Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  Bain Capital Specialty Finance, Inc.    BCSF

BAIN CAPITAL SPECIALTY FINANCE, INC.

(BCSF)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector news

BAIN CAPITAL SPECIALTY FINANCE : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

05/04/2020 | 05:21pm EST
You should read the following analysis of our financial condition and results of
operations in conjunction with our financial statements and related notes
appearing in our Annual Report on Form 10-K (the "Annual Report") for the year
ended December 31, 2019, filed with the U.S. Securities and Exchange Commission
("SEC") on February 26, 2020. The information contained in this section should
also be read in conjunction with our unaudited financial statements and related
notes and other financial information appearing elsewhere in this Quarterly
Report on Form 10-Q (the "Quarterly Report").



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 by
BCSF Advisors, LP (our "Advisor" or "BCSF Advisors"), a subsidiary of Bain
Capital Credit, LP ("Bain Capital Credit"). Our Advisor is registered as an
investment adviser with the SEC 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 on October 13, 2016 through
March 31, 2020, we have invested approximately $3.7 billion 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.



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, investment activity for the first quarter of 2020 was focused primarily
on meeting undrawn commitments from existing portfolio companies and, to a
lesser extent, opportunistically pursuing investments made available or
potentially more attractively priced as a result of market disruptions. 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 the SEC, "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.



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.



                                       44





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 of
March 31, 2020 and December 31, 2019, 99.7% 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 investment advisory agreement (the "Investment 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;

· the costs of any public offerings of our common stock and other securities,

   including registration and listing fees;



· costs of calculating our net asset value (including the cost and expenses of

   any third-party valuation services);



· 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;



· interest payable on debt and other borrowing costs, if any, incurred to finance

   our investments;



· costs of effecting sales and repurchases of our common stock and other

   securities;



· the base management fee and any incentive fee;

· distributions on our common stock;

· transfer agent and custody fees and expenses;

· the allocated costs incurred by the Administrator in providing managerial

   assistance to those portfolio companies that request it;



· other expenses incurred by BCSF Advisors or us in connection with administering

our business, including payments made to third-party providers of goods or

   services;




· brokerage fees and commissions;

· federal and state registration fees;

· U.S. federal, state and local taxes;




                                       45




· Independent Director fees and expenses;

· costs associated with our reporting and compliance obligations under the 1940

   Act and applicable U.S. federal and state securities laws;



· costs of any reports, proxy statements or other notices to our stockholders,

   including printing costs;



· costs of holding stockholder meetings;




 · our fidelity bond;



· directors' and officers' errors and omissions liability insurance, and any

   other insurance premiums;



· litigation, indemnification and other non-recurring or extraordinary expenses;

· direct costs and expenses of administration and operation, including printing,

mailing, long distance telephone, staff, audit, compliance, tax and legal

   costs;



· fees and expenses associated with marketing efforts;

· dues, fees and charges of any trade association of which we are a member; and

· 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 by BCSF Advisors, we will
generally reimburse BCSF 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"). We incurred
expenses related to the Administrator of $0.0 million and $0.1 million for the
three months ended March 31, 2020 and 2019, respectively, which is included in
other general and administrative expenses on the consolidated statements of
operations. 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 $0.1 million and $0.2 million for
the three months ended March 31, 2020 and 2019, 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), as of March 31, 2020, 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.



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. The Company has limited exposure to cyclical industries,
including those currently experiencing significant distress, such as the energy,
hospitality, and airline industries. The Company has no direct investments in
commercial aviation companies and has focused on identifying portfolio companies
in defensive industries such as technology, aerospace & defense and healthcare &
pharmaceuticals with an emphasis on the durability of a portfolio company's cash
flow profile.



With respect to the Company's investments, we are taking 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
March 31, 2020 as compared to our net asset value as of December 31, 2019. The
significant decrease is primarily the result of the impact of the COVID-19
pandemic. During the three months ended March 31, 2020, the Company had
significant net losses driven by unrealized depreciation across the fair value
of the Company's investments due to spread widening.



The decline in value of the Company's net asset value, together, with the new
fundings of draw requests on revolving credit and delayed draw facilities,
caused the Company's asset coverage to decrease as of March 31, 2020 as compared
to our asset coverage as of December 31, 2019. As of March 31, 2020, we are
permitted under the 1940 Act, as a BDC, to borrow amounts such that our asset
coverage, as defined in the 1940 Act, must equal at least 150% immediately after
each time we incur indebtedness. As of March 31, 2020, the Company's asset
coverage was 154%.



As of March 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 March 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 three months ended March 31, 2020, we invested $276.3 million, including PIK, in 52 portfolio companies, and had $180.7 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $95.6 million for the period. Of the $276.3 million invested during the three months ended March 31, 2020, $165.4 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.




During the three months ended March 31, 2019, we invested $275.6 million,
including PIK, in 45 portfolio companies, including ABCS as a single portfolio
company, and had $192.2 million in aggregate amount of principal repayments and
sales, resulting in a net increase in investments of $83.4 million for the
period.



                                       46




The following table shows the composition of the investment portfolio and associated yield data as of March 31, 2020 (dollars in thousands):



                                                                                         As of March 31, 2020
                                                                                                                              Weighted Average Yield (1)
                                                                                                                                          at
                                                                Percentage of                         Percentage of         Amortized              Market
                                          Amortized Cost       Total Portfolio      Fair Value       Total Portfolio          Cost                  Value
First Lien Senior Secured Loans          $      2,283,074                  87.0 %   $ 2,178,825                  87.7 %             6.9 %                 7.2 %
First Lien Last Out Loans                          16,821                   0.6          16,258                   0.6              10.7                  11.1
Second Lien Senior Secured Loans                  187,660                   7.2         153,050                   6.2               9.2                  10.8
Subordinated Debt                                  14,763                   0.6          15,000                   0.6              12.7                  12.5
Equity Interests                                  103,332                   3.9          99,867                   4.0              10.1                   9.9
Preferred Equity                                   19,584                   0.7          21,533                   0.9              15.1                  15.0
Warrants                                                -                   0.0               -                   0.0               N/A                   N/A
Total                                    $      2,625,234                 100.0 %   $ 2,484,533                 100.0 %             7.3 %                 7.6 %





(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, 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 December 31, 2019 (dollars in thousands):



                                                                                       As of December 31, 2019
                                                                                                                              Weighted Average Yield (1)
                                                                                                                                          at
                                                                Percentage of                         Percentage of         Amortized              Market
                                          Amortized 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              13.5                  13.3
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 %             7.8 %                 7.8 %





(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, 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 March 31, 2020:



                                                      As of
                                                  March 31, 2020
Number of portfolio companies                                 108
Percentage of debt bearing a floating rate (1)               99.7 %
Percentage of debt bearing a fixed rate (1)                   0.3 %






(1)    Measured on a fair value basis.


The following table presents certain selected information regarding our investment portfolio as of December 31, 2019:



                                                        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.




                                       47










The following table shows the amortized cost and fair value of our performing and non-accrual investments as of March 31, 2020 (dollars in thousands):



                                        As of March 31, 2020
                                    Percentage at                        Percentage at
               Amortized Cost       Amortized Cost      Fair Value        Fair Value
Performing    $      2,579,499                 98.3 %   $ 2,458,445                98.9 %
Non-accrual             45,735                  1.7          26,088                 1.1
Total         $      2,625,234                  100 %   $ 2,484,533                 100 %





The following table shows the amortized cost and fair value of our performing and non-accrual investments as of December 31, 2019 (dollars in thousands):



                                       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 March
31, 2020, there had been three loans placed on non-accrual in the Company's
portfolio and only 1.1% of portfolio, based on fair value, was on non-accrual
status. This is compared to two loans on non-accrual as of December 31, 2019 and
0.1% of the portfolio being on non-accrual status.



The following table shows the amortized cost and fair value of the investment
portfolio, cash and cash equivalents and foreign cash as of March 31, 2020
(dollars in thousands):



                                                                  As of March 31, 2020
                                                              Percentage of                       Percentage of
                                         Amortized Cost           Total          Fair Value           Total
Cash and cash equivalents               $         55,128                 2.0 %   $    55,128                 2.2 %
Foreign cash                                         943                 0.0             632                 0.0
Restricted cash                                   18,706                 0.7          18,706                 0.7
First Lien Senior Secured Loans                2,283,074                84.6       2,178,825                85.1
First Lien Last Out Loans                         16,821                 0.6          16,258                 0.6
Second Lien Senior Secured Loans                 187,660                 7.0         153,050                 6.0
Subordinated Debt                                 14,763                 0.6          15,000                 0.7
Equity Interests                                 103,332                 3.8          99,867                 3.9
Preferred Equity                                  19,584                 0.7          21,533                 0.8
Warrants                                               -                 0.0               -                 0.0
Total                                   $      2,700,011               100.0 %   $ 2,558,999               100.0 %




The following table shows the amortized cost and fair value of the investment
portfolio, cash and cash equivalents and foreign cash as of December 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 %




                                       48





The following table shows the composition of the investment portfolio by
industry, at amortized cost and fair value as of March 31, 2020 (with
corresponding percentage of total portfolio investments) (dollars in thousands):



                                                                        As of March 31, 2020
                                                                   Percentage of                         Percentage of
                                             Amortized Cost       Total Portfolio      Fair Value       Total Portfolio
High Tech Industries                        $        393,219                  15.0 %   $   378,539                  15.2 %
Aerospace & Defense                                  319,706                  12.2         306,957                  12.4
Healthcare & Pharmaceuticals                         225,606                   8.6         209,603                   8.4
Consumer Goods: Non-Durable                          211,887                   8.1         206,863                   8.3
Capital Equipment                                    188,172                   7.2         185,100                   7.5
Services: Business                                   198,438                   7.6         182,645                   7.4
Transportation: Cargo                                117,045                   4.5         113,471                   4.6
Construction & Building                              109,634                   4.2         106,754                   4.3
Wholesale                                             80,575                   3.1          73,846                   3.0
Energy: Oil & Gas                                     80,603                   3.1          72,177                   2.9
Automotive                                            69,217                   2.6          67,997                   2.7
Consumer Goods: Durable                               67,532                   2.6          65,370                   2.6
Transportation: Consumer                              69,696                   2.6          61,343                   2.4
FIRE: Insurance (1)                                   58,540                   2.2          56,203                   2.3
Media: Advertising, Printing & Publishing             59,762                   2.3          52,736                   2.1
Hotel, Gaming & Leisure                               53,022                   2.0          46,867                   1.9
Media: Broadcasting & Subscription                    43,199                   1.6          43,162                   1.7
Media: Diversified & Production                       37,920                   1.4          36,777                   1.5
Chemicals, Plastics & Rubber                          33,702                   1.3          33,327                   1.3
Retail                                                32,289                   1.2          32,125                   1.3
Services: Consumer                                    30,479                   1.2          27,168                   1.1
Telecommunications                                    21,850                   0.8          20,879                   0.8
Energy: Electricity                                   22,124                   0.8          20,784                   0.8
Environmental Industries                              16,821                   0.6          16,258                   0.7
FIRE: Finance (1)                                     14,865                   0.6          14,857                   0.6
Banking                                               15,340                   0.6          14,388                   0.6
Containers, Packaging & Glass                         11,642                   0.4          11,485                   0.5
FIRE: Real Estate (1)                                 10,805                   0.4          10,024                   0.4
Beverage, Food & Tobacco                              21,235                   0.8           9,461                   0.4
Forest Products & Paper                               10,309                   0.4           7,367                   0.3
Total                                       $      2,625,234                 100.0 %   $ 2,484,533                 100.0 %







(1) Finance, Insurance and Real Estate ("FIRE").




                                       49





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) (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
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;



· periodic or regular contact with portfolio company management and, if

appropriate, the financial or strategic sponsor to discuss financial position,

   requirements and accomplishments;



· comparisons to our other portfolio companies in the industry, if any;

· attendance at and participation in board meetings or presentations by portfolio

   companies; and



· 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, the 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.



· 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.



· 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.




                                       50








The following table shows the composition of our portfolio on the 1 to 4 rating scale as of March 31, 2020 (dollars in thousands):



                                                       As of March 31, 2020
                                   Fair          Percentage of       Number of       Percentage of
Investment Performance Rating      Value             Total           Companies           Total
              1                 $    15,245                 0.6 %             1                 0.9 %
              2                   2,128,915                85.7              88                81.5
              3                     313,896                12.6              17                15.7
              4                      26,477                 1.1               2                 1.9
Total                           $ 2,484,533               100.0 %           108               100.0 %







The following table shows the composition of our portfolio on the 1 to 4 rating scale as of December 31, 2019 (dollars in thousands):



                                                      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 %



We believe that, overall, our portfolio has continued to perform well, with approximately 86% of loans performing at or above expectations.

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' 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 both Antares 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 the Advisor and Antares Credit Opportunities Manager LLC, as representatives of us and Antares, respectively. Each of the Advisor and Antares sourced investments for ABCS.




On April 30, 2019, we 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. 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, 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.



                                       51




Below is selected statements of operations information for the three months ended March 31, 2019:

© Edgar Online, source Glimpses

All news about BAIN CAPITAL SPECIALTY FINANCE, INC.
03/05BAIN CAPITAL SPECIALTY FINANCE, INC. : Entry into a Material Definitive Agreemen..
AQ
03/03BAIN CAPITAL SPECIALTY FINANCE, INC. : Regulation FD Disclosure (form 8-K)
AQ
03/03BAIN CAPITAL SPECIALTY FINANCE  : Prices Offering of $300 Million of 2.95% Notes..
MT
03/03BAIN CAPITAL SPECIALTY FINANCE, INC. : Prices Public Offering of $300 Million of..
BU
03/01BAIN CAPITAL SPECIALTY FINANCE  : Wells Fargo Upgrades Bain Capital Specialty Fi..
MT
02/25BAIN CAPITAL SPECIALTY FINANCE  : Janney Raises Price Target for Bain Capital Sp..
MT
02/25BAIN CAPITAL SPECIALTY FINANCE, INC. : Regulation FD Disclosure (form 8-K)
AQ
02/25BAIN CAPITAL SPECIALTY FINANCE, INC. : Receives Investment Grade Rating from Moo..
BU
02/24BAIN CAPITAL SPECIALTY FINANCE, INC. : Results of Operations and Financial Condi..
AQ
02/24BAIN CAPITAL SPECIALTY : 4Q Earnings Snapshot
AQ
More news