BAIN CAPITAL SPECIALTY FINANCE, INC.
The following discussion and other parts of this report contain forward-looking
information that involves risks and uncertainties. The discussion and analysis
contained in this section refers to our financial condition, results of
operations and cash flows. The information contained in this section should be
read in conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this report. Please see "Forward-Looking Statements" for
a discussion of the uncertainties, risks and assumptions associated with this
discussion and analysis. Our actual results could differ materially from those
anticipated by such forward-looking information due to factors discussed under
"Forward-Looking Statements" appearing elsewhere in this report.
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Overview
Bain Capital Specialty Finance, Inc. (the "Company", "we", "our" and "us") is an externally managed specialty finance company focused on lending to middle market companies. We have elected to be regulated as a business development company (a "BDC") under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the "1940 Act"). We are managed byBCSF Advisors, LP (our "Advisor" or "BCSF Advisors "), a subsidiary ofBain Capital Credit, LP ("Bain Capital Credit"). Our Advisor is registered as an investment adviser with theSEC under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). Our Advisor also provides the administrative services necessary for us to operate (in such capacity, our "Administrator" or "BCSF Advisors "). Since we commenced operations onOctober 13, 2016 throughDecember 31, 2020 , we have invested approximately$3,913.9 million in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. We seek to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last-out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds. OnNovember 19, 2018 , we closed our initial public offering (the "IPO") issuing 7,500,000 shares of our common stock at a public offering price of$20.25 per share. Shares of common stock of the Company began trading on theNew York Stock Exchange under the symbol "BCSF" onNovember 15, 2018 . Our primary focus is capitalizing on opportunities within our Senior Direct Lending strategy, which seeks to provide risk-adjusted returns and current income to our stockholders by investing primarily in middle-market companies with between$10.0 million and$150.0 million in annual earnings before interest, taxes, depreciation and amortization ("EBITDA"). However, we may, from time to time, invest in larger or smaller companies. We generally seek to retain effective voting control in respect of the loans or particular classes of securities in which we invest through maintaining affirmative voting positions or negotiating consent rights that allow us to retain a blocking position. We focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. We may also invest in mezzanine debt and other junior securities, including common and preferred equity, on an opportunistic basis, and in secondary purchases of assets or portfolios but such investments are not the principal focus of our investment strategy. In addition, we may invest, from time to time, in distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities. We generate revenues primarily through receipt of interest income from the investments we hold. In addition, we generate income from various loan origination and other fees, dividends on direct equity investments and capital gains on the sales of investments. The companies in which we invest use our capital for a variety of reasons, including to support organic growth, to fund changes of control, to fund acquisitions, to make capital investments and for refinancing and recapitalizations. Investments Our level of investment activity may vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the level of investment and capital expenditures of such companies, the general economic environment, the amount of capital we have available to us and the competitive environment for the type of investments we make. Due to the impact of COVID-19 and related measures taken to contain its spread, the future duration and breadth of the adverse impact of COVID-19 on the broader markets in which the Company invests cannot currently be accurately predicted and future investment activity of the Company will be subject to these effects and the related uncertainty. As a BDC, we may not acquire any assets other than "qualifying assets" specified in the 1940 Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in "eligible portfolio companies." Pursuant to rules adopted by theSEC , "eligible portfolio companies" include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than$250 million . 79
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As a BDC, we may also invest up to 30% of our portfolio opportunistically in "non-qualifying" portfolio investments, such as investments in non-U.S. companies. Revenues We primarily generate revenue in the form of interest income on debt investments and distributions on equity investments and, to a lesser extent, capital gains, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments or payment-in-kind ("PIK") interest. The principal amount of the debt investments and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts into or against income over the life of the loan. We record contractual prepayment premiums on loans and debt securities as interest income. Our debt investment portfolio consists of primarily floating rate loans. As ofDecember 31, 2020 andDecember 31, 2019 , 99.2% and 99.0%, respectively, of our debt investments, based on fair value, bore interest at floating rates, which may be subject to interest rate floors. Variable-rate investments subject to a floor generally reset periodically to the applicable floor, only if the floor exceeds the index. Trends in base interest rates, such as LIBOR, may affect our net investment income over the long term. In addition, our results may vary from period to period depending on the interest rates of new investments made during the period compared to investments that were sold or repaid during the period; these results reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macroeconomic trends. 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. Expenses Our primary operating expenses include the payment of fees to our Advisor under the second amended and restated investment advisory agreement (the "Amended Advisory Agreement"), our allocable portion of overhead expenses under the administration agreement (the "Administration Agreement") and other operating costs, including those described below. The Base Management Fee and Incentive Fee compensate our Advisor for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other out-of-pocket costs and expenses of our operations and transactions, including: • our operational and organizational cost;
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the costs of any public offerings of our common stock and other securities, including registration and listing fees;
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costs of calculating our net asset value (including the cost and expenses of any third-party valuation services);
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fees and expenses payable to third parties relating to evaluating, making and disposing of investments, including our Advisor's or its affiliates' travel expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments, monitoring our investments and, if necessary, enforcing our rights;
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interest payable on debt and other borrowing costs, if any, incurred to finance our investments;
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costs of effecting sales and repurchases of our common stock and other securities;
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distributions on our common stock;
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transfer agent and custody fees and expenses;
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the allocated costs incurred by the Administrator in providing managerial assistance to those portfolio companies that request it;
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•
other expenses incurred by
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brokerage fees and commissions;
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federal and state registration fees;
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Independent Director fees and expenses;
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costs associated with our reporting and compliance obligations under the 1940
Act and applicable
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costs of any reports, proxy statements or other notices to our stockholders, including printing costs;
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costs of holding stockholder meetings;
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our fidelity bond;
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directors' and officers' errors and omissions liability insurance, and any other insurance premiums;
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litigation, indemnification and other non-recurring or extraordinary expenses;
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direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, staff, audit, compliance, tax and legal costs;
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fees and expenses associated with marketing efforts;
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dues, fees and charges of any trade association of which we are a member; and
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all other expenses reasonably incurred by us or the Administrator in connection with administering our business.
To the extent that expenses to be borne by us are paid byBCSF Advisors , we will generally reimburseBCSF Advisors for such expenses. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to the Administrator. We will also reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain rent and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment and fees paid to third-party providers for goods or services. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to our business and affairs, and will be subject to oversight by our Board of Directors (our "Board"). The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. We incurred expenses related to the sub-administrator of$0.5 million ,$0.6 million and$0.8 million for the years endedDecember 31, 2020 , 2019 and 2018 respectively, which is included in other general and administrative expenses on the consolidated statements of operations.BCSF Advisors will not be reimbursed to the extent that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of the foregoing expenses are ultimately borne by our stockholders. Leverage We may borrow money from time to time. However, our ability to incur indebtedness (including by issuing preferred stock), is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150%. In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook. As ofDecember 31, 2020 , the Company's asset coverage was 173%. 81
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Impact of COVID-19
In late 2019 and early 2020, a novel coronavirus (SARS-CoV-2) and related
respiratory disease ("COVID-19") emerged in China and spread rapidly to across
the world, including to the U.S. This outbreak has led and for an unknown period
of time will continue to lead to disruptions in local, regional, national and
global markets and economies affected thereby. The extent to which the COVID-19
pandemic will adversely impact the Company's business, financial condition,
liquidity and results of operations will depend on future developments, which
are highly uncertain and cannot be predicted, including the scope and duration
of this outbreak, and any future outbreaks.
It is clear that these types of events are negatively impacting and will, for at
least some time, continue to negatively impact the Company and portfolio
companies and in many instances the impact will be profound. For example,
smaller and middle market companies in which we may invest are being
significantly impacted by these emerging events and the uncertainty caused by
these events. With respect to loans to such companies, the Company will be
impacted if, among other things, (i) amendments and waivers are granted (or are
required to be granted) to borrowers permitting deferral of loan payments or
allowing for payment-in-kind ("PIK") interest payments, (ii) borrowers default
on their loans, are unable to refinance their loans at maturity, or go out of
business permanently, and/or (iii) the value of loans held by the Company
decreases as a result of such events and the uncertainty they cause. Such
emerging events, to the extent experienced, will cause the Company to suffer a
loss on its investments or interest thereon. The Company will also be negatively
affected if the operations and effectiveness of the Adviser or a portfolio
company (or any of the key personnel or service providers of the foregoing) is
compromised or if necessary or beneficial systems and processes are disrupted as
a result of stay-at-home orders or other related interruptions to regular
business operations.
With respect to the Company's investments, we have taken incremental steps in
actively overseeing all of our individual portfolio companies. These measures
include, among other things, (i) frequent communication with our portfolio
company management teams and related private equity sponsors to understand the
expected financial performance impact of the COVID-19 pandemic;
(ii) re-underwriting our portfolio companies to understand the impact if the
current economic environment persists; and (iii) the creation of an internal
working group focused on understanding the potential financial needs of our
portfolio companies and engaging with these companies and their private equity
sponsors, as needed. The effects of the COVID-19 pandemic on economic and market
conditions have increased the Company's demands to provide capital to its
existing portfolio companies. During the month of March 2020 , we received
unprecedented draw requests on revolving credit and delayed draw facilities we
provided to our portfolio companies as many of them sought to husband excess
cash as a defensive measure in these uncertain times. All of those draws were
met in a timely fashion and we maintain adequate cash and additional borrowing
capacity in reserve to meet any further such draw requests.
The Company experienced a significant reduction in our net asset value as of
December 31, 2020 as compared to our net asset value as of December 31, 2019 .
The significant decrease between those time periods is primarily the result of
unrealized depreciation across the fair value of the Company's investments
resulting from the COVID-19 pandemic and the dilution impact from the Company's
rights offering.
As of December 31, 2020 , the Company was in compliance with its asset coverage
requirements under the 1940 Act. In addition, the Company was in compliance with
all financial covenants within its credit facilities as of December 31, 2020 .
However, any continued increase in realized or unrealized depreciation of our
investment portfolio or further significant reductions in our net asset value as
a result of the effects of the COVID-19 pandemic or otherwise increase the risk
of breaching the relevant covenants and requirements. Any breach of these
requirements may adversely affect the Company's access to sufficient debt and
equity capital. The effects of the COVID-19 pandemic may also cause the Company
to limit distributions.
It is impossible to determine the scope of this outbreak, or any future
outbreaks, how long any such outbreak, market disruption or uncertainties may
last, the effect any governmental actions will have or the full potential impact
on the Company, the Adviser and portfolio companies.
Portfolio and Investment Activity
During the year ended December 31, 2020 , we invested $535.8 million , including
PIK, in 67 portfolio companies, and had $525.8 million in aggregate amount of
principal repayments and sales, resulting in a net increase in investments of
$10.0 million for the year.
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During the year endedDecember 31, 2019 , we invested$1,295.2 million , including PIK, in 89 portfolio companies, and had$1,088.0 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of$207.2 million for the year. During the year endedDecember 31, 2018 , we invested$1,168.7 million in 110 portfolio companies, including ABCS as a single portfolio company, and had$235.2 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of$933.5 million for the year. The following table shows the composition of the investment portfolio and associated yield data as ofDecember 31, 2020 (dollars in thousands): As of December 31, 2020 Weighted Average Yield (1) at Amortized Percentage of Percentage of Amortized Market Cost Total Portfolio Fair Value Total Portfolio Cost
Value
First Lien Senior Secured Loans$ 2,193,827 87.0%$ 2,164,910 87.1% 7.1%
7.2%
Second Lien Senior Secured Loans 167,698 6.6 161,960 6.6 9.0 9.3 Equity Interests 131,491 5.2 119,905 4.8 8.8 10.7 Preferred Equity 29,723 1.2 37,713 1.5 15.0 15.0 Warrants - 0.0 - 0.0 N/A N/A Total$ 2,522,739 100.0%$ 2,484,488 100.0% 7.3% 7.5% (1) Weighted average yields are computed as (a) the annual stated interest rate or yield earned on the relevant accruing debt and other income producing securities plus amortization of fees and discounts on the performing debt and other income producing investments, divided by (b) the total relevant investments at amortized cost or at fair value, as applicable. The weighted average yield does not represent the total return to our stockholders.
The following table shows the composition of the investment portfolio and
associated yield data as of
As of December 31, 2019
Weighted Average Yield (1)
at
Amortized Percentage of Percentage of Amortized Market
Cost Total Portfolio Fair Value Total Portfolio Cost Value
First Lien Senior Secured Loans $ 2,167,932 85.4% $ 2,165,844 85.7% 7.5% 7.5%
First Lien Last Out Loans 28,315 1.1 29,300 1.2 9.9 9.5
Second Lien Senior Secured Loans 187,565 7.4 175,670 7.0 9.7 10.0
Subordinated Debt 14,752 0.6 15,000 0.5 13.7 13.5
Corporate Bonds 22,412 0.9 17,508 0.7 8.5 10.8
Equity Interests 96,736 3.8 99,293 3.9 7.7 7.5
Preferred Equity 19,551 0.8 24,318 1.0 15.1 15.1
Warrants - 0.0 122 0.0 N/A N/A
Total $ 2,537,263 100.0% $ 2,527,055 100.0% 8.0% 8.0%
(1)Weighted average yields are computed as (a) the annual stated interest rate or yield earned on
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the relevant accruing debt and other income producing securities plus
amortization of fees and discounts on the performing debt and other income
producing investments, divided by (b) the total relevant investments at
amortized cost or at fair value, as applicable. The weighted average yield does
not represent the total return to our stockholders.
The following table presents certain selected information regarding our
investment portfolio as of
As of
December 31, 2020
Number of portfolio companies 105
Percentage of debt bearing a floating rate (1) 99.2%
Percentage of debt bearing a fixed rate (1) 0.8%
(1)
Measured on a fair value basis.
The following table presents certain selected information regarding our
investment portfolio as of
As of
December 31, 2019
Number of portfolio companies 114
Percentage of debt bearing a floating rate (1) 99.0%
Percentage of debt bearing a fixed rate (1) 1.0%
(1)
Measured on a fair value basis.
The following table shows the amortized cost and fair value of our performing
and non-accrual investments as of
As of December 31, 2020
Percentage at Percentage at
Amortized Cost Amortized Cost Fair Value Fair Value
Performing $ 2,517,782 99.8% $ 2,479,794 99.8%
Non-accrual 4,957 0.2 4,694 0.2
Total $ 2,522,739 100.0% $ 2,484,488 100.0%
The following table shows the amortized cost and fair value of our performing
and non-accrual investments as of
As of December 31, 2019
Percentage at Percentage at
Amortized Cost Amortized Cost Fair Value Fair Value
Performing $ 2,523,110 99.4% $ 2,523,626 99.9%
Non-accrual 14,153 0.6 3,429 0.1
Total $ 2,537,263 100.0% $ 2,527,055 100.0%
Loans or debt securities are placed on non-accrual status when there is
reasonable doubt that principal or interest will be collected. Accrued interest
generally is reversed when a loan or debt security is placed on non-accrual
status. Interest payments received on non-accrual loans or debt securities may
be recognized as income or applied to principal depending upon management's
judgment. Non-accrual loans and debt securities are restored to accrual status
when past due principal and interest is paid and, in management's judgment, are
likely to remain current. We may make exceptions to this treatment if the loan
has sufficient collateral value and is in the process of collection. As of
December 31, 2020 , there had been one loan placed on non-accrual
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in the Company's portfolio, comprising 0.2% of the Company's portfolio, based on fair value. This is compared to two loans on non-accrual as ofDecember 31, 2019 , comprising 0.1% of the Company's portfolio, based on fair value. The following table shows the amortized cost and fair value of the investment portfolio, cash and cash equivalents, foreign cash and restricted cash as ofDecember 31, 2020 (dollars in thousands): As of December 31, 2020 Percentage of Percentage of Amortized Cost Total Fair Value Total Cash and cash equivalents$ 53,704 2.2%$ 53,704 2.1% Foreign cash 976 0.0 972 0.0 Restricted cash and cash equivalents 27,026 1.0 27,026 1.1 First Lien Senior Secured Loans 2,193,827 84.3 2,164,910 84.3 Second Lien Senior Secured Loans 167,698 6.4 161,960 6.3 Equity Interests 131,491 5.0 119,905 4.7 Preferred Equity 29,723 1.1 37,713 1.5 Warrants - 0.0 - 0.0 Total$ 2,604,445 100.0%$ 2,566,190 100.0% The following table shows the amortized cost and fair value of the investment portfolio, cash and cash equivalents and foreign cash as ofDecember 31, 2019 (dollars in thousands): As of December 31, 2019 Percentage of Percentage of Amortized Cost Total Fair Value Total Cash and cash equivalents$ 36,531 1.4%$ 36,531 1.4% Foreign cash 854 0.0 810 0.0 Restricted cash and cash equivalents 31,505 1.2 31,505 1.3 First Lien Senior Secured Loans 2,167,932 83.2 2,165,844 83.4 First Lien Last Out Loans 28,315 1.1 29,300 1.1 Second Lien Senior Secured Loans 187,565 7.2 175,670 6.8 Subordinated Debt 14,752 0.5 15,000 0.6 Corporate Bonds 22,412 0.9 17,508 0.7 Equity Interests 96,736 3.7 99,293 3.8 Preferred Equity 19,551 0.8 24,318 0.9 Warrants - 0.0 122 0.0 Total$ 2,606,153 100.0%$ 2,595,901 100.0% The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as ofDecember 31, 2020 (with corresponding percentage of total portfolio investments) (dollars in thousands): As of December 31, 2020 Percentage of Percentage of Amortized Cost Total Portfolio Fair Value Total Portfolio Aerospace & Defense$ 331,174 13.1%$ 296,553 11.9% High Tech Industries 294,046 11.7 295,486 11.9 Healthcare & Pharmaceuticals 219,147 8.7 221,605 8.9 Capital Equipment 188,123 7.5 193,287 7.8 85
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As of December 31, 2020
Percentage of Percentage of
Amortized Cost Total Portfolio Fair Value Total Portfolio
Consumer Goods: Non-Durable 190,216 7.5 189,229 7.5
Services: Business 181,037 7.1 175,560 7.1
Transportation: Cargo 118,320 4.7 118,352 4.8
Construction & Building 105,567 4.2 104,999 4.2
Services: Consumer 76,341 3.0 78,697 3.2
Wholesale 78,248 3.1 78,042 3.1
Chemicals, Plastics & Rubber 75,808 3.0 76,463 3.1
Energy: Oil & Gas 68,198 2.7 68,807 2.7
FIRE: Insurance (1) 65,017 2.6 67,125 2.7
Automotive 66,470 2.6 66,100 2.7
Transportation: Consumer 71,750 2.8 61,243 2.5
Consumer Goods: Durable 59,399 2.3 58,065 2.3
Hotel, Gaming & Leisure 52,389 2.1 49,893 2.0
Media: Diversified & Production 47,810 1.9 48,470 2.0
Media: Broadcasting & Subscription 43,299 1.7 45,036 1.8
Media: Advertising, Printing & Publishing 47,143 1.9 41,140 1.7
Retail 39,050 1.5 39,050 1.6
Telecommunications 21,680 0.9 21,543 0.9
Energy: Electricity 21,979 0.9 21,249 0.9
Beverage, Food & Tobacco 12,087 0.5 21,024 0.8
Banking 14,058 0.6 13,622 0.5
Containers, Packaging, & Glass 11,659 0.5 11,781 0.5
FIRE: Finance (1) 11,830 0.5 11,778 0.5
FIRE: Real Estate (1) 10,894 0.4 10,289 0.4
Total $ 2,522,739 100.0% $ 2,484,488 100.0%
(1)Finance, Insurance and Real Estate ("FIRE").
The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as ofDecember 31, 2019 (with corresponding percentage of total portfolio investments) (dollars in thousands): As of December 31, 2019 Percentage of Percentage of Amortized Cost Total Portfolio Fair Value Total Portfolio High Tech Industries$ 356,086 14.0%$ 356,073 14.1% Aerospace & Defense 305,111 12.0 307,863 12.2 Healthcare & Pharmaceuticals 255,579 10.1 254,014 10.1 Consumer Goods: Non-Durable 195,602 7.7 196,653 7.8 Capital Equipment 183,618 7.2 186,913 7.4 Services: Business 165,286 6.5 165,862 6.5 Transportation: Cargo 116,074 4.6 116,237 4.6 Construction & Building 107,413 4.2 108,176 4.3 86
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As of December 31, 2019
Percentage of Percentage of
Amortized Cost Total Portfolio Fair Value Total Portfolio
Wholesale 79,542 3.1 78,225 3.1
Energy: Oil & Gas 77,264 3.0 77,979 3.1
Automotive 66,522 2.6 67,374 2.7
Consumer Goods: Durable 63,712 2.5 63,394 2.5
Transportation: Consumer 62,473 2.5 61,662 2.3
Media: Advertising, Printing & Publishing 59,419 2.3 54,765 2.2
FIRE: Insurance (1) 52,367 2.1 54,086 2.1
Hotel, Gaming & Leisure 52,866 2.1 53,074 2.1
Media: Broadcasting & Subscription 43,165 1.7 44,247 1.8
Media: Diversified & Production 35,670 1.4 36,403 1.4
Retail 34,774 1.4 34,827 1.4
Chemicals, Plastics & Rubber 32,288 1.3 32,446 1.3
Services: Consumer 30,458 1.2 30,794 1.2
Banking 25,656 1.0 25,466 1.0
Energy: Electricity 22,172 0.9 22,134 0.9
Telecommunications 21,323 0.8 21,343 0.8
Beverage, Food & Tobacco 30,687 1.2 19,531 0.8
Environmental Industries 16,814 0.7 17,612 0.7
Containers, Packaging & Glass 11,637 0.5 11,633 0.5
FIRE: Real Estate (1) 10,786 0.4 10,443 0.4
Forest Products & Paper 10,301 0.4 9,700 0.4
Utilities: Electric 12,598 0.6 8,126 0.3
Total $ 2,537,263 100.0% $ 2,527,055 100.0%
(1)Finance, Insurance and Real Estate ("FIRE").
Our Advisor monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action for each company. The Advisor has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following: • assessment of success in adhering to the portfolio company's business plan and compliance with covenants;
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periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments;
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comparisons to our other portfolio companies in the industry, if any;
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attendance at and participation in board meetings or presentations by portfolio companies; and
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review of monthly and quarterly financial statements and financial projections of portfolio companies.
Our Advisor rates the investments in our portfolio at least quarterly and it is
possible that the rating of a portfolio investment may be reduced or increased
over time. For investments rated 3 or 4, our Advisor enhances its level of
scrutiny over the monitoring of such portfolio company. Our internal performance
ratings do not constitute any rating of investments by a nationally recognized
statistical rating organization or represent or reflect any third-party
assessment of any of our investments.
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•
An investment is rated 1 if, in the opinion of our Advisor, it is performing above underwriting expectations, and the business trends and risk factors are generally favorable, which may include the performance of the portfolio company or the likelihood of a potential exit.
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An investment is rated 2 if, in the opinion of our Advisor, it is performing as expected at the time of our underwriting and there are generally no concerns about the portfolio company's performance or ability to meet covenant requirements, interest payments or principal amortization, if applicable. All new investments or acquired investments in new portfolio companies are initially given a rating of 2.
•
An investment is rated 3 if, in the opinion of our Advisor, the investment is performing below underwriting expectations and there may be concerns about the portfolio company's performance or trends in the industry, including as a result of factors such as declining performance, non-compliance with debt covenants or delinquency in loan payments (but generally not more than 180 days past due).
•
An investment is rated 4 if, in the opinion of our Advisor, the investment is performing materially below underwriting expectations. For debt investments, most of or all of the debt covenants are out of compliance and payments are substantially delinquent. Investments rated 4 are not anticipated to be repaid in full, if applicable, and there is significant risk that we may realize a substantial loss on our investment.
The following table shows the composition of our portfolio on the 1 to 4 rating
scale as of
As of December 31, 2020
Fair Percentage of Number of Percentage of
Investment Performance Rating Value Total Companies Total
1 $ 42,942 1.7% 3 2.9%
2 2,121,057 85.4 87 82.8
3 315,383 12.7 14 13.3
4 5,106 0.2 1 1.0
Total $ 2,484,488 100.0% 105 100.0%
(1)Number of investment rated companies may not agree to total portfolio companies due to investments across investment types and structures.
The following table shows the composition of our portfolio on the 1 to 4 rating
scale as of
As of December 31, 2019
Fair Percentage of Number of Percentage of
Investment Performance Rating Value Total Companies Total
1 $ 140,892 5.6% 4 3.5%
2 2,355,401 93.2 106 93.0
3 27,333 1.1 3 2.6
4 3,429 0.1 1 0.9
Total $ 2,527,055 100.0% 114 100.0%
Antares Bain Capital Complete Financing Solution
Prior to April 30, 2019 , the Company was party to a limited liability company
agreement with Antares Midco Inc. ("Antares") pursuant to which it invested in
ABC Complete Financing Solution LLC , which made investments through its
subsidiary, Antares Bain Capital Complete Financing Solution LLC (together with
ABC Complete Financing Solution LLC , "ABCS"). ABCS, an unconsolidated Delaware
limited liability company, was formed on September 27, 2017 and commenced
operations on November 29, 2017 . ABCS'
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principal purpose was to make investments, primarily in senior secured unitranche loans. The Company recorded its investment in ABCS at fair value. Distributions of income received from ABCS, if any, were recorded as dividend income from controlled affiliate investments in the consolidated statements of operations. Distributions received from ABCS in excess of income earned at ABCS, if any, were recorded as a return of capital and reduced the amortized cost of controlled affiliate investments. We and Antares, as members of ABCS, agreed to contribute capital up to (subject to the terms of their agreement)$950.0 million in aggregate to purchase equity interests in ABCS, with us and Antares contributing up to$425.0 million and$525.0 million , respectively. Funding of such commitments generally required the consent of bothAntares Credit Opportunities Manager LLC and the Advisor on behalf of Antares and us, respectively. ABCS was capitalized with capital contributions from its members on a pro-rata basis based on their maximum capital contributions as transactions were funded after they had been approved. Investment decisions of ABCS required the consent of both theAdvisor and Antares Credit Opportunities Manager LLC , as representatives of us and Antares, respectively. Each of the Advisor and Antares sourced investments for ABCS. OnApril 30, 2019 , we formedBCSF Complete Financing Solution Holdco, LLC ("BCSF CFSH, LLC ") andBCSF Complete Financing Solution, LLC ("BCSF Unitranche" or "BCSF CFS, LLC "), wholly-owned, newly-formed, subsidiaries. We received our proportionate share of all assets which represented 44.737% of ABCS. The portfolio of investments that was distributed to us comprised of 25 senior secured unitranche loans with a fair value of$919.0 million and cash of$3.2 million . We also assumed the obligation to fund outstanding unfunded commitments of$31.4 million . In connection with the distribution, we recognized a realized gain of$0.3 million . We are no longer a member of ABCS. The assets we received from ABCS have been included in the Company's consolidated financial statements and notes thereto. In conjunction with the distribution from ABCS, onApril 30, 2019 ,BCSF CFS, LLC entered into a loan and security agreement (the "JPM Credit Agreement" or the "JPM Credit Facility") as borrower, withJPMorgan Chase Bank, National Association , as Administrative Agent, andWells Fargo Bank, National Association as Collateral Administrator, Collateral Agent,Securities Intermediary and Bank . On the date of the ABCS distribution, the Company had$577.5 million outstanding on the JPM Credit Facility. Selected Statements of Operations Information Below are selected statements of operations information for ABCS for the years endedDecember 31, 2019 andDecember 31, 2018 : For the Year For the Year Ended Ended 2019 (2) 2018 December 31, December 31, Interest income$ 53,494 $ 104,548 Fee income 217 1,201 Total revenues 53,711 105,749 Credit facility expenses (1) 22,008 45,635 Other fees and expenses 6,661 22,231 Total expenses 28,669 67,866 Net investment income 25,042 37,883 Net realized gains - -
Net change in unrealized appreciation (depreciation) on investments
- -
Net increase in members' capital from operations $ 25,042 $ 37,883
(1)
As of
(2)
The ABCS distribution was effective
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Results of Operations Our operating results for the years endedDecember 31, 2020 , 2019 and 2018 were as follows (dollars in thousands): For the Year Ended December 31, 2020 2019 2018 Total investment income$ 194,460 $ 197,945 $ 99,294 Total expenses, net of fee waivers 108,397 113,078 43,364 Net investment income before taxes 86,063 84,867 55,930 Less Income taxes, including excise tax 232 - - Net investment income 85,831 84,867 55,930 Net realized gain (loss) (27,222) 7,785 (6,485) Net unrealized appreciation (depreciation) (50,331) 5,433 (22,800)
Net increase in net assets resulting from operations
Net increase in net assets resulting from operations can vary from period to period as a result of various factors, including additional financing, new investment commitments, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. Due to these factors, comparisons may not be meaningful. Investment Income The composition of our investment income for the years endedDecember 31, 2020 , 2019 and 2018 was as follows (dollars in thousands): For the Year Ended December 31, 2020 2019 2018 Interest income$ 182,975 $ 180,395 $ 73,363 Dividend income 9,324 16,741 25,386 Other income 2,161 809 545 Total investment income$ 194,460 $ 197,945 $ 99,294 Interest income from investments, which includes interest and accretion of discounts and fees, increased to$183.0 million for the year endedDecember 31, 2020 from$180.4 million for the year endedDecember 31, 2019 , primarily due to a full year of the ABCS investments being consolidated on the balance sheet after the closing distribution transaction onApril 30, 2019 . Our investment portfolio at amortized cost decreased slightly to$2,522.7 million from$2,537.3 million for the years endedDecember 31, 2020 and 2019, respectively. Dividend income decreased to$9.3 million for the year endedDecember 31, 2020 from$16.7 million for the year endedDecember 31, 2019 , primarily due to the closing of the ABCS distribution transaction onApril 30, 2019 . As ofDecember 31, 2020 , the weighted average yield of our investment portfolio decreased to 7.3% from 7.8% as ofDecember 31, 2019 , at amortized cost. Interest income from investments, which includes interest and accretion of discounts and fees, increased to$180.4 million for the year endedDecember 31, 2019 from$73.4 million for the year endedDecember 31, 2018 , primarily due to the growth of our investment portfolio. Our investment portfolio at amortized cost increased to$2,537.3 million from$1,753.1 million for the year endedDecember 31, 2018 . Dividend income decreased to$16.7 million for the year endedDecember 31, 2019 from$25.4 million for the year endedDecember 31, 2018 , primarily due to the closing of the ABCS distribution transaction onApril 30, 2019 . As ofDecember 31, 2019 , the weighted average yield of our investment portfolio decreased to 7.8% from 8.8% as ofDecember 31, 2018 , at amortized cost. Operating Expenses The composition of our operating expenses for the years endedDecember 31, 2020 , 2019 and 2018 were as follows (dollars in thousands): 90
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For the Year Ended December 31,
2020 2019 2018
Interest and debt financing expenses $ 63,309 $ 66,330 $ 24,011
Base management fee 35,215 32,702 17,544
Incentive fee 4,473 17,418 8,670
Professional fees 2,626 2,297 2,639
Directors fees 726 546 278
Other general and administrative expenses 5,398 4,772 902
Total expenses, before fee waivers $ 111,747 $ 124,065 $ 54,044
Base management fee waiver (2,676) (8,242) (8,772)
Incentive fee waiver (674) (2,745) (1,908)
Total expenses, net of fee waivers $ 108,397 $
113,078
Interest and Debt Financing Expenses Interest and debt financing expenses on our borrowings totaled approximately$63.3 million and$66.3 million for the years endedDecember 31, 2020 and 2019, respectively. Interest and debt financing expense for the year endedDecember 31, 2020 as compared toDecember 31, 2019 , decreased primarily due to a decline in LIBOR during 2020, since 89% of our principal debt outstanding is floating rate. OnApril 30, 2019 , the Company entered into a new loan and security agreement withJPMorgan Chase Bank, N.A ., andWells Fargo Bank, N.A. , the JPM Credit Facility. Interest and debt financing expenses on our borrowings totaled approximately$66.3 million and$24.0 million for the years endedDecember 31, 2019 and 2018, respectively. Interest and debt financing expense for the year endedDecember 31, 2019 as compared toDecember 31, 2018 , increased primarily due to higher principal balances outstanding on our revolving credit facilities throughout 2019 and the issuance of our 2019-1 Debt inAugust 2019 . OnApril 30, 2019 , the Company entered into a new loan and security agreement withJPMorgan Chase Bank, N.A ., andWells Fargo Bank, N.A. , the JPM Credit Facility. The weighted average interest rate (excluding deferred upfront financing costs and unused fees) on our debt outstanding was 3.6% and 4.7% as ofDecember 31, 2020 and 2019, respectively. Management Fees Management fee (net of waivers) increased to$32.5 million for the year endedDecember 31, 2020 from$24.5 million for the year endedDecember 31, 2019 . Management fees increased to$35.2 million for the year endedDecember 31, 2020 from$32.7 million for the year endedDecember 31, 2019 , primarily due to an increase in total assets throughout the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 . Management fees waived for the years endedDecember 31, 2020 and 2019, were$2.7 million and$8.2 million , respectively. The decrease in management fees waived during the year endedDecember 31, 2020 compared toDecember 31, 2019 , was due to the expiration of the voluntary fee waiver onDecember 31, 2019 of the ABCS distribution transaction. Management fee (net of waivers) increased to$24.5 million for the year endedDecember 31, 2019 from$8.8 million for the year endedDecember 31, 2018 . Management fees increased to$32.7 million for the year endedDecember 31, 2019 from$17.5 million for the year endedDecember 31, 2018 , primarily due to an increase in assets to$2.6 billion as ofDecember 31, 2019 from$1.8 billion as ofDecember 31, 2018 . Management fees waived for the years endedDecember 31, 2019 and 2018, were$8.2 million and$8.8 million , respectively. Incentive Fees Incentive fee (net of waivers) decreased to$3.8 million for the year endedDecember 31, 2020 from$14.7 million for the year endedDecember 31, 2019 , primarily due to the IncentiveFee Cap throughout the year endedDecember 31, 2020 . Incentive fee waivers related to pre-incentive fee net investment income 91
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consisted of voluntary waivers of$0.7 million for the year endedDecember 31, 2020 and$2.7 million for the year endedDecember 31, 2019 . For the year endedDecember 31, 2020 there were no incentive fees related to the GAAP Incentive Fee. Incentive fee (net of waivers) increased to$14.7 million for the year endedDecember 31, 2019 from$6.8 million for the year endedDecember 31, 2018 . Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of$2.7 million for the year endedDecember 31, 2019 and$1.9 million for the year endedDecember 31, 2018 . For the year endedDecember 31, 2019 there were no incentive fees related to the GAAP Incentive Fee. Professional Fees and Other General and Administrative Expenses Professional fees and other general and administrative expenses increased to$8.8 million for the year endedDecember 31, 2020 from$7.6 million for the year endedDecember 31, 2019 , due to an increase in costs associated with servicing our investment portfolio and legal fees. Professional fees and other general and administrative expenses increased to$7.6 million for the year endedDecember 31, 2019 from$3.8 million for the year endedDecember 31, 2018 , due to an increase in costs associated with servicing our investment portfolio. Net Realized and Unrealized Gains and Losses The following table summarizes our net realized and unrealized gains (losses) for the years endedDecember 31, 2020 , 2019, and 2018 (dollars in thousands): Year ended December 31, 2020 2019 2018 Net realized gains on investments$ 1,518 $ 2,682 $
2,033
Net realized losses on investments (35,342) (5,904)
(5,378)
Net realized gains on foreign currency transactions 647 119
135
Net realized losses on foreign currency transactions (517) (155)
(624)
Net realized gains on forward currency exchange contracts 6,545 11,043
-
Net realized losses on forward currency exchange contracts (73) - (2,651) Net realized gains (losses)$ (27,222) $ 7,785 $ (6,485) Net change in unrealized gains on investments$ 54,050 $ 47,990 $
4,210
Net change in unrealized losses on investments (82,093) (32,887)
(39,836)
Net change in unrealized gains (losses) on investments (28,043) 15,103
(35,626)
Unrealized appreciation (depreciation) on foreign currency translation
108 (130) -
Unrealized appreciation (depreciation) on forward currency exchange contracts
(22,396) (9,540) 12,826
Net change in unrealized gains (losses) on foreign currency and forward currency exchange contracts (22,288)
(9,670) 12,826
Net change in unrealized gains (losses)$ (50,331) $ 5,433 $
(22,800)
For the years endedDecember 31, 2020 , 2019 and 2018, we had net realized gains (losses) on investments of($33.8) million ,($3.2) million and$(3.3) million , respectively. For the year endedDecember 31, 2020 , we recognized gross realized losses of$35.3 million primarily from the sale and restructuring of debt investments in six portfolio companies. For the years endedDecember 31, 2020 , 2019 and 2018, we had net realized gains (losses) on foreign currency transactions of$0.1 million ,$0.0 million and$(0.5) million , respectively. For the years endedDecember 31, 2020 , 2019 and 2018, we had net realized gains (losses) on forward currency contracts of$6.5 million ,$11.0 million and($2.7) million , respectively, primarily as a result of settling GBP, AUD, DKK, EUR and NOK forward contracts. 92
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For the year endedDecember 31, 2020 , we had$54.1 million in unrealized appreciation on 56 portfolio company investments, which was offset by$82.1 million in unrealized depreciation on 69 portfolio company investments. Unrealized appreciation for the year endedDecember 31, 2020 resulted from an increase in fair value, primarily due to positive investment-related adjustments, and the reversal of unrealized depreciation from the sale of our debt investments. Unrealized depreciation was primarily due to widening spread environment and negative valuation adjustments. For the year endedDecember 31, 2019 , we had$48.0 million in unrealized appreciation on 98 portfolio company investments, which was offset by$32.9 million in unrealized depreciation on 57 portfolio company investments. Unrealized appreciation for the year endedDecember 31, 2019 resulted from an increase in fair value, primarily due to reversal of prior period unrealized depreciation and positive valuation adjustments. For the year endedDecember 31, 2018 , we had$4.2 million in unrealized appreciation on 24 portfolio company investments, which was offset by$39.8 million in unrealized depreciation on 108 portfolio company investments. Unrealized depreciation for the year endedDecember 31, 2018 resulted from a decrease in fair value, primarily due to reversal of prior period unrealized appreciation and widening credit spreads. For the years endedDecember 31, 2020 , 2019 and 2018, we had unrealized appreciation (depreciation) on forward currency exchange contracts of($22.4) million ,($9.5) million and$12.8 million , respectively. For the year endedDecember 31, 2020 , unrealized depreciation on forward currency exchange contracts was due to CAD, EUR, GBP, DKK, NOK and AUD forward contracts. For the year endedDecember 31, 2019 , unrealized appreciation on forward currency exchange contracts was due to EUR, GBP, DKK, NOK and AUD forward contracts. For the year endedDecember 31, 2018 , unrealized depreciation on forward currency exchange contracts were due to EUR, GBP, DKK, NOK and AUD forward contracts. The following table summarizes the impact of foreign currency for the years endedDecember 31, 2020 , 2019, and 2018 (dollars in thousands): For the Year ended December 31, 2020 2019 2018
Net change in unrealized appreciation (depreciation) on investments due to foreign currency
1,053 91 40
Net change in unrealized appreciation (depreciation) on foreign currency translation
108 (130) -
Net realized gain (loss) on foreign currency transactions 130 (36) (489)
Net change in unrealized appreciation (depreciation) on forward currency exchange contracts
(22,396) (9,540) 12,826
Net realized gain (loss) on forward currency exchange contracts 6,472 11,043 (2,651)
Foreign currency impact to net increase in net assets resulting from operations
$ 2,293 $ 4,188 $
2,322
Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of$18.2 million ,$2.7 million and($7.9) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the years endedDecember 31, 2020 , 2019 and 2018, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of($15.9) million ,$1.5 million and$10.2 million , respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is$2.3 million ,$4.2 million and$2.3 million for the years endedDecember 31, 2020 , 2019 and 2018, respectively. Net Increase (Decrease) in Net Assets Resulting from Operations For the years endedDecember 31, 2020 , 2019 and 2018, the net increase in net assets resulting from operations was$8.3 million ,$98.1 million and$26.6 million , respectively. Based on the weighted average 93
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shares of common stock outstanding for the years endedDecember 31, 2020 , 2019 and 2018, our per share net increase in net assets resulting from operations was$0.14 ,$1.90 , and$0.69 , respectively. Financial Condition, Liquidity and Capital Resources Our liquidity and capital resources are derived primarily from proceeds from equity issuances, advances from our credit facilities, 2018-1 Notes, 2019-1 Debt, 2023 Notes, and cash flows from operations. The primary uses of our cash are for (1) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements; (2) the cost of operations (including payments to the Advisor under the Investment Advisory and Administration Agreements); (3) debt service, repayment, and other financing costs; and, (4) cash distributions to the holders of our common shares. We intend to continue to generate cash primarily from cash flows from operations, future borrowings and future offerings of securities. We may from time to time raise additional equity or debt capital through registered offerings, enter into additional debt facilities, or increase the size of existing facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. We are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities. As ofDecember 31, 2020 and 2019, our asset coverage ratio was 173% and 164%, respectively. AtDecember 31, 2020 andDecember 31, 2019 , we had$81.7 million and$68.8 million in cash, foreign cash, restricted cash and cash equivalents, respectively. AtDecember 31, 2020 , we had approximately$167.2 million of availability on our BCSF Revolving Credit Facility,$156.7 million of availability on our JPM Credit Facility and$50.0 million of availability on our Revolving Advisor Loan, subject to existing terms and regulatory requirements. AtDecember 31, 2019 , we had approximately$232.0 million of availability on our BCSF Revolving Credit Facility and$119.8 million of availability on our JPM Credit Facility, subject to existing terms and regulatory requirements. For the year endedDecember 31, 2020 , cash, foreign cash, restricted cash, and cash equivalents increased by$12.9 million . During the year endedDecember 31, 2020 , we provided$89.4 million in cash for operating activities. The increase in cash used for operating activities was primarily related to the purchase of investments of$516.2 million offset by proceeds from principal payments and sales of investments of$538.5 million , a net increase in net assets resulting from operations of$8.3 million , net realized losses from investments of$33.8 million , and the net change in unrealized depreciation on investments of$28.0 million . During the year endedDecember 31, 2020 , we used($76.5) million for financing activities, primarily on borrowings on our debt from BCSF Revolving Credit Facility, JPM Credit Facility, Revolving Advisor Loan, and the issuance of the 2023 Notes of$597.3 million and the issuance of common stock of$131.9 million , offset by repayments on our debt of$710.8 million and distributions paid during the period of$86.3 million . For the year endedDecember 31, 2019 , cash, foreign cash, restricted cash, and cash equivalents increased by$35.6 million . During the year endedDecember 31, 2019 , we used$242.8 million in cash for operating activities, primarily to purchase investments of$1,413.7 million , which was offset by proceeds from principal payments and sales of investments of$1,069.5 million , and a net increase in net assets resulting from operations of$98.1 million . During the year endedDecember 31, 2019 , we generated$278.2 million from financing activities, primarily from borrowings on our debt totaling$1,249.0 million from BCSF Revolving Credit Facility, Citibank Revolving Credit Facility, JPM Credit Facility, and the issuance of our 2019-1 Debt, offset by repayments on our debt of$884.5 million and distributions paid during the period of$81.2 million . For the year endedDecember 31, 2018 , cash, foreign cash, restricted cash, and cash equivalents decreased by$107.6 million . During the year endedDecember 31, 2018 , we used$774.2 million in cash for operating activities, primarily to purchase investments of$1,064.3 million , offset by a net increase in net assets resulting from operations of$26.6 million , proceeds from principal payments and sales of investments of$236.1 million , and net change in unrealized activity of($22.8) million . During the year endedDecember 31, 2018 , we generated$667.1 million from financing activities, primarily from borrowings on our SMBC Revolving Credit Facility and our BCSF Revolving Credit Facility, together referred to as the "Revolving 94
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Credit Facilities", of$453.0 million , issuance of our 2018-1 Notes of$365.7 million and the issuance of common stock of$524.3 million , offset by repayments on our Revolving Credit Facilities of$632.7 million and distributions paid during the year of$41.0 million . Equity OnNovember 19, 2018 , we closed our initial public offering (the "IPO") issuing 7,500,000 shares of its common stock at a public offering price of$20.25 per share. Shares of common stock of the Company began trading on theNew York Stock Exchange under the symbol "BCSF" onNovember 15, 2018 . The offering generated net proceeds, after expenses, of$145.4 million . All outstanding capital commitments from the Company's Private Offering were cancelled as of the completion of the IPO. During the year endedDecember 31, 2020 , we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan. During the year endedDecember 31, 2019 , we issued 167,674.81 shares of our common stock to investors who have opted into our dividend reinvestment plan. During the year endedDecember 31, 2018 , we issued 436,914.94 shares of our common stock to investors who have opted into our dividend reinvestment plan. OnMay 7, 2019 , the Company's Board of Directors authorized the Company to repurchase up to$50 million of its outstanding common stock in accordance with safe harbor rules under the Exchange Act of 1934. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As ofDecember 31, 2020 , there have been no repurchases of common stock. OnMay 4, 2020 , the Company's Board of Directors approved a transferable subscription rights offering to our stockholders of record as ofMay 13, 2020 . The rights entitled record stockholders to subscribe for up to an aggregate of 12,912,453 shares of our common stock. Record stockholders received one right for each share of common stock owned on the record date. The rights entitled the holders to purchase one new share of common stock for every four rights held, and record stockholders who fully exercised their rights were entitled to subscribe, subject to certain limitations and allotment rules, for additional shares that remain unsubscribed as a result of any unexercised rights. The rights were transferable and listed on theNew York Stock Exchange under the symbol "BCSF RT". The rights offering expiredJune 5, 2020 . Based on the terms of the offering and the market price of the stock during the applicable period, holders of rights participating in the offering were entitled to purchase one new share of common stock for every four rights held at a subscription price of $10.2163 per share. OnJune 16, 2020 , the Company closed its transferrable rights offering and issued 12,912,453 shares. The offering generated net proceeds, before expenses, of$129.6 million , including the underwriting discount and commissions of$2.3 million . Debt Debt consisted of the following as ofDecember 31, 2020 , andDecember 31, 2019 (dollars in thousands): As of December 31, 2020 As of December 31, 2019 Total Total Aggregate Aggregate Principal Principal Principal Principal Amount Amount Carrying Amount Amount Carrying Committed Outstanding Value (1) Committed Outstanding Value (1) BCSF Revolving Credit Facility$ 425,000 $ 257,774 $ 257,774 $ 500,000 $ 268,015 $ 268,015 2018-1 Notes 365,700 365,700 364,006 365,700 365,700 363,832 JPM Credit Facility 450,000 293,283 293,283 666,581 546,754 546,754 2019-1 Debt 398,750 398,750 396,265 398,750 398,750 396,034 Revolving Advisor Loan 50,000 - - - - - 2023 Notes 150,000 150,000 147,032 - - - Total Debt$ 1,839,450 $ 1,465,507 $ 1,458,360 $ 1,931,031 $ 1,579,219 $ 1,574,635 95
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(1)
Carrying value represents aggregate principal amount outstanding less unamortized debt issuance costs
SMBC Revolving Credit Agreement OnNovember 21, 2018 , the SMBC Revolving Credit Facility was terminated. The proceeds from the initial public offering onNovember 15, 2018 , were used to repay the total outstanding debt. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense related to the SMBC Revolving Credit Facility were as follows (dollars in thousands):
For the Year Ended
2020 2019 2018
Borrowing interest expense $ - $ - $ 3,334
Unused facility fee - - 22Amortization of deferred financing costs and upfront commitment fees
- - 723
Total interest and debt financing expenses $ - $ - $ 4,079
BCSF Revolving Credit Facility
On October 4, 2017 , we entered into the revolving credit agreement (the "BCSF
Revolving Credit Facility") with us, as equity holder, BCSF I, LLC , a Delaware
limited liability company and a wholly owned and consolidated subsidiary of the
Company, as borrower, and Goldman Sachs Bank USA , as sole lead arranger
("Goldman Sachs"). The BCSF Revolving Credit Facility was subsequently amended
on May 15, 2018 to reflect certain clarifications regarding margin requirements
and hedging currencies. The maximum commitment amount under the BCSF Revolving
Credit Facility is $500.0 million and may be increased up to $750.0 million .
Proceeds of the loans under the BCSF Revolving Credit Facility may be used to
acquire certain qualifying loans and such other uses as permitted under the BCSF
Revolving Credit Facility. The BCSF Revolving Credit Facility includes customary
affirmative and negative covenants, including certain limitations on the
incurrence of additional indebtedness and liens, as well as usual and customary
events of default for revolving credit facilities of this nature.
On January 8, 2020 , the Company entered into an amended and restated credit
agreement of its BCSF Revolving Credit Facility. The amendment amended the
existing credit facility to, among other things, modify various financial
covenants, including removing a liquidity covenant and adding a net asset value
covenant with respect to the Company, as sponsor.
On March 31, 2020 , the Parties entered into Omnibus Amendment No. 1 to the
amended and restated credit agreement. The amendment amended the existing credit
facility to, among other things, provide for enhanced flexibility to purchase or
contribute and borrow against revolving loans and delayed draw term loans, and
to count certain additional assets in the calculation of collateral for the
outstanding advances; increase the spread payable under the facility from 2.50%
to 3.25% per annum; include additional events of default to the existing credit
facility, including but not limited to, a qualified equity raise not effected on
or prior to June 22, 2020 ; and, after June 22, 2020 , require the Company
maintain at least $50.0 million of unencumbered liquidity or pay down the
facility by at least $50.0 million .
On May 27, 2020 , the Parties entered into Amendment No. 2 to the amended and
restated credit agreement. The amendment amended the existing credit facility
to, among other things, (i) permit the Company to incur a lien on assets
purchased with the proceeds of the rights offering and (ii) remove the
requirement that the Company maintain $50.0 million in unencumbered cash after
the completion of the rights offering, instead requiring a pay down of
$50.0 million within two business days after the closing of the rights offering,
which was subsequently paid.
On August 14, 2020 , the Parties entered into the second amended and restated
credit agreement and the third amended and restated margining agreement
(collectively, the "Amendment"), which amended and
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restated the terms of the existing credit facility (the "Amended and Restated Credit Facility"). The Amendment amends the existing credit facility to, among other things, (i) decrease the financing limit from$500.0 million to$425.0 million , (ii) decrease the interest rate on financing from LIBOR plus 3.25% per annum to LIBOR plus 3.00% per annum, and (iii) provide enhanced flexibility to contribute and borrow against revolving and delayed draw loans and modify certain other terms relating to collaterals. Assets that are pledged as collateral for the BCSF Revolving Credit Facility are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company's obligations under the BCSF Revolving Credit Facility. Borrowings under the BCSF Revolving Credit Facility bear interest at LIBOR plus a margin. As ofDecember 31, 2020 andDecember 31, 2019 , the BCSF Revolving Credit Facility was accruing interest expense at a rate of LIBOR plus 3.00% and LIBOR plus 2.50%, respectively. We pay an unused commitment fee of 30 basis points (0.30%) per annum. Interest is payable quarterly in arrears. Any amounts borrowed under the BCSF Revolving Credit Facility, and all accrued and unpaid interest, will be due and payable, on the earliest of: (a)October 5, 2022 and (b) the date upon which all loans shall become due and payable in full, whether by acceleration or otherwise. As ofDecember 31, 2020 andDecember 31, 2019 there were$257.8 million and$268.0 million borrowings under the BCSF Revolving Credit Facility, respectively and we were in compliance with the terms of the BCSF Revolving Credit Facility. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense related to the BCSF Revolving Credit Facility were as follows (dollars in thousands):
For the Year Ended
2020 2019 2018
Borrowing interest expense $ 14,929 $ 17,566 $ 13,975
Unused facility fee 365 456 624Amortization of deferred financing costs and upfront commitment fees
1,127 1,067 1,068 Total interest and debt financing expenses
2018-1 Notes OnSeptember 28, 2018 , (the "2018-1 Closing Date"), we, throughBCC Middle Market CLO 2018-1 LLC (the "2018-1 Issuer"), aDelaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its$451.2 million term debt securitization (the "CLO Transaction"). The notes issued in connection with the CLO Transaction (the "2018-1 Notes") are secured by a diversified portfolio of the 2018-1 Issuer consisting primarily of middle market loans, the majority of which are senior secured loans (the "2018-1 Portfolio"). At the 2018-1 Closing Date, the 2018-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the CLO Transaction. The CLO Transaction was executed through a private placement of the following 2018-1 Notes (dollars in thousands): 97
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Interest rate at
2018-1 Notes Principal Amount Spread above Index December 31, 2020
Class A-1 A $ 205,900 1.55% + 3 Month LIBOR 1.77%
Class A-1 B 45,000 1.50% + 3 Month LIBOR (first 24 months) 2.02%
1.80% + 3 Month LIBOR (thereafter)
Class A-2 55,100 2.15% + 3 Month LIBOR 2.37%
Class B 29,300 3.00% + 3 Month LIBOR 3.22%
Class C 30,400 4.00% + 3 Month LIBOR 4.22%
Total 2018-1 Notes 365,700
Membership Interests 85,450 Non-interest bearing Not applicable
Total $ 451,150
The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes were issued at par and are
scheduled to mature on October 20, 2030 . The Company received 100% of the
membership interests (the "Membership Interests") in the 2018-1 Issuer in
exchange for its sale to the 2018-1 Issuer of the initial closing date loan
portfolio. The Membership Interests do not bear interest. As of December 31,
2020 , the Company's Membership Interests are pledged as collateral to the BCSF
Revolving Credit Facility.
The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes are included in the
consolidated financial statements. The Membership Interests are eliminated in
consolidation.
The Company serves as portfolio manager of the 2018-1 Issuer pursuant to a
portfolio management agreement between the Company and the 2018-1 Issuer. For so
long as the Company serves as portfolio manager, the Company will not charge any
management fee or subordinated interest to which it may be entitled.
During the reinvestment period (four years from the closing date of the CLO
Transaction), pursuant to the indenture governing the 2018-1 Notes, all
principal collections received on the underlying collateral may be used by the
2018-1 Issuer to purchase new collateral under the direction of the Company in
its capacity as portfolio manager of the 2018-1 Issuer and in accordance with
the 2018-1 Issuer's investment strategy and the terms of the indenture.
The Company has agreed to hold on an ongoing basis the Membership Interests with
an aggregate dollar purchase price of at least equal to 5% of the aggregate
amount of all obligations issued by the 2018-1 Issuer for so long as the 2018-1
Notes remain outstanding.
The 2018-1 Issuer pays ongoing administrative expenses to the trustee,
independent accountants, legal counsel, rating agencies and independent managers
in connection with developing and maintaining reports, and providing required
services in connection with the administration of the 2018-1 Issuer.
As of December 31, 2020 , there were 60 first lien and second lien senior secured
loans with a total fair value of approximately $424.0 million and cash of
$11.1 million securing the 2018-1 Notes. As of December 31, 2019 , there were 61
first lien and second lien senior secured loans with a total fair value of
approximately $435.8 million and cash of $9.1 million securing the 2018-1 Notes.
Assets that are pledged as collateral for the 2018-1 Notes are not directly
available to the creditors of the Company to satisfy any obligations of the
Company other than the Company's obligations under the indenture governing the
2018-1 Notes. Such assets are included in the Company's consolidated financial
statements. The creditors of the 2018-1 Issuer have received security interests
in such assets and such assets are not intended to be available to the creditors
of the Company (or an affiliate of the Company). The 2018-1 Portfolio must meet
certain requirements, including asset mix and concentration, term, agency
rating, collateral coverage, minimum coupon, minimum spread and sector diversity
requirements in the indenture governing the 2018-1 Notes. As of December 31,
2020 and December 31, 2019 , the Company was in compliance with its covenants
related to the 2018-1 Notes.
Costs of $2.1 million were incurred in connection with debt securitization of
the 2018-1 Notes by the 2018-1 Issuer which have been recorded as debt issuance
costs and presented as a reduction to the outstanding
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principal amount of the 2018-1 Notes on the consolidated statements of assets and liabilities and are being amortized over the life of the 2018-1 Issuer using the effective interest method. The balance of the unamortized debt issuance costs related to the 2018-1 Issuer was$1.7 million and$1.9 million as ofDecember 31, 2020 andDecember 31, 2019 , respectively. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense related to the 2018-1 Issuer were as follows (dollars in thousands):
For the Year Ended
2020 2019 2018
Borrowing interest expense $ 10,820 $ 16,226 $ 4,221
Amortization of debt issuance costs and upfront commitment fees 174 174 44
Total interest and debt financing expenses $
10,994
Citibank Revolving Credit Facility OnFebruary 19, 2019 , the Company entered into a credit and security agreement (the "Credit Agreement" or the "Citibank Revolving Credit Facility") with the Company as equity holder and servicer,BCSF II-C, LLC as Borrower,Citibank, N.A ., as Administrative Agent, andWells Fargo Bank, National Association as Collateral Administrator, Collateral Agent and Custodian. The Credit Agreement was effective as ofFebruary 19, 2019 . The facility amount under the Credit Agreement is$350.0 million . Proceeds of the loans under the Credit Agreement may be used to acquire certain qualifying loans and such other uses as permitted under the Credit Agreement. The period from the closing date untilFebruary 19, 2020 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the Credit Agreement. The final maturity date is the earliest of: (a) the business day designated by the Borrower as the final maturity date upon not less than three business days' prior written notice to the Administrative Agent, the Collateral Agent, the Lenders, the Custodian and the Collateral Administrator, (b)February 19, 2022 and (c) the date on which the Administrative Agent provides notice of the declaration of the final maturity date after the occurrence of an event of default. The Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature. Borrowings under the Citibank Revolving Credit Facility bear interest at LIBOR plus a margin. During the period prior to the last day of the reinvestment period, borrowings under the Credit Agreement will bear interest at a rate equal to the three-month LIBOR plus 1.60%. Commencing on the last day of the reinvestment period, the interest rate on borrowings under the Credit Agreement will reset to three month LIBOR plus 2.60% for the remaining term of the Credit Agreement. We pay an unused commitment fee based on a corresponding utilization rate; (i) 0 basis points (0.00%) per annum when greater than or equal to 85.0% utilization, (ii) 25 basis points (0.25%) per annum when greater than or equal to 75.0% but less than 85.0% utilization, (iii) 50 basis points (0.50%) per annum when greater than or equal to 50.0% but less than 75.0% utilization, (iv) 75 basis points (0.75%) per annum when greater than or equal to 25.0% but less than 50% utilization, or (v) 100 basis points (1.00%) per annum when less than 25.0% utilization. OnAugust 28, 2019 , the Citibank Revolving Credit Facility was terminated. The proceeds from the 2019-1 Debt were used to repay the total outstanding debt. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense related to the Citibank Revolving Credit Facility were as follows (dollars in thousands): 99
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For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $ - $ 4,104 $ -
Unused facility fee - 357 -Amortization of deferred financing costs and upfront commitment fees
- 124 -
Total interest and debt financing expenses $ - $ 4,585 $ -
JPM Credit Facility
On April 30, 2019 , the Company entered into a loan and security agreement (the
"JPM Credit Agreement" or the "JPM Credit Facility") as Borrower, with JPMorgan
Chase Bank, National Association , as Administrative Agent, and Wells Fargo Bank,
National Association as Collateral Administrator, Collateral Agent, Securities
Intermediary and Bank . The facility amount under the JPM Credit Agreement was
$666.6 million . Borrowings under the JPM Credit Facility bore interest at LIBOR
plus 2.75%.
On January 29, 2020 , the Company entered into an amended and restated loan and
security agreement (the "Amended Loan and Security Agreement") as Borrower, with
JPMorgan Chase Bank, National Association , as Administrative Agent, and Wells
Fargo Bank, National Association as Collateral Administrator, Collateral Agent,
Securities Intermediary and Bank . The Amended Loan and Security Agreement
amended the Existing Loan and Security Agreement to, among other things,
(1) decrease the financing limit under the agreement from $666.6 million to
$500.0 million ; (2) decrease the minimum facility amount from $466.6 million to
$300.0 million period from January 29, 2020 to July 29, 2020 (the minimum
facility amount will increase to $350.0 million after July 29, 2020 until the
end of the reinvestment period); (3) decrease the interest rate on financing
from 2.75% per annum over the applicable LIBOR to 2.375% per annum over the
applicable LIBOR; and (4) extend the scheduled termination date of the agreement
from November 29, 2022 to January 29, 2025 .
On March 20, 2020 , the Company entered into a second amended and restated loan
and security agreement between the parties (the "Second Amended Loan and
Security Agreement"). The Second Amended Loan and Security Agreement, among
other things, provides flexibility to contribute and borrow against revolving
loans, reduce the amount required to be reserved for unfunded revolvers and
delayed draw obligations and decreases the financing limit by $50.0 million
within 90 days or, based on the occurrence of certain events, such earlier
period as may be set forth in the Second Amended Loan and Security Agreement.
The Company shall pay to the Administrative Agent $50.0 million to the
prepayment of Advances and the Financing Commitments shall be reduced by the
amount of principal so prepaid on the earlier of two Business days following the
closing of the Rights Offering and June 18, 2020 , which the Company subsequently
paid.
On July 2, 2020 , the Company entered into a third amended and restated loan and
security agreement with respect to the JPM Credit Agreement to, among other
things, adjust the advance rates and make certain changes of an updating nature.
The facility amount under the JPM Credit Agreement is currently $450.0 million .
Proceeds of the loans under the JPM Credit Facility may be used to acquire
certain qualifying loans and such other uses as permitted under the JPM Credit
Agreement. The period from the effective date of the amendment until January 29,
2023 is referred to as the reinvestment period and during such reinvestment
period, the Borrower may request drawdowns under the JPM Credit Facility.
The maturity date is the earliest of: (a) January 29, 2025 , (b) the date on
which the secured obligations become due and payable following the occurrence of
an event of default, (c) the date on which the advances are repaid in full and
(d) the date after a market value cure failure occurs on which all portfolio
investments have been sold and proceeds therefrom have been received by the
Borrower. The stated maturity date of January 29, 2025 may be extended for
successive one-year periods by mutual agreement of the Borrower and the
Administrative Agent.
The JPM Credit Agreement includes customary affirmative and negative covenants,
including certain limitations on the incurrence of additional indebtedness and
liens, as well as usual and customary events of default for revolving credit
facilities of this nature.
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Borrowings under the JPM Credit Facility bear interest at LIBOR plus a margin. As ofDecember 31, 2020 , the JPM Credit Facility was accruing interest expense at a rate of LIBOR plus 2.375%. The Company pays an unused commitment fee of between 37.5 basis points (0.375%) and 75 basis points (0.75%) per annum depending on the size of the unused portion of the facility. Interest is payable quarterly in arrears. As ofDecember 31, 2019 , the JPM Credit Facility was accruing interest expense at a rate of LIBOR plus 2.75%. We paid an unused commitment fee of 75 basis points (0.75%) per annum. As ofDecember 31, 2020 andDecember 31, 2019 , there were$293.3 million and$546.8 million of borrowings under the JPM Credit Facility, respectively, and we were in compliance with the terms of the JPM Credit Facility. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense related to the JPM Credit Facility were as follows (dollars in thousands):
For the Year Ended
2020 2019 2018
Borrowing interest expense $ 13,961 $ 19,679 $ -
Unused facility fee 310 464 -Amortization of deferred financing costs and upfront commitment fees
467 53 -
Total interest and debt financing expenses 2019-1 Debt OnAugust 28, 2019 , the Company, through BCC Middle Market CLO 2019-1 LLC (the "2019-1 Issuer"), aCayman Islands limited liability company and a wholly-owned and consolidated subsidiary of the Company, and BCC Middle Market CLO 2019-1Co-Issuer, LLC (the "Co-Issuer" and, together with the Issuer, the "Co-Issuers"), aDelaware limited liability company, completed its$501.0 million term debt securitization (the "2019-1 CLO Transaction"). The notes issued in connection with the 2019-1 CLO Transaction (the "2019-1 Notes") are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market loans, the majority of which are senior secured loans (the "2019-1 Portfolio"). The Co-Issuers also issued Class A-1L Loans (the "Loans" and, together with the 2019-1 Notes, the "2019-1 Debt"). The Loans are also secured by the 2019-1 Portfolio. At the 2019-1 closing date, the 2019-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2019-1 CLO Transaction. The 2019-1 CLO Transaction was executed through a private placement of the following 2019-1 Debt (dollars in thousands): 2019-1 Debt Principal Amount Spread above Index Interest rate at December 31, 2020 Class A-1L$ 50,000 1.70% + 3 Month LIBOR 1.94% Class A-1 222,500 1.70% + 3 Month LIBOR 1.94% Class A-2A 50,750 2.70% + 3 Month LIBOR 2.94% Class A-2B 13,000 4.23% (Fixed) 4.23% Class B 30,000 3.60% + 3 Month LIBOR 3.84% Class C 32,500 4.75% + 3 Month LIBOR 4.99% Total 2019-1 Debt 398,750 Membership Interests 102,250 Non-interest bearing Not applicable Total$ 501,000 The Loans and the Class A-1, A-2A, A-2B, and B Notes were issued at par. The ClassC Notes were issued at a discount. The Notes are scheduled to mature onOctober 15, 2031 . The Company received 100% of the membership interests (the "Membership Interests") in the 2019-1 Issuer in exchange for its sale to the 101
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2019-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest. As ofDecember 31, 2020 , the Company's Membership Interests are pledged as collateral to the BCSF Revolving Credit Facility. The Loans and Class A-1, A-2A, A-2B, B, and C Notes are included in the consolidated financial statements of the Company. The Membership Interests are eliminated in consolidation. The Company serves as portfolio manager of the 2019-1 Issuer pursuant to a portfolio management agreement between the Company and the 2019-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled. During the reinvestment period, pursuant to the indenture and loan agreement governing the 2019-1 Notes and Loans, respectively, all principal collections received on the underlying collateral may be used by the 2019-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2019-1 Issuer and in accordance with the 2019-1 Issuer investment strategy and the terms of the indenture and loan agreement, as applicable. The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2019-1 Co-Issuers for so long as the 2019-1 Debt remains outstanding. The 2019-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2019-1 Issuer. As ofDecember 31, 2020 , there were 67 first lien and second lien senior secured loans with a total fair value of approximately$469.4 million and cash of$15.9 million securing the 2019-1 Debt. As ofDecember 31, 2019 , there were 65 first lien and second lien senior secured loans with a total fair value of approximately$471.3 million and cash of$22.4 million securing the 2019-1 Debt. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company's obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As ofDecember 31, 2020 , the Company was in compliance with its covenants related to the 2019-1 Debt. Costs of the offering, including the discount of the ClassC Notes , of$2.8 million were incurred in connection with debt securitization of the 2019-1 Debt by the 2019-1 Co-Issuers which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019-1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life of the 2019-1 Issuer using the effective interest method. The balance of the unamortized debt issuance costs related to the 2019-1 Issuer was$2.5 million and$2.7 million as ofDecember 31, 2020 andDecember 31, 2019 , respectively. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense related to the 2019-1 Co-Issuers were as follows (dollars in thousands):
For the Year Ended
2020 2019 2018
Borrowing interest expense $ 13,071 $ 5,981 $ -
Amortization of debt issuance costs and upfront commitment fees 230 79 -
Total interest and debt financing expenses $ 13,301 $ 6,060 $ -
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Revolving Advisor Loan OnMarch 27, 2020 , the Company entered into an unsecured revolving loan agreement (the "Revolving Advisor Loan") withBCSF Advisors, LP , the investment adviser of the Company. The Revolving Advisor Loan has a maximum credit limit of$50.0 million and a maturity date ofMarch 27, 2023 . The Revolving Advisor Loan accrues interest at the Applicable Federal Rate from the date of such loan until the loan is repaid in full. As ofDecember 31, 2020 , there were no borrowings under the Revolving Advisor Loan. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense related to the Revolving Advisor Loan were as follows (dollars in thousands): For the Year Ended December 31, 2020 2019 2018 Borrowing interest expense$ 58 $ - $ - Total interest and debt financing expenses$ 58
$ - $ -
2023 Notes OnJune 10, 2020 , the Company entered into a Master Note Purchase Agreement with institutional investors listed on the Purchaser Schedule thereto (the "Note Purchase Agreement"), in connection with the Company's issuance of$150.0 million aggregate principal amount of its 8.50% senior unsecured notes due 2023 (the " 2023 Notes"). The sale of the 2023 Notes generated net proceeds of approximately$146.4 million , including an offering discount of$1.5 million and debt issuance costs in connection with the transaction, including fees and commissions, of$2.1 million . The Notes will mature onJune 10, 2023 and may be redeemed in whole or in part at the Company's option at any time or from time to time at the redemption prices set forth in the Note Purchase Agreement. The Notes will bear interest at a rate of 8.50% per year payable semi-annually onJune 10 andDecember 10 of each year, commencing onDecember 10, 2020 . As ofDecember 31, 2020 , the Company was in compliance with the terms of the Note Purchase Agreement governing the 2023 Notes. For the years endedDecember 31, 2020 , 2019 and 2018, the components of the carrying value of the 2023 Notes were as follows (dollars in thousands): For the Year Ended December 31, 2020 2019 2018 Principal amount of debt$ 150,000 $ - $ - Unamortized debt issuance cost (1,785) - - Original issue discount, net of accretion (1,183) - - Carrying value of 2023 Notes$ 147,032 $ - $ -
For the years ended
For the Year Ended
2020 2019 2018
Borrowing interest expense $ 7,120 $ - $ -
Amortization of debt issuance cost 406 - -
Amortization of original issue discount 271 - -
Total interest and debt financing expenses $ 7,797 $ - $ -
Distribution Policy The following table summarizes distributions declared during the years endedDecember 31, 2020 , 2019, and 2018: 103
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Amount Per Total
Date Declared Record Date Payment Date Share Distributions
March 28, 2018 March 28, 2018 May 17, 2018 $ 0.34 $ 10,610
June 28, 2018 June 28, 2018 August 10, 2018 $ 0.36 $ 13,484
September 26, 2018 September 26, 2018 October 19, 2018 $ 0.41 $ 17,967
December 19, 2018 December 31, 2018 January 14, 2019 $ 0.41 $ 21,108
February 21, 2019 March 29, 2019 April 12, 2019 $ 0.41 $ 21,108
May 7, 2019 June 28, 2019 July 29, 2019 $ 0.41 $ 21,176
August 1, 2019 September 30, 2019 October 30, 2019 $ 0.41 $ 21,176
October 31, 2019 December 31, 2019 January 30, 2020 $ 0.41 $ 21,176
February 20, 2020 March 31, 2020 April 30, 2020 $ 0.41 $ 21,176
May 4, 2020 June 30, 2020 July 30, 2020 $ 0.34 $ 21,951
July 30, 2020 September 30, 2020 October 30, 2020 $ 0.34 $ 21,951
October 28, 2020 December 31, 2020 January 29, 2021 $ 0.34 $ 21,951
Total distributions declared $ 4.59 $ 234,834
Distributions to common stockholders are recorded on the record date. To the
extent that we have income available, we intend to distribute quarterly
distributions to our stockholders. Our quarterly distributions, if any, will be
determined by the Board. Any distributions to our stockholders will be declared
out of assets legally available for distribution.
We have elected to be treated, and intend to operate in a manner so as to
continuously qualify, as a regulated investment company (a "RIC) under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
beginning with our taxable year ended December 31, 2016 . To qualify for and
maintain RIC tax treatment, among other things, we must distribute dividends to
our stockholders in respect of each taxable year of an amount generally at least
equal to 90% of the sum of our net ordinary income and net short-term capital
gains in excess of our net long-term capital losses. In order to avoid the
imposition of certain excise taxes imposed on RICs, we must distribute dividends
to our stockholders in respect of each calendar year of an amount at least equal
to the sum of: (1) 98% of our net ordinary income (taking into account certain
deferrals and elections) for such calendar year; (2) 98.2% of our capital gains
in excess of capital losses, adjusted for certain ordinary losses, generally for
the one-year period ending on October 31 of such calendar year; and (3) the sum
of any net ordinary income plus capital gains net income for preceding years
that were not distributed during such years and on which we paid no federal
income tax.
We intend to distribute net capital gains (i.e., net long-term capital gains in
excess of net short-term capital losses), if any, at least annually out of the
assets legally available for such distributions. However, we may decide in the
future to retain all or a portion of our net capital gains for investment, incur
a corporate-level tax on such capital gains, and elect to treat such capital
gains as deemed distributions to our stockholders.
We have adopted a dividend reinvestment plan that provides for the reinvestment
of cash dividends and distributions. Prior to the IPO, stockholders who "opted
in" to our dividend reinvestment plan had their cash dividends and distributions
automatically reinvested in additional shares of our common stock, rather than
receiving cash dividends and distributions. Subsequent to the IPO, stockholders
who do not "opt out" of our dividend reinvestment plan will have their cash
dividends and distributions automatically reinvested in additional shares of our
common stock, rather than receiving cash dividends and distributions.
Stockholders could elect to "opt in" or "opt out" of our dividend reinvestment
plan in their subscription agreements, through the private offering. The
elections of stockholders prior to the IPO shall remain effective after the IPO.
The U.S. federal income tax characterization of distributions declared and paid
for the fiscal year will be determined at fiscal year-end based upon our
investment company taxable income for the full fiscal year and distributions
paid during the full year.
Commitments and Off-Balance Sheet Arrangements
We may become a party to financial instruments with off-balance sheet risk in
the normal course of our business to fund investments and to meet the financial
needs of our portfolio companies. These
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instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized on the statements of assets and liabilities. As ofDecember 31, 2020 , the Company had$189.9 million of unfunded commitments under loan and financing agreements as follows (dollars in thousands): Expiration Date (1) Unfunded Commitments (2) First Lien Senior Secured Loans 9 Story Media Group Inc. - Revolver 4/30/2026 $ 74 A&R Logistics, Inc. - Revolver 5/5/2025 6,096 Abracon Group Holding, LLC. - Revolver 7/18/2024 2,833 Allworth Financial Group, L.P. - Delayed Draw 12/23/2026 3,042 Allworth Financial Group, L.P. - Revolver 12/23/2026 2,440 AMI US Holdings Inc. - Revolver 4/1/2024 488 Amspec Services, Inc. - Revolver 7/2/2024 5,667 Ansira Holdings, Inc. - Revolver 12/20/2024 1,700 AP Plastics Group, LLC - Revolver 8/2/2021 5,667 Appriss Holdings, Inc. - Revolver 5/30/2025 4,711 Aramsco, Inc. - Revolver 8/28/2024 3,387 Batteries Plus Holding Corporation - Revolver 7/6/2022 4,250 Captain D's LLC - Revolver 12/15/2023 490 CB Nike IntermediateCo Ltd - Revolver 10/31/2025 4,428 CMI Marketing Inc - Revolver 5/24/2023 2,112 CPS Group Holdings, Inc. - Revolver 3/3/2025 4,933 CST Buyer Company - Revolver 10/3/2025 2,190 Datix Bidco Limited - Revolver 10/28/2024 1,328 Direct Travel, Inc. - Delayed Draw 10/2/2023 4,800 Dorner Manufacturing Corp - Revolver 3/15/2022 1,099 Efficient Collaborative Retail Marketing Company, LLC - Revolver 6/15/2022 1,275 Element Buyer, Inc. - Revolver 7/19/2024 3,967 FFI Holdings I Corp - Delayed Draw 1/24/2025 3,156 FFI Holdings I Corp - Revolver 1/24/2025 3,938 Fineline Technologies, Inc. - Revolver 11/4/2022 2,633 Grammer Purchaser, Inc. - Revolver 9/30/2024 1,050 Great Expressions Dental Center PC - Revolver 9/28/2022 513 Green Street Parent, LLC - Revolver 8/27/2025 2,419 GSP Holdings, LLC - Revolver 11/6/2025 3,400 JHCC Holdings, LLC - Delayed Draw 9/9/2025 6,262 JHCC Holdings, LLC - Revolver 9/9/2025 1,272 Kellstrom Commercial Aerospace, Inc. - Revolver 7/1/2025 1,066 Margaux Acquisition Inc. - Revolver 12/19/2024 2,872 Margaux UK Finance Limited - Revolver 12/19/2024 681 MRI Software LLC - Delayed Draw 2/10/2026 731 MRI Software LLC - Revolver 2/10/2026 1,782 Profile Products LLC - Revolver 12/20/2024 3,003 105
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Expiration Date (1) Unfunded Commitments (2)
Refine Intermediate, Inc. - Revolver 9/3/2026 5,340
RoC Opco LLC - Revolver 2/25/2025 10,241
Solaray, LLC - Revolver 9/9/2022 5,327
TA/WEG Holdings - Delayed Draw 10/2/2025 7,538
TEI Holdings Inc. - Revolver 12/23/2025 1,055
Thrasio - Delayed Draw 12/18/2026 12,522
Tidel Engineering, L.P. - Revolver 3/1/2023 4,250
TLC Purchaser, Inc. - Delayed Draw 10/13/2025 7,119
TLC Purchaser, Inc. - Revolver 10/13/2025 8,900
V Global - Revolver 12/22/2025 7,885
Ventiv Holdco, Inc. - Revolver 9/3/2025 2,981
WCI-HSG Purchaser, Inc. - Revolver 2/24/2025 1,612
Whitcraft LLC - Revolver 4/3/2023 1,812
WU Holdco, Inc. - Revolver 3/26/2025 3,043
YLG Holdings, Inc. - Revolver 10/31/2025 8,545
Total First Lien Senior Secured Loans $ 189,925
(1)
Commitments are generally subject to borrowers meeting certain criteria such as
compliance with covenants and certain operational metrics. These amounts may
remain outstanding until the commitment period of an applicable loan expires,
which may be shorter than its maturity.
(2)
Unfunded commitments denominated in currencies other thanU.S. dollars have been converted toU.S. dollars using the applicable foreign currency exchange rate as ofDecember 31, 2020 .
As of
Expiration Date (1) Unfunded Commitments (2)
First Lien Senior Secured Loans
A&R Logistics, Inc. - Revolver 5/5/2025 $ 5,043
Abracon Group Holding, LLC. - Revolver 7/18/2024 2,833
AMI US Holdings Inc. - Revolver 4/1/2024 977
Amspec Services, Inc. - Revolver 7/2/2024 3,542
Ansira Holdings, Inc. - Delayed Draw 12/20/2022 1,509
AP Plastics Group, LLC - Revolver 8/2/2021 8,500
Appriss Holdings, Inc. - Revolver 5/30/2025 4,711
Aramsco, Inc. - Revolver 8/28/2024 2,766
Batteries Plus Holding Corporation - Revolver 7/6/2022 4,250
Captain D's LLC - Revolver 12/15/2023 577
CB Nike Intermediate Co Ltd - Revolver 10/31/2025 2,878
Clinical Innovations, LLC - Revolver 10/17/2022 380
CMI Marketing Inc. - Revolver 5/24/2023 2,112
CPS Group Holdings, Inc. - Revolver 3/3/2025 4,933
Cruz Bay Publishing, Inc. - Delayed Draw 2/28/2020 1,098
Cruz Bay Publishing, Inc. - Revolver 2/28/2020 535
CST Buyer Company - Revolver 10/3/2025 2,190
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Expiration Date (1) Unfunded Commitments (2)
10/28/2024 1,290
Direct Travel, Inc. - Delayed Draw 12/1/2021 7,030
Direct Travel, Inc. - Revolver 12/1/2021 4,250
Dorner Manufacturing Corp - Revolver 3/15/2022 1,099
Efficient Collaborative Retail Marketing Company, LLC - Revolver 6/15/2022 3,542
Element Buyer, Inc. - Delayed Draw 7/18/2025 7,933
Element Buyer, Inc. - Revolver 7/19/2024 2,833
FFI Holdings I Corp - Delayed Draw 1/24/2025 677
FFI Holdings I Corp - Revolver 1/24/2025 1,994
Fineline Technologies, Inc. - Revolver 11/4/2022 655
Grammer Purchaser, Inc. - Revolver 9/30/2024 998
Great Expressions Dental Center PC - Revolver 9/28/2022 150
Green Street Parent, LLC - Revolver 8/27/2025 2,419
GSP Holdings, LLC - Revolver 11/6/2025 4,307
Hightower Holding, LLC - Delayed Draw 1/31/2025 6,640
Horizon Telcom, Inc. - Delayed Draw 6/15/2023 1,256
Horizon Telcom, Inc. - Revolver 6/15/2023 116
Ivy Finco Limited - First Lien Senior Secured Loan 5/19/2025 5,817
JHCC Holdings, LLC - Delayed Draw 9/9/2025 8,500
JHCC Holdings, LLC - Revolver 9/9/2025 1,820
Kellstrom Commercial Aerospace, Inc. - Delayed Draw 7/1/2025 3,838
Kellstrom Commercial Aerospace, Inc. - Revolver 7/1/2025 640
Margaux Acquisition Inc. - Delayed Draw 12/19/2024 7,139
Margaux Acquisition Inc. - Revolver 12/19/2024 2,872
Margaux UK Finance Limited - Revolver 12/19/2024 662
Mertus 522. GmbH - Delayed Draw 5/28/2026 13,761
Profile Products LLC - Revolver 12/20/2024 3,833
RoC Opco LLC - Revolver 2/25/2025 10,241
Solaray, LLC - Revolver 9/9/2022 1,077SumUp Holdings Luxembourg S.à.r.l. - First Lien Senior Secured Loan
8/1/2024 10,638
Symplr Software, Inc. - Revolver 11/30/2023 466
TCFI Aevex LLC - Revolver 5/13/2025 138
TEI Holdings Inc. - Revolver 12/23/2025 3,018
Tidel Engineering, L.P. - Revolver 3/1/2023 4,250
TLC Purchaser, Inc. - Delayed Draw 10/13/2025 7,119
TLC Purchaser, Inc. - Revolver 10/13/2025 4,984
Ventiv Holdco, Inc. - Revolver 9/3/2025 3,407
WCI-HSG Purchaser, Inc. - Revolver 2/24/2025 2,284
WU Holdco, Inc. - Delayed Draw 3/26/2026 4,801
WU Holdco, Inc. - Revolver 3/26/2025 3,944
YLG Holdings, Inc. - Delayed Draw 10/31/2025 5,127
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Expiration Date (1) Unfunded Commitments (2)
YLG Holdings, Inc. - Revolver 10/31/2025 8,545
Zywave, Inc. - Revolver 11/17/2022 851
Total First Lien Senior Secured Loans $ 215,795
(1)
Commitments are generally subject to borrowers meeting certain criteria such as
compliance with covenants and certain operational metrics. These amounts may
remain outstanding until the commitment period of an applicable loan expires,
which may be shorter than its maturity.
(2)
Unfunded commitments denominated in currencies other thanU.S. dollars have been converted toU.S. dollars using the applicable foreign currency exchange rate as ofDecember 31, 2019 . Significant Accounting Estimates and Critical Accounting Policies Basis of Presentation The Company's consolidated financial statements have been prepared in accordance with generally accepted accounting principles inthe United States of America ("US GAAP"). The Company's consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-K and Articles 1, 6, 10 and 12 of Regulation S-X. We have determined we meet the definition of an investment company and follow the accounting and reporting guidance in theFinancial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946-Financial Services-Investment Companies ("ASC 946"). Our financial currency isU.S. dollars and these consolidated financial statements have been prepared in that currency. Use of Estimates The preparation of the consolidated financial statements in conformity with US GAAP requires us 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 consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material. Revenue Recognition We record our investment transactions on a trade date basis. We record realized gains and losses based on the specific identification method. We record interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Discount and premium to par value on investments acquired are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Loan origination fees, original issue discount and market discount or premium are capitalized and amortized into or against interest income using the effective interest method or straight-line method, as applicable. We record any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts received upon prepayment of a loan or debt security as interest 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 such distributions in the case of private portfolio companies, and on the ex-dividend date for publicly traded portfolio companies. Distributions received from a limited liability company or limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Certain investments may have contractual PIK interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer. We record PIK as interest or dividend income, as applicable. If at any point we believe PIK 108
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may not be realized, we place the investment generating PIK on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest or dividend income, as applicable. Certain structuring fees and amendment fees are recorded as other income when earned. We record administrative agent fees received as other income when the services are rendered. Valuation of Portfolio Investments Investments for which market quotations are readily available are typically valued at such market quotations. Market quotations are obtained from an independent pricing service, where available. If we cannot obtain a price from an independent pricing service or if the independent pricing service is not deemed to be representative with the market, we value certain investments held by us on the basis of prices provided by principal market makers. Generally investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained, in some cases, primarily illiquid securities, multiple quotes may not be available and the mid of the bid/ask from one broker will be used. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value, subject at all times to the oversight and approval of the Board, based on the input of our Advisor, our Audit Committee and one or more independent third party valuation firms engaged by our Board. With respect to unquoted securities, we value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate and/or assist us in our valuation. 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 differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. With respect to investments for which market quotations are not readily available, the Advisor will undertake a multi-step valuation process, which includes among other things, the below: • Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Advisor responsible for the portfolio investment or by an independent valuation firm;
•
Preliminary valuation conclusions are then documented and discussed with our senior management and our Advisor. Agreed upon valuation recommendations are presented to our Audit Committee;
•
Our Audit Committee of our Board reviews the valuations presented and recommends values for each of the investments to our Board;
•
At least once annually, the valuation for each portfolio investment constituting a material portion of the Company's portfolio will be reviewed by an independent valuation firm; and
•
Our Board discusses valuations and determines the fair value of each investment in good faith based upon, among other things, the input of our Advisor, independent valuation firms, where applicable, and our Audit Committee.
In following this approach, the types of factors that are taken into account in
the fair value pricing of investments include, as relevant, but are not limited
to: comparison to publicly traded securities, including factors such as yield,
maturity and measures of credit quality; the enterprise value of a portfolio
company; the nature and realizable value of any collateral; the portfolio
companies ability to make payments and its earnings and discounted cash flows;
and the markets in which the portfolio company does business. In cases where an
independent valuation firm provides fair valuations for investments, the
independent valuation firm provides a fair valuation report, a description of
the methodology used to determine the fair value and their analysis and
calculations to support their conclusion.
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Recent Accounting Pronouncements InMarch 2020 , the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as ofMarch 12, 2020 throughDecember 31, 2022 . The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated afterDecember 31, 2022 , except for hedging transactions as ofDecember 31, 2022 , that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company is currently evaluating the impact of adopting ASU 2020-04 on the Company's consolidated financial statements. Contractual Obligations We have entered into the Amended Advisory Agreement with our Advisor (which supersedes the Investment Advisory Agreement datedNovember 14, 2018 we had previously entered into). Our Advisor has agreed to serve as our investment adviser in accordance with the terms of the Amended Advisory Agreement. Under the Amended Advisory Agreement, we have agreed to pay an annual base management fee as well as an incentive fee based on our investment performance. OnOctober 11, 2018 the Board approved, subject to completion of the IPO, the Investment Advisory Agreement. Beginning with the calendar quarter that commencesJanuary 1, 2019 , this Investment Advisory Agreement incorporates (i) a three-year lookback provision and (ii) a cap on quarterly income incentive fee payments based on net realized or unrealized capital loss, if any, during the applicable three-year lookback period. OnNovember 28, 2018 , our Board, including a majority of our Independent Directors, approved the Amended Advisory Agreement. OnFebruary 1, 2019 the Company's stockholders approved the Amended Advisory Agreement. Pursuant to this Agreement, effectiveFebruary 1, 2019 , the base management fee of 1.5% (0.375% per quarter) of the average value of the Company's gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will continue to apply to assets held at an asset coverage ratio of 200%, but a lower base management fee of 1.0% (0.25% per quarter) of the average value of the Company's gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will apply to any amount of assets attributable to leverage decreasing the Company's asset coverage ratio below 200%. We have entered into an Administration Agreement with the Administrator pursuant to which the Administrator will furnish us with administrative services necessary to conduct our day-to-day operations. We reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment. If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under our Amended Advisory Agreement and Administration Agreement. A summary of the maturities of our principal amounts of debt and other contractual payment obligations as ofDecember 31, 2020 are as follows (dollars in thousands): 110
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Payments Due by Period
Less than More than
Total 1 year 1-3 years 3-5 years 5 years
BCSF Revolving Credit Facility $ 257,774 $ - $ 257,774 $ - $ -
2018-1 Notes 365,700 - - - 365,700
JPM Credit Facility 293,283 - - 293,283 -
2019-1 Debt 398,750 - - - 398,750
2023 Notes 150,000 - 150,000 - -
Total Debt Obligations $ 1,465,507 $ - $ 407,774 $ 293,283 $ 764,450
Subsequent Events
On February 9, 2021 , the Company and certain entities and managed accounts of
Pantheon Ventures (US) LP ("Pantheon"), a global alternative private markets
asset manager, entered into an amended and restated limited liability company
agreement to co-manage a newly-formed joint venture, International Senior Loan
Program, LLC ("ISLP"). ISLP will seek to provide direct lending solutions to
middle market borrowers primarily across Europe and Australia . Middle-market
companies are those with between $10.0 million and $150.0 million in annual
earnings before interest, taxes, depreciation, and amortization, with a focus on
senior investments with a first or second lien on collateral (including
"unitranche" loans, which are loans that combine both first lien and second lien
debt). Investment decisions, including providing new loans, and all other
decisions in respect of ISLP must be approved by representatives of the Company
and Pantheon.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates.
We will generally invest in illiquid loans and securities including debt and
equity securities of middle-market companies. Because we expect that there will
not be a readily available market for many of the investments in our portfolio,
we expect to value many of our portfolio investments at fair value as determined
in good faith by the Board using a documented valuation policy and a
consistently applied valuation process. 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 differ significantly from
the values that would have been used had a readily available market value
existed for such investments, and the differences could be material.
Assuming that the statement of financial condition as of December 31, 2020 were
to remain constant and that we took no actions to alter our existing interest
rate sensitivity, the following table shows the annualized impact of
hypothetical base rate changes in interest rates (dollars in thousands):
Net Increase
(Decrease) in
Increase (Decrease) Increase(Decrease) Net Investment Change in Interest Rates in Interest Income in Interest Expense
Income
Down 25 basis points $ (822) $ (3,105) $ 2,283
Up 100 basis points 8,849 13,025 (4,176)
Up 200 basis points 32,150 26,050 6,100
Up 300 basis points 55,911 39,075 16,836
From time to time, we may make investments that are denominated in a foreign
currency. These investments are translated into U.S. dollars at the balance
sheet date, exposing us to movements in foreign exchange rates. We may employ
hedging techniques to minimize these risks, but we cannot assure you that such
strategies will be effective or without risk to us. We may seek to utilize
instruments such as, but not limited to, forward contracts to seek to hedge
against fluctuations in the relative values of our portfolio positions from
changes in currency exchange rates.
Item 8. Consolidated Financial Statements and Supplementary Data
Our consolidated financial statements and supplementary data are annexed to this
Annual Report beginning on page 113.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm 113Consolidated Financial Statements:
Consolidated Statements of Assets and Liabilities as of
Consolidated Statements of Operations for the years ended
117
Consolidated Statements of Changes in Net Assets for the years ended
118
Consolidated Statements of Cash Flows for the years ended
119
Consolidated Schedule of Investments as of December 31, 2020 120
Consolidated Schedule of Investments as of December 31, 2019 131
Notes to Consolidated Financial Statements 142
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Bain Capital Specialty Finance,
Inc.
Opinions on the Financial Statements and Internal Control over Financial
Reporting
We have audited the accompanying consolidated statements of assets and
liabilities, including the consolidated schedules of investments, of Bain
Capital Specialty Finance, Inc. and its subsidiaries (the "Company") as of
December 31, 2020 and 2019, and the related consolidated statements of
operations, changes in net assets and cash flows for each of the three years in
the period ended December 31, 2020 , including the related notes (collectively
referred to as the "consolidated financial statements"). We also have audited
the Company's internal control over financial reporting as of December 31, 2020 ,
based on criteria established in Internal Control-Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2020 and 2019, and the results of its operations, changes in its
net assets and its cash flows for each of the three years in the period ended
December 31, 2020 in conformity with accounting principles generally accepted in
the United States of America . Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of
December 31, 2020 , based on criteria established in Internal Control-Integrated
Framework (2013) issued by the COSO.
We have also previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States ), the consolidated statements
of assets and liabilities, including the consolidated schedules of investments,
of Bain Capital Specialty Finance, Inc. and its subsidiaries (the "Company") as
of December 31, 2018 , 2017, and 2016, and the related consolidated statements of
operations, changes in net assets and cash flows for each of the years ended
December 31, 2017 and 2016 (none of which are presented herein), and we
expressed unqualified opinions on those consolidated financial statements. In
our opinion, the information set forth in the Senior Securities table of Bain
Capital Specialty Finance, Inc. and its subsidiaries for each of the five years
in the period ended December 31, 2020 , appearing on page 77 in Part II, Item 5
of this Form 10-K, is fairly stated, in all material respects, in relation to
the consolidated financial statements from which it has been derived.
Basis for Opinions
The Company's management is responsible for these consolidated financial
statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial
reporting, included in Management's Report on Internal Control Over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on
the Company's consolidated financial statements and on the Company's internal
control over financial reporting based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United
States ) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective
internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing
procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
Our procedures included confirmation of securities owned as of December 31, 2020
and 2019 by correspondence with the custodian,
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agent banks, portfolio company investees and brokers; when replies were not received, we performed other auditing procedures. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Portfolio Investments-Certain Level 3 Portfolio Investments in Loans, Preferred Equity, and Equity Interests Valued Using Significant Unobservable Inputs Developed by Management As described in Notes 2 and 4 to the consolidated financial statements,$2,075 million of the Company's$2,484 million total investments at fair value as ofDecember 31, 2020 represent Level 3 portfolio investments in loans, preferred equity, and equity interests for which significant unobservable inputs were developed by management. For certain of these investments, management used the income approach to determine fair value. With respect to unquoted portfolio investments, management values each investment considering, among other measures, discounted cash flow models. Management applied significant judgment in determining the fair value of these investments, which involved the development and use of significant unobservable inputs. The significant unobservable inputs used in the income approach are the comparative yield and discount rate. The principal considerations for our determination that performing procedures relating to the valuation of certain Level 3 portfolio investments in loans, preferred equity, and equity interests for which significant unobservable inputs were developed by management is a critical audit matter are the significant judgment by management to determine the fair value of these investments which included the development and use of significant unobservable inputs related to the comparative yields and discount rates; this in turn led to a high degree of auditor subjectivity, judgment and effort in performing procedures to evaluate the audit evidence obtained related to the valuation, and the audit effort involved the use of professionals with specialized skill and knowledge. 114
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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of certain Level 3 portfolio investments in loans, preferred equity, and equity interests for which a significant unobservable input was developed by management, including controls over the Company's methods, data, comparative yields, and discount rates. These procedures also included, among others, testing management's process for determining the fair value of the investments, which included evaluating the appropriateness of management's discounted cash flow models, testing the data used in the models and provided by management, and evaluating the reasonableness of the comparative yields and discount rates used in the models. Evaluating the reasonableness of management's comparative yields and discount rates involved evaluating whether the comparative yields and discount rates used by management considered (i) company specific information, (ii) market information and (iii) subordination of the debt for investments in loans. Professionals with specialized skill and knowledge were used to assist in developing an independent fair value range for certain investments and comparison of management's estimate to each of the independently developed fair value ranges. Developing the independent fair value range involved testing the data used in the models and developing significant unobservable inputs in order to evaluate the reasonableness of management's fair value estimate for a portion of the level 3 investments. For investments where management's process for determining the fair value was tested, professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of comparative yields and discount rates used by management for certain investments. /s/PricewaterhouseCoopers LLP Boston, Massachusetts February 24, 2021 We have served as the Company's auditor since 2016. 115
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Bain Capital Specialty Finance, Inc.
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
As of December 31,
2020 2019
Assets
Investments at fair value:
Non-controlled/non-affiliate investments (amortized cost of
$
2,261,461
92,915 6,720
Controlled affiliate investment (amortized cost of
130,112 117,085
Cash and cash equivalents 53,704 36,531
Foreign cash (cost of $976 and $854 , respectively) 972 810
Restricted cash and cash equivalents 27,026 31,505
Collateral on forward currency exchange contracts 4,934 -
Deferred financing costs 3,131 3,182
Interest receivable on investments 15,720 22,482
Receivable for sales and paydowns of investments 5,928 21,994
Unrealized appreciation on forward currency exchange contracts - 1,034
Dividend receivable 7,589 961
Total Assets $ 2,603,492 $ 2,645,554
Liabilities
Debt (net of unamortized debt issuance costs of $7,147 and $4,584 , respectively) $ 1,458,360 $ 1,574,635
Interest payable 8,223 15,534
Payable for investments purchased 10,991 293
Collateral payable on forward currency exchange contracts - 331
Unrealized depreciation on forward currency exchange contracts 22,614 1,252
Base management fee payable 6,289 7,265
Incentive fee payable 3,799 4,513
Accounts payable and accrued expenses 3,261 2,155
Distributions payable 21,951 21,176
Total Liabilities 1,535,488 1,627,154
Commitments and Contingencies (See Note 11)
Net Assets
Preferred stock, $0.001 par value per share, 10,000,000,000 shares authorized, none issued and outstanding as of December 31, 2020 and December 31, 2019 , respectively $ - $ -
Common stock, par value
65 52
Paid in capital in excess of par value 1,166,453 1,038,343
Total distributable earnings (loss) (98,514) (19,995)
Total Net Assets 1,068,004 1,018,400
Total Liabilities and Total Net assets $ 2,603,492 $ 2,645,554
Net asset value per share $ 16.54 $ 19.72
See Notes to Consolidated Financial Statements
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Bain Capital Specialty Finance, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
For the Year Ended December 31,
2020 2019 2018Income
Investment income from non-controlled/non-affiliate investments: Interest from investments$ 178,186 $ 178,586 $ 73,049 Dividend income 787 62 - Other income 1,955 805 545
Total investment income from non-controlled/non-affiliate investments
180,928 179,453 73,594
Investment income from non-controlled/affiliate investments: Interest from investments 1,866 - - Other income 202 - -
Total investment income from non-controlled/affiliate investments
2,068 - -
Investment income from controlled affiliate investments:
Interest from investments 2,923 1,809 314
Dividend income 8,537 16,679 25,386
Other income 4 4 -
Total investment income from controlled affiliate investments 11,464 18,492 25,700
Total investment income 194,460 197,945 99,294
Expenses
Interest and debt financing expenses 63,309 66,330 24,011
Base management fee 35,215 32,702 17,544
Incentive fee 4,473 17,418 8,670
Professional fees 2,626 2,297 2,639
Directors fees 726 546 278
Other general and administrative expenses 5,398 4,772 902
Total expenses before fee waivers 111,747 124,065 54,044
Base management fee waiver (2,676) (8,242) (8,772)
Incentive fee waiver (674) (2,745) (1,908)
Total expenses, net of fee waivers 108,397 113,078 43,364
Net investment income before taxes 86,063 84,867 55,930 Excise tax expense 232 - - Net investment income 85,831 84,867 55,930 Net realized and unrealized gains (losses) Net realized loss on non-controlled/non-affiliate investments (33,824) (3,487)
(3,345)
Net realized gain on controlled affiliate investments - 265 - Net realized gain (loss) on foreign currency transactions 130 (36)
(489)
Net realized gain (loss) on forward currency exchange contracts 6,472 11,043
(2,651)
Net change in unrealized appreciation (depreciation) on foreign currency translation
108 (130) -
Net change in unrealized appreciation (depreciation) on forward currency exchange contracts
(22,396) (9,540) 12,826
Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliate investments
(6,744) 13,308 (36,334)
Net change in unrealized depreciation on non-controlled/affiliate investments
(174) - -
Net change in unrealized appreciation (depreciation) on controlled affiliate investments (21,125) 1,795 708
Total net gains (losses) (77,553) 13,218 (29,285)
Net increase in net assets resulting from operations $ 8,278 $ 98,085 $ 26,645
Basic and diluted net investment income per common share $ 1.46 $ 1.64 $ 1.45 Basic and diluted increase in net assets resulting from operations per common share
$ 0.14 $ 1.90 $ 0.69
Basic and diluted weighted average common shares outstanding 58,670,518 51,603,415 38,567,001
See Notes to Consolidated Financial Statements
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Bain Capital Specialty Finance, Inc.
Consolidated Statements of Changes in Net Assets
(in thousands, except share and per share data)
For the Year Ended December 31,
2020 2019 2018Operations: Net investment income$ 85,831 $ 84,867 $ 55,930 Net realized gain (loss) (27,222) 7,785 (6,485) Net change in unrealized appreciation (depreciation) (50,331) 5,433 (22,800) Net increase in net assets resulting from operations 8,278 98,085 26,645 Stockholder distributions: Distributions from distributable earnings (87,029) (84,636) (63,169)
Net decrease in net assets resulting from stockholder distributions
(87,029) (84,636) (63,169)
Capital share transactions:
Issuance of common stock, net 128,355 - 522,358
Reinvestment of stockholder distributions - 3,322 8,832
Net increase in net assets resulting from capital share transactions
128,355 3,322 531,190
Total increase in net assets 49,604 16,771 494,666
Net assets at beginning of year 1,018,400 1,001,629 506,963
Net assets at end of year
64,562,265 51,649,812 51,482,137
See Notes to Consolidated Financial Statements
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Bain Capital Specialty Finance, Inc.
Consolidated Statements of Cash Flows
(in thousands, except share and per share data)
For the Year Ended December 31,
2020 2019 2018
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations $ 8,278 $ 98,085 $ 26,645
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchases of investments (516,234) (1,413,662) (1,064,335)
Proceeds from principal payments and sales of investments 538,494 1,069,492 236,107
Net realized loss from investments 33,824 3,222 3,345
Net realized (gain) loss on foreign currency transactions (130) 36 489
Net change in unrealized (appreciation) depreciation on forward currency exchange contracts
22,396 9,540 (12,826)
Net change in unrealized (appreciation) depreciation on investments
28,043 (15,103) 35,626
Net change in unrealized (appreciation) depreciation on foreign currency translation
(108) 130 -
Increase in investments due to PIK (8,779) (479) -
Accretion of discounts and amortization of premiums (5,905) (4,476) (1,756)
Amortization of deferred financing costs and debt issuance costs 2,675 1,497 1,835
Changes in operating assets and liabilities:
Collateral on forward currency exchange contracts (4,934) 4 4,418
Interest receivable on investments 6,762 (16,233) (3,362)
Prepaid insurance - 1 136
Dividend receivable (6,628) 7,748 (8,709)
Interest payable (7,311) 10,699 4,020
Collateral payable on forward currency exchange contracts (331) 331 -
Base management fee payable (976) 4,315 1,706
Incentive fee payable (714) 1,213 2,282
Accounts payable and accrued expenses 996 874 137
Excise tax payable - - (5)
Net cash provided by (used in) operating activities 89,418 (242,766) (774,247)
Cash flows from financing activities
Borrowings on debt 597,262 1,249,048 818,700
Repayments on debt (710,802) (884,529) (632,735)
Payments of financing costs (1,447) (409) -
Payments of offering costs (3,545) (1,820) (89)
Payments of debt issuance costs (3,648) (2,795) (2,085)
Proceeds from issuance of common stock 131,917 - 524,267
Stockholder distributions paid (86,254) (81,246) (40,971)
Net cash (used in) provided by financing activities (76,517) 278,249 667,087
Net increase (decrease) in cash, foreign cash, restricted cash and cash equivalents
12,901 35,483 (107,160)
Effect of foreign currency exchange rates (45) 92 (487)
Cash, foreign cash, restricted cash and cash equivalents, beginning of year
68,846 33,271 140,918
Cash, foreign cash, restricted cash and cash equivalents, end of year
$ 81,702 $ 68,846 $ 33,271 Supplemental disclosure of cash flow information: Cash interest paid during the year$ 67,945 $ 54,134 $ 18,156 Cash paid for excise taxes during the year $ - $ - $ 5 Supplemental disclosure of non-cash information: Reinvestment of stockholder distributions $ - $ 3,322 $ 8,832 Distribution to owner from ABCS JV $ -$ 346,329 $ - 2020 2019 2018 Cash$ 53,704 $ 36,531 $ 14,693 Restricted cash 27,026 31,505 17,987 Foreign cash 972 810 591
Total cash, foreign cash, restricted cash, and cash equivalents shown in the consolidated statements of cash flows
68,846$ 33,271 See Notes to Consolidated Financial Statements 119
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Bain Capital Specialty Finance, Inc.
Consolidated Schedule of Investments
As of December 31, 2020
(In thousands)
Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Spread Above Index(1) Rate Date Principal/Shares(9) Cost Value NAV(4)
Non-Controlled/Non-Affiliate Investments
Aerospace & Defense Forming & Machining Industries Inc. (18)(19)(21) Second Lien Senior Secured Loan L+ 8.25% 8.50% 10/9/2026 $ 6,540 6,486 5,036
Forming & Machining Industries Inc. (12)(18)(29) First Lien Senior Secured Loan L+ 4.25% 4.50% 10/9/2025 $ 16,608 16,498 13,301
GSP Holdings, LLC (7)(12)(15)(19)(21)(26)(29) First Lien Senior Secured Loan L+ 5.75% (0.25% PIK) 7.00% 11/6/2025 $ 35,917 35,686 31,607
GSP Holdings, LLC(3)(7)(15)(19)(26) First Lien Senior Secured Loan-
Revolver L+ 5.50% (0.25% PIK) 6.75% 11/6/2025 $ 1,134 1,097 590
Kellstrom Aerospace Group, Inc (14)(19)(25) Equity Interest - - - 1 1,963 753
Kellstrom Commercial
Revolver L+ 5.50% 6.88% 7/1/2025 $ 5,331 5,234 4,755
Kellstrom Commercial
L+ 5.50% 6.50% 7/1/2025 $ 33,608 33,067 30,583
Novetta, LLC (12)(15)(29) First Lien Senior Secured Loan L+ 5.00% 6.00% 10/17/2022 $ 6,513 6,457 6,499
Precision Ultimate Holdings, LLC (14)(19)(25) Equity Interest - - - 1,417 1,417 952
Salient CRGT, Inc. (12)(15)(29) First Lien Senior Secured Loan L+ 6.50% 7.50% 2/28/2022 $ 12,087 12,109 11,634
WCI-HSG HOLDCO, LLC (14)(19)(25) Preferred Equity - - - 675 675 1,550
WCI-HSG Purchaser, Inc.(3)(12)(15)(19)(29) First Lien Senior Secured Loan-
Revolver L+ 4.50% 5.50% 2/24/2025 $ 1,075 1,047 1,048
WCI-HSG Purchaser, Inc. (12)(15)(19)(29) First Lien Senior Secured Loan L+ 4.50% 5.50% 2/24/2025 $ 17,600 17,416 17,424
Whitcraft LLC(2)(3)(5)(15)(19) First Lien Senior Secured Loan-
Revolver - - 4/3/2023 $ - (13) (91)
Whitcraft LLC (12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 6.00% 7.00% 4/3/2023 $ 40,182 39,870 38,172
WP CPP Holdings, LLC . (12)(15)(21)(29) Second Lien Senior Secured Loan L+ 7.75% 8.75% 4/30/2026 $ 11,724 11,632 9,936
Aerospace & Defense Total $ 190,641 $ 173,749 16.3%
Automotive CST Buyer Company(3)(5)(15)(19)(21) First Lien Senior Secured Loan-
Revolver - - 10/3/2025 $ - (21) -
CST Buyer Company (12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 6.00% 7.00% 10/3/2025
$ 34,166 33,764 34,166
JHCC Holdings, LLC(2)(3)(5)(15)(19)(28) First Lien Senior Secured Loan-
Delayed Draw - - 9/9/2025 $ - (33) (188)
JHCC Holdings, LLC(3)(7)(15)(19)(22)(31) First Lien Senior Secured Loan-
Revolver P+ 4.50% 7.10% 9/9/2025 $ 1,561 1,519 1,470
JHCC Holdings, LLC(7)(15)(19) First Lien Senior Secured Loan-
Delayed Draw L+ 5.50% 6.50% 9/9/2025 $ 2,222 2,214 2,155
JHCC Holdings, LLC (7)(12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 5.50% 6.50% 9/9/2025 $ 29,379 29,027 28,497
Automotive Total $ 66,470 $ 66,100 6.2%
Banking Green Street Parent, LLC(2)(3)(5)(18)(19)(29) First Lien Senior Secured Loan-
Revolver - - 8/27/2025 $ - (38) (103)
Green Street Parent, LLC (12)(18)(19)(29) First Lien Senior Secured Loan L+ 5.25% 5.52% 8/27/2026 $ 14,335 14,096 13,725
Banking Total $ 14,058 $ 13,622 1.3%
Beverage, Food & Tobacco NPC International,Inc.(15)(27)(31) First Lien Senior Secured Loan P+ 4.50% 7.75%4/19/2024 $ 4,937 4,957 4,694NPC International, Inc. (32) First Lien Senior Secured Loan L+ 15.50% 17.00%1/21/2021 $ 412 410 412 120
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Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Spread Above Index(1) Rate Date Principal/Shares(9) Cost Value NAV(4)
Beverage, Food & Tobacco
Total $ 5,367 $ 5,106 0.5%
Capital Equipment Dorner Manufacturing Corp.(3)(5)(15)(19)(29) First Lien Senior Secured Loan-
Revolver - - 3/15/2022 $ - (7) -
Dorner Manufacturing Corp. (12)(15)(19) First Lien Senior Secured Loan L+ 5.75% 6.75% 3/15/2023 $ 6,799 6,721 6,799
East BCC Coinvest II, LLC (14)(19)(25) Equity Interest - - - 1,419 1,419 754
Electronics For Imaging, Inc. (12)(18)(19)(29) Second Lien Senior Secured Loan L+ 9.00% 9.15% 7/23/2027 $ 13,070 12,327 10,717
Engineered Controls International, First Lien Senior Secured Loan
LLC(12)(19)(21)(29)(32) L+ 7.00% 8.50% 11/5/2024 $ 32,759 32,174 32,759
EXC Holdings III Corp.(12)(15)(21)(29) Second Lien Senior Secured Loan
L+ 7.50% 8.50% 12/1/2025 $ 8,240 8,251 8,274
FCG Acquisitions, Inc. (14)(19)(25) Preferred Equity - - - 4 4,251 10,398
FFI Holdings I Corp(3)(19)(30)(31) First Lien Senior Secured Loan-
Revolver P+ 4.75% 8.00% 1/24/2025 $ 1,494 1,437 1,494
FFI Holdings I Corp(7)(12)(13)(15)(19)(21)(29) First Lien Senior Secured Loan
L+ 5.75% 6.75% 1/24/2025 $ 68,317 67,850 68,317
FFI Holdings I Corp(3)(5)(15)(19)(28) First Lien Senior Secured Loan-
Delayed Draw - - 1/24/2025 $ - (63) -
FFI Holdings I Corp (7)(15)(19) First Lien Senior Secured Loan L+ 6.25% 7.25% 1/24/2025 $ 789 781 789
Jonathan Acquisition Company (15)(19)(21) Second Lien Senior Secured Loan L+ 9.00% 10.00% 12/22/2027 $ 8,000 7,801 7,800
Tidel Engineering, L.P.(3)(15)(19) First Lien Senior Secured Loan-
Revolver - - 3/1/2023 $ - - -
Tidel Engineering, L.P. (7)(15)(19)(29) First Lien Senior Secured Loan L+ 6.25% 7.25% 3/1/2024 $ 37,835 37,835 37,835
Velvet Acquisition B.V. (6)(18)(19)(21) Second Lien Senior Secured Loan EURIBOR+ 8.00% 8.00% 4/17/2026 € 6,013 7,346 7,351
Capital Equipment Total $ 188,123 $ 193,287 18.1%
Chemicals, Plastics & Rubber AP Plastics Group, LLC(3)(15)(19) First Lien Senior Secured Loan-
Revolver L+ 4.00% 5.00% 8/2/2021 $ 2,833 2,833 2,833
AP Plastics Group, LLC(7)(15)(19)(21) First Lien Senior Secured Loan
L+ 5.25% 6.25% 8/1/2022 $ 19,856 19,671 19,856
Niacet b.v.(15)(19)(21) First Lien Senior Secured Loan EURIBOR+ 4.50% 5.50% 2/1/2024 € 3,437 3,690 4,128
Plaskolite, Inc. (15)(29) First Lien Senior Secured Loan L+ 4.25% 5.25% 12/15/2025 $ 2,253 2,218 2,250
V Global Holdings LLC (7)(12)(15)(19)(29) First Lien Senior Secured Loan L+ 6.00% 7.00% 12/22/2027 $ 48,813 47,593 47,593
V Global Holdings LLC(2)(3)(5)(15)(19) First Lien Senior Secured Loan-
Revolver - - 12/22/2025 $ - (197) (197)
Chemicals, Plastics &
Rubber Total $ 75,808 $ 76,463 7.2%
Construction & Building Chase Industries, Inc.(15)(19)(26) First Lien Senior Secured Loan-
Delayed Draw L+ 5.50% (1.5% PIK) 8.00% 5/12/2025 $ 1,166 1,162 947
Chase Industries, Inc. (15)(19)(26) First Lien Senior Secured Loan L+ 5.50% (1.5% PIK) 8.00% 5/12/2025 $ 12,333 12,290 10,021
Elk Parent Holdings, LP (14)(19)(25) Equity Interest - - - 1 12 145
Elk Parent Holdings, LP (14)(19)(25) Preferred Equity - - - 120 1,202 1,319
PP Ultimate Holdings B, LLC (14)(19)(25) Equity Interest - - - 1 1,352 1,675
Profile Products LLC(3)(7)(19)(31) First Lien Senior Secured Loan-
Revolver P+ 5.00% 8.25% 12/20/2024 $ 831 779 783
Profile Products LLC (7)(12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 6.00% 7.00% 12/20/2024 $ 36,168 35,635 35,716
Regan Development Holdings Limited (6)(17)(19) First Lien Senior Secured Loan EURIBOR+ 6.50% 7.00% 4/18/2022 € 2,087 2,274 2,488
Regan Development Holdings Limited (6)(17)(19) First Lien Senior Secured Loan EURIBOR+ 6.50% 7.00% 4/18/2022 € 677 768 807
Regan Development Holdings First Lien Senior Secured Loan
Limited (6)(17)(19) EURIBOR+ 6.50% 7.00% 4/18/2022 € 6,335 6,869 7,513
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Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Spread Above Index(1) Rate Date Principal/Shares(9) Cost Value NAV(4)
YLG Holdings, Inc.(7)(15)(19) First Lien Senior Secured Loan-
Delayed Draw L+ 6.25% 7.25% 10/31/2025 $ 5,111 5,104 5,111
YLG Holdings, Inc.(3)(5)(7)(15)(19) First Lien Senior Secured Loan-
Revolver - - 10/31/2025 $ - (69) -
YLG Holdings, Inc. (7)(12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 6.25% 7.25% 10/31/2025 $ 38,474 38,189 38,474
Construction & Building
Total $ 105,567 $ 104,999 9.8%
Consumer Goods: Durable New Milani Group LLC (12)(15)(19)(29) First Lien Senior Secured Loan L+ 5.00% 6.00% 6/6/2024 $ 16,926 16,822 15,403
TLC Holdco LP (14)(19)(25) Equity Interest - - - 1,188 1,186 1,096
TLC Purchaser, Inc.(2)(3)(5)(19) First Lien Senior Secured Loan-
Delayed Draw - - 10/13/2025 $ - (57) (89)
TLC Purchaser, Inc.(2)(3)(5)(19)(21) First Lien Senior Secured Loan-
Revolver - - 10/13/2025 $ - (142) (111)
TLC Purchaser, Inc. (12)(19)(21)(29) First Lien Senior Secured Loan L+ 5.75% 6.75% 10/13/2025 $ 42,294 41,590 41,766
Consumer Goods: Durable
Total $ 59,399 $ 58,065 5.4%
Consumer Goods: Non-Durable FineLine Technologies, Inc.(2)(3)(5)(15)(19)(21) First Lien Senior Secured Loan-
Revolver - - 11/4/2022 $ - (9) (72)
FineLine Technologies, Inc. (12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 4.25% 5.25% 11/4/2022 $ 31,066 30,974 30,212
MND Holdings III Corp (12)(15)(29) First Lien Senior Secured Loan L+ 3.50% 4.50% 6/19/2024 $ 10,614 10,627 9,907
RoC Opco LLC(3)(5)(15)(19)(21) First Lien Senior Secured Loan-
Revolver - - 2/25/2025 $ - (145) -
RoC Opco LLC (12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 7.75% 8.75% 2/25/2025 $ 40,487 39,737 40,487
Solaray, LLC(7)(15)(19) First Lien Senior Secured Loan-
Delayed Draw L+ 6.00% 7.00% 9/11/2023 $ 14,425 14,425 14,136
Solaray, LLC(3)(7)(15)(19) First Lien Senior Secured Loan-
Revolver L+ 4.50% 5.50% 9/9/2022 $ 7,424 7,395 7,424
Solaray, LLC (7)(15)(19)(21) First Lien Senior Secured Loan L+ 6.00% 7.00% 9/11/2023 $ 42,170 42,170 41,326
WU Holdco, Inc.(7)(15)(19) First Lien Senior Secured Loan-
Delayed Draw L+ 5.25% 6.25% 3/26/2026 $ 5,588 5,536 5,588
WU Holdco, Inc.(3)(18)(19) First Lien Senior Secured Loan-
Revolver L+ 5.25% 5.50% 3/26/2025 $ 902 857 902
WU Holdco, Inc. (7)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 5.25% 6.25% 3/26/2026 $ 39,319 38,649 39,319
Consumer Goods:
Non-Durable Total $ 190,216 $ 189,229 17.7%
Containers, Packaging, & Glass Automate IntermediateHoldings II S.à r.l.(6)(18)(19)(21) Second Lien Senior Secured Loan
L+ 7.75% 7.90% 7/22/2027 $ 11,870 11,659 11,781
Containers, Packaging, &
Glass Total $ 11,659 $ 11,781 1.1%
Energy: Electricity Infinite Electronics
L+ 4.00% 4.15% 7/2/2025 $ 19,552 19,541 18,868
Infinite Electronics International Inc. (18)(19)(21) Second Lien Senior Secured Loan L+ 8.00% 8.15% 7/2/2026 $ 2,480 2,438 2,381
Energy: Electricity Total $ 21,979 $ 21,249 2.0%
Energy: Oil & Gas Amspec Services, Inc.(3)(5)(7)(15)(19) First Lien Senior Secured Loan-
Revolver - - 7/2/2024 $ - (42) -
Amspec Services, Inc. (7)(12)(15)(19)(29) First Lien Senior Secured Loan L+ 5.75% 6.75% 7/2/2024 $ 43,653 43,261 43,653
Amspec Services, Inc. (7)(15)(19) First Lien Senior Secured Loan L+ 5.75% 6.75% 7/2/2024 $ 2,826 2,786 2,826
Energy: Oil & Gas Total $ 46,005 $ 46,479 4.4%
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TABLE OF CONTENTS
Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Spread Above Index(1) Rate Date Principal/Shares(9) Cost Value NAV(4)
FIRE: Finance Allworth Financial Group, L.P.(2)(3)(5)(15)(19) First Lien Senior Secured Loan-
Delayed Draw - - 12/23/2026 $ - (61) (61)
Allworth Financial Group, L.P. (12)(15)(19)(29) First Lien Senior Secured Loan L+ 5.50% 6.50% 12/23/2026 $ 10,138 9,987 9,936
Allworth Financial Group, L.P.(2)(3)(5)(15)(19) First Lien Senior Secured Loan-
Revolver - - 12/23/2026 $ - (18) (18)
TA/Weg Holdings(3)(18)(19) First Lien Senior Secured Loan-
Delayed Draw L+ 5.75% 6.75% 10/2/2025 $ 1,992 1,922 1,921
FIRE: Finance Total $ 11,830 $ 11,778 1.1%
FIRE: Insurance Ivy Finco Limited (6)(18)(19)(21) First Lien Senior Secured Loan GBP LIBOR+ 5.75% 5.83% 5/19/2025 £ 7,217 8,992 9,704
Ivy Finco Limited (6)(18)(19) First Lien Senior Secured Loan GBP LIBOR+ 5.75% 5.83% 5/19/2025 £ 7,077 8,827 9,502
Margaux Acquisition Inc.(7)(15)(19) First Lien Senior Secured Loan-
Delayed Draw L+ 5.75% 6.75% 12/19/2024 $ 9,288 9,256 9,195
Margaux Acquisition, Inc.(2)(3)(5)(15)(19) First Lien Senior Secured Loan-
Revolver - - 12/19/2024 $ - (50) (29)
Margaux Acquisition Inc. (7)(12)(15)(19)(29) First Lien Senior Secured Loan L+ 5.75% 6.75% 12/19/2024 $ 28,625 28,196 28,339
Margaux UK Finance Limited(3)(5)(6)(15)(19) First Lien Senior Secured Loan-
Revolver - - 12/19/2024 £ - (8) -
Margaux UK Finance Limited(6)(15)(19)(21) First Lien Senior Secured Loan
GBP LIBOR+ 5.75% 6.75% 12/19/2024 £ 7,629 9,804 10,414
FIRE: Insurance Total $ 65,017 $ 67,125 6.3%
FIRE: Real Estate Spectre (CarrisbrookHouse) Limited(6)(15)(19) First Lien Senior Secured Loan
EURIBOR+ 9.50% 10.50% 8/9/2021 € 9,300 10,894 10,289
FIRE: Real Estate Total $ 10,894 $ 10,289 1.0%
Healthcare & Pharmaceuticals CB Titan Holdings,
Inc.(14)(19)(25) Preferred Equity - - - 1,953 1,953 2,625
CPS Group Holdings, Inc.(3)(5)(15)(19) First Lien Senior Secured Loan-
Revolver - - 3/3/2025 $ - (64) -
CPS Group Holdings,Inc.(7)(12)(15)(19)(21)(29) First Lien Senior Secured Loan
L+ 5.50% 6.50% 3/3/2025 $ 55,347 54,925 55,347
Datix Bidco Limited(2)(3)(5)(6)(18)(19)(21) First Lien Senior Secured Loan-
Revolver - - 10/28/2024 £ - (17) (7)
Datix Bidco Limited (6)(18)(19)(21) Second Lien Senior Secured Loan GBP LIBOR+ 7.75% 7.81% 4/27/2026 £ 12,134 16,369 16,564
Datix Bidco Limited (6)(18)(19)(21) First Lien Senior Secured Loan BBSW+ 4.50% 4.62% 4/28/2025 AUD 4,212 3,215 3,224
Golden State Buyer, Inc. (12)(16)(29) First Lien Senior Secured Loan L+ 4.75% 5.50% 6/22/2026 $ 15,077 14,952 14,992
Great Expressions Dental Centers PC(3)(15)(19)(26) First Lien Senior Secured Loan-
Revolver L+ 4.75% (0.5% PIK) 6.25% 9/28/2022 $ 661 655 454
Great Expressions DentalCenters PC(15)(19)(26) First Lien Senior Secured Loan L+ 4.75% (0.5% PIK) 6.25%
9/28/2023 $ 7,802 7,789 6,437
Island Medical Management Holdings, LLC (15)(19)(29) First Lien Senior Secured Loan L+ 6.50% 7.50% 9/1/2023 $ 8,627 8,570 7,764
Medical Depot Holdings, Inc. (12)(15)(26) First Lien Senior Secured Loan L+ 5.50% (2% PIK) 8.50% 1/3/2023 $ 16,520 15,638 14,084
Mendel Bidco, Inc. (18)(19)(21) First Lien Senior Secured Loan EURIBOR+ 4.50% 4.50% 6/17/2027 € 10,033 11,169 12,204
Mendel Bidco, Inc. (18)(19)(21) First Lien Senior Secured Loan L+ 4.50% 4.73% 6/17/2027 $ 19,966 19,541 19,667
Mertus 522. GmbH(6)(18)(19)(21) First Lien Senior Secured Loan-
Delayed Draw EURIBOR+ 6.00% 6.00% 5/28/2026 € 13,131 14,138 15,892
Mertus 522. GmbH (6)(18)(19)(21) First Lien Senior Secured Loan EURIBOR+ 6.00% 6.00% 5/28/2026 € 22,468 24,635 27,193
TecoStar Holdings, Inc. (12)(15)(19)(21)(29) Second Lien Senior Secured Loan L+ 8.50% 9.50% 11/1/2024 $ 9,472 9,315 9,306
U.S. Anesthesia Partners, Inc. (12)(15)(19)(21) Second Lien Senior Secured Loan L+ 7.25% 7.49% 6/23/2025 $ 16,520 16,364 15,859
Healthcare &
Pharmaceuticals Total $ 219,147 $ 221,605 20.7%
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Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Spread Above Index(1) Rate Date Principal/Shares(9) Cost Value NAV(4)
High Tech Industries AMI US Holdings Inc.(3)(12)(18)(19) First Lien Senior Secured Loan-
Revolver L+ 5.50% 5.65% 4/1/2024 $ 1,256 1,232 1,256
AMI US Holdings Inc. (12)(15)(19)(29) First Lien Senior Secured Loan L+ 5.50% 6.50% 4/1/2025 $ 13,025 12,825 13,025
Appriss Holdings, Inc.(2)(3)(5)(7)(18)(19) First Lien Senior Secured Loan-
Revolver - - 5/30/2025 $ - (46) (47)
Appriss Holdings, Inc. (7)(12)(18)(19)(21)(29) First Lien Senior Secured Loan L+ 5.25% 5.50% 5/29/2026 $ 48,386 47,879 47,902
Appriss Holdings, Inc. (7)(18)(19) First Lien Senior Secured Loan L+ 6.00% 6.25% 5/29/2026 $ 4,988 4,843 4,988
CB Nike IntermediateCo Ltd(3)(5)(6)(15)(19)(21) First Lien Senior Secured Loan-
Revolver - - 10/31/2025 $ - (71) -
CB Nike IntermediateCo Ltd (6)(12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 4.75% 5.75% 10/31/2025 $ 35,068 34,485 35,068
CMI Marketing Inc(3)(5)(15)(19)(29) First Lien Senior Secured Loan-
Revolver - - 5/24/2023 $ - (10) -
CMI Marketing Inc (12)(15)(19)(29) First Lien Senior Secured Loan L+ 4.50% 5.50% 5/24/2024 $ 15,101 15,008 15,101
Drilling Info Holdings, Inc (12)(18)(21)(29) First Lien Senior Secured Loan L+ 4.25% 4.40% 7/30/2025 $ 22,380 22,317 21,728
Element Buyer, Inc.(7)(15)(19) First Lien Senior Secured Loan-
Delayed Draw L+ 5.25% 6.25% 7/18/2025 $ 11,192 11,216 11,192
Element Buyer, Inc.(3)(7)(15)(19) First Lien Senior Secured Loan-
Revolver L+ 5.25% 6.25% 7/19/2024 $ 283 244 283
Element Buyer, Inc. (7)(15)(19)(21) First Lien Senior Secured Loan L+ 5.25% 6.25% 7/18/2025 $ 37,390 37,660 37,390
Everest Bidco(6)(15)(19)(21) Second Lien Senior Secured Loan GBP LIBOR+ 7.50% 8.50% 7/3/2026 £ 10,216 13,142 13,946
MRI Software LLC (7)(15)(28) First Lien Senior Secured Loan L+ 5.50% 6.50% 2/10/2026 $ 25,454 25,359 25,390
MRI Software LLC(2)(3)(5)(15)(28) First Lien Senior Secured Loan-
Delayed Draw - - 2/10/2026 $ - (7) (2)
MRI Software LLC(2)(3)(15)(19) First Lien Senior Secured Loan-
Revolver - - 2/10/2026 $ - 44 (45)
nThrive, Inc.(15)(19)(21) Second Lien Senior Secured Loan L+ 9.75% 10.75% 4/20/2023 $ 8,000 7,988 8,000
Utimaco, Inc. (6)(18)(19)(21)(29) First Lien Senior Secured Loan L+ 4.25% 4.91% 8/9/2027 $ 14,849 14,535 14,849
Ventiv Topco, Inc. (14)(19)(25) Equity Interest - - - 28 2,833 3,065
Ventiv Holdco, Inc.(3)(7)(18)(19) First Lien Senior Secured Loan-
Revolver L+ 5.50% 5.68% 9/3/2025 $ 426 382 417
Ventiv Holdco, Inc. (7)(15)(19)(21) First Lien Senior Secured Loan L+ 5.50% 6.50% 9/3/2025 $ 24,056 23,760 23,996
VPARK BIDCO AB (6)(16)(19)(21) First Lien Senior Secured Loan CIBOR+ 4.00% 4.75% 3/10/2025 DKK 56,999 9,198 9,364
VPARK BIDCO AB (6)(16)(19)(21) First Lien Senior Secured Loan NIBOR+ 4.00% 4.75% 3/10/2025 NOK 74,020 9,230 8,620
High Tech Industries
Total $ 294,046 $ 295,486 27.7%
Hotel, Gaming & Leisure Aimbridge Acquisition Co., Inc.(12)(18)(19)(21)(29) Second Lien Senior Secured Loan
L+ 7.50% 7.65% 2/1/2027 $ 20,193 19,707 18,174
Captain D's LLC(3)(15)(19) First Lien Senior Secured Loan-
Revolver L+ 4.50% 5.50% 12/15/2023 $ 1,382 1,373 1,382
Captain D's LLC (12)(15)(19)(29) First Lien Senior Secured Loan L+ 4.50% 5.50% 12/15/2023 $ 12,559 12,489 12,559
Quidditch Acquisition, Inc.(12)(15)(29) First Lien Senior Secured Loan L+ 9.00% 10.00% 3/21/2025 $ 18,829 18,820 17,778
Hotel, Gaming & Leisure
Total $ 52,389 $ 49,893 4.7%
Media: Advertising, Printing & Ansira Holdings, Inc.(15)(19)(26)(33) First Lien Senior Secured Loan-
Publishing Delayed Draw L+ 6.50% PIK 7.50% 12/20/2024 $ 4,613 4,610 3,944
Ansira Holdings, Inc.(3)(19)(23)(31) First Lien Senior Secured Loan-
Revolver P+ 4.75% 7.77% 12/20/2024 $ 5,383 5,383 5,383
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Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type
Spread Above Index(1) Rate Date
Principal/Shares(9) Cost Value NAV(4)
Ansira Holdings, Inc.(15)(19)(26) First Lien Senior Secured Loan L+ 6.50% PIK 7.50% 12/20/2024 $ 37,208 37,150 31,813
Media: Advertising,
Printing & Publishing
Total $ 47,143 $ 41,140 3.9%
Media: Broadcasting & Vital Holdco Limited(6)(12)(15)(19)(21)(29) First Lien Senior Secured Loan
Subscription L+ 4.75% 5.75% 5/29/2026 $ 35,357 34,654 35,357
Vital Holdco Limited (6)(18)(19)(21) First Lien Senior Secured Loan EURIBOR+ 4.75% 4.75% 5/29/2026 € 7,917 8,645 9,679
Media: Broadcasting &
Subscription Total $ 43,299 $ 45,036 4.2%
Media: Diversified & Production 9 Story Media Group Inc.(3)(6)(15)(19) First Lien Senior Secured Loan-
Revolver CDOR+ 5.50% 6.50% 4/30/2026 CAD 56 40 44
9 Story Media Group Inc.(6)(15)(19)(21) First Lien Senior Secured Loan CDOR+ 5.50% 6.50% 4/30/2026 CAD 7,310 5,363 5,725
9 Story Media Group Inc.(6)(18)(19)(21) First Lien Senior Secured Loan EURIBOR+ 5.50% 5.50% 4/30/2026 € 3,938 4,507 4,814
First Lien Senior Secured Loan-
EfficientCollaborative Retail Marketing Company, LLC(3)(15)(19) Revolver
L+ 5.25% 6.25% 6/15/2022 $ 2,267 2,267 2,267
Efficient Collaborative Retail Marketing Company, First Lien Senior Secured Loan
LLC(7)(15)(19)(21) L+ 6.75% 7.75% 6/15/2022 $ 15,095 15,151 14,416
Efficient Collaborative Retail Marketing Company, First Lien Senior Secured Loan
LLC(7)(15)(19) L+ 6.75% 7.75% 6/15/2022 $ 9,788 9,825 9,347
International Entertainment Investments First Lien Senior Secured Loan
Limited(6)(18)(19)(21) GBP LIBOR+ 4.75% 4.82% 5/31/2023 £ 8,686 10,657 11,857
Media: Diversified &
Production Total $ 47,810 $ 48,470 4.5%
Retail Batteries Plus Holding Corporation(3)(15)(19) First Lien Senior Secured Loan-
Revolver - - 7/6/2022 $ - - -
Batteries Plus Holding Corporation(7)(15)(19) First Lien Senior Secured Loan L+ 6.75% 7.75% 7/6/2022 $ 28,672 28,672 28,672
Thrasio, LLC(2)(3)(5)(15)(19) First Lien Senior Secured Loan-
Delayed Draw - - 12/18/2026 $ - (313) (313)
Thrasio, LLC(15)(19)(21) First Lien Senior Secured Loan L+ 7.00% 8.00% 12/18/2026 $ 10,965 10,691 10,691
Retail Total $ 39,050 $ 39,050 3.7%
Services: Business AMCP Clean Acquisition Company, LLC(12)(18)(29) First Lien Senior Secured Loan-
Delayed Draw L+ 4.25% 4.40% 7/10/2025 $ 3,855 3,848 2,660
AMCP Clean Acquisition Company, LLC(12)(18)(29) First Lien Senior Secured Loan L+ 4.25% 4.40% 7/10/2025 $ 15,930 15,904 10,992
Comet Bidco Limited (6)(18)(21) First Lien Senior Secured Loan GBP LIBOR+ 5.25% 5.34% 9/30/2024 £ 7,362 9,523 8,911
Elevator Holdco Inc.(14)(19)(25) Equity Interest - - - 2 2,448 1,605
Hightower Holding , LLC(12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 5.00% 6.00% 1/31/2025 $ 40,850 40,708 40,850
Refine Intermediate, Inc.(3)(5)(18)(19) First Lien Senior Secured Loan-
Revolver - - 9/3/2026 $ - (117) -
Refine Intermediate, Inc.(15)(19)(21) First Lien Senior Secured Loan L+ 4.75% 5.75% 3/3/2027 $ 21,894 21,396 21,894
SumUp Holdings Luxembourg S.à.r.l.(6)(15)(19)(21) First Lien Senior Secured Loan EURIBOR+ 8.00% 9.00% 8/1/2024 € 15,715 17,453 19,212
SumUp Holdings Luxembourg S.à.r.l.(6)(15)(19)(21) First Lien Senior Secured Loan EURIBOR+ 8.00% 9.00% 8/1/2024 € 16,697 18,244 20,412
TEI Holdings Inc.(3)(7)(15)(19) First Lien Senior Secured Loan-
Revolver L+ 7.25% 8.25% 12/23/2025 $ 3,471 3,426 3,200
TEI Holdings Inc.(7)(12)(15)(19)(21)(26)(29) First Lien Senior Secured Loan L+ 6.00% (1.25% PIK) 8.25% 12/23/2026 $ 48,749 48,204 45,824
Services: Business Total $ 181,037 $ 175,560 16.3%
Services: Consumer MZR Aggregator(14)(19)(25) Equity Interest - - - 1 798 798
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Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Spread Above Index(1) Rate Date Principal/Shares(9) Cost Value NAV(4)
MZR Buyer, LLC(15)(19) First Lien Senior Secured Loan-
Revolver L+ 6.75% 7.75% 12/21/2026 $ 5,210 5,106 5,105
MZR Buyer, LLC(7)(15)(19) First Lien Senior Secured Loan L+ 6.75% 7.75% 12/21/2026 $ 40,634 39,828 39,822
Pearl Intermediate Parent LLC(18)(29) Second Lien Senior Secured Loan
L+ 6.25% 6.40% 2/13/2026 $ 2,571 2,584 2,558
Surrey Bidco Limited(6)(17)(19)(21) First Lien Senior Secured Loan GBP LIBOR+ 6.00% 6.50% 5/11/2026 £ 5,000 6,163 6,501
Trafalgar Bidco Limited (6)(18)(19)(21) First Lien Senior Secured Loan GBP LIBOR+ 5.00% 5.02% 9/11/2024 £ 6,011 7,763 8,206
Zeppelin BidCo Pty Limited(6)(18)(19)(21) First Lien Senior Secured Loan BBSY+ 6.00% 6.23% 6/28/2024 AUD 20,621 14,099 15,707
Services: Consumer
Total $ 76,341 $ 78,697 7.4%
Telecommunications Conterra Ultra Broadband Holdings, Inc. (18)(29) First Lien Senior Secured Loan L+ 4.50% 4.65% 4/30/2026 $ 6,386 6,360 6,373
Horizon Telcom, Inc.(15)(19)(29) First Lien Senior Secured Loan-
Revolver L+ 5.00% 6.00% 6/15/2023 $ 116 113 114
Horizon Telcom, Inc.(12)(15)(19)(29) First Lien Senior Secured Loan-
Delayed Draw L+ 5.00% 6.00% 6/15/2023 $ 919 914 903
Horizon Telcom, Inc. (12)(15)(19)(29) First Lien Senior Secured Loan L+ 5.00% 6.00% 6/15/2023 $ 13,538 13,431 13,302
Masergy Holdings, Inc.(15)(29) Second Lien Senior Secured Loan L+ 7.50% 8.50% 12/16/2024 $ 857 862 851
Telecommunications
Total $ 21,680 $ 21,543 2.0%
Transportation: Cargo A&R Logistics, Inc.(2)(3)(5)(15)(19) First Lien Senior Secured Loan-
Revolver - - 5/5/2025 $ - (90) (46)
A&R Logistics, Inc. (7)(12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 6.00% 7.00% 5/5/2025 $ 43,534 42,827 43,207
A&R Logistics, Inc. (7)(15)(19) First Lien Senior Secured Loan L+ 6.00% 7.00% 5/5/2025 $ 2,448 2,408 2,430
A&R Logistics, Inc. (7)(15)(19) First Lien Senior Secured Loan L+ 6.00% 7.00% 5/5/2025 $ 6,035 5,961 5,989
A&R Logistics, Inc. (7)(15)(19) First Lien Senior Secured Loan L+ 6.50% 7.50% 5/5/2025 $ 2,743 2,717 2,743
ARL Holdings, LLC(14)(19)(25) Equity Interest - - - - 445 522
ARL Holdings, LLC(14)(19)(25) Equity Interest - - - 9 9 16
ENC Holding Corporation(12)(18)(19)(29) First Lien Senior Secured Loan L+ 4.00% 4.25% 5/30/2025 $ 10,173 10,163 10,072
Grammer Investment Holdings LLC(14)(19)(25) Equity Interest - - - 1,011 1,011 805
Grammer Investment Holdings LLC(19)(25)(26) Preferred Equity 10% PIK 10.00% - 7 714 754
Grammer Investment Holdings LLC(14)(19)(25) Warrants - - - 122 - -
Grammer Purchaser, Inc.(3)(12)(15)(19)(29) First Lien Senior Secured Loan-
Revolver - - 9/30/2024 $ - 6 -
Grammer Purchaser, Inc.(12)(15)(19)(29) First Lien Senior Secured Loan-
Revolver L+ 4.75% 5.75% 9/30/2024 $ 9,277 9,128 9,277
Omni Logistics, LLC (15)(19)(21) Second Lien Senior Secured Loan L+ 9.00% 10.00% 12/30/2027 $ 13,770 13,427 13,426
PS HoldCo, LLC (12)(15)(29) First Lien Senior Secured Loan L+ 4.75% 5.75% 3/13/2025 $ 22,295 22,286 21,849
Transportation: Cargo
Total $ 111,012 $ 111,044 10.3%
Transportation: Consumer Toro Private Investments II, L.P.(6)(14)(19)(25) Equity Interest - - - 3,090 3,090 1,969
Toro Private Investments II, L.P.(6)(12)(18)(29) First Lien Senior Secured Loan L+ 5.00% 5.25% 5/29/2026 $ 6,715 4,484 4,605
Transportation: Consumer
Total $ 7,574 $ 6,574 0.6%
Wholesale Abracon Group Holding, LLC(14)(19)(25) Equity Interest - - - 2 1,833 1,618
Abracon Group Holding, LLC(2)(3)(5)(15)(19) First Lien Senior Secured Loan-
Revolver - - 7/18/2024 $ - (25) (50)
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Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Spread Above Index(1) Rate Date Principal/Shares(9) Cost Value NAV(4)
Abracon Group Holding, LLC(7)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 5.75% 6.75% 7/18/2024 $ 35,639 35,511 35,015
Aramsco, Inc.(2)(3)(5)(7)(18)(19) First Lien Senior Secured Loan-
Revolver - - 8/28/2024 $ - (36) (51)
Aramsco, Inc. (7)(12)(18)(19)(21)(29) First Lien Senior Secured Loan L+ 5.25% 5.40% 8/28/2024 $ 24,042 23,729 23,681
Armor Group, LP(14)(19)(25) Equity Interest - - - 10 1,012 2,126
PetroChoice Holdings, Inc. (12)(15)(29) First Lien Senior Secured Loan L+ 5.00% 6.00% 8/19/2022 $ 9,844 9,794 9,450
PetroChoice Holdings, Inc. (12)(15)(29) First Lien Senior Secured Loan L+ 5.00% 6.00% 8/19/2022 $ 6,514 6,430 6,253
Wholesale Total $ 78,248 $ 78,042 7.3%
Non-Controlled/
Non-Affiliate
Investments Total $ 2,281,809 $ 2,261,461 211.7%Non-Controlled/Affiliate Investments
Beverage, Food & Tobacco ADT Pizza, LLC(10)(14)(19)(25) Equity Interest - - - 6,720 6,720 15,918
Beverage, Food &
Tobacco Total $ 6,720 $ 15,918 1.5%
Energy: Oil & Gas Blackbrush Oil & Gas,
L.P.(10)(14)(19)(25) Equity Interest - - - 1,123 - -
Blackbrush Oil & Gas, L.P. (10)(14)(19)(25) Preferred Equity - - - 36 10,104 10,239
Blackbrush Oil & Gas, L.P. (10)(12)(15)(19)(26)(29) First Lien Senior Secured Loan L+ 5.00% (2% PIK) 8.00% 9/3/2025 $ 12,089 12,089 12,089
Energy: Oil & Gas $ 22,193 $ 22,328 2.1%
Transportation: Consumer Direct Travel, Inc. (10)(18)(19)(21) First Lien Senior Secured Loan L+ 1.00% 1.25% 10/2/2023 $ 4,404 4,404 4,404
Direct Travel, Inc. (10)(14)(19)(25) Equity Interest - - - 68 - -
Direct Travel, Inc.(7)(10)(15)(19)(26) First Lien Senior Secured Loan-
Delayed Draw L+ 1.00%
(8.25% PIK) 9.50% 10/2/2023 $ 3,100 3,100 2,588
Direct Travel, Inc.(7)(10)(15)(19)(26) First Lien Senior Secured Loan-
Delayed Draw L+ 1.00% (8.25% PIK) 9.50% 10/2/2023 $ 1,572 1,572 1,313
Direct Travel, Inc. (7)(10)(15)(19)(21)(26) First Lien Senior Secured Loan L+ 1.00% (8.27% PIK) 9.50% 10/2/2023 $ 52,948 52,948 44,212
Direct Travel, Inc.(3)(10)(15)(19)(28) First Lien Senior Secured Loan-
Delayed Draw L+ 6.00% 7.00% 10/2/2023 $ 1,950 1,950 1,950
Direct Travel, Inc. (10)(18)(19)(28) First Lien Senior Secured Loan L+ 6.00% 7.00% 10/2/2023 $ 202 202 202
Transportation: Consumer $ 64,176 $ 54,669 5.1%
Non-Controlled/Affiliate
Investments Total $ 93,089 $ 92,915 8.7%Controlled Affiliate Investments
Aerospace & Defense ACC Holdco, LLC (10)(11)(19)(25) Preferred Equity - 16.00% - 10,828 10,824 10,828
Air Comm Corporation LLC(10)(11)(12)(15)(19)(21)(29) First Lien Senior Secured Loan
L+ 6.50% 7.50% 6/30/2025 $ 27,023 26,362 26,484
BCC Jetstream Holdings Aviation (Off I), Equity Interest
LLC(3)(6)(10)(11)(19)(20)(25) - - - 11,863 11,863 11,703
BCC Jetstream Holdings Aviation (On II), Equity Interest
LLC(10)(11)(19)(20)(25) - - - 1,116 1,116 629
BCC Jetstream Holdings Aviation (On II), First Lien Senior Secured Loan 10.00%
LLC(3)(10)(11)(19)(20)(26) - PIK 6/2/2022 $ 6,712 6,712 6,712
Gale Aviation (Offshore) Co(6)(10)(11)(19)(25) Equity Interest - - - 84 83,656 66,448
Aerospace & Defense Total $ 140,533 $ 122,804 11.5%
Transportation: Cargo Lightning Holdings B,
LLC(6)(10)(11)(19)(25) Equity Interest - - - 7,308 7,308 7,308
$ 7,308 $ 7,308 0.7%
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Interest Maturity Market % of
Control Type Industry Portfolio Company
Investment Type Spread Above Index(1) Rate Date Principal/Shares(9) Cost Value NAV(4)
Controlled Affiliate
Investments Total $ 147,841 $ 130,112 12.2%
Investments Total $ 2,522,739 $ 2,484,488 232.6%Cash Equivalents
Cash Equivalents Goldman Sachs Financial Square Government
Fund Institutional Share Class Cash Equivalents - 0.03% - $ 1,846 1,846 1,846
Cash Equivalents Goldman Sachs US Treasury Liquid Reserves
Fund(30) Cash Equivalents - 0.01% - $ 53,106 53,106 53,106
Cash Equivalents Total $ 54,952 $ 54,952 5.2%
Investments and Cash
Equivalents Total $ 2,577,691 $ 2,539,440 237.8%
Forward Foreign Currency Exchange Contracts
Unrealized
Appreciation
Currency Purchased Currency Sold Counterparty Settlement Date (Depreciation)(8)
US DOLLARS 183 CANADIAN DOLLAR 256 Bank of New York Mellon 4/14/2021 $ (18)
US DOLLARS 088 CANADIAN DOLLAR 122 Bank of New York Mellon 4/15/2021 (7)
US DOLLARS 141 EURO 129 Bank of New York Mellon 4/15/2021 (17)
POUND STERLING 6,460 US DOLLARS 8,406 Bank of New York Mellon 9/10/2021 (440)
US DOLLARS 7,609 EURO 6,840 Citibank 3/26/2021 (776)
US DOLLARS 5,616 CANADIAN DOLLAR 7,662 Citibank 4/15/2021 (400)
US DOLLARS 4,217 EURO 3,731 Citibank 4/15/2021 (359)
US DOLLARS 12,756 EURO 11,200 Citibank 5/21/2021 (990)
US DOLLARS 31,103 EURO 27,540 Goldman Sachs 3/9/2021 (2,644)
US DOLLARS 82,431 EURO 72,370 Goldman Sachs 5/21/2021 (6,395)
US DOLLARS 16,734 AUSTRALIAN DOLLARS 23,870 Goldman Sachs 6/7/2021 (1,630)
US DOLLARS 19,442 POUND STERLING 14,522 Goldman Sachs 6/7/2021 434
US DOLLARS 97,874 POUND STERLING 77,470 Goldman Sachs 6/7/2021 (8,159)
US DOLLARS 8,606 DANISH KRONE 56,290 Goldman Sachs 6/7/2021 (642)
US DOLLARS 2,794 CANADIAN DOLLAR 3,713 Goldman Sachs 9/10/2021 (121)
US DOLLARS 8,187 NORWEGIAN KRONE 74,020 Goldman Sachs 9/10/2021 (450)
$ (22,614)
(1) The investments bear interest at a rate that may be determined by reference
to the London Interbank Offered Rate ("LIBOR" or "L"), the Euro Interbank
Offered Rate ("EURIBOR" or "E"), British Pound Sterling LIBOR Rate ("GBP
LIBOR"), the Norwegian Interbank Offered Rate ("NIBOR" or "N"), the Copenhagen
Interbank Offered Rate ("CIBOR" or "C"), Canadian Dollar LIBOR Rate ("CDOR
LIBOR"), the Bank Bill Swap Rate ("BBSW"), the Bank Bill Swap Bid Rate ("BBSY"),
or the Prime Rate ("Prime" or "P") and which reset daily, monthly, quarterly or
semiannually. Investments or a portion thereof may bear Payment-in-Kind ("PIK").
For each, the Company has provided the PIK or the spread over LIBOR, EURIBOR,
GBP LIBOR, NIBOR, CIBOR, CDOR, BBSW, BBSY, or Prime and the current weighted
average interest rate in effect at December 31, 2020. Certain investments are
subject to a LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, CDOR, BBSW, or Prime
interest rate floor.
(2) The negative fair value is the result of the capitalized discount on the
loan or the unfunded commitment being valued below par.
(3) Position or portion thereof is an unfunded loan commitment, and no interest
is being earned on the unfunded portion. The investment may be subject to an
unused/letter of credit facility fee.
(4) Percentages are based on the Company's net assets of $1,068,004 as of
December 31, 2020.
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(5) The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. (6) The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company's total assets. As of December 31, 2020, non-qualifying assets totaled 17.6% of the Company's total assets. (7) Assets or a portion thereof are pledged as collateral for the BCSF Complete Financing Solution LLC. See Note 6 "Debt". (8) Unrealized appreciation/(depreciation) on forward currency exchange contracts. (9) The principal amount (par amount) for all debt securities is denominated inU.S. dollars, unless otherwise noted. Share amounts of equity investments are presented in thousands. £ represents Pound Sterling, € represents Euro, NOK represents Norwegian krone, AUD represents Australian, CAD represents Canadian Dollar and DKK represents Kroner. (10) As defined in the 1940 Act, the portfolio company is deemed to be an "Affiliated Investment" of the Company as the Company owns 5% or more of the portfolio company's securities. (11) As defined in the 1940 Act, the Company is deemed to "Control" this portfolio company as the Company either owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. (12) Assets or a portion thereof are pledged as collateral for the 2018-1 Issuer. See Note 6 "Debt". (13) $85 of the total par amount for this security is at P+ 4.75%. (14) Non-Income Producing. (15) Loan includes interest rate floor of 1.00%. (16) Loan includes interest rate floor of 0.75%. (17) Loan includes interest rate floor of 0.50%. (18) Loan includes interest rate floor of 0.00%. (19) Security valued using unobservable inputs (Level 3). (20) The Company holds non-controlling, affiliate interest in an aircraft-owning special purpose vehicle through this investment. (21) Assets or a portion thereof are pledged as collateral for the BCSF Revolving Credit Facility. See Note 6 "Debt". (22) $751 of the total par amount for this security is at P+ 4.50%. (23) $992 of the total par amount for this security is at L+ 5.75%. (24) $1,621 of the total par amount for this security is at P+ 4.50%. (25) Security exempt from registration under the Securities Act of 1933 (the "Securities Act"), and may be deemed to be "restricted securities" under the Securities Act. As of December 31, 2020, the aggregate fair value of these securities is $157,618 or 14.76% of the Company's net assets. The acquisition dates of the restricted securities are as follows: 129
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Investment Acquisition Date BCC Jetstream Holdings Aviation (On II), LLC-Equity Interest
6/1/2017
BCC Jetstream Holdings Aviation (Off I), LLC-Equity Interest
6/1/2017
CB Titan Holdings, Inc.-Preferred Equity
11/14/2017
Abracon Group Holding, LLC.-Equity Interest
7/18/2018
Armor Group, LP-Equity Interest
8/28/2018
Grammer Investment Holdings LLC-Warrants
10/1/2018
Grammer Investment Holdings LLC-Equity Interest
10/1/2018
Grammer Investment Holdings LLC-Preferred Equity
10/1/2018
ADT Pizza, LLC-Equity Interest
10/29/2018
PP Ultimate Holdings B, LLC-Equity Interest
12/20/2018
FCG Acquisitions, Inc.-Preferred Equity
1/24/2019
WCI-HSG HOLDCO, LLC-Preferred Equity
2/22/2019
Toro Private Investments II, L.P.-Equity Interest
3/19/2019
ARL Holdings, LLC.-Equity Interest
5/3/2019
ARL Holdings, LLC.-Equity Interest
5/3/2019
ACCHoldco, LLC .-Equity Interest
6/28/2019
Kellstrom Aerospace Group , Inc-Equity Interest
7/1/2019
East BCC Coinvest II,LLC-Equity Interest
7/23/2019
Gale Aviation (Offshore) Co-Equity Interest
8/2/2019
Ventiv Topco, Inc.-Equity Interest
9/3/2019
TLC Holdco LP-Equity Interest
10/11/2019
Elk Parent Holdings, LP-Equity Interest
11/1/2019
Elk Parent Holdings, LP-Preferred Equity
11/1/2019
Precision Ultimate Holdings, LLC-Equity Interest
11/6/2019
Elevator Holdco Inc.-Equity Interest
12/23/2019
Blackbrush Oil & Gas, L.P. -Equity Interest
9/3/2020
Blackbrush Oil & Gas, L.P. -Preferred Equity
9/3/2020
Direct Travel, Inc. -Equity Interest
10/2/2020
Lightning Holdings-Equity Interest
11/5/2020
MZR Aggregator-Equity Interest
12/22/2020
(26) Denotes that all or a portion of the debt investment includes PIK interest
during the period.
(27) Asset has been placed on non-accrual.
(28) Assets or a portion thereof are pledged as collateral for the BCSF Complete
Financing Solution Holdco LLC. See Note 6 "Debt".
(29) Assets or a portion thereof are pledged as collateral for the 2019-1
Issuer. See Note 6 "Debt".
(30) Cash equivalents include $27,026 of restricted cash.
(31) Loan includes interest rate floor of 2.00%.
(32) Loan includes interest rate floor of 1.50%.
(33) $2 of the total par amount for this security is at P+ 5.50%.
See Notes to Consolidated Financial Statements
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Bain Capital Specialty Finance, Inc.
Consolidated Schedule of Investments
As of December 31, 2019
(In thousands)
Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
Non-Controlled/Non-Affiliate Investments
Aerospace & Defense Forming & Machining Industries Inc. (18) (19) (21) Second Lien Senior Secured Loan L+ 8.25% 10.19% 10/9/2026 $ 6,540 6,480 6,278
Forming & Machining Industries Inc. (12) (18) (19) (29) First Lien Senior Secured Loan L+ 4.00% 5.94% 10/9/2025 $ 16,778 16,648 16,275
GSP Holdings, LLC (7) (12) (15) (19) (29) First Lien Senior Secured Loan L+ 5.50% 7.39% 11/6/2025 $ 36,268 35,917 35,542
First Lien Senior Secured Loan-
GSP Holdings, LLC (3) (15) (19) Revolver L+ 5.50% 7.29% 11/6/2025 $ 227 182 136
Kellstrom Aerospace Group, Inc (14) (19) (25) Equity Interest - - - 1 1,963 1,911
First Lien Senior Secured Loan-
Kellstrom Commercial Aerospace, Inc. (2) (3) (5) (18) (19) Delayed Draw - - 7/1/2025 $ - (35) (77)
First Lien Senior Secured Loan-
Kellstrom Commercial Aerospace, Inc. (3) (18) (19) (26) Revolver L+ 5.00% 8.35% 7/1/2025 $ 5,758 5,639 5,630
Kellstrom Commercial Aerospace, Inc. (12) (18) (19) (21) (29)
First Lien Senior Secured Loan L+ 5.00% 7.10% 7/1/2025 $ 33,949 33,304 33,270
Novetta, LLC (12) (15) (29) First Lien Senior Secured Loan L+ 5.00% 6.80% 10/17/2022 $ 6,581 6,497 6,484
Precision Ultimate Holdings, LLC (14) (19) (25) Equity Interest - - - 1,417 1,417 1,417
Salient CRGT, Inc. (12) (15) (29) First Lien Senior Secured Loan L+ 6.50% 8.29% 2/28/2022 $ 12,723 12,770 12,087
First Lien Senior Secured Loan-
TCFI Aevex LLC (3) (15) (19) Revolver L+ 6.25% 8.20% 5/13/2025 $ 2,627 2,571 2,627
TCFI Aevex LLC (12) (15) (19) (21) (29) First Lien Senior Secured Loan L+ 6.25% 8.24% 5/13/2025 $ 38,515 37,854 38,515
WCI-HSG HOLDCO, LLC (14) (19) (25) Preferred equity - - - 675 675 968
First Lien Senior Secured Loan-
WCI-HSG Purchaser, Inc. (3) (15) (19) Revolver L+ 4.25% 6.04% 2/24/2025 $ 403 369 396
WCI-HSG Purchaser, Inc. (12) (15) (19) (29) First Lien Senior Secured Loan L+ 4.50% 6.30% 2/24/2025 $ 17,779 17,551 17,735
WP CPP Holdings, LLC. (12) (15) (21) (29) Second Lien Senior Secured Loan L+ 7.75% 9.68% 4/30/2026 $ 11,724 11,620 11,584
Aerospace & Defense
Total $ 191,422 $ 190,778 18.7%
First Lien Senior Secured Loan-
Automotive CST Buyer Company (3) (5) (15) (19) Revolver - - 10/3/2025 $ - (31) -
CST Buyer Company (12) (15) (19) (21) (29) First Lien Senior Secured Loan L+ 5.75% 7.55% 10/3/2025 $ 36,890 36,286 36,890
First Lien Senior Secured Loan-
JHCC Holdings, LLC (2) (3) (5) (18) (19) (28) Delayed Draw - - 9/9/2025 $ - (40) (43)
First Lien Senior Secured Loan-
JHCC Holdings, LLC (3) (18) (19) Revolver P+ 4.50% 10.00% 9/9/2025 $ 1,013 972 999
JHCC Holdings, LLC (7) (18) (19) First Lien Senior Secured Loan L+ 5.50% 7.21% 9/9/2025 $ 29,676 29,335 29,528
Automotive Total $ 66,522 $ 67,374 6.6%
First Lien Senior Secured Loan-
Banking Green Street Parent, LLC (2) (3) (5) (18) (19) Revolver - - 8/27/2025 $ - (46) (48)
Green Street Parent, LLC (12) (18) (19) (29) First Lien Senior Secured Loan L+ 5.25% 7.05% 8/27/2026 $ 14,480 14,201 14,190
Transaction Network Services, Inc. (12) (15) (19) (21) (29) First Lien Senior Secured Loan L+ 4.00% 5.93% 8/15/2022 $ 11,630 11,501 11,324
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Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
Banking Total $ 25,656 $ 25,466 2.5%
Beverage, Food & Tobacco Hearthside Food Solutions, LLC Corporate Bond - 8.50% 6/1/2026 $ 10,000 9,814 9,382
NPC International, Inc. (12) (15) (21) (33) Second Lien Senior Secured Loan L+ 7.50% 9.43% 4/18/2025 $ 9,159 9,190 1,101
NPC International, Inc. (15) (33) First Lien Senior Secured Loan L+ 3.50% 5.42% 4/19/2024 $ 4,937 4,963 2,328
Beverage, Food & Tobacco
Total $ 23,967 $ 12,811 1.3%
First Lien Senior Secured Loan-
Capital Equipment Dorner Manufacturing Corp. (3) (5) (15) (19) Revolver - - 3/15/2022 $ - (12) -
Dorner Manufacturing Corp. (12) (15) (19) First Lien Senior Secured Loan L+ 5.75% 7.71% 3/15/2023 $ 7,890 7,766 7,890
East BCC Coinvest II,LLC (14) (19) (25) Equity Interest - - - 1,419 1,419 1,419
Electronics For Imaging, Inc. (18) (19) (21) Second Lien Senior Secured Loan L+ 9.00% 10.94% 7/23/2027 $ 13,070 12,253 12,220
Engineered Controls International, LLC (12) (19) (21) (29) (32)
First Lien Senior Secured Loan L+ 7.00% 8.70% 11/5/2024 $ 33,599 32,861 32,843
EXC Holdings III Corp. (12) (15) (21) (29) Second Lien Senior Secured Loan L+ 7.50% 9.59% 12/1/2025 $ 8,240 8,252 7,993
FCG Acquisitions, Inc. (14) (19) (25) Preferred equity - - - 4 4,251 7,263
First Lien Senior Secured Loan-
FFI Holdings I Corp (3) (5) (15) (19) (28) Delayed Draw - - 1/24/2025 $ - (9) 3
First Lien Senior Secured Loan-
FFI Holdings I Corp (3) (15) (19) (30) Revolver L+ 5.75% 7.95% 1/24/2025 $ 3,438 3,368 3,465
FFI Holdings I Corp (7) (12) (15) (19) (29) First Lien Senior Secured Loan L+ 5.75% 7.60% 1/24/2025 $ 68,421 67,842 68,763
First Lien Senior Secured Loan-
Tidel Engineering, L.P. (3) (15) (19) Revolver - - 3/1/2023 $ - - -
Tidel Engineering, L.P. (7) (15) (19) First Lien Senior Secured Loan L+ 6.25% 8.19% 3/1/2024 $ 38,302 38,302 38,302
Velvet Acquisition B.V. (6) (18) (19) (21) Second Lien Senior Secured Loan EURIBOR+ 8.00% 8.00% 4/17/2026 € 6,013 7,325 6,752
Capital Equipment
Total $ 183,618 $ 186,913 18.4%
First Lien Senior Secured Loan-
Chemicals, Plastics & Rubber AP Plastics Group, LLC (3) (15) (19) Revolver - - 8/2/2021 $ - - -
AP Plastics Group, LLC (7) (15) (19) First Lien Senior Secured Loan L+ 5.25% 6.94% 8/1/2022 $ 19,856 19,566 19,756
Niacet b.v. (15) (19) (21) First Lien Senior Secured Loan EURIBOR+ 4.50% 5.50% 2/1/2024 € 3,684 3,949 4,126
Plaskolite , Inc. (15) (29) First Lien Senior Secured Loan L+ 4.25% 6.04% 12/15/2025 $ 8,933 8,773 8,564
Chemicals, Plastics &
Rubber Total $ 32,288 $ 32,446 3.2%
First Lien Senior Secured Loan-
Construction & Building Chase Industries, Inc.
(15) (19) (29) Delayed Draw L+ 4.00% 5.94% 5/12/2025 $ 1,115 1,115 1,111
Chase Industries, Inc. (12) (15) (19) (29) First Lien Senior Secured Loan L+ 4.00% (1.5% PIK) 7.44% 5/12/2025 $ 11,812 11,762 11,753
Crown Subsea (12) (18) (29) First Lien Senior Secured Loan L+ 6.00% 7.69% 11/3/2025 $ 9,696 9,566 9,675
Elk Parent Holdings, LP (14) (19) (25) Equity Interest - - - 1 12 12
Elk Parent Holdings, LP (14) (19) (25) Preferred Equity - - - 120 1,202 1,202
PP Ultimate Holdings B, LLC (14) (19) (25) Equity Interest - - - 1 1,352 1,613
First Lien Senior Secured Loan-
Profile Products LLC (2) (3) (5) (15) (19) Revolver - - 12/20/2024 $ - (64) (10)
Profile Products LLC (7) (15) (19) First Lien Senior Secured Loan L+ 5.50% 7.44% 12/20/2024 $ 35,003 34,367 34,915
Regan Development Holdings Limited (6) (17) (19) First Lien Senior Secured Loan EURIBOR+ 6.50% 7.00% 4/18/2022 € 2,051 2,235 2,303
Regan Development Holdings Limited (6) (17) (19) First Lien Senior Secured Loan EURIBOR+ 6.50% 7.00% 4/18/2022 € 665 755 747
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Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
Regan Development Holdings Limited (6) (17) (19) First Lien Senior Secured Loan EURIBOR+ 6.50% 7.00% 4/18/2022 € 6,226 6,710 6,992
First Lien Senior Secured Loan-
YLG Holdings, Inc. (2) (3) (15) (19) (28) Delayed Draw - - 10/31/2025 € - - (51)
First Lien Senior Secured Loan-
YLG Holdings, Inc. (2) (3) (5) (15) (19) Revolver L+ 5.75% - 10/31/2025 € - (83) (171)
YLG Holdings, Inc. (7) (12) (15) (19) (29) First Lien Senior Secured Loan L+ 5.75% 7.66% 10/31/2025 € 38,862 38,484 38,085
Construction & Building Total $ 107,413 $ 108,176 10.6%
Consumer Goods: Durable New Milani Group LLC (12) (15) (19) (29) First Lien Senior Secured Loan L+ 5.00% 6.94% 6/6/2024 $ 17,100 16,968 16,672
TLC Holdco LP (14) (19) (25) Equity Interest - - - 1,188 1,186 1,188
First Lien Senior Secured Loan-
TLC Purchaser, Inc. (2) (3) (5) (19) Delayed Draw - - 10/13/2025 $ - (69) (71)
First Lien Senior Secured Loan-
TLC Purchaser, Inc. (3) (19) Revolver P+ 4.75% 9.50% 10/13/2025 $ 3,916 3,745 3,738
TLC Purchaser, Inc. (12) (19) (21) (29) First Lien Senior Secured Loan L+ 5.75% 7.49% 10/13/2025 $ 42,721 41,882 41,867
Consumer Goods:
Durable Total $ 63,712 $ 63,394 6.2%
First Lien Senior Secured Loan-
Consumer Goods: Non-Durable FineLine Technologies, Inc. (3) (15) (19) Revolver P+ 3.25% 8.00% 11/4/2022 $ 1,966 1,944 1,952
FineLine Technologies, Inc. (12) (15) (19) (21) (29) First Lien Senior Secured Loan L+ 4.25% 6.05% 11/4/2022 $ 31,384 31,217 31,228
Kronos Acquisition Holdings Inc. (18) (19) (21) First Lien Senior Secured Loan L+ 7.00% 8.80% 5/15/2023 $ 2,647 2,605 2,627
MND Holdings III Corp (15) (19) (21) (29) First Lien Senior Secured Loan L+ 3.50% 5.44% 6/19/2024 $ 11,642 11,667 10,944
First Lien Senior Secured Loan-
RoC Opco LLC (3) (5) (15) (19) Revolver - - 2/25/2025 $ - (176) -
RoC Opco LLC (12) (15) (19) (21) (29) First Lien Senior Secured Loan L+ 7.25% 9.19% 2/25/2025 $ 40,793 39,888 40,793
First Lien Senior Secured Loan-
Solaray, LLC (7) (15) (19) Delayed Draw L+ 6.00% 7.85% 9/11/2023 $ 14,573 14,573 14,501
First Lien Senior Secured Loan-
Solaray, LLC (3) (15) (19) Revolver L+ 4.50% 6.40% 9/9/2022 $ 11,674 11,629 11,674
Solaray, LLC (7) (15) (19) First Lien Senior Secured Loan L+ 6.00% 7.82% 9/11/2023 $ 42,610 42,610 42,397
First Lien Senior Secured Loan-
WU Holdco , Inc. (3) (7) (15) (19) Delayed Draw L+ 5.50% 7.44% 3/26/2026 $ 832 778 832
First Lien Senior Secured Loan-
WU Holdco , Inc. (3) (5) (18) (19) Revolver - - 3/26/2025 $ - (56) -
WU Holdco , Inc. (7) (15) (19) First Lien Senior Secured Loan L+ 5.50% 7.44% 3/26/2026 $ 39,705 38,923 39,705
Consumer Goods:
Non-Durable Total $ 195,602 $ 196,653 19.3%
Containers, Packaging, & Glass Automate Intermediate
Holdings II S.à r.l. (6) (18) (19) (21) Second Lien Senior Secured Loan L+ 7.75% 9.55% 7/22/2027 $ 11,870 11,637 11,633
Containers, Packaging, &
Glass Total $ 11,637 $ 11,633 1.1%
Energy: Electricity Infinite Electronics International Inc. (12) (18) (19) (29) First Lien Senior Secured Loan
L+ 4.00% 5.80% 7/2/2025 $ 19,752 19,739 19,654
Infinite Electronics International Inc. (18) (19) (21) Second Lien Senior Secured Loan
L+ 8.00% 9.80% 7/2/2026 $ 2,480 2,433 2,480
Energy: Electricity
Total $ 22,172 $ 22,134 2.2%
First Lien Senior Secured Loan-
Energy: Oil & Gas Amspec Services, Inc.
(3) (15) (19) Revolver P+ 3.75% 9.00% 7/2/2024 $ 2,125 2,071 2,125
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Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
Amspec Services, Inc. (7) (15) (19) First Lien Senior Secured Loan L+ 6.25% 8.19% 7/2/2024 $ 44,100 43,605 44,100
Blackbrush Oil & Gas, L.P. (12) (15) (19) (21) (29) First Lien Senior Secured Loan
L+ 8.00% 9.89% 2/9/2024 $ 32,075 31,588 1,754
Energy: Oil & Gas Total $ 77,264 $ 77,979 7.7%
GBP LIBOR+ 8.25%
Environmental Industries Adler & Allan Group Limited (6) (17) (19) (21) (22) First Lien Last Out (2% PIK) 11.04% 9/30/2022 £ 13,279 16,814 17,612
Environmental Industries
Total $ 16,814 $ 17,612 1.7%
FIRE: Insurance Ivy Finco Limited
(6)(18)(19)(21) First Lien Senior Secured Loan GBP LIBOR+ 5.00% 5.70% 5/19/2025 £ 7,217 8,950 9,381
Ivy Finco Limited (3) (6)(18)(19) First Lien Senior Secured Loan GBP LIBOR+ 5.00% 5.70% 5/19/2025 £ 2,691 3,194 3,382
First Lien Senior Secured Loan-
Margaux Acquisition Inc. (3) (7) (15) (19) Delayed Draw L+ 6.00% 8.10% 12/19/2024 $
2,186 2,020 2,186
First Lien Senior Secured Loan-
Margaux Acquisition, Inc. (3) (5) (15) (19) Revolver - - 12/19/2024 $ - (48) -
Margaux Acquisition Inc. (7) (15) (19) (29) First Lien Senior Secured Loan
L+ 5.50% 7.60% 12/19/2024 $ 28,916 28,392 28,916
First Lien Senior Secured Loan-
Margaux UK Finance Limited (3) (5) (6) (15) (19) Revolver - - 12/19/2024 £ - (10) -
Margaux UK Finance Limited (6) (7) (15) (19) First Lien Senior Secured Loan GBP LIBOR+ 5.50% 6.50% 12/19/2024 £ 7,706 9,869 10,221
FIRE: Insurance Total $ 52,367 $ 54,086 5.3%
FIRE: Real Estate Spectre (CarrisbrookHouse) Limited (6) (15) (19) First Lien Senior Secured Loan
EURIBOR+ 7.50% 8.50% 8/9/2021 € 9,300 10,786 10,443
FIRE: Real Estate Total $ 10,786 $ 10,443 1.0%
Forest Products & Paper Solenis International LLC (18) (21) Second Lien Senior Secured Loan L+ 8.50% 10.41% 6/26/2026 $ 10,601 10,301 9,700
Forest Products &
Paper Total $ 10,301 $ 9,700 1.0%
Healthcare & Pharmaceuticals CB Titan Holdings, Inc.
(14) (19) (25) Preferred equity - - - 1,953 1,953 3,378
Clarkson Eyecare , LLC (12) (15) (19) (21) (29) First Lien Senior Secured Loan L+ 6.25% 8.05% 4/2/2021 $ 23,118 22,747 23,118
Clarkson Eyecare , LLC (12) (15) (19) (21) (29) First Lien Senior Secured Loan L+ 6.25% 8.05% 4/2/2021 $ 15,284 15,031 15,284
Clinical Innovations, LLC (3) (15) (19) (22) First Lien Last Out-Revolver L+ 5.50% 7.21% 10/17/2022 $ 772 757 772
Clinical Innovations, LLC (12) (15) (19) (22) (29) First Lien Last Out L+ 5.50% 7.30% 10/17/2023 $ 10,916 10,744 10,916
Clinical Innovations (12) (15) (19) (29) First Lien Senior Secured Loan L+ 5.50% 7.30% 10/17/2023 $ 511 500 511
First Lien Senior Secured Loan-
CPS Group Holdings, Inc. (3) (5) (15) (19) Revolver - - 3/3/2025 $ - (64) -
CPS Group Holdings, Inc. (7) (15) (19) First Lien Senior Secured Loan L+ 5.25% 7.19% 3/3/2025 $ 55,905 55,390 55,905
First Lien Senior Secured Loan-
Datix Bidco Limited (3) (5) (6) (18) (19) Revolver - - 10/28/2024 £ - (21) -
Datix Bidco Limited (6) (18) (19) (21) Second Lien Senior Secured Loan GBP LIBOR+ 7.75% 8.63% 4/27/2026 £ 12,134 16,314 16,093
Datix Bidco Limited (6) (18) (19) (21) First Lien Senior Secured Loan BBSW+ 4.50% 5.50% 4/28/2025 AUD4,212 3,205 2,958
Golden State Buyer, Inc. (12) (18) (19) (29) First Lien Senior Secured Loan L+ 4.75% 6.55% 6/22/2026 $ 15,230 15,084 14,887
First Lien Senior Secured Loan-
Great Expressions Dental Centers PC (3) (15) (19) (34) Revolver L+ 4.75% (0.5% PIK) 7.22% 9/28/2022 $ 1,017 1,009 789
Great Expressions Dental Centers PC (12) (15) (19) First Lien Senior Secured Loan L+ 5.25% 7.17% 9/28/2023 $ 7,609 7,540 6,125
Island Medical Management Holdings, LLC (15) (19) (29)
First Lien Senior Secured Loan L+ 6.50% 8.30% 9/1/2022 $ 9,160 9,071 8,428
Medical Depot Holdings, Inc. (12) (15) (21) First Lien Senior Secured Loan L+ 7.50% 9.44% 1/3/2023 $ 16,189 14,935 12,293
Mendel Bidco, Inc. (18) (19) (21) First Lien Senior Secured Loan EURIBOR+ 4.50% 4.50% 6/17/2027 € 10,033 11,134 10,985
Mendel Bidco, Inc. (12) (18) (19) (29) First Lien Senior Secured Loan L+ 4.50% 6.45% 6/17/2027 $ 19,966 19,492 19,467
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Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
First Lien Senior Secured Loan-
Mertus 522. GmbH (3) (6) (18) (19) Delayed Draw EURIBOR+ 5.75% 5.75% 5/28/2026 € 875 602 946
Mertus 522. GmbH (6) (18) (19) (21) First Lien Senior Secured Loan EURIBOR+ 5.75% 5.75% 5/28/2026 € 22,468 24,540 25,167
TecoStar Holdings, Inc. (12) (15) (19) (21) Second Lien Senior Secured Loan L+ 8.50% 10.24% 11/1/2024 $ 9,472 9,282 9,472
U.S. Anesthesia Partners, Inc. (12) (15) (19) (21) Second Lien Senior Secured Loan L+ 7.25% 9.05% 6/23/2025 $ 16,520 16,334 16,520
Healthcare & Pharmaceuticals Total $ 255,579 $ 254,014 24.9%
First Lien Senior Secured Loan-
High Tech Industries AMI US Holdings Inc. (3)(6)(15)(19) Revolver L+ 5.50% 7.25% 4/1/2024 $ 767 737 767
AMI US Holdings Inc. (6)(12)(15)(19)(29) First Lien Senior Secured Loan L+ 5.50% 7.19% 4/1/2025 $ 13,157 12,916 13,157
First Lien Senior Secured Loan-
Appriss Holdings, Inc. (3)(5)(18)(19) Revolver - - 5/30/2025 $ - (61) -
Appriss Holdings, Inc. (7)(18)(19) First Lien Senior Secured Loan L+ 5.50% 7.44% 5/29/2026 $ 48,876 48,272 48,876
First Lien Senior Secured Loan-
CB Nike IntermediateCo Ltd (3)(6)(15)(19) Revolver L+ 5.00% 6.93% 10/31/2025 $ 1,550 1,464 1,461
CB Nike IntermediateCo Ltd (6)(12)(15)(19)(21)(29) First Lien Senior Secured Loan L+ 5.00% 6.93% 10/31/2025 $ 35,422 34,729 34,714
First Lien Senior Secured Loan-
CMI Marketing Inc (3)(5)(15)(19) Revolver - - 5/24/2023 $ - (14) -
CMI Marketing Inc (12)(15)(19)(29) First Lien Senior Secured Loan L+ 4.50% 6.30% 5/24/2024 $ 15,256 15,136 15,256
Drilling Info Holdings, Inc (12)(18)(21)(29) First Lien Senior Secured Loan L+ 4.25% 6.05% 7/30/2025 $ 22,609 22,532 22,496
First Lien Senior Secured Loan-
Element Buyer, Inc. (3)(7)(15)(19) Delayed Draw L+ 5.25% 7.05% 7/18/2025 $ 3,366 3,466 3,366
First Lien Senior Secured Loan-
Element Buyer, Inc. (3)(15)(19) Revolver L+ 5.25% 7.05% 7/19/2024 $ 1,417 1,368 1,417
Element Buyer, Inc. (7)(15)(19) First Lien Senior Secured Loan L+ 5.25% 7.05% 7/18/2025 $ 37,772 38,104 37,772
Elo Touch Solutions, Inc. (18)(29) First Lien Senior Secured Loan L+ 6.50% 8.24% 12/15/2025 $ 3,261 3,168 3,244
Everest Bidco (6)(15)(19)(21) Second Lien Senior Secured Loan GBP LIBOR+ 7.50% 8.50% 7/3/2026 £ 10,216 13,098 13,076
MeridianLink, Inc. (15)(29) First Lien Senior Secured Loan L+ 4.00% 5.80% 5/30/2025 $ 1,825 1,804 1,798
Netsmart Technologies, Inc. (15)(19)(21) Second Lien Senior Secured Loan L+ 7.50% 9.30% 10/19/2023 $ 2,749 2,749 2,735
nThrive, Inc. (15)(19)(21) Second Lien Senior Secured Loan L+ 9.75% 11.55% 4/20/2023 $ 8,000 7,986 7,080
Park Place Technologies (15)(21) Second Lien Senior Secured Loan L+ 8.00% 9.80% 3/30/2026 $ 6,733 6,688 6,682
First Lien Senior Secured Loan-
Symplr Software, Inc. (3)(18)(19) Revolver L+ 6.00% 7.95% 11/30/2023 $ 4,499 4,445 4,499
Symplr Software, Inc. (7)(18)(19) First Lien Senior Secured Loan L+ 6.00% 7.94% 11/28/2025 $ 61,060 60,211 61,060
Utimaco, Inc. (6)(18)(19)(21)(29) First Lien Senior Secured Loan L+ 4.50% 6.42% 8/9/2027 $ 14,849 14,490 14,775
Ventiv Topco, Inc. (14)(19)(25) Equity Interest - - - 28 2,833 2,886
First Lien Senior Secured Loan-
Ventiv Holdco, Inc. (2)(3)(5)(18)(19) Revolver L+ 5.50% - 9/3/2025 $ - (49) (17)
Ventiv Holdco, Inc. (7)(15)(19) First Lien Senior Secured Loan L+ 5.50% 7.44% 9/3/2025 $ 24,299 23,948 24,178
VPARK BIDCO AB (6)(19)(21) First Lien Senior Secured Loan CIBOR+ 4.00% 4.75% 3/10/2025 DKK56,999 9,160 8,566
VPARK BIDCO AB (6)(16)(19)(21) First Lien Senior Secured Loan NIBOR+ 4.00% 5.86% 3/10/2025 NOK74,020 9,197 8,430
First Lien Senior Secured Loan-
Zywave, Inc. (3) (15) (19) Revolver L+ 5.00% 6.80% 11/17/2022 $ 428 419 429
Zywave, Inc. (12) (15) (19) (29) First Lien Senior Secured Loan L+ 5.00% 6.93% 11/17/2022 $ 17,370 17,290 17,370
High Tech Industries
Total $ 356,086 $ 356,073 35.0%
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TABLE OF CONTENTS
Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
Hotel, Gaming & Leisure Aimbridge Acquisition Co., Inc. (12) (18) (19) (21) (29) Second Lien Senior Secured Loan L+ 7.50% 9.19% 2/1/2027 $ 20,193 19,649 19,688
First Lien Senior Secured Loan-
Captain D's LLC (3) (15) (19) (35) Revolver P+ 3.50% 7.45% 12/15/2023 $ 1,285 1,273 1,266
Captain D's LLC (12) (15) (19) (29) First Lien Senior Secured Loan L+ 4.50% 6.44% 12/15/2023 $ 13,037 12,940 12,907
Quidditch Acquisition, Inc. (12) (15) (19) (29) First Lien Senior Secured Loan L+ 7.00% 8.80% 3/21/2025 $ 19,023 19,004 19,213
Hotel, Gaming & Leisure
Total $ 52,866 $ 53,074 5.2%
Media: Advertising, Printing &
Publishing A-L Parent LLC (12) (15) (21) Second Lien Senior Secured Loan L+ 7.25% 9.05% 12/2/2024 $ 4,050 4,020 3,594
First Lien Senior Secured Loan-
Ansira Holdings, Inc. (3) (7) (15) (19) Delayed Draw L+ 5.75% 7.51% 12/20/2022 $ 2,936 2,926 2,458
First Lien Senior Secured Loan-
Ansira Holdings, Inc. (15) (19) (24) Revolver L+ 5.00% 7.22% 12/20/2022 $ 7,084 7,084 7,084
Ansira Holdings, Inc. (7) (15) (19) First Lien Senior Secured Loan L+ 5.75% 7.55% 12/20/2022 $ 35,877 35,791 32,020
First Lien Senior Secured Loan-
Cruz Bay Publishing, Inc. (3) (15) (19) Delayed Draw P+ 5.00% 9.75% 2/28/2020 $ 876 865 876
First Lien Senior Secured Loan-
Cruz Bay Publishing (3) (15) (19) Revolver P+ 3.00% 7.75% 2/28/2020 $ 2,298 2,298 2,298
Cruz Bay Publishing, Inc. (7) (15) (19) (27) First Lien Senior Secured Loan L+ 5.75% 7.70% 2/28/2020 $ 4,824 4,824 4,824
Cruz Bay Publishing, Inc. (7) (15) (19) First Lien Senior Secured Loan L+ 6.75% 8.46% 2/28/2020 $ 1,611 1,611 1,611
Media: Advertising, Printing & Publishing Total $ 59,419 $ 54,765 5.4%
Media: Broadcasting & Subscription Vital Holdco Limited (6) (12) (15) (19) (21) (29) First Lien Senior Secured Loan L+ 5.25% 7.05% 5/29/2026 $ 35,357 34,552 35,357
Vital Holdco Limited (6) (18) (19) (21) First Lien Senior Secured Loan EURIBOR+ 5.25% 5.25% 5/29/2026 € 7,917 8,613 8,890
Media: Broadcasting & Subscription Total $ 43,165 $ 44,247 4.3%
Media: Diversified & Production Efficient Collaborative Retail Marketing Company, First Lien Senior Secured Loan-
LLC (3) (15) (19) Revolver - - 6/15/2022 $ - - -
EfficientCollaborative Retail Marketing Company,
LLC (7) (15) (19) First Lien Senior Secured Loan L+ 6.75% 8.69% 6/15/2022 $ 15,095 15,185 15,095
EfficientCollaborative Retail Marketing Company,
LLC (7) (15) (19) First Lien Senior Secured Loan L+ 6.75% 8.69% 6/15/2022 $ 9,788 9,847 9,788
InternationalEntertainment Investments Limited (6) (18) (19) (21)
First Lien Senior Secured Loan GBP LIBOR+ 4.00% 4.86% 5/31/2023 £ 8,686 10,638 11,520
Media: Diversified &
Production Total $ 35,670 $ 36,403 3.6%
First Lien Senior Secured Loan-
Retail Batteries Plus Holding Corporation (3) (15) (19) Revolver - - 7/6/2022 $ - - -
Batteries Plus Holding Corporation (7) (15) (19) First Lien Senior Secured Loan L+ 6.75% 8.55% 7/6/2022 $ 28,827 28,827 28,827
Calceus Acquisition, Inc. (12) (18) (29) First Lien Senior Secured Loan L+ 5.50% 7.30% 2/12/2025 $ 5,997 5,947 6,000 Retail Total $ 34,774 $ 34,827 3.4% Services: Business AMCP Clean Acquisition Company, First Lien Senior Secured Loan- LLC (12) (18) (29) Delayed Draw L+ 4.25% 6.19% 6/16/2025 $ 3,894 3,886 3,806 AMCP Clean Acquisition Company, LLC (12) (18) (29) First Lien Senior Secured Loan L+ 4.25% 6.19% 6/16/2025 $ 16,093 16,062 15,731Comet Bidco Limited (6) (18) (21) First Lien Senior Secured Loan GBP LIBOR+ 5.00% 5.70% 9/30/2024 £ 7,362 9,488 9,605 136
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Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
Elevator Holdco Inc. (14) (19) (25) Equity Interest - - - 2 2,448 2,448
First Lien Senior Secured Loan-
Hightower Holding , LLC (2) (3) (5) (15) (19) Delayed Draw - - 1/31/2025 $ - (15) (17)
Hightower Holding , LLC (12) (15) (19) (21) (29) (31) First Lien Senior Secured Loan L+ 5.00% 6.80% 1/31/2025 $ 34,589 34,432 34,503
SumUp Holdings Luxembourg S.à.r.l. (6) (15) (19) (21) First Lien Senior Secured Loan EURIBOR+ 8.00% 9.00% 8/1/2024 € 15,957 17,658 17,873
SumUp Holdings Luxembourg
S.à.r.l. (3) (6) (15) (19) (21) First Lien Senior Secured Loan EURIBOR+ 8.00% 9.00% 8/1/2024 € 7,480 7,823 8,351
First Lien Senior Secured Loan-
TEI Holdings Inc. (3) (15) (19) Revolver L+ 6.00% 7.83% 12/23/2025 $ 1,509 1,464 1,464
TEI Holdings Inc. (7) (12) (15) (19) (29) First Lien Senior Secured Loan L+ 6.00% 7.93% 12/23/2026 $ 49,050 48,340 48,559
Valet Waste Holdings, Inc (12) (18) (21) (29) First Lien Senior Secured Loan L+ 3.75% 5.55% 9/29/2025 $ 23,747 23,700 23,539
Services: Business Total $ 165,286 $ 165,862 16.3%
Services: Consumer Pearl Intermediate Parent LLC (18) (29) Second Lien Senior Secured Loan L+ 6.25% 8.05% 2/13/2026 $ 2,571 2,587 2,545
Surrey Bidco Limited (6) (17) (19) (21) First Lien Senior Secured Loan GBP LIBOR+ 6.00% 6.78% 5/11/2026 £ 5,000 6,138 6,466
Trafalgar Bidco Limited (6) (18) (19) (21) First Lien Senior Secured Loan GBP LIBOR+ 5.00% 5.70% 9/11/2024 £ 6,011 7,727 7,733
Zeppelin BidCo Pty Limited (6) (18) (19) (21) First Lien Senior Secured Loan BBSY+ 6.00% 6.90% 6/28/2024 AUD20,621 14,006 14,050
Services: Consumer
Total $ 30,458 $ 30,794 3.0%
Telecommunications Conterra Ultra Broadband Holdings, Inc. (18) (29) First Lien Senior Secured Loan L+ 4.50% 6.30% 4/30/2026 $ 6,451 6,420 6,448
First Lien Senior Secured Loan-
Horizon Telcom, Inc. (3) (12) (15) (19) (29) Delayed Draw L+ 4.75% 6.46% 6/15/2023 $ 481 465 464
First Lien Senior Secured Loan-
Horizon Telcom, Inc. (2) (3) (5) (15) (19) Revolver - - 6/15/2023 $ - (2) (1)
Horizon Telcom, Inc. (12) (15) (19) (29) First Lien Senior Secured Loan L+ 4.75% 6.44% 6/15/2023 $ 13,730 13,577 13,592
Masergy Holdings, Inc. (15) (29) Second Lien Senior Secured Loan L+ 7.50% 9.46% 12/16/2024 $ 857 863 840
Telecommunications
Total $ 21,323 $ 21,343 2.1%
First Lien Senior Secured Loan-
Transportation: Cargo A&R Logistics, Inc. (3) (15) (19) Revolver L+ 5.75% 7.85% 5/5/2025 $ 1,053 940 1,053
A&R Logistics, Inc. (7) (12) (15) (19) (29) First Lien Senior Secured Loan L+ 5.75% 7.85% 5/5/2025 $ 43,976 43,130 43,976
A&R Logistics, Inc. (7) (15) (19) First Lien Senior Secured Loan L+ 5.75% 7.85% 5/5/2025 $ 2,473 2,424 2,473
A&R Logistics, Inc. (7) (15) (19) First Lien Senior Secured Loan L+ 5.75% 7.66% 5/5/2025 $ 6,096 6,004 6,096
ARL Holdings, LLC. (14) (19) (25) Equity Interest - - - - 445 448
ARL Holdings, LLC. (14) (19) (25) Equity Interest - - - 9 9 8
ENC Holding Corporation (12) (18) (29) First Lien Senior Secured Loan L+ 4.00% 5.94% 5/30/2025 $ 10,272 10,259 10,041
Grammer Investment Holdings LLC (14) (19) (25) Equity Interest - - - 1,011 1,011 1,021
Grammer Investment Holdings LLC (19) (25) Preferred Equity 10% PIK 10.00% - 6 646 679
Grammer Investment Holdings LLC (14) (19) (25) Warrants - - - 122 - 122
First Lien Senior Secured Loan-
Grammer Purchaser, Inc. (3) (15) (19) Revolver L+ 4.50% 6.30% 9/30/2024 $ 52 56 42
First Lien Senior Secured Loan-
Grammer Purchaser, Inc. (12) (15) (19) (29) Revolver L+ 4.50% 6.31% 9/30/2024 $ 10,206 10,043 10,104
Omni Logistics, LLC (15) (19) Subordinated Debt L+ 11.50% 13.30% 1/19/2024 $ 15,000 14,752 15,000
PS HoldCo, LLC (12) (15) (29) First Lien Senior Secured Loan L+ 4.75% 6.55% 3/13/2025 $ 23,277 23,265 22,084
Toro Private Investments II, L.P. (6) (14) (19) (25) Equity Interest - - - 3,090 3,090 3,090
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Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
Transportation: Cargo
Total $ 116,074 $ 116,237 11.4%
First Lien Senior Secured Loan-
Transportation: Consumer Direct Travel, Inc. (3) (7) (15) (19) Delayed Draw L+ 6.50% 8.44% 12/1/2021 $ 1,471 1,382 1,471
First Lien Senior Secured Loan-
Direct Travel, Inc. (7) (15) (19) Delayed Draw L+ 6.50% 8.45% 12/1/2021 $ 2,920 2,920 2,920
First Lien Senior Secured Loan-
Direct Travel, Inc. (3) (15) (19) Revolver - - 12/1/2021 $ - - -
Direct Travel, Inc. (7) (15) (19) (23) First Lien Senior Secured Loan L+ 6.50% 8.40% 12/1/2021 $ 49,667 49,667 49,667
Toro Private Holdings III, Ltd (6) (12) (18) (29) Second Lien Senior Secured Loan L+ 9.00% 10.94% 5/28/2027 $ 8,998 8,504 7,604
Transportation: Consumer
Total $ 62,473 $ 61,662 6.1%
Utilities: Electric CSVC Acquisition Corp Corporate Bond - 7.75% 6/15/2025 $ 13,478 12,598 8,126
Utilities: Electric Total $ 12,598 $ 8,126 0.8%
Wholesale Abracon Group Holding, LLC. (14) (19) (25) Equity Interest - - - 2 1,833 1,294
First Lien Senior Secured Loan-
Abracon Group Holding, LLC. (2) (3) (5) (15) (19) Revolver - - 7/18/2024 $ - (32) (28)
Abracon Group Holding, LLC. (7) (13) (15) (19) First Lien Senior Secured Loan L+ 5.75% 7.70% 7/18/2024 $ 36,094 35,929 35,733
First Lien Senior Secured Loan-
Aramsco, Inc. (3) (18) (19) Revolver L+ 5.25% 7.05% 8/28/2024 $ 621 579 553
Aramsco, Inc. (7) (18) (19) First Lien Senior Secured Loan L+ 5.25% 7.05% 8/28/2024 $ 24,288 23,902 23,802
Armor Group, LP (14) (19) (25) Equity Interest - - - 10 1,012 1,085
8/19/2022 $ 9,948 9,867 9,500
PetroChoice Holdings, Inc. (12) (15) (19) (29) First Lien Senior Secured Loan L+ 5.00% 6.93% 8/19/2022 $ 6,582 6,452 6,286 Wholesale Total $ 79,542 $ 78,225 7.7% Non-Controlled/ Non-Affiliate Investments Total $ 2,416,854 $ 2,403,250 236.0%
Non-Controlled/ Affiliate Investments
Beverage, Food & Tobacco ADT Pizza, LLC (10) (14) (19) (25) Equity Interest - - - 6,720 6,720 6,720
Beverage, Food & Tobacco
Total $ 6,720 $ 6,720 0.6%
Non-Controlled/Affiliate Investments Total $ 6,720 $
6,720 0.6%
Controlled Affiliate Investments
Aerospace & Defense ACC Holdco, LLC (10) (11) (19) (25) Preferred equity - 16.00% - 10,828 10,824 10,828
Air Comm Corporation
LLC (10) (11) (12) (18) (19) (21) (29) First Lien Senior Secured Loan L+ 6.50% 8.44% 6/30/2025 $ 27,298 26,516 27,161
BCC Jetstream Holdings Aviation (Off I),
LLC (6) (10) (11) (19) (20) (25) Equity Interest - - - 11,863 11,863 13,091
BCC Jetstream Holdings Aviation (On II),
LLC (10) (11) (19) (20) (25) Equity Interest - - - 1,116 1,116 1,869
BCCJetstream Holdings Aviation (On II),
LLC (10) (11) (19) (20) First Lien Senior Secured Loan - 10.00% 6/2/2022 $ 6,363 6,363 6,363
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Spread Above Interest Maturity Market % of
Control Type Industry Portfolio Company Investment Type Index (1) Rate Date Principal/Shares (9) Cost Value NAV (4)
Gale Aviation (Offshore) Co (6) (10) (11) (19) (25) Equity Interest - - - 57 57,007 57,773
Aerospace & Defense Total $ 113,689 $ 117,085 11.5%
Controlled Affiliate
Investments Total $ 113,689 $ 117,085 11.5%
Investments Total $ 2,537,263 $ 2,527,055 248.1%
Cash Equivalents
Cash Equivalents Goldman Sachs Financial SquareGovernment Fund Institutional Share Class (36) Cash Equivalents
- 1.64% - $ 66,965 66,965 66,965
Cash Equivalents Total $ 66,965 $ 66,965 6.6%
Investments and Cash
Equivalents Total $ 2,604,228 $ 2,594,020 254.7%
Forward Foreign Currency Exchange Contracts
Unrealized
Appreciation
Currency Purchased Currency Sold Counterparty Settlement Date (Depreciation) (8) US DOLLARS 8,720 POUND STERLING 6,400 Bank of New York Mellon
9/21/2020 $ 288
POUND STERLING 6,220 US DOLLARS 8,192 Bank of New York Mellon 9/21/2020 -
US DOLLARS 12,177 EURO 10,370 Bank of New York Mellon 1/10/2020 552
EURO 3,270 US DOLLARS 2,930 Bank of New York Mellon 1/10/2020 -
US DOLLARS 11,874 EURO 10,300 Bank of New York Mellon 6/15/2020 194
US DOLLARS 412 POUND STERLING 310 Citibank 9/23/2020 (1)
US DOLLARS 25,257 POUND STERLING 19,410 Goldman Sachs
1/10/2020 (465)
US DOLLARS 68,701 POUND STERLING 53,430 Goldman Sachs
6/15/2020 (2,399)
US DOLLARS 83,784 EURO 72,370 Goldman Sachs 6/15/2020 1,716
US DOLLARS 16,897 AUSTRALIAN DOLLARS 24,180 Goldman Sachs
6/15/2020 (167)
US DOLLARS 8,885 DANISH KRONE 57,000 Goldman Sachs 6/15/2020 225
US DOLLARS 8,257 NORWEGIAN KRONE 74,020 Goldman Sachs
3/20/2020 (161)
$ (218)
(1) The investments bear interest at a rate that may be determined by reference
to the London Interbank Offered Rate ("LIBOR" or "L"), the Euro Interbank
Offered Rate ("EURIBOR" or "E"), British Pound Sterling LIBOR Rate ("GBP
LIBOR"), the Norwegian Interbank Offered Rate ("NIBOR" or "N"), the Copenhagen
Interbank Offered Rate ("CIBOR" or "C"), the Bank Bill Swap Rate ("BBSW"), the
Bank Bill Swap Bid Rate ("BBSY"), or the Prime Rate ("Prime" or "P") and which
reset daily, monthly, quarterly or semiannually. Investments or a portion
thereof may bear Payment-in-Kind ("PIK"). For each, the Company has provided the
PIK or the spread over LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, BBSW, BBSY, or
Prime and the current weighted average interest rate in effect at December 31,
2019. Certain investments are subject to a LIBOR, EURIBOR, GBP LIBOR, NIBOR,
CIBOR, BBSW, or Prime interest rate floor.
(2) The negative fair value is the result of the capitalized discount on the
loan or the unfunded commitment being valued below par.
(3) Position or portion thereof is an unfunded loan commitment, and no interest
is being earned on the unfunded portion. The investment may be subject to an
unused/letter of credit facility fee.
(4) Percentages are based on the Company's net assets of $1,018,400 as of
December 31, 2019.
(5) The negative amortized cost is the result of the capitalized discount being
greater than the principal amount outstanding on the loan.
(6) The investment is not a qualifying asset under Section 55(a) of the
Investment Company Act of 1940. The Company may not acquire any non-qualifying
asset unless, at the time of acquisition, qualifying assets represent at least
70% of the Company's total assets. As of December 31, 2019, non-qualifying
assets totaled 15.6% of the Company's total assets.
(7) Assets or a portion thereof are pledged as collateral for the BCSF Complete
Financing Solution LLC. See Note 6 "Debt".
(8) Unrealized appreciation/(depreciation) on forward currency exchange
contracts.
(9) The principal amount (par amount) for all debt securities is denominated in
U.S. dollars, unless otherwise noted. £ represents Pound Sterling, € represents
Euro, NOK represents Norwegian krone, AUD represents Australian and DKK
represents Kroner.
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(10) As defined in the 1940 Act, the Company is deemed to be an "Affiliated Investment" of the Company as the Company owns 5% or more of the portfolio company's securities. (11) As defined in the 1940 Act, the Company is deemed to "Control" this portfolio company as the Company either owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. (12) Assets or a portion thereof are pledged as collateral for the 2018-1 Issuer. See Note 6 "Debt". (13) $91 of the total par amount for this security is at P+ 4.75%. (14) Non-Income Producing. (15) Loan includes interest rate floor of 1.00%. (16) Loan includes interest rate floor of 0.75%. (17) Loan includes interest rate floor of 0.50%. (18) Loan includes interest rate floor of 0.00%. (19) Security valued using unobservable inputs (Level 3). (20) The Company holds non-controlling, affiliate interest in an aircraft-owning special purpose vehicle through this investment. (21) Assets or a portion thereof are pledged as collateral for the BCSF Revolving Credit Facility. See Note 6 "Debt". (22) The Company generally earns a higher interest rate on the "last out" tranche of debt, to the extent the debt has been allocated to "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder. (23) $127 of the total par amount for this security is at P+ 5.50%. (24) $1,643 of the total par amount for this security is at P+ 4.00%. (25) Security exempt from registration under the Securities Act of 1933 (the "Securities Act"), and may be deemed to be "restricted securities" under the Securities Act. As of December 31, 2019, the aggregate fair value of these securities is $123,733 or 12.15% of the Company's net assets. The acquisition dates of the restricted securities are as follows: Investment Acquisition Date BCC Jetstream Holdings Aviation (On II), LLC-Equity Interest
6/1/2017
BCC Jetstream Holdings Aviation (Off I), LLC-Equity Interest
6/1/2017
CB Titan Holdings, Inc.-Preferred Equity
11/14/2017
Impala Private Investments, LLC-Equity Interest
11/10/2017
Abracon Group Holding, LLC.-Equity Interest
7/18/2018
Armor Group, LP-Equity Interest
8/28/2018
Grammer Investment Holdings LLC-Warrants
10/1/2018
Grammer Investment Holdings LLC-Equity Interest
10/1/2018
Grammer Investment Holdings LLC-Preferred Equity
10/1/2018
ADT Pizza, LLC-Equity Interest
10/29/2018
PP Ultimate Holdings B, LLC-Equity Interest
12/20/2018
FCG Acquisitions, Inc.-Preferred equity
1/24/2019
WCI-HSG HOLDCO, LLC-Preferred equity
2/22/2019
Toro Private Investments II, L.P.-Equity Interest
3/19/2019
ARL Holdings, LLC.-Equity Interest
5/3/2019
ARL Holdings, LLC.-Equity Interest
5/3/2019
ACCHoldco, LLC .-Equity Interest
6/28/2019
Kellstrom Aerospace Group , Inc-Equity Interest
7/1/2019
East BCC Coinvest II,LLC-Equity Interest
7/23/2019
Gale Aviation (Offshore) Co-Equity Interest
8/2/2019
Ventiv Topco, Inc.-Equity Interest
9/3/2019
TLC Holdco LP-Equity Interest
10/11/2019
Elk Parent Holdings, LP-Equity Interest
11/1/2019
Elk Parent Holdings, LP-Preferred equity
11/1/2019
Precision Ultimate Holdings, LLC-Equity Interest
11/6/2019
Elevator Holdco Inc.-Equity Interest
12/23/2019
(26) $4,606 of the total par amount for this security is at P+ 4.00%.
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(27) $71 of the total par amount for this security is at P+ 4.75%.
(28) Assets or a portion thereof are pledged as collateral for the BCSF Complete
Financing Solution Holdco LLC. See Note 6 "Debt".
(29) Assets or a portion thereof are pledged as collateral for the 2019-1
Issuer. See Note 6 "Debt".
(30) $747 of the total par amount for this security is at P+ 4.75%.
(31) $87 of the total par amount for this security is at P+ 4.00%.
(32) Loan includes interest rate floor of 1.50%.
(33) Asset has been placed on non-accrual
(34) $350 of the total par amount for this security is at P+ 3.75%.
(35) $540 of the total par amount for this security is at L+ 4.50%
(36) Cash equivalents include $31,434 of restricted cash.
See Notes to Consolidated Financial Statements
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BAIN CAPITAL SPECIALTY FINANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Note 1. Organization
Bain Capital Specialty Finance, Inc. (the "Company") was formed on October 5,
2015 and commenced investment operations on October 13, 2016. The Company has
elected to be treated and is regulated as a business development company (a
"BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). In
addition, for tax purposes the Company has elected to be treated and intends to
operate in a manner so as to continuously qualify as a regulated investment
company (a "RIC") under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). The Company is externally managed by BCSF Advisors, LP
(the "Advisor" or "BCSF Advisors"), our investment adviser that is registered
with the Securities and Exchange Commission (the "SEC") under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"). The Advisor also provides
the administrative services necessary for the Company to operate (in such
capacity, the "Administrator" or "BCSF Advisors").
On November 19, 2018, the Company closed its initial public offering (the
"IPO"), which was a Qualified IPO, issuing 7,500,000 shares of its common stock
at a public offering price of $20.25 per share. Shares of common stock of the
Company began trading on the New York Stock Exchange under the symbol "BCSF" on
November 15, 2018.
The Company's primary focus is capitalizing on opportunities within its
Advisor's Senior Direct Lending Strategy, which seeks to provide risk-adjusted
returns and current income to its stockholders by investing primarily in
middle-market companies with between $10.0 million and $150.0 million in EBITDA.
The Company focuses on senior investments with a first or second lien on
collateral and strong structures and documentation intended to protect the
lender. The Company generally seeks to retain voting control in respect of the
loans or particular classes of securities in which the Company invests through
maintaining affirmative voting positions or negotiating consent rights that
allow the Company to retain a blocking position. The Company may also invest in
mezzanine debt and other junior securities and in secondary purchases of assets
or portfolios, as described below. Investments are likely to include, among
other things, (i) senior first lien, stretch senior, senior second lien,
unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary
purchases of assets or portfolios that primarily consist of middle-market
corporate debt. The Company may also invest, from time to time, in equity
securities, distressed debt, debtor-in-possession loans, structured products,
structurally subordinate loans, investments with deferred interest features,
zero-coupon securities and defaulted securities.
Our operations comprise only a single reportable segment.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The Company's consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of America
("US GAAP"). The Company's consolidated financial statements and related
financial information have been prepared pursuant to the requirements for
reporting on Form 10-K and Regulation S-X. The Company has determined it meets
the definition of an investment company and follows the accounting and reporting
guidance in the Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") Topic 946-Financial Services- Investment
Companies. The functional currency of the Company is U.S. dollars and these
consolidated financial statements have been prepared in that currency. Certain
prior period information has been reclassified to conform to the current period
presentation and this had no effect on the Company's consolidated financial
position or the consolidated results of operations as previously reported.
Basis of Consolidation
The Company will generally consolidate any wholly, or substantially, owned
subsidiary when the design and purpose of the subsidiary is to act as an
extension of the Company's investment operations and to
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facilitate the execution of the Company's investment strategy. Accordingly, the Company consolidated the results of its subsidiaries BCSF I, LLC, BCSF II-C, LLC, BCSF CFSH, LLC, BCSF CFS, LLC, BCC Middle Market CLO 2018-1, LLC, and BCC Middle Market CLO 2019-1, LLC in its consolidated financial statements. All intercompany transactions and balances have been eliminated in consolidation. Since the Company is an investment company, portfolio investments held by the Company are not consolidated into the consolidated financial statements. The portfolio investments held by the Company (including its investments held by consolidated subsidiaries) are included on the consolidated statements of assets and liabilities as investments at fair value. Use of Estimates The preparation of the consolidated financial statements in conformity with US GAAP requires the Company 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 consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material. Valuation of Portfolio Investments Investments for which market quotations are readily available are typically valued at such market quotations. Market quotations are obtained from an independent pricing service, where available. If a price cannot be obtained from an independent pricing service or if the independent pricing service is not deemed to be current with the market, certain investments held by the Company will be valued on the basis of prices provided by principal market makers. Generally, investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value, subject at all times to the oversight and approval of the Board of Directors of the Company (the "Board"), based on, among other things, the input of the Advisor, the Company's audit committee of the Board (the "Audit Committee) and one or more independent third party valuation firms engaged by the Board. With respect to unquoted portfolio investments, the Company will value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will use the pricing indicated by the external event to corroborate and/or assist us in our valuation. 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 differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. With respect to investments for which market quotations are not readily available, the Advisor will undertake a multi-step valuation process, which includes among other things, the below: • The Company's quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Advisor responsible for the portfolio investment or by an independent valuation firm;
•
Preliminary valuation conclusions are then documented and discussed with the Company's senior management and the Advisor. Agreed upon valuation recommendations are presented to the Audit Committee;
•
The Audit Committee of the Board reviews the valuations presented and recommends values for each of the investments to the Board; and
•
The Board will discuss valuations and determine the fair value of each investment in good faith based upon, among other things, the input of the Advisor, independent valuation firms, where applicable, and the Audit Committee.
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In following this approach, the types of factors that are taken into account in
the fair value pricing of investments include, as relevant, but are not limited
to: comparison to publicly traded securities, including factors such as yield,
maturity and measures of credit quality; the enterprise value of a portfolio
company; the nature and realizable value of any collateral; the portfolio
company's ability to make payments and its earnings and discounted cash flows;
and the markets in which the portfolio company does business. In cases where an
independent valuation firm provides fair valuations for investments, the
independent valuation firm provides a fair valuation report, a description of
the methodology used to determine the fair value and their analysis and
calculations to support their conclusion.
The Company applies ASC Topic 820, Fair Value Measurement ("ASC 820"), which
establishes a framework for measuring fair value in accordance with US GAAP and
required disclosures of fair value measurements. The fair value of a financial
instrument is the amount that would be received in an orderly transaction
between market participants at the measurement date. The Company determines the
fair value of investments consistent with its valuation policy. The Company
discloses the fair value of its investments in a hierarchy which prioritizes and
ranks the level of market observability used in the determination of fair value.
In accordance with ASC 820, these levels are summarized below:
•
Level 1 - Valuations based on quoted prices (unadjusted) in active markets for
identical assets or liabilities at the measurement date.
•
Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
•
Level 3 - Valuations based on inputs that are unobservable and significant to the fair value measurement.
A financial instrument's level within the hierarchy is based on the lowest level
of any input that is significant to the fair value measurement. Valuations of
Level 2 investments are generally based on quotations received from pricing
services, dealers or brokers. Consideration is given to the source and nature of
the quotations and the relationship of recent market activity to the quotations
provided.
Transfers between levels, if any, are recognized at the beginning of the
reporting period in which the transfers occur. The Company evaluates the source
of inputs used in the determination of fair value, including any markets in
which the investments, or similar investments, are trading. When the fair value
of an investment is determined using inputs from a pricing service (or principal
market makers), the Company considers various criteria in determining whether
the investment should be classified as a Level 2 or Level 3 investment. Criteria
considered includes the pricing methodologies of the pricing services (or
principal market makers) to determine if the inputs to the valuation are
observable or unobservable, as well as the number of prices obtained and an
assessment of the quality of the prices obtained. The level of an investment
within the fair value hierarchy is based on the lowest level of any input that
is significant to the fair value measurement. However, the determination of what
constitutes "observable" requires significant judgment.
The fair value assigned to these investments is based upon available information
and may fluctuate from period to period. In addition, it does not necessarily
represent the amount that might ultimately be realized upon sale. Due to
inherent uncertainty of valuation, the estimated fair value of investments may
differ from the value that would have been used had a ready market for the
security existed, and the difference could be material.
Securities Transactions, Revenue Recognition and Expenses
The Company records its investment transactions on a trade date basis. The
Company measures realized gains or losses by the difference between the net
proceeds from the repayment or sale and the amortized cost basis of the
investment, using the specified identification method. Interest income, adjusted
for amortization of premium and accretion of discount, is recorded on an accrual
basis. Discount and premium to par value on investments acquired are accreted
and amortized, respectively, into interest income over the life of the
respective investment using the effective interest method. Commitment fees are
recorded on an accrual basis and recognized as interest income. Loan origination
fees, original issue discount and market discount or premium are capitalized and
amortized against or accreted into interest income using the effective interest
method or straight-line method, as applicable. For the Company's investments in
revolving bank
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loans, the cost basis of the investment purchased is adjusted for the cash
received for the discount on the total balance committed. The fair value is also
adjusted for price appreciation or depreciation on the unfunded portion. As a
result, the purchase of commitments not completely funded may result in a
negative value until it is offset by the future amounts called and funded. Upon
prepayment of a loan or debt security, any prepayment premium, unamortized
upfront loan origination fees and unamortized discount are recorded as interest
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. Distributions received
from an equity interest, limited liability company or a limited partnership
investment are evaluated to determine if the distribution should be recorded as
dividend income or a return of capital.
Certain investments may have contractual payment-in-kind ("PIK") interest or
dividends. PIK represents accrued interest or accumulated dividends that are
added to the loan principal of the investment on the respective interest or
dividend payment dates rather than being paid in cash and generally becomes due
at maturity or upon being called by the issuer. PIK is recorded as interest or
dividend income, as applicable. If at any point the Company believes PIK is not
expected to be realized, the investment generating PIK will be placed on
non-accrual status. Accrued PIK interest or dividends are generally reversed
through interest or dividend income, respectively, when an investment is placed
on non-accrual status.
Certain structuring fees and amendment fees are recorded as other income when
earned. Administrative agent fees received by the Company are recorded as other
income when the services are rendered.
Expenses are recorded on an accrual basis.
Non-Accrual Loans
Loans or debt securities are placed on non-accrual status when there is
reasonable doubt that principal or interest will be collected. Accrued interest
generally is reversed when a loan or debt security is placed on non-accrual
status. Interest payments received on non-accrual loans or debt securities may
be recognized as income or applied to principal depending upon management's
judgment. Non-accrual loans and debt securities are restored to accrual status
when past due principal and interest are paid and, in management's judgment,
principal and interest payments are likely to remain current. The Company may
make exceptions to this treatment if a loan has sufficient collateral value and
is in the process of collection. As of December 31, 2020 and December 31, 2019,
one and two loans have been placed on non-accrual status, respectively.
Distributions
Distributions to common stockholders are recorded on the record date. The amount
to be distributed, if any, is determined by the Board each quarter, and is
generally based upon the earnings estimated by the Advisor. Distributions from
net investment income and net realized capital gains are determined in
accordance with U.S. federal income tax regulations, which may differ from those
amounts determined in accordance with US GAAP. The Company may pay distributions
to its stockholders in a year in excess of its investment company taxable income
and net capital gain for that year and, accordingly, a portion of such
distributions may constitute a return of capital for U.S. federal income tax
purposes. This excess generally would be a tax-free return of capital in the
period and generally would reduce the stockholder's tax basis in its shares.
These book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent; they are charged or credited to paid-in
capital in excess of par, accumulated undistributed net investment income or
accumulated net realized gain (loss), as appropriate, in the period that the
differences arise. Temporary and permanent differences are primarily
attributable to differences in the tax treatment of certain loans and the tax
characterization of income and non-deductible expenses.
The Company intends to timely distribute to its stockholders substantially all
of its annual taxable income for each year, except that the Company may retain
certain net capital gains for reinvestment and, depending upon the level of the
Company's taxable income earned in a year, the Company may choose to
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carry forward taxable income for distribution in the following year and incur applicableU.S. federal excise tax. The specific tax characteristics of the Company's distributions will be reported to stockholders after the end of the calendar year. All distributions will be subject to available funds, and no assurance can be given that the Company will be able to declare such distributions in future periods. The Company distributes net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, the Company may decide in the future to retain such capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to stockholders. Dividend Reinvestment Plan The Company has adopted a dividend reinvestment plan that provides for the reinvestment of cash dividends and distributions. Prior to the IPO, stockholders who elected to "opt in" to the Company's dividend reinvestment plan had their cash dividends and distributions automatically reinvested in additional shares of the Company's common stock, rather than receiving cash dividends and distributions. Subsequent to the IPO, stockholders who do not "opt out" of the Company's dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company's common stock, rather than receiving cash dividends and distributions. Offering Costs Offering costs consist primarily of fees and expenses incurred in connection with the offering of shares, legal, printing and other costs associated with the preparation and filing of applicable registration statements. To the extent such expenses relate to equity offerings, these expenses are charged as a reduction of paid-in-capital upon each such offering. Cash, Restricted Cash, and Cash Equivalents Cash and cash equivalents consist of deposits held at custodian banks, and highly liquid investments, such as money market funds, with original maturities of three months or less. Cash and cash equivalents are carried at cost or amortized cost, which approximates fair value. The Company may deposit its cash and cash equivalents in financial institutions and, at certain times, such balances may exceed theFederal Deposit Insurance Corporation insurance limits. Cash equivalents are presented separately on the consolidated schedules of investments. Restricted cash is collected and held by the trustee who has been appointed as custodian of the assets securing certain of the Company's financing transactions. Foreign Currency Translation The accounting records of the Company are maintained inU.S. dollars. The fair values of foreign securities, foreign cash and other assets and liabilities denominated in foreign currency are translated toU.S. dollars based on the current exchange rates at the end of each business day. Income and expenses denominated in foreign currencies are translated at current exchange rates when accrued or incurred. Unrealized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates are included in the net change in unrealized appreciation (depreciation) on foreign currency translation on the consolidated statements of operations. Net realized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to changes in foreign currency exchange rates are included in net realized gain (loss) on foreign currency transactions on the consolidated statements of operations. The portion of both realized and unrealized gains and losses on investments that result from changes in foreign currency exchange rates is not separately disclosed, but is included in net realized gain (loss) on investments and net change in unrealized appreciation (depreciation) on investments, respectively, on the consolidated statements of operations. Forward Currency Exchange Contracts The Company may enter into forward currency exchange contracts to reduce the Company's exposure to foreign currency exchange rate fluctuations in the value of foreign currencies. A forward currency exchange 146
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contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The Company does not utilize hedge accounting and as such the Company recognizes the value of its derivatives at fair value on the consolidated statements of assets and liabilities with changes in the net unrealized appreciation (depreciation) on forward currency exchange contracts recorded on the consolidated statements of operations. Forward currency exchange contracts are valued using the prevailing forward currency exchange rate of the underlying currencies. Unrealized appreciation (depreciation) on forward currency exchange contracts are recorded on the consolidated statements of assets and liabilities by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Cash collateral maintained in accounts held by counterparties is included in collateral on forward currency exchange contracts on the consolidated statements of assets and liabilities. Notional amounts and the gross fair value of forward currency exchange contracts assets and liabilities are presented separately on the consolidated schedules of investments. Changes in net unrealized appreciation (depreciation) are recorded on the consolidated statements of operations in net change in unrealized appreciation (depreciation) on forward currency exchange contracts. Net realized gains and losses are recorded on the consolidated statements of operations in net realized gain (loss) on forward currency exchange contracts. Realized gains and losses on forward currency exchange contracts are determined using the difference between the fair market value of the forward currency exchange contract at the time it was opened and the fair market value at the time it was closed or covered. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. Deferred Financing Costs and Debt Issuance Costs The Company records costs related to issuance of revolving debt obligations as deferred financing costs. These costs are deferred and amortized using the straight-line method over the stated maturity life of the obligation. The Company records costs related to the issuance of term debt obligations as debt issuance costs. These costs are deferred and amortized using the effective interest method. These costs are presented as a reduction to the outstanding principal amount of the term debt obligations on the consolidated statements of assets and liabilities. Income Taxes The Company has elected to be treated forU.S. federal income tax purposes as a RIC under the Code. So long as the Company maintains its status as a RIC, it will generally not be subject to corporate-levelU.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually as dividends to its stockholders. As a result, any tax liability related to income earned and distributed by the Company represents obligations of the Company's stockholders and will not be reflected in the consolidated financial statements of the Company. The Company intends to comply with the applicable provisions of the Code pertaining to RICs and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the consolidated financial statements. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to stockholders through December 31, 2020 may include return of capital, however, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until the Company files our tax return for the tax year ending December 31, 2020. The character of income and gains that the Company distributes is determined in accordance with income tax regulations that may differ from GAAP. BCSF I, LLC; BCSF II-C, LLC; BCSF CFSH, LLC; BCSF CFS, LLC; BCC Middle Market CLO 2018-1, LLC; and BCC Middle Market CLO 2019-1, LLC are disregarded entities for tax purposes and are consolidated with the tax return of the Company. The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are "more-likely-than-not" to be sustained by the applicable tax authority. Tax positions not deemed to meet the "more-likely-than-not" threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes, if any, are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. Management has analyzed the Company's tax 147
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positions, and has concluded that no liability for unrecognized tax benefits related to uncertain tax positions on returns to be filed by the Company for all open tax years should be recorded. The Company identifies its major tax jurisdiction asthe United States , and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. As of December 31, 2020, the tax years that remain subject to examination are from 2017 forward. Recent Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022, at the Company's election. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company is currently evaluating the impact of adopting ASU 2020-04 on the Company's consolidated financial statements. Note 3. Investments The following table shows the composition of the investment portfolio, at amortized cost and fair value as of December 31, 2020 (with corresponding percentage of total portfolio investments): As of December 31, 2020 Percentage of Percentage of Amortized Cost Total Portfolio Fair Value Total Portfolio First Lien Senior Secured Loans $ 2,193,827 87.0% $ 2,164,910 87.1% Second Lien Senior Secured Loans 167,698 6.6 161,960 6.6 Equity Interests 131,491 5.2 119,905 4.8 Preferred Equity 29,723 1.2 37,713 1.5 Warrants - 0.0 - 0.0 Total $ 2,522,739 100.0% $ 2,484,488 100.0%
The following table shows the composition of the investment portfolio, at amortized cost and fair value as of December 31, 2019 (with corresponding percentage of total portfolio investments):
As of December 31, 2019
Percentage of Percentage of
Amortized Cost Total Portfolio Fair Value Total Portfolio
First Lien Senior Secured Loans $ 2,167,932 85.4% $ 2,165,844 85.7%
First Lien Last Out Loans 28,315 1.1 29,300 1.2
Second Lien Senior Secured Loans 187,565 7.4 175,670 7.0
Subordinated Debt 14,752 0.6 15,000 0.5
Corporate Bonds 22,412 0.9 17,508 0.7
Equity Interests 96,736 3.8 99,293 3.9
Preferred Equity 19,551 0.8 24,318 1.0
Warrants - 0.0 122 0.0
Total $ 2,537,263 100.0% $ 2,527,055 100.0%
The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of December 31, 2020 (with corresponding percentage of total portfolio investments):
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As of December 31, 2020
Percentage of Percentage of
Amortized Cost Total Portfolio Fair Value Total PortfolioUnited States $ 2,094,741 83.0% $ 2,055,861 82.7% United Kingdom 106,768 4.2 110,706 4.5 Cayman Islands 90,964 3.7 73,756 3.0 Luxembourg 51,840 2.1 56,010 2.3 Germany 38,773 1.5 43,085 1.7 Israel 34,414 1.4 35,068 1.4 Ireland 20,805 0.8 21,097 0.8 Jersey 17,819 0.7 19,206 0.8 Sweden 18,428 0.7 17,984 0.7 Australia 14,099 0.6 15,707 0.6 France 13,142 0.5 13,946 0.6 Netherlands 11,036 0.4 11,479 0.5 Canada 9,910 0.4 10,583 0.4 Total $ 2,522,739 100.0% $ 2,484,488 100.0%
The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of December 31, 2019 (with corresponding percentage of total portfolio investments):
As of December 31, 2019
Percentage of Percentage of
Amortized Cost Total Portfolio Fair Value Total Portfolio
United States $ 2,160,607 85.2% $ 2,146,830 85.0%
United Kingdom 123,327 4.9 126,455 5.0
Cayman Islands 57,007 2.2 57,773 2.3
Luxembourg 45,622 1.8 45,461 1.8
Israel 36,193 1.4 36,175 1.4
Germany 25,142 1.0 26,113 1.0
Ireland 20,486 0.8 20,485 0.8
Sweden 18,357 0.7 16,996 0.7
Australia 14,006 0.6 14,050 0.6
France 13,098 0.5 13,076 0.5
Jersey 12,144 0.5 12,763 0.5
Netherlands 11,274 0.4 10,878 0.4
Total $ 2,537,263 100.0% $ 2,527,055 100.0%
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The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 2020 (with corresponding percentage of total portfolio investments):
As of December 31, 2020
Percentage of Percentage of
Amortized Cost Total Portfolio Fair Value Total Portfolio
Aerospace & Defense $ 331,174 13.1% $ 296,553 11.9%
High Tech Industries 294,046 11.7 295,486 11.9
Healthcare & Pharmaceuticals 219,147 8.7 221,605 8.9
Capital Equipment 188,123 7.5 193,287 7.8
Consumer Goods: Non-Durable 190,216 7.5 189,229 7.5
Services: Business 181,037 7.1 175,560 7.1
Transportation: Cargo 118,320 4.7 118,352 4.8
Construction & Building 105,567 4.2 104,999 4.2
Services: Consumer 76,341 3.0 78,697 3.2
Wholesale 78,248 3.1 78,042 3.1
Chemicals, Plastics & Rubber 75,808 3.0 76,463 3.1
Energy: Oil & Gas 68,198 2.7 68,807 2.7
FIRE: Insurance (1) 65,017 2.6 67,125 2.7
Automotive 66,470 2.6 66,100 2.7
Transportation: Consumer 71,750 2.8 61,243 2.5
Consumer Goods: Durable 59,399 2.3 58,065 2.3
Hotel, Gaming & Leisure 52,389 2.1 49,893 2.0
Media: Diversified & Production 47,810 1.9 48,470 2.0
Media: Broadcasting & Subscription 43,299 1.7 45,036 1.8
Media: Advertising, Printing & Publishing 47,143 1.9 41,140 1.7
Retail 39,050 1.5 39,050 1.6
Telecommunications 21,680 0.9 21,543 0.9
Energy: Electricity 21,979 0.9 21,249 0.9
Beverage, Food & Tobacco 12,087 0.5 21,024 0.8
Banking 14,058 0.6 13,622 0.5
Containers, Packaging, & Glass 11,659 0.5 11,781 0.5
FIRE: Finance (1) 11,830 0.5 11,778 0.5
FIRE: Real Estate (1) 10,894 0.4 10,289 0.4
$ 2,522,739 100.0% $ 2,484,488 100.0%
(1)Finance, Insurance, and Real Estate ("FIRE").
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The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 2019 (with corresponding percentage of total portfolio investments):
As of December 31, 2019
Percentage of Percentage of
Amortized Cost TotalPortfolio Fair Value Total Portfolio High Tech Industries
$ 356,086 14.0% $ 356,073 14.1%
Aerospace & Defense 305,111 12.0 307,863 12.2
Healthcare & Pharmaceuticals 255,579 10.1 254,014 10.1
Consumer Goods: Non-Durable 195,602 7.7 196,653 7.8
Capital Equipment 183,618 7.2 186,913 7.4
Services: Business 165,286 6.5 165,862 6.5
Transportation: Cargo 116,074 4.6 116,237 4.6
Construction & Building 107,413 4.2 108,176 4.3
Wholesale 79,542 3.1 78,225 3.1
Energy: Oil & Gas 77,264 3.0 77,979 3.1
Automotive 66,522 2.6 67,374 2.7
Consumer Goods: Durable 63,712 2.5 63,394 2.5
Transportation: Consumer 62,473 2.5 61,662 2.3
Media: Advertising, Printing & Publishing 59,419 2.3 54,765 2.2
FIRE: Insurance (1) 52,367 2.1 54,086 2.1
Hotel, Gaming & Leisure 52,866 2.1 53,074 2.1
Media: Broadcasting & Subscription 43,165 1.7 44,247 1.8
Media: Diversified & Production 35,670 1.4 36,403 1.4
Retail 34,774 1.4 34,827 1.4
Chemicals, Plastics & Rubber 32,288 1.3 32,446 1.3
Services: Consumer 30,458 1.2 30,794 1.2
Banking 25,656 1.0 25,466 1.0
Energy: Electricity 22,172 0.9 22,134 0.9
Telecommunications 21,323 0.8 21,343 0.8
Beverage, Food & Tobacco 30,687 1.2 19,531 0.8
Environmental Industries 16,814 0.7 17,612 0.7
Containers, Packaging, & Glass 11,637 0.5 11,633 0.5
FIRE: Real Estate (1) 10,786 0.4 10,443 0.4
Forest Products & Paper 10,301 0.4 9,700 0.4
Utilities: Electric 12,598 0.6 8,126 0.3
Total $ 2,537,263 100.0% $ 2,527,055 100.0%
(1)Finance, Insurance, and Real Estate ("FIRE").
Antares Bain Capital Complete Financing Solution
Prior to April 30, 2019, the Company was party to a limited liability company
agreement with Antares Midco Inc. ("Antares") pursuant to which it invested in
ABC Complete Financing Solution LLC, which made investments through its
subsidiary, Antares Bain Capital Complete Financing Solution LLC (together with
ABC Complete Financing Solution LLC, "ABCS"). ABCS, an unconsolidated Delaware
limited liability company, was formed on September 27, 2017 and commenced
operations on November 29, 2017. ABCS'
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principal purpose was to make investments, primarily in senior secured
unitranche loans. The Company recorded its investment in ABCS at fair value.
Distributions of income received from ABCS, if any, were recorded as dividend
income from controlled affiliate investments in the consolidated statements of
operations. Distributions received from ABCS in excess of income earned at ABCS,
if any, were recorded as a return of capital and reduced the amortized cost of
controlled affiliate investments.
The Company and Antares, as members of ABCS, agreed to contribute capital up to
(subject to the terms of their agreement) $950.0 million in aggregate to
purchase equity interests in ABCS, with the Company and Antares contributing up
to $425.0 million and $525.0 million, respectively. Funding of such commitments
generally required the consent of both Antares Credit Opportunities Manager LLC
and the Advisor on behalf of Antares and the Company, respectively. ABCS was
capitalized with capital contributions from its members on a pro-rata basis
based on their maximum capital contributions as transactions were funded after
they had been approved.
Investment decisions of ABCS required the consent of both the Advisor and
Antares Credit Opportunities Manager LLC, as representatives of the Company and
Antares, respectively. Each of the Advisor and Antares sourced investments for
ABCS.
On April 30, 2019, the Company formed BCSF Complete Financing Solution Holdco,
LLC ("BCSF CFSH, LLC") and BCSF Complete Financing Solution, LLC ("BCSF
Unitranche" or "BCSF CFS, LLC"), wholly-owned, newly-formed, subsidiaries. The
Company received its proportionate share of all assets which represented 44.737%
of ABCS. The portfolio of investments that was distributed comprised of 25
senior secured unitranche loans with a fair value of $919.0 million and cash of
$3.2 million. The Company also assumed the obligation to fund outstanding
unfunded commitments of $31.4 million. In connection with the distribution, the
Company recognized a realized gain of $0.3 million. The Company is no longer a
member of ABCS. The assets the Company received from ABCS have been included in
the Company's consolidated financial statements and notes thereto.
In conjunction with the distribution from ABCS, on April 30, 2019, BCSF CFS, LLC
entered into a loan and security agreement (the "JPM Credit Agreement" or the
"JPM Credit Facility") as borrower, with JPMorgan Chase Bank, National
Association , as Administrative Agent, and Wells Fargo Bank, National Association
as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank.
On the date of the ABCS distribution, the Company had $577.5 million outstanding
on the JPM Credit Facility. See Note 6 for additional information on the JPM
Credit Facility.
Selected Statements of Operations Information
Below are selected statements of operations information for ABCS for the years
ended December 31, 2019 and December 31, 2018:
For the Year Ended For the Year Ended
December 31, 2019 (2) December 31, 2018
Interest income $53,494 $104,548
Fee income 217 1,201
Total revenues 53,711 105,749
Credit facility expenses (1) 22,008 45,635
Other fees and expenses 6,661 22,231
Total expenses 28,669 67,866
Net investment income 25,042 37,883
Net realized gains - -Net change in unrealized appreciation (depreciation) on investments
- -
Net increase in members' capital from operations $25,042 $37,883
(1)As of December 31, 2018, the ABCS Facility had $1,031.2 million of outstanding debt
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(2)
The ABCS distribution was effective April 30, 2019.
Note 4. Fair Value Measurements
Fair Value Disclosures
The following table presents fair value measurements of investments, by major
class, cash equivalents and derivatives as of December 31, 2020, according to
the fair value hierarchy:
Fair Value Measurements
Level 1 Level 2 Level 3 Total
Investments:
First Lien Senior Secured Loans $ - $ 213,760 $ 1,951,150 $ 2,164,910
Second Lien Senior Secured Loans - 21,619 140,341 161,960
Equity Interests - - 119,905 119,905
Preferred Equity - - 37,713 37,713
Warrants - - - -
Total Investments $ - $ 235,379 $ 2,249,109 $ 2,484,488
Cash equivalents $ 54,952 $ - $ - $ 54,952 Forward currency exchange contracts (liability) $ - $ 22,614 $ - $ 22,614
The following table presents fair value measurements of investments, by major
class, cash equivalents and derivatives as of December 31, 2019, according to
the fair value hierarchy:
Fair Value Measurements
Level 1 Level 2 Level 3 Total
Investments:
First Lien Senior Secured Loans $ - $ 176,223 $ 1,989,621 $ 2,165,844
First Lien Last Out Loans - - 29,300 29,300
Second Lien Senior Secured Loans - 51,643 124,027 175,670
Subordinated Debt - - 15,000 15,000
Corporate Bonds - 17,508 - 17,508
Equity Interests - - 99,293 99,293
Preferred Equity - - 24,318 24,318
Warrants - - 122 122
Total Investments $ - $ 245,374 $ 2,281,681 $ 2,527,055
Cash equivalents $ 66,965 $ - $ - $ 66,965
Forward currency exchange contracts (asset) $ - $ 1,034 $ - $ 1,034 Forward currency exchange contracts (liability) $ - $ 1,252 $ - $ 1,252
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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,
2020:
Second
First Lien Lien
Senior First Lien Senior
Secured Last Out Secured Subordinated Equity Preferred Total
Loans Loans Loans Debt Interest Equity Warrants Investments
Balance as of January 1, 2020 $ 1,989,621 $ 29,300 $ 124,027 $ 15,000 $ 99,293 $ 24,318 $ 122 $ 2,281,681 Purchases of investments and other adjustments to cost (1)
422,917 2,561 21,226 - 34,753 10,104 - 491,561 Paid-in-kind interest 7,978 402 - - - 68 - 8,448 Net accretion of discounts (amortization of premiums) 4,636 70 382 49 - - - 5,137 Proceeds from principal repayments and sales of investments (1) (386,350) (32,089) (4,420) (14,801) - - - (437,660)
Net change in unrealized appreciation (depreciation) on investments
(20,650) (984) (1,628) (248) (14,141) 3,223 (122) (34,550) Net realized gains (losses) on investments 62 740 (4,115) - - - - (3,313) Transfers out of Level 3 (77,105) - (2,735) - - - - (79,840) Transfers to Level 3 10,041 - 7,604 - - - - 17,645 Balance as of December 31, 2020 $ 1,951,150 $ - $ 140,341 $ - $ 119,905 $ 37,713 $ - $ 2,249,109 Change in unrealized appreciation (depreciation) attributable to investments still held at December 31, 2020 $ (18,223) $ - $ (2,528) $ - $ (14,141) $ 3,223 $ (122) $ (31,791) (1)
Includes reorganizations and restructuring of investments
Transfers between levels, if any, are recognized at the beginning of the quarter
in which transfers occur. For the year ended December 31, 2020, transfers from
Level 2 to Level 3 were primarily due to decreased price transparency. For the
year ended December 31, 2020, transfers from Level 3 to Level 2 were primarily
due to increased price transparency.
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,
2019:
Second
First Lien Lien
Senior First Lien Senior
Secured Last Out Secured Subordinated Investment Equity Preferred Total
Loans Loans Loans Debt Vehicles Interest Equity Warrants Investments
Balance as of January 1, 2019 $ 439,487 $ 27,487 $ 145,555 $ 39,625 $
279,363 $ 26,521 $ 2,807 $ - $
960,845
Purchases of investments and other adjustments to cost 987,615 1,137 50,795 - 64,741 73,279 17,860 -
1,195,427
Distribution to Company from ABCS 918,870 - - - (346,329) - - - 572,541
Paid-in-kind interest 55 329 - - - - 15 - 399
Net accretion of discounts
(amortization of premiums) 2,875 101 285 41 - - - - 3,302
Proceeds from principal repayments and sales of investments (410,882) (575) (62,244) (25,000) 1,432 (814) (878) - (498,961)
Net change in unrealized
appreciation (depreciation)
on investments 7,187 822 584 334 528 112 4,514 122 14,203
Net realized gains (losses) on investments 49 (1) 280 - 265 195 - - 788
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Second
First Lien Lien
Senior First Lien Senior
Secured Last Out Secured Subordinated Investment Equity Preferred Total
Loans Loans Loans Debt Vehicles Interest Equity Warrants Investments
Transfers out of Level 3 (72,845) - (17,384) - - - - - (90,229)
Transfers to Level 3 117,210 - 6,156 - - - - - 123,366Balance as of December 31, 2019 $ 1,989,621 $ 29,300 $ 124,027
$ 15,000 $ - $ 99,293 $ 24,318 $ 122 $ 2,281,681
Change in unrealized
appreciation (depreciation)
attributable to investments
still held at December 31,
2019 $ 6,387 $ 822
$ 60 $ 334 $ - $ 238 $ 4,510 $ 122 $ 12,473
Transfers between levels, if any, are recognized at the beginning of the quarter
in which transfers occur. For the year ended December 31, 2019, transfers from
Level 2 to Level 3 were primarily due to decreased price transparency. For the
year ended December 31, 2019, transfers from Level 3 to Level 2 were primarily
due to increased price transparency.
Significant Unobservable Inputs
ASC 820 requires disclosure of quantitative information about the significant
unobservable inputs used in the valuation of assets and liabilities classified
as Level 3 within the fair value hierarchy. Disclosure of this information is
not required in circumstances where a valuation (unadjusted) is obtained from a
third-party pricing service and the information regarding the unobservable
inputs is not reasonably available to the Company and as such, the disclosures
provided below exclude those investments valued in that manner.
The valuation techniques and significant unobservable inputs used in Level 3
fair value measurements of assets as of December 31, 2020 were as follows:
As of December 31, 2020
Fair Value of Significant Range of Significant
Level 3 Valuation Unobservable Unobservable Inputs
Assets (1) Technique Inputs (Weighted Average (2))First Lien Senior Secured Loans $ 1,730,334 Discounted Cash Flows Comparative Yields 4.7%-15.2% (7.7)% First Lien Senior Secured Loans
54,669 Comparable Company Multiple EBITDA Multiple 7.5x-7.5x (7.5x)
Probability weighting
of alternative outcomes 33.3%-66.7%
First Lien Senior Secured Loans 18,801 Discounted Cash Flows Discount Rate 10.0%-10.0% (10.0)%
First Lien Senior Secured Loans 17,907 Collateral Analysis Recovery Rate 100%
Second Lien Senior Secured Loans 103,764 Discounted Cash Flows Comparative Yields 8.3%-15.7% (10.5)%
Equity Interests 33,019 Comparable Company Multiple EBITDA Multiple 7.0x-17.0x (10.0x)
Equity Interests 78,780 Discounted Cash Flows Discount Rate 10.0%-16.4% (15.4)%
Preferred Equity 27,474 Comparable Company Multiple EBITDA Multiple 7.8x-13.3x (11.5x)
Preferred Equity 10,239 Discounted Cash Flows Discount Rate 10.0%
Warrants - Comparable Company Multiple EBITDA Multiple 7.8x
Total investments $ 2,074,987
(1)
Included within the Level 3 assets of $2,249,109 is an amount of $174,122 for
which the Advisor did not develop the unobservable inputs for the determination
of fair value (examples include single source quotation and prior or pending
transactions).
(2)
Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category.
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The Company used the income approach and market approach to determine the fair
value of certain Level 3 assets as of December 31, 2020. The significant
unobservable inputs used in the income approach are the comparative yield and
discount rate. The comparative yield and discount rate are used to discount the
estimated future cash flows expected to be received from the underlying
investment. An increase/decrease in the comparative yield or discount rate would
result in a decrease/increase, respectively, in the fair value. The significant
unobservable inputs used in the market approach are the EBITDA multiple and the
recovery rate. The multiple is used to estimate the enterprise value of the
underlying investment. An increase/decrease in the multiple would result in an
increase/decrease, respectively, in the fair value. The recovery rate represents
the extent to which proceeds can be recovered. An increase/decrease in the
recovery rate would result in an increase/decrease, respectively, in the fair
value.
The valuation techniques and significant unobservable inputs used in Level 3
fair value measurements of assets as of December 31, 2019 were as follows:
As of December 31, 2019
Fair Value of Significant Range of Significant
Level 3 Valuation Unobservable Unobservable Inputs
Assets (1) Technique Inputs (Weighted Average (2))First Lien Senior Secured Loans $ 1,475,477 Discounted Cash Flows Comparative Yields 4.4%-15.8% (7.7)% First Lien Senior Secured Loans
6,363 Discounted Cash Flows Discount Rate 10.0%-10.0% (10.0)% First Lien Senior Secured Loans
23,181 Collateral Analysis Recovery Rate 100%
First Lien Last Out 29,300 Discounted Cash Flows Comparative Yields 7.1%-12.5% (10.3)% Second Lien Senior Secured Loans
115,014 Discounted Cash Flows Comparative Yields 6.1%-17.0% (10.4)% Subordinated Debt
15,000 Discounted Cash Flows Comparative Yields 15.3%
Equity Interests 21,495 Comparable Company Multiple EBITDA Multiple 6.8x-17.5x (9.8x) Equity Interests
24,514 Discounted Cash Flows Discount Rate 10.0%-18.8% (13.4)%
Preferred Equity 23,116 Comparable Company Multiple EBITDA Multiple 7.3x-12.5x (11.0x)
Warrants 122 Comparable Company Multiple EBITDA Multiple 7.3x
Total investments $ 1,733,582
(1)
Included within the Level 3 assets of $2,281,681 is an amount of $548,099 for
which the Advisor did not develop the unobservable inputs for the determination
of fair value (examples include single source quotation and prior or pending
transactions).
(2)
Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category.
The Company used the income approach and market approach to determine the fair
value of certain Level 3 assets as of December 31, 2019. The significant
unobservable inputs used in the income approach are the comparative yield and
discount rate. The comparative yield and discount rate are used to discount the
estimated future cash flows expected to be received from the underlying
investment. An increase/decrease in the comparative yield or discount rate would
result in a decrease/increase, respectively, in the fair value. The significant
unobservable input used in the market approach is the EBITDA multiple. The
multiple is used to estimate the enterprise value of the underlying investment.
An increase/decrease in the multiple would result in an increase/decrease,
respectively, in the fair value. The recovery rate represents the extent to
which proceeds can be recovered. An increase/decrease in the recovery rate would
result in an increase/decrease, respectively, in the fair value.
The fair value of the BCSF Revolving Credit Facility (as defined in Note 6),
which is categorized as Level 3 within the fair value hierarchy as of
December 31, 2020 and December 31, 2019, approximates the carrying value of such
facility. The fair values of the 2018-1 Notes (as defined in Note 6), which are
categorized as Level 3 within the fair value hierarchy as of December 31, 2020
and December 31, 2019, approximate the carrying value of such notes. The fair
value of the JPM Credit Facility (as defined in Note 6), which is categorized as
Level 3 within the fair value hierarchy as of December 31, 2020 and December 31,
2019, approximates the carrying value of such facility. The fair values of the
2019-1 Debt (as defined in Note 6), which are categorized as Level 3 within the
fair value hierarchy as of December 31, 2020 and December 31,
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2019, approximate the carrying value of such debt. The fair values of the 2023
Notes (as defined in Note 6), which are categorized as Level 3 within the fair
value hierarchy as of December 31, 2020, approximate the carrying value of such
notes.
Note 5. Related Party Transactions
Investment Advisory Agreement
The Company entered into the first amended and restated investment advisory
agreement as of November 14, 2018 (the "Investment Advisory Agreement") with the
Advisor, pursuant to which the Advisor manages the Company's investment program
and related activities. On November 28, 2018, the Board, including a majority of
the Independent Directors, approved a second amended and restated advisory
agreement (the "Amended Advisory Agreement") between the Company and BCSF
Advisors, LP ("the Advisor"). On February 1, 2019, Shareholders approved the
Amended Advisory Agreement which replaced the existing Investment Advisory
Agreement.
Base Management Fee
The Company pays the Advisor a base management fee (the "Base Management Fee"),
accrued and payable quarterly in arrears. The Base Management Fee is calculated
at an annual rate of 1.5% (0.375% per quarter) of the average value of the
Company's gross assets (excluding cash and cash equivalents, but including
assets purchased with borrowed amounts) at the end of each of the two most
recently completed calendar quarters. Such amount shall be appropriately
adjusted (based on the actual number of days elapsed relative to the total
number of days in such calendar quarter) for any share issuance or repurchases
by the Company during a calendar quarter. The Base Management Fee for any
partial quarter will be appropriately prorated. Effective February 1, 2019, the
base management fee has been revised to a tiered management fee structure so
that the base management fee of 1.5% (0.375% per quarter) of the average value
of the Company's gross assets (excluding cash and cash equivalents, but
including assets purchased with borrowed amounts) will continue to apply to
assets held at an asset coverage ratio down to 200%, but a lower base management
fee of 1.0% (0.25% per quarter) of the average value of the Company's gross
assets (excluding cash and cash equivalents, but including assets purchased with
borrowed amounts) will apply to any amount of assets attributable to leverage
decreasing the Company's asset coverage ratio below 200%.
The Advisor, however, contractually waived its right to receive the Base
Management Fee in excess of 0.75% of the aggregate gross assets excluding cash
(including capital drawn to pay the Company's expenses) during any period prior
to the IPO. Additionally, for the period from the date of the IPO through
December 31, 2018, the Advisor voluntarily waived its right to receive the Base
Management Fee in excess of 0.75%. The Advisor was not permitted to recoup any
waived amounts. In certain previous filings, management fees were presented on a
net basis.
For the years ended December 31, 2020, 2019, and 2018 Management fees were
$35.2 million, $32.7 million, and $17.5 million, respectively. For the year
ended December 31, 2020, $0.0 million was contractually waived and $2.7 million
was voluntarily waived. For the year ended December 31, 2019, $0.0 million was
contractually waived and $8.2 million was voluntarily waived. For the year ended
December 31, 2018, $7.3 million was contractually waived and $1.5 million was
voluntarily waived
As of December 31, 2020 and December 31, 2019, $6.3 million and $7.3 million
remained payable, respectively.
Incentive Fee
The incentive fee consists of two parts that are determined independently of
each other such that one component may be payable even if the other is not.
The first part, the Incentive Fee based on income (the "Income Fee"), is
calculated and payable quarterly in arrears as detailed below.
The second part, the capital gains incentive fee, is determined and payable in
arrears as detailed below.
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Incentive Fee on Pre-Incentive Fee Net Investment Income
Pre-incentive fee net investment income means interest income, dividend income
and any other income (including any other fees such as commitment, origination,
structuring, diligence and consulting fees or other fees that the Company
receives from portfolio companies but excluding fees for providing managerial
assistance) accrued during the calendar quarter, minus operating expenses for
the quarter (including the Base Management Fee, any expenses payable under the
Administration Agreement, and any interest expense and dividends paid on any
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 market discount, original issue discount ("OID"), debt
instruments with PIK interest, preferred stock with PIK dividends 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 or
unrealized capital gains or losses or unrealized capital appreciation or
depreciation. Because of the structure of the incentive fee, it is possible that
the Company may pay an incentive fee in a quarter where the Company incurs a
loss. For example, if the Company receives pre-incentive fee net investment
income in excess of the Hurdle rate for a quarter, the Company will pay the
applicable incentive fee even if the Company has incurred a loss in that quarter
due to realized and unrealized capital losses.
Prior to the calendar quarter that commenced on January 1, 2019 the incentive on
income was calculated as follows:
(i)
15.0% of the pre-incentive fee net investment income for the current quarter
prior to the IPO; or
(ii)
17.5% of the pre-incentive fee net income for the current quarter after the IPO; and
(i)
15.0% of all remaining pre-incentive fee net investment income above the "catch-up" prior to the IPO, or
(ii)
17.5% of all remaining pre-incentive fee net investment income above the "catch-up" after the IPO.
Beginning with the calendar quarter that commenced on January 1, 2019, the incentive fee based on income is calculated and payable quarterly in arrears based on the aggregate pre-incentive fee net investment income in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commenced on or after January 1, 2019 (or the appropriate portion thereof in the case of any of the Company's first eleven calendar quarters that commence on or after January 1, 2019) (in either case, the "Trailing Twelve Quarters"). This calculation is referred to as the "Three-Year Lookback." With respect to any calendar quarter that commenced on or after January 1, 2019, pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters is compared to a "Hurdle Amount" equal to the product of (i) the hurdle rate of 1.5% per quarter (6% annualized) and (ii) the sum of our net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The Hurdle Amount will be calculated after making appropriate adjustments to our NAV at the beginning of each applicable calendar quarter for our subscriptions (which shall include all issuances by us of shares of our Common Stock, including issuances pursuant to the Company's dividend reinvestment plan) and distributions during the applicable calendar quarter. Commencing on January 1, 2019, the quarterly incentive fee based on income is calculated, subject to the IncentiveFee Cap (as defined below), based on the amount by which (A) aggregate pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters exceeds (B) the Hurdle Amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the "Excess Income Amount." The incentive fee based on income that is paid to the Advisor in respect of a particular calendar quarter will equal the Excess Income Amount less the aggregate incentive fees based on income that were paid to the Advisor in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters. The incentive fee based on income for each calendar quarter is determined as follows: 158
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(i)
No incentive fee based on income is payable to the Advisor for any calendar quarter for which there is no Excess Income Amount;
(ii)
100% of the aggregate pre-incentive fee net investment income in respect of the Trailing Twelve Quarters with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Amount, but is less than or equal to an amount, which the Company refers to as the "Catch-up Amount," determined as the sum of 1.8182% multiplied by our NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters; and
(iii)
17.5% of the aggregate pre-incentive fee net investment income in respect of the Trailing Twelve Quarters that exceeds the Catch-up Amount.
IncentiveFee Cap With respect to any calendar quarter that commences on or after January 1, 2019, the incentive fee based on income is subject to a cap (the "IncentiveFee Cap "). The IncentiveFee Cap in respect of any calendar quarter is an amount equal to 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters less the aggregate incentive fees based on income that were paid to the Advisor in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters. "Cumulative Net Return" during the relevant Trailing Twelve Quarters means (x) the pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters less (y) any Net Capital Loss, if any, in respect of the relevant Trailing Twelve Quarters. If, in any quarter, the IncentiveFee Cap is zero or a negative value, the Company will pay no incentive fee based on income to the Advisor in respect of that quarter. If, in any quarter, the IncentiveFee Cap for such quarter is a positive value but is less than the incentive fee based on income that is payable to the Advisor for such quarter calculated as described above, the Company will pay an incentive fee based on income to the Advisor equal to the IncentiveFee Cap in respect of such quarter. If, in any quarter, the IncentiveFee Cap for such quarter is equal to or greater than the incentive fee based on income that is payable to the Advisor for such quarter calculated as described above, the Company will pay an incentive fee based on income to the Advisor equal to the incentive fee calculated as described above for such quarter without regard to the IncentiveFee Cap . "Net Capital Loss" in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in respect of such period and (ii) aggregate capital gains, whether realized or unrealized, in respect of such period. For the years ended December 31, 2020, 2019 and 2018 the Company incurred $4.5 million, $17.4 million and $9.7 million, respectively, of income incentive fees (before waivers), which are included in incentive fees on the consolidated statements of operations. The Advisor has voluntarily waived $0.7 million, $2.7 million and $1.9 million of the income incentive fees earned by the Advisor during the years ended December 31, 2020, 2019, and 2018, respectively. Such income incentive fee waiver is irrevocable and such waived income incentive fees will not be subject to recoupment in future periods. This income incentive fee waiver does not impact any income incentive fees earned by the Advisor in future periods. As a result of the income incentive fee waivers, the Company incurred $3.8 million, $14.7 million and $7.8 million of income incentive fees (after waivers) for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020 and December 31, 2019, there was $3.8 million and $4.5 million, respectively, related to the income incentive fee accrued in incentive fee payable on the consolidated statements of assets and liabilities. On October 11, 2018, the Board approved, subject to completion of the IPO, the Investment Advisory Agreement. Beginning with the calendar quarter that commenced on January 1, 2019, this Investment Advisory Agreement incorporates (i) a three-year lookback provision and (ii) a cap on quarterly income incentive fee payments based on net realized or unrealized capital loss, if any, during the applicable three-year lookback period. The Amended Advisory Agreement approved by Stockholders on February 1, 2019 contains the same provisions. 159
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Annual Incentive Fee Based on Capital Gains
The second part of the incentive fee is a capital gains incentive fee that will
be determined and payable in arrears in cash as of the end of each fiscal year
(or upon termination of the Amended Advisory Agreement, as of the termination
date), and equals (i) 15% of our realized capital gains as of the end of the
fiscal year prior to the IPO, and (ii) 17.5% of our realized capital gains as of
the end of the fiscal year after the IPO. In determining the capital gains
incentive fee payable to the Advisor, the Company calculates the cumulative
aggregate realized capital gains and cumulative aggregate realized capital
losses since our inception, and the aggregate unrealized capital depreciation as
of the date of the calculation, as applicable, with respect to each of the
investments in our portfolio. For this purpose, cumulative aggregate realized
capital gains, if any, equals the sum of the differences between the net sales
price of each investment, when sold, and the cost of such investment. Cumulative
aggregate realized capital losses equals the sum of the amounts by which the net
sales price of each investment, when sold, is less than the cost of such
investment. Aggregate unrealized capital depreciation equals the sum of the
difference, if negative, between the valuation of each investment as of the
applicable calculation date and the cost of such investment. At the end of the
applicable year, the amount of capital gains that serves as the basis for our
calculation of the capital gains incentive fee equals the cumulative aggregate
realized capital gains less cumulative aggregate realized capital losses, less
aggregate unrealized capital depreciation, with respect to our portfolio of
investments. If this number is positive at the end of such year, then the
capital gains incentive fee for such year will equal 15% before the IPO or 17.5%
after the IPO, as applicable, of such amount, less the aggregate amount of any
capital gains incentive fees paid in respect of our portfolio in all
prior years.
Because the IPO occurred on a date other than the first day of a fiscal year, a
capital gains incentive fee was calculated as of the day before the IPO, with
such capital gains incentive fee paid to the Advisor following the end of the
fiscal year in which the IPO occurred. For the avoidance of doubt, such capital
gains incentive fee was equal to 15% of the Company's realized capital gains on
a cumulative basis from inception through the day before the IPO, computed net
of all realized capital losses and unrealized capital depreciation on a
cumulative basis, less the aggregate amount of any previously paid capital gains
incentive fees. Following the IPO, solely for the purposes of calculating the
capital gains incentive fee, the Company will be deemed to have previously paid
capital gains incentive fees prior to the IPO equal to the product obtained by
multiplying (a) the actual aggregate amount of previously paid capital gains
incentive fees for all periods prior to the IPO by (b) the percentage obtained
by dividing (x) 17.5% by (y) 15%. In the event that the Amended Advisory
Agreement shall terminate as of a date that is not a fiscal year end, the
termination date shall be treated as though it were a fiscal year end for
purposes of calculating and paying a capital gains incentive fee.
There was no capital gains incentive fee payable to the Advisor under the
Amended Advisory Agreement as of December 31, 2020 and December 31, 2019.
US GAAP requires that the incentive fee accrual consider the cumulative
aggregate unrealized capital appreciation of investments or other financial
instruments in the calculation, as an incentive fee would be payable if such
unrealized capital appreciation were realized, even though such unrealized
capital appreciation is not permitted to be considered in calculating the fee
actually payable under the Amended Advisory Agreement ("GAAP Incentive Fee").
There can be no assurance that such unrealized appreciation will be realized in
the future. Accordingly, such fee, as calculated and accrued, would not
necessarily be payable under the Amended Advisory Agreement, and may never be
paid based upon the computation of incentive fees in subsequent period.
For the year ended December 31, 2020, the Company accrued $0.0 million of
incentive fees related to the GAAP Incentive Fee, which is included in incentive
fees on the consolidated statements of operations. For the year ended
December 31, 2019, the Company accrued $0.0 million of incentive fees related to
the GAAP Incentive Fee which is included in incentive fee on the consolidated
statements of operations. For the year ended December 31, 2018, there was a
reduction of $1.0 million of incentive fees related to the GAAP Incentive Fee
which is included in incentive fee on the consolidated statements of operations.
As of December 31, 2020 and December 31, 2019, there was $0.0 million and
$0.0 million related to the GAAP Incentive Fee accrued in incentive fee payable
on the consolidated statements of assets and liabilities.
Administration Agreement
The Company has entered into an administration agreement (the "Administration
Agreement") with the advisor (in such capacity, the "Administrator"), pursuant
to which the Administrator will provide the
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administrative services necessary for us to operate, and the Company will utilize the Administrator's office facilities, equipment and recordkeeping services. Pursuant to the Administration Agreement, the Administrator has agreed to oversee our public reporting requirements and tax reporting and monitor our expenses and the performance of professional services rendered to us by others. The Administrator has also hired a sub-administrator to assist in the provision of administrative services. The Company will reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to the business and affairs of the Company, and will be subject to oversight by the Board. The Company incurred expenses related to the Administrator of $0.0 million, $0.8 million and $0.0 million for the years ended December 31, 2020, 2019 and 2018, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. As of December 31, 2020, and December 31, 2019, respectively, there were no outstanding expenses related to the Administrator that were payable and included in "accounts payable and accrued expenses" in the consolidated statements of assets and liabilities. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. The Company incurred expenses related to the sub-administrator of $0.5 million, $0.6 million and 0.8 million for the years ended December 31, 2020, 2019 and 2018, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Administrator will not seek reimbursement in the event that any such reimbursements would cause any distributions to our stockholders to constitute a return of capital. In addition, the Administrator is permitted to delegate its duties under the Administration Agreement to affiliates or third parties and the Company will reimburse the expenses of these parties incurred and paid by the Advisor on our behalf. Resource Sharing Agreement The Company's investment activities are managed by the Advisor, an investment adviser that is registered with theSEC under the Advisers Act. The Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. The Advisor has entered into a Resource Sharing Agreement (the "Resource Sharing Agreement") withBain Capital Credit , LP ("Bain Capital Credit"), pursuant to whichBain Capital Credit provides the Advisor with experienced investment professionals (including the members of the Advisor's Credit Committee) and access to the resources ofBain Capital Credit so as to enable the Advisor to fulfill its obligations under the Amended Advisory Agreement. Through the Resource Sharing Agreement, the Advisor intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience ofBain Capital Credit's investment professionals. There can be no assurance thatBain Capital Credit will perform its obligations under the Resource Sharing Agreement. The Resource Sharing Agreement may be terminated by either party on 60 days' notice, which if terminated may have a material adverse consequence on the Company's operations. Co-investments The Company will invest alongside our affiliates, subject to compliance with applicable regulations and our allocation procedures. Certain types of negotiated co-investments will be made only in accordance with the terms of the exemptive order the Company received from theSEC initially on August 23, 2016, as amended on March 23, 2018 (the "Order"). Under the terms of the Order, a "required majority" (as defined in Section 57(o) of the 1940 Act) of our independent directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching 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 Board's approved criteria. In certain situations where co-investment with one or 161
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more funds managed by the Advisor or its affiliates is not covered by the Order,
the personnel of the Advisor or its affiliates will need to decide which funds
will proceed with the investment. Such personnel will make these determinations
based on policies and procedures, which are designed to reasonably ensure that
investment opportunities are allocated fairly and equitably among affiliated
funds over time and in a manner that is consistent with applicable laws, rules
and regulations.
Revolving Advisor Loan
On March 27, 2020, the Company entered into an unsecured revolving loan
agreement (the "Revolving Advisor Loan") with BCSF Advisors, LP, the investment
adviser of the Company. The Revolving Advisor Loan has a maximum credit limit of
$50.0 million and a maturity date of March 27, 2023. The Revolving Advisor Loan
accrues interest at the Applicable Federal Rate from the date of such loan until
the loan is repaid in full. Please see Note 6 for additional details.
Related Party Commitments
Prior to the IPO, the Advisor made commitments of $10.8 million to the Company
as of December 31, 2018, of which $7.8 million had been called by the Company as
of December 31, 2018. As of December 31, 2020 and December 31, 2019, the Advisor
held 487,574.03 and 389,695.20 shares of the Company's common stock,
respectively. An affiliate of the Advisor is the investment manager to certain
pooled investment vehicles which are investors in the Company. Collectively,
these investors had made commitments to the Company of $555.3 million as of
December 31, 2018 of which $388.7 million, had been called by the Company. These
investors held 12,875,920.66 and 9,539,043.66 shares of the Company at
December 31, 2020 and December 31, 2019, respectively.
All outstanding commitments were cancelled due the completion of the IPO on
November 15, 2018.
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Non-Controlled/Affiliate and Controlled Affiliate Investments Transactions during the year ended December 31, 2020 in which the issuer was either a non-controlled Affiliated Person, as defined in the 1940 Act or an Affiliated Person that the Company is deemed to Control are as follows:
Fair Value Change in Fair Value Dividend
as of Unrealized Realized as of and
December 31, Gross Gross Gains Gains December 31, Interest Other
Portfolio Company 2019 Additions Reductions (Losses) (Losses) 2020 Income Income
Non-Controlled/affiliate investment
ADT Pizza, LLC, Equity Interest (1) $ 6,720 $ - $ - $ 9,198
$ - $ 15,918 $ - $ -
- - - - - - - -
Blackbrush Oil & Gas, L.P. Preferred Equity (1) - 10,104 - 135 - 10,239 - -
Blackbrush Oil & Gas, L.P. First Lien Senior Secured Loan - 12,089 - - - 12,089 321 -
Direct Travel, Inc. First Lien Senior Secured Loan - 4,404 - - - 4,404 14 -
Direct Travel, Inc. Equity Interest(1) - - - - - - - -
- 3,100 - (512) - 2,588 73 -
- 1,572 - (259) - 1,313 37 -
Direct Travel, Inc. First Lien Senior Secured Loan - 52,948 - (8,736) - 44,212 1,236 -
- 1,950 - - - 1,950 28 -
Direct Travel, Inc. First Lien Senior Secured Loan - 202 - - - 202 157 202
Total Non-Controlled/affiliate investment $ 6,720 $ 86,369 $ - $ (174) $ - $ 92,915 $ 1,866 $ 202 Controlled affiliate investment ACC Holdco, LLC, Preferred Equity
$ 10,828 $ - $ - $ -
$ - $ 10,828 $ 868 $ -
27,161 121 (274) (524) - 26,484 2,290 4
BCC Jetstream Holdings Aviation (On II), LLC, Equity Interest 1,869 - - (1,240) - 629 100 -
BCC Jetstream Holdings Aviation (On II), LLC, First Lien Senior Secured Loan
6,363 349 - - - 6,712 634 -
BCC Jetstream Holdings Aviation (Off I), LLC, Equity Interest 13,091 - - (1,388) - 11,703 1,068 -
Gale Aviation (Offshore) Co, Equity Interest 57,773 26,648 - (17,973) - 66,448 6,500 -
Lightning Holdings Equity Interest - 7,308 - - - 7,308 - -
Total Controlled affiliate investment $ 117,085 $ 34,426 $ (274) $ (21,125) $ - $ 130,112 $ 11,460 $ 4
Total $ 123,805 $ 120,795 $ (274) $ (21,299) $ - $ 223,027 $ 13,326 $ 206
(1) Non-income producing.
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Transactions during the year ended December 31, 2019 in which the issuer was
either an Affiliated Person or an Affiliated Person that the Company is deemed
to Control are as follows:
Fair Value
Fair Value Change in as of Dividend
as of Unrealized Realized December and
December 31, Gross Gross Gains Gains 31, Interest Other
Portfolio Company 2018 Additions Reductions (Losses) (Losses) 2019 Income Income
Non-Controlled/affiliate investment
ADT Pizza, LLC, Equity Interest (1) $ 6,720 $ - $ - $ - $ - $ 6,720 $ - $ - Total Non-Controlled/affiliate investment
$ 6,720 $ - $ - $ - $ - $ 6,720 $ - $ - Controlled affiliate investment ACC Holdco, LLC, Preferred Equity
$ - $ 11,707 $ (882) $ 3
$ - $ 10,828 $ 955 $ 4
- 26,653 (137) 645 - 27,161 1,266 -
Antares Bain Capital Complete Financing Solution LLC, Investment Vehicle
279,363 1,432 (281,589) 529 265 - 13,875
BCC Jetstream Holdings Aviation (On II), LLC, Equity Interest 1,243 384 - 242 - 1,869 107 -
BCC Jetstream Holdings Aviation (On II), LLC, First Lien Senior Secured Loan
4,163 2,219 (19) - - 6,363 543 -
BCC Jetstream Holdings Aviation (Off I), LLC, Equity Interest 13,479 - - (388) - 13,091 1,115 -
Gale Aviation (Offshore) Co, Equity Interest - 57,626 (617) 764 - 57,773 627 -
Total Controlled affiliate investment $ 298,248 $ 100,021 $ (283,244) $ 1,795 $ 265 $ 117,085 $ 18,488 $ 4
Total $ 304,968 $ 100,021 $ (283,244) $ 1,795 $ 265 $ 123,805 $ 18,488 $ 4
(1) Non-income producing.
Note 6. Debt
In accordance with applicable SEC staff guidance and interpretations, as a BDC,
with certain exceptions, effective February 2, 2019, the Company is permitted to
borrow amounts such that its asset coverage ratio is at least 150% after such
borrowing (if certain requirements are met), rather than 200%, as previously
required. As of December 31, 2020 and December 31, 2019, the Company's asset
coverage ratio based on aggregated borrowings outstanding was 173% and 164%,
respectively.
The Company's outstanding borrowings as of December 31, 2020 and December 31,
2019 were as follows:
As of December 31, 2020 As of December 31, 2019
Total Aggregate Principal Total Aggregate Principal
Principal Amount Amount Carrying Principal Amount Amount Carrying
Committed Outstanding Value (1) Committed Outstanding Value (1)
BCSF Revolving Credit Facility $ 425,000 $ 257,774 $ 257,774 $ 500,000 $ 268,015 $ 268,015
2018-1 Notes 365,700 365,700 364,006 365,700 365,700 363,832
JPM Credit Facility 450,000 293,283 293,283 666,581 546,754 546,754
2019-1 Debt 398,750 398,750 396,265 398,750 398,750 396,034
Revolving Advisor Loan 50,000 - - - - -
2023 Notes 150,000 150,000 147,032 - - -
Total Debt $ 1,839,450 $ 1,465,507 $ 1,458,360 $ 1,931,031 $ 1,579,219 $ 1,574,635
(1)Carrying value represents aggregate principal amount outstanding less unamortized debt issuance costs
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The combined weighted average interest rate (excluding deferred upfront
financing costs and unused fees) of the aggregate borrowings outstanding for
the years ended December 31, 2020 and year ended December 31, 2019 were 3.6% and
4.7%, respectively.
The following table shows the contractual maturities of our debt obligations as
of December 31, 2020:
Payments Due by Period
Less than More than
Total 1 year 1 - 3 years 3 - 5 years 5 years
BCSF Revolving Credit Facility $ 257,774 $ - $ 257,774 $ - $ -
2018-1 Notes 365,700 - - - 365,700
JPM Credit Facility 293,283 - - 293,283 -
2019-1 Debt 398,750 - - - 398,750
2023 Notes 150,000 - 150,000 - -
Total Debt Obligations $ 1,465,507 $ - $ 407,774 $ 293,283 $ 764,450
SMBC Revolving Credit Agreement
On November 21, 2018, the SMBC Revolving Credit Facility was terminated. The
proceeds from the initial public offering on November 15, 2018, were used to
repay the total outstanding debt.
For the years ended December 31, 2020, 2019 and 2018, the components of interest
expense related to the SMBC Revolving Credit Facility were as follows:
For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $ - $ - $ 3,334
Unused facility fee - - 22Amortization of deferred financing costs and upfront commitment fees
- - 723
Total interest and debt financing expenses $ - $ - $ 4,079
BCSF Revolving Credit Facility
On October 4, 2017, the Company entered into the revolving credit agreement (the
"BCSF Revolving Credit Facility") with us, as equity holder, BCSF I, LLC, a
Delaware limited liability company and a wholly owned and consolidated
subsidiary of the Company, as borrower, and Goldman Sachs Bank USA , as sole lead
arranger ("Goldman Sachs"). The BCSF Revolving Credit Facility was subsequently
amended on May 15, 2018 to reflect certain clarifications regarding margin
requirements and hedging currencies. The maximum commitment amount under the
BCSF Revolving Credit Facility is $500.0 million, and may be increased up to
$750.0 million. Proceeds of the loans under the BCSF Revolving Credit Facility
may be used to acquire certain qualifying loans and such other uses as permitted
under the BCSF Revolving Credit Facility. The BCSF Revolving Credit Facility
includes customary affirmative and negative covenants, including certain
limitations on the incurrence of additional indebtedness and liens, as well as
usual and customary events of default for revolving credit facilities of this
nature.
On January 8, 2020, the Company entered into an amended and restated credit
agreement of its BCSF Revolving Credit Facility. The amendment amended the
existing credit facility to, among other things, modify various financial
covenants, including removing a liquidity covenant and adding a net asset value
covenant with respect to the Company, as sponsor.
On March 31, 2020, the Parties entered into Omnibus Amendment No. 1 to the
amended and restated credit agreement. The amendment amended the existing credit
facility to, among other things, provide for enhanced flexibility to purchase or
contribute and borrow against revolving loans and delayed draw term
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loans, and to count certain additional assets in the calculation of collateral
for the outstanding advances; increase the spread payable under the facility
from 2.50% to 3.25% per annum; include additional events of default to the
existing credit facility, including but not limited to, a qualified equity raise
not effected on or prior to June 22, 2020; and, after June 22, 2020, require the
Company to maintain at least $50.0 million of unencumbered liquidity or pay down
the facility by at least $50.0 million.
On May 27, 2020, the Parties entered into Amendment No. 2 to the amended and
restated credit agreement. The amendment amended the existing credit facility
to, among other things, (i) permit the Company to incur a lien on assets
purchased with the proceeds of the rights offering and (ii) remove the
requirement that the Company maintain $50.0 million in unencumbered cash after
the completion of the rights offering, instead requiring a pay down of
$50.0 million within two business days after the closing of the rights offering,
which was subsequently paid.
On August 14, 2020, the Parties entered into the second amended and restated
credit agreement and the third amended and restated margining agreement
(collectively, the "Amendment"), which amended and restated the terms of the
existing credit facility (the "Amended and Restated Credit Facility"). The
Amendment amends the existing credit facility to, among other things,
(i) decrease the financing limit from $500.0 million to $425.0 million,
(ii) decrease the interest rate on financing from LIBOR plus 3.25% per annum to
LIBOR plus 3.00% per annum, and (iii) provide enhanced flexibility to contribute
and borrow against revolving and delayed draw loans and modify certain other
terms relating to collaterals.
Assets that are pledged as collateral for the BCSF Revolving Credit Facility are
not directly available to the creditors of the Company to satisfy any
obligations of the Company other than the Company's obligations under the BCSF
Revolving Credit Facility.
Borrowings under the BCSF Revolving Credit Facility bear interest at LIBOR plus
a margin. As of December 31, 2020 and December 31, 2019, the BCSF Revolving
Credit Facility was accruing interest expense at a rate of LIBOR plus 3.00% and
LIBOR plus 2.50%, respectively. We pay an unused commitment fee of 30 basis
points (0.30%) per annum. Interest is payable quarterly in arrears. Any amounts
borrowed under the BCSF Revolving Credit Facility, and all accrued and unpaid
interest, will be due and payable, on the earliest of: (a) October 5, 2022 and
(b) the date upon which all loans shall become due and payable in full, whether
by acceleration or otherwise.
As of December 31, 2020 and December 31, 2019 there were $257.8 million and
$268.0 million borrowings under the BCSF Revolving Credit Facility, respectively
and the Company was in compliance with the terms of the BCSF Revolving Credit
Facility.
For the years ended December 31, 2020, 2019 and 2018, the components of interest
expense related to the BCSF Revolving Credit Facility were as follows:
For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $ 14,929 $ 17,566 $ 13,975
Unused facility fee 365 456 624Amortization of deferred financing costs and upfront commitment fees
1,127 1,067 1,068 Total interest and debt financing expenses
$ 16,421 $ 19,089 $ 15,667
2018-1 Notes On September 28, 2018, (the "2018-1 Closing Date"), we, through BCC Middle Market CLO 2018-1 LLC (the "2018-1 Issuer"), aDelaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its $451.2 million term debt securitization (the "CLO Transaction"). The notes issued in connection with the CLO Transaction (the "2018-1 Notes") are secured by a diversified portfolio of the 2018-1 Issuer consisting primarily of middle market loans, the majority of which are senior secured loans (the "2018-1 Portfolio"). At the 2018-1 Closing Date, the 2018-1 Portfolio was comprised of 166
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assets transferred from the Company and its consolidated subsidiaries. All
transfers were eliminated in consolidation and there were no realized gains or
losses recognized in the CLO Transaction.
The CLO Transaction was executed through a private placement of the following
2018-1 Notes:
Interest rate
2018-1 Notes Principal Amount Spread above Index at December 31, 2020
Class A-1 A $ 205,900 1.55% + 3 Month LIBOR 1.77%
Class A-1 B 45,000 1.50% + 3 Month LIBOR (first 24 months) 2.02%
1.80% + 3 Month LIBOR (thereafter)
Class A-2 55,100 2.15% + 3 Month LIBOR 2.37%
Class B 29,300 3.00% + 3 Month LIBOR 3.22%
Class C 30,400 4.00% + 3 Month LIBOR 4.22%
Total 2018-1 Notes 365,700
Membership Interests 85,450 Non-interest bearing Not applicable
Total $ 451,150
The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes were issued at par and are
scheduled to mature on October 20, 2030. The Company received 100% of the
membership interests (the "Membership Interests") in the 2018-1 Issuer in
exchange for its sale to the 2018-1 Issuer of the initial closing date loan
portfolio. The Membership Interests do not bear interest. As of December 31,
2020, the Company's Membership Interests are pledged as collateral to the BCSF
Revolving Credit Facility.
The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes are included in the
consolidated financial statements. The Membership Interests are eliminated in
consolidation.
The Company serves as portfolio manager of the 2018-1 Issuer pursuant to a
portfolio management agreement between the Company and the 2018-1 Issuer. For so
long as the Company serves as portfolio manager, the Company will not charge any
management fee or subordinated interest to which it may be entitled.
During the reinvestment period (four years from the closing date of the CLO
Transaction), pursuant to the indenture governing the 2018-1 Notes, all
principal collections received on the underlying collateral may be used by the
2018-1 Issuer to purchase new collateral under the direction of the Company in
its capacity as portfolio manager of the 2018-1 Issuer and in accordance with
the 2018-1 Issuer's investment strategy and the terms of the indenture.
The Company has agreed to hold on an ongoing basis the Membership Interests with
an aggregate dollar purchase price of at least equal to 5% of the aggregate
amount of all obligations issued by the 2018-1 Issuer for so long as the 2018-1
Notes remain outstanding.
The 2018-1 Issuer pays ongoing administrative expenses to the trustee,
independent accountants, legal counsel, rating agencies and independent managers
in connection with developing and maintaining reports and providing required
services in connection with the administration of the 2018-1 Issuer.
As of December 31, 2020, there were 60 first lien and second lien senior secured
loans with a total fair value of approximately $424.0 million and cash of
$11.1 million securing the 2018-1 Notes. As of December 31, 2019, there were 61
first lien and second lien senior secured loans with a total fair value of
approximately $435.8 million and cash of $9.1 million securing the 2018-1 Notes.
Assets that are pledged as collateral for the 2018-1 Notes are not directly
available to the creditors of the Company to satisfy any obligations of the
Company other than the Company's obligations under the indenture governing the
2018-1 Notes. Such assets are included in the Company's consolidated financial
statements. The creditors of the 2018-1 Issuer have received security interests
in such assets and such assets are not intended to be available to the creditors
of the Company (or an affiliate of the Company). The 2018-1 Portfolio must meet
certain requirements, including asset mix and concentration, term, agency
rating, collateral coverage, minimum
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coupon, minimum spread and sector diversity requirements in the indenture
governing the 2018-1 Notes. As of December 31, 2020 and December 31, 2019, the
Company was in compliance with its covenants related to the 2018-1 Notes.
Costs of $2.1 million were incurred in connection with debt securitization of
the 2018-1 Notes by the 2018-1 Issuer which have been recorded as debt issuance
costs and presented as a reduction to the outstanding principal amount of the
2018-1 Notes on the consolidated statements of assets and liabilities and are
being amortized over the life of the 2018-1 Issuer using the effective interest
method. The balance of the unamortized debt issuance costs related to the 2018-1
Issuer was $1.7 million and $1.9 million as of December 31, 2020 and
December 31, 2019, respectively.
For the years ended December 31, 2020, 2019 and 2018, the components of interest
expense related to the 2018-1 Issuer were as follows:
For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $10,820 $16,226 $4,221
Amortization of debt issuance costs and upfront commitment fees 174 174 44
Total interest and debt financing expenses $10,994 $16,400 $4,265
Citibank Revolving Credit Facility On February 19, 2019, the Company entered into a credit and security agreement (the "Credit Agreement" or the "Citibank Revolving Credit Facility") with the Company as equity holder and servicer, BCSF II-C, LLC as Borrower,Citibank, N.A ., as Administrative Agent, andWells Fargo Bank, National Association as Collateral Administrator, Collateral Agent and Custodian. The Credit Agreement was effective as of February 19, 2019. The facility amount under the Credit Agreement is $350.0 million. Proceeds of the loans under the Credit Agreement may be used to acquire certain qualifying loans and such other uses as permitted under the Credit Agreement. The period from the closing date until February 19, 2020 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the Credit Agreement. The final maturity date is the earliest of: (a) the business day designated by the Borrower as the final maturity date upon not less than three business days' prior written notice to the Administrative Agent, the Collateral Agent, the Lenders, the Custodian and the Collateral Administrator, (b) February 19, 2022 and (c) the date on which the Administrative Agent provides notice of the declaration of the final maturity date after the occurrence of an event of default. The Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature. Borrowings under the Citibank Revolving Credit Facility bear interest at LIBOR plus a margin. During the period prior to the last day of the reinvestment period, borrowings under the Credit Agreement will bear interest at a rate equal to the three-month LIBOR plus 1.60%. Commencing on the last day of the reinvestment period, the interest rate on borrowings under the Credit Agreement will reset to three-month LIBOR plus 2.60% for the remaining term of the Credit Agreement. We pay an unused commitment fee based on a corresponding utilization rate; (i) 0 basis points (0.00%) per annum when greater than or equal to 85.0% utilization, (ii) 25 basis points (0.25%) per annum when greater than or equal to 75.0% but less than 85.0% utilization, (iii) 50 basis points (0.50%) per annum when greater than or equal to 50.0% but less than 75.0% utilization, (iv) 75 basis points (0.75%) per annum when greater than or equal to 25.0% but less than 50% utilization, or (v) 100 basis points (1.00%) per annum when less than 25.0% utilization. On August 28, 2019, the Citibank Revolving Credit Facility was terminated. The proceeds from the 2019-1 Debt were used to repay the total outstanding debt. 168
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For the years ended December 31, 2020, 2019 and 2018, the components of interest expense related to the Citibank Revolving Credit Facility were as follows:
For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $- $4,104 $-
Unused facility fee - 357 -Amortization of deferred financing costs and upfront commitment fees
- 124 -
Total interest and debt financing expenses $- $4,585 $-
JPM Credit Facility
On April 30, 2019, the Company entered into a loan and security agreement (the
"JPM Credit Agreement" or the "JPM Credit Facility") as Borrower, with JPMorgan
Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank,
National Association as Collateral Administrator, Collateral Agent, Securities
Intermediary and Bank. The facility amount under the JPM Credit Agreement was
$666.6 million. Borrowings under the JPM Credit Facility bore interest at LIBOR
plus 2.75%.
On January 29, 2020, the Company entered into an amended and restated loan and
security agreement (the "Amended Loan and Security Agreement") as Borrower, with
JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells
Fargo Bank, National Association as Collateral Administrator, Collateral Agent,
Securities Intermediary and Bank. The Amended Loan and Security Agreement
amended the Existing Loan and Security Agreement to, among other things,
(1) decrease the financing limit under the agreement from $666.6 million to
$500.0 million; (2) decrease the minimum facility amount from $466.6 million to
$300.0 million period from January 29, 2020 to July 29, 2020 (the minimum
facility amount will increase to $350.0 million after July 29, 2020 until the
end of the reinvestment period); (3) decrease the interest rate on financing
from 2.75% per annum over the applicable LIBOR to 2.375% per annum over the
applicable LIBOR; and (4) extend the scheduled termination date of the agreement
from November 29, 2022 to January 29, 2025.
On March 20, 2020, the Company entered into a second amended and restated loan
and security agreement between the parties (the "Second Amended Loan and
Security Agreement"). The Second Amended Loan and Security Agreement, among
other things, provides flexibility to contribute and borrow against revolving
loans, reduce the amount required to be reserved for unfunded revolvers and
delayed draw obligations and decreases the financing limit by $50.0 million
within 90 days or, based on the occurrence of certain events, such earlier
period as may be set forth in the Second Amended Loan and Security Agreement.
The Company shall pay to the Administrative Agent $50.0 million to the
prepayment of Advances and the Financing Commitments shall be reduced by the
amount of principal so prepaid on the earlier of two Business days following the
closing of the Rights Offering and June 18, 2020, which the Company subsequently
paid.
On July 2, 2020, the Company entered into a third amended and restated loan and
security agreement with respect to the JPM Credit Agreement to, among other
things, adjust the advance rates and make certain changes of an updating nature.
The facility amount under the JPM Credit Agreement is $450.0 million. Proceeds
of the loans under the JPM Credit Facility may be used to acquire certain
qualifying loans and such other uses as permitted under the JPM Credit
Agreement. The period from the effective date of the amendment until January 29,
2023 is referred to as the reinvestment period and during such reinvestment
period, the Borrower may request drawdowns under the JPM Credit Facility.
The maturity date is the earliest of: (a) January 29, 2025, (b) the date on
which the secured obligations become due and payable following the occurrence of
an event of default, (c) the date on which the advances are repaid in full and
(d) the date after a market value cure failure occurs on which all portfolio
investments have been sold and proceeds therefrom have been received by the
Borrower. The stated maturity date of January 29, 2025 may be extended for
successive one-year periods by mutual agreement of the Borrower and the
Administrative Agent.
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The JPM Credit Agreement includes customary affirmative and negative covenants,
including certain limitations on the incurrence of additional indebtedness and
liens, as well as usual and customary events of default for revolving credit
facilities of this nature.
Borrowings under the JPM Credit Facility bear interest at LIBOR plus a margin.
As of December 31, 2020, the JPM Credit Facility was accruing interest expense
at a rate of LIBOR plus 2.375%. The Company pays an unused commitment fee of
between 37.5 basis points (0.375%) and 75 basis points (0.75%) per annum
depending on the size of the unused portion of the facility. Interest is payable
quarterly in arrears. As of December 31, 2019, the JPM Credit Facility was
accruing interest expense at a rate of LIBOR plus 2.75%. We paid an unused
commitment fee of 75 basis points (0.75%) per annum.
As of December 31, 2020 and December 31, 2019, there were $293.3 million and
$546.8 million of borrowings under the JPM Credit Facility, respectively, and
the Company was in compliance with the terms of the JPM Credit Facility.
For the years ended December 31, 2020, 2019 and 2018, the components of interest
expense related to the JPM Credit Facility were as follows:
For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $13,961 $19,679 $-
Unused facility fee 310 464 -Amortization of deferred financing costs and upfront commitment fees
467 53 -
Total interest and debt financing expenses $14,738 $20,196 $-
2019-1 Debt On August 28, 2019, the Company, through BCC Middle Market CLO 2019-1 LLC (the "2019-1 Issuer"), a Cayman Islands limited liability company and a wholly-owned and consolidated subsidiary of the Company, and BCC Middle Market CLO 2019-1 Co-Issuer, LLC (the "Co-Issuer" and, together with the Issuer, the "Co-Issuers"), a Delaware limited liability company, completed its $501.0 million term debt securitization (the "2019-1 CLO Transaction"). The notes issued in connection with the 2019-1 CLO Transaction (the "2019-1 Notes") are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market loans, the majority of which are senior secured loans (the "2019-1 Portfolio"). The Co-Issuers also issued Class A-1L Loans (the "Loans" and, together with the 2019-1 Notes, the "2019-1 Debt"). The Loans are also secured by the 2019-1 Portfolio. At the 2019-1 closing date, the 2019-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2019-1 CLO Transaction. The 2019-1 CLO Transaction was executed through a private placement of the following 2019-1 Debt: 2019-1 Debt Principal Amount Spread above Index Interest rate at December 31, 2020 Class A-1L $ 50,000 1.70% + 3 Month LIBOR 1.94% Class A-1 222,500 1.70% + 3 Month LIBOR 1.94% Class A-2A 50,750 2.70% + 3 Month LIBOR 2.94% Class A-2B 13,000 4.23% (Fixed) 4.23% Class B 30,000 3.60% + 3 Month LIBOR 3.84% Class C 32,500 4.75% + 3 Month LIBOR 4.99% Total 2019-1 Debt 398,750 Membership Interests 102,250 Non-interest bearing
Not applicable
Total $ 501,000
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The Loans and the Class A-1, A-2A, A-2B, and B Notes were issued at par. The
Class C Notes were issued at a discount. The Notes are scheduled to mature on
October 15, 2031. The Company received 100% of the membership interests (the
"Membership Interests") in the 2019-1 Issuer in exchange for its sale to the
2019-1 Issuer of the initial closing date loan portfolio. The Membership
Interests do not bear interest. As of December 31, 2020, the Company's
Membership Interests are pledged as collateral to the BCSF Revolving Credit
Facility.
The Loans and Class A-1, A-2A, A-2B, B, and C Notes are included in the
consolidated financial statements of the Company. The Membership Interests are
eliminated in consolidation.
The Company serves as portfolio manager of the 2019-1 Issuer pursuant to a
portfolio management agreement between the Company and the 2019-1 Issuer. For so
long as the Company serves as portfolio manager, the Company will not charge any
management fee or subordinated interest to which it may be entitled.
During the reinvestment period, pursuant to the indenture and loan agreement
governing the 2019-1 Notes and Loans, respectively, all principal collections
received on the underlying collateral may be used by the 2019-1 Issuer to
purchase new collateral under the direction of the Company in its capacity as
portfolio manager of the 2019-1 Issuer and in accordance with the 2019-1 Issuer
investment strategy and the terms of the indenture and loan agreement, as
applicable.
The Company has agreed to hold on an ongoing basis the Membership Interests with
an aggregate dollar purchase price at least equal to 5% of the aggregate amount
of all obligations issued by the 2019-1 Co-Issuers for so long as the 2019-1
Debt remains outstanding.
The 2019-1 Issuer pays ongoing administrative expenses to the trustee,
independent accountants, legal counsel, rating agencies and independent managers
in connection with developing and maintaining reports, and providing required
services in connection with the administration of the 2019-1 Issuer.
As of December 31, 2020, there were 67 first lien and second lien senior secured
loans with a total fair value of approximately $469.4 million and cash of
$15.9 million securing the 2019-1 Debt. As of December 31, 2019, there were 65
first lien and second lien senior secured loans with a total fair value of
approximately $471.3 million and cash of $22.4 million securing the 2019-1 Debt.
Assets that are pledged as collateral for the 2019-1 Debt are not directly
available to the creditors of the Company to satisfy any obligations of the
Company other than the Company's obligations under the indenture and loan
agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have
received security interests in such assets and such assets are not intended to
be available to the creditors of the Company (or an affiliate of the Company).
The 2019-1 Portfolio must meet certain requirements, including asset mix and
concentration, term, agency rating, collateral coverage, minimum coupon, minimum
spread and sector diversity requirements in the indenture and loan agreement
governing the 2019-1 Debt. As of December 31, 2020, the Company was in
compliance with its covenants related to the 2019-1 Debt.
Costs of the offering, including the discount of the Class C Notes, of
$2.8 million were incurred in connection with debt securitization of the 2019-1
Debt by the 2019-1 Co-Issuers which have been recorded as debt issuance costs
and presented as a reduction to the outstanding principal amount of the 2019-1
Debt on the consolidated statements of assets and liabilities and are being
amortized over the life of the 2019-1 Issuer using the effective interest
method. The balance of the unamortized debt issuance costs related to the 2019-1
Issuer was $2.5 million and $2.7 million as of December 31, 2020 and
December 31, 2019, respectively.
For the years ended December 31, 2020, 2019 and 2018, the components of interest
expense related to the 2019-1 Co-Issuers were as follows:
For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $13,071 $5,981 $-
Amortization of debt issuance costs and upfront commitment fees 230 79 -
Total interest and debt financing expenses $13,301 $6,060 $-
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Revolving Advisor Loan
On March 27, 2020, the Company entered into an unsecured revolving loan
agreement (the "Revolving Advisor Loan") with BCSF Advisors, LP, the investment
adviser of the Company. The Revolving Advisor Loan has a maximum credit limit of
$50.0 million and a maturity date of March 27, 2023. The Revolving Advisor Loan
accrues interest at the Applicable Federal Rate from the date of such loan until
the loan is repaid in full. As of December 31, 2020, there were no borrowings
under the Revolving Advisor Loan.
For the years ended December 31, 2020, 2019 and 2018, the components of interest
expense related to the Revolving Advisor Loan were as follows:
For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $58 $- $-
Total interest and debt financing expenses $58 $- $-
2023 Notes
On June 10, 2020, the Company entered into a Master Note Purchase Agreement with
institutional investors listed on the Purchaser Schedule thereto (the "Note
Purchase Agreement"), in connection with the Company's issuance of
$150.0 million aggregate principal amount of its 8.50% senior unsecured notes
due 2023 (the " 2023 Notes"). The sale of the 2023 Notes generated net proceeds
of approximately $146.4 million, including an offering discount of $1.5 million
and debt issuance costs in connection with the transaction, including fees and
commissions, of $2.1 million.
The Notes will mature on June 10, 2023 and may be redeemed in whole or in part
at the Company's option at any time or from time to time at the redemption
prices set forth in the Note Purchase Agreement. The Notes will bear interest at
a rate of 8.50% per year payable semi-annually on June 10 and December 10 of
each year, commencing on December 10, 2020. As of December 31, 2020, the Company
was in compliance with the terms of the Note Purchase Agreement governing the
2023 Notes.
For the years ended December 31, 2020, 2019 and 2018, the components of the
carrying value of the 2023 Notes were as follows:
For the Year Ended December 31,
2020 2019 2018
Principal amount of debt $150,000 $- $-
Unamortized debt issuance cost (1,785) - -
Original issue discount, net of accretion (1,183) - - Carrying value of 2023 Notes $147,032 $- $-
For the years ended December 31, 2020, 2019 and 2018, the components of interest expense related to the 2023 Notes were as follows:
For the Year Ended December 31,
2020 2019 2018
Borrowing interest expense $7,120 $-
$-
Amortization of debt issuance cost 406 -
-
Amortization of original issue discount 271 -
-
Total interest and debt financing expenses $7,797 $- $-
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Note 7. Derivatives
The Company is subject to foreign currency exchange rate risk in the normal
course of pursuing its investment objectives. The value of foreign investments
held by the Company may be significantly affected by changes in foreign currency
exchange rates. The dollar value of a foreign security generally decreases when
the value of the dollar rises against the foreign currency in which the security
is denominated and tends to increase when the value of the dollar declines
against such foreign currency.
The Company may enter into forward currency exchange contracts to reduce the
Company's exposure to foreign currency exchange rate fluctuations in the value
of foreign currencies, as described in Note 2. The fair value of derivative
contracts open as of December 31, 2020 and December 31, 2019 is included on the
consolidated schedule of investments by contract. The Company had collateral
receivable of $4.9 million for December 31, 2020 and collateral payable of
$0.3 million for December 31, 2019 with the counterparties on foreign currency
exchange contracts. Collateral amounts posted are included in collateral on
forward currency exchange contracts on the consolidated statements of assets and
liabilities. Collateral payable is included in collateral payable on forward
currency exchange contracts on the consolidated statements of assets and
liabilities.
For the years ended December 31, 2020, 2019 and 2018, the Company's average U.S.
dollar notional exposure to forward currency exchange contracts were
$261.8 million, $179.2 million and $97.8 million, respectively.
By using derivative instruments, the Company is exposed to the counterparty's
credit risk-the risk that derivative counterparties may not perform in
accordance with the contractual provisions offset by the value of any collateral
received. The Company's exposure to credit risk associated with counterparty
non-performance is limited to collateral posted and the unrealized gains
inherent in such transactions that are recognized in the consolidated statements
of assets and liabilities. The Company minimizes counterparty credit risk
through credit monitoring procedures, executing master netting arrangements and
managing margin and collateral requirements, as appropriate.
The Company presents forward currency exchange contracts on a net basis by
counterparty on the consolidated statements of assets and liabilities. The
Company has elected not to offset assets and liabilities in the consolidated
statements of assets and liabilities that may be received or paid as part of
collateral arrangements, even when an enforceable master netting arrangement or
other arrangement is in place that provides the Company, in the event of
counterparty default, the right to liquidate collateral and the right to offset
a counterparty's rights and obligations.
The following table presents both gross and net information about derivative
instruments eligible for offset in the consolidated statements of assets and
liabilities as of December 31, 2020.
Gross amount of Gross amount of Net amount of assets or
Account in the assets on the (liabilities) on the (liabilities) presented on
consolidated consolidated consolidated the consolidated CashCollateral
statements of statements of statements of statements of paid Net
Counterparty assets and liabilities assets and liabilities
assets and liabilities assets and liabilities (received)(1) Amounts(2)
Bank of New York Unrealized
depreciation on
forward currency
contracts $ - $ (482) $ (482) $ 482 $ -
Citibank Unrealized
depreciation on
forward currency
contracts $ - $ (2,525) $ (2,525) $ 2,525 $ -
Goldman Sachs Unrealized
depreciation on
forward currency
contracts $ - $ (19,607) $ (19,607) $ - $ (19,607)
(1)Amount excludes excess cash collateral paid.
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(2)
Net amount represents the net amount due (to) from counterparty in the event of
default based on the contractual set-off rights under the agreement. Net amount
excludes any over-collateralized amounts.
The following table presents both gross and net information about derivative
instruments eligible for offset in the consolidated statements of assets and
liabilities as of December 31, 2019.
Gross amount of Gross amount of Net amount of assets or
Account in the assets on the (liabilities) on the (liabilities) presented on
consolidated consolidated consolidated the consolidated CashCollateral
statements of statements of statements of statements of paid Net
Counterparty assets and liabilities assets and liabilities
assets and liabilities assets and liabilities (received)(1) Amounts(2)
Bank of New York Unrealized
appreciation on
forward currency
contracts $ 1,034 $ - $ 1,034 $ (341) $ 693
Citibank Unrealized
appreciation on
forward currency
contracts $ - $ (1) $ (1) $ 1 $ -
Goldman Sachs Unrealized
appreciation on
forward currency
contracts $ - $ (1,251) $ (1,251) $ - $ (1,251)
(1)Amount excludes excess cash collateral paid.
(2)
Net amount represents the net amount due (to) from counterparty in the event of
default based on the contractual set-off rights under the agreement. Net amount
excludes any over-collateralized amounts.
The effect of transactions in derivative instruments to the consolidated
statements of operations during the years ended December 31, 2020, 2019 and 2018
was as follows:
For the Years Ended December 31,
2020 2019 2018
Net realized gain (loss) on forward currency exchange contracts $6,472 $11,043 $(2,651)
Net change in unrealized appreciation (depreciation) on forward currency exchange contracts (22,396) (9,540) 12,826 Total net realized and unrealized gain (losses) on forward currency exchange contracts
$(15,924) $1,503 $10,175
Included in total net gains (losses) on the consolidated statements of
operations is net gains (losses) of $18.2 million, $2.7 million and ($7.9)
million related to realized and unrealized gains and losses on investments,
foreign currency holdings and non-investment assets and liabilities attributable
to the changes in foreign currency exchange rates for the years ended
December 31, 2020, 2019 and 2018, respectively. Including the total net realized
and unrealized gains (losses) on forward currency exchange contracts of ($15.9)
million, $1.5 million and $10.2 million, respectively, included in the above
table, the net impact of foreign currency on total net gains (losses) on the
consolidated statements of operations is $2.3 million, $4.2 million and
$2.3 million for the years ended December 31, 2020, 2019 and 2018 respectively.
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Note 8. Distributions
The Company's distributions are recorded on the record date. The following table
summarizes distributions declared during the years ended December 31, 2020,
2019, and 2018:
Amount Per Total
Date Declared Record Date Payment Date Share Distributions
March 28, 2018 March 28, 2018 May 17, 2018 $ 0.34 $ 10,610
June 28, 2018 June 28, 2018 August 10, 2018 $ 0.36 $ 13,484
September 26, 2018 September 26, 2018 October 19, 2018 $ 0.41 $ 17,967
December 19, 2018 December 31, 2018 January 14, 2019 $ 0.41 $ 21,108
February 21, 2019 March 29, 2019 April 12, 2019 $ 0.41 $ 21,108
May 7, 2019 June 28, 2019 July 29, 2019 $ 0.41 $ 21,176
August 1, 2019 September 30, 2019 October 30, 2019 $ 0.41 $ 21,176
October 31, 2019 December 31, 2019 January 30, 2020 $ 0.41 $ 21,176
February 20, 2020 March 31, 2020 April 30, 2020 $ 0.41 $ 21,176
May 4, 2020 June 30, 2020 July 30, 2020 $ 0.34 $ 21,951
July 30, 2020 September 30, 2020 October 30, 2020 $ 0.34 $ 21,951
October 28, 2020 December 31, 2020 January 29, 2021 $ 0.34 $ 21,951
Total distributions declared $ 4.59 $ 234,834
The distributions declared during the years ended December 31, 2020, 2019 and
2018 were derived from investment company taxable income and net capital gain,
if any.
The federal income tax characterization of distributions declared and paid for
the fiscal year will be determined at fiscal year-end based upon the Company's
investment company taxable income for the full fiscal year and distributions
paid during the full year.
Note 9. Common Stock/Capital
The Company has authorized 100,000,000,000 shares of its common stock with a par
value of $0.001 per share. The Company has authorized 10,000,000,000 shares of
its preferred stock with a par value of $0.001 per share. Shares of preferred
stock have not been issued.
Prior to the IPO, the Company had issued 43,982,137.46 shares in the private
placement of the Company's common shares (the "Private Offering"). Each investor
had entered into a separate subscription agreement relating to the Company's
common stock (the "Subscription Agreements"). Each investor had made a capital
commitment to purchase shares of the Company's common stock pursuant to the
Subscription Agreements. Investors were required to make capital contributions
to purchase shares of the Company's common stock each time the Company delivered
a drawdown notice, which were delivered at least 10 business days prior to the
required funding date in an aggregate amount not to exceed their respective
capital commitments. The number of shares to be issued to a stockholder was
determined by dividing the total dollar amount of the contribution by a
stockholder by the net asset value per share of the common stock as of the last
day of the Company's fiscal quarter or such other date and price per share as
determined by the Board in accordance with the requirements of the 1940 Act. As
of December 31, 2018, aggregate commitments relating to the Private Offering
were $1.3 billion. All outstanding commitments related to these Subscription
Agreements were cancelled due to the completion of the IPO on November 15, 2018.
As of December 31, 2020 and December 31, 2019, BCSF Advisors, LP contributed in
aggregate $8.9 million to the Company and received 487,574.03 shares of the
Company and contributed $7.8 million to the Company and received 389,695.20
shares of the Company, respectively. At December 31, 2020 and December 31, 2019,
BCSF Advisors, LP owned 0.76% and 0.75%, respectively, of the outstanding common
stock of the Company.
On November 19, 2018, the Company closed its initial public offering (the "IPO")
issuing 7,500,000 shares of its common stock at a public offering price of
$20.25 per share. Shares of common stock of the Company began trading on the New
York Stock Exchange under the symbol "BCSF" on November 15, 2018.
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The offering generated proceeds, before expenses, of $147.3 million. All
outstanding commitments were cancelled due to the completion of the initial
public offering.
The following table summarizes the total shares issued and amount received
related to capital drawdowns delivered pursuant to the Subscription Agreements,
issuance of common stock, and shares issued pursuant to the dividend
reinvestment plan during the years ended December 31, 2020, 2019 and 2018:
For the Year Ended December 31,
2020 2019 2018
Shares Amount Shares Amount Shares Amount
Total capital drawdowns - $ - - $ - 18,569,410.12 $ 376,949
Issuance of common stock, net 12,912,453.00 128,372 - - 7,500,000.00 145,409
Dividend reinvestment - - 167,674.81 3,322 436,914.94 8,832
Total capital drawdowns
and dividend
reinvestment 12,912,453.00 $ 128,372 167,674.81 $ 3,322 26,506,325.06 $ 531,190
BCSF Investments, LLC and certain individuals, including Michael A. Ewald, the
Company's Chief Executive Officer and a Managing Director of Bain Capital
Credit; Jonathan S. Lavine, Co-Managing Partner of Bain Capital, LP and Founder
and Chief Investment Officer of Bain Capital Credit; John Connaughton,
Co-Managing Partner of Bain Capital, LP; Jeffrey B. Hawkins, Chairman of the
Company's Board of Directors and a Managing Director of Bain Capital Credit; and
Michael J. Boyle, the Company's Vice President and Treasurer and a Managing
Director of Bain Capital Credit, adopted the 10b5-1 Plan in accordance with
Rules 10b5-1 and 10b-18 under the Exchange Act, under which such parties would
buy up to $20 million in the aggregate of the Company's common stock in the open
market during the period beginning after four full calendar weeks after the
closing of the IPO and ending on the earlier of the date on which the capital
committed to the 10b5-1 has been exhausted or one year after the closing of the
IPO. For the year ended December 31, 2019, 827,933 shares were purchased at a
weighted average price of $18.78, inclusive of commissions, for a total cost of
$15.6 million. As of February 28, 2019, zero dollars remain under the 10b5-1
Plan and no further purchases are intended under the 10b5-1 Plan.
On May 7, 2019, the Company's Board of Directors authorized the Company to
repurchase up to $50 million of its outstanding common stock in accordance with
safe harbor rules under the Securities Exchange Act of 1934. Any such
repurchases will depend upon market conditions and there is no guarantee that
the Company will repurchase any particular number of shares or any shares at
all. As of December 31, 2020, there have been no repurchases of common stock.
On May 4, 2020, the Company's Board of Directors approved a transferable
subscription rights offering to our stockholders of record as of May 13, 2020.
The rights entitled record stockholders to subscribe for up to an aggregate of
12,912,453 shares of our common stock. Record stockholders received one right
for each share of common stock owned on the record date. The rights entitled the
holders to purchase one new share of common stock for every four rights held,
and record stockholders who fully exercised their rights were entitled to
subscribe, subject to certain limitations and allotment rules, for additional
shares that remain unsubscribed as a result of any unexercised rights. The
rights were transferable and on the New York Stock Exchange under the symbol
"BCSF RT". The rights offering expired June 5, 2020. Based on the terms of the
offering and the market price of the stock during the applicable period, holders
of rights participating in the offering were entitled to purchase one new share
of common stock for every four rights held at a subscription price of $10.2163
per share. On June 16, 2020, the Company closed its transferrable rights
offering and issued 12,912,453 shares. The offering generated net proceeds,
before expenses, of $129.6 million, including the underwriting discount and
commissions of $2.3 million.
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Note 10. Income Tax
For income tax purposes, dividends paid and distributions made to the Company's
stockholders are reported by the Company to the stockholders as ordinary income,
capital gains, or a combination thereof. The tax character of distributions
during the years ended December 31, 2020, 2019 and 2018 were as follows:
For the Year Ended December 31,
2020 2019 2018
Distributions paid from:
Ordinary Income $87,029 $84,636 $63,169
Net Long-Term Capital Gains - - -
Total Taxable Distributions $87,029 $84,636 $63,169
The following reconciles net increase in net assets resulting from operations to taxable income for the years ended December 31, 2020, 2019 and 2018:
For the Year Ended December 31,
2020 2019 2018
Net increase in net assets resulting from operations $8,278 $98,085 $26,645
Net change in unrealized (appreciation) depreciation 50,331 (5,433) 22,800
Expenses not currently deductible 232 - 6,762
Income for tax but not book (553) (26,327) 4,715
Taxable/Distributable Income (1) $58,288 $66,325 $60,922
(1)
The calculation of estimated 2020 taxable income includes a number of estimated
inputs, including information received from third parties and, as a result,
actual 2020 taxable income will not be finally determined until the Company's
2020 tax return is filed in 2021 (and, therefore, such estimate is subject to
change).
Taxable income generally differs from net increase in net assets resulting from
operations for financial reporting purposes due to temporary and permanent
differences in the recognition of income and expenses, and generally excludes
net unrealized gains or losses, as unrealized gains or losses are generally not
included in taxable income until they are realized.
Capital losses in excess of capital gains earned in a tax year may generally be
carried forward and used to offset capital gains, subject to certain
limitations. Under the Regulated Investment Company Modernization Act of 2010,
capital losses incurred after September 30, 2011 will not be subject to
expiration. As of December 31, 2020, the Company has a short-term capital loss
carryforward of $1.3 million and a long-term capital loss carryforward of
$39.9 million.
As of December 31, 2020, 2019 and 2018, the Company's aggregate unrealized
appreciation and depreciation on investments and forward currency exchange
contracts based on cost for U.S. federal income tax purposes was as follows:
As of December 31,
2020 2019 2018
Tax cost $2,527,163 $2,536,466 $1,753,256
Gross unrealized appreciation 47,890 35,500 19,610
Gross unrealized depreciation (104,331) (45,494) (35,739)
Net unrealized appreciation (depreciation) on investments and forward currency exchange contracts $(56,441) $(9,994) $(16,129)
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ASC Topic 740 ((Accounting for Uncertainty in Income Taxes ("ASC 740")) provides
guidance on the accounting for and disclosure of uncertainty in tax position.
ASC 740 requires the evaluation of tax positions taken or expected to be taken
in the course of preparing the Company's tax returns to determine whether the
tax positions are "more-likely-than-not" of being sustained by the applicable
tax authority. Tax positions not deemed to meet the more-likely-than-not
threshold are recorded as a tax benefit or expense in the current year. Based on
its analysis of its tax position for all open tax years (the current and
prior years, as applicable), the Company has concluded that it does not have any
uncertain tax positions that met the recognition or measurement criteria of ASC
740. Such open tax years remain subject to examination and adjustment by tax
authorities. As of December 31, 2020, all tax filings of the Company since 2017
remain subject to examination by tax authorities.
The Company has determined that there were no tax positions which met the
recognition and measurement requirements of the relevant accounting standards
and therefore, the Company did not record an expense related to uncertain
positions on the Company's consolidated statements of operations for the years
ended December 31, 2020, 2019 and 2018.
Note 11. Commitments and Contingencies
Commitments
The Company's investment portfolio may contain debt investments that are in the
form of lines of credit and unfunded delayed draw commitments, which require the
Company to provide funding when requested by portfolio companies in accordance
with the terms of the underlying loan agreements.
As of December 31, 2020, the Company had $189.9 million of unfunded commitments
under loan and financing agreements as follows:
Expiration Unfunded
Date (1) Commitments (2)
First Lien Senior Secured Loans
9 Story Media Group Inc. - Revolver 4/30/2026 $ 74
A&R Logistics, Inc. - Revolver 5/5/2025 6,096
Abracon Group Holding, LLC. - Revolver 7/18/2024 2,833
Allworth Financial Group, L.P. - Delayed Draw 12/23/2026 3,042
Allworth Financial Group, L.P. - Revolver 12/23/2026 2,440
AMI US Holdings Inc. - Revolver 4/1/2024 488
Amspec Services, Inc. - Revolver 7/2/2024 5,667
Ansira Holdings, Inc. - Revolver 12/20/2024 1,700
AP Plastics Group, LLC - Revolver 8/2/2021 5,667
Appriss Holdings, Inc. - Revolver 5/30/2025 4,711
Aramsco, Inc. - Revolver 8/28/2024 3,387
Batteries Plus Holding Corporation - Revolver 7/6/2022 4,250
Captain D's LLC - Revolver 12/15/2023 490
CB Nike IntermediateCo Ltd - Revolver 10/31/2025 4,428
CMI Marketing Inc - Revolver 5/24/2023 2,112
CPS Group Holdings, Inc. - Revolver 3/3/2025 4,933
CST Buyer Company - Revolver 10/3/2025 2,190
Datix Bidco Limited - Revolver 10/28/2024 1,328
Direct Travel, Inc. - Delayed Draw 10/2/2023 4,800
Dorner Manufacturing Corp - Revolver 3/15/2022 1,099
Efficient Collaborative Retail Marketing Company, LLC - Revolver 6/15/2022
1,275
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Expiration Unfunded
Date (1) Commitments (2)
Element Buyer, Inc. - Revolver 7/19/2024 3,967
FFI Holdings I Corp - Delayed Draw 1/24/2025
3,156
FFI Holdings I Corp - Revolver 1/24/2025
3,938
Fineline Technologies, Inc. - Revolver 11/4/2022
2,633
Grammer Purchaser, Inc. - Revolver 9/30/2024
1,050
Great Expressions Dental Center PC - Revolver 9/28/2022 513 Green Street Parent, LLC - Revolver 8/27/2025
2,419
GSP Holdings, LLC - Revolver 11/6/2025
3,400
JHCC Holdings, LLC - Delayed Draw 9/9/2025
6,262
JHCC Holdings, LLC - Revolver 9/9/2025
1,272
Kellstrom Commercial Aerospace, Inc. - Revolver 7/1/2025
1,066
Margaux Acquisition Inc. - Revolver 12/19/2024
2,872
Margaux UK Finance Limited - Revolver 12/19/2024 681 MRI Software LLC - Delayed Draw 2/10/2026 731 MRI Software LLC - Revolver 2/10/2026
1,782
Profile Products LLC - Revolver 12/20/2024
3,003
Refine Intermediate, Inc. - Revolver 9/3/2026 5,340 RoC Opco LLC - Revolver 2/25/2025 10,241 Solaray, LLC - Revolver 9/9/2022 5,327 TA/WEG Holdings - Delayed Draw 10/2/2025 7,538 TEI Holdings Inc. - Revolver 12/23/2025 1,055 Thrasio - Delayed Draw 12/18/2026 12,522 Tidel Engineering, L.P. - Revolver 3/1/2023
4,250
TLC Purchaser, Inc. - Delayed Draw 10/13/2025
7,119
TLC Purchaser, Inc. - Revolver 10/13/2025
8,900
V Global - Revolver 12/22/2025
7,885
Ventiv Holdco, Inc. - Revolver 9/3/2025
2,981
WCI-HSG Purchaser, Inc. - Revolver 2/24/2025 1,612 Whitcraft LLC - Revolver 4/3/2023 1,812 WU Holdco, Inc. - Revolver 3/26/2025 3,043 YLG Holdings, Inc. - Revolver 10/31/2025 8,545 Total First Lien Senior Secured Loans $ 189,925 (1) Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.
(2)
Unfunded commitments denominated in currencies other than U.S. dollars have been
converted to U.S. dollars using the applicable foreign currency exchange rate as
of December 31, 2020.
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As of December 31, 2019, the Company had $215.8 million of unfunded commitments under loan and financing agreements as follows:
Expiration Unfunded
Date (1) Commitments (2)
First Lien Senior Secured Loans
A&R Logistics, Inc. - Revolver 5/5/2025 $ 5,043
Abracon Group Holding, LLC. - Revolver 7/18/2024 2,833
AMI US Holdings Inc. - Revolver 4/1/2024 977
Amspec Services, Inc. - Revolver 7/2/2024 3,542
Ansira Holdings, Inc. - Delayed Draw 12/20/2022 1,509
AP Plastics Group, LLC - Revolver 8/2/2021 8,500
Appriss Holdings, Inc. - Revolver 5/30/2025 4,711
Aramsco, Inc. - Revolver 8/28/2024 2,766
Batteries Plus Holding Corporation - Revolver 7/6/2022 4,250
Captain D's LLC - Revolver 12/15/2023 577
CB Nike Intermediate Co Ltd - Revolver 10/31/2025 2,878
Clinical Innovations, LLC - Revolver 10/17/2022 380
CMI Marketing Inc. - Revolver 5/24/2023 2,112
CPS Group Holdings, Inc. - Revolver 3/3/2025 4,933
Cruz Bay Publishing, Inc. - Delayed Draw 2/28/2020 1,098
Cruz Bay Publishing, Inc. - Revolver 2/28/2020 535
CST Buyer Company - Revolver 10/3/2025 2,190
Datix Bidco Limited - Revolver 10/28/2024 1,290
Direct Travel, Inc. - Delayed Draw 12/1/2021 7,030
Direct Travel, Inc. - Revolver 12/1/2021 4,250
Dorner Manufacturing Corp - Revolver 3/15/2022 1,099
Efficient Collaborative Retail Marketing Company, LLC - Revolver 6/15/2022
3,542
Element Buyer, Inc. - Delayed Draw 7/18/2025 7,933
Element Buyer, Inc. - Revolver 7/19/2024 2,833
FFI Holdings I Corp - Delayed Draw 1/24/2025 677
FFI Holdings I Corp - Revolver 1/24/2025 1,994
Fineline Technologies, Inc. - Revolver 11/4/2022 655
Grammer Purchaser, Inc. - Revolver 9/30/2024 998
Great Expressions Dental Center PC - Revolver 9/28/2022 150
Green Street Parent, LLC - Revolver 8/27/2025 2,419
GSP Holdings, LLC - Revolver 11/6/2025 4,307
Hightower Holding, LLC - Delayed Draw 1/31/2025 6,640
Horizon Telcom, Inc. - Delayed Draw 6/15/2023 1,256
Horizon Telcom, Inc. - Revolver 6/15/2023 116
Ivy Finco Limited - First Lien Senior Secured Loan 5/19/2025 5,817
JHCC Holdings, LLC - Delayed Draw 9/9/2025 8,500
JHCC Holdings, LLC - Revolver 9/9/2025 1,820
Kellstrom Commercial Aerospace, Inc. - Delayed Draw 7/1/2025 3,838
Kellstrom Commercial Aerospace, Inc. - Revolver 7/1/2025 640
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Expiration Unfunded
Date (1) Commitments (2)
Margaux Acquisition Inc. - Delayed Draw 12/19/2024 7,139
Margaux Acquisition Inc. - Revolver 12/19/2024 2,872
Margaux UK Finance Limited - Revolver 12/19/2024 662
Mertus 522. GmbH - Delayed Draw 5/28/2026 13,761
Profile Products LLC - Revolver 12/20/2024 3,833
RoC Opco LLC - Revolver 2/25/2025 10,241
Solaray, LLC - Revolver 9/9/2022 1,077SumUp Holdings Luxembourg S.à.r.l. - First Lien Senior Secured Loan
8/1/2024 10,638
Symplr Software, Inc. - Revolver 11/30/2023 466
TCFI Aevex LLC - Revolver 5/13/2025 138
TEI Holdings Inc. - Revolver 12/23/2025 3,018
Tidel Engineering, L.P. - Revolver 3/1/2023 4,250
TLC Purchaser, Inc. - Delayed Draw 10/13/2025 7,119
TLC Purchaser, Inc. - Revolver 10/13/2025 4,984
Ventiv Holdco, Inc. - Revolver 9/3/2025 3,407
WCI-HSG Purchaser, Inc. - Revolver 2/24/2025 2,284
WU Holdco, Inc. - Delayed Draw 3/26/2026 4,801
WU Holdco, Inc. - Revolver 3/26/2025 3,944
YLG Holdings, Inc. - Delayed Draw 10/31/2025 5,127
YLG Holdings, Inc. - Revolver 10/31/2025 8,545
Zywave, Inc. - Revolver 11/17/2022 851
Total First Lien Senior Secured Loans $ 215,795
(1)
Commitments are generally subject to borrowers meeting certain criteria such as
compliance with covenants and certain operational metrics. These amounts may
remain outstanding until the commitment period of an applicable loan expires,
which may be shorter than its maturity.
(2)
Unfunded commitments denominated in currencies other than U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of December 31, 2019.
Contingencies
In the normal course of business, the Company may enter into certain contracts
that provide a variety of indemnities. The Company's maximum exposure under
these indemnities is unknown as it would involve future claims that may be made
against the Company. Currently, the Company is not aware of any such claims and
no such claims are expected to occur. As such, the Company does not consider it
necessary to record a liability in this regard.
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Note 12. Financial Highlights The following is a schedule of financial highlights for the years ended December 31, 2020, 2019, 2018, 2017 and 2016:
For the Year Ended December 31,
2020 2019 2018 2017 2016
Per share data:
Net asset value at beginning of year $ 19.72 $ 19.46 $ 20.30 $ 20.10 $
-
Net investment income (loss) (1) 1.46 1.64 1.45 0.73 (0.90)
Net realized gain (loss)(1)(7) (0.46) 0.15 (0.17) 0.00 -
Net change in unrealized appreciation (depreciation) (1)(2)(8) (0.86) 0.11 (0.60) 0.17 1.01
Net increase in net assets resulting from operations (1)(9)(10) 0.14 1.90 0.68 0.90 0.11
Stockholder distributions from income(3) (1.43) (1.64) (1.52) (0.70) (0.01)
Issuance / (dilution due to issuance) of common stock (1.89) - - - 20.00
Net asset value at end of year $ 16.54 $ 19.72 $ 19.46 $ 20.30
20.10
Net assets at end of year $ 1,068,004 $ 1,018,400 $ 1,001,629 $ 506,963 $ 110,344 Shares outstanding at end of year
64,562,265.27 51,649,812.27 51,482,137.46 24,975,812.40 5,490,882.30
Per share market value at end of year $ 12.13 $ 19.76 $ 16.77
N/A N/A
Total return based on market value (12) (29.82)% 28.18% (15.16)% N/A N/A
Total return based on net asset value (4) (8.62)% 10.02% 3.36% 4.52% 0.58%
Ratios:
Ratio of net investment income (loss) to average net assets (5)(11)
8.58% 8.36% 7.19% 3.51% (4.57)%
Ratio of total expenses to average net assets (5)(11) 10.85% 11.14% 5.57% 2.57% 8.25%
Supplemental data:
Ratio of interest and debt financing expenses to average net assets (5) 6.33% 6.53% 3.09% 0.89% 0.11%
Ratio of expenses (without incentive fees) to average net assets (5)(11)
10.47% 9.69% 4.71% 2.38% 7.18%
Ratio of incentive fees and management fees, net of contractual and voluntary waivers, to average net assets (5)(11)
3.63% 3.85% 2.00% 0.19% 1.07%
Average principal debt outstanding $ 1,572,195 $ 1,339,072 $ 490,468 $ 67,253 $ 484
Portfolio turnover (6) 21.15% 49.37% 19.95% 18.57% 1.71%
Total committed capital, end of year N/A N/A N/A $ 1,255,119 $ 546,720
Ratio of total contributed capital to total committed
capital, end of year N/A N/A N/A 40.04% 20.10%
(1)The per share data was derived by using the weighted average shares outstanding during the year.
(2)
Net change in unrealized appreciation (depreciation) on investments per share may not be consistent with the consolidated statements of operations due to the timing of shareholder transactions.
(3)
The per share data for distributions reflects the actual amount of distributions declared during the year.
(4)
Total return based on net asset value is calculated as the change in net asset value per share during the year, assuming dividends and distributions, including those distributions that have been declared.
(5)
The computation of average net assets during the year is based on averaging net assets for the years reported.
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(6)
Portfolio turnover rate is calculated using the lesser of year-to-date sales or year-to-date purchases over the average of the invested assets at fair value for the years reported. Year-to-date sales and year-to-date purchases for the year ended December 31, 2019 exclude the ABCS distribution transaction.
(7)
Net realized gain (loss) includes net realized gain (loss) on investments, net realized loss on forward currency exchange contracts and net realized gain (loss) on foreign currency transactions.
(8)
Net change in unrealized appreciation (depreciation) includes net change in unrealized appreciation (depreciation) on investments, net change in unrealized appreciation (depreciation) on forward currency exchange contracts and net change in unrealized appreciation (depreciation) on foreign currency translation.
(9)
The sum of quarterly per share amounts presented in previously filed financial statements on Form 10-Q may not equal earnings per share. This is due to changes in the number of weighted average shares outstanding and the effects of rounding.
(10)
Net increase in net assets resulting from operations per share in these financial highlights may be different from the net increase in net assets per share on the consolidated statements of operations due to rounding.
(11)
Ratio of voluntary incentive fee waiver to average net assets was (0.07%) for the year ended December 31, 2020 (Note 5). Ratio of voluntary management fee waiver to average net assets was (0.27%) for the year ended December 31, 2020 (Note 5). The ratio of net investment income without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the year ended December 31, 2020 would be 8.24%. The ratio of total expenses without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the year ended December 31, 2020 would be 11.19%. Ratio of voluntary incentive fee waiver to average net assets was (0.27%) for the year ended December 31, 2019 (Note 5). Ratio of voluntary management fee waiver to average net assets was (0.81%) for the year ended December 31, 2019 (Note 5). The ratio of net investment income without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the year ended December 31, 2019 would be 7.28%. The ratio of total expenses without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the year ended December 31, 2019 would be 12.22%. Ratio of voluntary incentive fee waiver to average net assets was 0.25% for the year ended December 31, 2018 (Note 5). Ratio of voluntary management fee waiver to average net assets was 0.20% for the year ended December 31, 2018 (Note 5). The ratio of net investment income without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the year ended December 31, 2018 would be 6.75%. The ratio of total expenses without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the year ended December 31, 2018 would be 6.02%. No fees were voluntarily waived in the year ended December 31, 2017.
(12)
Total return based on market value (not annualized) is calculated as the change
in market value per share during the period, assuming dividends and
distributions, plus the declared distributions, divided by the beginning market
price for the period. For the year ended December 31, 2018 the beginning market
value per share is based on the IPO price of $20.25. For the year ended
December 31, 2018 total return based on market value covers the period
November 15, 2018 through December 31, 2018.
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Note 13. Selected Quarterly Financial Data (unaudited)
The following are the quarterly results of operations as of and for the years
ended December 31, 2020, 2019 and 2018. The operating results for any quarter
are not necessarily indicative of results for any future period:
As of and for As of and for As of and for As of and for
the Quarter the Quarter the Quarter the Quarter
Ended Ended Ended Ended
December 31, September 30, June 30, March 31,
2020 2020 2020 2020
Total investment income $ 48,276 $ 46,817 $ 47,871 $ 51,496
Net investment income before taxes $ 22,085 $ 21,456 $ 20,022 $ 22,500
Excise tax expense $ 232 $ - $ - $ -
Net investment income after taxes $ 21,853 $ 21,456 $ 20,022 $ 22,500
Net realized and unrealized gain (loss) $ 17,643 $ 30,001 $ 1,750 $ (126,947)
Net increase in net assets resulting from operations $ 39,496 $ 51,457 $ 21,772 $ (104,447) Net realized and unrealized gain (loss) per share - basic and diluted
$ 0.27 $ 0.46 $ 0.03 $ (2.46) Net increase in net assets resulting from operations per share - basic and diluted $ 0.61
$ 0.80 $ 0.40 $ (2.02)
Net asset value per share at period end $ 16.54 $ 16.27 $ 15.81 $ 17.29
As of and for As of and for As of and for As of and for
the Quarter the Quarter the Quarter the Quarter
Ended Ended Ended Ended
December 31, September 30, June 30, March 31,
2019 2019 2019 2019
Total investment income $ 54,767 $ 52,688 $ 50,598 $ 39,892
Net investment income before taxes $ 21,292 $ 21,175 $ 21,155 $ 21,245
Excise tax expense $ - $ - $ - $ -
Net investment income after taxes $ 21,292 $ 21,175 $ 21,155 $ 21,245
Net realized and unrealized gain (loss) $ 59 $ (2,976) $ (1,933) $ 18,068
Net increase in net assets resulting from operations $ 21,351 $ 18,199 $ 19,222 $ 39,313 Net realized and unrealized gain (loss) per share - basic and diluted
$ 0.00 $ (0.06) $ (0.04) $ 0.35 Net increase in net assets resulting from operations per share - basic and diluted $ 0.41
$ 0.35 $ 0.37 $ 0.76
Net asset value per share at period end $ 19.72 $ 19.71 $ 19.77 $ 19.81
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As of and for As of and for As of and for As of and for
the Quarter the Quarter the Quarter the Quarter
Ended Ended Ended Ended
December 31, September 30, June 30, March 31,
2018 2018 2018 2018
Total investment income $ 33,747 $ 26,663 $ 21,425 $ 17,459
Net investment income before taxes $ 19,774 $ 13,899 $ 13,482 $ 8,775
Excise tax expense $ - $ - $ - $ -
Net investment income after taxes $ 19,774 $ 13,899 $ 13,482 $ 8,775
Net realized and unrealized gain (loss) $ (29,646) $ 5,092 $ (7,315) $ 2,584
Net increase (decrease) in net assets resulting from operations $ (9,872) $ 18,991 $ 6,167 $ 11,359
Net realized and unrealized gain (loss) per share - basic and diluted
$ (0.62) $ 0.12 $ (0.21) $ 0.09
Net increase (decrease) in net assets resulting from operations per share - basic and diluted $ (0.21)
$ 0.46 $ 0.17 $ 0.39
Net asset value per share at period end $ 19.46 $ 20.17 $ 20.14 $ 20.33
Note 14. Subsequent Events
On February 9, 2021, the Company and certain entities and managed accounts of
Pantheon Ventures (US) LP ("Pantheon"), a global alternative private markets
asset manager, entered into an amended and restated limited liability company
agreement to co-manage a newly-formed joint venture, International Senior Loan
Program, LLC ("ISLP"). ISLP will seek to provide direct lending solutions to
middle market borrowers primarily across Europe and Australia. Middle-market
companies are those with between $10.0 million and $150.0 million in annual
earnings before interest, taxes, depreciation, and amortization, with a focus on
senior investments with a first or second lien on collateral (including
"unitranche" loans, which are loans that combine both first lien and second lien
debt). Investment decisions, including providing new loans, and all other
decisions in respect of ISLP must be approved by representatives of the Company
and Pantheon.
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