our portfolio consisted of debt and equity investments in 19 and nine portfolio companies, respectively, including TCW Strategic Ventures. Of these investments, 76.9% were debt investments which were primarily senior secured, first lien term loans and 23.1% were equity comprised of common and preferred stocks; warrants; and our common and preferred membership interests in TCW Strategic Ventures. No debt investments were on non-accrual status as of December 31, 2019.

For a further discussion of our investment activities and investment attributes as of December 31, 2020 and 2019, see “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Investment Advisory and Management Agreement

On August 10, 2020 the Company’s Board of Directors (the “Board”) reapproved the Investment Advisory and Management Agreement (the “Advisory Agreement”) originally entered into by the Company on September 15, 2014 with the Adviser, our registered investment adviser under the Investment Advisers Act of 1940, as amended. Unless earlier terminated, the Advisory Agreement will remain in effect for a period of one year and will remain in effect from year to year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of the independent directors of the Board.

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

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

(a)

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

(b)

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

(c)

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

(d)

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

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

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

Administration Agreement

On August 10, 2020, the Company’s Board reapproved the Administration Agreement with the Adviser, originally entered into on September 15, 2014, under which the Adviser (or one or more delegated service providers) oversees the maintenance of our financial records and otherwise assists the Company’s compliance with regulations applicable to a BDC under the 1940 Act and a RIC under the Code, to prepare reports to our Members, monitor the payment of our expenses and the performance of other administrative or professional service providers, and generally provides us with administrative and back office support. The Company reimburses the Administrator for expenses incurred by it on behalf of the Company in performing its obligations under the Administration Agreement. Amounts paid pursuant to the Administration Agreement are subject to the annual cap on Company Expenses (as defined below), as described more fully below.

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

Employees

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

License Agreement

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

Competition

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

Derivatives

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

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

Regulation as a Business Development Company

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

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

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

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

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

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

Qualifying Assets

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

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

•

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

•

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

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satisfies either of the following:

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

•

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

•

Securities of any eligible portfolio company that we control.

•

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

•

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

•

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

•

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

Managerial Assistance to Portfolio Companies

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

Temporary Investments

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

Senior Securities

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

Code of Ethics

We and the Adviser have each adopted a code of ethics of the Adviser (the “Code of Ethics”) pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, which establish procedures for personal investments and restricts certain transactions. The Code of Ethics generally contains restrictions on investments by our personnel in securities that we may purchase or hold. You may obtain copies of the Code of Ethics by written request addressed to the following: Gladys Xiques, Chief Compliance Officer, 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017.

Compliance Policies and Procedures

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

Proxy Voting Policies and Procedures

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

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

If the Adviser has responsibility for voting proxies in connection with its investment advisory duties, or has the responsibility to specify to an agent how to vote the client’s proxies, it exercises such voting responsibilities through the corporate proxy voting process. The Adviser believes that the right to vote proxies is a significant asset of its clients’ holdings. In order to provide a basis for making decisions in the voting of proxies for its clients, the Adviser has established a proxy voting committee (the “Proxy Committee”) and adopted proxy voting guidelines (the “Guidelines”) and procedures. The Proxy Committee generally meets quarterly (or at such other frequency as determined by the Proxy Committee), and its duties include establishing proxy voting guidelines and procedures, overseeing the internal proxy voting process, and reviewing proxy voting issues. The members of the Proxy Committee include the Adviser’s personnel from the investment, compliance, legal and marketing departments. The Adviser also uses outside proxy voting services (each an “Outside Service”) to help manage the proxy voting process. An Outside Service facilitates its voting according to the Guidelines (or according to guidelines submitted by the Adviser’s clients) and helps maintain the Adviser’s proxy voting records. The Adviser’s proxy voting and record keeping is dependent on the timely provision of proxy ballots by custodians, clients and other third parties. Under circumstances described below involving potential conflicts of interest, the Adviser may also request an Outside Service to help decide certain proxy votes. In certain limited circumstances, the Adviser may enter into voting agreements or other contractual obligations that govern the voting of proxies. In the event of a conflict between any contractual requirements and the Guidelines, the Adviser will vote in accordance with its contractual obligations. As a matter of firm policy, the Adviser does not disclose to unaffiliated third parties how it expects to vote on upcoming proxies and does not disclose the way it voted proxies without a legitimate need to know such information.

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

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

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

ITEM 1A.

RISK FACTORS

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

Risks Related to our Business and Structure

Dependence on the Key Personnel and Other Management

Members have no right or power to participate in the management of the Company and may not receive detailed financial information regarding investments that is available to the Adviser. An investor in the Company must rely upon the ability of the Adviser (including the Direct Lending Team and other investment professionals of the Adviser) to identify, structure and implement investments consistent with our investment objectives and policies. Accordingly, our success is dependent on the Adviser’s ability to retain and motivate highly-qualified professionals. The loss of services of the Adviser’s investment professionals could have an adverse effect on our business, financial condition and results of operations. Our future success also depends on the Adviser’s ability to identify, hire, train and retain other highly qualified and experienced investment and management professionals. Competition for such professionals

is significant, and there can be no assurance that the Adviser will be able to attract or retain other highly qualified professionals in the future. The inability of the Adviser to attract and retain such professionals could have a material adverse effect upon our business, financial condition and results of operations. In addition, we cannot assure you that the Adviser will remain the Company’s investment adviser or that the Company will continue to have access to its investment professionals or its information.

Reliance Upon Unaffiliated Co-Lender

In certain circumstances we may co-invest with an unaffiliated lender, who is sometimes responsible for performing some of the legal due diligence on the borrower and for negotiating some of the terms of the loan agreement that establishes the terms and conditions of the debt investment and the rights of the borrower and the lenders. In such circumstances, although we perform our own due diligence, we may rely in part on the quality of the due diligence performed by the co-lender and will be bound by the negotiated terms of the loan documentation. There can be no assurance that the unaffiliated co-lender has performed or will perform the same level of due diligence as we would perform or that the co-lender will negotiate terms that are consistent with the terms generally negotiated and obtained by us. If the unaffiliated co-lender is acting as collateral agent under the loan documentation and becomes insolvent, the assets securing the debt investment may be determined by a court or regulatory authority to be subject to the claims of the co-lender’s creditors. If that were to occur, we might incur delays and costs in realizing payment on the loan, or we might suffer a loss of principal and/or interest.

Reliance Upon Consultants

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

Borrowing Money

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

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

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

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

Effect of BDC and RIC Rules on Investment Strategy

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

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

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

Regulations Governing our Operation as a BDC

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

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

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

Failure to Qualify as a RIC

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

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

We will be subject to U.S. federal corporate-level income tax if we are unable to maintain our qualification as a RIC. To qualify as a RIC, we must meet certain source-of-income, asset diversification and distribution requirements. The distribution requirement for a RIC is satisfied if we distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to the Members on an annual basis. Because we have incurred debt, we are subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to qualify as a RIC and, thus, may be subject to corporate-level income tax.

To qualify as a RIC, we must also meet certain asset diversification requirements at the end of each calendar quarter. Failure to meet these tests may result in the Company having to dispose of certain investments quickly, at times we would not have otherwise done so, to prevent the loss of such qualification as a RIC. Because most of our investments will be in private or thinly traded public companies, any such dispositions may be made at disadvantageous prices and may result in substantial losses. In addition, we may have difficulty satisfying the diversification requirements as loans are repaid or we otherwise liquidate our portfolio during the fund’s wind-down period, since we will generally not be making additional investments (except for certain follow-on investments and investments that were significantly in process prior to the termination of the Commitment Period).

While we generally will not lose our status as a RIC as long as we do not acquire any non-qualifying securities or other property, under certain circumstances we may be deemed to have made an acquisition of non-qualifying securities or other property.

If we fail to qualify as a RIC for any reason and become subject to corporate-level income tax, the resulting corporate income taxes could substantially reduce our net assets, the amount of income available for distributions to the Members and the amount of funds available for new investments. Such a failure would have a material adverse effect on us and the Members.

Conflicts of Interest

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

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

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

We and the Adviser, have obtained exemptive relief from the SEC that, subject to certain conditions and limitations, permits us and other funds, accounts and investment vehicles advised by the Adviser (including Fund VII) and certain affiliates of the Adviser (referred to as “potential co investment funds”) to engage in certain co investment transactions (the “Co-Investment Exemptive Order”). Under the Co-Investment Exemptive Order, in the case where the interest in a particular investment opportunity exceeds the size of the opportunity, then the investment opportunity will be allocated among us, Fund VII and any other potential co-investment funds based on capital available for investment, which generally is determined based on the amount of cash on hand, existing commitments and reserves, if any, the targeted leverage level, targeted asset mix and other investment policies and restrictions set from time to time by the board or other governing body of the relevant fund or imposed by applicable laws, rules, regulations or interpretations. Since the Commitment Period ended in September 2017, we may not make new investments (other than certain follow-on investments and investments that were significantly in process prior to the termination of the Commitment Period) and therefore would not expect to rely on the Co-Investment Exemptive Order except in connection with follow-on or significantly in-process investments. In situations where we cannot co-invest with other funds, accounts or investment vehicles managed by the Adviser or an affiliate of the Adviser due to the restrictions contained in the 1940 Act that are not addressed by the Co-Investment Exemptive Order or SEC guidance, the investment policies and procedures of the Adviser generally require that such opportunities be offered to us, Fund VII and such other funds, accounts and investment vehicles on an alternating basis. There can be no assurance that we will be able to participate in all investment opportunities that are suitable to us.

Effect of Fees and Expenses on Returns

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

Economic Interest of the Adviser

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

Resignation of the Adviser

The Adviser and the Administrator may resign at any time upon 60 days’ written notice under the terms of the Advisory Agreement and Administration Agreement, and the sub-administrator may resign upon 60 days’ written notice in certain situations under the terms of the sub-administration agreement, regardless of whether we have found replacements. If the Adviser, the Administrator or the sub-administrator resigns, we may not be able to find replacements or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption and our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected. In addition, the coordination of our management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise

possessed by the Adviser, the Administrator, the sub-administrator and their affiliates. Even if comparable service providers or individuals performing such services are retained, whether internal or external, their integration into the business and lack of familiarity with our investment objectives may result in additional costs and time delays that may materially adversely affect our business, results of operations and financial condition. Any new advisory agreement also would be subject to approval by the Members.

Limited Liability of the Adviser

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

Fluctuations in Quarterly Results

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

Recourse to Our Assets

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

Litigation Risks

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

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

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

Wind Down

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

Further, some of our remaining investments (including certain equity investments) may require additional time beyond the Company’s current term before we can dispose of them at a favorable price or otherwise recoup our investment. The Board may elect to extend the Company’s term until September 2022. Any further extensions will require Member approval. If we are unable to extend the Company’s term beyond September 2022, we may be required to dispose of our remaining investments at unfavorable prices.

Information System Failures

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

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sudden electrical or telecommunications outages;

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natural disasters such as earthquakes, tornadoes and hurricanes;

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disease pandemics or other serious public health events, such as the global outbreak of COVID-19;

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

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cyber-attacks.

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

Cybersecurity Risks

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

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

Ineffective Internal Controls

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

Risks Related to Portfolio Company Investments

Portfolio Concentration

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

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

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

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

Credit Risks

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

Limited Secondary Market for Securities

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

Use of Investment Vehicles

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

Insolvency Considerations With Respect to Portfolio Companies

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

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

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

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

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

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

Lender Liability

In recent years, a number of judicial decisions in the United States have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories (collectively termed “Lender Liability”). Generally, Lender Liability is founded upon the premise that an institutional lender has violated a duty (whether implied or contractual) of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders. Lender Liability claims generally arise in bankruptcy, but can also arise under state law claims. Lender Liability often involves claims of misconduct where a lender (a) intentionally takes an action that exacerbates the insolvency of a borrower or issuer or that results in the undercapitalization of a borrower or issuer to the detriment of other creditors of such borrower or issuer, (b) engages in other inequitable conduct to the detriment of such other creditors, (c) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (d) uses its influence as a shareholder to dominate or control a borrower or issuer to the detriment of other creditors of such borrower or issuer. We could be subject to allegations of Lender Liability because of the nature of certain of our investments. There is also a risk that where Lender Liability is alleged, a court may elect to subordinate the claim of the offending lender or bondholder to the claims of the disadvantaged creditor or creditors (a remedy called “Equitable Subordination”).

We do not intend to engage in conduct that would give rise to a claim of Lender Liability or Equitable Subordination. However, as a BDC, we are obligated to offer managerial assistance to each of our portfolio companies. To the extent any of our portfolio companies elect to accept such offer to provide managerial assistance, that level of involvement with a portfolio company could strengthen a Lender Liability or Equitable Subordination claim against us. Therefore, claims for Lender Liability or Equitable Subordination

affecting our investments could arise as a result of any managerial assistance that we provide in order to fulfill our obligations as a BDC. Moreover, because of the nature of our investments, we may not always be the lead creditor, and security or other agents may act on behalf of the investors in a security owned by us. Therefore, claims for Lender Liability or Equitable Subordination affecting our investments could also arise without our direct managerial or other involvement.

Reliance on Portfolio Company Management

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

Need for Follow-On Investments

We may be called upon to provide follow-on funding or additional loans for, or have the opportunity to increase our investment in, our portfolio companies. There can be no assurance that we will be able to make or arrange for follow-on investments or loans or that we

will have sufficient funds to do so. Any decision not to make follow-on investments or loans or the inability to make them may have a substantial negative impact on a portfolio company in need of funds or may diminish our proportionate ownership in such entity and thus our ability to influence the entity’s future conduct. The inability to make follow-on investments or loans may also impede, diminish or reduce the number of attractive investments made available to us.

Risks of Using Derivative Instruments

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

Non-U.S. Investment Risk

We may invest up to 30% of our gross assets in portfolio companies domiciled outside of the United States (assuming that the remaining 70% of our gross assets constitute “qualifying assets” (as defined in the 1940 Act)). Non-U.S. obligations have risks not typically involved in domestic investments. For example, non-U.S. obligations not denominated in U.S. dollars will cause our investment performance to vary based on changes in the applicable currency exchange rate. Moreover, even if we attempt to hedge the currency exchange risk, these hedges may be expensive and may not completely protect us in all circumstances. Non-U.S. investing can also result in higher transaction and operating costs for the Company. Non-U.S. issuers may not be subject to the same accounting and disclosure requirements that U.S. issuers are subject to. The value of non-U.S. investments may be affected by foreign governmental laws, rules and regulations, including exchange control regulations, expropriation or nationalization of a company’s assets, tax and bankruptcy related laws and policies restricting ownership of assets, non-U.S. taxes, delays in settlement of transactions, changes in governmental economic or monetary policies in the United States or abroad, or other political and economic factors. We may have greater difficulty taking appropriate legal actions in non-U.S. courts.

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

Risks Related to Economic and Market Conditions

General Economic and Financial Conditions

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

In late 2019 and early 2020, a novel coronavirus (SARS-CoV-2) and related respiratory disease (“COVID-19”) was first reported in China and spread rapidly to across the world, including to the United States. This outbreak has led, and for an unknown period of time, will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the United States credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved, is likely to continue to result in, the following (among other things): (i) government imposition of various forms of “stay at home” orders and the closing or reduced operating capacity of “non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which may not adequately address the problems facing the loan market and middle market businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on our portfolio companies and on the markets and the economy in general, and that impact could be material.

In addition, the United States capital markets have experienced extreme volatility and disruption following the spread of COVID-19 in the United States. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market

disruptions and/or illiquidity may have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions may also increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, and limit our ability to grow and could have a material negative impact on our operating results and the fair values of our debt and equity investments.

Further, from an operational perspective, many of our Adviser’s investment professionals are currently working remotely. An extended period of remote work arrangements could increase operational risks, including but not limited to cybersecurity risks and risks related to business continuity capacity, which may impair our ability to manage our business. In addition, we are highly dependent on third party services providers for certain communication and information systems. As a result, we rely upon the successful implementation and execution of the business continuity planning of such providers in the current environment. If one or more of these third parties to whom we outsource certain critical business activities experience operational failures as a result of the impacts from the spread of COVID-19, or claim that they cannot perform due to a force majeure, it may have a material adverse effect on our business, and its financial condition, results of operations, liquidity and cash flows.

Disruption and Instability in Capital Markets

The U.S. and global capital markets experienced extreme volatility and disruption in recent years, leading to recessionary conditions and depressed levels of consumer and commercial spending. For instance, uncertainty related to the global outbreak of COVID-19, the partial U.S. government shutdown in December 2018 and January 2019, U.S. trade policies and the referendum by British voters to exit the European Union (“Brexit”) in June 2016 and the United Kingdom’s subsequent invocation of Article 50 of the Treaty on the European Union in March 2017 and subsequent withdrawal have led to disruption and instability in the global markets. Disruptions in the capital markets increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. We cannot assure you that these conditions will not worsen. If conditions worsen, a prolonged period of market illiquidity could have a material adverse effect on our business, financial condition and results of operations. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could limit our investment originations, limit our ability to grow and negatively impact our operating results.

In addition, to the extent that recessionary conditions return, the financial results of small to mid-sized companies, like those in which we invest, will likely experience deterioration, which could ultimately lead to difficulty in meeting debt service requirements and an increase in defaults. Additionally, the end markets for certain of our portfolio companies’ products and services have experienced, and continue to experience, negative economic trends. The performances of certain of our portfolio companies have been, and may continue to be, negatively impacted by these economic or other conditions, which may ultimately result in:

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our receipt of a reduced level of interest income from our portfolio companies;

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decreases in the value of collateral securing some of our loans and the value of our equity investments; and

•

ultimately, losses or change-offs related to our investments.

Effective from December 31, 2020, the United Kingdom left the Council of the European Union and also ceased to be subject to international trade agreements to which the European Union is a party. As a result, and subject to the terms of a trade and cooperation agreement entered into on December 24, 2020, which sets out the terms of the United Kingdom’s future relationship with the European Union, the rules of the European Union relating to free movement of persons, goods, services and capital between the United Kingdom and the European Union end, and the European Union and the United Kingdom formed two separate markets and two distinct regulatory and legal spaces. The trade agreement offers United Kingdom and European Union businesses preferential access to each other’s markets ensuring imported goods will be free of tariffs and quotas. However, economic relations between the United Kingdom and European Union will now be on more restricted terms than previously existed, and the trade agreement does not incorporate the full scope of the services sector, and businesses such as banking and finance face a more uncertain future. Talks on a separate memorandum of understanding regarding financial services are expected to begin by March 2021. At this time, the impact that the trade agreement and any future agreements, including the memorandum of understanding, will have on business interests in the European Union and the United Kingdom cannot be predicted and, given the lack of comparable precedent, it is unclear what financial, trade and legal implications the withdrawal of the United Kingdom will have on business interests. As a result of the original referendum and other geopolitical developments leading to Brexit, as well as the United Kingdom’s subsequent withdrawal, the financial markets experienced increased levels of volatility and it is likely that, in the near term, Brexit will continue to bring about higher levels of uncertainty and volatility.

Changes to or Discontinuation of LIBOR

Our debt investments may be based on floating rates, such as LIBOR or the Prime Rate. General interest rate fluctuations may have a substantial negative impact on our investments, the value of our securities and our rate of return on invested capital. Currently, most of our investments are linked to LIBOR and it is unclear how increased regulatory oversight and the future of LIBOR may affect market liquidity and the value of the financial obligations to be held by or issued to us that are linked to LIBOR or how such changes could affect our investments and transactions and financial condition or results of operations. Central banks and regulators in a number of major jurisdictions (for example, the United States, United Kingdom, European Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates (“IBORs”). The U.K. Financial Conduct Authority, which regulates LIBOR, has announced that it intends not to compel panel banks to contribute to LIBOR after 2021. On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR, with the support of the United States Federal Reserve and the United Kingdom’s Financial Conduct Authority, announced plans to consult on ceasing publication of USD LIBOR on December 31, 2021 for only the one week and two month USD LIBOR tenors, and on June 30, 2023 for all other USD LIBOR tenors. The United States Federal Reserve concurrently issued a statement advising banks to stop new USD LIBOR issuances by the end of 2021. Such announcements indicate that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. It appears highly likely that LIBOR will be discontinued or modified by 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short term repurchase agreements, backed by Treasury securities (the “Secured Overnight Financing Rate,” or “SOFR”). The future of LIBOR at this time is uncertain. Potential changes, or uncertainty related to such potential changes, may adversely affect the market for LIBOR based securities, including our portfolio of LIBOR indexed, floating rate debt securities, or the cost of our borrowings. In addition, changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR based securities, including the value of the LIBOR indexed, floating rate debt securities in our portfolio, or the cost of our borrowings.

If LIBOR ceases to exist, we may need to renegotiate some of our credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate in order to replace LIBOR with the new standard that is established, and this may have an adverse effect on our ability to receive attractive returns. As such, some or all of these credit agreements may bear a lower interest rate, which would adversely impact our financial condition or results of operations. Moreover, if LIBOR ceases to exist, we may need to renegotiate certain terms of our credit agreements. If we are unable to do so, amounts drawn under our credit agreements may bear interest at a higher rate, which would increase the cost of our borrowings and, in turn, affect our results of operations.

Terrorist Action

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

Changes in Applicable Law

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

Risks Related to our Common Units

No Assurance of Profits

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

Effect of Varying Terms of Classes of Units

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

Obligations of Common Unitholders Relating to Credit Facilities

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

Consequences of Failure to Pay Commitment in Full

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

No Registration; Limited Transferability of Common Units

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

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

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

ITEM 3.

LEGAL PROCEEDINGS

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies.

ITEM 4.

MINE SAFETY DISCLOSURES

None.

PART II

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

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

ITEM 6.

SELECTED FINANCIAL DATA

The table below sets forth our consolidated selected financial data for the years ended December 31, 2020, 2019, 2018, 2017 and 2016 and have been derived from our audited consolidated financial statements, which are included elsewhere in this Form 10-K and our SEC filings.

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


	Year Ended December 31,
	2020			2019			2018			2017			2016
	($ in thousands, except unit data)
Statement of Operations Data
Income
Total investment income	$	102,407		$	177,158		$	173,928		$	151,429		$	111,425

Expenses
Net expenses		21,946			29,350			38,250			47,354			46,222

Net investment income		80,461			147,808			135,678			104,075			65,203
Net realized (loss) gain on investments		(3,475	)		(13,164	)		(236	)		(88	)		519
Net change in unrealized appreciation/depreciation on investments		(71,289	)		(49,792	)		(41,455	)		(1,103	)		(3,921	)
Net realized gain distributions from investments		—			4,833			931			1,432			—

Net increase in Members’ Capital from operations	$	5,697		$	89,685		$	94,918		$	104,316		$	61,801

Income per unit	$	0.28		$	4.45		$	4.71		$	5.17		$	3.07


	Year Ended December 31,
	2020			2019			2018			2017			2016
	($ in thousands, except unit data)
Balance Sheet Data
Cash and cash equivalents	$	34,802		$	254,474		$	145,912		$	209,784		$	214,913
Short term investments		599,748			—			—			—			—
Total debt and equity investments		645,269			978,604			1,126,209			1,422,992			1,330,390
Total assets		1,286,496			1,241,296			1,281,948			1,655,257			1,558,101
Total debt		115,250			364,065			365,000			378,000			590,000
Total liabilities		718,221			367,068			368,405			379,837			594,997
Total Members’ Capital		568,275			874,228			913,543			1,275,420			963,104
Net asset value per unit (accrual base), End of year/period	$	48.54		$	63.74		$	65.69		$	78.70		$	93.55

Other Data
Number of portfolio companies at year-end		13			20			23			27			24
Common Unitholder Total Return (1)		0.78	%		10.8	%		9.1	%		9.5	%		8.3	%
Weighted-average yield of debt and income producing securities (2)		7.1	%		10.9	%		11.0	%		10.5	%		10.3	%
Fair value of debt investments as a percentage of principal		76.1	%		89.8	%		92.8	%		96.5	%		96.7	%

(1)

Common Unitholder Total Return for the periods ended December 31, 2020, 2019, 2018, 2017 and 2016 was calculated by taking the net investment income/(loss) of the Company for the period divided by the weighted average contributions from the members during the period. The return is net of management fees and expenses.

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

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

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

Overview

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

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

In 2018, we cancelled all but two of our wholly-owned Delaware limited liability companies. Further, TCW Direct Lending Luxembourg, a private limited liability company organized under the laws of Luxembourg and originally established in 2016 as a wholly-owned subsidiary, was also dissolved and our interest in the subsidiary was terminated.

In 2019, we established two wholly-owned subsidiaries, TCW DL CTH LLC and TCW DL ASH LLC, each a Delaware limited liability company and each designed to hold an equity investment of ours.

In 2020, we established TCW DL SSP LLC, also a Delaware limited liability company and also designed to hold an equity investment of ours.

Revenues

We generate revenues in the form of interest income and capital appreciation by providing private capital to middle market companies operating in a broad range of industries primarily in the United States. As our investment period has ended, we will not originate new loans, but may increase credit facilities to existing borrowers or affiliates. The historical investment philosophy, strategy and approach of the direct lending team of the Adviser (the “Direct Lending Team”) has generally not involved the use of payment-in-kind (“PIK”) interest, which represents contractual interest accrued and added to the loan balance that generally becomes due at maturity, or similar arrangements. Although the Direct Lending Team generally did not originate a significant amount of investments for us with PIK interest features, from time to time we made, and currently have, investments that contain such features. We have investments with PIK interest features in certain circumstances involving debt restructurings or work-outs of current investments. Our highly negotiated private investments may include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities such as options and warrants. However, historically, our investment bias has been towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments.

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

Expenses

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

We will bear (including by reimbursing the Adviser or Administrator) all costs and expenses of our operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of our counsel and accounting fees. However, we will not bear (a) more than an amount equal to 10 basis points of the aggregate Commitments for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments per annum

(pro-rated for partial years) for our Operating Expenses, including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser and its affiliates. Notwithstanding the foregoing, the cap on Operating Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap described above), amounts payable in connection with our borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to our liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments to either the Adviser or the Administrator). All expenses that we will not bear will be borne by the Adviser or its affiliates.

to the separate cap described above), amounts payable in connection with our borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to our liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments to either the Adviser or the Administrator). All expenses that we will not bear will be borne by the Adviser or its affiliates.

Critical Accounting Policies and Estimates

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

In addition to the discussion below, our critical accounting policies surrounding investment valuations and fair value measurements are further described in Note 3 to the consolidated financial statements. We consider these accounting policies to be critical because they involve management judgments and assumptions, require estimates about matters that are inherently uncertain and are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. The critical accounting policies should be read in connection with our risk factors as disclosed in “Item 1A. Risk Factors.” Investments at Fair Value

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

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

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

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

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

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

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

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

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

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

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

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

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

Investment Activity

The table below describes our debt and equity investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets by industry as of December 31, 2020:


Industry	Percent of Total Investments
Investment Funds & Vehicles		21	%
Metals & Mining		18	%
Hotels, Restaurants & Leisure		13	%
Industrial Conglomerates		11	%
Information Technology Services		8	%
Pharmaceuticals		7	%
Diversified Consumer Services		6	%
Household Durables		5	%
Distributors		5	%
Technologies Hardware, Storage and Peripherals		3	%
Internet & Direct Marketing Retail		2	%
Diversified Financial Services		1	%

Total		100	%

Interest income, including interest income paid-in-kind, was $80.0 million, $108.2 million and $141.9 million, for the years ended December 31, 2020, 2019 and 2018, respectively. During the years ended December 31, 2020, 2019 and 2018, we also earned $0.2 million, $0.6 million and $0 of other fee income for administration fees.

Results of Operations

Our operating results for the years ended December 31, 2020, 2019 and 2018 were as follows (dollar amounts in thousands):


	For the Year Ended December 31,
	2020			2019			2018
Total investment income	$	102,407		$	177,158		$	173,928
Net expenses		21,946			29,350			38,250

Net investment income		80,461			147,808			135,678
Net realized loss on investments		(3,492	)		(13,164	)		(236	)
Net change in unrealized appreciation/depreciation on investments		(71,289	)		(49,792	)		(41,455	)
Net realized gain on short-term investments		17			—			—
Net realized gain distributions from controlled affiliated investments		—			4,833			931

Net increase in Members’ Capital from operations	$	5,697		$	89,685		$	94,918

Total investment income

Total investment income for the years ended December 31, 2020 2019 and 2018 was $102.4 million, $177.2 million and $173.9 million, respectively, and was comprised of the following (dollar amounts in thousands):


	For the Year Ended December 31,
	2020		2019		2018
Interest income	$	47,102	$	91,138	$	120,391
Interest income paid-in-kind		32,912		17,075		21,482
Dividend income		22,217		68,305		32,055
Other fee income		176		640		—

Total investment income	$	102,407	$	177,158	$	173,928

The decrease in total investment income during the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily due to lower total interest income and interest income paid-in-kind from our debt investments driven by the decrease in the size of our debt portfolio, as well as lower dividend income from TCW Strategic Ventures.

The increase in total investment income during the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily due to higher dividend income from TCW Strategic Ventures, partially offset by lower interest income and interest income paid-in-kind from our debt investments.

Net investment income

Our net investment income for the years ended December 31, 2020, 2019 and 2018 was $80.5 million, $147.8 million and $135.7 million, respectively.

The decrease in net investment income during the year ended December 31, 20120versus the year ended December 31, 2019 was primarily due to lower total investment income partially offset by lower total expenses. The decrease in total expenses was primarily attributable to lower interest and credit facility expenses; and lower management fees. The decrease in interest and credit facility expenses is commensurate with lower average debt outstanding balance during the current year compared to prior year. The decrease in management fees during the current year is commensurate with the overall decrease in the size of our portfolio.

The increase in net investment income during the year ended December 31, 2019 versus the year ended December 31, 2018 was primarily due to a $7.1 increase in interest and credit facility expenses driven by lower interest expense, undrawn commitment fees and amortization of deferred financing costs. Management fees during the year also decreased by $1.8 million compared to the prior year, due to the lower cost basis of investments during the year, compared to the prior year.

Total expenses for the years ended December 31, 2020, 2019 and 2018 were as follows (dollar amounts in thousands):


	For the Year Ended December 31,
	2020		2019		2018
Expenses
Interest and credit facility expenses	$	11,863	$	18,146	$	25,300
Management fees		7,511		8,605		10,418
Administrative fees		942		1,047		1,209
Professional fees		931		1,019		1,031
Directors’ fees		320		336		333
Other expenses		379		197		222

Total expenses		21,946		29,350		38,513
Expenses reimbursed by the Adviser		—		—		(263	)

Net expenses	$	21,946	$	29,350	$	38,250

Our total expenses were $21.9 million, $29.4 million and $38.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Our operating expenses include management fees attributed to the Adviser of $7.5 million, $8.6 million and $10.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Total operating expenses decreased during the year-ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to lower interest and credit facility expenses and lower management fees. The decrease in interest and credit facility expenses was primarily due to lower interest expense as our average debt outstanding balance decreased during the current year compared to the prior year. The decrease in management fees during the current year is commensurate with the overall decrease in the size of our portfolio.

Total operating expenses decreased during the year-ended December 31, 2019 versus the prior year primarily due to lower interest and credit facility expenses. Interest and credit facility expenses during the year ended December 31, 2018 included $2.3 million of deferred financing costs, which we accelerated in connection with the decrease in our Credit Facility’s available commitment in 2018.

Net expenses include no expense reimbursement for the years ended December 31, 2020 and 2019 and were $0.3 in the year ended December 31, 2018. The expense reimbursement during the year ended December 31, 2018 was due to the expense limitation on operating expenses as outlined in the Advisory Agreement.

Net realized loss on investments

Our net realized loss on investments for the years ended December 31, 2020, 2019 and 2018 was $3.5 million, $13.2 million and $0.2 million, respectively.

Our net realized loss on investments during the year ended December 31, 2020 was primarily due to the dispositions of our term loan to School Specialty Inc.; our common stock in Verus Financial, LLC; and our Class A equity interest in Animal Supply Holdings, LLC. These resulted in an aggregate realized loss of $5.5 million and were partially offset by $2.1 million of realized gains from the disposition of our term loan to Bumble Bee Holdings, Inc.

Our net realized loss on investments during the year-ended December 31, 2019 was primarily due to our term loan to Frontier Spinning Mills, Inc., which realized $16.7 million in losses during the year, partially offset by our warrants for Quantum Corporation, which realized $3.3 million in gains during the year.

Our net realized loss on investments during the year-ended December 31, 2018 was primarily due to $2.4 million in losses on our term loan to H-D Advanced Manufacturing Company, partially offset by realized gains on the disposition of our term loans to Mavenir, Inc. and Mavenir Private Holdings II Ltd. of $1.9 million.

Net change in unrealized appreciation/depreciation on investments

Our net change in unrealized appreciation/depreciation on investments for the years ended December 31, 2020, 2019 and 2018 and ($71.3) million, ($49.8) million and ($41.5) million, respectively.

Our net change in unrealized appreciation/depreciation for the year ended December 31, 2020 was primarily attributable to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ Depreciation
H-D Advanced Manufacturing Company	Term Loan	$	(30,539	)
OTG Management, LLC	Term Loan		(17,824	)
TCW Direct Lending Strategic Ventures LLC	Preferred Membership Interests		(10,836	)
ASC Acquisition Holdings, LLC	Term Loans		(8,102	)
Pace Industries, Inc.	Term Loans		(7,802	)
Guardia LLC (fka Carrier & Technology Solutions, LLC)	Term Loan		(5,473	)
Guardia LLC (fka Carrier & Technology Solutions, LLC)	Revolver		(4,598	)
School Specialty, Inc.	Preferred Stock		(4,033	)
Quantum Corporation	Common Stock		(3,472	)
Pace Industries, Inc.	Common Stock		(2,111	)
RTI Holding Company, LLC	Warrants		(1,007	)
ENA Holding Corporation	Term Loan		1,281
Intren, LLC	Term Loan		1,562
School Specialty, Inc.,	Term Loan		1,637
KPI Holding LLC	Warrant		1,692
Cedar Ultimate Parent LLC	Preferred Membership Interests		7,916
Noramco, LLC	Term Loan		12,538
All others	Various		(2,118	)

Net change in unrealized appreciation/depreciation		$	(71,289	)

Our net change in unrealized appreciation/depreciation during the year ended December 31, 2020 was affected by significant business disruptions and various other consequences experienced by our portfolio companies due to the uncertainty and economic volatility caused by COVID-19; in addition to other business conditions unique to our respective issuers.

Our net change in unrealized appreciation/depreciation for the year ended December 31, 2019 was primarily due to our terms loans to Carrier & Technology Holdings, LLC; and Noramco, LLC, which collectively recorded $20.2 million in unrealized depreciation, partially offset by our Quantum Corporation common stock, which recorded $10.0 million in unrealized appreciation. In addition, we also recognized a $40.5 million net unrealized depreciation on our investment in Strategic Ventures. The net change in unrealized appreciation/depreciation of our investment in Strategic Ventures during the year ended December 31, 2019 primarily resulted from changes in the portfolio market value of, and undistributed profits from, TCW Strategic Ventures.

Our net change in unrealized appreciation/depreciation for the year ended December 31, 2018 was primarily due to our term loan to Carrier & Technology Holdings, LLC and our Cedar Ultimate Parent LLC preferred stock which collectively recorded net decreases in fair value of $41.7 million, partially offset by $1.9 million of prior period reversals of unrealized losses on our term loan to H-D Advanced Manufacturing Company, as well as other mark to market adjustments during the year.

Net realized gain on short-term investments

During the year ended December 31, 2020 we earned $17 in realized gains from our short-term investments in government treasuries.

Net realized gain distributions from controlled affiliated investments

Our net realized gain distributions from controlled affiliated investments for the years ended December 31, 2020, 2019 and 2018 were was $0, $4.9 million and $0.9 million, respectively. The net realized gains during the years ended December 31, 2019 and 2018 reflect distributions from TCW Strategic Ventures during the respective periods from its net short- and long-term gains.

Net increase in members’ capital from operations

Our net increase in members’ capital from operations during the years ended December 31, 2020, 2019 and 2018 was $5.7 million, $89.7 million and $94.9 million, respectively.

The relative decrease during the year ended December 31, 2020 is primarily due to the higher net realized and unrealized loss on investments coupled with lower net investment income.

The relative decrease during the year ended December 31, 2019 is primarily due to the higher net realized and unrealized loss on investments, partially offset by higher net investment income.

The relative decrease during the year ended December 31, 2018 is primarily attributable to the increase in net unrealized depreciation on investments.

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

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

Financial Condition, Liquidity and Capital Resources

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

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

As of December 31, 2020, 2019 and 2018, aggregate Commitments, Undrawn Commitments and subscribed for Units of the Company were as follows (dollar amounts in thousands):


	December 31,
	2020			2019			2018
Commitments	$	2,013,470		$	2,013,470		$	2,013,470
Undrawn commitments	$	409,125		$	409,125		$	409,125
Percentage of commitments funded		79.7	%		79.7	%		79.7	%
Units		20,134,698			20,134,698			20,134,698

Natixis Credit Agreement

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

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

On April 6, 2020, we entered into a First Amendment to the Third Amended and Restated Revolving Credit Agreement (the “Amended Credit Agreement”), with Natixis, New York Branch, as administrative agent and the lenders party thereto. The Amended Credit Agreement provides for a revolving credit line of up to $375.0 million (with an option for us to increase this amount to

$450.0 million subject to consent of the lenders and satisfaction of certain other conditions), subject to the available borrowing base, which is generally the sum of (a) a percentage of certain eligible investments, (b) a percentage of remaining unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Amended Credit Agreement is generally secured by the unfunded commitments (together with the recallable amounts) of our investors, portfolio investments and substantially all other assets of the Company. The stated maturity date of the Amended Credit Agreement is April 9, 2021, which date (subject to the satisfaction of certain conditions) may be extended by the Company for up to an additional 364 days. Borrowings under the Amended Credit Agreement bear interest at a rate equal to either (a) adjusted eurodollar rate calculated in a customary manner plus 2.50%, (b) commercial paper rate plus 2.50%, or (c) a base rate calculated in a customary manner (which will never be less than the adjusted eurodollar rate plus 1.00%) plus 1.50%, provided however in each case the commercial paper rate and the eurocurrency rate shall have a floor of 1.00%.

On May 27, 2020, we entered into a Lender Group Joinder Agreement pursuant to which Zions Bancorporation, N.A. d/b/a California Bank & Trust was added as a committed lender (with a commitment of $25.0 million) under the Amended Credit Agreement. Concurrently therewith, we elected to increase the size of our revolving credit line under the Credit Agreement to $400.0 million. On December 29, 2020, we elected to permanently decrease the size of our revolving credit line under the Credit Agreement to $177.0 million.

As of December 31, 2020 and 2019, the Available Commitment under the Credit Facility was $177.0 million and $387.1 million, respectively.

As of December 31, 2020 and 2019, the amounts outstanding under the Credit Facility were $115.3 million and $364.1 million, respectively. The carrying amount of the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of December 31, 2020 and 2019, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details, credit, market and liquidity risk and events, financial health of the Company, place in the capital structure, interest rate and terms and conditions of the Credit Facility. We incurred financing costs of $10.1 million in connection with the April 10, 2017 Third Amended and Restated Revolving Credit Agreement. We also incurred additional financing costs totaling $1.8 million in connection with the Amended Credit Agreement on April 6, 2020 and May 27, 2020. We recorded these costs as deferred financing costs on its Consolidated Statements of Asset and Liabilities and the costs are being amortized over the life of the Credit Facility. As of December 31, 2020 and 2019, $1.2 million and $0.7 million, respectively, of such prepaid deferred financing costs had yet to be amortized.

The summary information regarding the Credit Facility for the years ended December 31, 2019, 2018 and 2017 was as follows (dollar amounts in thousands):


	Year Ended December 31,
	2020			2019			2018
Credit facility interest expense	$	9,162		$	15,036		$	16,360
Undrawn commitment fees		1,162			438			3,425
Administrative fees		65			65			65
Amortization of deferred financing costs		1,474			2,607			5,450

Total	$	11,863		$	18,146		$	25,300

Weighted average interest rate		3.57	%		4.61	%		4.43	%
Average outstanding balance	$	252,629		$	321,518		$	364,512

On December 31, 2019, our ratio of aggregate fair value of all eligible portfolio assets (as defined in the Credit Agreement) to the principal amount outstanding (“Ratio of Eligible Portfolio Assets”) fell below 150%, which triggered a mandatory prepayment provision in the Credit Agreement requiring us to utilize all cash receipts attributable to the eligible portfolio assets as a prepayment to the outstanding principal obligation, within five days of collecting such cash receipts, until such a time when the Ratio of Eligible Portfolio Assets exceeds 150%. Our Ratio of Eligible Portfolio Assets exceeded 150% on January 10, 2020 through March 26, 2020. On March 27, 2020, our Ratio of Eligible Portfolio Assets fell below 150%. However, in connection with the First Amendment to the Third Amended and Restated Revolving Credit Agreement executed on April 6, 2020, the mandatory repayment was waived by Natixis. Our Ratio of Eligible Portfolio Assets has exceeded 150% since April 6, 2020.

Contractual Obligations

A summary of our contractual payment obligations as of December 31, 2020 and 2019 is as follows (dollar amounts in thousands):


Revolving Credit Agreement	Total Facility Commitment		Borrowings Outstanding		Available Amount⁽¹⁾
Total Debt Obligations – December 31, 2020	$	177,000	$	115,250	$	61,750
Total Debt Obligations – December 31, 2019	$	750,000	$	364,065	$	23,000

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

The Company had the following unfunded commitments and unrealized depreciation as of December 31, 2020 and 2019 by investment (dollar amounts in thousands):


	Maturity/ Expiration	December 31, 2020				December 31, 2019
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
Guardia LLC (fka Carrier & Technology Solutions, LLC)	July 2023	$	1,769	$	713	$	2,124	$	—
Help At Home, LLC	August 2020		—		—		10,541		—
KBP Investments, LLC (fka FQSR, LLC)	September 2021		—		—		5,798		—
Quicken Parent Corp	April 2021		—		—		863		26
Ruby Tuesday, Inc.	March 2021		4,941		—		—		—
Ruby Tuesday, Inc.	December 2022		—		—		4,575		—

Total		$	6,710	$	713	$	23,901	$	26

The Company’s total capital commitment to its underlying investment in TCW Direct Lending Strategic Ventures LLC is $481.6 million. As of December 31, 2020 and 2019, the Company’s unfunded commitment to TCW Strategic Ventures was $219.6 million.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. At December 31, 2020, 97.3% of our debt investments bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. At December 31, 2020, the percentage of our floating rate debt investments that bore interest based on an interest rate floor was 97.3%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

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

Based on our December 31, 2020 consolidated statement of assets and liabilities, the following table shows the annual impact on net investment income (excluding the related incentive compensation impact) of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure (dollar amounts in thousands):


Basis Point Change	Interest Income			Interest Expense		Net Investment Income (Loss)
Up 300 basis points	$	9,674		$	2,524	$	7,150
Up 200 basis points		5,696			1,355		4,341
Up 100 basis points		1,545			187		1,358
Down 100 basis points		(3	)		—		(3	)
Down 200 basis points		(3	)		—		(3	)
Down 300 basis points		(3	)		—		(3	)

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

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

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

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our President and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective, at a reasonable assurance level, in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and disposition of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with the authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

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

Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2020, based upon the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as of December 31, 2020, we maintained in all material respects, effective internal control over financial reporting. Pursuant to rules established by the SEC, this annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

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

ITEM 9B.

OTHER INFORMATION

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item has been omitted and will be incorporated herein by reference, when filed, to our Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2020.

ITEM 11.

EXECUTIVE COMPENSATION

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

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

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a) List separately all financial statements filed

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

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


Exhibits

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

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

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

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

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

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

21.1*		Subsidiaries of the Registrant

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

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

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

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

99.1*		Financial Statements of TCW Direct Lending Strategic Ventures LLC for the fiscal year ended to December 31, 2020.

*	Filed herewith

ITEM 16.

Form 10-K Summary

None.

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

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



Date: March 22, 2021	By:	/s/ Richard T. Miller
		Richard T. Miller
		Chairman of the Board, President and Director
		(Principal Executive Officer)

Date: March 22, 2021	By:	/s/ Laird R. Landmann
		Laird. R Landmann
		Director

Date: March 22, 2021	By:	/s/ David R. Adler
		David R. Adler
		Director

Date: March 22, 2021	By:	/s/ William Cobb
		William Cobb
		Director

Date: March 22, 2021	By:	/s/ Donald M. Mykrantz
		Donald M. Mykrantz
		Director

Date: March 22, 2021	By:	/s/ James G. Krause
		James G. Krause
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

TCW Direct Lending LLC

Index to Consolidated Financial Statements


Report of Independent Registered Public Accounting Firm			F-2

Consolidated Schedule of Investments as of December 31, 2020 and 2019			F-4

Consolidated Statements of Assets and Liabilities as of December 31, 2020 and 2019			F-16

Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018			F-17

Consolidated Statements of Changes in Members’ Capital for the Years Ended December 31, 2020, 2019 and 2018			F-18

Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018			F-19

Notes to Consolidated Financial Statements			F-20

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying consolidated statements of assets and liabilities of TCW Direct Lending LLC (the “Company”), including the consolidated schedule of investments, as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in members’ capital, and cash flows for each of the three years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations, changes in members’ capital and cash flows for each of the three years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of investments owned as of December 31, 2020 and 2019, by correspondence with the custodian, loan agents, and borrowers; when replies were not received, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Investments, at fair value - Level 3 Investment Valuations and Fair Value Measurements – Refer to Note 3

Critical Audit Matter Description

The Company held certain investments with fair values based on significant unobservable inputs that reflect management’s determination of assumptions that market participants might reasonably use in valuing the investments. These investments are classified as Level 3 investments under accounting principles generally accepted in the United States of America. These investments included debt and equity securities, each of which lack observable market prices. Such investments are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A market approach is generally used to determine fair value of equity instruments and a discounted cash flow approach or enterprise value waterfall is generally used for debt instruments. Valuation may also include a shadow rating method. The fair value of the Company’s Level 3 investments was $490,036,410 as of December 31, 2020.

How the Critical Audit Matter Was Addressed in the Audit

We identified the valuation of Level 3 investments as a critical audit matter because of the judgments necessary for management to select appropriate valuation techniques and to use significant unobservable inputs to estimate the fair value of the investment. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs as determined by management. This required a high degree of auditor judgement and increased effort, including the need to involve our fair value specialists who possess significant quantitative and modeling expertise, to audit and evaluate the appropriateness of these models and internal assumptions and the weighting of the best available pricing inputs in determining the fair value of these investments.

Our audit procedures related to the valuation techniques and unobservable inputs used by management to estimate the fair value of Level 3 investments included the following, among others:

•	We obtained an understanding of the methods, valuation models, and assumptions for the unobservable inputs used to derive the pricing information as part of the procedures to test the fair value estimates.

•	We inspected all investment transactions within 60 days prior and subsequent to year end, if any, and compared the transaction price to the valuation at year end to assess the reasonableness of the valuation at year end.

•

We utilized fair value specialists to assist in validating the appropriateness of the valuation techniques and valuation assumptions and to test the valuation by developing an independent expectation. We also assessed the reasonableness of the business assumptions used in the valuation. We developed independent estimates of the fair values and compared our estimates to management’s estimates.

•	We evaluated the reasonableness of any significant changes in valuation techniques or significant unobservable inputs for those investments from the prior year-end.

LOGO

Los Angeles, California

March 22, 2021

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

F-3

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments

As of December 31, 2020


Industry	Issuer	Acquisition Date	Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Debt (1)
Distributors
	ASC Acquisition Holdings, LLC(2)(3)	08/14/20	Term Loan - 7.00% inc. PIK (7.00% Fixed Coupon, all PIK)		1.7%	$	25,046,760		08/03/25	$	23,426,565	$	9,617,957
	ASC Acquisition Holdings, LLC(3)	08/14/20	Term Loan - 9.50% inc. PIK (LIBOR + 8.50%, 1.00% Floor, 9.5% PIK)		3.6%		20,398,360		08/03/25		20,398,360		20,398,360

					5.3%		45,445,120				43,824,925		30,016,317

Diversified Consumer Services
	School Specialty, Inc.(4)	09/15/20	Term Loan - 9.25% inc. PIK (LIBOR + 8.00%, 1.25% Floor, 4.00% PIK)		6.1%		34,562,488		09/15/25		34,341,012		34,562,488

					6.1%		34,562,488				34,341,012		34,562,488

Diversified Financial Services
	Carrier & Technology Holdings, LLC(2)(3)	07/02/18	Term Loan - 11.75% inc. PIK (11.75%, Fixed Coupon, all PIK)		0.0%		46,908,147		07/02/23		42,546,059		—
	Guardia LLC (fka Carrier & Technology Solutions, LLC)(2)(3)	07/02/18	Revolver - 8.75% inc. PIK (LIBOR + 7.25%, 1.50% Floor, all PIK)		1.0%		9,669,605		07/02/23		9,669,605		5,782,424
	Guardia LLC (fka Carrier & Technology Solutions, LLC)(2)(3)	07/02/18	Term Loan - 8.75% inc. PIK (LIBOR + 7.25%, 1.50% Floor, all PIK)		0.0%		11,087,550		07/02/23		9,387,868		—

					1.0%		20,757,155				19,057,473		5,782,424

					1.0%		67,665,302				61,603,532		5,782,424

Hotels, Restaurants & Leisure
	OTG Management, LLC	10/07/20	Incremental Delayed Draw Term Loan - 10.00% inc. PIK (LIBOR + 9.00 %, 1.00% Floor, 2.00% PIK)		1.3%		9,102,189		08/26/21		9,102,189		7,299,956
	OTG Management, LLC	06/30/16	Term Loan - 10.00% inc. PIK (LIBOR + 9.00%, 1.00% Floor, 2.00% PIK)		10.9%		77,605,399		08/26/21		77,432,408		62,239,530

					12.2%		86,707,588				86,534,597		69,539,486

	Ruby Tuesday, Inc.	10/09/20	DIP Term Loan -11.00% (LIBOR + 10.00%, 1.00% Floor)		0.3%		1,836,034		03/08/21		1,836,034		1,836,034
	Ruby Tuesday, Inc.	12/21/17	Term Loan - 11.00% inc. PIK (LIBOR + 10.00%, 1.00% Floor, 2.00% PIK)		1.7%		9,647,259		12/21/22		9,466,906		9,647,259

					2.0%		11,483,293				11,302,940		11,483,293

					14.2%		98,190,881				97,837,537		81,022,779

Household Durables
	Cedar Electronics Holdings, Corp.(4)	01/30/19	Incremental Term Loan - 15.00% inc. PIK (15.00%, Fixed Coupon, all PIK)		0.5%		3,177,284		12/18/23		3,177,284		3,177,284
	Cedar Electronics Holdings, Corp.(4)	05/19/15	Term Loan 9.50% (LIBOR + 8.00%, 1.50% Floor)		3.7%		20,795,847		12/18/23		20,792,899		20,795,847

					4.2%		23,973,131				23,970,183		23,973,131

F-4

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020


Industry	Issuer	Acquisition Date	Investment	% of Net Assets		Par Amount		Maturity Date	Amortized Cost		Fair Value
Industrial Conglomerates
	H-D Advanced Manufacturing Company	06/30/15	First Lien Last Out Term Loan - 8.50% inc. PIK (LIBOR + 7.00%, 1.50% Floor, All PIK)		12.8%	$	108,376,477	01/01/23	$	108,166,430	$	72,612,240

					12.8%		108,376,477			108,166,430		72,612,240

Information Technology Services
	ENA Holding Corporation	05/06/16	First Lien Term Loan -10.00% inc. PIK (LIBOR + 9.25%, 0.75% Floor, 4.75% PIK)		7.3%		41,682,875	05/06/21		41,613,205		41,307,729
	ENA Holding Corporation	05/06/16	Revolver - 10.00% inc. PIK (LIBOR + 9.25%, 0.75% Floor, 4.75% PIK)		1.4%		8,150,861	05/06/21		8,150,861		8,077,503

					8.7%		49,833,736			49,764,066		49,385,232

Internet & Direct Marketing Retail
	Lulu’s Fashion Lounge, LLC	08/28/17	First Lien Term Loan - 10.50% inc. PIK (LIBOR + 9.50%, 1.00% Floor, 2.50% PIK)		2.1%		12,194,025	08/28/22		12,074,279		12,047,697

					2.1%		12,194,025			12,074,279		12,047,697

Metals & Mining
	Pace Industries, Inc.(2)(4)	06/01/20	HoldCo Term Loan - 3.50% inc. PIK (LIBOR + 2.00%, 1.50% Floor, all PIK)		11.6%		82,630,313	06/01/40		78,157,034		66,352,141
	Pace Industries, Inc.(4)	06/01/20	Opco Term Loan - 9.75% inc. PIK (LIBOR + 8.25%, 1.50% Floor, 2.25% PIK)		9.3%		52,749,501	06/01/25		52,710,862		52,749,501

					20.9%		135,379,814			130,867,896		119,101,642

Pharmaceuticals
	Noramco, LLC	07/01/16	Senior Term Loan - 9.38% inc. PIK (LIBOR + 8.38%, 1.00% Floor, 0.38% PIK)		8.4%		50,315,714	12/31/23		50,133,886		47,548,349

					8.4%		50,315,714			50,133,886		47,548,349

	Total Debt Investments				83.7%					612,583,746		476,052,299


	Equity					Shares
Distributors
	Animal Supply Holdings, LLC(2)(3)(5)(8)		Class A Common		0.0%		224,156			1,572,726		—

					0.0%		224,156			1,572,726		—

Diversified Consumer Services
	School Specialty, Inc.(2)(4)(8)		Class A Preferred Stock		0.8%		806,264			8,062,637		4,386,075
	School Specialty, Inc.(2)(4)(8)		Class B Preferred Stock		0.0%		359,474			356,635		—
	School Specialty, Inc.(2)(4)(8)		Common Stock		0.0%		80,700			53,889		—

					0.8%		1,246,438			8,473,161		4,386,075

Diversified Financial Services
	Carrier & Technology Holdings, LLC(2)(3)(6)		Common Stock		0.0%		2,143			—		—

					0.0%		2,143			—		—

F-5

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020


Industry	Issuer	Investment	% of Net Assets		Shares		Amortized Cost		Fair Value
Hotels, Restaurants & Leisure
	RTI Holding Company, LLC (an affiliate of Ruby Tuesday, Inc.)(2)(8)	Warrant, expires 12/21/27		0.0%		1,470,632	$	1,379,747	$	—

				0.0%		1,470,632		1,379,747		—

Household Durables
	Cedar Ultimate Parent LLC(2)(4)(8)	Class A Preferred Units		1.7%		9,297,990		9,187,900		9,598,036
	Cedar Ultimate Parent LLC(2)(4)(8)	Class D Preferred Units		0.0%		2,900,000		—		—
	Cedar Ultimate Parent LLC(2)(4)(8)	Class E Common Units		0.0%		300,000		—		—

				1.7%		12,497,990		9,187,900		9,598,036

Investment Funds & Vehicles
	TCW Direct Lending Strategic Ventures LLC(2)(4)(7)	Common membership interests		0.0%		800		—		—
	TCW Direct Lending Strategic Ventures LLC(4)(7)	Preferred membership interests		24.4%		165,200		165,200,000		138,889,888

				24.4%		166,000		165,200,000		138,889,888

Metals & Mining
	Pace Industries, Inc.(2)(4)(8)	Common Stock		0.0%		917,418		2,110,522		—

				0.0%		917,418		2,110,522		—

Technologies Hardware, Storage and Peripherals
	Quantum Corporation(2)(3)	Common Stock		2.9%		2,670,416		9,799,470		16,342,946

				2.9%		2,670,416		9,799,470		16,342,946

	Total Equity Investments			29.8%				197,723,526		169,216,945

	Total Debt & Equity Investments(9)			113.5%			$	810,307,272	$	645,269,244

	Cash Equivalents
	Blackrock Liquidity Funds, Yield 0.01%			4.8%		27,031,770		27,031,770		27,031,770
	U.S. Treasury Bill, Yield 0.08%			105.5%		600,000,000		599,747,833		599,747,832

				110.3%		627,031,770		626,779,603		626,779,602

	Total Cash Equivalents			110.3%			$	626,779,603	$	626,779,602

	Total Investments 223.8%						$	1,437,086,875	$	1,272,048,846

	Net unrealized depreciation on unfunded commitments (0.1%)								$	(713,058	)

	Liabilities in Excess of Other Assets (123.7%)								$	(703,060,436	)

	Net Assets 100.0%								$	568,275,352

F-6

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $153,637,845 and $416,887,805, respectively, for the period ended December 31, 2020. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.

(1)

Certain debt investments are subject to contractual restrictions on resale, such as approval of the agent or borrower.

(2)

Non-income producing.

(3)

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, between 5% and 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. Fair value as of December 31, 2019 and December 31, 2020 along with transactions during the year ended December 31, 2020 in these affiliated investments are as follows:


												Net Change in
	Fair Value at								Realized			Unrealized			Fair Value at		Interest/
	December 31,		Gross			Gross			Gains			Appreciation/			December 31,		Dividend/
Name of Investment	2019		Additions^(a)			Reductions^(b)			(Losses)			Depreciation			2020		Other income
Animal Supply Holdings, LLC Class A Common	$	—	$	1,572,727		$	—		$	(708,537	)	$	(864,190	)	$	—	$	15,767
ASC Acquisition Holdings, LLC Term Loan—7.00%		—		23,426,565			—			—			(13,808,608	)		9,617,957		873,444
ASC Acquisition Holdings, LLC Term Loan—9.50%		—		20,398,360			—			—			—			20,398,360		1,503,104
ASC Acquisition Holdings, LLC Term Loan—11.80%		16,973,303		12,091,695			(34,771,688	)		—			5,706,690			—		3,053,968
Carrier & Technology Holdings, LLC Term Loan—11.75%		—		—			—			—			—			—		(417,901	)
Carrier & Technology Holdings, LLC Common Stock		—		—			—			—			—			—		—
Guardia LLC (fka Carrier & Technology Solutions, LLC) Revolver—8.75%		8,494,311		(469,870	)		1,645,164			—			(3,887,181	)		5,782,424		1,649,576
Guardia LLC (fka Carrier & Technology Solutions, LLC) Term loan—8.75%		7,740,609		552,378			(2,819,690	)		—			(5,473,297	)		—		999,895
Quantum Corporation Common Stock		19,814,479		—			—			—			(3,471,533	)		16,342,946		—

Total non-controlled affiliated investments	$	53,022,702	$	57,571,855		$	(35,946,214	)	$	(708,537	)	$	(21,798,119	)	$	52,141,687	$	7,677,853

^(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

^(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

F-7

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020

(4)

As defined in the Investment Company Act of 1940, the investment is deemed to be a “controlled person” of the Company because the Company owns, either directly or indirectly, 25% or more of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. Fair value as of December 31, 2019 and December 31, 2020 along with transactions during the year ended December 31, 2020 in these controlled investments are as follows:


											Net Change in
	Fair Value at							Realized			Unrealized			Fair Value at		Interest/
	December 31,		Gross		Gross			Gains			Appreciation/			December 31,		Dividend/
Name of Investment	2019		Additions^(a)		Reductions^(b)			(Losses)			Depreciation			2020		Other income
Cedar Electronics Holdings, Corp. Incremental Term Loan—15.00%	$	2,738,388	$	438,897	$	—		$	—		$	(1	)	$	3,177,284	$	885,745
Cedar Electronics Holdings, Corp. Term Loan—9.50%		19,817,479		1,019,695		—			—			(41,327	)		20,795,847		2,898,179
Cedar Ultimate Parent LLC Class A Preferred Units		1,640,937		—		—			—			7,957,099			9,598,036		—
Cedar Ultimate Parent LLC Class D Preferred Units		—		—		—			—			—			—		—
Cedar Ultimate Parent LLC Class E Common Units		—		—		—			—			—			—		—
Pace Industries, Inc. Common Stock		—		2,110,522		—			—			(2,110,522	)		—		—
Pace Industries, Inc. First Lien Term Loan—12.70%		87,910,865		18,431,418		(110,306,182	)		—			3,963,899			—		8,786,785
Pace Industries, Inc. HoldCo Term Loan—3.50%		—		110,746,735		(32,589,701	)		—			(11,804,893	)		66,352,141		19,164
Pace Industries, Inc. Opco Term Loan—9.75%		—		52,710,862		—			—			38,639			52,749,501		3,344,140
School Specialty, Inc. Class A Preferred Stock		—		8,062,637		—			—			(3,676,562	)		4,386,075		—
School Specialty, Inc. Class B Preferred Stock		—		356,635		—			—			(356,635	)		—		—
School Specialty, Inc. Common Stock		—		59,124		—			(5,235	)		(53,889	)		—		—
School Specialty, Inc. Delayed Draw Term Loan—16.75%		3,768,338		4,400,424		(8,396,541	)		—			227,779			—		718,873
School Specialty, Inc. Term Loan—9.25%		—		34,341,012		—			—			221,476			34,562,488		961,647
School Specialty, Inc. Term Loan A—16.75%		28,294,179		11,202,554		(38,039,495	)		(2,866,190	)		1,408,952			—		5,843,440
School Specialty, Inc. Warrant		124,508		—		—			(124,655	)		147			—		—
TCW Direct Lending Strategic Ventures LLC Common Membership Interests		—		—		—			—			—			—		—
TCW Direct Lending Strategic Ventures LLC Preferred Membership Interests		195,726,195		—		(46,000,000	)		(3	)		(10,836,304	)		138,889,888		22,000,000

Total controlled affiliated investments	$	340,020,889	$	243,880,515	$	(235,331,919	)	$	(2,996,083	)	$	(15,062,142	)	$	330,511,260	$	45,457,973

^(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

^(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

F-8

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020

(5)

Holding of Animal Supply Holdings, LLC Class A units are held through TCW DL ASH LLC, a special purpose vehicle.

(6)

Holdings of Carrier & Technology Holdings, LLC common stock are held through TCW DL CTH LLC, a special purpose vehicle.

(7)

The investment is not a qualifying asset as defined in Section 55(a) under the Investment Company Act of 1940, as amended. A business development company may not acquire an asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2020, $138,889,888 or 10.8% of the Company’s total assets were represented by “non-qualifying assets.”

(8)

All or a portion of such security was acquired in a transaction exempt from registration under the Securities Act of 1933, and may be deemed “restricted securities” under the Securities Act. As of December 31, 2020, the aggregate fair value of these securities was $13,984,111, or 1.1% of the Company’s total assets.

(9)

The fair value of the Quantum Corporation Common Stock held by the Company is based on the quoted market price of the issuer’s stock as of December 31, 2020. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy. Otherwise, the fair value of each debt and equity investment was determined using significant unobservable inputs and such investments are considered to be Level 3 within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

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


Country Breakdown Portfolio
United States	100.0	%

See Notes to Consolidated Financial Statements.

F-9

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments

As of December 31, 2019


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Debt⁽¹⁾
Auto Components
	Challenge Manufacturing Company LLC		04/20/17	Term Loan - 8.80% (LIBOR + 7.00%, 1.00% Floor)		5.3%	$	47,217,268		04/20/22	$	46,728,546	$	46,414,574

						5.3%		47,217,268				46,728,546		46,414,574

Commercial Services & Supplies
	School Specialty, Inc.		04/07/17	Delayed Draw Term Loan - 16.75% inc. PIK (PRIME + 9.00%, 1.00% Floor, 3.00% PIK)		0.4%		3,996,117		11/22/20		3,996,117		3,768,338
	School Specialty, Inc.		04/07/17	Term Loan A - 16.75% inc. PIK (PRIME + 9.00%, 1.00% Floor, 3.00% PIK)		3.3%		30,004,431		11/22/20		29,703,130		28,294,179

						3.7%		34,000,548				33,699,247		32,062,517

Construction & Engineering
	Intren, LLC		07/18/17	Term Loan - 8.45% (LIBOR + 6.75%, 1.25% Floor)		1.0%		10,537,755		07/18/23		10,413,341		8,851,715

						1.0%		10,537,755				10,413,341		8,851,715

Distributors
	ASC Acquisition Holdings, LLC		02/25/19	Term Loan - 11.80% inc. PIK (LIBOR + 7.50%, 1.00% Floor, 2.50% PIK)		1.9%		23,187,573		02/22/22		22,679,993		16,973,303

						1.9%		23,187,573				22,679,993		16,973,303

Diversified Financial Services
	Carrier & Technology Holdings, LLC(2)		07/02/18	Term Loan - 11.75% (11.75%, Fixed Coupon, all PIK)		0.0%		42,679,251		07/02/23		42,546,059		—
	Guardia LLC (fka Carrier & Technology Solutions, LLC)(2)		07/02/18	Revolver - 9.02% (LIBOR + 7.25%, 1.50% Floor, all PIK)		1.0%		8,494,311		07/02/23		8,494,311		8,494,311
	Guardia LLC (fka Carrier & Technology Solutions, LLC)(2)		07/02/18	Term Loan - 8.96% (LIBOR + 7.25%, 1.50% Floor, all PIK)		0.9%		11,692,763		07/02/23		11,655,180		7,740,609

						1.9%		20,187,074				20,149,491		16,234,920

	Verus Analytics, LLC		04/11/16	First Lien Term Loan - 9.20% (LIBOR + 7.25%, 0.75% Floor)		1.8%		15,859,375		04/12/21		15,778,386		15,859,375

						3.7%		78,725,700				78,473,936		32,094,295

Food Products
	Bumble Bee Foods, LLC		11/01/19	DIP Term Loan - 12.29% (LIBOR + 10.50%, 1.00% Floor)		0.3%		2,632,205		05/26/20		2,510,487		2,632,205
	Bumble Bee Foods, LLC		11/01/19	Delayed Draw Term Loan - 12.29% (LIBOR + 10.50%, 1.00% Floor)		0.3%		2,632,205		05/26/20		2,632,205		2,632,205
	Bumble Bee Holdings, Inc.		08/15/17	Term Loan B1 - 13.75% inc. PIK (PRIME + 7.50%, 2.00% Floor, 1.50% PIK)		3.9%		33,416,751		08/15/23		33,020,954		33,851,168
	Connors Bros. Clover Leaf Seafoods Company (Canada) (an affiliate of Bumble Bee Holdings, Inc.)(3)		08/15/17	Term Loan B2 - 13.75% inc. PIK (PRIME + 7.50%, 2.00% Floor, 1.50% PIK)		1.1%		9,467,529		08/15/23		9,355,394		9,590,608
	Harvest Hill Beverage Company		01/20/16	Term Loan A1 - 8.30% (LIBOR + 6.50%, 1.00% Floor)		7.0%		61,188,810		01/19/21		60,995,793		61,188,810

						12.6%		109,337,500				108,514,833		109,894,996

F-10

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
Health Care Providers & Services
	Help at Home, LLC		08/03/15	Revolver - 8.43% (LIBOR + 6.63%, 1.25% Floor)		0.5%	$	4,324,324		08/03/20	$	4,324,324	$	4,324,324
	Help at Home, LLC		08/03/15	Term Loan B -8.45% (LIBOR + 6.75%, 1.25% Floor)		5.1%		44,900,288		08/03/20		44,799,753		44,900,288

						5.6%		49,224,612				49,124,077		49,224,612

Hotels, Restaurants & Leisure
	KBP Investments, LLC (fka FQSR, LLC)		05/14/18	Delayed Draw Term Loan - 7.42% (LIBOR + 5.50%, 1.00% Floor)		1.2%		10,797,116		05/14/23		10,797,116		10,797,116
	KBP Investments, LLC (fka FQSR, LLC)		05/14/18	Term Loan - 7.41% (LIBOR + 5.50%, 1.00% Floor)		2.8%		24,200,810		05/14/23		23,664,447		24,200,810

						4.0%		34,997,926				34,461,563		34,997,926

	OTG Management, LLC		06/30/16	Delayed Draw Term Loan - 8.90% (LIBOR + 7.00%, 1.00% Floor)		2.1%		18,546,807		08/26/21		18,489,721		18,639,541
	OTG Management, LLC		06/30/16	Term Loan - 9.00% (LIBOR + 7.00%, 1.00% Floor)		6.7%		58,502,243		08/26/21		58,115,859		58,794,754

						8.8%		77,049,050				76,605,580		77,434,295

	Ruby Tuesday, Inc.		12/21/17	Term Loan - 11.94% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 2.00% PIK)		1.9%		17,034,239		12/21/22		16,510,648		16,540,246

						14.7%		129,081,215				127,577,791		128,972,467

Household Durables
	Cedar Electronics Holdings, Corp.(4)		01/30/19	Incremental Term Loan - 15.00% inc. PIK (15.00% , Fixed Coupon, all PIK)		0.3%		2,738,388		06/26/20		2,738,388		2,738,388
	Cedar Electronics Holdings, Corp.(4)		05/19/15	Term Loan - 9.70% (LIBOR + 8.00%, 1.50% Floor)		2.3%		19,817,479		06/26/20		19,773,204		19,817,479

						2.6%		22,555,867				22,511,592		22,555,867

Industrial Conglomerates
	H-D Advanced Manufacturing Company		06/30/15	First Lien Last Out Term Loan - 10.44% inc. PIK (LIBOR + 7.00%, 1.00% Floor, 1.50% PIK)		11.5%		105,574,504		12/31/21		105,205,810		100,190,204

						11.5%		105,574,504				105,205,810		100,190,204

Information Technology Services
	ENA Holding Corporation		05/06/16	First Lien Term Loan - 9.16% inc. PIK (LIBOR + 7.25%, 1.00% Floor, 2.50% PIK)		4.8%		43,605,802		05/06/21		43,317,091		41,730,752
	ENA Holding Corporation		05/06/16	Revolver - 9.17% (LIBOR + 7.25%, 1.00% Floor, 2.50% PIK)		0.9%		8,092,133		05/06/21		8,092,133		7,744,172

						5.7%		51,697,935				51,409,224		49,474,924

Internet & Direct Marketing Retail
	Lulu’s Fashion Lounge, LLC		08/28/17	First Lien Term Loan - 10.80% (LIBOR + 9.00%, 1.00% Floor)		1.4%		12,292,109		08/28/22		12,095,363		12,316,693

						1.4%		12,292,109				12,095,363		12,316,693

F-11

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
Metals & Mining
	Pace Industries, Inc.		06/30/15	First Lien Term Loan - 12.70% inc. PIK (LIBOR + 8.25%, 1.00% Floor, 2.50% PIK)		10.0%		93,224,671		06/30/20	$	91,874,763	$	87,910,865

						10.0%		93,224,671				91,874,763		87,910,865

Pharmaceuticals
	Noramco, LLC		07/01/16	Senior Term Loan - 10.48% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 0.38% PIK)		4.1%		50,914,830		07/01/21		50,713,260		35,589,466

						4.1%		50,914,830				50,713,260		35,589,466

Software
	Quicken Parent Corp.		04/01/16	First Lien Term Loan - 10.71% inc. PIK (LIBOR + 8.50%, 1.00% Floor, 0.50% PIK)		2.2%		20,324,881		04/01/21		20,284,943		19,715,135

						2.2%		20,324,881				20,284,943		19,715,135

	Total Debt Investments					86.0%					$	831,306,719	$	752,241,633


	Equity						Shares
Commercial Services & Supplies
	School Specialty, Inc.(5),(6)			Warrant, expires 12/27/22		0.0%		487,004			$	124,655	$	124,508

						0.0%		487,004				124,655		124,508

Distributors
	Animal Supply Holdings, LLC(5),(6),(7)			Class A		0.0%		9,807				708,537		—

						0.0%		9,807				708,537		—

Diversified Financial Services
	Carrier & Technology Holdings, LLC(2),(5),(6),(8)			Common Stock		0.0%		2,143				—		—
	Verus Financial, LLC(5),(9)			Common Stock		0.9%		8,750				7,640,647		8,049,137

						0.9%		10,893				7,640,647		8,049,137

Hotels, Restaurants & Leisure
	RTI Holding Company, LLC (an affiliate of Ruby Tuesday, Inc.)(5),(6)			Warrant, expires 12/21/27		0.1%		1,470,632				1,379,747		1,007,408

						0.1%		1,470,632				1,379,747		1,007,408

Household Durables
	Cedar Ultimate Parent LLC(4),(5),(6)			Common Stock		0.0%		300,000				—		—
	Cedar Ultimate Parent LLC(4),(5),(6)			Preferred Stock		0.2%		9,297,990				9,187,900		1,640,937
	Cedar Ultimate Parent LLC(4),(5),(6)			Preferred Stock		0.0%		2,900,000				—		—

						0.2%		12,497,990				9,187,900		1,640,937

Investment Funds & Vehicles
	TCW Direct Lending Strategic Ventures LLC(3),(4)			Preferred membership interests		22.4%		211,200				211,200,000		195,726,195
	TCW Direct Lending Strategic Ventures LLC(3),(4),(6)			Common membership interests		0.0%		800				—		—

						22.4%		212,000				211,200,000		195,726,195

F-12

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019


Industry	Issuer	Investment	% of Net Assets		Shares		Amortized Cost		Fair Value
Metals & Mining
	KPI Holding LLC(5),(6)	Warrant, expires 06/30/2020		0.0%		4,466	$	1,692,000	$	—

				0.0%		4,466		1,692,000		—

Technologies Hardware, Storage and Peripherals
	Quantum Corporation(2)(6)	Common Stock		2.3%		2,670,415		9,799,470		19,814,479

				2.3%		2,670,415		9,799,470		19,814,479

	Total Equity Investments			25.9%			$	241,732,956	$	226,362,664

	Total Debt & Equity Investments(10)			111.9%			$	1,073,039,675	$	978,604,297

	Cash Equivalents
	Blackrock Liquidity Funds, Yield 1.52%			8.0%		69,842,068	$	69,842,068	$	69,842,068


	Total Investments 119.9%						$	1,142,881,743	$	1,048,446,365

	Net unrealized depreciation on unfunded commitments (0.0%)								$	(25,875	)

	Liabilities in Excess of Other Assets (19.9%)								$	(174,192,368	)

	Net Assets 100.0%								$	874,228,122

F-13

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019

(1)

Certain debt investments are subject to contractual restrictions on resale, such as approval of the agent or borrower.

(2)

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, between 5% and 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. Fair value as of December 31, 2018 and December 31, 2019 along with transactions during the year ended December 31, 2019 in these affiliated investments are as follows (as corrected):


											Net Change in
	Fair Value at							Realized			Unrealized			Fair Value at		Interest/
	December 31,		Gross		Gross			Gains			Appreciation/			December 31,		Dividend/
Name of Investment	2018		Additions^(a)		Reductions^(b)			(Losses)			Depreciation			2019		Other income
Carrier & Technology Holdings, LLC Term Loan—11.75%	$	5,229,652	$	4,821,263	$	—		$	—		$	(10,050,915	)	$	—	$	4,855,262
Guardia LLC (fka Carrier & Technology Solutions, LLC) Revolver—9.02%		7,198,078		1,746,233		(450,000	)		—			—			8,494,311		764,805
Guardia LLC (fka Carrier & Technology Solutions, LLC) Term loan—8.96%		11,147,081		1,135,798		(576,837	)		—			(3,965,433	)		7,740,609		1,133,643
Quantum Corporation Common Stock		783,890		8,091,159		—			—			10,939,430			19,814,479		—
Quantum Corporation Warrant, expires 9/7/23		373,414		—		(2,281,233	)		1,138,176			769,643			—		—
Quantum Corporation Warrant, expires 9/30/23		373,414		—		(2,334,870	)		1,117,656			843,800			—		—
Quantum Corporation Warrant, expires 10/31/23		373,415		—		(2,316,706	)		1,124,605			818,686			—		—
Quantum Corporation Warrant, expires 11/30/23		187,157		—		(1,158,802	)		(33,299	)		1,004,944			—		—

Total non-controlled affiliated investments	$	25,666,101	$	13,524,548	$	(6,848,543	)	$	3,347,138		$	360,155		$	36,049,399	$	6,753,710

^(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

^(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

F-14

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019

(3)

The investment is not a qualifying asset as defined in Section 55(a) under the Investment Company Act of 1940, as amended. A business development company may not acquire an asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2019, $205,316,803 or 16.5% of the Company’s total assets were represented by “non-qualifying assets.”

(4)

As defined in the Investment Company Act of 1940, the investment is deemed to be a “controlled person” of the Company because the Company owns, either directly or indirectly, 25% or more of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. Fair value as of December 31, 2018 and December 31, 2019 along with transactions during the year ended December 31, 2019 in these controlled investments are as follows (as corrected):


										Net Change in
	Fair Value at							Realized		Unrealized			Fair Value at		Interest/
	December 31,		Gross		Gross			Gains		Appreciation/			December 31,		Dividend/
Name of Investment	2018		Additions^(a)		Reductions^(b)			(Losses)		Depreciation			2019		Other income
Cedar Electronics Holdings, Corp. Incremental Term Loan—15.00%	$	—	$	2,738,387	$	—		$	—	$	1		$	2,738,388	$	338,387
Cedar Electronics Holdings, Corp. Term Loan—9.70%		17,683,200		755,170		—			—		1,379,109			19,817,479		2,449,479
Cedar Ultimate Parent LLC Class A Preferred Units		—		—		—			—		1,640,937			1,640,937		—
Cedar Ultimate Parent LLC Class D Preferred Units		—		—		—			—		—			—		—
Cedar Ultimate Parent LLC Class E Common Units		—		—		—			—		—			—		—
TCW Direct Lending Strategic Ventures LLC Common membership interests		—		—		—			—		—			—		—
TCW Direct Lending Strategic Ventures LLC Preferred membership interests		260,252,121		235,200,000		(259,200,000	)		—		(40,525,926	)		195,726,195		68,127,000

Total controlled affiliated investments	$	277,935,321	$	238,693,557	$	(259,200,000	)	$	—	$	(37,505,879	)	$	219,922,999	$	70,914,866

^(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

^(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

(5)

All or a portion of such security was acquired in a transaction exempt from registration under the Securities Act of 1933, and may be deemed “restricted securities” under the Securities Act. As of December 31, 2019, the aggregate fair value of these securities was $10,821,990, or 0.9% of the Company’s total assets..

(6)

Non-income producing.

(7)

Holding of Animal Supply Holdings, LLC Class A units are held through TCW DL ASH LLC, a special purpose vehicle.

(8)

Holdings of Carrier & Technology Holdings, LLC common stock are held through TCW DL CTH LLC, a special purpose vehicle.

(9)

Holdings of Verus Financial, LLC common stock are held through TCW DL VF Holdings, Inc., a special purpose vehicle.

(10)

The fair value of the Quantum Corporation Common Stock held by the Company is based on the quoted market price of the issuer’s stock as of December 31, 2019. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy. Otherwise, the fair value of each debt and equity investment was determined using significant unobservable inputs and such investments are considered to be Level 3 within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

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

Prime - Prime Rate

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $71,865,047 and $162,495,879, respectively, for the year ended December 31, 2019. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.


Country Breakdown Portfolio
United States		99.1%
Canada		0.9%

See Notes to Consolidated Financial Statements.

F-15

TCW DIRECT LENDING LLC

Consolidated Statements of Assets and Liabilities

(Dollar amounts in thousands, except unit data)


	As of December 31,
	2020			2019
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (amortized cost of $319,356 and $757,646, respectively)⁽¹⁾	$	262,616		$	722,632
Non-controlled affiliated investments (amortized cost of $116,801 and $72,495, respectively)⁽¹⁾		52,142			36,049
Controlled affiliated investments (amortized cost of $374,150 and $242,899, respectively)⁽¹⁾		330,511			219,923
Cash and cash equivalents		34,802			254,474
Short-term investments		599,748			—
Interest receivable		5,360			7,427
Deferred financing costs		1,235			710
Prepaid and other assets		82			81

Total Assets	$	1,286,496		$	1,241,296

Liabilities
Payable for short-term investments purchased	$	599,748		$	—
Credit facility payable		115,250			364,065
Management fees payable		1,698			2,094
Unrealized depreciation on unfunded commitments		713			26
Interest and credit facility expense payable		457			111
Directors’ fees payable		—			—
Other accrued expenses and other liabilities		355			772

Total Liabilities	$	718,221		$	367,068

Commitments and Contingencies (Note 5)

Members’ Capital
Common Unitholders’ commitment: (20,134,698 units issued and outstanding)	$	2,013,470		$	2,013,470
Common Unitholders’ undrawn commitment: (20,134,698 units issued and outstanding)		(409,125	)		(409,125	)
Common Unitholders’ return of capital		(854,503	)		(618,250	)
Common Unitholders’ offering costs		(853	)		(853	)
Accumulated Common Unitholders’ tax reclassification		(13,733	)		(13,595	)

Common Unitholders’ capital		735,256			971,647
Accumulated loss		(166,981	)		(97,419	)

Total Members’ Capital	$	568,275		$	874,228

Total Liabilities and Members’ Capital	$	1,286,496		$	1,241,296

Net Asset Value Per Unit (accrual base) (Note 9)	$	48.54		$	63.74

(1)	Amounts disclosed for the year ended December 31, 2019 have been restated, as described in Note 2.

See Notes to Consolidated Financial Statements.

F-16

TCW DIRECT LENDING LLC

Consolidated Statements of Operations

(Dollar amounts in thousands, except unit data)


	For the Year Ended December 31,
	2020			2019			2018
Investment Income
Non-controlled/non-affiliated investments:
Interest income⁽¹⁾	$	31,641		$	89,223		$	118,401
Interest income paid-in-kind⁽¹⁾		17,323			9,448			18,844
Dividend income		217			178			87
Other fee income		90			640			—
Non-controlled affiliated investments:
Interest income⁽¹⁾		3,946			83			461
Interest income paid-in-kind⁽¹⁾		3,716			6,671			2,543
Other fee income		16			—			—
Controlled affiliated investments:
Interest income⁽¹⁾		11,515			1,832			1,529
Interest income paid-in-kind⁽¹⁾		11,873			956			95
Dividend income		22,000			68,127			31,968
Other fee income		70			—			—

Total investment income		102,407			177,158			173,928
Expenses
Interest and credit facility expenses		11,863			18,146			25,300
Management fees		7,511			8,605			10,418
Administrative fees		942			1,047			1,209
Professional fees		931			1,019			1,031
Directors’ fees		320			336			333
Other expenses		379			197			222

Total expenses		21,946			29,350			38,513
Expenses reimbursed by the Adviser		—			—			(263	)

Net expenses		21,946			29,350			38,250

Net investment income	$	80,461		$	147,808		$	135,678
Net realized and unrealized gain (loss) on investments
Net realized gain (loss):
Non-controlled/non-affiliated investments⁽¹⁾	$	213		$	(17,109	)	$	(236	)
Non-controlled affiliated investments⁽¹⁾		(709	)		3,945			—
Controlled affiliated investments		(2,996	)		—			—
Net change in unrealized appreciation/depreciation:
Non-controlled/non-affiliated investments⁽¹⁾		(34,429	)		1,127			(36,076	)
Non-controlled affiliated investments⁽¹⁾		(21,798	)		(13,413	)		(5,136	)
Controlled affiliated investments⁽¹⁾		(15,062	)		(37,506	)		(243	)
Net realized gain on short-term investments		17			—			—
Net realized gain distributions from controlled affiliated investments		—			4,833			931

Net realized and unrealized loss on investments	$	(74,764	)	$	(58,123	)	$	(40,760	)

Net increase in Members’ Capital from operations	$	5,697		$	89,685		$	94,918

Basic and diluted:
Income per unit	$	0.28		$	4.45		$	4.71

(1)	Amounts disclosed for the years ended December 31, 2019 and 2018 have been restated, as described in Note 2.

See Notes to Consolidated Financial Statements

F-17

TCW DIRECT LENDING LLC

Consolidated Statements of Changes in Members’ Capital

(Dollar amounts in thousands, except unit data)


	Common Unitholders’ Capital			Accumulated Earnings (Loss)			Total
Members’ Capital at December 31, 2017	$	1,300,269		$	(24,849	)	$	1,275,420
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			135,678			135,678
Net realized gain on investments		—			695			695
Net change in unrealized appreciation/depreciation on investments		—			(41,455	)		(41,455	)

Distributions to Members from:
Distributable earnings					(136,673	)		(136,673	)
Return of capital		(220,122	)		—			(220,122	)
Return of unused capital		(100,000	)		—			(100,000	)

Total Decrease in Members’ Capital for the year ended December 31, 2018		(320,122	)		(41,755	)		(361,877	)
Tax reclassification of Members’ Capital		(265	)		265			—

Members’ Capital at December 31, 2018	$	979,882		$	(66,339	)	$	913,543
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			147,808			147,808
Net realized loss on investments		—			(8,331	)		(8,331	)
Net change in unrealized appreciation/depreciation on investments		—			(49,792	)		(49,792	)
Distributions to Members from:
Distributable earnings					(124,880	)		(124,880	)
Return of capital		(4,120	)		—			(4,120	)

Total Decrease in Members’ Capital for the year ended December 31, 2019		(4,120	)		(35,195	)		(39,315	)
Tax reclassification of Members’ Capital		(4,115	)		4,115			—

Members’ Capital at December 31, 2019	$	971,647		$	(97,419	)	$	874,228
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			80,461			80,461
Net realized loss on investments		—			(3,475	)		(3,475	)
Net change in unrealized appreciation/depreciation on investments		—			(71,289	)		(71,289	)
Distributions to Members from:
Distributable earnings		—			(75,397	)		(75,397	)
Return of capital		(236,253	)		—			(236,253	)

Total Decrease in Members’ Capital for the year ended December 31, 2020		(236,253	)		(69,700	)		(305,953	)
Tax reclassification of Members’ Capital		(138	)		138			—

Members’ Capital at December 31, 2020	$	735,256		$	(166,981	)	$	568,275

See Notes to Consolidated Financial Statements.

F-18

TCW DIRECT LENDING LLC

Consolidated Statements of Cash Flows

(Dollar amounts in thousands, except unit data)


	For the Year Ended December 31,
	2020			2019			2018
Cash Flows from Operating Activities
Net increase in net assets resulting from operations	$	5,697		$	89,685		$	94,918
Adjustments to reconcile the net increase in net assets resulting from operations to net cash provided by operating activities:
Purchases of investments		(120,726	)		(54,791	)		(101,688	)
Purchases of short-term investments		(599,748	)		—			—
Interest income paid in-kind		(32,912	)		(17,074	)		(21,482	)
Proceeds from sales and paydowns of investments		416,888			162,496			388,281
Net realized loss on investments		3,492			13,164			236
Change in net unrealized appreciation/depreciation on investments		71,289			49,792			41,455
Amortization of premium and accretion of discount, net		(4,009	)		(6,125	)		(10,380	)
Amortization of deferred financing costs		1,474			2,607			5,450
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in interest receivable		2,067			(1,208	)		6,266
(Increase) decrease in receivable from Adviser		—			263			940
(Increase) decrease in prepaid and other assets		(1	)		4			10
Increase (decrease) in payable for short-term investments purchased		599,748			—			—
Increase (decrease) in interest and credit facility expense payable		346			(40	)		(267	)
Increase (decrease) in management fees payable		(396	)		(410	)		2,504
Increase (decrease) in other accrued expenses and liabilities		(417	)		191			(308	)

Net cash provided by operating activities	$	342,792		$	238,554		$	405,935

Cash Flows from Financing Activities
Return of capital	$	(236,253	)	$	(4,120	)	$	(220,122	)
Unused contributions returned to Members		—			—			(100,000	)
Distributions to Members		(75,397	)		(124,880	)		(136,673	)
Deferred financing costs paid		(1,999	)		(57	)		(12	)
Proceeds from credit facility		353,000			215,000			227,000
Repayments of credit facility		(601,815	)		(215,935	)		(240,000	)

Net cash used in financing activities	$	(562,464	)	$	(129,992	)	$	(469,807	)

Net (decrease) increase in cash and cash equivalents	$	(219,672	)	$	108,562		$	(63,872	)
Cash and cash equivalents, beginning of year	$	254,474		$	145,912		$	209,784

Cash and cash equivalents, end of year	$	34,802		$	254,474		$	145,912

Supplemental and non-cash financing activities
Interest expense paid	$	8,857		$	15,043		$	16,391

See Notes to Consolidated Financial Statements.

F-19

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements

(Dollar amount in thousands, except for unit data)

December 31, 2020

1. Organization and Basis of Presentation

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

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

In 2019, the Company established two wholly-owned subsidiaries, TCW DL CTH LLC and TCW DL ASH LLC, each a Delaware limited liability company and each designed to hold an equity investment of the Company.

In 2020, the Company established TCW DL SSP LLC, also a Delaware limited liability company, also designed to hold an equity investment of the Company.

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

Term: The initial term of the Company continued until the sixth anniversary of the Initial Closing Date (as defined below), September 14, 2020 unless extended or sooner dissolved as provided in the limited liability agreement or by operation of law. The Company may extend the term for two additional one-year periods upon written notice to the holders of the Common Units and holders of preferred units, if any, (collectively the “Unitholders” or “Members”) at least 90 days prior to the expiration of the term or the end of the first one-year period. Thereafter, the term may be extended for successive one-year periods, with the vote or consent of a supermajority in interest of the holders of the Common Units. On June 10, 2020, the Company’s Board of Directors (the “Board”) approved a one-year extension of the Company’s term to September 2021.

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

In October 2020, the Company’s Members approved a proposal to allow the Company to make pre-identified follow-on investments in specific portfolio companies as well as their holding companies, subsidiaries, successors or other affiliates, up to an aggregate maximum of 10% of Capital Commitments.

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

F-20

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

1. Organization and Basis of Presentation (Continued)

The commitment amount funded does not include amounts contributed in anticipation of a potential investment that the Company did not consummate and therefore returned to the Members’ as unused capital. As of December 31, 2020, aggregate Commitments, Undrawn Commitments, the percentage of Commitments funded and the number of subscribed for Units of the Company were as follows:


	Commitments		Undrawn Commitments		% of Commitments Funded			Units
Common Unitholder	$	2,013,470	$	409,125		79.7	%		20,134,698

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

The Recallable Amount as of December 31, 2020 was $100,875.

2. Significant Accounting Policies

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

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

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

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

Income Recognition: Interest income is recorded on an accrual basis unless doubtful of collection or the related investment is in default. Realized gains and losses on investments are recorded on a specific identification basis. The Company typically receives a fee in the form of a discount to the purchase price at the time it funds an investment in a loan. The discount is accreted to interest income over the life of the respective loan, using the effective-interest method assuming there are no questions as to collectability, and reflected in the amortized cost basis of the investment. Ongoing facility, commitment or other additional fees including prepayment fees, consent fees and forbearance fees are recognized immediately when earned as income.

The Company has entered into certain intercreditor agreements that entitle the Company to the “last out” tranche of first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. In certain cases, the Company may receive a higher interest rate than the contractual stated interest rate as disclosed on the Company’s Consolidated Schedule of Investments.

F-21

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

2. Significant Accounting Policies (Continued)

Certain investments have an unfunded loan commitment for a delayed draw term loan or revolving credit. The Company earns an unused commitment fee on the unfunded commitment during the commitment period. The expiration date of the commitment period may be earlier than the maturity date of the investment stated above. See Note 5—Commitments and Contingencies.

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection.

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

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

Cash and Cash Equivalents: The Company considers all investments with a maturity of three months or less at the time of acquisition to be cash equivalents. As of December 31, 2020, cash and cash equivalents is comprised of demand deposits and highly liquid investments with maturities of three months or less. Cash equivalents are carried at amortized costs which approximates fair value, and are classified as Level 1 in the GAAP valuation hierarchy.

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

Recent Accounting Pronouncements: In March 2020, the FASB issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank offered reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. The Company does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial statements.

On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The updated guidance modifies the disclosure requirements on fair value measurements by (1) removing certain disclosure requirements including policies related to valuation processes and the timing of transfers between levels of the fair value hierarchy, (2) amending disclosure requirements related to measurement uncertainty from the use of significant unobservable inputs, and (3) adding certain new disclosure requirements including changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods therein, with early adoption permitted. As permitted by the ASU, the Company early adopted the following applicable provisions of the ASU:

•

removed the Company’s disclosure of policy for timing of transfers between levels;

F-22

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

2. Significant Accounting Policies (Continued)

•

removed the disclosure describing the Company’s valuation process for Level 3 fair value measurements;

•

for investments measured using net asset values, disclosed (1) the timing of liquidation of an investee’s assets and (2) the date when redemption restrictions will lapse, to the extent that such information has been publicly announced by the investee; and

•

disclosed information about the uncertainty of Level 3 fair value measurements as of the reporting date, rather than at a point in the future.

During the fourth quarter of 2019, the Company adopted the remaining provisions of the ASU which included disclosing the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

Correction of Affiliates Disclosure: Subsequent to the issuance of the Company’s 2019 consolidated financial statements, management identified certain disclosures required by Article 6 of Regulation S-X relating to investments in, and income from non-affiliates versus affiliates that should have been separately disclosed in the Company’s Consolidated Statement of Assets and Liabilities as of December 31, 2019; and Consolidated Statement of Operations for the years ended December 31, 2019 and 2018; all of which are included as comparative periods in the Company’s consolidated financial statement as of and for the year ended December 31, 2020.

The resulting adjustments to the comparative periods presented had no impact on the Company’s Net Asset Values (“NAVs”), Net increase in Members’ Capital from operations, or Distributions to Members. The adjustments also had no impact on any of the disclosures appearing on the Company’s Financial Highlights. The adjustments pertain solely to (1) investment cost and fair value between non-controlled/non-affiliated investments to non-controlled affiliated investments and controlled affiliated investments on the Company’s Consolidated Statements of Assets and Liabilities and (2) investment income, realized gain (loss), and net change in unrealized appreciation/depreciation from non-controlled/non-affiliated investments to non-controlled affiliated investments and controlled affiliated investments on the Company’s Consolidated Statements of Operations.

The following table summarizes the effect of the adjustments on the Company’s Consolidated Statement of Assets and Liabilities as of December 31, 2019:


	As of December 31, 2019
	As Previously Reported		Total Adjustment			As Corrected
Consolidated Statement of Assets and Liabilities
Non-controlled/non-affiliated investments, fair value	$	782,878	$	(60,246	)	$	722,632
Non-controlled affiliated investments, fair value		—		36,049			36,049
Controlled affiliated investments, fair value		195,726		24,197			219,923

Non-controlled/non-affiliated investments, amortized cost		861,840		(104,194	)		757,646
Non-controlled affiliated investments, amortized cost		—		72,495			72,495
Controlled affiliated investments, amortized cost		211,200		31,699			242,899

F-23

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

2. Significant Accounting Policies (Continued)

The following table summarizes the effect of the adjustments on the Company’s Consolidated Statements of Operations for the years ended December 31, 2019 and 2018:


	For the Year Ended December 31, 2019									For the Year Ended December 31, 2018
	As Previously Reported			Total Adjustment			As Corrected			As Previously Reported			Total Adjustment			As Corrected
Consolidated Statement of Operations
Non-controlled/non-affiliated investments:
Interest income	$	91,139		$	(1,916	)	$	89,223		$	120,391		$	(1,990	)	$	118,401
Interest income paid-in-kind		17,074			(7,626	)		9,448			21,482			(2,638	)		18,844
Non-controlled affiliated investments:
Interest income		—			83			83			—			461			461
Interest income paid-in-kind		—			6,671			6,671			—			2,543			2,543
Controlled affiliated investments:
Interest income		—			1,832			1,832			—			1,529			1,529
Interest income paid-in-kind		—			956			956			—			95			95

Net realized and unrealized gain (loss) on investments
Net realized gain (loss):
Non-controlled/non-affiliated investments		(13,164	)		(3,945	)		(17,109	)		(236	)		—			(236	)
Non-controlled affiliated investments		—			3,945			3,945			—			—			—
Net change in unrealized appreciation/depreciation:
Non-controlled/non-affiliated investments		(9,266	)		10,393			1,127			(46,363	)		10,287			(36,076	)
Non-controlled affiliated investments		—			(13,413	)		(13,413	)		—			(5,136	)		(5,136	)
Controlled affiliated investments		(40,526	)		3,020			(37,506	)		4,908			(5,151	)		(243	)

3. Investment Valuations and Fair Value Measurements

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

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

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

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

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

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

F-24

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

3. Investment Valuations and Fair Value Measurements (Continued)

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

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

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

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

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

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Consolidated Schedule of Investments as of December 31, 2020:


Investments	Level 1		Level 2		Level 3		NAV		Total
Debt	$	—	$	—	$	476,052	$	—	$	476,052
Equity		16,343		—		13,984		—		30,327
Investment Funds & Vehicles ⁽¹⁾		—		—		—		138,890		138,890
Short- term investments		599,748		—		—		—		599,748
Cash equivalents		27,032		—		—		—		27,032

Total Assets	$	643,123	$	—	$	490,036	$	138,890	$	1,272,049

⁽¹⁾

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

F-25

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2020

3. Investment Valuations and Fair Value Measurements (Continued)

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Consolidated Schedule of Investments as of December 31, 2019:


Investments	Level 1		Level 2		Level 3		NAV		Total
Debt	$	—	$	—	$	752,242	$	—	$	752,242
Equity		19,814		—		10,822		—		30,636
Investment Funds & Vehicles ⁽¹⁾		—		—		—		195,726		195,726
Cash equivalents		69,842		—		—		—		69,842

Total Assets	$	89,656	$	—	$	763,064	$	195,726	$	1,048,446

⁽¹⁾

The following tables provide a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the years ended December 31, 2020 and 2019:


	Debt			Equity			Total
Balance, January 1, 2020	$	752,242		$	10,822		$	763,064
Purchases*		363,754			12,162			375,916
Sales and paydowns of investments		(585,744	)		(7,422	)		(593,166	)
Amortization of premium and accretion of discount, net		4,009			—			4,009
Net realized losses		(742	)		(2,750	)		(3,492	)
Net change in unrealized appreciation/depreciation		(57,467	)		1,172			(56,295	)

Balance, December 31, 2020	$	476,052		$	13,984		$	490,036

Change in net unrealized appreciation/depreciation in investments held as of December 31, 2020	$	(63,674	)	$	4,281		$	(59,393	)

*	Includes payments received in-kind


	Debt			Equity			Total
Balance, January 1, 2019	$	854,564		$	10,608		$	865,172
Purchases*		61,945			2,537			64,482
Sales and paydowns of investments		(131,107	)		(8,097	)		(139,204	)
Amortization of premium and accretion of discount, net		6,125			—			6,125
Net realized (losses) gains		(16,505	)		3,341			(13,164	)
Net change in unrealized appreciation/depreciation		(22,780	)		2,433			(20,347	)

Balance December 31, 2019	$	752,242		$	10,822		$	763,064

Change in net unrealized appreciation/depreciation in investments held as of December 31, 2019	$	(19,436	)	$	1,422		$	(18,014	)

*	Includes payments received in-kind

During the years ended December 31, 2020 and 2019, the Company did not have any transfers between levels.

F-26

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

3. Investment Valuations and Fair Value Measurements (Continued)

Level 3 Valuation and Quantitative Information: The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of December 31, 2020.

Investment
Type

Fair Value

Valuation

Technique

Unobservable

Input

Range

Weighted
Average*

Impact to

Valuation if

Input

Increases

Debt

$108,981

Income Method

Discount Rate

10.6% to 14.0%

12.2%

Decrease

Debt

$143,075

Market Method

EBITDA Multiple

5.8x to 8.0x

N/A

Increase

Debt

$72,612

Market Method

Revenue Multiple

1.2x to 1.4x

N/A

Increase

Debt

$17,266

Market Method

Indicative Bid

0.0% to 100.0%

86.6%

Increase

Debt

$99,556

Market Method

EBITDA Multiple

Revenue Multiple

5.3x to 9.5x

0.2x to 1.6x

N/A
N/A

Increase

Debt

$34,562

Income Method

Discount Rate

22.0% to 24.0%

N/A

Decrease

Equity

$—

Market Method Market Method

EBITDA Multiple

Revenue Multiple

Indicative Bid

3.5x to 4.5x

0.2x to 0.4x

0.0% to 0.0%

N/A
N/A
N/A

Increase

Equity

$9,598

Market Method

EBITDA Multiple

5.8x to 8.0x

N/A

Increase

Equity

$—

Market Method

EBITDA Multiple

Revenue Multiple

5.3x to 6.3x 0.2x to 0.2x

N/A
N/A

Increase

Equity

$4,386

Income Method Market Method

Discount Rate

EBITDA Multiple

Revenue Multiple

22.0% to 24.0%

3.5x to 4.5x

0.2x to 0.4x

N/A
N/A
N/A

Decrease

Increase

*	Weighted based on fair value

The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of December 31, 2019.

Investment

Type

Fair Value

Valuation

Technique

Unobservable

Input

Range

Weighted
Average*

Impact to

Valuation if

Input

Increases

Debt

$483,357

Income Method

Discount Rate

5.8% to 17.4%

10.1%

Decrease

Debt

$210,997

Market Method

EBITDA Multiple

Revenue Multiple

5.5x to 8.5x 2.2x to 2.4x

N/A
N/A

Increase Increase

Debt

$32,062

Income Method

Take-Out Indication

Discount Rate

100.0% to 100.0% 18.6% to 23.2%

100.0%
20.4%

Increase Decrease

Debt

$16,973

Income Method Market Method

Take-Out Indication

EBITDA Multiple

Revenue Multiple

100.0% to 100.0%

7.5x to 8.5x

0.2x to 0.2x

100.0%
N/A
N/A

Increase Increase Increase

Debt

$8,853

Income Method

Market Method

Discount Rate

EBITDA Multiple

14.2% to 17.9% 3.8x to 4.8x

16.8%
N/A

Decrease Increase

Equity

$10,822

Market Method

EBITDA Multiple

Revenue Multiple

4.8x to 12x 0.2x to 2.4x

N/A
N/A

Increase Increase

*	Weighted based on fair value

Unless noted, the Company generally utilizes the midpoint of a valuation range provided by an external, independent valuation firm.

F-27

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

4. Agreements and Related Party Transactions

Advisory Agreement: On September 15, 2014, the Company entered into an Investment Advisory and Management Agreement (the “Advisory Agreement”) with the Adviser, its registered investment adviser under the Investment Advisers Act of 1940, as amended. The Advisory Agreement was approved by the Board at an in-person meeting. Unless earlier terminated, the Advisory Agreement will remain in effect for a period of two years and will remain in effect from year to year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of the independent directors of the Board. On August 10, 2020, the Company’s Board reapproved the Advisory Agreement.

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

For the years ended December 31, 2020, 2019 and 2018, Management Fees incurred amounted to $7,511, $8,605 and $10,418, respectively, of which $1,698, $2,094 and $2,504 remained payable at December 31, 2020, 2019 and 2018, respectively. Net expenses include an expense reimbursement of $0, $0 and $263 in the years ended December 31, 2020, 2019 and 2018, respectively.

Transaction and Other Fees: Any (i) transaction, advisory, consulting, management, monitoring, directors’ or similar fees, (ii) closing, investment banking, finders’, transaction or similar fees, (iii) commitment, breakup or topping fees or litigation proceeds and (iv) other fee or payment of services performed or to be performed with respect to an investment or proposed investment received from or with respect to Portfolio Companies or prospective Portfolio Companies in connection with the Company’s activities will be will be the property of the Company.

Since inception, the Company received $2,615 in such fees, of which $1,788 was paid during the year ended December 31, 2019. The Company received $0 of such fees during the years ended December 31, 2020 and 2018.

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

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

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

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

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

F-28

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

4. Agreements and Related Party Transactions (Continued)

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

For the years ended December 31, 2020, 2019 and 2018, no Incentive Fees were incurred.

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

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

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

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

F-29

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

5. Commitments and Contingencies

The Company had the following unfunded commitments and unrealized depreciation by investment as of December 31, 2020 and 2019:


	Maturity/ Expiration		December 31, 2020				December 31, 2019
Unfunded Commitments	Maturity/ Expiration		Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
Guardia LLC (fka Carrier & Technology Solutions, LLC)		July 2023	$	1,769	$	713	$	2,124	$	—
Help At Home, LLC		August 2020		—		—		10,541		—
KBP Investments, LLC (fka FQSR, LLC)		September 2021		—		—		5,798		—
Quicken Parent Corp		April 2021		—		—		863		26
Ruby Tuesday, Inc.		March 2021		4,941		—		—		—
Ruby Tuesday, Inc.		December 2022		—		—		4,575		—

Total			$	6,710	$	713	$	23,901	$	26

The Company’s total capital commitment to its underlying investment in Strategic Ventures is $481,600. As of December 31, 2020, the Company’s unfunded commitment to Strategic Ventures is $219,646.

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of December 31, 2020, management is not aware of any pending or threatened litigation.

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

F-30

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

6. Members’ Capital

During the years ended December 31, 2020, 2019 and 2018, the Company did not sell or issue any Common Units. The activity for the years ended December 31, 2020, 2019 and 2018 was as follows:

Year Ended December 31,

2020

2019

2018

Units at beginning of year

20,134,698

Units issued and committed at end of year

20,134,698

For the years ended December 31, 2020, 2019 and 2018, the Company processed $0 deemed distributions and re-contributions.

7. Credit Facility

The Company has a secured revolving credit agreement (the “Credit Agreement”) with Natixis, New York Branch (“Natixis”) as administrative agent and committed lender. The Credit Agreement provides for a revolving credit line of up to $750,000 (the “Maximum Commitment”) (the “Credit Facility”), subject to the lesser of the “Borrowing Base” assets or the Maximum Commitment (the “Available Commitment”). The Borrowing Base assets generally equal the sum of (a) a percentage of certain eligible investments in a controlled account, (b) a percentage of unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Credit Agreement is generally secured by the Borrowing Base assets.

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

On April 6, 2020, the Company entered into a First Amendment to the Third Amended and Restated Revolving Credit Agreement (the “Amended Credit Agreement”), by and among the Company, as borrower, and Natixis, New York Branch, as administrative agent and the lenders party thereto. The Amended Credit Agreement provides for a revolving credit line of up to $375,000 (with an option for the Company to increase this amount to $450,000 subject to consent of the lenders and satisfaction of certain other conditions), subject to the available borrowing base, which is generally the sum of (a) a percentage of certain eligible investments, (b) a percentage of remaining unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Amended Credit Agreement is generally secured by the unfunded commitments (together with the recallable amounts) of the Company’s investors, portfolio investments and substantially all other assets of the Company. The stated maturity date of the Amended Credit Agreement is April 9, 2021, which date (subject to the satisfaction of certain conditions) may be extended by the Company for up to an additional 364 days. Borrowings under the Amended Credit Agreement bear interest at a rate equal to either (a) adjusted eurodollar rate calculated in a customary manner plus 2.50%, (b) commercial paper rate plus 2.50%, or (c) a base rate calculated in a customary manner (which will never be less than the adjusted eurodollar rate plus 1.00%) plus 1.50%, provided however in each case the commercial paper rate and the eurocurrency rate shall have a floor of 1.00%.

On May 27, 2020, the Company entered into a Lender Group Joinder Agreement pursuant to which Zions Bancorporation, N.A. d/b/a California Bank & Trust was added as a committed lender (with a commitment of $25,000) under the Amended Credit Agreement. Concurrently therewith, the Company elected to increase the size of its revolving credit line under the Credit Agreement to $400,000. On December 29, 2020, the Company elected to permanently decrease the size of its revolving credit line under the Credit Agreement to $177,000.

As of December 31, 2020 and 2019, the Available Commitment under the Amended Credit Agreement and the Third Amended and Restated Revolving Credit Agreement was $177,000 and $387,062, respectively.

F-31

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

7. Credit Facility (Continued)

As of December 31, 2020 and 2019, the amounts outstanding under the Credit Facility were $115,250 and $364,065, respectively. The carrying amount of the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of December 31, 2020 and 2019, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details; credit, market and liquidity risk and events; financial health of the Company; place in the capital structure; interest rate; and terms and conditions of the Credit Facility. The Company incurred financing costs of $10,123 in connection with the April 10, 2017 Third Amended and Restated Revolving Credit Agreement. The Company also incurred additional financing costs of $1,848 in connection with the Amended Credit Agreement on April 6, 2020 and May 27, 2020. The Company recorded these costs as deferred financing costs on its Consolidated Statements of Asset and Liabilities and the costs are being amortized over the life of the Credit Facility. As of December 31, 2020 and 2019, $1,235 and $710, respectively, of such prepaid deferred financing costs had yet to be amortized.

The summary information regarding the Credit Facility for the years ended December 31, 2020, 2019 and 2018 was as follows:


	Year Ended December 31,
	2020			2019			2018
Credit facility interest expense	$	9,162		$	15,036		$	16,360
Undrawn commitment fees		1,162			438			3,425
Administrative fees		65			65			65
Amortization of deferred financing costs		1,474			2,607			5,450

Total	$	11,863		$	18,146		$	25,300

Weighted average interest rate		3.57	%		4.61	%		4.43	%
Average outstanding balance	$	252,629		$	321,518		$	364,512

On December 31, 2019, the Company’s ratio of aggregate fair value of all eligible portfolio assets (as defined in the Credit Agreement) to the principal amount outstanding (“Ratio of Eligible Portfolio Assets”) fell below 150%, which triggered a mandatory prepayment provision in the Credit Agreement requiring the Company to utilize all cash receipts attributable to the eligible portfolio assets as a prepayment to the outstanding principal obligation, within five days of collecting such cash receipts, until such a time when the Ratio of Eligible Portfolio Assets exceeds 150%. The Company’s Ratio of Eligible Portfolio Assets exceeded 150% on January 10, 2020 through March 26, 2020. On March 27, 2020, the Company’s Ratio of Eligible Portfolio Assets fell below 150%. However, in connection with the Amended Credit Agreement executed on April 6, 2020, the mandatory repayment was waived by Natixis. The Company’s Ratio of Eligible Portfolio Assets has exceeded 150% since April 6, 2020.

8. Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act and has elected to be treated as a RIC under the Code. So long as the Company maintains its status as a RIC, it will generally not pay corporate-level U.S. Federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its common unitholders as dividends. The Company elected to be taxed as a RIC in 2015. The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

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

F-32

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

8. Income Taxes (Continued)

As of December 31, 2020, 2019 and 2018, the Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes were as follows:


	Year Ended December 31,
	2020			2019			2018
Cost of investments for federal income tax purposes	$	1,410,101		$	1,136,131		$	1,264,745
Unrealized appreciation	$	7,397		$	78		$	31,987
Unrealized depreciation	$	(145,449	)	$	(87,789	)	$	(96,848	)
Net unrealized appreciation (depreciation) on investments	$	(138,052	)	$	(87,711	)	$	(64,861	)

The following reclassifications have been made for the permanent difference between book and tax accounting as of December 31, 2020, 2019 and 2018. These differences result primarily from net operating losses, differences in accounting for partnership interests, and amendment fees reclassified as capital gains.


	Year Ended December 31,
	2020			2019			2018
Common Unitholders tax reclassification	$	(137	)	$	(4,115	)	$	(265	)
Undistributed net investment (loss) income	$	(4,484	)	$	(23,085	)	$	1,294
Accumulated net realized gain (loss)	$	4,621		$	27,200		$	(1,029	)

The tax character of shareholder distributions attributable to the years ended December 31, 2020, 2019 and 2018 was as follows:


	Year Ended December 31,
	2020		2019		2018
Ordinary income	$	75,397	$	124,880	$	136,673
Return of capital	$	236,253	$	4,120	$	220,122

The tax components of distributable earnings on a tax basis for years ended December 31, 2020, 2019 and 2018 were as follows:


	Year Ended December 31,
	2020			2019			2018
Net tax appreciation (depreciation)	$	(138,765	)	$	(87,711	)	$	(64,861	)
Capital loss carryover	$	(27,846	)	$	(9,294	)	$	(1,019	)

As of December 31, 2020, the Company had a short-term capital loss carryforward of $8,984 and a long-term capital loss carryforward of $18,862 for federal income tax purposes, which may be carried forward indefinitely. These capital loss carryforwards are available to offset net realized gains in future years, thereby reducing future taxable gains distributions.

The Company did not have any unrecognized tax benefits at December 31, 2020 or 2019, nor were there any increases or decreases in unrecognized tax benefits for the period then ended; and therefore no interest or penalties were accrued. The Company is subject to examination by U.S. federal and state tax authorities regarding returns filed for the prior three and four years, respectively.

F-33

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

9. Financial Highlights

Selected data for a unit outstanding throughout the years ended December 31, 2020, 2019, 2018, 2017 and 2016 is presented below. The accrual base Net Asset Value is calculated by subtracting the per unit loss from investment operations from the beginning Net Asset Value per unit and reflects all units issued and outstanding.


	For the Year Ended December 31,
	2020			2019			2018			2017			2016
Net Asset Value Per Unit (accrual base), Beginning of Year	$	63.74		$	65.69		$	78.70		$	93.55		$	99.35

Income from Investment Operations:
Net investment income⁽¹⁾		4.00			7.34			6.74			5.17			3.24
Net realized and unrealized (loss) gain		(3.72	)		(2.89	)		(2.03	)		0.01			(0.18	)

Total from investment operations		0.28			4.45			4.71			5.18			3.06
Less Distributions:
From net investment income		(3.74	)		(6.20	)		(6.79	)		(5.43	)		(3.59	)
From net realized gains		—			—			—			(0.14	)		(0.16	)
Return of capital		(11.74	)		(0.20	)		(10.93	)		(14.46	)		(5.11	)

Total distributions⁽²⁾		(15.48	)		(6.40	)		(17.72	)		(20.03	)		(8.86	)

Net Asset Value Per Unit (accrual base), End of Year	$	48.54		$	63.74		$	65.69		$	78.70		$	93.55

Common Unitholder Total Return⁽³⁾		0.78	%		10.83	%		9.07	%		9.52	%		8.27	%

Common Unitholder IRR⁽⁴⁾		7.24	%		8.18	%		7.58	%		6.87	%		4.45	%

Ratios and Supplemental Data
Members’ Capital, end of year	$	568,275		$	874,228		$	913,543		$	1,275,420		$	963,104
Units outstanding, end of year		20,134,698			20,134,698			20,134,698			20,134,698			20,134,698
Ratios based on average net assets of Members’ Capital:
Ratio of total expenses to average net assets		3.10	%		3.42	%		3.57	%		4.21	%		6.10	%
Expenses recaptured (reimbursed) by Investment Adviser		—	%		—	%		(0.02	)%		(0.11	)%		(0.11	)%
Ratio of net expenses to average net assets		3.10	%		3.42	%		3.55	%		4.10	%		5.99	%
Ratio of financing cost to average net assets		1.68	%		2.11	%		2.35	%		1.70	%		1.75	%
Ratio of net investment income before expense recapture (reimbursement) to average net assets		11.38	%		17.23	%		12.56	%		8.91	%		8.34	%
Ratio of net investment income to average net assets		11.38	%		17.23	%		12.59	%		9.02	%		8.45	%
Credit facility payable	$	115,250		$	364,065		$	365,000		$	378,000		$	590,000
Asset coverage ratio		5.93			3.40			3.50			4.37			2.63
Portfolio turnover rate		14.68	%		5.12	%		7.60	%		30.35	%		36.70	%

⁽¹⁾	Per unit data was calculated using the number of Common Units issued and outstanding as of December 31, 2020, 2019, 2018, 2017 and 2016.

⁽²⁾	Includes distributions which have an offsetting capital re-contribution (“deemed distributions”). Excludes return of unused capital.

⁽³⁾

The Total Return for the years ended December 31, 2020, 2019, 2018, 2017 and 2016 was calculated by taking the net investment income (loss) of the Company for the period divided by the weighted average capital contributions from the Members during the period. The return does not reflect sales load and is net of management fees and expenses.

⁽⁴⁾

The Internal Rate of Return (IRR) since inception for the Common Unitholders, after management fees, financing costs and operating expenses is 7.24% through December 31, 2020. The IRR is computed based on cash flow due dates contained in notices to Members (contributions from and distributions to the Common Unitholders) and the net assets (residual value) of the Members’ Capital account at period end. The IRR is calculated based on the fair value of investments using principles and methods in accordance with GAAP and does not necessarily represent the amounts that may be realized from sales or other dispositions. Accordingly, the return may vary significantly upon realization.

F-34

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

10. Selected Quarterly Financial Data (Unaudited)

The following are the quarterly results of operations for the years ended December 31, 2020, 2019 and 2018. The following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.


	Quarter Ended
	December 31, 2020		September 30, 2020			June 30, 2020			March 31, 2020
Total investment income	$	21,294	$	35,556		$	21,716		$	23,841
Net investment income		16,259		30,247			16,075			17,880
Net realized and unrealized gain (loss)		18,532		(26,502	)		(23,676	)		(43,118	)
Net increase (decrease) in Members’ Capital from operations		34,791		3,745			(7,601	)		(25,238	)
Basic and diluted earnings (loss) per Unit		1.72		0.19			(0.38	)		(1.25	)
Net asset value per unit at quarter end		48.54		47.06			55.57			55.95


	Quarter Ended
	December 31, 2019			September 30, 2019		June 30, 2019			March 31, 2019
Total investment income	$	56,587		$	27,140	$	44,536		$	48,895
Net investment income		49,362			20,235		36,968			41,243
Net realized and unrealized (loss) gain		(26,590	)		23,792		(35,524	)		(19,801	)
Net increase in Members’ Capital from operations		22,772			44,027		1,444			21,442
Basic and diluted earnings per Unit		1.13			2.19		0.07			1.06
Net asset value per unit at quarter end		63.74			63.60		61.41			61.94


	Quarter Ended
	December 31, 2018			September 30, 2018		June 30, 2018			March 31, 2018
Total investment income	$	39,970		$	34,153	$	58,042		$	41,763
Net investment income		31,465			25,457		46,005			32,751
Net realized and unrealized (loss) gain		(9,871	)		7,379		(33,854	)		(4,414	)
Net increase in Members’ Capital from operations		21,594			32,836		12,151			28,337
Basic and diluted earnings per Unit		1.08			1.63		0.60			1.40
Net asset value per unit at quarter end		65.69			67.31		74.84			79.11

F-35

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(Dollar amount in thousands, except for unit data)

December 31, 2020

11. Subsequent Events

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

F-36

Large accelerated filer

Accelerated filer

Non-Accelerated filer

Smaller reporting company

Emerging growth company