Attached files

file filename
EX-32.1 - EX-32.1 - TriLinc Global Impact Fund LLCtrilinc-ex321_6.htm
EX-31.2 - EX-31.2 - TriLinc Global Impact Fund LLCtrilinc-ex312_8.htm
EX-31.1 - EX-31.1 - TriLinc Global Impact Fund LLCtrilinc-ex311_7.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the Quarterly Period Ended March 31, 2021

OR

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

For the transition period from                      to                     

Commission File Number 000-55432

 

TriLinc Global Impact Fund, LLC

(Exact name of registrant as specified in its charter)

 

 

Delaware

36-4732802

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1230 Rosecrans Avenue, Suite 605,

Manhattan Beach, CA 90266

(Address of principal executive offices)

(310) 997-0580

(Registrant’s telephone number, including area code)

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

 

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

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

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

 

 

Emerging growth company

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

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

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

 

None

 

None

 

As of May 14, 2021, the Company had outstanding 18,080,042 Class A units, 7,996,734 Class C units, 10,433,014 Class I units, 24,555 Class W units, 2,205,861 Class Y units, and 8,423,851 Class Z units.

 

 

 


 

Table of Contents

 

Part I. Financial Information

 

1

 

 

 

Item 1. Consolidated Financial Statements

 

1

 

 

 

Consolidated Statements of Assets and Liabilities as of March 31, 2021 (unaudited) and December 31, 2020

 

1

 

 

 

Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited)

 

2

 

 

 

Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2021 and 2020 (unaudited)

 

3

 

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)

 

4

 

 

 

Consolidated Schedules of Investments as of March 31, 2021 (unaudited) and December 31, 2020

 

5-8

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

9

 

 

 

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

 

33

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

43

 

 

 

Item 4. Controls and Procedures

 

43

 

 

 

Part II. Other Information

 

45

 

 

 

Item 1. Legal Proceedings

 

45

 

 

 

Item 1A. Risk Factors

 

45

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

45

 

 

 

Item 3. Defaults Upon Senior Securities

 

46

 

 

 

Item 4. Mine Safety Disclosures

 

46

 

 

 

Item 5. Other Information

 

46

 

 

 

Item 6. Exhibits

 

47

 

 

 

 


 

Part I. Financial Information

Item 1. Consolidated Financial Statements.

TriLinc Global Impact Fund, LLC

Consolidated Statements of Assets and Liabilities

 

 

 

As of

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

ASSETS

 

(Unaudited)

 

 

 

 

 

Investments owned, at fair value (amortized cost of $334,260,703 and

   $315,576,654, respectively)

 

$

305,283,020

 

 

$

287,574,298

 

Cash

 

 

33,935,092

 

 

 

55,002,776

 

Interest receivable

 

 

22,409,670

 

 

 

21,076,328

 

Due from affiliates (see Note 5)

 

 

4,057,734

 

 

 

4,057,734

 

Other assets

 

 

1,383,741

 

 

 

990,387

 

Total assets

 

 

367,069,257

 

 

 

368,701,523

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Due to unitholders

 

 

1,672,498

 

 

 

1,640,061

 

Management fee payable

 

 

1,825,856

 

 

 

1,816,626

 

Incentive fee payable

 

 

696,912

 

 

 

1,215,456

 

Notes payable

 

 

5,000,000

 

 

 

5,000,000

 

Unit repurchases payable

 

 

2,136,340

 

 

 

2,282,554

 

Accrued distribution and other fees

 

 

476,000

 

 

 

480,000

 

Other payables

 

 

1,006,426

 

 

 

993,196

 

Total liabilities

 

 

12,814,032

 

 

 

13,427,893

 

Commitments and Contingencies (see Note 5)

 

 

 

 

 

 

 

 

NET ASSETS

 

$

354,255,225

 

 

$

355,273,630

 

 

 

 

 

 

 

 

 

 

ANALYSIS OF NET ASSETS:

 

 

 

 

 

 

 

 

Net capital paid in on Class A units

 

$

144,064,395

 

 

$

144,861,885

 

Net capital paid in on Class C units

 

 

63,234,869

 

 

 

63,700,945

 

Net capital paid in on Class I units

 

 

83,319,836

 

 

 

84,131,597

 

Net capital paid in on Class W units

 

 

195,161

 

 

 

196,655

 

Net capital paid in on Class Y units

 

 

17,240,366

 

 

 

15,595,564

 

Net capital paid in on Class Z units

 

 

63,518,306

 

 

 

64,024,791

 

Offering costs

 

 

(17,317,708

)

 

 

(17,237,807

)

Net assets (equivalent to $7.540 and $7.600, respectively per unit based

   on total units outstanding of 47,044,755 and 46,807,115, respectively)

 

$

354,255,225

 

 

$

355,273,630

 

Net assets, Class A (units outstanding of 18,033,532 and 17,996,350, respectively)

 

$

135,978,114

 

 

$

136,779,779

 

Net assets, Class C (units outstanding of 7,972,375 and 7,970,536, respectively)

 

 

59,660,037

 

 

 

60,121,402

 

Net assets, Class I (units outstanding of 10,432,345 and 10,454,368, respectively)

 

 

78,641,946

 

 

 

79,436,572

 

Net assets, Class W (units outstanding of 24,555 and 24,555, respectively)

 

 

184,151

 

 

 

185,627

 

Net assets, Class Y (units outstanding of 2,158,097 and 1,937,455, respectively)

 

 

16,272,671

 

 

 

14,725,459

 

Net assets, Class Z (units outstanding of 8,423,851 and 8,423,851, respectively)

 

 

63,518,306

 

 

 

64,024,791

 

NET ASSETS

 

$

354,255,225

 

 

$

355,273,630

 

 

See accompanying notes to the consolidated financial statements.

 

1


 

TriLinc Global Impact Fund, LLC

Consolidated Statements of Operations

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2021

 

 

2020

 

INVESTMENT INCOME

 

 

 

 

 

 

 

 

Interest income

 

$

9,150,446

 

 

$

9,956,842

 

Interest from cash

 

 

27,429

 

 

 

43,657

 

Total investment income

 

 

9,177,875

 

 

 

10,000,499

 

EXPENSES

 

 

 

 

 

 

 

 

Asset management fees

 

 

1,809,230

 

 

 

1,846,556

 

Incentive fees

 

 

781,456

 

 

 

851,111

 

Professional fees

 

 

861,955

 

 

 

1,269,819

 

General and administrative expenses

 

 

284,487

 

 

 

356,167

 

Interest expense

 

 

47,268

 

 

 

68,537

 

Board of managers fees

 

 

64,375

 

 

 

64,375

 

Total expenses

 

 

3,848,771

 

 

 

4,456,565

 

NET INVESTMENT INCOME

 

 

5,329,104

 

 

 

5,543,934

 

Net change in unrealized depreciation on investments

 

 

(975,327

)

 

 

(8,678,718

)

Foreign exchange loss

 

 

(5,700

)

 

 

(3,072

)

NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

 

$

4,348,077

 

 

$

(3,137,856

)

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME PER UNIT - BASIC AND DILUTED

 

$

0.11

 

 

$

0.12

 

EARNINGS PER UNIT - BASIC AND DILUTED

 

$

0.09

 

 

$

(0.07

)

WEIGHTED AVERAGE UNITS OUTSTANDING - BASIC AND DILUTED

 

 

47,002,965

 

 

 

46,381,431

 

See accompanying notes to the consolidated financial statements.

 

 

2


 

TriLinc Global Impact Fund, LLC

Consolidated Statements of Changes in Net Assets

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2021

 

 

2020

 

INCREASE FROM OPERATIONS

 

 

 

 

 

 

 

 

Net investment income

 

$

5,329,104

 

 

$

5,543,934

 

Foreign exchange loss

 

 

(5,700

)

 

 

(3,072

)

Net change in unrealized depreciation on investments

 

 

(975,327

)

 

 

(8,678,718

)

Net increase from operations

 

 

4,348,077

 

 

 

(3,137,856

)

DECREASE FROM DISTRIBUTIONS

 

 

 

 

 

 

 

 

Distributions to Class A unitholders

 

 

(2,739,296

)

 

 

(2,746,530

)

Distributions to Class C unitholders

 

 

(1,196,990

)

 

 

(1,208,275

)

Distributions to Class I unitholders

 

 

(1,591,386

)

 

 

(1,609,102

)

Distributions to Class W unitholders

 

 

(3,405

)

 

 

(3,376

)

Distributions to Class Y unitholders

 

 

(314,430

)

 

 

(221,712

)

Distributions to Class Z unitholders

 

 

(1,278,804

)

 

 

(1,293,013

)

Net decrease from distributions

 

 

(7,124,311

)

 

 

(7,082,008

)

INCREASE FROM CAPITAL TRANSACTIONS

 

 

 

 

 

 

 

 

Issuance of Class A units

 

 

1,053,700

 

 

 

1,085,946

 

Issuance of Class C units

 

 

526,839

 

 

 

558,440

 

Issuance of Class I units

 

 

634,678

 

 

 

666,528

 

Issuance of Class W units

 

 

 

 

 

708

 

Issuance of Class Y units

 

 

1,823,896

 

 

 

2,225,000

 

Repurchase of units

 

 

(2,205,383

)

 

 

(2,308,859

)

Offering costs

 

 

(79,901

)

 

 

 

Distribution and other fees

 

 

4,000

 

 

 

10,000

 

Net increase from capital transactions

 

 

1,757,829

 

 

 

2,237,763

 

NET CHANGE IN NET ASSETS

 

 

(1,018,405

)

 

 

(7,982,101

)

Net assets at beginning of period

 

 

355,273,630

 

 

 

369,595,560

 

Net assets at end of period

 

$

354,255,225

 

 

$

361,613,459

 

See accompanying notes to the consolidated financial statements.

 

 

3


 

TriLinc Global Impact Fund, LLC

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

 

$

4,348,077

 

 

$

(3,137,856

)

ADJUSTMENT TO RECONCILE NET CHANGE IN NET ASSETS RESULTING

   FROM OPERATIONS TO NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of investments

 

 

(18,919,036

)

 

 

(21,000,000

)

Maturity of investments

 

 

6,461,904

 

 

 

27,839,372

 

Payment-in-kind interest

 

 

(5,500,696

)

 

 

(2,032,823

)

Net change in unrealized depreciation on investments

 

 

975,327

 

 

 

8,678,718

 

Foreign exchange loss

 

 

5,700

 

 

 

3,072

 

Accretion of discounts on investments

 

 

(726,221

)

 

 

(267,201

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Decrease in interest receivable

 

 

(1,339,042

)

 

 

(3,967,697

)

Decrease in other assets

 

 

(393,354

)

 

 

(653,700

)

Increase in due to unitholders

 

 

32,437

 

 

 

34,897

 

Decrease in management and incentive fees payable

 

 

(509,314

)

 

 

(302,332

)

Increase in other payables

 

 

13,231

 

 

 

188,320

 

NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES

 

 

(15,550,987

)

 

 

5,382,770

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Net proceeds from issuance of units

 

 

1,821,625

 

 

 

2,226,672

 

Distributions paid to unitholders

 

 

(4,906,823

)

 

 

(4,772,058

)

Payments of offering costs

 

 

(79,901

)

 

 

 

Repurchase of units

 

 

(2,351,598

)

 

 

(1,360,377

)

NET CASH USED IN FINANCING ACTIVITIES

 

 

(5,516,697

)

 

 

(3,905,763

)

TOTAL (DECREASE) INCREASE IN CASH

 

 

(21,067,684

)

 

 

1,477,007

 

Cash at beginning of period

 

 

55,002,776

 

 

 

22,333,304

 

Cash at end of period

 

$

33,935,092

 

 

$

23,810,311

 

Supplemental information

 

 

 

 

 

 

 

 

Cash paid for interest during the period

 

$

48,319

 

 

$

69,290

 

Supplemental non-cash information

 

 

 

 

 

 

 

 

Issuance of units in connection with distribution reinvestment plan

 

$

2,217,488

 

 

$

2,309,949

 

Change in accrual of distribution and other fees

 

$

(4,000

)

 

$

(10,000

)

See accompanying notes to the consolidated financial statements.

 

 

 

4


 

TriLinc Global Impact Fund, LLC

Consolidated Schedule of Investments

As of March 31, 2021

(Unaudited)

 

Investment

Type /

Country

 

Portfolio Company

 

Sector

 

Description

 

Interest

 

 

Fees

(2)

 

 

Maturity

(3)

 

Principal

Amount

 

 

Participation

% (4)

 

 

Amortized

Cost

 

 

Fair Value

 

 

% of

Net

Assets

 

Senior Secured Term Loans (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brazil

 

Usivale Industria E Commercio  Ltda (12), (17), (18)

 

Agricultural Products

 

Sugar Producer

 

12.43%

 

 

 

0.0

%

 

12/15/2020

 

$

2,851,296

 

 

N/A

 

 

$

2,851,296

 

 

$

2,367,936

 

 

 

0.7

%

Chile

 

Itelecom Holding Chile SPA (5), (17)

 

Electric Services

 

LED Lighting Service Provider

 

11.00%

 

 

 

0.0

%

 

6/6/2021

 

 

1,456,162

 

 

N/A

 

 

 

1,446,830

 

 

 

1,446,830

 

 

 

0.4

%

Colombia

 

Other Investments (5)

 

Personal Credit Institutions

 

Consumer Lender

 

11.25%

 

 

 

0.0

%

 

8/1/2021

 

 

1,417,654

 

 

N/A

 

 

 

1,417,654

 

 

 

1,417,654

 

 

 

0.4

%

Ecuador

 

Other Investments

 

Corrugated and solid fiber boxes

 

Sustainable Packaging Manufacturer

 

9.16% Cash/2.20% PIK

 

 

 

0.0

%

 

6/18/2025

 

 

13,503,499

 

 

N/A

 

 

 

13,503,499

 

 

 

13,503,499

 

 

 

3.8

%

Hong Kong

 

Other Investments (22)

 

Secondary Nonferrous Metals

 

Minor Metals Resource Trader

 

12.00%

 

 

 

0.0

%

 

6/22/2021

 

 

2,500,000

 

 

N/A

 

 

 

2,500,000

 

 

 

2,500,000

 

 

 

0.7

%

Hong Kong

 

Other Investments (23)

 

Coal and Other Minerals and Ores

 

Resource Trader

 

11.50%

 

 

 

0.0

%

 

3/31/2022

 

 

18,698,119

 

 

N/A

 

 

 

18,698,119

 

 

 

18,698,119

 

 

 

5.3

%

Indonesia

 

Other Investments

 

Chocolate and Cocoa Products

 

Cocoa Processor

 

13.00%

 

 

 

0.0

%

 

3/4/2024

 

 

10,000,000

 

 

N/A

 

 

 

10,000,000

 

 

 

10,000,000

 

 

 

2.8

%

Malaysia

 

Other Investments (24)

 

Chemicals and Allied Products

 

Wholesale Distributor

 

12.00%

 

 

 

0.0

%

 

12/31/2022

 

 

15,858,045

 

 

N/A

 

 

 

15,858,045

 

 

 

15,858,045

 

 

 

4.5

%

Mexico

 

Blue Arrow Biojet Holdings, LLC (9)

 

Refuse Systems

 

Waste to Fuels Processor

 

14.50% PIK

 

 

 

0.0

%

 

7/27/2021

 

 

29,588,341

 

 

N/A

 

 

 

29,588,341

 

 

 

29,588,341

 

 

 

8.4

%

Peru

 

Kinder Investments, Ltd. (16)

 

Consumer Products

 

Diaper Manufacturer II

 

11.00%

 

 

 

0.0

%

 

12/31/2024

 

 

4,737,437

 

 

N/A

 

 

 

4,737,437

 

 

 

4,737,437

 

 

 

1.3

%

Singapore

 

Triton Metallics Pte Ltd. (17)

 

Coal and Other Minerals and Ores

 

Non-Ferrous Metal Trader

 

3.00% Cash/3.00% PIK

 

 

 

0.0

%

 

8/18/2025

 

 

18,545,256

 

 

N/A

 

 

 

18,545,256

 

 

 

16,882,110

 

 

 

4.8

%

Total Senior Secured Term Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

119,146,477

 

 

 

116,999,971

 

 

 

33.1

%

Senior Secured Term Loan Participations (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Botswana

 

Other Investments

 

Short-Term Business Credit

 

SME Financier

 

11.47%

 

 

 

0.0

%

 

8/18/2021

 

 

4,740,000

 

 

47%

 

 

 

4,740,000

 

 

 

4,740,000

 

 

 

1.3

%

Brazil

 

Other Investments (21)

 

Programming and Data Processing

 

IT Service Provider

 

10.00% Cash/3.00% PIK

 

 

 

0.0

%

 

11/23/2023

 

 

18,776,594

 

 

27%

 

 

 

18,945,974

 

 

 

18,945,974

 

 

 

5.3

%

Brazil

 

Other Investments

 

Boatbuilding and Repairing

 

Ship Maintenance & Repair Service Provider

 

8.00% Cash/8.00% PIK

 

 

 

0.0

%

 

12/7/2023

 

 

6,119,529

 

 

42%

 

 

 

6,070,640

 

 

 

6,070,640

 

 

 

1.7

%

Cabo Verde

 

TRG Cape Verde Holdings Ltd (6), (17)

 

Hotels and Motels

 

Hospitality Service Provider

 

10.00% Cash/4.75% PIK

 

 

 

0.0

%

 

8/21/2021

 

 

13,641,904

 

 

88%

 

 

 

13,641,904

 

 

 

11,331,704

 

 

 

3.2

%

Colombia

 

Other Investments

 

Personal Credit Institutions

 

Consumer Lender

 

11.90%

 

 

 

0.0

%

 

9/1/2025

 

 

5,069,682

 

 

30%

 

 

 

5,069,682

 

 

 

5,069,682

 

 

 

1.4

%

Croatia

 

Other Investments (8), (20)

 

Department Stores

 

Mall Operator

 

8.50% Cash/4.50% PIK

 

 

 

0.0

%

 

1/23/2022

 

 

9,605,039

 

 

5%

 

 

 

9,605,039

 

 

 

9,605,039

 

 

 

2.7

%

Ghana

 

Other Investments (6)

 

Petroleum and Petroleum Products

 

Tank Farm Operator

 

12.00%

 

 

 

0.0

%

 

2/10/2023

 

 

12,551,220

 

 

76%

 

 

 

12,551,220

 

 

 

12,551,220

 

 

 

3.5

%

Jersey

 

Africell Holding Limited (10)

 

Telephone Communications

 

Mobile Network Operator

 

10.06%

 

 

 

3.0

%

 

3/28/2023

 

 

1,417,700

 

 

16%

 

 

 

1,189,700

 

 

 

1,189,700

 

 

 

0.3

%

Kenya

 

Other Investments

 

Freight Transportation Arrangement

 

Freight and Cargo Transporter

 

7.74% Cash/4.00% PIK

 

 

 

0.0

%

 

3/31/2023

 

 

14,175,263

 

 

42%

 

 

 

14,175,263

 

 

 

14,175,263

 

 

 

4.0

%

Namibia

 

Trustco Group Holdings Ltd. (14), (17)

 

Land Subdividers and Developers

 

Property Developer

 

8.50% Cash/4.00% PIK

 

 

 

0.0

%

 

8/15/2021

 

 

17,708,880

 

 

100%

 

 

 

17,695,487

 

 

 

15,099,527

 

 

 

4.3

%

Netherlands

 

Other Investments (9)

 

Motor Vehicle Parts and Accessories

 

Wheel Manufacturer

 

14.23%

 

 

 

0.0

%

 

8/20/2021

 

 

8,275,000

 

 

44%

 

 

 

9,521,444

 

 

 

9,521,444

 

 

 

2.7

%

Nigeria

 

Helios Maritime I (15), (17)

 

Water Transportation

 

Marine Logistics Provider

 

10.62%

 

 

 

0.8

%

 

9/16/2020

 

 

16,019,419

 

 

100%

 

 

 

16,019,419

 

 

 

12,929,666

 

 

 

3.6

%

Romania

 

Other Investments (8)

 

Food Products

 

Bread Manufacturer

 

8.00% Cash/5.00% PIK

 

 

 

2.5

%

 

7/18/2021

 

 

1,853,390

 

 

25%

 

 

 

1,848,001

 

 

 

1,848,001

 

 

 

0.5

%

Uganda

 

Other Investments

 

Farm Products

 

Grain Processor C

 

14.50%

 

 

 

0.0

%

 

4/30/2024

 

 

9,028,989

 

 

100%

 

 

 

9,087,477

 

 

 

9,087,477

 

 

 

2.6

%

Total Senior Secured Term Loan Participations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

140,161,250

 

 

 

132,165,337

 

 

 

37.1

%

Senior Secured Trade Finance Participations (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Argentina

 

Compania Argentina de Granos S.A. (17), (18)

 

Agricultural Products

 

Agriculture Distributor

 

10.45%

 

 

 

0.0

%

 

6/30/2018

 

 

12,500,000

 

 

83%

 

 

 

12,500,000

 

 

 

9,679,638

 

 

 

2.7

%

Argentina

 

Sancor Cooperativas Unidas Ltda (17)

 

Consumer Products

 

Dairy Co-Operative

 

10.67%

 

 

 

0.0

%

 

7/29/2019

 

 

6,000,000

 

 

22%

 

 

 

6,000,000

 

 

 

4,719,383

 

 

 

1.3

%

Argentina

 

Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay (17), (18)

 

Meat, Poultry & Fish

 

Beef Exporter

 

11.50%

 

 

 

0.0

%

 

8/31/2017

 

 

9,000,000

 

 

28%

 

 

 

9,000,000

 

 

 

6,361,679

 

 

 

1.8

%

Argentina

 

Algodonera Avellaneda S.A. (17), (18)

 

Fats and Oils

 

Oilseed Distributor

 

9.00%

 

 

 

0.0

%

 

8/31/2017

 

 

6,000,000

 

 

27%

 

 

 

6,000,000

 

 

 

3,398,558

 

 

 

1.0

%

Cameroon

 

Producam SA (17)

 

Chocolate and Cocoa Products

 

Cocoa & Coffee Exporter

 

9.5%, 6%

 

 

 

0.0

%

 

8/31/2019

 

 

14,022,395

 

 

72%

 

 

 

14,022,395

 

 

 

13,618,566

 

 

 

3.8

%

Chile

 

Functional Products Trading S.A. (17), (18)

 

Farm Products

 

Chia Seed Exporter

 

10.90%

 

 

 

0.0

%

 

3/4/2018

 

 

1,326,687

 

 

100%

 

 

 

1,326,687

 

 

 

1,375,794

 

 

 

0.4

%

5


Investment

Type /

Country

 

Portfolio Company

 

Sector

 

Description

 

Interest

 

 

Fees

(2)

 

 

Maturity

(3)

 

Principal

Amount

 

 

Participation

% (4)

 

 

Amortized

Cost

 

 

Fair Value

 

 

% of

Net

Assets

 

Ecuador

 

Other Investments (25), (17)

 

Commercial Fishing

 

Fish Processor & Exporter

 

9.00%

 

 

 

0.0

%

 

6/19/2019

 

 

35,838

 

 

3%

 

 

 

35,838

 

 

 

35,838

 

 

 

0.0

%

Guatemala

 

Procesos Fabriles S.A. (17), (18)

 

Farm Products

 

Sesame Seed Exporter

 

12.00%

 

 

 

0.0

%

 

3/31/2016

 

 

881,800

 

 

24%

 

 

 

881,800

 

 

 

10,504

 

 

 

0.0

%

Hong Kong

 

Conplex International Ltd. (17), (18)

 

Telephone and Telegraph Apparatus

 

Mobile Phone Distributor

 

12.00%

 

 

 

0.0

%

 

5/31/2020

 

 

9,500,000

 

 

26%

 

 

 

9,500,000

 

 

 

3,366,355

 

 

 

1.0

%

Indonesia

 

Other Investments

 

Chocolate and Cocoa Products

 

Cocoa Processor

 

11.00%

 

 

 

0.0

%

 

5/26/2021

 

 

5,000,000

 

 

33%

 

 

 

5,000,000

 

 

 

5,000,000

 

 

 

1.4

%

Mauritius

 

Other Investments

 

Groceries and Related Products

 

Vanilla Exporter

 

10.61%

 

 

 

0.0

%

 

8/31/2021

 

 

304,739

 

 

2%

 

 

 

304,739

 

 

 

304,739

 

 

 

0.1

%

Morocco

 

Mac Z Group SARL (17)

 

Secondary Nonferrous Metals

 

Scrap Metal Recycler

 

11.00%

 

 

 

0.0

%

 

7/31/2018

 

 

1,433,058

 

 

73%

 

 

 

1,433,058

 

 

 

628,862

 

 

 

0.2

%

Nigeria

 

Other Investments (9), (26)

 

Farm Products

 

Cocoa Trader III

 

8.50%

 

 

 

0.0

%

 

4/15/2021

 

 

675,256

 

 

25%

 

 

 

675,256

 

 

 

675,256

 

 

 

0.2

%

Nigeria

 

Other Investments (9), (26)

 

Farm Products

 

Cocoa Trader II

 

8.50%

 

 

 

0.0

%

 

4/15/2021

 

 

838,967

 

 

14%

 

 

 

838,967

 

 

 

838,967

 

 

 

0.2

%

South Africa

 

Applewood Trading 199 Pty, Ltd.(17), (18)

 

Food Products

 

Fruit & Nut Distributor

 

17.50%

 

 

 

0.0

%

 

5/22/2015

 

 

785,806

 

 

19%

 

 

 

785,806

 

 

 

497,462

 

 

 

0.1

%

United Arab Emirates

 

Global Pharma Intelligence Sarl (17), (18)

 

Drugs, Proprietaries, and Sundries

 

Pharmaceuticals Distributor

 

14.60%

 

 

 

0.0

%

 

6/30/2018

 

 

648,430

 

 

60%

 

 

 

648,430

 

 

 

648,430

 

 

 

0.2

%

Total Senior Secured Trade Finance Participations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68,952,976

 

 

 

51,160,031

 

 

 

14.4

%

Short Term Investments (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N/A

 

IIG TOF B.V. (17), (18), (19)

 

Financial services

 

Receivable from IIG TOF B.V.

 

8.75%

 

 

 

0.0

%

 

N/A

 

 

6,000,000

 

 

N/A

 

 

 

6,000,000

 

 

 

3,758,063

 

 

 

1.1

%

Equity Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

Blue Arrow Biojet Holdings, LLC

 

Refuse Systems

 

Waste to Fuels Processor

 

N/A

 

 

N/A

 

 

N/A

 

N/A

 

 

N/A

 

 

 

-

 

 

 

1,199,618

 

 

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

334,260,703

 

 

$

305,283,020

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

1 

Refer to Notes 2, 3 and 4 of the consolidated financial statements for additional information on the Company’s investments.

2 

Fees may include upfront, origination, commitment, facility and/or other fees that the borrower must contractually pay to the Company. Fees, if any, are typically received in connection with term loan transactions and are rarely applicable to trade finance transactions.

3 

Trade finance borrowers may be granted flexibility with respect to repayment relative to the stated maturity date to accommodate specific contracts and/or business cycle characteristics. This flexibility in each case is agreed upon between the Company and the sub-advisor and between the sub-advisor and the borrower.

4 

Percentage of the Company’s participation in total borrowings outstanding under sub-advisor provided financing facility.

5 

Principal and interest paid monthly.

6 

Principal and interest paid quarterly.

7 

Monthly interest only payment. Principal due at maturity.

8 

Quarterly interest only payment. Principal due at maturity.

9 

Principal and interest to be paid at maturity.  

10

Quarterly interest payments. Principal to start amortizing 15 months from 03/26/18, the initial utilization date (IUD) as follows: 4.5% of loan balance quarterly until IUD + 27 months, then 6.5% of loan balance quarterly until IUD + 48 months, thereafter 7.5% of loan balance quarterly until maturity.   

11

Cash interest paid monthly. Principal, including PIK interest, to be repaid in equal monthly installments starting in October 2020.

12

Principal and interest paid annually. The maturity date is expected to be extended in connection with a restructure of the loan.  

13

In October 2017, this investment was refinanced from a trade finance participation to a term loan participation and the maturity dates were extended to 8/31/2022.  

14

Quarterly interest payments. Refer to Note 3 for additional information.

15

Interest accrues at a variable rate of one-month London Interbank Offered Rate (“LIBOR”) + 10.5%, which is paid currently, and also includes 4.68% of deferred interest due at maturity.

16

In connection with a restructure of the underlying facilities, all maturity dates were extended to 12/31/2024.

17

Watch List investment. Refer to Note 3 for additional information.  

18

Investment on non-accrual status.

19

This investment was originally classified as an investment in a credit facility originated by IIG Trade Opportunities Fund B.V. (“IIG TOF B.V.”), a fund advised by The International Investment Group L.L.C. (“IIG”). During the third quarter of 2018, as part of its quarterly verification process, the Company learned new information concerning this investment, which resulted in the Company reclassifying it from senior secured trade finance participations to short term investments. Please see Note 3 for additional information.

20

Loan is denominated in euro currency with a principal amount of 6,200,000 euro; however, the Company’s participation is denominated in US dollars.  The quarterly interest payments are paid at the current exchange rate and subject to foreign currency fluctuations. The fair value includes an investment premium of $91,200.

21

Interest includes a stated coupon rate plus additional contingent interest payments based on a percentage of EBITDA after a minimum threshold has been achieved by the borrower.

22

Interest paid quarterly. Principal to be repaid in four equal quarterly installments starting in September 2020. 

23

Interest paid quarterly. Principal to be repaid in  full in March 2022.

24

Interest paid quarterly. Principal to be repaid in quarterly installments starting in September 2020.

25

IIG was the sub-advisor for this investment. See Note 3 for additional information about IIG.

26

The Company extended the maturity dates of these investments to 05/15/21. These extensions were finalized during the second quarter of 2021.

 

6


 

TriLinc Global Impact Fund, LLC

Consolidated Schedule of Investments

December 31, 2020

 

Investment

Type /

Country

 

Portfolio

Company

 

Sector

 

Description

 

Interest

 

 

Fees

(2)

 

 

Maturity

(3)

 

Principal

Amount

 

 

Participation

% (4)

 

 

Amortized

Cost

 

 

Fair

Value

 

 

% of

Net

Assets

 

Senior Secured Term Loans (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brazil

 

Usivale Industria E Commercio  Ltda (12), (17), (18)

 

Agricultural Products

 

Sugar Producer

 

12.43%

 

 

 

0.0

%

 

12/15/2020

 

$

2,851,296

 

 

N/A

 

 

$

2,851,296

 

 

$

2,367,936

 

 

 

0.7

%

Chile

 

Itelecom Holding Chile SPA (17)

 

Electric Services

 

LED Lighting Service Provider

 

11.00%

 

 

 

0.0

%

 

6/6/2021

 

 

1,456,162

 

 

N/A

 

 

 

1,434,285

 

 

 

1,434,285

 

 

 

0.4

%

Colombia

 

Other Investments (5)

 

Personal Credit Institutions

 

Consumer Lender

 

11.25%

 

 

 

0.0

%

 

8/1/2021

 

 

1,816,934

 

 

N/A

 

 

 

1,816,934

 

 

 

1,816,934

 

 

 

0.5

%

Ecuador

 

Other Investments

 

Corrugated and solid fiber boxes

 

Sustainable Packaging Manufacturer

 

9.16% Cash/2.20% PIK

 

 

 

0.0

%

 

6/18/2025

 

 

13,503,499

 

 

N/A

 

 

 

13,503,499

 

 

 

13,503,499

 

 

 

3.8

%

Hong Kong

 

Other Investments (22)

 

Secondary Nonferrous Metals

 

Minor Metals Resource Trader

 

12.00%

 

 

 

0.0

%

 

6/22/2021

 

 

5,000,000

 

 

N/A

 

 

 

5,000,000

 

 

 

5,000,000

 

 

 

1.4

%

Hong Kong

 

Other Investments (23), (26)

 

Coal and Other Minerals and Ores

 

Resource Trader

 

11.50%

 

 

 

0.0

%

 

12/31/2020

 

 

17,166,559

 

 

N/A

 

 

 

17,166,559

 

 

 

17,166,559

 

 

 

4.8

%

Singapore

 

Triton Metallics Pte Ltd. (17)

 

Coal and Other Minerals and Ores

 

Non-Ferrous Metal Trader

 

3.00% Cash/3.00% PIK

 

 

 

0.0

%

 

8/18/2025

 

 

18,146,500

 

 

N/A

 

 

 

18,146,500

 

 

 

16,483,354

 

 

 

4.6

%

Malaysia

 

Other Investments (24)

 

Chemicals and Allied Products

 

Wholesale Distributor

 

12.00%

 

 

 

0.0

%

 

12/31/2022

 

 

15,858,045

 

 

N/A

 

 

 

15,858,045

 

 

 

15,858,045

 

 

 

4.5

%

Mexico

 

Blue Arrow Biojet Holdings, LLC (9)

 

Refuse Systems

 

Waste to Fuels Processor

 

14.50% PIK

 

 

 

0.0

%

 

7/27/2021

 

 

28,531,105

 

 

N/A

 

 

 

28,531,105

 

 

 

28,531,105

 

 

 

8.0

%

Peru

 

Kinder Investments, Ltd. (16)

 

Consumer Products

 

Diaper Manufacturer II

 

11.00%

 

 

 

0.0

%

 

12/31/2024

 

 

4,737,437

 

 

N/A

 

 

 

4,737,437

 

 

 

4,737,437

 

 

 

1.3

%

Total Senior Secured Term Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

109,045,660

 

 

 

106,899,154

 

 

 

30.0

%

Senior Secured Term Loan Participations (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Botswana

 

Other Investments

 

Short-Term Business Credit

 

SME Financier

 

11.47%

 

 

 

0.0

%

 

8/18/2021

 

 

4,740,000

 

 

47%

 

 

 

4,740,000

 

 

 

4,740,000

 

 

 

1.3

%

Brazil

 

Other Investments (21)

 

Programming and Data Processing

 

IT Service Provider

 

10.00% Cash/1.50% PIK

 

 

 

0.0

%

 

11/23/2023

 

 

18,362,141

 

 

27%

 

 

 

18,502,811

 

 

 

18,502,811

 

 

 

5.2

%

Brazil

 

Other Investments

 

Boatbuilding and Repairing

 

Ship Maintenance & Repair Service Provider

 

8.00% Cash/6.00% PIK

 

 

 

0.0

%

 

12/7/2023

 

 

5,999,538

 

 

42%

 

 

 

5,946,066

 

 

 

5,946,066

 

 

 

1.7

%

Cabo Verde

 

TRG Cape Verde Holdings Ltd (6), (17)

 

Hotels and Motels

 

Hospitality Service Provider

 

10.00% Cash/4.75% PIK

 

 

 

0.0

%

 

8/21/2021

 

 

13,478,292

 

 

88%

 

 

 

13,478,292

 

 

 

11,337,937

 

 

 

3.2

%

Colombia

 

Other Investments

 

Personal Credit Institutions

 

Consumer Lender

 

11.90%

 

 

 

0.0

%

 

9/1/2025

 

 

1,245,664

 

 

7%

 

 

 

1,245,664

 

 

 

1,245,664

 

 

 

0.4

%

Croatia

 

Other Investments (8), (20), (26)

 

Department Stores

 

Mall Operator

 

8.50% Cash/4.50% PIK

 

 

 

0.0

%

 

1/23/2021

 

 

9,360,235

 

 

5%

 

 

 

9,360,235

 

 

 

9,360,235

 

 

 

2.6

%

Ghana

 

Other Investments (6)

 

Petroleum and Petroleum Products

 

Tank Farm Operator

 

12.00%

 

 

 

0.0

%

 

2/10/2023

 

 

13,685,366

 

 

76%

 

 

 

13,685,366

 

 

 

13,685,366

 

 

 

3.9

%

Jersey

 

Africell Holding Limited (10)

 

Telephone Communications

 

Mobile Network Operator

 

10.06%

 

 

 

3.0

%

 

3/28/2023

 

 

1,417,700

 

 

16%

 

 

 

1,161,200

 

 

 

1,161,200

 

 

 

0.3

%

Kenya

 

Other Investments

 

Freight Transportation Arrangement

 

Freight and Cargo Transporter

 

7.77% Cash/4.00% PIK

 

 

 

0.0

%

 

3/31/2023

 

 

14,034,913

 

 

42%

 

 

 

14,034,913

 

 

 

14,034,913

 

 

 

4.0

%

Namibia

 

Trustco Group Holdings Ltd. (14), (17)

 

Land Subdividers and Developers

 

Property Developer

 

8.50% Cash/4.00% PIK

 

 

 

0.0

%

 

8/15/2021

 

 

17,529,688

 

 

100%

 

 

 

17,508,259

 

 

 

15,242,460

 

 

 

4.3

%

Netherlands

 

Other Investments (9)

 

Motor Vehicle Parts and Accessories

 

Wheel Manufacturer

 

14.23%

 

 

 

0.0

%

 

8/20/2021

 

 

8,275,000

 

 

44%

 

 

 

8,893,693

 

 

 

8,893,693

 

 

 

2.5

%

Nigeria

 

Helios Maritime I (15), (17)

 

Water Transportation

 

Marine Logistics Provider

 

10.65%

 

 

 

0.8

%

 

9/16/2020

 

 

15,600,710

 

 

100%

 

 

 

15,600,710

 

 

 

12,986,279

 

 

 

3.7

%

Romania

 

Other Investments (8)

 

Food Products

 

Bread Manufacturer

 

8.00% Cash/5.00% PIK

 

 

 

2.5

%

 

7/18/2021

 

 

1,830,509

 

 

27%

 

 

 

1,821,078

 

 

 

1,821,078

 

 

 

0.5

%

Uganda

 

Other Investments

 

Farm Products

 

Grain Processor C

 

14.50%

 

 

 

0.0

%

 

4/30/2024

 

 

8,709,445

 

 

100%

 

 

 

8,755,878

 

 

 

8,755,878

 

 

 

2.5

%

Zambia

 

Other Investments (5)

 

Soap, Detergents, and Cleaning

 

FMCG Manufacturer

 

10.38%

 

 

 

0.0

%

 

8/27/2023

 

 

2,203,673

 

 

25%

 

 

 

2,203,673

 

 

 

2,203,673

 

 

 

0.6

%

Total Senior Secured Term Loan Participations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

136,937,838

 

 

 

129,917,253

 

 

 

36.7

%

Senior Secured Trade Finance Participations (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Argentina

 

Compania Argentina de Granos S.A. (17), (18)

 

Agricultural Products

 

Agriculture Distributor

 

10.45%

 

 

 

0.0

%

 

6/30/2018

 

 

12,500,000

 

 

83%

 

 

 

12,500,000

 

 

 

9,679,636

 

 

 

2.7

%

Argentina

 

Sancor Cooperativas Unidas Ltda (17)

 

Consumer Products

 

Dairy Co-Operative

 

10.67%

 

 

 

0.0

%

 

7/29/2019

 

 

6,000,000

 

 

22%

 

 

 

6,000,000

 

 

 

4,719,383

 

 

 

1.3

%

Argentina

 

Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay (17), (18)

 

Meat, Poultry & Fish

 

Beef Exporter

 

11.50%

 

 

 

0.0

%

 

8/31/2017

 

 

9,000,000

 

 

28%

 

 

 

9,000,000

 

 

 

6,361,679

 

 

 

1.8

%

Argentina

 

Algodonera Avellaneda S.A. (17), (18)

 

Fats and Oils

 

Oilseed Distributor

 

9.00%

 

 

 

0.0

%

 

8/31/2017

 

 

6,000,000

 

 

27%

 

 

 

6,000,000

 

 

 

3,398,558

 

 

 

1.0

%

Cameroon

 

Producam SA (17)

 

Chocolate and Cocoa Products

 

Cocoa & Coffee Exporter

 

9%, 5.5%

 

 

 

0.0

%

 

8/31/2019

 

 

13,532,693

 

 

72%

 

 

 

13,532,695

 

 

 

13,128,867

 

 

 

3.7

%

Chile

 

Functional Products Trading S.A. (17), (18)

 

Farm Products

 

Chia Seed Exporter

 

10.90%

 

 

 

0.0

%

 

3/4/2018

 

 

1,326,687

 

 

100%

 

 

 

1,326,687

 

 

 

1,375,794

 

 

 

0.4

%

Ecuador

 

Other Investments (25), (17)

 

Commercial Fishing

 

Fish Processor & Exporter

 

9.00%

 

 

 

0.0

%

 

6/19/2019

 

 

35,838

 

 

3%

 

 

 

35,838

 

 

 

35,838

 

 

 

0.0

%

7


Investment

Type /

Country

 

Portfolio

Company

 

Sector

 

Description

 

Interest

 

 

Fees

(2)

 

 

Maturity

(3)

 

Principal

Amount

 

 

Participation

% (4)

 

 

Amortized

Cost

 

 

Fair

Value

 

 

% of

Net

Assets

 

Guatemala

 

Procesos Fabriles S.A. (17), (18)

 

Farm Products

 

Sesame Seed Exporter

 

12.00%

 

 

 

0.0

%

 

3/31/2016

 

 

881,800

 

 

24%

 

 

 

881,800

 

 

 

10,504

 

 

 

0.0

%

Hong Kong

 

Conplex International Ltd. (17), (18)

 

Telephone and Telegraph Apparatus

 

Mobile Phone Distributor

 

12.00%

 

 

 

0.0

%

 

5/31/2020

 

 

9,500,000

 

 

26%

 

 

 

9,500,000

 

 

 

3,366,356

 

 

 

0.9

%

Mauritius

 

Other Investments (26)

 

Groceries and Related Products

 

Vanilla Exporter

 

10.65%

 

 

 

0.0

%

 

10/20/2020

 

 

434,619

 

 

2%

 

 

 

434,619

 

 

 

434,619

 

 

 

0.1

%

Morocco

 

Mac Z Group SARL (17)

 

Secondary Nonferrous Metals

 

Scrap Metal Recycler

 

11.00%

 

 

 

0.0

%

 

7/31/2018

 

 

1,433,058

 

 

73%

 

 

 

1,433,058

 

 

 

628,861

 

 

 

0.2

%

Nigeria

 

Other Investments (9), (26)

 

Farm Products

 

Cocoa Trader III

 

8.50%

 

 

 

0.0

%

 

11/30/2020

 

 

675,256

 

 

25%

 

 

 

675,256

 

 

 

675,256

 

 

 

0.2

%

Nigeria

 

Other Investments (9), (26)

 

Farm Products

 

Cocoa Trader II

 

8.50%

 

 

 

0.0

%

 

11/30/2020

 

 

838,967

 

 

14%

 

 

 

838,967

 

 

 

838,967

 

 

 

0.2

%

South Africa

 

Applewood Trading 199 Pty, Ltd.(17), (18)

 

Food Products

 

Fruit & Nut Distributor

 

17.50%

 

 

 

0.0

%

 

5/22/2015

 

 

785,806

 

 

19%

 

 

 

785,806

 

 

 

497,462

 

 

 

0.1

%

United Arab Emirates

 

Global Pharma Intelligence Sarl (17), (18)

 

Drugs, Proprietaries, and Sundries

 

Pharmaceuticals Distributor

 

14.60%

 

 

 

0.0

%

 

6/30/2018

 

 

648,430

 

 

60%

 

 

 

648,430

 

 

 

648,430

 

 

 

0.2

%

Total Senior Secured Trade Finance Participations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63,593,156

 

 

 

45,800,210

 

 

 

12.8

%

Short Term Investments (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N/A

 

IIG TOF B.V. (17), (18), (19)

 

Financial services

 

Receivable from IIG TOF B.V.

 

8.75%

 

 

 

0.0

%

 

N/A

 

 

6,000,000

 

 

N/A

 

 

 

6,000,000

 

 

 

3,758,063

 

 

 

1.1

%

Equity Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

Blue Arrow Biojet Holdings, LLC

 

Refuse Systems

 

Waste to Fuels Processor

 

N/A

 

 

N/A

 

 

N/A

 

N/A

 

 

N/A

 

 

 

-

 

 

 

1,199,618

 

 

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

315,576,654

 

 

$

287,574,298

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

1 

Refer to Notes 2, 3 and 4 of the consolidated financial statements for additional information on the Company’s investments.

2 

Fees may include upfront, origination, commitment, facility and/or other fees that the borrower must contractually pay to the Company. Fees, if any, are typically received in connection with term loan transactions and are rarely applicable to trade finance transactions.

3 

Trade finance borrowers may be granted flexibility with respect to repayment relative to the stated maturity date to accommodate specific contracts and/or business cycle characteristics. This flexibility in each case is agreed upon between the Company and the sub-advisor and between the sub-advisor and the borrower.

4 

Percentage of the Company’s participation in total borrowings outstanding under sub-advisor provided financing facility.

5 

Principal and interest paid monthly.

6 

Principal and interest paid quarterly.

7 

Monthly interest only payment. Principal due at maturity.

8 

Quarterly interest only payment. Principal due at maturity.

9 

Principal and interest paid at maturity.  

10

Quarterly interest payments. Principal to start amortizing 15 months from initial utilization date (IUD) as follows: 4.5% of loan balance quarterly until IUD + 27 months, then 6.5% of loan balance quarterly until IUD + 48 months, thereafter 7.5% of loan balance quarterly until maturity. 

11

Cash interest paid monthly. Principal, including PIK interest, to be repaid in equal monthly installments starting in October 2020.  

12

Principal and interest paid annually. The maturity date is expected to be extended in connection with a restructure of the loan.  

13

 In October 2017, this investment was refinanced from a trade finance participation to a term loan participation and the maturity dates were extended to 8/31/2022.  

14

Quarterly interest payments. Refer to Note 3 for additional information.

15

Interest accrues at a variable rate of one-month London Interbank Offered Rate (“Libor”) + 10.5%, which is paid currently, and also includes 4.68% of deferred interest due at maturity.

16

In connection with a restructure of the underlying facilities, all maturity dates were extended to 12/31/24. This investment was removed from] the Watch List on April 1, 2019.

17

Watch List investment. Refer to Note 3 for additional information.  

18

Investment on non-accrual status.

19

This investment was originally classified as an investment in a credit facility originated by IIG Trade Opportunities Fund B.V. (‘IIG TOF B.V.’), a fund advised by The International Investment Group L.L.C. (‘IIG’). During the third quarter of 2018, as part of its quarterly verification process, the Company learned new information concerning this investment, which resulted in the Company reclassifying it from senior secured trade finance participations to short term investments. Please see Note 3 for additional information.

20

Loan is denominated in euro currency with a principal amount of 6,200,000 euro, however the Company’s participation is denominated in US dollars.  The quarterly interest payments are paid at the current exchange rate and subject to foreign currency fluctuations. The fair value includes an investment premium of $91,200.

21

Interest includes a stated coupon rate plus additional contingent interest payments based on a percentage of EBITDA after a minimum threshold has been achieved by the borrower.   

22

Interest paid quarterly. Principal to be repaid in four equal quarterly installments starting in September 2020.

23

Interest paid quarterly. Principal to be repaid in two equal quarterly installments starting in September 2020.

24

Interest paid quarterly. Principal to be repaid in quarterly installments starting in September 2020.

25

IIG was the sub-advisor for this investment. See Note 3 for additional information about IIG.

26

The Company extended the maturity dates of these investments. These extensions were finalized during the first quarter of 2021.

 

 

 

8


 

TRILINC GLOBAL IMPACT FUND, LLC

Notes to Consolidated Financial Statements

March 31, 2021

(Unaudited)

Note 1. Organization and Operations of the Company

TriLinc Global Impact Fund, LLC (the “Company”) was organized as a Delaware limited liability company on April 30, 2012 and formally commenced operations on June 11, 2013. The Company makes impact investments in Small and Medium Enterprises, known as SMEs, which the Company defines as those businesses having less than 500 employees, primarily in developing economies that provide the opportunity to achieve both competitive financial returns and positive measurable impact. The Company uses the proceeds raised from the issuance of units to invest in SMEs through local market sub-advisors in a diversified portfolio of financial assets, including direct loans, convertible debt instruments, trade finance, structured credit and preferred and common equity investments. To a lesser extent, the Company may also make impact investments in companies that may not meet our technical definition of SMEs due to a larger number of employees but that also provide the opportunity to achieve both competitive financial returns and positive measurable impact. In addition, the Company may also make investments in developed economies, including the United States. The Company generally expects that such investments will have similar investment characteristics as SMEs as defined by the Company. The Company’s investment objectives are to generate current income, capital preservation and modest capital appreciation primarily through investments in SMEs. The Company is externally managed by TriLinc Advisors, LLC (the “Advisor”). The Advisor is an investment advisor registered with the Securities and Exchange Commission (“SEC”).

TriLinc Global, LLC (the “Sponsor”) is the sponsor of the Company and employs staff who operate both the Advisor and the Company. Until July 2019, the Sponsor owned 85% of the units of the Advisor and Strategic Capital Advisory Services, LLC (“SCAS”) owned 15% of the Advisor, and was considered an affiliate of the Company. The Sponsor, the Advisor and SCAS are Delaware limited liability companies. In July 2019, the Sponsor acquired SCAS’ 15% ownership interest in the Advisor. As a result, the Sponsor now owns 100% of the Advisor and SCAS is no longer considered to be an affiliate of the Company.

In May 2012, the Advisor purchased 22,161 Class A units for aggregate gross proceeds of $200,000. The Company commenced its initial public offering of up to $1,500,000,000 in units of limited liability company interest (the “Offering”) on February 25, 2013. On June 11, 2013, the Company satisfied its minimum offering requirement of $2,000,000 when the Sponsor purchased 321,330 Class A units for aggregate gross proceeds of $2,900,000 and the Company commenced operations. The primary offering terminated on March 31, 2017. The Company continues to offer and sell units pursuant to its Distribution Reinvestment Plan (“DRP”). Through the termination of the primary offering, the Company raised approximately $361,776,000 in gross proceeds, including approximately $13,338,000 raised through the DRP. For the period from April 1, 2017 to March 31, 2021, the Company raised an additional $95,508,000 pursuant to a private placement and $39,788,000 pursuant to the DRP for total gross proceeds of $497,072,000 as of March 31, 2021.

Although the Company was organized and intends to conduct its business in a manner so that it is not required to register as an investment company under the Investment Company Act of 1940, as amended, the consolidated financial statements are prepared using the specialized accounting principles of the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies. Overall, the Company’s management believes the use of investment company accounting makes the Company’s financial statements more useful to investors and other financial statement users since it allows a more appropriate basis of comparison to other entities with similar objectives.

To assist the Company in achieving its investment objective, the Company makes investments via wholly owned subsidiaries (each a “Subsidiary” and collectively, the “Subsidiaries”), all of which are Cayman Islands exempted companies.  The Subsidiaries own all of the Company’s investments. As of March 31, 2021, the Company’s subsidiaries are as follows:

 

TriLinc Global Impact Fund – Asia, Ltd.

 

TriLinc Global Impact Fund – Latin America, Ltd.

 

TriLinc Global Impact Fund – Trade Finance, Ltd.

 

TriLinc Global Impact Fund – African Trade Finance, Ltd.

 

TriLinc Global Impact Fund – Africa, Ltd.

 

TriLinc Global Impact Fund – Latin America II, Ltd.

 

TriLinc Global Impact Fund – African Trade Finance II, Ltd.

 

TriLinc Global Impact Fund – Latin America III, Ltd.

 

TriLinc Global Impact Fund – Asia II, Ltd.

 

TriLinc Global Impact Fund – Asia III, Ltd.

 

TriLinc Global Impact Fund – Asia IV, Ltd.

 

TriLinc Global Impact Fund – African Trade Finance III, Ltd.

 

TriLinc Global Impact Fund – Europe, Ltd.

 

TriLinc Global Impact Fund – Cayman, Ltd.

9


 

Through March 31, 2021, the Company has made, through its Subsidiaries, loans in a number of countries located in South America, Asia, Africa, and Europe.

COVID-19

There is an ongoing COVID-19 pandemic (more commonly referred to as the Coronavirus), which continues to adversely impact many industries and businesses directly or indirectly. Adverse impacts include disrupted global travel and supply chains, which adversely impact global commercial activity.  Many businesses across the globe have seen a downturn in production and productivity due to the suspension of business and temporary closure of offices and factories that was prevalent during most of 2020 in an attempt to curb the spread of the Coronavirus. Any of these adverse developments could have a material adverse effect on our business, financial condition and results of operations. In addition, if COVID-19 further adversely impacts the Company’s borrowers’ businesses, financial condition and results of operations, it may result in their inability to make required payments in the near term which could impact the fair value of the Company’s investments. Although multiple vaccines have been approved for use in certain countries and the vaccination rates in the United States and certain other parts of the world have been encouraging, there is still uncertainty as to when a sufficient portion of the population will be vaccinated such that restrictions and safety protocols can be fully relaxed. For the three months ended March 31, 2021, the Company’s cash flows and operations were not materially impacted by COVID-19; however, during the year ended December 31, 2020, the Company made material adjustments to the fair value of certain of its investments due to the impact of COVID-19. These adjustments, which amounted to $6,417,933 in the aggregate during the year ended December 31, 2020, were made with respect to 21.8% of the Company’s investments (calculated based on the aggregate fair value of the Company’s total investments as of March 31, 2021).

Although the Coronavirus has created material uncertainty and economic disruption, due to the rapidly evolving nature of the situation, we cannot predict the ultimate impact it will have on us. The Company is managing the situation through active engagement with its borrowers and is analyzing the potential effects COVID-19 may have on the portfolio or any potential capital deployments. Additionally, our Advisor has implemented its business continuity plan and additional procedures designed to protect against the introduction of the coronavirus to the workforce, including permitting and encouraging employees to work remotely, temporarily ceasing travel and significantly enhanced office sterilization procedures to minimize the probability of contagion.

While many of the Company’s borrowers' businesses have experienced some disruption related to COVID-19, degrees of effect have varied to-date.  As indicated under "-Watch List Investments" below, the borrowers with respect to three of the six investments added to the Watch List for the year ended December 31, 2020 have not made required payments in part due to adverse impacts they have experienced related to the COVID-19 pandemic. Where appropriate, the Company and/or the Company’s sub-advisors are working with borrowers to restructure facilities and may restructure additional facilities to provide relief needed by certain borrowers, without necessarily providing concessions that are out of market. In the case of one investment, where efforts to reach an appropriate risk-adjusted restructuring have been unsuccessful, the Company sub-advisor issued a notice of default and acceleration notice, including the initiation of legal proceedings to recover amounts due, which remain ongoing. Due to the disruptions associated with COVID-19, the Company can provide no assurances that it will be able to continue to collect interest and principal payments at levels comparable to those prior to the pandemic. Further, the Company can provide no assurances that it will be able to recover all past due amounts from delinquent borrowers. The economic uncertainty and disruption caused by the pandemic is expected to be prolonged and the Company may see further defaults and additional investments may be added to the Watch List in subsequent quarters. The adverse impact of COVID-19 was a significant contributor to the $0.06 decline in the Company's NAV per unit as of March 31, 2021, as compared to the Company’s NAV per unit as of December 31, 2020.

In addition, the Company saw a slowdown in transaction volume due to the impact of the pandemic through most of 2020, as smaller SMEs and those in industries most affected by COVID-19 (travel and hospitality, retail sales, etc.) were no longer in a position to appropriately add debt capital. Transaction volumes may continue to be affected by restrictions on travel and other shelter in place orders, making it more difficult to conduct in-person visits with potential borrowers. Additionally, in future periods the Company may hold higher levels of cash than before the pandemic to ensure it has sufficient cash available to meet its cash obligations. Uncertain or inconsistent deployment of capital or higher cash balances each have the potential to further reduce cash flow generated to cover the Company’s distributions to its unitholders and/or cause the Company to further reduce its NAV in future periods.

 

 

 

10


 

Note 2. Significant Accounting Policies

Basis of Presentation

The Company’s financial information is prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company follows the accounting and reporting guidance in the FASB ASC Topic 946 — Financial Services, Investment Companies (“ASC 946”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company's business, the businesses of the Company's borrowers and the global markets generally. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including fair value measurements, and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

The interim consolidated financial statements and notes are presented as permitted by the requirements for Quarterly Reports on Form 10-Q. Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP is not required for interim reporting purposes and has been omitted herein. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 31, 2021.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that ultimately may be achieved for the full year ending December 31, 2021.

The accompanying consolidated financial statements include the accounts of the Company and its Subsidiaries, which were established to hold certain investments of the Company. The Company owns 100% of each Subsidiary and, as such, the Subsidiaries are consolidated into the Company’s consolidated financial statements. Transactions between Subsidiaries, to the extent they occur, are eliminated in consolidation. The consolidated financial statements reflect all adjustments, consisting solely of normal recurring accruals, that, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition as of and for the periods presented. These financial statements are presented in United States (“U.S.”) dollars, which is the functional and reporting currency of the Company and all its subsidiaries.

Cash

Cash consists of demand deposits at a financial institution located in the U.S. Such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limits. The Company considers the credit risk of this financial institution to be remote and has not experienced and does not expect to experience any losses in any such accounts. The Company limits its credit risk by selecting financial institutions considered to be highly creditworthy.

Revenue Recognition

The Company records interest income on an accrual basis to the extent that the Company expects to collect such amounts. The Company does not accrue as a receivable interest on loans for accounting purposes if there is reason to doubt the ability to collect such interest. Structuring, upfront and similar fees are recorded as a discount on investments purchased and are accreted into interest income, on a straight-line basis, which the Company has determined not to be materially different from the effective yield method.

The Company records prepayment fees for loans and debt securities paid back to the Company prior to the maturity date as income upon receipt.

The Company generally places loans on non-accrual status when there is a reasonable doubt that principal or interest will be collected. If, however, management believes the principal and interest will be collected, a loan may be left on accrual status during the period the Company is pursuing repayment of the loan. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment of the financial condition of the borrower. Non-accrual loans are generally restored to accrual status when past due principal and interest is paid and, in the Company’s management’s judgment, is likely to remain current over the remainder of the term.

11


Valuation of Investments

The Company carries all of its investments at fair value with changes in fair value recognized in the consolidated statement of operations. Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

The fair value measurement guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:

 

Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 — Valuations based on inputs other than quoted prices included in Level 1, which are either directly or indirectly observable.

 

Level 3 — Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and is based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities.

 

These investments include debt and equity investments in private companies or assets valued using the income, market or cost approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples. The information may also include pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. Certain investments may be valued based upon a collateral approach, which uses estimated value of underlying collateral and include adjustments deemed necessary for estimates of costs to obtain control and liquidate available collateral. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

The inputs used in the determination of fair value may require significant judgment or estimation.

Investments for which market quotations are readily available are valued at those quotations. Most of the Company’s investments are loans to private companies, which are not actively traded in any market and for which quotations are not available. For those investments for which market quotations are not readily available, or when such market quotations are deemed by the Advisor not to represent fair value, the Company’s board of managers has approved a multi-step valuation process to be followed each fiscal quarter, as described below:

 

1.

Each investment is valued by the Advisor in collaboration with the relevant sub-advisor;

 

2.

For all investments with a stated maturity of greater than 12 months, the Company has engaged a third-party independent valuation firm to perform certain limited procedures that the Company identified and requested the independent valuation firm perform a review on the reasonableness of the Company’s internal estimates of fair value on each asset on a quarterly rotating basis, with each of such investments being reviewed at least annually. In addition, the Company engaged an independent valuation firm to perform certain limited procedures that the Company identified and requested the independent valuation firm to perform to provide an estimate of the range of fair value of material investments on the Watch List. The analysis performed by the independent valuation firm was based upon data and assumptions provided to it by the Company and received from third party sources, which the independent valuation firm relied upon as being accurate without independent verification. The results of the analyses performed by the independent valuation firm are among the factors taken into consideration by the Company and its management in making its determination with respect to the fair value of such investments, but are not determinative. The Company and its management are solely and ultimately responsible for determining the fair value of the Company’s investments in good faith;

 

3.

The audit committee of the Company’s board of managers reviews and discusses the preliminary valuation prepared by the Advisor and any report rendered by the independent valuation firm; and

 

4.

The board of managers discusses the valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the inputs which include but are not limited to, inputs of the Advisor, the independent valuation firm and the audit committee. The Company and its board of managers are solely and ultimately responsible for the determination, in good faith, of the fair value of each investment.

Below is a description of factors that the Company’s board of managers may consider when valuing the Company’s investments.

12


Any potential valuation adjustments are subject to a materiality threshold as determined by the Advisor. Due to the fact that all non-Watch List investments are performing loans, with no macroeconomic indicator or other event observed that would reasonably be expected to have a material impact on the underlying performance or collateral value of the investment, most of these investments generally do not deviate materially from the amortized cost. If, pursuant to the Company's quarterly review, the Company determines that one or more material valuation adjustments are appropriate, then the Company adjusts the fair value. Historically, in most cases these adjustments that have resulted in a fair value that is materially different from the investment’s amortized cost, the Company has determined to place it on the Watch List. Fixed income investments are typically valued utilizing a market approach, income approach, collateral based approach, or a combination of these approaches (and any others, as appropriate). The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including the sale of a business) and is used less frequently due to the private nature of the Company’s investments. The income approach uses valuation techniques to convert future amounts (for example, interest and principal payments) to a single present value amount (Discounted Cash Flow or “DCF”) calculated based on an appropriate discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts. For Watch List investments, the Company predominantly uses the income approach, but may also use a collateral based approach (also known as a liquidation or net recovery approach), or a hybrid approach consisting of the income approach and the collateral based approach. The collateral based approach uses estimates of the collateral value of the borrower’s assets using an expected recovery model.  When using the collateral based approach, the Company determines the fair value of the remaining assets, discounted to reflect the anticipated amount of time to recovery and the uncertainty of recovery.  The Company also may make further adjustments to account for anticipated costs of recovery, including legal fees and expenses. In following a given approach, the types of factors that the Company may take into account in valuing the Company’s investments include, as applicable:

 

Macro-economic factors that are relevant to the investment or the underlying borrower

 

Industry factors that are relevant to the investment or the underlying borrower

 

Historical and projected financial performance of the borrower based on most recent financial statements

 

Borrower draw requests and payment track record

 

Loan covenants, duration and drivers

 

Performance and condition of the collateral (nature, type and value) that supports the investment

 

Sub-Advisor recommendation as to possible impairment or reserve, including updates and feedback

 

For participations, the Company’s ownership percentage of the overall facility

 

Key inputs and assumptions that are believed to be most appropriate for the investment and the approach utilized

 

Applicable global interest rates

 

Impact of investments placed on non-accrual status

With respect to warrants and other equity investments, as well as certain fixed income investments, the Company may also look to private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies, option pricing models or industry practices in determining fair value. The Company may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, as well as any other factors the Company deems relevant in measuring the fair values of the Company’s investments.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments

The Company measures net realized gains or losses by the difference between the net proceeds from the repayment or sale on investments and the amortized cost basis of the investment including unamortized upfront fees and prepayment penalties. Realized gains or losses on the disposition of an investment are calculated using the specific identification method, utilizing the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering any prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Payment-in-Kind Interest

The Company has investments that contain a payment-in-kind, or PIK, interest provision. For loans with contractual PIK interest, any interest will be added to the principal balance of such investments and be recorded as income, if the valuation indicates that such interest is collectible. For the three months ended March 31, 2021 and 2020, the Company earned and capitalized PIK interest of $5,500,696 and $2,032,823, respectively.

13


Distribution and Ongoing Dealer Manager and Services Fees

The Company pays a distribution fee equal to 0.8% per annum of the Company’s current estimated value per share for each Class C unit sold in the Offering or pursuant to a private placement. The distribution fee is payable until the earlier to occur of the following: (i) a listing of the Class C units on a national securities exchange, (ii) following completion of each respective offering, total selling compensation equaling 10% of the gross proceeds of such offering, or (iii) there are no longer any Class C units outstanding. In addition, the Company pays an ongoing dealer manager fee for each Class I unit and Class W unit sold pursuant to a private placement. Such ongoing dealer manager fee is payable for five years until the earlier of: (x) the date on which such Class I units or Class W units are repurchased by the Company; (y) the listing of the Class I units or Class W units on a national securities exchange, the sale of the Company or the sale of all or substantially all of the Company’s assets; or (z) the fifth anniversary of the admission of the investor as a unitholder. Further, the Company pays an ongoing service fee for each Class W unit sold pursuant to the private placement.  Such ongoing service fee is payable for six years until the earlier of: (x) the date on which such Class W units are repurchased by the Company; (y) the listing of the Class W units on a national securities exchange, the sale of the Company or the sale of all or substantially all of the Company’s assets; or (z) the sixth anniversary of the admission of the investor as a unitholder. The distribution fees, ongoing dealer manager fees and service fees are not paid at the time of purchase.  Such fees are payable monthly in arrears, as they become contractually due.

The Company accounts for the distribution fees as a charge to equity at the time each Class C unit was sold in the Offering and recorded a corresponding liability for the estimated amount to be paid in future periods.  The Company accounts for the ongoing dealer manager fees and service fees paid in connection with the sale of Class I and Class W units in the private placement in the same manner. At March 31, 2021, the estimated unpaid distribution fees for Class C units amounted to $455,000, the unpaid dealer manager fees for Class I units amounted to $20,000 and the unpaid dealer manager and service fees for Class W units amounted to $1,000.

Income Taxes

The Company is classified as a partnership for U.S. federal income tax purposes. As such, the Company allocates all income or loss to its unitholders according to their respective percentage of ownership, and is generally not subject to tax at the entity level. Therefore, no provision for federal or state income taxes has been included in these financial statements.

The Company may be subject to withholding taxes on income and capital gains imposed by certain countries in which the Company invests. The withholding tax on income is netted against the income accrued or received. Any reclaimable taxes are recorded as income. The withholding tax on realized or unrealized gain is recorded as a liability.

The Company follows the guidance for uncertainty in income taxes included in the ASC 740, Income Taxes. This guidance requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including the resolution of any related appeals or litigation processes, based on the technical merits of the position.

As of March 31, 2021, no tax liability for uncertain tax provision had been recognized in the accompanying financial statements nor did the Company recognize any interest and penalties related to unrecognized tax benefits. The earliest year that the Company’s income tax returns are subject to examination is the period ended December 31, 2016.

Unitholders are individually responsible for reporting income or loss, to the extent required by the federal and state income tax laws and regulations, based upon their respective share of the Company’s income and expense as reported for income tax purposes.

Calculation of Net Asset Value

The Company’s net asset value is calculated on a quarterly basis. As of March 31, 2021, the Company has six classes of units: Class A units, Class C units, Class I units, Class W units, Class Y and Class Z units. All units participate in the income and expenses of the Company on a pro-rata basis based on the number of units outstanding. Under GAAP, pursuant to SEC guidance, the Company records liabilities for (i) ongoing fees that the Company currently owes to the dealer manager under the terms of the dealer manager agreement and (ii) for an estimate of the fees that the Company may pay to the dealer manager in future periods. As of March 31, 2021, under GAAP, the Company has recorded a liability in the amount of $476,000 for the estimated future amount of Class C unit distribution fees, Class I unit dealer manager fees, Class W unit ongoing dealer manager fees and Class W unit service fees payable.

The Company is not required to determine its net asset value per unit under GAAP and therefore, its determination of net asset value per unit for Class C units, Class I units and Class W units varies from GAAP.  The Company does not deduct the liability for estimated future distribution fees in its calculation of net asset value per unit for Class C units. Further, the Company does not deduct the liability for estimated future dealer manager fees in its calculation of the net asset value per unit for Class I units and Class W units. Likewise, the Company does not deduct the liability for estimated future service fees in its calculation of the net asset value per unit for Class W units. The Company believes this approach is consistent with the industry standard and appropriate since the Company intends for the net asset value to reflect the estimated value on the date that the Company determines its net asset value.

14


Accordingly, the Company believes that its estimated net asset value at any given time should not include consideration of any estimated future distribution, ongoing dealer manager or service fees that may become payable after such date. As a result, as of March 31, 2021, each of the Class A, Class C, Class I, Class W, Class Y and Class Z units have the same net asset value per unit of $7.54, which is different than the net asset value per unit of $7.52 (on an aggregate basis for all unit classes) as shown in Note 10 – Financial Highlights. This net asset value per unit reflects a decrease of $0.06 per unit from the net asset value per unit of $7.60 as of December 31, 2020. The decrease in net asset value per unit was primarily due to the adverse impact of COVID-19 and the Company having recorded $975,327 in unrealized depreciation on its investments during the three months ended March 31, 2021.

Net Income (Loss) per Unit

Basic net income (loss) per unit is computed by dividing net income (loss) by the weighted average number of members’ units outstanding during the period. Diluted net income or loss per unit is computed by dividing net income (loss) by the weighted average number of members’ units and members’ unit equivalents outstanding during the period. The Company did not have any potentially dilutive units outstanding at March 31, 2021 and 2020.

Organization and Offering Costs

The Sponsor has incurred organization and offering costs on behalf of the Company. Organization and offering costs incurred in connection with the Offering were reimbursable to the Sponsor to the extent the aggregate of selling commissions, dealer manager fees and other organization and offering costs did not exceed 15.0% of the gross offering proceeds (the “O&O Reimbursement Limit”) raised from the Offering and were accrued and payable by the Company only to the extent that such costs did not exceed the O&O Reimbursement Limit. These expense reimbursements were subject to regulatory caps and approval by the Company’s board of managers. Reimbursements to the Sponsor of organization and offering costs are included as a reduction to net assets on the Consolidated Statement of Changes in Net Assets. Based on the proceeds raised in the Offering at the end of the Offering, the organization and offering expenses were equal to 4.7% of the gross proceeds.  As a result of the termination of the Offering, effective March 31, 2017, the Company no longer pays upfront selling commissions and dealer manager fees under a dealer manager agreement relating to the Offering. The Company will continue to incur certain offering costs associated with the DRP offering and ongoing distribution fees on Class C units. The Company may incur these costs directly, or may reimburse the Sponsor for paying these offering costs on behalf of the Company.           

Operating Expense Responsibility Agreement

On March 26, 2018, the Company, Advisor and the Sponsor entered into an Amended and Restated Operating Expense Responsibility Agreement (“Responsibility Agreement”) originally effective as of June 11, 2013 and covering expenses through December 31, 2017. Since the inception of the Company through December 31, 2017, pursuant to the terms of the Responsibility Agreement, the Sponsor paid approximately $12,420,600 of operating expenses, asset management fees, and incentive fees on behalf of the Company and will reimburse to the Company an additional $4,057,734 of expenses, which had been paid by the Company as of December 31, 2017.

The Sponsor will only be entitled to reimbursement of the cumulative expenses it has incurred on the Company’s behalf to the extent the Company’s investment income in any quarter, as reflected on the statement of operations, exceeds the sum of (a) total distributions to unitholders incurred during the quarter and (b) the Company’s expenses as reflected on the statement of operations for the same quarter (the “Reimbursement Hurdle”). If the Sponsor is entitled to receive reimbursement for any given quarter because the Company’s investment income exceeds the Reimbursement Hurdle for such quarter, the Company will apply the excess amount (the “Excess Amount”) as follows: (i) first, the Company will reimburse the Sponsor for all expenses, other than asset management fees and incentive fees, that the Sponsor previously paid on the Company’s behalf, which will generally consist of operating expenses (the “Previously Paid Operating Expenses”) until all Previously Paid Operating Expenses incurred to date have been reimbursed; and (ii) second, the Company will apply 50% of the Excess Amount remaining after the payment of Previously Paid Operating Expenses to reimburse the Sponsor for the asset management fees and incentive fees that the Sponsor has agreed to pay on the Company’s behalf until all such asset management fees and incentive fees accrued to date have been reimbursed. The Company entered into an amended version of the Responsibility Agreement in May 2021. See “Note 11. Subsequent Events.”

The Company did not meet the Reimbursement Hurdle for the three months ended March 31, 2021 and 2020. Therefore, none of the expenses of the Company covered by the Responsibility Agreement have been recorded as expenses of the Company for the three months ended March 31, 2021 and 2020. As of March 31, 2021, there is a remaining aggregate balance of approximately $16,091,300 in expenses covered by the Responsibility Agreement which are not yet reimbursable to the Sponsor and have not been recorded by the Company. In accordance with ASC 450, Contingencies, such expenses will be accrued and payable by the Company in the period that they become both probable and estimable. The Sponsor may demand the reimbursement of cumulative Company expenses covered by the Responsibility Agreement to the extent the Company exceeds the Reimbursement Hurdle during any quarter.

15


Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces an approach based on expected losses to estimate credit losses for financial instruments measured at amortized cost. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022. The guidance requires companies to apply the requirements in the year of adoption through cumulative adjustment with some aspects of the update requiring a prospective transition approach. The Company believes that the adoption of ASU 2016-13 will not have a material impact on its consolidated financial statements.

On January 2, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13. This update removes the disclosure requirements for the amounts of and the reasons for transfers between Level 1 and Level 2 and disclosure of the policy for timing of transfers between levels. This update also removes disclosure requirements for the valuation processes for Level 3 fair value measurements. Additionally, this update adds disclosure requirements for the changes in unrealized gains and losses for recurring Level 3 fair value measurements and quantitative information for certain unobservable inputs in Level 3 fair value measurements. The adoption of this guidance did not have a material impact on its consolidated financial statements.

 

Risk Factors

As an externally-managed company, the Company is largely dependent on the efforts of the Advisor, the sub-advisors and other service providers and has been dependent on the Sponsor for financial support in prior periods.

The Company’s sub-advisors are responsible for locating, performing due diligence and closing on suitable acquisitions based on their access to local markets, local market knowledge for quality deal flow and extensive local private credit experience. However, because the sub-advisors are separate companies from the Advisor, the Company is subject to the risk that one or more of its sub-advisors will be ineffective or materially underperform. The Company’s ability to achieve its investment objectives and to pay distributions to unitholders will be dependent upon the performance of its sub-advisors in the identification, performance of due diligence on and acquisition of investments, the determination of any financing arrangements, and the management of the Company’s projects and assets. The Company is subject to the risk that the Company’s sub-advisors may fail to perform according to the Company’s expectations, or the due diligence conducted by the sub-advisors may fail to reveal all material risks of the Company’s investments, which could result in the Company being materially adversely affected.

The Company is subject to financial market risks, including changes in interest rates. Global economies and capital markets can and have experienced significant volatility, which has increased the risks associated with investments in collateralized private debt instruments. Investment in the Company carries risk and there are no guarantees that the Company’s investment objectives will be achieved. The Company relies on the ability of the Advisor and the ability of the sub-advisors’ investment professionals to obtain adequate information to evaluate the potential returns from these investments, which primarily are made in, with or through private companies. If the Company is unable to uncover all material information about these companies or is provided incorrect or inadequate information about these companies from the Company’s subadvisors, the Company may not make a fully informed investment decision, and the Company may lose money on its investments. As described further in “Note 3—Investments—Watch List Investments,” IIG was the sub-advisor with respect to eight of the 19 investments that we have deemed Watch List investments, which are investments with respect to which we have determined there have been significant changes in the credit and collection risk of the investment.  As described in Note 3, IIG failed to provide the Company with complete and accurate information with respect to the Company’s investments for which IIG was the sub-advisor, and sold the Company a $6 million participation in a loan that did not exist.  In November 2019, the SEC charged IIG with fraud and revoked IIG's registration as an investment adviser. On March 30, 2020, the SEC obtained a final judgment on consent that enjoins IIG from violating the antifraud provisions of the federal securities laws. IIG has ceased operations and the Company does not expect to receive any further reporting from IIG with respect to its outstanding investments. IIG’s acts and omissions have negatively affected and are likely to continue to negatively affect the value of certain of the Company’s investments, which could adversely affect returns to the Company’s unitholders.

The Company’s investments consist of loans, loan participations and trade finance participations that are illiquid and non-traded, making purchase or sale of such financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.

16


The value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults on its obligations, there is insufficient collateral securing the loan and/or there are extensive legal and other costs incurred in collecting on a defaulted loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk premiums required in the market between smaller companies, such as the Company’s borrowers, and those for which market yields are observable increase materially. The majority of the Company’s investments are in the form of participation interests, in financing facilities originated by one of the Company’s sub-advisors.  Accordingly, the Company’s counterparty for investments in participation interests generally will be the respective sub-advisor or its affiliate.  The Company will not have a contract with the underlying borrower and therefore, in the event of default, will not have the ability to directly seek recovery against the collateral and instead will have to seek recovery through the Company’s sub-advisor counterparty, which increases the risk of full recovery. These risks may be further exacerbated by the adverse impact the COVID-19 pandemic has had and is expected to continue to have on the business of our borrowers. In addition, as of March 31, 2021 and December 31, 2020, all but one of the Company’s investments were denominated in U.S. dollars. If the U.S. dollar rises, it may become more difficult for borrowers to make loan payments if the borrowers are operating in markets where the local currencies are depreciating relative the U.S. dollar.

In addition, certain of the Company’s investments in loans contain a PIK interest provision.  These investments may expose us to higher risks, including an increased risk of potential loss because PIK interest results in an increase in the size of the outstanding loan balance. The Company may also be exposed to the risk that it may be more difficult to value the investments because the continuing accrual of interest requires continuing subjective judgments about the collectability of the deferred payments and the value of the underlying collateral.  To the extent the loan is structured as a PIK interest-only loan, the probability and magnitude of a loss on the Company’s investment may increase.

At March 31, 2021, the Company’s largest loan by value was $29,588,341 or 9.7% of total investments and provides for PIK interest, with principal and interest due at maturity. The Company’s five largest loans by value comprised 32.7% of the Company’s portfolio at March 31, 2021. Participation in loans amounted to 60.1% of the Company’s total portfolio at March 31, 2021.

 

Note 3. Investments

As of March 31, 2021, the Company’s investments consisted of the following: 

 

 

 

 

 

 

 

 

 

 

 

Percentage

 

 

 

Amortized Cost

 

 

Fair Value

 

 

of Total

Investments

 

Senior secured term loans

 

$

119,146,477

 

 

$

116,999,971

 

 

 

38.3

%

Senior secured term loan participations

 

 

140,161,250

 

 

 

132,165,337

 

 

 

43.3

%

Senior secured trade finance participations

 

 

68,952,976

 

 

 

51,160,031

 

 

 

16.8

%

Other investments

 

 

6,000,000

 

 

 

3,758,063

 

 

 

1.2

%

Equity warrants

 

 

-

 

 

 

1,199,618

 

 

 

0.4

%

Total investments

 

$

334,260,703

 

 

$

305,283,020

 

 

 

100.0

%

 

As of December 31, 2020, the Company’s investments consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

Percentage

 

 

 

Amortized Cost

 

 

Fair Value

 

 

of Total

Investments

 

Senior secured term loans

 

$

109,045,660

 

 

$

106,899,154

 

 

 

37.2

%

Senior secured term loan participations

 

 

136,937,838

 

 

 

129,917,253

 

 

 

45.2

%

Senior secured trade finance participations

 

 

63,593,156

 

 

 

45,800,210

 

 

 

15.9

%

Short term investments

 

 

6,000,000

 

 

 

3,758,063

 

 

 

1.3

%

Equity warrants

 

 

-

 

 

 

1,199,618

 

 

 

0.4

%

Total investments

 

$

315,576,654

 

 

$

287,574,298

 

 

 

100.0

%

 

Participations

The majority of the Company’s investments are in the form of participation interests (“Participations”). Participations are interests in financing facilities originated by one of the Company’s sub-advisors. Participations may be interests in one specific loan or trade finance transaction, several loans or trade finance transactions under a facility, or may be interests in an entire facility.  The Company’s rights under Participations include, without limitation, all corresponding rights in payments, collateral, guaranties, and any other security interests obtained by the respective sub-advisor in the underlying financing facilities.

17


Interest Receivable

Depending on the specific terms of the Company’s investments, interest earned by the Company is payable either monthly, quarterly, or, in the case of most trade finance investments, at maturity.  As such, some of the Company’s trade finance investments have up to a year of accrued interest receivable as of March 31, 2021.  In addition, certain of the Company’s investments in term loans accrue deferred interest, which is not payable until the maturity of the loans.  Accrued deferred interest included in the interest receivable balance as of March 31, 2021 and December 31, 2020 amounted to $3,695,780 and $3,418,264, respectively. The Company’s interest receivable balances at March 31, 2021 and December 31, 2020 are recorded at the amounts that the Company expects to collect.

 

Trade Finance

 

Trade finance encompasses a variety of lending structures that support the export, import or sale of goods between producers and buyers in various countries and across various jurisdictions. The strategy is most prevalent in the financing of commodities. The Company’s Participations in trade finance positions typically fall into two broad categories: pre-export financing and receivable/inventory financing. Pre-export financing represents advances to borrowers based on proven orders from buyers. Receivable/inventory financing represents advances on borrowers’ eligible receivable and inventory balances. For trade finance, the structure and terms of the facility underlying the Company’s Participations vary according to the nature of the transaction being financed. The structure can take the form of a revolver with multiple draw requests and maturity of up to one year based on collateral and performance requirements. The structure can also be specific to the individual transaction being financed, which typically have shorter durations of 60 – 180 days. With respect to underwriting, particular consideration is given to the following:

 

nature of the goods or transaction being financed,

 

the terms associated with the sale and repayment of the goods,

 

the execution risk associated with producing, storing and shipment of the goods,

 

the financial and performance profile of both the borrower and end buyer(s),

 

the underlying advance rate and subsequent Loan to Value (“LTV”) associated with lending against the goods that serve to secure the facility or transaction,

 

collateral and financial controls (collection accounts and inventory possession),

 

third party inspections and insurance, and

 

the region, country or jurisdiction in which the financing is being completed.

 

Collateral varies by transaction, but is typically raw or finished goods inventory, and/or receivables.  In the case of pre-export finance, the transaction is secured by purchase orders from buyers or offtake contracts, which are agreements between a buyer and seller to purchase/sell a future product.

 

Terms depend on the nature of the facility or transaction being financed. As such, they depend on the credit profile of the underlying financing, as well as the speed and detail associated with the request for financing. Interest can be paid as often as monthly or quarterly on revolving facilities (one year in duration) or at maturity when dealing with specific transactions with shorter duration, which is the case for the majority of the Company’s trade finance positions. At times, settlement can be delayed due to documentation, shipment, transportation or port clearing issues, delays associated with the end buyer or off-taker assuming possession, possible changes to contract or offtake terms, and the aggregation of settlement of multiple individual transactions. Conversely, at times payments are made ahead of schedule, as transactions either clear faster than expected, borrowers decide to prepay or pay down ahead of schedule, counterparties clear multiple individual transactions in one settlement, or less expensive financing is secured by the borrower.

 

On occasion, the Company may receive notice from the respective sub-advisor that a borrower or counterparty to a financing facility underlying one of the Company’s Participations intends to pay ahead of schedule or in one lump sum (settling multiple draw requests all at once). Depending on timing and the ability to redeploy these funds, combined with projected inflows of fund capital, these outsize payments can negatively impact the Company’s performance. In these situations, the credit profile of the borrower, and the transaction in general, is reviewed with the sub-advisor and a request may be made to either stagger payments, where at all possible, or request that payment only be made at the end of that specific financial quarter. These requests or accommodations, which happen very rarely, will only be made where the Company has strong comfort in and around the credit profile of the transaction or borrower.

 

Short Term Investments

 

Short term investments are defined by the Company as investments that generally meet the standard underwriting guidelines for trade finance and term loan transactions and that also have the following characteristics: (1) maturity of less than one year, (2) loans to borrowers to whom, at the time of funding, the Company does not expect to re-lend. Impact data is not tracked for short term investments.

 

18


 

Warrants

 

Certain investments, including loans and participations, may carry equity warrants, which allow the Company to buy shares of the portfolio company at a given price, which the Company may exercise at its discretion during the life of the portfolio company. The Company’s goal is to ultimately dispose of such equity interests and realize gains upon the disposition of such interests. However, these warrants and equity interests are generally illiquid and it may be difficult for the Company to dispose of them. In addition, the Company expects that any warrants or other return enhancements received when the Company makes or invests in loans may require several years to appreciate in value and may not appreciate at all.

 

Watch List Investments

The Company monitors and reviews the performance of its investments and if the Company determines that there are any significant changes in the credit and collection risk of an investment, the investment will be placed on the Watch List. The Company places an investment on the Watch List when it believes the investment has material performance weakness driven by company-specific and macro events that may affect the timing of future cash flows. For all Watch List investments, the Company evaluates: (i) liquidation value of collateral; (ii) rights and remedies enforceable against the borrower; (iii) any credit insurance and/or guarantees; (iv) market, sector and macro events and (v) other relevant information (e.g., third party purchase of the borrower and potential or ongoing litigation). At March 31, 2021, ten portfolio companies were on non-accrual status with an aggregate fair value of $31,464,418 or 10.3% of the fair value of the Company’s total investments. At December 31, 2020, ten portfolio companies were on non-accrual status with an aggregate fair value of $31,464,418 or 10.9% of the fair value of the Company’s total investments. Interest income not recorded relative to the original terms of the loans to the companies on non-accrual status amounted to approximately $509,366 and $917,869, respectively for the three months ended March 31, 2021 and 2020.  As of March 31, 2021 and December 31, 2020, respectively, the Company had 19 and 19 Watch List investments.

 

As of March 31, 2021, the Company’s Watch List investments consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest not accrued on Investments on Watch List status

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

March 31,

 

 

Portfolio Company

 

Principal Balance

 

 

Fair Value

 

 

Accrued Interest

 

 

Sub-advisor

 

Valuation Approach

 

2021

 

 

2020

 

 

Trustco Group Holdings Ltd.

 

$

17,708,880

 

 

$

15,099,527

 

 

$

2,496,592

 

 

Helios

 

Income approach

 

$

-

 

 

$

-

 

 

TRG Cape Verde Holdings Ltd.

 

 

13,641,904

 

 

 

11,331,704

 

 

 

2,250,244

 

 

Helios

 

Income approach

 

 

 

 

 

 

 

Helios Maritime

 

 

16,019,419

 

 

 

12,929,666

 

 

 

2,760,320

 

 

Helios

 

Income approach

 

 

 

 

 

 

 

Compania Argentina de Granos S.A.

 

 

12,500,000

 

 

 

9,679,638

 

 

 

664,010

 

 

IIG

 

Income approach

 

 

326,563

 

 

 

330,191

 

 

Frigorifico Regional Industrias

   Alimentarias, S.A., Sucursal

   Uruguay

 

 

9,000,000

 

 

 

6,361,679

 

 

 

264,500

 

 

IIG

 

Income approach

 

 

 

 

 

 

 

Sancor Cooperativas Unidas Ltda

 

 

6,000,000

 

 

 

4,719,383

 

 

 

1,091,897

 

 

IIG

 

Hybrid income/collateral based approach

 

 

 

 

 

161,829

 

 

IIG TOF B.V.

 

 

6,000,000

 

 

 

3,758,063

 

 

 

572,000

 

 

IIG

 

Income approach

 

 

 

 

 

93,000

 

 

Algodonera Avellaneda S.A.

 

 

6,000,000

 

 

 

3,398,558

 

 

 

778,500

 

 

IIG

 

Income approach

 

 

 

 

 

 

 

Functional Products Trading S.A. (1)

 

 

1,326,687

 

 

 

1,375,794

 

 

 

220,881

 

 

IIG

 

Income approach

 

 

36,152

 

 

 

36,554

 

 

Representaciones Saldana S.A. (1)

 

 

35,838

 

 

 

35,838

 

 

 

7,356

 

 

IIG

 

Income approach

 

 

 

 

 

 

 

Procesos Fabriles S.A. (1)

 

 

881,800

 

 

 

10,504

 

 

 

 

 

IIG

 

Collateral based approach

 

 

 

 

 

27,529

 

 

Triton Metallics Pte Ltd.

 

 

18,545,256

 

 

 

16,882,110

 

 

 

517,903

 

 

TransAsia

 

Income approach

 

 

 

 

 

 

 

Conplex International Ltd.

 

 

9,500,000

 

 

 

3,366,355

 

 

 

1,312,945

 

 

TransAsia

 

Collateral based approach

 

 

 

 

 

 

 

Producam S.A.

 

 

14,022,395

 

 

 

13,618,566

 

 

 

 

 

AMC

 

Income approach

 

 

 

 

 

 

 

Global Pharma Intelligence Sarl (1)

 

 

648,430

 

 

 

648,430

 

 

 

134,215

 

 

Scipion

 

Income approach

 

 

23,668

 

 

 

29,644

 

 

Mac Z Group SARL

 

 

1,433,058

 

 

 

628,862

 

 

 

210,568

 

 

Scipion

 

Income approach

 

 

 

 

 

204,361

 

 

Applewood Trading 199 Pty, Ltd. (1)

 

 

785,806

 

 

 

497,462

 

 

 

 

 

Barak

 

Income approach

 

 

34,379

 

 

 

34,761

 

 

Usivale Industria E Commercio

   Ltda (1)

 

 

2,851,296

 

 

 

2,367,936

 

 

 

645,932

 

 

N/A

 

Income approach

 

 

88,604

 

 

 

 

 

Itelecom Holding Chile SPA (1)

 

 

1,456,162

 

 

 

1,446,830

 

 

 

159,629

 

 

Alsis

 

Income approach

 

 

 

 

 

 

 

Total Watchlist

 

$

138,356,931

 

 

$

108,156,905

 

 

$

14,087,492

 

 

 

 

 

 

$

509,366

 

 

$

917,869

 

 

 

1 

Investments with a fair value equal to less than 1.0% of the aggregate fair value of the Company's net assets as of March 31, 2021. Additional information regarding Watch List investments with a fair value equal to or greater than 1.0% of the aggregate fair value of the Company's net assets as of March 31, 2021 is presented below.

 

 

19


 

As of December 31, 2020, the Company’s Watch List investments consisted of the following:

 

Portfolio Company

 

Principal Balance

 

 

Fair Value

 

 

Accrued Interest

 

 

Sub-advisor

 

Valuation Approach

Trustco Group Holdings Ltd.

 

$

17,529,688

 

 

$

15,242,460

 

 

$

2,125,182

 

 

Helios

 

Income approach

TRG Cape Verde Holdings Ltd.

 

 

13,478,292

 

 

 

11,337,937

 

 

 

1,913,827

 

 

Helios

 

Income approach

Helios Maritime

 

 

15,600,710

 

 

 

12,986,279

 

 

 

2,760,320

 

 

Helios

 

Income approach

Compania Argentina de Granos S.A.

 

 

12,500,000

 

 

 

9,679,636

 

 

 

664,010

 

 

IIG

 

Income approach

Frigorifico Regional Industrias

   Alimentarias, S.A., Sucursal

   Uruguay

 

 

9,000,000

 

 

 

6,361,679

 

 

 

264,500

 

 

IIG

 

Income approach

Sancor Cooperativas Unidas Ltda

 

 

6,000,000

 

 

 

4,719,383

 

 

 

931,847

 

 

IIG

 

Hybrid income/collateral based approach

IIG TOF B.V.

 

 

6,000,000

 

 

 

3,758,063

 

 

 

572,000

 

 

IIG

 

Income approach

Algodonera Avellaneda S.A.

 

 

6,000,000

 

 

 

3,398,558

 

 

 

778,500

 

 

IIG

 

Income approach

Functional Products Trading S.A. (1)

 

 

1,326,687

 

 

 

1,375,794

 

 

 

220,881

 

 

IIG

 

Income approach

Representaciones Saldana S.A. (1)

 

 

35,838

 

 

 

35,838

 

 

 

6,550

 

 

IIG

 

Income approach

Procesos Fabriles S.A. (1)

 

 

881,800

 

 

 

10,504

 

 

 

 

 

IIG

 

Collateral based approach

Triton Metallics Pte Ltd.

 

 

18,146,500

 

 

 

16,483,354

 

 

 

537,538

 

 

TransAsia

 

Income approach

Conplex International Ltd.

 

 

9,500,000

 

 

 

3,366,356

 

 

 

1,312,945

 

 

TransAsia

 

Collateral based approach

Producam S.A.

 

 

13,532,693

 

 

 

13,128,867

 

 

 

-

 

 

AMC

 

Income approach

Global Pharma Intelligence Sarl (1)

 

 

648,430

 

 

 

648,430

 

 

 

134,215

 

 

Scipion

 

Income approach

Mac Z Group SARL

 

 

1,433,058

 

 

 

628,861

 

 

 

210,568

 

 

Scipion

 

Income approach

Applewood Trading 199 Pty, Ltd. (1)

 

 

785,806

 

 

 

497,462

 

 

 

 

 

Barak

 

Income approach

Usivale Industria E Commercio

   Ltda (1)

 

 

2,851,296

 

 

 

2,367,936

 

 

 

645,932

 

 

N/A

 

Income approach

Itelecom Holding Chile SPA (1)

 

 

1,456,162

 

 

 

1,434,285

 

 

 

119,585

 

 

Alsis

 

Income approach

Total Watchlist

 

$

136,706,960

 

 

$

107,461,682

 

 

$

13,198,400

 

 

 

 

 

 

1 

Investments with a fair value equal to less than 1.0% of the aggregate fair value of the Company's net assets as of December 31, 2020. Additional information regarding Watch List investments with a fair value equal to or greater than 1.0% of the aggregate fair value of the Company's net assets as of December 31, 2020 is presented below.

 

 

Investments through Helios Investment Partners, LLP (“Helios”) as the Sub-Advisor

 

Trustco Group Holdings Ltd

In January 2017, the Company purchased a $15,000,000 Participation in a term loan facility with Trustco Group Holdings Ltd (“Trustco”), a Namibia based group operating a diversified set of business lines including property development, financial services (insurance, retail banking), education, and diamond mining. Repayment on this position has been slower than originally anticipated, largely due to a slowdown in the local real estate market. Helios has been actively working with the borrower to restructure the facility. As this has proved challenging, Helios issued a notice of default and acceleration notice to Trustco along with launching initial legal proceedings. A demand has also been made against Elisenheim as guarantor in respect of Trustco’s obligations to Helios. In addition to recourse against Trustco, Helios has the benefit of a security interest in property owned by the guarantor. The estimated proceeds from the property collateral are enough to cover the principal and the interest for the Trustco facility.

 

TRG Cape Verde Holdings Ltd

In May 2016, the Company purchased a $17,000,000 Participation in a term loan facility with TRG Cape Verde Holdings Ltd (“TRG Cape Verde”), an owner and developer of resorts based in Cabo Verde. Repayment on this position has been slower than originally anticipated due to regulatory changes in TRG Cape Verde’s fundraising model, along with further challenges associated with little to no occupancy at its resort properties due to the ongoing COVID-19 pandemic. Helios is actively working with the borrower to restructure the facility, which is expected to be finalized in the coming quarters. In addition to the restructuring being conducted, the borrower has pledged certain of its real properties as collateral in support of its repayment obligations under this facility.

 

Helios Maritime I

Between July 2015 and December 2017, the Company purchased six Participations totaling $15,300,000 in a term loan facility with Helios Maritime I (“Helios Maritime”), a company setup for the purposes of on-lending to Starz Investment Company, Ltd., a Nigerian shipping and logistics company for the purpose of acquiring a handling tug vessel. Repayment on this position has been slower than originally anticipated due to delays in acquiring a long-term contract, which has been further prolonged based on challenges presented by the COVID-19 pandemic and the volatility in oil prices. Helios is actively working with the borrower to restructure the facility which is expected to be finalized in the coming quarters. The borrower has pledged a marine vessel as collateral in support of its repayment obligations under this facility.

 

20


 

Investments through The International Investment Group L.L.C. (“IIG”) as the Sub-Advisor

 

The International Investment Group L.L.C. (“IIG”) was the sub-advisor with respect to certain investments that the Company made in South America, including eight of the 19 Watch List investments as of March 31, 2021.  Since June 30, 2018, the Company has discovered, among other things, that IIG failed to provide the Company with complete and accurate information with respect to the investments for which IIG was the sub-advisor and, in 2017, sold the Company a $6 million participation in a loan to Nacadie (defined below) that did not exist.  The Company has not received any material updated information from IIG concerning the investments for which IIG was the sub-advisor since the first quarter of 2019, despite IIG being contractually obligated to provide the Company with updated information.  

The SEC previously charged IIG with fraud on November 21, 2019 and revoked IIG's registration as an investment adviser on November 26, 2019. On March 30, 2020, the SEC obtained a final judgment on consent that enjoins IIG from violating the antifraud provisions of the federal securities laws. On July 17, 2020, the SEC filed fraud charges against David Hu, one of IIG's co-founders, who was also charged by the U.S. Attorney's Office for the Southern District of New York in a parallel criminal action. On January 28, 2021, David Hu pled guilty to one count of securities fraud, one count of wire fraud, and one count of conspiracy to commit securities fraud and wire fraud. On April 13, 2021, the U.S. Attorney's Office for the Southern District of New York announced that Martin Silver, IIG's other co-founder, pled guilty to one count of conspiracy to commit investment adviser fraud, securities fraud, and wire fraud, one count of securities fraud, and one count of wire fraud for his role in overvaluing and selling fake loans to investors so IIG could collect management and performance fees. Also on April 13, 2021, the SEC filed a civil complaint against Martin Silver, asserting several claims that involve allegations of a string of frauds perpetrated by Mr. Silver and others at IIG in order to keep IIG afloat. IIG has ceased operations and the Company does not expect to receive any further reporting from IIG with respect to its outstanding investments.   The Company is taking necessary steps, including legal action in some cases, in order to ascertain as much information as possible regarding these investments.

Most of the outstanding investments for which IIG was the sub-advisor were purchased from IIG TOF B.V., a Dutch Limited Liability Company advised by IIG.  On December 11, 2019, a subsidiary of the Company filed an application in Amsterdam District Court to declare IIG TOF B.V. bankrupt. As set forth in the application for the Declaration of Bankruptcy, the Company and other creditors believe they have multiple due and payable claims against IIG TOF B.V. which IIG TOF B.V. has acknowledged it is unable to pay. On January 21, 2020, the Amsterdam District Court declared IIG TOF B.V. bankrupt and appointed a Dutch law firm as liquidator. The Company is seeking recovery of amounts due and payable to the Company with respect to the Participations it acquired from IIG TOF B.V. There can be no assurances as to when or if the Company will recover the amounts to which the Company believes it is entitled. Additional information regarding Watch List investments for which IIG was the sub-advisor with a fair value equal to or greater than 1.0% of the Company's net assets as of March 31, 2021 is presented below.

Compania Argentina de Granos

Between October 2016 and February 2017, the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Compania Argentina de Granos (“CAGSA”), as borrower. The Company purchased the initial Participation in October 2016 for $10,000,000 and subsequently increased the Participation by another $2,500,000 in February 2017. This facility is collateralized by two export contracts. CAGSA, an Argentine company, is mainly engaged in the trading of grain and oilseed and the distribution and processing of food ingredients. Due to unfavorable weather conditions, CAGSA was unable to make delivery of toasted soybean meal under the terms of its export contracts. As a result, it failed to pay IIG its outstanding principal due on June 30, 2018.

IIG previously informed the Company that it had been in active discussions with CAGSA and other CAGSA lenders to protect its rights under the credit facility. Additionally, IIG had previously informed the Company that IIG is a member of the creditors committee, which would determine all financial and restructuring options of CAGSA, which may include additional equity infusions by the existing shareholders. In February 2019, CAGSA disclosed that it had reached a preliminary settlement with its creditors. As of the date of this report, the Company does not know if the preliminary settlement has been finalized and details of the terms of the preliminary settlement were not available. As noted above, IIG has ceased operations and the Company has taken legal action in an attempt to recover amounts due.

 

Sancor Cooperativas Unidas Limitada

 

In April 2016 the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Sancor Cooperativas Unidas Limitada (“Sancor”), an Argentine company that distributes dairy products, as the borrower. IIG had worked with Sancor to restructure the existing loan and extended the maturity to July 29, 2019, with an annual renewal option. Since February 2019, Sancor has announced the sale of certain of its assets, which allowed it to make some payments to creditors and maintain operations, but the Company has not received any payment as a result of those asset sales. It is the Company’s understanding that Sancor is engaged in ongoing negotiations with its lenders regarding a debt restructuring. As noted above, IIG has ceased operations and the Company has taken legal action in an attempt to recover amounts due. During the quarter ended March 31, 2021, the Company learned, in connection with certain court proceedings in the United States Bankruptcy Court for the Southern District of New York regarding a fund advised by IIG, that funds had been received in a New York bank account controlled by an affiliate of IIG

21


and that such funds may include prior debt service payments by Sancor related to the Company’s interests in the Sancor trade finance facility. The Company is monitoring the proceedings and expects to take steps, which may include legal action, to obtain control over any funds in such account to which the Company is entitled. There can be no assurances as to the amount of funds the Company may be able to obtain, or that it will be able to obtain any amounts from the account.

Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay and Algodonera Avellaneda S.A.

Between June 2016 and July 2016, the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay (“FRIAR”), an Argentine company that produces, processes and exports beef, as the borrower. In June 2017, IIG called a technical event of default due to non-payment by FRIAR. In an effort to seek repayment from FRIAR, IIG filed the promissory notes for FRIAR in the commercial court in Buenos Aires, Argentina.

 

 

In March 2017, the Company purchased a Participation in a trade finance facility originated by IIG TOF B.V., with Algodonera Avellaneda S.A. (“Algodonera”) as the borrower for $6,000,000. The loan agreement states that Vicentin has guaranteed the payments to be made by Algodonera under the facility. Algodonera is an Argentinian vertically integrated cotton business. IIG informed the Company that in June 2017, IIG called a technical default on Algodonera under the facility due to nonpayment of interest and on Vicentin under the payment guarantee due to the breach of informational covenants. Thereafter, IIG made a filing against Vicentin and Algodonera in the commercial court in Buenos Aires, Argentina on July 4, 2017.

In August 2019, the Company was informed by IIG’s legal counsel that the commercial court proceedings with FRIAR and Algonodera had been terminated due to the parties having reached a settlement. The Company has evidence that the settlement proceeds have been placed in an escrow account with a New York law firm. The Company is awaiting a final decision by the relevant bankruptcy courts in order to reach a final settlement agreement amongst all the creditors and determine the Company’s allocated portion of the proceeds held in escrow.

 

 

IIG Trade Opportunities Fund B.V. Receivable

In March 2017, the Company purchased a Participation from IIG TOF B.V. in what the Company at that time believed to be a trade finance facility originated by IIG TOF B.V., with Nacadie Commercial S.A. (“Nacadie”) as the borrower. The Company purchased the Participation in March 2017 for $6,000,000. In connection with the Company’s review of this investment during the third quarter of 2018, IIG informed the Company that IIG had misapplied the funds the Company had transmitted at the time the Company made this investment. As a result, IIG offered to refund the Company’s investment amount, including all accrued interest. However, IIG did not repay the Company for this Participation. As noted above, the Company knows that the Nacadie facility in which it purchased this Participation did not exist and the Company considers this asset to be a receivable from IIG TOF B.V. rather than a Participation in a trade finance facility.

As noted above, IIG TOF B.V. has been declared bankrupt in the Netherlands, and the Company is seeking to recover amounts to which it is entitled through the bankruptcy proceedings. The Company has applied a discount to the fair value based on the risk created by the uncertainty of the ultimate resolution of the Company’s attempt to recover amounts to which it is entitled through the bankruptcy proceedings in the Netherlands.

 

 

Investments through TransAsia Private Capital Ltd. (“TransAsia”) as the Sub-Advisor

Triton Metallics Pte. Ltd.

In November 2019, the Company made an investment in Triton Metallics Pte. Ltd. (“Triton”) totaling $16,456,270 in a trade finance facility. Triton is a Singapore based diversified commodities trading company. TransAsia informed the Company in early 2020 that due to the COVID-19 pandemic there have been constrained trading volumes. As a result, TransAsia then began working with the borrower to restructure the facility and a restructuring agreement was executed on August 17, 2020. Under the new agreement, the loan was restructured from a trade finance facility into a term loan with the interest rate reduced from 11.5% to 6%, including 3% of PIK interest. The unpaid interest of $1,503,463 under the old trade finance facility has been capitalized and added to the outstanding principal balance as of the date of the new agreement.  During the period of July 1, 2020 through August 16, 2020, $241,816 of interest income was recognized prior to the date the loan was restructured.

 

22


 

Conplex International Ltd.

Between November 2018 and May 2019, the Company purchased three Participations totaling $9,500,000 in a trade finance facility with Conplex International Ltd. (“Conplex”), a Hong Kong-based international open market distributor and wholesaler of electronics products. TransAsia had informed the Company that the borrower had a large portion of receivables overdue from a large off-taker. Subsequently, TransAsia began to actively work with the borrower to restructure the facility.  While the restructuring was still progressing, TransAsia, after its regular search and review process, found that a winding-up petition was filed and approved on October 7, 2020.  TransAsia immediately notified the Company while a court appointed provisional liquidator took control of Conplex.  On October 14, 2020, TransAsia appointed a receiver to enforce on the secured facility. The receiver continues to work with the court appointed provisional liquidator in order to take control of the security. This facility is secured by a lien on mortgaged properties, accounts receivable and personal guarantees, which have been valued using the collateral based approach in the above table to arrive at the estimated fair value.

 

Investments through Africa Merchant Capital Group (“AMC”) as the Sub-Advisor

Producam SA

Between March 2018 and June 2018, the Company purchased three Participations totaling $15,986,369 in a trade finance facility with Producam SA (“Producam”), a Cameroon based cocoa and coffee exporter, as the borrower. Repayment on these Participations has been slower than originally anticipated due to short run cash flow pressure on Producam. The original sub-advisor for this facility was Africa Merchant Capital Group (“AMC”). In the third quarter of 2018, AMC informed the Company that the borrower misapplied the proceeds from the sale of certain of its inventory to finance its own cash flow needs rather than repay the facility. AMC then began working with the borrower to restructure the facility to recover amounts due. In April 2021, Scipion replaced AMC as the sub-advisor with respect to Producam and has agreed to undertake efforts to liquidate the collateral underlying the facility in order to recover amounts due to the Company and the restructuring process is finalized.

 

Investments through Scipion Capital, Ltd. (“Scipion”) as the Sub-Advisor

Mac Z Group SARL

Between July 2016 and April 2017, the Company purchased nine Participations totaling $9,000,000 in a trade finance facility with Mac Z Group SARL (“Mac Z”), a scrap metal recycler, as the borrower. Mac Z is located in Morocco. The primary collateral securing this Participation was 1,970 tons of copper scrap. In late October 2017, Scipion’s designated collateral manager for Mac Z notified Scipion of an investigation into a 1,820 ton, approximately $13.3 million, shortage of copper scrap inventory physically held in the warehouse. The copper scrap is pledged to the Company and serves as the primary collateral for this Participation. The missing inventory led the Company to place Mac Z on the Watch List and on non-accrual status.

In addition to conducting its investigation, Scipion issued an event of default and has taken steps to enforce the corporate guarantee, personal guarantee and relevant pledges made for the benefit of Scipion with respect to the facility, which include two insurance policies. Scipion has placed a blocking notice on all of Mac Z’s bank accounts and has requested a freeze order from the Moroccan local courts on the physical assets of the company. Since the initial discovery and actions, Mac Z sold remaining inventory and the Company was paid interest of approximately $330,000 in January 2018 and $292,000 during the first week April 2018.

A judgment was received on December 18, 2017, in English court ordering the borrower and the corporate guarantor to make payment. In parallel to its recovery plan with respect to Mac Z, Scipion informed the Company that it has received a judgment in its favor with respect to its claim against the collateral manager under its professional indemnity insurance policy, which covers up to $40 million in losses. During the fourth quarter of 2020, $9,377,199 from a settlement under this insurance policy was received by the Company.

 

23


 

The industry composition of the Company’s portfolio, at fair value as of March 31, 2021 and December 31, 2020, was as follows:

 

 

 

As of  March 31, 2021

 

 

As of December 31, 2020

 

 

 

Fair

 

 

Percentage

 

 

Fair

 

 

Percentage

 

Industry

 

Value

 

 

of Total

 

 

Value

 

 

of Total

 

Agricultural Products

 

$

12,047,574

 

 

 

3.9

%

 

$

12,047,572

 

 

 

4.2

%

Boatbuilding and Repairing

 

 

6,070,640

 

 

 

2.0

%

 

 

5,946,066

 

 

 

2.1

%

Chemicals and Allied Products

 

 

15,858,045

 

 

 

5.2

%

 

 

15,858,045

 

 

 

5.5

%

Chocolate and Cocoa Products

 

 

28,618,566

 

 

 

9.4

%

 

 

13,128,867

 

 

 

4.6

%

Coal and Other Minerals and Ores

 

 

35,580,229

 

 

 

11.7

%

 

 

33,649,913

 

 

 

11.7

%

Commercial Fishing

 

 

35,838

 

 

 

0.0

%

 

 

35,838

 

 

 

0.0

%

Communications Equipment

 

 

 

 

 

0.0

%

 

 

 

 

 

0.0

%

Consumer Products

 

 

9,456,820

 

 

 

3.1

%

 

 

9,456,820

 

 

 

3.3

%

Corrugated and solid fiber boxes

 

 

13,503,499

 

 

 

4.4

%

 

 

13,503,499

 

 

 

0

 

Department Stores

 

 

9,605,039

 

 

 

3.1

%

 

 

9,360,235

 

 

 

3.3

%

Drugs, Proprietaries, and Sundries

 

 

648,430

 

 

 

0.2

%

 

 

648,430

 

 

 

0.2

%

Electric Services

 

 

1,446,830

 

 

 

0.5

%

 

 

1,434,285

 

 

 

0.5

%

Farm Products

 

 

11,987,998

 

 

 

3.9

%

 

 

11,656,399

 

 

 

4.1

%

Fats and Oils

 

 

3,398,558

 

 

 

1.1

%

 

 

3,398,558

 

 

 

1.2

%

Financial services

 

 

3,758,063

 

 

 

1.2

%

 

 

3,758,063

 

 

 

1.3

%

Food Products

 

 

2,345,463

 

 

 

0.8

%

 

 

2,318,540

 

 

 

0.8

%

Freight Transportation Arrangement

 

 

14,175,263

 

 

 

4.6

%

 

 

14,034,913

 

 

 

4.9

%

Groceries and Related Products

 

 

304,739

 

 

 

0.1

%

 

 

434,619

 

 

 

0.2

%

Hotels and Motels

 

 

11,331,704

 

 

 

3.7

%

 

 

11,337,937

 

 

 

3.9

%

Land Subdividers and Developers

 

 

15,099,527

 

 

 

4.9

%

 

 

15,242,460

 

 

 

5.3

%

Logging

 

 

 

 

 

0.0

%

 

 

 

 

 

0.0

%

Meat, Poultry & Fish

 

 

6,361,679

 

 

 

2.1

%

 

 

6,361,679

 

 

 

2.2

%

Motor Vehicle Parts and Accessories

 

 

9,521,444

 

 

 

3.1

%

 

 

8,893,693

 

 

 

3.1

%

Personal Credit Institutions

 

 

6,487,336

 

 

 

2.1

%

 

 

3,062,598

 

 

 

1.1

%

Petroleum and Petroleum Products

 

 

12,551,220

 

 

 

4.1

%

 

 

13,685,366

 

 

 

4.8

%

Programming and Data Processing

 

 

18,945,974

 

 

 

6.2

%

 

 

18,502,811

 

 

 

6.4

%

Refuse Systems

 

 

30,787,959

 

 

 

10.1

%

 

 

29,730,723

 

 

 

10.3

%

Secondary Nonferrous Metals

 

 

3,128,862

 

 

 

1.0

%

 

 

5,628,861

 

 

 

2.0

%

Short-Term Business Credit

 

 

4,740,000

 

 

 

1.6

%

 

 

4,740,000

 

 

 

1.6

%

Soap, Detergents, and Cleaning

 

 

 

 

 

0.0

%

 

 

2,203,673

 

 

 

0.8

%

Telephone and Telegraph Apparatus

 

 

3,366,355

 

 

 

1.1

%

 

 

3,366,356

 

 

 

1.2

%

Telephone Communications

 

 

1,189,700

 

 

 

0.4

%

 

 

1,161,200

 

 

 

0.4

%

Water Transportation

 

 

12,929,666

 

 

 

4.4

%

 

 

12,986,279

 

 

 

4.3

%

Total

 

$

305,283,020

 

 

 

100.0

%

 

$

287,574,298

 

 

 

100.0

%

 

24


 

The table below shows the portfolio composition by geographic classification at fair value as of March 31, 2021 and December 31, 2020:

 

 

 

As of  March 31, 2021

 

 

As of December 31, 2020

 

 

 

Fair

 

 

Percentage

 

 

Fair

 

 

Percentage

 

Country

 

Value

 

 

of Total

 

 

Value

 

 

of Total

 

Argentina (1)

 

$

24,159,258

 

 

 

7.9

%

 

$

24,159,256

 

 

 

8.4

%

Botswana

 

 

4,740,000

 

 

 

1.6

%

 

 

4,740,000

 

 

 

1.7

%

Brazil

 

 

27,384,550

 

 

 

9.0

%

 

 

26,816,813

 

 

 

9.3

%

Cabo Verde

 

 

11,331,704

 

 

 

3.7

%

 

 

11,337,937

 

 

 

3.9

%

Cameroon

 

 

13,618,566

 

 

 

4.5

%

 

 

13,128,867

 

 

 

4.6

%

Chile

 

 

2,822,624

 

 

 

0.9

%

 

 

2,810,079

 

 

 

1.0

%

Colombia

 

 

6,487,336

 

 

 

2.1

%

 

 

3,062,598

 

 

 

1.1

%

Croatia

 

 

9,605,039

 

 

 

3.1

%

 

 

9,360,235

 

 

 

3.3

%

Ecuador

 

 

13,539,337

 

 

 

4.4

%

 

 

13,539,337

 

 

 

4.7

%

Ghana

 

 

12,551,220

 

 

 

4.1

%

 

 

13,685,366

 

 

 

4.8

%

Guatemala

 

 

10,504

 

 

 

0.0

%

 

 

10,504

 

 

 

0.0

%

Hong Kong

 

 

24,564,474

 

 

 

8.0

%

 

 

25,532,915

 

 

 

8.9

%

Indonesia

 

 

15,000,000

 

 

 

4.9

%

 

 

 

 

 

0.0

%

Jersey

 

 

1,189,700

 

 

 

0.4

%

 

 

1,161,200

 

 

 

0.4

%

Kenya

 

 

14,175,263

 

 

 

4.6

%

 

 

14,034,913

 

 

 

4.9

%

Malaysia

 

 

15,858,045

 

 

 

5.2

%

 

 

15,858,045

 

 

 

5.5

%

Mauritius

 

 

304,739

 

 

 

0.1

%

 

 

434,619

 

 

 

0.2

%

Mexico

 

 

30,787,959

 

 

 

10.1

%

 

 

29,730,723

 

 

 

10.3

%

Morocco

 

 

628,862

 

 

 

0.2

%

 

 

628,861

 

 

 

0.2

%

Namibia

 

 

15,099,527

 

 

 

4.9

%

 

 

15,242,460

 

 

 

5.3

%

Netherlands

 

 

9,521,444

 

 

 

3.1

%

 

 

8,893,693

 

 

 

3.1

%

New Zealand

 

 

 

 

 

0.0

%

 

 

 

 

 

0.0

%

Nigeria

 

 

14,443,889

 

 

 

4.9

%

 

 

14,500,502

 

 

 

5.0

%

Peru

 

 

4,737,437

 

 

 

1.6

%

 

 

4,737,437

 

 

 

1.7

%

Romania

 

 

1,848,001

 

 

 

0.6

%

 

 

1,821,078

 

 

 

0.6

%

Singapore

 

 

16,882,110

 

 

 

5.5

%

 

 

16,483,354

 

 

 

5.7

%

South Africa

 

 

497,462

 

 

 

0.2

%

 

 

497,462

 

 

 

0.2

%

United Arab Emirates

 

 

648,430

 

 

 

0.2

%

 

 

648,430

 

 

 

0.2

%

Uganda

 

 

9,087,477

 

 

 

3.0

%

 

 

8,755,878

 

 

 

3.0

%

Zambia

 

 

-

 

 

 

0.0

%

 

 

2,203,673

 

 

 

0.8

%

N/A

 

 

3,758,063

 

 

 

1.2

%

 

 

3,758,063

 

 

 

1.3

%

Total

 

$

305,283,020

 

 

 

100.0

%

 

$

287,574,298

 

 

 

100.0

%

 

(1)

All of the Company’s investments in Argentina are Participations in trade finance facilities originated by IIG TOF B.V. See Note 3 “Watch List Investments” for further information.

 

 

Note 4. Fair Value Measurements

The following table summarizes the valuation of the Company’s investments by the fair value hierarchy levels required under ASC 820 as of March 31, 2021:

 

 

 

Fair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Senior secured term loans

 

$

116,999,971

 

 

$

 

 

$

 

 

$

116,999,971

 

Senior secured term loan participations

 

 

132,165,337

 

 

 

 

 

 

 

 

 

132,165,337

 

Senior secured trade finance participations

 

 

51,160,031

 

 

 

 

 

 

 

 

 

51,160,031

 

Other investments

 

 

3,758,063

 

 

 

 

 

 

 

 

 

3,758,063

 

Equity warrants

 

 

1,199,618

 

 

 

 

 

 

 

 

 

1,199,618

 

Total

 

$

305,283,020

 

 

$

 

 

$

 

 

$

305,283,020

 

 

25


 

The following table summarizes the valuation of the Company’s investments by the fair value hierarchy levels required under ASC 820 as of December 31, 2020:

 

 

 

Fair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Senior secured term loans

 

$

106,899,154

 

 

$

 

 

$

 

 

$

106,899,154

 

Senior secured term loan participations

 

 

129,917,253

 

 

 

 

 

 

 

 

 

 

 

129,917,253

 

Senior secured trade finance participations

 

 

45,800,210

 

 

 

 

 

 

 

 

 

45,800,210

 

Other investments

 

 

3,758,063

 

 

 

 

 

 

 

 

 

 

 

3,758,063

 

Equity warrants

 

 

1,199,618

 

 

 

 

 

 

 

 

 

 

 

1,199,618

 

Total

 

$

287,574,298

 

 

$

 

 

$

 

 

$

287,574,298

 

 

 

The following is a reconciliation of activity for the three months ended March 31, 2021, of investments classified as Level 3: 

 

 

 

Fair Value at December 31, 2020

 

 

Purchases

 

 

Maturities or Prepayments

 

 

Accretion of discounts / Payment-in-kind interest

 

 

Net change in unrealized appreciation (depreciation)

 

 

Fair Value at March 31, 2021

 

Senior secured term loans

 

$

106,899,154

 

 

$

10,000,000

 

 

$

(2,899,280

)

 

$

3,000,097

 

 

$

 

 

$

116,999,971

 

Senior secured term loan participations

 

 

129,917,253

 

 

 

3,919,036

 

 

 

(3,432,837

)

 

 

2,737,212

 

 

 

(975,327

)

 

 

132,165,337

 

Senior secured trade finance participations

 

 

45,800,210

 

 

 

5,000,000

 

 

 

(129,787

)

 

 

489,608

 

 

 

 

 

 

51,160,031

 

Short term and other investments

 

 

3,758,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,758,063

 

Equity warrants

 

 

1,199,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,199,618

 

Total

 

$

287,574,298

 

 

$

18,919,036

 

 

$

(6,461,904

)

 

$

6,226,917

 

 

$

(975,327

)

 

$

305,283,020

 

 

There were no transfers into and out of Level 3 investments and no realized gains or losses for any of the Company’s investments classified as Level 3 during the three months ended March 31, 2021 and 2020. Net unrealized depreciation for the three months ended March 31, 2021 and 2020 reported in the Company’s consolidated statements of operations attributable to the Company’s Level 3 assets still held at period end were $975,327 and $8,678,718, respectively. These unrealized losses were primarily driven by macro events including the uncertainty created by the recent COVID-19 pandemic and its impact on the future cash flows generated by our investments as well as the ultimate realization of the underlying collateral.

As of March 31, 2021, all of the Company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the Company’s investments as of March 31, 2021:

 

 

 

Fair value

 

 

Valuation technique

 

Unobservable input

 

Range (weighted average)

 

Senior secured trade finance

   participations (2)

 

$

47,783,172

 

 

Income approach (DCF)

 

Market yield

 

8.0% - 14.6% (10.3%)

 

Senior secured trade finance

   participations (1)

 

$

3,376,859

 

 

Collateral based approach

 

Value of collateral (collateral coverage)

 

1.0x - 1.1x

 

Senior secured term loans

 

$

116,999,971

 

 

Income approach (DCF)

 

Market yield

 

8.0% - 14.5% (11.1%)

 

Senior secured term loan participations

 

$

132,165,337

 

 

Income approach  (DCF)

 

Market yield

 

10.3% - 14.75% (12.3%)

 

Other investments (3)

 

$

3,758,063

 

 

Income approach (DCF)

 

Market yield

 

8.80%

 

Equity warrants

 

$

1,199,618

 

 

Option Pricing Method

 

Estimated company value

 

N/A

 

 

(1)

Collateral based approach used for the following watch list investments: Procesos Fabriles S.A. ("Profasa") and Conplex International Ltd. (“Conplex”). See Note 3 “Watch List Investments” for further information.

(2)

The Company used the income approach for all Watch List investments except for Conplex, Sancor and Profasa and a hybrid of the collateral based approach and the income approach for Sancor, using additional unobservable inputs including recovery rates ranging from 15% to 30%, after considering potential and ongoing litigation and expected collection period ranging from 2 to 3 years. See Note 3 Watch List Investmentsfor further information.

(3)

Receivable from IIG TOF B.V. using additional discount rate of 20%. The Company considers this asset to be a receivable from IIG TOF B.V. rather than a Participation in a trade finance facility; therefore, the income approach is being applied.

(4)

The weighted average is the total annual interest of each investment divided by total amortized cost.

26


As of December 31, 2020, all of the Company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the Company’s investments as of December 31, 2020:

 

 

 

Fair value

 

 

Valuation technique

 

Unobservable input

 

Range (weighted average)

 

Senior secured trade finance

   participations (2)

 

$

42,423,350

 

 

Income approach (DCF)

 

Market yield

 

8.5% - 17.5% (10.5%)

 

Senior secured trade finance

   participations (1)

 

$

3,376,860

 

 

Collateral based approach

 

Value of collateral (collateral coverage)

 

1.0x - 1.1x

 

Senior secured term loans

 

$

106,899,154

 

 

Income approach (DCF)

 

Market yield

 

11.0% - 14.5% (11.4%)

 

Senior secured term loan participations

 

$

129,917,253

 

 

Income approach  (DCF)

 

Market yield

 

10.3% - 15.0% (12.3%)

 

Other investments (3)

 

$

3,758,063

 

 

Income approach (DCF)

 

Market yield

 

8.80%

 

Equity warrants

 

$

1,199,618

 

 

Option Pricing Method

 

Estimated company value

 

N/A

 

 

(1)

Collateral based approach used for the following Watch List investments: Procesos Fabriles S.A. (“Profasa”) and Conplex International Ltd. (“Conplex”). See Note 3 “Watch List Investments” for further information.

(2)

The Company used the income approach for all Watch List investments except for Conplex, Sancor and Profasa and a hybrid of the collateral based approach and the income approach for Sancor, using additional unobservable inputs including recovery rates ranging from 15% to 30%, after considering potential and ongoing litigation and expected collection period ranging from 2 to 3 years. See Note 3 Watch List Investmentsfor further information.

(3)

Receivable from IIG TOF B.V. using additional discount rate of 20%. The Company considers this asset to be a receivable from IIG TOF B.V. rather than a Participation in a trade finance facility; therefore, the income approach is being applied.

(4)

The weighted average is the total annual interest of each investment divided by total amortized cost.

The significant unobservable Level 3 inputs used in the fair value measurement of the Company’s investments are market yields used to discount the estimated future cash flows expected to be received from the underlying investments, which include both future principal and interest payments. Significant increases in market yields would result in significantly lower fair value measurements. In addition, a significant decrease in future cash flows is expected to be received from the underlying investments due to a projected decrease in results of operations and cash flows from the underlying investments, would result in significantly lower fair value measurements.

For additional information concerning of the country-specific risk concentrations for the Company’s investments, refer to the Consolidated Schedule of Investments and Note 3.

 

Note 5. Contingencies and Related Parties

Agreements

Advisory Agreement

The current term of the Advisory Agreement between the Company and the Advisor, (the “Advisory Agreement”) ends on February 25, 2022, subject to an unlimited number of one-year renewals upon mutual consent of the Company and the Advisor.

Asset management fees payable to the Advisor are remitted quarterly in arrears and are equal to 0.50% (2.00% per annum) of Gross Asset Value, as defined in the Advisory Agreement between the Company and the Advisor. Asset management fees are paid to the Advisor in exchange for fund management and administrative services. Although the Advisor manages, on the Company’s behalf, many of the risks associated with global investments in developing economies, management fees do not include the cost of any hedging instruments or insurance policies that may be required to appropriately manage the Company’s risk.

If certain financial goals are reached by the Company, the Company is required to pay the Advisor an incentive fee that is comprised of two parts: (i) a subordinated fee on net investment income and (ii) an incentive fee on capital gains. The subordinated incentive fee on income is calculated and payable quarterly in arrears and is based upon the Company’s pre-incentive fee net investment income for the immediately preceding quarter. No subordinated incentive fee is earned by the Advisor in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the quarterly preferred return rate of 1.50% (6.00% annualized) (the “Preferred Return”). In any quarter, all of the Company’s pre-incentive fee net investment income, if any, that exceeds the quarterly Preferred Return, but is less than or equal to 1.875% (7.50% annualized) at the end of the immediately preceding fiscal quarter, is payable to the Advisor. For any quarter in which the Company’s pre-incentive fee net investment income exceeds 1.875% on its net assets at the end of the immediately preceding fiscal quarter, the subordinated incentive fee on income equals 20% of the amount of the Company’s pre-incentive fee net investment income.

27


An incentive fee on capital gains will be earned on investments sold and shall be determined and payable to the Advisor in arrears as of the end of each calendar year. The incentive fee on capital gains is equal to 20% of the Company’s realized capital gains on a cumulative basis from inception, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees on capital gains. The Company had no capital gains and therefore did not accrue an incentive fee on capital gains for the three months ended March 31, 2021 and 2020.

Transactions

    For the three months ended March 31, 2021 and 2020, the Advisor earned $1,809,230 and $1,846,556, respectively, in asset management fees and $781,456 and $851,111, respectively, in incentive fees.

As of March 31, 2021 and December 31, 2020, due from affiliates on the Consolidated Statement of Assets and Liabilities in the amount of $4,057,734 and $4,057,734, respectively was due from the Sponsor pursuant to the Responsibility Agreement for operating expenses which were paid by the Company, but, under the terms of the Responsibility Agreement, are the responsibility of the Sponsor. The Sponsor anticipates paying this receivable in the due course of business.

 

Note 6. Organization and Offering Costs

The Sponsor previously paid approximately $17,602,000 of offering costs and $236,000 of organization costs relating to the Offering, all of which were paid directly by the Sponsor on behalf of the Company.  Such amounts include approximately $12,000 and $0 of offering costs incurred by the Sponsor during the three months ended March 31, 2021 and 2020, respectively. During the three months ended March 31, 2021 and 2020, the Company paid approximately $80,000 and $0 in reimbursement of offering costs to the Sponsor, respectively. Such offering costs reimbursed by the Company have been recognized against the proceeds from the issuance of units.

Since the commencement of the Company’s operations, the Company has reimbursed the Sponsor a total of approximately $17,318,000 of offering and organization costs as of March 31, 2021.  

For the three months ended March 31, 2021 and 2020, we paid SC Distributors, the dealer manager for certain of our offerings, approximately $111,000 and $122,000, respectively in ongoing distribution fees, dealer manager fees and service fees.

 

Note 7. Notes Payable

The Company notes payable consist of the following:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Outstanding Balance

 

 

Outstanding Balance

 

Christian Super promissory note

 

$

5,000,000

 

 

$

5,000,000

 

Total notes payable

 

$

5,000,000

 

 

$

5,000,000

 

 

Christian Super Promissory Notes

       On December 18, 2018, Trilinc Global Impact Fund Cayman, Ltd. (“TGIFC”) issued $5 million of Series 2 Senior Secured Promissory Notes (“CS Note”) to State Street Australia Ltd ACF Christian Super (“Christian Super”) pursuant to the CS Notes private offering. The CS Note has an interest rate of 3.5% per annum plus one-year LIBOR (3.83% as of March 31, 2021) and interest is payable quarterly in arrears within 15 days after the end of each calendar quarter. The interest rate may not exceed the maximum rate of non-usurious interest permitted by applicable law, with excess interest to be applied to the principal amount of the CS Note. The entire principal balance under the CS Note (and any unpaid interest) is due in one balloon payment on December 18, 2021, which is the fourth anniversary of the issuance date. The principal balance of the CS Note may be prepaid prior to the maturity date without premium or penalty.  

 

  

TGIFC’s obligation under the CS Note is secured by an equitable mortgage pursuant to the Equitable Mortgage Over Shares by and between TGIFC and the Noteholders, dated as of August 7, 2017 (the “CS Equitable Mortgage”), granting the holder of the CS Note a mortgage over 10 shares out of a total of 32.11 of the issued and outstanding shares of the Subsidiaries. While the collateral initially pledged under the CS Equitable Mortgage greatly exceeds the amount funded under the CS Note based on the current net asset value of the Company’s investments held by the Subsidiaries, the Company may issue more shares of the Subsidiaries to secure further financing obligations as long as the pro rata value of TGIFC shares (based on the aggregate net asset value of the investments held by the Subsidiaries) is equal to at least the outstanding amount due and payable under the CS Note.  The CS Note and the CS Equitable Mortgage contain representations, warranties and covenants customary for financing and mortgage arrangements of this type. As of March 31, 2021, the Company was in full compliance with all such representations, warranties and covenants.

28


For the three months ended March 31, 2021 and 2020, the Company recognized $47,268 and $68,537, respectively, in interest expense. Due to the variable rate structure of these borrowings, the carrying basis of these debt obligations is considered to approximate their fair value.

The principal payments due on borrowings for each of the next five years ending December 31 and thereafter, are as follows:

 

Year ending December 31:

 

Principal payments

 

2021

 

$

5,000,000

 

Thereafter

 

 

-

 

 

 

$

5,000,000

 

 

Note 8. Unit Capital

As of March 31, 2021, the Company had six classes of units: Class A, Class C, Class I, Class W, Class Y and Class Z units. The unit classes have been sold with different upfront sales commissions and dealer manager fees as well as different ongoing distribution fees, dealer manager fees and/or service fees with respect to certain classes of units, including a distribution fee with respect to Class C units, an ongoing dealer manager fee with respect to Class I and Class W units, and an ongoing service fee with respect to Class W units. As of March 31, 2021, the Company recorded a liability in the aggregate amount of $476,000 for the estimated future amount of ongoing distribution fees, dealer manager fees and service fees payable. The estimated liability as of March 31, 2021 is calculated based on a net asset value per Class C, Class I and Class W units of $7.60 with a distribution fee of 0.80% for Class C units, an ongoing dealer manager fee of 0.50% for Class I units, and ongoing aggregate dealer and service fees of 0.75% for Class W units, per annum applied to the net asset value, during the expected period that Class C, Class W and Class I units remain outstanding, and discounted using an annual rate of 4%. All units participate in the income and expenses of the Company on a pro-rata basis based on the number of units outstanding. The following table is a summary of unit activity during the three months ended March 31, 2021:

 

 

 

Units

 

 

 

 

 

 

 

 

 

 

Units

 

 

 

Outstanding

 

 

 

 

 

 

Units

 

 

Outstanding

 

 

 

as of

 

 

Units Issued

 

 

Repurchased

 

 

as of

 

 

 

December 31,

 

 

During

 

 

During

 

 

March 31,

 

 

 

2020

 

 

the Period

 

 

the Period

 

 

2021

 

Class A units

 

 

17,996,350

 

 

 

137,846

 

 

 

(100,664

)

 

 

18,033,532

 

Class C units

 

 

7,970,536

 

 

 

68,933

 

 

 

(67,094

)

 

 

7,972,375

 

Class I units

 

 

10,454,368

 

 

 

83,026

 

 

 

(105,049

)

 

 

10,432,345

 

Class W units

 

 

24,555

 

 

 

-

 

 

 

-

 

 

 

24,555

 

Class Y units

 

 

1,937,455

 

 

 

237,923

 

 

 

(17,281

)

 

 

2,158,097

 

Class Z units

 

 

8,423,851

 

 

 

-

 

 

 

-

 

 

 

8,423,851

 

Total

 

 

46,807,115

 

 

 

527,728

 

 

 

(290,088

)

 

 

47,044,755

 

 

The total of 527,728 units issued during the three months ended March 31, 2021 included 290,117 units issued under the DRP at a value of $2,217,000 and 237,923 units sold pursuant to our private placement for aggregate gross proceeds of $1,824,000.

Beginning June 11, 2014, the Company commenced a unit repurchase program pursuant to which the Company may conduct quarterly unit repurchases of up to 5% of the weighted average number of outstanding units in any 12-month period to allow the Company’s unitholders, who have held units for a minimum of one year, to sell their units back to the Company at a price equal to the most recently determined net asset value per unit for each class of units, as most recently disclosed by the Company in a public filing with the SEC at the time of repurchase. Repurchases for the first quarter of 2021 have been made at a price equal to $7.60 per unit, which was the net asset value per unit of each class as of December 31, 2020, the most recently disclosed net asset value at the time of repurchase.

The unit repurchase program includes numerous restrictions, including a one-year holding period, that limit the ability of the Company’s unitholders to sell their units. Unless the Company’s board of managers determines otherwise, the Company will limit the number of units to be repurchased during any calendar year to the number of units that can be repurchased with the proceeds the Company receives from the sale of units under the Company’s DRP. At the sole discretion of the Company’s board of managers, the Company may also use cash on hand, cash available from borrowings and cash from the repayment or liquidation of investments as of the end of the applicable quarter to repurchase units.

During the three months ended March 31, 2021, the Company fulfilled repurchase requests for a total of 290,088 units at a weighted average repurchase price per unit of $7.60 for an aggregate repurchase price of $2,205,383. As of March 31, 2021, $2,136,340 of these repurchase requests were pending processing and were completed by the Company in April 2021. For the quarter ended March 31, 2021, eligible repurchase requests exceeded the limitations of the Company’s unit repurchase program described above and the requests were fulfilled on a pro rata basis, such that the Company fulfilled 10.53% of eligible repurchase requests (based on the number of units submitted for repurchase) and approximately 2,169,000 units were not redeemed. Pursuant to the terms of the Company’s unit repurchase program, the unsatisfied portion of repurchase requests that were not fulfilled at quarter-end will be

29


carried over to the next quarter and treated as a request for repurchase at the next quarter-end repurchase date, unless the repurchase request is withdrawn.

 

Note 9. Distributions

Since July 2013, the Company has paid monthly distributions for all classes of units. The following table summarizes the distributions paid for the three months ended March 31, 2021:

 

 

 

 

 

Daily Rate

 

 

Cash

 

 

Distributions

 

 

Total

 

Month ended

 

Date Declared

 

Per Unit

 

 

Distributions

 

 

Reinvested

 

 

Declared

 

January 31, 2021

 

November 10, 2020

 

$

0.00168675

 

 

$

1,676,282

 

 

$

767,969

 

 

$

2,444,251

 

February 28, 2021

 

November 10, 2020

 

$

0.00168675

 

 

 

1,519,708

 

 

 

695,616

 

 

 

2,215,324

 

March 31, 2021

 

February 26, 2021

 

$

0.00168675

 

 

 

1,710,833

 

 

 

753,903

 

 

 

2,464,736

 

Total for 2021

 

 

 

 

 

 

 

$

4,906,823

 

 

$

2,217,488

 

 

$

7,124,311

 

 

On March 26, 2021, the Company’s board of managers determined that it is in the Company’s best interests, that, for periods on and after May 1, 2021, the Company’s daily distribution rate will be more closely tied to the most recently determined NAV per unit that the Company has disclosed in a public filing with the SEC at the time the distribution is declared. Accordingly, with the authorization of the Company’s board of managers, on March 31, 2021, the Company declared a daily distribution rate of $0.00145753 per unit (less the ongoing fees applicable to certain classes of units which reduce the amount of distributions paid to the applicable unitholders) for the month of May 2021, which is equal to an annualized rate of approximately 7.0% of the NAV of $7.600 per unit, determined as of December 31, 2020. This daily distribution rate is lower than the daily distribution rate of $0.00168675 per unit, per day that had been declared by the Company with respect to distributions from March 2018 through April 2021. The board of managers expects to maintain the declaration and payment of distributions at an annualized rate equal to approximately 7.0% of the most recently determined NAV per unit that the Company has disclosed in a public filing with the SEC at the time the distribution is declared, which means the distribution rate is expected to remain relatively constant as a percentage of the Company’s NAV per unit.  However, the board of managers may determine, in its discretion at any time, to change the rate at which distributions are paid or to not pay distributions at all. Given that the Company’s NAV per unit varies from quarter to quarter, it is expected that, even if the approximate annualized rate at which distributions are declared remains constant, the actual per unit dollar amount of distributions paid to unitholders may vary from time to time in concert with variations in the Company’s NAV. The payment of distributions is uncertain and cannot be guaranteed.

 

 

Note 10. Financial Highlights

The following is a schedule of financial highlights of the Company for the three months ended March 31, 2021 and 2020:

 

 

Three months ended

 

 

March 31,

 

 

March 31,

 

 

2021

 

 

2020

 

Per unit data (1):

 

 

 

 

 

 

 

Net asset value at beginning of period

$

7.58

 

 

$

8.01

 

Net investment income

$

0.11

 

 

$

0.12

 

Net change in unrealized depreciation on investments

$

(0.02

)

 

$

(0.19

)

Net increase in net assets resulting from operations

$

0.09

 

 

$

(0.07

)

Distributions

$

(0.15

)

 

$

(0.15

)

Net change in accrued distribution and other fees

$

-

 

 

$

-

 

Net decrease in net assets

$

(0.06

)

 

$

(0.22

)

Net asset value at end of period (2)

$

7.52

 

 

$

7.79

 

Total return based on net asset value (3)

 

1.22

%

 

 

-0.84

%

Net assets at end of period

$

354,255,225

 

 

$

361,613,459

 

Units Outstanding at end of period

 

47,044,755

 

 

 

46,417,517

 

Ratio/Supplemental data (annualized) (3):

 

 

 

 

 

 

 

Ratio of net investment income to average net assets

 

6.27

%

 

 

6.08

%

Ratio of net operating expenses to average net assets

 

5.04

%

 

 

4.89

%

 

1

The per unit data was derived by using the weighted average units outstanding during the three months ended March 31, 2021 and 2020, which were 47,002,965 and 46,381,431, respectively.

30


2

For financial statement reporting purposes under GAAP, as of March 31, 2021 and 2020, the Company recorded a liability in the amount of $476,000 and $637,000, respectively, for the estimated future amount of Class C distribution fees, Class I dealer manager fees, Class W dealer manager fees and Class W services fees payable. This liability is reflected in this table, which is consistent with the financial statements.  While the Company follows GAAP for financial reporting purposes, it has determined that deducting the accrual for the estimated future amount of Class C distribution fees, Class I dealer manager fees, Class W dealer manager fees and Class W services fees may not be the appropriate approach for determining the net asset value used on the quarterly investor statements and for other purposes. The Company believes that not making such deduction for purposes of net asset value determination is consistent with the industry standard and is more appropriate since the Company intends for the net asset value to reflect the estimated value on the date that the Company determines its net asset value.

3

The Company’s net investment income has been annualized assuming consistent results over a full fiscal year, however, this may not be indicative of actual results over a full fiscal year.

 

Note 11. Subsequent Events

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Except as discussed below, there have been no subsequent events that occurred during such period that would require disclosure in the Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three months ended March 31, 2021.

Distributions

With the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from April 1 through April 30, 2021. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00168675 per unit per day (less the distribution fee with respect to Class C units, the ongoing dealer manager fee with respect to certain Class I units and Class W units, and the ongoing service fee with respect to Class W units).

The cash distributions for April totaled $1,630,113. With respect to unitholders participating in the Distribution Reinvestment Plan, $741,528 of the distributions for April were reinvested in units.

The Company’s board of managers has authorized the declaration of distributions for June, July and August of 2021. These distributions will be calculated based on unitholders of record for each day in an amount equal to $0.00144603 per unit per day (less the distribution fee with respect to Class C units, the ongoing dealer manager fee with respect to certain Class I units and Class W units and the ongoing service fee with respect to Class W units). On an annualized basis, these distributions are equal to approximately 7.0% of the NAV per unit of $7.54, determined as of March 31, 2021. These distributions will be paid in cash or reinvested in units, for those unitholders participating in the Distribution Reinvestment Plan, on or about the first day of the month following the month to which the distributions relate. There can be no assurances that distributions will continue to be paid at this rate in subsequent periods or at all.

 

Operating Expense Responsibility Agreement

     On May 12, 2021, the Company entered into the Second Amended and Restated Operating Expense Responsibility Agreement with the Advisor and the Sponsor (the “Amended Responsibility Agreement”).  The Amended Responsibility Agreement amends and replaces the Responsibility Agreement and amended the manner in which reimbursements to the Sponsor under the agreement will be allocated.  Since the inception of the Company through December 31, 2017, pursuant to the terms of the Responsibility Agreement, the Sponsor paid approximately $12,420,600 of operating expenses, asset management fees, and incentive fees on behalf of the Company and will reimburse to the Company an additional $4,057,734 of expenses, which had been paid by the Company as of December 31, 2017.

     Pursuant to the Amended Responsibility Agreement, the Sponsor will only be entitled to reimbursement of the cumulative expenses it has incurred on the Company’s behalf to the extent the Company’s investment income in any quarter, as reflected on the statement of operations, exceeds the sum of (a) total distributions to unitholders incurred during the quarter and (b) the Company’s expenses as reflected on the statement of operations for the same quarter (the “Reimbursement Hurdle”). If the Sponsor is entitled to receive reimbursement for any given quarter because the Company’s investment income exceeds the Reimbursement Hurdle for such quarter, the Company will apply 50% of the excess amount (the “Reimbursement Amount”) for such quarter as follows: (i) first, the Company will apply the Reimbursement Amount to reimburse the Sponsor for all expenses, other than asset management fees and incentive fees, that the Sponsor previously paid on the Company’s behalf, which will generally consist of operating expenses (the “Previously Paid Operating Expenses”) until all Previously Paid Operating Expenses have been reimbursed; and (ii) second, the Company will apply the Reimbursement Amount remaining after the payment of Previously Paid Operating Expenses to reimburse the Sponsor for the asset management fees and incentive fees that the Sponsor has agreed to pay on the Company’s behalf until all such asset management fees and incentive fees accrued to date have been reimbursed.

31


Company Strategy
  

Although the Company has a perpetual duration, it disclosed previously that if the Company does not consummate a liquidity event by August 25, 2021, it would commence an orderly liquidation of its assets unless a majority of the board of managers, including a majority of the independent managers, determines that liquidation is not in the best interests of the Company’s unitholders. Following the completion of a review process, in May 2021, the board of managers, including all of the independent managers, determined that a liquidation was not in the best interests of the Company’s unitholders and approved the continuation of the Company’s operations for at least an additional 12 months, until August 26, 2022. 

 

Investments

Subsequent to March 31, 2021 through May 14, 2021, the Company funded approximately $1.2 million in new investments and received proceeds from repayment of investments of approximately $2.4 million.

 

 

 

32


 

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

The following discussion and analysis should be read in conjunction with the Company’s financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q.

Except as otherwise specified, references to “we,” “us,” “our,” or the “Company,” refer to TriLinc Global Impact Fund, LLC.

Forward Looking Statements

Some of the statements in this Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties, including statements as to:

 

our future operating results;

 

our ability to purchase or make investments in a timely manner;

 

our business prospects and the prospects of our borrowers;

 

the impact of the COVID-19 pandemic and actions taken to prevent its spread on our business, results of operations, financial condition, liquidity and net asset value per unit;

 

the economic, social and/or environmental impact of the investments that we expect to make;

 

our contractual arrangements and relationships with third parties;

 

our ability to make distributions to our unitholders;

 

the dependence of our future success on the general economy and its impact on the companies in which we invest;

 

the availability of cash flow from operating activities for distributions and payment of operating expenses;

 

the performance of our Advisor, our sub-advisors and our Sponsor;

 

our dependence on our Advisor and our dependence on and the availability of the financial resources of our Sponsor;

 

the ability of our borrowers to make required payments;

 

our Advisor’s ability to attract and retain sufficient personnel to support our growth and operations;

 

the lack of a public trading market for our units;

 

our ongoing litigation;

 

our ability to borrow funds;

 

our expected financings and investments;

 

the adequacy of our cash resources and working capital;

 

performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments;

 

any failure in our Advisor’s or sub-advisors’ due diligence to identify all relevant facts in our underwriting process or otherwise;

 

the ability of our sub-advisors and borrowers to achieve their objectives;

 

the effectiveness of our portfolio management techniques and strategies;

 

failure to maintain effective internal controls; and

 

the loss of our exemption from the definition of an “investment company” under the Investment Company Act of 1940, as amended.

We use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason.

The foregoing list of factors is not exhaustive. We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC.

Overview

We make impact investments in SMEs that provide the opportunity to achieve both competitive financial returns and positive measurable impact. We were organized as a Delaware limited liability company on April 30, 2012. We have operated and intend to continue to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act of 1940, as amended. We use the proceeds raised from the issuance of units to invest in SMEs through local market sub-advisors in a diversified portfolio of financial assets, including direct loans, loan participations, convertible debt instruments, trade finance, structured credit and preferred and common equity investments. A substantial portion of our assets consists of collateralized private debt instruments, which we believe offer opportunities for competitive risk-adjusted returns and income generation. We are externally managed and advised by TriLinc Advisors, LLC, or the Advisor. The Advisor is an investment advisor registered with the SEC.

33


Our business strategy is to generate competitive financial returns and positive economic, social and environmental impact by providing financing to SMEs, which we define as those business having less than 500 employees, primarily in developing economies. To a lesser extent, we may also make impact investments in companies that may not meet our technical definition of SMEs due to a larger number of employees but that also provide the opportunity to achieve both competitive financial returns and positive measurable impact. We generally expect that such investments will have similar investment characteristics as SMEs as defined by us. Our style of investment is referred to as impact investing, which J.P. Morgan Global Research and Rockefeller Foundation in a 2010 report called “an emerging alternative asset class” and defined as investing with the intent to create positive impact beyond financial return. We believe it is possible to generate competitive financial returns while creating positive, measurable impact. We measure the economic, social and environmental impact of our investments using industry-standard metrics, including the Impact Reporting and Investment Standards. Through our investments in SMEs, we intend to enable job creation and stimulate economic growth.

We commenced the Offering on February 25, 2013. Pursuant to the Offering, we were offering on a continuous basis up to $1.5 billion in units of our limited liability company interest, consisting of up to $1.25 billion of units in the primary offering consisting of Class A and Class C units at initial offering prices of $10.00 and $9.576 per unit, respectively, and Class I units at $9.025 per unit, and up to $250 million of units pursuant to our Distribution Reinvestment Plan. SC Distributors, LLC was the dealer manager for the Offering. In May 2012, the Advisor purchased 22,161 Class A units for aggregate gross proceeds of $200,000. On June 11, 2013, we satisfied the minimum offering requirement of $2,000,000 when the Sponsor purchased 321,330 Class A units for aggregate gross proceeds of $2,900,000 and we commenced operations. The Offering terminated on March 31, 2017.  Through the termination of the Offering, we raised approximately $361,776,000 in gross proceeds, including approximately $13,338,000 raised through our Distribution Reinvestment Plan.

Upon termination of the primary portion of the Offering, we registered $75 million in Class A, Class C and Class I units to continue to be offered pursuant to our Distribution Reinvestment Plan to the investors who have purchased units in the Offering.  Units issued pursuant to our Distribution Reinvestment Plan are being offered at the price equal to the net asset value per unit of each class of units, as most recently disclosed by the Company in a public filing with the SEC at the time of reinvestment. Our Distribution Reinvestment Plan was amended, effective May 25, 2020, to allow holders of all classes of units other than Class Z units to participate, including holders who purchased units in our private placements. The offering must be registered or exempt from registration in every state in which we offer or sell units. If the offering is not exempt from registration, the required registration generally is for a period of one year. Therefore, we may have to stop selling units in any state in which the registration is not renewed annually and the offering is not otherwise exempt from registration.

From time to time we opportunistically seek to raise capital through sales of our common units in private placements that are exempt from registration under the Securities Act, as amended (the “Securities Act”). For example, we currently are seeking to raise up to $100,000,000 in a continuous private offering of our Class Y and Class Z units that will expire on June 30, 2021, unless terminated earlier by us.

For the three months ended March 31, 2021, we issued 290,117 of our units pursuant to our Distribution Reinvestment Plan for gross proceeds of approximately $2,217,000. In addition, for the three months ended March 31, 2021, we issued 237,923 of our units for gross proceeds of approximately $1,824,000 pursuant to our ongoing private placement described above. As of March 31, 2021, $35,212,000 in units remained available for sale pursuant to the Distribution Reinvestment Plan.

From our inception to March 31, 2021, we have issued an aggregate of 53,302,459 of our units, including 6,257,704 units issued under our Distribution Reinvestment Plan, for gross proceeds of approximately $497,072,000 including approximately $53,126,000 reinvested under our Distribution Reinvestment Plan (before dealer manager fees of approximately $4,801,000 and selling commissions of $16,862,000), for net proceeds of $475,409,000.

 

 

Impact of COVID-19

There is an ongoing COVID-19 pandemic (more commonly referred to as the Coronavirus), which continues to adversely impact many industries and businesses directly or indirectly. Adverse impacts include disrupted global travel and supply chains, which adversely impact global commercial activity.  Many businesses across the globe have seen a downturn in production and productivity due to the suspension of business and temporary closure of offices and factories that was prevalent during most of 2020, in an attempt to curb the spread of the Coronavirus. Any of these adverse developments could have a material adverse effect on our business, financial condition and results of operations. In addition, if COVID-19 further adversely impacts the Company’s borrowers’ businesses, financial condition and results of operations, it may result in their inability to make required payments in the near term, which could impact the fair value of the Company’s investments. Although multiple vaccines have been approved for use in certain countries and the vaccination rates in the United States and certain other parts of the world have been encouraging, there is still uncertainty as to when a sufficient portion of the population will be vaccinated such that restrictions and safety protocols can be fully relaxed. For the three months ended March 31, 2021, the Company’s cash flows and operations were not materially impacted by COVID-19; however, during the year ended December 31, 2020, the Company made material adjustments to the fair value of certain of its investments due to the impact of COVID-19.  These adjustments, which amounted to $6,417,933 in the aggregate during the year ended December 31, 2020, were made with respect to 21.8% of the Company’s investments (calculated based on the aggregate fair value of the Company’s total investments as of March 31, 2021).

Although the Coronavirus has created material uncertainty and economic disruption, due to the rapidly evolving nature of the situation, we cannot predict the ultimate impact it will have on us. The Company is managing the situation through active engagement with its borrowers and is analyzing the potential effects COVID-19 may have on the portfolio or any potential capital deployments.

34


Additionally, our Advisor has implemented its business continuity plan and additional procedures designed to protect against the introduction of the coronavirus to the workforce, including permitting and encouraging employees to work remotely, temporarily ceasing travel and significantly enhanced office sterilization procedures to minimize the probability of contagion.

While many of the Company’s borrowers' businesses have experienced some disruption related to COVID-19, degrees of effect have varied to-date.  As indicated under "-Watch List Investments" below, the borrowers with respect to three of the six investments added to the Watch List for the year ended December 31, 2020 have not made required payments in part due to adverse impacts they have experienced related to the COVID-19 pandemic. Where appropriate, the Company and/or the Company’s sub-advisors are working with borrowers to restructure facilities and may restructure additional facilities to provide relief needed by certain borrowers, without necessarily providing concessions that are out of market. In the case of one investment, where efforts to reach an appropriate risk-adjusted restructuring have been unsuccessful, the Company sub-advisor issued a notice of default and acceleration notice, including the initiation of legal proceedings to recover amounts due, which remain ongoing. Due to the disruptions associated with COVID-19, the Company can provide no assurances that it will be able to continue to collect interest and principal payments at levels comparable to those prior to the pandemic. Further, the Company can provide no assurances that it will be able to recover all past due amounts from delinquent borrowers. The economic uncertainty and disruption caused by the pandemic is expected to be prolonged and the Company may see further defaults and additional investments may be added to the Watch List in subsequent quarters. The adverse impact of COVID-19 was a significant contributor to the $0.06 decline in the Company’s NAV per unit as of March 31, 2021, as compared to the Company’s NAV per unit as of December 31, 2020.

In addition, the Company saw a slowdown in transaction volume due to the impact of the pandemic through most of 2020, as smaller SMEs and those in industries most affected by COVID-19 (travel and hospitality, retail sales, etc.) were no longer in a position to appropriately add debt capital.  Transaction volumes may continue to be affected by restrictions on travel and other shelter in place orders, making it more difficult to conduct in-person visits with potential borrowers. Additionally, in future periods, the Company may hold higher levels of cash than before the pandemic to ensure it has sufficient cash available to meet its cash obligations. Uncertain or inconsistent deployment of capital or higher cash balances each have the potential to further reduce cash flow generated to cover the Company’s distributions to its unitholders and/or cause the Company to further reduce its NAV in future periods.

 

Investments

Our investment objectives are to provide our unitholders current income, capital preservation, and modest capital appreciation. These objectives are achieved primarily through SME trade finance and term loan financing, while employing rigorous risk-mitigation and due diligence practices, and transparently measuring and reporting the economic, social and environmental impacts of our investments. The majority of our investments are senior and other collateralized loans to SMEs with established, profitable businesses in developing economies. To a lesser extent, we may also make investments in financing to companies that may not meet our technical definition of SMEs due, for example, to the companies having a larger number of employees, but that also provide the opportunity to achieve both competitive financial returns and positive measurable impact. Furthermore, we may also make investments in developed economies, including the United States. With the sub-advisors that our Advisor has contracted with to assist the Advisor in implementing the Company’s investment program, we expect to provide growth capital financing generally ranging in size from $5-20 million per transaction for direct SME loans and $500,000 to $15 million for trade finance transactions. We seek to protect and grow investor capital by: (1) targeting countries with favorable economic growth and investor protections; (2) partnering with sub-advisors with significant experience in local markets; (3) focusing on creditworthy lending targets who have at least 3-year operating histories and demonstrated cash flows enabling loan repayment; (4) making primarily debt investments, backed by collateral and borrower guarantees; (5) employing best practices in our due diligence and risk mitigation processes; and (6) monitoring our portfolio on an ongoing basis. By providing additional liquidity to growing small businesses, we believe we support both economic growth and the expansion of the global middle class.

Investments will continue to be primarily credit facilities and participations in credit facilities to developing economy SMEs, including trade finance and term loans, through the Advisor’s team of professional sub-advisors with a local presence in the markets where they invest. As of March 31, 2021, more than a majority of our investments were in the form of participations and we expect that future investments will continue to be primarily participations. We typically provide financing that is collateralized, has a short to medium-term maturity and is self-liquidating through the repayment of principal. Our counterparty for participations generally will be the respective sub-advisor or its affiliate that originates the loan in which we are participating.  We will not have a contract with the underlying borrower and therefore, in the event of default, we will not have the ability to directly seek recovery against the collateral and instead will have to seek recovery through our sub-advisor counterparty, which increases the risk of full recovery.

Certain investments, including loans and participations, may carry equity warrants on borrowers, which allow us to buy shares of the portfolio company at a given price, which we will exercise at our discretion during the life of the portfolio company. Our goal is to ultimately dispose of such equity interests and realize gains upon the disposition of such interests. However, these warrants and equity interests are illiquid and it may be difficult for the Company to dispose of them. In addition, we expect that any warrants or other return enhancements received when we make or invest in loans may require several years to appreciate in value and may not appreciate at all.

35


LIBOR

In July 2017, the United Kingdom’s Financial Conduct Authority (“FCA”) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR. As a result, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR in derivatives and other financial contracts. We are not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, interest rates of our debt could decrease, which could adversely affect our operating results. In addition, uncertainty about the extent and manner of future changes may result in interest rate that are higher or lower than if LIBOR were to remain available in the current form.

LIBOR is expected to be phased out or modified by June 2023, and the writing of contracts using LIBOR is expected to stop by the end of 2021. As of March 31, 2021, 15% of the fair value of the Company’s total investments bore interest at floating rates based on LIBOR. There can be no assurances as to whether such replacement or alternative rate will be more or less favorable than LIBOR. We intend to monitor the developments with respect to the potential phasing out of LIBOR after 2023 and work with our sub-advisors to seek to ensure any transition away from LIBOR will have minimal impact on our investments, but we can provide no assurances regarding the impact of the discontinuation of LIBOR.

Revenues

Since we anticipate that the majority of our assets will continue to consist of trade finance instruments and term loans, we expect that the majority of our revenue will continue to be generated in the form of interest. Our senior and subordinated debt investments may bear interest at a fixed or floating rate. Interest on debt securities is generally payable monthly, quarterly or semi-annually. In some cases, some of our investments provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally is due at the maturity date. In addition, we generate revenue in the form of acquisition and other fees in connection with some transactions. Original issue discounts and market discounts or premiums are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans and debt securities as interest income. Dividend income, if any, will be recognized on an accrual basis to the extent that we expect to collect such amounts.

Expenses

Our primary operating expenses include the payment of asset management fees and expenses reimbursable to our Advisor under the Advisory Agreement. We bear all other costs and expenses of our operations and transactions.

From our inception through December 31, 2017, under the terms of the Expense Responsibility Agreement, our Sponsor assumed substantially all our operating expenses. Our Sponsor has not assumed any of our operating expenses subsequent to December 31, 2017. As of December 31, 2017, the Sponsor had agreed to pay a cumulative total of approximately $16.5 million of operating expenses, of which $16.1 million have not been reimbursed to the Sponsor as of March 31, 2021.

Portfolio and Investment Activity

During the three months ended March 31, 2021, we invested approximately $18.9 million across two separate portfolio companies, including one new borrower. Our investments consisted of senior secured trade finance participations, senior secured term loan participations, senior secured term loans, short term notes, and equity warrants. Additionally, we received proceeds from repayments of investment principal of approximately $6.5 million.

36


At March 31, 2021 and December 31, 2020, the Company’s investment portfolio included 42 and 41 companies, respectively, and the fair value of our portfolio was comprised of the following:

 

 

 

As of March 31, 2021

 

 

 

 

Investments

 

 

Percentage of

 

 

 

 

at Fair Value

 

 

Total Investments

 

 

Senior secured term loans

 

$

116,999,971

 

 

 

38.3

%

 

Senior secured term loan participations

 

 

132,165,337

 

 

 

43.4

%

 

Senior secured trade finance participations

 

 

51,160,031

 

 

 

16.8

%

 

Short term and other investments *

 

 

3,758,063

 

 

 

1.2

%

 

Equity warrants

 

 

1,199,618

 

 

 

0.4

%

 

Total investments

 

$

305,283,020

 

 

 

100.0

%

 

 

*

Short term investments are defined by the Company as investments that generally meet the standard underwriting guidelines for trade finance and term loan transactions and that also have the following characteristics: (1) maturity of less than one year, (2) loans to borrowers to whom, at the time of funding, the Company does not expect to re-lend. Impact data is not tracked for short term investments.

As of March 31, 2021, the weighted average yields, based upon the cost of our portfolio, on trade finance participations, term loan participations, senior secured term loans, and short term investments were 10.6%, 12.8%, 11.6%, and 8.8%, respectively, for a weighted average yield on investments of approximately 11.8% on our total portfolio.  

As of March 31, 2020, the weighted average yields, based upon the cost of our portfolio, on trade finance participations, term loan participations, senior secured term loans, and short term investments were 11.7%, 12.7%, 12.4%, and 8.8%, respectively, for a weighted average yield on investments of approximately 12.3% on our total portfolio.

37


As of March 31, 2021, we had the following investments, listed by description of the underlying borrower (if applicable):

 

Description

 

Sector

 

Industry Classification

 

Country

 

Interest

 

 

Maturity (1)

 

Principal

Amount

 

 

Fair Value

 

Sugar Producer

 

Agricultural Products

 

Sustainable Agriculture & Agroprocessing

 

Brazil

 

12.43%

 

 

12/15/2020

(2)

$

2,851,296

 

 

$

2,367,936

 

LED Lighting Service Provider

 

Electric Services

 

Technological Innovation

 

Chile

 

11.00%

 

 

6/6/2021

(2)

 

1,456,162

 

 

 

1,446,830

 

Minor Metals Resource Trader

 

Secondary Nonferrous Metals

 

Responsible Metals Distribution

 

Hong Kong

 

12.00%

 

 

6/22/2021

 

 

2,500,000

 

 

 

2,500,000

 

Consumer Lender

 

Personal Credit Institutions

 

Inclusive Finance

 

Colombia

 

11.25%

 

 

8/1/2021

 

 

1,417,654

 

 

 

1,417,654

 

Sustainable Packaging Manufacturer

 

Corrugated and solid fiber boxes

 

Recycling

 

Ecuador

 

9.16% Cash/2.20% PIK

 

 

6/18/2025

 

 

13,503,499

 

 

 

13,503,499

 

Resource Trader

 

Coal and Other Minerals and Ores

 

Responsible Natural Resources Distribution

 

Hong Kong

 

11.50%

 

 

3/31/2022

 

 

18,698,119

 

 

 

18,698,119

 

Wholesale Distributor

 

Chemicals and Allied Products

 

Responsible Industrial Goods Distribution

 

Malaysia

 

12.00%

 

 

12/31/2022

 

 

15,858,045

 

 

 

15,858,045

 

Waste to Fuels Processor

 

Refuse Systems

 

Recycling

 

Mexico

 

14.50% PIK

 

 

7/27/2021

(3)

 

29,588,341

 

 

 

30,787,959

 

Cocoa Processor

 

Chocolate and Cocoa Products

 

Sustainable Agriculture & Agroprocessing

 

Indonesia

 

13.00%

 

 

3/4/2024

 

 

10,000,000

 

 

 

10,000,000

 

Cocoa Processor

 

Chocolate and Cocoa Products

 

Sustainable Agriculture & Agroprocessing

 

Indonesia

 

11.00%

 

 

5/26/2021

 

 

5,000,000

 

 

 

5,000,000

 

Diaper Manufacturer II

 

Consumer Products

 

Responsible Consumer Goods Production

 

Peru

 

11.00%

 

 

12/31/2024

 

 

4,737,437

 

 

 

4,737,437

 

SME Financier

 

Short-Term Business Credit

 

Inclusive Finance

 

Botswana

 

11.47%

 

 

8/18/2021

 

 

4,740,000

 

 

 

4,740,000

 

IT Service Provider

 

Programming and Data Processing

 

Access to Technology

 

Brazil

 

10.00% Cash/3.00% PIK

 

 

11/23/2023

 

 

18,776,594

 

 

 

18,945,974

 

Ship Maintenance & Repair Service Provider

 

Boatbuilding and Repairing

 

Infrastructure Development

 

Brazil

 

8.00% Cash/8.00% PIK

 

 

12/7/2023

 

 

6,119,529

 

 

 

6,070,640

 

Hospitality Service Provider

 

Hotels and Motels

 

Infrastructure Development

 

Cabo Verde

 

10.00% Cash/4.75% PIK

 

 

8/21/2021

(2)

 

13,641,904

 

 

 

11,331,704

 

Consumer Lender

 

Personal Credit Institutions

 

Inclusive Finance

 

Colombia

 

11.90%

 

 

9/1/2025

 

 

5,069,682

 

 

 

5,069,682

 

Mall Operator

 

Department Stores

 

Infrastructure Development

 

Croatia

 

8.50% Cash/4.50% PIK

 

 

1/23/2022

 

 

9,605,039

 

 

 

9,605,039

 

Tank Farm Operator

 

Petroleum and Petroleum Products

 

Responsible Fuel Storage

 

Ghana

 

12.00%

 

 

2/10/2023

 

 

12,551,220

 

 

 

12,551,220

 

Mobile Network Operator

 

Telephone Communications

 

Access to Technology

 

Jersey

 

10.06%

 

 

3/28/2023

 

 

1,417,700

 

 

 

1,189,700

 

Freight and Cargo Transporter

 

Freight Transportation Arrangement

 

Responsible Logistics Management

 

Kenya

 

7.74% Cash/4.00% PIK

 

 

3/31/2023

 

 

14,175,263

 

 

 

14,175,263

 

Property Developer

 

Land Subdividers and Developers

 

Infrastructure Development

 

Namibia

 

8.50% Cash/4.00% PIK

 

 

8/15/2021

(2)

 

17,708,880

 

 

 

15,099,527

 

Wheel Manufacturer

 

Motor Vehicle Parts and Accessories

 

Responsible Consumer Goods Production

 

Netherlands

 

14.23%

 

 

8/20/2021

 

 

8,275,000

 

 

 

9,521,444

 

Marine Logistics Provider

 

Water Transportation

 

Responsible Logistics Management

 

Nigeria

 

10.62%

 

 

9/16/2020

(2)

 

16,019,419

 

 

 

12,929,666

 

Bread Manufacturer

 

Food Products

 

Responsible Consumer Goods Production

 

Romania

 

8.00% Cash/5.00% PIK

 

 

7/18/2021

 

 

1,853,390

 

 

 

1,848,001

 

Grain Processor C

 

Farm Products

 

Sustainable Agriculture & Agroprocessing

 

Uganda

 

14.50%

 

 

4/30/2024

 

 

9,028,989

 

 

 

9,087,477

 

FMCG Manufacturer

 

Soap, Detergents, and Cleaning

 

Responsible Consumer Goods Production

 

Zambia

 

10.38%

 

 

8/27/2023

 

 

-

 

 

 

-

 

Agriculture Distributor

 

Agricultural Products

 

Sustainable Agriculture & Agroprocessing

 

Argentina

 

10.45%

 

 

6/30/2018

(2)

 

12,500,000

 

 

 

9,679,638

 

Dairy Co-Operative

 

Consumer Products

 

Sustainable Dairy Production

 

Argentina

 

10.67%

 

 

7/29/2019

(2)

 

6,000,000

 

 

 

4,719,383

 

Beef Exporter

 

Meat, Poultry & Fish

 

Sustainable Agriculture & Agroprocessing

 

Argentina

 

11.50%

 

 

8/31/2017

(2)

 

9,000,000

 

 

 

6,361,679

 

Oilseed Distributor

 

Fats and Oils

 

Sustainable Agriculture & Agroprocessing

 

Argentina

 

9.00%

 

 

8/31/2017

(2)

 

6,000,000

 

 

 

3,398,558

 

Cocoa & Coffee Exporter

 

Chocolate and Cocoa Products

 

Sustainable Agriculture & Agroprocessing

 

Cameroon

 

9.5%, 6%

 

 

8/31/2019

(2)

 

14,022,395

 

 

 

13,618,566

 

Chia Seed Exporter

 

Farm Products

 

Sustainable Agriculture & Agroprocessing

 

Chile

 

10.90%

 

 

3/4/2018

(2)

 

1,326,687

 

 

 

1,375,794

 

Fish Processor & Exporter

 

Commercial Fishing

 

Sustainable Aquaculture & Processing

 

Ecuador

 

9.00%

 

 

6/19/2019

(2), (4)

 

35,838

 

 

 

35,838

 

Sesame Seed Exporter

 

Farm Products

 

Sustainable Agriculture & Agroprocessing

 

Guatemala

 

12.00%

 

 

3/31/2016

(2)

 

881,800

 

 

 

10,504

 

Non-Ferrous Metal Trader

 

Coal and Other Minerals and Ores

 

Responsible Metals Distribution

 

Singapore

 

3.00% Cash/3.00% PIK

 

 

8/18/2025

(2)

 

18,545,256

 

 

 

16,882,110

 

Mobile Phone Distributor

 

Telephone and Telegraph Apparatus

 

Access to Technology

 

Hong Kong

 

12.00%

 

 

5/31/2020

(2)

 

9,500,000

 

 

 

3,366,355

 

Vanilla Exporter

 

Groceries and Related Products

 

Sustainable Agriculture & Agroprocessing

 

Mauritius

 

10.61%

 

 

8/31/2021

(4)

 

304,739

 

 

 

304,739

 

Scrap Metal Recycler

 

Secondary Nonferrous Metals

 

Recycling

 

Morocco

 

11.00%

 

 

7/31/2018

(2)

 

1,433,058

 

 

 

628,862

 

38


Cocoa Trader III

 

Farm Products

 

Sustainable Agriculture & Agroprocessing

 

Nigeria

 

8.50%

 

 

4/15/2021

(4)

 

675,256

 

 

 

675,256

 

Cocoa Trader II

 

Farm Products

 

Sustainable Agriculture & Agroprocessing

 

Nigeria

 

8.50%

 

 

4/15/2021

(4)

 

838,967

 

 

 

838,967

 

Fruit & Nut Distributor

 

Food Products

 

Sustainable Agriculture & Agroprocessing

 

South Africa

 

17.50%

 

 

5/22/2015

(2)

 

785,806

 

 

 

497,462

 

Pharmaceuticals Distributor

 

Drugs, Proprietaries, and Sundries

 

Access to Healthcare and Pharmaceuticals

 

United Arab Emirates

 

14.60%

 

 

6/30/2018

(2)

 

648,430

 

 

 

648,430

 

Receivable from IIG TOF B.V.

 

Financial services

 

Other

 

N/A

 

8.75%

 

 

N/A

(2)

 

6,000,000

 

 

 

3,758,063

 

Total Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

305,283,020

 

 

1

Trade finance borrowers may be granted flexibility with respect to repayment relative to the stated maturity date to accommodate specific contracts and/or business cycle characteristics. This flexibility in each case is agreed upon between the Company and the sub-advisor and between the sub-advisor and the borrower.

2

See Watch List Investments section below for further information.

3

This investment consists of a senior secured term loan and equity warrants in the borrower.

4

Refer to the Consolidated Schedule of Investments for further information about the status of this investment.

 

As of March 31, 2021, the composition our investments based on the Company created industry classification was as follows:

 

Industry Classification

 

Value

 

 

of Total

 

Access to Healthcare and Pharmaceuticals

 

$

648,430

 

 

 

0.2

%

Access to Technology

 

 

23,502,029

 

 

 

7.7

%

Inclusive Finance

 

 

11,227,336

 

 

 

3.7

%

Infrastructure Development

 

 

42,106,910

 

 

 

13.8

%

Recycling

 

 

44,920,320

 

 

 

14.7

%

Responsible Consumer Goods Production

 

 

16,106,882

 

 

 

5.4

%

Responsible Fuel Storage

 

 

12,551,220

 

 

 

4.1

%

Responsible Industrial Goods Distribution

 

 

15,858,045

 

 

 

5.2

%

Responsible Logistics Management

 

 

27,104,929

 

 

 

8.9

%

Responsible Metals Distribution

 

 

19,382,110

 

 

 

6.3

%

Responsible Natural Resources Distribution

 

 

18,698,119

 

 

 

6.1

%

Sustainable Agriculture & Agroprocessing

 

 

63,216,576

 

 

 

20.7

%

Sustainable Aquaculture & Processing

 

 

35,838

 

 

 

0.0

%

Sustainable Dairy Production

 

 

4,719,383

 

 

 

1.5

%

Sustainable Forestry

 

 

 

 

 

0.0

%

Technological Innovation

 

 

1,446,830

 

 

 

0.5

%

Other

 

 

3,758,063

 

 

 

1.2

%

Total

 

$

305,283,020

 

 

 

100.0

%

 

Concentration Limits

The Company is subject to the following concentration limits:

 

Maximum 45% regional exposure

 

Maximum 20% country exposure

 

Maximum 5% individual investment exposure

 

We may only make investments that do not cause us to exceed these limits on the date of investment.  These limits are calculated as a percentage of the aggregate of all outstanding principal balances on our investments and our cash balances on the date of investment.  As of March 31, 2021, the Company was in compliance with all of the above concentration limits.

Watch List Investments

 

Please see “Notes to Consolidated Financial Statements—Note 3. Investments—Watch List Investments".

 

39


 

Results of Operations

Consolidated operating results for the three months ended March 31, 2021 and 2020 are as follows:

 

 

 

Three Months Ended

 

 

 

 

March 31, 2021

 

 

March 31, 2020

 

 

Investment income

 

 

 

 

 

 

 

 

 

Interest income

 

$

9,150,446

 

 

$

9,956,842

 

 

Interest from cash

 

 

27,429

 

 

 

43,657

 

 

Total investment income

 

 

9,177,875

 

 

 

10,000,499

 

 

Expenses

 

 

 

 

 

 

 

 

 

Asset management fees

 

 

1,809,230

 

 

 

1,846,556

 

 

Incentive fees

 

 

781,456

 

 

 

851,111

 

 

Professional fees

 

 

861,955

 

 

 

1,269,819

 

 

General and administrative expenses

 

 

284,487

 

 

 

356,167

 

 

Interest expense

 

 

47,268

 

 

 

68,537

 

 

Board of managers fees

 

 

64,375

 

 

 

64,375

 

 

Total expenses

 

 

3,848,771

 

 

 

4,456,565

 

 

Expense support payment to (from) Sponsor

 

 

-

 

 

 

-

 

 

Net expenses

 

 

3,848,771

 

 

 

4,456,565

 

 

Net investment income

 

$

5,329,104

 

 

$

5,543,934

 

 

 

 

Revenues

Three months ended March 31, 2021 and 2020

For the three months ended March 31, 2021 and 2020, total investment income amounted to $9,177,875 and $10,000,499, respectively.  Interest income decreased by $806,396 during the three months ended March 31, 2021 compared to the same period in 2020 as a result of a decrease in our weighted average investment portfolio of approximately $25,821,000 offset by an increase in the weighted average yield of approximately 0.4% from a weighted average yield of 11.4% for the three months ended March 31, 2020 to approximately 11.8% for the three months ended March 31, 2021. The decrease in the average size of our portfolio during the first quarter of 2021 was due to investment repayments that were not redeployed. The increase in yield was primarily due to a change in the mix of investments.

During the three months ended March 31, 2021, $5,761,294 or 63.0% of the interest income earned came from loan and trade finance participations and $3,389,152 or 37.0% came from direct loans. In addition, we earned $27,429 in interest income on our cash balances.

During the three months ended March 31, 2020, $7,047,594 or 70.9% of the interest income earned came from loan and trade finance participations and $2,896,046 or 29.1% came from direct loans. In addition, we earned $43,657 in interest income on our cash balances.

Expenses

Three months ended March 31, 2021 and 2020

Total operating expenses, excluding the asset management and incentive fees, incurred for the three months ended March 31, 2021 decreased by $500,813 to $1,258,085 from $1,758,898 for the three months ended March 31, 2020.  The decrease was primarily due to the following: 1) a decrease in interest expense of $21,269, which was attributable to a decrease in outstanding indebtedness and 2) a decrease in professional fees of $407,864 which was primarily due to less fees incurred for legal, valuation and accounting services in connection with the valuation of our portfolio and our ongoing efforts to recover amounts outstanding with respect to investments for which IIG was the sub-advisor.

For the three months ended March 31, 2021 and 2020, the asset management fees amounted to $1,809,230, and $1,846,556, respectively. The incentive fees for the three months ended March 31, 2021 and 2020 amounted to $781,456 and $851,111, respectively.  The decrease in incentive fees is due to the decrease in revenue during the first quarter of 2021.

40


Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments. We measure net realized gains or losses by the difference between the net proceeds from the repayment or sale of an investment and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment fair market values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized. We had no realized gains or losses for the three months ended March 31, 2021 and 2020. We recorded unrealized losses of $975,327 and $8,678,718 for the three months ended March 31, 2021 and 2020, respectively. These unrealized losses were primarily driven by macro events, including the uncertainty created by the recent COVID-19 pandemic and its impact on the future cash flows generated by our investments as well as the ultimate realization of the underlying collateral.

Financial Condition, Liquidity and Capital Resources

As of March 31, 2021, we had approximately $33.9 million in cash. We generate cash primarily from cash flows from interest, dividends and fees earned from our investments and principal repayments, proceeds from sales of our investments and from sales of promissory notes, and proceeds from private placements of our units. We may also generate cash in the future from debt financing. Our primary use of cash will be to make loans, either directly or through participations, payments of our expenses, payments on our notes and any other borrowings, and cash distributions to our unitholders. We expect to maintain cash reserves from time to time for investment opportunities, working capital and distributions. As noted above, the combination of a slower pace of deployment of capital with higher cash balances may further reduce cash flows generated to cover our distributions to our unitholders and/or cause us to further reduce our NAV in future periods. From the beginning of the Company’s operations to date, our Sponsor has assumed a significant portion of our operating expenses under the Responsibility Agreement in the amount of approximately $16.5 million. The Company may only reimburse the Sponsor for expenses assumed by the Sponsor pursuant to the Responsibility Agreement to the extent the Company’s investment income in any quarter, as reflected on the statement of operations, exceeds the sum of (a) total distributions to unitholders incurred during the quarter and (b) the Company’s expenses as reflected on the statement of operations for the same quarter (the “Reimbursement Hurdle”). To the extent the Company is not successful in satisfying the Reimbursement Hurdle, no amount will be payable in that quarter by the Company for reimbursement to the Sponsor of the Company’s cumulative operating expenses.  The Company did not meet the Reimbursement Hurdle for the quarter ended March 31, 2021. Therefore, none of the expenses of the Company covered by the Responsibility Agreement have been recorded as expenses of the Company for the quarter ended March 31, 2021.  As of March 31, 2021, there is a remaining aggregate balance of approximately $16.1 million in operating expenses assumed by the Sponsor pursuant to the Responsibility Agreement which have not been recorded by the Company. Thus, such amounts are not yet reimbursable by the Company to the Sponsor. Such reimbursements to the Sponsor would affect the amount of cash available to the Company to pay distributions and/or make investments.

We may borrow additional funds to make investments. We have not decided to what extent going forward we will finance portfolio investments using debt or the specific form that any such financing would take, but we believe that obtaining financing is necessary for us to fully achieve our long-term goals.  We have been, and still are, actively seeking further financing through both development banks and several commercial banks. Accordingly, we cannot predict with certainty what terms any such financing would have or the costs we would incur in connection with any such arrangement.  On August 7, 2017, TGIFC issued $5 million in the first of a Series 1 Senior Secured Promissory Notes private offering to State Street Australia Ltd ACF Christian Super (“Christian Super”). On December 18, 2018, TGIFC issued $5 million of Series 2 Senior Secured Promissory Notes to Christian Super. As of March 31, 2021, TGIFC has $5 million total outstanding under the Christian Super notes. For more information on this note, please see “Notes to Consolidated Financial Statements— Note 7. Notes Payable—Christian Super Promissory Note.” As of March 31, 2021, we had $5 million in total debt outstanding with a debt to equity ratio of 1.4%.

Contractual Obligations and Commitments

The following table shows our payment obligations for repayment of debt, which represent our total contractual obligations as of March 31, 2021:

 

 

 

Total

 

 

Less than 1

Year

 

 

1 - 3 Years

 

 

3- 5 years

 

 

More than 5

years

 

Notes payable

 

$

5,000,000

 

 

$

-

 

 

$

5,000,000

 

 

$

-

 

 

$

-

 

Total contractual obligations

 

$

5,000,000

 

 

$

-

 

 

$

5,000,000

 

 

$

-

 

 

$

-

 

 

We have included the following information to further assist investors in understanding our outstanding commitments.

We have entered into certain contracts under which we have material future commitments. Our Advisory Agreement between us and the Advisor, originally dated as of February 25, 2014, had previously been renewed and is subject to an unlimited number of one-year renewals upon mutual consent of the Company and the Advisor. The current term of the Advisory Agreement ends on February 25, 2021. The Advisor will serve as our advisor in accordance with the terms of our Advisory Agreement. Payments under our Advisory Agreement in each reporting period will consist of (i) asset management and incentive fees described in Part 1, Item 1. Business – Operating Expense Responsibility Agreement and – Investment Advisory Agreements and Fees of our Annual Report on Form 10-K for the year ended December 31, 2020, and (ii) the reimbursement of certain expenses.

41


If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under our Advisory Agreement.

Off-Balance Sheet Arrangements

Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not expect to have any off-balance sheet financings or liabilities. The Company reimburses organization and offering expenses to the Sponsor to the extent that the aggregate of selling commissions, dealer manager fees and other organization and offering costs do not exceed 15.0% of the gross offering proceeds raised from the particular offering.

Pursuant to the terms of the Responsibility Agreement between the Company, the Advisor and the Sponsor, the Sponsor has paid expenses on behalf of the Company through December 31, 2017, which may not be reimbursable to the Sponsor if the Company does not satisfy the Reimbursement Hurdle. Such expenses will be expensed and payable by the Company in the period they become reimbursable and are estimated to be approximately $16,091,300 as of March 31, 2021.

Distributions

We have paid distributions commencing with the month beginning July 1, 2013, and we intend to continue to pay distributions on a monthly basis. From time to time, we may also pay interim distributions at the discretion of our board. Distributions are subject to the board of managers’ discretion and applicable legal restrictions and accordingly, there can be no assurance that we will make distributions at a specific rate or at all. Distributions are made on all classes of our units at the same time. The cash distributions received by our unitholders with respect to the Class C units, Class W units and certain Class I units, are and will continue to be lower than the cash distributions with respect to Class A and certain other Class I units because of the distribution fee relating to Class C units, the ongoing dealer manager fee relating to Class W units and Class I units issued pursuant to a private placement and the ongoing service fee relating to the Class W units, which are expenses specific to those classes of units. Amounts distributed to each class are allocated among the unitholders in such class in proportion to their units. Distributions are paid in cash or reinvested in units, for those unitholders participating in the DRP. For the three months ended March 31, 2021, we paid a total of $7,124,311 in distributions, comprised of $4,906,823 paid in cash and $2,217,488 reinvested under our DRP.

Related Party Transactions

For the three months ended March 31, 2021 and 2020, the Advisor earned $1,809,230, and $1,846,556, respectively, in asset management fees and $781,456 and $851,111, respectively, in incentive fees.

From our inception through September 30, 2017, pursuant to the terms of the Responsibility Agreement, the Sponsor has paid approximately $12,420,600 of operating expenses, asset management fees, and incentive fees on our behalf and will reimburse us an additional $4,057,734 of expenses, which we had paid as of September 30, 2017. Such expenses, in the aggregate of $16,091,300 since the Company’s inception, may be expensed and payable by the Company to the Sponsor only if the Company satisfies the Reimbursement Hurdle. The Company did not meet the Reimbursement Hurdle for the quarter ended March 31, 2021. Therefore, none of the expenses of the Company covered by the Responsibility Agreement have been recorded as expenses of the Company for the quarter ended March 31, 2021.

As of March 31, 2021 and December 31, 2020, due from affiliates on the Consolidated Statement of Assets and Liabilities in the amount of $4,057,734 and $4,057,734, respectively was due from the Sponsor pursuant to the Responsibility Agreement for operating expenses which were paid by the Company, but, under the terms of the Responsibility Agreement, are the responsibility of the Sponsor. The Sponsor anticipates paying this receivable in the due course of business.

For the three months ended March 31, 2021 and 2020, we paid SC Distributors, the dealer manager for certain of our offerings, $111,000 and $122,000, respectively in ongoing distributions fees, dealer manager fees and service fees.

Legal Proceedings

As of March 31, 2021, the Company was not a party to any material legal proceedings other than as set forth in “Notes to Consolidated Financial Statements—Note 3. Investments—Watch List Investments".

 

Critical Accounting Policies and Use of Estimates

In preparing our Consolidated Financial Statements in accordance with GAAP and pursuant to the rules and regulations promulgated by the SEC, we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and discuss our critical accounting policies and estimates with the audit committee of our board of managers. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions.

42


There have been no significant changes to our critical accounting policies, estimates and judgments during three months ended March 31, 2021, compared to the critical accounting policies, estimates and judgments disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2020.

The preparation of financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the amounts reported in the financial statements. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company's business, the businesses of the Company's borrowers and the global markets generally. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including fair value measurements, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Recent Accounting Pronouncements

See Note 2 to our accompanying Consolidated Financial Statements for a description of recent accounting pronouncements and our expectation of their impact on our results of operations and financial condition.

 

Subsequent Events

 

Please see “Notes to Consolidated Financial Statements—Note 11. Subsequent Events".

 

Company Strategy

     Although the Company has a perpetual duration, we disclosed previously that if we do not consummate a liquidity event by August 25, 2021, we would commence an orderly liquidation of our assets unless a majority of the board of managers, including a majority of the independent managers, determines that liquidation is not in the best interests of our unitholders.  In light of this previous disclosure, beginning in late 2020, the board of managers, together with our management, conducted a review of the risks and benefits of various potential strategic alternatives, with the goal of determining what is in the best interests of the Company and our unitholders.  The board of managers engaged a nationally recognized investment bank to evaluate possible strategic alternatives, including: liquidation; continuing as an operating company; listing the Company’s units on a national securities exchange; and merger with another company.  After review and discussion of the strategic alternatives and market conditions, the board of managers, including all of the independent managers, determined in May 2021 that the commencement of a liquidation of our assets in August 2021 was not in the best interests of the unitholders and approved the continuation of operations for at least an additional 12 months thereafter, until August 26, 2022.  This decision was consistent with the recommendation of management and the investment bank.  The board of managers and management believe that this will provide the Company with time to stabilize its portfolio and NAV as the world begins to emerge from the adverse impact of the pandemic.  In addition, the Company will continue to pursue leverage, which, if obtained, is expected to be accretive as the portfolio stabilizes. The board of managers will revisit this analysis no later than August 26, 2022 and then may continue to reassess strategic alternatives annually, or may determine to extend the period between its considerations of alternatives for a longer period. 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

Item 4. Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that the disclosure controls and procedures were effective as of March 31, 2021.

There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As a result of COVID-19, starting in March 2020, our Advisor implemented its business continuity plan and additional procedures designed to protect against the introduction of COVID-19 amongst its personnel, including permitting and encouraging employees to work remotely and temporarily ceasing travel and significantly enhanced office sterilization procedures to minimize the probability of contagion. The cessation of travel has caused us to adapt the methods we use to review our sub-advisors and investments.  While our

43


pre-existing controls were not specifically designed to operate in a predominantly remote work operating environment with no international travel, we have re-evaluated and adapted our review and reporting processes for this environment and we believe that our disclosure controls and procedures and internal controls over financial reporting continue to be effective. We are monitoring and assessing our internal control environment to ensure that our controls continue to be designed effectively and continue to operate effectively throughout the duration of the pandemic.

44


Part II. Other Information

Item 1. Legal Proceedings.

As of March 31, 2021, the Company was not a party to any material legal proceedings other than the legal proceedings described in “Notes to Consolidated Financial Statements—Note 3. Investments—Watch List Investments".

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 31, 2021 (“2020 Form 10-K”) which could materially affect our business, financial condition, and/or future results. The risks described in our 2020 Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.

There have been no material changes to the risk factors disclosed in our 2020 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended March 31, 2021, we sold an aggregate of 237,923 Class Y units to accredited investors for an aggregate amount of $1,824,000.  The units were issued pursuant to an exemption from registration provided under Rule 506 of Regulation D promulgated under the Securities Act, for transactions not involving a public offering. 

Unit Repurchase Program

Beginning June 11, 2014, we commenced a unit repurchase program pursuant to which we conduct quarterly unit repurchases of up to 5% of our weighted average number of outstanding units in any 12-month period to allow our unitholders, who have held our units for a minimum of one year, to sell their units back to us. Our unit repurchase program includes numerous restrictions, including a one-year holding period, that limit our unitholders’ ability to sell their units. Additionally, we have no obligation to repurchase units if the repurchase would violate the restrictions on distributions under federal law or Delaware law, and all units to be repurchased under the program must be fully transferable and not be subject to any liens or other encumbrances and free from any restrictions on transfer. Unless our board of managers determines otherwise, we will limit the number of units to be repurchased during any calendar year to the number of units we can repurchase with the proceeds we receive from the sale of units under our distribution reinvestment plan. At the sole discretion of our board of managers, we may also use cash on hand, cash available from borrowings and cash from liquidation of investments as of the end of the applicable quarter to repurchase units.

On August 9, 2019, our board of managers amended and restated our unit repurchase program in order to amend the basis on which we will honor repurchase requests in the event repurchase requests exceed the existing limitations of the program.  The amended and restated unit repurchase program took effect on September 30, 2019. Under the amended and restated unit repurchase program, if we cannot repurchase all units presented for repurchase in any quarter because of the limitations on repurchases set forth in the program, then we will honor repurchase requests in the following order of priority (unless our board of managers determines that we will not repurchase units in that quarter):

 

first, we will repurchase units pursuant to repurchase requests made in connection with the death or disability of a unitholder (or on a pro rata basis among such requests if less than all of such death or disability requests can be satisfied);

 

second, we will repurchase units pursuant to any repurchase request that has been carried over from one or more previous quarterly periods where the value of the units that have not yet been repurchased pursuant to such request (with the value calculated as the number of units multiplied by the estimated net asset value per unit for units of that class, as most recently disclosed by us in a filing with the SEC) is less than $2,500 (or on a pro rata basis among such requests if less than all of such requests carried over from prior periods can be satisfied); and

 

third, we will repurchase units pursuant to all other repurchase requests on a pro rata basis.

Unit repurchases are made on the last calendar day of the quarter at a price equal to the estimated net asset value per unit for each class of units, as most recently disclosed by us in a public filing with the SEC. Redemptions for the first quarter of 2021 were redeemed at a price equal to $7.60 per unit, which was the net asset value per unit of each class as of December 31, 2020.

Our board of managers has the right to amend, suspend or terminate the unit repurchase program to the extent that it determines that it is in our best interest to do so. We will promptly notify our unitholders of any changes to the unit repurchase program, including any amendment, suspension or termination of it in our periodic or current reports or by means of other notice. Moreover, the unit repurchase program will terminate on the date that our units are listed on a national securities exchange, are included for quotation in a national securities market or, in the sole determination of our board of managers, a secondary trading market for the units otherwise develops.  

45


During the three months ended March 31, 2021, we fulfilled the following requests pursuant to our unit repurchase program:

 

Period

 

Total Number of

Units Purchased

 

 

Average Price

Paid Per Unit

 

 

Total Number of Units

Purchased as Part of

Publicly Announced

Plans or Programs

 

 

Maximum Number of

Units that May Yet be

Purchased Under the

Program

 

01/01/2021 - 01/31/2021

 

 

307,172

 

 

$

7.667

 

 

 

307,172

 

 

 

892,446

 

02/01/2021 - 02/28/2021

 

 

(436

)

 

$

7.666

 

 

 

(436

)

 

 

892,446

 

03/01/2021 - 03/31/2021

 

 

 

 

$

-

 

 

 

 

 

 

892,446

 

Total

 

 

306,736

 

 

$

7.667

 

 

 

306,736

 

 

 

 

 

 

During the three months ended March 31, 2021, we repurchased 306,736 units for a total of $2,351,597.  In addition, as of March 31, 2021, there were repurchase requests for a total of 281,098 units that were pending which were processed by the Company during April 2021 at a price of $7.60 per unit. For the quarter ended March 31, 2021, eligible repurchase requests exceeded the limitations of our unit repurchase program described above and the requests were fulfilled on a pro rata basis, such that we fulfilled 10.53% of eligible repurchase requests (based on the number of units submitted for repurchase). Pursuant to the terms of our unit repurchase program, the unsatisfied portion of repurchase requests that were not fulfilled at quarter-end will be carried over to the next quarter and treated as a request for repurchase at the next quarter-end repurchase date, unless the repurchase request is withdrawn.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

46


Item 6. Exhibits.

 

Number 

 

Description

 

 

 

    3.1

 

Certificate of Formation of TriLinc Global Impact Fund, LLC. Incorporated by reference to Exhibit 3.1 to the Draft Registration Statement on Form S-1 (File No. 377-00015) filed with the Securities and Exchange Commission (the “SEC”) on November 1, 2012.

 

 

 

    3.2

 

Fifth Amended and Restated Limited Liability Company Operating Agreement dated January 20, 2018. Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on January 25, 2018.

 

 

 

    4.1

 

Fourth Amended and Restated Distribution Reinvestment Plan. Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC on August 14, 2020.

 

 

 

    4.2

 

Fourth Amended and Restated Unit Repurchase Program. Incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed with the SEC on August 13, 2019.

 

 

 

  31.1*

 

Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

 

 

 

  31.2*

 

Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

 

 

 

  32.1*

 

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

   101

 

The following materials from TriLinc Global Impact Fund LLC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, filed on May 14, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Assets and Liabilities, (ii) Consolidated Statement of Operations, (iii) Consolidated Statement of Changes in Net Assets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Schedules of Investments and (vi) Notes to the Consolidated Financial Statements.

 

*

Filed herewith

 

47


 

SIGNATURES

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

 

 

 

TRILINC GLOBAL IMPACT FUND, LLC.

 

 

 

 

 

May 14, 2021

 

By:

 

/s/ Gloria S. Nelund 

 

 

 

 

Gloria S. Nelund

 

 

 

 

Chief Executive Officer

 

 

 

 

 

May 14, 2021

 

By:

 

/s/ Mark A. Tipton

 

 

 

 

Mark A. Tipton

 

 

 

 

Chief Financial Officer

 

48