Franklin BSP Lending Corp - Quarter Report: 2022 June (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended June 30, 2022
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
Commission file number: 814-00821
FRANKLIN BSP LENDING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
| Maryland | 27-2614444 | |||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| 9 West 57th Street, 49th Floor, Suite 4920 New York, New York | 10019 | |||||||
| (Address of Principal Executive Office) | (Zip Code) | |||||||
(212) 588-6770
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
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 x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | |||||||
Non-accelerated filer x | 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. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of
the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The number of shares of the registrant's common stock, $0.001 par value, outstanding as of August 9, 2022 was 218,841,301.
FRANKLIN BSP LENDING CORPORATION
FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 2022
TABLE OF CONTENTS
| Page | |||||
| PART I - FINANCIAL INFORMATION | |||||
| PART II - OTHER INFORMATION | |||||
PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollars in thousands except share and per share data)
| June 30, | December 31, | ||||||||||
| 2022 | 2021 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Investments, at fair value: | |||||||||||
Control Investments, at fair value (amortized cost of $611,288 and $614,408, respectively) | $ | 651,828 | $ | 657,414 | |||||||
Affiliate Investments, at fair value (amortized cost of $138,696 and $154,211, respectively) | 90,727 | 110,952 | |||||||||
Non-affiliate Investments, at fair value (amortized cost of $2,031,700 and $2,014,998, respectively) | 2,014,400 | 2,010,598 | |||||||||
Investments, at fair value (amortized cost of $2,781,684 and $2,783,617, respectively) | 2,756,955 | 2,778,964 | |||||||||
| Cash and cash equivalents | 16,448 | 42,774 | |||||||||
| Interest and dividends receivable | 37,122 | 29,089 | |||||||||
| Receivable for unsettled trades | 13,136 | 37,379 | |||||||||
| Prepaid expenses and other assets | 4,442 | 6,749 | |||||||||
| Unrealized appreciation on forward currency exchange contracts | — | 266 | |||||||||
| Total assets | $ | 2,828,103 | $ | 2,895,221 | |||||||
| LIABILITIES | |||||||||||
Debt (net of deferred financing costs of $10,116 and $9,553, respectively) | $ | 1,189,831 | $ | 1,272,274 | |||||||
| Stockholder distributions payable | 24,661 | 23,253 | |||||||||
| Management fees payable | 10,549 | 10,499 | |||||||||
| Incentive fee on income payable | 7,737 | 7,169 | |||||||||
| Accounts payable and accrued expenses | 24,290 | 29,975 | |||||||||
| Payable for unsettled trades | 195 | 34,394 | |||||||||
| Interest and debt fees payable | 6,049 | 8,044 | |||||||||
| Directors' fees payable | 28 | 121 | |||||||||
| Unrealized depreciation on forward currency exchange contracts | 60 | — | |||||||||
| Total liabilities | 1,263,400 | 1,385,729 | |||||||||
| Commitments and contingencies (Note 7) | |||||||||||
| NET ASSETS | |||||||||||
| Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding | — | — | |||||||||
Common stock, $.001 par value, 450,000,000 shares authorized; 244,777,636 issued and 210,809,173 outstanding at June 30, 2022, and 232,419,916 issued and 201,610,757 outstanding at December 31, 2021 | 211 | 202 | |||||||||
| Additional paid in capital | 1,982,856 | 1,913,365 | |||||||||
| Total distributable loss | (418,364) | (404,075) | |||||||||
| Total net assets | 1,564,703 | 1,509,492 | |||||||||
| Total liabilities and net assets | $ | 2,828,103 | $ | 2,895,221 | |||||||
| Net asset value per share | $ | 7.42 | $ | 7.49 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands except share and per share data)
(Unaudited)
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Investment income: | |||||||||||||||||||||||
| From control investments | |||||||||||||||||||||||
| Interest income | $ | 4,571 | $ | 2,791 | $ | 9,157 | $ | 6,271 | |||||||||||||||
| Dividend income | 15,754 | 13,666 | 32,034 | 27,499 | |||||||||||||||||||
| Fee and other income | 74 | 7 | 144 | 42 | |||||||||||||||||||
| Total investment income from control investments | 20,399 | 16,464 | 41,335 | 33,812 | |||||||||||||||||||
| From affiliate investments | |||||||||||||||||||||||
| Interest income | 1,396 | 2,517 | 3,277 | 4,875 | |||||||||||||||||||
| Dividend income | 137 | 1,179 | 621 | 2,057 | |||||||||||||||||||
| Fee and other income | — | 2,036 | — | 2,036 | |||||||||||||||||||
| Total investment income from affiliate investments | 1,533 | 5,732 | 3,898 | 8,968 | |||||||||||||||||||
| From non-affiliate investments | |||||||||||||||||||||||
| Interest income | 39,423 | 34,596 | 77,982 | 69,476 | |||||||||||||||||||
| Dividend income | — | 56 | — | 56 | |||||||||||||||||||
| Fee and other income | 2,042 | 1,401 | 3,957 | 2,370 | |||||||||||||||||||
| Total investment income from non-affiliate investments | 41,465 | 36,053 | 81,939 | 71,902 | |||||||||||||||||||
| Interest from cash and cash equivalents | 20 | 2 | 21 | 3 | |||||||||||||||||||
| Total investment income | 63,417 | 58,251 | 127,193 | 114,685 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Management fees | 10,494 | 9,462 | 20,997 | 19,036 | |||||||||||||||||||
| Incentive fee on income | 7,124 | 6,876 | 14,380 | 13,531 | |||||||||||||||||||
| Interest and debt fees | 13,393 | 11,032 | 25,677 | 20,632 | |||||||||||||||||||
| Professional fees | 1,126 | 1,133 | 1,979 | 2,412 | |||||||||||||||||||
| Other general and administrative | 1,602 | 1,429 | 3,009 | 3,030 | |||||||||||||||||||
| Administrative services | 198 | 181 | 393 | 362 | |||||||||||||||||||
| Directors' fees | 232 | 228 | 505 | 454 | |||||||||||||||||||
| Total expenses | 34,169 | 30,341 | 66,940 | 59,457 | |||||||||||||||||||
| Income tax expense, including excise tax | 752 | 403 | 2,731 | 1,103 | |||||||||||||||||||
| Net investment income | 28,496 | 27,507 | 57,522 | 54,125 | |||||||||||||||||||
| Realized and unrealized gain (loss): | |||||||||||||||||||||||
| Net realized gain (loss) | |||||||||||||||||||||||
| Control investments | 6,840 | 2 | 6,841 | 3 | |||||||||||||||||||
| Affiliate investments | 392 | 20,364 | 504 | 20,057 | |||||||||||||||||||
| Non-affiliate investments | (1,253) | 7,636 | 3,654 | 7,193 | |||||||||||||||||||
| Net realized gain (loss) on foreign currency transactions | 308 | (853) | 501 | (1,381) | |||||||||||||||||||
| Net realized loss on extinguishment of debt | — | — | (1,769) | (1,286) | |||||||||||||||||||
| Total net realized gain | 6,287 | 27,149 | 9,731 | 24,586 | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands except share and per share data)
(Unaudited)
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | |||||||||||||||||||||||
| Control investments | (12,179) | (1,301) | (2,656) | (9,426) | |||||||||||||||||||
| Affiliate investments | (5,564) | (1,470) | (4,520) | 19,412 | |||||||||||||||||||
| Non-affiliate investments | (5,100) | 14,241 | (12,900) | 44,115 | |||||||||||||||||||
| Net change in deferred taxes | (107) | — | 122 | — | |||||||||||||||||||
| Total net change in unrealized appreciation (deprecation) on investments, net of change in deferred taxes | (22,950) | 11,470 | (19,954) | 54,101 | |||||||||||||||||||
| Net change in unrealized appreciation (depreciation) from forward currency exchange contracts | 214 | 595 | (325) | 888 | |||||||||||||||||||
| Net realized and unrealized gain (loss) | (16,449) | 39,214 | (10,548) | 79,575 | |||||||||||||||||||
| Net increase in net assets resulting from operations | $ | 12,047 | $ | 66,721 | $ | 46,974 | $ | 133,700 | |||||||||||||||
| Per share information - basic and diluted | |||||||||||||||||||||||
| Net investment income | $ | 0.14 | $ | 0.14 | $ | 0.28 | $ | 0.27 | |||||||||||||||
| Net increase in net assets resulting from operations | $ | 0.06 | $ | 0.33 | $ | 0.23 | $ | 0.67 | |||||||||||||||
| Weighted average shares outstanding | 205,577,018 | 199,172,026 | 203,038,687 | 199,753,150 | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(dollars in thousands except share and per share data)
(Unaudited)
| For the six months ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Operations: | |||||||||||
| Net investment income | $ | 57,522 | $ | 54,125 | |||||||
| Net realized gain from investments | 10,999 | 27,253 | |||||||||
| Net realized gain (loss) on foreign currency transactions | 501 | (1,381) | |||||||||
| Net realized loss on extinguishment of debt | (1,769) | (1,286) | |||||||||
| Net change in unrealized appreciation (depreciation) on investments | (20,076) | 54,101 | |||||||||
| Net change in deferred taxes | 122 | — | |||||||||
| Net change in unrealized appreciation (depreciation) from forward currency exchange contracts | (325) | 888 | |||||||||
| Net increase in net assets resulting from operations | 46,974 | 133,700 | |||||||||
| Stockholder distributions: | |||||||||||
| Distributions | (61,263) | (39,657) | |||||||||
| Net decrease in net assets from stockholder distributions | (61,263) | (39,657) | |||||||||
| Capital share transactions: | |||||||||||
| Issuance of common stock, net of issuance costs | 79,441 | — | |||||||||
| Reinvestment of stockholder distributions | 13,630 | 9,145 | |||||||||
| Repurchases of common stock | (23,571) | (19,532) | |||||||||
| Net increase (decrease) in net assets from capital share transactions | 69,500 | (10,387) | |||||||||
| Total increase in net assets | 55,211 | 83,656 | |||||||||
| Net assets at beginning of period | 1,509,492 | 1,399,755 | |||||||||
| Net assets at end of period | $ | 1,564,703 | $ | 1,483,411 | |||||||
| Net asset value per common share | $ | 7.42 | $ | 7.43 | |||||||
| Common shares outstanding at end of period | 210,809,173 | 199,773,641 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
7
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
| For the six months ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Operating activities: | |||||||||||
| Net increase in net assets resulting from operations | $ | 46,974 | $ | 133,700 | |||||||
| Adjustments to reconcile net increase (decrease) in net assets from operations to net cash provided by (used in) operating activities: | |||||||||||
| Payment-in-kind interest income | (5,472) | (2,555) | |||||||||
| Net accretion of discount on investments | (4,326) | (4,683) | |||||||||
| Amortization of deferred financing costs | 1,456 | 1,605 | |||||||||
| Amortization of discount on unsecured notes | 619 | 433 | |||||||||
| Sales and repayments of investments | 216,780 | 483,587 | |||||||||
| Purchases of investments | (194,050) | (623,054) | |||||||||
| Net realized gain from investments | (10,999) | (27,253) | |||||||||
| Net realized (gain) loss on foreign currency transactions | (501) | 1,381 | |||||||||
| Net realized loss on extinguishment of debt | 1,769 | 1,286 | |||||||||
| Net change in unrealized (appreciation) depreciation on investments | 20,076 | (54,101) | |||||||||
| Net change in unrealized (appreciation) depreciation from forward currency exchange contracts | 325 | (888) | |||||||||
| (Increase) decrease in operating assets: | |||||||||||
| Interest and dividends receivable | (8,033) | (10,994) | |||||||||
| Receivable for unsettled trades | 24,243 | (7,367) | |||||||||
| Prepaid expenses and other assets | 2,307 | 429 | |||||||||
| Increase (decrease) in operating liabilities: | |||||||||||
| Management fees payable | 50 | 14 | |||||||||
| Incentive fee on income payable | 568 | 1,381 | |||||||||
| Accounts payable and accrued expenses | (5,553) | 8,003 | |||||||||
| Payable for unsettled trades | (34,199) | (144,905) | |||||||||
| Interest and debt fees payable | (1,995) | 379 | |||||||||
| Directors' fees payable | (93) | (24) | |||||||||
| Net cash provided by (used in) operating activities | 49,946 | (243,626) | |||||||||
| Financing activities: | |||||||||||
| Proceeds from issuance of shares of common stock, net | 79,441 | — | |||||||||
| Repurchases of common stock | (23,571) | (19,532) | |||||||||
| Proceeds from debt | 129,000 | 784,994 | |||||||||
| Payments on debt | (211,500) | (509,100) | |||||||||
| Payments of financing costs | (3,918) | (708) | |||||||||
| Stockholder distributions | (46,225) | (30,670) | |||||||||
| Net cash provided by (used in) financing activities | (76,773) | 224,984 | |||||||||
| Net decrease in cash and cash equivalents | (26,827) | (18,642) | |||||||||
| Effect of foreign currency exchange rates | 501 | (1,381) | |||||||||
| Cash and cash equivalents, beginning of period | 42,774 | 53,182 | |||||||||
| Cash and cash equivalents, end of period | $ | 16,448 | $ | 33,159 | |||||||
| Supplemental information: | |||||||||||
| Interest paid during the period | $ | 25,416 | $ | 9,022 | |||||||
| Net taxes, including excise tax, paid (refunds received) for the period | $ | 1,808 | $ | (297) | |||||||
| Distributions reinvested | $ | 13,630 | $ | 9,145 | |||||||
| Assets and liabilities exchanged for interest in FBLC Senior Loan Fund, LLC (Note 3) | $ | — | $ | 262,544 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
8
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt - 117.9% (b) | ||||||||||||||||||||||||||||||||||||||
| 1236904 BC, Ltd. (c) (h) | Software/Services | L+7.50% (9.63%), 3/4/2027 | $ | 10,441 | $ | 10,281 | $ | 10,600 | 0.7 | % | ||||||||||||||||||||||||||||
| 1236904 BC, Ltd. (c) (h) (i) | Software/Services | L+5.50% (7.13%), 3/4/2027 | 18,545 | 18,041 | 17,933 | 1.1 | % | |||||||||||||||||||||||||||||||
| Absolute Software Corp. (a) (c) (h) (i) | Software/Services | L+6.00% (8.25%), 7/1/2027 | 46,172 | 45,402 | 45,401 | 2.9 | % | |||||||||||||||||||||||||||||||
| ADCS Clinics Intermediate Holdings, LLC (c) (h) | Healthcare | L+6.25% (8.22%), 5/7/2027 | 13,703 | 13,481 | 13,481 | 0.9 | % | |||||||||||||||||||||||||||||||
| ADCS Clinics Intermediate Holdings, LLC (c) | Healthcare | L+6.25% (7.74%), 5/7/2027 | 2,812 | 2,812 | 2,767 | 0.2 | % | |||||||||||||||||||||||||||||||
| Arch Global Precision, LLC (c) | Industrials | L+4.75% (7.00%), 4/1/2026 | 2,368 | 2,368 | 2,369 | 0.2 | % | |||||||||||||||||||||||||||||||
| Arch Global Precision, LLC (c) (h) (i) | Industrials | L+4.75% (7.00%), 4/1/2026 | 7,518 | 7,491 | 7,518 | 0.5 | % | |||||||||||||||||||||||||||||||
| Arctic Holdco, LLC (c) (i) | Paper & Packaging | L+6.00% (8.25%), 12/23/2026 | 10,582 | 10,582 | 10,423 | 0.7 | % | |||||||||||||||||||||||||||||||
| Arctic Holdco, LLC (c) | Paper & Packaging | L+6.00% (8.25%), 12/23/2026 | 1,830 | 1,829 | 1,802 | 0.1 | % | |||||||||||||||||||||||||||||||
| Arctic Holdco, LLC (c) (h) (i) | Paper & Packaging | L+6.00% (8.25%), 12/23/2026 | 50,399 | 49,435 | 49,643 | 3.2 | % | |||||||||||||||||||||||||||||||
| Armada Parent, Inc. (c) (h) | Industrials | L+5.75% (6.99%), 10/29/2027 | 44,943 | 44,145 | 44,143 | 2.8 | % | |||||||||||||||||||||||||||||||
| Aventine Holdings, LLC (c) | Media/Entertainment | L+6.00% (7.61%) 4.00% PIK, 6/18/2027 | 9,116 | 9,116 | 8,951 | 0.6 | % | |||||||||||||||||||||||||||||||
| Aventine Holdings, LLC (c) | Media/Entertainment | 10.25% PIK, 6/18/2027 | 23,589 | 23,081 | 23,056 | 1.5 | % | |||||||||||||||||||||||||||||||
| Aventine Holdings, LLC (c) (i) | Media/Entertainment | L+6.00% (7.61%) 4.00% PIK, 6/18/2027 | 25,670 | 25,215 | 25,205 | 1.6 | % | |||||||||||||||||||||||||||||||
| Axiom Global, Inc. (c) (h) (i) | Business Services | L+5.50% (6.49%), 10/1/2026 | 20,421 | 20,282 | 20,421 | 1.3 | % | |||||||||||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. (c) (i) | Healthcare | L+6.25% (8.50%), 12/29/2028 | 3,416 | 3,416 | 3,345 | 0.2 | % | |||||||||||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. (c) (i) | Healthcare | L+6.25% (8.50%), 12/29/2028 | 20,499 | 20,070 | 20,070 | 1.3 | % | |||||||||||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. (c) | Healthcare | L+6.25% (7.85%), 12/30/2026 | 1,142 | 1,142 | 1,118 | 0.1 | % | |||||||||||||||||||||||||||||||
| Bearcat Buyer, Inc. (c) (i) | Healthcare | L+4.25% (6.50%), 7/9/2026 | 150 | 150 | 150 | 0.0 | % | |||||||||||||||||||||||||||||||
| Bearcat Buyer, Inc. (c) (i) | Healthcare | L+4.25% (6.50%), 7/9/2026 | 723 | 723 | 723 | 0.0 | % | |||||||||||||||||||||||||||||||
| Black Mountain Sand, LLC (c) | Energy | L+9.00% (10.51%), 6/30/2024 | 15,469 | 15,416 | 15,469 | 1.0 | % | |||||||||||||||||||||||||||||||
| Capstone Logistics (c) | Transportation | L+4.75% (6.42%), 11/12/2027 | 1,121 | 1,121 | 1,121 | 0.1 | % | |||||||||||||||||||||||||||||||
| Capstone Logistics (c) (h) | Transportation | L+4.75% (6.42%), 11/12/2027 | 19,111 | 18,972 | 19,111 | 1.2 | % | |||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (a) (h) (i) (p) | Media/Entertainment | L+6.00% (8.23%), 11/24/2025 | 5,570 | 5,521 | 5,447 | 0.3 | % | |||||||||||||||||||||||||||||||
| CHA Holdings, Inc. (c) (i) | Business Services | L+4.50% (6.75%), 4/10/2025 | 517 | 495 | 517 | 0.0 | % | |||||||||||||||||||||||||||||||
| Chudy Group, LLC (c) | Healthcare | L+5.75% (6.75%), 6/30/2027 | 574 | 574 | 574 | 0.0 | % | |||||||||||||||||||||||||||||||
| Chudy Group, LLC (c) (h) | Healthcare | L+5.75% (6.75%), 6/30/2027 | 20,497 | 20,241 | 20,497 | 1.3 | % | |||||||||||||||||||||||||||||||
| Cobblestone Intermediate Holdco, LLC (c) (i) | Consumer | L+5.50% (7.17%), 1/29/2026 | 14,938 | 14,862 | 14,938 | 1.0 | % | |||||||||||||||||||||||||||||||
| Cobblestone Intermediate Holdco, LLC (c) | Consumer | L+5.50% (7.17%), 1/29/2026 | 6,129 | 6,129 | 6,130 | 0.4 | % | |||||||||||||||||||||||||||||||
| Cold Spring Brewing, Co. (c) (h) (i) | Food & Beverage | L+4.75% (5.81%), 12/19/2025 | 7,034 | 6,993 | 7,034 | 0.4 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
9
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Communication Technology Intermediate, LLC (c) (h) | Business Services | L+5.50% (7.17%), 5/5/2027 | $ | 17,981 | $ | 17,691 | $ | 17,981 | 1.1 | % | ||||||||||||||||||||||||||||
| Communication Technology Intermediate, LLC (c) (i) | Business Services | L+5.50% (7.17%), 5/5/2027 | 6,255 | 6,255 | 6,255 | 0.4 | % | |||||||||||||||||||||||||||||||
| Communication Technology Intermediate, LLC (c) | Business Services | L+5.50% (7.12%), 5/5/2027 | 205 | 205 | 205 | 0.0 | % | |||||||||||||||||||||||||||||||
| Corfin Industries, LLC (c) | Industrials | L+5.75% (7.33%), 12/27/2027 | 1,606 | 1,606 | 1,606 | 0.1 | % | |||||||||||||||||||||||||||||||
| Corfin Industries, LLC (c) (h) (i) | Industrials | L+5.75% (6.76%), 2/5/2026 | 16,436 | 16,224 | 16,436 | 1.1 | % | |||||||||||||||||||||||||||||||
| Cornerstone Chemical, Co. | Chemicals | 6.75%, 8/15/2024 | 14,850 | 14,453 | 13,278 | 0.8 | % | |||||||||||||||||||||||||||||||
| CRS-SPV, Inc. (c) (o) | Industrials | L+4.50% (6.17%), 3/8/2023 | 62 | 62 | 62 | 0.0 | % | |||||||||||||||||||||||||||||||
| Drilling Info Holdings, Inc. (c) (i) | Business Services | L+4.25% (5.92%), 7/30/2025 | 6,988 | 6,824 | 6,988 | 0.4 | % | |||||||||||||||||||||||||||||||
| Dynagrid Holdings, LLC (c) (h) | Utilities | L+6.00% (8.06%), 12/18/2025 | 3,916 | 3,840 | 3,840 | 0.2 | % | |||||||||||||||||||||||||||||||
| Dynagrid Holdings, LLC (c) | Utilities | L+6.00% (7.55%), 12/18/2025 | 452 | 452 | 452 | 0.0 | % | |||||||||||||||||||||||||||||||
| Dynagrid Holdings, LLC (c) (i) | Utilities | L+6.00% (8.25%), 12/18/2025 | 14,264 | 14,053 | 14,264 | 0.9 | % | |||||||||||||||||||||||||||||||
| Eliassen Group, LLC (c) (i) | Business Services | S+5.75% (7.80%), 4/14/2028 | 11,615 | 11,501 | 11,501 | 0.7 | % | |||||||||||||||||||||||||||||||
| FGT Purchaser, LLC (c) (h) | Consumer | L+5.50% (6.51%), 9/13/2027 | 21,338 | 20,968 | 20,967 | 1.3 | % | |||||||||||||||||||||||||||||||
| Foresight Energy Operating, LLC (p) | Energy | L+8.00% (10.25%), 6/30/2027 | 1,084 | 1,084 | 1,072 | 0.1 | % | |||||||||||||||||||||||||||||||
| Galway Borrower, LLC (c) (h) | Financials | L+5.25% (7.50%), 9/29/2028 | 27,397 | 26,959 | 26,906 | 1.7 | % | |||||||||||||||||||||||||||||||
| Geosyntec Consultants, Inc. (c) | Business Services | S+5.25% (6.76%), 5/16/2029 | 27,373 | 26,902 | 26,902 | 1.7 | % | |||||||||||||||||||||||||||||||
| Green Energy Partners/Stonewall, LLC (c) | Utilities | L+6.00% (8.25%), 11/12/2026 | 10,296 | 10,116 | 10,296 | 0.7 | % | |||||||||||||||||||||||||||||||
| Health Plan One, Inc. (c) | Financials | L+7.50% (9.75%), 7/16/2025 | 10,695 | 10,370 | 10,695 | 0.7 | % | |||||||||||||||||||||||||||||||
| Higginbotham Insurance Agency, Inc. (c) (h) | Financials | L+5.50% (7.17%), 11/25/2026 | 14,700 | 14,573 | 14,700 | 0.9 | % | |||||||||||||||||||||||||||||||
| Higginbotham Insurance Agency, Inc. (c) | Financials | L+5.50% (6.56%), 11/25/2026 | 956 | 956 | 956 | 0.1 | % | |||||||||||||||||||||||||||||||
| Hospice Care Buyer, Inc. (c) | Healthcare | L+6.50% (8.08%), 12/9/2026 | 4,553 | 4,553 | 4,502 | 0.3 | % | |||||||||||||||||||||||||||||||
| Hospice Care Buyer, Inc. (c) (h) | Healthcare | L+6.50% (7.74%), 12/9/2026 | 24,437 | 23,865 | 24,161 | 1.5 | % | |||||||||||||||||||||||||||||||
| Hospice Care Buyer, Inc. (c) (h) | Healthcare | L+6.50% (7.74%), 12/9/2026 | 18,099 | 17,753 | 17,895 | 1.1 | % | |||||||||||||||||||||||||||||||
| Hospice Care Buyer, Inc. (c) | Healthcare | P+5.50% (10.25%), 12/9/2026 | 2,141 | 2,141 | 2,117 | 0.1 | % | |||||||||||||||||||||||||||||||
| ICR Operations, LLC (c) (h) | Business Services | L+5.25% (6.92%), 11/22/2028 | 42,559 | 41,781 | 41,780 | 2.7 | % | |||||||||||||||||||||||||||||||
| ICR Operations, LLC (c) | Business Services | L+5.25% (6.92%), 11/22/2027 | 1,545 | 1,544 | 1,517 | 0.1 | % | |||||||||||||||||||||||||||||||
| Ideal Tridon Holdings, Inc. (c) | Industrials | L+5.25% (7.50%), 7/31/2024 | 45 | 45 | 45 | 0.0 | % | |||||||||||||||||||||||||||||||
| Ideal Tridon Holdings, Inc. (c) (h) (i) | Industrials | L+5.25% (7.50%), 7/31/2024 | 30,683 | 30,467 | 30,683 | 2.0 | % | |||||||||||||||||||||||||||||||
| IG Investments Holdings, LLC (c) (h) | Business Services | L+6.00% (8.25%), 9/22/2028 | 17,718 | 17,403 | 17,550 | 1.1 | % | |||||||||||||||||||||||||||||||
| IG Investments Holdings, LLC (c) (h) | Business Services | L+6.00% (8.25%), 9/22/2028 | 319 | 316 | 316 | 0.0 | % | |||||||||||||||||||||||||||||||
| IG Investments Holdings, LLC (c) | Business Services | P+5.00% (9.75%), 9/22/2027 | 382 | 382 | 379 | 0.0 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
10
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Indigo Buyer, Inc. (c) | Paper & Packaging | S+5.75% (7.18%), 5/23/2028 | $ | 605 | $ | 605 | $ | 593 | 0.0 | % | ||||||||||||||||||||||||||||
| Indigo Buyer, Inc. (c) | Paper & Packaging | S+5.75% (7.18%), 5/23/2028 | 21,333 | 20,914 | 20,915 | 1.3 | % | |||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (o) | Industrials | 7.50%, 12/31/2025 | 180 | 180 | 180 | 0.0 | % | |||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (o) | Industrials | 7.50%, 12/31/2025 | 1,428 | 1,428 | 1,428 | 0.1 | % | |||||||||||||||||||||||||||||||
| Integrated Global Services, Inc. (c) (i) | Industrials | L+6.00% (7.34%), 2/4/2026 | 11,327 | 11,191 | 11,011 | 0.7 | % | |||||||||||||||||||||||||||||||
| Integrated Global Services, Inc. (c) | Industrials | L+6.00% (7.62%), 2/4/2026 | 1,420 | 1,420 | 1,380 | 0.1 | % | |||||||||||||||||||||||||||||||
| Internap Corp. (c) (h) (o) | Business Services | L+6.50% (7.90%), 5/8/2025 | 6,470 | 6,470 | 5,707 | 0.4 | % | |||||||||||||||||||||||||||||||
| International Cruise & Excursions, Inc. (c) (i) | Business Services | S+5.35% (6.88%), 6/6/2025 | 4,875 | 4,853 | 4,437 | 0.3 | % | |||||||||||||||||||||||||||||||
| IQN Holding Corp. (c) (i) | Software/Services | S+5.50% (6.90%), 5/2/2029 | 11,051 | 10,943 | 10,943 | 0.7 | % | |||||||||||||||||||||||||||||||
| K2 Intelligence Holdings, Inc. (c) (h) (i) | Business Services | L+5.75% (8.00%), 9/23/2024 | 7,685 | 7,616 | 7,151 | 0.5 | % | |||||||||||||||||||||||||||||||
| KidKraft, Inc. (c) | Consumer | L+5.00% (6.00%), 8/15/2022 | 1,060 | 984 | 1,060 | 0.1 | % | |||||||||||||||||||||||||||||||
| Kissner Milling Co., Ltd. | Industrials | 4.88%, 5/1/2028 | 2,983 | 2,983 | 2,481 | 0.2 | % | |||||||||||||||||||||||||||||||
| Knowledge Pro Buyer, Inc. (c) (i) | Business Services | L+5.75% (7.44%), 12/10/2027 | 24,676 | 24,228 | 24,227 | 1.5 | % | |||||||||||||||||||||||||||||||
| Knowledge Pro Buyer, Inc. (c) | Business Services | P+4.75% (9.50%), 12/10/2027 | 466 | 466 | 457 | 0.0 | % | |||||||||||||||||||||||||||||||
| Labrie Environmental Group, LLC (a) (c) (h) | Industrials | L+5.50% (7.17%), 9/1/2026 | 22,466 | 22,154 | 22,466 | 1.4 | % | |||||||||||||||||||||||||||||||
| Lakeland Tours, LLC (c) (h) (i) | Education | L+7.50% (8.75%) 6.00% PIK, 9/25/2025 | 4,432 | 4,117 | 3,989 | 0.3 | % | |||||||||||||||||||||||||||||||
| Lakeland Tours, LLC (c) (h) (i) | Education | 13.25% PIK, 9/25/2027 | 5,015 | 3,471 | 3,761 | 0.2 | % | |||||||||||||||||||||||||||||||
| Lakeview Health Holdings, Inc. (c) (o) | Healthcare | P+6.00% (10.75%) PIK, 10/15/2024 | 538 | 538 | 538 | 0.0 | % | |||||||||||||||||||||||||||||||
| Lakeview Health Holdings, Inc. (c) (o) (t) | Healthcare | P+4.50% (9.25%) PIK, 10/15/2024 | 1,640 | 664 | 518 | 0.0 | % | |||||||||||||||||||||||||||||||
| LightSquared, LP | Telecom | 15.50% PIK, 11/1/2023 | 1,933 | 1,933 | 1,053 | 0.1 | % | |||||||||||||||||||||||||||||||
| Manna Pro Products, LLC (c) | Consumer | L+6.00% (7.20%), 12/10/2026 | 4,013 | 4,013 | 4,013 | 0.3 | % | |||||||||||||||||||||||||||||||
| Manna Pro Products, LLC (c) (i) | Consumer | L+6.00% (7.67%), 12/10/2026 | 33,082 | 32,477 | 33,082 | 2.1 | % | |||||||||||||||||||||||||||||||
| Manna Pro Products, LLC (c) | Consumer | L+6.00% (7.62%), 12/10/2026 | 1,759 | 1,759 | 1,759 | 0.1 | % | |||||||||||||||||||||||||||||||
| McDonald Worley, P.C. (c) | Business Services | 26.00% PIK, 12/31/2024 | 12,296 | 12,296 | 11,583 | 0.7 | % | |||||||||||||||||||||||||||||||
| MCS Acquisition Corp. (c) | Business Services | L+6.00% (7.00%), 10/2/2025 | 776 | 776 | 776 | 0.1 | % | |||||||||||||||||||||||||||||||
| Medical Depot Holdings, Inc. (h) (i) | Healthcare | L+9.50% (10.51%) 4.00% PIK, 6/1/2025 | 20,232 | 19,875 | 19,220 | 1.2 | % | |||||||||||||||||||||||||||||||
| Medical Management Resource Group, LLC (c) | Healthcare | L+5.75% (6.50%), 9/30/2027 | 1,008 | 1,008 | 990 | 0.1 | % | |||||||||||||||||||||||||||||||
| Medical Management Resource Group, LLC (c) (h) | Healthcare | L+5.75% (6.50%), 9/30/2027 | 16,058 | 15,777 | 15,777 | 1.0 | % | |||||||||||||||||||||||||||||||
| MGTF Radio Company, LLC (c) (o) | Media/Entertainment | L+6.00% (7.67%), 4/1/2024 | 49,271 | 49,221 | 41,708 | 2.7 | % | |||||||||||||||||||||||||||||||
| Midwest Can Company, LLC (c) (h) (i) | Paper & Packaging | L+6.00% (8.25%), 3/2/2026 | 32,220 | 31,792 | 32,220 | 2.1 | % | |||||||||||||||||||||||||||||||
| Miller Environmental Group, Inc. (c) (h) (i) | Business Services | L+6.50% (8.81%), 3/15/2024 | 11,288 | 11,211 | 11,288 | 0.7 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
11
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Miller Environmental Group, Inc. (c) (h) (i) | Business Services | L+6.50% (8.81%), 3/15/2024 | $ | 10,324 | $ | 10,241 | $ | 10,324 | 0.7 | % | ||||||||||||||||||||||||||||
| Mirra-Primeaccess Holdings, LLC (c) (h) | Healthcare | L+6.50% (8.17%), 7/29/2026 | 49,074 | 48,274 | 49,074 | 3.1 | % | |||||||||||||||||||||||||||||||
| Mirra-Primeaccess Holdings, LLC (c) | Healthcare | L+6.50% (8.12%), 7/29/2026 | 5,870 | 5,870 | 5,870 | 0.4 | % | |||||||||||||||||||||||||||||||
| Muth Mirror Systems, LLC (c) (h) (i) | Technology | L+6.75% (7.75%), 4/23/2025 | 14,981 | 14,840 | 13,760 | 0.9 | % | |||||||||||||||||||||||||||||||
| New Star Metals, Inc. (c) (h) (i) | Industrials | L+5.00% (7.26%), 1/9/2026 | 32,635 | 32,255 | 32,635 | 2.1 | % | |||||||||||||||||||||||||||||||
| Norvax, LLC (c) | Business Services | L+6.50% (8.15%), 9/13/2024 | 893 | 893 | 862 | 0.1 | % | |||||||||||||||||||||||||||||||
| NTM Acquisition Corp. (c) (h) (i) | Media/Entertainment | L+7.25% (9.50%) 1.00% PIK, 6/7/2024 | 21,113 | 21,113 | 20,543 | 1.3 | % | |||||||||||||||||||||||||||||||
| Odessa Technologies, Inc. (c) (h) | Software/Services | L+5.75% (7.35%), 10/19/2027 | 14,415 | 14,160 | 14,160 | 0.9 | % | |||||||||||||||||||||||||||||||
| ORG GC Holdings, LLC (c) (o) | Business Services | L+6.50% (8.76%) PIK, 11/29/2026 | 8,660 | 8,660 | 8,660 | 0.6 | % | |||||||||||||||||||||||||||||||
| Pie Buyer, Inc. (c) (i) | Food & Beverage | S+5.50% (6.50%), 4/5/2027 | 2,093 | 2,053 | 2,053 | 0.1 | % | |||||||||||||||||||||||||||||||
| Pie Buyer, Inc. (c) (i) | Food & Beverage | L+5.50% (8.38%), 4/5/2027 | 28,176 | 27,505 | 27,638 | 1.8 | % | |||||||||||||||||||||||||||||||
| Pie Buyer, Inc. (c) | Food & Beverage | L+5.50% (6.56%), 4/5/2027 | 6,098 | 6,098 | 5,982 | 0.4 | % | |||||||||||||||||||||||||||||||
| PlayPower, Inc. (c) (h) (i) | Industrials | L+5.50% (7.75%), 5/8/2026 | 23,828 | 23,631 | 21,922 | 1.4 | % | |||||||||||||||||||||||||||||||
| Pluralsight, LLC (c) (h) | Software/Services | L+8.00% (9.00%), 4/6/2027 | 18,826 | 18,527 | 18,514 | 1.2 | % | |||||||||||||||||||||||||||||||
| Pluralsight, LLC (c) (h) | Software/Services | L+8.00% (9.00%), 4/6/2027 | 6,728 | 6,616 | 6,616 | 0.4 | % | |||||||||||||||||||||||||||||||
| Point Broadband Acquisition, LLC (c) (h) | Telecom | L+6.00% (7.00%), 10/2/2028 | 19,243 | 18,814 | 18,814 | 1.2 | % | |||||||||||||||||||||||||||||||
| Premier Global Services, Inc. (c) (t) | Telecom | P+5.50% (10.25%), 6/8/2023 | 5,024 | 4,908 | — | — | % | |||||||||||||||||||||||||||||||
| Premier Global Services, Inc. (c) (t) | Telecom | P+5.50% (10.25%), 12/8/2022 | 969 | 969 | 239 | 0.0 | % | |||||||||||||||||||||||||||||||
| Prototek, LLC (c) (h) | Industrials | L+5.75% (6.81%), 10/20/2026 | 11,116 | 10,936 | 11,060 | 0.7 | % | |||||||||||||||||||||||||||||||
| Prototek, LLC (c) | Industrials | L+5.75% (7.78%), 10/20/2026 | 1,354 | 1,354 | 1,348 | 0.1 | % | |||||||||||||||||||||||||||||||
| PSKW, LLC (c) (h) (i) | Healthcare | L+6.25% (7.92%), 3/9/2026 | 29,325 | 28,874 | 29,325 | 1.9 | % | |||||||||||||||||||||||||||||||
| Questex, Inc. (c) (h) (i) | Media/Entertainment | L+5.00% (6.70%), 9/9/2024 | 15,582 | 15,468 | 14,991 | 1.0 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) | Food & Beverage | L+6.50% (7.62%), 7/1/2024 | 440 | 440 | 432 | 0.0 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) | Food & Beverage | L+6.50% (7.50%), 7/1/2025 | 1,798 | 1,787 | 1,763 | 0.1 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) | Food & Beverage | L+6.50% (7.50%), 7/1/2025 | 1,469 | 1,469 | 1,440 | 0.1 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) | Food & Beverage | L+6.50% (7.50%), 7/1/2025 | 4,838 | 4,838 | 4,744 | 0.3 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) (h) (i) | Food & Beverage | L+6.50% (7.50%), 7/1/2025 | 19,049 | 18,763 | 18,677 | 1.2 | % | |||||||||||||||||||||||||||||||
| Relativity Oda, LLC (c) (i) | Software/Services | L+8.15% (9.15%) PIK, 5/12/2027 | 5,031 | 4,938 | 4,873 | 0.3 | % | |||||||||||||||||||||||||||||||
| REP TEC Intermediate Holdings, Inc. (c) (h) (i) | Software/Services | L+6.50% (8.76%), 6/19/2025 | 28,636 | 28,219 | 28,192 | 1.8 | % | |||||||||||||||||||||||||||||||
| Roadsafe Holdings, Inc. (c) | Industrials | P+4.75% (9.50%), 10/19/2027 | 5,296 | 5,296 | 5,209 | 0.3 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
12
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Roadsafe Holdings, Inc. (c) (i) | Industrials | L+5.75% (7.76%), 10/19/2027 | $ | 7,792 | $ | 7,665 | $ | 7,665 | 0.5 | % | ||||||||||||||||||||||||||||
| RSC Acquisition, Inc. (c) (i) | Financials | S+5.50% (7.70%), 10/30/2026 | 11,051 | 11,035 | 11,051 | 0.7 | % | |||||||||||||||||||||||||||||||
| Saturn SHC Buyer Holdings, Inc. (c) (h) | Healthcare | L+6.00% (7.83%), 11/18/2027 | 33,157 | 32,562 | 32,561 | 2.1 | % | |||||||||||||||||||||||||||||||
| Sherlock Buyer Corp. (c) (i) | Business Services | L+5.75% (6.74%), 12/8/2028 | 11,096 | 10,892 | 10,892 | 0.7 | % | |||||||||||||||||||||||||||||||
| Simplifi Holdings, Inc. (c) (h) | Media/Entertainment | L+5.50% (6.46%), 10/1/2027 | 35,283 | 34,665 | 34,665 | 2.2 | % | |||||||||||||||||||||||||||||||
| Skillsoft Corp. (a) (h) | Technology | S+5.25% (6.19%), 7/14/2028 | 1,453 | 1,434 | 1,345 | 0.1 | % | |||||||||||||||||||||||||||||||
| St. Croix Hospice Acquisition Corp. (c) | Healthcare | L+6.00% (8.07%), 10/30/2026 | 1,579 | 1,579 | 1,579 | 0.1 | % | |||||||||||||||||||||||||||||||
| St. Croix Hospice Acquisition Corp. (c) (i) | Healthcare | L+6.00% (7.24%), 10/30/2026 | 25,550 | 25,181 | 25,550 | 1.6 | % | |||||||||||||||||||||||||||||||
| Striper Buyer, LLC (c) (h) | Paper & Packaging | L+5.50% (7.17%), 12/30/2026 | 12,330 | 12,236 | 12,330 | 0.8 | % | |||||||||||||||||||||||||||||||
| Subsea Global Solutions, LLC (c) (i) | Business Services | L+6.75% (9.06%), 12/31/2023 | 4,673 | 4,653 | 4,673 | 0.3 | % | |||||||||||||||||||||||||||||||
| Subsea Global Solutions, LLC (c) (i) | Business Services | L+6.75% (9.06%), 12/31/2023 | 7,104 | 7,083 | 7,104 | 0.5 | % | |||||||||||||||||||||||||||||||
| Subsea Global Solutions, LLC (c) | Business Services | L+6.75% (7.75%), 12/31/2023 | 623 | 623 | 623 | 0.0 | % | |||||||||||||||||||||||||||||||
| SunMed Group Holdings, LLC (c) (h) | Healthcare | L+5.75% (8.00%), 6/16/2028 | 9,009 | 8,875 | 8,875 | 0.6 | % | |||||||||||||||||||||||||||||||
| SunMed Group Holdings, LLC (c) | Healthcare | L+5.75% (7.90%), 6/16/2027 | 288 | 288 | 284 | 0.0 | % | |||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (p) (t) | Consumer | L+6.00% (10.00%) PIK, 3/31/2023 | 6,937 | 3,833 | 486 | 0.0 | % | |||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (p) (t) | Consumer | 10.00% PIK, 3/31/2023 | 4,054 | 2,986 | 4,054 | 0.3 | % | |||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (p) (t) | Consumer | L+6.00% (10.00%) PIK, 3/31/2023 | 39,079 | 21,646 | 2,736 | 0.2 | % | |||||||||||||||||||||||||||||||
| Therapy Brands Holdings, LLC (c) (h) | Healthcare | L+4.00% (4.79%), 5/18/2028 | 3,458 | 3,443 | 3,458 | 0.2 | % | |||||||||||||||||||||||||||||||
| Tillamook Country Smoker, LLC (c) (h) | Food & Beverage | L+7.75% (9.42%), 8/19/2022 | 9,527 | 9,527 | 9,527 | 0.6 | % | |||||||||||||||||||||||||||||||
| Tillamook Country Smoker, LLC (c) | Food & Beverage | L+7.75% (9.42%), 8/19/2022 | 2,561 | 2,561 | 2,561 | 0.2 | % | |||||||||||||||||||||||||||||||
| Trinity Air Consultants Holdings Corp. (c) | Business Services | L+5.25% (6.00%), 6/29/2027 | 3,836 | 3,836 | 3,772 | 0.2 | % | |||||||||||||||||||||||||||||||
| Trinity Air Consultants Holdings Corp. (c) (h) | Business Services | L+5.25% (7.08%), 6/29/2027 | 20,424 | 20,084 | 20,083 | 1.3 | % | |||||||||||||||||||||||||||||||
| Triple Lift, Inc. (c) | Software/Services | S+5.75% (7.17%), 5/5/2028 | 1,265 | 1,265 | 1,265 | 0.1 | % | |||||||||||||||||||||||||||||||
| Triple Lift, Inc. (c) (i) | Software/Services | S+5.75% (6.58%), 5/5/2028 | 28,406 | 27,918 | 28,406 | 1.8 | % | |||||||||||||||||||||||||||||||
| University of St. Augustine Acquisition Corp. (c) (h) (i) | Education | L+4.25% (5.92%), 2/2/2026 | 23,399 | 23,099 | 23,399 | 1.5 | % | |||||||||||||||||||||||||||||||
| Urban One, Inc. | Media/Entertainment | 7.38%, 2/1/2028 | 1,561 | 1,561 | 1,337 | 0.1 | % | |||||||||||||||||||||||||||||||
| US Oral Surgery Management Holdco, LLC (c) | Healthcare | L+5.50% (7.76%), 11/18/2027 | 428 | 428 | 425 | 0.0 | % | |||||||||||||||||||||||||||||||
| US Oral Surgery Management Holdco, LLC (c) (h) | Healthcare | L+5.50% (6.96%), 11/18/2027 | 12,173 | 11,955 | 12,079 | 0.8 | % | |||||||||||||||||||||||||||||||
| US Salt Investors, LLC (c) (h) | Chemicals | L+5.50% (7.75%), 7/19/2028 | 20,032 | 19,686 | 19,658 | 1.3 | % | |||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (p) (t) | Transportation | L+6.00% (7.00%) 4.50% PIK, 3/21/2024 | 1,932 | 251 | — | — | % | |||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (p) | Transportation | L+6.00% (7.07%) 4.50% PIK, 3/21/2024 | 248 | 244 | 248 | 0.0 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
13
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Vensure Employer Services, Inc. (c) (i) | Business Services | L+4.75% (6.83%), 4/1/2027 | $ | 11,564 | $ | 11,494 | $ | 11,564 | 0.7 | % | ||||||||||||||||||||||||||||
| Victors CCC Buyer, LLC (c) | Business Services | P+4.75% (9.50%), 6/2/2029 | 397 | 397 | 390 | 0.0 | % | |||||||||||||||||||||||||||||||
| Victors CCC Buyer, LLC (c) | Business Services | S+5.75% (7.75%), 6/2/2029 | 17,032 | 16,695 | 16,695 | 1.1 | % | |||||||||||||||||||||||||||||||
| Westwood Professional Services, Inc. (c) | Business Services | L+6.00% (7.06%), 5/26/2026 | 1,007 | 1,007 | 992 | 0.1 | % | |||||||||||||||||||||||||||||||
| Westwood Professional Services, Inc. (c) (i) | Business Services | L+6.00% (7.06%), 5/26/2026 | 8,604 | 8,470 | 8,475 | 0.5 | % | |||||||||||||||||||||||||||||||
| WHCG Purchaser III, Inc. (c) (h) | Healthcare | L+5.75% (8.00%), 6/22/2028 | 29,272 | 28,773 | 28,772 | 1.8 | % | |||||||||||||||||||||||||||||||
| WHCG Purchaser III, Inc. (c) | Healthcare | L+5.75% (8.00%), 6/22/2028 | 7,113 | 7,113 | 6,992 | 0.4 | % | |||||||||||||||||||||||||||||||
| WIN Holdings III Corp. (c) (h) | Consumer | L+5.75% (8.63%), 7/16/2028 | 31,468 | 30,925 | 30,924 | 2.0 | % | |||||||||||||||||||||||||||||||
| WIN Holdings III Corp. (c) | Consumer | L+5.75% (8.63%), 7/16/2026 | 890 | 890 | 875 | 0.1 | % | |||||||||||||||||||||||||||||||
| WMK, LLC (c) (i) | Business Services | L+5.75% (8.00%), 9/5/2025 | 2,545 | 2,538 | 2,545 | 0.2 | % | |||||||||||||||||||||||||||||||
| WMK, LLC (c) | Business Services | L+5.75% (6.76%), 9/5/2025 | 351 | 349 | 351 | 0.0 | % | |||||||||||||||||||||||||||||||
| WMK, LLC (c) (h) (i) | Business Services | L+5.75% (6.79%), 9/5/2025 | 18,069 | 17,905 | 18,069 | 1.2 | % | |||||||||||||||||||||||||||||||
| WMK, LLC (c) | Business Services | L+5.75% (6.99%), 9/5/2024 | 2,618 | 2,618 | 2,618 | 0.2 | % | |||||||||||||||||||||||||||||||
| Subtotal Senior Secured First Lien Debt | $ | 1,882,170 | $ | 1,844,648 | 117.9 | % | ||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt - 15.1% (b) | ||||||||||||||||||||||||||||||||||||||
| Accentcare, Inc. (c) (h) | Healthcare | L+8.75% (10.83%), 6/21/2027 | $ | 30,152 | $ | 29,639 | $ | 28,795 | 1.8 | % | ||||||||||||||||||||||||||||
| Anchor Glass Container Corp. (c) (t) | Paper & Packaging | L+7.75% (8.75%), 12/7/2024 | 6,667 | 6,469 | 2,003 | 0.1 | % | |||||||||||||||||||||||||||||||
| Aruba Investments Holdings, LLC (i) | Chemicals | L+7.75% (9.38%), 11/24/2028 | 3,759 | 3,714 | 3,552 | 0.2 | % | |||||||||||||||||||||||||||||||
| Astro AB Merger Sub, Inc. (a) (c) (h) | Financials | L+8.00% (9.24%), 4/30/2025 | 8,162 | 8,142 | 8,080 | 0.5 | % | |||||||||||||||||||||||||||||||
| Carlisle FoodService Products, Inc. (c) (h) | Consumer | L+7.75% (8.81%), 3/20/2026 | 10,719 | 10,619 | 10,166 | 0.7 | % | |||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (a) (p) | Media/Entertainment | L+8.00% (10.23%) 7.00% PIK, 11/24/2027 | 10,693 | 10,644 | 10,440 | 0.7 | % | |||||||||||||||||||||||||||||||
| CommerceHub, Inc. (c) (h) | Technology | L+7.00% (9.25%), 12/29/2028 | 12,360 | 12,310 | 10,506 | 0.7 | % | |||||||||||||||||||||||||||||||
| Corelogic, Inc. (c) (h) | Business Services | L+6.50% (8.19%), 6/4/2029 | 10,808 | 10,714 | 9,641 | 0.6 | % | |||||||||||||||||||||||||||||||
| HAH Group Holding Company, LLC (c) (h) | Healthcare | L+8.50% (10.76%), 10/30/2028 | 12,445 | 12,198 | 12,445 | 0.8 | % | |||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (o) | Industrials | 10.00% PIK, 12/31/2026 | 1,509 | 918 | 640 | 0.0 | % | |||||||||||||||||||||||||||||||
| Mercury Merger Sub, Inc. (c) (h) | Business Services | L+6.50% (7.50%), 8/2/2029 | 13,965 | 13,862 | 13,518 | 0.9 | % | |||||||||||||||||||||||||||||||
| ORG GC Holdings, LLC (c) (o) | Business Services | 18.00% PIK, 11/29/2027 | 3,757 | 3,757 | 3,673 | 0.2 | % | |||||||||||||||||||||||||||||||
| PetVet Care Centers, LLC (c) (h) | Healthcare | L+6.25% (7.92%), 2/13/2026 | 3,539 | 3,531 | 3,510 | 0.2 | % | |||||||||||||||||||||||||||||||
| Project Boost Purchaser, LLC (c) | Business Services | L+8.00% (9.67%), 5/31/2027 | 1,848 | 1,848 | 1,848 | 0.1 | % | |||||||||||||||||||||||||||||||
| Proofpoint, Inc. (h) | Software/Services | L+6.25% (7.83%), 8/31/2029 | 8,541 | 8,503 | 8,157 | 0.5 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
14
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| QuickBase, Inc. (c) | Technology | L+8.00% (9.67%), 4/2/2027 | $ | 7,484 | $ | 7,395 | $ | 7,484 | 0.5 | % | ||||||||||||||||||||||||||||
| RealPage, Inc. (c) (i) | Software/Services | L+6.50% (8.17%), 4/23/2029 | 13,647 | 13,472 | 13,664 | 0.9 | % | |||||||||||||||||||||||||||||||
| Recess Holdings, Inc. (c) (h) | Industrials | L+7.75% (8.75%), 9/29/2025 | 16,134 | 16,020 | 16,134 | 1.0 | % | |||||||||||||||||||||||||||||||
| River Cree Enterprises, LP (a) (c) (m) | Gaming/Lodging | 10.00%, 5/17/2025 | CAD | 21,275 | 16,509 | 16,527 | 1.1 | % | ||||||||||||||||||||||||||||||
| SSH Group Holdings, Inc. (c) (h) | Education | L+8.25% (10.50%), 7/30/2026 | 10,122 | 10,070 | 10,122 | 0.6 | % | |||||||||||||||||||||||||||||||
| Therapy Brands Holdings, LLC (c) (h) | Healthcare | L+6.75% (7.54%), 5/18/2029 | 3,275 | 3,247 | 3,275 | 0.2 | % | |||||||||||||||||||||||||||||||
| Travelpro Products, Inc. (a) (c) | Consumer | 13.00%, 2.00% PIK, 11/20/2022 | 2,953 | 2,953 | 2,953 | 0.2 | % | |||||||||||||||||||||||||||||||
| Travelpro Products, Inc. (a) (c) (m) | Consumer | 13.00%, 2.00% PIK, 11/20/2022 | CAD | 3,411 | 2,645 | 2,650 | 0.2 | % | ||||||||||||||||||||||||||||||
| USIC Holdings, Inc. (c) (h) | Business Services | L+6.50% (8.17%), 5/14/2029 | 5,798 | 5,748 | 5,721 | 0.4 | % | |||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (p) (t) | Transportation | L+6.00% (7.07%) PIK, 3/21/2024 | 1,155 | 17 | — | — | % | |||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (p) (t) | Transportation | L+6.00% (7.07%) PIK, 3/21/2024 | 3,750 | 2,914 | — | — | % | |||||||||||||||||||||||||||||||
| Victory Buyer, LLC (c) (h) | Industrials | L+7.00% (9.06%), 11/19/2029 | 31,686 | 31,387 | 31,369 | 2.0 | % | |||||||||||||||||||||||||||||||
| Subtotal Senior Secured Second Lien Debt | $ | 249,245 | $ | 236,873 | 15.1 | % | ||||||||||||||||||||||||||||||||
| Subordinated Debt - 7.1% (b) | ||||||||||||||||||||||||||||||||||||||
| Del Real, LLC (c) | Food & Beverage | 16.00%, 12.00% PIK, 4/7/2023 | $ | 4,567 | $ | 3,914 | $ | 4,185 | 0.3 | % | ||||||||||||||||||||||||||||
| Encina Equipment Finance, LLC (c) (o) | Financials | L+7.75% (9.00%), 12/31/2028 | 8,229 | 8,229 | 8,229 | 0.5 | % | |||||||||||||||||||||||||||||||
| Encina Equipment Finance, LLC (c) (o) | Financials | L+7.75% (9.00%), 12/31/2028 | 38,100 | 37,973 | 38,100 | 2.4 | % | |||||||||||||||||||||||||||||||
| Siena Capital Finance, LLC (c) (j) (o) | Financials | 12.50%, 11/26/2026 | 61,000 | 60,994 | 61,000 | 3.9 | % | |||||||||||||||||||||||||||||||
| Subtotal Subordinated Debt | $ | 111,110 | $ | 111,514 | 7.1 | % | ||||||||||||||||||||||||||||||||
| Collateralized Securities - 2.1% (b) | ||||||||||||||||||||||||||||||||||||||
| Collateralized Securities - Debt Investments | ||||||||||||||||||||||||||||||||||||||
| NewStar Arlington Senior Loan Program, LLC 14-1A FR (a) (c) (p) | Diversified Investment Vehicles | L+11.00% (12.18%), 4/25/2031 | $ | 4,750 | $ | 4,594 | $ | 4,330 | 0.3 | % | ||||||||||||||||||||||||||||
| Newstar Fairfield Fund CLO, Ltd. 2015-1RA F (a) (c) (p) | Diversified Investment Vehicles | L+7.50% (8.56%), 1/20/2027 | 10,728 | 10,103 | 8,688 | 0.6 | % | |||||||||||||||||||||||||||||||
| Whitehorse, Ltd. 2014-1A E (a) (c) (p) | Diversified Investment Vehicles | L+4.55% (5.84%) PIK, 5/1/2026 | 8,048 | 7,969 | 6,931 | 0.4 | % | |||||||||||||||||||||||||||||||
| Collateralized Securities - Equity Investments (n) | ||||||||||||||||||||||||||||||||||||||
| NewStar Arlington Senior Loan Program, LLC 14-1A SUB (a) (c) (k) (p) | Diversified Investment Vehicles | 20.69%, 4/25/2031 | $ | 31,603 | $ | 12,690 | $ | 11,901 | 0.8 | % | ||||||||||||||||||||||||||||
| Newstar Fairfield Fund CLO, Ltd. 2015-1RA SUB (a) (c) (k) (p) | Diversified Investment Vehicles | 0.00%, 1/20/2027 | 31,575 | 6,285 | — | — | % | |||||||||||||||||||||||||||||||
| OFSI Fund, Ltd. 2014-6A Side Letter (a) (c) | Diversified Investment Vehicles | 0.00%, 3/20/2025 | 1,970 | 47 | — | — | % | |||||||||||||||||||||||||||||||
| Whitehorse, Ltd. 2014-1A Side Letter (a) (c) (p) | Diversified Investment Vehicles | 0.00%, 5/1/2026 | 1,886 | 134 | — | — | % | |||||||||||||||||||||||||||||||
| Whitehorse, Ltd. 2014-1A SUB (a) (c) (k) (p) | Diversified Investment Vehicles | 0.00%, 5/1/2026 | 36,000 | 6,965 | — | — | % | |||||||||||||||||||||||||||||||
| Subtotal Collateralized Securities | $ | 48,787 | $ | 31,850 | 2.1 | % | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
15
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Equity/Other - 34.0% (b) (d) | ||||||||||||||||||||||||||||||||||||||
| Aden & Anais Holdings, Inc. (c) (e) (w) | Retail | 4,470 | $ | — | $ | — | — | % | ||||||||||||||||||||||||||||||
| Answers Corp. (c) (e) (p) | Media/Entertainment | 908,911 | 10,262 | 118 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Baker Hill Acquisition, LLC (c) (e) | Financials | 22,653 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Black Mountain Sand, LLC (c) (e) (u) | Energy | 55,463 | — | 967 | 0.1 | % | ||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (a) (e) (p) | Media/Entertainment | 539,708 | 1,224 | 4,958 | 0.3 | % | ||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (a) (c) (e) (p) | Media/Entertainment | 874,000 | 437 | 2,360 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Clover Technologies Group, LLC (c) (e) | Industrials | 180,274 | 1,153 | 23 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Clover Technologies Group, LLC (c) (e) | Industrials | 2,753 | 275 | 516 | 0.0 | % | ||||||||||||||||||||||||||||||||
| CRS-SPV, Inc. (c) (e) (o) | Industrials | 246 | 2,219 | 1,470 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Danish CRJ, Ltd. (a) (c) (e) (o) (r) | Transportation | 5,002 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Data Source Holdings, LLC (c) (e) | Business Services | 10,617 | 140 | 287 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Del Real, LLC (c) (e) (u) | Food & Beverage | 670,510 | 382 | — | — | % | ||||||||||||||||||||||||||||||||
| Dyno Acquiror, Inc. (c) (e) | Consumer | 134,102 | 58 | 21 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Encina Equipment Finance, LLC (c) (o) (u) | Financials | 79,479 | 81,787 | 81,693 | 5.2 | % | ||||||||||||||||||||||||||||||||
| FBLC Senior Loan Fund, LLC (a) (c) (j) (o) | Diversified Investment Vehicles | 304,934 | 304,934 | 304,934 | 19.5 | % | ||||||||||||||||||||||||||||||||
| First Eagle Greenway Fund II, LLC (a) (p) | Diversified Investment Vehicles | 5,329 | 3,977 | 370 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Foresight Energy Operating, LLC (c) (e) (p) (u) | Energy | 158,093 | 2,087 | 3,789 | 0.2 | % | ||||||||||||||||||||||||||||||||
| HemaSource, Inc. (c) (e) (w) | Healthcare | 223,503 | 168 | 277 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (e) (o) (u) | Industrials | 55,991 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (e) (o) (u) | Industrials | 57,427 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Internap Corp (c) (e) (o) | Business Services | 1,293,189 | 543 | 1,552 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Jakks Pacific, Inc. (e) (p) (s) | Consumer | 237,436 | 2,385 | 3,006 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Jakks Pacific, Inc. (c) (p) | Consumer | 5,303 | 204 | 788 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Kahala Ireland OpCo Designated Activity Company (a) (c) (o) (y) | Transportation | 1 | — | 11,176 | 0.7 | % | ||||||||||||||||||||||||||||||||
| Kahala Ireland OpCo Designated Activity Company (a) (c) (e) (o) (y) | Transportation | 3,250,000 | — | 3,250 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Kahala US OpCo, LLC (a) (c) (e) (o) (x) | Transportation | 4,413,472 | — | — | — | % | ||||||||||||||||||||||||||||||||
| KidKraft, Inc. (c) (e) (u) | Consumer | 2,682,257 | — | 2,682 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Lakeview Health Holdings, Inc. (c) (e) (o) | Healthcare | 5,272 | — | — | — | % | ||||||||||||||||||||||||||||||||
| McDonald Worley, P.C. (c) (e) | Business Services | 20,167 | 20 | 804 | 0.1 | % | ||||||||||||||||||||||||||||||||
| MCS Acquisition Corp. (c) (e) | Business Services | 31,521 | 4,103 | 1,662 | 0.1 | % | ||||||||||||||||||||||||||||||||
| MGTF Holdco, LLC (c) (e) (o) (u) | Media/Entertainment | 402,000 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Motor Vehicle Software Corp. (c) (e) (w) | Business Services | 223,503 | 318 | 324 | 0.0 | % | ||||||||||||||||||||||||||||||||
| ORG GC Holdings, LLC (c) (e) (o) | Business Services | 93,380 | 212 | — | — | % | ||||||||||||||||||||||||||||||||
| ORG GC Holdings, LLC (c) (e) (o) | Business Services | 1,771 | — | — | — | % | ||||||||||||||||||||||||||||||||
| PennantPark Credit Opportunities Fund II, LP (a) (p) | Diversified Investment Vehicles | 8,739 | 826 | 1,419 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Point Broadband Acquisition, LLC (c) (e) (u) | Telecom | 2,550,487 | 2,550 | 2,550 | 0.2 | % | ||||||||||||||||||||||||||||||||
| RMP Group, Inc. (c) (e) (u) | Financials | 223 | 164 | 383 | 0.0 | % | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
16
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
| Portfolio Company (f) (q) (v) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Siena Capital Finance, LLC (c) (j) (o) | Financials | 41,789,400 | $ | 42,499 | $ | 77,310 | 4.9 | % | ||||||||||||||||||||||||||||||
| Skillsoft Corp (a) (e) (s) | Technology | 248,712 | 2,636 | 875 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Smile Brands, Inc. (c) | Healthcare | 712 | — | 1,437 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Squan Holding Corp. (c) (e) | Telecom | 180,835 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Tap Rock Resources, LLC (c) (g) (p) (u) | Energy | 18,356,442 | 5,849 | 8,467 | 0.5 | % | ||||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (e) (p) | Consumer | 147,099 | 425 | — | — | % | ||||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (e) (p) | Consumer | 633,382 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Tennenbaum Waterman Fund, LP (a) (p) | Diversified Investment Vehicles | 10,000 | 10,000 | 9,119 | 0.6 | % | ||||||||||||||||||||||||||||||||
| Travelpro Products, Inc. (a) (c) (e) | Consumer | 447,007 | 506 | 165 | 0.0 | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) | Healthcare | 39,769 | 132 | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) | Healthcare | 3,155 | — | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) | Healthcare | 4,206 | 31 | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) | Healthcare | 99,236 | — | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) | Healthcare | 223 | 35 | — | — | % | ||||||||||||||||||||||||||||||||
| USASF Holdco, LLC (c) (e) (u) | Financials | 10,000 | 10 | — | — | % | ||||||||||||||||||||||||||||||||
| USASF Holdco, LLC (c) (e) (u) | Financials | 490 | 490 | 364 | 0.0 | % | ||||||||||||||||||||||||||||||||
| USASF Holdco, LLC (c) (e) (u) | Financials | 139 | 139 | 278 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (e) (p) | Transportation | 512,923 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (e) (p) | Transportation | 4,639,261 | 3,140 | — | — | % | ||||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (e) (p) | Transportation | 1,940,977 | — | — | — | % | ||||||||||||||||||||||||||||||||
| World Business Lenders, LLC (c) (e) | Financials | 922,669 | 3,750 | 2,676 | 0.2 | % | ||||||||||||||||||||||||||||||||
| WPNT, LLC (c) (e) (o) (u) | Media/Entertainment | 402,000 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Wythe Will Tzetzo, LLC (c) (e) (u) | Food & Beverage | 22,312 | 302 | — | — | % | ||||||||||||||||||||||||||||||||
| YummyEarth, Inc. (c) (e) | Food & Beverage | 223 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Subtotal Equity/Other | $ | 490,372 | $ | 532,070 | 34.0 | % | ||||||||||||||||||||||||||||||||
| TOTAL INVESTMENTS - 176.2% (b) | $ | 2,781,684 | $ | 2,756,955 | 176.2 | % | ||||||||||||||||||||||||||||||||
Forward foreign currency contracts:
| Counterparty | Contract to Deliver | In Exchange For | Maturity Date | Unrealized Depreciation | ||||||||||||||||||||||
| Goldman Sachs International | CAD 21,807 | $ | 16,859 | 8/17/2022 | $ | 60 | ||||||||||||||||||||
_____________
(a)All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. Qualifying assets represent 82.8% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.
(b)Percentages are based on net assets as of June 30, 2022.
(c)The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act. Such investments are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).
(d)All amounts are in thousands except share amounts.
(e)Non-income producing at June 30, 2022.
The accompanying notes are an integral part of these consolidated financial statements.
17
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
(f)The Company has various unfunded commitments to portfolio companies. Please refer to Note 7 - Commitments and Contingencies for details of these unfunded commitments.
(g)The commitment related to this investment is discretionary.
(h)The Company's investment or a portion thereof is pledged as collateral under the JPM Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(i)The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(j)The Company's investment falls under the definition of a significant subsidiary, as it exceeded the threshold of at least one of the tests under Rule 4-08(g), or exceeded the threshold of at least one of the tests under Rule 3-09. See Note 3 for additional disclosure.
(k)The Collateralized Securities - subordinated notes are treated as equity investments and are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
(l)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L"), Secured Overnight Financing Rate ("SOFR" or "S"), or Prime ("P") and which reset daily, monthly, quarterly, or semiannually. For each, the Company has provided the spread over the relevant reference rate and the current interest rate in effect at June 30, 2022. Certain investments are subject to reference rate floors. For fixed rate loans, a spread above a reference rate is not applicable. For floating rate securities the all-in rate is disclosed within parentheses.
(m)The principal amount (par amount) is denominated in Canadian Dollars ("CAD").
(n)For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (k) for a further description of an equity investment in a Collateralized Security.
(o)The provisions of the 1940 Act classify investments based on the level of control that the Company maintains in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be "non-controlled" when the Company owns 25% or less of the portfolio company's voting securities and/or does not have the power to exercise control over the management or policies of such portfolio company. A company is generally presumed to be "controlled" when the Company owns more than 25% of the portfolio company's voting securities and/or has the power to exercise control over the management or policies of such portfolio company. The Company classifies this investment as "controlled".
(p)The provisions of the 1940 Act classify investments further based on the level of ownership that the Company maintains in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as "non-affiliated" when the Company owns less than 5% of a portfolio company's voting securities and "affiliated" when the Company owns 5% or more of a portfolio company's voting securities. The Company classifies this investment as "affiliated".
(q)Unless otherwise indicated, all investments in the consolidated schedule of investments are non-affiliated, non-controlled investments.
(r)The Company's investment is held through the consolidated subsidiary, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.
(s)The investment is not a restricted security. All other securities are restricted securities.
(t)The investment is on non-accrual status as of June 30, 2022.
(u)Investments are held in the taxable wholly-owned, consolidated subsidiary, 54th Street Equity Holdings, Inc.
(v)Unless otherwise indicated, all of the Company's investments or a portion thereof are pledged as collateral under the JPM Revolver Facility.
(w)The investment is held through BSP TCAP Acquisition Holdings LP, which is an affiliated acquisition entity utilized for the Triangle Transaction. Due to certain restrictions, such as limits on the number of partners allowable within the equity structures of the newly acquired investments, these investments are still held within the acquisition entity as of June 30, 2022.
(x)The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc., which own 100% of the equity of the operating company, Kahala US OpCo LLC.
(y)The Company's investment is held through the consolidated subsidiary, Kahala Aviation Holdings, LLC, which owns 100% of the equity of the operating company, Kahala Ireland OpCo Designated Activity Company.
The accompanying notes are an integral part of these consolidated financial statements.
18
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
June 30, 2022
(Unaudited)
The following table shows the portfolio composition by industry grouping based on fair value at June 30, 2022:
At June 30, 2022 | |||||||||||
| Investments at Fair Value | Percentage of Total Portfolio | ||||||||||
| Healthcare | $ | 403,026 | 14.7 | % | |||||||
| Business Services | 385,660 | 14.0 | % | ||||||||
Diversified Investment Vehicles (1) | 347,692 | 12.6 | % | ||||||||
| Financials | 342,421 | 12.4 | % | ||||||||
| Industrials | 271,799 | 9.9 | % | ||||||||
| Software/Services | 208,724 | 7.6 | % | ||||||||
| Media/Entertainment | 193,779 | 7.0 | % | ||||||||
| Consumer | 143,455 | 5.2 | % | ||||||||
| Paper & Packaging | 129,929 | 4.7 | % | ||||||||
| Food & Beverage | 86,036 | 3.1 | % | ||||||||
| Education | 41,271 | 1.5 | % | ||||||||
| Chemicals | 36,488 | 1.3 | % | ||||||||
| Transportation | 34,906 | 1.3 | % | ||||||||
| Technology | 33,970 | 1.2 | % | ||||||||
| Energy | 29,764 | 1.1 | % | ||||||||
| Utilities | 28,852 | 1.0 | % | ||||||||
| Telecom | 22,656 | 0.8 | % | ||||||||
| Gaming/Lodging | 16,527 | 0.6 | % | ||||||||
| Total | $ | 2,756,955 | 100.0 | % | |||||||
_____________
(1) Includes FBLC's investment in FBLC Senior Loan Fund, LLC, which represents 11.1% of the fair value of investments as of June 30, 2022.
The accompanying notes are an integral part of these consolidated financial statements.
19
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt - 121.3% (b) | ||||||||||||||||||||||||||||||||||||||
| 1236904 BC, Ltd. (c) (h) | Software/Services | L+7.50% (8.50%), 3/4/2027 | $ | 10,441 | $ | 10,264 | $ | 10,754 | 0.7 | % | ||||||||||||||||||||||||||||
| 1236904 BC, Ltd. (c) (h) (i) | Software/Services | L+5.50% (5.60%), 3/4/2027 | 18,639 | 18,079 | 18,276 | 1.2 | % | |||||||||||||||||||||||||||||||
| Absolute Software Corp. (a) (c) (h) | Software/Services | L+6.00% (6.75%), 7/1/2027 | 46,405 | 45,555 | 45,556 | 3.0 | % | |||||||||||||||||||||||||||||||
| ADCS Clinics Intermediate Holdings, LLC (c) (h) | Healthcare | L+6.25% (7.25%), 5/7/2027 | 13,772 | 13,526 | 13,527 | 0.9 | % | |||||||||||||||||||||||||||||||
| ADCS Clinics Intermediate Holdings, LLC (c) | Healthcare | L+6.25% (7.25%), 5/7/2027 | 2,119 | 2,119 | 2,082 | 0.1 | % | |||||||||||||||||||||||||||||||
| Arch Global Precision, LLC (c) | Industrials | L+4.50% (4.72%), 4/1/2026 | 2,216 | 2,216 | 2,216 | 0.1 | % | |||||||||||||||||||||||||||||||
| Arch Global Precision, LLC (c) (h) (i) | Industrials | L+4.50% (4.72%), 4/1/2026 | 7,556 | 7,526 | 7,556 | 0.5 | % | |||||||||||||||||||||||||||||||
| Arctic Holdco, LLC (c) | Paper & Packaging | L+6.00% (7.00%), 12/23/2026 | 6,938 | 6,938 | 6,834 | 0.6 | % | |||||||||||||||||||||||||||||||
| Arctic Holdco, LLC (c) | Paper & Packaging | L+6.00% (7.00%), 12/23/2026 | 1,015 | 1,015 | 1,000 | 0.1 | % | |||||||||||||||||||||||||||||||
| Arctic Holdco, LLC (c) (h) (i) | Paper & Packaging | L+6.00% (7.00%), 12/23/2026 | 51,003 | 49,921 | 50,238 | 3.3 | % | |||||||||||||||||||||||||||||||
| Armada Parent, Inc. (c) (h) | Industrials | L+5.75% (6.50%), 10/29/2027 | 45,169 | 44,292 | 44,293 | 2.9 | % | |||||||||||||||||||||||||||||||
| Armada Parent, Inc. (c) | Industrials | L+5.75% (6.50%), 10/29/2027 | 452 | 452 | 443 | 0.0 | % | |||||||||||||||||||||||||||||||
| Aventine Holdings, LLC (c) | Media/Entertainment | 10.25%, 6/18/2027 | 22,439 | 21,881 | 21,880 | 1.5 | % | |||||||||||||||||||||||||||||||
| Aventine Holdings, LLC (c) | Media/Entertainment | L+6.00% (6.75%), 6/18/2027 | 25,159 | 24,658 | 24,658 | 1.6 | % | |||||||||||||||||||||||||||||||
| Axiom Global, Inc. (c) (h) (i) | Business Services | L+4.75% (5.50%), 10/1/2026 | 20,525 | 20,370 | 20,525 | 1.4 | % | |||||||||||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. (c) (i) | Healthcare | L+6.25% (7.00%), 12/29/2028 | 20,550 | 20,088 | 20,088 | 1.3 | % | |||||||||||||||||||||||||||||||
| Bearcat Buyer, Inc. (c) (i) | Healthcare | L+4.25% (5.25%), 7/9/2026 | 151 | 151 | 151 | 0.0 | % | |||||||||||||||||||||||||||||||
| Bearcat Buyer, Inc. (c) (i) | Healthcare | L+4.25% (5.25%), 7/9/2026 | 726 | 726 | 726 | 0.0 | % | |||||||||||||||||||||||||||||||
| Black Mountain Sand, LLC (c) | Energy | L+9.00% (10.50%), 6/28/2024 | 17,145 | 17,071 | 17,145 | 1.1 | % | |||||||||||||||||||||||||||||||
| Capstone Logistics (c) | Transportation | L+4.75% (5.75%), 11/12/2027 | 1,127 | 1,127 | 1,127 | 0.1 | % | |||||||||||||||||||||||||||||||
| Capstone Logistics (c) (h) | Transportation | L+4.75% (5.75%), 11/12/2027 | 19,208 | 19,053 | 19,208 | 1.3 | % | |||||||||||||||||||||||||||||||
| Capstone Logistics (c) | Transportation | P+3.75% (7.00%), 11/12/2025 | 278 | 278 | 278 | 0.0 | % | |||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (a) (h) (i) (p) | Media/Entertainment | L+6.00% (7.00%), 11/24/2025 | 5,570 | 5,514 | 5,565 | 0.4 | % | |||||||||||||||||||||||||||||||
| CHA Holdings, Inc. (c) (i) | Business Services | L+4.50% (5.50%), 4/10/2025 | 520 | 493 | 520 | 0.0 | % | |||||||||||||||||||||||||||||||
| Chudy Group, LLC (c) (h) | Healthcare | L+5.75% (6.75%), 6/30/2027 | 20,600 | 20,317 | 20,318 | 1.3 | % | |||||||||||||||||||||||||||||||
| Cobblestone Intermediate Holdco, LLC (c) (i) | Consumer | L+5.25% (6.25%), 1/29/2026 | 15,014 | 14,927 | 15,014 | 1.0 | % | |||||||||||||||||||||||||||||||
| Cobblestone Intermediate Holdco, LLC (c) | Consumer | L+5.50% (6.25%), 1/29/2026 | 1,116 | 1,116 | 1,116 | 0.1 | % | |||||||||||||||||||||||||||||||
| Cold Spring Brewing, Co. (c) (h) (i) | Food & Beverage | L+4.75% (5.75%), 12/19/2025 | 7,746 | 7,694 | 7,746 | 0.5 | % | |||||||||||||||||||||||||||||||
| Communication Technology Intermediate, LLC (c) (h) | Business Services | L+5.75% (6.75%), 5/5/2027 | 18,072 | 17,750 | 18,072 | 1.2 | % | |||||||||||||||||||||||||||||||
| Communication Technology Intermediate, LLC (c) | Business Services | L+5.75% (6.75%), 5/5/2027 | 6,286 | 6,286 | 6,286 | 0.4 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
20
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Community Care Health Network, LLC (h) | Healthcare | L+4.75% (4.85%), 2/17/2025 | $ | 8 | $ | 7 | $ | 7 | 0.0 | % | ||||||||||||||||||||||||||||
| Corfin Industries, LLC (c) (h) (i) | Industrials | L+5.75% (6.75%), 2/5/2026 | 16,520 | 16,277 | 16,520 | 1.1 | % | |||||||||||||||||||||||||||||||
| Cornerstone Chemical, Co. | Chemicals | 6.75%, 8/15/2024 | 14,850 | 14,369 | 13,271 | 0.9 | % | |||||||||||||||||||||||||||||||
| CRS-SPV, Inc. (c) (j) (o) (w) | Industrials | L+4.50% (5.50%), 3/8/2022 | 62 | 62 | 62 | 0.0 | % | |||||||||||||||||||||||||||||||
| Drilling Info Holdings, Inc. (c) (i) | Business Services | L+4.25% (4.35%), 7/30/2025 | 7,024 | 6,833 | 7,024 | 0.5 | % | |||||||||||||||||||||||||||||||
| Dynagrid Holdings, LLC (c) | Utilities | L+6.00% (7.00%), 12/18/2025 | 679 | 679 | 679 | 0.0 | % | |||||||||||||||||||||||||||||||
| Dynagrid Holdings, LLC (c) (i) | Utilities | L+6.00% (7.00%), 12/18/2025 | 14,336 | 14,101 | 14,336 | 0.9 | % | |||||||||||||||||||||||||||||||
| FGT Purchaser, LLC (c) (h) | Consumer | L+5.50% (6.50%), 9/13/2027 | 21,445 | 21,038 | 21,038 | 1.4 | % | |||||||||||||||||||||||||||||||
| FGT Purchaser, LLC (c) | Consumer | L+5.50% (6.50%), 9/13/2027 | 643 | 643 | 631 | 0.0 | % | |||||||||||||||||||||||||||||||
| Foresight Energy Operating, LLC (c) (p) | Energy | L+8.00% (9.50%), 6/30/2027 | 1,091 | 1,091 | 1,102 | 0.1 | % | |||||||||||||||||||||||||||||||
| Galway Borrower, LLC (c) (h) | Financials | L+5.25% (6.00%), 9/29/2028 | 26,354 | 25,878 | 25,845 | 1.7 | % | |||||||||||||||||||||||||||||||
| Gold Standard Baking, Inc. (c) (t) | Food & Beverage | P+5.50% (8.75%) 2.00% PIK, 7/25/2022 | 2,515 | 2,176 | 755 | 0.1 | % | |||||||||||||||||||||||||||||||
| Green Energy Partners/Stonewall, LLC | Utilities | L+6.00% (6.50%), 11/12/2026 | 10,339 | 10,138 | 10,235 | 0.7 | % | |||||||||||||||||||||||||||||||
| Health Plan One, Inc. (c) (j) | Financials | L+7.50% (8.50%), 7/15/2025 | 10,695 | 10,317 | 10,695 | 0.7 | % | |||||||||||||||||||||||||||||||
| Higginbotham Insurance Agency, Inc. (c) (h) | Financials | L+5.50% (6.25%), 11/25/2026 | 11,521 | 11,380 | 11,521 | 0.8 | % | |||||||||||||||||||||||||||||||
| Higginbotham Insurance Agency, Inc. (c) | Financials | L+5.50% (6.25%), 11/25/2026 | 4,091 | 4,091 | 4,091 | 0.3 | % | |||||||||||||||||||||||||||||||
| Hospice Care Buyer, Inc. (c) | Healthcare | L+6.50% (7.50%), 12/9/2026 | 4,579 | 4,579 | 4,527 | 0.3 | % | |||||||||||||||||||||||||||||||
| Hospice Care Buyer, Inc. (c) (h) | Healthcare | L+6.50% (7.50%), 12/9/2026 | 24,561 | 23,956 | 24,283 | 1.6 | % | |||||||||||||||||||||||||||||||
| Hospice Care Buyer, Inc. (c) (h) | Healthcare | L+6.50% (7.50%), 12/9/2026 | 18,191 | 17,804 | 17,986 | 1.2 | % | |||||||||||||||||||||||||||||||
| Hospice Care Buyer, Inc. (c) | Healthcare | P+5.50% (8.75%), 12/9/2026 | 1,705 | 1,705 | 1,686 | 0.1 | % | |||||||||||||||||||||||||||||||
| ICR Operations, LLC (c) (h) | Business Services | L+5.50% (6.50%), 11/22/2028 | 42,773 | 41,931 | 41,930 | 2.8 | % | |||||||||||||||||||||||||||||||
| ICR Operations, LLC (c) | Business Services | L+5.25% (6.25%), 11/22/2027 | 3,089 | 3,089 | 3,028 | 0.2 | % | |||||||||||||||||||||||||||||||
| Ideal Tridon Holdings, Inc. (c) | Industrials | L+5.25% (6.25%), 7/31/2024 | 45 | 45 | 45 | 0.0 | % | |||||||||||||||||||||||||||||||
| Ideal Tridon Holdings, Inc. (c) (h) (i) | Industrials | L+5.25% (6.25%), 7/31/2024 | 820 | 812 | 820 | 0.1 | % | |||||||||||||||||||||||||||||||
| Ideal Tridon Holdings, Inc. (c) (h) (i) | Industrials | L+5.25% (6.25%), 7/31/2024 | 26,837 | 26,699 | 26,837 | 1.8 | % | |||||||||||||||||||||||||||||||
| Ideal Tridon Holdings, Inc. (c) (j) | Industrials | L+5.25% (6.25%), 7/31/2023 | 883 | 883 | 883 | 0.1 | % | |||||||||||||||||||||||||||||||
| IG Investments Holdings, LLC (c) (h) | Business Services | L+6.00% (6.75%), 9/22/2028 | 17,807 | 17,465 | 17,465 | 1.2 | % | |||||||||||||||||||||||||||||||
| IG Investments Holdings, LLC (c) | Business Services | L+6.00% (6.75%), 9/22/2027 | 695 | 695 | 682 | 0.0 | % | |||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (o) (w) | Industrials | 7.50%, 12/31/2025 | 1,436 | 1,436 | 1,436 | 0.1 | % | |||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (o) (w) | Industrials | 7.50%, 12/31/2025 | 131 | 131 | 131 | 0.0 | % | |||||||||||||||||||||||||||||||
| Integrated Global Services, Inc. (c) (i) | Industrials | L+6.00% (7.00%), 2/4/2026 | 11,385 | 11,230 | 10,928 | 0.7 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
21
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Integrated Global Services, Inc. (c) (j) | Industrials | L+6.00% (7.00%), 2/4/2026 | $ | 1,622 | $ | 1,622 | $ | 1,556 | 0.1 | % | ||||||||||||||||||||||||||||
| Internap Corp. (c) (h) (p) | Business Services | L+6.50% (7.50%) 5.50% PIK, 5/8/2025 | 6,294 | 6,294 | 5,475 | 0.4 | % | |||||||||||||||||||||||||||||||
| International Cruise & Excursions, Inc. (c) (i) | Business Services | L+5.25% (6.25%), 6/6/2025 | 4,900 | 4,874 | 4,459 | 0.3 | % | |||||||||||||||||||||||||||||||
| K2 Intelligence Holdings, Inc. (c) (h) (i) | Business Services | L+5.75% (6.75%), 9/23/2024 | 10,251 | 10,140 | 9,539 | 0.6 | % | |||||||||||||||||||||||||||||||
| Kaman Distribution Corp. (c) (h) (i) | Industrials | L+5.00% (5.10%), 8/26/2026 | 20,448 | 19,219 | 20,448 | 1.4 | % | |||||||||||||||||||||||||||||||
| KidKraft, Inc. (c) (w) | Consumer | L+5.00% (6.00%), 8/15/2022 | 1,060 | 680 | 1,060 | 0.1 | % | |||||||||||||||||||||||||||||||
| Kissner Milling Co., Ltd. | Industrials | 4.88%, 5/1/2028 | 2,983 | 2,983 | 2,871 | 0.2 | % | |||||||||||||||||||||||||||||||
| Knowledge Pro Buyer, Inc. (c) (i) | Business Services | L+5.75% (6.50%), 12/10/2027 | 24,800 | 24,309 | 24,309 | 1.6 | % | |||||||||||||||||||||||||||||||
| Knowledge Pro Buyer, Inc. (c) | Business Services | L+5.75% (6.50%), 12/10/2027 | 607 | 607 | 595 | 0.0 | % | |||||||||||||||||||||||||||||||
| Labrie Environmental Group, LLC (a) (c) (h) | Industrials | L+5.50% (6.50%), 9/1/2026 | 22,580 | 22,229 | 22,580 | 1.5 | % | |||||||||||||||||||||||||||||||
| Lakeland Tours, LLC (c) (h) (i) | Education | L+7.50% (8.75%) 6.00% PIK, 9/25/2025 | 3,565 | 3,548 | 3,565 | 0.2 | % | |||||||||||||||||||||||||||||||
| Lakeland Tours, LLC (c) (h) (i) | Education | L+7.50% (8.75%) 6.00% PIK, 9/25/2025 | 4,321 | 3,955 | 3,889 | 0.3 | % | |||||||||||||||||||||||||||||||
| Lakeland Tours, LLC (c) (h) | Education | L+12.00% (13.25%) 6.00% PIK, 9/25/2023 | 1,875 | 1,875 | 1,875 | 0.1 | % | |||||||||||||||||||||||||||||||
| Lakeland Tours, LLC (c) (h) (i) | Education | 13.25% PIK, 9/27/2027 | 4,700 | 3,010 | 3,290 | 0.2 | % | |||||||||||||||||||||||||||||||
| Lakeview Health Holdings, Inc. (c) (o) (w) | Healthcare | P+6.00% (9.25%), 10/15/2024 | 414 | 414 | 414 | 0.0 | % | |||||||||||||||||||||||||||||||
| Lakeview Health Holdings, Inc. (c) (o) (t) (w) | Healthcare | P+4.50% (7.75%) PIK, 10/15/2024 | 1,576 | 600 | 584 | 0.0 | % | |||||||||||||||||||||||||||||||
| LightSquared, LP | Telecom | 15.50% PIK, 11/1/2023 | 1,794 | 1,794 | 1,471 | 0.1 | % | |||||||||||||||||||||||||||||||
| Manna Pro Products, LLC (c) | Consumer | L+6.00% (7.00%), 12/10/2026 | 4,033 | 4,033 | 4,033 | 0.3 | % | |||||||||||||||||||||||||||||||
| Manna Pro Products, LLC (c) (i) | Consumer | L+6.00% (7.00%), 12/10/2026 | 33,250 | 32,596 | 33,250 | 2.2 | % | |||||||||||||||||||||||||||||||
| Manna Pro Products, LLC (c) | Consumer | L+6.00% (7.00%), 12/10/2026 | 744 | 744 | 744 | 0.0 | % | |||||||||||||||||||||||||||||||
| McDonald Worley, P.C. (c) | Business Services | 26.00% PIK, 12/31/2024 | 12,080 | 12,080 | 11,826 | 0.8 | % | |||||||||||||||||||||||||||||||
| MCS Acquisition Corp. (c) | Business Services | L+6.00% (7.00%), 10/2/2025 | 780 | 780 | 780 | 0.1 | % | |||||||||||||||||||||||||||||||
| Medical Depot Holdings, Inc. (c) (h) (i) | Healthcare | L+9.50% (10.50%) 4.00% PIK, 6/2/2025 | 19,929 | 19,510 | 19,630 | 1.3 | % | |||||||||||||||||||||||||||||||
| Medical Management Resource Group, LLC (c) (h) | Healthcare | L+5.75% (6.50%), 9/30/2027 | 16,139 | 15,830 | 15,829 | 1.0 | % | |||||||||||||||||||||||||||||||
| MGTF Radio Company, LLC (c) (j) (o) | Media/Entertainment | L+6.00% (7.00%), 4/1/2024 | 51,596 | 51,529 | 42,567 | 2.8 | % | |||||||||||||||||||||||||||||||
| Midwest Can Company, LLC (c) (h) (i) | Paper & Packaging | L+6.00% (7.00%), 3/2/2026 | 32,385 | 31,896 | 32,385 | 2.1 | % | |||||||||||||||||||||||||||||||
| Midwest Can Company, LLC (c) (j) | Paper & Packaging | L+6.00% (7.00%), 3/2/2026 | 565 | 565 | 565 | 0.0 | % | |||||||||||||||||||||||||||||||
| Miller Environmental Group, Inc. (c) (h) (i) | Business Services | L+6.50% (7.50%), 3/15/2024 | 11,346 | 11,246 | 11,346 | 0.8 | % | |||||||||||||||||||||||||||||||
| Miller Environmental Group, Inc. (c) (h) (i) | Business Services | L+6.50% (7.50%), 3/15/2024 | 10,377 | 10,269 | 10,377 | 0.7 | % | |||||||||||||||||||||||||||||||
| Ministry Brands, LLC (c) (i) | Software/Services | L+4.00% (5.00%), 12/2/2022 | 5,610 | 5,585 | 5,610 | 0.4 | % | |||||||||||||||||||||||||||||||
| Mintz Group, LLC (c) (i) | Business Services | L+4.25% (5.25%), 3/18/2026 | 3,986 | 3,958 | 3,986 | 0.3 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
22
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Mirra-Primeaccess Holdings, LLC (c) (h) | Healthcare | L+6.50% (7.50%), 7/29/2026 | $ | 49,321 | $ | 48,419 | $ | 49,321 | 3.3 | % | ||||||||||||||||||||||||||||
| Muth Mirror Systems, LLC (c) (h) (i) | Technology | L+5.25% (6.25%), 4/23/2025 | 15,140 | 14,973 | 14,032 | 0.9 | % | |||||||||||||||||||||||||||||||
| New Star Metals, Inc. (c) (h) (i) | Industrials | L+5.00% (6.00%), 1/9/2026 | 32,817 | 32,335 | 32,817 | 2.2 | % | |||||||||||||||||||||||||||||||
| Norvax, LLC (a) (c) | Business Services | L+6.50% (7.50%), 9/13/2024 | 893 | 893 | 893 | 0.1 | % | |||||||||||||||||||||||||||||||
| NTM Acquisition Corp. (c) (h) (i) | Media/Entertainment | L+7.25% (8.25%) 1.00% PIK, 6/7/2024 | 21,678 | 21,655 | 21,093 | 1.4 | % | |||||||||||||||||||||||||||||||
| Odessa Technologies, Inc. (c) (h) | Software/Services | L+5.75% (6.50%), 10/19/2027 | 14,451 | 14,172 | 14,172 | 0.9 | % | |||||||||||||||||||||||||||||||
| Olaplex, Inc. (c) (h) (i) | Consumer | L+6.25% (7.25%), 1/8/2026 | 16,792 | 16,567 | 16,792 | 1.1 | % | |||||||||||||||||||||||||||||||
| ORG GC Holdings, LLC (c) (o) | Business Services | L+6.50% (7.50%) PIK, 11/24/2026 | 8,343 | 8,343 | 8,343 | 0.6 | % | |||||||||||||||||||||||||||||||
| Pie Buyer, Inc. (c) (i) | Food & Beverage | L+5.50% (6.50%), 4/5/2027 | 28,390 | 27,644 | 28,390 | 1.9 | % | |||||||||||||||||||||||||||||||
| Pie Buyer, Inc. (c) | Food & Beverage | L+5.50% (6.50%), 4/5/2027 | 1,471 | 1,471 | 1,471 | 0.1 | % | |||||||||||||||||||||||||||||||
| Pilot Air Freight, LLC (c) (i) | Transportation | L+5.25% (6.25%), 7/25/2024 | 8,964 | 8,859 | 8,964 | 0.6 | % | |||||||||||||||||||||||||||||||
| Pilot Air Freight, LLC (c) | Transportation | L+5.25% (6.25%), 7/25/2024 | 2,326 | 2,326 | 2,326 | 0.2 | % | |||||||||||||||||||||||||||||||
| PlayPower, Inc. (c) (h) (i) | Industrials | L+5.50% (5.72%), 5/8/2026 | 23,961 | 23,737 | 22,786 | 1.5 | % | |||||||||||||||||||||||||||||||
| Pluralsight, LLC (c) (h) | Software/Services | L+8.00% (9.00%), 4/6/2027 | 18,826 | 18,496 | 18,481 | 1.2 | % | |||||||||||||||||||||||||||||||
| Pluralsight, LLC (c) (h) | Software/Services | L+8.00% (9.00%), 4/6/2027 | 6,728 | 6,605 | 6,605 | 0.4 | % | |||||||||||||||||||||||||||||||
| Point Broadband Acquisition, LLC (c) (h) | Telecom | L+6.00% (7.00%), 9/29/2028 | 19,340 | 18,874 | 18,874 | 1.3 | % | |||||||||||||||||||||||||||||||
| Premier Global Services, Inc. (c) (t) | Telecom | P+5.50% (8.75%), 6/8/2023 | 5,024 | 4,908 | 251 | 0.0 | % | |||||||||||||||||||||||||||||||
| Premier Global Services, Inc. (c) | Telecom | P+5.50% (8.75%), 3/31/2022 | 969 | 969 | 969 | 0.1 | % | |||||||||||||||||||||||||||||||
| Prototek, LLC (c) (h) | Industrials | L+5.75% (6.75%), 10/20/2026 | 11,172 | 10,971 | 11,060 | 0.7 | % | |||||||||||||||||||||||||||||||
| Prototek, LLC (c) | Industrials | L+5.75% (6.75%), 10/20/2026 | 1,242 | 1,242 | 1,229 | 0.1 | % | |||||||||||||||||||||||||||||||
| PSKW, LLC (c) (h) (i) | Healthcare | L+6.25% (7.25%), 3/9/2026 | 29,475 | 28,961 | 29,475 | 2.0 | % | |||||||||||||||||||||||||||||||
| PT Network, LLC (c) (h) | Healthcare | L+7.50% (8.50%) 2.00% PIK, 11/30/2023 | 17,179 | 17,142 | 17,179 | 1.1 | % | |||||||||||||||||||||||||||||||
| PT Network, LLC (c) | Healthcare | L+7.50% (8.50%) 2.00% PIK, 11/30/2023 | 395 | 395 | 395 | 0.0 | % | |||||||||||||||||||||||||||||||
| Questex, Inc. (c) (h) (i) | Media/Entertainment | L+5.00% (6.00%), 9/9/2024 | 15,665 | 15,525 | 14,257 | 0.9 | % | |||||||||||||||||||||||||||||||
| Questex, Inc. (c) (j) | Media/Entertainment | L+5.00% (6.00%), 9/9/2024 | 1,550 | 1,550 | 1,410 | 0.1 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) (j) | Food & Beverage | L+6.50% (7.50%), 7/1/2025 | 1,807 | 1,795 | 1,772 | 0.1 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) | Food & Beverage | L+6.50% (7.50%), 7/1/2025 | 1,476 | 1,476 | 1,447 | 0.1 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) | Food & Beverage | L+6.50% (7.50%), 7/1/2025 | 4,844 | 4,845 | 4,707 | 0.3 | % | |||||||||||||||||||||||||||||||
| Reddy Ice Corp. (c) (h) (i) | Food & Beverage | L+6.50% (7.50%), 7/1/2025 | 19,147 | 18,812 | 18,774 | 1.2 | % | |||||||||||||||||||||||||||||||
| Refresh Parent Holdings, Inc. (c) | Healthcare | L+6.50% (7.50%), 12/9/2026 | 3,035 | 3,035 | 3,035 | 0.2 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
23
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Refresh Parent Holdings, Inc. (c) (h) | Healthcare | L+6.50% (7.50%), 12/9/2026 | $ | 9,487 | $ | 9,277 | $ | 9,487 | 0.6 | % | ||||||||||||||||||||||||||||
| Refresh Parent Holdings, Inc. (c) (h) | Healthcare | L+6.50% (7.50%), 12/9/2026 | 1,159 | 1,136 | 1,136 | 0.1 | % | |||||||||||||||||||||||||||||||
| Refresh Parent Holdings, Inc. (c) | Healthcare | P+5.50% (8.75%), 12/9/2026 | 406 | 406 | 406 | 0.0 | % | |||||||||||||||||||||||||||||||
| Relativity Oda, LLC (c) (i) | Software/Services | L+7.50% (8.50%) PIK, 5/12/2027 | 4,885 | 4,781 | 4,787 | 0.3 | % | |||||||||||||||||||||||||||||||
| REP TEC Intermediate Holdings, Inc. (c) (h) (i) | Software/Services | L+6.50% (7.50%), 12/1/2027 | 28,236 | 27,758 | 27,717 | 1.8 | % | |||||||||||||||||||||||||||||||
| Resco Products, Inc. (c) | Industrials | L+7.00% (9.00%) 2.00% PIK, 6/5/2022 | 9,376 | 9,376 | 9,376 | 0.6 | % | |||||||||||||||||||||||||||||||
| Roadsafe Holdings, Inc. (c) (i) | Industrials | L+5.75% (6.75%), 10/19/2027 | 7,832 | 7,692 | 7,692 | 0.5 | % | |||||||||||||||||||||||||||||||
| Roadsafe Holdings, Inc. (c) | Industrials | P+4.75% (8.00%), 10/19/2027 | 2,879 | 2,879 | 2,828 | 0.2 | % | |||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. (c) | Financials | L+5.50% (6.25%), 10/30/2026 | 4,249 | 4,249 | 4,208 | 0.3 | % | |||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. (c) | Financials | L+5.50% (6.25%), 10/30/2026 | 1,293 | 1,293 | 1,280 | 0.1 | % | |||||||||||||||||||||||||||||||
| RSC Acquisition, Inc. (c) (i) | Financials | L+5.50% (6.25%), 10/30/2026 | 1,847 | 1,829 | 1,829 | 0.1 | % | |||||||||||||||||||||||||||||||
| Saturn SHC Buyer Holdings, Inc. (c) (h) | Healthcare | L+6.00% (6.75%), 11/18/2027 | 33,324 | 32,671 | 32,671 | 2.2 | % | |||||||||||||||||||||||||||||||
| Saturn SHC Buyer Holdings, Inc. (c) | Healthcare | P+5.00% (8.25%), 11/18/2027 | 3,332 | 3,332 | 3,267 | 0.2 | % | |||||||||||||||||||||||||||||||
| SCIH Salt Holdings, Inc. (c) | Industrials | L+4.00% (5.00%), 3/17/2025 | 1,030 | 1,030 | 978 | 0.1 | % | |||||||||||||||||||||||||||||||
| Sherlock Buyer Corp. (c) (i) | Business Services | L+5.75% (6.50%), 12/8/2028 | 11,124 | 10,904 | 10,904 | 0.7 | % | |||||||||||||||||||||||||||||||
| Simplifi Holdings, Inc. (c) (h) | Media/Entertainment | L+5.50% (6.25%), 10/1/2027 | 35,460 | 34,781 | 34,779 | 2.3 | % | |||||||||||||||||||||||||||||||
| Skillsoft Corp. (a) (h) | Technology | L+4.75% (5.50%), 7/14/2028 | 1,460 | 1,440 | 1,462 | 0.1 | % | |||||||||||||||||||||||||||||||
| St. Croix Hospice Acquisition Corp. (c) (i) | Healthcare | L+6.00% (7.00%), 10/30/2026 | 25,680 | 25,267 | 25,680 | 1.7 | % | |||||||||||||||||||||||||||||||
| Striper Buyer, LLC (c) (h) | Paper & Packaging | L+5.50% (6.25%), 12/30/2026 | 12,393 | 12,287 | 12,393 | 0.8 | % | |||||||||||||||||||||||||||||||
| Subsea Global Solutions, LLC (c) (i) | Business Services | L+7.00% (8.00%), 3/29/2023 | 4,697 | 4,663 | 4,697 | 0.3 | % | |||||||||||||||||||||||||||||||
| Subsea Global Solutions, LLC (c) (i) | Business Services | L+7.00% (8.00%), 3/29/2023 | 7,916 | 7,877 | 7,916 | 0.5 | % | |||||||||||||||||||||||||||||||
| Subsea Global Solutions, LLC (c) (j) | Business Services | L+7.00% (8.00%), 3/29/2023 | 963 | 963 | 963 | 0.1 | % | |||||||||||||||||||||||||||||||
| SunMed Group Holdings, LLC (c) (h) | Healthcare | L+5.75% (6.50%), 6/16/2028 | 9,054 | 8,908 | 8,909 | 0.6 | % | |||||||||||||||||||||||||||||||
| SunMed Group Holdings, LLC (c) | Healthcare | L+5.75% (6.50%), 6/16/2027 | 96 | 96 | 95 | 0.0 | % | |||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (p) (t) | Consumer | L+6.00% (10.00%) PIK, 3/31/2022 | 6,633 | 3,833 | 464 | 0.0 | % | |||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (p) (t) | Consumer | 10.00% PIK, 3/31/2022 | 3,678 | 2,986 | 3,678 | 0.3 | % | |||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (p) (t) | Consumer | L+6.00% (10.00%) PIK, 3/31/2022 | 37,368 | 21,646 | 2,616 | 0.2 | % | |||||||||||||||||||||||||||||||
| Therapy Brands Holdings, LLC (c) (h) | Healthcare | L+4.00% (4.75%), 5/18/2028 | 3,475 | 3,459 | 3,475 | 0.2 | % | |||||||||||||||||||||||||||||||
| Tillamook Country Smoker, LLC (c) (h) | Food & Beverage | L+7.75% (8.75%), 5/19/2022 | 9,629 | 9,618 | 8,493 | 0.6 | % | |||||||||||||||||||||||||||||||
| Tillamook Country Smoker, LLC (c) (j) | Food & Beverage | L+7.75% (8.75%), 5/19/2022 | 2,561 | 2,561 | 2,259 | 0.1 | % | |||||||||||||||||||||||||||||||
| Trilogy International Partners, LLC (a) | Telecom | 8.88%, 5/15/2023 | 15,510 | 15,240 | 15,359 | 1.0 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
24
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Trilogy International Partners, LLC (a) (c) (h) | Telecom | 10.00%, 5/1/2022 | $ | 6,298 | $ | 6,235 | $ | 6,298 | 0.4 | % | ||||||||||||||||||||||||||||
| Trinity Air Consultants Holdings Corp. (c) (h) | Business Services | L+5.25% (6.00%), 6/29/2027 | 20,424 | 20,050 | 20,050 | 1.3 | % | |||||||||||||||||||||||||||||||
| Trinity Air Consultants Holdings Corp. (c) | Business Services | L+5.25% (6.00%), 6/29/2027 | 1,594 | 1,594 | 1,565 | 0.1 | % | |||||||||||||||||||||||||||||||
| Triple Lift, Inc. (c) (i) | Software/Services | L+5.75% (6.50%), 5/8/2028 | 22,983 | 22,566 | 22,983 | 1.5 | % | |||||||||||||||||||||||||||||||
| University of St. Augustine Acquisition Corp. (c) (h) (i) | Education | L+4.25% (5.25%), 2/2/2026 | 23,520 | 23,177 | 23,520 | 1.6 | % | |||||||||||||||||||||||||||||||
| Urban One, Inc. | Media/Entertainment | 7.38%, 2/1/2028 | 1,561 | 1,561 | 1,613 | 0.1 | % | |||||||||||||||||||||||||||||||
| US Oral Surgery Management Holdco, LLC (c) | Healthcare | L+5.50% (6.25%), 11/18/2027 | 428 | 428 | 420 | 0.0 | % | |||||||||||||||||||||||||||||||
| US Oral Surgery Management Holdco, LLC (c) (h) | Healthcare | L+5.50% (6.25%), 11/18/2027 | 12,173 | 11,934 | 11,934 | 0.8 | % | |||||||||||||||||||||||||||||||
| US Salt Investors, LLC (c) (h) | Chemicals | L+5.50% (6.25%), 7/19/2028 | 20,133 | 19,756 | 19,757 | 1.3 | % | |||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (p) (t) (w) | Transportation | L+6.00% (7.00%), 3/21/2024 | 1,897 | 251 | 251 | 0.0 | % | |||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (p) (w) | Transportation | L+6.00% (7.00%), 3/21/2024 | 244 | 244 | 244 | 0.0 | % | |||||||||||||||||||||||||||||||
| Vensure Employer Services, Inc. (c) (i) | Business Services | L+4.75% (5.50%), 3/26/2027 | 9,614 | 9,536 | 9,614 | 0.6 | % | |||||||||||||||||||||||||||||||
| Westwood Professional Services, Inc. (c) | Business Services | L+6.00% (7.00%), 5/26/2026 | 1,007 | 1,007 | 982 | 0.1 | % | |||||||||||||||||||||||||||||||
| Westwood Professional Services, Inc. (c) (i) | Business Services | L+6.00% (7.00%), 5/26/2026 | 8,648 | 8,495 | 8,431 | 0.6 | % | |||||||||||||||||||||||||||||||
| WHCG Purchaser III, Inc. (c) (h) | Healthcare | L+5.75% (6.50%), 6/22/2028 | 29,420 | 28,876 | 28,876 | 1.9 | % | |||||||||||||||||||||||||||||||
| WHCG Purchaser III, Inc. (c) | Healthcare | L+5.75% (6.50%), 6/22/2028 | 919 | 919 | 902 | 0.1 | % | |||||||||||||||||||||||||||||||
| WIN Holdings III Corp. (c) (h) | Consumer | L+5.75% (6.50%), 7/16/2028 | 31,627 | 31,036 | 31,035 | 2.1 | % | |||||||||||||||||||||||||||||||
| WIN Holdings III Corp. (c) | Consumer | L+5.75% (6.50%), 7/16/2026 | 556 | 556 | 546 | 0.0 | % | |||||||||||||||||||||||||||||||
| WMK, LLC (c) (j) | Business Services | L+5.75% (6.75%), 9/5/2025 | 2,558 | 2,550 | 2,558 | 0.2 | % | |||||||||||||||||||||||||||||||
| WMK, LLC (c) | Business Services | L+5.75% (6.75%), 9/5/2025 | 352 | 350 | 352 | 0.0 | % | |||||||||||||||||||||||||||||||
| WMK, LLC (c) (h) (i) | Business Services | L+5.75% (6.75%), 9/5/2025 | 18,912 | 18,714 | 18,912 | 1.3 | % | |||||||||||||||||||||||||||||||
| WMK, LLC (c) (j) | Business Services | L+5.75% (6.75%), 9/5/2024 | 2,618 | 2,618 | 2,618 | 0.2 | % | |||||||||||||||||||||||||||||||
| Subtotal Senior Secured First Lien Debt | $ | 1,865,403 | $ | 1,831,170 | 121.3 | % | ||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt - 16.2% (b) | ||||||||||||||||||||||||||||||||||||||
| Accentcare, Inc. (c) (h) | Healthcare | L+8.75% (9.50%), 6/21/2027 | $ | 30,152 | $ | 29,588 | $ | 30,152 | 2.0 | % | ||||||||||||||||||||||||||||
| Anchor Glass Container Corp. (c) (j) | Paper & Packaging | L+7.75% (8.75%), 12/6/2024 | 6,667 | 6,615 | 2,003 | 0.1 | % | |||||||||||||||||||||||||||||||
| Aruba Investments Holdings, LLC (i) | Chemicals | L+7.75% (8.50%), 11/24/2028 | 3,759 | 3,710 | 3,765 | 0.2 | % | |||||||||||||||||||||||||||||||
| Astro AB Merger Sub, Inc. (a) (c) (h) | Financials | L+8.00% (9.00%), 4/30/2025 | 8,162 | 8,138 | 8,162 | 0.5 | % | |||||||||||||||||||||||||||||||
| Carlisle FoodService Products, Inc. (c) (h) | Consumer | L+7.75% (8.75%), 3/20/2026 | 10,719 | 10,606 | 10,166 | 0.7 | % | |||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (a) (p) | Media/Entertainment | L+8.00% (9.00%) 7.00% PIK, 11/24/2027 | 10,324 | 10,271 | 10,262 | 0.7 | % | |||||||||||||||||||||||||||||||
| CommerceHub, Inc. (c) (h) | Technology | L+7.00% (7.75%), 12/29/2028 | 12,360 | 12,306 | 12,125 | 0.8 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
25
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Corelogic, Inc. (h) | Business Services | L+6.50% (7.00%), 6/4/2029 | $ | 10,808 | $ | 10,707 | $ | 10,882 | 0.7 | % | ||||||||||||||||||||||||||||
| HAH Group Holding Company, LLC (c) (h) | Healthcare | L+8.50% (9.50%), 10/30/2028 | 12,445 | 12,180 | 12,445 | 0.8 | % | |||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (o) (w) | Industrials | 10.00% PIK, 12/31/2026 | 1,436 | 780 | 780 | 0.1 | % | |||||||||||||||||||||||||||||||
| Mercury Merger Sub, Inc. (c) (h) | Business Services | L+6.50% (7.00%), 8/2/2029 | 13,965 | 13,855 | 13,965 | 0.9 | % | |||||||||||||||||||||||||||||||
| MLN US Holdco, LLC (a) (c) (h) (i) | Technology | L+8.75% (8.85%), 11/30/2026 | 3,000 | 2,963 | 2,699 | 0.2 | % | |||||||||||||||||||||||||||||||
| ORG GC Holdings, LLC (c) (o) | Business Services | 18.00% PIK, 11/24/2027 | 3,439 | 3,439 | 3,439 | 0.2 | % | |||||||||||||||||||||||||||||||
| PetVet Care Centers, LLC (c) (h) | Healthcare | L+6.25% (6.35%), 2/13/2026 | 3,539 | 3,530 | 3,539 | 0.2 | % | |||||||||||||||||||||||||||||||
| Project Boost Purchaser, LLC (c) (j) | Business Services | L+8.00% (8.10%), 5/31/2027 | 1,848 | 1,848 | 1,848 | 0.1 | % | |||||||||||||||||||||||||||||||
| Proofpoint, Inc. (c) (h) | Software/Services | L+6.25% (6.75%), 8/31/2029 | 8,541 | 8,500 | 8,541 | 0.6 | % | |||||||||||||||||||||||||||||||
| QuickBase, Inc. (c) | Technology | L+8.00% (8.10%), 4/2/2027 | 7,484 | 7,386 | 7,484 | 0.5 | % | |||||||||||||||||||||||||||||||
| RealPage, Inc. (c) (i) | Software/Services | L+6.50% (7.25%), 4/23/2029 | 13,647 | 13,460 | 13,756 | 0.9 | % | |||||||||||||||||||||||||||||||
| Recess Holdings, Inc. (c) (h) | Industrials | L+7.75% (8.75%), 9/29/2025 | 16,134 | 16,003 | 16,134 | 1.1 | % | |||||||||||||||||||||||||||||||
| River Cree Enterprises, LP (a) (c) (m) | Gaming/Lodging | 10.00%, 5/17/2025 | CAD | 21,275 | 16,493 | 16,836 | 1.1 | % | ||||||||||||||||||||||||||||||
| SSH Group Holdings, Inc. (c) (h) | Education | L+8.25% (8.38%), 7/30/2026 | 10,122 | 10,064 | 10,122 | 0.7 | % | |||||||||||||||||||||||||||||||
| Therapy Brands Holdings, LLC (c) (h) | Healthcare | L+6.75% (7.50%), 5/18/2029 | 3,275 | 3,245 | 3,275 | 0.2 | % | |||||||||||||||||||||||||||||||
| Travelpro Products, Inc. (a) (c) (w) | Consumer | 14.00%, 10.75% PIK, 11/21/2022 | 2,861 | 2,861 | 2,282 | 0.2 | % | |||||||||||||||||||||||||||||||
| Travelpro Products, Inc. (a) (c) (m) (w) | Consumer | 13.00%, 2.00% PIK, 11/21/2022 | CAD | 3,304 | 2,557 | 2,086 | 0.2 | % | ||||||||||||||||||||||||||||||
| USIC Holdings, Inc. (c) (h) | Business Services | L+6.50% (7.25%), 5/14/2029 | 5,798 | 5,744 | 5,798 | 0.4 | % | |||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (p) (t) (w) | Transportation | L+6.00% (7.00%), 3/21/2024 | 1,134 | 17 | 17 | 0.0 | % | |||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (p) (t) (w) | Transportation | L+6.00% (7.00%) PIK, 3/21/2024 | 3,578 | 2,914 | — | — | % | |||||||||||||||||||||||||||||||
| Victory Buyer, LLC (c) (h) | Industrials | L+7.00% (7.50%), 11/15/2029 | 31,686 | 31,369 | 31,369 | 2.1 | % | |||||||||||||||||||||||||||||||
| Subtotal Senior Secured Second Lien Debt | $ | 251,149 | $ | 243,932 | 16.2 | % | ||||||||||||||||||||||||||||||||
| Subordinated Debt - 7.8% (b) | ||||||||||||||||||||||||||||||||||||||
| Del Real, LLC (c) (t) (w) | Food & Beverage | 14.50%, 2.00% PIK, 4/1/2023 | $ | 4,239 | $ | 3,131 | $ | 3,576 | 0.2 | % | ||||||||||||||||||||||||||||
| Encina Equipment Finance, LLC (c) (o) | Financials | L+7.75% (9.00%), 12/31/2028 | 38,100 | 37,964 | 37,964 | 2.5 | % | |||||||||||||||||||||||||||||||
| Park Ave RE Holdings, LLC (c) (j) (o) (v) | Financials | 13.00%, 12/30/2022 | 1,537 | 1,537 | 1,537 | 0.1 | % | |||||||||||||||||||||||||||||||
| Siena Capital Finance, LLC (c) (j) (o) (z) | Financials | 12.50%, 11/27/2026 | 75,000 | 74,995 | 75,000 | 5.0 | % | |||||||||||||||||||||||||||||||
| Subtotal Subordinated Debt | $ | 117,627 | $ | 118,077 | 7.8 | % | ||||||||||||||||||||||||||||||||
| Collateralized Securities - 2.5% (b) | ||||||||||||||||||||||||||||||||||||||
| Collateralized Securities - Debt Investments | ||||||||||||||||||||||||||||||||||||||
| Newstar Fairfield Fund CLO, Ltd. 2015-1RA F (a) (c) (j) (p) | Diversified Investment Vehicles | L+7.50% (7.63%), 1/20/2027 | $ | 10,728 | $ | 9,945 | $ | 8,237 | 0.6 | % | ||||||||||||||||||||||||||||
| NewStar Arlington Senior Loan Program, LLC 14-1A FR (a) (c) (j) (p) | Diversified Investment Vehicles | L+11.00% (11.12%), 4/25/2031 | 4,750 | 4,585 | 4,575 | 0.3 | % | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
26
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Whitehorse, Ltd. 2014-1A E (a) (c) (p) | Diversified Investment Vehicles | L+4.55% (4.68%), 5/1/2026 | $ | 8,000 | $ | 7,899 | $ | 7,171 | 0.5 | % | ||||||||||||||||||||||||||||
| Collateralized Securities - Equity Investments (n) | ||||||||||||||||||||||||||||||||||||||
| Newstar Fairfield Fund CLO, Ltd. 2015-1RA SUB (a) (c) (k) (p) | Diversified Investment Vehicles | 0.00%, 1/20/2027 | $ | 31,575 | $ | 6,285 | $ | — | — | % | ||||||||||||||||||||||||||||
| NewStar Arlington Senior Loan Program, LLC 14-1A SUB (a) (c) (j) (k) (p) | Diversified Investment Vehicles | 23.85%, 4/25/2031 | 31,603 | 15,223 | 17,114 | 1.1 | % | |||||||||||||||||||||||||||||||
| OFSI Fund, Ltd. 2014-6A Side Letter (a) (c) | Diversified Investment Vehicles | 0.00%, 3/20/2025 | 1,970 | 47 | — | — | % | |||||||||||||||||||||||||||||||
| Whitehorse, Ltd. 2014-1A Side Letter (a) (c) (p) | Diversified Investment Vehicles | 0.00%, 5/1/2026 | 1,886 | 134 | — | — | % | |||||||||||||||||||||||||||||||
| Whitehorse, Ltd. 2014-1A SUB (a) (c) (k) (p) | Diversified Investment Vehicles | 0.00%, 5/1/2026 | 36,000 | 6,965 | — | — | % | |||||||||||||||||||||||||||||||
| Subtotal Collateralized Securities | $ | 51,083 | $ | 37,097 | 2.5 | % | ||||||||||||||||||||||||||||||||
| Equity/Other - 36.3% (b) (d) | ||||||||||||||||||||||||||||||||||||||
| Aden & Anais Holdings, Inc. (c) (e) (w) | Retail | 4,470 | $ | — | $ | — | — | % | ||||||||||||||||||||||||||||||
| Answers Corp. (c) (e) (p) | Media/Entertainment | 908,911 | 10,643 | 145 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Baker Hill Acquisition, LLC (c) (e) (w) | Financials | 22,653 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Black Mountain Sand, LLC (c) (e) (u) | Energy | 55,463 | — | 478 | 0.0 | % | ||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (a) (e) (p) | Media/Entertainment | 539,708 | 1,224 | 5,442 | 0.4 | % | ||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (a) (c) (e) (p) | Media/Entertainment | 874,000 | 437 | 2,884 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Clover Technologies Group, LLC (c) (e) | Industrials | 180,274 | 1,153 | 29 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Clover Technologies Group, LLC (c) (e) | Industrials | 2,753 | 275 | 627 | 0.0 | % | ||||||||||||||||||||||||||||||||
| CRS-SPV, Inc. (c) (e) (j) (o) (w) | Industrials | 246 | 2,219 | 1,266 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Danish CRJ, Ltd. (a) (c) (e) (o) (r) | Transportation | 5,002 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Data Source Holdings, LLC (c) (e) (w) | Business Services | 10,617 | 140 | 276 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Del Real, LLC (c) (e) (u) (w) | Food & Beverage | 670,510 | 382 | — | — | % | ||||||||||||||||||||||||||||||||
| Dyno Acquiror, Inc. (c) (e) (w) | Consumer | 134,102 | 58 | 107 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Encina Equipment Finance, LLC (c) (e) (o) (u) | Financials | 79,479,085 | 81,693 | 81,693 | 5.4 | % | ||||||||||||||||||||||||||||||||
| FBLC Senior Loan Fund, LLC (a) (c) (o) (z) | Diversified Investment Vehicles | 304,934 | 304,934 | 304,934 | 20.2 | % | ||||||||||||||||||||||||||||||||
| First Eagle Greenway Fund II, LLC (a) (j) (p) | Diversified Investment Vehicles | 5,329 | 4,049 | 464 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Foresight Energy Operating, LLC (c) (e) (p) (u) | Energy | 158,093 | 2,087 | 3,965 | 0.3 | % | ||||||||||||||||||||||||||||||||
| HemaSource, Inc. (c) (e) (w) | Healthcare | 223,503 | 168 | 268 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (e) (o) | Industrials | 55,991 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. (c) (e) (o) | Industrials | 57,427 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Internap Corp (c) (e) (p) | Business Services | 1,293,189 | 543 | 1,552 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Jakks Pacific, Inc. (e) (p) (s) | Consumer | 237,436 | 2,385 | 2,412 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Jakks Pacific, Inc. (c) (e) (p) | Consumer | 5,303 | 185 | 785 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Kahala Ireland OpCo Designated Activity Company (a) (c) (o) (y) | Transportation | 1 | — | 23,732 | 1.6 | % | ||||||||||||||||||||||||||||||||
| Kahala Ireland OpCo Designated Activity Company (a) (c) (e) (o) (y) | Transportation | 3,250,000 | — | 3,250 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Kahala US OpCo, LLC (a) (c) (e) (o) (x) | Transportation | 13.00% | 4,413,472 | — | — | — | % | |||||||||||||||||||||||||||||||
| KidKraft, Inc. (c) (e) (u) (w) | Consumer | 2,682,257 | — | 1,048 | 0.1 | % | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
27
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
| December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Portfolio Company (f) (q) | Industry | Investment Coupon Rate / Maturity (l) | Principal / Number of Shares | Amortized Cost | Fair Value | % of Net Assets (b) | ||||||||||||||||||||||||||||||||
| Lakeview Health Holdings, Inc. (c) (e) (o) (w) | Healthcare | 5,272 | $ | — | $ | — | — | % | ||||||||||||||||||||||||||||||
| McDonald Worley, P.C. (c) (e) | Business Services | 248,600 | 104 | 1,272 | 0.1 | % | ||||||||||||||||||||||||||||||||
| MCS Acquisition Corp. (c) (e) | Business Services | 31,521 | 4,103 | 2,431 | 0.2 | % | ||||||||||||||||||||||||||||||||
| MGTF Holdco, LLC (c) (e) (o) (u) | Media/Entertainment | 402,000 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Motor Vehicle Software Corp. (c) (e) (w) | Business Services | 223,503 | 318 | 386 | 0.0 | % | ||||||||||||||||||||||||||||||||
| New Constellis Holdings Inc. (c) (e) (w) | Business Services | 2,316 | 67 | — | — | % | ||||||||||||||||||||||||||||||||
| ORG GC Holdings, LLC (c) (e) (o) | Business Services | 93,380 | 212 | 212 | 0.0 | % | ||||||||||||||||||||||||||||||||
| ORG GC Holdings, LLC (c) (e) (o) | Business Services | 1,771 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Park Ave RE Holdings, LLC (c) (e) (j) (o) (v) | Financials | 719 | 1,623 | 4,461 | 0.3 | % | ||||||||||||||||||||||||||||||||
| PennantPark Credit Opportunities Fund II, LP (a) (p) | Diversified Investment Vehicles | 8,739 | 3,936 | 4,953 | 0.3 | % | ||||||||||||||||||||||||||||||||
| Point Broadband Acquisition, LLC (c) (e) | Telecom | 2,099,333 | 2,099 | 2,099 | 0.1 | % | ||||||||||||||||||||||||||||||||
| PT Network, LLC (c) (e) (u) | Healthcare | 3 | — | 2,813 | 0.2 | % | ||||||||||||||||||||||||||||||||
| RMP Group, Inc. (c) (e) (u) (w) | Financials | 223 | 164 | 340 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Schweiger Dermatology Group, LLC (c) (e) (u) (w) | Healthcare | 265,024 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Siena Capital Finance, LLC (c) (j) (o) (z) | Financials | 41,789,400 | 42,499 | 65,609 | 4.3 | % | ||||||||||||||||||||||||||||||||
| Skillsoft Corp (a) (e) (s) | Technology | 248,712 | 2,636 | 2,275 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Smile Brands, Inc. (c) (w) | Healthcare | 712 | — | 1,437 | 0.1 | % | ||||||||||||||||||||||||||||||||
| Squan Holding Corp. (c) (e) | Telecom | 180,835 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Tap Rock Resources, LLC (c) (g) (p) (u) | Energy | 18,356,442 | 6,490 | 8,742 | 0.6 | % | ||||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (e) (p) | Consumer | 147,099 | 425 | — | — | % | ||||||||||||||||||||||||||||||||
| Tax Defense Network, LLC (c) (e) (p) | Consumer | 633,382 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Team Waste, LLC (c) (e) (p) (u) (w) | Industrials | 128,483 | 2,569 | 3,073 | 0.2 | % | ||||||||||||||||||||||||||||||||
| Tennenbaum Waterman Fund, LP (a) (j) (p) | Diversified Investment Vehicles | 10,000 | 10,000 | 9,764 | 0.6 | % | ||||||||||||||||||||||||||||||||
| Travelpro Products, Inc. (a) (c) (e) (w) | Consumer | 447,007 | 506 | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) (w) | Healthcare | 39,769 | 132 | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) (w) | Healthcare | 3,155 | — | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) (w) | Healthcare | 4,206 | 31 | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) (w) | Healthcare | 99,236 | — | — | — | % | ||||||||||||||||||||||||||||||||
| United Biologics, LLC (c) (e) (u) (w) | Healthcare | 223 | 35 | — | — | % | ||||||||||||||||||||||||||||||||
| USASF Holdco, LLC (c) (e) (u) | Financials | 10,000 | 10 | — | — | % | ||||||||||||||||||||||||||||||||
| USASF Holdco, LLC (c) (e) (u) | Financials | 490 | 490 | 510 | 0.0 | % | ||||||||||||||||||||||||||||||||
| USASF Holdco, LLC (c) (e) (u) | Financials | 139 | 139 | 278 | 0.0 | % | ||||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (e) (p) (w) | Transportation | 512,923 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (e) (p) (w) | Transportation | 4,439,484 | 3,140 | — | — | % | ||||||||||||||||||||||||||||||||
| Vantage Mobility International, LLC (c) (e) (p) (w) | Transportation | 1,940,977 | — | — | — | % | ||||||||||||||||||||||||||||||||
| World Business Lenders, LLC (c) (e) | Financials | 922,669 | 3,750 | 2,676 | 0.2 | % | ||||||||||||||||||||||||||||||||
| WPNT, LLC (c) (e) (o) (u) | Media/Entertainment | 402,000 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Wythe Will Tzetzo, LLC (c) (e) (u) (w) | Food & Beverage | 22,312 | 302 | — | — | % | ||||||||||||||||||||||||||||||||
| YummyEarth, Inc. (c) (e) (w) | Food & Beverage | 223 | — | — | — | % | ||||||||||||||||||||||||||||||||
| Subtotal Equity/Other | $ | 498,355 | $ | 548,688 | 36.3 | % | ||||||||||||||||||||||||||||||||
| TOTAL INVESTMENTS - 184.1% (b) | $ | 2,783,617 | $ | 2,778,964 | 184.1 | % | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
28
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
December 31, 2021
| Forward foreign currency contracts: | ||||||||||||||||||||||||||
| Counterparty | Contract to Deliver | In Exchange For | Maturity Date | Unrealized Depreciation | ||||||||||||||||||||||
| Goldman Sachs International | CAD 21,807 | $17,388 | 2/17/2022 | $266 | ||||||||||||||||||||||
_____________
(a)All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. Qualifying assets represent 81.4% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.
(b)Percentages are based on net assets as of December 31, 2021.
(c)The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act. Such investments are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).
(d)All amounts are in thousands except share amounts.
(e)Non-income producing at December 31, 2021.
(f)The Company has various unfunded commitments to portfolio companies. Please refer to Note 7 - Commitments and Contingencies for details of these unfunded commitments.
(g)The commitment related to this investment is discretionary.
(h)The Company's investment or a portion thereof is pledged as collateral under the JPM Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(i)The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(j)The Company's investment or a portion thereof is pledged as collateral under the MassMutual Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(k)The Collateralized Securities - subordinated notes are treated as equity investments and are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
(l)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L") or Prime ("P") and which reset daily, monthly, quarterly, or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the current interest rate in effect at December 31, 2021. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable. For floating rate securities the all-in rate is disclosed within parentheses.
(m)The principal amount (par amount) is denominated in Canadian Dollars ("CAD").
(n)For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (k) for a further description of an equity investment in a Collateralized Security.
(o)The provisions of the 1940 Act classify investments based on the level of control that the Company maintains in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be "non-controlled" when the Company owns 25% or less of the portfolio company's voting securities and/or does not have the power to exercise control over the management or policies of such portfolio company. A company is generally presumed to be "controlled" when the Company owns more than 25% of the portfolio company's voting securities and/or has the power to exercise control over the management or policies of such portfolio company. The Company classifies this investment as "controlled".
(p)The provisions of the 1940 Act classify investments further based on the level of ownership that the Company maintains in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as "non-affiliated" when the Company owns less than 5% of a portfolio company's voting securities and "affiliated" when the Company owns 5% or more of a portfolio company's voting securities. The Company classifies this investment as "affiliated".
(q)Unless otherwise indicated, all investments in the consolidated schedule of investments are non-affiliated, non-controlled investments.
(r)The Company's investment is held through the Consolidated Holding Company, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.
(s)The investment is not a restricted security. All other securities are restricted securities.
(t)The investment is on non-accrual status as of December 31, 2021.
(u)Investments are held in the taxable wholly-owned, consolidated subsidiary, 54th Street Equity Holdings, Inc.
(v)The Company's investment is held through the consolidated subsidiary, Park Ave RE, Inc., which owns 100% of the equity of the operating company, Park Ave RE Holdings, LLC.
(w)The investment is held through BSP TCAP Acquisition Holdings LP, which is an affiliated acquisition entity utilized for the Triangle Transaction. Due to
The accompanying notes are an integral part of these consolidated financial statements.
29
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
certain restrictions, such as limits on the number of partners allowable within the equity structures of the newly acquired investments, these investments are still held within the acquisition entity as of December 31, 2021.
(x)The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc., which own 100% of the equity of the operating company, Kahala US OpCo LLC.
(y)The Company's investment is held through the consolidated subsidiary, Kahala Aviation Holdings, LLC, which owns 100% of the equity of the operating company, Kahala Ireland OpCo Designated Activity Company.
(z)The Company's investment falls under the definition of a significant subsidiary, as it exceeded the threshold of at least one of the tests under Rule 4-08(g), but did not exceed the threshold of any tests under Rule 3-09. See Note 3 for additional disclosure.
The accompanying notes are an integral part of these consolidated financial statements.
30
FRANKLIN BSP LENDING CORPORATION
CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)
December 31, 2021
The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2021:
At December 31, 2021 | |||||||||||
| Investments at Fair Value | Percentage of Total Portfolio | ||||||||||
| Healthcare | $ | 422,430 | 15.2 | % | |||||||
Diversified Investment Vehicles (1) | 357,212 | 12.9 | % | ||||||||
| Business Services | 339,083 | 12.2 | % | ||||||||
| Financials | 337,699 | 12.2 | % | ||||||||
| Industrials | 301,669 | 10.9 | % | ||||||||
| Software/Services | 197,238 | 7.1 | % | ||||||||
| Media/Entertainment | 186,555 | 6.7 | % | ||||||||
| Consumer | 150,903 | 5.4 | % | ||||||||
| Paper & Packaging | 105,418 | 3.8 | % | ||||||||
| Food & Beverage | 79,390 | 2.9 | % | ||||||||
| Transportation | 59,397 | 2.1 | % | ||||||||
| Education | 46,261 | 1.7 | % | ||||||||
| Telecom | 45,321 | 1.6 | % | ||||||||
| Technology | 40,077 | 1.4 | % | ||||||||
| Chemicals | 36,793 | 1.3 | % | ||||||||
| Energy | 31,432 | 1.1 | % | ||||||||
| Utilities | 25,250 | 0.9 | % | ||||||||
| Gaming/Lodging | 16,836 | 0.6 | % | ||||||||
| Retail | — | — | % | ||||||||
| Total | $ | 2,778,964 | 100.0 | % | |||||||
_____________
(1) Includes FBLC's investment in FBLC Senior Loan Fund, LLC, which represents 11.0% of the fair value of investments as of December 31, 2021.
The accompanying notes are an integral part of these consolidated financial statements.
31
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Note 1 — Organization and Basis of Presentation
Franklin BSP Lending Corporation (the “Company” or "FBLC") is an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, the Company has elected to be treated for tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s investment activities are managed by Franklin BSP Lending Adviser, L.L.C. (the “Adviser”), a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by the Company’s Board of Directors ("Board" or "Board of Directors"), a majority of whom are independent of the Adviser and its affiliates. As a BDC, the Company is required to comply with certain regulatory requirements.
The Company’s investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. The Company invests primarily in first and second lien senior secured loans and mezzanine debt issued by middle market companies. The Company defines middle market companies as those with annual revenues up to $1 billion. The Company also purchases interests in loans through secondary market transactions. First and second lien secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in bankruptcy priority and are generally secured by liens on the operating assets of a borrower, which may include inventory, receivables, plant, property, and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. The Company may invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities” or "CLOs"). CLOs are entities that are formed to manage a portfolio of senior secured loans made to companies whose debt is typically rated below investment grade or, in limited circumstances, unrated. The senior secured loans within these Collateralized Securities meet specified credit and diversity criteria and are subject to concentration limitations in order to create a diverse investment portfolio. In most cases, companies to whom the Company provides customized financing solutions will be privately held at the time the Company invests in them.
On February 1, 2019, Franklin Resources, Inc. (“FRI”) and Templeton International, Inc. (collectively with FRI, “Franklin Templeton”) acquired BSP, including BSP’s 100% ownership interest in the Adviser (the “FT Transaction”).
While the structure of the Company’s investments is likely to vary, the Company may invest in senior secured debt, senior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, preferred equity, common equity, warrants, CLOs, and other instruments, many of which generate current yields. If the Adviser deems appropriate, the Company may invest in more liquid senior secured and second lien debt securities, some of which may be traded. The Company will make such investments to the extent allowed by the 1940 Act and consistent with its continued qualification as a RIC for federal income tax purposes.
On January 25, 2011, the Company commenced its initial public offering (the “IPO”) on a “reasonable best efforts basis” of up to 150.0 million shares of common stock, $0.001 par value per share, and subsequently amended the offering to issue up to an additional 101.1 million shares of its common stock (the “Offering”). The Company closed the Offering to new investments on April 30, 2015. As of June 30, 2022, the Company had issued 244.8 million shares of common stock for gross proceeds of $2.5 billion including the shares purchased by affiliates and shares issued under the Company's distribution reinvestment plan (“DRIP”). As of June 30, 2022, the Company had repurchased a cumulative 34.0 million shares of common stock through its share repurchase program for payments of $282.8 million.
The Company intends to co-invest, subject to the conditions included in the exemptive order the Company received from the Securities and Exchange Commission ("SEC"), with certain of its affiliates. The Company believes that such co-investments may afford it additional investment opportunities and an ability to achieve greater diversification.
As a BDC, the Company is generally required to invest at least 70% of its total assets primarily in securities of private and certain U.S. public companies (other than certain financial institutions), cash, cash equivalents and U.S. Government securities, and other high-quality debt investments that mature in one year or less.
The Company is permitted to borrow money from time to time within the levels permitted by the 1940 Act (which generally currently allows it to incur leverage for up to one half of its total assets). The Company has used, and expects to continue to use, its credit facilities and other borrowings, along with proceeds from the rotation of its portfolio and proceeds from private securities offerings to finance its investment objectives.
Although the Small Business Credit Availability Act of 2018 (the “SBCAA”) amended the 1940 Act to permit BDCs to incur increased leverage if certain conditions are met, the Company does not presently intend to avail itself of the increased
32
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
leverage limits permitted by the SBCAA. If the Company were to avail itself of the increased leverage permitted by the SBCAA, this would effectively allow the Company to double its leverage, which would increase leverage risk and expenses.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The consolidated financial statements reflect all adjustments, both normal and recurring which, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition for the periods presented. The Company is an investment company and follows accounting and reporting guidance in Accounting Standards Codification ("ASC") Topic 946 - Financial Services - Investment Companies ("ASC 946").
We have also formed and expect to continue to form consolidated subsidiaries (the “Consolidated Holding Companies”). The Company consolidates the following subsidiaries for accounting purposes: FBLC Funding I, LLC (“Funding I”), FBLC 57th Street Funding, LLC ("57th Street") and 54th Street Equity Holdings, Inc. Prior to February 18, 2022, the Company also consolidated BDCA Asset Financing, LLC ("BDCA Asset Financing"); and prior to January 20, 2021, the Company consolidated BDCA-CB Funding, LLC (“CB Funding”). Refer to Note 3 and Note 5 for more information. The Company owns 100% of the equity of Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc., which are consolidated for accounting purposes. All significant intercompany balances and transactions have been eliminated in consolidation.
Interim financial statements are prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the consolidated financial statements may not include all of the information and notes required by U.S. GAAP for annual consolidated financial statements. U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets, and any other parameters used in determining these estimates could cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2022.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Consolidation
As provided under ASC 946, the Company will generally not consolidate its investment in a company other than a substantially or wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's substantially wholly-owned subsidiaries in its consolidated financial statements. Although the Company owns more than 25% of the voting securities of FBLC Senior Loan Fund, LLC, ("SLF"), the Company does not have sole control over significant actions of SLF for purposes of the 1940 Act or otherwise, and thus does not consolidate its interest.
Valuation of Portfolio Investments
Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis, the Company performs an analysis of each investment to determine fair value as follows:
Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined to be readily available, the Company uses the quote obtained.
Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these
33
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
approaches, the types of factors that the Company may take into account in fair value pricing the Company's investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.
With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:
•Each portfolio company or investment will be valued by the Adviser, with assistance from one or more independent valuation firms engaged by the Company's Board of Directors or as noted below, with respect to investments in an investment fund;
•The independent valuation firm(s) conduct independent appraisals and make an independent assessment of the value of each investment; and
•The Board of Directors determines the fair value of each investment, in good faith, based on the input of the Adviser and independent valuation firm (to the extent applicable). On August 10, 2022, pursuant to Rule 2a-5, the Board has designated the Adviser as the Company's valuation designee (the "Valuation Designee") to perform fair value determinations relating to the value of assets held by the Company. The Adviser also has established a Valuation Committee to assist the Adviser in carrying out its designated responsibilities that the Board has designated to the Adviser as Valuation Designee, subject to oversight of the Board.
For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of the Company's measurement date. However, there can be no assurance that the Company will be able to sell such investment at a price equal to its net asset value per share and the Company may ultimately sell such investment at a discount to its net asset value per share.
The Company’s investments in funds that offer periodic liquidity have redemption frequencies which range from monthly to quarterly and redemption notice periods which range from 30 to 90 days. Investments in private equity typically do not offer liquidity and instead, capital is returned through periodic distributions.
Because there is not a readily available market value for most of the investments in its portfolio, the Company values substantially all of its portfolio investments at fair value as determined in good faith by its Board of Directors, as described herein. 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. Additionally, the fair value of the Company's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it.
Investment Classification
The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control” is defined as the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. In addition, any person “who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company and/or has the power to exercise control over the management or policies of such portfolio company shall be presumed to control such company. Typically, any person who does not so own more than 25% of the voting securities of any company and/or does not have the power to exercise control over the management or policies of such portfolio company shall be presumed not to control such company.” Consistent with the 1940 Act, “Affiliated Investments” are defined as those investments in companies in which the Company owns 5% or more of the voting securities. Consistent with the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments.
34
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Cash and Cash Equivalents
Cash and cash equivalents include short-term, liquid investments in a money market deposit account. Cash and cash equivalents are carried at cost which approximates fair value.
Offering Costs
The Company incurs certain costs in connection with the registration of shares of its common stock. Offering costs principally relate to professional fees, printing costs, direct marketing expenses, due diligence costs, fees paid to regulators, and other expenses, including the salaries and/or expenses of the Adviser and its affiliates engaged in registering and marketing the Company’s common stock. Such allocated expenses of the Adviser and its affiliates may include the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.
Pursuant to the Investment Advisory Agreement, the Company and the Adviser have agreed that the Company will not be liable for organization and offering costs, including transfer agent fees, in excess of 1.5% of the aggregate gross proceeds from the Company’s on-going offering. Should the Company resume continually offering its shares, any offering costs incurred will be capitalized and amortized as an expense on a straight-line basis over a 12-month period. For the periods ended June 30, 2022 and 2021, the Company did not incur any offering costs subject to the Adviser limitation.
Deferred Financing Costs
Financing costs incurred in connection with the Company’s unsecured notes and revolving credit facilities are capitalized and amortized into expense using the straight-line method, which approximates the effective yield method over the life of the respective facility. See Note 5 - Borrowings for details on the credit facilities and unsecured notes.
Distributions
The Company’s Board of Directors authorizes and declares cash distributions payable on a quarterly basis to stockholders of record on each record date. The amount of each such distribution is subject to the discretion of the Board of Directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the quarter using record and declaration dates. The distributions are payable by the fifth day following each record date. From time to time, the Company may also pay interim distributions, including capital gains distributions, at the discretion of the Company’s Board of Directors. The Company’s distributions may exceed earnings, especially during the period before it has substantially invested the proceeds from the offering. As a result, a portion of the distributions made by the Company may represent a return of capital for U.S. federal income tax purposes. A return of capital is a return of each stockholder’s investment rather than earnings or gains derived from the Company’s investment activities.
The Company may fund cash distributions to stockholders from any sources of funds available to the Company, including advances from the Adviser that are subject to reimbursement, as well as offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. The Company has not established limits on the amount of funds it may use from available sources to make distributions. See Note 14 - Income Tax Information and Distributions to Stockholders for additional information.
Revenue Recognition
Interest Income
Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discount and amortization of premium on investments.
The Company has a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in the Company's case, preferred shares or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC 325-40-35, Beneficial Interests in Securitized Financial Assets ("ASC 325-40-35"). The Company monitors the expected cash inflows from its equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly. In accordance with ASC 325-40, investments in CLOs are periodically assessed for other-than-temporary impairment ("OTTI"). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.
35
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Dividend Income
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.
Dividend income from SLF is recorded on accrual basis once dividends are declared by SLF's board of directors. Distributions from SLF are evaluated at the time of distribution to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions as dividend income unless there are sufficient accumulated tax-basis earnings and profit in SLF prior to distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
Fee Income
Fee income, such as structuring fees, origination, closing, amendment fees, commitment, termination, and other upfront fees are generally non-recurring and are recognized as income when earned, either upon receipt or amortized into income. Upon the re-payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment, and other upfront fees are recorded as income.
Payment-in-Kind Interest/Dividends
The Company may hold debt and equity investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions. PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are recorded on accrual basis to the extent such amounts are expected to be collected.
Non-accrual Income
Investments may be placed on non-accrual status when principal or interest payments are past due and/or when there is reasonable doubt that principal or interest will be collected. Accrued interest which may include un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.
Net Realized Gain or Loss and Net Change in Unrealized Appreciation or Depreciation
Gain or loss on the sale of investments is calculated using the specific identification method. The Company measures realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when a gain or loss is realized.
Income Taxes
The Company has elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Code. Generally, a RIC is not subject to federal income taxes in respect of each taxable year if it distributes dividends for federal income tax purposes to stockholders of an amount generally equal to at least 90% of ‘‘investment company taxable income,’’ as defined in the Code, and determined without regard to any deduction for dividends paid. Distributions declared prior to the filing of the previous year's tax return and paid up to twelve months after the previous tax year can be carried back to the prior tax year in determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its ability to be subject to be taxed as a RIC each year. The Company may be subject to federal excise tax imposed at a rate of 4% on certain undistributed amounts. See Note 14 - Income Tax Information and Distributions to Stockholders for additional information.
36
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Note 3 — Fair Value of Financial Instruments
The Company’s fair value measurements are classified into a fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurement, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:
•Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
•Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.
For investments for which Level 1 inputs, such as quoted prices, were not available at June 30, 2022 and December 31, 2021, the investments were valued at fair value as determined in good faith using the valuation policy approved by the Board of Directors using Level 2 and Level 3 inputs. The Company evaluates the source of inputs, including any markets in which the Company's investments are trading, in determining fair value. Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio at June 30, 2022 and December 31, 2021 may differ materially from values that would have been used had a ready market for the securities existed.
In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the Board of Directors. Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as described below.
Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, the Company uses the quote obtained.
37
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Company may take into account in fair value pricing the Company's investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.
For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC Topic 946, as of the Company's measurement date.
For investments in Collateralized Securities, the Adviser models both the assets and liabilities of each Collateralized Securities' capital structure. The model uses a waterfall engine to store the collateral data, generate cash flows from the assets, and distribute the cash flows to the liability structure based on the contractual priority of payments. The cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, the Adviser considers broker quotations and/or comparable trade activity, which are considered as inputs to determining fair value when available.
As part of the Company's quarterly valuation process, the Adviser may be assisted by one or more independent valuation firms engaged by the Company. The Board of Directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).
Determination of fair values involves subjective judgments and estimates. Accordingly, the notes to the consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations on the consolidated financial statements.
For discussion of the fair value measurement of the Company's borrowings, refer to Note 5 - Borrowings.
For discussion of the fair value measurement of the Company's foreign currency contracts, refer to Note 6 - Derivatives.
The following table presents fair value measurements of investments, by major class, as of June 30, 2022, according to the fair value hierarchy:
| Fair Value Measurements | |||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Measured at Net Asset Value (1) | Total | |||||||||||||||||||||||||
| Senior Secured First Lien Debt | $ | — | $ | 45,233 | $ | 1,799,415 | $ | — | $ | 1,844,648 | |||||||||||||||||||
| Senior Secured Second Lien Debt | — | 22,149 | 214,724 | — | 236,873 | ||||||||||||||||||||||||
| Subordinated Debt | — | — | 111,514 | — | 111,514 | ||||||||||||||||||||||||
| Collateralized Securities | — | — | 31,850 | — | 31,850 | ||||||||||||||||||||||||
| Equity/Other | 3,881 | 4,958 | 207,389 | 10,908 | 227,136 | ||||||||||||||||||||||||
| FBLC Senior Loan Fund, LLC | — | — | 304,934 | — | 304,934 | ||||||||||||||||||||||||
| Total | $ | 3,881 | $ | 72,340 | $ | 2,669,826 | $ | 10,908 | $ | 2,756,955 | |||||||||||||||||||
______________
(1) In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient election have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.
38
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
The following table presents fair value measurements of investments, by major class, as of December 31, 2021, according to the fair value hierarchy:
| Fair Value Measurements | |||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Measured at Net Asset Value (1) | Total | |||||||||||||||||||||||||
| Senior Secured First Lien Debt | $ | — | $ | 51,854 | $ | 1,779,316 | $ | — | $ | 1,831,170 | |||||||||||||||||||
| Senior Secured Second Lien Debt | — | 24,909 | 219,023 | — | 243,932 | ||||||||||||||||||||||||
| Subordinated Debt | — | — | 118,077 | — | 118,077 | ||||||||||||||||||||||||
| Collateralized Securities | — | — | 37,097 | — | 37,097 | ||||||||||||||||||||||||
| Equity/Other | 4,687 | 5,442 | 218,444 | 15,181 | 243,754 | ||||||||||||||||||||||||
| FBLC Senior Loan Fund, LLC | — | — | 304,934 | — | 304,934 | ||||||||||||||||||||||||
| Total | $ | 4,687 | $ | 82,205 | $ | 2,676,891 | $ | 15,181 | $ | 2,778,964 | |||||||||||||||||||
______________
(1) In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient election have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended June 30, 2022:
| Senior Secured First Lien Debt | Senior Secured Second Lien Debt | Subordinated Debt | Collateralized Securities | Equity/Other (1) | Total | ||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | 1,779,316 | $ | 219,023 | $ | 118,077 | $ | 37,097 | $ | 523,378 | $ | 2,676,891 | |||||||||||||||||||||||
| Purchases and other adjustments to cost | 191,672 | 827 | 9,020 | 237 | 489 | 202,245 | |||||||||||||||||||||||||||||
| Sales and repayments | (159,537) | (2,981) | (15,537) | (2,533) | (15,892) | (196,480) | |||||||||||||||||||||||||||||
| Net realized gain (loss) | 318 | (129) | — | — | 10,601 | 10,790 | |||||||||||||||||||||||||||||
| Transfers in | 10,243 | 10,882 | — | — | — | 21,125 | |||||||||||||||||||||||||||||
| Transfers out | (21,710) | (8,541) | — | — | — | (30,251) | |||||||||||||||||||||||||||||
| Net change in unrealized depreciation on investments | (887) | (4,357) | (46) | (2,951) | (6,253) | (14,494) | |||||||||||||||||||||||||||||
Balance as of June 30, 2022 | $ | 1,799,415 | $ | 214,724 | $ | 111,514 | $ | 31,850 | $ | 512,323 | $ | 2,669,826 | |||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period: | $ | (313) | $ | (4,622) | $ | (46) | $ | (2,951) | $ | 1,004 | $ | (6,928) | |||||||||||||||||||||||
_______________
(1) Includes FBLC's investment in FBLC Senior Loan Fund, LLC.
For the six months ended June 30, 2022, transfers from Level 2 to Level 3 were due to current assessments of investment liquidity and a decrease in the number of observable market inputs. For the six months ended June 30, 2022, transfers from Level 3 to Level 2 were due to an increase in the number of observable market inputs.
39
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended December 31, 2021:
| Senior Secured First Lien Debt | Senior Secured Second Lien Debt | Subordinated Debt | Collateralized Securities | Equity/Other | Total | ||||||||||||||||||||||||||||||
Balance as of December 31, 2020 | $ | 1,307,957 | $ | 186,899 | $ | 108,610 | $ | 106,525 | $ | 208,793 | $ | 1,918,784 | |||||||||||||||||||||||
| Purchases and other adjustments to cost | 1,077,201 | 83,554 | 115,838 | 422 | 395,008 | (1) | 1,672,023 | ||||||||||||||||||||||||||||
| Sales and repayments | (664,874) | (68,648) | (106,646) | (84,250) | (119,493) | (1,043,911) | |||||||||||||||||||||||||||||
| Net realized gain (loss) | (12,043) | 382 | 2,561 | (4,677) | 25,959 | 12,182 | |||||||||||||||||||||||||||||
| Transfers in | 90,853 | 25,018 | — | — | — | 115,871 | |||||||||||||||||||||||||||||
| Transfers out | (63,570) | (13,094) | — | — | (1,224) | (77,888) | |||||||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | 43,792 | 4,912 | (2,286) | 19,077 | 14,335 | 79,830 | |||||||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | 1,779,316 | $ | 219,023 | $ | 118,077 | $ | 37,097 | $ | 523,378 | $ | 2,676,891 | |||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period: | $ | 18,655 | $ | 4,052 | $ | 504 | $ | 10,436 | $ | 18,515 | $ | 52,162 | |||||||||||||||||||||||
_______________
(1) Includes $304.9 million of purchases related to FBLC Senior Loan Fund, LLC.
For the year ended December 31, 2021, transfers from Level 2 to Level 3 were due to current assessments of investment liquidity and a decrease in the number of observable market inputs. For the year ended December 31, 2021, transfers from Level 3 to Level 2 were due to an increase in the number of observable market inputs.
The composition of the Company’s investments as of June 30, 2022, at amortized cost and fair value, were as follows:
| Investments at Amortized Cost | Investments at Fair Value | Fair Value Percentage of Total Portfolio | |||||||||||||||
| Senior Secured First Lien Debt | $ | 1,882,170 | $ | 1,844,648 | 66.9 | % | |||||||||||
| Senior Secured Second Lien Debt | 249,245 | 236,873 | 8.6 | ||||||||||||||
| Subordinated Debt | 111,110 | 111,514 | 4.0 | ||||||||||||||
| Collateralized Securities | 48,787 | 31,850 | 1.2 | ||||||||||||||
| Equity/Other | 185,438 | 227,136 | 8.2 | ||||||||||||||
| FBLC Senior Loan Fund, LLC | 304,934 | 304,934 | 11.1 | ||||||||||||||
| Total | $ | 2,781,684 | $ | 2,756,955 | 100.0 | % | |||||||||||
40
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
The composition of the Company’s investments as of December 31, 2021, at amortized cost and fair value, were as follows:
| Investments at Amortized Cost | Investments at Fair Value | Fair Value Percentage of Total Portfolio | |||||||||||||||
| Senior Secured First Lien Debt | $ | 1,865,403 | $ | 1,831,170 | 65.9 | % | |||||||||||
| Senior Secured Second Lien Debt | 251,149 | 243,932 | 8.8 | ||||||||||||||
| Subordinated Debt | 117,627 | 118,077 | 4.2 | ||||||||||||||
| Collateralized Securities | 51,083 | 37,097 | 1.3 | ||||||||||||||
| Equity/Other | 193,421 | 243,754 | 8.8 | ||||||||||||||
| FBLC Senior Loan Fund, LLC | 304,934 | 304,934 | 11.0 | ||||||||||||||
| Total | $ | 2,783,617 | $ | 2,778,964 | 100.0 | % | |||||||||||
41
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Significant Unobservable Inputs
The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of June 30, 2022. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.
| Range | ||||||||||||||||||||||||||||||||||||||
| Asset Category | Fair Value | Primary Valuation Technique | Unobservable Inputs | Minimum | Maximum | Weighted Average (a) | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | $ | 951,737 | Discounted Cash Flow | Market Yield | 6.75% | 22.85% | 10.05% | |||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | 727,509 | Yield Analysis | Market Yield | 7.46% | 15.94% | 9.52% | ||||||||||||||||||||||||||||||||
Senior Secured First Lien Debt (c) | 93,831 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | 17,759 | Waterfall Analysis | EBITDA Multiple | 2.80x | 8.80x | 6.67x | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | 8,579 | Waterfall Analysis | Revenue Multiple | 0.24x | 0.75x | 0.30x | ||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt | 140,979 | Discounted Cash Flow | Market Yield | 9.25% | 13.34% | 10.56% | ||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt | 67,429 | Yield Analysis | Market Yield | 9.63% | 14.03% | 12.96% | ||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt | 6,316 | Waterfall Analysis | EBITDA Multiple | 5.08x | 6.75x | 6.36x | ||||||||||||||||||||||||||||||||
| Subordinated Debt | 107,328 | Waterfall Analysis | Tangible Net Asset Value Multiple | 1.61x | 1.94x | 1.75x | ||||||||||||||||||||||||||||||||
Subordinated Debt (b) | 4,186 | Yield Analysis | Market Yield | 22.88% | 22.88% | 22.88% | ||||||||||||||||||||||||||||||||
| Collateralized Securities | 31,850 | Discounted Cash Flow | Discount Rate | 12.50% | 19.50% | 17.00% | ||||||||||||||||||||||||||||||||
| Equity/Other | 159,003 | Waterfall Analysis | Tangible Net Asset Value Multiple | 1.61x | 1.94x | 1.78x | ||||||||||||||||||||||||||||||||
| Equity/Other | 17,173 | Waterfall Analysis | EBITDA Multiple | 3.00x | 20.82x | 8.57x | ||||||||||||||||||||||||||||||||
| Equity/Other | 14,427 | Waterfall Analysis | Discount Rate | 22.00% | 22.00% | 22.00% | ||||||||||||||||||||||||||||||||
Equity/Other (b) | 8,467 | Discounted Cash Flow | Discount Rate | 20.00% | 20.00% | 20.00% | ||||||||||||||||||||||||||||||||
Equity/Other (b) | 2,676 | Waterfall Analysis | TBV Multiple | 4.60x | 4.60x | 4.60x | ||||||||||||||||||||||||||||||||
| Equity/Other | 2,381 | Waterfall Analysis | Revenue Multiple | 0.30x | 2.54x | 2.52x | ||||||||||||||||||||||||||||||||
| Equity/Other | 1,592 | Discounted Cash Flow | Market Yield | 8.80% | 10.50% | 9.64% | ||||||||||||||||||||||||||||||||
Equity/Other (b)(d) | 1,552 | Waterfall Analysis | Asset Recovery | $191.00 | $191.00 | $191.00 | ||||||||||||||||||||||||||||||||
Equity/Other (b)(c) | 118 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
FBLC Senior Loan Fund, LLC (b) | 304,934 | Discounted Cash Flow | Discount Rate | 14.90% | 14.90% | 14.90% | ||||||||||||||||||||||||||||||||
| Total | $ | 2,669,826 | ||||||||||||||||||||||||||||||||||||
______________
(a)Weighted averages are calculated based on fair value of investments.
(b)This asset category contains one investment.
(c)Investment(s) were valued based on recent or pending transactions expected to close after the valuation date.
(d)Values shown in millions.
There were no significant changes in valuation approach or technique as of June 30, 2022.
42
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2021. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.
| Range | ||||||||||||||||||||||||||||||||||||||
| Asset Category | Fair Value | Primary Valuation Technique | Unobservable Inputs | Minimum | Maximum | Weighted Average (a) | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | $ | 1,258,128 | Discounted Cash Flow | Market Yield | 5.00% | 23.71% | 8.15% | |||||||||||||||||||||||||||||||
Senior Secured First Lien Debt (c) | 272,647 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | 214,761 | Yield Analysis | Market Yield | 1.82% | 14.14% | 7.93% | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | 27,022 | Waterfall Analysis | EBITDA Multiple | 4.30x | 10.16x | 8.08x | ||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | 6,758 | Waterfall Analysis | Revenue Multiple | 0.24x | 0.24x | 0.24x | ||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt | 120,275 | Discounted Cash Flow | Market Yield | 7.00% | 19.54% | 9.17% | ||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt | 64,578 | Yield Analysis | Market Yield | 8.03% | 24.78% | 10.92% | ||||||||||||||||||||||||||||||||
Senior Secured Second Lien Debt (c) | 31,387 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt | 2,783 | Waterfall Analysis | EBITDA Multiple | 6.26x | 6.30x | 6.29x | ||||||||||||||||||||||||||||||||
Subordinated Debt (b) | 75,000 | Waterfall Analysis | Tangible Net Asset Value Multiple | 1.65x | 1.65x | 1.65x | ||||||||||||||||||||||||||||||||
Subordinated Debt (b) (c) | 37,963 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
Subordinated Debt (b) | 3,577 | Waterfall Analysis | EBITDA Multiple | 11.12x | 11.12x | 11.12x | ||||||||||||||||||||||||||||||||
Subordinated Debt (b) | 1,537 | Discounted Cash Flow | Discount Rate | 8.75% | 8.75% | 8.75% | ||||||||||||||||||||||||||||||||
| Collateralized Securities | 37,097 | Discounted Cash Flow | Discount Rate | 9.00% | 17.00% | 14.62% | ||||||||||||||||||||||||||||||||
Equity/Other (c) | 89,678 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
Equity/Other (b) | 65,609 | Waterfall Analysis | Tangible Net Asset Value Multiple | 1.65x | 1.65x | 1.65x | ||||||||||||||||||||||||||||||||
| Equity/Other | 26,981 | Waterfall Analysis | Discount Rate | 17.50% | 17.50% | 17.50% | ||||||||||||||||||||||||||||||||
| Equity/Other | 15,209 | Waterfall Analysis | EBITDA Multiple | 2.75x | 12.00x | 7.01x | ||||||||||||||||||||||||||||||||
| Equity/Other | 13,204 | Discounted Cash Flow | Discount Rate | 8.75% | 12.50% | 11.23% | ||||||||||||||||||||||||||||||||
| Equity/Other | 3,030 | Waterfall Analysis | Revenue Multiple | 0.15x | 2.70x | 2.58x | ||||||||||||||||||||||||||||||||
Equity/Other (b) | 2,676 | Waterfall Analysis | TBV Multiple | 5.50x | 5.50x | 5.50x | ||||||||||||||||||||||||||||||||
| Equity/Other | 2,057 | Discounted Cash Flow | Market Yield | 9.75% | 12.54% | 11.48% | ||||||||||||||||||||||||||||||||
FBLC Senior Loan Fund, LLC (b) | 304,934 | Discounted Cash Flow | Discount Rate | 13.03% | 13.03% | 13.03% | ||||||||||||||||||||||||||||||||
| Total | $ | 2,676,891 | ||||||||||||||||||||||||||||||||||||
______________
(a)Weighted averages are calculated based on fair value of investments.
(b)This asset category contains one investment.
(c)Investment(s) were valued based on recent or pending transactions expected to close after the valuation date.
There were no significant changes in valuation approach or technique as of December 31, 2021.
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 that are included in this category include investments in privately held entities where the fair value is based on unobservable inputs.
Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.
The income and market approaches were used in the determination of fair value of certain Level 3 assets as of June 30, 2022 and December 31, 2021. The significant unobservable inputs used in the income approach are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates is risk of default, rating of the investment, call provisions and comparable company investments. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market comparable transactions or market multiples would result in an increase or decrease, respectively, in the fair value.
43
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Valuations of loans, corporate debt, and other debt obligations are generally based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market yields and recovery assumptions. The significant inputs are generally determined based on relative value analysis, which incorporate comparisons to other debt instruments for which observable prices or broker quotes are available. Other valuation methodologies are used as appropriate including market comparables, transactions in similar instruments and recovery/liquidation analysis. The Company also considers the use of EBITDA multiples, revenue multiples, tangible net asset value multiples, TBV multiples, and other relevant multiples on its debt and equity investments to determine any credit gains or losses in certain instances. Increases or decreases in either of these inputs in isolation may result in a significantly lower or higher fair value measurement of the respective subject instrument.
As of June 30, 2022, the Company had five portfolio companies on non-accrual with a total amortized cost of $44.7 million and fair value of $10.0 million, which represented 1.6% and 0.4% of the investment portfolio's total amortized cost and fair value, respectively. As of December 31, 2021, the Company had six portfolio companies on non-accrual with a total amortized cost of $42.5 million and fair value of $12.2 million, which represented 1.5%, and 0.4% of the investment portfolio's total amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - for additional details regarding the Company’s non-accrual policy.
44
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
FBLC Senior Loan Fund, LLC
On January 20, 2021, FBLC and Cliffwater Corporate Lending Fund (“CCLF”) formed a joint venture, FBLC Senior Loan Fund, LLC (the “SLF”), that invests primarily in senior secured loans, and to a lesser extent may invest in mezzanine loans, unsecured loans and equity of predominantly private U.S. middle-market companies. SLF was formed as a Delaware limited liability company and is not consolidated by FBLC for financial reporting purposes. FBLC provides capital to SLF in the form of LLC equity interests. At formation, FBLC and CCLF owned 87.5% and 12.5%, respectively, of the LLC equity interests of SLF. As of June 30, 2022 and December 31, 2021, FBLC and CCLF owned 79.8% and 20.2%, respectively, of the LLC equity interests of SLF. Profit and loss are allocated based on each members' ownership percentage of the joint venture's net asset value. SLF has an Administrative and Loan Services Agreement with BSP, an affiliate of the Company, pursuant to which BSP provides certain operational and valuation services for SLF's investments; as well as certain agreements with third-party service providers. FBLC and CCLF each appoint two members to SLF's four-person board of members. All material decisions with respect to SLF, including those involving its investment portfolio, require unanimous approval of a quorum of the board of members. Quorum is defined as (i) the presence of two members of the board of members; provided that at least one individual is present that was elected, designated or appointed by each member; (ii) the presence of three members of the board of members; provided that the individual that was elected, designated or appointed by the member with only one individual present shall be entitled to cast two votes on each matter; and (iii) the presence of four members of the board of members; provided that two individuals are present that were elected, designated or appointed by each member.
As part of the initial contribution to SLF, FBLC contributed $751.8 million of assets, including $664.2 million of investments and $42.4 million of cash, as well as $446.9 million worth of liabilities, including the Citi Credit Facility (as defined in Note 5) debt of $344.4 million in exchange for $304.9 million of equity in SLF. As of June 30, 2022 and December 31, 2021, FBLC’s investment in SLF consisted of equity contributions of $304.9 million. FBLC’s investment in SLF is classified as “Equity/Other” on the Consolidated Schedule of Investments, and other disclosures unless otherwise indicated. Subsequent to the initial contribution, FBLC may sell investments to SLF. For the three and six months ended June 30, 2022, FBLC had not sold any investments to SLF. For the year ended December 31, 2021, FBLC had sold $322.7 million of investments to SLF. As of June 30, 2022, $0.2 million of net accounts payable relates to investments sold by FBLC to SLF, which is reflected on the Consolidated Statements of Assets and Liabilities. As of December 31, 2021, $0.1 million of net accounts receivable relates to investments sold by FBLC to SLF, which is reflected on the Consolidated Statements of Assets and Liabilities.
Below is a summary of SLF’s portfolio as of June 30, 2022 and December 31, 2021. A listing of the individual investments in SLF’s portfolio as of such dates can be found below:
| June 30, 2022 | December 31, 2021 | |||||||||||||
| Total assets | $ | 1,069,210 | $ | 1,195,960 | ||||||||||
Total investments (1) | $ | 971,257 | $ | 1,088,337 | ||||||||||
Weighted Average Current Yield for Total Portfolio (2) | 7.1 | % | 5.4 | % | ||||||||||
| Number of Portfolio companies in SLF | 174 | 172 | ||||||||||||
Largest portfolio company investment (1) | $ | 20,558 | $ | 27,965 | ||||||||||
Total of five largest portfolio company investments (1) | $ | 93,622 | $ | 113,297 | ||||||||||
_____________________
(1) At fair value.
(2) Includes the effect of the amortization or accretion of loan premiums or discounts.
SLF may invest in portfolio companies in the same industries in which FBLC directly invests.
Below is a listing of SLF’s individual investments as of June 30, 2022:
June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | ||||||||||||||||||||||||||||||||||||||||||||
| Accentcare, Inc. (b) | Healthcare | L+4.00% (6.08%) | 6/22/2026 | $ | 9,979 | $ | 9,979 | $ | 8,657 | 2.6 | % | |||||||||||||||||||||||||||||||||
| Access Cig, LLC (b) | Business Services | L+3.75% (5.33%) | 2/27/2025 | 4,210 | 4,200 | 3,961 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Acrisure, LLC (b) | Financials | L+3.50% (5.17%) | 2/15/2027 | 20,216 | 19,830 | 18,497 | 5.5 | % | ||||||||||||||||||||||||||||||||||||
| Adtalem Global Education, Inc. | Education | 5.50% | 3/1/2028 | 1,042 | 1,042 | 936 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
45
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| Adtalem Global Education, Inc. (f) | Education | L+4.00% (5.60%) | 8/11/2028 | $ | 1,034 | $ | 1,034 | $ | 984 | 0.3 | % | |||||||||||||||||||||||||||||||||
| Advisor Group, Inc. (f) | Financials | L+4.50% (6.17%) | 7/31/2026 | 7,863 | 7,863 | 7,466 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| Alchemy US Holdco 1, LLC (b) | Industrials | L+5.50% (7.17%) | 10/10/2025 | 15,555 | 15,426 | 14,865 | 4.4 | % | ||||||||||||||||||||||||||||||||||||
| Altice Financing, SA | Telecom | 5.00% | 1/15/2028 | 2,000 | 1,932 | 1,585 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Alvogen Pharma US, Inc. (b) | Healthcare | L+5.25% (7.50%) | 12/31/2023 | 12,177 | 12,098 | 10,911 | 3.3 | % | ||||||||||||||||||||||||||||||||||||
| Amentum Government Services Holdings, LLC (f) | Industrials | L+3.75% (5.42%) | 1/29/2027 | 1,980 | 1,969 | 1,880 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Amentum Government Services Holdings, LLC (b) | Industrials | S+4.00% (4.78%) | 2/15/2029 | 5,000 | 4,930 | 4,750 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| American Airlines Inc/AAdvantage Loyalty IP, Ltd. (b) | Transportation | L+4.75% (5.81%) | 4/20/2028 | 8,316 | 8,244 | 7,918 | 2.4 | % | ||||||||||||||||||||||||||||||||||||
| American Rock Salt Company, LLC (f) | Chemicals | L+4.00% (5.67%) | 6/9/2028 | 4,753 | 4,754 | 4,278 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| AmWINS Group, Inc. (f) | Financials | L+2.25% (3.92%) | 2/19/2028 | 4,950 | 4,890 | 4,666 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| AP Gaming I, LLC (f) | Gaming/Lodging | S+4.00% (6.20%) | 2/9/2029 | 7,448 | 7,323 | 7,094 | 2.1 | % | ||||||||||||||||||||||||||||||||||||
| Apollo Commercial Real Estate Finance, Inc. | Financials | 4.63% | 6/15/2029 | 3,000 | 3,000 | 2,221 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| AppLovin Corp. (b) | Media/Entertainment | L+3.00% (5.25%) | 10/25/2028 | 8,978 | 8,958 | 8,501 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Artera Services, LLC (f) | Utilities | L+3.50% (5.75%) | 3/6/2025 | 2,475 | 2,463 | 1,950 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Ascensus Holidngs, Inc. (b) | Business Services | L+3.50% (5.81%) | 8/2/2028 | 7,960 | 7,955 | 7,403 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| Astoria Energy, LLC (f) | Utilities | L+3.50% (5.17%) | 12/10/2027 | 1,949 | 1,949 | 1,831 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Astro AB Merger Sub, Inc. (f) | Financials | L+4.25% (6.50%) | 4/30/2024 | 3,823 | 3,821 | 3,792 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Asurion, LLC (b) | Business Services | L+3.25% (4.92%) | 12/23/2026 | 4,950 | 4,876 | 4,476 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Athenahealth, Inc. (b) | Healthcare | S+3.50% (5.01%) | 2/15/2029 | 12,484 | 12,424 | 11,462 | 3.4 | % | ||||||||||||||||||||||||||||||||||||
| Athletico Management, LLC (f) | Healthcare | S+4.25% (5.16%) | 2/15/2029 | 5,000 | 4,976 | 4,734 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Avaya Holdings Corp. (b) | Technology | L+4.00% (5.32%) | 12/15/2027 | 12,475 | 12,475 | 9,419 | 2.8 | % | ||||||||||||||||||||||||||||||||||||
| Avis Budget Car Rental, LLC (b) | Transportation | S+3.50% (5.13%) | 3/8/2029 | 4,988 | 4,843 | 4,763 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Bally's Corp. (b) | Gaming/Lodging | L+3.25% (4.37%) | 10/2/2028 | 2,716 | 2,692 | 2,515 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| BBB Industries, LLC (b) | Transportation | L+4.50% (6.17%) | 8/1/2025 | 11,791 | 11,714 | 11,679 | 3.5 | % | ||||||||||||||||||||||||||||||||||||
| BCP Renaissance, LLC (f) | Energy | L+3.50% (5.17%) | 10/31/2024 | 1,986 | 1,973 | 1,911 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Bella Holding Company, LLC (f) | Healthcare | L+3.75% (5.42%) | 5/10/2028 | 2,966 | 2,941 | 2,772 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Blackstone CQP Holdco, LP (b) | Industrials | L+3.75% (6.00%) | 6/5/2028 | 7,927 | 7,893 | 7,455 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| BMC Software Finance, Inc. (b) | Technology | L+3.75% (5.42%) | 10/2/2025 | 12,674 | 12,702 | 11,777 | 3.5 | % | ||||||||||||||||||||||||||||||||||||
| Bomgar Corp. (f) | Technology | L+4.00% (5.67%) | 4/18/2025 | 3,869 | 3,880 | 3,705 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Cablevision Lightpath, LLC | Telecom | 3.88% | 9/15/2027 | 2,000 | 1,930 | 1,640 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| CareCentrix, Inc. (b) | Healthcare | L+4.50% (6.75%) | 4/3/2025 | 20,558 | 19,949 | 20,558 | 6.1 | % | ||||||||||||||||||||||||||||||||||||
| CDK Global, Inc. (f) | Software/Services | S+4.50% (5.68%) | 6/8/2029 | 2,625 | 2,546 | 2,474 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| CLP Health Services, Inc. (b) | Healthcare | L+4.25% (7.13%) | 12/31/2026 | 12,850 | 12,808 | 12,080 | 3.6 | % | ||||||||||||||||||||||||||||||||||||
| Cnt Holdings I Corp (f) | Consumer | L+3.50% (4.69%) | 11/8/2027 | 3,456 | 3,456 | 3,274 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| CommerceHub, Inc. (f) | Technology | L+4.00% (6.25%) | 12/29/2027 | 9,590 | 9,602 | 8,415 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Community Care Health Network, LLC (b) | Healthcare | L+4.75% (6.42%) | 2/17/2025 | 9,712 | 9,688 | 8,456 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Compass Power Generation, LLC (b) | Utilities | S+4.25% (5.89%) | 4/14/2029 | 4,882 | 4,739 | 4,659 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Connect Finco SARL (f) | Telecom | L+3.50% (5.17%) | 12/11/2026 | 7,500 | 7,521 | 6,881 | 2.1 | % | ||||||||||||||||||||||||||||||||||||
| Connectwise, LLC (f) | Software/Services | L+3.50% (5.75%) | 9/29/2028 | 6,965 | 6,957 | 6,361 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
| Conservice Midco, LLC (b) | Business Services | L+4.25% (5.92%) | 5/13/2027 | 7,661 | 7,674 | 7,552 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| Conterra Ultra Broadband, LLC (b) | Telecom | S+4.75% (6.38%) | 4/30/2026 | 6,676 | 6,676 | 6,676 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Corelogic, Inc. (b) | Business Services | L+3.50% (5.19%) | 6/2/2028 | 7,940 | 7,927 | 6,582 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Directv Financing, LLC (b) | Media/Entertainment | L+5.00% (6.67%) | 8/2/2027 | 4,663 | 4,622 | 4,280 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Dish Dbs Corp. | Cable | 5.25% | 12/1/2026 | 700 | 700 | 549 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| Dish Dbs Corp. | Cable | 5.75% | 12/1/2028 | 1,000 | 1,000 | 740 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
46
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| Division Holding Corp. (b) | Business Services | L+4.75% (6.42%) | 5/27/2028 | $ | 8,695 | $ | 8,705 | $ | 8,152 | 2.4 | % | |||||||||||||||||||||||||||||||||
| Dynasty Acquisition Co., Inc. (e) | Industrials | L+3.50% (5.17%) | 4/6/2026 | 2,810 | 2,656 | 2,583 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Dynasty Acquisition Co., Inc. (e) | Industrials | L+3.50% (5.17%) | 4/6/2026 | 5,226 | 4,940 | 4,805 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Echo Global Logistics, Inc. (b) | Transportation | L+3.50% (5.17%) | 11/23/2028 | 3,322 | 3,315 | 3,089 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| Edelman Financial Services, LLC (b) | Financials | L+3.50% (5.17%) | 4/7/2028 | 1,990 | 1,951 | 1,837 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Edgewater Generation, LLC (b) | Utilities | L+3.75% (5.42%) | 12/13/2025 | 2,440 | 2,427 | 2,062 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Emerald 2, Ltd. (b) | Industrials | L+3.50% (5.17%) | 7/12/2028 | 515 | 513 | 491 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
| Flex Acquisition Company, Inc. (f) | Paper & Packaging | S+4.25% (5.88%) | 3/30/2029 | 2,500 | 2,439 | 2,335 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Florida Food Products, LLC (f) | Food & Beverage | L+5.00% (6.67%) | 10/18/2028 | 7,980 | 7,870 | 7,860 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| Foley Products Co, LLC (b) | Industrials | S+4.75% (6.95%) | 12/29/2028 | 3,192 | 3,161 | 3,136 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| Frontier Communications Corp. | Telecom | 5.00% | 5/1/2028 | 1,240 | 1,298 | 1,061 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Frontier Communications Corp. (b) | Telecom | L+3.75% (6.06%) | 5/1/2028 | 19,327 | 19,313 | 18,042 | 5.4 | % | ||||||||||||||||||||||||||||||||||||
| Geon Performance Solutions, LLC (b) | Chemicals | L+4.50% (6.17%) | 8/18/2028 | 4,682 | 4,651 | 4,661 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Gordian Medical, Inc. (b) | Healthcare | L+6.25% (8.50%) | 1/31/2027 | 11,005 | 10,943 | 10,135 | 3.0 | % | ||||||||||||||||||||||||||||||||||||
| Greeneden U.S. Holdings I, LLC (b) | Software/Services | L+4.00% (5.67%) | 12/1/2027 | 4,915 | 4,819 | 4,686 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| GVC Holdings Gibraltar, Ltd. (f) | Gaming/Lodging | L+2.25% (3.74%) | 3/29/2027 | 4,950 | 4,944 | 4,728 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| HAH Group Holding Company, LLC (b) | Healthcare | S+5.00% (7.21%) | 10/29/2027 | 734 | 734 | 723 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| HAH Group Holding Company, LLC (b) | Healthcare | S+5.00% (7.05%) | 10/29/2027 | 5,798 | 5,725 | 5,711 | 1.7 | % | ||||||||||||||||||||||||||||||||||||
| Hamilton Projects Acquiror, LLC (f) | Utilities | L+4.50% (6.75%) | 6/17/2027 | 5,608 | 5,585 | 5,363 | 1.6 | % | ||||||||||||||||||||||||||||||||||||
| Heartland Dental, LLC (e) | Healthcare | L+3.50% (5.17%) | 4/30/2025 | 4,132 | 3,942 | 3,828 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Hertz Corp. (b) (f) | Transportation | L+3.25% (4.92%) | 6/30/2028 | 4,164 | 4,150 | 3,913 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Hertz Corp. (b) (f) | Transportation | L+3.25% (4.92%) | 6/30/2028 | 793 | 791 | 746 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| HireRight, Inc. (f) | Business Services | L+3.75% (5.42%) | 7/11/2025 | 5,207 | 5,190 | 4,942 | 1.5 | % | ||||||||||||||||||||||||||||||||||||
| Hudson River Trading, LLC (b) | Financials | S+3.00% (4.64%) | 3/20/2028 | 5,419 | 5,354 | 5,055 | 1.5 | % | ||||||||||||||||||||||||||||||||||||
| ICP Industrial, Inc. (f) | Chemicals | L+3.75% (6.00%) | 12/29/2027 | 6,940 | 6,932 | 6,043 | 1.8 | % | ||||||||||||||||||||||||||||||||||||
| IDERA, Inc. (f) | Technology | L+3.75% (5.47%) | 3/2/2028 | 6,948 | 6,957 | 6,387 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
| Ineos Us Finance, LLC (f) | Chemicals | L+2.50% (4.17%) | 11/8/2028 | 3,990 | 3,985 | 3,788 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Intelsat Jackson Holdings, SA | Telecom | S+4.25% (4.92%) | 2/1/2029 | 9,237 | 9,147 | 8,450 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Iri Holdings, Inc. (b) | Business Services | L+4.25% (5.92%) | 12/1/2025 | 7,779 | 7,762 | 7,779 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| Jack Ohio Finance, LLC (f) | Gaming/Lodging | L+4.75% (6.42%) | 10/4/2028 | 3,980 | 3,963 | 3,841 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Jane Street Group, LLC | Financials | 4.50% | 11/15/2029 | 5,000 | 4,855 | 4,398 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Jump Financial, LLC (b) | Financials | S+4.50% (6.82%) | 8/7/2028 | 7,456 | 7,327 | 6,897 | 2.1 | % | ||||||||||||||||||||||||||||||||||||
| Kissner Milling Co., Ltd. | Industrials | 4.88% | 5/1/2028 | 9,000 | 8,878 | 7,486 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| LABL, Inc. (b) | Paper & Packaging | L+5.00% (6.67%) | 10/29/2028 | 3,980 | 3,925 | 3,668 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Lightstone Holdco, LLC (f) | Utilities | S+5.75% (7.02%) | 1/29/2027 | 413 | 366 | 369 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
| Lightstone Holdco, LLC (f) | Utilities | S+5.75% (7.02%) | 1/29/2027 | 7,314 | 6,486 | 6,546 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Liquid Tech Solutions Holdings, LLC (b) (f) | Industrials | L+4.75% (7.00%) | 3/20/2028 | 10,164 | 10,117 | 9,809 | 2.9 | % | ||||||||||||||||||||||||||||||||||||
| Luxembourg Investment Co., 428 SARL (b) | Chemicals | S+5.00% (7.05%) | 1/3/2029 | 3,864 | 3,829 | 3,699 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Madison IAQ, LLC | Industrials | 4.13% | 6/30/2028 | 2,000 | 1,984 | 1,652 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Medallion Midland Acquisition, LP (f) | Energy | L+3.75% (5.42%) | 10/18/2028 | 5,600 | 5,570 | 5,359 | 1.6 | % | ||||||||||||||||||||||||||||||||||||
| MH Sub I, LLC (f) | Business Services | L+3.75% (5.42%) | 9/13/2024 | 8,597 | 8,592 | 8,079 | 2.4 | % | ||||||||||||||||||||||||||||||||||||
| Michael Baker International, LLC (b) | Industrials | L+5.00% (6.67%) | 12/1/2028 | 3,317 | 3,287 | 3,219 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| MicroStrategy, Inc. | Software/Services | 6.13% | 6/15/2028 | 1,500 | 1,500 | 1,193 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Monitronics International, Inc. (b) | Business Services | L+7.50% (8.75%) | 3/29/2024 | 5,480 | 5,314 | 3,544 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| MPH Acquisition Holdings, LLC | Healthcare | 5.50% | 9/1/2028 | 2,000 | 1,991 | 1,783 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| MPH Acquisition Holdings, LLC (b) | Healthcare | L+4.25% (5.83%) | 9/1/2028 | 4,963 | 4,876 | 4,556 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| MYOB US Borrower, LLC (f) | Business Services | L+4.00% (5.67%) | 5/6/2026 | 5,439 | 5,427 | 5,004 | 1.5 | % | ||||||||||||||||||||||||||||||||||||
| Naked Juice, LLC (f) | Food & Beverage | S+3.25% (5.40%) | 1/24/2029 | 1,430 | 1,427 | 1,328 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| National Mentor Holdings, Inc. (f) | Healthcare | L+3.75% (6.01%) | 3/2/2028 | 179 | 178 | 155 | 0.0 | % | ||||||||||||||||||||||||||||||||||||
47
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| National Mentor Holdings, Inc. (b) (f) | Healthcare | L+3.75% (6.01%) | 3/2/2028 | $ | 5,473 | $ | 5,449 | $ | 4,727 | 1.4 | % | |||||||||||||||||||||||||||||||||
| Nexus Buyer, LLC (f) | Business Services | L+3.75% (5.42%) | 11/9/2026 | 4,466 | 4,466 | 4,202 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Nouryon Finance B.V. (e) | Chemicals | L+3.00% (5.25%) | 10/1/2025 | 2,326 | 2,247 | 2,196 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Novae, LLC (f) | Industrials | S+5.00% (5.92%) | 12/22/2028 | 1,111 | 1,111 | 1,050 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Novae, LLC (f) | Industrials | S+5.00% (5.75%) | 12/22/2028 | 3,879 | 3,843 | 3,666 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Pathway Vet Alliance, LLC (b) | Healthcare | L+3.75% (6.00%) | 3/31/2027 | 2,985 | 2,992 | 2,765 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Paysafe Finance, PLC | Software/Services | 4.00% | 6/15/2029 | 400 | 400 | 286 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
| Peabody Energy Corp. (f) | Energy | L+2.75% (4.37%) | 3/31/2025 | 5,565 | 5,276 | 5,160 | 1.5 | % | ||||||||||||||||||||||||||||||||||||
| Peraton Corp. (b) | Industrials | L+3.75% (5.42%) | 2/1/2028 | 2,931 | 2,899 | 2,755 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Perstorp Holding Ab (b) | Chemicals | L+4.75% (6.25%) | 2/27/2026 | 8,732 | 8,331 | 8,552 | 2.6 | % | ||||||||||||||||||||||||||||||||||||
| PG&E Corp. (f) | Utilities | L+3.00% (4.69%) | 6/23/2025 | 10,644 | 10,676 | 10,010 | 3.0 | % | ||||||||||||||||||||||||||||||||||||
| Polaris Newco, LLC (f) | Business Services | L+4.00% (5.67%) | 6/2/2028 | 1,990 | 1,937 | 1,833 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Power Stop, LLC (f) | Transportation | L+4.75% (5.99%) | 1/26/2029 | 3,990 | 3,952 | 3,412 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Project Accelerate Parent, LLC (e) | Technology | L+4.25% (5.92%) | 1/2/2025 | 16,026 | 15,504 | 15,825 | 4.7 | % | ||||||||||||||||||||||||||||||||||||
| Proofpoint, Inc. (b) | Software/Services | L+3.25% (4.83%) | 8/31/2028 | 6,470 | 6,424 | 5,999 | 1.8 | % | ||||||||||||||||||||||||||||||||||||
| Protective Industrial Products, Inc. (b) | Industrials | L+4.00% (5.67%) | 12/29/2027 | 9,081 | 9,045 | 8,925 | 2.7 | % | ||||||||||||||||||||||||||||||||||||
| Pug, LLC (f) | Technology | L+3.50% (5.17%) | 2/12/2027 | 4,937 | 4,829 | 4,443 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Quikrete Holdings, Inc. (f) | Industrials | L+3.00% (4.67%) | 6/11/2028 | 7,980 | 7,940 | 7,511 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| Regionalcare Hospital Partners Holdings, Inc. | Healthcare | 4.38% | 2/15/2027 | 2,000 | 2,000 | 1,752 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Regionalcare Hospital Partners Holdings, Inc. (b) | Healthcare | L+3.75% (5.42%) | 11/16/2025 | 5,195 | 5,212 | 4,832 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Renaissance Learning, Inc. (f) | Software/Services | S+4.50% (5.58%) | 3/30/2029 | 2,000 | 1,942 | 1,905 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| RXB Holdings, Inc. (f) | Healthcare | L+4.50% (6.61%) | 12/20/2027 | 10,154 | 10,187 | 9,342 | 2.8 | % | ||||||||||||||||||||||||||||||||||||
| S&S Holdings, LLC (f) | Consumer | L+5.00% (6.75%) | 3/11/2028 | 6,913 | 6,736 | 6,913 | 2.1 | % | ||||||||||||||||||||||||||||||||||||
| Safe Fleet Holdings, LLC (b) | Industrials | S+3.75% (4.77%) | 2/17/2029 | 7,481 | 7,444 | 6,954 | 2.1 | % | ||||||||||||||||||||||||||||||||||||
| Safety Products/JHC Acquisition Corp. (b) | Industrials | L+4.50% (6.17%) | 6/28/2026 | 934 | 890 | 887 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Safety Products/JHC Acquisition Corp. (b) | Industrials | L+4.50% (6.17%) | 6/28/2026 | 17,271 | 16,544 | 16,408 | 4.9 | % | ||||||||||||||||||||||||||||||||||||
| Schenectady International Group, Inc. (b) | Chemicals | L+4.75% (6.01%) | 10/15/2025 | 19,911 | 19,808 | 18,169 | 5.4 | % | ||||||||||||||||||||||||||||||||||||
| SCIH Salt Holdings, Inc. (f) | Industrials | L+4.00% (4.75%) | 3/16/2027 | 3,712 | 3,686 | 3,304 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| SFR Group, SA (b) (e) | Telecom | L+4.00% (5.41%) | 8/14/2026 | 12,640 | 12,335 | 11,522 | 3.4 | % | ||||||||||||||||||||||||||||||||||||
| Sierra Acquisition, Inc. (b) | Food & Beverage | L+4.00% (5.67%) | 11/11/2024 | 4,877 | 4,719 | 4,657 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Sophia, LP (f) | Software/Services | L+3.25% (5.50%) | 10/7/2027 | 2,989 | 2,991 | 2,781 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Spirit Aerosystems, Inc. (b) | Industrials | L+3.75% (5.42%) | 1/15/2025 | 2,542 | 2,567 | 2,473 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| SSH Group Holdings, Inc. (e) | Education | L+4.25% (6.50%) | 7/30/2025 | 10,464 | 9,730 | 9,716 | 2.9 | % | ||||||||||||||||||||||||||||||||||||
| Staples, Inc. (b) | Business Services | L+5.00% (6.29%) | 4/16/2026 | 4,924 | 4,877 | 4,269 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Station Casinos, LLC (f) | Gaming/Lodging | L+2.25% (3.92%) | 2/8/2027 | 2,266 | 2,256 | 2,127 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Team Health Holdings, Inc. (e) (f) | Healthcare | S+5.25% (6.78%) | 3/2/2027 | 5,464 | 5,105 | 4,569 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Tecta America Corp. (f) | Industrials | L+4.25% (5.92%) | 4/10/2028 | 8,999 | 8,977 | 8,392 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Tenneco, Inc. (e) | Transportation | L+3.00% (4.67%) | 10/1/2025 | 2,954 | 2,802 | 2,836 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| The Dun & Bradstreet Corp. (f) | Business Services | L+3.25% (4.87%) | 2/6/2026 | 4,839 | 4,856 | 4,556 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| TransDigm, Inc. (f) | Industrials | L+2.25% (3.92%) | 12/9/2025 | 2,955 | 2,940 | 2,799 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Traverse Midstream Partners, LLC (b) | Energy | S+4.25% (5.95%) | 9/27/2024 | 14,532 | 14,511 | 13,830 | 4.1 | % | ||||||||||||||||||||||||||||||||||||
| Triton Water Holdings, Inc. (f) | Food & Beverage | L+3.50% (5.75%) | 3/31/2028 | 7,425 | 7,410 | 6,547 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Truck Hero, Inc. (f) | Transportation | L+3.50% (5.17%) | 1/31/2028 | 1,481 | 1,478 | 1,321 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| TSL Engineered Products, LLC (b) | Industrials | S+4.75% (6.38%) | 1/7/2028 | 7,818 | 7,752 | 7,818 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| United Airlines, Inc. (f) | Transportation | L+3.75% (5.39%) | 4/21/2028 | 3,775 | 3,764 | 3,506 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| University Support Services, LLC (f) | Education | L+3.25% (4.92%) | 2/10/2029 | 4,975 | 4,958 | 4,677 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
48
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| Urban One, Inc. | Media/Entertainment | 7.38% | 2/1/2028 | $ | 6,000 | $ | 6,182 | $ | 5,138 | 1.5 | % | |||||||||||||||||||||||||||||||||
| Venga Finance Sarl (b) | Telecom | L+4.75% (6.71%) | 12/4/2028 | 4,000 | 3,880 | 3,807 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Veritext Corp. (f) | Business Services | L+3.25% (4.26%) | 8/1/2025 | 3,476 | 3,440 | 3,294 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Virgin Media Bristol, LLC (f) | Telecom | L+3.25% (4.57%) | 1/31/2029 | 2,500 | 2,497 | 2,390 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Vyaire Medical, Inc. (f) | Healthcare | L+4.75% (5.75%) | 4/16/2025 | 7,392 | 6,357 | 5,623 | 1.7 | % | ||||||||||||||||||||||||||||||||||||
| WaterBridge Midstream Operating, LLC (b) | Energy | L+5.75% (7.39%) | 6/22/2026 | 8,698 | 7,888 | 8,201 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Watlow Electric Manufacturing Co. (b) | Industrials | L+3.75% (5.42%) | 3/2/2028 | 9,426 | 9,383 | 8,797 | 2.6 | % | ||||||||||||||||||||||||||||||||||||
| Western Dental Services, Inc. (f) | Healthcare | L+4.50% (5.28%) | 8/18/2028 | 9,029 | 9,024 | 8,392 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Western Dental Services, Inc. (f) | Healthcare | L+4.50% (6.17%) | 8/18/2028 | 894 | 894 | 831 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| Wilsonart, LLC (b) | Consumer | L+3.25% (5.51%) | 12/31/2026 | 7,412 | 7,408 | 6,546 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| YI, LLC (e) | Healthcare | L+4.00% (5.67%) | 11/7/2024 | 8,927 | 8,614 | 8,838 | 2.6 | % | ||||||||||||||||||||||||||||||||||||
| Subtotal Senior Secured First Lien Debt | $ | 906,300 | $ | 851,003 | 253.9 | % | ||||||||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt | ||||||||||||||||||||||||||||||||||||||||||||
| American Rock Salt Company, LLC (b) | Chemicals | L+7.25% (8.92%) | 6/11/2029 | $ | 1,943 | $ | 1,924 | $ | 1,858 | 0.6 | % | |||||||||||||||||||||||||||||||||
| Asurion, LLC (b) | Business Services | L+5.25% (6.92%) | 1/31/2028 | 7,632 | 7,603 | 6,487 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
| Barracuda Networks, Inc. (b) | Software/Services | L+6.75% (7.99%) | 10/30/2028 | 3,540 | 3,559 | 3,540 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. | Media/Entertainment | L+8.00% (10.23%) 7.00% PIK | 11/24/2027 | 5,270 | 5,253 | 5,146 | 1.5 | % | ||||||||||||||||||||||||||||||||||||
| Edelman Financial Services, LLC (b) (e) | Financials | L+6.75% (8.42%) | 7/20/2026 | 7,972 | 7,607 | 7,257 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| IDERA, Inc. (b) (e) | Technology | L+6.75% (7.82%) | 3/2/2029 | 1,545 | 1,504 | 1,518 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Tecta America Corp. (b) | Industrials | L+8.50% (10.17%) | 4/9/2029 | 4,998 | 4,973 | 4,998 | 1.5 | % | ||||||||||||||||||||||||||||||||||||
| TIBCO Software, Inc. (b) | Technology | L+7.25% (8.31%) | 3/3/2028 | 13,020 | 13,161 | 12,740 | 3.8 | % | ||||||||||||||||||||||||||||||||||||
| Subtotal Senior Secured Second Lien Debt | $ | 45,584 | $ | 43,544 | 13.0 | % | ||||||||||||||||||||||||||||||||||||||
| Collateralized Securities | ||||||||||||||||||||||||||||||||||||||||||||
| Collateralized Securities - Debt Investments | ||||||||||||||||||||||||||||||||||||||||||||
| AIG CLO, Ltd. 21-1A F | Diversified Investment Vehicles | L+6.90% (8.04%) | 4/22/2034 | $ | 1,410 | $ | 1,288 | $ | 1,054 | 0.3 | % | |||||||||||||||||||||||||||||||||
| Battalion CLO, Ltd. 21-17A F | Diversified Investment Vehicles | L+7.50% (8.56%) | 3/9/2034 | 1,224 | 1,135 | 935 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Carlyle GMS CLO, 16-3A FRR | Diversified Investment Vehicles | L+8.60% (9.66%) | 7/20/2034 | 2,100 | 1,988 | 1,646 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Covenant Credit Partners CLO, Ltd. 17 1A E | Diversified Investment Vehicles | L+6.45% (7.49%) | 10/15/2029 | 2,500 | 2,288 | 2,094 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Eaton Vance CDO, Ltd. 15-1A FR | Diversified Investment Vehicles | L+7.97% (9.03%) | 1/20/2030 | 2,000 | 1,747 | 1,565 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Elevation CLO, Ltd. 13-1A D2 | Diversified Investment Vehicles | L+7.65% (9.06%) | 8/15/2032 | 2,000 | 1,962 | 1,824 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Fortress Credit BSL, Ltd. 22-1A E | Diversified Investment Vehicles | S+8.15% (9.27%) | 10/23/2034 | 1,000 | 980 | 948 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Great Lakes CLO, Ltd. 21-6A E (f) | Diversified Investment Vehicles | L+8.03% (9.07%) | 1/15/2034 | 5,150 | 4,953 | 4,464 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Greywolf CLO, Ltd. 20-3RA ER | Diversified Investment Vehicles | S+9.00% (9.91%) | 4/15/2033 | 1,000 | 876 | 819 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| Hayfin Kingsland XI, Ltd. 19-2A ER | Diversified Investment Vehicles | L+7.72% (8.78%) | 10/20/2034 | 2,500 | 2,428 | 2,165 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Highbridge Loan Management, Ltd. 11A-17 E (f) | Diversified Investment Vehicles | L+6.10% (7.51%) | 5/6/2030 | 3,000 | 2,703 | 2,598 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
49
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
June 30, 2022 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| Jamestown CLO, Ltd. 22-18A E | Diversified Investment Vehicles | S+7.87% (9.40%) | 7/25/2035 | $ | 3,000 | $ | 2,730 | $ | 2,740 | 0.8 | % | |||||||||||||||||||||||||||||||||
| KKR Financial CLO, Ltd. 15 FR | Diversified Investment Vehicles | L+8.50% (9.54%) | 1/18/2032 | 2,000 | 1,896 | 1,592 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| LCM, Ltd. Partnership 16A ER2 (f) | Diversified Investment Vehicles | L+6.38% (7.42%) | 10/15/2031 | 2,500 | 2,288 | 2,174 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Marble Point CLO, Ltd. 20-1A E (f) | Diversified Investment Vehicles | L+6.82% (7.88%) | 4/20/2033 | 4,500 | 4,404 | 3,975 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Medalist Partners Corporate Finance CLO, Ltd. 21-1A D (f) | Diversified Investment Vehicles | L+7.48% (8.54%) | 10/20/2034 | 3,000 | 2,857 | 2,543 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Northwoods Capital, Ltd. 17-15A ER | Diversified Investment Vehicles | L+7.64% (9.74%) | 6/20/2034 | 3,000 | 2,921 | 2,617 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Ocean Trails CLO 22-12A E | Diversified Investment Vehicles | S+8.11% (9.98%) | 7/20/2035 | 3,460 | 3,184 | 3,115 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| OCP CLO, Ltd. 14-5A DR (f) | Diversified Investment Vehicles | L+5.70% (6.91%) | 4/26/2031 | 2,200 | 2,083 | 1,830 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| OZLM, Ltd. 16-15A DR (f) | Diversified Investment Vehicles | L+6.75% (7.81%) | 4/20/2033 | 2,000 | 1,907 | 1,611 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Palmer Square CLO, Ltd. 21-4A F | Diversified Investment Vehicles | L+7.66% (8.70%) | 10/15/2034 | 1,500 | 1,429 | 1,160 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Regatta II Funding, LP 13-2A DR2 (f) | Diversified Investment Vehicles | L+6.95% (7.99%) | 1/15/2029 | 2,000 | 1,928 | 1,720 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Saranac CLO, Ltd. 20-8A E | Diversified Investment Vehicles | L+8.12% (9.60%) | 2/20/2033 | 1,455 | 1,441 | 1,303 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Sculptor CLO, Ltd. 27A E | Diversified Investment Vehicles | L+7.05% (8.11%) | 7/20/2034 | 1,500 | 1,459 | 1,239 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Sound Point CLO, Ltd. 17-1A E (f) | Diversified Investment Vehicles | L+5.96% (7.14%) | 1/23/2029 | 4,000 | 3,611 | 3,502 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Sound Point CLO, Ltd. 17-2A E (f) | Diversified Investment Vehicles | L+6.10% (7.28%) | 7/25/2030 | 2,400 | 2,079 | 2,015 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Sound Point CLO, Ltd. 18-3A D (f) | Diversified Investment Vehicles | L+5.79% (7.00%) | 10/26/2031 | 1,000 | 902 | 803 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| Symphony CLO, Ltd. 2012-9A ER2 (f) | Diversified Investment Vehicles | L+6.95% (7.99%) | 7/16/2032 | 3,000 | 2,776 | 2,644 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Trimaran CAVU 2021-2A, Ltd. 21-2A E (f) | Diversified Investment Vehicles | L+7.20% (8.38%) | 10/25/2034 | 3,000 | 2,944 | 2,609 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Trysail CLO, Ltd. 21-1A E | Diversified Investment Vehicles | L+7.38% (8.44%) | 7/20/2032 | 1,500 | 1,447 | 1,308 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Venture CDO, Ltd. 16-23A ER2 (f) | Diversified Investment Vehicles | L+7.55% (8.59%) | 7/19/2034 | 3,000 | 2,915 | 2,597 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Venture CDO, Ltd. 16-25A E (f) | Diversified Investment Vehicles | L+7.20% (8.26%) | 4/20/2029 | 2,000 | 1,946 | 1,708 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Venture CDO, Ltd. 20-39A E | Diversified Investment Vehicles | L+7.63% (8.67%) | 4/15/2033 | 4,995 | 4,963 | 4,466 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Venture CLO 43, Ltd. 21-43A E (f) | Diversified Investment Vehicles | L+7.15% (8.19%) | 4/15/2034 | 3,000 | 2,916 | 2,609 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Wind River CLO, Ltd. 14-2A FR | Diversified Investment Vehicles | L+7.87% (8.91%) | 1/15/2031 | 3,000 | 2,513 | 2,138 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Zais CLO 13, Ltd. 19-13A D1 (f) | Diversified Investment Vehicles | L+4.52% (5.56%) | 7/15/2032 | 3,000 | 2,732 | 2,580 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Subtotal Collateralized Securities | $ | 84,619 | $ | 76,710 | 22.9 | % | ||||||||||||||||||||||||||||||||||||||
| TOTAL INVESTMENTS | $ | 1,036,503 | $ | 971,257 | 289.8 | % | ||||||||||||||||||||||||||||||||||||||
______________
(a)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L"), Secured Overnight Financing Rate ("SOFR" or "S"), or Prime ("P") and which reset daily, monthly, quarterly, or semiannually. For each, SLF has provided the spread over the relevant reference rate and the current
50
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
interest rate in effect at June 30, 2022. Certain investments are subject to reference rate floors. For fixed rate loans, a spread above a reference rate is not applicable. For floating rate securities the all-in rate is disclosed within parentheses.
(b)SLF's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(c)Percentages are based on SLF members' capital as of June 30, 2022.
(d)SLF has various unfunded commitments to portfolio companies.
(e)SLF's investment or a portion thereof is held through a total return swap with J.P. Morgan.
(f)SLF's investment or a portion thereof is pledged as collateral under a credit facility with CIBC. Individual investments can be divided into parts which are pledged to separate credit facilities.
SLF had $2.1 million of unfunded commitments on delayed draw term loans as of June 30, 2022.
Below is a listing of SLF’s individual investments as of December 31, 2021:
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| Senior Secured First Lien Debt | ||||||||||||||||||||||||||||||||||||||||||||
| ABC Financial Intermediate, LLC (e) | Technology | L+4.25% (5.25%) | 1/2/2025 | $ | 19,109 | $ | 19,038 | $ | 19,014 | 4.8 | % | |||||||||||||||||||||||||||||||||
| Accentcare, Inc. (b) | Healthcare | L+4.00% (4.18%) | 6/22/2026 | 10,030 | 10,030 | 9,976 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Access Cig, LLC (b) | Business Services | L+3.75% (3.84%) | 2/27/2025 | 4,233 | 4,220 | 4,200 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Acrisure, LLC (b) (f) | Financials | L+3.50% (3.72%) | 2/16/2027 | 28,319 | 27,836 | 27,965 | 7.0 | % | ||||||||||||||||||||||||||||||||||||
| Adtalem Global Education, Inc. | Education | 5.50% | 3/1/2028 | 2,000 | 2,000 | 1,959 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Adtalem Global Education, Inc. (f) | Education | L+4.50% (5.25%) | 8/12/2028 | 2,000 | 2,000 | 2,003 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Advisor Group, Inc. (f) | Financials | L+4.50% (4.60%) | 7/31/2026 | 7,903 | 7,902 | 7,925 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Alchemy US Holdco 1, LLC (b) | Industrials | L+5.50% (5.60%) | 10/10/2025 | 15,555 | 15,403 | 15,555 | 3.9 | % | ||||||||||||||||||||||||||||||||||||
| Alvogen Pharma US, Inc. (b) | Healthcare | L+5.25% (6.25%) | 12/29/2023 | 12,497 | 12,388 | 11,935 | 3.0 | % | ||||||||||||||||||||||||||||||||||||
| Amentum Government Services Holdings, LLC (f) | Industrials | L+3.50% (3.60%) | 2/1/2027 | 1,990 | 1,978 | 1,956 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| American Airlines Inc/AAdvantage Loyalty IP, Ltd. (b) | Transportation | L+4.75% (5.50%) | 4/20/2028 | 6,316 | 6,259 | 6,534 | 1.6 | % | ||||||||||||||||||||||||||||||||||||
| American Rock Salt Company, LLC (f) | Chemicals | L+4.00% (4.75%) | 6/9/2028 | 4,777 | 4,780 | 4,759 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| AmWINS Group, Inc. (f) | Financials | L+2.25% (3.00%) | 2/22/2028 | 4,975 | 4,909 | 4,933 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| AP Gaming I, LLC (f) | Gaming/Lodging | L+3.50% (4.50%) | 2/15/2024 | 7,467 | 7,327 | 7,410 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
| APLP Holdings, LP (b) | Utilities | L+3.75% (4.75%) | 5/14/2027 | 3,245 | 3,215 | 3,265 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Apollo Commercial Real Estate Finance, Inc. | Financials | 4.63% | 6/15/2029 | 3,000 | 3,000 | 2,922 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| AppLovin Corp. (b) | Media/Entertainment | L+3.00% (3.50%) | 10/25/2028 | 8,978 | 8,955 | 8,953 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| Artera Services, LLC (f) | Utilities | L+3.50% (4.50%) | 3/6/2025 | 2,488 | 2,473 | 2,404 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Ascensus Holidngs, Inc. (b) | Business Services | L+3.50% (4.00%) | 8/2/2028 | 5,000 | 4,982 | 4,974 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Asp Navigate Acquisition Corp. (f) | Healthcare | L+4.50% (5.50%) | 10/6/2027 | 3,276 | 3,284 | 3,276 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Astoria Energy, LLC (f) | Utilities | L+3.50% (4.50%) | 12/10/2027 | 1,985 | 1,985 | 1,976 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Astro AB Merger Sub, Inc. (f) | Financials | L+4.25% (5.25%) | 4/30/2024 | 3,902 | 3,898 | 3,907 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Asurion, LLC (b) | Business Services | L+3.25% (3.35%) | 12/23/2026 | 4,975 | 4,892 | 4,938 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Athenahealth, Inc. (e) | Healthcare | L+4.25% (4.38%) | 2/11/2026 | 14,233 | 14,197 | 14,219 | 3.6 | % | ||||||||||||||||||||||||||||||||||||
| Avaya Holdings Corp. (b) | Technology | L+4.00% (4.11%) | 12/15/2027 | 17,770 | 17,770 | 17,743 | 4.5 | % | ||||||||||||||||||||||||||||||||||||
| Aveanna Healthcare, LLC | Healthcare | L+3.75% (4.25%) | 7/17/2028 | 5,465 | 5,457 | 5,432 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Bally's Corp. (b) | Gaming/Lodging | L+3.25% (3.75%) | 10/2/2028 | 2,730 | 2,704 | 2,729 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| BBB Industries, LLC (b) | Transportation | L+4.50% (4.60%) | 8/1/2025 | 12,855 | 12,754 | 12,855 | 3.2 | % | ||||||||||||||||||||||||||||||||||||
| BCP Raptor, LLC (b) | Energy | L+4.25% (5.25%) | 6/24/2024 | 13,604 | 12,835 | 13,572 | 3.4 | % | ||||||||||||||||||||||||||||||||||||
51
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| BCP Renaissance, LLC (f) | Energy | L+3.50% (4.50%) | 10/31/2024 | $ | 5,896 | $ | 5,852 | $ | 5,880 | 1.5 | % | |||||||||||||||||||||||||||||||||
| Beasley Mezzanine Holdings, LLC | Broadcasting | 8.63% | 2/1/2026 | 2,174 | 2,225 | 2,151 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Bella Holding Company, LLC (f) | Healthcare | L+3.75% (4.50%) | 5/10/2028 | 7,481 | 7,411 | 7,469 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
| Blackstone CQP Holdco, LP (f) | Industrials | L+3.75% (4.25%) | 6/5/2028 | 7,967 | 7,931 | 7,944 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| BMC Software Finance, Inc. (b) | Technology | L+3.75% (3.97%) | 10/2/2025 | 12,748 | 12,782 | 12,659 | 3.2 | % | ||||||||||||||||||||||||||||||||||||
| Bomgar Corp. (f) | Technology | L+4.00% (4.10%) | 4/18/2025 | 1,922 | 1,926 | 1,916 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| CareCentrix, Inc. (b) | Healthcare | L+4.50% (4.72%) | 4/3/2025 | 20,845 | 20,127 | 20,715 | 5.2 | % | ||||||||||||||||||||||||||||||||||||
| Clover Technologies Group, LLC (e) | Industrials | L+7.50% (8.50%) | 2/5/2024 | 1,445 | 1,375 | 1,369 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| CLP Health Services, Inc. (b) | Healthcare | L+4.25% (5.00%) | 12/31/2026 | 12,915 | 12,867 | 12,882 | 3.2 | % | ||||||||||||||||||||||||||||||||||||
| Cnt Holdings I Corp (f) | Consumer | L+3.50% (4.25%) | 11/8/2027 | 3,474 | 3,474 | 3,473 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| CommerceHub, Inc. (f) | Technology | L+4.00% (4.75%) | 12/29/2027 | 7,639 | 7,649 | 7,551 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
| Community Care Health Network, LLC (b) | Healthcare | L+4.75% (4.85%) | 2/17/2025 | 9,755 | 9,726 | 9,368 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| Compass Power Generation, LLC (f) | Utilities | L+3.50% (4.50%) | 12/20/2024 | 4,777 | 4,765 | 4,753 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Connect Finco SARL (f) | Telecom | L+3.50% (4.50%) | 12/11/2026 | 7,538 | 7,560 | 7,534 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
| Connectwise, LLC (f) | Software/Services | L+3.50% (4.00%) | 9/29/2028 | 4,000 | 3,980 | 3,986 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Conservice Midco, LLC (b) | Business Services | L+4.25% (4.47%) | 5/13/2027 | 7,700 | 7,713 | 7,679 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
| CONSOL Energy, Inc. (b) | Energy | L+4.50% (4.60%) | 9/27/2024 | 3,612 | 3,328 | 3,502 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| Conterra Ultra Broadband, LLC (b) | Telecom | L+4.75% (5.75%) | 4/30/2026 | 6,710 | 6,710 | 6,710 | 1.7 | % | ||||||||||||||||||||||||||||||||||||
| Corelogic, Inc. (b) | Business Services | L+3.50% (4.00%) | 6/2/2028 | 7,980 | 7,965 | 7,964 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| CVENT, Inc. (e) | Technology | L+3.75% (3.83%) | 11/29/2024 | 2,700 | 2,628 | 2,695 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Dealer Tire, LLC (e) | Retail | L+4.25% (4.33%) | 12/12/2025 | 3,952 | 3,927 | 3,946 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Directv Financing, LLC (b) | Media/Entertainment | L+5.00% (5.75%) | 8/2/2027 | 4,888 | 4,842 | 4,889 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Dish DBS Corp. | Cable | 5.25% | 12/1/2026 | 700 | 700 | 711 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| Dish DBS Corp. | Cable | 5.75% | 12/1/2028 | 1,000 | 1,000 | 1,009 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Division Holding Corp. (b) | Business Services | L+4.75% (5.50%) | 5/26/2028 | 8,739 | 8,749 | 8,745 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| Dunn Paper, Inc. (b) | Paper & Packaging | L+5.25% (6.25%) | 8/26/2022 | 578 | 562 | 555 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
| Dynasty Acquisition Co., Inc. (e) | Industrials | L+3.50% (3.63%) | 4/6/2026 | 2,824 | 2,736 | 2,743 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Dynasty Acquisition Co., Inc. (e) | Industrials | L+3.50% (3.63%) | 4/6/2026 | 5,253 | 5,089 | 5,102 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Echo Global Logistics, Inc. (b) | Transportation | L+3.75% (4.25%) | 11/23/2028 | 3,330 | 3,322 | 3,313 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Edgewater Generation, LLC (b) | Utilities | L+3.75% (3.85%) | 12/12/2025 | 2,491 | 2,476 | 2,349 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Emerald 2, Ltd. (b) | Industrials | L+3.25% (3.47%) | 7/12/2028 | 518 | 515 | 514 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
| Fastlane Parent Co, Inc. (b) | Transportation | L+4.50% (4.60%) | 2/4/2026 | 1,569 | 1,569 | 1,567 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Flex Acquisition Company, Inc. (f) | Paper & Packaging | L+3.50% (4.00%) | 3/2/2028 | 6,957 | 6,920 | 6,939 | 1.7 | % | ||||||||||||||||||||||||||||||||||||
| Florida Food Products, LLC (f) | Food & Beverage | L+5.00% (5.75%) | 10/18/2028 | 8,000 | 7,881 | 7,860 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Frontier Communications Corp. | Telecom | 5.00% | 5/1/2028 | 1,240 | 1,303 | 1,276 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Frontier Communications Corp. (b) | Telecom | L+3.75% (4.50%) | 5/1/2028 | 19,425 | 19,407 | 19,386 | 4.9 | % | ||||||||||||||||||||||||||||||||||||
| Geon Performance Solutions, LLC (b) | Chemicals | L+4.75% (5.50%) | 8/18/2028 | 4,705 | 4,671 | 4,739 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Gogo Intermediate Holdings, LLC (f) | Telecom | L+3.75% (4.50%) | 4/28/2028 | 8,381 | 8,381 | 8,373 | 2.1 | % | ||||||||||||||||||||||||||||||||||||
| Golden Nugget, LLC (b) (f) | Gaming/Lodging | L+2.50% (3.25%) | 10/4/2023 | 3,960 | 3,932 | 3,933 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Gordian Medical, Inc. (b) | Healthcare | L+6.25% (7.00%) | 1/31/2027 | 11,060 | 10,987 | 10,968 | 2.8 | % | ||||||||||||||||||||||||||||||||||||
| Greenway Health, LLC (f) | Healthcare | L+3.75% (4.75%) | 2/16/2024 | 4,733 | 4,462 | 4,496 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
52
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| GVC Holdings Gibraltar, Ltd. (f) | Gaming/Lodging | L+2.50% (3.00%) | 3/29/2027 | $ | 4,975 | $ | 4,969 | $ | 4,958 | 1.2 | % | |||||||||||||||||||||||||||||||||
| HAH Group Holding Company, LLC (b) | Healthcare | L+5.00% (6.00%) | 10/29/2027 | 737 | 737 | 737 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| HAH Group Holding Company, LLC (b) | Healthcare | L+5.00% (6.00%) | 10/29/2027 | 5,827 | 5,748 | 5,827 | 1.5 | % | ||||||||||||||||||||||||||||||||||||
| Hamilton Projects Acquiror, LLC (f) | Utilities | L+4.50% (5.25%) | 6/17/2027 | 5,718 | 5,694 | 5,710 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Heartland Dental, LLC (e) | Healthcare | L+3.50% (3.58%) | 4/30/2025 | 4,154 | 4,076 | 4,109 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Hertz Corp. (b) (f) | Transportation | L+3.25% (3.75%) | 6/30/2028 | 4,186 | 4,170 | 4,185 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Hertz Corp. (b) (f) | Transportation | L+3.25% (3.75%) | 6/30/2028 | 793 | 790 | 793 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| HireRight, Inc. (f) | Business Services | L+3.75% (3.85%) | 7/11/2025 | 7,237 | 7,197 | 7,203 | 1.8 | % | ||||||||||||||||||||||||||||||||||||
| Hudson River Trading, LLC (b) | Financials | L+3.00% (3.10%) | 3/20/2028 | 4,975 | 4,910 | 4,933 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| ICP Industrial, Inc. (f) | Chemicals | L+3.75% (4.50%) | 12/29/2027 | 4,975 | 4,971 | 4,900 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| IDERA, Inc. (f) | Technology | L+3.75% (4.50%) | 3/2/2028 | 6,983 | 6,994 | 6,972 | 1.7 | % | ||||||||||||||||||||||||||||||||||||
| Ineos Us Finance, LLC (f) | Chemicals | L+2.50% (3.00%) | 11/6/2028 | 4,000 | 3,995 | 3,977 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Iri Holdings, Inc. (b) | Business Services | L+4.25% (4.35%) | 12/1/2025 | 7,819 | 7,800 | 7,809 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Jack Ohio Finance, LLC (f) | Gaming/Lodging | L+4.75% (5.50%) | 10/4/2028 | 4,000 | 3,980 | 3,980 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Jane Street Group, LLC (f) | Financials | L+2.75% (2.85%) | 1/26/2028 | 4,938 | 4,932 | 4,895 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Jump Financial, LLC (b) | Financials | L+3.50% (4.00%) | 8/7/2028 | 2,494 | 2,482 | 2,475 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Kissner Milling Co., Ltd. | Industrials | 4.88% | 5/1/2028 | 5,000 | 5,035 | 4,814 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| LABL, Inc. (b) | Paper & Packaging | L+5.00% (5.50%) | 10/30/2028 | 5,000 | 4,925 | 4,988 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Liquid Tech Solutions Holdings, LLC (b) (f) | Industrials | L+4.75% (5.50%) | 3/20/2028 | 10,216 | 10,166 | 10,216 | 2.6 | % | ||||||||||||||||||||||||||||||||||||
| Luxembourg Investment Co., 428 SARL (b) | Chemicals | S+5.00% (5.50%) | 1/3/2029 | 3,864 | 3,825 | 3,827 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Medallion Midland Acquisition, LP (f) | Energy | L+3.75% (4.50%) | 10/18/2028 | 3,614 | 3,579 | 3,594 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| Meridian Adhesives Group, Inc. (b) | Chemicals | L+4.00% (4.75%) | 7/24/2028 | 5,000 | 4,953 | 5,000 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| MH Sub I, LLC (f) | Business Services | L+3.75% (4.75%) | 9/13/2024 | 8,641 | 8,636 | 8,650 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| Michael Baker International, LLC (b) | Industrials | L+5.00% (5.75%) | 12/1/2028 | 3,334 | 3,301 | 3,301 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| MicroStrategy, Inc. | Software/Services | 6.13% | 6/15/2028 | 1,500 | 1,500 | 1,508 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Monitronics International, Inc. (b) | Business Services | L+6.50% (7.75%) | 3/29/2024 | 5,508 | 5,301 | 5,164 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| MPH Acquisition Holdings, LLC (b) | Healthcare | L+4.25% (4.75%) | 9/1/2028 | 4,988 | 4,895 | 4,860 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| MSG National Properties, LLC (b) | Media/Entertainment | L+6.25% (7.00%) | 11/12/2025 | 12,188 | 12,431 | 12,188 | 3.1 | % | ||||||||||||||||||||||||||||||||||||
| MYOB US Borrower, LLC (f) | Business Services | L+4.00% (4.10%) | 5/6/2026 | 5,468 | 5,453 | 5,422 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| National Mentor Holdings, Inc. (b) (f) | Healthcare | L+3.75% (4.50%) | 3/2/2028 | 7,370 | 7,336 | 7,282 | 1.8 | % | ||||||||||||||||||||||||||||||||||||
| National Mentor Holdings, Inc. (f) | Healthcare | L+3.75% (4.50%) | 3/2/2028 | 233 | 232 | 230 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
| Navitas Midstream Midland Basin, LLC (b) | Energy | L+4.00% (4.75%) | 12/13/2024 | 10,676 | 10,676 | 10,639 | 2.7 | % | ||||||||||||||||||||||||||||||||||||
| Nexus Buyer, LLC (f) | Business Services | L+3.75% (3.85%) | 11/9/2026 | 1,489 | 1,485 | 1,480 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Nouryon USA, LLC (e) | Chemicals | L+3.00% (3.10%) | 10/1/2025 | 2,342 | 2,310 | 2,332 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Paysafe Finance, PLC | Software/Services | 4.00% | 6/15/2029 | 400 | 400 | 373 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
| Perstorp Holding Ab (b) | Chemicals | L+4.75% (4.91%) | 2/27/2026 | 8,777 | 8,325 | 8,777 | 2.2 | % | ||||||||||||||||||||||||||||||||||||
| PG&E Corp. (f) | Utilities | L+3.00% (3.50%) | 6/23/2025 | 10,698 | 10,735 | 10,569 | 2.7 | % | ||||||||||||||||||||||||||||||||||||
| Proofpoint, Inc. (b) | Software/Services | L+3.25% (3.75%) | 8/31/2028 | 2,500 | 2,494 | 2,488 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Protective Industrial Products, Inc. (b) | Industrials | L+4.00% (4.75%) | 12/29/2027 | 9,127 | 9,091 | 9,087 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| Pug, LLC (f) | Technology | L+3.50% (3.60%) | 2/12/2027 | 4,962 | 4,843 | 4,843 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
53
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| Pug, LLC (f) | Technology | L+4.25% (4.75%) | 2/13/2027 | $ | 1,995 | $ | 1,986 | $ | 1,983 | 0.5 | % | |||||||||||||||||||||||||||||||||
| Quikrete Holdings, Inc. (f) | Industrials | L+3.00% (3.19%) | 6/11/2028 | 8,000 | 7,959 | 7,978 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Regionalcare Hospital Partners Holdings, Inc. | Healthcare | 4.38% | 2/15/2027 | 2,000 | 2,000 | 2,025 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Regionalcare Hospital Partners Holdings, Inc. (b) | Healthcare | L+3.75% (3.85%) | 11/14/2025 | 5,195 | 5,214 | 5,186 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| RXB Holdings, Inc. (f) | Healthcare | L+4.50% (5.25%) | 12/20/2027 | 10,205 | 10,244 | 10,205 | 2.6 | % | ||||||||||||||||||||||||||||||||||||
| S&S Holdings, LLC (f) | Consumer | L+5.00% (5.50%) | 3/10/2028 | 6,948 | 6,759 | 6,948 | 1.7 | % | ||||||||||||||||||||||||||||||||||||
| Safe Fleet Holdings, LLC (f) | Industrials | L+3.00% (4.00%) | 2/3/2025 | 2,374 | 2,359 | 2,357 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Safety Products/JHC Acquisition Corp. (b) | Industrials | L+4.50% (4.60%) | 6/28/2026 | 938 | 891 | 892 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| Safety Products/JHC Acquisition Corp. (b) | Industrials | L+4.50% (4.60%) | 6/28/2026 | 17,360 | 16,549 | 16,492 | 4.1 | % | ||||||||||||||||||||||||||||||||||||
| Schenectady International Group, Inc. (b) | Chemicals | L+4.75% (4.87%) | 10/15/2025 | 19,911 | 19,791 | 19,911 | 5.0 | % | ||||||||||||||||||||||||||||||||||||
| SCIH Salt Holdings, Inc. (b) (f) | Industrials | L+4.00% (4.75%) | 3/16/2027 | 18,735 | 18,671 | 18,532 | 4.6 | % | ||||||||||||||||||||||||||||||||||||
| SFR Group, SA (b) (e) | Telecom | L+4.00% (4.13%) | 8/14/2026 | 12,705 | 12,640 | 12,629 | 3.2 | % | ||||||||||||||||||||||||||||||||||||
| Sierra Acquisition, Inc. (b) | Food & Beverage | L+4.00% (5.00%) | 11/11/2024 | 4,902 | 4,712 | 4,890 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Sophia, LP (f) | Software/Services | L+3.50% (4.00%) | 10/7/2027 | 3,004 | 3,007 | 3,001 | 0.8 | % | ||||||||||||||||||||||||||||||||||||
| Spirit Aerosystems, Inc. (b) | Industrials | L+3.75% (4.25%) | 1/15/2025 | 2,555 | 2,584 | 2,556 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| SSH Group Holdings, Inc. (e) | Education | L+4.25% (4.40%) | 7/30/2025 | 10,518 | 10,064 | 10,134 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| Staples, Inc. (b) | Business Services | L+5.00% (5.13%) | 4/16/2026 | 4,949 | 4,896 | 4,774 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Station Casinos, LLC (f) | Gaming/Lodging | L+2.25% (2.50%) | 2/8/2027 | 2,278 | 2,267 | 2,257 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Team Health Holdings, Inc. (e) | Healthcare | L+2.75% (3.75%) | 2/6/2024 | 2,969 | 2,808 | 2,830 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Tecta America Corp. (f) | Industrials | L+4.25% (5.00%) | 4/6/2028 | 9,045 | 9,018 | 9,033 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| Tenneco, Inc. | Transportation | 5.13% | 4/15/2029 | 3,846 | 3,846 | 3,773 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| Tenneco, Inc. (e) | Transportation | L+3.00% (3.08%) | 10/1/2025 | 2,969 | 2,911 | 2,921 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| The Dun & Bradstreet Corp. (f) | Business Services | L+3.25% (3.35%) | 2/6/2026 | 4,863 | 4,884 | 4,841 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| TransDigm, Inc. (f) | Industrials | L+2.25% (2.35%) | 12/9/2025 | 2,970 | 2,953 | 2,926 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Traverse Midstream Partners, LLC (b) | Energy | S+4.25% (5.25%) | 9/27/2024 | 14,962 | 14,936 | 14,878 | 3.7 | % | ||||||||||||||||||||||||||||||||||||
| Triton Water Holdings, Inc. (f) | Food & Beverage | L+3.50% (4.00%) | 3/31/2028 | 7,463 | 7,445 | 7,374 | 1.8 | % | ||||||||||||||||||||||||||||||||||||
| Truck Hero, Inc. (f) | Transportation | L+3.25% (4.00%) | 1/31/2028 | 1,489 | 1,485 | 1,479 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| TSL Engineered Products, LLC (b) | Industrials | L+4.75% (5.50%) | 1/7/2028 | 7,858 | 7,785 | 7,858 | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| United Airlines, Inc. (f) | Transportation | L+3.75% (4.50%) | 4/21/2028 | 3,794 | 3,782 | 3,800 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| University Support Services, LLC (f) | Education | L+3.25% (3.75%) | 6/29/2028 | 5,000 | 4,983 | 4,975 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Urban One, Inc. | Media/Entertainment | 7.38% | 2/1/2028 | 6,000 | 6,194 | 6,200 | 1.6 | % | ||||||||||||||||||||||||||||||||||||
| Venga Finance Sarl (b) | Telecom | L+4.75% (5.25%) | 12/4/2028 | 4,000 | 3,880 | 3,913 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
| Veritext Corp. (f) | Business Services | L+3.25% (3.35%) | 8/1/2025 | 3,505 | 3,463 | 3,472 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| Virgin Media Bristol, LLC (f) | Telecom | L+3.25% (3.36%) | 1/31/2029 | 2,500 | 2,497 | 2,497 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Vyaire Medical, Inc. (f) | Healthcare | L+4.75% (5.75%) | 4/16/2025 | 7,831 | 6,573 | 6,695 | 1.7 | % | ||||||||||||||||||||||||||||||||||||
| WaterBridge Midstream Operating, LLC (b) | Energy | L+5.75% (6.75%) | 6/22/2026 | 10,748 | 9,572 | 10,462 | 2.6 | % | ||||||||||||||||||||||||||||||||||||
| Watlow Electric Manufacturing Co. (b) | Industrials | L+3.75% (4.25%) | 3/2/2028 | 9,473 | 9,431 | 9,447 | 2.4 | % | ||||||||||||||||||||||||||||||||||||
| Western Dental Services, Inc. (f) | Healthcare | L+4.50% (5.25%) | 8/18/2028 | 9,075 | 9,067 | 9,070 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| Western Dental Services, Inc. (f) | Healthcare | L+4.50% (5.25%) | 8/18/2028 | 389 | 389 | 388 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
| Wilsonart, LLC (b) | Consumer | L+3.50% (4.50%) | 12/31/2026 | 7,450 | 7,444 | 7,444 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
54
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| Wrench Group, LLC (f) | Consumer | L+4.00% (4.22%) | 4/30/2026 | $ | 3,151 | $ | 3,098 | $ | 3,151 | 0.8 | % | |||||||||||||||||||||||||||||||||
| YI, LLC (e) | Healthcare | L+4.00% (5.00%) | 11/7/2024 | 8,974 | 8,891 | 8,974 | 2.3 | % | ||||||||||||||||||||||||||||||||||||
| Subtotal Senior Secured First Lien Debt | $ | 945,196 | $ | 947,148 | 237.6 | % | ||||||||||||||||||||||||||||||||||||||
| Senior Secured Second Lien Debt | ||||||||||||||||||||||||||||||||||||||||||||
| American Rock Salt Company, LLC (b) | Chemicals | L+7.25% (8.00%) | 6/11/2029 | $ | 4,943 | $ | 4,894 | $ | 4,955 | 1.2 | % | |||||||||||||||||||||||||||||||||
| Asp Ls Acquisition Corp. (b) | Transportation | L+7.50% (8.25%) | 4/30/2029 | 2,065 | 2,075 | 2,074 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Asurion, LLC (b) | Business Services | L+5.25% (5.35%) | 1/31/2028 | 15,632 | 15,564 | 15,671 | 3.9 | % | ||||||||||||||||||||||||||||||||||||
| Barracuda Networks, Inc. (b) | Software/Services | L+6.75% (7.50%) | 10/30/2028 | 4,698 | 4,724 | 4,749 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. (b) | Media/Entertainment | L+8.00% (9.00%) 7.00% PIK | 11/24/2027 | 5,088 | 5,070 | 5,058 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| Edelman Financial Services, LLC (b) (e) | Financials | L+6.75% (6.84%) | 7/20/2026 | 9,972 | 9,929 | 9,989 | 2.5 | % | ||||||||||||||||||||||||||||||||||||
| IDERA, Inc. (b) (e) | Technology | L+6.75% (7.50%) | 3/2/2029 | 1,545 | 1,537 | 1,545 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Tecta America Corp. (b) | Industrials | L+8.50% (9.25%) | 4/6/2029 | 4,998 | 4,973 | 4,998 | 1.3 | % | ||||||||||||||||||||||||||||||||||||
| TIBCO Software, Inc. (b) | Technology | L+7.25% (7.36%) | 3/3/2028 | 13,020 | 13,166 | 13,047 | 3.3 | % | ||||||||||||||||||||||||||||||||||||
| Subtotal Senior Secured Second Lien Debt | $ | 61,932 | $ | 62,086 | 15.6 | % | ||||||||||||||||||||||||||||||||||||||
| Collateralized Securities | ||||||||||||||||||||||||||||||||||||||||||||
| Collateralized Securities - Debt Investments | ||||||||||||||||||||||||||||||||||||||||||||
| AIG CLO, Ltd. 21‐1A F | Diversified Investment Vehicles | L+6.90% (7.03%) | 4/22/2034 | $ | 1,410 | $ | 1,285 | $ | 1,270 | 0.3 | % | |||||||||||||||||||||||||||||||||
| Avery Point CLO, Ltd. 15-6A E1 (f) | Diversified Investment Vehicles | L+5.50% (5.64%) | 8/6/2027 | 3,500 | 3,124 | 3,380 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| Battalion CLO, Ltd. 21-17A F | Diversified Investment Vehicles | L+7.50% (7.63%) | 3/9/2034 | 1,224 | 1,132 | 1,123 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| Carlyle GMS CLO, 16-3A FRR (f) | Diversified Investment Vehicles | L+8.60% (8.73%) | 7/20/2034 | 2,100 | 1,984 | 1,983 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Eaton Vance CDO, Ltd. 15-1A FR (f) | Diversified Investment Vehicles | L+7.97% (8.10%) | 1/20/2030 | 2,000 | 1,736 | 1,829 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Elevation CLO, Ltd. 13-1A D2 | Diversified Investment Vehicles | L+7.65% (7.80%) | 8/15/2032 | 2,000 | 1,961 | 1,973 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Great Lakes CLO, Ltd. 21-6A E | Diversified Investment Vehicles | L+8.03% (8.25%) | 1/15/2034 | 5,150 | 4,945 | 4,906 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Greywolf CLO, Ltd. 20-3RA ER (f) | Diversified Investment Vehicles | L+8.74% (8.87%) | 4/15/2033 | 1,000 | 873 | 949 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| Hayfin Kingsland XI, Ltd. 19‐2A ER | Diversified Investment Vehicles | L+7.72% (7.85%) | 10/20/2034 | 2,500 | 2,426 | 2,412 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Highbridge Loan Management, Ltd. 11A-17 E (f) | Diversified Investment Vehicles | L+6.10% (6.24%) | 5/6/2030 | 3,000 | 2,689 | 2,825 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Jamestown CLO, Ltd. 17-10A D (f) | Diversified Investment Vehicles | L+6.70% (6.82%) | 7/17/2029 | 1,200 | 1,120 | 1,153 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
| KKR Financial CLO, Ltd. 15 FR | Diversified Investment Vehicles | L+8.50% (8.62%) | 1/18/2032 | 2,000 | 1,892 | 1,880 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| LCM, Ltd. Partnership 16A ER2 (f) | Diversified Investment Vehicles | L+6.38% (6.50%) | 10/15/2031 | 2,500 | 2,280 | 2,373 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Marble Point CLO, Ltd. 20-1A E (f) | Diversified Investment Vehicles | L+6.82% (6.95%) | 4/20/2033 | 4,500 | 4,400 | 4,392 | 1.1 | % | ||||||||||||||||||||||||||||||||||||
| Medalist Partners Corporate Finance CLO, Ltd. 21-1A D (f) | Diversified Investment Vehicles | L+7.48% (7.69%) | 10/20/2034 | 3,000 | 2,852 | 2,833 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Northwoods Capital, Ltd. 17-15A ER | Diversified Investment Vehicles | L+7.64% (7.85%) | 6/20/2034 | 3,000 | 2,920 | 2,909 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
55
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Company (d) | Industry | Investment Coupon Rate (a) | Maturity | Principal/ Number of Shares | Amortized Cost | Fair Value | % of Members' Capital (c) | |||||||||||||||||||||||||||||||||||||
| OCP CLO, Ltd. 14-5A DR (f) | Diversified Investment Vehicles | L+5.70% (5.82%) | 4/26/2031 | $ | 2,200 | $ | 2,077 | $ | 2,118 | 0.5 | % | |||||||||||||||||||||||||||||||||
| OZLM, Ltd. 16-15A DR (f) | Diversified Investment Vehicles | L+6.75% (6.88%) | 4/20/2033 | 2,000 | 1,903 | 1,922 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Palmer Square CLO, Ltd. 21‐4A F | Diversified Investment Vehicles | L+7.66% (7.80%) | 10/15/2034 | 1,500 | 1,426 | 1,413 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Regatta II Funding, LP 13-2A DR2 (f) | Diversified Investment Vehicles | L+6.95% (7.07%) | 1/15/2029 | 2,000 | 1,923 | 1,968 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Saranac CLO, Ltd. 20-8A E | Diversified Investment Vehicles | L+8.12% (8.28%) | 2/20/2033 | 1,455 | 1,441 | 1,433 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Sound Point CLO, Ltd. 17-1A E (f) | Diversified Investment Vehicles | L+5.96% (6.08%) | 1/23/2029 | 4,000 | 3,589 | 3,736 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
| Sound Point CLO, Ltd. 17-2A E (f) | Diversified Investment Vehicles | L+6.10% (6.22%) | 7/25/2030 | 2,400 | 2,065 | 2,173 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Sound Point CLO, Ltd. 18-3A D (f) | Diversified Investment Vehicles | L+5.79% (5.91%) | 10/26/2031 | 1,000 | 899 | 895 | 0.2 | % | ||||||||||||||||||||||||||||||||||||
| Symphony CLO, Ltd. 2012-9A ER2 (f) | Diversified Investment Vehicles | L+6.95% (7.07%) | 7/16/2032 | 3,000 | 2,769 | 2,937 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Trimaran CAVU 2021-2A, Ltd. 21-2A E (f) | Diversified Investment Vehicles | L+7.20% (7.33%) | 10/25/2034 | 3,000 | 2,941 | 2,915 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Trysail CLO, Ltd. 21‐1A E | Diversified Investment Vehicles | L+7.38% (7.52%) | 7/20/2032 | 1,500 | 1,444 | 1,445 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
| Venture CDO, Ltd. 16-23A ER2 (f) | Diversified Investment Vehicles | L+7.55% (7.67%) | 7/19/2034 | 3,000 | 2,912 | 2,892 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Venture CDO, Ltd. 16-25A E (f) | Diversified Investment Vehicles | L+7.20% (7.33%) | 4/20/2029 | 2,000 | 1,943 | 1,936 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Venture CDO, Ltd. 20-39A E | Diversified Investment Vehicles | L+7.63% (7.75%) | 4/15/2033 | 4,995 | 4,961 | 4,922 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| Venture CLO 43, Ltd. 21-43A E (f) | Diversified Investment Vehicles | L+7.15% (7.27%) | 4/15/2034 | 3,000 | 2,913 | 2,901 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Wind River CLO, Ltd. 14-2A FR | Diversified Investment Vehicles | L+7.87% (7.99%) | 1/15/2031 | 3,000 | 2,495 | 2,489 | 0.6 | % | ||||||||||||||||||||||||||||||||||||
| Zais CLO 13, Ltd. 19-13A D1 (f) | Diversified Investment Vehicles | L+4.52% (4.64%) | 7/15/2032 | 3,000 | 2,722 | 2,818 | 0.7 | % | ||||||||||||||||||||||||||||||||||||
| Subtotal Collateralized Securities | $ | 78,042 | $ | 79,103 | 19.8 | % | ||||||||||||||||||||||||||||||||||||||
| TOTAL INVESTMENTS | $ | 1,085,170 | $ | 1,088,337 | 273.0 | % | ||||||||||||||||||||||||||||||||||||||
______________
(a)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L"), Secured Overnight Financing Rate ("SOFR" or "S"), or Prime ("P") and which reset daily, monthly, quarterly, or semiannually. For each, SLF has provided the spread over the relevant reference rate and the current interest rate in effect at December 31, 2021. Certain investments are subject to reference rate floors. For fixed rate loans, a spread above a reference rate is not applicable. For floating rate securities the all-in rate is disclosed within parentheses.
(b)SLF's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(c)Percentages are based on SLF members' capital as of December 31, 2021.
(d)SLF has various unfunded commitments to portfolio companies.
(e)SLF's investment or a portion thereof is held through a total return swap with J.P. Morgan.
(f)SLF's investment or a portion thereof is pledged as collateral under a credit facility with CIBC. Individual investments can be divided into parts which are pledged to separate credit facilities.
SLF had $2.2 million of unfunded commitments on delayed draw term loans as of December 31, 2021.
56
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Below is certain summarized financial information for SLF as of June 30, 2022 and December 31, 2021 and for the periods ended June 30, 2022 and June 30, 2021:
| Selected Statement of Assets and Liabilities Information | June 30, | December 31, | |||||||||
| 2022 | 2021 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
Investments, at fair value (amortized cost of $1,036,503 and $1,085,170, respectively) | $ | 971,257 | $ | 1,088,337 | |||||||
| Cash and other assets | 97,953 | 107,623 | |||||||||
| Total assets | $ | 1,069,210 | $ | 1,195,960 | |||||||
| LIABILITIES | |||||||||||
Revolving credit facilities (net of deferred financing costs of $1,991 and $2,488, respectively) | $ | 641,559 | $ | 631,562 | |||||||
| Secured borrowings | 65,016 | 94,737 | |||||||||
| Other liabilities | 27,473 | 71,008 | |||||||||
| Total liabilities | $ | 734,048 | $ | 797,307 | |||||||
| MEMBERS' CAPITAL | |||||||||||
| Total members' capital | $ | 335,162 | $ | 398,653 | |||||||
| Total liabilities and members' capital | $ | 1,069,210 | $ | 1,195,960 | |||||||
| Selected Statements of Operations Information | For the three months ended June 30, | For the three months ended June 30, | For the six months ended June 30, | For the period January 20, 2021 through June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||
| Investment income: | ||||||||||||||||||||||||||
| Total investment income | $ | 15,747 | $ | 10,874 | $ | 30,176 | $ | 19,326 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Interest and credit facility financing expenses | 3,910 | 2,381 | 7,278 | 3,975 | ||||||||||||||||||||||
| Other expenses | 708 | 480 | 1,342 | 763 | ||||||||||||||||||||||
| Total expenses | 4,618 | 2,861 | 8,620 | 4,738 | ||||||||||||||||||||||
| Net investment income | 11,129 | 8,013 | 21,556 | 14,588 | ||||||||||||||||||||||
| Realized and unrealized gain (loss): | ||||||||||||||||||||||||||
| Net realized and unrealized gain (loss) | (56,584) | 8,581 | (69,833) | 12,058 | ||||||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (45,455) | $ | 16,594 | $ | (48,277) | $ | 26,646 | ||||||||||||||||||
57
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Unconsolidated Significant Subsidiaries
In accordance with Rules 3-09 and 4-08(g) of Regulation S-X (“Rule 3-09” and “Rule 4-08(g),” respectively), the Company must determine which of its unconsolidated controlled affiliated investments are considered significant subsidiaries, if any. The Company had certain unconsolidated controlled affiliated investments for the six months ended June 30, 2022 that met at least one of the significance considerations under Regulation S-X. Accordingly, the summarized financial information for FBLC Senior Loan Fund, LLC is provided above in Note 3. Included below is the summarized financial information for Siena Capital Finance, LLC.
| Selected Balance Sheet Information | As of June 30, | As of December 31, | ||||||||||||
| 2022 | 2021 | |||||||||||||
| (Unaudited) | ||||||||||||||
| Total Assets | $ | 530,126 | $ | 470,781 | ||||||||||
| Total Liabilities | 470,535 | 414,464 | ||||||||||||
| Selected Income Statement Information | For the three months ended June 30, | For the three months ended June 30, | For the six months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
| Revenues | $ | 15,266 | $ | 9,287 | $ | 27,167 | $ | 17,147 | ||||||||||||||||||
| Net income | 5,530 | 2,137 | 8,475 | 4,405 | ||||||||||||||||||||||
Note 4 — Related Party Transactions and Arrangements
Investment Advisory Agreement
Pursuant to the Investment Advisory Agreement and for the investment advisory and management services provided thereunder, the Company pays the Adviser a base management fee and an incentive fee.
Prior to February 1, 2019, the Adviser provided investment advisory and management services under the investment advisory and management services agreement, effective November 1, 2016 (the “Prior Investment Advisory Agreement”), and most recently re-approved by the Board in August 2018. The terms of the Prior Investment Advisory Agreement were materially identical to the Investment Advisory Agreement. The Prior Investment Advisory Agreement automatically terminated on February 1, 2019 upon the indirect change of control of the Adviser on the consummation of Franklin Templeton's acquisition of BSP. The Investment Advisory Agreement was approved by the Board, including a majority of independent directors, on October 22, 2018, and by stockholders at a special meeting held on January 11, 2019 and took effect February 1, 2019. The Board renewed the Investment Advisory Agreement on January 31, 2022.
Base Management Fee
The base management fee is calculated at an annual rate of 1.5% of the Company's average gross assets (including assets purchased with borrowed funds). The Company's gross assets increase or decrease with any appreciation or depreciation associated with a derivative contract. Average gross assets is calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters. The base management fee is payable quarterly in arrears and is appropriately pro-rated for any partial month or quarter. All or any part of the base management fee not taken as to any quarter may be deferred without interest and may be taken in such other quarter as the Adviser will determine within three years.
As of June 30, 2022 and December 31, 2021, $10.5 million and $10.5 million was payable to the Adviser for base management fees, respectively.
For the three and six months ended June 30, 2022, the Company incurred $10.5 million and $21.0 million, respectively, in base management fees under the Investment Advisory Agreement. For the three and six months ended June 30, 2021, the Company incurred $9.5 million and $19.0 million, respectively, in base management fees under the Investment Advisory Agreement.
58
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Incentive Fees
The incentive fee consists of two parts. The first part is referred to as the incentive fee on income and it is calculated and payable quarterly in arrears based on the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter. “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 Company’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement and any interest expense 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 (such as original issue discount debt instruments with payment-in-kind interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains or losses, or unrealized capital appreciation or depreciation. The payment of the incentive fee on income is subject to payment of a preferred return to investors each quarter, expressed as a quarterly rate of return on the value of the Company's net assets at the end of the most recently completed calendar quarter, of 1.75% (7.00% annualized), subject to a “catch up” feature (as described below). The calculation of the incentive fee on income for each quarter is as follows:
•No incentive fee on income will be payable to the Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the preferred return rate of 1.75% or 7.00% annualized (the “Preferred Return”) on net assets;
•100% of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds the preferred return but is less than or equal to 2.1875% in any calendar quarter (8.75% annualized) will be payable to the Adviser. This portion of the Company’s incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches 2.1875% (8.75% annualized) in any calendar quarter; and
•For any quarter in which the Company's Pre-Incentive Fee Net Investment Income exceeds 2.1875% (8.75% annualized), the incentive fee on income will be equal to 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved.
As of June 30, 2022 and December 31, 2021, $7.7 million and $7.2 million was payable to the Adviser for the incentive fee on income, respectively.
For the three and six months ended June 30, 2022, the Company incurred $7.1 million and $14.4 million, respectively, in incentive fees on income under the Investment Advisory Agreement. For the three and six months ended June 30, 2021, the Company incurred $6.9 million and $13.5 million, respectively, in incentive fees on income under the Investment Advisory Agreement.
The second part of the incentive fee, referred to as the “incentive fee on capital gains during operations,” is an incentive fee on capital gains earned on liquidated investments from the portfolio during operations prior to the Company’s liquidation and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, if earlier). This fee equals 20% of the Company’s incentive fee capital gains, which equals the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. For the three and six months ended June 30, 2022 and 2021, the Company did not incur incentive fees on capital gains during operations under the Investment Advisory Agreement.
Administration Agreement
In connection with the Administration Agreement, BSP provides the Company with office facilities and administrative services. As of June 30, 2022 and December 31, 2021, $0.8 million and $1.6 million was payable to BSP under the Administration Agreement, respectively.
For the three and six months ended June 30, 2022, the Company incurred $0.4 million and $0.8 million, respectively, in administrative service fees under the Administration Agreement. For the three and six months ended June 30, 2021, the Company incurred $0.4 million and $0.9 million, respectively, in administrative service fees under the Administration Agreement.
59
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Co-Investment Relief
The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC. The SEC staff has granted the Company exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with its investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of its eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Company and the Company's stockholders and do not involve overreaching in respect of the Company or the Company's stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies.
Due To/From Affiliated Funds
Included within Prepaid and Other Assets on the Consolidated Statements of Assets and Liabilities as of June 30, 2022 and December 31, 2021 are $0.0 and $2.6 million, respectively of receivables from Affiliated Funds related to investment transactions.
Note 5 — Borrowings
Wells Fargo Credit Facility
On August 28, 2020, the Company entered into a $300.0 million revolving credit facility with the Company, as collateral manager, Funding I, a wholly owned, consolidated special purpose financing subsidiary, as borrower, the lenders party thereto, Wells Fargo, as administrative agent, and U.S. Bank, as collateral agent and collateral custodian (the “Wells Fargo Credit Facility”).
The Wells Fargo Credit Facility provides for borrowings through August 28, 2023, and any amounts borrowed under the Wells Fargo Credit Facility will mature on August 28, 2025. Prior to the Second Amendment (defined below), the Wells Fargo Credit Facility was priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 2.75% per annum. Interest is payable quarterly in arrears. Funding I will be subject to a non-usage fee to the extent the commitments available under the Wells Fargo Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 25% of the unused balance and up to 2.0% for the remaining unused balance. Funding I paid a structuring fee and incurred other customary costs and expenses in connection with the Wells Fargo Credit Facility. Pursuant to an amendment entered into on April 6, 2021, the commitment fee for any unused portion of the Wells Fargo Credit Facility was temporarily reduced until September 30, 2021 (the "First Amendment"). Additionally, pursuant to the First Amendment, the maximum spread was reduced from 2.75% to 2.50% as a result of this amendment. The other terms of the Wells Fargo Credit Facility were unchanged. Pursuant to an amendment entered into on May 27, 2022 (the "Second Amendment"), the benchmark rate was transitioned from LIBOR to SOFR. After the Second Amendment, the Wells Fargo Credit Facility is priced at Daily Simple SOFR, with a Daily Simple SOFR floor of zero, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 2.60% per annum.
Funding I’s obligations under the Wells Fargo Credit Facility are secured by a first priority security interest in substantially all of the assets of Funding I, including its portfolio of investments and the Company’s equity interest in Funding I. The obligations of Funding I under the Wells Fargo Credit Facility are non-recourse to the Company.
In connection with the Wells Fargo Credit Facility, the Company and Funding I have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The Wells Fargo Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the Wells Fargo Credit Facility may terminate the Company in its capacity as collateral manager/portfolio manager under the Wells Fargo Credit Facility. Upon the occurrence of an event of default under the Wells Fargo Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the Wells Fargo Credit Facility immediately due and payable.
JPM Credit Facility
On August 28, 2020, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, 57th Street, entered into a $300.0 million revolving credit facility with JPMorgan Chase Bank, National Association, as
60
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
administrative agent (“JPM”), and U.S. Bank, as collateral agent, collateral administrator and securities intermediary (the “JPM Credit Facility”).
The JPM Credit Facility provides for borrowings through August 28, 2023, and any amounts borrowed under the JPM Credit Facility will mature on August 28, 2023 unless the administrative agent exercises its option to extend the maturity date to August 28, 2024. The JPM Credit Facility is priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.75% per annum. Interest is payable quarterly in arrears. 57th Street will be subject to a non-usage fee to the extent the commitments available under the JPM Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance until August 28, 2021, when the non-usage fee per annum is 0.75% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance. 57th Street paid a structuring fee and incurred other customary costs and expenses in connection with the JPM Credit Facility. On January 21, 2021, the Company entered into an amendment (the “JPM Amendment”) to the JPM Credit Facility. The JPM Amendment, among other things, increases the amount that the Company is permitted to borrow under the JPM Credit Agreement from $300.0 million to $400.0 million. On April 12, 2021, the Company, through 57th Street, amended and restated the JPM Credit Facility. The amendment and restatement temporarily reduced the previous minimum funding amount until October 13, 2021. The other material terms of the JPM Credit Facility were unchanged.
57th Street’s obligations under the JPM Credit Facility are secured by a first priority security interest in substantially all of the assets of 57th Street, including its portfolio of investments and the Company’s equity interest in 57th Street. The obligations of 57th Street under the JPM Credit Facility are non-recourse to the Company.
In connection with the JPM Credit Facility, the Company and 57th Street have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The JPM Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the JPM Credit Facility may terminate the Company in its capacity as collateral manager/portfolio manager under the JPM Credit Facility. Upon the occurrence of an event of default under the JPM Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the JPM Credit Facility immediately due and payable.
JPM Revolver Facility
On June 10, 2022, the Company entered into a $495.0 million revolving credit facility with JPMorgan Chase Bank, as administrative agent and as collateral agent, MUFG Union Bank, N.A., Sumitomo Mitsui Banking Corporation, and Wells Fargo Bank, National Association as syndication agents, as well as other Lender parties (the “JPM Revolver Facility”).
The JPM Revolver Facility provides for borrowings through June 10, 2026, and any amounts borrowed under the JPM Revolver Facility will mature on June 10, 2027. The JPM Revolver Facility is priced at three-month Term SOFR, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 1.98% per annum. Interest is payable quarterly in arrears. The Company will be subject to a non-usage fee of 0.38% to the extent the commitments available under the JPM Revolver Facility have not been borrowed. The Company paid a structuring fee and incurred other customary costs and expenses in connection with the JPM Revolver Facility.
In connection with the JPM Revolver Facility, the Company has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolver Facility contains customary events of default for similar financing transactions. Upon the occurrence and during the continuation of an event of default, JPMorgan Chase Bank, N.A. may declare the outstanding advances and all other obligations under the JPM Revolver Facility immediately due and payable.
61
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Citi Credit Facility
On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, CB Funding, entered into a credit facility (as amended from time to time, the “Citi Credit Facility”) with Citibank, N.A. ("Citi") as administrative agent and U.S. Bank as collateral agent, account bank, and collateral custodian. From January 1, 2020 to January 20, 2021 the Citi Credit Facility provided for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, with a reinvestment period ending on May 31, 2021 and maturity date of May 31, 2022. On January 20, 2021, SLF, the Company's joint venture with CCLF entered into an amendment to the Citi Credit Facility (the “Citi Credit Agreement”). The amendment, among other things, (i) replaces the Company with SLF as the collateral manager under the Citi Credit Agreement, (ii) extends the end of the reinvestment period from May 31, 2021 to May 31, 2023 and (iii) extends the final maturity date from May 31, 2022 to May 31, 2024. As a result of this amendment to the Citi Credit Facility, the Company incurred a realized loss on extinguishment of debt of $1.3 million. In connection with the Citi Credit Facility, CB Funding has made certain representations and warranties, is required to comply with various covenants, reporting requirements, and other customary requirements for similar facilities and is subject to certain customary events of default. Upon the occurrence and during the continuation of an event of default, Citi may declare the outstanding advances and all other obligations under the Citi Credit Facility immediately due and payable. During the continuation of an event of default, CB Funding must pay interest at a default rate.
The Citi Credit Facility contains customary default provisions for facilities of this type pursuant to which Citi may terminate the rights, obligations, power, and authority of the Company, in its capacity as servicer of the portfolio assets under the Citi Credit Facility, including, but not limited to, non-performance of Citi Credit Facility obligations, insolvency, defaults of certain financial covenants, and other events with respect to the Company that may be adverse to Citi and the secured parties under the Citi Credit Facility.
The Citi Credit Facility is priced at three-month LIBOR plus a spread of 1.60% per annum through and including the last day of the investment period and 2.00% per annum thereafter. Interest is payable quarterly in arrears. CB Funding is subject to a non-usage fee to the extent the aggregate principal amount available under the Citi Credit Facility has not been borrowed. The non-usage fee per annum is 0.50%. Any amounts borrowed under the Citi Credit Facility along with any accrued and unpaid interest thereunder will mature, and will be due and payable, in three years.
MassMutual Credit Facility
On July 7, 2020, the Company and a wholly-owned, special purpose financing subsidiary, BDCA Asset Financing, entered into a loan and servicing agreement (the “MassMutual Credit Facility”) with Massachusetts Mutual Life Insurance Company (“MassMutual”) as facility servicer and a lender and U.S. Bank National Association as collateral custodian, collateral administrator and administrative agent. The MassMutual Credit Facility provides for borrowings of up to $100.0 million on a committed basis, and, subject to satisfaction of certain conditions, contains an accordion feature whereby the Mass Mutual Credit Facility can be expanded to $150.0 million.
BDCA Asset Financing’s obligations under the MassMutual Credit Facility are secured by a first priority security interest in substantially all of the assets of BDCA Asset Financing, including its portfolio of investments and the Company’s equity interest in BDCA Asset Financing. The obligations of BDCA Asset Financing under the MassMutual Credit Facility are non-recourse to the Company.
The MassMutual Credit Facility provides for borrowings through December 31, 2021 and matures on December 31, 2025.
The MassMutual Credit Facility is priced at three-month LIBOR, with a LIBOR floor of 0.75%, plus a spread of 5.0% per annum. Interest is payable quarterly in arrears. BDCA Asset Financing will be subject to a non-usage fee of 0.50% to the extent the aggregate principal amount available under the MassMutual Credit Facility has not been borrowed. BDCA Asset Financing paid a structuring fee and incurred other customary costs and expenses in connection with the MassMutual Credit Facility.
In connection with the MassMutual Credit Facility, the Company and BDCA Asset Financing have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The MassMutual Credit Facility contains customary default provisions pursuant to which MassMutual may terminate the Company in its capacity as portfolio asset servicer of the portfolio assets under the MassMutual Credit Facility. Upon the occurrence of an event of default, MassMutual may declare the outstanding advances and all other obligations under the MassMutual Credit Facility immediately due and payable.
62
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Effective February 18, 2022, the Company terminated the Mass Mutual Credit Facility. As a result of this termination, the Company incurred a realized loss on extinguishment of debt of $1.8 million.
2022 Notes
On December 14, 2017, the Company entered into a Purchase Agreement (the “2022 Notes Purchase Agreement”) with Sandler O'Neill & Partners, L.P. (the "Initial Purchaser") relating to the Company's sale of $150.0 million aggregate principal amount of its 4.75% fixed rate notes due 2022 (the “2022 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to institutional accredited investors under Rule 501(a)(1), (2), (3), or (7) under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The 2022 Notes Purchase Agreement also includes customary representations, warranties, and covenants by the Company. Under the terms of the 2022 Notes Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The 2022 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the 2022 Notes was approximately $147.0 million, after deducting an offering price discount of approximately $0.8 million, as well as Initial Purchaser’s discounts and commissions of approximately $1.7 million and offering expenses of approximately $0.6 million, each payable by the Company. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes.
The 2022 Notes were issued pursuant to the Indenture dated as of December 19, 2017 (the “2017 Indenture”), between the Company and the Trustee, and a Supplemental Indenture, dated as of December 19, 2017 (the “Supplemental Indenture”), between the Company and the Trustee. The 2022 Notes will mature on December 30, 2022, unless repurchased or redeemed in accordance with their terms prior to such date. The 2022 Notes bear interest at a rate of 4.75% per year payable semi-annually on June 30 and December 30 of each year, commencing on June 30, 2018. The 2022 Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2022 Notes. The 2022 Notes will rank equally in right of payment with all of the Company's existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company's subsidiaries, financing vehicles, or similar facilities, including credit facilities entered into by the Company's wholly owned, special purpose financing subsidiaries.
The 2017 Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2022 Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the 2017 Indenture.
In addition, if a change of control repurchase event, as defined in the 2017 Indenture, occurs prior to maturity, holders of the 2022 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.
63
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
2023 Notes
On May 11, 2018, the Company entered into a Purchase Agreement (the “2023 Notes Purchase Agreement”) with the Initial Purchaser relating to the Company’s sale of $60.0 million aggregate principal amount of its 5.38% fixed rate notes due 2023 (the “2023 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to institutional accredited investors under Rule 501 (a)(1), (2), (3), or (7) under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The 2023 Notes Purchase Agreement also includes customary representations, warranties, and covenants by the Company. Under the terms of the 2023 Notes Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The 2023 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the 2023 Notes were approximately $58.7 million, after deducting an offering price discount of approximately $0.3 million, as well as Initial Purchaser’s discounts and commissions of approximately $0.6 million and estimated offering expenses of approximately $0.4 million, each payable by the Company. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes. The 2023 Notes were issued pursuant to the 2017 Indenture between the Company and The Trustee, and a Second Supplemental Indenture, dated as of May 16, 2018, between the Company and the Trustee. The 2023 Notes will mature on May 30, 2023, unless repurchased or redeemed in accordance with their terms prior to such date. The 2023 Notes bear interest at a rate of 5.375% per year payable semi-annually on May 30 and November 30 of each year, commencing on November 30, 2018. The 2023 Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 2023 Notes. The 2023 Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles, or similar facilities, including credit facilities entered into by the Company’s wholly owned, special purpose financing subsidiaries. The 2017 Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2023 Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the 2017 Indenture. In addition, if a change of control repurchase event, as defined in the 2017 Indenture, occurs prior to maturity, holders of the 2023 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2023 Notes at a repurchase price equal to 100% of the principal amount of the 2023 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.
64
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
2024 Notes
On December 3, 2019, the Company entered into a Purchase Agreement (the “2024 Notes Purchase Agreement”) with the Initial Purchaser relating to the Company’s sale of $100.0 million aggregate principal amount of its 4.85% fixed rate notes due 2024 (the “2024 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to institutional accredited investors under Rule 501 (a)(1), (2), (3), or (7) under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The 2024 Notes Purchase Agreement also includes customary representations, warranties, and covenants by the Company. Under the terms of the 2024 Notes Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The 2024 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the 2024 Notes were approximately $98.4 million, after deducting the Initial Purchaser’s discounts and commissions of approximately $1.2 million and estimated offering expenses of approximately $0.4 million, each payable by the Company. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes. The 2024 Notes were issued pursuant to the 2017 Indenture between the Company and The Trustee, and a Third Supplemental Indenture, dated as of December 5, 2019, between the Company and the Trustee. The 2024 Notes will mature on December 15, 2024, unless repurchased or redeemed in accordance with their terms prior to such date. The 2024 Notes bear interest at a rate of 4.85% per year payable semi-annually on June 15 and December 15 of each year, commencing on June 15, 2020. The 2024 Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 2024 Notes. The 2024 Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles, or similar facilities, including credit facilities entered into by the Company’s wholly owned, special purpose financing subsidiaries. The 2017 Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2024 Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the 2017 Indenture. In addition, if a change of control repurchase event, as defined in the 2017 Indenture, occurs prior to maturity, holders of the 2024 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2024 Notes at a repurchase price equal to 100% of the principal amount of the 2024 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.
2026 Notes
On March 24, 2021, the Company entered into a Purchase Agreement (the “2026 Notes Purchase Agreement”) with the initial purchaser listed therein relating to the Company’s sale of $300.0 million aggregate principal amount of its 3.25% fixed rate notes due 2026 (the “Restricted 2026 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to certain non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The 2026 Notes Purchase Agreement also includes customary representations, warranties, and covenants by the Company. Under the terms of the 2026 Notes Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The Restricted 2026 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the 2026 Notes were approximately $296.0 million, after deducting the Initial Purchaser’s discounts and commissions and estimated offering expenses. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes. The Restricted 2026 Notes were issued pursuant to the Indenture dated as of March 29, 2021 (the “2021 Indenture”), between the Company and the Trustee, and a Supplemental Indenture, dated as of March 29, 2021 (the “First Supplemental Indenture”), between the Company and the Trustee. The 2026 Notes (as defined below) will mature on March 30, 2026, unless repurchased or redeemed in accordance with their terms prior to such date. The 2026 Notes bear interest at a rate of 3.25% per year payable semi-annually on March 30 and September 30 of
65
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
each year, commencing on September 30, 2021. The 2026 Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 2026 Notes. The 2026 Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles, or similar facilities, including credit facilities entered into by the Company’s wholly owned, special purpose financing subsidiaries. The 2021 Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2026 Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the 2021 Indenture. In addition, if a change of control repurchase event, as defined in the 2021 Indenture, occurs prior to maturity, holders of the 2026 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2026 Notes at a repurchase price equal to 100% of the principal amount of the 2026 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. Pursuant to a Registration Statement on Form N-14 (File No. 333-257321), on September 22, 2021, the Company closed an exchange offer in which holders of the Restricted 2026 Notes were offered the opportunity to exchange their Restricted 2026 Notes for new registered notes with substantially identical terms (the “Unrestricted 2026 Notes” and, together with the Restricted 2026 Notes, the 2026 Notes), through which holders representing 99.88% of the outstanding principal of the then Restricted 2026 Notes obtained Unrestricted 2026 Notes.
The weighted average annualized interest cost for all borrowings for the six months ended June 30, 2022 and 2021 was 3.60% and 3.53%, respectively. The average daily debt outstanding for the six months ended June 30, 2022 and 2021 was $1.3 billion, and 1.0 billion, respectively. The maximum debt outstanding for the six months ended June 30, 2022 and 2021 was $1.3 billion and 1.2 billion, respectively.
The following table represents borrowings as of June 30, 2022:
| Maturity Date | Total Aggregate Borrowing Capacity | Total Principal Outstanding | Less Deferred Financing Costs | Amount per Consolidated Statements of Assets and Liabilities | ||||||||||||||||||||||||||||
| Wells Fargo Credit Facility | 8/28/2025 | $ | 300,000 | $ | 267,000 | $ | (4,819) | $ | 262,181 | |||||||||||||||||||||||
| JPM Credit Facility | 8/28/2023 | 400,000 | 321,600 | (524) | 321,076 | |||||||||||||||||||||||||||
| JPM Revolver Facility | 6/10/2027 | 495,000 | 5,000 | (3,873) | 1,127 | |||||||||||||||||||||||||||
| 2026 Notes | 3/30/2026 | 300,000 | 297,075 | (409) | 296,666 | |||||||||||||||||||||||||||
| 2024 Notes | 12/15/2024 | 100,000 | 99,413 | (91) | 99,322 | |||||||||||||||||||||||||||
| 2023 Notes | 5/30/2023 | 60,000 | 59,941 | (172) | 59,769 | |||||||||||||||||||||||||||
| 2022 Notes | 12/30/2022 | 150,000 | 149,918 | (228) | 149,690 | |||||||||||||||||||||||||||
| Totals | $ | 1,805,000 | $ | 1,199,947 | $ | (10,116) | $ | 1,189,831 | ||||||||||||||||||||||||
66
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
The following table represents borrowings as of December 31, 2021:
| Maturity Date | Total Aggregate Borrowing Capacity | Total Principal Outstanding | Less Deferred Financing Costs | Amount per Consolidated Statements of Assets and Liabilities | ||||||||||||||||||||||||||||
| Wells Fargo Credit Facility | 8/28/2025 | $ | 300,000 | $ | 285,000 | $ | (5,575) | $ | 279,425 | |||||||||||||||||||||||
| JPM Credit Facility | 8/28/2023 | 400,000 | 391,100 | (734) | 390,366 | |||||||||||||||||||||||||||
| MassMutual Credit Facility | 12/31/2025 | 100,000 | — | (1,807) | (1,807) | |||||||||||||||||||||||||||
| 2026 Notes | 3/30/2026 | 300,000 | 296,688 | (607) | 296,081 | |||||||||||||||||||||||||||
| 2024 Notes | 12/15/2024 | 100,000 | 99,295 | (110) | 99,185 | |||||||||||||||||||||||||||
| 2023 Notes | 5/30/2023 | 60,000 | 59,908 | (266) | 59,642 | |||||||||||||||||||||||||||
| 2022 Notes | 12/30/2022 | 150,000 | 149,836 | (454) | 149,382 | |||||||||||||||||||||||||||
| Totals | $ | 1,410,000 | $ | 1,281,827 | $ | (9,553) | $ | 1,272,274 | ||||||||||||||||||||||||
The following table represents interest and debt fees for the three and six months ended June 30, 2022:
Three months ended June 30, 2022 | Six months ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest Rate | Non-Usage Rate | Interest Expense | Deferred Financing Costs (7) | Other Fees (8) | Interest Rate | Non-Usage Rate | Interest Expense | Deferred Financing Costs (7) | Other Fees (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Wells Fargo Credit Facility | (1) | (2) | $ | 2,268 | $ | 380 | $ | 92 | (1) | (2) | $ | 4,215 | $ | 756 | $ | 141 | |||||||||||||||||||||||||||||||||||||||||||
| JPM Credit Facility | (3) | (4) | 3,494 | 106 | 119 | (3) | (4) | 6,421 | 210 | 187 | |||||||||||||||||||||||||||||||||||||||||||||||||
| JPM Revolver Facility | (5) | 0.38% | 10 | 45 | 108 | (5) | 0.38% | 10 | 45 | 108 | |||||||||||||||||||||||||||||||||||||||||||||||||
MassMutual Credit Facility (9) | — | — | — | — | — | (6) | 0.50% | — | 38 | 26 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 Notes | 3.25% | n/a | 2,632 | 33 | 2 | 3.25% | n/a | 5,262 | 68 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 Notes | 4.85% | n/a | 1,272 | 9 | 9 | 4.85% | n/a | 2,543 | 18 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 Notes | 5.38% | n/a | 822 | 47 | — | 5.38% | n/a | 1,644 | 94 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 Notes | 4.75% | n/a | 1,822 | 114 | 9 | 4.75% | n/a | 3,644 | 227 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Totals | $ | 12,320 | $ | 734 | $ | 339 | $ | 23,739 | $ | 1,456 | $ | 482 | |||||||||||||||||||||||||||||||||||||||||||||||
______________
(1) From April 6, 2021 through May 26, 2022, the Wells Fargo Credit Facility had an interest rate priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of the loans in the collateral pool, which will not exceed 2.50% per annum. From May 27, 2022 through June 30, 2022, the Wells Fargo Credit Facility had an interest rate priced at Daily Simple SOFR, with a Daily Simple SOFR floor of zero, plus a spread calculated based upon the composition of the loans in the collateral pool, which will not exceed 2.60% per annum.
(2) The non-usage fee per annum is 0.50% for the first 25% of the unused balance and up to 2.0% for the remaining unused balance.
(3) Interest rate is priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.75% per annum.
(4) The non-usage fee per annum is 0.75% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance.
67
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
(5) Interest rate is priced at three-month Term SOFR, plus a spread calculated based upon the composition of the loans in the collateral pool,which will not exceed 1.98% per annum.
(6) Interest rate is priced at three-month LIBOR, with a LIBOR floor of 0.75%, plus a spread of 5.0% per annum.
(7) Amortization of deferred financing costs.
(8) Includes non-usage fees and custody fees.
(9) Amounts presented represent activity prior to termination on February 18, 2022.
The following table represents interest and debt fees for the three and six months ended June 30, 2021:
Three months ended June 30, 2021 | Six months ended June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest Rate | Non-Usage Rate | Interest Expense | Deferred Financing Costs (6) | Other Fees (7) | Interest Rate | Non-Usage Rate | Interest Expense | Deferred Financing Costs (6) | Other Fees (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Wells Fargo Credit Facility | (1) | (2) | $ | 1,184 | $ | 380 | $ | 194 | (1) | (2) | $ | 3,122 | $ | 756 | $ | 254 | |||||||||||||||||||||||||||||||||||||||||||
| JPM Credit Facility | (3) | (4) | 1,814 | 106 | 334 | (3) | (4) | 3,986 | 210 | 517 | |||||||||||||||||||||||||||||||||||||||||||||||||
Citi Credit Facility (8) | — | — | — | — | — | L+1.60% | 0.50% | 277 | 49 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||||
| MassMutual Credit Facility | (5) | 0.50% | — | 112 | 145 | (5) | 0.50% | — | 223 | 283 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 Notes | 3.25% | n/a | 2,633 | 28 | 15 | 3.25% | n/a | 2,693 | 29 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 Notes | 4.85% | n/a | 1,272 | 9 | — | 4.85% | n/a | 2,543 | 18 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 Notes | 5.38% | n/a | 823 | 47 | — | 5.38% | n/a | 1,645 | 94 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 Notes | 4.75% | n/a | 1,822 | 114 | — | 4.75% | n/a | 3,644 | 226 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Totals | $ | 9,548 | $ | 796 | $ | 688 | $ | 17,910 | $ | 1,605 | $ | 1,117 | |||||||||||||||||||||||||||||||||||||||||||||||
______________
(1) From August 28, 2020 through March 31, 2021, the Wells Fargo Credit Facility had an interest rate priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of the loans in the collateral pool, which will not exceed 2.75% per annum. From April 6, 2021 through June 30, 2021, the Wells Fargo Credit Facility had an interest rate priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of the loans in the collateral pool, which will not exceed 2.50% per annum.
(2) The non-usage fee per annum is 0.50% for the first 25% of the unused balance and up to 2.0% for the remaining unused balance.
(3) Interest rate is priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.75% per annum.
(4) The non-usage fee per annum is 0.50% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance.
(5) Interest rate is priced at three-month LIBOR, with a LIBOR floor of 0.75%, plus a spread of 5.0% per annum.
(6) Amortization of deferred financing costs.
(7) Includes non-usage fees and custody fees.
(8) Amounts presented represent activity prior to the Citi Credit Agreement on January 20, 2021.
The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate fair value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates, and accounts payable approximate their carrying value on the accompanying consolidated statements of assets and liabilities due to their short-term nature. The fair value of the Company's 2022 Notes, 2023 Notes, 2024 Notes, and 2026 Notes are derived from market indications provided by Bloomberg Finance L.P. at June 30, 2022 and December 31, 2021.
68
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
At June 30, 2022, the carrying amount of the Company's secured borrowings approximated their fair value. The fair values of the Company's debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Company's borrowings is estimated based upon market interest rates for the Company's own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. As of June 30, 2022 and December 31, 2021, the Company's borrowings would be deemed to be Level 3, as defined in Note 3 - Fair Value of Financial Instruments.
The fair values of the Company’s remaining financial instruments that are not reported at fair value on the accompanying consolidated statements of assets and liabilities are reported below:
| Level | Carrying Amount at June 30, 2022 | Fair Value at June 30, 2022 | |||||||||||||||
| Wells Fargo Credit Facility | 3 | $ | 267,000 | $ | 267,000 | ||||||||||||
| JPM Credit Facility | 3 | 321,600 | 321,600 | ||||||||||||||
| JPM Revolver Facility | 3 | 5,000 | 5,000 | ||||||||||||||
| 2026 Notes | 3 | 297,075 | 273,741 | ||||||||||||||
| 2024 Notes | 3 | 99,413 | 96,727 | ||||||||||||||
| 2023 Notes | 3 | 59,941 | 60,364 | ||||||||||||||
| 2022 Notes | 3 | 149,918 | 150,677 | ||||||||||||||
| $ | 1,199,947 | $ | 1,175,109 | ||||||||||||||
| Level | Carrying Amount at December 31, 2021 | Fair Value at December 31, 2021 | |||||||||||||||
| Wells Fargo Credit Facility | 3 | $ | 285,000 | $ | 285,000 | ||||||||||||
| JPM Credit Facility | 3 | 391,100 | 391,100 | ||||||||||||||
| MassMutual Credit Facility | 3 | — | — | ||||||||||||||
| 2026 Notes | 3 | 296,688 | 300,243 | ||||||||||||||
| 2024 Notes | 3 | 99,295 | 105,163 | ||||||||||||||
| 2023 Notes | 3 | 59,908 | 62,113 | ||||||||||||||
| 2022 Notes | 3 | 149,836 | 153,732 | ||||||||||||||
| $ | 1,281,827 | $ | 1,297,351 | ||||||||||||||
Note 6 — Derivatives
Foreign Currency
The Company may enter into forward foreign currency contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies or to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company's investments denominated in foreign currencies. A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date (usually the security transaction settlement date) at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market rate as unrealized appreciation or depreciation. Realized gains or losses are recognized when contracts are settled. The Company's forward foreign currency contracts generally have terms of approximately three months. The volume of open contracts at the end of each reporting period is reflective of the typical volume of transactions during each calendar quarter. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit this risk by dealing with creditworthy counterparties.
At June 30, 2022 and December 31, 2021, the forward foreign currency contracts were classified within Level 2 of the fair value hierarchy. The foreign currency forward contracts held as of June 30, 2022, and December 31, 2021 were subject to ISDA Master Agreements or similar agreements.
The Company is operated by a person who has claimed an exclusion from the definition of the "commodity pool operator" under the Commodity Exchange Act, and, therefore, who is not subject to registration or regulation as a pool operator under such Act.
69
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Note 7 — Commitments and Contingencies
Commitments
In the ordinary course of business, the Company may enter into future funding commitments. As of June 30, 2022, the Company had unfunded commitments on delayed draw term loans of $153.7 million, unfunded commitments on revolver term loans of $111.0 million, unfunded equity capital discretionary commitments of $11.1 million, and unfunded commitments on term loans of $0.6 million. As of December 31, 2021, the Company had unfunded commitments on delayed draw term loans of $163.6 million, unfunded commitments on revolver term loans of $102.9 million, unfunded equity capital discretionary commitments of $11.1 million, and unfunded commitments on term loans of $0.8 million. The Company maintains sufficient cash on hand and available borrowing capacity to fund such unfunded commitments.
As of June 30, 2022, the Company's unfunded commitments consisted of the following:
June 30, 2022
| Portfolio Company Name | Investment Type | Commitment Type | Total Commitment | Remaining Commitment | ||||||||||||||||||||||
| ADCS Clinics Intermediate Holdings, LLC | Senior Secured First Lien Debt | Delayed draw term loan | $ | 6,552 | $ | 3,740 | ||||||||||||||||||||
| ADCS Clinics Intermediate Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,264 | 1,264 | ||||||||||||||||||||||
| Arch Global Precision, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,008 | 1,008 | ||||||||||||||||||||||
| Arctic Holdco, LLC | Senior Secured First Lien Debt | Revolver term loan | 4,574 | 2,744 | ||||||||||||||||||||||
| Armada Parent, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 4,517 | 4,517 | ||||||||||||||||||||||
| Armada Parent, Inc. | Senior Secured First Lien Debt | Revolver term loan | 5,420 | 5,420 | ||||||||||||||||||||||
| Aventine Holdings, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 10,188 | 1,072 | ||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 11,417 | 11,417 | ||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,425 | 2,283 | ||||||||||||||||||||||
| Capstone Logistics | Senior Secured First Lien Debt | Revolver term loan | 1,804 | 1,804 | ||||||||||||||||||||||
| Chudy Group, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 3,442 | 2,868 | ||||||||||||||||||||||
| Chudy Group, LLC | Senior Secured First Lien Debt | Revolver term loan | 860 | 860 | ||||||||||||||||||||||
| Cobblestone Intermediate Holdco, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 7,010 | 881 | ||||||||||||||||||||||
| Communication Technology Intermediate, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,363 | 2,158 | ||||||||||||||||||||||
| CRS-SPV, Inc. | Senior Secured First Lien Debt | Revolver term loan | 224 | 162 | ||||||||||||||||||||||
| Dynagrid Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,262 | 1,810 | ||||||||||||||||||||||
| Eliassen Group, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 2,932 | 2,932 | ||||||||||||||||||||||
| Encina Equipment Finance, LLC | Subordinated Debt | Delayed draw term loan | 24,000 | 15,771 | ||||||||||||||||||||||
| FGT Purchaser, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,144 | 2,144 | ||||||||||||||||||||||
| Galway Borrower, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 2,798 | 2,798 | ||||||||||||||||||||||
| Galway Borrower, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,894 | 1,894 | ||||||||||||||||||||||
| Geosyntec Consultants, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 13,005 | 13,005 | ||||||||||||||||||||||
| Geosyntec Consultants, Inc. | Senior Secured First Lien Debt | Revolver term loan | 4,769 | 4,769 | ||||||||||||||||||||||
| Gogo Intermediate Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,053 | 1,053 | ||||||||||||||||||||||
| Health Plan One, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,458 | 1,458 | ||||||||||||||||||||||
| Higginbotham Insurance Agency, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 6,857 | 5,901 | ||||||||||||||||||||||
| Hospice Care Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,775 | 634 | ||||||||||||||||||||||
| ICR Operations, LLC | Senior Secured First Lien Debt | Revolver term loan | 6,178 | 4,633 | ||||||||||||||||||||||
| Ideal Tridon Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,810 | 2,810 | ||||||||||||||||||||||
| IG Investments Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,390 | 1,008 | ||||||||||||||||||||||
| Indigo Buyer, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 9,078 | 9,078 | ||||||||||||||||||||||
| Indigo Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,630 | 3,025 | ||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. | Senior Secured First Lien Debt | Revolver term loan | 600 | 420 | ||||||||||||||||||||||
| Integrated Global Services, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,028 | 608 | ||||||||||||||||||||||
| IQN Holding Corp. | Senior Secured First Lien Debt | Delayed draw term loan | 2,540 | 2,540 | ||||||||||||||||||||||
| IQN Holding Corp. | Senior Secured First Lien Debt | Revolver term loan | 1,017 | 1,017 | ||||||||||||||||||||||
| Knowledge Pro Buyer, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 5,061 | 5,061 | ||||||||||||||||||||||
| Knowledge Pro Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,531 | 2,065 | ||||||||||||||||||||||
| Manna Pro Products, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,706 | 947 | ||||||||||||||||||||||
70
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
| Portfolio Company Name | Investment Type | Commitment Type | Total Commitment | Remaining Commitment | ||||||||||||||||||||||
| McDonald Worley, P.C. | Senior Secured First Lien Debt | Term loan | $ | 12,887 | $ | 591 | ||||||||||||||||||||
| Medical Management Resource Group, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 6,631 | 5,623 | ||||||||||||||||||||||
| Medical Management Resource Group, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,326 | 1,326 | ||||||||||||||||||||||
| Midwest Can Company, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,019 | 2,019 | ||||||||||||||||||||||
| Miller Environmental Group, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 1,131 | 1,131 | ||||||||||||||||||||||
| Miller Environmental Group, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,324 | 1,324 | ||||||||||||||||||||||
| Mirra-Primeaccess Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 7,827 | 1,957 | ||||||||||||||||||||||
| Muth Mirror Systems, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,299 | 1,299 | ||||||||||||||||||||||
| Norvax, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,152 | 259 | ||||||||||||||||||||||
| Odessa Technologies, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 2,676 | 2,676 | ||||||||||||||||||||||
| Odessa Technologies, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,747 | 3,747 | ||||||||||||||||||||||
| ORG GC Holdings, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 584 | 584 | ||||||||||||||||||||||
| Pie Buyer, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 13,311 | 7,213 | ||||||||||||||||||||||
| Pie Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,840 | 1,840 | ||||||||||||||||||||||
| Pluralsight, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,602 | 1,602 | ||||||||||||||||||||||
| Point Broadband Acquisition, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 8,058 | 8,058 | ||||||||||||||||||||||
| Premier Global Services, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,042 | 73 | ||||||||||||||||||||||
| Prototek, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 2,257 | 2,257 | ||||||||||||||||||||||
| Prototek, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,693 | 339 | ||||||||||||||||||||||
| Questex, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,584 | 2,584 | ||||||||||||||||||||||
| Reddy Ice Corp. | Senior Secured First Lien Debt | Revolver term loan | 1,762 | 1,322 | ||||||||||||||||||||||
| Relativity Oda, LLC | Senior Secured First Lien Debt | Revolver term loan | 464 | 464 | ||||||||||||||||||||||
| REP TEC Intermediate Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,354 | 1,354 | ||||||||||||||||||||||
| Roadsafe Holdings, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 10,183 | 4,887 | ||||||||||||||||||||||
| Roadsafe Holdings, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 5,072 | 5,072 | ||||||||||||||||||||||
| RSC Acquisition, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 4,216 | 4,216 | ||||||||||||||||||||||
| Saturn SHC Buyer Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 8,886 | 8,886 | ||||||||||||||||||||||
| SCIH Salt Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,746 | 3,746 | ||||||||||||||||||||||
| Sherlock Buyer Corp. | Senior Secured First Lien Debt | Delayed draw term loan | 3,209 | 3,209 | ||||||||||||||||||||||
| Sherlock Buyer Corp. | Senior Secured First Lien Debt | Revolver term loan | 1,284 | 1,284 | ||||||||||||||||||||||
| Simplifi Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,782 | 3,782 | ||||||||||||||||||||||
| St. Croix Hospice Acquisition Corp. | Senior Secured First Lien Debt | Delayed draw term loan | 5,639 | 4,060 | ||||||||||||||||||||||
| St. Croix Hospice Acquisition Corp. | Senior Secured First Lien Debt | Revolver term loan | 2,256 | 2,256 | ||||||||||||||||||||||
| Subsea Global Solutions, LLC | Senior Secured First Lien Debt | Revolver term loan | 963 | 340 | ||||||||||||||||||||||
| SunMed Group Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 601 | 313 | ||||||||||||||||||||||
Tap Rock Resources, LLC (1) | Equity/Other | Equity | 29,470 | 11,114 | ||||||||||||||||||||||
| Therapy Brands Holdings, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 889 | 889 | ||||||||||||||||||||||
| Therapy Brands Holdings, LLC | Senior Secured Second Lien Debt | Delayed draw term loan | 1,379 | 1,379 | ||||||||||||||||||||||
| Trinity Air Consultants Holdings Corp. | Senior Secured First Lien Debt | Delayed draw term loan | 6,974 | 3,138 | ||||||||||||||||||||||
| Trinity Air Consultants Holdings Corp. | Senior Secured First Lien Debt | Revolver term loan | 1,993 | 1,993 | ||||||||||||||||||||||
| Triple Lift, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,300 | 2,035 | ||||||||||||||||||||||
| University of St. Augustine Acquisition Corp. | Senior Secured First Lien Debt | Revolver term loan | 2,615 | 2,615 | ||||||||||||||||||||||
| US Oral Surgery Management Holdco, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 4,821 | 4,393 | ||||||||||||||||||||||
| US Oral Surgery Management Holdco, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,167 | 1,167 | ||||||||||||||||||||||
| US Salt Investors, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,169 | 2,169 | ||||||||||||||||||||||
| Vensure Employer Services, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 379 | 379 | ||||||||||||||||||||||
| Victors CCC Buyer, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 4,391 | 4,391 | ||||||||||||||||||||||
| Victors CCC Buyer, LLC | Senior Secured First Lien Debt | Revolver term loan | 3,179 | 2,782 | ||||||||||||||||||||||
| Westwood Professional Services, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 3,023 | 2,016 | ||||||||||||||||||||||
| Westwood Professional Services, Inc. | Senior Secured First Lien Debt | Revolver term loan | 378 | 378 | ||||||||||||||||||||||
| WHCG Purchaser III, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 13,692 | 6,579 | ||||||||||||||||||||||
71
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
| Portfolio Company Name | Investment Type | Commitment Type | Total Commitment | Remaining Commitment | ||||||||||||||||||||||
| WHCG Purchaser III, Inc. | Senior Secured First Lien Debt | Revolver term loan | $ | 4,224 | $ | 4,224 | ||||||||||||||||||||
| WIN Holdings III Corp. | Senior Secured First Lien Debt | Revolver term loan | 4,448 | 3,558 | ||||||||||||||||||||||
| Total | $ | 386,482 | $ | 276,471 | ||||||||||||||||||||||
_____________
(1) The commitment related to this investment is discretionary.
As of December 31, 2021, the Company's unfunded commitments consisted of the following:
December 31, 2021
| Portfolio Company Name | Investment Type | Commitment Type | Total Commitment | Remaining Commitment | ||||||||||||||||||||||
| ADCS Clinics Intermediate Holdings, LLC | Senior Secured First Lien Debt | Delayed draw term loan | $ | 3,604 | $ | 1,485 | ||||||||||||||||||||
| ADCS Clinics Intermediate Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,264 | 1,264 | ||||||||||||||||||||||
| Arch Global Precision, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 2,380 | 164 | ||||||||||||||||||||||
| Arch Global Precision, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,008 | 1,008 | ||||||||||||||||||||||
| Arctic Holdco, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 10,632 | 3,694 | ||||||||||||||||||||||
| Arctic Holdco, LLC | Senior Secured First Lien Debt | Revolver term loan | 5,074 | 4,059 | ||||||||||||||||||||||
| Armada Parent, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 4,517 | 4,517 | ||||||||||||||||||||||
| Armada Parent, Inc. | Senior Secured First Lien Debt | Revolver term loan | 5,420 | 4,968 | ||||||||||||||||||||||
| Aventine Holdings, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 10,063 | 10,063 | ||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 11,417 | 11,417 | ||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 3,425 | 3,425 | ||||||||||||||||||||||
| BCPE Oceandrive Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,425 | 3,425 | ||||||||||||||||||||||
| Capstone Logistics | Senior Secured First Lien Debt | Delayed draw term loan | 2,945 | 1,818 | ||||||||||||||||||||||
| Capstone Logistics | Senior Secured First Lien Debt | Revolver term loan | 1,804 | 1,526 | ||||||||||||||||||||||
| Chudy Group, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 3,442 | 3,442 | ||||||||||||||||||||||
| Chudy Group, LLC | Senior Secured First Lien Debt | Revolver term loan | 860 | 860 | ||||||||||||||||||||||
| Cobblestone Intermediate Holdco, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 7,015 | 5,899 | ||||||||||||||||||||||
| Communication Technology Intermediate, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,363 | 2,363 | ||||||||||||||||||||||
| CRS-SPV, Inc. | Senior Secured First Lien Debt | Revolver term loan | 224 | 162 | ||||||||||||||||||||||
| Dynagrid Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,262 | 1,583 | ||||||||||||||||||||||
| Encina Equipment Finance, LLC | Subordinated Debt | Delayed draw term loan | 24,000 | 24,000 | ||||||||||||||||||||||
| FGT Purchaser, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,144 | 1,501 | ||||||||||||||||||||||
| Galway Borrower, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 3,977 | 3,977 | ||||||||||||||||||||||
| Galway Borrower, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,894 | 1,894 | ||||||||||||||||||||||
| Gogo Intermediate Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,053 | 1,053 | ||||||||||||||||||||||
| Health Plan One, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,458 | 1,458 | ||||||||||||||||||||||
| Higginbotham Insurance Agency, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 10,113 | 6,022 | ||||||||||||||||||||||
| Hospice Care Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,775 | 1,070 | ||||||||||||||||||||||
| ICR Operations, LLC | Senior Secured First Lien Debt | Revolver term loan | 6,178 | 3,089 | ||||||||||||||||||||||
| Ideal Tridon Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,810 | 1,927 | ||||||||||||||||||||||
| IG Investments Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,390 | 695 | ||||||||||||||||||||||
| Integrated Efficiency Solutions, Inc. | Senior Secured First Lien Debt | Revolver term loan | 600 | 469 | ||||||||||||||||||||||
| Integrated Global Services, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,028 | 406 | ||||||||||||||||||||||
| Knowledge Pro Buyer, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 5,061 | 5,061 | ||||||||||||||||||||||
| Knowledge Pro Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,531 | 1,924 | ||||||||||||||||||||||
| Lakeview Health Holdings, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 514 | 100 | ||||||||||||||||||||||
| Manna Pro Products, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,706 | 1,962 | ||||||||||||||||||||||
| McDonald Worley, P.C. | Senior Secured First Lien Debt | Term loan | 12,887 | 807 | ||||||||||||||||||||||
72
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
| Portfolio Company Name | Investment Type | Commitment Type | Total Commitment | Remaining Commitment | ||||||||||||||||||||||
| Medical Management Resource Group, LLC | Senior Secured First Lien Debt | Delayed draw term loan | $ | 6,631 | $ | 6,631 | ||||||||||||||||||||
| Medical Management Resource Group, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,326 | 1,326 | ||||||||||||||||||||||
| Midwest Can Company, LLC | Senior Secured First Lien Debt | Revolver term loan | 2,019 | 1,454 | ||||||||||||||||||||||
| Miller Environmental Group, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 1,131 | 1,131 | ||||||||||||||||||||||
| Miller Environmental Group, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,324 | 1,324 | ||||||||||||||||||||||
| Mintz Group, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 1,344 | 1,344 | ||||||||||||||||||||||
| Mintz Group, LLC | Senior Secured First Lien Debt | Revolver term loan | 630 | 630 | ||||||||||||||||||||||
| Mirra-Primeaccess Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 7,827 | 7,827 | ||||||||||||||||||||||
| Muth Mirror Systems, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,299 | 1,299 | ||||||||||||||||||||||
| Norvax, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,152 | 259 | ||||||||||||||||||||||
| Odessa Technologies, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 2,676 | 2,676 | ||||||||||||||||||||||
| Odessa Technologies, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,747 | 3,747 | ||||||||||||||||||||||
| Olaplex, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,908 | 1,908 | ||||||||||||||||||||||
| ORG GC Holdings, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 584 | 584 | ||||||||||||||||||||||
| Pie Buyer, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 6,129 | 4,658 | ||||||||||||||||||||||
| Pie Buyer, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,840 | 1,840 | ||||||||||||||||||||||
| Pluralsight, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,602 | 1,602 | ||||||||||||||||||||||
| Point Broadband Acquisition, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 8,058 | 8,058 | ||||||||||||||||||||||
| Premier Global Services, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,042 | 73 | ||||||||||||||||||||||
| Prototek, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 2,257 | 2,257 | ||||||||||||||||||||||
| Prototek, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,693 | 451 | ||||||||||||||||||||||
| PT Network, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,316 | 921 | ||||||||||||||||||||||
| Questex, Inc. | Senior Secured First Lien Debt | Revolver term loan | 2,584 | 1,034 | ||||||||||||||||||||||
| Reddy Ice Corp. | Senior Secured First Lien Debt | Delayed draw term loan | 4,863 | 19 | ||||||||||||||||||||||
| Reddy Ice Corp. | Senior Secured First Lien Debt | Revolver term loan | 1,762 | 1,762 | ||||||||||||||||||||||
| Refresh Parent Holdings, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 3,120 | 85 | ||||||||||||||||||||||
| Refresh Parent Holdings, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 1,859 | 1,859 | ||||||||||||||||||||||
| Refresh Parent Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,127 | 721 | ||||||||||||||||||||||
| Relativity Oda, LLC | Senior Secured First Lien Debt | Revolver term loan | 464 | 464 | ||||||||||||||||||||||
| REP TEC Intermediate Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 1,354 | 1,354 | ||||||||||||||||||||||
| Roadsafe Holdings, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 4,433 | 1,554 | ||||||||||||||||||||||
| RSC Acquisition, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 9,236 | 7,943 | ||||||||||||||||||||||
| Saturn SHC Buyer Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 8,886 | 5,554 | ||||||||||||||||||||||
| SCIH Salt Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,746 | 2,716 | ||||||||||||||||||||||
| Sherlock Buyer Corp. | Senior Secured First Lien Debt | Delayed draw term loan | 3,209 | 3,209 | ||||||||||||||||||||||
| Sherlock Buyer Corp. | Senior Secured First Lien Debt | Revolver term loan | 1,284 | 1,284 | ||||||||||||||||||||||
| Simplifi Holdings, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,782 | 3,782 | ||||||||||||||||||||||
| St. Croix Hospice Acquisition Corp. | Senior Secured First Lien Debt | Delayed draw term loan | 5,639 | 5,639 | ||||||||||||||||||||||
| St. Croix Hospice Acquisition Corp. | Senior Secured First Lien Debt | Revolver term loan | 2,256 | 2,256 | ||||||||||||||||||||||
| SunMed Group Holdings, LLC | Senior Secured First Lien Debt | Revolver term loan | 601 | 505 | ||||||||||||||||||||||
Tap Rock Resources, LLC (1) | Equity/Other | Equity | 29,470 | 11,114 | ||||||||||||||||||||||
| Therapy Brands Holdings, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 889 | 889 | ||||||||||||||||||||||
| Therapy Brands Holdings, LLC | Senior Secured Second Lien Debt | Delayed draw term loan | 1,379 | 1,379 | ||||||||||||||||||||||
| Trinity Air Consultants Holdings Corp. | Senior Secured First Lien Debt | Delayed draw term loan | 6,974 | 6,974 | ||||||||||||||||||||||
| Trinity Air Consultants Holdings Corp. | Senior Secured First Lien Debt | Revolver term loan | 1,993 | 399 | ||||||||||||||||||||||
| Triple Lift, Inc. | Senior Secured First Lien Debt | Revolver term loan | 3,300 | 3,300 | ||||||||||||||||||||||
| University of St. Augustine Acquisition Corp. | Senior Secured First Lien Debt | Revolver term loan | 2,615 | 2,615 | ||||||||||||||||||||||
| US Oral Surgery Management Holdco, LLC | Senior Secured First Lien Debt | Delayed draw term loan | 4,821 | 4,393 | ||||||||||||||||||||||
| US Oral Surgery Management Holdco, LLC | Senior Secured First Lien Debt | Revolver term loan | 1,167 | 1,167 | ||||||||||||||||||||||
73
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
| Portfolio Company Name | Investment Type | Commitment Type | Total Commitment | Remaining Commitment | ||||||||||||||||||||||
| US Salt Investors, LLC | Senior Secured First Lien Debt | Revolver term loan | $ | 2,169 | $ | 2,169 | ||||||||||||||||||||
| Vensure Employer Services, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 2,384 | 2,384 | ||||||||||||||||||||||
| Westwood Professional Services, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 3,023 | 2,016 | ||||||||||||||||||||||
| Westwood Professional Services, Inc. | Senior Secured First Lien Debt | Revolver term loan | 378 | 378 | ||||||||||||||||||||||
| WHCG Purchaser III, Inc. | Senior Secured First Lien Debt | Delayed draw term loan | 13,728 | 12,809 | ||||||||||||||||||||||
| WHCG Purchaser III, Inc. | Senior Secured First Lien Debt | Revolver term loan | 4,224 | 4,224 | ||||||||||||||||||||||
| WIN Holdings III Corp. | Senior Secured First Lien Debt | Revolver term loan | 4,448 | 3,892 | ||||||||||||||||||||||
| Total | $ | 367,965 | $ | 278,399 | ||||||||||||||||||||||
_____________
(1) The commitment related to this investment is discretionary.
Litigation and Regulatory Matters
In the ordinary course of business, the Company may become subject to litigation, claims, and regulatory matters. The Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time.
Indemnifications
In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote.
Note 8 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Adviser and its affiliates to provide certain services that are essential to the Company, including asset management services, asset acquisition and disposition decisions, the sale of shares of the Company’s common stock available for issuance, as well as other administrative responsibilities for the Company including accounting services and investor relations.
As a result of these relationships, the Company is dependent upon the Adviser and its affiliates. In the event that these companies were unable to provide the Company with the respective services, the Company would be required to find alternative providers of these services.
Note 9 — Common Stock
On August 25, 2011, the Company had raised sufficient funds to break escrow on its IPO. On July 1, 2014, the Company's registration statement on Form N-2 (File No. 333-193241) for its Follow-on was declared effective by the SEC. Simultaneously with the effectiveness of the registration statement of the Follow-on, the Company's IPO terminated. Through June 30, 2022, the Company issued 244.8 million shares of common stock for gross proceeds of $2.5 billion, including the shares purchased by an affiliate of BSP and shares issued under the Company's DRIP. Following the time the Company's updated registration statement was declared effective on June 30, 2015, the Company issued shares for subscription agreements that had been accepted through that date. The Company suspended the DRIP from March 29, 2020 through June 26, 2020. While the DRIP was suspended, participants and all other holders of the Company's common stock received distributions paid by the Company in cash. From inception of the Company's DRIP plan to June 30, 2022, the Company had repurchased 34.0 million shares of common stock through its share repurchase program for payments of $282.8 million. As of December 31, 2021, the Company had repurchased 30.8 million shares of common stock for payments of $259.2 million. Amounts include additional shares tendered for death and disability as permitted.
On April 1, 2022, April 12, 2022 and May 13, 2022, the Company entered into stock purchase agreements with certain investors (collectively, the “Purchase Agreements”) and associated subscription agreements (collectively, the “Subscription Agreements”), totaling $234.8 million, for the sale of the Company’s common stock at the net asset value of each drawdown date. Investors are required to make capital contributions to purchase the Company’s common stock each time the Company delivers a drawdown notice in an aggregate amount not to exceed their respective capital commitments. All purchases will generally be made subject to the terms and conditions set forth in the Purchase Agreements and Subscription Agreements, at a per-share price as determined by the Company’s Board, which price will be determined prior to the issuance of the Company’s
74
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
common stock and in accordance with the limitations under Section 23 of the 1940 Act. As of the date of this filing, the Company has called $79.4 million of capital commitments.
In connection with the Purchase Agreements, the Adviser has sold and will sell additional shares of the Company to such investors at a discounted price or contribute other consideration in connection with each drawdown. The Company is not obligated to reimburse the Adviser for the shares that were sold at a discounted price or the other consideration that was provided by the Adviser.
The following table reflects the common stock activity for the six months ended June 30, 2022:
| Shares | Value | |||||||||||||
| Shares Sold | 10,540,388 | $ | 79,441 | |||||||||||
| Shares Issued through DRIP | 1,817,333 | 13,630 | ||||||||||||
| Share Repurchases | (3,159,305) | (23,571) | ||||||||||||
| 9,198,416 | 69,500 | |||||||||||||
The following table reflects the common stock activity for the year ended December 31, 2021:
| Shares | Value | |||||||||||||
| Shares Sold | — | $ | — | |||||||||||
| Shares Issued through DRIP | 3,130,965 | 22,822 | ||||||||||||
| Share Repurchases | (2,910,936) | (19,532) | ||||||||||||
| 220,029 | $ | 3,290 | ||||||||||||
The following table reflects the stockholders' equity activity for the six months ended June 30, 2022:
| Common stock - shares | Common stock - par | Additional paid in capital | Total distributable earnings (loss) | Total Stockholders' Equity | |||||||||||||||||||||||||
Balance as of December 31, 2021 | 201,610,757 | $ | 202 | $ | 1,913,365 | $ | (404,075) | $ | 1,509,492 | ||||||||||||||||||||
| Net investment income | — | — | — | 29,026 | 29,026 | ||||||||||||||||||||||||
| Net realized gain from investment transactions | — | — | — | 3,444 | 3,444 | ||||||||||||||||||||||||
| Net change in unrealized appreciation on investments and foreign exchange currency contracts, net of change in deferred taxes | — | — | — | 2,457 | 2,457 | ||||||||||||||||||||||||
| Repurchases | (3,091,177) | (3) | (23,062) | — | (23,065) | ||||||||||||||||||||||||
| Distributions to stockholders | — | — | — | (29,778) | (29,778) | ||||||||||||||||||||||||
| Reinvested dividends | 908,625 | — | 6,806 | — | 6,806 | ||||||||||||||||||||||||
| Balance as of March 31,2022 | 199,428,205 | $ | 199 | $ | 1,897,109 | $ | (398,926) | $ | 1,498,382 | ||||||||||||||||||||
| Net investment income | — | — | — | 28,496 | 28,496 | ||||||||||||||||||||||||
| Net realized gain from investment transactions | — | — | — | 6,287 | 6,287 | ||||||||||||||||||||||||
| Net change in unrealized depreciation on investments and foreign exchange currency contracts, net of change in deferred taxes | — | — | — | (22,736) | (22,736) | ||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | 10,540,388 | 11 | 79,430 | — | 79,441 | ||||||||||||||||||||||||
| Repurchases | (68,128) | — | (506) | — | (506) | ||||||||||||||||||||||||
| Distributions to stockholders | — | — | — | (31,485) | (31,485) | ||||||||||||||||||||||||
| Reinvested dividends | 908,708 | 1 | 6,823 | — | 6,824 | ||||||||||||||||||||||||
Balance as of June 30, 2022 | 210,809,173 | $ | 211 | $ | 1,982,856 | $ | (418,364) | $ | 1,564,703 | ||||||||||||||||||||
75
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
The following table reflects the stockholders' equity activity for the six months ended June 30, 2021:
| Common stock - shares | Common stock - par | Additional paid in capital | Total distributable earnings (loss) | Total Stockholders' Equity | |||||||||||||||||||||||||
| Balance as of December 31, 2020 | 201,390,728 | $ | 201 | $ | 1,908,116 | $ | (508,562) | $ | 1,399,755 | ||||||||||||||||||||
| Net investment income | — | — | — | 26,618 | 26,618 | ||||||||||||||||||||||||
| Net realized loss from investment transactions | — | — | — | (2,563) | (2,563) | ||||||||||||||||||||||||
| Net change in unrealized appreciation on investments and foreign exchange currency contracts, net of change in deferred taxes | — | — | — | 42,924 | 42,924 | ||||||||||||||||||||||||
| Repurchases | (2,801,712) | (3) | (18,796) | — | (18,799) | ||||||||||||||||||||||||
| Distributions to stockholders | — | — | — | (19,757) | (19,757) | ||||||||||||||||||||||||
| Reinvested dividends | 658,852 | 1 | 4,578 | — | 4,579 | ||||||||||||||||||||||||
| Balance as of March 31, 2021 | 199,247,868 | $ | 199 | $ | 1,893,898 | $ | (461,340) | $ | 1,432,757 | ||||||||||||||||||||
| Net investment income | — | — | — | 27,507 | 27,507 | ||||||||||||||||||||||||
| Net realized gain from investment transactions | — | — | — | 27,149 | 27,149 | ||||||||||||||||||||||||
| Net change in unrealized appreciation on investments and foreign exchange currency contracts, net of change in deferred taxes | — | — | — | 12,065 | 12,065 | ||||||||||||||||||||||||
| Repurchases | (109,223) | — | (733) | — | (733) | ||||||||||||||||||||||||
| Distributions to stockholders | — | — | — | (19,900) | (19,900) | ||||||||||||||||||||||||
| Reinvested dividends | 634,996 | 1 | 4,565 | — | 4,566 | ||||||||||||||||||||||||
| Balance as of June 30, 2021 | 199,773,641 | $ | 200 | $ | 1,897,730 | $ | (414,519) | $ | 1,483,411 | ||||||||||||||||||||
Note 10 — Capital
Investor Commitments
As of June 30, 2022, the Company had $234.8 million in total capital commitments, of which $155.3 million was unfunded, in connection with the Purchase Agreements and Subscription Agreements (as defined in Note 9). As of December 31, 2021, the Company did not have any capital commitments in connection with the Purchase Agreements and Subscription Agreements.
Capital Drawdowns
The following table summarizes the total shares issued and proceeds received, net of issuance costs, related to capital drawdowns of Common Stock in connection with the Purchase Agreements and Subscription Agreements for the six months ended June 30, 2022:
| Share Issue Date | Shares Issued | Net Proceeds Received | ||||||||||||
For the six months ended June 30, 2022 | ||||||||||||||
| April 14, 2022 | 5,548,128 | $ | 41,500 | |||||||||||
| June 3, 2022 | 4,992,260 | 37,941 | ||||||||||||
| Total Capital Drawdowns | 10,540,388 | $ | 79,441 | |||||||||||
There were no shares issued or proceeds received related to capital drawdowns of Common Stock in connection with the Purchase Agreements and Subscription Agreements for the year ended December 31, 2021.
The issuances of Common Stock described above were exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) thereof and Regulation D thereunder. The Company relied, in part, upon representations from investors in the relevant Subscription Agreements that each investor is an "accredited investor," as defined in Regulation D under the Securities Act.
76
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Note 11 — Share Repurchase Program
The Company intends to conduct annual tender offers pursuant to its share repurchase program (“SRP”). The Company’s Board of Directors considers the following factors in making its determination regarding whether to cause the Company to offer to repurchase shares and under what terms:
•the effect of such repurchases on the Company's qualification as a RIC (including the consequences of any necessary asset sales);
•the liquidity of the Company's assets (including fees and costs associated with disposing of assets);
•the Company's investment plans and working capital requirements;
•the relative economies of scale with respect to the Company's size;
•the Company's history in repurchasing shares or portions thereof;
•the condition of the securities markets.
On June 26, 2020, the Company's Board of Directors amended the Company's SRP. The Company intends to conduct tender offers on an annual basis, instead of on a semi-annual basis as was done previously. The Company intends to continue to limit the number of shares to be repurchased in any calendar year to the lesser of (i) 10% of the weighted average number of shares outstanding in the prior calendar year or (ii) the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during the relevant redemption period. In addition, in the event of a stockholder’s death or disability, the Company may, in its sole discretion, accept up to the full amount tendered by such stockholder of the current net asset value per share. Any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that the Company may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period. The Company's ten most recent tender offers were oversubscribed.
| Offer Date | Repurchase Date | Shares Tendered | Shares Repurchased | Repurchase Price Per Share | Aggregate Consideration for Repurchased Shares (in thousands) | |||||||||||||||||||||||||||
| December 15, 2020 | January 26, 2021 | 39,794,155 | 2,776,140 | $ | 6.71 | $ | 18,627.86 | |||||||||||||||||||||||||
| December 14, 2021 | February 24, 2022 | 45,067,174 | 2,927,837 | $ | 7.46 | $ | 21,841.64 | |||||||||||||||||||||||||
Share amounts in the table above represent amounts filed in the tender offer.
Note 12 — Earnings Per Share
Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company had no potentially dilutive securities for the periods ended June 30, 2022 and 2021.
The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share resulting from operations for the three and six months ended June 30, 2022 and 2021.
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||||
| Net increase in net assets resulting from operations | $ | 12,047 | $ | 66,721 | $ | 46,974 | $ | 133,700 | |||||||||||||||
| Weighted average shares outstanding | 205,577,018 | 199,172,026 | 203,038,687 | 199,753,150 | |||||||||||||||||||
| Net increase in net assets resulting from operations per share | $ | 0.06 | $ | 0.33 | $ | 0.23 | $ | 0.67 | |||||||||||||||
77
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Note 13 — Distributions
The following table reflects the distributions declared on shares of the Company’s Common Stock during the six months ended June 30, 2022:
| Date Declared | Record Date | Payment Date | Amount Per Share | ||||||||||||||
For the Six Months Ended June 30, 2022 | |||||||||||||||||
| March 10, 2022 | March 31, 2022 | April 5, 2022 | $ | 0.13 | |||||||||||||
| March 10, 2022 (special) | March 31, 2022 | April 5, 2022 | $ | 0.02 | |||||||||||||
| May 11, 2022 | June 30, 2022 | July 1, 2022 | $ | 0.13 | |||||||||||||
| May 11, 2022 (special) | June 30, 2022 | July 1, 2022 | $ | 0.02 | |||||||||||||
The following table reflects the distributions declared on shares of the Company’s Common Stock during the year ended December 31, 2021:
| Date Declared | Record Date | Payment Date | Amount Per Share | ||||||||||||||
For the Year Ended December 31, 2021 | |||||||||||||||||
| March 11, 2021 | March 31, 2021 | April 1, 2021 | $ | 0.10 | |||||||||||||
| May 7, 2021 | June 30, 2021 | July 1, 2021 | $ | 0.10 | |||||||||||||
| September 28, 2021 | September 30, 2021 | October 1, 2021 | $ | 0.13 | |||||||||||||
| September 28, 2021 (special) | September 30, 2021 | October 1, 2021 | $ | 0.02 | |||||||||||||
| November 9, 2021 | December 31, 2021 | January 3, 2022 | $ | 0.13 | |||||||||||||
| November 9, 2021 (special) | December 31, 2021 | January 3, 2022 | $ | 0.02 | |||||||||||||
The amount of each such distribution is subject to the discretion of the Board of Directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the quarter using record and declaration dates. The distributions are payable by the fifth day following each record date.
As of June 30, 2022 and December 31, 2021, the Company had accrued $24.7 million and $23.3 million, respectively, in stockholder distributions that were unpaid.
Note 14 — Income Tax Information and Distributions to Stockholders
The Company has elected to be treated for federal income tax purposes as a RIC under the Code. Generally, a RIC is exempt from federal income taxes if it meets certain quarterly asset diversification requirements, annual income tests, and distributes to stockholders its ‘‘investment company taxable income,’’ as defined in the Code, each taxable year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the previous tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may also be subject to federal excise taxes of 4%.
A RIC is limited in its ability to deduct expenses in excess of its “investment company taxable income” (which is, generally, ordinary income plus net realized short-term capital gains in excess of net realized long-term capital losses). If the Company's expenses in a given taxable year exceed gross taxable income (e.g., as the result of large amounts of equity-based compensation), it would incur a net operating loss for that year. However, a RIC is not permitted to carry forward net operating losses to subsequent taxable years and such net operating losses do not pass through to the RIC’s stockholders. In addition, deductible expenses can be used only to offset investment company taxable income, not net capital gain. A RIC may not use any net capital losses (that is, realized capital losses in excess of realized capital gains) to offset the RIC’s investment company taxable income, but may carry forward such net capital losses, and use them to offset capital gains indefinitely. Due to these limits on the deductibility of expenses and net capital losses, the Company may for tax purposes have aggregate taxable income for several taxable years that it is required to distribute and that is taxable to stockholders even if such taxable income is greater than the aggregate net income the Company actually earned during those taxable years. Such required distributions may be made from the Company cash assets or by liquidation of investments, if necessary. The Company may realize gains or losses from such liquidations. In the event the Company realizes net capital gains from such transactions, the Company may make a larger capital gain distribution than it would have made in the absence of such transactions.
78
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Depending on the level of taxable income earned in a tax year, for excise tax purposes the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.
The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes (“ASC Topic 740”), nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company's 2021 tax year and 2020, 2019 and 2018 federal and state tax returns remain subject to examination by the Internal Revenue Service.
As of June 30, 2022, the Company had a deferred tax asset of $2.0 million and a deferred tax liability of $(3.1) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.0 million. As of December 31, 2021, the Company had a deferred tax asset of $2.0 million and a deferred tax liability of $(4.9) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.0 million.
The deferred tax asset valuation allowance has been determined pursuant to the provisions of ASC Topic 740, including the Company's estimation of future taxable income, if necessary, and is adequate to reduce the total deferred tax asset to an amount that will more likely than not be realized.
Note 15 — Financial Highlights
The following is a schedule of financial highlights for the six months ended June 30, 2022 and 2021:
| For the six months ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Per share data: | |||||||||||
| Net asset value, beginning of period | $ | 7.49 | $ | 6.95 | |||||||
Results of operations (1) | |||||||||||
| Net investment income | 0.28 | 0.27 | |||||||||
| Net realized and unrealized gain (loss), net of change in deferred taxes | (0.05) | 0.40 | |||||||||
| Net realized loss on foreign currency transactions | — | (0.01) | |||||||||
| Net unrealized appreciation on from forward currency exchange contracts | — | 0.01 | |||||||||
| Net increase in net assets resulting from operations | 0.23 | 0.67 | |||||||||
Stockholder distributions (2) | |||||||||||
| Distributions from net investment income | (0.30) | (0.20) | |||||||||
| Net decrease in net assets resulting from stockholder distributions | (0.30) | (0.20) | |||||||||
Other (6) | — | 0.01 | |||||||||
| Net asset value, end of period | $ | 7.42 | $ | 7.43 | |||||||
| Shares outstanding at end of period | 210,809,173 | 199,773,641 | |||||||||
Total return (3) | 3.14 | % | 9.88 | % | |||||||
| Ratio/Supplemental data: | |||||||||||
| Total net assets, end of period | $ | 1,564,703 | $ | 1,483,411 | |||||||
Ratio of net investment income to average net assets (7) | 8.57 | % | 8.54 | % | |||||||
Ratio of total expenses to average net assets (5) (7) | 8.26 | % | 7.53 | % | |||||||
Portfolio turnover rate (4) | 7.06 | % | 37.87 | % | |||||||
______________
(1)The per share data was derived by using the weighted average shares outstanding during the period.
(2)The per share data for distributions reflects the actual amount of distributions declared per share during the period.
79
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
(3) Total return is calculated assuming a purchase of shares of common stock at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP.
(4) Portfolio turnover rate is calculated using the lesser of year-to-date purchases or sales over the average of the invested assets at fair value.
(5) Ratio of total expenses to average net assets is calculated using total operating expenses, including income tax expense over average net assets.
(6) Represents the impact of calculating certain per share amounts based on weighted average shares outstanding during the period and certain per share amounts based on shares outstanding as of period end.
(7) Ratios are annualized, except for incentive fees.
Note 16 – Schedules of Investments and Advances to Affiliates
An affiliated company is generally a portfolio company in which FBLC owns 5% or more of its voting securities. A controlled affiliated company is generally a portfolio company in which FBLC owns more than 25% of its voting securities or has the power to exercise control over its management or policies (including through a management agreement.) Transactions related to investments in affiliated and controlled affiliated companies for the six months ended June 30, 2022 were as follows:
Portfolio Company (1) | Type of Asset | Industry | Amount of dividends and interest included in income | Beginning Fair Value at December 31, 2021 | Gross additions* | Gross reductions** | Realized Gain/(Loss) | Change in Unrealized Gain (Loss) (7) | Fair Value at June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Control Investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CRS-SPV, Inc. - (2) (3) (6) | Equity/Other Investments | Industrials | $ | — | $ | 1,266 | $ | — | $ | — | $ | — | $ | 204 | $ | 1,470 | ||||||||||||||||||||||||||||||||||||||||
CRS-SPV, Inc. - L+4.50% (6.17%), 3/8/2023 (2) (6) | Senior Secured First Lien Debt | Industrials | 2 | 62 | — | — | — | — | 62 | |||||||||||||||||||||||||||||||||||||||||||||||
Danish CRJ, Ltd. - (2) (3) (6) | Equity/Other Investments | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Encina Equipment Finance, LLC - L+7.75% (9.00%), 12/31/2028 (2) (6) | Subordinated Debt | Financials | 167 | — | 8,229 | — | — | — | 8,229 | |||||||||||||||||||||||||||||||||||||||||||||||
Encina Equipment Finance, LLC - (2) (6) | Equity/Other Investments | Financials | 3,582 | 81,693 | — | 94 | — | (94) | 81,693 | |||||||||||||||||||||||||||||||||||||||||||||||
Encina Equipment Finance, LLC - L+7.75% (9.00%), 12/31/2028 (2) (6) | Subordinated Debt | Financials | 1,734 | 37,964 | 10 | — | — | 126 | 38,100 | |||||||||||||||||||||||||||||||||||||||||||||||
FBLC Senior Loan Fund, LLC - (2) (4) (6) | Equity/ Other Investments | Diversified Investment Vehicles | 12,097 | 304,934 | — | — | — | — | 304,934 | |||||||||||||||||||||||||||||||||||||||||||||||
Integrated Efficiency Solutions, Inc. - 7.50%, 12/31/2025 (2) (6) | Senior Secured First Lien Debt | Industrials | 4 | 131 | 180 | (131) | — | — | 180 | |||||||||||||||||||||||||||||||||||||||||||||||
Integrated Efficiency Solutions, Inc. - 7.50%, 12/31/2025 (2) (6) | Senior Secured First Lien Debt | Industrials | 54 | 1,436 | — | (8) | — | — | 1,428 | |||||||||||||||||||||||||||||||||||||||||||||||
Integrated Efficiency Solutions, Inc. - 10.00% PIK, 12/31/2026 (2) (6) | Senior Secured Second Lien Debt | Industrials | 138 | 780 | 138 | — | — | (278) | 640 | |||||||||||||||||||||||||||||||||||||||||||||||
Integrated Efficiency Solutions, Inc. - (2) (3) (6) | Equity/Other Investments | Industrials | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Integrated Efficiency Solutions, Inc. - (2) (3) (6) | Equity/Other Investments | Industrials | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Internap Corp - (2) (3) (6) | Equity/Other Investments | Business Services | — | — | 1,552 | — | — | — | 1,552 | |||||||||||||||||||||||||||||||||||||||||||||||
Internap Corp. - L+6.50% (7.90%), 5/8/2025 (2) (6) | Senior Secured First Lien Debt | Business Services | 241 | — | 5,650 | — | — | 57 | 5,707 | |||||||||||||||||||||||||||||||||||||||||||||||
Kahala Ireland OpCo Designated Activity Company - (2) (6) | Equity/Other Investments | Transportation | 11,638 | 23,732 | — | — | — | (12,556) | 11,176 | |||||||||||||||||||||||||||||||||||||||||||||||
Kahala Ireland OpCo Designated Activity Company - (2) (3) (6) | Equity/Other Investments | Transportation | — | 3,250 | — | — | — | — | 3,250 | |||||||||||||||||||||||||||||||||||||||||||||||
Kahala US OpCo, LLC - (2) (3) (6) | Equity/Other Investments | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
80
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Portfolio Company (1) | Type of Asset | Industry | Amount of dividends and interest included in income | Beginning Fair Value at December 31, 2021 | Gross additions* | Gross reductions** | Realized Gain/(Loss) | Change in Unrealized Gain (Loss) (7) | Fair Value at June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Lakeview Health Holdings, Inc. - P+6.00% (10.75%) PIK, 10/15/2024 (2) (6) | Senior Secured First Lien Debt | Healthcare | $ | 24 | $ | 414 | $ | 124 | $ | — | $ | — | $ | — | $ | 538 | ||||||||||||||||||||||||||||||||||||||||
Lakeview Health Holdings, Inc. - P+4.50% (9.25%) PIK, 10/15/2024 (2) (6) | Senior Secured First Lien Debt | Healthcare | 64 | 584 | 64 | — | — | (130) | 518 | |||||||||||||||||||||||||||||||||||||||||||||||
Lakeview Health Holdings, Inc. - (2) (3) (6) | Equity/Other Investments | Healthcare | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
MGTF Holdco, LLC - (2) (3) (6) | Equity/Other Investments | Media/Entertainment | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
MGTF Radio Company, LLC - L+6.00% (7.67%), 4/1/2024 (2) (6) | Senior Secured First Lien Debt | Media/Entertainment | 1,806 | 42,567 | 15 | (2,325) | 3 | 1,448 | 41,708 | |||||||||||||||||||||||||||||||||||||||||||||||
ORG GC Holdings, LLC - L+6.50% (8.76%) PIK, 11/29/2026 (2) (6) | Senior Secured First Lien Debt | Business Services | 318 | 8,343 | 317 | — | — | — | 8,660 | |||||||||||||||||||||||||||||||||||||||||||||||
ORG GC Holdings, LLC - 18.00% PIK, 11/29/2027 (2) (6) | Senior Secured Second Lien Debt | Business Services | 318 | 3,439 | 319 | — | — | (85) | 3,673 | |||||||||||||||||||||||||||||||||||||||||||||||
ORG GC Holdings, LLC - (2) (3) (6) | Equity/Other Investments | Business Services | — | 212 | — | — | — | (212) | — | |||||||||||||||||||||||||||||||||||||||||||||||
ORG GC Holdings, LLC - (2) (3) (6) | Equity/Other Investments | Business Services | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Park Ave RE Holdings, LLC (2) (5) (6) | Equity/Other Investments | Financials | — | 4,461 | — | (8,461) | 6,838 | (2,838) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Park Ave RE Holdings, LLC (2) (5) (6) | Subordinated Debt | Financials | 31 | 1,537 | — | (1,537) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Siena Capital Finance, LLC - 12.50%, 11/26/2026 (2) (6) | Subordinated Debt | Financials | 4,399 | 75,000 | (1) | (14,000) | — | 1 | 61,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Siena Capital Finance, LLC - (2) (6) | Equity/Other Investments | Financials | 4,718 | 65,609 | — | — | — | 11,701 | 77,310 | |||||||||||||||||||||||||||||||||||||||||||||||
WPNT, LLC - (2) (3) (6) | Equity/Other Investments | Media/Entertainment | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Control Investments | $ | 41,335 | $ | 657,414 | $ | 16,597 | $ | (26,368) | $ | 6,841 | $ | (2,656) | $ | 651,828 | ||||||||||||||||||||||||||||||||||||||||||
| Affiliate Investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Answers Corp. - (3) (6) | Equity/Other Investments | Media/Entertainment | $ | — | $ | 145 | $ | — | $ | (381) | $ | — | $ | 354 | $ | 118 | ||||||||||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. - L+6.00% (8.23%), 11/24/2025 | Senior Secured First Lien Debt | Media/Entertainment | 204 | 5,565 | 6 | — | — | (124) | 5,447 | |||||||||||||||||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. - L+8.00% (10.23%) 7.00% PIK, 11/24/2027 | Senior Secured Second Lien Debt | Media/Entertainment | 492 | 10,262 | 374 | — | — | (196) | 10,440 | |||||||||||||||||||||||||||||||||||||||||||||||
CDS U.S. Intermediate Holdings, Inc. - (3) | Equity/Other Investments | Media/Entertainment | — | 5,442 | — | — | — | (484) | 4,958 | |||||||||||||||||||||||||||||||||||||||||||||||
CDS U.S. Intermediate Holdings, Inc. - (3) (6) | Equity/Other Investments | Media/Entertainment | — | 2,884 | — | — | — | (524) | 2,360 | |||||||||||||||||||||||||||||||||||||||||||||||
| First Eagle Greenway Fund II, LLC | Equity/Other Investments | Diversified Investment Vehicles | — | 464 | — | (72) | — | (22) | 370 | |||||||||||||||||||||||||||||||||||||||||||||||
Foresight Energy Operating, LLC - (3) (6) | Equity/Other Investments | Energy | — | 3,965 | — | — | — | (176) | 3,789 | |||||||||||||||||||||||||||||||||||||||||||||||
| Foresight Energy Operating, LLC - L+8.00% (10.25%), 6/30/2027 | Senior Secured First Lien Debt | Energy | 52 | 1,102 | — | (8) | — | (22) | 1,072 | |||||||||||||||||||||||||||||||||||||||||||||||
Internap Corp - (3) (6) | Equity/Other Investments | Business Services | — | 1,552 | — | (1,552) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Internap Corp. - L+6.50% (7.90%), 5/8/2025 (6) | Senior Secured First Lien Debt | Business Services | — | 5,475 | — | (5,475) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Jakks Pacific, Inc. - (3) | Equity/Other Investments | Consumer | — | 2,412 | — | — | — | 594 | 3,006 | |||||||||||||||||||||||||||||||||||||||||||||||
Jakks Pacific, Inc. - (6) | Equity/Other Investments | Consumer | 18 | 785 | 19 | — | — | (16) | 788 | |||||||||||||||||||||||||||||||||||||||||||||||
81
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Portfolio Company (1) | Type of Asset | Industry | Amount of dividends and interest included in income | Beginning Fair Value at December 31, 2021 | Gross additions* | Gross reductions** | Realized Gain/(Loss) | Change in Unrealized Gain (Loss) (7) | Fair Value at June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
NewStar Arlington Senior Loan Program, LLC 14-1A FR - L+11.00% (12.18%), 4/25/2031 (6) | Collateralized Securities | Diversified Investment Vehicles | $ | 285 | $ | 4,575 | $ | 8 | $ | — | $ | — | $ | (253) | $ | 4,330 | ||||||||||||||||||||||||||||||||||||||||
NewStar Arlington Senior Loan Program, LLC 14-1A SUB - 20.69%, 4/25/2031 (6) | Collateralized Securities | Diversified Investment Vehicles | 1,473 | 17,114 | — | (2,533) | — | (2,680) | 11,901 | |||||||||||||||||||||||||||||||||||||||||||||||
Newstar Fairfield Fund CLO, Ltd. 2015-1RA F - L+7.50% (8.56%), 1/20/2027 (6) | Collateralized Securities | Diversified Investment Vehicles | 505 | 8,237 | 159 | — | — | 292 | 8,688 | |||||||||||||||||||||||||||||||||||||||||||||||
Newstar Fairfield Fund CLO, Ltd. 2015-1RA SUB - 0.00%, 1/20/2027 (6) | Collateralized Securities | Diversified Investment Vehicles | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| PennantPark Credit Opportunities Fund II, LP | Equity/Other Investments | Diversified Investment Vehicles | — | 4,953 | — | (3,110) | — | (424) | 1,419 | |||||||||||||||||||||||||||||||||||||||||||||||
Tap Rock Resources, LLC - (6) | Equity/Other Investments | Energy | 306 | 8,742 | — | (641) | — | 366 | 8,467 | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC - (3) (6) | Equity/Other Investments | Consumer | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC - (3) (6) | Equity/Other Investments | Consumer | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC - L+6.00% (10.00%) PIK, 3/31/2023 (6) | Senior Secured First Lien Debt | Consumer | — | 464 | — | — | — | 22 | 486 | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC - 10.00% PIK, 3/31/2023 (6) | Senior Secured First Lien Debt | Consumer | — | 3,678 | — | — | — | 376 | 4,054 | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC - L+6.00% (10.00%) PIK, 3/31/2023 (6) | Senior Secured First Lien Debt | Consumer | — | 2,616 | — | — | — | 120 | 2,736 | |||||||||||||||||||||||||||||||||||||||||||||||
Team Waste, LLC (5) (6) | Equity/Other Investments | Diversified Investment Vehicles | — | 3,073 | — | (3,073) | 504 | (504) | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Tennenbaum Waterman Fund, LP | Equity/Other Investments | Diversified Investment Vehicles | 315 | 9,764 | — | — | — | (645) | 9,119 | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - L+6.00% (7.00%) 4.50% PIK, 3/21/2024 (6) | Senior Secured First Lien Debt | Transportation | 9 | 251 | — | — | — | (251) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - L+6.00% (7.07%) 4.50% PIK, 3/21/2024 (6) | Senior Secured First Lien Debt | Transportation | 4 | 244 | — | — | — | 4 | 248 | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - L+6.00% (7.07%) PIK, 3/21/2024 (6) | Senior Secured Second Lien Debt | Transportation | 5 | 17 | — | — | — | (17) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - L+6.00% (7.07%) PIK, 3/21/2024 (6) | Senior Secured Second Lien Debt | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - (3) (6) | Equity/Other Investments | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - (3) (6) | Equity/Other Investments | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - (3) (6) | Equity/Other Investments | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Whitehorse, Ltd. 2014-1A E - L+4.55% (5.84%) PIK, 5/1/2026 (6) | Collateralized Securities | Diversified Investment Vehicles | 230 | 7,171 | 70 | — | — | (310) | 6,931 | |||||||||||||||||||||||||||||||||||||||||||||||
Whitehorse, Ltd. 2014-1A Side Letter - 0.00%, 5/1/2026 (6) | Collateralized Securities | Diversified Investment Vehicles | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Whitehorse, Ltd. 2014-1A SUB - 0.00%, 5/1/2026 (6) | Collateralized Securities | Diversified Investment Vehicles | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Affiliate Investments | $ | 3,898 | $ | 110,952 | $ | 636 | $ | (16,845) | $ | 504 | $ | (4,520) | $ | 90,727 | ||||||||||||||||||||||||||||||||||||||||||
| Total Control & Affiliate Investments | $ | 45,233 | $ | 768,366 | $ | 17,233 | $ | (43,213) | $ | 7,345 | $ | (7,176) | $ | 742,555 | ||||||||||||||||||||||||||||||||||||||||||
82
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
______________________________________________________
* Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities, and the movement of an existing portfolio company into this category from a different category.
** Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities, and the movement of an existing portfolio company out of this category into a different category.
(1)The principal amount and ownership detail are shown in the consolidated schedules of investments.
(2)This investment was not deemed significant under Regulation S-X as of June 30, 2022.
(3)Investment is non-income producing at June 30, 2022.
(4)FBLC and CCLF are the members of SLF, a joint venture formed as a Delaware limited liability company that is not consolidated by either member for financial reporting purposes. The members make investments in SLF in the form of LLC equity interests as SLF makes investments, and all portfolio and other material decisions regarding SLF must be submitted to SLF’s board of directors which is comprised of an equal number of members appointed by each of FBLC and CCLF. Because management of SLF is shared equally between us and CCLF, we do not believe we control SLF for purposes of the 1940 Act or otherwise.
(5)Investment no longer held as of June 30, 2022.
(6)The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act. Such investments are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).
(7)Gross of net change in deferred taxes in the amount of $0.1 million.
Dividends and interest for the six months ended June 30, 2022 attributable to Controlled and Affiliated investments no longer held as of June 30, 2022 were $0.0 million.
Realized gain for the six months ended June 30, 2022 attributable to Controlled and Affiliated investments no longer held as of June 30, 2022 was $7.3 million.
Change in unrealized loss for the six months ended June 30, 2022 attributable to Controlled and Affiliated investments no longer held as of June 30, 2022 was $(3.3) million.
The following table presents the Schedule of Investments and Advances to Affiliates as of December 31, 2021:
Portfolio Company (1) | Type of Asset | Industry | Amount of dividends and interest included in income | Beginning Fair Value at December 31, 2020 | Gross additions* | Gross reductions** | Realized Gain/(Loss) | Change in Unrealized Gain (Loss) (7) | Fair Value at December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Control Investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CRD Holdings, LLC - 9.00% (2) (5) (6) | Equity/Other | Energy | $ | — | $ | 14,557 | $ | — | $ | (13,174) | $ | (597) | $ | (786) | $ | — | ||||||||||||||||||||||||||||||||||||||||
CRS-SPV, Inc. - L+4.50% (5.50%), 3/8/2022 (2) (6) | Senior Secured First Lien Debt | Industrials | 3 | 62 | — | — | — | — | 62 | |||||||||||||||||||||||||||||||||||||||||||||||
CRS-SPV, Inc. (2) (3) (6) | Equity/Other | Industrials | — | 1,393 | — | — | — | (127) | 1,266 | |||||||||||||||||||||||||||||||||||||||||||||||
Danish CRJ, Ltd. (2) (3) (6) | Equity/Other | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Encina Equipment Finance, LLC - L+7.75% (9.00%), 12/31/2028 (2) (6) | Subordinated Debt | Financials | 19 | — | 37,964 | — | — | — | 37,964 | |||||||||||||||||||||||||||||||||||||||||||||||
Encina Equipment Finance, LLC (2) (3) (6) | Equity/Other | Financials | — | — | 81,693 | — | — | — | 81,693 | |||||||||||||||||||||||||||||||||||||||||||||||
FBLC Senior Loan Fund, LLC (2) (4) (6) | Equity/Other | Diversified Investment Vehicles | 24,066 | — | 304,934 | — | — | — | 304,934 | |||||||||||||||||||||||||||||||||||||||||||||||
Integrated Efficiency Solutions, Inc. - 7.50%, 12/31/2025 (2) (6) | Senior Secured First Lien Debt | Industrials | — | — | 131 | — | — | — | 131 | |||||||||||||||||||||||||||||||||||||||||||||||
Integrated Efficiency Solutions, Inc. - 7.50%, 12/31/2025 (2) (6) | Senior Secured First Lien Debt | Industrials | — | — | 1,436 | — | — | — | 1,436 | |||||||||||||||||||||||||||||||||||||||||||||||
83
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Portfolio Company (1) | Type of Asset | Industry | Amount of dividends and interest included in income | Beginning Fair Value at December 31, 2020 | Gross additions* | Gross reductions** | Realized Gain/(Loss) | Change in Unrealized Gain (Loss) (7) | Fair Value at December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Integrated Efficiency Solutions, Inc. - 10.00% PIK, 12/31/2026 (2) (6) | Senior Secured Second Lien Debt | Industrials | $ | 1 | $ | — | $ | 780 | $ | — | $ | — | $ | — | $ | 780 | ||||||||||||||||||||||||||||||||||||||||
Kahala Ireland OpCo Designated Activity Company - L+8.00% (13.00%), 12/22/2028 (2) (5) (6) | Senior Secured First Lien Debt | Transportation | 950 | 18,549 | — | (18,549) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Kahala Ireland OpCo Designated Activity Company (2) (6) | Equity/Other | Transportation | 25,513 | 42,952 | — | — | — | (19,220) | 23,732 | |||||||||||||||||||||||||||||||||||||||||||||||
Kahala Ireland OpCo Designated Activity Company (2) (3) (6) | Equity/Other | Transportation | — | 3,250 | — | — | — | — | 3,250 | |||||||||||||||||||||||||||||||||||||||||||||||
Kahala US OpCo, LLC - 13.00% (2) (3) (6) | Equity/Other | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
KMTEX, LLC - P+3.00% (6.25%) PIK, 6/16/2025 (2) (5) (6) | Senior Secured First Lien Debt | Chemicals | 16 | 218 | 468 | (686) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
KMTEX, LLC - P+3.00% (6.25%) PIK, 6/16/2025 (2) (5) (6) | Senior Secured First Lien Debt | Chemicals | 92 | 3,230 | 102 | (1,060) | (2,272) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
KMTEX, LLC - P+3.00% (6.25%) PIK, 6/16/2025 (2) (5) (6) | Senior Secured First Lien Debt | Chemicals | 26 | 829 | 26 | (272) | (583) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
KMTEX, LLC (2) (3) (5) (6) | Equity/Other | Chemicals | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
KMTEX, LLC (2) (3) (5) (6) | Equity/Other | Chemicals | — | 2,289 | — | — | (2,793) | 504 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Lakeview Health Holdings, Inc. - P+4.50% (7.75%) PIK, 10/15/2024 (2) (6) | Senior Secured First Lien Debt | Healthcare | 26 | — | 600 | — | — | (16) | 584 | |||||||||||||||||||||||||||||||||||||||||||||||
Lakeview Health Holdings, Inc. - P+6.00% (9.25%), 10/15/2024 (2) (6) | Senior Secured First Lien Debt | Healthcare | 28 | — | 414 | — | — | — | 414 | |||||||||||||||||||||||||||||||||||||||||||||||
MGTF Holdco, LLC (2) (3) (6) | Equity/Other | Media/Entertainment | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
MGTF Radio Company, LLC - L+6.00% (7.00%), 4/1/2024 (2) (6) | Senior Secured First Lien Debt | Media/Entertainment | 3,854 | 43,400 | 32 | (3,551) | 6 | 2,680 | 42,567 | |||||||||||||||||||||||||||||||||||||||||||||||
NMFC Senior Loan Program I, LLC (2) (3) (5) (6) | Equity/Other | Diversified Investment Vehicles | 496 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
ORG GC Holdings, LLC - L+6.50% (7.50%) PIK, 11/24/2026 (2) (6) | Senior Secured First Lien Debt | Business Services | 57 | — | 8,343 | — | — | — | 8,343 | |||||||||||||||||||||||||||||||||||||||||||||||
ORG GC Holdings, LLC - 18.00% PIK, 11/24/2027 (2) (6) | Senior Secured Second Lien Debt | Business Services | 56 | — | 3,439 | — | — | — | 3,439 | |||||||||||||||||||||||||||||||||||||||||||||||
ORG GC Holdings, LLC (2) (3) (6) | Equity/Other | Business Services | — | — | 212 | — | — | — | 212 | |||||||||||||||||||||||||||||||||||||||||||||||
ORG GC Holdings, LLC (2) (3) (6) | Equity/Other | Business Services | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Park Ave RE Holdings, LLC - 13.00%, 12/30/2022 (2) (6) | Subordinated Debt | Financials | 1,784 | 37,237 | — | (35,700) | — | — | 1,537 | |||||||||||||||||||||||||||||||||||||||||||||||
Park Ave RE Holdings, LLC (2) (3) (6) | Equity/Other | Financials | — | 3,300 | — | (792) | — | 1,953 | 4,461 | |||||||||||||||||||||||||||||||||||||||||||||||
Siena Capital Finance, LLC - 12.50%, 11/27/2026 (2) (6) | Subordinated Debt | Financials | 5,340 | 25,500 | 74,502 | (25,000) | — | (2) | 75,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Siena Capital Finance, LLC (2) (6) | Equity/Other | Financials | 5,959 | 35,839 | 5,950 | — | — | 23,820 | 65,609 | |||||||||||||||||||||||||||||||||||||||||||||||
WPNT, LLC (2) (3) (6) | Equity/Other | Media/Entertainment | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Control Investments | $ | 68,286 | $ | 232,605 | $ | 521,026 | $ | (98,784) | $ | (6,239) | $ | 8,806 | $ | 657,414 | ||||||||||||||||||||||||||||||||||||||||||
| Affiliate Investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Answers Corp. (3) (6) | Equity/Other | Media/Entertainment | $ | — | $ | 727 | $ | — | $ | (718) | $ | — | $ | 136 | $ | 145 | ||||||||||||||||||||||||||||||||||||||||
84
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Portfolio Company (1) | Type of Asset | Industry | Amount of dividends and interest included in income | Beginning Fair Value at December 31, 2020 | Gross additions* | Gross reductions** | Realized Gain/(Loss) | Change in Unrealized Gain (Loss) (7) | Fair Value at December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Capstone Nutrition Development, LLC (3) (5) (6) | Equity/Other | Consumer | $ | — | $ | 5,928 | $ | — | $ | (28,103) | $ | 23,635 | $ | (1,460) | $ | — | ||||||||||||||||||||||||||||||||||||||||
CDS U.S. Intermediate Holdings, Inc. - L+6.00% (7.00%), 11/24/2025 (6) | Senior Secured First Lien Debt | Media/Entertainment | 330 | 1,940 | 3,944 | (374) | 3 | 52 | 5,565 | |||||||||||||||||||||||||||||||||||||||||||||||
| CDS U.S. Intermediate Holdings, Inc. - L+8.00% (9.00%) 7.00% PIK, 11/24/2027 | Senior Secured Second Lien Debt | Media/Entertainment | 756 | 1,104 | 13,866 | (4,977) | 278 | (9) | 10,262 | |||||||||||||||||||||||||||||||||||||||||||||||
CDS U.S. Intermediate Holdings, Inc. (3) (6) | Equity/Other | Media/Entertainment | — | 1,224 | — | — | — | 4,218 | 5,442 | |||||||||||||||||||||||||||||||||||||||||||||||
CDS U.S. Intermediate Holdings, Inc. (3) (6) | Equity/Other | Media/Entertainment | — | 437 | — | — | — | 2,447 | 2,884 | |||||||||||||||||||||||||||||||||||||||||||||||
| First Eagle Greenway Fund II, LLC | Equity/Other | Diversified Investment Vehicles | 170 | 1,759 | — | (1,279) | — | (16) | 464 | |||||||||||||||||||||||||||||||||||||||||||||||
Foresight Energy Operating, LLC - L+8.00% (9.50%), 6/30/2027 (6) | Senior Secured First Lien Debt | Energy | 119 | 1,354 | — | (235) | — | (17) | 1,102 | |||||||||||||||||||||||||||||||||||||||||||||||
Foresight Energy Operating, LLC (3) (6) | Equity/Other | Energy | — | 2,520 | — | — | — | 1,445 | 3,965 | |||||||||||||||||||||||||||||||||||||||||||||||
Internap Corp. - L+6.50% (7.50%) 5.50% PIK, 5/8/2025 (6) | Senior Secured First Lien Debt | Business Services | 466 | 5,181 | 338 | — | — | (44) | 5,475 | |||||||||||||||||||||||||||||||||||||||||||||||
Internap Corp (3) (6) | Equity/Other | Business Services | — | 2,231 | — | — | — | (679) | 1,552 | |||||||||||||||||||||||||||||||||||||||||||||||
Jakks Pacific, Inc. - 10.50%, 2.50% PIK, 2/9/2023 (5) (6) | Senior Secured First Lien Debt | Consumer | 1,217 | 17,104 | 1,552 | (18,515) | 866 | (1,007) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Jakks Pacific, Inc. - 6.00%, 2.75% PIK, 8/31/2021 (5) (6) | Subordinated Debt | Consumer | 80 | — | 1,495 | (2,827) | 1,332 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Jakks Pacific, Inc. (3) (6) | Equity/Other | Consumer | 81 | 402 | 83 | — | — | 300 | 785 | |||||||||||||||||||||||||||||||||||||||||||||||
Jakks Pacific, Inc. (3) | Equity/Other | Consumer | — | 49 | 2,345 | — | — | 18 | 2,412 | |||||||||||||||||||||||||||||||||||||||||||||||
LendingHome Corp. - 8.00% (5) (6) | Equity/Other | Financials | — | 59,823 | — | (59,477) | (346) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
MidOcean Credit CLO 2013-2A INC - 0.00%, 1/29/2030 (5) (6) | Collateralized Securities | Diversified Investment Vehicles | — | 6,313 | — | (10,152) | (5,677) | 9,516 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Mood Media - Common Equity (5) (6) | Equity/Other | Media/Entertainment | — | — | — | 645 | (645) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
NewStar Arlington Senior Loan Program, LLC 14-1A FR - L+11.00% (11.12%), 4/25/2031 (6) | Collateralized Securities | Diversified Investment Vehicles | 555 | 3,632 | 19 | — | — | 924 | 4,575 | |||||||||||||||||||||||||||||||||||||||||||||||
NewStar Arlington Senior Loan Program, LLC 14-1A SUB - 23.85%, 4/25/2031 (6) | Collateralized Securities | Diversified Investment Vehicles | 3,906 | 15,631 | — | (3,821) | — | 5,304 | 17,114 | |||||||||||||||||||||||||||||||||||||||||||||||
Newstar Fairfield Fund CLO, Ltd. 2015-1RA F - L+7.50% (7.63%), 1/20/2027 (6) | Collateralized Securities | Diversified Investment Vehicles | 2,060 | 5,459 | 318 | — | — | 2,460 | 8,237 | |||||||||||||||||||||||||||||||||||||||||||||||
Newstar Fairfield Fund CLO, Ltd. 2015-1RA SUB - 0.00%, 1/20/2027 (6) | Collateralized Securities | Diversified Investment Vehicles | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
PCX Aerostructures, LLC - 6.00%, 8/9/2021 (5) (6) | Subordinated Debt | Industrials | 2,829 | 9,859 | 645 | (7,995) | 634 | (3,143) | — | |||||||||||||||||||||||||||||||||||||||||||||||
PCX Aerostructures, LLC (5) (6) | Equity/Other | Industrials | — | 76 | — | (2,263) | 2,263 | (76) | — | |||||||||||||||||||||||||||||||||||||||||||||||
PCX Aerostructures, LLC (5) (6) | Equity/Other | Industrials | — | 535 | — | (609) | 609 | (535) | — | |||||||||||||||||||||||||||||||||||||||||||||||
PCX Aerostructures, LLC (5) (6) | Equity/Other | Industrials | — | — | — | (168) | 168 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| PennantPark Credit Opportunities Fund II, LP | Equity/Other | Diversified Investment Vehicles | 726 | 9,274 | — | (4,197) | — | (124) | 4,953 | |||||||||||||||||||||||||||||||||||||||||||||||
Tap Rock Resources, LLC (6) | Equity/Other | Energy | 1,398 | 11,405 | — | (3,484) | — | 821 | 8,742 | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC - 10.00% PIK, 3/31/2022 (6) | Senior Secured First Lien Debt | Consumer | — | 3,311 | — | — | — | 367 | 3,678 | |||||||||||||||||||||||||||||||||||||||||||||||
85
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
Portfolio Company (1) | Type of Asset | Industry | Amount of dividends and interest included in income | Beginning Fair Value at December 31, 2020 | Gross additions* | Gross reductions** | Realized Gain/(Loss) | Change in Unrealized Gain (Loss) (7) | Fair Value at December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC - L+6.00% (10.00%) PIK, 3/31/2022 (6) | Senior Secured First Lien Debt | Consumer | $ | — | $ | 420 | $ | — | $ | — | $ | — | $ | 44 | $ | 464 | ||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC - L+6.00% (10.00%) PIK, 3/31/2022 (6) | Senior Secured First Lien Debt | Consumer | — | 2,368 | — | — | — | 248 | 2,616 | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC (3) (6) | Equity/Other | Consumer | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Tax Defense Network, LLC (3) (6) | Equity/Other | Consumer | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Team Waste, LLC (3) (6) | Equity/Other | Industrials | — | 2,570 | — | — | — | 503 | 3,073 | |||||||||||||||||||||||||||||||||||||||||||||||
| Tennenbaum Waterman Fund, LP | Equity/Other | Diversified Investment Vehicles | 1,062 | 10,087 | — | — | — | (323) | 9,764 | |||||||||||||||||||||||||||||||||||||||||||||||
TwentyEighty, Inc. (3) (5) (6) | Equity/Other | Business Services | — | — | — | (35) | 35 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - L+6.00% (7.00%), 3/21/2024 (6) | Senior Secured First Lien Debt | Transportation | 8 | — | 251 | — | — | — | 251 | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - L+6.00% (7.00%), 3/21/2024 (6) | Senior Secured First Lien Debt | Transportation | 2 | — | 244 | — | — | — | 244 | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - L+6.00% (7.00%), 3/21/2024 (6) | Senior Secured Second Lien Debt | Transportation | — | — | 17 | — | — | — | 17 | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC - L+6.00% (7.00%) PIK, 3/21/2024 (6) | Senior Secured Second Lien Debt | Transportation | — | 944 | — | — | — | (944) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC (3) (6) | Equity/Other | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC (3) (6) | Equity/Other | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vantage Mobility International, LLC (3) (6) | Equity/Other | Transportation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Whitehorse, Ltd. 2014-1A E - L+4.55% (4.68%), 5/1/2026 (6) | Collateralized Securities | Diversified Investment Vehicles | 426 | 5,592 | 45 | — | — | 1,534 | 7,171 | |||||||||||||||||||||||||||||||||||||||||||||||
Whitehorse, Ltd. 2014-1A Side Letter - 0.00%, 5/1/2026 (6) | Collateralized Securities | Diversified Investment Vehicles | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Whitehorse, Ltd. 2014-1A SUB - 0.00%, 5/1/2026 (6) | Collateralized Securities | Diversified Investment Vehicles | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Affiliate Investments | $ | 16,191 | $ | 189,259 | $ | 25,162 | $ | (148,584) | $ | 23,155 | $ | 21,960 | $ | 110,952 | ||||||||||||||||||||||||||||||||||||||||||
| Total Control & Affiliate Investments | $ | 84,477 | $ | 421,864 | $ | 546,188 | $ | (247,368) | $ | 16,916 | $ | 30,766 | $ | 768,366 | ||||||||||||||||||||||||||||||||||||||||||
_____________________________________________________
* Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities, and the movement of an existing portfolio company into this category from a different category.
** Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities, and the movement of an existing portfolio company out of this category into a different category.
(1)The principal amount and ownership detail are shown in the consolidated schedules of investments.
(2)This investment was not deemed significant under Regulation S-X as of December 31, 2021.
(3)Investment is non-income producing at December 31, 2021.
86
FRANKLIN BSP LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2022
(Unaudited)
(4)FBLC and CCLF are the members of SLF, a joint venture formed as a Delaware limited liability company that is not consolidated by either member for financial reporting purposes. The members make investments in SLF in the form of LLC equity interests as SLF makes investments, and all portfolio and other material decisions regarding SLF must be submitted to SLF’s board of directors which is comprised of an equal number of members appointed by each of FBLC and CCLF. Because management of SLF is shared equally between us and CCLF, we do not believe we control SLF for purposes of the 1940 Act or otherwise.
(5)Investment no longer held as of December 31, 2021.
(6)The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act. Such investments are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).
(7)Gross of net change in deferred taxes in the amount of $(4.1) million.
Dividends and interest for the year ended December 31, 2021 attributable to Controlled and Affiliated investments no longer held as of December 31, 2021 were $5.7 million.
Realized loss for the year ended December 31, 2021 attributable to Controlled and Affiliated investments no longer held as of December 31, 2021 was $16.6 million.
Change in unrealized gain for the year ended December 31, 2021 attributable to Controlled and Affiliated investments no longer held as of December 31, 2021 was $3.0 million.
Note 17 – Subsequent Events
Unregistered Sales of Equity Securities
On July 26, 2022, pursuant to a drawdown notice previously delivered to investors, the Company issued and sold approximately 8.0 million shares of the Company's common stock for an aggregate offering price of approximately $60.0 million.
87
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Franklin BSP Lending Corporation (the "Company," "FBLC," "we," or "our") and the notes thereto and other financial information included elsewhere in this Quarterly Report on Form 10-Q. We are externally managed by our adviser, Franklin BSP Lending Adviser, L.L.C. (the “Adviser”).
Forward Looking Statements
This report, and other statements that we may make, may contain forward-looking statements with respect to future financial or business performance, strategies, or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions.
Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and we assume no duty to and do not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
In addition to factors previously disclosed in our U.S. Securities and Exchange Commission (“SEC”) reports and those identified elsewhere in this report, including the “Risk Factors” section, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:
•our future operating results;
•the impact of the COVID-19 pandemic on our business and our portfolio companies, including our and their ability to access capital and liquidity;
•changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including the effect of the current COVID-19 pandemic and recent supply chain disruptions;
•the impact of geopolitical conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflict between Russia and Ukraine;
•the impact that the discontinuation of LIBOR and the transition to new reference rates could have on the value of our LIBOR-indexed portfolio investments and the cost of borrowing under our credit facilities;
•the impact of the investments that we expect to make;
•the ability of our portfolio companies to achieve their objectives;
•our contractual arrangements and relationships with third parties;
•our expected financings and investments;
•the adequacy of our cash resources and working capital;
•the timing of cash flows, if any, from the operations of our portfolio companies;
•our repurchase of shares;
•actual and potential conflicts of interest with our Adviser and its affiliates;
•the dependence of our future success on the general economy and its effect on the industries in which we invest;
•the ability to qualify and maintain our qualifications as a regulated investment company (“RIC”) and a business development company (“BDC”);
•the timing, form, and amount of any distributions;
•the impact of fluctuations in interest rates on our business;
•the valuation of any investments in portfolio companies, particularly those having no liquid trading market;
•the impact of changes to generally accepted accounting principles, and the impact to FBLC; and
•the impact of changes to tax legislation and, generally, our tax position.
Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” and elsewhere in this Quarterly Report.
88
Overview
We are an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, we have elected to be treated for tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Our investment activities are managed by the Adviser, a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by our Board of Directors, a majority of whom are independent of the Adviser and its affiliates. As a BDC, we are required to comply with certain regulatory requirements.
Our investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. We invest primarily in senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans, and equity of predominantly private U.S. middle-market companies. We define middle market companies as those with annual revenues of less than $1 billion, although we may invest in larger or smaller companies. We may also purchase interests in loans or corporate bonds through secondary market transactions. We expect that each investment generally will range between approximately 0.5% and 3.0% of our total assets. As of June 30, 2022, 75.5% of our portfolio was invested in senior secured loans.
Senior secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in priority of payments and are generally secured by liens on the operating assets of a borrower which may include inventory, receivables, plant, property, and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. We may also invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities” or “CLO's”). Effective April 1, 2022, we have elected to not invest, directly or indirectly, in coal-related companies, or invest in portfolio companies primarily engaged in directly investing in the exploration for, or the production of, coal at the discretion of the Adviser; provided, however, we shall be considered in compliance with this investment restriction if, from this date forward, we do not invest in any portfolio company that has a Global Industry Classification Standard designation of "coal and consumable fuels."
Financial and Operating Highlights
| (Dollars in millions, except per share amounts) | ||||||||
At June 30, 2022: | ||||||||
| Investment Portfolio | $ | 2,757.0 | ||||||
| Net assets | 1,564.7 | |||||||
| Debt (net of deferred financing costs) | 1,189.8 | |||||||
| Net asset value per share | 7.42 | |||||||
Portfolio Activity for the Six Months Ended June 30, 2022: | ||||||||
| Purchases during the period | 194.0 | |||||||
| Sales, repayments, and other exits during the period | 216.8 | |||||||
| Number of portfolio companies at end of period | 151 | |||||||
Operating results for the Six Months Ended June 30, 2022: | ||||||||
| Net investment income per share | 0.28 | |||||||
| Distributions declared per share | 0.30 | |||||||
| Net increase in net assets resulting from operations per share | 0.23 | |||||||
| Net investment income | 57,522 | |||||||
| Net realized and unrealized loss, net of change in deferred taxes | (19,954) | |||||||
| Net increase in net assets resulting from operations | 46,974 | |||||||
Portfolio and Investment Activity
During the six months ended June 30, 2022, we made $194.0 million of investments in new and existing portfolio companies and had $216.8 million in aggregate amount of sales and repayments, resulting in a net decrease in investments of $22.8 million for the period. The total portfolio of debt investments at fair value consisted of 93.0% bearing variable interest rates and 7.0% bearing fixed interest rates.
89
Our portfolio composition, based on fair value at June 30, 2022 was as follows:
| June 30, 2022 | |||||||||||
| Percentage of Total Portfolio | Weighted Average Current Yield for Total Portfolio (1) | ||||||||||
| Senior Secured First Lien Debt | 66.9 | % | 8.3 | % | |||||||
| Senior Secured Second Lien Debt | 8.6 | 10.0 | |||||||||
| Subordinated Debt | 4.0 | 12.0 | |||||||||
| Debt Subtotal | 79.5 | 8.7 | |||||||||
Collateralized Securities (2) | 1.2 | 15.0 | |||||||||
Equity/Other (3) | 8.2 | 18.1 | |||||||||
FBLC Senior Loan Fund, LLC (3)(4) | 11.1 | 8.0 | |||||||||
| Total | 100.0 | % | 9.4 | % | |||||||
______________
(1) Includes the effect of the amortization or accretion of loan premiums or discounts.
(2) Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with Accounting Standards Codification ("ASC") Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).
(3) Weighted average current yield for Equity/Other may be based on actual or annualized income, where applicable.
(4) As of June 30, 2022, FBLC Senior Loan Fund, LLC's holdings consisted of 92.1% senior secured debt. On a look-through basis to FBLC Senior Loan Fund, LLC, our portfolio is comprised of approximately 86.6% senior secured debt as of June 30, 2022.
During the year ended December 31, 2021, we made $1,932.8 million of investments in new and existing portfolio companies and had $1,898.1 million in aggregate amount of sales and repayments, resulting in net investments of $34.7 million for the period. The total portfolio of debt investments at fair value consisted of 91.5% bearing variable interest rates and 8.5% bearing fixed interest rates.
Our portfolio composition, based on fair value at December 31, 2021 was as follows:
______________
| December 31, 2021 | |||||||||||
| Percentage of Total Portfolio | Weighted Average Current Yield for Total Portfolio (1) | ||||||||||
| Senior Secured First Lien Debt | 65.9 | % | 7.6 | % | |||||||
| Senior Secured Second Lien Debt | 8.8 | 9.1 | |||||||||
| Subordinated Debt | 4.2 | 11.0 | |||||||||
| Debt Subtotal | 78.9 | 7.9 | |||||||||
Collateralized Securities (2) | 1.3 | 15.0 | |||||||||
Equity/Other (3) | 8.8 | 17.1 | |||||||||
FBLC Senior Loan Fund, LLC (3)(4) | 11.0 | 8.0 | |||||||||
| Total | 100.0 | % | 8.8 | % | |||||||
(1) Includes the effect of the amortization or accretion of loan premiums or discounts.
(2) Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with Accounting Standards Codification ("ASC") Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).
(3) Weighted average current yield for Equity/Other may be based on actual or annualized income, where applicable.
(4) As of December 31, 2021, FBLC Senior Loan Fund, LLC holdings consisted of 92.7% senior secured debt. On a look-through basis to FBLC Senior Loan Fund, LLC, our portfolio is comprised of approximately 86.2% senior secured debt as of December 31, 2021.
90
Portfolio Asset Quality
Our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser grades the credit risk of all debt investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio debt investment relative to the inherent risk at the time the original debt investment was made (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors.
| Loan Rating | Summary Description | |||||||
| 1 | Debt investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since the time of investment are favorable. | |||||||
| 2 | Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. All investments are initially rated a “2”. | |||||||
| 3 | Performing debt investment requiring closer monitoring. Trends and risk factors show some deterioration. | |||||||
| 4 | Underperforming debt investment. Some loss of interest or dividend expected, but still expecting a positive return on investment. Trends and risk factors are negative. | |||||||
| 5 | Underperforming debt investment with expected loss of interest and some principal. | |||||||
The weighted average risk rating of our investments based on fair value was 2.1 and 2.1 as of June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022, we had five portfolio companies on non-accrual with a total amortized cost of $44.7 million and fair value of $10.0 million, which represented 1.6% and 0.4% of the investment portfolio's total amortized cost and fair value, respectively. As of December 31, 2021, we had six portfolio companies on non-accrual with a total amortized cost of $42.5 million and fair value of $12.2 million, which represented 1.5%, and 0.4% of the investment portfolio's total amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in our consolidated financial statements included in this report for additional details regarding our non-accrual policy.
FBLC Senior Loan Fund, LLC
On January 20, 2021, FBLC and Cliffwater Corporate Lending Fund (“CCLF”) formed a joint venture, FBLC Senior Loan Fund, LLC (the “SLF”), that invests primarily in senior secured loans, and to a lesser extent may invest in mezzanine loans, unsecured loans and equity of predominantly private U.S. middle-market companies. SLF was formed as a Delaware limited liability company and is not consolidated by FBLC for financial reporting purposes. FBLC provides capital to SLF in the form of LLC equity interests. At formation, FBLC and CCLF owned 87.5% and 12.5%, respectively, of the LLC equity interests of SLF. For both, quarter and year ended, June 30, 2022 and December 31, 2021, FBLC and CCLF owned 79.8% and 20.2%, respectively, of the LLC equity interests of SLF. Profit and loss are allocated based on each members' ownership percentage of the joint venture's net asset value. SLF has an Administrative and Loan Services Agreement with BSP, an affiliate of the Company, pursuant to which BSP provides certain operational and valuation services for SLF's investments; as well as certain agreements with third-party service providers. FBLC and CCLF each appoint two members to SLF's four-person board of members. All material decisions with respect to SLF, including those involving its investment portfolio, require unanimous approval of a quorum of the board of members. Quorum is defined as (i) the presence of two members of the board of members; provided that at least one individual is present that was elected, designated or appointed by each member; (ii) the presence of three members of the board of members; provided that the individual that was elected, designated or appointed by the member with only one individual present shall be entitled to cast two votes on each matter; and (iii) the presence of four members of the board of members; provided that two individuals are present that were elected, designated or appointed by each member.
As part of the initial contribution to SLF, FBLC contributed $751.8 million of assets including $664.2 million of investments and $42.4 million of cash as well as $446.9 million worth of liabilities including the Citi Credit Facility (as defined in Note 5) debt of $344.4 million in exchange for $304.9 million of equity in SLF. As of June 30, 2022 and December 31, 2021, FBLC’s investment in SLF consisted of equity contributions of $304.9 million.
Below is a summary of SLF’s portfolio as of June 30, 2022 and December 31, 2021. A listing of the individual investments in SLF’s portfolio as of such dates can be found in “Note 3 – Fair Value of Investments” in the notes to the accompanying consolidated financial statements (dollars in thousands):
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| June 30, 2022 | December 31, 2021 | |||||||||||||
| Total assets | $ | 1,069,210 | $ | 1,195,960 | ||||||||||
Total investments (1) | $ | 971,257 | $ | 1,088,337 | ||||||||||
Weighted Average Current Yield for Total Portfolio (2) | 7.1 | % | 5.4 | % | ||||||||||
| Number of Portfolio companies in SLF | 174 | 172 | ||||||||||||
Largest portfolio company investment (1) | $ | 20,558 | $ | 27,965 | ||||||||||
Total of five largest portfolio company investments (1) | $ | 93,622 | $ | 113,297 | ||||||||||
_____________________
(1) At fair value
(2) Includes the effect of the amortization or accretion of loan premiums or discounts.
Below is certain summarized financial information for SLF as of June 30, 2022 and December 31, 2021 and for the periods ended June 30, 2022 and June 30, 2021 (dollars in thousands):
| Selected Statement of Assets and Liabilities Information | June 30, | December 31, | |||||||||
| 2022 | 2021 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
Investments, at fair value (amortized cost of $1,036,503 and $1,085,170, respectively) | $ | 971,257 | $ | 1,088,337 | |||||||
| Cash and other assets | 97,953 | 107,623 | |||||||||
| Total assets | $ | 1,069,210 | $ | 1,195,960 | |||||||
| LIABILITIES | |||||||||||
Revolving credit facilities (net of deferred financing costs of $1,991 and $2,488, respectively) | $ | 641,559 | $ | 631,562 | |||||||
| Secured borrowings | 65,016 | 94,737 | |||||||||
| Other liabilities | 27,473 | 71,008 | |||||||||
| Total liabilities | $ | 734,048 | $ | 797,307 | |||||||
| MEMBERS' CAPITAL | |||||||||||
| Total members' capital | $ | 335,162 | $ | 398,653 | |||||||
| Total liabilities and members' capital | $ | 1,069,210 | $ | 1,195,960 | |||||||
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| Selected Statements of Operations Information | For the three months ended June 30, | For the three months ended June 30, | For the six months ended June 30, | For the period January 20, 2021 through June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||
| Investment income: | ||||||||||||||||||||||||||
| Total investment income | $ | 15,747 | $ | 10,874 | $ | 30,176 | $ | 19,326 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Interest and credit facility financing expenses | 3,910 | 2,381 | 7,278 | 3,975 | ||||||||||||||||||||||
| Other expenses | 708 | 480 | 1,342 | 763 | ||||||||||||||||||||||
| Total expenses | 4,618 | 2,861 | 8,620 | 4,738 | ||||||||||||||||||||||
| Net investment income | 11,129 | 8,013 | 21,556 | 14,588 | ||||||||||||||||||||||
| Realized and unrealized gain (loss): | ||||||||||||||||||||||||||
| Net realized and unrealized gain (loss) | (56,584) | 8,581 | (69,833) | 12,058 | ||||||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (45,455) | $ | 16,594 | $ | (48,277) | $ | 26,646 | ||||||||||||||||||
RESULTS OF OPERATIONS
Operating results for the three and six months ended June 30, 2022 and 2021 were as follows (dollars in thousands):
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Total investment income | $ | 63,417 | $ | 58,251 | $ | 127,193 | $ | 114,685 | |||||||||||||||
| Total expenses | 34,169 | 30,341 | 66,940 | 59,457 | |||||||||||||||||||
| Income tax expense, including excise tax | 752 | 403 | 2,731 | 1,103 | |||||||||||||||||||
| Net investment income | $ | 28,496 | $ | 27,507 | $ | 57,522 | $ | 54,125 | |||||||||||||||
Investment Income
For the three and six months ended June 30, 2022, total investment income was $63.4 million and $127.2 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.8 billion and a weighted average current yield of 9.4%. Included within total investment income was $2.1 million and $4.1 million, respectively, of fee income for the three and six months ended June 30, 2022. Fee income consists primarily of prepayment and amendment fees. For the three and six months ended June 30, 2021 total investment income was $58.3 million and $114.7 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.6 billion and a weighted average current yield of 8.7%. Included within total investment income was $3.4 million and $4.4 million, respectively, of fee income for the three and six months ended June 30, 2021. Fee income consists primarily of prepayment and amendment fees.
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Operating Expenses
The composition of our operating expenses for the three and six months ended June 30, 2022 and 2021 was as follows (dollars in thousands):
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Management fees | $ | 10,494 | $ | 9,462 | $ | 20,997 | $ | 19,036 | |||||||||||||||
| Incentive fee on income | 7,124 | 6,876 | 14,380 | 13,531 | |||||||||||||||||||
| Interest and debt fees | 13,393 | 11,032 | 25,677 | 20,632 | |||||||||||||||||||
| Professional fees | 1,126 | 1,133 | 1,979 | 2,412 | |||||||||||||||||||
| Other general and administrative | 1,602 | 1,429 | 3,009 | 3,030 | |||||||||||||||||||
| Administrative services | 198 | 181 | 393 | 362 | |||||||||||||||||||
| Directors' fees | 232 | 228 | 505 | 454 | |||||||||||||||||||
| Total operating expenses | $ | 34,169 | $ | 30,341 | $ | 66,940 | $ | 59,457 | |||||||||||||||
For the three and six months ended June 30, 2022, we incurred management fees of $10.5 million and $21.0 million, respectively. For the three and six months ended June 30, 2022, we incurred incentive fees on income of $7.1 million and $14.4 million, respectively. For the three and six months ended June 30, 2021, we incurred management fees of $9.5 million and $19.0 million, respectively. For the three and six months ended June 30, 2021, we incurred incentive fees on income of $6.9 million and $13.5 million, respectively.
For the three and six months ended June 30, 2022, we incurred interest and debt fees of $13.4 million and $25.7 million, respectively. For the three and six months ended June 30, 2021, we incurred interest and debt fees of $11.0 million and $20.6 million, respectively. Interest and debt fees are comprised of interest expense, non-usage fees, trustee fees, amortization of deferred financing costs, and amortization of discount if applicable related to our revolving credit facilities and unsecured notes, each as defined herein in the section entitled "Borrowings". The increase in interest and debt fees for the three and six months ended June 30, 2022 as compared to the same periods in 2021 is primarily the result of the timing of issuance of our 2026 Notes as well as an increase in total principal outstanding on our credit facilities.
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Net Realized Gain (Loss) and Net Change in Unrealized Appreciation (Depreciation) on Investments, Foreign Currency Transactions, and Forward Currency Exchange Contracts
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and foreign currency transactions, net of change in deferred taxes for the six months ended June 30, 2022 and 2021 were as follows (dollars in thousands):
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net realized gain (loss) | |||||||||||||||||||||||
| Control investments | $ | 6,840 | $ | 2 | $ | 6,841 | $ | 3 | |||||||||||||||
| Affiliate investments | 392 | 20,364 | 504 | 20,057 | |||||||||||||||||||
| Non-affiliate investments | (1,253) | 7,636 | 3,654 | 7,193 | |||||||||||||||||||
| Net realized gain (loss) on foreign currency transactions | 308 | (853) | 501 | (1,381) | |||||||||||||||||||
| Net realized loss on extinguishment of debt | — | — | (1,769) | (1,286) | |||||||||||||||||||
| Total net realized gain | 6,287 | 27,149 | 9,731 | 24,586 | |||||||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | |||||||||||||||||||||||
| Control investments | (12,179) | (1,301) | (2,656) | (9,426) | |||||||||||||||||||
| Affiliate investments | (5,564) | (1,470) | (4,520) | 19,412 | |||||||||||||||||||
| Non-affiliate investments | (5,100) | 14,241 | (12,900) | 44,115 | |||||||||||||||||||
| Net change in deferred taxes | (107) | — | 122 | — | |||||||||||||||||||
| Total net change in unrealized appreciation (depreciation) on investments, net of change in deferred taxes | (22,950) | 11,470 | (19,954) | 54,101 | |||||||||||||||||||
| Net change in unrealized appreciation (depreciation) from forward currency exchange contracts | 214 | 595 | (325) | 888 | |||||||||||||||||||
| Net realized and unrealized gain (loss) | $ | (16,449) | $ | 39,214 | $ | (10,548) | $ | 79,575 | |||||||||||||||
Net realized and unrealized loss on investments and foreign currency transactions, net of change in deferred taxes, resulted in a net losses of $16.4 million and $10.5 million, respectively, for the three and six months ended June 30, 2022 compared to a net gain of $39.2 million and $79.6 million, respectively, for the same periods in 2021. We look at net realized gain (loss) and change in unrealized appreciation (depreciation) together, as movement in unrealized appreciation or depreciation can be the result of realizations.
The net realized and unrealized loss for the three months ended June 30, 2022 was primarily driven by unrealized losses on Equity Investments and Collateralized Securities.The net realized and unrealized loss for the six months ended June 30, 2022 was primarily driven by unrealized losses on Equity Investments and Collateralized Securities.
The net realized and unrealized gain for the three months ended June 30, 2021 was primarily driven by realized gains on Equity Investment sales as well as unrealized gains on Senior Secured Investments and Collateralized Securities. The net realized and unrealized gain for the six months ended June 30, 2021 was primarily driven by realized gains on Equity Investment sales as well as unrealized gains on Senior Secured Investments and Collateralized Securities.
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Changes in Net Assets from Operations
For the three and six months ended June 30, 2022, we recorded a net increase in net assets resulting from operations of $12.0 million and $47.0 million, respectively, versus a net increase in net assets resulting from operations of $66.7 million and $133.7 million, respectively, for the three and six months ended June 30, 2021. The decrease is primarily driven by a decrease in realized gain on our investments and an increase in unrealized loss on our investments. Based on the weighted average shares of common stock outstanding for the six months ended June 30, 2022 and 2021, respectively, our per share net increase in net assets resulting from operations was $0.06 and $0.23, respectively, for the three and six months ended June 30, 2022, versus a net increase in net assets of $0.33 and $0.67, respectively, for the three and six months ended June 30, 2021.
Cash Flows
For the six months ended June 30, 2022, net cash provided by operating activities was $49.9 million. The level of cash flows provided by operating activities is affected by the timing of purchases, redemptions, and sales of portfolio investments. The increase in cash flows provided by operating activities for the six months ended June 30, 2022 was primarily a result of sales and repayments of investments of $216.8 million and a decrease in receivable for unsettled trades of $24.2 million, offset by purchases of investments of $194.1 million.
Net cash used in financing activities of $76.8 million during the six months ended June 30, 2022 related to payments on debt of $211.5 million, stockholder distributions of $46.2 million and repurchases of common stock of $23.6 million, partially offset by proceeds from issuance of shares of $79.4 million and proceeds from debt of $129.0 million.
For the six months ended June 30, 2021, net cash used in operating activities was $243.6 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions, and sales of portfolio investments. The decrease in cash flows used in operating activities for the six months ended June 30, 2021 was primarily a result of purchases of investments of $623.1 million as well as payable for unsettled trades of $144.9 million, partially offset by sales and repayments of $483.6 million.
Net cash provided by financing activities of $225.0 million during the six months ended June 30, 2021 primarily related to proceeds from debt of $785.0 million, partially offset by payments on debt of $509.1 million.
Recent Developments
Unregistered Sales of Equity Securities
On July 26, 2022, pursuant to a drawdown notice previously delivered to investors, the Company issued and sold approximately 8.0 million shares of the Company's common stock for an aggregate offering price of approximately $60.0 million.
Liquidity and Capital Resources
We generate cash flows from fees, interest, and dividends earned from our investments, as well as proceeds from sales of our investments and, previously, from the net proceeds of our Offering. As of June 30, 2022, we had issued 244.8 million shares of our common stock for gross proceeds of $2.5 billion, including the shares purchased by affiliates and shares issued pursuant to the DRIP. As of June 30, 2022, we had $610.0 million of senior unsecured notes outstanding. As of June 30, 2021, we had issued 230.6 million shares of our common stock for gross proceeds of $2.4 billion, including the shares purchased by affiliates and shares issued pursuant to the DRIP. As of June 30, 2021, we had $610.0 million of senior unsecured notes outstanding.
Our principal demands for funds in both the short-term and long-term are for portfolio investments, for the payment of operating expenses, distributions to our investors, repurchases under our share repurchase program, and for the payment of principal and interest on our outstanding indebtedness. We may also from time to time enter into other agreements with third parties whereby third parties will contribute to specific investment opportunities. Other potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from private offerings, proceeds from the sale of investments, and undistributed funds from operations. However, our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets, and borrowing restrictions that may be imposed by lenders.
We intend to conduct annual tender offers pursuant to our share repurchase program. Our Board of Directors will consider the following factors, among others, in making its determination regarding whether to cause us to offer to repurchase shares and under what terms:
•the effect of such repurchases on our qualification as a RIC (including the consequences of any necessary asset sales);
•the liquidity of our assets (including fees and costs associated with disposing of assets);
•our investment plans and working capital requirements;
•the relative economies of scale with respect to our size;
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•our history in repurchasing shares or portions thereof; and
•the condition of the securities markets.
We intend to conduct tender offers on an annual basis. We intend to continue to limit the number of shares to be repurchased in any calendar year to the lesser of (i) 10% of the weighted average number of shares outstanding in the prior calendar year or (ii) the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during the relevant redemption period. In addition, in the event of a stockholder’s death or disability, any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that we may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.
Distributions
On May 11, 2022, the Board declared a regular quarterly cash dividend of $0.13 per share and a special dividend of $0.02 per share of the Company's common stock, payable on July 1, 2022 to stockholders of record as of June 30, 2022.
The amount of each such distribution is subject to the discretion of the Board of Directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the quarter using record and declaration dates. The distributions are payable by the fifth day following each record date.
The table below shows the components of the distributions we have declared and/or paid during the six months ended June 30, 2022 and 2021 (dollars in thousands).
| For the six months ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Distributions declared | $ | 61,263 | $ | 39,657 | |||||||
| Distributions paid | $ | 59,855 | $ | 39,815 | |||||||
| Portion of distributions paid in cash | $ | 46,225 | $ | 30,670 | |||||||
| Portion of distributions paid in DRIP shares | $ | 13,630 | $ | 9,145 | |||||||
As of June 30, 2022, we had $24.7 million of distributions accrued and unpaid. As of December 31, 2021, we had $23.3 million of distributions accrued and unpaid.
We may fund our cash distributions to stockholders from any sources of funds available to us, including offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. We have not established limits on the amount of funds we may use from available sources to make distributions. We may have distributions which could be characterized as a return of capital for tax purposes. During the six months ended June 30, 2022 and 2021, no portion of our distributions was characterized as return of capital for tax purposes. The specific tax characteristics of our distributions made in respect of our anticipated fiscal year ending December 31, 2022 will be reported to stockholders shortly after the end of the calendar year 2022 as well as in our periodic reports with the SEC. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gain. Moreover, you should understand that any such distributions were not based on our investment performance and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser continues to make such reimbursements. There can be no assurance that we will achieve the performance necessary to sustain our distributions or that we will be able to pay distributions at all.
The following table sets forth the distributions declared during the six months ended June 30, 2022 and 2021 (dollars in thousands):
| For the six months ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Distributions | $ | 61,263 | $ | 39,657 | |||||||
| Total distributions | $ | 61,263 | $ | 39,657 | |||||||
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Private Placement of Shares
On April 1, 2022, April 12, 2022 and May 13, 2022, we entered into stock purchase agreements with certain investors (collectively, the “Purchase Agreements”) and associated subscription agreements (collectively, the “Subscription Agreements”), totaling $234.8 million, for the sale of our common stock at the net asset value of each drawdown date. Investors are required to make capital contributions to purchase our common stock each time we deliver a drawdown notice in an aggregate amount not to exceed their respective capital commitments. All purchases will generally be made subject to the terms and conditions set forth in the Purchase Agreements and Subscription Agreements, at a per-share price as determined by our Board, which price will be determined prior to the issuance of our common stock and in accordance with the limitations under Section 23 of the 1940 Act. As of the date of this filing, we have called $79.4 million of capital commitments.
In connection with the Purchase Agreements, the Adviser has sold and will sell additional shares of the Company to such investors at a discounted price or contribute other consideration in connection with each drawdown. The Company is not obligated to reimburse the Adviser for the shares that were sold at a discounted price or the other consideration that was provided by the Adviser.
Taxation as a RIC
We have elected to be treated as a RIC under Subchapter M of the Code commencing with our tax year ended December 31, 2011 and intend to maintain our qualification as a RIC thereafter. As a RIC, we generally will not be subject to corporate-level U.S. federal income taxes on any income that we distribute as dividends for U.S. federal income tax purposes to our stockholders. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our stockholders, for each tax year, an amount equal to at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss and determined without regard to any deduction for dividends paid, or the annual distribution requirement. Even if we qualify as a RIC, we generally will be subject to corporate-level U.S. federal income tax on our undistributed taxable income and could be subject to state, local, and foreign taxes.
Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our stockholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders. In addition, we could be required to recognize unrealized gains, incur substantial taxes and interest and make substantial distributions in order to re-qualify as a RIC. We cannot assure stockholders that they will receive any distributions.
Related Party Transactions and Agreements
Investment Advisory Agreement
We entered into an Investment Advisory Agreement as of February 1, 2019, under which the Adviser, subject to the overall supervision of our Board of Directors, manages the day-to-day operations of, and provides investment advisory services to us. The Adviser and its affiliates also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours. The Adviser and its affiliates serve as investment adviser or sub-adviser to private funds and registered open-end funds, and serves as an investment adviser to a public real estate investment trust. The Adviser’s policies are designed to manage and mitigate the conflicts of interest associated with the allocation of investment opportunities. In addition, any affiliated fund currently formed or formed in the future and managed by the Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Adviser or its affiliates. The Board renewed the Investment Advisory Agreement on January 31, 2022.
Prior to February 1, 2019, our Adviser provided investment advisory and management services under the Prior Investment Advisory Agreement, effective November 1, 2016, and most recently re-approved by the Board in August 2018. The terms of the Prior Investment Advisory Agreement were materially identical to the Investment Advisory Agreement. The Prior Investment Advisory Agreement automatically terminated upon the indirect change of control of the Adviser on the consummation of the FT Transaction.
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Administration Agreement
On November 1, 2016, we entered into the Administration Agreement with BSP, pursuant to which BSP provides us with office facilities and administrative services. The Administration Agreement may be terminated by either party without penalty upon not less than 60 days’ written notice to the other. For the three and six months ended June 30, 2022, the Company incurred $0.4 million and $0.8 million respectively, in administrative service fees under the Administration Agreement. For the three and six months ended June 30, 2021, the Company incurred $0.4 million and $0.9 million respectively, in administrative service fees under the Administration Agreement.
Co-Investment Relief
The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC permitting the BDC to do so. The SEC staff has granted us exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with our investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.
Due To/From Affiliated Funds
Included within Prepaid and Other Assets on the Consolidated Statements of Assets and Liabilities as of June 30, 2022 and December 31, 2021 are $0.0 and $2.6 million, respectively of receivables from Affiliated Funds.
Borrowings
We are only allowed to borrow money such that our asset coverage, which, as defined in the 1940 Act, measures the ratio of total assets less total liabilities not represented by senior securities to total borrowings, equals at least 200% after such borrowing, with certain limited exceptions. We are continually exploring additional forms of alternative debt financing which could include new or expanded credit facilities or the issuance of debt securities. We may use borrowed funds, known as “leverage,” to make investments and to attempt to increase returns to our stockholders by reducing our overall cost of capital. We currently have credit facilities with Wells Fargo, JPM and MassMutual and have sold $610.0 million in aggregate principal of unsecured notes.
Wells Fargo Credit Facility
On August 28, 2020, the Company entered into a $300.0 million revolving credit facility with the Company, as collateral manager, Funding I, as borrower, the lenders party thereto, Wells Fargo, as administrative agent, and U.S. Bank, as collateral agent and collateral custodian (the “Wells Fargo Credit Facility”).
The Wells Fargo Credit Facility provides for borrowings through August 28, 2023, and any amounts borrowed under the Wells Fargo Credit Facility will mature on August 28, 2025. Prior to the Second Amendment (defined below), the Wells Fargo Credit Facility was priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 2.75% per annum. Interest is payable quarterly in arrears. Funding I will be subject to a non-usage fee to the extent the commitments available under the Wells Fargo Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 25% of the unused balance and up to 2.0% for the remaining unused balance. Funding I paid a structuring fee and incurred other customary costs and expenses in connection with the Wells Fargo Credit Facility. Pursuant to an amendment entered into on April 6, 2021, the commitment fee for any unused portion of the Wells Fargo Credit Facility was temporarily reduced until September 30, 2021 (the "First Amendment"). Additionally, pursuant to the First Amendment, the maximum spread was reduced from 2.75% to 2.50% as a result of this amendment. The other terms of the Wells Fargo Credit Facility were unchanged. Pursuant to an amendment entered into on May 27, 2022 (the "Second Amendment"), the benchmark rate was transitioned from LIBOR to SOFR. After the Second Amendment, the Wells Fargo Credit Facility is priced at Daily Simple SOFR, with a Daily Simple SOFR floor of zero, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 2.60% per annum.
Funding I’s obligations under the Wells Fargo Credit Facility are secured by a first priority security interest in substantially all of the assets of Funding I, including its portfolio of investments and the Company’s equity interest in Funding I. The obligations of Funding I under the Wells Fargo Credit Facility are non-recourse to the Company.
In connection with the Wells Fargo Credit Facility, the Company and Funding I have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The Wells Fargo Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the Wells Fargo
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Credit Facility may terminate the Company in its capacity as collateral manager/portfolio manager under the Wells Fargo Credit Facility. Upon the occurrence of an event of default under the Wells Fargo Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the Wells Fargo Credit Facility immediately due and payable.
JPM Credit Facility
On August 28, 2020, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, 57th Street, entered into a $300.0 million revolving credit facility with JPMorgan Chase Bank, Nation Association, as administrative agent ("JPM"), and U.S. Bank, as collateral agent, collateral administrator and securities intermediary (the "JPM Credit Facility").
The JPM Credit Facility provides for borrowings through August 28, 2023, and any amounts borrowed under the JPM Credit Facility will mature on August 28, 2023 unless the administrative agent exercises its option to extend the maturity date to August 28, 2024. The JPM Credit Facility is priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.75% per annum. Interest is payable quarterly in arrears. 57th Street will be subject to a non-usage fee to the extent the commitments available under the JPM Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance until August 28, 2021, when the non-usage fee per annum is 0.75% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance. 57th Street paid a structuring fee and incurred other customary costs and expenses in connection with the JPM Credit Facility. On January 21, 2021, the Company entered into an amendment (the “JPM Amendment”) to the JPM Credit Facility. The JPM Amendment, among other things, increases the amount that the Company is permitted to borrow under the JPM Credit Agreement from $300.0 million to $400.0 million. On April 12, 2021, the Company, through 57th Street, amended and restated the JPM Credit Facility. The amendment and restatement temporarily reduced the previous minimum funding amount until October 13, 2021. The other material terms of the JPM Credit Facility were unchanged.
57th Street’s obligations under the JPM Credit Facility are secured by a first priority security interest in substantially all of the assets of 57th Street, including its portfolio of investments and the Company’s equity interest in 57th Street. The obligations of 57th Street under the JPM Credit Facility are non-recourse to the Company.
In connection with the JPM Credit Facility, the Company and 57th Street have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The JPM Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the JPM Credit Facility may terminate the Company in its capacity as collateral manager/portfolio manager under the JPM Credit Facility. Upon the occurrence of an event of default under the JPM Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the JPM Credit Facility immediately due and payable.
JPM Revolver Facility
On June 10, 2022, the Company entered into a $495.0 million revolving credit facility with JPMorgan Chase Bank, as administrative agent and as collateral agent, MUFG Union Bank, N.A., Sumitomo Mitsui Banking Corporation, and Wells Fargo Bank, National Association as syndication agents, as well as other Lender parties (the “JPM Revolver Facility”).
The JPM Revolver Facility provides for borrowings through June 10, 2026, and any amounts borrowed under the JPM Revolver Facility will mature on June 10, 2027. The JPM Revolver Facility is priced at three-month Term SOFR, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 1.98% per annum. Interest is payable quarterly in arrears. The Company will be subject to a non-usage fee of 0.38% to the extent the commitments available under the JPM Revolver Facility have not been borrowed. The Company paid a structuring fee and incurred other customary costs and expenses in connection with the JPM Revolver Facility.
In connection with the JPM Revolver Facility, the Company has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolver Facility contains customary events of default for similar financing transactions. Upon the occurrence and during the continuation of an event of default, JPMorgan Chase Bank, N.A. may declare the outstanding advances and all other obligations under the JPM Revolver Facility immediately due and payable.
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Citi Credit Facility
On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, CB Funding, entered into a credit facility (as amended from time to time, the “Citi Credit Facility”) with Citibank, N.A. ("Citi") as administrative agent and U.S. Bank as collateral agent, account bank, and collateral custodian. From January 1, 2020 to January 20, 2021, the Citi Credit Facility provided for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, with a reinvestment period ending on May 31, 2021 and maturity date of May 31, 2022. On January 20, 2021, SLF, the Company's joint venture with CCLF entered into an amendment to the Citi Credit Facility (the “Citi Credit Agreement”). The amendment, among other things, (i) replaces the Company with SLF as the collateral manager under the Citi Credit Agreement, (ii) extends the end of the reinvestment period from May 31, 2021 to May 31, 2023 and (iii) extends the final maturity date from May 31, 2022 to May 31, 2024. As a result of this amendment to the Citi Credit Facility, the Company incurred a realized loss on extinguishment of debt of $1.3 million. In connection with the Citi Credit Facility, CB Funding has made certain representations and warranties, is required to comply with various covenants, reporting requirements, and other customary requirements for similar facilities and is subject to certain customary events of default. Upon the occurrence and during the continuation of an event of default, Citi may declare the outstanding advances and all other obligations under the Citi Credit Facility immediately due and payable. During the continuation of an event of default, CB Funding must pay interest at a default rate.
The Citi Credit Facility contains customary default provisions for facilities of this type pursuant to which Citi may terminate the rights, obligations, power, and authority of the Company, in its capacity as servicer of the portfolio assets under the Citi Credit Facility, including, but not limited to, non-performance of Citi Credit Facility obligations, insolvency, defaults of certain financial covenants, and other events with respect to the Company that may be adverse to Citi and the secured parties under the Citi Credit Facility.
The Citi Credit Facility is priced at three-month LIBOR plus a spread of 1.60% per annum through and including the last day of the investment period and 2.00% per annum thereafter. Interest is payable quarterly in arrears. CB Funding is subject to a non-usage fee to the extent the aggregate principal amount available under the Citi Credit Facility has not been borrowed. The non-usage fee per annum is 0.50%. Any amounts borrowed under the Citi Credit Facility along with any accrued and unpaid interest thereunder will mature, and will be due and payable, in three years.
MassMutual Credit Facility
On July 7, 2020, the Company and a wholly-owned, special purpose financing subsidiary of the Company, BDCA Asset Financing, LLC (“BDCA Asset Financing”), entered into a loan and servicing agreement (the “MassMutual Credit Facility”) with Massachusetts Mutual Life Insurance Company (“MassMutual”) as facility servicer and a lender and U.S. Bank National Association as collateral custodian, collateral administrator and administrative agent. The MassMutual Credit Facility provides for borrowings of up to $100.0 million on a committed basis, and, subject to satisfaction of certain conditions, contains an accordion feature whereby the Mass Mutual Credit Facility can be expanded to $150.0 million.
BDCA Asset Financing’s obligations under the MassMutual Credit Facility are secured by a first priority security interest in substantially all of the assets of BDCA Asset Financing, including its portfolio of investments and the Company’s equity interest in BDCA Asset Financing. The obligations of BDCA Asset Financing under the MassMutual Credit Facility are non-recourse to the Company.
The MassMutual Credit Facility provides for borrowings through December 31, 2021 and matures on December 31, 2025. The MassMutual Credit Facility is priced at three-month LIBOR, with a LIBOR floor of 0.75%, plus a spread of 5.0% per annum. Interest is payable quarterly in arrears. BDCA Asset Financing will be subject to a non-usage fee of 0.50% to the extent the aggregate principal amount available under the MassMutual Credit Facility has not been borrowed. BDCA Asset Financing paid a structuring fee and incurred other customary costs and expenses in connection with the MassMutual Credit Facility.
In connection with the MassMutual Credit Facility, the Company and BDCA Asset Financing have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The MassMutual Credit Facility contains customary default provisions pursuant to which MassMutual may terminate the Company in its capacity as portfolio asset servicer of the portfolio assets under the MassMutual Credit Facility. Upon the occurrence of an event of default, MassMutual may declare the outstanding advances and all other obligations under the MassMutual Credit Facility immediately due and payable.
Effective February 18, 2022, the Company terminated the Mass Mutual Credit Facility. As a result of this termination, the Company incurred a realized loss on extinguishment of debt of $1.8 million.
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2022 Notes
On December 14, 2017, the Company entered into a Purchase Agreement relating to the Company's sale of $150.0 million aggregate principal amount of its 4.75% fixed rate notes due December 30, 2022 (the “2022 Notes”). The 2022 Notes are subject to customary indemnification provisions and representations, warranties, and covenants. The net proceeds from the sale of the 2022 Notes were approximately $147.0 million. The 2022 Notes bear interest at a rate of 4.75% per year payable semi-annually.
2023 Notes
On May 11, 2018, the Company entered into a Purchase Agreement relating to the Company's sale of $60.0 million aggregate principal amount of its 5.38% fixed rate notes due May 30, 2023 (the “2023 Notes”). The 2023 Notes are subject to customary indemnification provisions and representations, warranties, and covenants. The net proceeds from the sale of the 2023 Notes were approximately $58.7 million. The 2023 Notes bear interest at a rate of 5.375% per year payable semi-annually.
2024 Notes
On December 3, 2019, the Company entered into a Purchase Agreement relating to the Company's sale of $100.0 million aggregate principal amount of its 4.85% fixed rate notes due December 15, 2024 (the “2024 Notes”). The 2024 Notes are subject to customary indemnification provisions and representations, warranties, and covenants. The net proceeds from the sale of the 2024 Notes were approximately $98.4 million. The 2024 Notes bear interest at a rate of 4.85% per year payable semi-annually.
2026 Notes
On March 24, 2021, the Company entered into a Purchase Agreement relating to the Company's sale of $300.0 million aggregate principal amount of its 3.25% fixed rate notes due March 30, 2026 (the “Restricted 2026 Notes”). The net proceeds from the sale of the Restricted 2026 Notes were approximately $296.0 million. Pursuant to a Registration Statement on Form N-14 (File No. 333-257321), on September 22, 2021, the Company closed an exchange offer in which holders of the Restricted 2026 Notes were offered the opportunity to exchange their Restricted 2026 Notes for new registered notes with substantially identical terms (the "Unrestricted 2026 Notes" and, together with the Restricted 2026 Notes, the 2026 Notes), through which holders representing 99.88% of the outstanding principal of the then Restricted 2026 Notes obtained Unrestricted 2026 Notes. The 2026 Notes are subject to customary indemnification provisions and representations, warranties and covenants. The 2026 Notes bear interest at a rate of 3.25% per year payable semi-annually.
See Note 5 to our consolidated financial statements contained in this Quarterly Report on Form 10-Q for a more detailed discussion of our borrowings.
Contractual Obligations
The following table shows our payment obligations for repayment of debt and other contractual obligations as of June 30, 2022 (dollars in thousands):
| Payment Due by Period | |||||||||||||||||||||||||||||
| Total | Less than 1 year | 1 - 3 years | 3- 5 years | More than 5 years | |||||||||||||||||||||||||
Wells Fargo Credit Facility (1) | $ | 267,000 | $ | — | $ | — | $ | 267,000 | $ | — | |||||||||||||||||||
JPM Credit Facility (2) | 321,600 | — | 321,600 | — | — | ||||||||||||||||||||||||
JPM Revolver Facility (3) | 5,000 | — | — | 5,000 | — | ||||||||||||||||||||||||
2026 Notes (4) | 297,075 | — | — | 297,075 | — | ||||||||||||||||||||||||
2024 Notes (5) | 99,413 | — | 99,413 | — | — | ||||||||||||||||||||||||
2023 Notes (6) | 59,941 | 59,941 | — | — | — | ||||||||||||||||||||||||
2022 Notes (7) | 149,918 | 149,918 | — | — | — | ||||||||||||||||||||||||
| Total contractual obligations | $ | 1,199,947 | $ | 209,859 | $ | 421,013 | $ | 569,075 | $ | — | |||||||||||||||||||
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(1)As of June 30, 2022, we had $33.0 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.
(2)As of June 30, 2022, we had $78.4 million of unused borrowing capacity under the JPM Credit Facility, subject to borrowing base limits.
(3)As of June 30, 2022, we had $490.0 million of unused borrowing capacity under the JPM Revolver Facility, subject to borrowing base limits.
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(4)As of June 30, 2022, we had no unused borrowing capacity under the 2026 Notes.
(5)As of June 30, 2022, we had no unused borrowing capacity under the 2024 Notes.
(6)As of June 30, 2022, we had no unused borrowing capacity under the 2023 Notes.
(7)As of June 30, 2022, we had no unused borrowing capacity under the 2022 Notes.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Commitments
In the ordinary course of business, we may enter into future funding commitments. As of June 30, 2022, the Company had unfunded commitments on delayed draw term loans of $153.7 million, unfunded commitments on revolver term loans of $111.0 million, unfunded equity capital discretionary commitments of $11.1 million, and unfunded commitments on term loans of $0.6 million. As of December 31, 2021, the Company had unfunded commitments on delayed draw term loans of $163.6 million, unfunded commitments on revolver term loans of $102.9 million, unfunded equity capital discretionary commitments of $11.1 million, and unfunded commitments on term loans of $0.8 million. Please refer to Note 7 - Commitments and Contingencies for further detail of these unfunded commitments. We maintain sufficient cash on hand and available borrowing capacity to fund such unfunded commitments.
Significant Accounting Estimates and Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
While our significant accounting policies are more fully described in Note 2 - Summary of Significant Accounting Policies appearing elsewhere in this report, we believe the following accounting policies require the most significant judgment in the preparation of our consolidated financial statements.
Valuation of Portfolio Investments
Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis we perform an analysis of each investment to determine fair value as follows:
Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. We may also obtain quotes with respect to certain of our investments from pricing services or brokers or dealers in order to value assets. When doing so, we determine whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, we use the quote obtained.
Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.
For an investment in an investment fund that does not have a readily determinable fair value, we measure the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of our measurement date.
For investments in Collateralized Securities, both the assets and liabilities of each Collateralized Securities' capital structure are modeled. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets and distribute the cash flows to the liability structure based on the contractual priority of payments. The waterfall cash
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flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, broker quotations and/or comparable trade activity is considered as an input to determining fair value when available.
As part of our quarterly valuation process the Adviser may be assisted by one or more independent valuation firms engaged by us. The Board of Directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).
With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:
•Each portfolio company or investment will be valued by the Adviser, potentially with assistance from one or more independent valuation firms engaged by our Board of Directors;
•The independent valuation firm(s), if involved, will conduct independent appraisals and make an independent assessment of the value of each investment; and
•The Board of Directors determines the fair value of each investment, in good faith, based on the input of the Adviser and independent valuation firm (to the extent applicable). On August 10, 2022, pursuant to Rule 2a-5, the Board has designated the Adviser as the Company's valuation designee (the "Valuation Designee") to perform fair value determinations relating to the value of assets held by the Company. The Adviser also has established a Valuation Committee to assist the Adviser in carrying out its designated responsibilities that the Board has designated to the Adviser as Valuation Designee, subject to oversight of the Board.
Because there is not a readily available market value for most of the investments in its portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our Board of Directors, as described herein. 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. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.
Revenue Recognition
Interest Income
Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discount and amortization of premium on investments.
The Company has a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in the Company's case, preferred shares, or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC 325-40-35, Beneficial Interests in Securitized Financial Assets ("ASC 325-40-35"). The Company monitors the expected cash inflows from its equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly. In accordance with ASC 325-40, investments in CLOs are periodically assessed for other-than-temporary impairment ("OTTI"). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.
Dividend Income
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.
Dividend income from SLF is recorded on accrual basis once dividends are declared by SLF's board of directors. Distributions from SLF are evaluated at the time of distribution to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions as dividend income unless there are sufficient accumulated tax-basis earnings and profit in SLF prior to distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
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Fee Income
Fee income, such as structuring fees, origination, closing, amendment fees, commitment, and other upfront fees are generally non-recurring and are recognized as revenue when earned, either upfront or amortized into income. Upon the payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment, and other upfront fees are recorded as income.
Payment-in-Kind Interest/Dividends
We may hold debt and equity investments in our portfolio that contain PIK interest and dividend provisions. PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are recorded on accrual basis to the extent such amounts are expected to be collected.
Non-accrual Income
Investments are placed on non-accrual status when principal or interest/dividend payments are past due and/or when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.
Net Realized Gain or Loss and Net Change in Unrealized Appreciation or Depreciation
Gain or loss on the sale of investments is calculated using the specific identification method. We measure realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when a gain or loss is realized.
See Note 2 - Summary of Significant Accounting Policies to the consolidated financial statements for a description of other accounting policies and recently issued accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to interest rate fluctuations. Many factors including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control contribute to interest rate risk. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars, and treasury lock agreements, subject to the requirements of the 1940 Act, in order to mitigate our interest rate risk with respect to various debt instruments. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. During the periods covered by this report, we did not engage in interest rate hedging activities. We would not hold or issue these derivative contracts for trading or speculative purposes.
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As of June 30, 2022, our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR or SOFR plus 2.67% and fixed rate debt, bearing a weighted average interest rate of 4.09% with a total carrying value (net of deferred financing costs) of $1,189.8 million. The following table quantifies the potential changes in interest income net of interest expense should base interest rates increase or decrease by the amounts below assuming that our current consolidated statement of assets and liabilities was to remain constant and no actions were taken to alter our existing interest rate sensitivity. Interest rate floors, if applicable, are not reflected in the sensitivity analysis below.
| Change in Base Interest Rates | Estimated Change in Interest Income net of Interest Expense (in thousands) | |||||||
| (-) 229 Basis Points | $ | (33,776) | ||||||
| (-) 200 Basis Points | $ | (29,561) | ||||||
| (-) 100 Basis Points | $ | (14,781) | ||||||
| (-) 50 Basis Points | $ | (7,390) | ||||||
| (+) 50 Basis Points | $ | 7,390 | ||||||
| (+) 100 Basis Points | $ | 14,781 | ||||||
| (+) 200 Basis Points | $ | 29,561 | ||||||
Because we may borrow money to make investments, our net investment income may be dependent on the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of increasing interest rates, our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.
Capital Markets Risk
The prices of securities we hold may decline in response to certain events, including those directly involving the companies we invest in; conditions affecting the general economy; overall market changes; legislative reform; local, regional, national or global political, social or economic instability; and interest rate fluctuations. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the publicly-traded securities held by us.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were (a) designed to ensure that the information we are required to disclose in our reports under the Exchange Act is recorded, processed, and reported in an accurate manner and on a timely basis and the information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management to permit timely decisions with respect to required disclosure and (b) operating in an effective manner.
Change in Internal Control Over Financial Reporting
No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of June 30, 2022, we were not defendants in any material pending legal proceeding, and no such material proceedings are known to be contemplated. However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under the contracts with our portfolio companies. Third parties may also seek to impose liability on us in connection with the activities of our portfolio companies.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed below and in Part I., “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which could materially affect our business, financial condition, and/or operating results. The risks described below and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.
Because we borrow money, the potential for gain or loss on amounts invested in us will be magnified and may increase the risk of investing in us.
As of June 30, 2022, we had approximately $1.2 billion of debt financing. The use of borrowings, also known as leverage, increases the volatility of investments by magnifying the potential for gain or loss on invested equity capital. Because we use leverage to partially finance our investments, through borrowing from banks and other lenders, you will experience increased risks of investing in our common stock. If the value of our assets increases, leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause our net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make common stock distribution payments. Leverage is generally considered a speculative investment technique.
Illustration. The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below. The calculation assumes (i) $3.4 billion in total assets, (ii) a weighted average cost of funds of 3.60%, (iii) $1.8 billion in debt outstanding (i.e., assumes that the $610.0 million principal amount of our unsecured notes sold and the full $1,195.0 million available to us under our revolving credit facilities is outstanding), and (iv) $1.6 billion in stockholders’ equity. In order to compute the “Corresponding return to stockholders,” the “Assumed Return on Our Portfolio (net of expenses)” is multiplied by the assumed total assets to obtain an assumed return to us. From this amount, the interest expense is calculated by multiplying the assumed weighted average cost of funds by the assumed debt outstanding, and the product is subtracted from the assumed return to us in order to determine the return available to stockholders. The return available to stockholders is then divided by our stockholders’ equity to determine the “Corresponding return to stockholders.” Actual interest payments may be different.
| Assumed Return on Our Portfolio (net of expenses) | (10)% | (5)% | —% | 5% | 10% | |||||||||||||||||||||||||||
Corresponding return to stockholders (1) | (25.74)% | (14.95)% | (4.15)% | 6.64% | 17.44% | |||||||||||||||||||||||||||
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(1) In order for us to cover our hypothetical annual interest payments on indebtedness, we would need to achieve annual returns on our June 30, 2022 total assets of at least 1.92%.
As of June 30, 2022, the Wells Fargo Credit Facility provided for borrowings in an aggregate principal amount of up to $300.0 million on a committed basis, due August 28, 2025; the JPM Credit Facility provided for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, due August 28, 2023; the JPM Revolver Facility provided for borrowings in an aggregate principal amount of up to $495.0 million on a committed basis, due June 10, 2027; the 2022 Notes provided borrowings in an aggregate principal amount of $150.0 million, due December 30, 2022; the 2023 Notes provided borrowings in an aggregate principal amount of $60.0 million, due May 30, 2023; the 2024 Notes provided borrowings in an aggregate principal amount of $100.0 million, due December 15, 2024; and the 2026 Notes provided borrowings in an aggregate principal amount of $300.0 million, due March 30, 2026. See Item 7 in the Annual Report filed on Form 10-K for more information about these financing arrangements.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
On April 14, 2022, pursuant to a drawdown notice previously delivered to investors, the Company issued and sold approximately 5.6 million shares of the Company's common stock, par value $0.001 per share (the "Common Stock") for an aggregate offering price of approximately $41.5 million.
On June 3, 2022, pursuant to a drawdown notice previously delivered to investors, the Company issued and sold approximately 4.9 million shares of the Common Stock for an aggregate offering price of approximately $37.9 million.
Issuer Purchases of Equity Securities
Repurchases of our common stock pursuant to our tender offer are as follows:
| Period | Total Number of Shares Purchased | Average Price per Share | Cumulative Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | ||||||||||||||||||||||
| April 1, 2022 through April 30, 2022 | — | — | — | — | ||||||||||||||||||||||
| May 1, 2022 through May 31, 2022 | — | — | — | — | ||||||||||||||||||||||
| June 1, 2022 through June 30, 2022 | — | — | — | — | ||||||||||||||||||||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the six months ended June 30, 2022 (and are numbered in accordance with Item 601 of Regulation S-K).
| Exhibit No. | Description | ||||
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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.
| Signature | Title | Date | ||||||||||||
/s/ Richard J. Byrne Richard J. Byrne | Chief Executive Officer, President, and Chairman of the Board of Directors (Principal Executive Officer) | August 12, 2022 | ||||||||||||
/s/ Nina Kang Baryski Nina Kang Baryski | Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | August 12, 2022 | ||||||||||||
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