Carlyle Secured Lending, Inc. - Quarter Report: 2021 March (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | 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
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period to
Commission File No. 814-00995
TCG BDC, INC.
(Exact name of Registrant as specified in its charter)
| Maryland | 80-0789789 | |||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||
One Vanderbilt Avenue, Suite 3400, New York, NY 10017 | (212) 813-4900 | |||||||
| (Address of principal executive office) (Zip Code) | (Registrant’s telephone number, including area code) | |||||||
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
| Common stock, $0.01 par value | CGBD | The Nasdaq Global Select Market | ||||||
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. (Check one):
| Large accelerated filer | x | Accelerated filer | o | |||||||||||||||||
| Non-accelerated filer | o | Smaller reporting company | o | |||||||||||||||||
| Emerging growth company | o | |||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The number of shares of the registrant’s common stock, $0.01 par value per share, outstanding at May 3, 2021 was 54,649,010.
TCG BDC, INC.
INDEX
| Part I. | Financial Information | |||||||
| Item 1. | Financial Statements | |||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Part II. | Other Information | |||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
2
TCG BDC, INC.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollar amounts in thousands, except per share data)
| March 31, 2021 | December 31, 2020 | ||||||||||
| ASSETS | (unaudited) | ||||||||||
| Investments, at fair value | |||||||||||
| Investments—non-controlled/non-affiliated, at fair value (amortized cost of $1,575,395 and $1,574,182, respectively) | $ | 1,528,400 | $ | 1,509,271 | |||||||
| Investments—non-controlled/affiliated, at fair value (amortized cost of $38,395 and $37,571, respectively) | 27,650 | 26,180 | |||||||||
| Investments—controlled/affiliated, at fair value (amortized cost of $311,202 and $311,213, respectively) | 285,584 | 290,298 | |||||||||
| Total investments, at fair value (amortized cost of $1,924,992 and $1,922,966, respectively) | 1,841,634 | 1,825,749 | |||||||||
| Cash and cash equivalents | 35,493 | 68,419 | |||||||||
| Receivable for investment sold/repaid | 1,192 | 4,313 | |||||||||
| Deferred financing costs | 3,502 | 3,633 | |||||||||
| Interest receivable from non-controlled/non-affiliated investments | 12,948 | 12,634 | |||||||||
| Interest receivable from non-controlled/affiliated investments | 580 | 569 | |||||||||
| Interest and dividend receivable from controlled/affiliated investments | 7,925 | 6,480 | |||||||||
| Prepaid expenses and other assets | 813 | 816 | |||||||||
| Total assets | $ | 1,904,087 | $ | 1,922,613 | |||||||
| LIABILITIES | |||||||||||
| Secured borrowings (Note 7) | $ | 309,397 | $ | 347,949 | |||||||
| 2015-1 Notes payable, net of unamortized debt issuance costs of $2,602 and $2,664, respectively (Note 8) | 446,598 | 446,536 | |||||||||
| Senior Notes, net of unamortized debt issuance costs of $520 and $562, respectively (Note 8) | 189,480 | 189,438 | |||||||||
| Payable for investments purchased | 12,818 | 809 | |||||||||
| Interest and credit facility fees payable (Notes 7 and 8) | 2,427 | 2,439 | |||||||||
| Dividend payable (Note 10) | 20,280 | 19,892 | |||||||||
| Base management and incentive fees payable (Note 4) | 11,047 | 11,549 | |||||||||
| Administrative service fees payable (Note 4) | 202 | 85 | |||||||||
| Other accrued expenses and liabilities | 1,318 | 2,553 | |||||||||
| Total liabilities | 993,567 | 1,021,250 | |||||||||
| Commitments and contingencies (Notes 9 and 12) | |||||||||||
| EQUITY | |||||||||||
| NET ASSETS | |||||||||||
| Cumulative convertible preferred stock, $0.01 par value; 2,000,000 and 2,000,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 50,000 | 50,000 | |||||||||
| Common stock, $0.01 par value; 198,000,000 shares authorized; 54,809,262 and 55,320,309 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 548 | 553 | |||||||||
| Paid-in capital in excess of par value | 1,075,871 | 1,081,436 | |||||||||
| Offering costs | (1,633) | (1,633) | |||||||||
| Total distributable earnings (loss) | (214,266) | (228,993) | |||||||||
| Total net assets | $ | 910,520 | $ | 901,363 | |||||||
| NET ASSETS PER COMMON SHARE | $ | 15.70 | $ | 15.39 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
TCG BDC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Investment income: | |||||||||||
| From non-controlled/non-affiliated investments: | |||||||||||
Interest income | $ | 31,756 | $ | 41,465 | |||||||
Other income | 1,467 | 2,344 | |||||||||
Total investment income from non-controlled/non-affiliated investments | 33,223 | 43,809 | |||||||||
| From non-controlled/affiliated investments: | |||||||||||
Interest income | 38 | — | |||||||||
Other income | 3 | — | |||||||||
Total investment income from non-controlled/affiliated investments | 41 | — | |||||||||
| From controlled/affiliated investments: | |||||||||||
Interest income | 56 | 3,236 | |||||||||
Dividend income | 7,528 | 3,500 | |||||||||
Total investment income from controlled/affiliated investments | 7,584 | 6,736 | |||||||||
| Total investment income | 40,848 | 50,545 | |||||||||
| Expenses: | |||||||||||
| Base management fees (Note 4) | 6,800 | 7,386 | |||||||||
| Incentive fees (Note 4) | 4,257 | 5,086 | |||||||||
Professional fees | 691 | 667 | |||||||||
| Administrative service fees (Note 4) | 282 | 106 | |||||||||
| Interest expense (Notes 7 and 8) | 6,975 | 12,179 | |||||||||
| Credit facility fees (Note 7) | 519 | 590 | |||||||||
Directors’ fees and expenses | 116 | 96 | |||||||||
Other general and administrative | 405 | 411 | |||||||||
| Total expenses | 20,045 | 26,521 | |||||||||
| Net investment income (loss) before taxes | 20,803 | 24,024 | |||||||||
Excise tax expense | 124 | 52 | |||||||||
Net investment income (loss) | 20,679 | 23,972 | |||||||||
Net realized gain (loss) and net change in unrealized appreciation (depreciation): | |||||||||||
| Net realized gain (loss) on investments: | |||||||||||
Non-controlled/non-affiliated investments | 1,672 | (1,697) | |||||||||
| Non-controlled/affiliated investments | 1 | — | |||||||||
| Currency gains (losses) on non-investment assets and liabilities | (82) | (150) | |||||||||
| Net change in unrealized appreciation (depreciation) on investments: | |||||||||||
Non-controlled/non-affiliated investments | 17,916 | (117,042) | |||||||||
Non-controlled/affiliated investments | 646 | — | |||||||||
Controlled/affiliated investments | (4,703) | (28,521) | |||||||||
Net change in unrealized currency gains (losses) on non-investment assets and liabilities | (225) | 2,338 | |||||||||
Net realized and unrealized gain (loss) on investments and non-investment assets and liabilities | 15,225 | (145,072) | |||||||||
| Net increase (decrease) in net assets resulting from operations | 35,904 | (121,100) | |||||||||
| Preferred stock dividend | 875 | — | |||||||||
| Net increase (decrease) in net assets resulting from operations attributable to Common Stockholders | $ | 35,029 | $ | (121,100) | |||||||
| Basic and diluted earnings per common share (Note 10) | |||||||||||
| Basic | $ | 0.65 | $ | (2.12) | |||||||
| Diluted | $ | 0.60 | $ | (2.12) | |||||||
| Weighted-average shares of common stock outstanding (Note 10) | |||||||||||
| Basic | 55,039,010 | 57,112,193 | |||||||||
| Diluted | 60,306,312 | 57,112,193 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
TCG BDC, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(dollar amounts in thousands)
(unaudited)
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Net increase (decrease) in net assets resulting from operations: | |||||||||||
| Net investment income (loss) | $ | 20,679 | $ | 23,972 | |||||||
| Net realized gain (loss) | 1,591 | (1,847) | |||||||||
| Net change in unrealized appreciation (depreciation) on investments | 13,859 | (145,563) | |||||||||
| Net change in unrealized currency gains (losses) on non-investment assets and liabilities | (225) | 2,338 | |||||||||
| Net increase (decrease) in net assets resulting from operations | 35,904 | (121,100) | |||||||||
| Capital transactions: | |||||||||||
| Repurchase of common stock | (5,570) | (16,003) | |||||||||
| Dividends declared on preferred and common stock (Note 10) | (21,177) | (20,834) | |||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | (26,747) | (36,757) | |||||||||
| Net increase (decrease) in net assets | 9,157 | (157,937) | |||||||||
| Net Assets at beginning of period | 901,363 | 956,471 | |||||||||
| Net Assets at end of period | $ | 910,520 | $ | 798,534 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
TCG BDC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
(unaudited)
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 35,904 | $ | (121,100) | |||||||
| Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | |||||||||||
| Amortization of deferred financing costs | 253 | 305 | |||||||||
| Net accretion of discount on investments | (2,026) | (2,586) | |||||||||
| Paid-in-kind interest | (2,025) | (179) | |||||||||
| Net realized (gain) loss on investments | (1,673) | 1,697 | |||||||||
| Net realized currency (gain) loss on non-investment assets and liabilities | 82 | 150 | |||||||||
| Net change in unrealized (appreciation) depreciation on investments | (13,859) | 145,563 | |||||||||
| Net change in unrealized currency (gains) losses on non-investment assets and liabilities | 225 | (2,338) | |||||||||
| Cost of investments purchased and change in payable for investments purchased | (134,935) | (307,148) | |||||||||
| Proceeds from sales and repayments of investments and change in receivable for investments sold/repaid | 153,722 | 277,451 | |||||||||
| Changes in operating assets: | |||||||||||
| Interest receivable | (726) | (949) | |||||||||
| Dividend receivable | (1,044) | 500 | |||||||||
| Prepaid expenses and other assets | 3 | (270) | |||||||||
| Changes in operating liabilities: | |||||||||||
| Interest and credit facility fees payable | (12) | (664) | |||||||||
| Base management and incentive fees payable | (502) | (903) | |||||||||
| Administrative service fees payable | 117 | 21 | |||||||||
| Other accrued expenses and liabilities | (1,235) | 239 | |||||||||
| Net cash provided by (used in) operating activities | 32,269 | (10,211) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchase of common stock | (5,570) | (16,003) | |||||||||
| Borrowings on SPV Credit Facility and Credit Facility | 40,286 | 226,500 | |||||||||
| Repayments of SPV Credit Facility and Credit Facility | (79,000) | (139,443) | |||||||||
| Debt issuance costs paid | (122) | (299) | |||||||||
| Dividends paid in cash | (20,789) | (31,770) | |||||||||
| Net cash provided by (used in) financing activities | (65,195) | 38,985 | |||||||||
| Net increase (decrease) in cash and cash equivalents | (32,926) | 28,774 | |||||||||
| Cash and cash equivalents, beginning of period | 68,419 | 36,751 | |||||||||
| Cash and cash equivalents, end of period | $ | 35,493 | $ | 65,525 | |||||||
| Supplemental disclosures: | |||||||||||
| Interest paid during the period | $ | 6,915 | $ | 12,647 | |||||||
| Taxes, including excise tax, paid during the period | $ | 626 | $ | 387 | |||||||
| Dividends declared on preferred stock and common stock during the period | $ | 21,177 | $ | 20,834 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (64.8% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Advanced Web Technologies Holding Company | ^* | (2)(3)(13) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 12/17/2020 | 12/17/2026 | $ | 6,125 | $ | 5,949 | $ | 6,152 | 0.68 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Airnov, Inc. | ^* | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 12/20/2019 | 12/19/2025 | 12,438 | 12,286 | 12,409 | 1.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allied Universal Holdco LLC | ^ | (2)(3) | Business Services | L + 4.25% | 4.44% | 2/17/2021 | 7/10/2026 | 500 | 502 | 498 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpha Packaging Holdings, Inc. | ^* | (2)(3) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 6/26/2015 | 11/12/2021 | 2,765 | 2,765 | 2,765 | 0.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | * | (2)(3) | High Tech Industries | L + 5.75% | 6.75% | 2/2/2018 | 11/16/2022 | 10,890 | 10,842 | 10,722 | 1.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^ | (2)(3) | High Tech Industries | L + 8.50% | 9.50% | 7/24/2020 | 11/16/2022 | 1,618 | 1,583 | 1,618 | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^* | (2)(3) | High Tech Industries | L + 6.50% | 7.50% | 11/2/2020 | 11/16/2022 | 10,749 | 10,489 | 10,661 | 1.17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^ | (2)(3) | High Tech Industries | L + 7.00% | 8.00% | 2/10/2021 | 11/16/2022 | 3,046 | 2,964 | 3,035 | 0.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| American Physician Partners, LLC | ^* | (2)(3)(13) | Healthcare & Pharmaceuticals | L + 6.75% | 7.75% | 1/7/2019 | 12/21/2021 | 28,550 | 28,485 | 27,680 | 3.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AMS Group HoldCo, LLC | ^ | (2)(3)(13) | Transportation: Cargo | L + 6.50% | 7.50% | 9/29/2017 | 9/29/2023 | 22,220 | 21,993 | 22,184 | 2.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Analogic Corporation | ^* | (2)(3)(13) | Capital Equipment | L + 5.25% | 6.25% | 6/22/2018 | 6/22/2024 | 2,356 | 2,328 | 2,341 | 0.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Anchor Hocking, LLC | ^ | (2)(3) | Durable Consumer Goods | L + 11.75% | 12.75% | 1/25/2019 | 1/25/2024 | 4,190 | 4,108 | 4,060 | 0.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Applied Technical Services, LLC | ^ | (2)(3)(13) | Business Services | L + 5.75% | 6.75% | 12/29/2020 | 12/29/2026 | 394 | 382 | 392 | 0.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Apptio, Inc. | ^ | (2)(3)(13) | Software | L + 7.25% | 8.25% | 1/10/2019 | 1/10/2025 | 6,131 | 6,026 | 6,188 | 0.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At Home Holding III, Inc. | ^ | (2)(3)(7) | Retail | L + 9.00% | 10.00% | 6/12/2020 | 7/27/2022 | 852 | 838 | 852 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Aurora Lux FinCo S.Á.R.L. (Luxembourg) | ^* | (2)(3)(7) | Software | L + 6.00% | 7.00% | 12/24/2019 | 12/24/2026 | 32,736 | 32,037 | 29,620 | 3.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | * | (2)(3) | Sovereign & Public Finance | L + 5.25% | 6.25% | 9/28/2018 | 9/28/2024 | 13,650 | 13,518 | 13,650 | 1.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Barnes & Noble, Inc. | ^ | (2)(3)(11) | Retail | L + 5.50% | 6.50% | 8/7/2019 | 8/7/2024 | 16,521 | 16,225 | 15,615 | 1.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BlueCat Networks, Inc. (Canada) | * | (2)(3)(7) | High Tech Industries | L + 6.25% | 7.25% | 10/30/2020 | 10/30/2026 | 11,468 | 11,250 | 11,460 | 1.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BMS Holdings III Corp. | * | (2)(3) | Construction & Building | L + 5.25% | 6.25% | 9/30/2019 | 9/30/2026 | 1,592 | 1,559 | 1,578 | 0.17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Captive Resources Midco, LLC | ^* | (2)(3)(13) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 6/30/2015 | 5/31/2025 | 10,407 | 10,262 | 10,515 | 1.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Central Security Group, Inc. | ^* | (2)(3) | Consumer Services | L + 6.00% | 7.00% | 10/16/2020 | 10/16/2025 | 9,254 | 9,254 | 8,589 | 0.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chartis Holding, LLC | ^* | (2)(3)(13) | Business Services | L + 5.25% | 6.25% | 5/1/2019 | 5/1/2025 | 16,229 | 15,948 | 16,229 | 1.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chemical Computing Group ULC (Canada) | ^* | (2)(3)(7)(13) | Software | L + 5.00% | 6.00% | 8/30/2018 | 8/30/2023 | 470 | 469 | 470 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CircusTrix Holdings, LLC | ^* | (2)(3) | Hotel, Gaming & Leisure | L + 8.00% (100% PIK) | 9.00% | 2/2/2018 | 1/16/2024 | 10,400 | 10,368 | 8,597 | 0.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CircusTrix Holdings, LLC | ^ | (2)(3)(13) | Hotel, Gaming & Leisure | L + 8.00% (100% PIK) | 9.00% | 1/8/2021 | 7/16/2023 | 346 | 289 | 347 | 0.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cobblestone Intermediate Holdco LLC | ^ | (2)(3) | Consumer Services | L + 5.50% | 6.50% | 1/29/2020 | 1/29/2026 | 728 | 722 | 732 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comar Holding Company, LLC | ^* | (2)(3)(13) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 6/18/2018 | 6/18/2024 | 24,050 | 23,676 | 24,050 | 2.64 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^* | (2)(3)(7)(13) | Software | L + 5.25% | 6.25% | 7/2/2019 | 7/2/2026 | $ | 10,595 | $ | 10,384 | $ | 10,657 | 1.17 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^ | (2)(3)(7) | Software | L + 7.25% | 8.25% | 9/3/2020 | 7/2/2026 | 1,893 | 1,841 | 1,934 | 0.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DCA Investment Holding, LLC | ^ | (2)(3)(13) | Healthcare & Pharmaceuticals | L + 6.25% | 7.00% | 3/11/2021 | 3/12/2027 | 9,936 | 9,752 | 9,750 | 1.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derm Growth Partners III, LLC | ^ | (2)(3)(8) | Healthcare & Pharmaceuticals | L + 6.25% | 7.25% | 5/31/2016 | 5/31/2022 | 56,192 | 54,793 | 31,967 | 3.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DermaRite Industries, LLC | ^* | (2)(3)(13) | Healthcare & Pharmaceuticals | L + 6.75% | 7.75% | 3/3/2017 | 3/3/2022 | 18,669 | 18,604 | 17,945 | 1.97 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Designer Brands Inc. | ^ | (2)(3)(7) | Retail | L + 8.50% | 9.75% | 8/7/2020 | 8/7/2025 | 17,728 | 17,330 | 17,426 | 1.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diligent Corporation | ^ | (2)(3)(13) | Telecommunications | L + 6.25% | 7.25% | 8/4/2020 | 8/4/2025 | 577 | 560 | 582 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DTI Holdco, Inc. | * | (2)(3) | High Tech Industries | L + 4.75% | 5.75% | 12/18/2018 | 9/30/2023 | 1,949 | 1,878 | 1,867 | 0.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Emergency Communications Network, LLC | ^* | (2)(3) | Telecommunications | L + 2.625%, 5.125% PIK | 8.75% | 6/1/2017 | 6/1/2023 | 24,619 | 24,529 | 21,520 | 2.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ensono, LP | * | (2)(3) | Telecommunications | L + 5.25% | 5.36% | 4/30/2018 | 6/27/2025 | 2,152 | 2,137 | 2,136 | 0.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ensono, LP | ^* | (2)(3) | Telecommunications | L + 5.75% | 5.86% | 6/25/2020 | 6/27/2025 | 18,085 | 17,968 | 17,995 | 1.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ethos Veterinary Health LLC | ^ | (2)(3)(13) | Consumer Services | L + 4.75% | 4.86% | 5/17/2019 | 5/15/2026 | 2,606 | 2,565 | 2,572 | 0.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^* | (2)(3)(13) | Telecommunications | L + 5.75% | 6.75% | 11/26/2019 | 6/7/2023 | 25,798 | 25,746 | 25,798 | 2.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Frontline Technologies Holdings, LLC | ^* | (2)(3) | Software | L + 5.75% | 6.75% | 9/18/2017 | 9/18/2023 | 3,091 | 3,075 | 3,118 | 0.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FWR Holding Corporation | ^* | (2)(3)(13) | Beverage, Food & Tobacco | L + 5.50%, 1.50% PIK | 8.00% | 8/21/2017 | 8/21/2023 | 34,622 | 34,274 | 31,628 | 3.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Greenhouse Software, Inc. | ^ | (2)(3)(13) | Software | L + 6.50% | 7.50% | 3/1/2021 | 3/1/2027 | 15,196 | 14,824 | 14,821 | 1.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hawkeye AcquisitionCo, LLC | ^* | (2)(3)(13) | Aerospace & Defense | L + 6.75% | 7.75% | 3/1/2021 | 11/19/2026 | 6,109 | 5,890 | 5,887 | 0.65 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Helios Buyer, Inc. | ^* | (2)(3)(13) | Consumer Services | L + 6.00% | 7.00% | 12/15/2020 | 12/15/2026 | 9,364 | 9,081 | 9,301 | 1.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hercules Borrower LLC | ^ | (2)(3)(13) | Environmental Industries | L + 6.50% | 7.50% | 12/14/2020 | 12/14/2026 | 18,592 | 18,094 | 18,293 | 2.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Higginbotham Insurance Agency, Inc. | ^ | (2)(3)(13) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.50% | 11/25/2020 | 11/25/2026 | 3,902 | 3,830 | 3,930 | 0.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| iCIMS, Inc. | ^ | (2)(3) | Software | L + 6.50% | 7.50% | 9/12/2018 | 9/12/2024 | 1,671 | 1,648 | 1,679 | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Individual FoodService Holdings, LLC | ^ | (2)(3)(13) | Wholesale | L + 6.25% | 7.25% | 2/21/2020 | 11/22/2025 | 3,902 | 3,817 | 3,837 | 0.42 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Individual FoodService Holdings, LLC | ^ | (2)(3)(13) | Wholesale | L + 6.25% | 7.25% | 12/31/2020 | 11/22/2025 | 2,207 | 2,150 | 2,177 | 0.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Integrity Marketing Acquisition, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 1/15/2020 | 8/27/2025 | 4,958 | 4,897 | 5,004 | 0.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| K2 Insurance Services, LLC | ^* | (2)(3)(13) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 7/3/2019 | 7/1/2024 | 18,603 | 18,298 | 18,631 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kaseya, Inc. | ^ | (2)(3)(13) | High Tech Industries | L + 4.00%, 3.00% PIK | 8.00% | 5/3/2019 | 5/2/2025 | 15,714 | 15,466 | 15,714 | 1.73 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy.com, Inc. | ^ | (2)(3)(11) | High Tech Industries | L + 6.00% | 7.00% | 3/20/2017 | 3/20/2023 | 17,066 | 16,905 | 15,992 | 1.76 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lifelong Learner Holdings, LLC | ^* | (2)(3)(13) | Business Services | L + 5.75% | 6.75% | 10/18/2019 | 10/18/2026 | 23,756 | 23,315 | 21,927 | 2.41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liqui-Box Holdings, Inc. | ^ | (2)(3)(13) | Containers, Packaging & Glass | L + 4.50% | 5.50% | 6/3/2019 | 6/3/2024 | $ | 1,718 | $ | 1,698 | $ | 1,492 | 0.16 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mailgun Technologies, Inc. | ^ | (2)(3)(13) | High Tech Industries | L + 5.00% | 6.00% | 3/26/2019 | 3/26/2025 | 3,248 | 3,180 | 3,206 | 0.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| National Technical Systems, Inc. | ^ | (2)(3)(13) | Aerospace & Defense | L + 5.50% | 6.50% | 10/28/2020 | 6/12/2023 | 1,175 | 1,152 | 1,175 | 0.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NES Global Talent Finance US, LLC (United Kingdom) | ^* | (2)(3)(7) | Energy: Oil & Gas | L + 5.50% | 6.50% | 5/9/2018 | 5/11/2023 | 9,764 | 9,681 | 9,507 | 1.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NMI AcquisitionCo, Inc. | ^* | (2)(3)(13) | High Tech Industries | L + 5.00% | 6.00% | 9/6/2017 | 9/6/2023 | 40,650 | 40,382 | 40,814 | 4.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^* | (2)(3) | Capital Equipment | L + 4.50% | 5.50% | 5/3/2019 | 5/3/2025 | 5,213 | 5,176 | 5,184 | 0.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^ | (2)(3)(13) | Capital Equipment | L + 5.25% | 6.25% | 11/24/2020 | 5/3/2025 | 3,029 | 2,918 | 3,029 | 0.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PF Growth Partners, LLC | ^* | (2)(3)(13) | Hotel, Gaming & Leisure | L + 7.00% | 8.00% | 7/1/2019 | 7/11/2025 | 7,276 | 7,185 | 6,842 | 0.75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plano Molding Company, LLC | ^ | (2)(3) | Hotel, Gaming & Leisure | L + 7.50%, 1.50% PIK | 10.00% | 5/1/2015 | 5/12/2022 | 14,711 | 14,701 | 13,655 | 1.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plano Molding Company, LLC | ^ | (2)(3) | Hotel, Gaming & Leisure | L + 7.50%, 1.50% PIK | 10.00% | 8/7/2020 | 5/12/2022 | 1,082 | 1,076 | 1,082 | 0.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPC Flexible Packaging, LLC | ^* | (2)(3)(13) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 11/23/2018 | 11/23/2024 | 11,508 | 11,409 | 11,508 | 1.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPT Management Holdings, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00%, 2.50% PIK | 9.50% | 12/15/2016 | 12/16/2022 | 28,081 | 28,011 | 23,678 | 2.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PricewaterhouseCoopers Public Sector LLP | ^ | (2)(3)(13) | Aerospace & Defense | L + 3.25% | 3.44% | 5/1/2018 | 5/1/2023 | — | (66) | (19) | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product Quest Manufacturing, LLC | ^ | (2)(3)(8) | Containers, Packaging & Glass | L + 6.75% | 10.00% | 9/21/2017 | 3/31/2021 | 840 | 840 | 423 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Propel Insurance Agency, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 6/1/2018 | 6/1/2024 | 2,333 | 2,322 | 2,324 | 0.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prophix Software Inc. (Canada) | ^ | (2)(3)(7)(13) | Software | L + 6.50% | 7.50% | 2/1/2021 | 2/1/2026 | 10,963 | 10,710 | 10,704 | 1.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| QW Holding Corporation | ^* | (2)(3) | Environmental Industries | L + 5.75% | 6.75% | 8/31/2016 | 8/31/2022 | 43,007 | 42,711 | 40,913 | 4.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | * | (2)(3) | High Tech Industries | L + 6.00% | 7.00% | 11/13/2018 | 6/6/2023 | 5,030 | 5,007 | 5,030 | 0.56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | * | (2)(3) | High Tech Industries | L + 8.50% | 9.50% | 8/14/2020 | 6/6/2023 | 3,466 | 3,383 | 3,515 | 0.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | ^* | (2)(3)(13) | High Tech Industries | L + 7.25% | 8.25% | 10/19/2020 | 6/6/2023 | 14,566 | 14,265 | 14,702 | 1.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Regency Entertainment, Inc. | ^ | (2)(3) | Media: Diversified & Production | L + 6.75% | 7.75% | 5/22/2020 | 10/22/2025 | 20,000 | 19,652 | 19,652 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reladyne, Inc. | * | (2)(3) | Wholesale | L + 5.00% | 6.00% | 8/21/2020 | 7/22/2022 | 10,100 | 10,030 | 10,061 | 1.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Riveron Acquisition Holdings, Inc. | * | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/22/2019 | 5/22/2025 | 11,488 | 11,321 | 11,603 | 1.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. | ^ | (2)(3)(13) | Banking, Finance, Insurance & Real Estate | L + 5.50% | 6.50% | 11/1/2019 | 11/1/2026 | 6,068 | 5,961 | 6,100 | 0.67 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sapphire Convention, Inc. | ^* | (2)(3)(13) | Telecommunications | L + 6.25% | 7.25% | 11/20/2018 | 11/20/2025 | 29,378 | 28,930 | 24,547 | 2.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Smile Doctors, LLC | ^* | (2)(3)(13) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 10/6/2017 | 10/6/2022 | 16,887 | 16,838 | 16,887 | 1.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Southern Graphics, Inc. | ^ | (2)(3)(11) | Media: Advertising, Printing & Publishing | L + 6.50% | 7.50% | 10/30/2020 | 10/23/2023 | 9,959 | 9,781 | 9,950 | 1.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sovos Brands Intermediate, Inc. | ^* | (2)(3) | Beverage, Food & Tobacco | L + 4.75% | 4.98% | 11/16/2018 | 11/20/2025 | 12,292 | 12,200 | 12,226 | 1.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SPay, Inc. | ^* | (2)(3)(13) | Hotel, Gaming & Leisure | L + 2.30%, 6.95% PIK | 10.25% | 6/15/2018 | 6/17/2024 | $ | 21,730 | $ | 21,480 | $ | 18,273 | 2.01 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Speedstar Holding, LLC | ^* | (2)(3)(13) | Automotive | L + 7.00% | 8.00% | 1/22/2021 | 1/22/2027 | 27,432 | 26,824 | 26,813 | 2.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Superior Health Linens, LLC | ^* | (2)(3)(13) | Business Services | L + 6.50% | 7.50% | 9/30/2016 | 9/30/2021 | 12,837 | 12,812 | 12,821 | 1.41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^* | (2)(3)(13) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2016 | 9/28/2022 | 26,536 | 26,321 | 26,535 | 2.90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TCFI Aevex LLC | ^* | (2)(3)(13) | Aerospace & Defense | L + 6.00% | 7.00% | 3/18/2020 | 3/18/2026 | 9,668 | 9,487 | 9,651 | 1.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Leaders Romans Bidco Limited (United Kingdom) Term Loan B | ^ | (2)(3)(7) | Banking, Finance, Insurance & Real Estate | L + 6.75%, 3.50% PIK | 11.00% | 7/23/2019 | 6/30/2024 | £ | 20,739 | 25,444 | 28,520 | 3.13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Leaders Romans Bidco Limited (United Kingdom) Term Loan C | ^ | (2)(3)(7)(13) | Banking, Finance, Insurance & Real Estate | L + 6.75%, 3.50% PIK | 11.00% | 7/23/2019 | 6/30/2024 | £ | 4,991 | 7,363 | 8,945 | 0.98 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trump Card, LLC | ^* | (2)(3)(13) | Transportation: Cargo | L + 5.50% | 6.50% | 6/26/2018 | 4/21/2022 | 7,734 | 7,716 | 7,634 | 0.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TSB Purchaser, Inc. | ^* | (2)(3)(13) | Media: Advertising, Printing & Publishing | L + 6.00% | 7.00% | 5/14/2018 | 5/14/2024 | 18,618 | 18,328 | 18,518 | 2.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Turbo Buyer, Inc. | ^* | (2)(3)(13) | Automotive | L + 5.50% | 6.50% | 12/2/2019 | 12/2/2025 | 24,262 | 23,730 | 24,527 | 2.69 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tweddle Group, Inc. | ^ | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.50% | 5.50% | 9/17/2018 | 9/17/2023 | 1,710 | 1,694 | 1,536 | 0.17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unifrutti Financing PLC (Cyprus) | ^ | (7) | Beverage, Food & Tobacco | 7.50%, 1.00% PIK | 8.50% | 9/15/2019 | 9/15/2026 | € | 4,598 | 4,866 | 5,325 | 0.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unifrutti Financing PLC (Cyprus) | ^ | (7) | Beverage, Food & Tobacco | 11.00% PIK | 11.00% | 10/22/2020 | 9/15/2026 | € | 679 | 762 | 786 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| US INFRA SVCS Buyer, LLC | ^ | (2)(3)(13) | Environmental Industries | L + 6.00% | 7.00% | 4/13/2020 | 4/13/2026 | 4,066 | 3,531 | 3,658 | 0.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| USLS Acquisition, Inc. | ^* | (2)(3)(13) | Business Services | L + 5.75% | 6.75% | 11/30/2018 | 11/30/2024 | 21,393 | 21,089 | 20,124 | 2.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| USLS Acquisition, Inc. | ^ | (2)(3)(13) | Business Services | L + 5.75% | 6.75% | 9/3/2020 | 11/30/2024 | — | (21) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | ^* | (2)(3)(13) | Business Services | L + 6.50% | 7.50% | 3/31/2017 | 3/31/2023 | 33,201 | 32,989 | 32,504 | 3.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Westfall Technik, Inc. | ^* | (2)(3)(13) | Chemicals, Plastics & Rubber | L + 6.25% | 7.25% | 9/13/2018 | 9/13/2024 | 27,656 | 27,408 | 26,389 | 2.90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wheel Pros, LLC | * | (2)(3) | Automotive | L + 5.25% | 6.25% | 11/18/2020 | 11/6/2027 | 3,267 | 3,188 | 3,251 | 0.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| YLG Holdings, Inc. | ^ | (2)(3)(13) | Consumer Services | L + 6.25% | 7.25% | 9/30/2020 | 11/1/2025 | 1,626 | 1,570 | 1,613 | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zemax Software Holdings, LLC | ^* | (2)(3)(13) | Software | L + 5.75% | 6.75% | 6/25/2018 | 6/25/2024 | 6,271 | 6,207 | 6,159 | 0.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zenith Merger Sub, Inc. | ^* | (2)(3)(13) | Business Services | L + 5.25% | 6.25% | 12/13/2017 | 12/13/2023 | 13,603 | 13,499 | 13,579 | 1.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 1,237,509 | $ | 1,194,048 | 131.14 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (16.3% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AI Convoy S.A.R.L (United Kingdom) | ^ | (2)(3)(7) | Aerospace & Defense | L + 8.25% | 9.25% | 1/17/2020 | 1/17/2028 | $ | 24,814 | $ | 24,318 | $ | 25,717 | 2.82 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Aimbridge Acquisition Co., Inc. | ^ | (2)(3) | Hotel, Gaming & Leisure | L + 7.50% | 7.62% | 2/1/2019 | 2/1/2027 | 9,241 | 9,109 | 8,197 | 0.90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AQA Acquisition Holdings, Inc. | ^ | (2)(3) | High Tech Industries | L + 7.50% | 8.00% | 3/3/2021 | 3/3/2029 | 40,000 | 39,007 | 39,000 | 4.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brave Parent Holdings, Inc. | ^* | (2)(3) | Software | L + 7.50% | 7.61% | 10/3/2018 | 4/19/2026 | 19,062 | 18,725 | 19,062 | 2.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Drilling Info Holdings, Inc. | ^ | (2)(3) | Energy: Oil & Gas | L + 8.25% | 8.36% | 2/11/2020 | 7/30/2026 | $ | 18,600 | $ | 18,161 | $ | 18,739 | 2.06 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jazz Acquisition, Inc. | ^ | (2)(3) | Aerospace & Defense | L + 8.00% | 8.11% | 6/13/2019 | 6/18/2027 | 23,450 | 23,159 | 18,762 | 2.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outcomes Group Holdings, Inc. | ^* | (2)(3) | Business Services | L + 7.50% | 7.70% | 10/23/2018 | 10/26/2026 | 1,731 | 1,727 | 1,731 | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PAI Holdco, Inc. | ^ | (2)(3) | Automotive | L + 6.25%, 2.00% PIK | 9.25% | 10/28/2020 | 10/28/2028 | 13,599 | 13,210 | 13,480 | 1.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Peraton Corp. | ^ | (2)(3) | Aerospace & Defense | L + 7.75% | 8.50% | 2/24/2021 | 2/1/2029 | 12,300 | 12,115 | 12,115 | 1.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quartz Holding Company | ^ | (2)(3) | Software | L + 8.00% | 8.11% | 4/2/2019 | 4/2/2027 | 7,048 | 6,934 | 7,118 | 0.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reladyne, Inc. | ^ | (2)(3) | Wholesale | L + 9.50% | 10.50% | 4/19/2018 | 1/21/2023 | 12,242 | 12,145 | 11,834 | 1.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stonegate Pub Company Bidco Limited (United Kingdom) | ^ | (2)(3)(7) | Beverage, Food & Tobacco | L + 8.50% | 8.54% | 3/12/2020 | 3/12/2028 | £ | 20,000 | 24,743 | 22,976 | 2.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | ^* | (2)(3) | Capital Equipment | L + 8.25% | 8.36% | 3/26/2019 | 3/26/2027 | 35,965 | 35,489 | 36,214 | 3.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TruGreen Limited Partnership | ^ | (2)(3) | Consumer Services | L + 8.50% | 9.25% | 11/16/2020 | 11/2/2028 | 13,000 | 12,752 | 13,003 | 1.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ultimate Baked Goods MIDCO, LLC | ^ | (2)(3) | Beverage, Food & Tobacco | L + 8.00% | 9.00% | 8/9/2018 | 8/9/2026 | 2,820 | 2,777 | 2,600 | 0.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Watchfire Enterprises, Inc. | ^ | (2)(3) | Media: Advertising, Printing & Publishing | L + 8.00% | 9.00% | 10/2/2013 | 10/2/2021 | 7,000 | 6,990 | 6,947 | 0.76 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| World 50, Inc. | ^ | (9) | Business Services | 11.50% | 11.50% | 1/10/2020 | 1/9/2027 | 7,635 | 7,503 | 7,561 | 0.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WP CPP Holdings, LLC | ^* | (2)(3) | Aerospace & Defense | L + 7.75% | 8.75% | 7/18/2019 | 4/30/2026 | 39,500 | 39,184 | 34,266 | 3.77 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Second Lien Debt Total | $ | 308,048 | $ | 299,322 | 32.87 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Acquisition Date | Shares/ Units | Cost | Fair Value (5) | % of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (1.9% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ANLG Holdings, LLC | ^ | (6) | Capital Equipment | 6/22/2018 | 592 | $ | 592 | $ | 803 | 0.09 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | ^ | (6) | Sovereign & Public Finance | 9/28/2018 | 172 | 172 | 479 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BK Intermediate Company, LLC | ^ | (6) | Healthcare & Pharmaceuticals | 5/27/2020 | 288 | 288 | 266 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Central Security Group, Inc. | ^* | (6) | Consumer Services | 10/16/2020 | 443 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chartis Holding, LLC | ^ | (6) | Business Services | 5/1/2019 | 433 | 433 | 733 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CIP Revolution Holdings, LLC | ^ | (6) | Media: Advertising, Printing & Publishing | 8/19/2016 | 318 | 318 | 250 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^ | (6) | Software | 7/2/2019 | 250 | 250 | 312 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DecoPac, Inc. | ^ | (6) | Non-durable Consumer Goods | 9/29/2017 | 1,500 | 1,500 | 1,557 | 0.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derm Growth Partners III, LLC | ^ | (6) | Healthcare & Pharmaceuticals | 5/31/2016 | 1,000 | 1,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GRO Sub Holdco, LLC | ^ | (6) | Healthcare & Pharmaceuticals | 3/29/2018 | 268 | — | 290 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| K2 Insurance Services, LLC | ^ | (6) | Banking, Finance, Insurance & Real Estate | 7/3/2019 | 433 | 433 | 622 | 0.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Acquisition Date | Shares/ Units | Cost | Fair Value (5) | % of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy.com, Inc. | ^ | (6) | High Tech Industries | 3/20/2017 | 1,500 | $ | 1,500 | $ | 696 | 0.08 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mailgun Technologies, Inc. | ^ | (6) | High Tech Industries | 3/26/2019 | 424 | 424 | 784 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| North Haven Goldfinch Topco, LLC | ^ | (6) | Containers, Packaging & Glass | 6/18/2018 | 2,315 | 2,315 | 3,199 | 0.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^ | (6) | Capital Equipment | 6/17/2019 | 150 | 500 | 760 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPC Flexible Packaging, LLC | ^ | (6) | Containers, Packaging & Glass | 2/1/2019 | 965 | 965 | 1,483 | 0.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rough Country, LLC | ^ | (6) | Durable Consumer Goods | 5/25/2017 | 755 | 490 | 1,511 | 0.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems Parent Corporation | ^ | (6) | Transportation: Consumer | 9/28/2016 | 556 | 556 | 677 | 0.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tailwind HMT Holdings Corp. | ^ | (6) | Energy: Oil & Gas | 11/17/2017 | 22 | 1,558 | 2,023 | 0.22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | ^ | (6) | Capital Equipment | 3/26/2019 | 850 | 482 | 944 | 0.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Titan DI Preferred Holdings, Inc. | ^ | (6) | Energy: Oil & Gas | 2/11/2020 | 11,620 | 11,345 | 11,620 | 1.28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Turbo Buyer, Inc. | ^ | (6) | Automotive | 12/2/2019 | 1,925 | 1,925 | 2,601 | 0.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tweddle Holdings, Inc. | ^* | (6) | Media: Advertising, Printing & Publishing | 9/17/2018 | 17 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unifrutti Financing PLC (Cyprus) | ^ | (6) | Beverage, Food & Tobacco | 10/22/2020 | — | 424 | 421 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unifrutti Financing PLC (Cyprus) | ^ | (6) | Beverage, Food & Tobacco | 10/22/2020 | — | 133 | 148 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| USLS Acquisition, Inc. | ^ | (6) | Business Services | 11/30/2018 | 641 | 641 | 570 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| W50 Parent LLC | ^ | (6) | Business Services | 1/10/2020 | 500 | 500 | 672 | 0.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zenith American Holding, Inc. | ^ | (6) | Business Services | 12/13/2017 | 1,564 | 782 | 1,441 | 0.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zillow Topco LP | ^ | (6) | Software | 6/25/2018 | 313 | 312 | 168 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments Total | $ | 29,838 | $ | 35,030 | 3.85 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investments—non-controlled/non-affiliated | $ | 1,575,395 | $ | 1,528,400 | 167.86 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments—non-controlled/affiliated | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (1.5% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. | ^* | (2)(3)(8)(12) | Hotel, Gaming & Leisure | L + 1.00%, 7.50% PIK | 9.50% | 10/14/2016 | 10/1/2023 | $ | 36,839 | $ | 36,218 | $ | 25,473 | 2.80 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct Travel Inc. | ^ | (2)(3)(12)(13) | Hotel, Gaming & Leisure | L + 6.00% | 7.00% | 10/1/2020 | 10/1/2023 | 2,177 | 2,177 | 2,177 | 0.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 38,395 | $ | 27,650 | 3.04 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
| Investments—non-controlled/affiliated | Footnotes | Industry | Acquisition Date | Shares/ Units | Cost | Fair Value (5) | % of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (0.0% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. | ^ | (6)(12) | Hotel, Gaming & Leisure | 10/1/2020 | 43 | $ | — | $ | — | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments Total | $ | — | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investments—non-controlled/affiliated | $ | 38,395 | $ | 27,650 | 3.04 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments—controlled/affiliated | Footnotes | Industry | Reference Rate & Spread(2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (0.3% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (A1 Term Loan) | ^ | (2)(3)(8)(10) | Telecommunications | L + 8.00% (100% PIK) | 9.00% | 4/12/2019 | 10/12/2022 | $ | 3,166 | $ | 3,166 | $ | 670 | 0.07 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (A2 Term Loan) | ^ | (2)(3)(8)(10) | Telecommunications | L + 8.00% (100% PIK) | 9.00% | 4/12/2019 | 10/12/2022 | 8,707 | 8,707 | 1,843 | 0.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (Priority Facilities) | ^ | (2)(3)(10)(13) | Telecommunications | L + 6.00% | 7.00% | 4/12/2019 | 10/12/2022 | 2,442 | 2,417 | 2,442 | 0.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 14,290 | $ | 4,955 | 0.54 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments—controlled/affiliated | Footnotes | Industry | Acquisition Date | Shares/ Units | Cost | Fair Value (5) | % of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (0.0% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. | ^ | (6)(10) | Telecommunications | 4/12/2019 | 3 | $ | 2,815 | $ | — | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments Total | $ | 2,815 | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
| Investments—controlled/affiliated | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par Amount/ LLC Interest ** | Cost | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Funds (15.2% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle Market Credit Fund II, LLC, Member's Interest | ^ | (7)(10) | Investment Funds | N/A | —% | 11/3/2020 | 12/31/2030 | $ | 78,122 | $ | 78,096 | $ | 77,934 | 8.56 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle Market Credit Fund, LLC, Subordinated Loan and Member's Interest | ^ | (7)(10) | Investment Funds | N/A | —% | 2/29/2016 | 12/31/2024 | 216,000 | 216,001 | 202,695 | 22.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle Market Credit Fund, Mezzanine Loan | ^ | (2)(7)(9)(10) | Investment Funds | L + 9.00% | 9.19% | 6/30/2016 | 5/21/2022 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Fund Total | $ | 294,097 | $ | 280,629 | 30.82 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investments—controlled/affiliated | $ | 311,202 | $ | 285,584 | 31.37 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Investments | $ | 1,924,992 | $ | 1,841,634 | 202.26 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”). The Company has entered into a senior secured revolving credit facility (as amended, the “Credit Facility”). The lenders of the Credit Facility have a first lien security interest in substantially all of the portfolio investments held by the Company (see Note 7, Borrowings). Accordingly, such assets are not available to creditors of Carlyle Direct Lending CLO 2015-1R LLC (formerly known as Carlyle GMS Finance MM CLO 2015-1 LLC) (the “2015-1 Issuer”).
* Denotes that all or a portion of the assets are owned by the Company's wholly owned subsidiary, the 2015-1 Issuer, and secure the notes issued in connection with a term debt securitization completed by the Company on June 26, 2015 (see Note 8, Notes Payable). Accordingly, such assets are not available to the creditors of the Company.
** Par amount is denominated in USD ("$") unless otherwise noted, as denominated in Euro (“€”) or British Pound (“£”).
(1)Unless otherwise indicated, issuers of debt and equity investments held by the Company are domiciled in the United States. Under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”), the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of March 31, 2021, the Company does not “control” any of these portfolio companies. Under the Investment Company Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owns 5% or more of the portfolio company’s outstanding voting securities. As of March 31, 2021, the Company is not an “affiliated person” of any of these portfolio companies. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR (“L”) or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of March 31, 2021. As of March 31, 2021, the reference rates for our variable rate loans were the 30-day LIBOR at 0.11%, the 90-day LIBOR at 0.19% and the 180-day LIBOR at 0.21%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (see Note 2, Significant Accounting Policies, and Note 3, Fair Value Measurements), pursuant to the Company’s valuation policy. The fair value of all first lien and second lien debt investments, equity investments and the investment funds was determined using significant unobservable inputs.
(6)Security acquired in transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of March 31, 2021, the aggregate fair value of these securities is $35,030, or 3.85% of the Company’s net assets.
(7)The Company has determined the indicated investments are non-qualifying assets under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.
(8)Loan was on non-accrual status as of March 31, 2021.
(9)Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company/investment fund.
14
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
(10)Under the Investment Company Act, the Company is deemed to be an “affiliated person” of and “control” this investment fund because the Company owns more than 25% of the investment fund’s outstanding voting securities and/or has the power to exercise control over management or policies of such investment fund. See Note 5, Middle Market Credit Fund, LLC, and Note 6, Middle Market Credit Fund II, LLC, for more details. Transactions related to investments in controlled affiliates for the three month period ended March 31, 2021, were as follows:
| Investments—controlled/affiliated | Fair Value as of December 31, 2020 | Additions/Purchases | Reductions/Sales/ Paydowns | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value as of March 31, 2021 | Dividend and Interest Income | ||||||||||||||||||||||||||||||||||
Middle Market Credit Fund, LLC, Mezzanine Loan | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||
Middle Market Credit Fund, LLC, Subordinated Loan and Member’s Interest | 205,891 | — | — | — | (3,196) | 202,695 | 5,000 | ||||||||||||||||||||||||||||||||||
| Middle Market Credit Fund II LLC, Member's Interest | 77,395 | — | — | — | 539 | 77,934 | 2,524 | ||||||||||||||||||||||||||||||||||
| Total investments—controlled/affiliated | $ | 283,286 | $ | — | $ | — | $ | — | $ | (2,657) | $ | 280,629 | $ | 7,524 | |||||||||||||||||||||||||||
| Investments—controlled/affiliated | Fair Value as of December 31, 2020 | Additions/Purchases | Reductions/Sales/ Paydowns | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value as of March 31, 2021 | Dividend and Interest Income | ||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (Priority Term Loan) | $ | 2,640 | $ | — | $ | (18) | $ | — | $ | — | $ | 2,622 | $ | 56 | |||||||||||||||||||||||||||
| SolAero Technologies Corp. (A1 Term Loan) | 1,214 | — | — | — | (544) | 670 | — | ||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (A2 Term Loan) | 3,338 | — | — | — | (1,495) | 1,843 | — | ||||||||||||||||||||||||||||||||||
Solaero Technology Corp. (Equity) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total investments—controlled/affiliated | $ | 7,192 | $ | — | $ | (18) | $ | — | $ | (2,039) | $ | 5,135 | $ | 56 | |||||||||||||||||||||||||||
(11) In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company is entitled to receive additional interest as a result of an agreement among lenders as follows: Barnes & Noble, Inc. (1.83%), Southern Graphics, Inc. (1.71%), and Legacy.com Inc. (3.90%). Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.
(12) Under the Investment Company Act, the Company is deemed an "affiliated person" of this portfolio company because the Company owns 5% or more of the portfolio company's outstanding voting securities. Transactions related to the portfolio company during the three month period ended March 31, 2021were as follows:
| Investments—non-controlled/affiliated | Fair Value as of December 31, 2020 | Additions/Purchases | Reductions/Sales/ Paydowns | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value as of March 31, 2021 | Dividend and Interest Income | ||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. | $ | 24,949 | $ | — | $ | (123) | $ | 1 | $ | 646 | $ | 25,473 | $ | — | |||||||||||||||||||||||||||
| Direct Travel, Inc. | 1,231 | 946 | — | — | — | 2,177 | 38 | ||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. (Equity) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total investments—non-controlled/affiliated | $ | 26,180 | $ | 946 | $ | (123) | $ | 1 | $ | 646 | $ | 27,650 | $ | 38 | |||||||||||||||||||||||||||
15
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
(13)As of March 31, 2021, the Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans:
| Investments—non-controlled/non-affiliated | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| First and Second Lien Debt—unfunded delayed draw and revolving term loans commitments | |||||||||||||||||||||||
| Advanced Web Technologies Holding Company | Delayed Draw | 1.00% | $ | 2,299 | $ | 6 | |||||||||||||||||
| Advanced Web Technologies Holding Company | Revolver | 0.50 | 755 | 2 | |||||||||||||||||||
| American Physician Partners, LLC | Revolver | 0.50 | 550 | (16) | |||||||||||||||||||
| AMS Group HoldCo, LLC | Revolver | 0.50 | 2,315 | (3) | |||||||||||||||||||
| Analogic Corporation | Revolver | 0.50 | 168 | (1) | |||||||||||||||||||
| Applied Technical Services | Delayed Draw | 1.00 | 132 | (1) | |||||||||||||||||||
| Applied Technical Services | Revolver | 0.50 | 53 | — | |||||||||||||||||||
| Apptio, Inc. | Revolver | 0.50 | 1,420 | 11 | |||||||||||||||||||
| Captive Resources Midco, LLC | Revolver | 0.50 | 2,143 | 18 | |||||||||||||||||||
| Chartis Holding, LLC | Delayed Draw | 1.00 | 4,406 | — | |||||||||||||||||||
| Chartis Holding, LLC | Revolver | 0.50 | 2,401 | — | |||||||||||||||||||
| Chemical Computing Group ULC (Canada) | Revolver | 0.50 | 29 | — | |||||||||||||||||||
| CircusTrix Holdings, LLC | Delayed Draw | 1.00 | 287 | — | |||||||||||||||||||
| Comar Holding Company, LLC | Revolver | 0.50 | 2,935 | — | |||||||||||||||||||
| Comar Holding Company, LLC | Delayed Draw | 1.00 | 2,586 | — | |||||||||||||||||||
| Cority Software Inc.(Canada) | Revolver | 0.50 | 3,000 | 14 | |||||||||||||||||||
| DCA Investment Holding, LLC | Delayed Draw | 1.00 | 2,449 | (37) | |||||||||||||||||||
| DermaRite Industries, LLC | Revolver | 0.50 | 2,234 | (78) | |||||||||||||||||||
| Diligent Corporation | Delayed Draw | 1.00 | 141 | 1 | |||||||||||||||||||
| Diligent Corporation | Revolver | 0.50 | 47 | — | |||||||||||||||||||
| Direct Travel, Inc. | Delayed Draw | 0.50 | 2,083 | — | |||||||||||||||||||
| Ethos Veterinary Health LLC | Delayed Draw | 1.00 | 2,696 | (17) | |||||||||||||||||||
| EvolveIP, LLC | Delayed Draw | 1.00 | 3,333 | — | |||||||||||||||||||
| EvolveIP, LLC | Revolver | 0.50 | 2,941 | — | |||||||||||||||||||
| FWR Holding Corporation | Revolver | 0.50 | 4,444 | (340) | |||||||||||||||||||
| Greenhouse Software, Inc. | Revolver | 0.50 | 1,471 | (33) | |||||||||||||||||||
| Hawkeye AcquisitionCo, LLC | Delayed Draw | 1.00 | 4,454 | (89) | |||||||||||||||||||
| Hawkeye AcquisitionCo, LLC | Revolver | 0.50 | 557 | (11) | |||||||||||||||||||
| Helios Buyer, Inc. | Revolver | 0.50 | 689 | (3) | |||||||||||||||||||
| Helios Buyer, Inc. | Delayed Draw | 1.00 | 4,672 | (20) | |||||||||||||||||||
| Hercules Borrower LLC | Revolver | 0.50 | 2,160 | (31) | |||||||||||||||||||
| Higginbotham Insurance Agency, Inc. | Delayed Draw | 1.00 | 1,098 | 6 | |||||||||||||||||||
| Individual FoodService Holdings, LLC | Revolver | 0.50 | 607 | (8) | |||||||||||||||||||
| Individual FoodService Holdings, LLC | Delayed Draw | 1.00 | 584 | (7) | |||||||||||||||||||
| Individual FoodService Holdings, LLC | Delayed Draw | 1.00 | 149 | (2) | |||||||||||||||||||
16
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
| Investments—non-controlled/non-affiliated | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| K2 Insurance Services, LLC | Revolver | 0.50 | 2,290 | 3 | |||||||||||||||||||
| K2 Insurance Services, LLC | Delayed Draw | 1.00 | 1,571 | 2 | |||||||||||||||||||
| Kaseya, Inc. | Delayed Draw | 1.00 | 1,111 | — | |||||||||||||||||||
| Kaseya, Inc. | Revolver | 0.50 | 787 | — | |||||||||||||||||||
| Lifelong Learner Holdings, LLC | Delayed Draw | 1.00 | 1,690 | (115) | |||||||||||||||||||
| Lifelong Learner Holdings, LLC | Revolver | 0.50 | 1,377 | (94) | |||||||||||||||||||
| Liqui-Box Holdings, Inc. | Revolver | 0.50 | 912 | (79) | |||||||||||||||||||
| Mailgun Technologies, Inc. | Revolver | 0.50 | 1,342 | (12) | |||||||||||||||||||
| National Technical Systems, Inc. | Revolver | 0.50 | 836 | — | |||||||||||||||||||
| NMI AcquisitionCo, Inc. | Revolver | 0.50 | 1,280 | 5 | |||||||||||||||||||
| Paramit Corporation | Delayed Draw | 1.00 | 2,931 | — | |||||||||||||||||||
| PF Growth Partners, LLC | Delayed Draw | 1.00 | 823 | (44) | |||||||||||||||||||
| PPC Flexible Packaging, LLC | Revolver | 0.50 | 685 | — | |||||||||||||||||||
| PricewaterhouseCoopers Public Sector LLP | Revolver | 0.50 | 6,250 | (19) | |||||||||||||||||||
| Redwood Services Group, LLC | Delayed Draw | 3.63 | 2,992 | 23 | |||||||||||||||||||
| RSC Acquisition, Inc. | Revolver | 0.50 | 462 | 2 | |||||||||||||||||||
| Sapphire Convention, Inc. | Revolver | 0.50 | 3,089 | (460) | |||||||||||||||||||
| Smile Doctors, LLC | Revolver | 0.50 | 707 | — | |||||||||||||||||||
| SolAero Technologies Corp. (Priority Facilities) | Revolver | 0.50 | 984 | — | |||||||||||||||||||
| SolAero Technologies Corp. (Priority Facilities) | Revolver | 0.50 | 1,084 | — | |||||||||||||||||||
| SPay, Inc. | Revolver | 0.50 | 648 | (100) | |||||||||||||||||||
| Speedstar Holding, LLC | Delayed Draw | 1.00 | 3,775 | (76) | |||||||||||||||||||
| Superior Health Linens, LLC | Revolver | 0.50 | 1,667 | (2) | |||||||||||||||||||
| T2 Systems, Inc. | Revolver | 0.50 | 2,933 | — | |||||||||||||||||||
| TCFI Aevex LLC | Delayed Draw | 1.00 | 1,787 | (3) | |||||||||||||||||||
| The Leaders Romans Bidco Limited (United Kingdom) | Delayed Draw | 1.00 | £ | 2,111 | 252 | ||||||||||||||||||
| Trump Card, LLC | Revolver | 0.50 | 477 | (6) | |||||||||||||||||||
| TSB Purchaser, Inc. | Revolver | 0.50 | 1,891 | (9) | |||||||||||||||||||
| Turbo Buyer, Inc. | Revolver | 0.50 | 2,151 | 22 | |||||||||||||||||||
| US INFRA SVCS Buyer, LLC | Revolver | 0.50 | 2,275 | (29) | |||||||||||||||||||
| US INFRA SVCS Buyer, LLC | Delayed Draw | 1.00 | 25,328 | (327) | |||||||||||||||||||
| USLS Acquisition, Inc. | Revolver | 0.50 | 1,418 | (79) | |||||||||||||||||||
| VRC Companies, LLC | Revolver | 0.50 | 1,646 | (33) | |||||||||||||||||||
| Westfall Technik, Inc. | Revolver | 0.50 | 431 | (19) | |||||||||||||||||||
| YLG Holdings, Inc. | Delayed Draw | 1.00 | 368 | (2) | |||||||||||||||||||
| Zemax Software Holdings, LLC | Revolver | 0.50 | 642 | (10) | |||||||||||||||||||
| Zenith Merger Sub, Inc. | Revolver | 0.50 | 2,120 | (3) | |||||||||||||||||||
| Total unfunded commitments | $ | 149,152 | $ | (1,891) | |||||||||||||||||||
17
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
As of March 31, 2021, investments at fair value consisted of the following:
| Type | Amortized Cost | Fair Value | % of Fair Value | |||||||||||||||||
| First Lien Debt (excluding First Lien/Last Out Debt) | $ | 1,226,793 | $ | 1,164,592 | 63.2 | % | ||||||||||||||
| First Lien/Last Out Debt | 63,401 | 62,061 | 3.4 | |||||||||||||||||
| Second Lien Debt | 308,048 | 299,322 | 16.3 | |||||||||||||||||
| Equity Investments | 32,653 | 35,030 | 1.9 | |||||||||||||||||
| Investment Funds | 294,097 | 280,629 | 15.2 | |||||||||||||||||
| Total | $ | 1,924,992 | $ | 1,841,634 | 100.0 | % | ||||||||||||||
The rate type of debt investments at fair value as of March 31, 2021 was as follows:
| Rate Type | Amortized Cost | Fair Value | % of Fair Value of First and Second Lien Debt | |||||||||||||||||
| Floating Rate | $ | 1,585,111 | $ | 1,512,303 | 99.1 | % | ||||||||||||||
| Fixed Rate | 13,131 | 13,672 | 0.9 | |||||||||||||||||
| Total | $ | 1,598,242 | $ | 1,525,975 | 100.0 | % | ||||||||||||||
The industry composition of investments at fair value as of March 31, 2021 was as follows:
| Industry | Amortized Cost | Fair Value | % of Fair Value | ||||||||||||||
| Aerospace & Defense | $ | 115,239 | $ | 107,554 | 5.9 | % | |||||||||||
| Automotive | 68,877 | 70,672 | 3.9 | ||||||||||||||
| Banking, Finance, Insurance & Real Estate | 90,131 | 96,194 | 5.2 | ||||||||||||||
| Beverage, Food & Tobacco | 80,179 | 76,110 | 4.1 | ||||||||||||||
| Business Services | 132,101 | 130,782 | 7.1 | ||||||||||||||
| Capital Equipment | 47,485 | 49,275 | 2.7 | ||||||||||||||
| Chemicals, Plastics & Rubber | 27,408 | 26,389 | 1.4 | ||||||||||||||
| Construction & Building | 1,559 | 1,578 | 0.1 | ||||||||||||||
| Consumer Services | 35,944 | 35,810 | 1.9 | ||||||||||||||
| Containers, Packaging & Glass | 61,903 | 63,481 | 3.4 | ||||||||||||||
| Durable Consumer Goods | 4,598 | 5,571 | 0.3 | ||||||||||||||
| Energy: Oil & Gas | 40,745 | 41,889 | 2.3 | ||||||||||||||
| Environmental Industries | 64,336 | 62,864 | 3.4 | ||||||||||||||
| Healthcare & Pharmaceuticals | 157,771 | 128,463 | 7.0 | ||||||||||||||
| High Tech Industries | 178,525 | 178,816 | 9.7 | ||||||||||||||
| Hotel, Gaming & Leisure | 102,603 | 84,643 | 4.6 | ||||||||||||||
| Investment Funds | 294,097 | 280,629 | 15.2 | ||||||||||||||
| Media: Advertising, Printing & Publishing | 37,111 | 37,201 | 2.0 | ||||||||||||||
18
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of March 31, 2021
(dollar amounts in thousands)
(unaudited)
| Industry | Amortized Cost | Fair Value | % of Fair Value | ||||||||||||||
| Media: Diversified & Production | 19,652 | 19,652 | 1.1 | ||||||||||||||
| Non-durable Consumer Goods | 1,500 | 1,557 | 0.1 | ||||||||||||||
| Retail | 34,393 | 33,893 | 1.8 | ||||||||||||||
| Software | 113,442 | 112,010 | 6.1 | ||||||||||||||
| Sovereign & Public Finance | 13,690 | 14,129 | 0.8 | ||||||||||||||
| Telecommunications | 116,975 | 97,533 | 5.3 | ||||||||||||||
| Transportation: Cargo | 29,709 | 29,818 | 1.6 | ||||||||||||||
| Transportation: Consumer | 26,877 | 27,212 | 1.5 | ||||||||||||||
| Wholesale | 28,142 | 27,909 | 1.5 | ||||||||||||||
| $ | 1,924,992 | $ | 1,841,634 | 100.0 | % | ||||||||||||
The geographical composition of investments at fair value as of March 31, 2021 was as follows:
| Geography | Amortized Cost | Fair Value | % of Fair Value | ||||||||||||||
| Canada | $ | 34,904 | $ | 35,537 | 1.9 | % | |||||||||||
| Cyprus | 6,185 | 6,680 | 0.4 | ||||||||||||||
| Luxembourg | 32,037 | 29,620 | 1.6 | ||||||||||||||
| United Kingdom | 91,549 | 95,665 | 5.2 | ||||||||||||||
| United States | 1,760,317 | 1,674,132 | 90.9 | ||||||||||||||
| Total | $ | 1,924,992 | $ | 1,841,634 | 100.0 | % | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
19
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in thousands)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value(5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (65.2% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Advanced Web Technologies Holding Company | ^ | (2)(3)(13) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 12/17/2020 | 12/17/2026 | $ | 6,042 | $ | 5,859 | $ | 5,858 | 0.65 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Airnov, Inc. | ^* | (2)(3)(13) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 12/20/2019 | 12/19/2025 | 11,216 | 11,057 | 11,221 | 1.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpha Packaging Holdings, Inc. | * | (2)(3) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 6/26/2015 | 11/12/2021 | 2,784 | 2,784 | 2,784 | 0.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | * | (2)(3) | High Tech Industries | L + 5.75% | 6.75% | 2/2/2018 | 11/16/2022 | 10,890 | 10,835 | 10,808 | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^ | (2)(3) | High Tech Industries | L + 8.50% | 9.50% | 7/24/2020 | 11/16/2022 | 1,618 | 1,578 | 1,612 | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^* | (2)(3) | High Tech Industries | L + 6.50% | 7.50% | 11/2/2020 | 11/16/2022 | 10,750 | 10,452 | 10,698 | 1.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| American Physician Partners, LLC | ^* | (2)(3)(13) | Healthcare & Pharmaceuticals | L + 6.75% | 7.75% | 1/7/2019 | 12/21/2021 | 28,848 | 28,715 | 27,295 | 3.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AMS Group HoldCo, LLC | ^ | (2)(3)(13) | Transportation: Cargo | L + 6.50% | 7.50% | 9/29/2017 | 9/29/2023 | 22,252 | 22,004 | 21,945 | 2.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Analogic Corporation | * | (2)(3)(13) | Capital Equipment | L + 5.25% | 6.25% | 6/22/2018 | 6/22/2024 | 2,361 | 2,332 | 2,361 | 0.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Anchor Hocking, LLC | ^ | (2)(3) | Durable Consumer Goods | L + 11.75% | 12.75% | 1/25/2019 | 1/25/2024 | 9,758 | 9,547 | 9,358 | 1.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Applied Technical Services, LLC | ^ | (2)(3)(13) | Business Services | L + 5.75% | 6.75% | 12/29/2020 | 12/29/2026 | 395 | 382 | 382 | 0.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Apptio, Inc. | ^ | (2)(3)(13) | Software | L + 7.25% | 8.25% | 1/10/2019 | 1/10/2025 | 5,184 | 5,073 | 5,297 | 0.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At Home Holding III, Inc. | ^ | (2)(3)(7) | Retail | L + 9.00% | 10.00% | 6/12/2020 | 7/27/2022 | 875 | 858 | 870 | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Aurora Lux FinCo S.Á.R.L. (Luxembourg) | ^* | (2)(3)(7) | Software | L + 5.75% | 6.75% | 12/24/2019 | 12/24/2026 | 32,819 | 32,093 | 29,970 | 3.32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | ^* | (2)(3) | Sovereign & Public Finance | L + 5.25% | 6.25% | 9/28/2018 | 9/28/2024 | 37,276 | 36,883 | 37,276 | 4.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Barnes & Noble, Inc. | ^ | (2)(3)(11) | Retail | L + 5.50% | 6.50% | 8/7/2019 | 8/7/2024 | 16,744 | 16,426 | 15,808 | 1.75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BlueCat Networks, Inc. (Canada) | * | (2)(3)(7) | High Tech Industries | L + 6.25% | 7.25% | 10/30/2020 | 10/30/2026 | 11,468 | 11,243 | 11,239 | 1.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BMS Holdings III Corp. | * | (2)(3) | Construction & Building | L + 5.25% | 6.25% | 9/30/2019 | 9/30/2026 | 1,596 | 1,554 | 1,578 | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Captive Resources Midco, LLC | ^* | (2)(3)(13) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 6/30/2015 | 5/31/2025 | 10,525 | 10,370 | 10,611 | 1.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Central Security Group, Inc. | ^* | (2)(3) | Consumer Services | L + 6.00% | 7.00% | 10/16/2020 | 10/16/2025 | 9,278 | 9,278 | 7,930 | 0.88 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chartis Holding, LLC | ^* | (2)(3)(13) | Business Services | L + 5.50% | 6.50% | 5/1/2019 | 5/1/2025 | 16,266 | 15,969 | 16,275 | 1.81 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chemical Computing Group ULC (Canada) | ^* | (2)(3)(7)(13) | Software | L + 5.00% | 6.00% | 8/30/2018 | 8/30/2023 | 471 | 469 | 471 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CircusTrix Holdings, LLC | ^* | (2)(3) | Hotel, Gaming & Leisure | L + 6.75% (100% PIK) | 7.75% | 2/2/2018 | 12/6/2021 | 10,023 | 9,987 | 8,093 | 0.90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cobblestone Intermediate Holdco LLC | ^ | (2)(3)(13) | Consumer Services | L + 4.75% | 5.75% | 1/29/2020 | 1/29/2026 | 720 | 713 | 723 | 0.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comar Holding Company, LLC | ^* | (2)(3)(13) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 6/18/2018 | 6/18/2024 | 22,037 | 21,636 | 22,147 | 2.46 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^* | (2)(3)(7)(13) | Software | L + 5.25% | 6.25% | 7/2/2019 | 7/2/2026 | 10,622 | 10,401 | 10,718 | 1.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^ | (2)(3)(7) | Software | L + 7.25% | 8.25% | 9/3/2020 | 7/2/2026 | 1,898 | 1,843 | 1,935 | 0.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derm Growth Partners III, LLC | ^ | (2)(3)(8) | Healthcare & Pharmaceuticals | L + 6.25% (100% PIK) | 7.25% | 5/31/2016 | 5/31/2022 | 56,320 | 56,046 | 28,212 | 3.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DermaRite Industries, LLC | ^* | (2)(3)(13) | Healthcare & Pharmaceuticals | L + 7.00% | 8.00% | 3/3/2017 | 3/3/2022 | 18,862 | 18,776 | 18,656 | 2.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Designer Brands Inc. | ^ | (2)(3)(7) | Retail | L + 8.50% | 9.75% | 8/7/2020 | 8/7/2025 | 17,955 | 17,534 | 17,811 | 1.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value(5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diligent Corporation | ^ | (2)(3)(13) | Telecommunications | L + 6.25% | 7.25% | 8/4/2020 | 8/4/2025 | $ | 579 | $ | 561 | $ | 588 | 0.07 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DTI Holdco, Inc. | * | (2)(3) | High Tech Industries | L + 4.75% | 5.75% | 12/18/2018 | 9/30/2023 | 1,954 | 1,876 | 1,741 | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Emergency Communications Network, LLC | ^* | (2)(3) | Telecommunications | L + 2.625%, 5.125% PIK | 8.75% | 6/1/2017 | 6/1/2023 | 24,370 | 24,269 | 21,349 | 2.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ensono, LP | * | (2)(3) | Telecommunications | L + 5.25% | 5.40% | 4/30/2018 | 6/27/2025 | 2,158 | 2,142 | 2,142 | 0.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ensono, LP | ^* | (2)(3) | Telecommunications | L + 5.75% | 5.90% | 6/25/2020 | 6/27/2025 | 18,131 | 18,008 | 17,995 | 2.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ethos Veterinary Health LLC | ^ | (2)(3)(13) | Consumer Services | L + 4.75% | 4.90% | 5/17/2019 | 5/15/2026 | 2,612 | 2,570 | 2,540 | 0.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^ | (2)(3)(13) | Telecommunications | L + 5.75% | 6.75% | 11/26/2019 | 6/7/2023 | 25,864 | 25,806 | 25,828 | 2.87 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Frontline Technologies Holdings, LLC | * | (2)(3) | Software | L + 5.75% | 6.75% | 9/18/2017 | 9/18/2023 | 3,099 | 3,081 | 3,037 | 0.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FWR Holding Corporation | ^* | (2)(3)(13) | Beverage, Food & Tobacco | L + 5.50%, 1.50% PIK | 8.00% | 8/21/2017 | 8/21/2023 | 34,555 | 34,175 | 31,216 | 3.46 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Helios Buyer, Inc. | ^ | (2)(3)(13) | Consumer Services | L + 6.00% | 7.00% | 12/15/2020 | 12/15/2026 | 8,749 | 8,456 | 8,454 | 0.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hercules Borrower LLC | ^ | (2)(3)(13) | Environmental Industries | L + 6.50% | 7.50% | 12/14/2020 | 12/14/2026 | 18,592 | 18,077 | 18,073 | 2.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Higginbotham Insurance Agency, Inc. | ^ | (2)(3)(13) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.50% | 11/25/2020 | 11/25/2026 | 3,902 | 3,828 | 3,827 | 0.42 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| iCIMS, Inc. | ^ | (2)(3) | Software | L + 6.50% | 7.50% | 9/12/2018 | 9/12/2024 | 1,670 | 1,646 | 1,666 | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Individual FoodService Holdings, LLC | ^ | (2)(3)(13) | Wholesale | L + 6.25% | 7.25% | 2/21/2020 | 11/22/2025 | 3,883 | 3,797 | 3,759 | 0.42 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Individual FoodService Holdings, LLC | ^ | (2)(3)(13) | Wholesale | L + 6.25% | 7.25% | 12/31/2020 | 11/22/2025 | 2,197 | 2,134 | 2,134 | 0.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Innovative Business Services, LLC | ^* | (2)(3) | High Tech Industries | L + 5.50% | 6.50% | 4/5/2018 | 4/5/2023 | 13,779 | 13,523 | 13,484 | 1.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Integrity Marketing Acquisition, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 1/15/2020 | 8/27/2025 | 4,970 | 4,907 | 5,011 | 0.56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| K2 Insurance Services, LLC | ^* | (2)(3)(13) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 7/3/2019 | 7/1/2024 | 18,651 | 18,323 | 18,653 | 2.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kaseya, Inc. | ^ | (2)(3)(13) | High Tech Industries | L + 4.00%, 3.00% PIK | 8.00% | 5/3/2019 | 5/2/2025 | 14,871 | 14,610 | 14,940 | 1.66 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy.com, Inc. | ^ | (2)(3)(11) | High Tech Industries | L + 6.00% | 7.00% | 3/20/2017 | 3/20/2023 | 17,066 | 16,886 | 16,055 | 1.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lifelong Learner Holdings, LLC | ^* | (2)(3)(13) | Business Services | L + 5.75% | 6.75% | 10/18/2019 | 10/18/2026 | 23,814 | 23,355 | 21,580 | 2.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liqui-Box Holdings, Inc. | ^ | (2)(3)(13) | Containers, Packaging & Glass | L + 4.50% | 5.50% | 6/3/2019 | 6/3/2024 | 1,368 | 1,346 | 1,112 | 0.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mailgun Technologies, Inc. | ^ | (2)(3)(13) | High Tech Industries | L + 5.00% | 6.00% | 3/26/2019 | 3/26/2025 | 3,256 | 3,185 | 3,175 | 0.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| National Technical Systems, Inc. | ^ | (2)(3)(13) | Aerospace & Defense | L + 5.50% | 6.50% | 10/28/2020 | 6/12/2023 | 1,175 | 1,150 | 1,160 | 0.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NES Global Talent Finance US, LLC (United Kingdom) | * | (2)(3)(7) | Energy: Oil & Gas | L + 5.50% | 6.50% | 5/9/2018 | 5/11/2023 | 9,789 | 9,697 | 8,859 | 0.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NMI AcquisitionCo, Inc. | ^* | (2)(3)(13) | High Tech Industries | L + 5.00% | 6.00% | 9/6/2017 | 9/6/2022 | 40,756 | 40,442 | 40,336 | 4.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | * | (2)(3) | Capital Equipment | L + 4.50% | 5.50% | 5/3/2019 | 5/3/2025 | 5,213 | 5,174 | 5,109 | 0.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^ | (2)(3)(13) | Capital Equipment | L + 5.25% | 6.25% | 11/24/2020 | 5/3/2025 | 3,029 | 2,912 | 2,909 | 0.32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Park Place Technologies, LLC | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 11/19/2020 | 11/19/2027 | 20,000 | 19,211 | 19,150 | 2.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value(5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PF Growth Partners, LLC | ^* | (2)(3)(13) | Hotel, Gaming & Leisure | L + 7.00% | 8.00% | 7/1/2019 | 7/11/2025 | $ | 7,294 | $ | 7,198 | $ | 6,778 | 0.75 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plano Molding Company, LLC | ^ | (2)(3) | Hotel, Gaming & Leisure | L + 7.50%, 1.50% PIK | 10.00% | 5/1/2015 | 5/12/2022 | 14,693 | 14,664 | 13,001 | 1.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plano Molding Company, LLC | ^ | (2)(3) | Hotel, Gaming & Leisure | L + 7.50%, 1.50% PIK | 10.00% | 8/7/2020 | 5/12/2022 | 1,081 | 1,073 | 1,081 | 0.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPC Flexible Packaging, LLC | ^* | (2)(3)(13) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 11/23/2018 | 11/23/2024 | 11,338 | 11,234 | 11,300 | 1.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPT Management Holdings, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00%, 2.50% PIK | 9.50% | 12/15/2016 | 12/16/2022 | 27,896 | 27,817 | 22,798 | 2.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PricewaterhouseCoopers Public Sector LLP | ^ | (2)(3)(13) | Aerospace & Defense | L + 3.25% | 3.49% | 5/1/2018 | 5/1/2023 | — | (74) | (32) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product Quest Manufacturing, LLC | ^ | (2)(3)(8) | Containers, Packaging & Glass | L + 6.75% | 10.00% | 9/21/2017 | 3/31/2021 | 840 | 840 | 423 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Propel Insurance Agency, LLC | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 6/1/2018 | 6/1/2024 | 2,339 | 2,327 | 2,316 | 0.26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| QW Holding Corporation | ^* | (2)(3)(13) | Environmental Industries | L + 6.25% | 7.25% | 8/31/2016 | 8/31/2022 | 43,119 | 42,771 | 40,990 | 4.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | * | (2)(3) | High Tech Industries | L + 6.00% | 7.00% | 11/13/2018 | 6/6/2023 | 5,043 | 5,017 | 5,030 | 0.56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | * | (2)(3) | High Tech Industries | L + 8.50% | 9.50% | 8/14/2020 | 6/6/2023 | 3,474 | 3,378 | 3,494 | 0.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | ^* | (2)(3)(13) | High Tech Industries | L + 7.25% | 8.25% | 10/19/2020 | 6/6/2023 | 12,957 | 12,628 | 13,024 | 1.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Regency Entertainment, Inc. | ^ | (2)(3) | Media: Diversified & Production | L + 6.75% | 7.75% | 5/22/2020 | 10/22/2025 | 20,000 | 19,636 | 19,600 | 2.17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reladyne, Inc. | * | (2)(3) | Wholesale | L + 5.00% | 6.00% | 8/21/2020 | 7/22/2022 | 10,100 | 10,017 | 10,146 | 1.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Riveron Acquisition Holdings, Inc. | * | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/22/2019 | 5/22/2025 | 11,517 | 11,341 | 11,595 | 1.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. | ^ | (2)(3)(13) | Banking, Finance, Insurance & Real Estate | L + 5.50% | 6.50% | 11/1/2019 | 11/1/2026 | 10,711 | 10,534 | 10,824 | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sapphire Convention, Inc. | ^* | (2)(3)(13) | Telecommunications | L + 6.25% | 7.25% | 11/20/2018 | 11/20/2025 | 28,812 | 28,342 | 24,000 | 2.66 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Smile Doctors, LLC | ^* | (2)(3)(13) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 10/6/2017 | 10/6/2022 | 16,930 | 16,872 | 16,577 | 1.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Southern Graphics, Inc. | ^ | (2)(3)(11) | Media: Advertising, Printing & Publishing | L + 6.50% | 7.50% | 10/30/2020 | 10/23/2023 | 9,959 | 9,769 | 9,849 | 1.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sovos Brands Intermediate, Inc. | * | (2)(3) | Beverage, Food & Tobacco | L + 4.75% | 4.96% | 11/16/2018 | 11/20/2025 | 17,498 | 17,360 | 17,348 | 1.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SPay, Inc. | ^* | (2)(3)(13) | Hotel, Gaming & Leisure | L + 5.75%, 2.00% PIK | 8.75% | 6/15/2018 | 6/17/2024 | 21,365 | 21,099 | 17,318 | 1.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Superior Health Linens, LLC | ^* | (2)(3)(13) | Business Services | L + 6.50% | 7.50% | 9/30/2016 | 9/30/2021 | 13,155 | 13,116 | 13,079 | 1.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^* | (2)(3)(13) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2016 | 9/28/2022 | 26,605 | 26,356 | 26,605 | 2.95 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | ^ | (2)(3)(13) | Capital Equipment | L + 3.50% | 3.74% | 3/26/2019 | 3/26/2024 | — | — | (1) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TCFI Aevex LLC | ^* | (2)(3)(13) | Aerospace & Defense | L + 6.00% | 7.00% | 3/18/2020 | 3/18/2026 | 9,693 | 9,503 | 9,650 | 1.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Leaders Romans Bidco Limited (United Kingdom) Term Loan B | ^ | (2)(3)(7) | Banking, Finance, Insurance & Real Estate | L + 6.50%, 3.00% PIK | 10.25% | 7/23/2019 | 6/30/2024 | £ | 20,740 | 25,406 | 28,078 | 3.12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value(5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Leaders Romans Bidco Limited (United Kingdom) Term Loan C | ^ | (2)(3)(7)(13) | Banking, Finance, Insurance & Real Estate | L + 6.50%, 3.00% PIK | 10.25% | 7/23/2019 | 6/30/2024 | £ | 3,816 | $ | 4,748 | $ | 5,727 | 0.64 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trump Card, LLC | ^* | (2)(3)(13) | Transportation: Cargo | L + 5.50% | 6.50% | 6/26/2018 | 4/21/2022 | 7,594 | 7,572 | 7,444 | 0.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TSB Purchaser, Inc. | ^* | (2)(3)(13) | Media: Advertising, Printing & Publishing | L + 6.00% | 7.00% | 5/14/2018 | 5/14/2024 | 18,666 | 18,354 | 18,501 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Turbo Buyer, Inc. | ^* | (2)(3)(13) | Automotive | L + 5.25% | 6.25% | 12/2/2019 | 12/2/2025 | 24,323 | 23,766 | 24,567 | 2.73 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tweddle Group, Inc. | ^ | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.50% | 5.50% | 9/17/2018 | 9/17/2023 | 1,825 | 1,808 | 1,678 | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Acute Care Solutions, LLC | * | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 2/21/2019 | 5/15/2021 | 4,242 | 4,235 | 3,956 | 0.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unifrutti Financing PLC (Cyprus) | ^ | (7) | Beverage, Food & Tobacco | 7.50%, 1.00% PIK | 8.50% | 9/15/2019 | 9/15/2026 | € | 4,575 | 4,832 | 5,464 | 0.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unifrutti Financing PLC (Cyprus) | ^ | (7) | Beverage, Food & Tobacco | 11.00% PIK | 11.00% | 10/22/2020 | 9/15/2026 | € | 647 | 724 | 754 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| US INFRA SVCS Buyer, LLC | ^ | (2)(3)(13) | Environmental Industries | L + 6.00% | 7.00% | 4/13/2020 | 4/13/2026 | 3,248 | 2,688 | 3,175 | 0.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| USLS Acquisition, Inc. | ^* | (2)(3)(13) | Business Services | L + 5.75% | 6.75% | 11/30/2018 | 11/30/2024 | 21,447 | 21,124 | 19,981 | 2.22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| USLS Acquisition, Inc. | ^ | (2)(3)(13) | Business Services | L + 5.75% | 6.75% | 9/3/2020 | 11/30/2024 | — | (22) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | ^* | (2)(3)(13) | Business Services | L + 6.50% | 7.50% | 3/31/2017 | 3/31/2023 | 33,286 | 33,048 | 33,286 | 3.69 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Westfall Technik, Inc. | ^* | (2)(3)(13) | Chemicals, Plastics & Rubber | L + 6.25% | 7.25% | 9/13/2018 | 9/13/2024 | 27,720 | 27,457 | 25,733 | 2.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wheel Pros, LLC | * | (2)(3) | Automotive | L + 5.25% | 6.25% | 11/18/2020 | 11/6/2027 | 18,750 | 18,286 | 18,390 | 2.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| YLG Holdings, Inc. | ^ | (2)(3)(13) | Consumer Services | L + 6.25% | 7.25% | 9/30/2020 | 11/1/2025 | 1,401 | 1,343 | 1,370 | 0.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zemax Software Holdings, LLC | * | (2)(3)(13) | Software | L + 5.75% | 6.75% | 6/25/2018 | 6/25/2024 | 6,285 | 6,216 | 6,119 | 0.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zenith Merger Sub, Inc. | ^* | (2)(3)(13) | Business Services | L + 5.25% | 6.25% | 12/13/2017 | 12/13/2023 | 14,164 | 14,034 | 14,031 | 1.56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 1,246,281 | $ | 1,190,871 | 132.16 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (15.6% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AI Convoy S.A.R.L (United Kingdom) | ^ | (2)(3)(7) | Aerospace & Defense | L + 8.25% | 9.25% | 1/17/2020 | 1/17/2028 | $ | 24,814 | $ | 24,305 | $ | 25,546 | 2.83 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Aimbridge Acquisition Co., Inc. | ^ | (2)(3) | Hotel, Gaming & Leisure | L + 7.50% | 7.65% | 2/1/2019 | 2/1/2027 | 9,241 | 9,104 | 7,993 | 0.89 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AQA Acquisition Holding, Inc. | ^ | (2)(3) | High Tech Industries | L + 8.00% | 9.00% | 10/1/2018 | 5/24/2024 | 39,000 | 38,741 | 39,000 | 4.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brave Parent Holdings, Inc. | ^* | (2)(3) | Software | L + 7.50% | 7.64% | 10/3/2018 | 4/19/2026 | 19,062 | 18,711 | 19,062 | 2.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Drilling Info Holdings, Inc. | ^ | (2)(3) | Energy: Oil & Gas | L + 8.25% | 8.40% | 2/11/2020 | 7/30/2026 | 18,600 | 18,145 | 18,228 | 2.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jazz Acquisition, Inc. | ^ | (2)(3) | Aerospace & Defense | L + 8.00% | 8.15% | 6/13/2019 | 6/18/2027 | 23,450 | 23,150 | 18,146 | 2.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outcomes Group Holdings, Inc. | ^* | (2)(3) | Business Services | L + 7.50% | 7.75% | 10/23/2018 | 10/26/2026 | 3,462 | 3,455 | 3,462 | 0.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PAI Holdco, Inc. | ^ | (2)(3) | Automotive | L + 6.25%, 2.00% PIK | 9.25% | 10/28/2020 | 10/28/2028 | 13,530 | 13,132 | 13,329 | 1.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pharmalogic Holdings Corp. | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 8.00% | 9.00% | 6/7/2018 | 12/11/2023 | 800 | 798 | 783 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quartz Holding Company | ^ | (2)(3) | Software | L + 8.00% | 8.15% | 4/2/2019 | 4/2/2027 | 7,048 | 6,930 | 6,994 | 0.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reladyne, Inc. | ^ | (2)(3) | Wholesale | L + 9.50% | 10.50% | 4/19/2018 | 1/21/2023 | 12,242 | 12,133 | 11,956 | 1.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value(5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stonegate Pub Company Bidco Limited (United Kingdom) | ^ | (2)(3)(7) | Beverage, Food & Tobacco | L + 8.50% | 8.54% | 3/12/2020 | 3/12/2028 | £ | 20,000 | 24,729 | 21,902 | 2.43 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | (2)(3) | Capital Equipment | L + 8.25% | 8.40% | 3/26/2019 | 3/26/2027 | $ | 35,965 | $ | 35,454 | $ | 35,189 | 3.90 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TruGreen Limited Partnership | ^ | (2)(3) | Consumer Services | L + 8.50% | 9.25% | 11/16/2020 | 11/2/2028 | 13,000 | 12,743 | 13,000 | 1.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ultimate Baked Goods MIDCO, LLC | ^ | (2)(3) | Beverage, Food & Tobacco | L + 8.00% | 9.00% | 8/9/2018 | 8/9/2026 | 2,820 | 2,776 | 2,689 | 0.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Watchfire Enterprises, Inc. | ^ | (2)(3) | Media: Advertising, Printing & Publishing | L + 8.00% | 9.00% | 10/2/2013 | 10/2/2021 | 7,000 | 6,985 | 6,988 | 0.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| World 50, Inc. | ^ | (9) | Business Services | 11.50% | 11.50% | 1/10/2020 | 1/9/2027 | 7,635 | 7,499 | 7,518 | 0.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WP CPP Holdings, LLC | ^* | (2)(3) | Aerospace & Defense | L + 7.75% | 8.75% | 7/18/2019 | 4/30/2026 | 39,500 | 39,172 | 32,738 | 3.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt Total | $ | 297,962 | $ | 284,523 | 31.56 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Acquisition Date | Shares/ Units | Cost | Fair Value (5) | % of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (1.9% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Central Security Group, Inc. | ^* | (6) | Consumer Services | 10/16/2020 | 443 | $ | — | $ | — | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ANLG Holdings, LLC | ^ | (6) | Capital Equipment | 6/22/2018 | 592 | 592 | 865 | 0.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | ^ | (6) | Sovereign & Public Finance | 9/28/2018 | 172 | 172 | 345 | 0.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BK Intermediate Company, LLC | ^ | (6) | Healthcare & Pharmaceuticals | 5/27/2020 | 288 | 288 | 209 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chartis Holding, LLC | ^ | (6) | Business Services | 5/1/2019 | 433 | 433 | 571 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CIP Revolution Holdings, LLC | ^ | (6) | Media: Advertising, Printing & Publishing | 8/19/2016 | 318 | 318 | 245 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^ | (6) | Software | 7/2/2019 | 250 | 250 | 295 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DecoPac, Inc. | ^ | (6) | Non-durable Consumer Goods | 9/29/2017 | 1,500 | 1,500 | 1,664 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derm Growth Partners III, LLC | ^ | (6) | Healthcare & Pharmaceuticals | 5/31/2016 | 1,000 | 1,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GRO Sub Holdco, LLC | ^ | (6) | Healthcare & Pharmaceuticals | 3/29/2018 | 500 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| K2 Insurance Services, LLC | ^ | (6) | Banking, Finance, Insurance & Real Estate | 7/3/2019 | 433 | 433 | 676 | 0.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy.com, Inc. | ^ | (6) | High Tech Industries | 3/20/2017 | 1,500 | 1,500 | 613 | 0.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mailgun Technologies, Inc. | ^ | (6) | High Tech Industries | 3/26/2019 | 424 | 424 | 784 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| North Haven Goldfinch Topco, LLC | ^ | (6) | Containers, Packaging & Glass | 6/18/2018 | 2,315 | 2,315 | 3,043 | 0.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPC Flexible Packaging, LLC | ^ | (6) | Containers, Packaging & Glass | 2/1/2019 | 965 | 965 | 1,302 | 0.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^ | (6) | Capital Equipment | 6/17/2019 | 150 | 500 | 758 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rough Country, LLC | ^ | (6) | Durable Consumer Goods | 5/25/2017 | 755 | 755 | 1,634 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SiteLock Group Holdings, LLC | ^ | (6) | High Tech Industries | 4/5/2018 | 446 | 446 | 526 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems Parent Corporation | ^ | (6) | Transportation: Consumer | 9/28/2016 | 556 | 556 | 838 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tailwind HMT Holdings Corp. | ^ | (6) | Energy: Oil & Gas | 11/17/2017 | 20 | 1,334 | 2,001 | 0.22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
Investments—non-controlled/non-affiliated (1) | Footnotes | Industry | Acquisition Date | Shares/ Units | Cost | Fair Value (5) | % of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | ^ | (6) | Capital Equipment | 3/26/2019 | 850 | 482 | 944 | 0.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Titan DI Preferred Holdings, Inc. | ^ | (6) | Energy: Oil & Gas | 2/11/2020 | 11,246 | 10,959 | 11,021 | 1.22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Turbo Buyer, Inc. | ^ | (6) | Automotive | 12/2/2019 | 1,925 | $ | 1,925 | $ | 2,444 | 0.27 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tweddle Holdings, Inc. | ^* | (6) | Media: Advertising, Printing & Publishing | 9/17/2018 | 17 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unifrutti Financing PLC (Cyprus) | ^ | (6) | Beverage, Food & Tobacco | 10/22/2020 | — | 556 | 575 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unifrutti Financing PLC (Cyprus) | ^ | (6) | Beverage, Food & Tobacco | 10/22/2020 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| USLS Acquisition, Inc. | ^ | (6) | Business Services | 11/30/2018 | 641 | 641 | 565 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| W50 Parent LLC | ^ | (6) | Business Services | 1/10/2020 | 500 | 500 | 575 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zenith American Holding, Inc. | ^ | (6) | Business Services | 12/13/2017 | 1,565 | 782 | 1,221 | 0.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zillow Topco LP | ^ | (6) | Software | 6/25/2018 | 313 | 313 | 163 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Investments Total | $ | 29,939 | $ | 33,877 | 3.73 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investments—non-controlled/non-affiliated | $ | 1,574,182 | $ | 1,509,271 | 167.45 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments—non-controlled/affiliated | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (1.4% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. | ^* | (2)(3)(8)(12) | Hotel, Gaming & Leisure | L + 1.00%, 7.50% PIK | 9.50% | 10/14/2016 | 10/1/2023 | $ | 36,711 | $ | 36,340 | $ | 24,949 | 2.77 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. | ^ | (2)(3)(12)(13) | Hotel, Gaming & Leisure | L + 6.00% | 7.00% | 10/1/2020 | 10/1/2023 | 1,231 | 1,231 | 1,231 | 0.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
First Lien Debt Total | $ | 37,571 | $ | 26,180 | 2.91 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments—non-controlled/affiliated | Footnotes | Industry | Acquisition Date | Shares/ Units | Cost | Fair Value (5) | % of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (0.00% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. | ^ | (6)(12) | Hotel, Gaming & Leisure | 10/1/2020 | 43 | $ | — | $ | — | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments Total | $ | — | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investments—non-controlled/affiliated | $ | 37,571 | $ | 26,180 | 2.91 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
Investments—controlled/affiliated | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Acquisition Date | Maturity Date | Par/ Principal Amount ** | Amortized Cost (4) | Fair Value (5) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (0.4% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (A1 Term Loan) | ^ | (2)(3)(8)(10) | Telecommunications | L + 8.00% (100% PIK) | 9.00% | 4/12/2019 | 10/12/2022 | $ | 3,166 | $ | 3,166 | $ | 1,214 | 0.13 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (A2 Term Loan) | ^ | (2)(3)(8)(10) | Telecommunications | L + 8.00% (100% PIK) | 9.00% | 4/12/2019 | 10/12/2022 | 8,707 | 8,707 | 3,338 | 0.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (Priority Facilities) | ^ | (2)(3)(10)(13) | Telecommunications | L + 6.00% | 7.00% | 4/12/2019 | 10/12/2022 | 2,460 | 2,429 | 2,460 | 0.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
First Lien Debt Total | $ | 14,302 | $ | 7,012 | 0.77 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments—controlled/affiliated | Footnotes | Industry | Acquisition Date | Shares/ Units | Cost | Fair Value (5) | % of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (0.00% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. | ^ | (6)(10) | Telecommunications | 4/12/2019 | 3 | $ | 2,815 | $ | — | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments Total | $ | 2,815 | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments—controlled/affiliated | Footnotes | Industry | Reference Rate & Spread(2) | Interest Rate(2) | Acquisition Date | Maturity Date | Par Amount/ LLC Interest | Cost | Fair Value(7) | % of Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Funds (15.5% of fair value) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle Market Credit Fund II, LLC, Member's Interest | ^ | (10)(7) | Investment Funds | N/A | N/A | 11/3/2020 | 12/31/2030 | $ | 78,122 | $ | 78,096 | $ | 77,395 | 8.59 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle Market Credit Fund, LLC, Subordinated Loan and Member's Interest | ^ | (10)(7) | Investment Funds | N/A | N/A | 2/29/2016 | 3/1/2021 | 216,000 | 216,000 | 205,891 | 22.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle Market Credit Fund, Mezzanine Loan | ^ | (2)(10)(7)(9) | Investment Funds | L + 9.00% | 9.24% | 6/30/2016 | 3/22/2021 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Fund Total | $ | 294,096 | $ | 283,286 | 31.43 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investments—controlled/affiliated | $ | 311,213 | $ | 290,298 | 32.20 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investments | $ | 1,922,966 | $ | 1,825,749 | 202.56 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”). The Company has entered into a senior secured revolving credit facility (as amended, the “Credit Facility”). The lenders of the Credit Facility have a first lien security interest in substantially all of the portfolio investments held by the Company (see Note 7, Borrowings). Accordingly, such assets are not available to creditors of Carlyle Direct Lending CLO 2015-1R LLC (formerly known as Carlyle GMS Finance MM CLO 2015-1 LLC) (the “2015-1 Issuer”).
* Denotes that all or a portion of the assets are owned by the Company's wholly owned subsidiary, the 2015-1 Issuer, and secure the notes issued in connection with a term debt securitization completed by the Company on June 26, 2015 (see Note 8, Notes Payable). Accordingly, such assets are not available to the creditors of the Company.
** Par amount is denominated in USD ("$") unless otherwise noted, as denominated in Euro (“€”) or British Pound (“£”)
(1)Unless otherwise indicated, issuers of debt and equity investments held by the Company are domiciled in the United States. Under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”), the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of December 31, 2020, the Company does not “control” any of these portfolio companies.
26
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
Under the Investment Company Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owns 5% or more of the portfolio company’s outstanding voting securities. As of December 31, 2020, the Company is not an “affiliated person” of any of these portfolio companies. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR (“L”) or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2020. As of December 31, 2020, the reference rates for our variable rate loans were the 30-day LIBOR at 0.15%, the 90-day LIBOR at 0.25% and the 180-day LIBOR at 0.26%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (see Note 2, Significant Accounting Policies, and Note 3, Fair Value Measurements), pursuant to the Company’s valuation policy. The fair value of all first lien and second lien debt investments, equity investments and the investment fund was determined using significant unobservable inputs.
(6)Security acquired in transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act, unless otherwise noted. As of December 31, 2020, the aggregate fair value of these securities is $33,877, or 3.73% of the Company’s net assets.
(7)The Company has determined the indicated investments are non-qualifying assets under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.
(8)Loan was on non-accrual status as of December 31, 2020.
(9)Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company/investment fund.
(10)Under the Investment Company Act, the Company is deemed to be an “affiliated person” of and “control” this investment fund because the Company owns more than 25% of the investment fund’s outstanding voting securities and/or has the power to exercise control over management or policies of such investment fund. See Notes 5, Middle Market Credit Fund, LLC and 6. Middle Market Credit Fund II, LLC, for more details. Transactions related to investments in controlled affiliates for the year ended December 31, 2020, were as follows:
| Investments—controlled/affiliated | Fair Value as of December 31, 2019 | Additions/Purchases | Reductions/Sales/ Paydowns | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value as of December 31, 2020 | Dividend and Interest Income | ||||||||||||||||||||||||||||||||||
Middle Market Credit Fund, LLC, Mezzanine Loan | $ | 93,000 | $ | 63,500 | $ | (156,500) | $ | — | $ | — | $ | — | $ | 3,049 | |||||||||||||||||||||||||||
Middle Market Credit Fund, LLC, Subordinated Loan and Member’s Interest | 111,596 | 92,500 | — | — | 1,795 | 205,891 | 19,750 | ||||||||||||||||||||||||||||||||||
| Middle Market Credit Fund II, LLC, Member’s Interest | — | 78,096 | — | — | (701) | 77,395 | 1,446 | ||||||||||||||||||||||||||||||||||
| Total investments—controlled/affiliated | $ | 204,596 | $ | 234,096 | $ | (156,500) | $ | — | $ | 1,094 | $ | 283,286 | $ | 24,245 | |||||||||||||||||||||||||||
| Investments—controlled/affiliated | Fair Value as of December 31, 2019 | Additions/Purchases | Reductions/Sales/ Paydowns | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value as of December 31, 2020 | Dividend and Interest Income | ||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (Priority Term Loan) | 9,612 | — | (7,152) | — | — | 2,460 | 52 | ||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (A1 Term Loan) | 3,166 | — | — | — | (1,952) | 1,214 | — | ||||||||||||||||||||||||||||||||||
| SolAero Technologies Corp. (A2 Term Loan) | 8,707 | — | — | — | (5,369) | 3,338 | — | ||||||||||||||||||||||||||||||||||
Solaero Technology Corp. (Equity) | 826 | — | — | — | (826) | — | — | ||||||||||||||||||||||||||||||||||
| Total investments—controlled/affiliated | $ | 22.311 | $ | — | $ | (7,152) | $ | — | $ | (8,147) | $ | 7,012 | $ | 52 | |||||||||||||||||||||||||||
(11)In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company is entitled to receive additional interest as a result of an agreement among lenders as follows: Barnes & Noble, Inc. (1.83%), Southern Graphics, Inc. (1.71%), and Legacy.com, Inc (3.92%). Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.
(12)Under the Investment Company Act, the Company is deemed an “affiliated person” of this portfolio company because the Company owns 5% or more of the portfolio company’s outstanding voting securities. Transactions related to the portfolio company during the year ended December 31, 2020 were as follows:
27
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
| Investments—non-controlled/affiliated | Fair Value as of December 31, 2019 | Additions/Purchases | Reductions/Sales/ Paydowns | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value as of December 31, 2020 | Dividend and Interest Income | ||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. | $ | 36,757 | $ | — | $ | (176) | $ | 1 | $ | (11,633) | $ | 24,949 | $ | — | |||||||||||||||||||||||||||
| Direct Travel, Inc. | — | 1,231 | — | — | — | 1,231 | 18 | ||||||||||||||||||||||||||||||||||
| Direct Travel, Inc. (Equity) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total investments—non-controlled/affiliated | $ | 36.757 | $ | 1,231 | $ | (176) | $ | 1 | $ | (11,633) | $ | 26,180 | $ | 18 | |||||||||||||||||||||||||||
(13)As of December 31, 2020, the Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans:
| Investments—non-controlled/non-affiliated | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| First and Second Lien Debt—unfunded delayed draw and revolving term loans commitments | |||||||||||||||||||||||
| Advanced Web Technologies Holding Company | Delayed Draw | 1.00% | $ | 2,299 | $ | (46) | |||||||||||||||||
| Advanced Web Technologies Holding Company | Revolver | 0.50 | 854 | (17) | |||||||||||||||||||
| Airnov, Inc. | Revolver | 0.50 | 1,250 | 1 | |||||||||||||||||||
| American Physician Partners, LLC | Revolver | 0.50 | 550 | (29) | |||||||||||||||||||
| AMS Group HoldCo, LLC | Revolver | 0.50 | 2,315 | (29) | |||||||||||||||||||
| Analogic Corporation | Revolver | 0.50 | 168 | — | |||||||||||||||||||
| Applied Technical Services | Delayed Draw | 1.00 | 132 | (3) | |||||||||||||||||||
| Applied Technical Services | Revolver | 0.50 | 53 | (1) | |||||||||||||||||||
| Apptio, Inc. | Revolver | 0.50 | 2,367 | 36 | |||||||||||||||||||
| Captive Resources Midco, LLC | Revolver | 0.50 | 2,143 | 15 | |||||||||||||||||||
| Chartis Holding, LLC | Delayed Draw | 1.00 | 4,406 | 2 | |||||||||||||||||||
| Chartis Holding, LLC | Revolver | 0.50 | 2,401 | 1 | |||||||||||||||||||
| Chemical Computing Group ULC (Canada) | Revolver | 0.50 | 29 | — | |||||||||||||||||||
| Cobblestone Intermediate Holdco LLC | Delayed Draw | 1.00 | 11 | — | |||||||||||||||||||
| Comar Holding Company, LLC | Revolver | 0.50 | 2,935 | 11 | |||||||||||||||||||
| Comar Holding Company, LLC | Delayed Draw | 1.00 | 4,655 | 17 | |||||||||||||||||||
| Cority Software Inc.(Canada) | Revolver | 0.50 | 3,000 | 21 | |||||||||||||||||||
| DermaRite Industries, LLC | Revolver | 0.50 | 3,103 | (29) | |||||||||||||||||||
| Diligent Corporation | Delayed Draw | 1.00 | 141 | 2 | |||||||||||||||||||
| Diligent Corporation | Revolver | 0.50 | 47 | 1 | |||||||||||||||||||
| Direct Travel, Inc. | Delayed Draw | 0.50 | 3,029 | — | |||||||||||||||||||
| Ethos Veterinary Health LLC | Delayed Draw | 1.00 | 2,696 | (37) | |||||||||||||||||||
| EvolveIP, LLC | Delayed Draw | 1.00 | 3,333 | (4) | |||||||||||||||||||
| EvolveIP, LLC | Revolver | 0.50 | 2,941 | (3) | |||||||||||||||||||
| FWR Holding Corporation | Revolver | 0.50 | 4,444 | (380) | |||||||||||||||||||
| Helios Buyer, Inc. | Revolver | 0.50 | 1,326 | (27) | |||||||||||||||||||
| Helios Buyer, Inc. | Delayed Draw | — | 4,672 | (93) | |||||||||||||||||||
| Hercules Borrower LLC | Revolver | 0.50 | 2,160 | (54) | |||||||||||||||||||
28
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
| Investments—non-controlled/non-affiliated | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| Higginbotham Insurance Agency, Inc. | Delayed Draw | 1.00 | 1,098 | (16) | |||||||||||||||||||
| Individual FoodService Holdings, LLC | Revolver | 0.50 | 436 | (11) | |||||||||||||||||||
| Individual FoodService Holdings, LLC | Delayed Draw | 1.00 | 645 | (16) | |||||||||||||||||||
| Individual FoodService Holdings, LLC | Delayed Draw | 1.00 | 165 | (4) | |||||||||||||||||||
| Individual FoodService Holdings, LLC | Revolver | 0.50 | 139 | (3) | |||||||||||||||||||
| Innovative Business Services, LLC | Revolver | 0.50 | 2,232 | (41) | |||||||||||||||||||
| K2 Insurance Services, LLC | Revolver | 0.50 | 2,290 | — | |||||||||||||||||||
| K2 Insurance Services, LLC | Delayed Draw | 1.00 | 1,571 | — | |||||||||||||||||||
| Kaseya, Inc. | Delayed Draw | 1.00 | 1,852 | 7 | |||||||||||||||||||
| Kaseya, Inc. | Revolver | 0.50 | 787 | 3 | |||||||||||||||||||
| Lifelong Learner Holdings, LLC | Delayed Draw | 1.00 | 1,690 | (140) | |||||||||||||||||||
| Lifelong Learner Holdings, LLC | Revolver | 0.50 | 1,377 | (114) | |||||||||||||||||||
| Liqui-Box Holdings, Inc. | Revolver | 0.50 | 1,262 | (123) | |||||||||||||||||||
| Mailgun Technologies, Inc. | Revolver | 0.50 | 1,342 | (23) | |||||||||||||||||||
| National Technical Systems, Inc. | Revolver | 0.50 | 835 | (6) | |||||||||||||||||||
| NMI AcquisitionCo, Inc. | Revolver | 0.50 | 1,280 | (13) | |||||||||||||||||||
| Paramit Corporation | Delayed Draw | — | 2,931 | (59) | |||||||||||||||||||
| PF Growth Partners, LLC | Delayed Draw | 1.00 | 823 | (52) | |||||||||||||||||||
| PPC Flexible Packaging, LLC | Revolver | 0.50 | 881 | (3) | |||||||||||||||||||
| PricewaterhouseCoopers Public Sector LLP | Revolver | 0.50 | 6,250 | (32) | |||||||||||||||||||
| QW Holding Corporation | Delayed Draw | 1.00 | 600 | (29) | |||||||||||||||||||
| Redwood Services Group, LLC | Delayed Draw | 3.63 | 4,639 | 18 | |||||||||||||||||||
| RSC Acquisition, Inc. | Revolver | 0.50 | 608 | 6 | |||||||||||||||||||
| Sapphire Convention, Inc. | Revolver | 0.50 | 3,655 | (542) | |||||||||||||||||||
| Smile Doctors, LLC | Revolver | 0.50 | 707 | (14) | |||||||||||||||||||
| SolAero Technologies Corp. (Priority Facilities) | Revolver | 0.50 | 2,068 | — | |||||||||||||||||||
| SPay, Inc. | Revolver | 0.50 | 655 | (120) | |||||||||||||||||||
| Superior Health Linens, LLC | Revolver | 0.50 | 1,667 | (8) | |||||||||||||||||||
| T2 Systems, Inc. | Revolver | 0.50 | 2,933 | — | |||||||||||||||||||
| Tank Holding Corp. | Revolver | 0.25 | 47 | (1) | |||||||||||||||||||
| TCFI Aevex LLC | Delayed Draw | 1.00 | 1,787 | (7) | |||||||||||||||||||
| The Leaders Romans Bidco Limited (United Kingdom) | Delayed Draw | 1.63 | £ | 204 | 26 | ||||||||||||||||||
| Trump Card, LLC | Revolver | 0.50 | 635 | (12) | |||||||||||||||||||
| TSB Purchaser, Inc. | Revolver | 0.50 | 1,891 | (15) | |||||||||||||||||||
| Turbo Buyer, Inc. | Revolver | 0.50 | 2,151 | 20 | |||||||||||||||||||
| US INFRA SVCS Buyer, LLC | Revolver | 0.50 | 2,275 | (5) | |||||||||||||||||||
| US INFRA SVCS Buyer, LLC | Delayed Draw | 1.00 | 26,153 | (60) | |||||||||||||||||||
| USLS Acquisition, Inc. | Revolver | 0.50 | 1,418 | (91) | |||||||||||||||||||
| USLS Acquisition, Inc. | Delayed Draw | 0.50 | 591 | — | |||||||||||||||||||
29
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
| Investments—non-controlled/non-affiliated | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| VRC Companies, LLC | Revolver | 0.50 | 1,646 | — | |||||||||||||||||||
| Westfall Technik, Inc. | Revolver | 0.50 | 431 | (30) | |||||||||||||||||||
| YLG Holdings, Inc. | Delayed Draw | 1.00 | 596 | (9) | |||||||||||||||||||
| Zemax Software Holdings, LLC | Revolver | 0.50 | 642 | (15) | |||||||||||||||||||
| Zenith Merger Sub, Inc. | Revolver | 0.50 | 1,590 | (12) | |||||||||||||||||||
| Zenith Merger Sub, Inc. | Delayed Draw | 1.00 | 2,573 | (19) | |||||||||||||||||||
| Total unfunded commitments | $ | 149,508 | $ | (2,210) | |||||||||||||||||||
As of December 31, 2020, investments at fair value consisted of the following:
| Type | Amortized Cost | Fair Value | % of Fair Value | |||||||||||||||||
| First Lien Debt (excluding First Lien/Last Out Debt) | $ | 1,234,579 | $ | 1,161,881 | 63.6 | % | ||||||||||||||
| First Lien/Last Out Debt | 63,575 | 62,182 | 3.4 | |||||||||||||||||
| Second Lien Debt | 297,962 | 284,523 | 15.6 | |||||||||||||||||
| Equity Investments | 32,754 | 33,877 | 1.9 | |||||||||||||||||
| Investment Funds | 294,096 | 283,286 | 15.5 | |||||||||||||||||
| Total | $ | 1,922,966 | $ | 1,825,749 | 100.0 | % | ||||||||||||||
30
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
The rate type of debt investments at fair value as of December 31, 2020 was as follows:
| Rate Type | Amortized Cost | Fair Value | % of Fair Value of First and Second Lien Debt | |||||||||||||||||
| Floating Rate | $ | 1,583,061 | $ | 1,494,850 | 99.1 | % | ||||||||||||||
| Fixed Rate | 13,055 | 13,736 | 0.9 | |||||||||||||||||
| Total | $ | 1,596,116 | $ | 1,508,586 | 100.0 | % | ||||||||||||||
The industry composition of investments at fair value as of December 31, 2019 was as follows:
| Industry | Amortized Cost | Fair Value | % of Fair Value | ||||||||||||||
| Aerospace & Defense | $ | 97,206 | $ | 87,208 | 4.8 | % | |||||||||||
| Automotive | 57,109 | 58,730 | 3.2 | ||||||||||||||
| Banking, Finance, Insurance & Real Estate | 92,217 | 97,318 | 5.3 | ||||||||||||||
| Beverage, Food & Tobacco | 85,152 | 79,948 | 4.4 | ||||||||||||||
| Business Services | 134,316 | 132,526 | 7.3 | ||||||||||||||
| Capital Equipment | 47,446 | 48,134 | 2.6 | ||||||||||||||
| Chemicals, Plastics & Rubber | 27,457 | 25,733 | 1.4 | ||||||||||||||
| Construction & Building | 1,554 | 1,578 | 0.1 | ||||||||||||||
| Consumer Services | 35,103 | 34,017 | 1.9 | ||||||||||||||
| Containers, Packaging & Glass | 58,036 | 59,190 | 3.2 | ||||||||||||||
| Durable Consumer Goods | 10,302 | 10,992 | 0.6 | ||||||||||||||
| Energy: Oil & Gas | 40,135 | 40,109 | 2.2 | ||||||||||||||
| Environmental Industries | 63,536 | 62,238 | 3.4 | ||||||||||||||
| Healthcare & Pharmaceuticals | 154,547 | 118,486 | 6.5 | ||||||||||||||
| High Tech Industries | 205,975 | 205,709 | 11.3 | ||||||||||||||
| Hotel, Gaming & Leisure | 100,696 | 80,444 | 4.4 | ||||||||||||||
| Investment Funds | 294,096 | 283,286 | 15.5 | ||||||||||||||
| Media: Advertising, Printing & Publishing | 37,234 | 37,261 | 2.0 | ||||||||||||||
| Media: Diversified & Production | 19,636 | 19,600 | 1.1 | ||||||||||||||
| Non-durable Consumer Goods | 1,500 | 1,664 | 0.1 | ||||||||||||||
| Retail | 34,818 | 34,489 | 1.9 | ||||||||||||||
| Software | 87,026 | 85,727 | 4.7 | ||||||||||||||
| Sovereign & Public Finance | 37,055 | 37,621 | 2.1 | ||||||||||||||
| Telecommunications | 116,245 | 98,914 | 5.4 | ||||||||||||||
| Transportation: Cargo | 29,576 | 29,389 | 1.6 | ||||||||||||||
| Transportation: Consumer | 26,912 | 27,443 | 1.5 | ||||||||||||||
| Wholesale | 28,081 | 27,995 | 1.5 | ||||||||||||||
| Total | $ | 1,922,966 | $ | 1,825,749 | 100.0 | % | |||||||||||
31
TCG BDC, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
As of December 31, 2020
(dollar amounts in thousands)
The geographical composition of investments at fair value as of December 31, 2020 was as follows:
| Geography | Amortized Cost | Fair Value | % of Fair Value | ||||||||||||||
| Canada | $ | 24,206 | $ | 24,658 | 1.4 | % | |||||||||||
| Cyprus | 6,112 | 6,793 | 0.4 | ||||||||||||||
| Luxembourg | 32,093 | 29,970 | 1.6 | ||||||||||||||
| United Kingdom | 88,885 | 90,112 | 4.9 | ||||||||||||||
| United States | 1,771,670 | 1,674,216 | 91.7 | ||||||||||||||
| Total | $ | 1,922,966 | $ | 1,825,749 | 100.0 | % | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
32
TCG BDC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
As of March 31, 2021
(dollar amounts in thousands, except per share data)
1. ORGANIZATION
TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”) is a Maryland corporation formed on February 8, 2012, and structured as an externally managed, non-diversified closed-end investment company. The Company is managed by its investment adviser, Carlyle Global Credit Investment Management L.L.C. (“CGCIM” or “Investment Adviser”), a wholly owned subsidiary of The Carlyle Group Inc. (formerly, The Carlyle Group L.P.). The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”). In addition, the Company has elected to be treated, and intends to continue to comply with the requirements to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the “Code”).
The Company’s investment objective is to generate current income and capital appreciation primarily through debt investments. The Company's core investment strategy focuses on lending to U.S. middle market companies, which the Company defines as companies with approximately $25 million to $100 million of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which the Company believes is a useful proxy for cash flow. This core strategy is supplemented with complementary specialty lending and opportunistic investing strategies, which take advantage of the broad capabilities of Carlyle's Global Credit platform while offering risk diversifying portfolio benefits. The Company seeks to achieve its investment objective primarily through direct origination of secured debt instruments, including first lien senior secured loans (which may include stand-alone first lien loans, first lien/last out loans and “unitranche” loans) and second lien senior secured loans (collectively, “Middle Market Senior Loans”), with the balance of its assets invested in higher yielding investments (which may include unsecured debt, mezzanine debt and investments in equities). The Middle Market Senior Loans are generally made to private U.S. middle market companies that are, in many cases, controlled by private equity firms. Depending on market conditions, the Company expects that between 70% and 80% of the value of its assets will be invested in Middle Market Senior Loans. The Company expects that the composition of its portfolio will change over time given the Investment Adviser’s view on, among other things, the economic and credit environment (including with respect to interest rates) in which the Company is operating.
The Company invests primarily in loans to middle market companies whose debt, if rated, is rated below investment grade, and, if not rated, would likely be rated below investment grade if it were rated (that is, below BBB- or Baa3, which is often referred to as “junk”). Exposure to below investment grade instruments involves certain risks, including speculation with respect to the borrower’s capacity to pay interest and repay principal.
On May 2, 2013, the Company completed its initial closing of capital commitments (the “Initial Closing”) and subsequently commenced substantial investment operations. Effective March 15, 2017, the Company changed its name from “Carlyle GMS Finance, Inc.” to “TCG BDC, Inc.” On June 19, 2017, the Company closed its initial public offering (“IPO”), issuing 9,454,200 shares of its common stock (including shares issued pursuant to the exercise of the underwriters’ over-allotment option on July 5, 2017) at a public offering price of $18.50 per share. Net of underwriting costs, the Company received cash proceeds of $169,488. Shares of common stock of TCG BDC began trading on the Nasdaq Global Select Market under the symbol “CGBD” on June 14, 2017.
Until December 31, 2017, the Company was an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act of 2012. As of June 30, 2017, the market value of the common stock held by non-affiliates exceeded $700,000. Accordingly, the Company ceased to be an emerging growth company as of December 31, 2017.
The Company is externally managed by the Investment Adviser, an investment adviser registered under the Investment Advisers Act of 1940, as amended. Carlyle Global Credit Administration L.L.C. (the “Administrator”) provides the administrative services necessary for the Company to operate. Both the Investment Adviser and the Administrator are wholly owned subsidiaries of Carlyle Investment Management L.L.C. (“CIM”), a subsidiary of The Carlyle Group Inc. “Carlyle” refers to The Carlyle Group Inc. and its affiliates and its consolidated subsidiaries (other than portfolio companies of its affiliated funds), a global investment firm publicly traded on the Nasdaq Global Select Market under the symbol “CG”. Refer to the sec.gov website for further information on Carlyle.
33
TCG BDC SPV LLC (the “SPV”) is a Delaware limited liability company that was formed on January 3, 2013. Prior to the termination of its senior secured credit facility, the SPV invested in first and second lien senior secured loans. The SPV is a wholly owned subsidiary of the Company and is consolidated in these consolidated financial statements commencing from the date of its formation, January 3, 2013. Effective March 15, 2017, the SPV changed its name from “Carlyle GMS Finance SPV LLC” to “TCG BDC SPV LLC”.
On June 26, 2015, the Company completed a $400,000 term debt securitization (the “2015-1 Debt Securitization”). The notes offered in the 2015-1 Debt Securitization (the “2015-1 Notes”) were issued by Carlyle Direct Lending CLO 2015-1R LLC (formerly known as Carlyle GMS Finance MM CLO 2015-1 LLC) (the “2015-1 Issuer”), a wholly owned and consolidated subsidiary of the Company. On August 30, 2018, the 2015-1 Issuer refinanced the 2015-1 Debt Securitization (the “2015-1 Debt Securitization Refinancing”) by redeeming in full the 2015-1 Notes and issuing new notes (the “2015-1R Notes”). The 2015-1R Notes are secured by a diversified portfolio of the 2015-1 Issuer consisting primarily of first and second lien senior secured loans. Refer to Note 8, Notes Payable, for details. The 2015-1 Issuer is consolidated in these consolidated financial statements commencing from the date of its formation, May 8, 2015.
On February 29, 2016, the Company and Credit Partners USA LLC (“Credit Partners”) entered into an amended and restated limited liability company agreement, which was subsequently amended on June 24, 2016 and February 22, 2021 (as amended, the “Limited Liability Company Agreement”) to co-manage Middle Market Credit Fund, LLC (“Credit Fund”). Credit Fund primarily invests in first lien loans of middle market companies. Credit Fund is managed by a six-member board of managers, on which the Company and Credit Partners each have equal representation. The Company and Credit Partners each have 50% economic ownership of Credit Fund and have commitments to fund, from time to time, capital of up to $250,000 each. Refer to Note 5, Middle Market Credit Fund, LLC, for details.
On May 5, 2020, the Company issued and sold 2,000,000 shares of cumulative convertible preferred stock, par value $0.01 per share (the "Preferred Stock"), to an affiliate of Carlyle in a private placement at a price of $25 per share. See Note 10, Net Assets, for further information about the Preferred Stock.
On November 3, 2020, the Company and Cliffwater Corporate Lending Fund ("CCLF"), an investment vehicle managed by Cliffwater LLC, entered into a limited liability company agreement to co-manage Middle Market Credit Fund II, LLC ("Credit Fund II"). Credit Fund II invests in senior secured loans of middle market companies. Credit Fund II is managed by a four-member board of managers, on which the Company and CCLF each have equal representation. The Company and CCLF have approximately 84.13% and 15.87% economic ownership of Credit Fund II, respectively. The Company contributed certain senior secured debt investments with an aggregate principal balance of approximately $250 million to Credit Fund II in exchange for its 84.13% economic interest and gross cash proceeds of approximately $170 million. See Note 6, Middle Market Credit Fund II, LLC, to these consolidated financial statements for details.
As a BDC, the Company is required to comply with certain regulatory requirements. As part of these requirements, the Company must not acquire any assets other than “qualifying assets” specified in the Investment Company Act unless, at the time the acquisition is made, at least 70% of its total assets are qualifying assets (with certain limited exceptions).
To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to its stockholders generally at least 90% of its investment company taxable income, as defined by the Code, for each year. Pursuant to this election, the Company generally does not have to pay corporate level taxes on any income that it distributes to stockholders, provided that the Company satisfies those requirements.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The Company is an investment company for the purposes of accounting and financial reporting in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies (“ASC 946”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, the SPVs and the 2015-1 Issuer. All significant intercompany balances and transactions have been eliminated. U.S. GAAP for an investment company requires investments to be recorded at fair value. The carrying value for all other assets and liabilities approximates their fair value.
34
The interim financial statements have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. Accordingly, certain disclosures accompanying the annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments considered necessary for the fair presentation of consolidated financial statements for the interim periods presented have been included. These adjustments are of a normal, recurring nature. This Form 10-Q should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2020. The results of operations for the three month period ended March 31, 2021 are not necessarily indicative of the operating results to be expected for the full year.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make assumptions and estimates 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. Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances. It also requires management to exercise judgment in the process of applying the Company’s accounting policies. Assumptions and estimates regarding the valuation of investments and their resulting impact on base management and incentive fees involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements. Actual results could differ from these estimates and such differences could be material.
Investments
Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized appreciation or depreciation previously recognized, and includes investments charged off during the period, net of recoveries. Net change in unrealized appreciation or depreciation on investments as presented in the accompanying Consolidated Statements of Operations reflects the net change in the fair value of investments, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized. See Note 3 for further information about fair value measurements.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposits and highly liquid investments (e.g., money market funds, U.S. treasury notes) with original maturities of three months or less. Cash equivalents are carried at amortized cost, which approximates fair value. The Company’s cash and cash equivalents are held with two large financial institutions and cash held in such financial institutions may, at times, exceed the Federal Deposit Insurance Corporation insured limit.
Revenue Recognition
Interest from Investments and Realized Gain/Loss on Investments
Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any. At time of exit, the realized gain or loss on an investment is the difference between the amortized cost at time of exit and the cash received at exit using the specific identification method.
The Company has loans in its portfolio that contain payment-in-kind (“PIK”) provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity. Such income is included in interest income in the Consolidated Statements of Operations. As of March 31, 2021 and December 31, 2020, the fair value of the loans in the portfolio with PIK provisions was $219,536 and $240,861, respectively, which represents approximately 11.9% and 13.2% of total investments at fair value, respectively. For the three months ended March 31, 2021 and 2020, the Company earned $2,125 and $643 in PIK income, respectively. PIK income is included in interest income in the accompanying Consolidated Statements of Operations.
Dividend Income
35
Dividend income from the investment funds, Credit Fund and Credit Fund II, is recorded on the record date for the investment fund to the extent that such amounts are payable by the investment funds and are expected to be collected.
Other Income
Other income may include income such as consent, waiver, amendment, unused, underwriting, arranger and prepayment fees associated with the Company’s investment activities as well as any fees for managerial assistance services rendered by the Company to the portfolio companies. Such fees are recognized as income when earned or the services are rendered. The Company may receive fees for guaranteeing the outstanding debt of a portfolio company. Such fees are amortized into other income over the life of the guarantee. The unamortized amount, if any, is included in other assets in the accompanying Consolidated Statements of Assets and Liabilities. For the three months ended March 31, 2021 and 2020, the Company earned $1,470 and $2,344 in other income, respectively.
Non-Accrual Income
Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid current and, in management’s judgment, are likely to remain current. Management may determine not to place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of March 31, 2021 and December 31, 2020, the fair value of the loans in the portfolio on non-accrual status was $60,376 and $58,136, respectively. The remaining first and second lien debt investments were performing and current on their interest payments as of March 31, 2021 and December 31, 2020.
The Facilities, Senior Notes, and 2015-1R Notes – Related Costs, Expenses and Deferred Financing Costs
The Company entered into a senior secured revolving credit facility (as amended, the "Credit Facility") and the SPV entered into a senior secured credit facility (as amended, the "SPV Credit Facility", and together with the Credit Facility, the "Facilities"), which was terminated on December 11, 2020. Interest expense and unused commitment fees on the Facilities are recorded on an accrual basis. Unused commitment fees are included in credit facility fees in the accompanying Consolidated Statements of Operations.
On December 30, 2019, the Company closed a private offering of $115.0 million in aggregate principal amount of 4.750% Senior Unsecured Notes due December 31, 2024 (the "2019 Notes"). On December 11, 2020, the Company issued $75.0 million in aggregate principal amount of 4.500% Senior Unsecured Notes due December 31, 2024 (the "2020 Notes", and together with the 2019 Notes, the "Senior Notes"). The Facilities, the 2015-1R Notes and the Senior Notes are recorded at carrying value, which approximates fair value.
Deferred financing costs include capitalized expenses related to the closing or amendments of the Facilities. Amortization of deferred financing costs for each credit facility is computed on the straight-line basis over the respective term of each credit facility. The unamortized balance of such costs is included in deferred financing costs in the accompanying Consolidated Statements of Assets and Liabilities. The amortization of such costs is included in credit facility fees in the accompanying Consolidated Statements of Operations.
Debt issuance costs include capitalized expenses including structuring and arrangement fees related to the offering of the 2015-1R Notes and Senior Notes. Amortization of debt issuance costs for the notes is computed on the effective yield method over the term of the notes. The unamortized balance of such costs is presented as a direct deduction to the carrying amount of the notes in the accompanying Consolidated Statements of Assets and Liabilities. The amortization of such costs is included in interest expense in the accompanying Consolidated Statements of Operations.
Income Taxes
For federal income tax purposes, the Company has elected to be treated as a RIC under the Code, and intends to make the required distributions to its stockholders as specified therein. In order to qualify as a RIC, the Company must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then the Company is generally required to pay income taxes only on the portion of its taxable income and gains it does not distribute.
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The minimum distribution requirements applicable to RICs require the Company to distribute to its stockholders at least 90% of its investment company taxable income (“ICTI”), as defined by the Code, each year, although depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year distributions into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.
In addition, based on the excise distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed.
The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more likely than not” to be sustained by the applicable tax authority. The SPVs and the 2015-1 Issuer are disregarded entities for tax purposes and are consolidated with the tax return of the Company. All penalties and interest associated with income taxes, if any, are included in income tax expense. For the three months ended March 31, 2021 and 2020, the Company incurred $124 and $52 in excise tax expense, respectively.
Dividends and Distributions to Common Stockholders
To the extent that the Company has taxable income available, the Company intends to make quarterly distributions to its common stockholders. Dividends and distributions to common stockholders are recorded on the record date. The amount to be distributed is determined by the Board of Directors each quarter and is generally based upon the taxable earnings estimated by management and available cash. Net realized capital gains, if any, are generally distributed at least annually, although the Company may decide to retain such capital gains for investment.
Prior to July 5, 2017, the Company had an “opt in” dividend reinvestment plan. Effective on July 5, 2017, the Company converted the “opt in” dividend reinvestment plan to an “opt out” dividend reinvestment plan that provides for reinvestment of dividends and other distributions on behalf of the stockholders, other than those stockholders who have “opted out” of the plan. As a result of adopting the plan, if the Board of Directors authorizes, and the Company declares, a cash dividend or distribution, the stockholders who have not elected to “opt out” of the dividend reinvestment plan will have their cash dividends or distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash. Each registered stockholder may elect to have such stockholder’s dividends and distributions distributed in cash rather than participate in the plan. For any registered stockholder that does not so elect, distributions on such stockholder’s shares will be reinvested by State Street Bank and Trust Company, the Company’s plan administrator, in additional shares. The number of shares to be issued to the stockholder will be determined based on the total dollar amount of the cash distribution payable, net of applicable withholding taxes. The Company intends to use primarily newly issued shares to implement the plan so long as the market value per share is equal to or greater than the net asset value per share on the relevant valuation date. If the market value per share is less than the net asset value per share on the relevant valuation date, the plan administrator would implement the plan through the purchase of common stock on behalf of participants in the open market, unless the Company instructs the plan administrator otherwise.
Functional Translations
The functional currency of the Company is the U.S. Dollar. Investments are generally made in the local currency of the country in which the investments are domiciled and are translated into U.S. Dollars with foreign currency translation gains or losses recorded within net change in unrealized appreciation (depreciation) on investments in the accompanying Consolidated Statements of Operations. Foreign currency translation gains and losses on non-investment assets and liabilities are separately reflected in the accompanying Consolidated Statements of Operations.
Earnings Per Common Share
The Company computes earnings per common share in accordance with ASC 260, Earnings Per Share ("ASC 260"). Basic earnings per common share is calculated by dividing the net increase (decrease) in net assets resulting from operations attributable to common stock by the weighted average number of shares of common stock outstanding. Diluted earnings per common share reflects the assumed conversion of all dilutive securities.
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Recent Accounting Standards Updates
In May 2020, the SEC adopted rule amendments that will impact the requirement of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies. Under Rules 3-09 and 4-08(g) of Regulation S-X, investment companies are required to include separate financial statements or summary financial information, respectively, in their periodic reports for any portfolio company that meets the definition of "significant subsidiary." The rule amendments adopted in May 2020 create a new definition of "significant subsidiary", as set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act, which are applicable only to investment companies. This new definition modifies the investment test and income test, and eliminates the asset test, and is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an investment company. The rule amendments are effective on January 1, 2021, but voluntary compliance is permitted in advance of the effective date. The Company adopted the rule amendments for the quarter ended September 30, 2020, which did not have a material impact on the Company's consolidated financial statements.
3. FAIR VALUE MEASUREMENTS
The Company applies fair value accounting in accordance with the terms of FASB ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the amount that would be exchanged to sell an asset or transfer a liability in an orderly transfer between market participants at the measurement date. The Company values securities/instruments traded in active markets on the measurement date by multiplying the closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments, such as its securities/instruments traded in active markets and its liquid securities/instruments that are not traded in active markets, from pricing services, brokers, or counterparties (i.e., “consensus pricing”). When doing so, the Company determines whether the quote obtained is sufficient according to U.S. GAAP to determine the fair value of the security. The Company may use the quote obtained or alternative pricing sources may be utilized including valuation techniques typically utilized for illiquid securities/instruments.
Securities/instruments that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Investment Adviser or the Company’s Board of Directors, does not represent fair value shall each be valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data is available. These valuation techniques may vary by investment and include comparable public market valuations, comparable precedent transaction valuations and/or discounted cash flow analyses. The process generally used to determine the applicable value is as follows: (i) the value of each portfolio company or investment is initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments, a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs is used to determine a preliminary value, which is also reviewed alongside consensus pricing, where available; (ii) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of senior management; (iii) the Board of Directors engages a third-party valuation firm to provide positive assurance on portions of the Middle Market Senior Loans and equity investments portfolio each quarter (such that each non-traded investment other than Credit Fund is reviewed by a third-party valuation firm at least once on a rolling twelve month basis) including a review of management’s preliminary valuation and conclusion on fair value; (iv) the Audit Committee of the Board of Directors (the “Audit Committee”) reviews the assessments of the Investment Adviser and the third-party valuation firm and provides the Board of Directors with any recommendations with respect to changes to the fair value of each investment in the portfolio; and (v) the Board of Directors discusses the valuation recommendations of the Audit Committee and determines the fair value of each investment in the portfolio in good faith based on the input of the Investment Adviser and, where applicable, the third-party valuation firm.
All factors that might materially impact the value of an investment are considered, including, but not limited to the assessment of the following factors, as relevant:
•the nature and realizable value of any collateral;
•call features, put features and other relevant terms of debt;
•the portfolio company’s leverage and ability to make payments;
•the portfolio company’s public or private credit rating;
•the portfolio company’s actual and expected earnings and discounted cash flow;
•prevailing interest rates and spreads for similar securities and expected volatility in future interest rates;
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•the markets in which the portfolio company does business and recent economic and/or market events; and
•comparisons to comparable transactions and publicly traded securities.
Investment performance data utilized are the most recently available financial statements and compliance certificate received from the portfolio companies as of the measurement date which in many cases may reflect a lag in information.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the realized gains or losses on investments to be different from the net change in unrealized appreciation or depreciation currently reflected in the consolidated financial statements as of March 31, 2021 and December 31, 2020.
U.S. GAAP establishes a hierarchical disclosure framework which ranks the level of observability of market price inputs used in measuring investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.
Investments measured and reported at fair value are classified and disclosed based on the observability of inputs used in determination of fair values, as follows:
•Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date. Financial instruments in in this category generally include unrestricted securities, including equities and derivatives, listed in active markets. The Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
•Level 2—inputs to the valuation methodology are either directly or indirectly observable as of the reporting date and are those other than quoted prices in active markets. Financial instruments in this category generally include less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.
•Level 3—inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments in this category generally include investments in privately-held entities, collateralized loan obligations, and certain over-the-counter derivatives where the fair value is based on unobservable inputs.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Investment Adviser’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Investments in Credit Fund and Credit Fund II are valued based on the legal form of investment. For those structured through LLC membership interest, the practical expedient, or net asset value method, is used. For those structured through subordinated notes, a discounted cash flow method is used.
Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. For the three month periods ended March 31, 2021 and 2020, there were no transfers between levels.
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The following tables summarize the Company’s investments measured at fair value on a recurring basis by the above fair value hierarchy levels as of March 31, 2021 and December 31, 2020:
| March 31, 2021 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| First Lien Debt | $ | — | $ | — | $ | 1,226,653 | $ | 1,226,653 | |||||||||||||||
| Second Lien Debt | — | — | 299,322 | 299,322 | |||||||||||||||||||
| Equity Investments | — | — | 35,030 | 35,030 | |||||||||||||||||||
| Investment Funds | |||||||||||||||||||||||
| Mezzanine Loan | — | — | — | — | |||||||||||||||||||
| Subordinated Loan and Member's Interest | — | — | 202,695 | 202,695 | |||||||||||||||||||
| Total | $ | — | $ | — | $ | 1,763,700 | $ | 1,763,700 | |||||||||||||||
Investments measured at net asset value (1) | 77,934 | ||||||||||||||||||||||
| Total | $ | 1,841,634 | |||||||||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| First Lien Debt | $ | — | $ | — | $ | 1,224,063 | $ | 1,224,063 | |||||||||||||||
| Second Lien Debt | — | — | 284,523 | 284,523 | |||||||||||||||||||
| Equity Investments | — | — | 33,877 | 33,877 | |||||||||||||||||||
| Investment Funds | |||||||||||||||||||||||
| Mezzanine Loan | — | — | — | — | |||||||||||||||||||
| Subordinated Loan and Member's Interest | — | — | 205,891 | 205,891 | |||||||||||||||||||
| Total | $ | — | $ | — | $ | 1,748,354 | $ | 1,748,354 | |||||||||||||||
Investments measured at net asset value (1) | 77,395 | ||||||||||||||||||||||
| Total | $ | 1,825,749 | |||||||||||||||||||||
(1) Amount represents the Company's investment in Credit Fund II. The Company, as a practical expedient, estimates the fair value of this investment using the net asset value of the Company's member's interest in Credit Fund II. As such, the fair value of the Company's investment in Credit Fund II has not been categorized within the fair value hierarchy.
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The changes in the Company’s investments at fair value for which the Company has used Level 3 inputs to determine fair value and net change in unrealized appreciation (depreciation) included in earnings for Level 3 investments still held are as follows:
| Financial Assets | |||||||||||||||||||||||||||||
| For the three month period ended March 31, 2021 | |||||||||||||||||||||||||||||
| First Lien Debt | Second Lien Debt | Equity Investments | Investment Fund - Subordinated Loan and Member's Interest | Total | |||||||||||||||||||||||||
| Balance, beginning of period | $ | 1,224,063 | $ | 284,523 | $ | 33,877 | $ | 205,891 | $ | 1,748,354 | |||||||||||||||||||
| Purchases | 97,145 | 51,184 | 598 | — | 148,927 | ||||||||||||||||||||||||
| Sales | (75,754) | — | (1,392) | — | (77,146) | ||||||||||||||||||||||||
| Paydowns | (31,924) | (41,531) | — | — | (73,455) | ||||||||||||||||||||||||
| Accretion of discount | 1,581 | 433 | 12 | — | 2,026 | ||||||||||||||||||||||||
| Net realized gains (losses) | 992 | — | 681 | — | 1,673 | ||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) | 10,550 | 4,713 | 1,254 | (3,196) | 13,321 | ||||||||||||||||||||||||
| Balance, end of period | $ | 1,226,653 | $ | 299,322 | $ | 35,030 | $ | 202,695 | $ | 1,763,700 | |||||||||||||||||||
| Net change in unrealized appreciation (depreciation) included in earnings related to investments still held at the reporting date included in net change in unrealized appreciation (depreciation) on investments on the Consolidated Statements of Operations | $ | 10,170 | $ | 4,957 | $ | 1,334 | $ | (3,196) | $ | 13,265 | |||||||||||||||||||
| Financial Assets | |||||||||||||||||||||||||||||||||||
| For the three month period ended March 31, 2020 | |||||||||||||||||||||||||||||||||||
| First Lien Debt | Second Lien Debt | Equity Investments | Investment Fund - Mezzanine Loan | Investment Fund - Subordinated Loan and Member's Interest | Total | ||||||||||||||||||||||||||||||
| Balance, beginning of period | $ | 1,663,138 | $ | 234,532 | $ | 21,698 | $ | 93,000 | $ | 111,596 | $ | 2,123,964 | |||||||||||||||||||||||
| Purchases | 76,323 | 89,409 | 10,200 | 63,500 | 92,500 | 331,932 | |||||||||||||||||||||||||||||
| Sales | (44,060) | — | — | (156,500) | — | (200,560) | |||||||||||||||||||||||||||||
| Paydowns | (70,129) | (15,232) | (1,024) | — | (86,385) | ||||||||||||||||||||||||||||||
| Accretion of discount | 2,206 | 380 | — | — | — | 2,586 | |||||||||||||||||||||||||||||
| Net realized gains (losses) | (2,054) | — | 357 | — | — | (1,697) | |||||||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) | (90,659) | (34,034) | (1,908) | — | (18,962) | (145,563) | |||||||||||||||||||||||||||||
| Balance, end of period | $ | 1,534,765 | $ | 275,055 | $ | 29,323 | $ | — | $ | 185,134 | $ | 2,024,277 | |||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) included in earnings related to investments still held at the reporting date included in net change in unrealized appreciation (depreciation) on investments on the Consolidated Statements of Operations | $ | (92,299) | $ | (33,774) | $ | (1,908) | $ | — | $ | (18,962) | $ | (146,943) | |||||||||||||||||||||||
The Company generally uses the following framework when determining the fair value of investments that are categorized as Level 3:
Investments in debt securities are initially evaluated to determine whether the enterprise value of the portfolio company is greater than the applicable debt. The enterprise value of the portfolio company is estimated using a market approach and an income approach. The market approach utilizes market value (EBITDA) multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The Company carefully considers numerous
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factors when selecting the appropriate companies whose multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, relevant risk factors, as well as size, profitability and growth expectations. The income approach typically uses a discounted cash flow analysis of the portfolio company.
Investments in debt securities that do not have sufficient coverage through the enterprise value analysis are valued based on an expected probability of default and discount recovery analysis.
Investments in debt securities with sufficient coverage through the enterprise value analysis are generally valued using a discounted cash flow analysis of the underlying security. Projected cash flows in the discounted cash flow typically represent the relevant security’s contractual interest, fees and principal payments plus the assumption of full principal recovery at the security’s expected maturity date. The discount rate to be used is determined using an average of two market-based methodologies. Investments in debt securities may also be valued using consensus pricing.
Investments in equities are generally valued using a market approach and/or an income approach. The market approach utilizes market value (EBITDA) multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The income approach typically uses a discounted cash flow analysis of the portfolio company.
Investments in Credit Fund’s mezzanine loan are valued using collateral analysis with the expected recovery rate of principal and interest. Investments in Credit Fund’s subordinated loan and member’s interest are valued using discounted cash flow analysis with the expected discount rate, default rate and recovery rate of principal and interest.
The following tables summarize the quantitative information related to the significant unobservable inputs for Level 3 instruments which are carried at fair value as of March 31, 2021 and December 31, 2020:
| Fair Value as of March 31, 2021 | Valuation Techniques | Significant Unobservable Inputs | Range | ||||||||||||||||||||||||||||||||
| Low | High | Weighted Average | |||||||||||||||||||||||||||||||||
| Investments in First Lien Debt | $ | 1,091,189 | Discounted Cash Flow | Discount Rate | 3.87 | % | 17.30 | % | 9.08 | % | |||||||||||||||||||||||||
| 75,638 | Consensus Pricing | Indicative Quotes | 95.81 | 100.50 | 98.39 | ||||||||||||||||||||||||||||||
| 59,826 | Income Approach | Discount Rate | 11.96 | % | 13.35 | % | 12.61 | % | |||||||||||||||||||||||||||
| Market Approach | Comparable Multiple | 3.73x | 7.65x | 6.99x | |||||||||||||||||||||||||||||||
| Total First Lien Debt | 1,226,653 | ||||||||||||||||||||||||||||||||||
| Investments in Second Lien Debt | 206,992 | Discounted Cash Flow | Discount Rate | 7.03 | % | 14.53 | % | 9.74 | % | ||||||||||||||||||||||||||
| 92,330 | Consensus Pricing | Indicative Quotes | 86.75 | 99.25 | 93.77 | ||||||||||||||||||||||||||||||
| Total Second Lien Debt | 299,322 | ||||||||||||||||||||||||||||||||||
| Investments in Equity | 35,030 | Income Approach | Discount Rate | 7.22 | % | 11.96 | % | 8.74 | % | ||||||||||||||||||||||||||
| Market Approach | Comparable Multiple | 7.55x | 16.43x | 10.69x | |||||||||||||||||||||||||||||||
| Total Equity Investments | 35,030 | ||||||||||||||||||||||||||||||||||
| Investments in Investment Fund | |||||||||||||||||||||||||||||||||||
| Subordinated Loan and Member's Interest | 202,695 | Discounted Cash Flow | Discount Rate | 8.50 | % | 8.50 | % | 8.50 | % | ||||||||||||||||||||||||||
| Discounted Cash Flow | Default Rate | 3.00 | % | 3.00 | % | 3.00 | % | ||||||||||||||||||||||||||||
| Discounted Cash Flow | Recovery Rate | 65.00 | % | 65.00 | % | 65.00 | % | ||||||||||||||||||||||||||||
| Total Investments in Investment Fund | 202,695 | ||||||||||||||||||||||||||||||||||
| Total Level 3 Investments | $ | 1,763,700 | |||||||||||||||||||||||||||||||||
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| Fair Value as of December 31, 2020 | Valuation Techniques | Significant Unobservable Inputs | Range | ||||||||||||||||||||||||||||||||
| Low | High | Weighted Average | |||||||||||||||||||||||||||||||||
| Investments in First Lien Debt | $ | 879,159 | Discounted Cash Flow | Discount Rate | 3.96 | % | 16.60 | % | 8.80 | % | |||||||||||||||||||||||||
| 287,191 | Consensus Pricing | Indicative Quotes | 89.11 | 100.00 | 97.70 | ||||||||||||||||||||||||||||||
| 57,713 | Income Approach | Discount Rate | 12.80 | % | 14.70 | % | 13.50 | % | |||||||||||||||||||||||||||
| Market Approach | Comparable Multiple | 3.17x | 6.99x | 6.43x | |||||||||||||||||||||||||||||||
| Total First Lien Debt | 1,224,063 | ||||||||||||||||||||||||||||||||||
| Investments in Second Lien Debt | 238,785 | Discounted Cash Flow | Discount Rate | 7.14 | % | 15.27 | % | 9.67 | % | ||||||||||||||||||||||||||
| 45,738 | Consensus Pricing | Indicative Quotes | 82.88 | 100.00 | 87.75 | ||||||||||||||||||||||||||||||
| Total Second Lien Debt | 284,523 | ||||||||||||||||||||||||||||||||||
| Investments in Equity | 33,877 | Income Approach | Discount Rate | 7.22 | % | 12.80 | % | 8.84 | % | ||||||||||||||||||||||||||
| Market Approach | Comparable Multiple | 6.99x | 16.43x | 10.50x | |||||||||||||||||||||||||||||||
| Total Equity Investments | 33,877 | ||||||||||||||||||||||||||||||||||
| Investment in Investment Fund | |||||||||||||||||||||||||||||||||||
| Mezzanine Loan | — | Collateral Analysis | Recovery Rate | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||||||||||||||||
| Subordinated Loan and Member's Interest | 205,891 | Discounted Cash Flow | Discount Rate | 8.50 | % | 8.50 | % | 8.50 | % | ||||||||||||||||||||||||||
| Discounted Cash Flow | Default Rate | 3.00 | % | 3.00 | % | 3.00 | % | ||||||||||||||||||||||||||||
| Discounted Cash Flow | Recovery Rate | 65.00 | % | 65.00 | % | 65.00 | % | ||||||||||||||||||||||||||||
| Total Investments in Investment Fund | 205,891 | ||||||||||||||||||||||||||||||||||
| Total Level 3 Investments | $ | 1,748,354 | |||||||||||||||||||||||||||||||||
The significant unobservable inputs used in the fair value measurement of the Company’s investments in first and second lien debt securities are discount rates, indicative quotes and comparable EBITDA multiples. Significant increases in discount rates in isolation would result in a significantly lower fair value measurement. Significant decreases in indicative quotes or comparable EBITDA multiples in isolation may result in a significantly lower fair value measurement.
The significant unobservable inputs used in the fair value measurement of the Company’s investments in equities are discount rates and comparable EBITDA multiples. Significant increases in discount rates in isolation would result in a significantly lower fair value measurement. Significant decreases in comparable EBITDA multiples in isolation would result in a significantly lower fair value measurement.
The significant unobservable input used in the fair value measurement of the Company’s investment in the mezzanine loan of Credit Fund is the recovery rate of principal and interest. A significant decrease in the recovery rate would result in a significantly lower fair value measurement.
The significant unobservable inputs used in the fair value measurement of the Company’s investments in the subordinated loan and member’s interest of Credit Fund are the discount rate, default rate and recovery rate. Significant increases in the discount rate or default rate in isolation would result in a significantly lower fair value measurement. A significant decrease in the recovery rate in isolation would result in a significantly lower fair value measurement.
Financial instruments disclosed but not carried at fair value
The following table presents the carrying value and fair value of the Company’s secured borrowings and senior unsecured notes disclosed but not carried at fair value as of March 31, 2021 and December 31, 2020:
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| Secured borrowings | $ | 309,397 | $ | 309,397 | $ | 347,949 | $ | 347,949 | |||||||||||||||
| 2019 Notes | 115,000 | 116,250 | 115,000 | 116,250 | |||||||||||||||||||
| 2020 Notes | 75,000 | 75,000 | 75,000 | 75,000 | |||||||||||||||||||
| Total | $ | 499,397 | $ | 500,647 | $ | 537,949 | $ | 539,199 | |||||||||||||||
The carrying values of the secured borrowings and senior unsecured notes approximate their respective fair values and are categorized as Level 3 within the hierarchy. Secured borrowings are valued generally using discounted cash flow analysis.
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The significant unobservable inputs used in the fair value measurement of the Company’s secured borrowings and senior unsecured notes are discount rates. Significant increases in discount rates would result in a significantly lower fair value measurement.
The following table represents the carrying values (before debt issuance costs) and fair values of the Company’s 2015-1R Notes disclosed but not carried at fair value as of March 31, 2021 and December 31, 2020:
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| Aaa/AAA Class A-1-1-R Notes | $ | 234,800 | $ | 234,283 | $ | 234,800 | $ | 230,996 | |||||||||||||||
| Aaa/AAA Class A-1-2-R Notes | 50,000 | 50,000 | 50,000 | 49,645 | |||||||||||||||||||
| Aaa/AAA Class A-1-3-R Notes | 25,000 | 25,016 | 25,000 | 25,017 | |||||||||||||||||||
| AA Class A-2-R Notes | 66,000 | 66,000 | 66,000 | 64,895 | |||||||||||||||||||
| A Class B Notes | 46,400 | 46,400 | 46,400 | 45,291 | |||||||||||||||||||
| BBB- Class C Notes | 27,000 | 26,411 | 27,000 | 24,592 | |||||||||||||||||||
| Total | $ | 449,200 | $ | 448,110 | $ | 449,200 | $ | 440,436 | |||||||||||||||
The fair value determination of the Company’s notes payable was based on the market quotation(s) received from broker/dealer(s). These fair value measurements were based on significant inputs not observable and thus represent Level 3 measurements as defined in the accounting guidance for fair value measurement.
The carrying value of other financial assets and liabilities approximates their fair value based on the short term nature of these items.
4. RELATED PARTY TRANSACTIONS
Investment Advisory Agreement
On April 3, 2013, the Company’s Board of Directors, including a majority of the directors who are not “interested persons” as defined in Section 2(a)(19) of the Investment Company Act (the “Independent Directors”), approved an investment advisory agreement (the “Original Investment Advisory Agreement”) between the Company and the Investment Adviser in accordance with, and on the basis of an evaluation satisfactory to such directors as required by, Section 15(c) of the Investment Company Act. The Original Investment Advisory Agreement was amended on September 15, 2017 and August 6, 2018 after receipt of requisite Board and stockholders' approvals, as applicable (as amended, the “Investment Advisory Agreement”). Unless terminated earlier, the Investment Advisory Agreement renews automatically for successive annual periods, provided that such continuance is specifically approved at least annually by the vote of the Company's Board of Directors and by the vote of a majority of the Independent Directors. On May 29, 2020, the Company’s Board of Directors, including a majority of the Independent Directors, approved the continuance of the Company’s Investment Advisory Agreement with the Adviser for an additional one year term. On May 29, 2020, the Company’s Board of Directors, including a majority of the Independent Directors, approved the continuance of the Company’s Investment Advisory Agreement with the Adviser for an additional one year term. Pursuant to relief granted by the SEC in light of the COVID-19 pandemic (the “Order”) and a determination by the Board that reliance on the Order was appropriate due to circumstances related to the current or potential effects of COVID-19, the May 29 meeting was held by video- and telephone-conference. The Investment Advisory Agreement will automatically terminate in the event of an assignment and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party. Subject to the overall supervision of the Board of Directors, the Adviser provides investment advisory services to the Company. For providing these services, the Adviser receives fees from the Company consisting of two components—a base management fee and an incentive fee.
The base management fee has been calculated and payable quarterly in arrears at an annual rate of 1.50% of the average value of the gross assets at the end of the two most recently completed fiscal quarters; provided, however, effective July 1, 2018, the base management fee is calculated at an annual rate of 1.00% of the average value of the gross assets as of the end of the two most recently completed calendar quarters that exceeds the product of (A) 200% and (B) the average value of the Company’s net asset value at the end of the two most recently completed calendar quarters. The base management fee will be appropriately adjusted for any share issuances or repurchases during such fiscal quarter and the base management fees for any partial month or quarter will be pro-rated. The Company’s gross assets exclude any cash and cash equivalents and include assets acquired through the incurrence of debt from the use of leverage. For purposes of this calculation, cash and cash equivalents include any temporary investments in cash-equivalents, U.S. government securities and other high quality investment grade debt investments that mature in 12 months or less from the date of investment.
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The incentive fee has two parts. The first part is calculated and payable quarterly in arrears based on the pre-incentive fee net investment income for the immediately preceding calendar quarter. The second part is determined and payable in arrears based on capital gains as of the end of each calendar year.
Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the operating expenses accrued for the quarter (including the base management fee, expenses payable under the administration agreement, and any interest expense or fees on any credit facilities or outstanding debt and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature, accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, has been compared to a “hurdle rate” of 1.50% per quarter (6% annualized) or a “catch-up rate” of 1.82% per quarter (7.28% annualized), as applicable.
Pursuant to the Investment Advisory Agreement, the Company pays its Investment Adviser an incentive fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:
•no incentive fee based on pre-incentive fee net investment income in any calendar quarter in which its pre-incentive fee net investment income does not exceed the hurdle rate of 1.50%;
•100% of pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.82% in any calendar quarter (7.28% annualized). The Company refers to this portion of the pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 1.82%) as the “catch-up.” The “catch-up” is meant to provide the Investment Adviser with approximately 17.5% of the Company’s pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.82% in any calendar quarter; and
•17.5% of the amount of pre-incentive fee net investment income, if any, that exceeds 1.82% in any calendar quarter (7.28% annualized) will be payable to the Investment Adviser. This reflects that once the hurdle rate is reached and the catch-up is achieved, 17.5% of all pre-incentive fee net investment income thereafter is allocated to the Investment Adviser.
The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 17.5% of realized capital gains, if any, on a cumulative basis from inception through the date of determination, computed net of all realized capital losses on a cumulative basis and unrealized capital depreciation, less the aggregate amount of any previously paid capital gain incentive fees, provided that, the incentive fee determined at the end of the first calendar year of operations may be calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net of all realized capital losses on a cumulative basis and unrealized capital depreciation.
Below is a summary of the base management fees and incentive fees incurred during the three month periods ended March 31, 2021 and 2020.
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Base management fees | $ | 6,800 | $ | 7,386 | |||||||
| Incentive fees on pre-incentive fee net investment income | 4,257 | 5,086 | |||||||||
| Realized capital gains incentive fees | — | — | |||||||||
| Accrued capital gains incentive fees | — | — | |||||||||
| Total capital gains incentive fees | — | — | |||||||||
| Total incentive fees | 4,257 | 5,086 | |||||||||
| Total base management fees and incentive fees | $ | 11,057 | $ | 12,472 | |||||||
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Accrued capital gains incentive fees are based upon the cumulative net realized and unrealized appreciation (depreciation) from inception. Accordingly, the accrual for any capital gains incentive fee under U.S. GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual.
As of March 31, 2021 and December 31, 2020, $11,047 and $11,549, respectively, was included in base management and incentive fees payable in the accompanying Consolidated Statements of Assets and Liabilities.
On April 3, 2013, the Investment Adviser entered into a personnel agreement with The Carlyle Group Employee Co., L.L.C. (“Carlyle Employee Co.”), an affiliate of the Investment Adviser, pursuant to which Carlyle Employee Co. provides the Investment Adviser with access to investment professionals.
Administration Agreement
On April 3, 2013, the Company's Board of Directors approved the Administration Agreement. Pursuant to the Administration Agreement, the Administrator provides services and receives reimbursements equal to an amount that reimburses the Administrator for its costs and expenses and the Company’s allocable portion of overhead incurred by the Administrator in performing its obligations under the Administration Agreement, including the Company’s allocable portion of the compensation paid to or compensatory distributions received by the Company’s officers (including the Chief Compliance Officer and Treasurer) and respective staff who provide services to the Company, operations staff who provide services to the Company, and any internal audit staff, to the extent internal audit performs a role in the Company’s Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), internal control assessment. Reimbursement under the Administration Agreement occurs quarterly in arrears.
Unless terminated earlier, the Administration Agreement will renew automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (i) the vote of the Board of Directors or by a majority vote of the outstanding voting securities of the Company and (ii) the vote of a majority of the Company’s Independent Directors. On May 29, 2020, the Company's Board of Directors, including a majority of the Independent Directors, approved the continuance of the Administration Agreement for a one-year period. The Administration Agreement may not be assigned by a party without the consent of the other party and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party.
For the three month periods ended March 31, 2021 and 2020, the Company incurred $282 and $106, respectively, in fees under the Administration Agreement. These fees are included in administrative service fees in the accompanying Consolidated Statements of Operations. As of March 31, 2021 and December 31, 2020, $202 and $85, respectively, was unpaid and included in administrative service fees payable in the accompanying Consolidated Statements of Assets and Liabilities.
Sub-Administration Agreements
On April 3, 2013, the Administrator entered into a sub-administration agreement with Carlyle Employee Co. (the “Carlyle Sub-Administration Agreement”). Pursuant to the Carlyle Sub-Administration Agreement, Carlyle Employee Co. provides the Administrator with access to personnel.
On April 3, 2013, the Administrator entered into a sub-administration agreement with State Street Bank and Trust Company (“State Street” and, such agreement, the “State Street Sub-Administration Agreement” and, together with the Carlyle Sub-Administration Agreement, the “Sub-Administration Agreements”). Unless terminated earlier, the State Street Sub-Administration Agreement will renew automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (i) the vote of the Board of Directors or by the vote of a majority of the outstanding voting securities of the Company and (ii) the vote of a majority of the Company’s Independent Directors. On May 29, 2020, the Company's Board of Directors, including a majority of the Independent Directors, approved the continuance of the State Street Sub-Administration Agreement for a one-year period. The State Street Sub-Administration Agreement may be terminated upon at least 60 days’ written notice and without penalty by the vote of a majority of the outstanding securities of the Company, or by the vote of the Board of Directors or by either party to the State Street Sub-Administration Agreement.
For the three month periods ended March 31, 2021 and 2020, the Company incurred $170 and $193, respectively, in fees under the State Street Sub-Administration Agreement, which are included in other general and administrative expenses in the accompanying Consolidated Statements of Operations. As of March 31, 2021 and December 31, 2020, $510 and $334,
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respectively, was unpaid and included in other accrued expenses and liabilities in the accompanying Consolidated Statements of Assets and Liabilities.
License Agreement
The Company has entered into a royalty free license agreement with CIM, which wholly owns our Adviser and is a wholly owned subsidiary of Carlyle, pursuant to which CIM has granted the Company a non-exclusive, revocable and non-transferable license to use the name and mark “Carlyle.”
Board of Directors
The Company’s Board of Directors currently consists of six members, four of whom are Independent Directors. The Board of Directors has established an Audit Committee, a Pricing Committee, a Nominating and Governance Committee and a Compensation Committee, the members of each of which consist entirely of the Company’s Independent Directors. The Board of Directors may establish additional committees in the future. For the three month periods ended March 31, 2021 and 2020, the Company incurred $116 and $96, respectively, in fees and expenses associated with its Independent Directors' services on the Company's Board of Directors and its committees. As of March 31, 2021 and December 31, 2020, $117 and $96, respectively, in fees or expenses associated with its Independent Directors were payable, and included in other accrued expenses and liabilities in the accompanying Consolidated Statements of Assets and Liabilities.
Transactions with Investment Funds
For the three month period ended March 31, 2021, the Company sold 1 investment to Credit Fund for proceeds of $23,591 and realized gain (loss) of $228. For the three month period ended March 31, 2020, the Company sold 1 investment for proceeds of $19,119 and realized gain (loss) of $264. See Note 5, Middle Market Credit Fund, LLC, for further information about Credit Fund. For the three month period ended March 31, 2021, the Company sold 1 investment for proceeds of $5,119 and realized gains (losses) of $12 to Credit Fund II. See Note 6, Middle Market Credit Fund II, LLC, for further information about Credit Fund II.
Cumulative Convertible Preferred Stock
On May 5, 2020, the Company issued and sold 2,000,000 shares of the Preferred Stock to an affiliate of Carlyle in a private placement at a price of $25 per share. For the three month period ended March 31, 2021, the Company declared and paid a dividend on the Preferred Stock of $875. See Note 10, Net Assets, for further information about the Preferred Stock.
5. MIDDLE MARKET CREDIT FUND, LLC
Overview
On February 29, 2016, the Company and Credit Partners entered into an amended and restated limited liability company agreement, which was subsequently amended and restated on June 24, 2016 and February 22, 2021 (as amended, the "Limited Liability Company Agreement") to co-manage Credit Fund, a Delaware limited liability company that is not consolidated in the Company’s consolidated financial statements. Credit Fund primarily invests in first lien loans of middle market companies. Credit Fund is managed by a six-member board of managers, on which the Company and Credit Partners each have equal representation. Establishing a quorum for Credit Fund’s board of managers requires at least four members to be present at a meeting, including at least two of the Company’s representatives and two of Credit Partners’ representatives. The Company and Credit Partners each have 50% economic ownership of Credit Fund and have commitments to fund, from time to time, capital of up to $250,000 each. Funding of such commitments generally requires the approval of the board of Credit Fund, including the board members appointed by the Company. By virtue of its membership interest, the Company and Credit Partners each indirectly bear an allocable share of all expenses and other obligations of Credit Fund.
Together with Credit Partners, the Company co-invests through Credit Fund. Investment opportunities for Credit Fund are sourced primarily by the Company and its affiliates. Portfolio and investment decisions with respect to Credit Fund must be unanimously approved by a quorum of Credit Fund’s investment committee consisting of an equal number of representatives of the Company and Credit Partners. Therefore, although the Company owns more than 25% of the voting securities of Credit Fund, the Company does not believe that it has control over Credit Fund (other than for purposes of the Investment Company Act). Middle Market Credit Fund SPV, LLC (the “Credit Fund Sub”), MMCF CLO 2017-1 LLC (the “2017-1 Issuer”), MMCF CLO 2019-2, LLC (the "2019-2 Issuer", formerly known as MMCF Warehouse, LLC (the "Credit Fund Warehouse")) and MMCF Warehouse II, LLC (the "Credit Fund Warehouse II"), each a Delaware limited liability company, were formed on
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April 5, 2016, October 6, 2017, November 26, 2018 and August 16, 2019, respectively. Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer and Credit Fund Warehouse II are wholly owned subsidiaries of Credit Fund and are consolidated in Credit Fund’s consolidated financial statements commencing from the date of their respective formations. In December 2020, the 2017-1 CLO was redeemed in full and notes outstanding were repaid in full. Credit Fund Sub, the 2019-2 Issuer and Credit Fund Warehouse II primarily invest in first lien loans of middle market companies. Credit Fund and its wholly owned subsidiaries follow the same Internal Risk Rating System as the Company. Refer to "Debt" below for discussions regarding the credit facilities entered into and then notes issued by such wholly-owned subsidiaries.
Credit Fund, the Company and Credit Partners entered into an administration agreement with Carlyle Global Credit Administration L.L.C., the administrative agent of Credit Fund (in such capacity, the “Administrative Agent”), pursuant to which the Administrative Agent is delegated certain administrative and non-discretionary functions, is authorized to enter into sub-administration agreements at the expense of Credit Fund with the approval of the board of managers of Credit Fund, and is reimbursed by Credit Fund for its costs and expenses and Credit Fund’s allocable portion of overhead incurred by the Administrative Agent in performing its obligations thereunder.
Selected Financial Data
Since inception of Credit Fund and through March 31, 2021 and December 31, 2020, the Company and Credit Partners each made capital contributions of $1 and $1 in members’ equity, respectively, and $216,000 and $216,000 in subordinated loans, respectively, to Credit Fund. Below is certain summarized consolidated financial information for Credit Fund as of March 31, 2021 and December 31, 2020.
| As of | ||||||||||||||
| March 31, 2021 | December 31, 2020 | |||||||||||||
| (unaudited) | ||||||||||||||
| Selected Consolidated Balance Sheet Information | ||||||||||||||
| ASSETS | ||||||||||||||
| Investments, at fair value (amortized cost of $993,936 and $1,080,538, respectively) | $ | 983,277 | $ | 1,056,381 | ||||||||||
| Cash and cash equivalents | 63,384 | 119,796 | ||||||||||||
| Other assets | 11,344 | 7,553 | ||||||||||||
| Total assets | $ | 1,058,005 | $ | 1,183,730 | ||||||||||
| LIABILITIES AND MEMBERS’ EQUITY | ||||||||||||||
| Secured borrowings | $ | 446,301 | $ | 514,261 | ||||||||||
| Notes payable, net of unamortized debt issuance costs of $1,511 and $1,559, respectively | 184,326 | 253,933 | ||||||||||||
| Other liabilities | 15,243 | 15,543 | ||||||||||||
Subordinated loans and members’ equity (1) | 412,135 | 399,993 | ||||||||||||
| Liabilities and members’ equity | $ | 1,058,005 | $ | 1,183,730 | ||||||||||
(1) As of March 31, 2021 and December 31, 2020, the fair value of Company's ownership interest in the subordinated loans and members’ equity was $202,695 and $205,891, respectively.
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| For the three month periods ended | ||||||||||||||
| March 31, 2021 | March 31, 2020 | |||||||||||||
| (unaudited) | ||||||||||||||
| Selected Consolidated Statement of Operations Information: | ||||||||||||||
| Total investment income | $ | 16,105 | $ | 21,592 | ||||||||||
| Expenses | ||||||||||||||
| Interest and credit facility expenses | 5,415 | 13,927 | ||||||||||||
| Other expenses | 468 | 503 | ||||||||||||
| Total expenses | 5,883 | 14,430 | ||||||||||||
| Net investment income (loss) | 10,222 | 7,162 | ||||||||||||
| Net realized gain (loss) on investments | (1,578) | — | ||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | 13,498 | (86,293) | ||||||||||||
| Net increase (decrease) resulting from operations | $ | 22,142 | $ | (79,131) | ||||||||||
Below is a summary of Credit Fund’s portfolio, followed by a listing of the loans in Credit Fund’s portfolio as of March 31, 2021 and December 31, 2020:
| As of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
Senior secured loans (1) | $ | 997,657 | $ | 1,084,491 | |||||||
Weighted average yields of senior secured loans based on amortized cost (2) | 6.06 | % | 6.03 | % | |||||||
Weighted average yields of senior secured loans based on fair value (2) | 6.11 | % | 6.15 | % | |||||||
| Number of portfolio companies in Credit Fund | 50 | 54 | |||||||||
Average amount per portfolio company (1) | $ | 19,953 | $ | 20,083 | |||||||
| Number of loans on non-accrual status | — | — | |||||||||
| Fair value of loans on non-accrual status | $ | — | $ | — | |||||||
Percentage of portfolio at floating interest rates (3)(4) | 97.3 | % | 97.7 | % | |||||||
Percentage of portfolio at fixed interest rates (4) | 2.7 | % | 2.3 | % | |||||||
| Fair value of loans with PIK provisions | $ | 26,602 | $ | 24,113 | |||||||
Percentage of portfolio with PIK provisions (4) | 2.7 | % | 2.3 | % | |||||||
(1)At par/principal amount.
(2)Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2021 and December 31, 2020. Weighted average yield on debt and income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount ("OID") and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at fair value included in such securities. Weighted average yield on debt and income producing securities at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.
(3)Floating rate debt investments are generally subject to interest rate floors.
(4)Percentages based on fair value.
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| Consolidated Schedule of Investments as of March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (97.3% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACR Group Borrower, LLC | ^+ | (2)(3)(6) | Aerospace & Defense | L + 4.50% | 5.50% | 3/31/2028 | $ | 34,650 | $ | 34,020 | $ | 34,020 | |||||||||||||||||||||||||||||||||||||||||
| Acrisure, LLC | \# | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 3.50% | 3.70% | 2/15/2027 | 25,570 | 25,542 | 25,220 | ||||||||||||||||||||||||||||||||||||||||||||
| Alpha Packaging Holdings, Inc. | +\ | (2)(3) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 11/12/2021 | 16,269 | 16,269 | 16,269 | ||||||||||||||||||||||||||||||||||||||||||||
| AmeriLife Holdings LLC | # | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 4.00% | 4.11% | 3/18/2027 | 9,926 | 9,905 | 9,923 | ||||||||||||||||||||||||||||||||||||||||||||
| Analogic Corporation | ^+ | (2)(3)(6) | Capital Equipment | L + 5.25% | 6.25% | 6/22/2024 | 18,810 | 18,790 | 18,687 | ||||||||||||||||||||||||||||||||||||||||||||
| Anchor Packaging, Inc. | +# | (2)(3) | Containers, Packaging & Glass | L + 4.00% | 4.11% | 7/18/2026 | 24,660 | 24,559 | 24,660 | ||||||||||||||||||||||||||||||||||||||||||||
| API Technologies Corp. | +\ | (2)(3) | Aerospace & Defense | L + 4.25% | 4.36% | 5/9/2026 | 14,738 | 14,679 | 14,516 | ||||||||||||||||||||||||||||||||||||||||||||
| Aptean, Inc. | ^+# | (2)(3) | Software | L + 4.25% | 4.36% | 4/23/2026 | 12,250 | 12,199 | 12,121 | ||||||||||||||||||||||||||||||||||||||||||||
| Astra Acquisition Corp. | +# | (2)(3) | Software | L + 4.75% | 5.50% | 2/28/2027 | 28,782 | 28,405 | 28,443 | ||||||||||||||||||||||||||||||||||||||||||||
| Avalign Technologies, Inc. | +\ | (2)(3) | Healthcare & Pharmaceuticals | L + 4.50% | 4.69% | 12/22/2025 | 14,555 | 14,449 | 14,485 | ||||||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | + | (2)(3) | Sovereign & Public Finance | L + 5.25% | 6.25% | 9/28/2024 | 23,531 | 23,531 | 23,531 | ||||||||||||||||||||||||||||||||||||||||||||
| Big Ass Fans, LLC | +\# | (2)(3) | Capital Equipment | L + 3.75% | 4.75% | 5/21/2024 | 13,730 | 13,680 | 13,730 | ||||||||||||||||||||||||||||||||||||||||||||
| BK Medical Holding Company, Inc. | ^+ | (2)(3)(6) | Healthcare & Pharmaceuticals | L + 5.25% | 6.25% | 6/22/2024 | 24,104 | 23,905 | 23,650 | ||||||||||||||||||||||||||||||||||||||||||||
| Chemical Computing Group ULC (Canada) | ^+ | (2)(3)(6) | Software | L + 5.00% | 6.00% | 8/30/2023 | 14,019 | 13,402 | 14,019 | ||||||||||||||||||||||||||||||||||||||||||||
| Clearent Newco, LLC | ^ | (2)(3)(6) | High Tech Industries | L + 5.50% | 6.50% | 3/20/2025 | 29,423 | 29,187 | 29,423 | ||||||||||||||||||||||||||||||||||||||||||||
| Clearent Newco, LLC | +\ | (2)(3) | High Tech Industries | L + 6.50% | 7.50% | 3/20/2025 | 4,069 | 4,069 | 4,069 | ||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding LLC | ^ | (2) | Transportation: Cargo | 14.00% PIK | 14.00% | 3/26/2023 | 2,538 | 2,538 | 2,538 | ||||||||||||||||||||||||||||||||||||||||||||
| DecoPac, Inc. | ^+\ | (2)(3)(6) | Non-durable Consumer Goods | L + 4.25% | 5.25% | 9/29/2024 | 12,336 | 12,259 | 12,334 | ||||||||||||||||||||||||||||||||||||||||||||
| Diligent Corporation | ^+ | (2)(3)(6) | Telecommunications | L + 6.25% | 7.25% | 8/4/2025 | 8,661 | 8,399 | 8,738 | ||||||||||||||||||||||||||||||||||||||||||||
| DTI Holdco, Inc. | ^+\ | (2)(3) | High Tech Industries | L + 4.75% | 5.75% | 9/30/2023 | 18,641 | 18,566 | 17,860 | ||||||||||||||||||||||||||||||||||||||||||||
| Eliassen Group, LLC | +\ | (2)(3) | Business Services | L + 4.25% | 4.36% | 11/5/2024 | 7,533 | 7,509 | 7,496 | ||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^+ | (2)(3)(6) | Telecommunications | L + 5.75% | 6.75% | 6/7/2023 | 19,750 | 19,713 | 19,750 | ||||||||||||||||||||||||||||||||||||||||||||
| Exactech, Inc. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 3.75% | 4.75% | 2/14/2025 | 21,473 | 21,367 | 20,749 | ||||||||||||||||||||||||||||||||||||||||||||
| Excel Fitness Holdings, Inc. | +# | (2)(3) | Hotel, Gaming & Leisure | L + 5.25% | 6.25% | 10/7/2025 | 24,688 | 24,494 | 23,495 | ||||||||||||||||||||||||||||||||||||||||||||
| Frontline Technologies Holdings, LLC | + | (2)(3) | Software | L + 5.75% | 6.75% | 9/18/2023 | 14,849 | 14,214 | 14,980 | ||||||||||||||||||||||||||||||||||||||||||||
| Golden West Packaging Group LLC | +\ | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 6/20/2023 | 27,305 | 27,208 | 27,259 | ||||||||||||||||||||||||||||||||||||||||||||
| HMT Holding Inc. | +\ | (2)(3)(6) | Energy: Oil & Gas | L + 5.00% | 6.00% | 11/17/2023 | 32,737 | 32,404 | 32,001 | ||||||||||||||||||||||||||||||||||||||||||||
| Integrity Marketing Acquisition, LLC | ^+ | (2)(3)(6) | Banking, Finance, Insurance & Real Estate | L + 6.25% | 7.25% | 8/27/2025 | 8,495 | 8,381 | 8,615 | ||||||||||||||||||||||||||||||||||||||||||||
| Jensen Hughes, Inc. | +\ | (2)(3)(6) | Utilities: Electric | L + 4.50% | 5.50% | 3/22/2024 | 34,863 | 34,771 | 34,118 | ||||||||||||||||||||||||||||||||||||||||||||
| KAMC Holdings, Inc. | + | (2)(3) | Energy: Electricity | L + 4.00% | 4.19% | 8/14/2026 | 13,790 | 13,735 | 13,208 | ||||||||||||||||||||||||||||||||||||||||||||
| KBP Investments, LLC | ^+ | (2)(3)(6) | Beverage, Food & Tobacco | L + 5.00% | 6.00% | 5/15/2023 | 9,277 | 9,058 | 9,362 | ||||||||||||||||||||||||||||||||||||||||||||
| Marco Technologies, LLC | +\ | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.00% | 5.00% | 10/30/2023 | 7,332 | 7,313 | 7,332 | ||||||||||||||||||||||||||||||||||||||||||||
| Mold-Rite Plastics, LLC | +\ | (2)(3) | Chemicals, Plastics & Rubber | L + 4.25% | 5.25% | 12/14/2021 | 14,483 | 14,468 | 14,483 | ||||||||||||||||||||||||||||||||||||||||||||
| Newport Group Holdings II, Inc. | +\# | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 3.50% | 3.70% | 9/13/2025 | 23,415 | 23,235 | 23,389 | ||||||||||||||||||||||||||||||||||||||||||||
50
| Consolidated Schedule of Investments as of March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| Odyssey Logistics & Technology Corp. | +\# | (2)(3) | Transportation: Cargo | L + 4.00% | 5.00% | 10/12/2024 | $ | 33,328 | $ | 33,229 | $ | 32,652 | |||||||||||||||||||||||||||||||||||||||||
| Output Services Group | ^+\ | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.50% | 5.50% | 3/27/2024 | 19,371 | 19,335 | 15,128 | ||||||||||||||||||||||||||||||||||||||||||||
| Premise Health Holding Corp. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 3.50% | 3.70% | 7/10/2025 | 13,550 | 13,505 | 13,498 | ||||||||||||||||||||||||||||||||||||||||||||
| Propel Insurance Agency, LLC | ^+\ | (2)(3)(6) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 6/1/2024 | 37,562 | 37,123 | 37,403 | ||||||||||||||||||||||||||||||||||||||||||||
| Q Holding Company | +\# | (2)(3) | Automotive | L + 5.00% | 6.00% | 12/31/2023 | 21,680 | 21,554 | 20,355 | ||||||||||||||||||||||||||||||||||||||||||||
| QW Holding Corporation | + | (2)(3)(6) | Environmental Industries | L + 5.75% | 6.75% | 8/31/2022 | 11,536 | 11,455 | 10,706 | ||||||||||||||||||||||||||||||||||||||||||||
| Radiology Partners, Inc. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 4.25% | 4.79% | 7/9/2025 | 27,686 | 27,586 | 27,439 | ||||||||||||||||||||||||||||||||||||||||||||
| RevSpring Inc. | +\# | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.25% | 4.36% | 10/11/2025 | 29,374 | 29,199 | 29,216 | ||||||||||||||||||||||||||||||||||||||||||||
| Situs Group Holdings Corporation | +\ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 4.75% | 4.94% | 6/28/2025 | 14,744 | 14,656 | 14,642 | ||||||||||||||||||||||||||||||||||||||||||||
| Striper Buyer, LLC | + | (2)(3) | Containers, Packaging & Glass | L + 5.50% | 6.25% | 12/30/2026 | 14,963 | 14,815 | 14,813 | ||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^+ | (2)(3)(6) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2022 | 29,044 | 28,723 | 29,044 | ||||||||||||||||||||||||||||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | +\ | (2)(3)(6) | Beverage, Food & Tobacco | L + 4.50% | 5.50% | 7/20/2022 | 6,279 | 6,265 | 6,279 | ||||||||||||||||||||||||||||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | + | (2)(3) | Beverage, Food & Tobacco | L + 5.00% | 6.00% | 7/20/2022 | 8,815 | 8,796 | 8,815 | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. TelePacific Holdings Corp. | +\ | (2)(3) | Telecommunications | L + 5.50% | 6.50% | 5/2/2023 | 6,660 | 6,625 | 6,144 | ||||||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | + | (2)(3)(6) | Business Services | L + 6.50% | 7.50% | 3/31/2023 | 30,504 | 29,503 | 29,877 | ||||||||||||||||||||||||||||||||||||||||||||
| Water Holdings Acquisition LLC | ^+ | (2)(3)(6) | Utilities: Water | L + 5.25% | 6.25% | 12/18/2026 | 26,250 | 25,488 | 25,627 | ||||||||||||||||||||||||||||||||||||||||||||
| Welocalize, Inc. | + | (2)(3)(6) | Business Services | L + 4.50% | 5.50% | 12/23/2023 | 22,574 | 22,369 | 22,571 | ||||||||||||||||||||||||||||||||||||||||||||
| WRE Holding Corp. | ^+ | (2)(3)(6) | Environmental Industries | L + 5.50% | 6.50% | 1/3/2023 | 8,421 | 8,394 | 8,307 | ||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 964,843 | $ | 956,989 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (2.4% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | (2) | Transportation: Cargo | 10.00% PIK | 10.00% | 2/1/2026 | $ | 24,064 | $ | 23,729 | $ | 24,064 | |||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt Total | $ | 23,729 | $ | 24,064 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (0.2% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | Transportation: Cargo | 2,961 | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | Transportation: Cargo | 13,996 | 5,364 | 2,224 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments Total | $ | 5,364 | $ | 2,224 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total Investments | $ | 993,936 | $ | 983,277 | |||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into a revolving credit facility with the Company (the "Credit Fund Facility"). Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.
+ Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into a revolving credit facility (the “Credit Fund Sub Facility”). The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund, the 2019-2 Issuer or Credit Fund Warehouse II.
\ Denotes that all or a portion of the assets are owned by the 2019-2 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on May 21, 2019 (the “2019-2 Debt Securitization”). Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or Credit Fund Warehouse II.
# Denotes that all or a portion of the assets are owned by the Credit Fund Warehouse II. Credit Fund Warehouse II has entered into a revolving credit facility (the "Credit Fund Warehouse II Facility"). The lenders of the Credit Fund Warehouse II Facility have a first lien security interest in substantially all of the assets of the Credit Fund Warehouse II. Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or the 2019-2 Issuer.
(1)Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of March 31, 2021, the geographical composition of investments as a percentage of fair value was 3.0% in Canada and 97.0% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of March 31, 2021. As of March 31,
51
2021, the reference rates for Credit Fund’s variable rate loans were the 30-day LIBOR at 0.11%, the 90-day LIBOR at 0.19% and the 180-day LIBOR at 0.21%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements.
(6)As of March 31, 2021, Credit Fund and Credit Fund Sub had the following unfunded commitments to fund delayed draw and revolving senior secured loans:
| First Lien Debt – unfunded delayed draw and revolving term loans commitments | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| ACR Group Borrower, LLC | Revolver | 0.375% | $ | 7,350 | $ | (110) | |||||||||||||||||
| Analogic Corporation | Revolver | 0.50 | 1,975 | — | |||||||||||||||||||
| BK Medical Holding Company, Inc. | Revolver | 0.50 | 2,609 | (176) | |||||||||||||||||||
| Chemical Computing Group ULC (Canada) | Revolver | 0.50 | 873 | — | |||||||||||||||||||
| Clearent Newco, LLC | Delayed Draw | 1.00 | 2,549 | (66) | |||||||||||||||||||
| DecoPac, Inc. | Revolver | 0.50 | 2,143 | (3) | |||||||||||||||||||
| Diligent Corporation | Delayed Draw | 1.00 | 2,109 | 25 | |||||||||||||||||||
| Diligent Corporation | Revolver | 0.50 | 703 | 8 | |||||||||||||||||||
| EvolveIP, LLC | Delayed Draw | 1.00 | 1,904 | (2) | |||||||||||||||||||
| EvolveIP, LLC | Revolver | 0.50 | 1,680 | (2) | |||||||||||||||||||
| HMT Holding Inc. | Revolver | 0.50 | 6,173 | (291) | |||||||||||||||||||
| Integrity Marketing Acquisition, LLC | Delayed Draw | 1.00 | 3,464 | 46 | |||||||||||||||||||
| Jensen Hughes, Inc. | Delayed Draw | 1.00 | 1,127 | (35) | |||||||||||||||||||
| Jensen Hughes, Inc. | Revolver | 0.50 | 1,000 | (31) | |||||||||||||||||||
| KBP Investments, LLC | Delayed Draw | 1.00 | 503 | 1 | |||||||||||||||||||
| KBP Investments, LLC | Delayed Draw | 1.00 | 10,190 | 30 | |||||||||||||||||||
| Propel Insurance Agency, LLC | Revolver | 0.50 | 2,381 | (24) | |||||||||||||||||||
| Propel Insurance Agency, LLC | Delayed Draw | 1.00 | 1,733 | (17) | |||||||||||||||||||
| QW Holding Corporation | Revolver | 0.50 | 5,498 | (268) | |||||||||||||||||||
| QW Holding Corporation | Delayed Draw | 1.00 | 162 | (8) | |||||||||||||||||||
| T2 Systems, Inc. | Revolver | 0.50 | 1,955 | — | |||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | Revolver | 0.50 | 1,665 | (1) | |||||||||||||||||||
| VRC Companies, LLC | Revolver | 0.50 | 858 | — | |||||||||||||||||||
| Water Holdings Acquisition LLC | Delayed Draw | 1.00 | 8,421 | (126) | |||||||||||||||||||
| Water Holdings Acquisition LLC | Revolver | 0.50 | 5,263 | (79) | |||||||||||||||||||
| Welocalize, Inc. | Revolver | 0.50 | 1,800 | (3) | |||||||||||||||||||
| WRE Holding Corp. | Revolver | 0.50 | 778 | (9) | |||||||||||||||||||
| WRE Holding Corp. | Delayed Draw | 1.00 | 563 | (7) | |||||||||||||||||||
| Total unfunded commitments | $ | 77,429 | $ | (1,148) | |||||||||||||||||||
52
| Consolidated Schedule of Investments as of December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (97.5% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acrisure, LLC | \# | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 3.50% | 3.65% | 2/15/2027 | $ | 25,634 | $ | 25,606 | $ | 25,104 | |||||||||||||||||||||||||||||||||||||||||
| Alku, LLC | +# | (2)(3) | Business Services | L + 5.50% | 5.75% | 7/29/2026 | 23,666 | 23,466 | 23,512 | ||||||||||||||||||||||||||||||||||||||||||||
| Alpha Packaging Holdings, Inc. | +\ | (2)(3) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 11/12/2021 | 16,378 | 16,378 | 16,378 | ||||||||||||||||||||||||||||||||||||||||||||
| AmeriLife Holdings LLC | # | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 4.00% | 4.15% | 3/18/2027 | 9,951 | 9,929 | 9,802 | ||||||||||||||||||||||||||||||||||||||||||||
| Analogic Corporation | ^+ | (2)(3)(6) | Capital Equipment | L + 5.25% | 6.25% | 6/22/2024 | 18,857 | 18,837 | 18,857 | ||||||||||||||||||||||||||||||||||||||||||||
| Anchor Packaging, Inc. | +# | (2)(3) | Containers, Packaging & Glass | L + 4.00% | 4.15% | 7/18/2026 | 24,723 | 24,617 | 24,656 | ||||||||||||||||||||||||||||||||||||||||||||
| API Technologies Corp. | +\ | (2)(3) | Aerospace & Defense | L + 4.25% | 4.49% | 5/9/2026 | 14,775 | 14,713 | 13,999 | ||||||||||||||||||||||||||||||||||||||||||||
| Aptean, Inc. | +\ | (2)(3) | Software | L + 4.25% | 4.40% | 4/23/2026 | 12,281 | 12,227 | 12,077 | ||||||||||||||||||||||||||||||||||||||||||||
| AQA Acquisition Holding, Inc. | +\ | (2)(3)(6) | High Tech Industries | L + 4.25% | 5.25% | 5/24/2023 | 18,759 | 18,752 | 18,757 | ||||||||||||||||||||||||||||||||||||||||||||
| Astra Acquisition Corp. | +# | (2)(3) | Software | L + 5.50% | 6.50% | 3/1/2027 | 28,783 | 28,392 | 28,783 | ||||||||||||||||||||||||||||||||||||||||||||
| Avalign Technologies, Inc. | +\ | (2)(3) | Healthcare & Pharmaceuticals | L + 4.50% | 4.73% | 12/22/2025 | 14,592 | 14,481 | 14,334 | ||||||||||||||||||||||||||||||||||||||||||||
| Big Ass Fans, LLC | +\# | (2)(3) | Capital Equipment | L + 3.75% | 4.75% | 5/21/2024 | 13,766 | 13,714 | 13,766 | ||||||||||||||||||||||||||||||||||||||||||||
| BK Medical Holding Company, Inc. | ^+ | (2)(3)(6) | Healthcare & Pharmaceuticals | L + 5.25% | 6.25% | 6/22/2024 | 24,165 | 23,951 | 22,363 | ||||||||||||||||||||||||||||||||||||||||||||
| Chemical Computing Group ULC (Canada) | ^+ | (2)(3)(6) | Software | L + 5.00% | 6.00% | 8/30/2023 | 14,055 | 13,378 | 14,055 | ||||||||||||||||||||||||||||||||||||||||||||
| Clarity Telecom LLC. | + | Media: Broadcasting & Subscription | L + 4.25% | 4.40% | 8/30/2026 | 14,813 | 14,773 | 14,813 | |||||||||||||||||||||||||||||||||||||||||||||
| Clearent Newco, LLC | ^ | (2)(3)(6) | High Tech Industries | L + 6.50% | 7.50% | 3/20/2025 | 4,079 | 4,079 | 3,907 | ||||||||||||||||||||||||||||||||||||||||||||
| Clearent Newco, LLC | ^+\ | (2)(3) | High Tech Industries | L + 5.50% | 6.50% | 3/20/2025 | 29,486 | 29,236 | 28,722 | ||||||||||||||||||||||||||||||||||||||||||||
| DecoPac, Inc. | ^+\ | (2)(3)(6) | Non-durable Consumer Goods | L + 4.25% | 5.25% | 9/29/2024 | 12,336 | 12,253 | 12,318 | ||||||||||||||||||||||||||||||||||||||||||||
| Diligent Corporation | ^+ | (2)(3)(6) | Telecommunications | L + 6.25% | 7.25% | 8/4/2025 | 8,683 | 8,411 | 8,819 | ||||||||||||||||||||||||||||||||||||||||||||
| DTI Holdco, Inc. | ^+\ | (2)(3) | High Tech Industries | L + 4.75% | 5.75% | 9/30/2023 | 18,690 | 18,642 | 16,655 | ||||||||||||||||||||||||||||||||||||||||||||
| Eliassen Group, LLC | +\ | (2)(3) | Business Services | L + 4.25% | 4.40% | 11/5/2024 | 7,543 | 7,516 | 7,483 | ||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^+ | (2)(3)(6) | Telecommunications | L + 5.75% | 6.75% | 6/7/2023 | 19,800 | 19,759 | 19,775 | ||||||||||||||||||||||||||||||||||||||||||||
| Exactech, Inc. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 3.75% | 4.75% | 2/14/2025 | 21,528 | 21,416 | 20,422 | ||||||||||||||||||||||||||||||||||||||||||||
| Excel Fitness Holdings, Inc. | +# | (2)(3) | Hotel, Gaming & Leisure | L + 5.25% | 6.25% | 10/7/2025 | 24,750 | 24,546 | 22,780 | ||||||||||||||||||||||||||||||||||||||||||||
| Frontline Technologies Holdings, LLC | + | (2)(3) | Software | L + 5.75% | 6.75% | 9/18/2023 | 14,886 | 14,198 | 14,589 | ||||||||||||||||||||||||||||||||||||||||||||
| Golden West Packaging Group LLC | +\ | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 6/20/2023 | 29,012 | 28,896 | 28,974 | ||||||||||||||||||||||||||||||||||||||||||||
| HMT Holding Inc. | +\ | (2)(3)(6) | Energy: Oil & Gas | L + 5.00% | 6.00% | 11/17/2023 | 32,821 | 32,458 | 30,984 | ||||||||||||||||||||||||||||||||||||||||||||
| Integrity Marketing Acquisition, LLC | ^+ | (2)(3)(6) | Banking, Finance, Insurance & Real Estate | L + 6.25% | 7.25% | 8/27/2025 | 7,836 | 7,701 | 7,956 | ||||||||||||||||||||||||||||||||||||||||||||
| Jensen Hughes, Inc. | +\ | (2)(3)(6) | Utilities: Electric | L + 4.50% | 5.50% | 3/22/2024 | 34,584 | 34,489 | 33,424 | ||||||||||||||||||||||||||||||||||||||||||||
| KAMC Holdings, Inc. | +# | (2)(3) | Energy: Electricity | L + 4.00% | 4.23% | 8/14/2026 | 13,825 | 13,768 | 12,531 | ||||||||||||||||||||||||||||||||||||||||||||
| KBP Investments, LLC | ^+ | (2)(3)(6) | Beverage, Food & Tobacco | L + 5.00% | 6.00% | 5/15/2023 | 9,292 | 9,059 | 9,350 | ||||||||||||||||||||||||||||||||||||||||||||
| Marco Technologies, LLC | ^+\ | (2)(3)(6) | Media: Advertising, Printing & Publishing | L + 4.00% | 5.00% | 10/30/2023 | 7,332 | 7,293 | 7,332 | ||||||||||||||||||||||||||||||||||||||||||||
| Mold-Rite Plastics, LLC | +\ | (2)(3) | Chemicals, Plastics & Rubber | L + 4.25% | 5.25% | 12/14/2021 | $ | 14,520 | $ | 14,501 | $ | 14,520 | |||||||||||||||||||||||||||||||||||||||||
| Newport Group Holdings II, Inc. | +\# | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 3.50% | 3.75% | 9/13/2025 | 23,475 | 23,285 | 23,405 | ||||||||||||||||||||||||||||||||||||||||||||
| Odyssey Logistics & Technology Corp. | +\# | (2)(3) | Transportation: Cargo | L + 4.00% | 5.00% | 10/12/2024 | 38,897 | 38,773 | 37,766 | ||||||||||||||||||||||||||||||||||||||||||||
| Output Services Group | ^+\ | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.50% | 5.50% | 3/27/2024 | 19,421 | 19,382 | 14,178 | ||||||||||||||||||||||||||||||||||||||||||||
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| Consolidated Schedule of Investments as of December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| Pasternack Enterprises, Inc. | +\ | (2)(3) | Capital Equipment | L + 4.00% | 5.00% | 7/2/2025 | $ | 22,524 | $ | 22,513 | $ | 22,218 | |||||||||||||||||||||||||||||||||||||||||
| Pharmalogic Holdings Corp. | +\ | (2)(3) | Healthcare & Pharmaceuticals | L + 4.00% | 5.00% | 6/11/2023 | 11,205 | 11,189 | 11,158 | ||||||||||||||||||||||||||||||||||||||||||||
| Premise Health Holding Corp. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 3.50% | 3.75% | 7/10/2025 | 13,584 | 13,538 | 13,503 | ||||||||||||||||||||||||||||||||||||||||||||
| Propel Insurance Agency, LLC | ^+\ | (2)(3)(6) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 6/1/2024 | 38,134 | 37,662 | 37,716 | ||||||||||||||||||||||||||||||||||||||||||||
| Q Holding Company | +\# | (2)(3) | Automotive | L + 5.00% | 6.00% | 12/31/2023 | 21,735 | 21,604 | 20,229 | ||||||||||||||||||||||||||||||||||||||||||||
| QW Holding Corporation | + | (2)(3)(6) | Environmental Industries | L + 6.25% | 7.25% | 8/31/2022 | 11,566 | 11,465 | 10,727 | ||||||||||||||||||||||||||||||||||||||||||||
| Radiology Partners, Inc. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 4.25% | 4.81% | 7/9/2025 | 27,686 | 27,581 | 27,193 | ||||||||||||||||||||||||||||||||||||||||||||
| RevSpring Inc. | +\# | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.25% | 4.40% | 10/11/2025 | 29,449 | 29,265 | 29,199 | ||||||||||||||||||||||||||||||||||||||||||||
| Situs Group Holdings Corporation | +\ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 4.75% | 5.75% | 6/28/2025 | 14,781 | 14,689 | 14,636 | ||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^+ | (2)(3)(6) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2022 | 29,119 | 28,743 | 29,118 | ||||||||||||||||||||||||||||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | +\ | (2)(3)(6) | Beverage, Food & Tobacco | L + 4.50% | 5.50% | 7/20/2022 | 6,295 | 6,281 | 6,289 | ||||||||||||||||||||||||||||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | + | (2)(3) | Beverage, Food & Tobacco | L + 5.00% | 6.00% | 7/20/2022 | 8,837 | 8,815 | 8,829 | ||||||||||||||||||||||||||||||||||||||||||||
| Thoughtworks, Inc. | \# | (2)(3) | Business Services | L + 3.75% | 4.75% | 10/11/2024 | 11,704 | 11,683 | 11,704 | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. Acute Care Solutions, LLC | +\ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 5/15/2021 | 31,211 | 31,184 | 29,104 | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. TelePacific Holdings Corp. | +\ | (2)(3) | Telecommunications | L + 5.50% | 6.50% | 5/2/2023 | 26,660 | 26,585 | 23,984 | ||||||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | + | (2)(3)(6) | Business Services | L + 6.50% | 7.50% | 3/31/2023 | 30,582 | 29,464 | 30,582 | ||||||||||||||||||||||||||||||||||||||||||||
| Water Holdings Acquisition LLC | ^+ | (2)(3)(6) | Utilities: Water | L + 5.25% | 6.25% | 12/18/2026 | 26,316 | 25,520 | 25,516 | ||||||||||||||||||||||||||||||||||||||||||||
| Welocalize, Inc. | + | (2)(3)(6) | Business Services | L + 4.50% | 5.50% | 12/23/2023 | 22,629 | 22,414 | 22,584 | ||||||||||||||||||||||||||||||||||||||||||||
| WRE Holding Corp. | ^+ | (2)(3)(6) | Environmental Industries | L + 5.25% | 6.25% | 1/3/2023 | 8,367 | 8,336 | 8,252 | ||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 1,051,406 | $ | 1,029,687 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (2.3% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | (2) | Transportation: Cargo | 9.00% PIK | 9.00% | 2/1/2026 | $ | 24,113 | $ | 23,768 | $ | 24,113 | |||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt Total | $ | 23,768 | $ | 24,113 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (0.2%of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | Transportation: Cargo | 2,961 | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | Transportation: Cargo | 13,996 | 5,364 | 2,581 | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity Investments Total | $ | 5,364 | $ | 2,581 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total Investments | $ | 1,080,538 | $ | 1,056,381 | |||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into a revolving credit facility (the "Credit Fund Facility"). Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.
+ Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into a revolving credit facility (the “Credit Fund Sub Facility”). The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund, the 2019-2 Issuer or Credit Fund Warehouse II.
\ Denotes that all or a portion of the assets are owned by the 2019-2 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on May 21, 2019 (the “2019-2 Debt Securitization”). Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or Credit Fund Warehouse II.
# Denotes that all or a portion of the assets are owned by the Credit Fund Warehouse II. Credit Fund Warehouse II has entered into a revolving credit facility (the "Credit Fund Warehouse II"). The lenders of the Credit Fund Warehouse II Facility have a first lien security interest in substantially all of the assets of the Credit Fund Warehouse II. Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or 2019-2 Issuer.
(1)Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of December 31, 2020, the geographical composition of investments as a percentage of fair value was 2.8% in Canada and 97.2% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2020. As of
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December 31, 2020, the reference rates for Credit Fund's variable rate loans were the 30-day LIBOR at 0.15%, the 90-day LIBOR at 0.25% and the 180-day LIBOR at 0.26%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements, to these consolidated financial statements.
(6)As of December 31, 2020, Credit Fund and Credit Fund Sub had the following unfunded commitments to fund delayed draw and revolving senior secured loans:
| First Lien Debt—unfunded delayed draw and revolving term loans commitments | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| Analogic Corporation | Revolver | 0.50 | % | $ | 1,975 | $ | — | ||||||||||||||||
| AQA Acquisition Holding, Inc. | Revolver | 0.50 | 2,459 | — | |||||||||||||||||||
| BK Medical Holding Company, Inc. | Revolver | 0.50 | 2,609 | (176) | |||||||||||||||||||
| Chemical Computing Group ULC (Canada) | Revolver | 0.50 | 873 | — | |||||||||||||||||||
| Clearent Newco, LLC | Delayed Draw | 1.00 | 2,549 | (66) | |||||||||||||||||||
| DecoPac, Inc. | Revolver | 0.50 | 2,143 | (3) | |||||||||||||||||||
| Diligent Corporation | Delayed Draw | 1.00 | 2,109 | 25 | |||||||||||||||||||
| Diligent Corporation | Revolver | 0.50 | 703 | 8 | |||||||||||||||||||
| EvolveIP, LLC | Delayed Draw | 1.00 | 1,904 | (2) | |||||||||||||||||||
| EvolveIP, LLC | Revolver | 0.50 | 1,680 | (2) | |||||||||||||||||||
| HMT Holding Inc. | Revolver | 0.50 | 6,173 | (291) | |||||||||||||||||||
| Integrity Marketing Acquistion, LLC | Delayed Draw | 1.00 | 4,144 | 41 | |||||||||||||||||||
| Jensen Hughes, Inc. | Delayed Draw | 1.00 | 1,127 | (35) | |||||||||||||||||||
| Jensen Hughes, Inc. | Revolver | 0.50 | 1,364 | (43) | |||||||||||||||||||
| KBP Investments, LLC | Delayed Draw | 1.00 | 503 | 1 | |||||||||||||||||||
| KBP Investments, LLC | Delayed Draw | 1.00 | 10,190 | 30 | |||||||||||||||||||
| Marco Technologies, LLC | Delayed Draw | 1.00 | 7,500 | — | |||||||||||||||||||
| Propel Insurance Agency, LLC | Revolver | 0.50 | 1,905 | (19) | |||||||||||||||||||
| Propel Insurance Agency, LLC | Delayed Draw | 1.00 | 1,733 | (17) | |||||||||||||||||||
| QW Holding Corporation | Revolver | 0.50 | 5,498 | (268) | |||||||||||||||||||
| QW Holding Corporation | Delayed Draw | 1.00 | 161 | (8) | |||||||||||||||||||
| T2 Systems, Inc. | Revolver | 0.50 | 1,955 | — | |||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | Revolver | 0.50 | 1,665 | (1) | |||||||||||||||||||
| VRC Companies, LLC | Revolver | 0.50 | 858 | — | |||||||||||||||||||
| Water Holdings Acquisition LLC | Delayed Draw | 1.00 | 8,421 | (168) | |||||||||||||||||||
| Water Holdings Acquisition LLC | Revolver | 0.50 | 5,263 | (105) | |||||||||||||||||||
| Welocalize, Inc. | Revolver | 0.50 | 2,250 | (4) | |||||||||||||||||||
| WRE Holding Corp. | Revolver | 0.50 | 852 | (10) | |||||||||||||||||||
| WRE Holding Corp. | Delayed Draw | 1.00 | 563 | (7) | |||||||||||||||||||
| Total unfunded commitments | $ | 81,129 | $ | (1,120) | |||||||||||||||||||
Debt
Credit Fund Facilities
The Credit Fund, Credit Fund Sub and Credit Fund Warehouse II are party to separate credit facilities as described below. As of March 31, 2021 and December 31, 2020, Credit Fund, Credit Fund Sub and Credit Fund Warehouse II were in compliance with all covenants and other requirements of their respective credit facility agreements.
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Below is a summary of the borrowings and repayments under the credit facilities for the three month periods ended 2021 and 2020, and the outstanding balances under the credit facilities for the respective periods.
| Credit Fund Facility | Credit Fund Sub Facility | Credit Fund Warehouse II Facility | ||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||
| Three Month Periods Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| Outstanding balance, beginning of period | $ | — | $ | 93,000 | $ | 420,859 | $ | 343,506 | $ | 93,402 | $ | 97,571 | ||||||||||||||||||||||||||
| Borrowings | — | 63,500 | 63,000 | 57,000 | — | 19,794 | ||||||||||||||||||||||||||||||||
| Repayments | — | (156,500) | (120,738) | (33,500) | (10,222) | (21,950) | ||||||||||||||||||||||||||||||||
| Outstanding balance, end of period | $ | — | $ | — | $ | 363,121 | $ | 367,006 | $ | 83,180 | $ | 95,415 | ||||||||||||||||||||||||||
Credit Fund Facility. On June 24, 2016, Credit Fund entered into the Credit Fund Facility with the Company, which was subsequently amended on June 5, 2017, October 2, 2017, November 3, 2017, June 22, 2018, June 29, 2018, February 21, 2019, March 20, 2020 and February 22, 2021, pursuant to which Credit Fund may from time to time request mezzanine loans from the Company. The maximum principal amount of the Credit Fund Facility is $175,000. The maturity date of the Credit Fund Facility is May 21, 2022. Amounts borrowed under the Credit Fund Facility bear interest at a rate of LIBOR plus 9.00%.
Credit Fund Sub Facility. On June 24, 2016, Credit Fund Sub closed on the Credit Fund Sub Facility with lenders, which was subsequently amended on May 31, 2017, October 27, 2017, August 24, 2018, December 12, 2019, March 11, 2020 and May 3, 2021. The Credit Fund Sub Facility provides for secured borrowings during the applicable revolving period up to an amount equal to $640,000. The facility is secured by a first lien security interest in substantially all of the portfolio investments held by Credit Fund Sub. The maturity date of the Credit Fund Sub Facility is May 22, 2024. Amounts borrowed under the Credit Fund Sub Facility bear interest at a rate of LIBOR plus 2.25%.
Credit Fund Warehouse II Facility. On August 16, 2019, Credit Fund Warehouse II closed on a revolving credit facility (the "Credit Fund Warehouse II Facility") with lenders. The Credit Fund Warehouse II Facility provides for secured borrowings during the applicable revolving period up to an amount equal to $150,000. The Credit Fund Warehouse II Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Credit Fund Warehouse II Facility. The maturity date of the Credit Fund Warehouse II Facility is August 16, 2022. Amounts borrowed under the Credit Fund Warehouse II Facility bear interest at a rate of LIBOR plus 1.05% for the first 12 months, LIBOR plus 1.15% for the next 12 months, and LIBOR plus 1.50% in the final 12 months.
2017-1 Notes
On December 19, 2017, Credit Fund completed the 2017-1 Debt Securitization. The notes offered in the 2017-1 Debt Securitization (the “2017-1 Notes”) were issued by the 2017-1 Issuer, a wholly owned and consolidated subsidiary of Credit Fund, and are secured by a diversified portfolio of the 2017-1 Issuer consisting primarily of first and second lien senior secured loans. The 2017-1 Debt Securitization was executed through a private placement of the 2017-1 Notes, consisting of:
•$231,700 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.17%;
•$48,300 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 1.50%;
•$15,000 of A2/A Class B-1 Notes, which bear interest at the three-month LIBOR plus 2.25%;
•$9,000 of A2/A Class B-2 Notes which bear interest at 4.30%;
•$22,900 of Baa2/BBB Class C Notes which bear interest at the three-month LIBOR plus 3.20%; and
•$25,100 of Ba2/BB Class D Notes which bear interest at the three-month LIBOR plus 6.38%.
The 2017-1 Notes are scheduled to mature on January 15, 2028. Credit Fund received 100% of the preferred interests issued by the 2017-1 Issuer (the “2017-1 Issuer Preferred Interests”) on the closing date of the 2017-1 Debt Securitization in exchange for Credit Fund’s contribution to the 2017-1 Issuer of the initial closing date loan portfolio. The 2017-1 Issuer Preferred Interests do not bear interest and had a nominal value of $47,900 at closing.
The 2017-1 Notes were fully redeemed during the year ended December 31, 2020. As of the redemption date, the 2017-1 Issuer was in compliance with all covenants and other requirements of the indenture.
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2019-2 Notes
On May 21, 2019, Credit Fund completed the 2019-2 Debt Securitization. The notes offered in the 2019-2 Debt Securitization (the “2019-2 Notes”) were issued by the 2019-2 Issuer, a wholly owned and consolidated subsidiary of Credit Fund, and are secured by a diversified portfolio of the 2019-2 Issuer consisting primarily of first and second lien senior secured loans. The 2019-2 Debt Securitization was executed through a private placement of the 2019-2 Notes, consisting of:
•$233,000 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.50%;
•$48,000 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 2.40%;
•$23,000 of A2/A Class B Notes, which bear interest at the three-month LIBOR plus 3.45%;
•$27,000 of Baa2/BBB- Class C Notes which bear interest at the three-month LIBOR plus 4.55%; and
•$21,000 of Ba2/BB- Class D Notes which bear interest at the three-month LIBOR plus 8.03%.
The 2019-2 Notes are scheduled to mature on April 15, 2029. Credit Fund received 100% of the preferred interests issued by the 2019-2 Issuer (the “2019-2 Issuer Preferred Interests”) on the closing date of the 2019-2 Debt Securitization in exchange for Credit Fund’s contribution to the 2019-2 Issuer of the initial closing date loan portfolio. The 2019-2 Issuer Preferred Interests do not bear interest and had a nominal value of $48,300 at closing.
As of March 31, 2021 and December 31, 2020, the 2019-2 Issuer was in compliance with all covenants and other requirements of the indenture.
6. MIDDLE MARKET CREDIT FUND II, LLC
Overview
On November 3, 2020, the Company and CCLF entered into a limited liability company agreement to co-manage Credit Fund II, a Delaware limited liability company that is not consolidated in the Company's consolidated financial statements. Credit Fund II primarily invests in senior secured loans of middle market companies. Credit Fund II is managed by a four-member board, on which the Company and CCLF have equal representation. Establishing a quorum for Credit Fund II's board requires at least one of the Company's representatives and one of CCLF's representatives. The Company and CCLF have 84.13% and 15.87% economic ownership of Credit Fund II, respectively. By virtue of its membership interest, each of the Company and CCLF indirectly bears an allocable share of all expenses and other obligations of Credit Fund II.
Credit Fund II's initial portfolio consisted of 45 senior secured loans of middle market companies with an aggregate principal balance of approximately $250 million. Credit Fund II's initial portfolio was funded on November 3, 2020 with existing senior secured debt investments contributed by the Company and as part of the transaction, the Company determined that the contribution met the requirements under ASC 860, Transfers and Servicing.
Credit Fund II is expected to make only limited new investments in senior secured loans of middle market companies. Portfolio and investment decisions with respect to Credit Fund II must be unanimously approved by a quorum of Credit Fund II’s board members consisting of at least one of the Company's representatives and one of CCLF's representatives. Therefore, although the Company owns more than 25% of the voting securities of Credit Fund II, the Company does not believe that it has control over Credit Fund (other than for purposes of the Investment Company Act).
Middle Market Credit Fund II SPV, LLC (“Credit Fund II Sub”), a Delaware limited liability company, was formed on September 4, 2020. Credit Fund II Sub is a wholly owned subsidiary of Credit Fund II and is consolidated in Credit Fund II’s consolidated financial statements commencing from the date of its formation. Credit Fund II Sub primarily holds investments in first lien loans of middle market companies, which are pledged as security for the Credit Fund II Senior Notes (see below).
Credit Fund II, the Company and CCLF entered into an administration agreement with Carlyle Global Credit Administration L.L.C., the administrative agent of Credit Fund II (in such capacity, the “Credit Fund II Administrative Agent”), pursuant to which the Credit Fund II Administrative Agent is delegated certain administrative and non-discretionary functions, is authorized to enter into sub-administration agreements at the expense of Credit Fund II with the approval of the board of managers of Credit Fund II, and is reimbursed by Credit Fund II for its costs and expenses and Credit Fund II’s allocable portion of overhead incurred by the Credit Fund II Administrative Agent in performing its obligations thereunder.
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Credit Fund II Senior Notes
On November 3, 2020, Credit Fund II Sub closed on the Credit Fund II Senior Notes (the “Credit Fund II Senior Notes”) with lenders. The Credit Fund II Senior Notes provides for secured borrowings totaling $157,500 with two tranches, A-1 and A-2 outstanding. The facility is secured by a first lien security interest in substantially all of the portfolio investments held by Credit Fund II Sub. The maturity date of the Credit Fund II Senior Notes Sub Facility is November 3, 2030. Amounts issued for the Class A-1 notes totaled $147,500 and bear interest at a rate of LIBOR plus 2.70%, and amounts issued for the Class A-2 notes totaled $10,000 and bear interest at LIBOR plus 3.20%. The A-1 Notes were rated AAA, and the A-2 Notes were rated AA by DBRS Morningstar. The terms of the Credit Fund II Senior Notes provide that as loans pay down, up to $50,000 is available from principal proceeds for reinvestment, and then the investment principal proceeds are used to directly pay down the principal balance on the Credit Fund II Senior Notes. As of March 31, 2021 and December 31, 2020, Credit Fund II Sub was in compliance with all covenants and other requirements of its respective credit agreements.
Selected Financial Data
Since inception of Credit Fund II and through March 31, 2021, the Company and CCLF made capital contributions of $78,096 and $12,709 in members’ equity, respectively, to Credit Fund II. Below is certain summarized consolidated information for Credit Fund II as of March 31, 2021 and December 31, 2020.
| As of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Investments, at fair value (amortized cost of $246,772 and $245,312, respectively) | $ | 248,375 | $ | 246,421 | |||||||
| Cash and cash equivalents | 3,492 | 1,385 | |||||||||
| Other assets | 2,238 | 3,436 | |||||||||
| Total assets | $ | 254,105 | $ | 251,242 | |||||||
| LIABILITIES AND MEMBERS’ EQUITY | |||||||||||
| Notes payable, net of unamortized debt issuance costs of $857 and $875, respectively | $ | 156,643 | $ | 156,625 | |||||||
| Other liabilities | 4,859 | 2,675 | |||||||||
Total members' equity (1) | 92,603 | 91,942 | |||||||||
| Total liabilities and members’ equity | $ | 254,105 | $ | 251,242 | |||||||
(1) As of March 31, 2021 and December 31, 2020, the fair value of Company's ownership interest in the members' equity was $77,934 and $77,395, respectively.
| For the three month period ended | ||||||||
| March 31, 2021 | ||||||||
| (unaudited) | ||||||||
| Selected Consolidated Statement of Operations Information: | ||||||||
| Total investment income | $ | 4,563 | ||||||
| Expenses | ||||||||
| Interest and credit facility expenses | 1,201 | |||||||
| Other expenses | 191 | |||||||
| Total expenses | 1,392 | |||||||
| Net investment income (loss) | 3,171 | |||||||
| Net realized gain (loss) on investments | — | |||||||
| Net change in unrealized appreciation (depreciation) on investments | 494 | |||||||
| Net increase (decrease) resulting from operations | $ | 3,665 | ||||||
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Below is a summary of Credit Fund II’s portfolio, followed by a listing of the loans in Credit Fund II’s portfolio as of March 31, 2021 and December 31, 2020:
| As of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
Senior secured loans (1) | $ | 249,442 | $ | 248,172 | |||||||
Weighted average yields of senior secured loans based on amortized cost (2) | 7.26 | % | 7.32 | % | |||||||
Weighted average yields of senior secured loans based on fair value (2) | 7.21 | % | 7.29 | % | |||||||
| Number of portfolio companies in Credit Fund II | 42 | 44 | |||||||||
Average amount per portfolio company (1) | $ | 5,939 | $ | 5,640 | |||||||
Percentage of portfolio at floating interest rates (3) (4) | 99.1 | % | 99.1 | % | |||||||
Percentage of portfolio at fixed interest rates (4) | 0.9 | % | 0.9 | % | |||||||
| Fair value of loans with PIK provisions | $ | 8,892 | $ | 8,856 | |||||||
Percentage of portfolio with PIK provisions (4) | 3.6 | % | 3.6 | % | |||||||
(1)At par/principal amount.
(2)Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2021 and December 31, 2020. Weighted average yield on debt and income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at fair value included in such securities. Weighted average yield on debt and income producing securities at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.
(3)Floating rate debt investments are generally subject to interest rate floors.
(4)Percentages based on fair value.
| Consolidated Schedule of Investments as of March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (90.5% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Airnov, Inc. | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 12/19/2025 | $ | 1,496 | $ | 1,478 | $ | 1,493 | |||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^ | (2)(3) | High Tech Industries | L + 5.75% | 6.75% | 11/16/2022 | 4,411 | 4,392 | 4,342 | ||||||||||||||||||||||||||||||||||||||||||||
| American Physician Partners, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.75% | 7.75% | 12/21/2021 | 8,629 | 8,595 | 8,371 | ||||||||||||||||||||||||||||||||||||||||||||
| AMS Group HoldCo, LLC | ^ | (2)(3) | Transportation: Cargo | L + 6.50% | 7.50% | 9/29/2023 | 8,169 | 8,091 | 8,157 | ||||||||||||||||||||||||||||||||||||||||||||
| Apptio, Inc. | ^ | (2)(3) | Software | L + 7.25% | 8.25% | 1/10/2025 | 5,357 | 5,282 | 5,397 | ||||||||||||||||||||||||||||||||||||||||||||
| Aurora Lux FinCo S.Á.R.L. (Luxembourg) | ^ | (2)(3) | Software | L + 6.00% | 7.00% | 12/24/2026 | $ | 4,389 | $ | 4,295 | $ | 3,971 | |||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | ^ | (2)(3) | Sovereign & Public Finance | L + 5.25% | 6.25% | 9/28/2024 | 995 | 985 | 995 | ||||||||||||||||||||||||||||||||||||||||||||
| BMS Holdings III Corp. | ^ | (2)(3) | Construction & Building | L + 5.25% | 6.25% | 9/30/2026 | 3,300 | 3,233 | 3,270 | ||||||||||||||||||||||||||||||||||||||||||||
| Captive Resources Midco, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/31/2025 | 8,324 | 8,220 | 8,396 | ||||||||||||||||||||||||||||||||||||||||||||
| Chartis Holding, LLC | ^ | (2)(3) | Business Services | L + 5.25% | 6.25% | 5/1/2025 | 1,492 | 1,471 | 1,492 | ||||||||||||||||||||||||||||||||||||||||||||
| Comar Holding Company, LLC | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 6/18/2024 | 8,776 | 8,676 | 8,776 | ||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^ | (2)(3) | Software | L + 5.25% | 6.25% | 7/2/2026 | 8,777 | 8,639 | 8,817 | ||||||||||||||||||||||||||||||||||||||||||||
| Ensono, LP | ^ | (2)(3) | Telecommunications | L + 5.25% | 5.36% | 6/27/2025 | 6,276 | 6,232 | 6,227 | ||||||||||||||||||||||||||||||||||||||||||||
| Ethos Veterinary Health LLC | ^ | (2)(3) | Consumer Services | L + 4.75% | 4.86% | 5/15/2026 | 8,170 | 8,108 | 8,118 | ||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^ | (2)(3) | Telecommunications | L + 5.75% | 6.75% | 6/7/2023 | 8,777 | 8,763 | 8,777 | ||||||||||||||||||||||||||||||||||||||||||||
| K2 Insurance Services, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 7/1/2024 | 6,894 | 6,800 | 6,902 | ||||||||||||||||||||||||||||||||||||||||||||
| Kaseya, Inc. | ^ | (2)(3) | High Tech Industries | L + 4.00%, 3.00% PIK | 8.00% | 5/2/2025 | 8,892 | 8,765 | 8,892 | ||||||||||||||||||||||||||||||||||||||||||||
59
| Consolidated Schedule of Investments as of March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| Mailgun Technologies, Inc. | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 3/26/2025 | 8,457 | 8,332 | 8,379 | ||||||||||||||||||||||||||||||||||||||||||||
| National Technical Systems, Inc. | ^ | (2)(3) | Aerospace & Defense | L + 5.50% | 6.50% | 6/12/2023 | 8,800 | 8,780 | 8,800 | ||||||||||||||||||||||||||||||||||||||||||||
| NMI AcquisitionCo, Inc. | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 9/6/2023 | 8,776 | 8,719 | 8,810 | ||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^ | (2)(3) | Capital Equipment | L + 4.50% | 5.50% | 5/3/2025 | 1,000 | 993 | 994 | ||||||||||||||||||||||||||||||||||||||||||||
| PPC Flexible Packaging, LLC | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 11/23/2024 | 4,389 | 4,349 | 4,389 | ||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | ^ | (2)(3) | High Tech Industries | L + 6.00% | 7.00% | 6/6/2023 | 3,291 | 3,273 | 3,291 | ||||||||||||||||||||||||||||||||||||||||||||
| Reladyne, Inc. | ^ | (2)(3) | Wholesale | L + 5.00% | 6.00% | 7/22/2022 | 6,484 | 6,439 | 6,458 | ||||||||||||||||||||||||||||||||||||||||||||
| Riveron Acquisition Holdings, Inc. | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/22/2025 | 8,236 | 8,117 | 8,318 | ||||||||||||||||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.50% | 6.50% | 11/1/2026 | 8,465 | 8,325 | 8,508 | ||||||||||||||||||||||||||||||||||||||||||||
| Smile Doctors, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 10/6/2022 | 6,493 | 6,491 | 6,493 | ||||||||||||||||||||||||||||||||||||||||||||
| Sovos Brands Intermediate, Inc. | ^ | (2)(3) | Beverage, Food & Tobacco | L + 4.75% | 4.98% | 11/20/2025 | 7,355 | 7,311 | 7,316 | ||||||||||||||||||||||||||||||||||||||||||||
| Superior Health Linens, LLC | ^ | (2)(3) | Business Services | L + 6.50% | 7.50% | 9/30/2021 | 7,024 | 7,010 | 7,016 | ||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^ | (2)(3) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2022 | 8,776 | 8,702 | 8,776 | ||||||||||||||||||||||||||||||||||||||||||||
| TCFI Aevex LLC | ^ | (2)(3) | Aerospace & Defense | L + 6.00% | 7.00% | 3/18/2026 | 1,714 | 1,685 | 1,711 | ||||||||||||||||||||||||||||||||||||||||||||
| TSB Purchaser, Inc. | ^ | (2)(3) | Media: Advertising, Printing & Publishing | L + 6.00% | 7.00% | 5/14/2024 | 8,777 | 8,649 | 8,734 | ||||||||||||||||||||||||||||||||||||||||||||
| Turbo Buyer, Inc. | ^ | (2)(3) | Automotive | L + 5.50% | 6.50% | 12/2/2025 | 8,153 | 7,988 | 8,235 | ||||||||||||||||||||||||||||||||||||||||||||
| US INFRA SVCS Buyer, LLC | ^ | (2)(3) | Environmental Industries | L + 6.00% | 7.00% | 4/13/2026 | 3,292 | 3,235 | 3,249 | ||||||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | ^ | (2)(3) | Business Services | L + 6.50% | 7.50% | 3/31/2023 | 4,300 | 4,264 | 4,214 | ||||||||||||||||||||||||||||||||||||||||||||
| Zemax Software Holdings, LLC | ^ | (2)(3) | Software | L + 5.75% | 6.75% | 6/25/2024 | 4,388 | 4,354 | 4,318 | ||||||||||||||||||||||||||||||||||||||||||||
| Zenith Merger Sub, Inc. | ^ | (2)(3) | Business Services | L + 5.25% | 6.25% | 12/13/2023 | 4,389 | 4,360 | 4,382 | ||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 223,401 | $ | 224,784 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (9.5% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AI Convoy S.A.R.L (United Kingdom) | ^ | (2)(3) | Aerospace & Defense | L + 8.25% | 9.25% | 1/17/2028 | $ | 5,514 | $ | 5,404 | $ | 5,714 | |||||||||||||||||||||||||||||||||||||||||
| Quartz Holding Company | ^ | (2)(3) | Software | L + 8.00% | 8.11% | 4/2/2027 | $ | 4,852 | $ | 4,773 | $ | 4,900 | |||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | ^ | (2)(3) | Capital Equipment | L + 8.25% | 8.36% | 3/26/2027 | 5,514 | 5,439 | 5,552 | ||||||||||||||||||||||||||||||||||||||||||||
| Ultimate Baked Goods MIDCO, LLC | ^ | (2)(3) | Beverage, Food & Tobacco | L + 8.00% | 9.00% | 8/9/2026 | 5,514 | 5,431 | 5,083 | ||||||||||||||||||||||||||||||||||||||||||||
| World 50, Inc. | ^ | (6) | Business Services | 11.50% | 11.50% | 1/9/2027 | 2,365 | 2,324 | 2,342 | ||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt Total | $ | 23,371 | $ | 23,591 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total Investments | $ | 246,772 | $ | 248,375 | |||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by Credit Fund II Sub. Credit Fund II Sub has entered into the Credit Fund II Sub Notes. The lenders of the Credit Fund II Sub Notes have a first lien security interest in substantially all of the assets of Credit Fund II Sub. Accordingly, such assets are not available to creditors of Credit Fund II.
(1) Unless otherwise indicated, issuers of investments held by Credit Fund II are domiciled in the United States. As of March 31, 2021, the geographical composition of investments as a percentage of fair value was 3.5% in Canada, 1.6% in Luxembourg, 2.3% in the United Kingdom and 92.6% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund II has indicated the reference rate used and provided the spread and the interest rate in effect as of March 31, 2021. As of March 31, 2021, the reference rates for Credit Fund II's variable rate loans were the 30-day LIBOR at 0.11%, the 90-day LIBOR at 0.19% and the 180-day LIBOR at 0.21%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
60
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund II, pursuant to Credit Fund II’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements, to these consolidated financial statements.
(6)Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company.
61
| Consolidated Schedule of Investments as of December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (90.10% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Airnov, Inc. | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 12/19/2025 | $ | 1,500 | $ | 1,481 | $ | 1,501 | |||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^ | (2)(3) | High Tech Industries | L + 5.75% | 6.75% | 11/16/2022 | 4,411 | 4,390 | 4,378 | ||||||||||||||||||||||||||||||||||||||||||||
| American Physician Partners, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.75% | 7.75% | 12/21/2021 | 8,725 | 8,679 | 8,265 | ||||||||||||||||||||||||||||||||||||||||||||
| AMS Group HoldCo, LLC | ^ | (2)(3) | Transportation: Cargo | L + 6.50% | 7.50% | 9/29/2023 | 8,182 | 8,096 | 8,079 | ||||||||||||||||||||||||||||||||||||||||||||
| Apptio, Inc. | ^ | (2)(3) | Software | L + 7.25% | 8.25% | 1/10/2025 | 5,357 | 5,278 | 5,437 | ||||||||||||||||||||||||||||||||||||||||||||
| Aurora Lux FinCo S.Á.R.L. (Luxembourg) | ^ | (2)(3) | Software | L + 5.75% | 6.75% | 12/24/2026 | 4,400 | 4,303 | 4,018 | ||||||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | ^ | (2)(3) | Sovereign & Public Finance | L + 5.25% | 6.25% | 9/28/2024 | 997 | 987 | 997 | ||||||||||||||||||||||||||||||||||||||||||||
| BMS Holdings III Corp. | ^ | (2)(3) | Construction & Building | L + 5.25% | 6.25% | 9/30/2026 | 3,308 | 3,239 | 3,270 | ||||||||||||||||||||||||||||||||||||||||||||
| Captive Resources Midco, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/31/2025 | 8,406 | 8,297 | 8,463 | ||||||||||||||||||||||||||||||||||||||||||||
| Chartis Holding, LLC | ^ | (2)(3) | Business Services | L + 5.50% | 6.50% | 5/1/2025 | 1,496 | 1,474 | 1,497 | ||||||||||||||||||||||||||||||||||||||||||||
| Comar Holding Company, LLC | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 6/18/2024 | 8,799 | 8,692 | 8,832 | ||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^ | (2)(3) | Software | L + 5.25% | 6.25% | 7/2/2026 | 8,800 | 8,655 | 8,862 | ||||||||||||||||||||||||||||||||||||||||||||
| Ensono, LP | ^ | (2)(3) | Telecommunications | L + 5.25% | 5.40% | 6/27/2025 | 6,292 | 6,246 | 6,245 | ||||||||||||||||||||||||||||||||||||||||||||
| Ethos Veterinary Health LLC | ^ | (2)(3) | Consumer Services | L + 4.75% | 4.90% | 5/15/2026 | 8,182 | 8,117 | 8,070 | ||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^ | (2)(3) | Telecommunications | L + 5.75% | 6.75% | 6/7/2023 | 8,799 | 8,784 | 8,790 | ||||||||||||||||||||||||||||||||||||||||||||
| Innovative Business Services, LLC | ^ | (2)(3) | High Tech Industries | L + 5.50% | 6.50% | 4/5/2023 | 2,200 | 2,162 | 2,159 | ||||||||||||||||||||||||||||||||||||||||||||
| K2 Insurance Services, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 7/1/2024 | 6,927 | 6,827 | 6,928 | ||||||||||||||||||||||||||||||||||||||||||||
| Kaseya, Inc. | ^ | (2)(3) | High Tech Industries | L + 4.00%, 3.00% PIK | 8.00% | 5/2/2025 | 8,822 | 8,688 | 8,856 | ||||||||||||||||||||||||||||||||||||||||||||
| Mailgun Technologies, Inc. | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 3/26/2025 | 8,478 | 8,347 | 8,330 | ||||||||||||||||||||||||||||||||||||||||||||
| National Technical Systems, Inc. | ^ | (2)(3) | Aerospace & Defense | L + 5.50% | 6.50% | 6/12/2023 | 8,800 | 8,778 | 8,733 | ||||||||||||||||||||||||||||||||||||||||||||
| NMI AcquisitionCo, Inc. | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 9/6/2022 | 8,799 | 8,732 | 8,711 | ||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^ | (2)(3) | Capital Equipment | L + 4.50% | 5.50% | 5/3/2025 | 1,000 | 992 | 980 | ||||||||||||||||||||||||||||||||||||||||||||
| PPC Flexible Packaging, LLC | ^ | (2)(3) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 11/23/2024 | 4,400 | 4,358 | 4,386 | ||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | ^ | (2)(3) | High Tech Industries | L + 6.00% | 7.00% | 6/6/2023 | 3,300 | 3,279 | 3,291 | ||||||||||||||||||||||||||||||||||||||||||||
| Reladyne, Inc. | ^ | (2)(3) | Wholesale | L + 5.00% | 6.00% | 7/22/2022 | 6,484 | 6,431 | 6,514 | ||||||||||||||||||||||||||||||||||||||||||||
| Riveron Acquisition Holdings, Inc. | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/22/2025 | 8,257 | 8,131 | 8,312 | ||||||||||||||||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.50% | 6.50% | 11/1/2026 | 8,487 | 8,341 | 8,572 | ||||||||||||||||||||||||||||||||||||||||||||
| Smile Doctors, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 10/6/2022 | 6,509 | 6,507 | 6,379 | ||||||||||||||||||||||||||||||||||||||||||||
| Sovos Brands Intermediate, Inc. | ^ | (2)(3) | Beverage, Food & Tobacco | L + 4.75% | 4.96% | 11/20/2025 | 2,200 | 2,182 | 2,181 | ||||||||||||||||||||||||||||||||||||||||||||
| Superior Health Linens, LLC | ^ | (2)(3) | Business Services | L + 6.50% | 7.50% | 9/30/2021 | 7,199 | 7,178 | 7,162 | ||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^ | (2)(3) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2022 | 8,799 | 8,713 | 8,799 | ||||||||||||||||||||||||||||||||||||||||||||
| TCFI Aevex LLC | ^ | (2)(3) | Aerospace & Defense | L + 6.00% | 7.00% | 3/18/2026 | 1,718 | 1,688 | 1,712 | ||||||||||||||||||||||||||||||||||||||||||||
| TSB Purchaser, Inc. | ^ | (2)(3) | Media: Advertising, Printing & Publishing | L + 6.00% | 7.00% | 5/14/2024 | 8,799 | 8,663 | 8,729 | ||||||||||||||||||||||||||||||||||||||||||||
| Turbo Buyer, Inc. | ^ | (2)(3) | Automotive | L + 5.25% | 6.25% | 12/2/2025 | 8,174 | 8,001 | 8,249 | ||||||||||||||||||||||||||||||||||||||||||||
62
| Consolidated Schedule of Investments as of December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| US INFRA SVCS Buyer, LLC | ^ | (2)(3) | Environmental Industries | L + 6.00% | 7.00% | 4/13/2026 | $ | 3,300 | $ | 3,240 | $ | 3,292 | |||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | ^ | (2)(3) | Business Services | L + 6.50% | 7.50% | 3/31/2023 | 4,311 | 4,271 | 4,311 | ||||||||||||||||||||||||||||||||||||||||||||
| Zemax Software Holdings, LLC | ^ | (2)(3) | Software | L + 5.75% | 6.75% | 6/25/2024 | 4,400 | 4,363 | 4,294 | ||||||||||||||||||||||||||||||||||||||||||||
| Zenith Merger Sub, Inc. | ^ | (2)(3) | Business Services | L + 5.25% | 6.25% | 12/13/2023 | 4,399 | 4,370 | 4,367 | ||||||||||||||||||||||||||||||||||||||||||||
First Lien Debt Total | $ | 220,960 | $ | 221,951 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (9.90% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AI Convoy S.A.R.L (United Kingdom) | ^ | (2)(3) | Aerospace & Defense | L + 8.25% | 9.25% | 1/17/2028 | $ | 5,514 | $ | 5,401 | $ | 5,676 | |||||||||||||||||||||||||||||||||||||||||
| AQA Acquisition Holding, Inc. | ^ | (2)(3) | High Tech Industries | L + 8.00% | 9.00% | 5/24/2024 | 1,000 | 993 | 1,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Quartz Holding Company | ^ | (2)(3) | Software | L + 8.00% | 8.15% | 4/2/2027 | 4,852 | 4,771 | 4,815 | ||||||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | ^ | (2)(3) | Capital Equipment | L + 8.25% | 8.40% | 3/26/2027 | 5,514 | 5,436 | 5,394 | ||||||||||||||||||||||||||||||||||||||||||||
| Ultimate Baked Goods MIDCO, LLC | ^ | (2)(3) | Beverage, Food & Tobacco | L + 8.00% | 9.00% | 8/9/2026 | 5,514 | 5,428 | 5,257 | ||||||||||||||||||||||||||||||||||||||||||||
| World 50, Inc. | (6) | Business Services | 11.50% | 11.50% | 1/9/2027 | 2,365 | 2,323 | 2,328 | |||||||||||||||||||||||||||||||||||||||||||||
Second Lien Debt Total | $ | 24,352 | $ | 24,470 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total Investments | $ | 245,312 | $ | 246,421 | |||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by Credit Fund II Sub. Credit Fund II Sub has entered into the Credit Fund II Sub Notes. The lenders of the Credit Fund II Sub Notes have a first lien security interest in substantially all of the assets of Credit Fund II Sub. Accordingly, such assets are not available to creditors of Credit Fund II.
(1) Unless otherwise indicated, issuers of investments held by Credit Fund II are domiciled in the United States. As of December 31, 2020, the geographical composition of investments as a percentage of fair value was 3.6% in Canada, 1.6% in Luxembourg, 2.3% in the United Kingdom and 92.5% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund II has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2020. As of December 31, 2020, the reference rates for Credit Fund II's variable rate loans were the 30-day LIBOR at 0.15%, the 90-day LIBOR at 0.25% and the 180-day LIBOR at 0.26%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund II, pursuant to Credit Fund II’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements, to these consolidated financial statements.
(6)Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company.
7. BORROWINGS
The Company is party to the Credit Facility and, until its termination on December 11, 2020, the SPV was party to the SPV Credit Facility as described below. In accordance with the Investment Company Act, the Company is currently only allowed to borrow amounts such that its asset coverage, as defined in the Investment Company Act, is at least 150% after such borrowing. For the purposes of the asset coverage ratio under the Investment Company Act, the Preferred Stock, as defined in Note 1, is considered a senior security and is included in the denominator of the calculation. As of March 31, 2021 and December 31, 2020, asset coverage was 186.17% and 182.09%, respectively.
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Below is a summary of the borrowings and repayments under the credit facilities for the three month periods ended March 31, 2021 and 2020, and the outstanding balances under the Facilities for the respective periods.
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Outstanding Borrowing, beginning of period | $ | 347,949 | $ | 616,543 | |||||||
| Borrowings | 40,286 | 226,500 | |||||||||
| Repayments | (79,000) | (139,443) | |||||||||
| Foreign currency translation | 162 | (1,991) | |||||||||
| Outstanding balance, end of period | $ | 309,397 | $ | 701,609 | |||||||
SPV Credit Facility
The SPV closed on the SPV Credit Facility on May 24, 2013, which was subsequently amended on June 30, 2014, June 19, 2015, June 9, 2016, May 26, 2017 and August 9, 2018. On December 11, 2020, the SPV repaid all outstanding amounts under the SPV Credit Facility and the facility was terminated. The SPV Credit Facility provided for secured borrowings during the applicable revolving period up to an amount equal to the lesser of $275,000, subject to restrictions imposed on borrowings under the Investment Company Act and certain restrictions and conditions set forth in the SPV Credit Facility, including adequate collateral to support such borrowings. The SPV Credit Facility had a revolving period through May 21, 2021 and a maturity date of May 23, 2023. Borrowings under the SPV Credit Facility bore interest initially at the applicable commercial paper rate (if the lender is a conduit lender) or LIBOR (or, if applicable, a rate based on the prime rate or federal funds rate) plus 2.00% per year. The SPV was also required to pay an undrawn commitment fee of between 0.50% and 0.75% per year depending on the drawings under the SPV Credit Facility. Payments under the SPV Credit Facility were made quarterly. The lenders had a first lien security interest on substantially all of the assets of the SPV.
Credit Facility
The Company closed on the Credit Facility on March 21, 2014, which was subsequently amended on January 8, 2015, May 25, 2016, March 22, 2017, September 25, 2018, June 14, 2019, and October 28, 2020. The maximum principal amount of the Credit Facility is $688,000, subject to availability under the Credit Facility, which is based on certain advance rates multiplied by the value of the Company’s portfolio investments (subject to certain concentration limitations) net of certain other indebtedness that the Company may incur in accordance with the terms of the Credit Facility. Proceeds of the Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. Maximum capacity under the Credit Facility may be increased to $900,000 through the exercise by the Company of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Credit Facility includes a $50,000 limit for swingline loans and a $20,000 limit for letters of credit. The Company may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Credit Facility, including amounts drawn in respect of letters of credit, bear interest at either LIBOR plus an applicable spread of 2.25%, or an “alternative base rate” (which is the highest of a prime rate, the federal funds effective rate plus 0.50%, or one month LIBOR plus 1.00%) plus an applicable spread of 1.25%. The Company may elect either the LIBOR or the “alternative base rate” at the time of drawdown, and loans may be converted from one rate to another at any time, subject to certain conditions. The Company also pays a fee of 0.375% on undrawn amounts under the Credit Facility and, in respect of each undrawn letter of credit, a fee and interest rate equal to the then-applicable margin under the Credit Facility while the letter of credit is outstanding. The availability period under the Credit Facility will terminate on October 28, 2024 and the Credit Facility will mature on October 28, 2025. During the period from October 29, 2024 to October 28, 2025, the Company will be obligated to make mandatory prepayments under the Credit Facility out of the proceeds of certain asset sales, other recovery events and equity and debt issuances.
Subject to certain exceptions, the Credit Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Company. The Credit Facility includes customary covenants, including certain financial covenants related to asset coverage, shareholders’ equity and liquidity, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature. As of March 31, 2021 and December 31, 2020, the Company was in compliance with all covenants and other requirements of its credit facility agreements.
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Summary of Facilities
The Facilities consisted of the following as of March 31, 2021 and December 31, 2020:
| March 31, 2021 | |||||||||||||||||||||||
| Total Facility | Borrowings Outstanding | Unused Portion (1) | Amount Available (2) | ||||||||||||||||||||
| Credit Facility | $ | 688,000 | $ | 309,397 | $ | 378,603 | $ | 358,091 | |||||||||||||||
| Total | $ | 688,000 | $ | 309,397 | $ | 378,603 | $ | 358,091 | |||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||
| Total Facility | Borrowings Outstanding | Unused Portion (1) | Amount Available (2) | ||||||||||||||||||||
| Credit Facility | $ | 688,000 | $ | 347,949 | $ | 340,051 | $ | 207,365 | |||||||||||||||
| Total | $ | 688,000 | $ | 347,949 | $ | 340,051 | $ | 207,365 | |||||||||||||||
(1)The unused portion is the amount upon which commitment fees are based.
(2)Available for borrowing based on the computation of collateral to support the borrowings and subject to compliance with applicable covenants and financial ratios.
For the three month periods ended March 31, 2021 and 2020, the components of interest expense and credit facility fees were as follows:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Interest expense | $ | 2,033 | $ | 6,373 | |||||||
| Facility unused commitment fee | 328 | 318 | |||||||||
| Amortization of deferred financing costs | 191 | 244 | |||||||||
| Other fees | — | 29 | |||||||||
| Total interest expense and credit facility fees | $ | 2,552 | $ | 6,964 | |||||||
| Cash paid for interest expense | $ | 1,985 | $ | 6,688 | |||||||
| Average principal debt outstanding | $ | 340,357 | $ | 672,263 | |||||||
| Weighted average interest rate | 2.39 | % | 3.75 | % | |||||||
As of March 31, 2021 and December 31, 2020, the components of interest and credit facilities payable were as follows:
| As of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| Interest expense payable | $ | 165 | $ | 119 | |||||||
| Unused commitment fees payable | 4 | 4 | |||||||||
| Other credit facility fees payable | 4 | 14 | |||||||||
| Interest and credit facilities payable | $ | 173 | $ | 137 | |||||||
| Weighted average interest rate (based on floating LIBOR rates) | 2.37 | % | 2.59 | % | |||||||
8. NOTES PAYABLE
Senior Notes
On December 30, 2019, the Company closed a private offering of $115.0 million in aggregate principal amount of 4.750% Senior Unsecured Notes due December 31, 2024 (the "2019 Notes"). Interest is payable quarterly, beginning March 31, 2020. On December 11, 2020, the Company issued an additional $75.0 million aggregate principal amount of senior unsecured
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notes due December 31, 2024 (the "2020 Notes", and together with the 2019 Notes, the "Senior Notes"). The 2020 Notes bear interest at an interest rate of 4.500% and the interest is payable quarterly, beginning December 31, 2020.
The interest rate on the Senior Notes is subject to increase (up to an additional 1.00% over the stated rate of such notes) in the event that, subject to certain exceptions, the Senior Notes cease to have an investment grade rating. The Company is obligated to offer to repay the notes at par if certain change in control events occur. The Senior Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company. Interest expense on the Senior Notes for the three months ended March 31, 2021 and 2020 was $2,209 and $1,400, respectively.
The note purchase agreement for the Senior Notes contains customary terms and conditions for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a business development company within the meaning of the Investment Company Act and a regulated investment company under the Code, minimum asset coverage ratio and interest coverage ratio, and prohibitions on certain fundamental changes at the Company or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, breach of covenant, material breach of representation or warranty under the note purchase agreement, cross-acceleration under other indebtedness of the Company or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy. As of March 31, 2021, the Company was in compliance with these terms and conditions.
2015-1R Notes
On June 26, 2015, the Company completed the 2015-1 Debt Securitization. The 2015-1 Notes were issued by the 2015-1 Issuer, a wholly-owned and consolidated subsidiary of the Company. The 2015-1 Debt Securitization was executed through a private placement of the 2015-1 Notes, consisting of:
•$160,000 of Aaa/AAA Class A-1A Notes;
•$40,000 of Aaa/AAA Class A-1B Notes;
•$27,000 of Aaa/AAA Class A-1C Notes; and
•$46,000 of Aa2 Class A-2 Notes.
The 2015-1 Notes were issued at par and were scheduled to mature on July 15, 2027. The Company received 100% of the preferred interests issued by the 2015-1 Issuer (the “2015-1 Issuer Preferred Interests”) on the closing date of the 2015-1 Debt Securitization in exchange for the Company’s contribution to the 2015-1 Issuer of the initial closing date loan portfolio. The 2015-1 Issuer Preferred Interests do not bear interest and had a nominal value of $125,900 at closing. In connection with the contribution, the Company made customary representations, warranties and covenants to the 2015-1 Issuer in the purchase agreement. The Class A-1A, Class A-1B and Class A-1C and Class A-2 Notes are included in these consolidated financial statements. The 2015-1 Issuer Preferred Interests were eliminated in consolidation.
On the closing date of the 2015-1 Debt Securitization, the 2015-1 Issuer effected a one-time distribution to the Company of a substantial portion of the proceeds of the private placement of the 2015-1 Notes, net of expenses, which distribution was used to repay a portion of certain amounts outstanding under the SPV Credit Facility and the Credit Facility. As part of the 2015-1 Debt Securitization, certain first and second lien senior secured loans were distributed by the SPV to the Company pursuant to a distribution and contribution agreement.
On August 30, 2018, the Company and the 2015-1 Issuer closed the 2015-1 Debt Securitization Refinancing. On the closing date of the 2015-1 Debt Securitization Refinancing, the 2015-1 Issuer, among other things:
(a) refinanced the issued Class A-1A Notes by redeeming in full the Class A-1A Notes and issuing new AAA Class A-1-1-R Notes in an aggregate principal amount of $234,800 which bear interest at the three-month LIBOR plus 1.55%;
(b) refinanced the issued Class A-1B Notes by redeeming in full the Class A-1B Notes and issuing new AAA Class A-1-2-R Notes in an aggregate principal amount of $50,000 which bear interest at the three-month LIBOR plus 1.48% for the first 24 months and the three-month LIBOR plus 1.78% thereafter;
(c) refinanced the issued Class A-1C Notes by redeeming in full the Class A-1C Notes and issuing new AAA Class A-1-3-R Notes in an aggregate principal amount of $25,000 which bear interest at 4.56%;
(d) refinanced the issued Class A-2 Notes by redeeming in full the Class A-2 Notes and issuing new Class A-2-R Notes in an aggregate principal amount of $66,000 which bear interest at the three-month LIBOR plus 2.20%;
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(e) issued new single-A Class B Notes and BBB- Class C Notes in aggregate principal amounts of $46,400 and $27,000, respectively, which bear interest at the three-month LIBOR plus 3.15% and the three-month LIBOR plus 4.00%, respectively;
(f) reduced the 2015-1 Issuer Preferred Interests by approximately $21,375 from a nominal value of $125,900 to approximately $104,525 at close; and
(g) extended the reinvestment period end date and maturity date applicable to the 2015-1 Issuer to October 15, 2023 and October 15, 2031, respectively.
Following the 2015-1 Debt Securitization Refinancing, the Company retained the 2015-1 Issuer Preferred Interests. The 2015-1R Notes in the 2015-1 Debt Securitization Refinancing were issued by the 2015-1 Issuer and are secured by a diversified portfolio of the 2015-1 Issuer consisting primarily of first and second lien senior secured loans.
On the closing date of the 2015-1 Debt Securitization Refinancing, the 2015-1 Issuer effected a one-time distribution to the Company of a substantial portion of the proceeds of the private placement of the 2015-1R Notes, net of expenses, which distribution was used to repay a portion of certain amounts outstanding under the SPV Credit Facility and the Credit Facility. As part of the 2015-1 Debt Securitization Refinancing, certain first and second lien senior secured loans were distributed by the SPV to the Company pursuant to a distribution and contribution agreement. The Company contributed the loans that comprised the initial closing date loan portfolio (including the loans distributed to the Company from the SPV) to the 2015-1 Issuer pursuant to a contribution agreement. Future loan transfers from the Company to the 2015-1 Issuer will be made pursuant to a sale agreement and are subject to the approval of the Company’s Board of Directors. Assets of the 2015-1 Issuer are not available to the creditors of the SPV or the Company. In connection with the issuance and sale of the 2015-1R Notes, the Company made customary representations, warranties and covenants in the purchase agreement.
During the reinvestment period, pursuant to the indenture governing the 2015-1R Notes, all principal collections received on the underlying collateral may be used by the 2015-1 Issuer to purchase new collateral under the direction of Investment Adviser in its capacity as collateral manager of the 2015-1 Issuer and in accordance with the Company’s investment strategy.
The Investment Adviser serves as collateral manager to the 2015-1 Issuer under a collateral management agreement (the “Collateral Management Agreement”). Pursuant to the Collateral Management Agreement, the 2015-1 Issuer pays management fees (comprised of base management fees, subordinated management fees and incentive management fees) to the Investment Adviser for rendering collateral management services. As per the Collateral Management Agreement, for the period the Company retains all of the 2015-1 Issuer Preferred Interests, the Investment Adviser does not earn management fees for providing such collateral management services. The Company currently retains all of the 2015-1 Issuer Preferred Interests, thus the Investment Adviser did not earn any management fees from the 2015-1 Issuer for the three month periods ended March 31, 2021 and 2020. Any such waived fees may not be recaptured by the Investment Adviser.
Pursuant to an undertaking by the Company in connection with the 2015-1 Debt Securitization Refinancing, the Company has agreed to hold on an ongoing basis the 2015-1 Issuer Preferred Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate outstanding amount of all collateral obligations by the 2015-1 Issuer for so long as any securities of the 2015-1 Issuer remain outstanding. As of March 31, 2021, the Company was in compliance with its undertaking.
The 2015-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2015-1 Issuer.
As of March 31, 2021, the 2015-1R Notes were secured by 63 first lien and second lien senior secured loans with a total fair value of approximately $521,355 and cash of $13,334. The pool of loans in the securitization must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture governing the 2015-1R Notes.
For the three month periods ended March 31, 2021 and 2020, the effective annualized weighted average interest rates, which include amortization of debt issuance costs on the 2015-1R Notes, were 2.43% and 3.92%, respectively, based on floating LIBOR rates. As of March 31, 2021 and December 31, 2020 the weighted average interest rates were 2.38% and 2.42% respectively, based on floating LIBOR rates.
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For the for the three month periods ended March 31, 2021 and 2020, the components of interest expense on the 2015-1R Notes were as follows:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Interest expense | $ | 2,671 | $ | 4,393 | |||||||
| Amortization of deferred financing costs | 62 | 62 | |||||||||
| Total interest expense and credit facility fees | $ | 2,733 | $ | 4,455 | |||||||
| Cash paid for interest expense | $ | 2,720 | $ | 4,594 | |||||||
As of March 31, 2021 and December 31, 2020, $2,253 and $2,302, respectively, of interest expense was included in interest and credit facility fees payable.
9. COMMMITMENTS AND CONTINGENCIES
A summary of significant contractual payment obligations was as follows as of March 31, 2021 and December 31, 2020:
| Payment Due by Period | March 31, 2021 | December 31, 2020 | ||||||||||||
| Less than one year | $ | — | $ | — | ||||||||||
| 1-3 years | — | — | ||||||||||||
| 3-5 years | 499,397 | 537,949 | ||||||||||||
| More than 5 years | 449,200 | 449,200 | ||||||||||||
| Total | $ | 948,597 | $ | 987,149 | ||||||||||
In the ordinary course of its business, the Company enters into contracts or agreements that contain indemnification or warranties. Future events could occur that lead to the execution of these provisions against the Company. The Company believes that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in the consolidated financial statements as of March 31, 2021 and December 31, 2020 for any such exposure.
We have in the past, currently are and may in the future become obligated to fund commitments such as revolving credit facilities, bridge financing commitments, or delayed draw commitments.
The Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans as of the indicated dates:
| Par Value as of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| Unfunded delayed draw commitments | $ | 75,856 | $ | 73,292 | |||||||
| Unfunded revolving loan commitments | 73,296 | 76,216 | |||||||||
| Total unfunded commitments | $ | 149,152 | $ | 149,508 | |||||||
10. NET ASSETS
The Company has the authority to issue 198,000,000 shares of common stock, par value $0.01 per share, and 2,000,000 shares of preferred stock, par value $0.01 per share.
Cumulative Convertible Preferred Stock
On May 5, 2020, the Company issued and sold 2,000,000 shares of Preferred Stock to an affiliate of Carlyle in a private placement at a price of $25 per share. The Preferred Stock has a liquidation preference equal to $25 per share (the “Liquidation Preference”) plus any accumulated but unpaid dividends up to but excluding the date of distribution. Dividends are payable on a quarterly basis in an initial amount equal to 7.00% per annum of the Liquidation Preference per share, payable in cash, or at the Company’s option, 9.00% per annum of the Liquidation Preference payable in additional shares of Preferred Stock. After May 5, 2027, the dividend rate will increase annually, in each case by 1.00% per annum.
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The Preferred Stock is convertible, in whole or in part, at the option of the holder of the Preferred Stock into the number of shares of common stock equal to the Liquidation Preference plus any accumulated but unpaid dividends, divided by an initial conversion price of $9.50, subject to certain adjustments to prevent dilution as set forth in the Company's Articles Supplementary. The conversion price as of March 31, 2021 was $9.49. At any time after May 5, 2023, the Company, with the approval of the Board of Directors, including a majority of the Independent Directors, will have the option to redeem all of the Preferred Stock for cash consideration equal to the Liquidation Preference plus any accumulated but unpaid dividends. The holders of the Preferred Stock will have the right to convert all or a portion of their shares of Preferred Stock prior to the date fixed for such redemption. At any time after May 5, 2027, the holders of the Preferred Stock will have the option to require the Company to redeem any or all of the then-outstanding Preferred Stock upon 90 days’ notice. The form of consideration used in any such redemption is at the option of the Board of Directors, including a majority of the Independent Directors, and may be cash consideration equal to the Liquidation Preference plus any accumulated but unpaid dividends, or shares of common stock. Holders also have the right to redeem the Preferred Stock upon a Change in Control (as defined in the Article Supplementary).
The following table summarizes the Company’s dividends declared on its preferred stock during the prior year and the current fiscal year to-date. Unless otherwise noted, dividends were declared and paid, or are payable, in cash.
| Date Declared | Record Date | Payment Date | Per Share Amount | ||||||||||||||||||||
| June 30, 2020 | June 30, 2020 | September 30, 2020 | $ | 0.277 | |||||||||||||||||||
| September 30, 2020 | September 30, 2020 | September 30, 2020 | 0.423 | ||||||||||||||||||||
| December 31, 2020 | December 31, 2020 | December 31, 2020 | 0.438 | ||||||||||||||||||||
| March 31, 2021 | March 31, 2021 | March 31, 2021 | 0.438 | ||||||||||||||||||||
| Total | $ | 1.576 | |||||||||||||||||||||
Company Stock Repurchase Program
On November 2, 2020, the Company's Board of Directors approved the continuation of the Company's common stock repurchase program (the "Company Stock Repurchase Program") until November 5, 2021, or until the approved dollar amount has been used to repurchase shares of common stock, as well as the expansion of the repurchase authorization to $150 million in the aggregate of the Company's outstanding common stock. This program may be suspended, extended, modified or discontinued by the Company at any time, subject to applicable law. The Company's Stock Repurchase Program was originally approved by the Company's Board of Directors on November 5, 2018 and announced on November 6, 2018. Since the inception of the Company Stock Repurchase Program through March 31, 2021, the Company has repurchased 7,759,397 shares of the Company's common stock at an average cost of $13.20 per share, or $102,418 in the aggregate, resulting in accretion to net assets per share of $0.44.
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Changes in Net Assets
For the three month period ended March 31, 2021, the Company repurchased and extinguished 511,047 shares for $5,570. The following table summarizes capital activity during the for the three month period ended March 31, 2021:
| Preferred Stock | Common Stock | Capital in Excess of Par Value | Offering Costs | Accumulated Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) | Accumulated Net Unrealized Appreciation (Depreciation) | Total Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2021 | 2,000,000 | $ | 50,000 | 55,320,309 | $ | 553 | $ | 1,081,436 | $ | (1,633) | $ | 14,568 | $ | (140,133) | $ | (103,428) | $ | 901,363 | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | (511,047) | (5) | (5,565) | — | — | — | — | (5,570) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net investment income (loss) | — | — | — | — | — | — | 20,679 | — | — | 20,679 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net realized gain (loss) | — | — | — | — | — | — | — | 1,591 | — | 1,591 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) | — | — | — | — | — | — | — | — | 13,634 | 13,634 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on common stock and preferred stock | — | — | — | — | — | — | (21,177) | — | — | (21,177) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | 2,000,000 | $ | 50,000 | 54,809,262 | $ | 548 | $ | 1,075,871 | $ | (1,633) | $ | 14,070 | $ | (138,542) | $ | (89,794) | $ | 910,520 | ||||||||||||||||||||||||||||||||||||||||||||
For the three month period ended March 31, 2020, the Company repurchased and extinguished 1,455,195 shares for $16,003. The following table summarizes capital activity for the three month period ended March 31, 2020:
| Common Stock | Capital in Excess of Par Value | Offering Costs | Accumulated Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) | Accumulated Net Unrealized Appreciation (Depreciation) | Total Net Assets | ||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2020 | 57,763,811 | $ | 578 | $ | 1,109,238 | $ | (1,633) | $ | 10,368 | $ | (82,654) | $ | (79,426) | $ | 956,471 | |||||||||||||||||||||||||||||||||||
| Repurchase of common stock | (1,455,195) | (15) | (15,988) | — | — | — | — | (16,003) | ||||||||||||||||||||||||||||||||||||||||||
| Net investment income (loss) | — | — | — | — | 23,972 | — | — | 23,972 | ||||||||||||||||||||||||||||||||||||||||||
| Net realized gain (loss) | — | — | — | — | — | (1,847) | — | (1,847) | ||||||||||||||||||||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) | — | — | — | — | — | — | (143,225) | (143,225) | ||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | (20,834) | — | — | (20,834) | ||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2020 | 56,308,616 | $ | 563 | $ | 1,093,250 | $ | (1,633) | $ | 13,506 | $ | (84,501) | $ | (222,651) | $ | 798,534 | |||||||||||||||||||||||||||||||||||
Earnings Per Share
The Company calculates earnings per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is calculated by dividing the net increase (decrease) in net assets resulting from operations, less preferred dividends, by the weighted average number of common shares outstanding. Diluted earnings per share gives effect to all dilutive potential common shares outstanding using the if-converted method for the convertible Preferred Stock. Diluted earnings per share excludes all dilutive potential common shares if their effect is anti-dilutive. Potential common shares for the three months ended
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March 31, 2021 would be dilutive because of profit during the period. Basic and diluted earnings per common share were as follows:
| For the three month period ended March 31, 2021 | ||||||||||||||
| Basic | Diluted | |||||||||||||
| Net increase (decrease) in net assets resulting from operations attributable to Common Stockholders | $ | 35,029 | $ | 35,904 | ||||||||||
| Weighted-average common shares outstanding | 55,039,010 | 60,306,312 | ||||||||||||
| Basic and diluted earnings per share | $ | 0.65 | $ | 0.60 | ||||||||||
| For the three month period ended March 31, 2020 | ||||||||||||||
| Basic | Diluted | |||||||||||||
| Net increase (decrease) in net assets resulting from operations attributable to Common Stockholders | $ | (121,100) | $ | (121,100) | ||||||||||
| Weighted-average common shares outstanding | 57,112,193 | 57,112,193 | ||||||||||||
| Basic and diluted earnings per share | $ | (2.12) | $ | (2.12) | ||||||||||
Common Stock Dividends
The following table summarizes the Company’s dividends declared on its common stock during the two most recent fiscal years and the current fiscal year to-date:
| Date Declared | Record Date | Payment Date | Per Common Share Amount | ||||||||||||||||||||
| February 22, 2019 | March 29, 2019 | April 17, 2019 | $ | 0.37 | |||||||||||||||||||
| May 6, 2019 | June 28, 2019 | July 17, 2019 | $ | 0.37 | |||||||||||||||||||
| June 17, 2019 | June 28, 2019 | July 17, 2019 | $ | 0.08 | (1) | ||||||||||||||||||
| August 5, 2019 | September 30, 2019 | October 17, 2019 | $ | 0.37 | |||||||||||||||||||
| November 4, 2019 | December 31, 2019 | January 17, 2020 | $ | 0.37 | |||||||||||||||||||
| December 12, 2019 | December 31, 2019 | January 17, 2020 | $ | 0.18 | (1) | ||||||||||||||||||
| February 24, 2020 | March 31, 2020 | April 17, 2020 | $ | 0.37 | |||||||||||||||||||
| May 4, 2020 | June 30, 2020 | July 17, 2020 | $ | 0.37 | |||||||||||||||||||
| August 3, 2020 | September 30, 2020 | October 16, 2020 | $ | 0.32 | (2) | ||||||||||||||||||
| August 3, 2020 | September 30, 2020 | October 16, 2020 | $ | 0.05 | (1) | ||||||||||||||||||
| November 2, 2020 | December 31, 2020 | January 15, 2021 | $ | 0.32 | |||||||||||||||||||
| November 2, 2020 | December 31, 2020 | January 15, 2021 | $ | 0.04 | (1) | ||||||||||||||||||
| February 22, 2021 | March 31, 2021 | April 16, 2021 | $ | 0.32 | |||||||||||||||||||
| February 22, 2021 | March 31, 2021 | April 16, 2021 | $ | 0.05 | (1) | ||||||||||||||||||
(1)Represents a special/supplemental dividend.
(2)The Company updated its dividend policy such that the regular dividend is $0.32 per share of common stock, effective with the third quarter 2020 dividend.
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11. CONSOLIDATED FINANCIAL HIGHLIGHTS
The following is a schedule of consolidated financial highlights for the three month periods ended March 31, 2021 and 2020:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Per Common Share Data: | |||||||||||
| Net asset value per common share, beginning of period | $ | 15.39 | $ | 16.56 | |||||||
Net investment income (loss) (1) | 0.36 | 0.42 | |||||||||
| Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and non-investment assets and liabilities | 0.29 | (2.57) | |||||||||
| Net increase (decrease) in net assets resulting from operations | 0.65 | (2.15) | |||||||||
Dividends declared (2) | (0.37) | (0.37) | |||||||||
| Accretion due to share repurchases | 0.03 | 0.14 | |||||||||
| Net asset value per common share, end of period | $ | 15.70 | $ | 14.18 | |||||||
| Market price per common share, end of period | $ | 13.20 | $ | 5.22 | |||||||
| Number of common shares outstanding, end of period | 54,809,262 | 56,308,616 | |||||||||
Total return based on net asset value (3) | 4.42 | % | (12.14) | % | |||||||
Total return based on market price (4) | 32.26 | % | (58.22) | % | |||||||
| Net assets attributable to Common Stockholders, end of period | $ | 860,520 | $ | 798,534 | |||||||
Ratio to average net assets attributable to Common Stockholders(5): | |||||||||||
| Expenses before incentive fees | 1.76 | % | 2.38 | % | |||||||
| Expenses after incentive fees | 2.23 | % | 2.94 | % | |||||||
| Net investment income (loss) | 2.28 | % | 2.66 | % | |||||||
| Interest expense and credit facility fees | 0.83 | % | 1.41 | % | |||||||
| Ratios/Supplemental Data: | |||||||||||
| Asset coverage, end of period | 186.17 | % | 163.08 | % | |||||||
| Portfolio turnover | 8.05 | % | 3.11 | % | |||||||
| Weighted-average shares outstanding | 55,039,010 | 57,112,193 | |||||||||
(1)Net investment income (loss) per common share was calculated as net investment income (loss) less the preferred dividend for the period divided by the weighted average number of common shares outstanding for the period.
(2)Dividends declared per common share was calculated as the sum of dividends on common stock declared during the period divided by the number of common shares outstanding at each respective quarter-end date (refer to Note 10, Net Assets).
(3)Total return based on net asset value (not annualized) is based on the change in net asset value per common share during the period plus the declared dividends on common stock, assuming reinvestment of dividends in accordance with the dividend reinvestment plan, divided by the beginning net asset value for the period.
(4)Total return based on market value (not annualized) is calculated as the change in market value per common share during the period plus the declared dividends on common stock, assuming reinvestment of dividends in accordance with the dividend reinvestment plan, divided by the beginning market price for the period.
(5)These ratios to average net assets attributable to Common Stockholders have not been annualized.
12. LITIGATION
The Company may become party to certain lawsuits in the ordinary course of business. The Company does not believe that the outcome of current matters, if any, will materially impact the Company or its consolidated financial statements. As of March 31, 2021 and December 31, 2020, the Company was not subject to any material legal proceedings, nor, to the Company’s knowledge, is any material legal proceeding threatened against the Company.
In addition, portfolio investments of the Company could be the subject of litigation or regulatory investigations in the ordinary course of business. The Company does not believe that the outcome of any current contingent liabilities of its portfolio investments, if any, will materially affect the Company or these consolidated financial statements.
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13. TAX
The Company has not recorded a liability for any uncertain tax positions pursuant to the provisions of ASC 740, Income Taxes, as of March 31, 2021 and December 31, 2020.
In the normal course of business, the Company is subject to examination by federal and certain state, local and foreign tax regulators. As of March 31, 2021 and December 31, 2020, the Company had filed tax returns and therefore is subject to examination.
The Company’s taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate. The estimated tax character of dividends declared on preferred stock and common stock for three month periods ended March 31, 2021 and 2020 was as follows:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Ordinary income | $ | 21,177 | $ | 20,834 | |||||||
| Tax return of capital | $ | — | $ | — | |||||||
14. SUBSEQUENT EVENTS
Subsequent events have been evaluated through the date the consolidated financial statements were issued. There have been no subsequent events that require recognition or disclosure through the date the consolidated financial statements were issued, except as disclosed below and elsewhere in the consolidated financial statements.
On May 3, 2021, the Board of Directors declared a regular quarterly common dividend of $0.32 plus a supplemental common dividend of $0.04, which are payable on July 15, 2021 to common stockholders of record on June 30, 2021.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(dollar amounts in thousands, except per share data, unless otherwise indicated)
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have included or incorporated by reference in this Form 10-Q, and from time to time our management may make, “forward-looking statements”. These forward-looking statements are not historical facts, but instead relate to future events or the future performance or financial condition of TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”). These statements are based on current expectations, estimates and projections about us, our current or prospective portfolio investments, our industry, our beliefs, and our assumptions. The forward-looking statements contained in this Form 10-Q involve a number of risks and uncertainties, including statements concerning:
•our, or our portfolio companies’, future business, operations, operating results or prospects, including our and their ability to achieve our respective objectives as a result of the current COVID-19 pandemic;
•the return or impact of current and future investments;
•the general economy and its impact on the industries in which we invest and the impact of the COVID-19 pandemic thereon;
•the impact of any protracted decline in the liquidity of credit markets on our business and the impact of the COVID-19 pandemic thereon;
•the impact of fluctuations in interest rates on our business, including from changes in or the discontinuation of LIBOR, on our business;
•the valuation of investments in portfolio companies, particularly those having no liquid trading market, and the impact of the COVID-19 pandemic thereon;
•the impact of changes in laws, policies or regulations (including the interpretation thereof) affecting our operations or the operations of our portfolio companies;
•the valuation of our investments in portfolio companies, particularly those having no liquid trading market, and the impact of the COVID-19 pandemic thereon;
•our ability to recover unrealized losses;
•market conditions and our ability to access alternative debt markets and additional debt and equity capital, and the impact of the COVID-19 pandemic thereon;
•our contractual arrangements and relationships with third parties;
•uncertainty surrounding the financial stability of the United States, Europe and China;
•the social, geopolitical, financial, trade and legal implications of the exit of the United Kingdom from the European Union, or Brexit;
•competition with other entities and our affiliates for investment opportunities;
•the speculative and illiquid nature of our investments;
•the use of borrowed money to finance a portion of our investments;
•our expected financings and investments;
•the adequacy of our cash resources and working capital;
•the timing, form and amount of any dividend distributions;
•the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the COVID-19 pandemic thereon;
•the ability to consummate acquisitions;
•the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;
•currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;
•the ability of The Carlyle Group Employee Co., L.L.C. to attract and retain highly talented professionals that can provide services to our investment adviser and administrator;
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•our ability to maintain our status as a business development company; and
•our intent to satisfy the requirements of a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended.
We use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” in Part II, Item 1A of our annual report on Form 10-K for the year ended December 31, 2020 (our "2020 Form 10-K").
We have based the forward-looking statements included in this Form 10-Q on information available to us on the date of this Form 10-Q, 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 have filed or in the future may file with the Securities and Exchange Commission (the “SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
OVERVIEW
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Part I, Item 1 of this Form 10-Q “Financial Statements.” This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in “Risk Factors” in Part I, Item 1A of our 2020 Form 10-K. Our actual results could differ materially from those anticipated by such forward-looking statements due to factors discussed under “Risk Factors” in our 2020 Form 10-K and “Cautionary Statements Regarding Forward-Looking Statements” appearing elsewhere in this Form 10-Q.
We are a Maryland corporation formed on February 8, 2012, and structured as an externally managed, non-diversified closed-end investment company. We have elected to be regulated as a BDC under the Investment Company Act. We have elected to be treated, and intend to continue to comply with the requirements to qualify annually, as a RIC under Subchapter M of the Code.
Our investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies. Our core investment strategy focuses on lending to U.S. middle market companies, which we define as companies with approximately $25 million to $100 million of EBITDA, which we believe is a useful proxy for cash flow. We complement this core strategy with additive, diversifying assets including, but not limited to, specialty lending investments. We seek to achieve our investment objective primarily through direct origination of Middle Market Senior Loans, with the balance of our assets invested in higher yielding investments (which may include unsecured debt, mezzanine debt and investments in equities). We generally make Middle Market Senior Loans to private U.S. middle market companies that are, in many cases, controlled by private equity firms. Depending on market conditions, we expect that between 70% and 80% of the value of our assets will be invested in Middle Market Senior Loans. We expect that the composition of our portfolio will change over time given our Investment Adviser’s view on, among other things, the economic and credit environment (including with respect to interest rates) in which we are operating.
On June 19, 2017, we closed our IPO, issuing 9,454,200 shares of our common stock (including shares issued pursuant to the exercise of the underwriters’ over-allotment option on July 5, 2017) at a public offering price of $18.50 per share. Net of underwriting costs, we received cash proceeds of $169,488. Shares of common stock of TCG BDC began trading on the Nasdaq Global Select Market under the symbol “CGBD” on June 14, 2017.
On June 9, 2017, we acquired NF Investment Corp. (“NFIC”), a BDC managed by our Investment Advisor (the “NFIC Acquisition”). As a result, we issued 434,233 shares of common stock to the NFIC stockholders and approximately $145,602 in cash, and acquired approximately $153,648 in net assets.
We are externally managed by our Investment Adviser, an investment adviser registered under the Advisers Act. Our Administrator provides the administrative services necessary for us to operate. Both our Investment Adviser and our Administrator are wholly owned subsidiaries of Carlyle Investment Management L.L.C., a subsidiary of Carlyle. Our Investment Adviser’s five-person investment committee is responsible for reviewing and approving our investment opportunities. The members of the investment committee have experience investing through different credit cycles. Our Investment Adviser’s investment committee comprises five of the most senior credit professional within the Carlyle Global
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Credit segment, with backgrounds and expertise across asset classes and over 26 years of average industry experience and 10 years of average tenure. In addition, our Investment Adviser and its investment team are supported by a team of finance, operations and administrative professionals currently employed by Carlyle Employee Co., a wholly owned subsidiary of Carlyle.
In conducting our investment activities, we believe that we benefit from the significant scale, relationships and resources of Carlyle, including our Investment Adviser and its affiliates. We have operated our business as a BDC since we began our investment activities in May 2013.
KEY COMPONENTS OF OUR RESULTS OF OPERATIONS
Investments
Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt available to middle market companies, the general economic environment and the competitive environment for the type of investments we make.
Revenue
We generate revenue primarily in the form of interest income on debt investments we hold. In addition, we generate income from dividends on direct equity investments, capital gains on the sales of loans and debt and equity securities and various loan origination and other fees. Our debt investments generally have a stated term of five to eight years and generally bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR. Interest on these debt investments is generally paid quarterly. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments fluctuates significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. We may also generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees.
Expenses
Our primary operating expenses include the payment of: (i) investment advisory fees, including base management fees and incentive fees, to our Investment Adviser pursuant to the Investment Advisory Agreement between us and our Investment Adviser; (ii) costs and other expenses and our allocable portion of overhead incurred by our Administrator in performing its administrative obligations under the Administration Agreement between us and our Administrator; and (iii) other operating expenses as detailed below:
•administration fees payable under our Administration Agreement and Sub-Administration Agreements, including related expenses;
•the costs of any offerings of our common stock and other securities, if any;
•calculating individual asset values and our net asset value (including the cost and expenses of any independent valuation firms);
•expenses, including travel expenses, incurred by our Investment Adviser, or members of our Investment Adviser team managing our investments, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, expenses of enforcing our rights;
•certain costs and expenses relating to distributions paid on our shares;
•debt service and other costs of borrowings or other financing arrangements;
•the allocated costs incurred by our Investment Adviser in providing managerial assistance to those portfolio companies that request it;
•amounts payable to third parties relating to, or associated with, making or holding investments;
•the costs associated with subscriptions to data service, research-related subscriptions and expenses and quotation equipment and services used in making or holding investments;
•transfer agent and custodial fees;
•costs of hedging;
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•commissions and other compensation payable to brokers or dealers;
•federal and state registration fees;
•any U.S. federal, state and local taxes, including any excise taxes;
•independent director fees and expenses;
•costs of preparing financial statements and maintaining books and records, costs of preparing tax returns, costs of Sarbanes-Oxley Act compliance and attestation and costs of filing reports or other documents with the SEC (or other regulatory bodies), and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation or review of the foregoing;
•the costs of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholders’ meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;
•the costs of specialty and custom software for monitoring risk, compliance and overall portfolio, including any development costs incurred prior to the filing of our election to be regulated as a BDC;
•our fidelity bond;
•directors and officers/errors and omissions liability insurance, and any other insurance premiums;
•indemnification payments;
•direct fees and expenses associated with independent audits, agency, consulting and legal costs; and
•all other expenses incurred by us or our Administrator in connection with administering our business, including our allocable share of certain officers and their staff compensation.
We expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.
PORTFOLIO AND INVESTMENT ACTIVITY
Below is a summary of certain characteristics of our investment portfolio as of March 31, 2021 and December 31, 2020.
| As of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| Fair value of investments | $ | 1,841,634 | $ | 1,825,749 | |||||||
| Count of investments | 164 | 160 | |||||||||
| Count of portfolio companies / investment funds | 119 | 117 | |||||||||
| Count of industries | 27 | 27 | |||||||||
| Percentage of total investment fair value: | |||||||||||
| First lien debt (excluding first lien/last out debt) | 63.2 | % | 63.6 | % | |||||||
| First lien/last out debt | 3.4 | % | 3.4 | % | |||||||
| Second lien debt | 16.3 | % | 15.6 | % | |||||||
| Total secured debt | 82.9 | % | 82.6 | % | |||||||
| Investment Funds | 15.2 | % | 15.5 | % | |||||||
| Equity investments | 1.9 | % | 1.9 | % | |||||||
| Percentage of debt investment fair value: | |||||||||||
Floating rate (1) | 99.1 | % | 99.1 | % | |||||||
| Fixed interest rate | 0.9 | % | 0.9 | % | |||||||
(1) Primarily subject to interest rate floors.
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Our investment activity for the three month periods ended March 31, 2021 and 2020 is presented below (information presented herein is at amortized cost unless otherwise indicated):
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Investments: | |||||||||||
| Total investments, beginning of period | $ | 1,922,966 | $ | 2,201,451 | |||||||
| New investments purchased | 148,927 | 331,932 | |||||||||
| Net accretion of discount on investments | 2,026 | 2,586 | |||||||||
| Net realized gain (loss) on investments | 1,673 | (1,697) | |||||||||
| Investments sold or repaid | (150,601) | (286,945) | |||||||||
| Total Investments, end of period | $ | 1,924,991 | $ | 2,247,327 | |||||||
| Principal amount of investments funded: | |||||||||||
| First Lien Debt (excluding First Lien/Last Out Debt) | $ | 98,408 | $ | 75,510 | |||||||
| First Lien/Last Out Debt | — | — | |||||||||
| Second Lien Debt | 52,369 | 86,109 | |||||||||
| Equity Investments | 645 | 10,500 | |||||||||
| Investment Funds | — | 156,000 | |||||||||
| Total | $ | 151,422 | $ | 328,119 | |||||||
| Principal amount of investments sold or repaid: | |||||||||||
| First Lien Debt (excluding First Lien/Last Out Debt) | $ | (106,827) | $ | (97,185) | |||||||
| First Lien/Last Out Debt | (246) | (19,273) | |||||||||
| Second Lien Debt | (41,531) | (15,232) | |||||||||
| Equity Investments | (446) | — | |||||||||
| Investment Funds | — | (156,500) | |||||||||
| Total | $ | (149,050) | $ | (288,190) | |||||||
| Number of new funded investments | 10 | 10 | |||||||||
| Average amount of new funded investments | $ | 12,583 | $ | 10,277 | |||||||
| Percentage of new funded debt investments at floating interest rates | 100 | % | 90 | % | |||||||
| Percentage of new funded debt investments at fixed interest rates | — | % | 10 | % | |||||||
As of March 31, 2021 and December 31, 2020, investments consisted of the following:
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| First Lien Debt (excluding First Lien/Last Out Debt) | $ | 1,226,793 | $ | 1,164,592 | $ | 1,234,579 | $ | 1,161,881 | |||||||||||||||
| First Lien/Last Out Debt | 63,401 | 62,061 | 63,575 | 62,182 | |||||||||||||||||||
| Second Lien Debt | 308,048 | 299,322 | 297,962 | 284,523 | |||||||||||||||||||
| Equity Investments | 32,653 | 35,030 | 32,754 | 33,877 | |||||||||||||||||||
| Investment Funds | 294,097 | 280,629 | 294,096 | 283,286 | |||||||||||||||||||
| Total | $ | 1,924,992 | $ | 1,841,634 | $ | 1,922,966 | $ | 1,825,749 | |||||||||||||||
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The weighted average yields (1) for our first and second lien debt, based on the amortized cost and fair value as of March 31, 2021 and December 31, 2020, were as follows:
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| First Lien Debt (excluding First Lien/Last Out Debt) | 7.18 | % | 7.56 | % | 7.08 | % | 7.53 | % | |||||||||||||||
| First Lien/Last Out Debt | 9.64 | % | 9.85 | % | 9.65 | % | 9.87 | % | |||||||||||||||
| First Lien Debt Total | 7.30 | % | 7.68 | % | 7.21 | % | 7.65 | % | |||||||||||||||
| Second Lien Debt | 9.04 | % | 9.30 | % | 9.15 | % | 9.59 | % | |||||||||||||||
| First and Second Lien Debt Total | 7.63 | % | 7.99 | % | 7.57 | % | 8.01 | % | |||||||||||||||
(1)Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2021 and December 31, 2020. Weighted average yield on debt and income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount "OID") and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at fair value included in such securities. Weighted average yield on debt and income producing securities at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.
Total weighted average yields (which includes the effect of accretion of discount and amortization of premiums) of our first and second lien debt investments as measured on an amortized cost basis increased from 7.57% to 7.63% from December 31, 2020 to March 31, 2021.
The following table summarizes the fair value of our performing and non-accrual/non-performing investments as of March 31, 2021 and December 31, 2020:
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Fair Value | Percentage | Fair Value | Percentage | ||||||||||||||||||||
| Performing | $ | 1,781,258 | 96.7 | % | $ | 1,767,613 | 96.8 | % | |||||||||||||||
Non-accrual (1) | 60,376 | 3.3 | 58,136 | 3.2 | |||||||||||||||||||
| Total | $ | 1,841,634 | 100.0 | % | $ | 1,825,749 | 100.0 | % | |||||||||||||||
(1)For information regarding our non-accrual policy, see Note 2 to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
See the Consolidated Schedules of Investments as of March 31, 2021 and December 31, 2020 in our consolidated financial statements in Part I, Item 1 of this Form 10-Q for more information on these investments, including a list of companies and type and amount of investments.
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As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on categories, which we refer to as “Internal Risk Ratings”. Pursuant to these risk policies, an Internal Risk Rating of 1 – 5, which are defined below, is assigned to each debt investment in our portfolio. Key drivers of internal risk ratings include financial metrics, financial covenants, liquidity and enterprise value coverage.
Internal Risk Ratings Definitions
| Rating | Definition | |||||||
| 1 | Borrower is operating above expectations, and the trends and risk factors are generally favorable. | |||||||
| 2 | Borrower is operating generally as expected or at an acceptable level of performance. The level of risk to our initial cost bases is similar to the risk to our initial cost basis at the time of origination. This is the initial risk rating assigned to all new borrowers. | |||||||
| 3 | Borrower is operating below expectations and level of risk to our cost basis has increased since the time of origination. The borrower may be out of compliance with debt covenants. Payments are generally current although there may be higher risk of payment default. | |||||||
| 4 | Borrower is operating materially below expectations and the loan’s risk has increased materially since origination. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due, but generally not by more than 120 days. It is anticipated that we may not recoup our initial cost basis and may realize a loss of our initial cost basis upon exit. | |||||||
| 5 | Borrower is operating substantially below expectations and the loan’s risk has increased substantially since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. It is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit. | |||||||
Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. Our Investment Adviser reviews our investment ratings in connection with our quarterly valuation process. The below table summarizes the Internal Risk Ratings as of March 31, 2021 and December 31, 2020.
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Fair Value | % of Fair Value | Fair Value | % of Fair Value | ||||||||||||||||||||
| (dollar amounts in millions) | |||||||||||||||||||||||
| Internal Risk Rating 1 | $ | 19.1 | 1.3 | % | $ | 19.1 | 1.3 | % | |||||||||||||||
| Internal Risk Rating 2 | 1,097.9 | 71.9 | 1,047.5 | 69.4 | |||||||||||||||||||
| Internal Risk Rating 3 | 324.9 | 21.3 | 361.1 | 23.9 | |||||||||||||||||||
| Internal Risk Rating 4 | 49.6 | 3.2 | 48.2 | 3.2 | |||||||||||||||||||
| Internal Risk Rating 5 | 34.5 | 2.3 | 32.8 | 2.2 | |||||||||||||||||||
| Total | $ | 1,526.0 | 100.0 | % | $ | 1,508.6 | 100.0 | % | |||||||||||||||
As of March 31, 2021 and December 31, 2020, the weighted average Internal Risk Rating of our debt investment portfolio was 2.3 and 2.4, respectively. As of March 31, 2021, six of our debt investments, with an aggregate fair value of $84.1 million were assigned an Internal Risk Rating of 4-5. As of December 31, 2020, six of our debt investments, with an aggregate fair value of $80.9 million were assigned an Internal Risk Rating of 4-5. As of March 31, 2021 and December 31, 2020, five and five of our debt investments were on non-accrual status, respectively. Our debt investments non-accrual status had a fair value of $60.4 million and $58.1 million, respectively, which represented approximately 3.3% and 3.2%, respectively, of our total investments at fair value as of March 31, 2021 and December 31, 2020. The remaining first and second lien debt investments were performing and current on their interest payments as of March 31, 2021 and December 31, 2020.
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CONSOLIDATED RESULTS OF OPERATIONS
For the three month periods ended March 31, 2021 and 2020
The net increase or decrease in net assets from operations may vary substantially from period to period as a result of various factors, including the recognition of realized gains and losses and net change in unrealized appreciation and depreciation. As a result, quarterly comparisons may not be meaningful.
Investment Income
Investment income for the three month periods ended March 31, 2021 and 2020 was as follows:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Investment income | |||||||||||
| First Lien Debt | $ | 25,584 | $ | 35,650 | |||||||
| Second Lien Debt | 6,700 | 8,126 | |||||||||
| Equity Investments | 1,036 | 185 | |||||||||
| Investment Funds | 7,528 | 6,549 | |||||||||
| Cash | — | 35 | |||||||||
| Total investment income | $ | 40,848 | $ | 50,545 | |||||||
The decrease in investment income for the three month period ended March 31, 2021 from the comparable period in 2020 was primarily driven by a lower average loan balance and the decrease in LIBOR. As of March 31, 2021, the size of our portfolio decreased to $1,924,992 from $2,247,327 as of March 31, 2020, at amortized cost. As of March 31, 2021, the weighted average yield of our first and second lien debt investments decreased to 7.63% from 7.74% as of March 31, 2020 on amortized cost, primarily due to the decrease in LIBOR.
Interest income on our first and second lien debt investments is dependent on the composition and credit quality of the portfolio. Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement. As of March 31, 2021 and 2020, five and seven first lien debt investments, respectively, were on non-accrual status. Non-accrual investments had a fair value of $60,376 and $44,116 respectively, which represented approximately 3.3% and 2.2% of total investments at fair value, respectively, as of March 31, 2021 and 2020. The remaining first and second lien debt investments were performing and current on their interest payments as of March 31, 2021 and 2020.
For the three month periods ended March 31, 2021 and 2020, the Company earned $1,470 and $2,344, respectively, in other income. The decrease in other income for the three month period ended March 31, 2021 from the comparable period in 2020 was primarily driven by lower prepayment and underwriting fees.
For the three month periods ended March 31, 2021 and 2020, the Company earned $7,528 and $6,549, respectively, in dividend and interest income from the Investment Funds. The increase for the three month period ended March 31, 2021 from the comparable periods in 2020 was driven by the formation of Credit Fund II during the fourth quarter of 2020 and by a higher dividend from Credit Fund, partially offset by a decrease in interest income on the Mezzanine Loan to Credit Fund.
Net investment income (loss) for the three month periods ended March 31, 2021 and 2020 was as follows:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Total investment income | $ | 40,848 | $ | 50,545 | |||||||
| Net expenses (including excise tax expense) | (20,169) | (26,573) | |||||||||
| Net investment income (loss) | $ | 20,679 | $ | 23,972 | |||||||
81
Expenses
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Base management fees | $ | 6,800 | $ | 7,386 | |||||||
| Incentive fees | 4,257 | 5,086 | |||||||||
| Professional fees | 691 | 667 | |||||||||
| Administrative service fees | 282 | 106 | |||||||||
| Interest expense | 6,975 | 12,179 | |||||||||
| Credit facility fees | 519 | 590 | |||||||||
| Directors’ fees and expenses | 116 | 96 | |||||||||
| Other general and administrative | 405 | 411 | |||||||||
| Excise tax expense | 124 | 52 | |||||||||
| Expenses | $ | 20,169 | $ | 26,573 | |||||||
Interest expense and credit facility fees for the three month periods ended March 31, 2021 and 2020 were comprised of the following:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Interest expense | $ | 6,975 | $ | 12,179 | |||||||
| Facility unused commitment fee | 328 | 318 | |||||||||
| Amortization of deferred financing costs | 191 | 243 | |||||||||
| Other fees | — | 29 | |||||||||
| Total interest expense and credit facility fees | $ | 7,494 | $ | 12,769 | |||||||
| Cash paid for interest expense | $ | 6,915 | $ | 12,647 | |||||||
| Average principal debt outstanding | $ | 979,557 | $ | 1,236,463 | |||||||
| Weighted average interest rate | 2.85 | % | 3.91 | % | |||||||
The decrease in interest expense for the three month period ended March 31, 2021 compared to the comparable period in 2020 was primarily driven by lower LIBOR and lower average principal balances outstanding.
Below is a summary of the base management fees and incentive fees incurred during the three month periods ended March 31, 2021 and 2020.
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Base management fees | $ | 6,800 | $ | 7,386 | |||||||
| Incentive fees on pre-incentive fee net investment income | 4,257 | 5,086 | |||||||||
| Realized capital gains incentive fees | — | — | |||||||||
| Accrued capital gains incentive fees | — | — | |||||||||
| Total capital gains incentive fees | — | — | |||||||||
| Total incentive fees | 4,257 | 5,086 | |||||||||
| Total base management fees and incentive fees | $ | 11,057 | $ | 12,472 | |||||||
The decrease in base management fees and incentive fees related to pre-incentive fee net investment income for the three month periods ended March 31, 2021 from the comparable period in 2020 was driven by lower investment fair value and lower pre-incentive fee net investment income, respectively.
82
For the three month periods ended March 31, 2021 and 2020, there were no accrued capital gains incentive fees based upon the cumulative net realized and unrealized appreciation (depreciation) as of March 31, 2021 and 2020. The accrual for any capital gains incentive fee under accounting principles generally accepted in the United States (“U.S. GAAP”) in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. See Note 4 to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for more information on the incentive and base management fees.
Professional fees include legal, rating agencies, audit, tax, valuation, technology and other professional fees incurred related to the management of the Company. Administrative service fees represent fees paid to the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our executive officers and their respective staff. Other general and administrative expenses include insurance, filing, research, subscriptions and other costs.
Net Realized Gain (Loss) and Net Change in Unrealized Appreciation (Depreciation) on Investments
During the three month periods ended March 31, 2021 and 2020, we had realized gains on 8 and 4 investments, respectively, totaling approximately $1,673 and $627, respectively, which was offset by realized losses on 0 and 3 investments, respectively, totaling approximately $0 and $2,324, respectively. During the three month periods ended March 31, 2021 and 2020, we had unrealized appreciation on 99 and 15 investments, respectively, totaling approximately $24,087 and $4,389, respectively, which was offset by unrealized depreciation on 58 and 122 investments, respectively, totaling approximately $10,228 and $149,952, respectively.
Net realized gain (loss) and net change in unrealized appreciation (depreciation) by the type of investments for the three month periods ended March 31, 2021 and 2020 were as follows:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Net realized gain (loss) on investments | $ | 1,673 | $ | (1,697) | |||||||
| Net change in unrealized appreciation (depreciation) on investments | 13,859 | (145,563) | |||||||||
| Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments | $ | 15,532 | $ | (147,260) | |||||||
Net realized gain (loss) and net change in unrealized appreciation (depreciation) by the type of investments for the three month periods ended March 31, 2021 and 2020 were as follows:
| For the three month periods ended | |||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||||||||||||||
| Type | Net realized gain (loss) | Net change in unrealized appreciation (depreciation) | Net realized gain (loss) | Net change in unrealized appreciation (depreciation) | |||||||||||||||||||
| First Lien Debt | $ | 992 | $ | 10,550 | $ | (2,054) | $ | (90,659) | |||||||||||||||
| Second Lien Debt | — | 4,713 | — | (34,034) | |||||||||||||||||||
| Equity Investments | 681 | 1,254 | 357 | (1,908) | |||||||||||||||||||
| Investment Funds | — | (2,691) | — | (18,962) | |||||||||||||||||||
| Total | $ | 1,673 | $ | 13,826 | $ | (1,697) | $ | (145,563) | |||||||||||||||
Net change in unrealized appreciation in our investments for the three month period ended March 31, 2021 improved compared to the comparable period in 2020 primarily due to tightening market yields and improving credit fundamentals in 2021, compared to higher market yields in 2020 related to the COVID-19 pandemic. Net change in unrealized appreciation (depreciation) is also driven by changes in other inputs utilized under our valuation methodology, including, but not limited to, enterprise value multiples, borrower leverage multiples and borrower ratings, and the impact of exits.
83
MIDDLE MARKET CREDIT FUND, LLC
Overview
On February 29, 2016, the Company and Credit Partners entered into an amended and restated limited liability agreement, which was subsequently amended and restated on June 24, 2016 and February 22, 2021 (as amended, the "Limited Liability Company Agreement") to co-manage Credit Fund, a Delaware limited liability company that is not consolidated in the Company’s consolidated financial statements. Credit Fund primarily invests in first lien loans of middle market companies. Credit Fund is managed by a six-member board of managers, on which the Company and Credit Partners each have equal representation. Establishing a quorum for Credit Fund’s board of managers requires at least four members to be present at a meeting, including at least two of the Company’s representatives and two of Credit Partners’ representatives. The Company and Credit Partners each have 50% economic ownership of Credit Fund and have commitments to fund, from time to time, capital of up to $250,000 each. Funding of such commitments generally requires the approval of the board of Credit Fund, including the board members appointed by the Company. By virtue of its membership interest, the Company and Credit Partners each indirectly bear an allocable share of all expenses and other obligations of Credit Fund.
Together with Credit Partners, the Company co-invests through Credit Fund. Investment opportunities for Credit Fund are sourced primarily by the Company and its affiliates. Portfolio and investment decisions with respect to Credit Fund must be unanimously approved by a quorum of Credit Fund’s investment committee consisting of an equal number of representatives of the Company and Credit Partners. Therefore, although the Company owns more than 25% of the voting securities of Credit Fund, the Company does not believe that it has control over Credit Fund (other than for purposes of the Investment Company Act). Middle Market Credit Fund SPV, LLC (the “Credit Fund Sub”), MMCF CLO 2017-1 LLC (the “2017-1 Issuer”), MMCF CLO 2019-2, LLC (the "2019-2 Issuer", formerly known as MMCF Credit Warehouse, LLC (the "Credit Fund Warehouse")) and MMCF Warehouse II, LLC (the "Credit Fund Warehouse II"), each a Delaware limited liability company, were formed on April 5, 2016, October 6, 2017 November 26, 2018 and August 16, 2019, respectively. Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer, and Credit Fund Warehouse II are wholly owned subsidiaries of Credit Fund and are consolidated in Credit Fund’s consolidated financial statements commencing from the date of their respective formations. Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer and Credit Fund Warehouse II primarily invest in first lien loans of middle market companies. Credit Fund and its wholly owned subsidiaries follow the same Internal Risk Rating System as the Company. Refer to "Debt" below for discussions regarding the credit facilities entered into and the notes issued by such wholly-owned subsidiaries.
Credit Fund, the Company and Credit Partners entered into an administration agreement with Carlyle Global Credit Administration L.L.C., the administrative agent of Credit Fund (in such capacity, the “Administrative Agent”), pursuant to which the Administrative Agent is delegated certain administrative and non-discretionary functions, is authorized to enter into sub-administration agreements at the expense of Credit Fund with the approval of the board of managers of Credit Fund, and is reimbursed by Credit Fund for its costs and expenses and Credit Fund’s allocable portion of overhead incurred by the Administrative Agent in performing its obligations thereunder.
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Selected Financial Data
Since inception of Credit Fund and through March 31, 2021 and December 31, 2020, the Company and Credit Partners each made capital contributions of $1 and $1 in members’ equity, respectively, and $216,000 and $216,000 in subordinated loans, respectively, to Credit Fund. Below is certain summarized consolidated financial information for Credit Fund as of March 31, 2021 and December 31, 2020.
| March 31, 2021 | December 31, 2020 | |||||||||||||
| (unaudited) | ||||||||||||||
| Selected Consolidated Balance Sheet Information | ||||||||||||||
| ASSETS | ||||||||||||||
| Investments, at fair value (amortized cost of $993,936 and $1,080,538, respectively) | $ | 983,277 | $ | 1,056,381 | ||||||||||
| Cash and cash equivalents | 63,384 | 119,796 | ||||||||||||
| Other assets | 11,344 | 7,553 | ||||||||||||
| Total assets | $ | 1,058,005 | $ | 1,183,730 | ||||||||||
| LIABILITIES AND MEMBERS’ EQUITY | ||||||||||||||
| Secured borrowings | $ | 446,301 | $ | 514,261 | ||||||||||
| Notes payable, net of unamortized debt issuance costs of $1,511 and $1,559, respectively | 184,326 | 253,933 | ||||||||||||
| Other liabilities | 15,243 | 15,543 | ||||||||||||
Subordinated loans and members’ equity (1) | 412,135 | 399,993 | ||||||||||||
| Liabilities and members’ equity | $ | 1,058,005 | $ | 1,183,730 | ||||||||||
(1) As of March 31, 2021 and December 31, 2020, the fair value of the Company’s ownership interest in the subordinated loans and members’ equity was $202,695 and $205,891, respectively.
| For the three month periods ended | ||||||||||||||
| March 31, 2021 | March 31, 2020 | |||||||||||||
| (unaudited) | ||||||||||||||
| Selected Consolidated Statement of Operations Information: | ||||||||||||||
| Total investment income | $ | 16,105 | $ | 21,592 | ||||||||||
| Expenses | ||||||||||||||
| Interest and credit facility expenses | 5,415 | 13,927 | ||||||||||||
| Other expenses | 468 | 503 | ||||||||||||
| Total expenses | 5,883 | 14,430 | ||||||||||||
| Net investment income (loss) | 10,222 | 7,162 | ||||||||||||
| Net realized gain (loss) on investments | (1,578) | — | ||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | 13,498 | (86,293) | ||||||||||||
| Net increase (decrease) resulting from operations | $ | 22,142 | $ | (79,131) | ||||||||||
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Below is a summary of Credit Fund’s portfolio, followed by a listing of the loans in Credit Fund's portfolio, as of March 31, 2021 and December 31, 2020:
| As of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
Senior secured loans (1) | $ | 997,657 | $ | 1,084,491 | |||||||
Weighted average yields of senior secured loans based on amortized cost (2) | 6.06 | % | 6.03 | % | |||||||
Weighted average yields of senior secured loans based on fair value (2) | 6.11 | % | 6.15 | % | |||||||
| Number of portfolio companies in Credit Fund | 50 | 54 | |||||||||
Average amount per portfolio company (1) | $ | 19,953 | $ | 20,083 | |||||||
| Number of loans on non-accrual status | — | — | |||||||||
| Fair value of loans on non-accrual status | $ | — | $ | — | |||||||
Percentage of portfolio at floating interest rates (3)(4) | 97.3 | % | 97.7 | % | |||||||
Percentage of portfolio at fixed interest rates (4) | 2.7 | % | 2.3 | % | |||||||
| Fair value of loans with PIK provisions | $ | 26,602 | $ | 24,113 | |||||||
Percentage of portfolio with PIK provisions (4) | 2.7 | % | 2.3 | % | |||||||
(1)At par/principal amount.
(2)Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2021 and December 31, 2020. Weighted average yield on debt and income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at fair value included in such securities. Weighted average yield on debt and income producing securities at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.
(3)Floating rate debt investments are primarily subject to interest rate floors.
(4)Percentages based on fair value.
86
| Consolidated Schedule of Investments as of March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (97.3% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACR Group Borrower, LLC | ^+ | (2)(3)(6) | Aerospace & Defense | L + 4.50% | 5.50% | 3/31/2028 | $ | 34,650 | $ | 34,020 | $ | 34,020 | |||||||||||||||||||||||||||||||||||||||||
| Acrisure, LLC | \# | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 3.50% | 3.70% | 2/15/2027 | 25,570 | 25,542 | 25,220 | ||||||||||||||||||||||||||||||||||||||||||||
| Alpha Packaging Holdings, Inc. | +\ | (2)(3) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 11/12/2021 | 16,269 | 16,269 | 16,269 | ||||||||||||||||||||||||||||||||||||||||||||
| AmeriLife Holdings LLC | # | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 4.00% | 4.11% | 3/18/2027 | 9,926 | 9,905 | 9,923 | ||||||||||||||||||||||||||||||||||||||||||||
| Analogic Corporation | ^+ | (2)(3)(6) | Capital Equipment | L + 5.25% | 6.25% | 6/22/2024 | 18,810 | 18,790 | 18,687 | ||||||||||||||||||||||||||||||||||||||||||||
| Anchor Packaging, Inc. | +# | (2)(3) | Containers, Packaging & Glass | L + 4.00% | 4.11% | 7/18/2026 | 24,660 | 24,559 | 24,660 | ||||||||||||||||||||||||||||||||||||||||||||
| API Technologies Corp. | +\ | (2)(3) | Aerospace & Defense | L + 4.25% | 4.36% | 5/9/2026 | 14,738 | 14,679 | 14,516 | ||||||||||||||||||||||||||||||||||||||||||||
| Aptean, Inc. | (2)(3) | Software | L + 4.25% | 4.36% | 4/23/2026 | 12,250 | 12,199 | 12,121 | |||||||||||||||||||||||||||||||||||||||||||||
| Astra Acquisition Corp. | +# | (2)(3) | Software | L + 4.75% | 5.50% | 2/28/2027 | 28,782 | 28,405 | 28,443 | ||||||||||||||||||||||||||||||||||||||||||||
| Avalign Technologies, Inc. | +\ | (2)(3) | Healthcare & Pharmaceuticals | L + 4.50% | 4.69% | 12/22/2025 | 14,555 | 14,449 | 14,485 | ||||||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | + | (2)(3) | Sovereign & Public Finance | L + 5.25% | 6.25% | 9/28/2024 | 23,531 | 23,531 | 23,531 | ||||||||||||||||||||||||||||||||||||||||||||
| Big Ass Fans, LLC | +\# | (2)(3) | Capital Equipment | L + 3.75% | 4.75% | 5/21/2024 | 13,730 | 13,680 | 13,730 | ||||||||||||||||||||||||||||||||||||||||||||
| BK Medical Holding Company, Inc. | ^+ | (2)(3)(6) | Healthcare & Pharmaceuticals | L + 5.25% | 6.25% | 6/22/2024 | 24,104 | 23,905 | 23,650 | ||||||||||||||||||||||||||||||||||||||||||||
| Chemical Computing Group ULC (Canada) | ^+ | (2)(3)(6) | Software | L + 5.00% | 6.00% | 8/30/2023 | 14,019 | 13,402 | 14,019 | ||||||||||||||||||||||||||||||||||||||||||||
| Clearent Newco, LLC | ^ | (2)(3)(6) | High Tech Industries | L + 5.50% | 6.50% | 3/20/2025 | 29,423 | 29,187 | 29,423 | ||||||||||||||||||||||||||||||||||||||||||||
| Clearent Newco, LLC | +\ | (2)(3) | High Tech Industries | L + 6.50% | 7.50% | 3/20/2025 | 4,069 | 4,069 | 4,069 | ||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding LLC | ^ | (2) | Transportation: Cargo | 14.00% PIK | 14.00% | 3/26/2023 | 2,538 | 2,538 | 2,538 | ||||||||||||||||||||||||||||||||||||||||||||
| DecoPac, Inc. | ^+\ | (2)(3)(6) | Non-durable Consumer Goods | L + 4.25% | 5.25% | 9/29/2024 | 12,336 | 12,259 | 12,334 | ||||||||||||||||||||||||||||||||||||||||||||
| Diligent Corporation | ^+ | (2)(3)(6) | Telecommunications | L + 6.25% | 7.25% | 8/4/2025 | 8,661 | 8,399 | 8,738 | ||||||||||||||||||||||||||||||||||||||||||||
| DTI Holdco, Inc. | ^+\ | (2)(3) | High Tech Industries | L + 4.75% | 5.75% | 9/30/2023 | 18,641 | 18,566 | 17,860 | ||||||||||||||||||||||||||||||||||||||||||||
| Eliassen Group, LLC | +\ | (2)(3) | Business Services | L + 4.25% | 4.36% | 11/5/2024 | 7,533 | 7,509 | 7,496 | ||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^+ | (2)(3)(6) | Telecommunications | L + 5.75% | 6.75% | 6/7/2023 | 19,750 | 19,713 | 19,750 | ||||||||||||||||||||||||||||||||||||||||||||
| Exactech, Inc. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 3.75% | 4.75% | 2/14/2025 | 21,473 | 21,367 | 20,749 | ||||||||||||||||||||||||||||||||||||||||||||
| Excel Fitness Holdings, Inc. | +# | (2)(3) | Hotel, Gaming & Leisure | L + 5.25% | 6.25% | 10/7/2025 | 24,688 | 24,494 | 23,495 | ||||||||||||||||||||||||||||||||||||||||||||
| Frontline Technologies Holdings, LLC | + | (2)(3) | Software | L + 5.75% | 6.75% | 9/18/2023 | 14,849 | 14,214 | 14,980 | ||||||||||||||||||||||||||||||||||||||||||||
| Golden West Packaging Group LLC | +\ | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 6/20/2023 | 27,305 | 27,208 | 27,259 | ||||||||||||||||||||||||||||||||||||||||||||
| HMT Holding Inc. | +\ | (2)(3)(6) | Energy: Oil & Gas | L + 5.00% | 6.00% | 11/17/2023 | 32,737 | 32,404 | 32,001 | ||||||||||||||||||||||||||||||||||||||||||||
| Integrity Marketing Acquisition, LLC | ^+ | (2)(3)(6) | Banking, Finance, Insurance & Real Estate | L + 6.25% | 7.25% | 8/27/2025 | 8,495 | 8,381 | 8,615 | ||||||||||||||||||||||||||||||||||||||||||||
| Jensen Hughes, Inc. | +\ | (2)(3)(6) | Utilities: Electric | L + 4.50% | 5.50% | 3/22/2024 | 34,863 | 34,771 | 34,118 | ||||||||||||||||||||||||||||||||||||||||||||
| KAMC Holdings, Inc. | (2)(3) | Energy: Electricity | L + 4.00% | 4.19% | 8/14/2026 | 13,790 | 13,735 | 13,208 | |||||||||||||||||||||||||||||||||||||||||||||
| KBP Investments, LLC | ^+ | (2)(3)(6) | Beverage, Food & Tobacco | L + 5.00% | 6.00% | 5/15/2023 | 9,277 | 9,058 | 9,362 | ||||||||||||||||||||||||||||||||||||||||||||
| Marco Technologies, LLC | +\ | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.00% | 5.00% | 10/30/2023 | 7,332 | 7,313 | 7,332 | ||||||||||||||||||||||||||||||||||||||||||||
| Mold-Rite Plastics, LLC | +\ | (2)(3) | Chemicals, Plastics & Rubber | L + 4.25% | 5.25% | 12/14/2021 | 14,483 | 14,468 | 14,483 | ||||||||||||||||||||||||||||||||||||||||||||
| Newport Group Holdings II, Inc. | +\# | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 3.50% | 3.70% | 9/13/2025 | 23,415 | 23,235 | 23,389 | ||||||||||||||||||||||||||||||||||||||||||||
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| Consolidated Schedule of Investments as of March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| Odyssey Logistics & Technology Corp. | +\# | (2)(3) | Transportation: Cargo | L + 4.00% | 5.00% | 10/12/2024 | $ | 33,328 | $ | 33,229 | $ | 32,652 | |||||||||||||||||||||||||||||||||||||||||
| Output Services Group | ^+\ | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.50% | 5.50% | 3/27/2024 | 19,371 | 19,335 | 15,128 | ||||||||||||||||||||||||||||||||||||||||||||
| Premise Health Holding Corp. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 3.50% | 3.70% | 7/10/2025 | 13,550 | 13,505 | 13,498 | ||||||||||||||||||||||||||||||||||||||||||||
| Propel Insurance Agency, LLC | ^+\ | (2)(3)(6) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 6/1/2024 | 37,562 | 37,123 | 37,403 | ||||||||||||||||||||||||||||||||||||||||||||
| Q Holding Company | +\# | (2)(3) | Automotive | L + 5.00% | 6.00% | 12/31/2023 | 21,680 | 21,554 | 20,355 | ||||||||||||||||||||||||||||||||||||||||||||
| QW Holding Corporation | + | (2)(3)(6) | Environmental Industries | L + 5.75% | 6.75% | 8/31/2022 | 11,536 | 11,455 | 10,706 | ||||||||||||||||||||||||||||||||||||||||||||
| Radiology Partners, Inc. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 4.25% | 4.79% | 7/9/2025 | 27,686 | 27,586 | 27,439 | ||||||||||||||||||||||||||||||||||||||||||||
| RevSpring Inc. | +\# | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.25% | 4.36% | 10/11/2025 | 29,374 | 29,199 | 29,216 | ||||||||||||||||||||||||||||||||||||||||||||
| Situs Group Holdings Corporation | +\ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 4.75% | 4.94% | 6/28/2025 | 14,744 | 14,656 | 14,642 | ||||||||||||||||||||||||||||||||||||||||||||
| Striper Buyer, LLC | + | (2)(3) | Containers, Packaging & Glass | L + 5.50% | 6.25% | 12/30/2026 | 14,963 | 14,815 | 14,813 | ||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^+ | (2)(3)(6) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2022 | 29,044 | 28,723 | 29,044 | ||||||||||||||||||||||||||||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | +\ | (2)(3)(6) | Beverage, Food & Tobacco | L + 4.50% | 5.50% | 7/20/2022 | 6,279 | 6,265 | 6,279 | ||||||||||||||||||||||||||||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | + | (2)(3) | Beverage, Food & Tobacco | L + 5.00% | 6.00% | 7/20/2022 | 8,815 | 8,796 | 8,815 | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. TelePacific Holdings Corp. | +\ | (2)(3) | Telecommunications | L + 5.50% | 6.50% | 5/2/2023 | 6,660 | 6,625 | 6,144 | ||||||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | + | (2)(3)(6) | Business Services | L + 6.50% | 7.50% | 3/31/2023 | 30,504 | 29,503 | 29,877 | ||||||||||||||||||||||||||||||||||||||||||||
| Water Holdings Acquisition LLC | ^+ | (2)(3)(6) | Utilities: Water | L + 5.25% | 6.25% | 12/18/2026 | 26,250 | 25,488 | 25,627 | ||||||||||||||||||||||||||||||||||||||||||||
| Welocalize, Inc. | + | (2)(3)(6) | Business Services | L + 4.50% | 5.50% | 12/23/2023 | 22,574 | 22,369 | 22,571 | ||||||||||||||||||||||||||||||||||||||||||||
| WRE Holding Corp. | ^+ | (2)(3)(6) | Environmental Industries | L + 5.50% | 6.50% | 1/3/2023 | 8,421 | 8,394 | 8,307 | ||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 964,843 | $ | 956,989 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (2.4% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | (2) | Transportation: Cargo | 10.00% PIK | 10.00% | 2/1/2026 | $ | 24,064 | $ | 23,729 | $ | 24,064 | |||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt Total | $ | 23,729 | $ | 24,064 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (0.2% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | Transportation: Cargo | 2,961 | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | Transportation: Cargo | 13,996 | 5,364 | 2,224 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments Total | $ | 5,364 | $ | 2,224 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total Investments | $ | 993,936 | $ | 983,277 | |||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into a revolving credit facility with the Company (the "Credit Fund Facility"). Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.
+ Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into a revolving credit facility (the “Credit Fund Sub Facility”). The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund, the 2019-2 Issuer or Credit Fund Warehouse II.
\ Denotes that all or a portion of the assets are owned by the 2019-2 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on May 21, 2019 (the “2019-2 Debt Securitization”). Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or Credit Fund Warehouse II.
# Denotes that all or a portion of the assets are owned by the Credit Fund Warehouse II. Credit Fund Warehouse II has entered into a revolving credit facility (the "Credit Fund Warehouse II Facility"). The lenders of the Credit Fund Warehouse II Facility have a first lien security interest in substantially all of the assets of the Credit Fund Warehouse II. Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or the 2019-2 Issuer.
(1)Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of March 31, 2021, the geographical composition of investments as a percentage of fair value was 3.0% in Canada and 97.0% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of March 31, 2021. As of March 31,
88
2021, the reference rates for Credit Fund’s variable rate loans were the 30-day LIBOR at 0.11%, the 90-day LIBOR at 0.19% and the 180-day LIBOR at 0.21%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
(6)As of March 31, 2021, Credit Fund and Credit Fund Sub had the following unfunded commitments to fund delayed draw and revolving senior secured loans:
| First Lien Debt – unfunded delayed draw and revolving term loans commitments | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| ACR Group Borrower, LLC | Revolver | 0.38% | $ | 7,350 | $ | (110) | |||||||||||||||||
| Analogic Corporation | Revolver | 0.50 | 1,975 | — | |||||||||||||||||||
| BK Medical Holding Company, Inc. | Revolver | 0.50 | 2,609 | (176) | |||||||||||||||||||
| Chemical Computing Group ULC (Canada) | Revolver | 0.50 | 873 | — | |||||||||||||||||||
| Clearent Newco, LLC | Delayed Draw | 1.00 | 2,549 | (66) | |||||||||||||||||||
| DecoPac, Inc. | Revolver | 0.50 | 2,143 | (3) | |||||||||||||||||||
| Diligent Corporation | Delayed Draw | 1.00 | 2,109 | 25 | |||||||||||||||||||
| Diligent Corporation | Revolver | 0.50 | 703 | 8 | |||||||||||||||||||
| EvolveIP, LLC | Delayed Draw | 1.00 | 1,904 | (2) | |||||||||||||||||||
| EvolveIP, LLC | Revolver | 0.50 | 1,680 | (2) | |||||||||||||||||||
| HMT Holding Inc. | Revolver | 0.50 | 6,173 | (291) | |||||||||||||||||||
| Integrity Marketing Acquisition, LLC | Delayed Draw | 1.00 | 3,464 | 46 | |||||||||||||||||||
| Jensen Hughes, Inc. | Delayed Draw | 1.00 | 1,127 | (35) | |||||||||||||||||||
| Jensen Hughes, Inc. | Revolver | 0.50 | 1,000 | (31) | |||||||||||||||||||
| KBP Investments, LLC | Delayed Draw | 1.00 | 503 | 1 | |||||||||||||||||||
| KBP Investments, LLC | Delayed Draw | 1.00 | 10,190 | 30 | |||||||||||||||||||
| Propel Insurance Agency, LLC | Revolver | 0.50 | 2,381 | (24) | |||||||||||||||||||
| Propel Insurance Agency, LLC | Delayed Draw | 1.00 | 1,733 | (17) | |||||||||||||||||||
| QW Holding Corporation | Revolver | 0.50 | 5,498 | (268) | |||||||||||||||||||
| QW Holding Corporation | Delayed Draw | 1.00 | 162 | (8) | |||||||||||||||||||
| T2 Systems, Inc. | Revolver | 0.50 | 1,955 | — | |||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | Revolver | 0.50 | 1,665 | (1) | |||||||||||||||||||
| VRC Companies, LLC | Revolver | 0.50 | 858 | — | |||||||||||||||||||
| Water Holdings Acquisition LLC | Delayed Draw | 1.00 | 8,421 | (126) | |||||||||||||||||||
| Water Holdings Acquisition LLC | Revolver | 0.50 | 5,263 | (79) | |||||||||||||||||||
| Welocalize, Inc. | Revolver | 0.50 | 1,800 | (3) | |||||||||||||||||||
| WRE Holding Corp. | Revolver | 0.50 | 778 | (9) | |||||||||||||||||||
| WRE Holding Corp. | Delayed Draw | 1.00 | 563 | (7) | |||||||||||||||||||
| Total unfunded commitments | $ | 77,429 | $ | (1,148) | |||||||||||||||||||
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| Consolidated Schedule of Investments as of December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (97.5% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acrisure, LLC | \# | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 3.50% | 3.65% | 2/15/2027 | $ | 25,634 | $ | 25,606 | $ | 25,104 | |||||||||||||||||||||||||||||||||||||||||
| Alku, LLC | +# | (2)(3) | Business Services | L + 5.50% | 5.75% | 7/29/2026 | 23,666 | 23,466 | 23,512 | ||||||||||||||||||||||||||||||||||||||||||||
| Alpha Packaging Holdings, Inc. | +\ | (2)(3) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 11/12/2021 | 16,378 | 16,378 | 16,378 | ||||||||||||||||||||||||||||||||||||||||||||
| AmeriLife Holdings LLC | # | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 4.00% | 4.15% | 3/18/2027 | 9,951 | 9,929 | 9,802 | ||||||||||||||||||||||||||||||||||||||||||||
| Analogic Corporation | ^+ | (2)(3)(6) | Capital Equipment | L + 5.25% | 6.25% | 6/22/2024 | 18,857 | 18,837 | 18,857 | ||||||||||||||||||||||||||||||||||||||||||||
| Anchor Packaging, Inc. | +# | (2)(3) | Containers, Packaging & Glass | L + 4.00% | 4.15% | 7/18/2026 | 24,723 | 24,617 | 24,656 | ||||||||||||||||||||||||||||||||||||||||||||
| API Technologies Corp. | +\ | (2)(3) | Aerospace & Defense | L + 4.25% | 4.49% | 5/9/2026 | 14,775 | 14,713 | 13,999 | ||||||||||||||||||||||||||||||||||||||||||||
| Aptean, Inc. | +\ | (2)(3) | Software | L + 4.25% | 4.40% | 4/23/2026 | 12,281 | 12,227 | 12,077 | ||||||||||||||||||||||||||||||||||||||||||||
| AQA Acquisition Holding, Inc. | +\ | (2)(3)(6) | High Tech Industries | L + 4.25% | 5.25% | 5/24/2023 | 18,759 | 18,752 | 18,757 | ||||||||||||||||||||||||||||||||||||||||||||
| Astra Acquisition Corp. | +# | (2)(3) | Software | L + 5.50% | 6.50% | 3/1/2027 | 28,783 | 28,392 | 28,783 | ||||||||||||||||||||||||||||||||||||||||||||
| Avalign Technologies, Inc. | +\ | (2)(3) | Healthcare & Pharmaceuticals | L + 4.50% | 4.73% | 12/22/2025 | 14,592 | 14,481 | 14,334 | ||||||||||||||||||||||||||||||||||||||||||||
| Big Ass Fans, LLC | +\# | (2)(3) | Capital Equipment | L + 3.75% | 4.75% | 5/21/2024 | 13,766 | 13,714 | 13,766 | ||||||||||||||||||||||||||||||||||||||||||||
| BK Medical Holding Company, Inc. | ^+ | (2)(3)(6) | Healthcare & Pharmaceuticals | L + 5.25% | 6.25% | 6/22/2024 | 24,165 | 23,951 | 22,363 | ||||||||||||||||||||||||||||||||||||||||||||
| Chemical Computing Group ULC (Canada) | ^+ | (2)(3)(6) | Software | L + 5.00% | 6.00% | 8/30/2023 | 14,055 | 13,378 | 14,055 | ||||||||||||||||||||||||||||||||||||||||||||
| Clarity Telecom LLC. | + | Media: Broadcasting & Subscription | L + 4.25% | 4.40% | 8/30/2026 | 14,813 | 14,773 | 14,813 | |||||||||||||||||||||||||||||||||||||||||||||
| Clearent Newco, LLC | ^ | (2)(3)(6) | High Tech Industries | L + 6.50% | 7.50% | 3/20/2025 | 4,079 | 4,079 | 3,907 | ||||||||||||||||||||||||||||||||||||||||||||
| Clearent Newco, LLC | ^+\ | (2)(3) | High Tech Industries | L + 5.50% | 6.50% | 3/20/2025 | 29,486 | 29,236 | 28,722 | ||||||||||||||||||||||||||||||||||||||||||||
| DecoPac, Inc. | ^+\ | (2)(3)(6) | Non-durable Consumer Goods | L + 4.25% | 5.25% | 9/29/2024 | 12,336 | 12,253 | 12,318 | ||||||||||||||||||||||||||||||||||||||||||||
| Diligent Corporation | ^+ | (2)(3)(6) | Telecommunications | L + 6.25% | 7.25% | 8/4/2025 | 8,683 | 8,411 | 8,819 | ||||||||||||||||||||||||||||||||||||||||||||
| DTI Holdco, Inc. | ^+\ | (2)(3) | High Tech Industries | L + 4.75% | 5.75% | 9/30/2023 | 18,690 | 18,642 | 16,655 | ||||||||||||||||||||||||||||||||||||||||||||
| Eliassen Group, LLC | +\ | (2)(3) | Business Services | L + 4.25% | 4.40% | 11/5/2024 | 7,543 | 7,516 | 7,483 | ||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^+ | (2)(3)(6) | Telecommunications | L + 5.75% | 6.75% | 6/7/2023 | 19,800 | 19,759 | 19,775 | ||||||||||||||||||||||||||||||||||||||||||||
| Exactech, Inc. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 3.75% | 4.75% | 2/14/2025 | 21,528 | 21,416 | 20,422 | ||||||||||||||||||||||||||||||||||||||||||||
| Excel Fitness Holdings, Inc. | +# | (2)(3) | Hotel, Gaming & Leisure | L + 5.25% | 6.25% | 10/7/2025 | 24,750 | 24,546 | 22,780 | ||||||||||||||||||||||||||||||||||||||||||||
| Frontline Technologies Holdings, LLC | + | (2)(3) | Software | L + 5.75% | 6.75% | 9/18/2023 | 14,886 | 14,198 | 14,589 | ||||||||||||||||||||||||||||||||||||||||||||
| Golden West Packaging Group LLC | +\ | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 6/20/2023 | 29,012 | 28,896 | 28,974 | ||||||||||||||||||||||||||||||||||||||||||||
| HMT Holding Inc. | +\ | (2)(3)(6) | Energy: Oil & Gas | L + 5.00% | 6.00% | 11/17/2023 | 32,821 | 32,458 | 30,984 | ||||||||||||||||||||||||||||||||||||||||||||
| Integrity Marketing Acquisition, LLC | ^+ | (2)(3)(6) | Banking, Finance, Insurance & Real Estate | L + 6.25% | 7.25% | 8/27/2025 | 7,836 | 7,701 | 7,956 | ||||||||||||||||||||||||||||||||||||||||||||
| Jensen Hughes, Inc. | +\ | (2)(3)(6) | Utilities: Electric | L + 4.50% | 5.50% | 3/22/2024 | 34,584 | 34,489 | 33,424 | ||||||||||||||||||||||||||||||||||||||||||||
| KAMC Holdings, Inc. | +# | (2)(3) | Energy: Electricity | L + 4.00% | 4.23% | 8/14/2026 | 13,825 | 13,768 | 12,531 | ||||||||||||||||||||||||||||||||||||||||||||
| KBP Investments, LLC | ^+ | (2)(3)(6) | Beverage, Food & Tobacco | L + 5.00% | 6.00% | 5/15/2023 | 9,292 | 9,059 | 9,350 | ||||||||||||||||||||||||||||||||||||||||||||
| Marco Technologies, LLC | ^+\ | (2)(3)(6) | Media: Advertising, Printing & Publishing | L + 4.00% | 5.00% | 10/30/2023 | 7,332 | 7,293 | 7,332 | ||||||||||||||||||||||||||||||||||||||||||||
| Mold-Rite Plastics, LLC | +\ | (2)(3) | Chemicals, Plastics & Rubber | L + 4.25% | 5.25% | 12/14/2021 | 14,520 | 14,501 | 14,520 | ||||||||||||||||||||||||||||||||||||||||||||
| Newport Group Holdings II, Inc. | +\# | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 3.50% | 3.75% | 9/13/2025 | 23,475 | 23,285 | 23,405 | ||||||||||||||||||||||||||||||||||||||||||||
| Odyssey Logistics & Technology Corp. | +\# | (2)(3) | Transportation: Cargo | L + 4.00% | 5.00% | 10/12/2024 | 38,897 | 38,773 | 37,766 | ||||||||||||||||||||||||||||||||||||||||||||
| Output Services Group | ^+\ | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.50% | 5.50% | 3/27/2024 | 19,421 | 19,382 | 14,178 | ||||||||||||||||||||||||||||||||||||||||||||
90
| Consolidated Schedule of Investments as of December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| Pasternack Enterprises, Inc. | +\ | (2)(3) | Capital Equipment | L + 4.00% | 5.00% | 7/2/2025 | $ | 22,524 | $ | 22,513 | $ | 22,218 | |||||||||||||||||||||||||||||||||||||||||
| Pharmalogic Holdings Corp. | +\ | (2)(3) | Healthcare & Pharmaceuticals | L + 4.00% | 5.00% | 6/11/2023 | 11,205 | 11,189 | 11,158 | ||||||||||||||||||||||||||||||||||||||||||||
| Premise Health Holding Corp. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 3.50% | 3.75% | 7/10/2025 | 13,584 | 13,538 | 13,503 | ||||||||||||||||||||||||||||||||||||||||||||
| Propel Insurance Agency, LLC | ^+\ | (2)(3)(6) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 6/1/2024 | 38,134 | 37,662 | 37,716 | ||||||||||||||||||||||||||||||||||||||||||||
| Q Holding Company | +\# | (2)(3) | Automotive | L + 5.00% | 6.00% | 12/31/2023 | 21,735 | 21,604 | 20,229 | ||||||||||||||||||||||||||||||||||||||||||||
| QW Holding Corporation | + | (2)(3)(6) | Environmental Industries | L + 6.25% | 7.25% | 8/31/2022 | 11,566 | 11,465 | 10,727 | ||||||||||||||||||||||||||||||||||||||||||||
| Radiology Partners, Inc. | +\# | (2)(3) | Healthcare & Pharmaceuticals | L + 4.25% | 4.81% | 7/9/2025 | 27,686 | 27,581 | 27,193 | ||||||||||||||||||||||||||||||||||||||||||||
| RevSpring Inc. | +\# | (2)(3) | Media: Advertising, Printing & Publishing | L + 4.25% | 4.40% | 10/11/2025 | 29,449 | 29,265 | 29,199 | ||||||||||||||||||||||||||||||||||||||||||||
| Situs Group Holdings Corporation | +\ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 4.75% | 5.75% | 6/28/2025 | 14,781 | 14,689 | 14,636 | ||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^+ | (2)(3)(6) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2022 | 29,119 | 28,743 | 29,118 | ||||||||||||||||||||||||||||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | +\ | (2)(3)(6) | Beverage, Food & Tobacco | L + 4.50% | 5.50% | 7/20/2022 | 6,295 | 6,281 | 6,289 | ||||||||||||||||||||||||||||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | + | (2)(3) | Beverage, Food & Tobacco | L + 5.00% | 6.00% | 7/20/2022 | 8,837 | 8,815 | 8,829 | ||||||||||||||||||||||||||||||||||||||||||||
| Thoughtworks, Inc. | \# | (2)(3) | Business Services | L + 3.75% | 4.75% | 10/11/2024 | 11,704 | 11,683 | 11,704 | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. Acute Care Solutions, LLC | +\ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 5/15/2021 | 31,211 | 31,184 | 29,104 | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. TelePacific Holdings Corp. | +\ | (2)(3) | Telecommunications | L + 5.50% | 6.50% | 5/2/2023 | 26,660 | 26,585 | 23,984 | ||||||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | + | (2)(3)(6) | Business Services | L + 6.50% | 7.50% | 3/31/2023 | 30,582 | 29,464 | 30,582 | ||||||||||||||||||||||||||||||||||||||||||||
| Water Holdings Acquisition LLC | ^+ | (2)(3)(6) | Utilities: Water | L + 5.25% | 6.25% | 12/18/2026 | 26,316 | 25,520 | 25,516 | ||||||||||||||||||||||||||||||||||||||||||||
| Welocalize, Inc. | + | (2)(3)(6) | Business Services | L + 4.50% | 5.50% | 12/23/2023 | 22,629 | 22,414 | 22,584 | ||||||||||||||||||||||||||||||||||||||||||||
| WRE Holding Corp. | ^+ | (2)(3)(6) | Environmental Industries | L + 5.25% | 6.25% | 1/3/2023 | 8,367 | 8,336 | 8,252 | ||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 1,051,406 | $ | 1,029,687 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (2.3% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | (2) | Transportation: Cargo | 9.00% PIK | 9.00% | 2/1/2026 | $ | 24,113 | $ | 23,768 | $ | 24,113 | |||||||||||||||||||||||||||||||||||||||||
Second Lien Debt Total | $ | 23,768 | $ | 24,113 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments (0.2%of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | Transportation: Cargo | $ | 2,961 | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||
| DBI Holding, LLC | ^ | Transportation: Cargo | $ | 13,996 | $ | 5,364 | $ | 2,581 | |||||||||||||||||||||||||||||||||||||||||||||
Equity Investments Total | $ | 5,364 | $ | 2,581 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total Investments | $ | 1,080,538 | $ | 1,056,381 | |||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into the Credit Fund Facility. Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.
+ Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into a revolving credit facility the Credit Fund Sub Facility. The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund, the 2019-2 Issuer or Credit Fund Warehouse II.
\ Denotes that all or a portion of the assets are owned by the 2019-2 Issuer and secure the notes issued in connection with the 2019-2 Debt Securitization. Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or Credit Fund Warehouse II.
# Denotes that all or a portion of the assets are owned by the Credit Fund Warehouse II. Credit Fund Warehouse II has entered into the Credit Fund Warehouse II Facility. The lenders of the Credit Fund Warehouse II Facility have a first lien security interest in substantially all of the assets of the Credit Fund Warehouse II. Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or the 2019-2 Issuer.
(1)Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of December 31, 2020, the geographical composition of investments as a percentage of fair value was 2.8% in Canada and 97.2% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2020. As of
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December 31, 2020, the reference rates for Credit Fund's variable rate loans were the 30-day LIBOR at 0.15%, the 90-day LIBOR at 0.25% and the 180-day LIBOR at 0.26%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements.
(6)As of December 31, 2020, Credit Fund and Credit Fund Sub had the following unfunded commitments to fund delayed draw and revolving senior secured loans:
| First Lien Debt—unfunded delayed draw and revolving term loans commitments | Type | Unused Fee | Par/ Principal Amount | Fair Value | |||||||||||||||||||
| Analogic Corporation | Revolver | 0.50 | % | $ | 1,975 | $ | — | ||||||||||||||||
| AQA Acquisition Holding, Inc. | Revolver | 0.50 | 2,459 | — | |||||||||||||||||||
| BK Medical Holding Company, Inc. | Revolver | 0.50 | 2,609 | (176) | |||||||||||||||||||
| Chemical Computing Group ULC (Canada) | Revolver | 0.50 | 873 | — | |||||||||||||||||||
| Clearent Newco, LLC | Delayed Draw | 1.00 | 2,549 | (66) | |||||||||||||||||||
| DecoPac, Inc. | Revolver | 0.50 | 2,143 | (3) | |||||||||||||||||||
| Diligent Corporation | Delayed Draw | 1.00 | 2,109 | 25 | |||||||||||||||||||
| Diligent Corporation | Revolver | 0.50 | 703 | 8 | |||||||||||||||||||
| EvolveIP, LLC | Delayed Draw | 1.00 | 1,904 | (2) | |||||||||||||||||||
| EvolveIP, LLC | Revolver | 0.50 | 1,680 | (2) | |||||||||||||||||||
| HMT Holding Inc. | Revolver | 0.50 | 6,173 | (291) | |||||||||||||||||||
| Integrity Marketing Acquistion, LLC | Delayed Draw | 1.00 | 4,144 | 41 | |||||||||||||||||||
| Jensen Hughes, Inc. | Delayed Draw | 1.00 | 1,127 | (35) | |||||||||||||||||||
| Jensen Hughes, Inc. | Revolver | 0.50 | 1,364 | (43) | |||||||||||||||||||
| KBP Investments, LLC | Delayed Draw | 1.00 | 503 | 1 | |||||||||||||||||||
| KBP Investments, LLC | Delayed Draw | 1.00 | 10,190 | 30 | |||||||||||||||||||
| Marco Technologies, LLC | Delayed Draw | 1.00 | 7,500 | — | |||||||||||||||||||
| Propel Insurance Agency, LLC | Revolver | 0.50 | 1,905 | (19) | |||||||||||||||||||
| Propel Insurance Agency, LLC | Delayed Draw | 1.00 | 1,733 | (17) | |||||||||||||||||||
| QW Holding Corporation | Revolver | 0.50 | 5,498 | (268) | |||||||||||||||||||
| QW Holding Corporation | Delayed Draw | 1.00 | 161 | (8) | |||||||||||||||||||
| T2 Systems, Inc. | Revolver | 0.50 | 1,955 | — | |||||||||||||||||||
| The Original Cakerie, Ltd. (Canada) | Revolver | 0.50 | 1,665 | (1) | |||||||||||||||||||
| VRC Companies, LLC | Revolver | 0.50 | 858 | — | |||||||||||||||||||
| Water Holdings Acquisition LLC | Delayed Draw | 1.00 | 8,421 | (168) | |||||||||||||||||||
| Water Holdings Acquisition LLC | Revolver | 0.50 | 5,263 | (105) | |||||||||||||||||||
| Welocalize, Inc. | Revolver | 0.50 | 2,250 | (4) | |||||||||||||||||||
| WRE Holding Corp. | Revolver | 0.50 | 852 | (10) | |||||||||||||||||||
| WRE Holding Corp. | Delayed Draw | 1.00 | 563 | (7) | |||||||||||||||||||
| Total unfunded commitments | $ | 81,129 | $ | (1,120) | |||||||||||||||||||
(7)Loan was on non-accrual status as of December 31, 2020.
Debt
Credit Fund, Credit Fund Sub and Credit Fund Warehouse II are party to separate credit facilities as described below. In addition, until May 15, 2019, the 2019-2 Issuer (formerly known as Credit Fund Warehouse) was a party to the Credit Warehouse Facility. As of March 31, 2021 and December 31, 2020, Credit Fund, Credit Fund Sub and Credit Fund Warehouse II were in compliance with all covenants and other requirements of their respective credit facility agreements. Below is a summary of the borrowings and repayments under the credit facilities for the three month periods ended 2021 and 2020, and the outstanding balances under the credit facilities for the respective periods.
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| Credit Fund Facility | Credit Fund Sub Facility | Credit Fund Warehouse II Facility | ||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||
| Three Month Periods Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| Outstanding balance, beginning of period | $ | — | $ | 93,000 | $ | 420,859 | $ | 343,506 | $ | 93,402 | $ | 97,571 | ||||||||||||||||||||||||||
| Borrowings | — | 63,500 | 63,000 | 57,000 | — | 19,794 | ||||||||||||||||||||||||||||||||
| Repayments | — | (156,500) | (120,738) | (33,500) | (10,222) | (21,950) | ||||||||||||||||||||||||||||||||
| Outstanding balance, end of period | $ | — | $ | — | $ | 363,121 | $ | 367,006 | $ | 83,180 | $ | 95,415 | ||||||||||||||||||||||||||
| Three Month Periods Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| Outstanding Borrowing, beginning of period | $ | — | $ | 93,000 | $ | — | $ | 343,506 | $ | — | $ | 97,571 | ||||||||||||||||||||||||||
| Borrowings | — | 63,500 | — | 57,000 | — | 19,794 | ||||||||||||||||||||||||||||||||
| Repayments | — | (156,500) | — | (33,500) | — | (21,950) | ||||||||||||||||||||||||||||||||
| Outstanding balance, end of period | $ | — | $ | — | $ | — | $ | 367,006 | $ | — | $ | 95,415 | ||||||||||||||||||||||||||
Credit Fund Facility. On June 24, 2016, Credit Fund entered into the Credit Fund Facility with the Company, which was subsequently amended on June 5, 2017, October 2, 2017, November 3, 2017, June 22, 2018, June 29, 2018, February 21, 2019, March 20, 2020 and February 22, 2021, pursuant to which Credit Fund may from time to time request mezzanine loans from the Company. The maximum principal amount of the Credit Fund Facility is $175,000. The maturity date of the Credit Fund Facility is May 21, 2022. Amounts borrowed under the Credit Fund Facility bear interest at a rate of LIBOR plus 9.00%.
Credit Fund Sub Facility. On June 24, 2016, Credit Fund Sub closed on the Credit Fund Sub Facility with lenders, which was subsequently amended on May 31, 2017, October 27, 2017, August 24, 2018, December 12, 2019, March 11, 2020 and May 3, 2021. The Credit Fund Sub Facility provides for secured borrowings during the applicable revolving period up to an amount equal to $640,000. The facility is secured by a first lien security interest in substantially all of the portfolio investments held by Credit Fund Sub. The maturity date of the Credit Fund Sub Facility is May 22, 2024. Amounts borrowed under the Credit Fund Sub Facility bear interest at a rate of LIBOR plus 2.25%.
Credit Fund Warehouse II Facility. On August 16, 2019, Credit Fund Warehouse II closed on a revolving credit facility (the "Credit Fund Warehouse II Facility") with lenders. The Credit Fund Warehouse II Facility provides for secured borrowings during the applicable revolving period up to an amount equal to $150,000. The Credit Fund Warehouse II Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Credit Fund Warehouse II Facility. The maturity date of the Credit Fund Warehouse II Facility is August 16, 2022. Amounts borrowed under the Credit Fund Warehouse II Facility bear interest at a rate of LIBOR plus 1.05% for the first 12 months, LIBOR plus 1.15% for the next 12 months, and LIBOR plus 1.50% in the final 12 months.
2017-1 Notes
On December 19, 2017, Credit Fund completed the 2017-1 Debt Securitization. The notes offered in the 2017-1 Debt Securitization (the “2017-1 Notes”) were issued by the 2017-1 Issuer, a wholly owned and consolidated subsidiary of Credit Fund, and are secured by a diversified portfolio of the 2017-1 Issuer consisting primarily of first and second lien senior secured loans. The 2017-1 Debt Securitization was executed through a private placement of the 2017-1 Notes, consisting of:
•$231,700 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.17%;
•$48,300 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 1.50%;
•$15,000 of A2/A Class B-1 Notes, which bear interest at the three-month LIBOR plus 2.25%;
•$9,000 of A2/A Class B-2 Notes which bear interest at 4.30%;
•$22,900 of Baa2/BBB Class C Notes which bear interest at the three-month LIBOR plus 3.20%; and
•$25,100 of Ba2/BB Class D Notes which bear interest at the three-month LIBOR plus 6.38%.
The 2017-1 Notes are scheduled to mature on January 15, 2028. Credit Fund received 100% of the preferred interests issued by the 2017-1 Issuer (the “2017-1 Issuer Preferred Interests”) on the closing date of the 2017-1 Debt Securitization in exchange for Credit Fund’s contribution to the 2017-1 Issuer of the initial closing date loan portfolio. The 2017-1 Issuer Preferred Interests do not bear interest and had a nominal value of $47,900 at closing.
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The 2017-1 Notes were fully redeemed during the year ended December 31, 2020. As of the redemption date, the 2017-1 Issuer was in compliance with all covenants and other requirements of the indenture.
2019-2 Notes
On May 21, 2019, Credit Fund completed the 2019-2 Debt Securitization. The notes offered in the 2019-2 Debt Securitization (the “2019-2 Notes”) were issued by the 2019-2 Issuer, a wholly owned and consolidated subsidiary of Credit Fund, and are secured by a diversified portfolio of the 2019-2 Issuer consisting primarily of first and second lien senior secured loans. The 2019-2 Debt Securitization was executed through a private placement of the 2019-2 Notes, consisting of:
•$233,000 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.50%;
•$48,000 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 2.40%;
•$23,000 of A2/A Class B Notes, which bear interest at the three-month LIBOR plus 3.45%;
•$27,000 of Baa2/BBB- Class C Notes which bear interest at the three-month LIBOR plus 4.55%; and
•$21,000 of Ba2/BB- Class D Notes which bear interest at the three-month LIBOR plus 8.03%.
The 2017-1 Notes are scheduled to mature on April 15, 2029. Credit Fund received 100% of the preferred interests issued by the 2019-2 Issuer (the “2019-2 Issuer Preferred Interests”) on the closing date of the 2019-2 Debt Securitization in exchange for Credit Fund’s contribution to the 2019-2 Issuer of the initial closing date loan portfolio. The 2019-2 Issuer Preferred Interests do not bear interest and had a nominal value of $48,300 at closing.
As of March 31, 2021 and December 31, 2020, the 2019-2 Issuer was in compliance with all covenants and other requirements of the indenture.
MIDDLE MARKET CREDIT FUND II, LLC
Overview
On November 3, 2020, the Company and CCLF entered into a limited liability company agreement to co-manage Credit Fund II, a Delaware limited liability company that is not consolidated in the Company's consolidated financial statements. Credit Fund II primarily invests in senior secured loans of middle market companies. Credit Fund II is managed by a four-member board, on which the Company and CCLF have equal representation. Establishing a quorum for Credit Fund II's board requires at least one of the Company's representatives and one of CCLF's representatives. The Company and CCLF have 84.13% and 15.87% economic ownership of Credit Fund II, respectively. By virtue of its membership interest, each of the Company and CCLF indirectly bears an allocable share of all expenses and other obligations of Credit Fund II.
Credit Fund II's initial portfolio consisted of 45 senior secured loans of middle market companies with an aggregate principal balance of approximately $250 million. Credit Fund II's initial portfolio was funded on November 3, 2020 with existing senior secured debt investments contributed by the Company and as part of the transaction, the Company determined that the contribution met the requirements under ASC 860, Transfers and Servicing.
Credit Fund II is expected to make only limited new investments in senior secured loans of middle market companies. Portfolio and investment decisions with respect to Credit Fund II must be unanimously approved by a quorum of Credit Fund II’s board members consisting of at least one of the Company's representatives and one of CCLF's representatives. Therefore, although the Company owns more than 25% of the voting securities of Credit Fund II, the Company does not believe that it has control over Credit Fund (other than for purposes of the Investment Company Act).
Middle Market Credit Fund II SPV, LLC (“Credit Fund II Sub”), a Delaware limited liability company, was formed on September 4, 2020. Credit Fund II Sub is a wholly owned subsidiary of Credit Fund II and is consolidated in Credit Fund II’s consolidated financial statements commencing from the date of its formation. Credit Fund II Sub primarily holds investments in first lien loans of middle market companies, which are pledged as security for the Credit Fund II Senior Notes (see below).
Credit Fund II, the Company and CCLF entered into an administration agreement with Carlyle Global Credit Administration L.L.C., the administrative agent of Credit Fund II (in such capacity, the “Credit Fund II Administrative Agent”), pursuant to which the Credit Fund II Administrative Agent is delegated certain administrative and non-discretionary functions, is authorized to enter into sub-administration agreements at the expense of Credit Fund II with the approval of the board of managers of Credit Fund II, and is reimbursed by Credit Fund II for its costs and expenses and Credit Fund II’s allocable portion of overhead incurred by the Credit Fund II Administrative Agent in performing its obligations thereunder.
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Credit Fund II Senior Notes
On November 3, 2020, Credit Fund II Sub closed on the Credit Fund II Senior Notes (the “Credit Fund II Senior Notes”) with lenders. The Credit Fund II Senior Notes provides for secured borrowings totaling $157,500 with two tranches, A-1 and A-2 outstanding. The facility is secured by a first lien security interest in substantially all of the portfolio investments held by Credit Fund II Sub. The maturity date of the Credit Fund II Senior Notes Sub Facility is November 3, 2030. Amounts issued for the Class A-1 notes totaled $147,500 and bear interest at a rate of LIBOR plus 2.70%, and amounts issued for the Class A-2 notes totaled $10,000 and bear interest at LIBOR plus 3.20%. The A-1 Notes were rated AAA, and the A-2 Notes were rated AA by DBRS Morningstar. The terms of the Credit Fund II Senior Notes provide that as loans pay down, up to $50,000 is available from principal proceeds for reinvestment, and then the investment principal proceeds are used to directly pay down the principal balance on the Credit Fund II Senior Notes. As of March 31, 2021 and December 31, 2020, Credit Fund II Sub was in compliance with all covenants and other requirements of its respective credit agreements.
Selected Financial Data
Since inception of Credit Fund II and through March 31, 2021, the Company and CCLF made capital contributions of $78,096 and $12,709 in members’ equity, respectively, to Credit Fund II. Below is certain summarized consolidated information for Credit Fund II as of March 31, 2021 and December 31, 2020.
| As of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Investments, at fair value (amortized cost of $246,772 and $245,312, respectively) | $ | 248,375 | $ | 246,421 | |||||||
| Cash and cash equivalents | 3,492 | 1,385 | |||||||||
| Other assets | 2,238 | 3,436 | |||||||||
| Total assets | $ | 254,105 | $ | 251,242 | |||||||
| LIABILITIES AND MEMBERS’ EQUITY | |||||||||||
| Notes payable, net of unamortized debt issuance costs of $857 and $875, respectively | $ | 156,643 | $ | 156,625 | |||||||
| Other liabilities | 4,859 | 2,675 | |||||||||
Total members' equity (1) | 92,603 | 91,942 | |||||||||
| Total liabilities and members’ equity | $ | 254,105 | $ | 251,242 | |||||||
(1) As of March 31, 2021 and December 31, 2020, the fair value of Company's ownership interest in the members' equity was $77,934 and $77,395, respectively.
| For the three month period ended | ||||||||
| March 31, 2021 | ||||||||
| (unaudited) | ||||||||
| Selected Consolidated Statement of Operations Information: | ||||||||
| Total investment income | $ | 4,563 | ||||||
| Expenses | ||||||||
| Interest and credit facility expenses | 1,201 | |||||||
| Other expenses | 191 | |||||||
| Total expenses | 1,392 | |||||||
| Net investment income (loss) | 3,171 | |||||||
| Net realized gain (loss) on investments | — | |||||||
| Net change in unrealized appreciation (depreciation) on investments | 494 | |||||||
| Net increase (decrease) resulting from operations | $ | 3,665 | ||||||
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Below is a summary of Credit Fund II’s portfolio, followed by a listing of the loans in Credit Fund II’s portfolio as of March 31, 2021 and December 31, 2020:
| As of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
Senior secured loans (1) | $ | 249,442 | $ | 248,172 | |||||||
Weighted average yields of senior secured loans based on amortized cost (2) | 7.26 | % | 7.32 | % | |||||||
Weighted average yields of senior secured loans based on fair value (2) | 7.21 | % | 7.29 | % | |||||||
| Number of portfolio companies in Credit Fund II | 42 | 44 | |||||||||
Average amount per portfolio company (1) | $ | 5,939 | $ | 5,640 | |||||||
Percentage of portfolio at floating interest rates (3) (4) | 99.1 | % | 99.1 | % | |||||||
Percentage of portfolio at fixed interest rates (4) | 0.9 | % | 0.9 | % | |||||||
| Fair value of loans with PIK provisions | $ | 8,892 | $ | 9 | |||||||
Percentage of portfolio with PIK provisions (4) | 3.6 | % | 3.6 | % | |||||||
(1)At par/principal amount.
(2)Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2021 and December 31, 2020. Weighted average yield on debt and income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at fair value included in such securities. Weighted average yield on debt and income producing securities at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.
(3)Floating rate debt investments are generally subject to interest rate floors.
(4)Percentages based on fair value.
| Consolidated Schedule of Investments as of March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (90.5% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Airnov, Inc. | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 12/19/2025 | $ | 1,496 | $ | 1,478 | $ | 1,493 | |||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^ | (2)(3) | High Tech Industries | L + 5.75% | 6.75% | 11/16/2022 | 4,411 | 4,392 | 4,342 | ||||||||||||||||||||||||||||||||||||||||||||
| American Physician Partners, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.75% | 7.75% | 12/21/2021 | 8,629 | 8,595 | 8,371 | ||||||||||||||||||||||||||||||||||||||||||||
| AMS Group HoldCo, LLC | ^ | (2)(3) | Transportation: Cargo | L + 6.50% | 7.50% | 9/29/2023 | 8,169 | 8,091 | 8,157 | ||||||||||||||||||||||||||||||||||||||||||||
| Apptio, Inc. | ^ | (2)(3) | Software | L + 7.25% | 8.25% | 1/10/2025 | 5,357 | 5,282 | 5,397 | ||||||||||||||||||||||||||||||||||||||||||||
| Aurora Lux FinCo S.Á.R.L. (Luxembourg) | ^ | (2)(3) | Software | L + 6.00% | 7.00% | 12/24/2026 | $ | 4,389 | $ | 4,295 | $ | 3,971 | |||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | ^ | (2)(3) | Sovereign & Public Finance | L + 5.25% | 6.25% | 9/28/2024 | 995 | 985 | 995 | ||||||||||||||||||||||||||||||||||||||||||||
| BMS Holdings III Corp. | ^ | (2)(3) | Construction & Building | L + 5.25% | 6.25% | 9/30/2026 | 3,300 | 3,233 | 3,270 | ||||||||||||||||||||||||||||||||||||||||||||
| Captive Resources Midco, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/31/2025 | 8,324 | 8,220 | 8,396 | ||||||||||||||||||||||||||||||||||||||||||||
| Chartis Holding, LLC | ^ | (2)(3) | Business Services | L + 5.25% | 6.25% | 5/1/2025 | 1,492 | 1,471 | 1,492 | ||||||||||||||||||||||||||||||||||||||||||||
| Comar Holding Company, LLC | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 6/18/2024 | 8,776 | 8,676 | 8,776 | ||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^ | (2)(3) | Software | L + 5.25% | 6.25% | 7/2/2026 | 8,777 | 8,639 | 8,817 | ||||||||||||||||||||||||||||||||||||||||||||
| Ensono, LP | ^ | (2)(3) | Telecommunications | L + 5.25% | 5.36% | 6/27/2025 | 6,276 | 6,232 | 6,227 | ||||||||||||||||||||||||||||||||||||||||||||
| Ethos Veterinary Health LLC | ^ | (2)(3) | Consumer Services | L + 4.75% | 4.86% | 5/15/2026 | 8,170 | 8,108 | 8,118 | ||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^ | (2)(3) | Telecommunications | L + 5.75% | 6.75% | 6/7/2023 | 8,777 | 8,763 | 8,777 | ||||||||||||||||||||||||||||||||||||||||||||
| K2 Insurance Services, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 7/1/2024 | 6,894 | 6,800 | 6,902 | ||||||||||||||||||||||||||||||||||||||||||||
| Kaseya, Inc. | ^ | (2)(3) | High Tech Industries | L + 4.00%, 3.00% PIK | 8.00% | 5/2/2025 | 8,892 | 8,765 | 8,892 | ||||||||||||||||||||||||||||||||||||||||||||
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| Consolidated Schedule of Investments as of March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| Mailgun Technologies, Inc. | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 3/26/2025 | 8,457 | 8,332 | 8,379 | ||||||||||||||||||||||||||||||||||||||||||||
| National Technical Systems, Inc. | ^ | (2)(3) | Aerospace & Defense | L + 5.50% | 6.50% | 6/12/2023 | 8,800 | 8,780 | 8,800 | ||||||||||||||||||||||||||||||||||||||||||||
| NMI AcquisitionCo, Inc. | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 9/6/2023 | 8,776 | 8,719 | 8,810 | ||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^ | (2)(3) | Capital Equipment | L + 4.50% | 5.50% | 5/3/2025 | 1,000 | 993 | 994 | ||||||||||||||||||||||||||||||||||||||||||||
| PPC Flexible Packaging, LLC | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 11/23/2024 | 4,389 | 4,349 | 4,389 | ||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | ^ | (2)(3) | High Tech Industries | L + 6.00% | 7.00% | 6/6/2023 | 3,291 | 3,273 | 3,291 | ||||||||||||||||||||||||||||||||||||||||||||
| Reladyne, Inc. | ^ | (2)(3) | Wholesale | L + 5.00% | 6.00% | 7/22/2022 | 6,484 | 6,439 | 6,458 | ||||||||||||||||||||||||||||||||||||||||||||
| Riveron Acquisition Holdings, Inc. | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/22/2025 | 8,236 | 8,117 | 8,318 | ||||||||||||||||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.50% | 6.50% | 11/1/2026 | 8,465 | 8,325 | 8,508 | ||||||||||||||||||||||||||||||||||||||||||||
| Smile Doctors, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 10/6/2022 | 6,493 | 6,491 | 6,493 | ||||||||||||||||||||||||||||||||||||||||||||
| Sovos Brands Intermediate, Inc. | ^ | (2)(3) | Beverage, Food & Tobacco | L + 4.75% | 4.98% | 11/20/2025 | 7,355 | 7,311 | 7,316 | ||||||||||||||||||||||||||||||||||||||||||||
| Superior Health Linens, LLC | ^ | (2)(3) | Business Services | L + 6.50% | 7.50% | 9/30/2021 | 7,024 | 7,010 | 7,016 | ||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^ | (2)(3) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2022 | 8,776 | 8,702 | 8,776 | ||||||||||||||||||||||||||||||||||||||||||||
| TCFI Aevex LLC | ^ | (2)(3) | Aerospace & Defense | L + 6.00% | 7.00% | 3/18/2026 | 1,714 | 1,685 | 1,711 | ||||||||||||||||||||||||||||||||||||||||||||
| TSB Purchaser, Inc. | ^ | (2)(3) | Media: Advertising, Printing & Publishing | L + 6.00% | 7.00% | 5/14/2024 | 8,777 | 8,649 | 8,734 | ||||||||||||||||||||||||||||||||||||||||||||
| Turbo Buyer, Inc. | ^ | (2)(3) | Automotive | L + 5.50% | 6.50% | 12/2/2025 | 8,153 | 7,988 | 8,235 | ||||||||||||||||||||||||||||||||||||||||||||
| US INFRA SVCS Buyer, LLC | ^ | (2)(3) | Environmental Industries | L + 6.00% | 7.00% | 4/13/2026 | 3,292 | 3,235 | 3,249 | ||||||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | ^ | (2)(3) | Business Services | L + 6.50% | 7.50% | 3/31/2023 | 4,300 | 4,264 | 4,214 | ||||||||||||||||||||||||||||||||||||||||||||
| Zemax Software Holdings, LLC | ^ | (2)(3) | Software | L + 5.75% | 6.75% | 6/25/2024 | 4,388 | 4,354 | 4,318 | ||||||||||||||||||||||||||||||||||||||||||||
| Zenith Merger Sub, Inc. | ^ | (2)(3) | Business Services | L + 5.25% | 6.25% | 12/13/2023 | 4,389 | 4,360 | 4,382 | ||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt Total | $ | 223,401 | $ | 224,784 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (9.5% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AI Convoy S.A.R.L (United Kingdom) | ^ | (2)(3) | Aerospace & Defense | L + 8.25% | 9.25% | 1/17/2028 | $ | 5,514 | $ | 5,404 | $ | 5,714 | |||||||||||||||||||||||||||||||||||||||||
| Quartz Holding Company | ^ | (2)(3) | Software | L + 8.00% | 8.11% | 4/2/2027 | 4,852 | 4,773 | 4,900 | ||||||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | ^ | (2)(3) | Capital Equipment | L + 8.25% | 8.36% | 3/26/2027 | $ | 5,514 | $ | 5,439 | $ | 5,552 | |||||||||||||||||||||||||||||||||||||||||
| Ultimate Baked Goods MIDCO, LLC | ^ | (2)(3) | Beverage, Food & Tobacco | L + 8.00% | 9.00% | 8/9/2026 | 5,514 | 5,431 | 5,083 | ||||||||||||||||||||||||||||||||||||||||||||
| World 50, Inc. | ^ | (6) | Business Services | 0.115 | 11.50% | 1/9/2027 | 2,365 | 2,324 | 2,342 | ||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt Total | $ | 23,371 | $ | 23,591 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total Investments | $ | 246,772 | $ | 248,375 | |||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by Credit Fund II Sub. Credit Fund II Sub has entered into the Credit Fund II Sub Notes. The lenders of the Credit Fund II Sub Notes have a first lien security interest in substantially all of the assets of Credit Fund II Sub. Accordingly, such assets are not available to creditors of Credit Fund II.
(1) Unless otherwise indicated, issuers of investments held by Credit Fund II are domiciled in the United States. As of March 31, 2021, the geographical composition of investments as a percentage of fair value was 3.5% in Canada, 1.6% in Luxembourg, 2.3% in the United Kingdom and 92.6% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund II has indicated the reference rate used and provided the spread and the interest rate in effect as of March 31, 2021. As of March 31, 2021, the reference rates for Credit Fund II's variable rate loans were the 30-day LIBOR at 0.11%, the 90-day LIBOR at 0.19% and the 180-day LIBOR at 0.21%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
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(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund II, pursuant to Credit Fund II’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements, to these consolidated financial statements.
(6)Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company.
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| Consolidated Schedule of Investments as of December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| First Lien Debt (90.1% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Airnov, Inc. | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.25% | 6.25% | 12/19/2025 | $ | 1,500 | $ | 1,481 | $ | 1,501 | |||||||||||||||||||||||||||||||||||||||||
| Alpine SG, LLC | ^ | (2)(3) | High Tech Industries | L + 5.75% | 6.75% | 11/16/2022 | 4,411 | 4,390 | 4,378 | ||||||||||||||||||||||||||||||||||||||||||||
| American Physician Partners, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.75% | 7.75% | 12/21/2021 | 8,725 | 8,679 | 8,265 | ||||||||||||||||||||||||||||||||||||||||||||
| AMS Group HoldCo, LLC | ^ | (2)(3) | Transportation: Cargo | L + 6.50% | 7.50% | 9/29/2023 | 8,182 | 8,096 | 8,079 | ||||||||||||||||||||||||||||||||||||||||||||
| Apptio, Inc. | ^ | (2)(3) | Software | L + 7.25% | 8.25% | 1/10/2025 | 5,357 | 5,278 | 5,437 | ||||||||||||||||||||||||||||||||||||||||||||
| Aurora Lux FinCo S.Á.R.L. (Luxembourg) | ^ | (2)(3) | Software | L + 5.75% | 6.75% | 12/24/2026 | 4,400 | 4,303 | 4,018 | ||||||||||||||||||||||||||||||||||||||||||||
| Avenu Holdings, LLC | ^ | (2)(3) | Sovereign & Public Finance | L + 5.25% | 6.25% | 9/28/2024 | 997 | 987 | 997 | ||||||||||||||||||||||||||||||||||||||||||||
| BMS Holdings III Corp. | ^ | (2)(3) | Construction & Building | L + 5.25% | 6.25% | 9/30/2026 | 3,308 | 3,239 | 3,270 | ||||||||||||||||||||||||||||||||||||||||||||
| Captive Resources Midco, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/31/2025 | 8,406 | 8,297 | 8,463 | ||||||||||||||||||||||||||||||||||||||||||||
| Chartis Holding, LLC | ^ | (2)(3) | Business Services | L + 5.50% | 6.50% | 5/1/2025 | 1,496 | 1,474 | 1,497 | ||||||||||||||||||||||||||||||||||||||||||||
| Comar Holding Company, LLC | ^ | (2)(3) | Containers, Packaging & Glass | L + 5.50% | 6.50% | 6/18/2024 | 8,799 | 8,692 | 8,832 | ||||||||||||||||||||||||||||||||||||||||||||
| Cority Software Inc. (Canada) | ^ | (2)(3) | Software | L + 5.25% | 6.25% | 7/2/2026 | 8,800 | 8,655 | 8,862 | ||||||||||||||||||||||||||||||||||||||||||||
| Ensono, LP | ^ | (2)(3) | Telecommunications | L + 5.25% | 5.40% | 6/27/2025 | 6,292 | 6,246 | 6,245 | ||||||||||||||||||||||||||||||||||||||||||||
| Ethos Veterinary Health LLC | ^ | (2)(3) | Consumer Services | L + 4.75% | 4.90% | 5/15/2026 | 8,182 | 8,117 | 8,070 | ||||||||||||||||||||||||||||||||||||||||||||
| EvolveIP, LLC | ^ | (2)(3) | Telecommunications | L + 5.75% | 6.75% | 6/7/2023 | 8,799 | 8,784 | 8,790 | ||||||||||||||||||||||||||||||||||||||||||||
| Innovative Business Services, LLC | ^ | (2)(3) | High Tech Industries | L + 5.50% | 6.50% | 4/5/2023 | 2,200 | 2,162 | 2,159 | ||||||||||||||||||||||||||||||||||||||||||||
| K2 Insurance Services, LLC | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.00% | 6.00% | 7/1/2024 | 6,927 | 6,827 | 6,928 | ||||||||||||||||||||||||||||||||||||||||||||
| Kaseya, Inc. | ^ | (2)(3) | High Tech Industries | L + 4.00%, 3.00% PIK | 8.00% | 5/2/2025 | 8,822 | 8,688 | 8,856 | ||||||||||||||||||||||||||||||||||||||||||||
| Mailgun Technologies, Inc. | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 3/26/2025 | 8,478 | 8,347 | 8,330 | ||||||||||||||||||||||||||||||||||||||||||||
| National Technical Systems, Inc. | ^ | (2)(3) | Aerospace & Defense | L + 5.50% | 6.50% | 6/12/2023 | 8,800 | 8,778 | 8,733 | ||||||||||||||||||||||||||||||||||||||||||||
| NMI AcquisitionCo, Inc. | ^ | (2)(3) | High Tech Industries | L + 5.00% | 6.00% | 9/6/2022 | 8,799 | 8,732 | 8,711 | ||||||||||||||||||||||||||||||||||||||||||||
| Paramit Corporation | ^ | (2)(3) | Capital Equipment | L + 4.50% | 5.50% | 5/3/2025 | 1,000 | 992 | 980 | ||||||||||||||||||||||||||||||||||||||||||||
| PPC Flexible Packaging, LLC | ^ | (2)(3) | Containers, Packaging & Glass | L + 6.00% | 7.00% | 11/23/2024 | 4,400 | 4,358 | 4,386 | ||||||||||||||||||||||||||||||||||||||||||||
| Redwood Services Group, LLC | ^ | (2)(3) | High Tech Industries | L + 6.00% | 7.00% | 6/6/2023 | 3,300 | 3,279 | 3,291 | ||||||||||||||||||||||||||||||||||||||||||||
| Reladyne, Inc. | ^ | (2)(3) | Wholesale | L + 5.00% | 6.00% | 7/22/2022 | 6,484 | 6,431 | 6,514 | ||||||||||||||||||||||||||||||||||||||||||||
| Riveron Acquisition Holdings, Inc. | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.75% | 6.75% | 5/22/2025 | 8,257 | 8,131 | 8,312 | ||||||||||||||||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. | ^ | (2)(3) | Banking, Finance, Insurance & Real Estate | L + 5.50% | 6.50% | 11/1/2026 | 8,487 | 8,341 | 8,572 | ||||||||||||||||||||||||||||||||||||||||||||
| Smile Doctors, LLC | ^ | (2)(3) | Healthcare & Pharmaceuticals | L + 6.00% | 7.00% | 10/6/2022 | 6,509 | 6,507 | 6,379 | ||||||||||||||||||||||||||||||||||||||||||||
| Sovos Brands Intermediate, Inc. | ^ | (2)(3) | Beverage, Food & Tobacco | L + 4.75% | 4.96% | 11/20/2025 | 2,200 | 2,182 | 2,181 | ||||||||||||||||||||||||||||||||||||||||||||
| Superior Health Linens, LLC | ^ | (2)(3) | Business Services | L + 6.50% | 7.50% | 9/30/2021 | 7,199 | 7,178 | 7,162 | ||||||||||||||||||||||||||||||||||||||||||||
| T2 Systems, Inc. | ^ | (2)(3) | Transportation: Consumer | L + 6.75% | 7.75% | 9/28/2022 | 8,799 | 8,713 | 8,799 | ||||||||||||||||||||||||||||||||||||||||||||
| TCFI Aevex LLC | ^ | (2)(3) | Aerospace & Defense | L + 6.00% | 7.00% | 3/18/2026 | 1,718 | 1,688 | 1,712 | ||||||||||||||||||||||||||||||||||||||||||||
| TSB Purchaser, Inc. | ^ | (2)(3) | Media: Advertising, Printing & Publishing | L + 6.00% | 7.00% | 5/14/2024 | 8,799 | 8,663 | 8,729 | ||||||||||||||||||||||||||||||||||||||||||||
| Turbo Buyer, Inc. | ^ | (2)(3) | Automotive | L + 5.25% | 6.25% | 12/2/2025 | 8,174 | 8,001 | 8,249 | ||||||||||||||||||||||||||||||||||||||||||||
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| Consolidated Schedule of Investments as of December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments (1) | Footnotes | Industry | Reference Rate & Spread (2) | Interest Rate (2) | Maturity Date | Par/ Principal Amount | Amortized Cost (4) | Fair Value (5) | |||||||||||||||||||||||||||||||||||||||||||||
| US INFRA SVCS Buyer, LLC | ^ | (2)(3) | Environmental Industries | L + 6.00% | 7.00% | 4/13/2026 | $ | 3,300 | $ | 3,240 | $ | 3,292 | |||||||||||||||||||||||||||||||||||||||||
| VRC Companies, LLC | ^ | (2)(3) | Business Services | L + 6.50% | 7.50% | 3/31/2023 | 4,311 | 4,271 | 4,311 | ||||||||||||||||||||||||||||||||||||||||||||
| Zemax Software Holdings, LLC | ^ | (2)(3) | Software | L + 5.75% | 6.75% | 6/25/2024 | 4,400 | 4,363 | 4,294 | ||||||||||||||||||||||||||||||||||||||||||||
| Zenith Merger Sub, Inc. | ^ | (2)(3) | Business Services | L + 5.25% | 6.25% | 12/13/2023 | 4,399 | 4,370 | 4,367 | ||||||||||||||||||||||||||||||||||||||||||||
First Lien Debt Total | $ | 220,960 | $ | 221,951 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Second Lien Debt (9.9% of fair value) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AI Convoy S.A.R.L (United Kingdom) | ^ | (2)(3) | Aerospace & Defense | L + 8.25% | 9.25% | 1/17/2028 | $ | 5,514 | $ | 5,401 | $ | 5,676 | |||||||||||||||||||||||||||||||||||||||||
| AQA Acquisition Holding, Inc. | ^ | (2)(3) | High Tech Industries | L + 8.00% | 9.00% | 5/24/2024 | 1,000 | 993 | 1,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Quartz Holding Company | ^ | (2)(3) | Software | L + 8.00% | 8.15% | 4/2/2027 | 4,852 | 4,771 | 4,815 | ||||||||||||||||||||||||||||||||||||||||||||
| Tank Holding Corp. | ^ | (2)(3) | Capital Equipment | L + 8.25% | 8.40% | 3/26/2027 | 5,514 | 5,436 | 5,394 | ||||||||||||||||||||||||||||||||||||||||||||
| Ultimate Baked Goods MIDCO, LLC | ^ | (2)(3) | Beverage, Food & Tobacco | L + 8.00% | 9.00% | 8/9/2026 | 5,514 | 5,428 | 5,257 | ||||||||||||||||||||||||||||||||||||||||||||
| World 50, Inc. | (6) | Business Services | 11.50% | 11.50% | 1/9/2027 | 2,365 | 2,323 | 2,328 | |||||||||||||||||||||||||||||||||||||||||||||
Second Lien Debt Total | $ | 24,352 | $ | 24,470 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total Investments | $ | 245,312 | $ | 246,421 | |||||||||||||||||||||||||||||||||||||||||||||||||
^ Denotes that all or a portion of the assets are owned by Credit Fund II Sub. Credit Fund II Sub has entered into the Credit Fund II Sub Notes. The lenders of the Credit Fund II Sub Notes have a first lien security interest in substantially all of the assets of Credit Fund II Sub. Accordingly, such assets are not available to creditors of Credit Fund II.
(1) Unless otherwise indicated, issuers of investments held by Credit Fund II are domiciled in the United States. As of December 31, 2020, the geographical composition of investments as a percentage of fair value was 3.6% in Canada, 1.6% in Luxembourg, 2.3% in the United Kingdom and 92.5% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund II has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2020. As of December 31, 2020, the reference rates for Credit Fund II's variable rate loans were the 30-day LIBOR at 0.15%, the 90-day LIBOR at 0.25% and the 180-day LIBOR at 0.26%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund II, pursuant to Credit Fund II’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements, to these consolidated financial statements.
(6)Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We generate cash from the net proceeds of offerings of our common stock and through cash flows from operations, including investment sales and repayments as well as income earned on investments and cash equivalents. We may also fund a portion of our investments through borrowings under the Credit Facility, as defined below, the issuance of debt, and through securitization of a portion of our existing investments. The primary use of existing funds and any funds raised in the future is expected to be for investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders and for other general corporate purposes. We believe our current cash position, available capacity on our revolving credit facilities – which is well in excess of our unfunded commitments – and net cash provided by operating activities will provide us with sufficient resources to meet our obligations and continue to support our investment objectives, including reserving for the capital needs which may arise at our portfolio companies.
On March 21, 2014, the Company closed on the Credit Facility, which was subsequently amended on January 8, 2015, May 25, 2016, March 22, 2017, September 25, 2018, June 14, 2019 and October 28, 2020. The maximum principal amount of the Credit Facility is $688,000, subject to availability under the Credit Facility, which is based on certain advance rates multiplied by the value of the Company’s portfolio investments (subject to certain concentration limitations) net of certain other indebtedness that the Company may incur in accordance with the terms of the Credit Facility. Proceeds of the Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. Maximum capacity under the Credit Facility may be increased, subject to certain conditions, to $900,000 through the exercise by the Company of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional
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financing. The Credit Facility includes a $50,000 limit for swingline loans and a $20,000 limit for letters of credit. Subject to certain exceptions, the Credit Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Company. The Credit Facility includes customary covenants, including certain financial covenants related to asset coverage, shareholders’ equity and liquidity, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature.
Although we believe that we will remain in compliance, there are no assurances that we will continue to comply with the covenants in the Credit Facility. Failure to comply with these covenants could result in a default under the Credit Facility that, if we were unable to obtain a waiver from the applicable lenders, could result in the immediate acceleration of the amounts due under the Credit Facility, and thereby have a material adverse impact on our business, financial condition and results of operations. For more information on the Credit Facility, see Note 7 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.
On December 30, 2019, the Company closed a private offering of $115.0 million in aggregate principal amount of 4.750% Senior Unsecured Notes due December 31, 2024 (the "2019 Notes"). Interest is payable quarterly, beginning March 31, 2020. On December 11, 2020, the Company issued an additional $75.0 million aggregate principal amount of senior unsecured notes due December 31, 2024 (the "2020 Notes", together with the 2019 Notes, the "Senior Notes"). The 2020 Notes bear interest at an interest rate of 4.500%. The interest rates of the Senior Notes are subject to increase (up to an additional 1.00% over the stated rate of such notes) in the event that, subject to certain exceptions, the Senior Notes cease to have an investment grade rating. The Senior Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
On June 26, 2015, we completed the 2015-1 Debt Securitization. The 2015-1 Notes were issued by Carlyle Direct Lending CLO 2015-1R LLC (formerly known as Carlyle GMS Finance MM CLO 2015-1 LLC) (the “2015-1 Issuer”), a wholly owned and consolidated subsidiary of us. On August 30, 2018, the 2015-1 Issuer refinanced the 2015-1 Debt Securitization (the “2015-1 Debt Securitization Refinancing”) by redeeming in full the 2015-1 Notes and issuing new notes (the “2015-1R Notes”). The 2015-1R Notes are secured by a diversified portfolio of the 2015-1 Issuer consisting primarily of first and second lien senior secured loans. On the closing date of the 2015-1 Debt Securitization Refinancing, the 2015-1 Issuer, among other things:
(a) refinanced the issued Class A-1A Notes by redeeming in full the Class A-1A Notes and issuing new AAA Class A-1-1-R Notes in an aggregate principal amount of $234,800 which bear interest at the three-month LIBOR plus 1.55%;
(b) refinanced the issued Class A-1B Notes by redeeming in full the Class A-1B Notes and issuing new AAA Class A-1-2-R Notes in an aggregate principal amount of $50,000 which bear interest at the three-month LIBOR plus 1.48% for the first 24 months and the three-month LIBOR plus 1.78% thereafter;
(c) refinanced the issued Class A-1C Notes by redeeming in full the Class A-1C Notes and issuing new AAA Class A-1-3-R Notes in an aggregate principal amount of $25,000 which bear interest at 4.56%;
(d) refinanced the issued Class A-2 Notes by redeeming in full the Class A-2 Notes and issuing new Class A-2-R Notes in an aggregate principal amount of $66,000 which bear interest at the three-month LIBOR plus 2.20%;
(e) issued new single-A Class B Notes and BBB- Class C Notes in aggregate principal amounts of $46,400 and $27,000, respectively, which bear interest at the three-month LIBOR plus 3.15% and the three-month LIBOR plus 4.00%, respectively;
(f) reduced the 2015-1 Issuer Preferred Interests by approximately $21,375 from a nominal value of $125,900 to approximately $104,525 at close; and
(g) extended the reinvestment period end date and maturity date applicable to the 2015-1 Issuer to October 15, 2023 and October 15, 2031, respectively. In connection with the contribution, we have made customary representations, warranties and covenants to the 2015-1 Issuer.
In connection with the contribution, we have made customary representations, warranties and covenants to the 2015-1 Issuer. The Class A-1-1-R, Class A-1-2-R, Class A-1-3-R, Class A-2-R, Class B and Class C Notes are included in the consolidated financial statements included in Part I, Item 1 of this Form 10-Q. The 2015-1 Issuer Preferred Interests were eliminated in consolidation. For more information on the 2015-1R Notes, see Note 8 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.
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As of March 31, 2021 and December 31, 2020, we had $35,493 and $68,419, respectively, in cash and cash equivalents. The Facilities consisted of the following as of March 31, 2021 and December 31, 2020:
| March 31, 2021 | |||||||||||||||||||||||
| Total Facility | Borrowings Outstanding | Unused Portion (1) | Amount Available (2) | ||||||||||||||||||||
| Credit Facility | $ | 688,000 | $ | 309,397 | $ | 378,603 | $ | 358,091 | |||||||||||||||
| Total | $ | 688,000 | $ | 309,397 | $ | 378,603 | $ | 358,091 | |||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||
| Total Facility | Borrowings Outstanding | Unused Portion (1) | Amount Available (2) | ||||||||||||||||||||
| Credit Facility | 688,000 | 347,949 | 340,051 | 207,365 | |||||||||||||||||||
| Total | $ | 688,000 | $ | 347,949 | $ | 340,051 | $ | 207,365 | |||||||||||||||
(1)The unused portion is the amount upon which commitment fees are based.
(2)Available for borrowing based on the computation of collateral to support the borrowings and subject to compliance with applicable covenants and financial ratios.
The following were the carrying values (before debt issuance costs) and fair values of the Company’s 2015-1R Notes as of March 31, 2021 and December 31, 2020:
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| Aaa/AAA Class A-1-1-R Notes | $ | 234,800 | $ | 234,283 | $ | 234,800 | $ | 230,996 | |||||||||||||||
| Aaa/AAA Class A-1-2-R Notes | 50,000 | 50,000 | 50,000 | 49,645 | |||||||||||||||||||
| Aaa/AAA Class A-1-3-R Notes | 25,000 | 25,016 | 25,000 | 25,017 | |||||||||||||||||||
| AA Class A-2-R Notes | 66,000 | 66,000 | 66,000 | 64,895 | |||||||||||||||||||
| A Class B Notes | 46,400 | 46,400 | 46,400 | 45,291 | |||||||||||||||||||
| BBB- Class C Notes | 27,000 | 26,411 | 27,000 | 24,592 | |||||||||||||||||||
| Total | $ | 449,200 | $ | 448,110 | $ | 449,200 | $ | 440,436 | |||||||||||||||
As of March 31, 2021 and December 31, 2020, we had a combined $948,597 and $987,149, respectively, of outstanding consolidated indebtedness under the Credit Facility, the 2015-1R Notes and the Senior Notes. Our annualized interest cost as of March 31, 2021 and December 31, 2020, was 2.83% and 2.89%, excluding fees (such as fees on undrawn amounts and amortization of upfront fees). For the three months ended March 31, 2021 and 2020, we incurred $6,975 and $12,179, respectively, of interest expense and $519 and $590, respectively, of unused commitment fees.
Equity Activity
Common shares issued and outstanding as of March 31, 2021 and December 31, 2020 were 54,809,262 and 55,320,309, respectively.
The following table summarizes activity in the number of shares of our common stock outstanding during the three month periods ended March 31, 2021 and 2020:
| For the three month periods ended | |||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||
| Common shares outstanding, beginning of period | 55,320,309 | 57,763,811 | |||||||||
Repurchase of common stock (1) | (511,047) | (1,455,195) | |||||||||
| Common shares outstanding, end of period | 54,809,262 | 56,308,616 | |||||||||
(1) See Note 10 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information regarding the Company Stock Repurchase Program.
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On May 5, 2020, we issued and sold 2,000,000 shares of Preferred Stock, par value $0.01, to an affiliate of Carlyle in a private placement at a price of $25 per share. Shares of Preferred Stock issued and outstanding were 2,000,000 as of March 31, 2021 and December 31, 2020.
Contractual Obligations
A summary of our significant contractual payment obligations was as follows as of March 31, 2021 and December 31, 2020:
| As of | ||||||||||||||
| Payment Due by Period | March 31, 2021 | December 31, 2020 | ||||||||||||
| Less than 1 Year | $ | — | $ | — | ||||||||||
1-3 Years (1) | — | — | ||||||||||||
3-5 Years (1) | 499,397 | 537,949 | ||||||||||||
More than 5 Years (2) | 449,200 | 449,200 | ||||||||||||
| Total | $ | 948,597 | $ | 987,149 | ||||||||||
(1) Includes amounts outstanding under the Credit Facility and Senior Notes.
(2) Includes amounts outstanding under the 2015-1R Notes.
OFF BALANCE SHEET ARRANGEMENTS
In the ordinary course of our business, we enter into contracts or agreements that contain indemnifications or warranties. Future events could occur which may give rise to liabilities arising from these provisions against us. We believe that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in these consolidated financial statements as of March 31, 2021 and December 31, 2020 in Part I, Item 1 of this Form 10-Q for any such exposure.
We have in the past, currently are and may in the future become obligated to fund commitments such as revolving credit facilities, bridge financing commitments, or delayed draw commitments.
We had the following unfunded commitments to fund delayed draw and revolving senior secured loans as of the indicated dates:
| Principal Amount as of | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| Unfunded delayed draw commitments | $ | 75,856 | $ | 73,292 | |||||||
| Unfunded revolving commitments | 73,296 | 76,216 | |||||||||
| Total unfunded commitments | $ | 149,152 | $ | 149,508 | |||||||
Pursuant to an undertaking by us in connection with the 2015-1 Debt Securitization, we agreed to hold on an ongoing basis the 2015-1 Issuer Preferred Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate outstanding amount of all collateral obligations by the 2015-1 Issuer for so long as any securities of the 2015-1 Issuer remains outstanding. As of March 31, 2021 and December 31, 2020, we were in compliance with this undertaking.
DIVIDENDS AND DISTRIBUTIONS
Prior to July 5, 2017, we had an “opt in” dividend reinvestment plan in respect of our common stock. Effective on July 5, 2017, we converted our “opt in” dividend reinvestment plan to an “opt out” dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our common stockholders, other than those common stockholders who have “opted out” of the plan. As a result of adopting the plan, if our Board of Directors authorizes, and we declare, a cash dividend or distribution on our common stock, our common stockholders who have not elected to “opt out” of our dividend reinvestment plan will have their cash dividends or distributions automatically reinvested in additional shares of our common stock, rather than receiving cash. Each registered common stockholder may elect to have such common stockholder’s dividends and distributions distributed in cash rather than participate in the plan. For any registered common stockholder that does not so elect, distributions on such common stockholder’s shares will be reinvested by State Street Bank and Trust Company, our plan administrator, in additional common shares. The number of common shares to be issued to the common stockholder will be determined based on the total dollar amount of the cash distribution payable, net of applicable
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withholding taxes. We intend to use primarily newly issued common shares to implement the plan so long as the market value per share is equal to or greater than the net asset value per share on the relevant valuation date. If the market value per share is less than the net asset value per share on the relevant valuation date, the plan administrator would implement the plan through the purchase of common stock on behalf of participants in the open market, unless we instruct the plan administrator otherwise.
The following table summarizes the Company's dividends declared per share of common stock during the two most recent fiscal years and the current fiscal year to date:
| Date Declared | Record Date | Payment Date | Per Share Amount | ||||||||||||||||||||
| 2019 | |||||||||||||||||||||||
| February 22, 2019 | March 29, 2019 | April 17, 2019 | $ | 0.37 | |||||||||||||||||||
| May 6, 2019 | June 28, 2019 | July 17, 2019 | 0.37 | ||||||||||||||||||||
| June 17, 2019 | June 28, 2019 | July 17, 2019 | 0.08 | (1) | |||||||||||||||||||
| August 5, 2019 | September 30, 2019 | October 17, 2019 | 0.37 | ||||||||||||||||||||
| November 4, 2019 | December 31, 2019 | January 17, 2020 | 0.37 | ||||||||||||||||||||
| December 12, 2019 | December 31, 2019 | January 17, 2020 | 0.18 | (1) | |||||||||||||||||||
| Total | $ | 1.74 | |||||||||||||||||||||
| 2020 | |||||||||||||||||||||||
| February 24, 2020 | March 31, 2020 | April 17, 2020 | $ | 0.37 | |||||||||||||||||||
| May 4, 2020 | June 30, 2020 | July 17, 2020 | 0.37 | ||||||||||||||||||||
| August 3, 2020 | September 30, 2020 | October 16, 2020 | 0.32 | (2) | |||||||||||||||||||
| August 3, 2020 | September 30, 2020 | October 16, 2020 | 0.05 | (1) | |||||||||||||||||||
| November 2, 2020 | December 31, 2020 | January 15, 2021 | 0.32 | (2) | |||||||||||||||||||
| November 2, 2020 | December 31, 2020 | January 15, 2021 | 0.04 | (1) | |||||||||||||||||||
| Total | $ | 1.47 | |||||||||||||||||||||
| 2021 | |||||||||||||||||||||||
| February 22, 2021 | March 31, 2021 | April 16, 2021 | $ | 0.32 | (2) | ||||||||||||||||||
| February 22, 2021 | March 31, 2021 | April 16, 2021 | 0.05 | (1) | |||||||||||||||||||
| Total | $ | 0.37 | |||||||||||||||||||||
(1)Represents a special/supplemental dividend.
(2)The Company updated its dividend policy such that the regular dividend is $0.32 per share of common stock, effective with the third quarter 2020 dividend.
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Our Preferred Stock has a liquidation preference equal to $25 per share (the "Liquidation Preference") plus any accumulated but unpaid dividends up to but excluding the date of distribution. Dividends on our Preferred Stock are payable on a quarterly basis in an initial amount equal to 7.00% per annum of the Liquidation Preference per share, payable in cash, or at our option, 9.00% per annum of the Liquidation Preference payable in additional shares of Preferred Stock.
The following table summarizes the Company's dividends declared per share of preferred stock during the prior year and current fiscal year to date. Unless otherwise noted, dividends declared were paid in cash.
| Date Declared | Record Date | Payment Date | Per Share Amount | ||||||||||||||||||||
| 2020 | |||||||||||||||||||||||
| June 30, 2020 | June 30, 2020 | September 30, 2020 | $ | 0.277 | |||||||||||||||||||
| September 30, 2020 | September 30, 2020 | September 30, 2020 | 0.423 | ||||||||||||||||||||
| December 31, 2020 | December 31, 2020 | December 31, 2020 | 0.438 | ||||||||||||||||||||
| Total | $ | 1.138 | |||||||||||||||||||||
| 2021 | |||||||||||||||||||||||
| March 31, 2021 | March 31, 2021 | March 31, 2021 | $ | 0.438 | |||||||||||||||||||
| Total | $ | 0.438 | |||||||||||||||||||||
ASSET COVERAGE
In accordance with the Investment Company Act, a BDC is only allowed to borrow amounts such that its “asset coverage,” as defined in the Investment Company Act, satisfies the minimum asset coverage ratio specified in the Investment Company Act after such borrowing. “Asset coverage” generally refers to a company’s total assets, less all liabilities and indebtedness not represented by “senior securities,” as defined in the Investment Company Act, divided by total senior securities representing indebtedness and, if applicable, preferred stock. “Senior securities” for this purpose includes borrowings from banks or other lenders, debt securities and preferred stock.
Prior to March 23, 2018, BDCs were required to maintain a minimum asset coverage ratio of 200%. On March 23, 2018, an amendment to Section 61(a) of the Investment Company Act was signed into law to permit BDCs to reduce the minimum asset coverage ratio from 200% to 150%, so long as certain approval and disclosure requirements are satisfied. Under the 200% minimum asset coverage ratio, BDCs are permitted to borrow up to one dollar for investment purposes for every one dollar of investor equity, and under the 150% minimum asset coverage ratio, BDCs are permitted to borrow up to two dollars for investment purposes for every one dollar of investor equity. In other words, Section 61(a) of the Investment Company Act, as amended, permits BDCs to potentially increase their debt-to-equity ratio from a maximum of 1 to 1 to a maximum of 2 to 1.
On April 9, 2018 and June 6, 2018, the Board of Directors, including a “required majority” (as such term is defined in Section 57(o) of the Investment Company Act), and the stockholders of the Company, respectively, approved the application to the Company of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the Investment Company Act. As a result, the minimum asset coverage ratio applicable to the Company was reduced from 200% to 150%, effective as of June 7, 2018.
As of March 31, 2021 and December 31, 2020, the Company had total senior securities of $998,597 and $1,037,149, respectively, consisting of secured borrowings under the Credit Facility, the Senior Notes, the 2015-1R Notes, and the Preferred Stock, and had asset coverage ratios of 186.17% and 182.09%, respectively.
CRITICAL ACCOUNTING POLICIES
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below. The critical accounting policies should be read in connection with our consolidated financial statements in Part I, Item 1 of this Form 10-Q and in Part II, Item 8 of the Company’s annual report on Form 10-K for the year ended December 31, 2020.
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Fair Value Measurements
The Company applies fair value accounting in accordance with the terms of Financial Accounting Standards Board ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the amount that would be exchanged to sell an asset or transfer a liability in an orderly transfer between market participants at the measurement date. The Company values securities/instruments traded in active markets on the measurement date by multiplying the closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments, such as its securities/instruments traded in active markets and its liquid securities/instruments that are not traded in active markets, from pricing services, brokers, or counterparties (i.e., “consensus pricing”). When doing so, the Company determines whether the quote obtained is sufficient according to U.S. GAAP to determine the fair value of the security. The Company may use the quote obtained or alternative pricing sources may be utilized including valuation techniques typically utilized for illiquid securities/instruments.
Securities/instruments that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Investment Adviser or the Board of Directors, does not represent fair value shall each be valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data is available. These valuation techniques may vary by investment and include comparable public market valuations, comparable precedent transaction valuations and/or discounted cash flow analyses. The process generally used to determine the applicable value is as follows: (i) the value of each portfolio company or investment is initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments, a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs is used to determine a preliminary value, which is also reviewed alongside consensus pricing, where available; (ii) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of senior management; (iii) the Board of Directors engages a third-party valuation firm to provide positive assurance on portions of the Middle Market Senior Loans and equity investments portfolio each quarter (such that each non-traded investment other than Credit Fund is reviewed by a third-party valuation firm at least once on a rolling twelve month basis) including a review of management’s preliminary valuation and conclusion on fair value; (iv) the Audit Committee of the Board of Directors (the “Audit Committee”) reviews the assessments of the Investment Adviser and the third-party valuation firm and provides the Board of Directors with any recommendations with respect to changes to the fair value of each investment in the portfolio; and (v) the Board of Directors discusses the valuation recommendations of the Audit Committee and determines the fair value of each investment in the portfolio in good faith based on the input of the Investment Adviser and, where applicable, the third-party valuation firm.
All factors that might materially impact the value of an investment are considered, including, but not limited to the assessment of the following factors, as relevant:
•the nature and realizable value of any collateral;
•call features, put features and other relevant terms of debt;
•the portfolio company’s leverage and ability to make payments;
•the portfolio company’s public or private credit rating;
•the portfolio company’s actual and expected earnings and discounted cash flow;
•prevailing interest rates and spreads for similar securities and expected volatility in future interest rates;
•the markets in which the portfolio company does business and recent economic and/or market events; and
•comparisons to comparable transactions and publicly traded securities.
Investment performance data utilized are the most recently available financial statements and compliance certificate received from the portfolio companies as of the measurement date which in many cases may reflect a lag in information.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the realized gains or losses on investments to be different from the net change in unrealized appreciation or depreciation currently reflected in the consolidated financial statements as of March 31, 2021 and December 31, 2020.
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U.S. GAAP establishes a hierarchical disclosure framework which ranks the level of observability of market price inputs used in measuring investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.
For further information on the fair value hierarchies, our framework for determining fair value and the composition of our portfolio, see Note 3 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.
Use of Estimates
The preparation of consolidated financial statements in Part I, Item 1 of this Form 10-Q in conformity with U.S. GAAP requires management to make assumptions and estimates 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. Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances. It also requires management to exercise judgment in the process of applying the Company’s accounting policies. Assumptions and estimates regarding the valuation of investments and their resulting impact on base management and incentive fees involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements in Part I, Item 1 of this Form 10-Q. Actual results could differ from these estimates and such differences could be material.
Investments
Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized appreciation or depreciation previously recognized, and includes investments charged off during the period, net of recoveries. Net change in unrealized appreciation or depreciation on investments as presented in the Consolidated Statements of Operations in Part I, Item 1 of this Form 10-Q reflects the net change in the fair value of investments, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.
Revenue Recognition
Interest from Investments and Realized Gain/Loss on Investments
Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any. At time of exit, the realized gain or loss on an investment is the difference between the amortized cost at time of exit and the cash received at exit using the specific identification method.
The Company has loans in its portfolio that contain payment-in-kind (“PIK”) provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity. Such income is included in interest income in the Consolidated Statements of Operations included in Part I, Item 1 of this Form 10-Q.
Dividend Income
Dividend income from the investment fund, Credit Fund, is recorded on the record date for the investment fund to the extent that such amounts are payable by the investment fund and are expected to be collected.
Other Income
Other income may include income such as consent, waiver, amendment, unused, underwriting, arranger and prepayment fees associated with the Company’s investment activities as well as any fees for managerial assistance services rendered by the Company to the portfolio companies. Such fees are recognized as income when earned or the services are rendered. The Company may receive fees for guaranteeing the outstanding debt of a portfolio company. Such fees are
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amortized into other income over the life of the guarantee. The unamortized amount, if any, is included in other assets in the Consolidated Statements of Assets and Liabilities included in Part I, Item 1 of this Form 10-Q.
Non-Accrual Income
Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid current and, in management’s judgment, are likely to remain current. Management may determine not to place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.
Income Taxes
For federal income tax purposes, the Company has elected to be treated as a RIC under the Code, and intends to make the required distributions to its stockholders as specified therein. In order to qualify as a RIC, the Company must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then the Company is generally required to pay income taxes only on the portion of its taxable income and gains it does not distribute.
The minimum distribution requirements applicable to RICs require the Company to distribute to its stockholders at least 90% of its investment company taxable income (“ICTI”), as defined by the Code, each year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year distributions into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.
In addition, based on the excise distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed.
The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely than not” to be sustained by the applicable tax authority. All penalties and interest associated with income taxes, if any, are included in income tax expense.
The SPV and the 2015-1 Issuer are disregarded entities for tax purposes and are consolidated with the tax return of the Company.
Dividends and Distributions to Common Stockholders
To the extent that the Company has taxable income available, the Company intends to make quarterly distributions to its common stockholders. Dividends and distributions to common stockholders are recorded on the record date. The amount to be distributed is determined by the Board of Directors each quarter and is generally based upon the taxable earnings estimated by management and available cash. Net realized capital gains, if any, are generally distributed at least annually, although the Company may decide to retain such capital gains for investment.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to financial market risks, including changes in the valuations of our investment portfolio and interest rates.
Valuation Risk
Our investments generally do not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board of Directors in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. In addition, because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material.
Interest Rate Risk
As of March 31, 2021, on a fair value basis, approximately 0.9% of our debt investments bear interest at a fixed rate and approximately 99.1% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors. Additionally, our Credit Facility is also subject to floating interest rates and is currently paid based on floating LIBOR rates.
Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. There can be no assurance that a significant change in market interest rates will not have a material adverse effect on our income in the future.
The following table estimates the potential changes in net cash flow generated from interest income, should interest rates increase or decrease by 100, 200 or 300 basis points. These hypothetical interest income calculations are based on a model of the settled debt investments in our portfolio, excluding our investments in Credit Fund and Credit Fund II, held as of March 31, 2021 and December 31, 2020, and are only adjusted for assumed changes in the underlying base interest rates and the impact of that change on interest income. Interest expense is calculated based on outstanding secured borrowings and notes payable as of March 31, 2021 and December 31, 2020 and based on the terms of our Credit Facility and notes payable. Interest expense on our Credit Facility and notes payable is calculated using the stated interest rate as of March 31, 2021 and December 31, 2020, adjusted for the hypothetical changes in rates, as shown below. We intend to continue to finance a portion of our investments with borrowings and the interest rates paid on our borrowings may impact significantly our net interest income.
We regularly measure exposure to interest rate risk. We assess interest rate risk and manage interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.
Based on our Consolidated Statements of Assets and Liabilities as of March 31, 2021 and December 31, 2020, the following table shows the annual impact on net investment income of base rate changes in interest rates for our settled debt investments (considering interest rate floors for variable rate instruments), excluding our investments in Credit Fund and Credit Fund II, and outstanding secured borrowings and notes payable assuming no changes in our investment and borrowing structure:
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||
| Basis Point Change | Interest Income | Interest Expense | Net Investment Income | Interest Income | Interest Expense | Net Investment Income | |||||||||||||||||||||||||||||
| Up 300 basis points | $ | 34,724 | $ | (22,008) | $ | 12,716 | $ | 35,024 | $ | (23,164) | $ | 11,860 | |||||||||||||||||||||||
| Up 200 basis points | $ | 19,699 | $ | (14,672) | $ | 5,027 | $ | 20,031 | $ | (15,443) | $ | 4,588 | |||||||||||||||||||||||
| Up 100 basis points | $ | 4,684 | $ | (7,336) | $ | (2,652) | $ | 5,040 | $ | (7,721) | $ | (2,681) | |||||||||||||||||||||||
| Down 100 basis points | $ | (194) | $ | 1,402 | $ | 1,208 | $ | (260) | $ | 1,570 | $ | 1,310 | |||||||||||||||||||||||
| Down 200 basis points | $ | (194) | $ | 1,402 | $ | 1,208 | $ | (260) | $ | 1,570 | $ | 1,310 | |||||||||||||||||||||||
| Down 300 basis points | $ | (194) | $ | 1,402 | $ | 1,208 | $ | (260) | $ | 1,570 | $ | 1,310 | |||||||||||||||||||||||
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to the Company that is required to be disclosed by us in the reports we file or submit under the Exchange Act.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal control over financial reporting during the three month period ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The Company may become party to certain lawsuits in the ordinary course of business. The Company is not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against the Company. See also Note 12 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.
Item 1A. Risk Factors.
In addition to the other information set forth within this Form 10-Q, consideration should be given to the information disclosed in “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2020.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Except as previously reported, we did not sell any equity securities during the period covered in this report that were not registered under the Securities Act of 1933, as amended.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table provides information regarding purchases of our common stock made by or on behalf of the Company or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the three months ended March 31, 2021 for the periods indicated.
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)(2) | Maximum (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| January 1, 2021 through January 31, 2021 | 190,888 | $ | 10.92 | 190,888 | $ | 51,067 | ||||||||||||||||||||
| February 1, 2021 through February 28, 2021 | 88,970 | 11.61 | 88,970 | 50,034 | ||||||||||||||||||||||
| March 1, 2021 through March 31, 2021 | 182,962 | 13.40 | 182,962 | 47,582 | ||||||||||||||||||||||
| Total | 462,820 | 462,820 | ||||||||||||||||||||||||
(1)On trade date basis.
(2)On November 2, 2020, the Company's Board of Directors approved the continuation of the Company's Stock Repurchase Program until November 5, 2021, or until the date the approved dollar amount has been used to repurchase shares, as well as the expansion of the repurchase authorization from $100 million to $150 million in the aggregate of the Company's outstanding stock. Pursuant to the program, the Company is authorized to repurchase up to $150 million in the aggregate of its outstanding common stock in the open market and/or through privately negotiated transactions at prices not to exceed the Company’s net asset value per share as reported in its most recent financial statements, in accordance with the guidelines specified in Rule 10b-18 of the Exchange Act. The timing, manner, price and amount of any repurchases will be determined by the Company, in its discretion, based upon the evaluation of economic and market conditions, stock price, available cash, applicable legal and regulatory requirements and other factors, and may include purchases pursuant to Rule 10b5-1 of the Exchange Act. The program does not require the Company to repurchase any specific number of shares and there can be no assurance as to the amount of shares repurchased under the program. The program may be suspended, extended, modified or discontinued by the Company at any time, subject to applicable law. Pursuant to the authorization described above, the Company adopted a 10b5-1 plan (the "Company 10b5-1 Plan"). The Company 10b5-1 Plan provides that purchases will be conducted on the open market in accordance with Rules 10b5-1 and 10b-18 under the Exchange Act and will otherwise be subject to applicable law, which may prohibit purchases under certain circumstances. The amount of purchases made under the Company 10b5-1 Plan or otherwise and how much will be purchased at any time is uncertain, dependent on prevailing market prices and trading volumes, all of which we cannot predict. The Company's Stock Repurchase Program was originally approved by the Company's Board of Directors on November 5, 2018 and announced on November 6, 2018.
Item 3. Defaults Upon Senior Securities.
Not applicable.
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Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
| 10.1 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
* Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TCG BDC, INC. | |||||||||||
| Dated: May 4, 2021 | By | /s/ Thomas M. Hennigan | |||||||||
| Thomas M. Hennigan Chief Financial Officer (principal financial officer) | |||||||||||
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