OAKTREE SPECIALTY LENDING CORPORATION The following discussion should be read in connection with our Consolidated Financial Statements and the notes thereto included elsewhere in this quarterly report on Form 10-Q. Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to: •our future operating results and distribution projections; •the ability ofOaktree Fund Advisors, LLC , or Oaktree, to reposition our portfolio and to implement Oaktree's future plans with respect to our business; •the ability of Oaktree and its affiliates to attract and retain highly talented professionals; •our business prospects and the prospects of our portfolio companies; •the impact of the investments that we expect to make; •the ability of our portfolio companies to achieve their objectives; •our expected financings and investments and additional leverage we may seek to incur in the future; •the adequacy of our cash resources and working capital; •the timing of cash flows, if any, from the operations of our portfolio companies; and •the cost or potential outcome of any litigation to which we may be a party. In addition, words such as "anticipate," "believe," "expect," "seek," "plan," "should," "estimate," "project" and "intend" indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in "Item 1A. Risk Factors" in our annual report on Form 10-K for the year endedSeptember 30, 2020 and elsewhere in this quarterly report on Form 10-Q. Other factors that could cause actual results to differ materially include: •changes or potential disruptions in our operations, the economy, financial markets or political environment; •risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic; •future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to Business Development Companies or regulated investment companies, or RICs; •general considerations associated with the COVID-19 pandemic; •the ability of the parties to consummate the Mergers (as defined below) on the expected timeline, or at all; •the ability to realize the anticipated benefits of the Mergers; •the effects of disruption on our business from the proposed Mergers; •the combined company's plans, expectations, objectives and intentions, as a result of the Mergers; •any potential termination of the Merger Agreement; •the actions of our stockholders or the stockholders of Oaktree Strategic Income Corporation, or OCSI, with respect to the proposals submitted for their approval in connection with the Mergers; and •other considerations that may be disclosed from time to time in our publicly disseminated documents and filings. We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with theSecurities and Exchange Commission , or theSEC , including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. All dollar amounts in tables are in thousands, except share and per share amounts and as otherwise indicated. Business Overview We are a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company under the Investment Company Act 73 -------------------------------------------------------------------------------- of 1940, as amended, or the Investment Company Act. In addition, we have qualified and elected to be treated as a RIC under the Internal Revenue Code of 1986, as amended, or the Code for tax purposes. We are externally managed by Oaktree pursuant to an investment advisory agreement, as amended from time to time, or the Investment Advisory Agreement.Oaktree Fund Administration, LLC , or the Oaktree Administrator, an affiliate of Oaktree, provides certain administrative and other services necessary for us to operate pursuant to an administration agreement, as amended from time to time, or the Administration Agreement. Our investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. We may also seek to generate capital appreciation and income through secondary investments at discounts to par in either private or syndicated transactions. Our portfolio may also include certain structured finance and other non-traditional structures. We invest in companies that typically possess resilient business models with strong underlying fundamentals. We intend to deploy capital across credit and economic cycles with a focus on long-term results, which we believe will enable us to build lasting partnerships with financial sponsors and management teams, and we may seek to opportunistically take advantage of dislocations in the financial markets and other situations that may benefit from Oaktree's credit and structuring expertise, including during the COVID-19 pandemic. Sponsors may include financial sponsors, such as an institutional investor or a private equity firm, or a strategic entity seeking to invest in a portfolio company. Oaktree is generally focused on middle-market companies, which we define as companies with enterprise values of between$100 million and$750 million . We generally invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as "high yield" and "junk," have predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. Oaktree intends to continue to rotate our portfolio into investments that are better aligned with Oaktree's overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles (which we call "core investments"). Oaktree has performed a comprehensive review of our portfolio and categorized our portfolio into core investments, non-core performing investments and underperforming investments. Certain additional information on such categorization and our portfolio composition is included in investor presentations that we file with theSEC . Since an Oaktree affiliate became our investment adviser inOctober 2017 , Oaktree and its affiliates have reduced the investments identified as non-core by over$700 million at fair value. Over time, Oaktree intends to rotate us out of the remaining non-core investments, which were approximately$125 million at fair value as ofDecember 31, 2020 . Oaktree periodically reviews designations of investments as core and non-core and may change such designations over time. OnOctober 28, 2020 , we entered into an Agreement and Plan of Merger, or the Merger Agreement, with OCSI,Lion Merger Sub, Inc. , aDelaware corporation and our wholly-owned subsidiary, or the Merger Sub, and, solely for the limited purposes set forth therein, Oaktree. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into OCSI, with OCSI continuing as the surviving company and as our wholly-owned subsidiary, or the Merger, and, immediately thereafter, OCSI will merge with and into us, with us continuing as the surviving company, or together with the Merger, the Mergers. Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2021, is subject to certain closing conditions, including requisite approvals of our and OCSI's stockholders and certain other closing conditions. For more information about the Mergers, see Note 15 to our consolidated financial statements included in this quarterly report on Form 10-Q and our final joint proxy statement/prospectus filed with theSEC onJanuary 21, 2021 . Business Environment and Developments We believe that the COVID-19 pandemic may have lasting effects on theU.S. and global financial markets and may cause further economic uncertainties or deterioration in the performance of the middle market inthe United States and worldwide. While the initial market disruptions have somewhat eased, the global economy continues to experience economic uncertainty, particularly due to difficulties in the reopening of certain economies, or portions thereof, and delays in vaccine rollout. This uncertainty can impact the overall supply and demand of the market through changing spreads, deal terms and structures, and equity purchase price multiples. Despite this economic uncertainty, we believe attractive risk-adjusted returns can be achieved by making loans to companies in the middle market. Given the breadth of the investment platform of Oaktree and its affiliates, we believe that we have the resources and experience to source, diligence and structure investments in these companies and are well placed to generate attractive returns for investors. 74 -------------------------------------------------------------------------------- We have proactively taken a number of actions to evaluate and support our portfolio companies in light of the COVID-19 pandemic, including outreach to a variety of management teams and sponsors. We have been in close contact with many of our portfolio companies to understand their liquidity and solvency positions. We believe that these efforts to closely monitor and identify vulnerable investments will allow us to address potential problems early and provide constructive solutions to our portfolio companies. As ofDecember 31, 2020 , 88.8% of our debt investment portfolio (at fair value) and 89.6% of our debt investment portfolio (at cost) bore interest at floating rates indexed to the LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly or monthly at the borrower's option. As a result of the COVID-19 pandemic and the related decision of theU.S. Federal Reserve to reduce certain interest rates, LIBOR decreased beginning inMarch 2020 . A prolonged reduction in interest rates will result in a decrease in our total investment income and could result in a decrease in our net investment income to the extent the decreases are not offset by an increase in the spread on our floating rate investments, a decrease in our interest expense or a reduction of our incentive fee on income. InJuly 2017 , the head of theUnited Kingdom Financial Conduct Authority , or theFCA , announced the desire to phase out the use of LIBOR by the end of 2021. However, theFCA recently announced that most US Dollar LIBOR would continue to be published throughJune 30, 2023 . In anticipation of the cessation of LIBOR, we may need to renegotiate any credit agreements extending beyond the applicable phase out date with our prospective portfolio companies that utilize LIBOR as a factor in determining the interest rate. Certain of the loan agreements with our portfolio companies have included fallback language in the event that LIBOR becomes unavailable. This language generally provides that the administrative agent may identify a replacement reference rate, typically with the consent of (or prior consultation with) the borrower. In certain cases, the administrative agent will be required to obtain the consent of either a majority of the lenders under the facility, or the consent of each lender, prior to identifying a replacement reference rate. Certain of the loan agreements with our portfolio companies do not include any fallback language providing a mechanism for the parties to negotiate a new reference interest rate and will instead revert to the base rate in the event LIBOR ceases to exist.
Critical Accounting Policies
Basis of Presentation Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted inthe United States of America , or GAAP, and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the Consolidated Financial Statements have been made. All intercompany balances and transactions have been eliminated. We are an investment company following the accounting and reporting guidance inFinancial Accounting Standards Board , or FASB, Accounting Standards Codification, or ASC, Topic 946, Financial Services-Investment Companies, or ASC 946. Investment Valuation We value our investments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity. Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: •Level 1 - Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. •Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities. •Level 3 - Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. If inputs used to measure fair value fall into different levels of the fair value hierarchy, an investment's level is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. This 75 -------------------------------------------------------------------------------- includes investment securities that are valued using "bid" and "ask" prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions. Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, Oaktree obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of our investments for which quotations are available. In determining the fair value of a particular investment, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations. We seek to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If we are unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within our set threshold, we seek to obtain a quote directly from a broker making a market for the asset. Oaktree evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, Oaktree performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process. Generally, we do not adjust any of the prices received from these sources. If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, we value such investments using any of three different valuation techniques. The first valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The second valuation technique is an analysis of the enterprise value, or EV, of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The EV analysis is typically performed to determine (i) the value of equity investments, (ii) whether there is credit impairment for debt investments and (iii) the value for debt investments that we are deemed to control under the Investment Company Act. To estimate the EV of a portfolio company, Oaktree analyzes various factors, including the portfolio company's historical and projected financial results, macroeconomic impacts on the company and competitive dynamics in the company's industry. Oaktree also utilizes some or all of the following information based on the individual circumstances of the portfolio company: (i) valuations of comparable public companies, (ii) recent sales of private and public comparable companies in similar industries or having similar business or earnings characteristics, (iii) purchase prices as a multiple of their earnings or cash flow, (iv) the portfolio company's ability to meet its forecasts and its business prospects, (v) a discounted cash flow analysis, (vi) estimated liquidation or collateral value of the portfolio company's assets and (vii) offers from third parties to buy the portfolio company. We may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date. The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments. In the market yield technique, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk, and we consider the current contractual interest rate, the capital structure and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by us are substantially illiquid with no active transaction market, we depend on primary market data, including newly funded transactions and industry-specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable. In accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels. These investments are generally not redeemable. We estimate the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk-free rate. Changes in the subjective input assumptions can materially affect the fair value estimates. Our Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of our investments: •The quarterly valuation process begins with each portfolio company or investment being initially valued by Oaktree's valuation team in conjunction with Oaktree's portfolio management team and investment professionals responsible for each portfolio investment; •Preliminary valuations are then reviewed and discussed with management of Oaktree; 76 -------------------------------------------------------------------------------- •Separately, independent valuation firms engaged by our Board of Directors prepare valuations of our investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to us and provide such reports to Oaktree and the Audit Committee of our Board of Directors; •Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee; •The Audit Committee reviews the preliminary valuations with Oaktree, and Oaktree responds and supplements the preliminary valuations to reflect any discussions between Oaktree and the Audit Committee; •The Audit Committee makes a recommendation to our full Board of Directors regarding the fair value of the investments in our portfolio; and •Our Board of Directors discusses valuations and determines the fair value of each investment in our portfolio. The fair value of our investments as ofDecember 31, 2020 andSeptember 30, 2020 was determined in good faith by our Board of Directors. Our Board of Directors has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of a portion of our portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance. As ofDecember 31, 2020 , 94.3% of our portfolio at fair value was valued either based on market quotations, the transactions precedent approach or corroborated by independent valuation firms. However, our Board of Directors is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to our 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 fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material. As ofDecember 31, 2020 andSeptember 30, 2020 , approximately 95.5% and 95.9%, respectively, of our total assets represented investments at fair value. Revenue Recognition Interest Income Interest income, adjusted for accretion of original issue discount, or OID, is recorded on an accrual basis to the extent that such amounts are expected to be collected. We stop accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management's judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash, and the portfolio company, in management's judgment, is likely to continue timely payment of its remaining obligations. As ofDecember 31, 2020 , there was one investment on which we had stopped accruing cash and/or payment in kind, or PIK, interest or OID income. In connection with our investment in a portfolio company, we sometimes receive nominal cost equity that is valued as part of the negotiation process with the portfolio company. When we receive nominal cost equity, we allocate our cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan. PIK Interest Income Our investments in debt securities may contain PIK interest provisions. PIK interest, which typically represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We generally cease accruing PIK interest if there is insufficient value to support the accrual or if we do not expect the portfolio company to be able to pay all principal and interest due. Our decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; our assessment of the portfolio company's business development success; information obtained by us in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. Our determination to cease accruing PIK interest is generally made well before our full write-down of a loan or debt security. In 77 -------------------------------------------------------------------------------- addition, if it is subsequently determined that we will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on our debt investments increases the recorded cost bases of these investments in our Consolidated Financial Statements including for purposes of computing the capital gains incentive fee payable by us to Oaktree. To maintain our status as a RIC, certain income from PIK interest may be required to be distributed to our stockholders, even though we have not yet collected the cash and may never do so. Fee Income Oaktree or its affiliates may provide financial advisory services to portfolio companies and, in return, we may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by us upon the investment closing date. We may also receive additional fees in the ordinary course of business, including servicing, amendment and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered. We have also structured exit fees across certain of our portfolio investments to be received upon the future exit of those investments. These fees are typically paid to us upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. These fees are included in net investment income over the life of the loan. Dividend Income We generally recognize dividend income on the ex-dividend date for public securities and the record date for private equity investments. Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from private equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. Portfolio Composition Our investments principally consist of loans, common and preferred equity and warrants in privately-held companies andSenior Loan Fund JV I, LLC , or SLF JV I, a joint venture through which we andTrinity Universal Insurance Company , a subsidiary of Kemper Corporation, or Kemper, co-invest in senior secured loans of middle-market companies and other corporate debt securities. Our loans are typically secured by a first, second or subordinated lien on the assets of the portfolio company and generally have terms of up to ten years (but an expected average life of between three and four years). During the three months endedDecember 31, 2020 , we originated$286.3 million of investment commitments in 14 new and seven existing portfolio companies and funded$241.5 million of investments. During the three months endedDecember 31, 2020 , we received$160.7 million of proceeds from prepayments, exits, other paydowns and sales and exited 12 portfolio companies. A summary of the composition of our investment portfolio at cost and fair value as a percentage of total investments is shown in the following tables: December 31, 2020 September 30, 2020 Cost: Senior secured debt 83.31 % 80.58 % Debt investment in SLF JV I 5.48 5.77 Common equity and warrants 3.32 3.69 Subordinated debt 2.83 4.64 LLC equity interests of SLF JV I 2.81 2.95 Preferred equity 2.25 2.37 Total 100.00 % 100.00 % 78
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December 31, 2020 September 30, 2020
Fair value:
Senior secured debt 85.70 % 84.06 %
Debt investment in SLF JV I 5.62 6.12
Subordinated debt 3.08 4.17
Common equity and warrants 2.15 2.40
Preferred equity 1.74 1.90
LLC equity interests of SLF JV I 1.71 1.35
Total 100.00 % 100.00 %
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The industry composition of our portfolio at cost and fair value as a percentage of total investments was as follows:
December 31, 2020 September 30, 2020
Cost:
Application Software 12.51 % 9.71 %
Multi-Sector Holdings (1) 8.38 8.87
Data Processing & Outsourced Services 7.50 6.57
Pharmaceuticals 6.35 5.96
Biotechnology 6.17 5.36
Health Care Services 4.20 4.26
Specialized Finance 3.98 3.11
Personal Products 3.13 3.00
Movies & Entertainment 2.86 2.68
Property & Casualty Insurance 2.73 2.88
Integrated Telecommunication Services 2.53 2.67
Real Estate Services 2.22 2.34
Specialty Chemicals 2.20 2.68
Fertilizers & Agricultural Chemicals 1.96 2.02
Aerospace & Defense 1.94 1.68
Auto Parts & Equipment 1.91 2.02
Internet Services & Infrastructure 1.91 1.72
Oil & Gas Refining & Marketing 1.77 1.87
Managed Health Care 1.56 1.65
Electronic Components 1.52 1.53
Oil & Gas Storage & Transportation 1.48 1.59
Research & Consulting Services 1.41 1.49
Airport Services 1.27 1.34
Health Care Supplies 1.24 1.30
Health Care Technology 1.22 1.29
Construction & Engineering 1.22 0.80
Independent Power Producers & Energy Traders 1.21 1.29
Diversified Support Services 1.07 1.13
Industrial Machinery 1.06 0.90
Insurance Brokers 0.96 1.05
Systems Software 0.96 1.24
Electrical Components & Equipment 0.91 1.25
Hotels, Resorts & Cruise Lines 0.87 0.92
IT Consulting & Other Services 0.85 0.89
Internet & Direct Marketing Retail 0.84 0.89
Airlines 0.81 0.63
Advertising 0.77 0.82
Health Care Distributors 0.73 0.77
Apparel, Accessories & Luxury Goods 0.72 0.82
Restaurants 0.59 0.61
Commercial Printing 0.45 0.47
Education Services 0.42 1.37
Food Retail 0.39 0.41
Diversified Real Estate Activities 0.36 0.92
Trading Companies & Distributors 0.33 0.61
Oil & Gas Equipment & Services 0.18 0.20
Construction Materials 0.12 0.13
Leisure Facilities 0.11 0.11
Specialty Stores 0.07 0.08
Thrifts & Mortgage Finance 0.04 0.06
Other Diversified Financial Services 0.01 0.01
General Merchandise Stores - 1.15
Metal & Glass Containers - 0.68
Health Care Facilities - 0.19
Specialized REITs - 0.01
Total 100.00 % 100.00 %
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December 31, 2020 September 30, 2020
Fair value:
Application Software 12.88 % 10.21 %
Multi-Sector Holdings (1) 7.54 7.74
Data Processing & Outsourced Services 7.14 6.33
Pharmaceuticals 6.91 6.55
Biotechnology 6.54 6.14
Specialized Finance 4.04 3.08
Health Care Services 3.64 3.81
Personal Products 3.27 3.24
Movies & Entertainment 3.00 2.77
Property & Casualty Insurance 2.81 2.97
Integrated Telecommunication Services 2.48 2.61
Real Estate Services 2.23 2.40
Specialty Chemicals 2.16 2.48
Fertilizers & Agricultural Chemicals 2.02 2.14
Auto Parts & Equipment 1.90 1.99
Aerospace & Defense 1.85 1.56
Internet Services & Infrastructure 1.83 1.69
Oil & Gas Refining & Marketing 1.73 1.90
Electronic Components 1.71 1.69
Managed Health Care 1.59 1.70
Research & Consulting Services 1.46 1.54
Oil & Gas Storage & Transportation 1.36 1.64
Health Care Technology 1.29 1.40
Construction & Engineering 1.28 0.86
Health Care Supplies 1.27 1.37
Airport Services 1.24 1.35
Independent Power Producers & Energy Traders 1.20 1.32
Insurance Brokers 1.10 1.15
Diversified Support Services 1.07 1.12
Airlines 1.03 0.83
Hotels, Resorts & Cruise Lines 1.00 1.09
Systems Software 0.99 1.30
Electrical Components & Equipment 0.95 1.30
Internet & Direct Marketing Retail 0.94 0.97
Industrial Machinery 0.91 0.74
IT Consulting & Other Services 0.83 0.88
Advertising 0.81 0.85
Health Care Distributors 0.73 0.78
Restaurants 0.60 0.50
Diversified Real Estate Activities 0.44 1.07
Commercial Printing 0.43 0.47
Food Retail 0.41 0.44
Apparel, Accessories & Luxury Goods 0.39 0.50
Education Services 0.39 0.45
Trading Companies & Distributors 0.33 0.64
Oil & Gas Equipment & Services 0.14 0.16
Construction Materials 0.13 0.13
Thrifts & Mortgage Finance 0.01 0.02
Leisure Facilities - -
General Merchandise Stores - 1.14
Metal & Glass Containers - 0.75
Health Care Facilities - 0.23
Specialized REITs - 0.01
Total 100.00 % 100.00 %
___________________(1)This industry includes our investments in SLF JV I and certain limited partnership interests.
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Loans and Debt Securities on Non-Accrual Status
As of December 31, 2020 and September 30, 2020 , there were one and two
investments, respectively, on which we had stopped accruing cash and/or PIK
interest or OID income.
The percentages of our debt investments at cost and fair value by accrual status
as of December 31, 2020 and September 30, 2020 were as follows:
December 31, 2020 September 30, 2020
% of Debt Fair % of Debt % of Debt Fair % of Debt
Cost Portfolio Value Portfolio Cost Portfolio Value Portfolio
Accrual $ 1,609,920 99.96 % $ 1,616,023 99.97 % $ 1,500,364 98.79 % $ 1,483,284 99.89 %
PIK non-accrual (1) - - - - 12,661 0.83 - -
Cash non-accrual (2) 588 0.04 470 0.03 5,712 0.38 1,571 0.11
Total $ 1,610,508 100.00 % $ 1,616,493 100.00 % $ 1,518,737 100.00 % $ 1,484,855 100.00 %
___________________
(1)PIK non-accrual status is inclusive of other non-cash income, where applicable. (2)Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.Senior Loan Fund JV I, LLC InMay 2014 , we entered into a limited liability company, or LLC, agreement with Kemper to form SLF JV I. We co-invest in senior secured loans of middle-market companies and other corporate debt securities with Kemper through our investment in SLF JV I. SLF JV I is managed by a four person Board of Directors, two of whom are selected by us and two of whom are selected by Kemper. All portfolio decisions and investment decisions in respect of SLF JV I must be approved by the SLF JV I investment committee, which consists of one representative selected by us and one representative selected by Kemper (with approval from a representative of each required). Since we do not have a controlling financial interest in SLF JV I, we do not consolidate SLF JV I. SLF JV I is capitalized pro rata with LLC equity interests as transactions are completed and may be capitalized with additional subordinated notes issued to us and Kemper by SLF JV I. The subordinated notes issued by SLF JV I are referred to as the SLF JV I Notes. The SLF JV I Notes are senior in right of payment to SLF JV I LLC equity interests and subordinated in right of payment to SLF JV I's secured debt. As ofDecember 31, 2020 andSeptember 30, 2020 , we and Kemper owned, in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV I and the outstanding SLF JV I Notes. SLF JV I has a senior revolving credit facility with Deutsche Bank AG,New York Branch, or, as amended, the Deutsche Bank I Facility, which permitted up to$225.0 million and$250.0 million of borrowings (subject to borrowing base and other limitations) as ofDecember 31, 2020 andSeptember 30, 2020 , respectively. Borrowings under the Deutsche Bank I Facility are secured by all of the assets ofSLF JV I Funding LLC , a special purpose financing subsidiary of SLF JV I. As ofDecember 31, 2020 , the reinvestment period of the Deutsche Bank I Facility was scheduled to expireJune 28, 2021 and the maturity date for the Deutsche Bank I Facility wasJune 29, 2026 . As ofDecember 31, 2020 , borrowings under the Deutsche Bank I Facility accrued interest at a rate equal to the 3-month LIBOR plus 1.85% per annum during the reinvestment period and 3-month LIBOR plus 2.00% per annum during the amortization period. Under the Deutsche Bank I Facility,$175.4 million and$167.9 million of borrowings were outstanding as ofDecember 31, 2020 andSeptember 30, 2020 , respectively. OnDecember 9, 2020 , the waiver period under the Deutsche Bank I Facility during which the facility agent was restricted from revaluing certain collateral obligations where the change in valuation was caused by or resulted from a business disruption due primarily to the COVID-19 pandemic was terminated. As ofDecember 31, 2020 andSeptember 30, 2020 , SLF JV I had total assets of$341.2 million and$313.5 million , respectively. SLF JV I's portfolio primarily consisted of senior secured loans to 56 portfolio companies as of each ofDecember 31, 2020 andSeptember 30, 2020 . The portfolio companies in SLF JV I are in industries similar to those in which we may invest directly. As ofDecember 31, 2020 , our investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of$125.5 million in aggregate at fair value. As ofSeptember 30, 2020 , our investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of$117.4 million in aggregate at fair value. As of each ofDecember 31, 2020 andSeptember 30, 2020 , we and Kemper had funded approximately$165.5 million to SLF JV I, of which$144.8 million was from us. As ofDecember 31, 2020 andSeptember 30, 2020 , we and Kemper had the option to fund additional SLF JV I Notes, subject to additional equity funding to SLF JV I. As of each ofDecember 31, 2020 andSeptember 30, 2020 , we had commitments to fund LLC equity interests in SLF JV I of$17.5 million , of which$1.3 million was unfunded. 82 -------------------------------------------------------------------------------- Below is a summary of SLF JV I's portfolio, followed by a listing of the individual loans in SLF JV I's portfolio as ofDecember 31, 2020 andSeptember 30, 2020 : December 31, 2020 September 30, 2020 Senior secured loans (1)$313,978 $307,579 Weighted average interest rate on senior secured loans (2) 5.65% 5.44% Number of borrowers in SLF JV I 56 56 Largest exposure to a single borrower (1)$9,879 $10,487 Total of five largest loan exposures to borrowers (1)$46,981 $49,097 __________________ (1) At principal amount. (2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value. 83 --------------------------------------------------------------------------------
SLF JV I Portfolio as of December 31, 2020
Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
First Lien Term Loan,
LIBOR+3.75% cash due
Access CIG, LLC 2/27/2025 3.98 % 9,107
First Lien Term Loan,
LIBOR+6.25% cash due
ADB Companies, LLC 12/18/2025 7.25 % Construction & Engineering 6667 6,500 6,533 (4)
First Lien Delayed Draw
Term Loan, LIBOR+6.25%
cash due 12/18/2025 Construction & Engineering - (33) (27) (4)(5)
Total ADB Companies,
LLC 6,467 6,506
AdVenture Interactive, 927 shares of common
Corp. stock Advertising 1,390 1,416 (4)
First Lien Term Loan,
AI Ladder (Luxembourg) LIBOR+4.50% cash due Electrical Components &
Subco S.a.r.l. 7/9/2025 4.65 % Equipment 6,011 5,894 5,974 (4)
First Lien Term Loan,
LIBOR+7.50% cash due
Airbnb, Inc. 4/17/2025 8.50 % Hotels, Resorts & Cruise Lines 3,044 2,977 3,306 (4)
First Lien Term Loan,
LIBOR+4.00% cash due Integrated Telecommunication
Altice France S.A. 8/14/2026 4.24 % Services 4,631 4,447 4,623
First Lien Term Loan,
LIBOR+5.25% cash due
Alvogen Pharma US, Inc. 12/31/2023 6.25 % Pharmaceuticals 9,879 9,643 9,500
First Lien Term Loan,
LIBOR+4.25% cash due
Amplify Finco Pty Ltd. 11/26/2026 5.00 % Movies & Entertainment 7,940 7,861 7,384 (4)
First Lien Term Loan,
LIBOR+3.75% cash due
Anastasia Parent, LLC 8/11/2025 Personal Products 2,821 2,247 1,890 (6)
First Lien Term Loan,
LIBOR+7.25% cash due
Apptio, Inc. 1/10/2025 8.25 % Application Software 4,615 4,554 4,529 (4)
First Lien Revolver,
LIBOR+7.25% cash due
1/10/2025 Application Software - (5) (7) (4)(5)
Total Apptio, Inc. 4,549 4,522
First Lien Term Loan,
LIBOR+5.75% cash due
Aurora Lux Finco S.À.R.L. 12/24/2026 6.75 % Airport Services 6,451 6,314 6,013 (4)
First Lien Term Loan,
Blackhawk Network LIBOR+3.00% cash due Data Processing & Outsourced
Holdings, Inc. 6/15/2025 3.15 % Services 9,750 9,734 9,517
First Lien Term Loan,
LIBOR+4.25% cash due
Boxer Parent Company Inc. 10/2/2025 4.40 % Systems Software 7,513 7,430 7,497 (4)
First Lien Term Loan,
LIBOR+4.00% cash due
Brazos Delaware II, LLC 5/21/2025 4.15 % Oil & Gas Equipment & Services 7,311 7,288 6,405
C5 Technology Holdings, Data Processing & Outsourced LLC 171 Common Units Services -
- (4)
7,193,539.63 Preferred Data Processing & Outsourced
Units Services 7,194 5,683 (4)
Total C5 Technology
Holdings, LLC 7,194 5,683
First Lien Term Loan,
Carrols Restaurant Group, LIBOR+6.25% cash due
Inc. 4/30/2026 7.25 % Restaurants 3,980 3,792 3,965
First Lien Term Loan,
LIBOR+6.25% cash due
CITGO Petroleum Corp. 3/28/2024 7.25 % Oil & Gas Refining & Marketing 7,165 7,094 7,140 (4)
First Lien Term Loan,
Clear Channel Outdoor LIBOR+3.50% cash due
Holdings, Inc. 8/21/2026 3.71 % Advertising 330 291 318
First Lien Term Loan,
LIBOR+4.50% cash due
Connect U.S. Finco LLC 12/11/2026 5.50 % Alternative Carriers 7,418 7,252 7,462
First Lien Term Loan,
LIBOR+3.75% cash due
Curium Bidco S.à.r.l. 7/9/2026 4.00 % Biotechnology 5,925 5,881 5,890
First Lien Term Loan,
LIBOR+4.00% cash due Internet Services &
Dcert Buyer, Inc. 10/16/2026 4.15 % Infrastructure 7,940 7,920 7,945
First Lien Term Loan,
LIBOR+4.25% cash due
Dealer Tire, LLC 12/12/2025 4.40 % Distributors 940 902 937
84
--------------------------------------------------------------------------------
Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
First Lien Term Loan,
LIBOR+4.50% cash due
eResearch Technology, Inc. 2/4/2027 5.50 % Application Software $ 7,463 $ 7,388 $ 7,411
First Lien Term Loan,
LIBOR+4.25% cash due
Gigamon, Inc. 12/27/2024 5.25 % Systems Software 7,762 7,717 7,708
First Lien Term Loan,
Global Medical Response, LIBOR+4.75% cash due
Inc. 10/2/2025 5.75 % Health Care Services 2,231 2,188 2,221
Second Lien Term Loan,
LIBOR+8.00% cash due Research & Consulting
Guidehouse LLP 5/1/2026 8.15 % Services 6,000 5,980 6,000 (4)
First Lien Term Loan,
Helios Software Holdings, LIBOR+4.25% cash due
Inc. 10/24/2025 4.52 % Systems Software 3,960 3,920 3,946
First Lien Term Loan,
Intelsat Jackson Holdings PRIME+4.75% cash due
S.A. 11/27/2023 8.00 % Alternative Carriers 3,568 3,543 3,628
First Lien Term Loan,
LIBOR+5.50% cash due
7/13/2022 6.50 % Alternative Carriers 1,943 1,762 1,988
Total Intelsat Jackson
Holdings S.A. 5,305 5,616
First Lien Term Loan,
LIBOR+4.75% cash due
LogMeIn, Inc. 8/31/2027 4.90 % Application Software 5,000 4,880 4,994
First Lien Term Loan,
Maravai Intermediate LIBOR+4.25% cash due
Holdings, LLC 10/19/2027 5.25 % Biotechnology 6,875 6,806 6,952
First Lien Term Loan,
LIBOR+7.00% cash 1.5% PIK Internet Services &
Mindbody, Inc. due 2/14/2025 8.00 % Infrastructure 4,564 4,502 4,181 (4)
First Lien Revolver,
LIBOR+8.00% cash due Internet Services &
2/14/2025 Infrastructure - (7) (40) (4)(5)
Total Mindbody, Inc. 4,495 4,141
First Lien Term Loan,
LIBOR+5.50% cash due
MRI Software LLC 2/10/2026 6.50 % Application Software 3,863 3,829 3,854 (4)
First Lien Delayed Draw
Term Loan, LIBOR+5.50%
cash due 2/10/2026 Application Software - (1) - (4)(5)
First Lien Revolver,
LIBOR+5.50% cash due
2/10/2026 Application Software - (3) (1) (4)(5)
Total MRI Software LLC 3,825 3,853
First Lien Term Loan,
LIBOR+4.00% cash due
Navicure, Inc. 10/22/2026 4.15 % Health Care Technology 5,955 5,925 5,955
First Lien Term Loan,
LIBOR+5.00% cash due Oil & Gas Equipment &
New IPT, Inc. 3/17/2021 6.00 % Services 941 941 735 (4)
21.876 Class A Common
Units in New IPT Holdings, Oil & Gas Equipment &
LLC Services - - (4)
Total New IPT, Inc. 941 735
First Lien Term Loan,
Northern Star Industries LIBOR+4.75% cash due Electrical Components &
Inc. 3/31/2025 5.75 % Equipment 6,807 6,787 6,671
First Lien Term Loan,
LIBOR+5.50% cash due Integrated
Northwest Fiber, LLC 4/30/2027 5.65 % Telecommunication Services 2,394 2,311 2,406
First Lien Term Loan,
LIBOR+5.00% cash due
Novetta Solutions, LLC 10/17/2022 6.00 % Application Software 5,915 5,897 5,903
First Lien Term Loan,
LIBOR+4.00% cash due
OEConnection LLC 9/25/2026 4.15 % Application Software 7,879 7,843 7,820
First Lien Delayed Draw
Term Loan, LIBOR+4.00%
cash due 9/25/2026 Application Software - - - (5)
Total OEConnection LLC 7,843 7,820
First Lien Term Loan,
LIBOR+6.50% cash due
Olaplex, Inc. 1/8/2026 7.50 % Personal Products 6,395 6,298 6,395 (4)
First Lien Revolver,
LIBOR+6.50% cash due
1/8/2025 Personal Products - (9) - (4)(5)
Total Olaplex, Inc. 6,289 6,395
First Lien Term Loan,
Park Place Technologies, LIBOR+5.00% cash due Internet Services &
LLC 11/10/2027 6.00 % Infrastructure 5,000 4,804 4,817 (4)
First Lien Term Loan,
LIBOR+4.25% cash due Specialized Consumer
PetVet Care Centers, LLC 2/14/2025 5.25 % Services 2,736 2,729 2,753
85
--------------------------------------------------------------------------------
Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
First Lien Term Loan,
LIBOR+4.50% cash due
PG&E Corporation 6/23/2025 5.50 % Electric Utilities $ 5,970 $ 5,889 $ 6,051
Second Lien Term Loan,
LIBOR+7.25% cash due
Planview Parent, Inc. 12/18/2028 8.00 % Application Software 4,503 4,435 4,503 (4)
First Lien Term Loan,
LIBOR+4.25% cash due
Recorded Books Inc. 8/29/2025 4.75 % Publishing 6,000 5,940 6,025
First Lien Term Loan,
LIBOR+5.50% cash due Oil & Gas Exploration &
RS Ivy Holdco, Inc. 12/23/2027 6.50 % Production 7,000 6,895 6,965
First Lien Term Loan,
LIBOR+4.50% cash due
Sabert Corporation 12/10/2026 5.50 % Metal & Glass Containers 2,742 2,714 2,743
First Lien Term Loan,
LIBOR+6.50% cash due
Salient CRGT, Inc. 2/28/2022 7.50 % Aerospace & Defense 2,080 2,070 2,002 (4)
First Lien Term Loan,
LIBOR+5.25% cash due
SHO Holding I Corporation 4/27/2024 6.25 % Footwear 8,445 8,430 7,347
First Lien Term Loan,
LIBOR+4.50% cash due
Signify Health, LLC 12/23/2024 5.50 % Health Care Services 9,725 9,669 9,433
First Lien Term Loan,
LIBOR+5.50% cash due Diversified Support
Sirva Worldwide, Inc. 8/4/2025 5.65 % Services 4,750 4,679 4,352
First Lien Term Loan,
LIBOR+4.25% cash due
Star US Bidco LLC 3/17/2027 5.25 % Industrial Machinery 3,709 3,529 3,649
First Lien Term Loan,
LIBOR+4.00% cash due
Sunshine Luxembourg VII SARL 10/1/2026 5.00 % Personal Products 7,920 7,880 7,969
First Lien Term Loan,
LIBOR+3.75% cash due
Supermoose Borrower, LLC 8/29/2025 4.00 % Application Software 4,876 4,580 4,574 (4)
First Lien Term Loan,
Surgery Center Holdings, LIBOR+3.25% cash due
Inc. 9/3/2024 4.25 % Health Care Facilities 4,949 4,931 4,876
First Lien Term Loan,
LIBOR+5.50% cash due
Veritas US Inc. 9/1/2025 6.50 % Application Software 6,484 6,362 6,475
First Lien Term Loan,
LIBOR+4.50% cash due
Verscend Holding Corp. 8/27/2025 4.65 % Health Care Technology 4,101 4,070 4,107 (4)
First Lien Term Loan, Integrated
LIBOR+6.25% cash due Telecommunication
Windstream Services II, LLC 9/21/2027 7.25 % Services 7,960 7,654 7,808 (4)
Second Lien Term Loan,
LIBOR+7.75% cash due
WP CPP Holdings, LLC 4/30/2026 8.75 % Aerospace & Defense 6,000 5,959 5,085 (4)
$ 313,978 $ 317,432 $ 313,261
__________________
(1) Represents the interest rate as of December 31, 2020 . All interest rates are
payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate
loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate),
which typically resets semi-annually, quarterly, or monthly at the borrower's
option. The borrower may also elect to have multiple interest reset periods for
each loan. For each of these loans, we have provided the applicable margin over
LIBOR or the alternate base rate based on each respective credit agreement and
the cash interest rate as of period end. All the LIBOR shown above is in U.S.
dollars. As of December 31, 2020 , the reference rates for SLF JV I's variable
rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day
LIBOR at 0.25%, the 180-day LIBOR at 0.26% and the PRIME at 3.25%. Most loans
include an interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of December 31, 2020
utilizing a similar technique as us in accordance with ASC 820. However, the
determination of such fair value is not included in our Board of Directors'
valuation process described elsewhere herein.
(4) This investment is held by both us and SLF JV I as of December 31, 2020 .
(5) Investment has undrawn commitments. Unamortized fees are classified as
unearned income which reduces cost basis, which may result in a negative cost
basis. A negative fair value may result from the unfunded commitment being
valued below par.
(6) This investment was on cash non-accrual status as of December 31, 2020 . Cash
non-accrual status is inclusive of PIK and other non-cash income, where
applicable.
86
--------------------------------------------------------------------------------
SLF JV I Portfolio as of September 30, 2020
Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
First Lien Term Loan,
LIBOR+3.75% cash due Diversified Support
Access CIG, LLC 2/27/2025 3.91 %
Services
927 shares of common stock Advertising 1,390 1,373 (4)
First Lien Term Loan,
AI Ladder (Luxembourg) LIBOR+4.50% cash due Electrical Components &
Subco S.a.r.l. 7/9/2025 4.65 % Equipment 6,038 5,914 5,781 (4)
First Lien Term Loan,
LIBOR+7.50% cash due Hotels, Resorts & Cruise
Airbnb, Inc. 4/17/2025 8.50 % Lines 3,051 2,981 3,311 (4)
First Lien Term Loan, Integrated
LIBOR+4.00% cash due Telecommunication
Altice France S.A. 8/14/2026 4.15 % Services 4,643 4,450 4,527
First Lien Term Loan,
LIBOR+5.25% cash due
Alvogen Pharma US, Inc. 12/31/2023 6.25 % Pharmaceuticals 9,879 9,623 9,566
First Lien Term Loan,
LIBOR+4.00% cash due
Amplify Finco Pty Ltd. 11/26/2026 4.75 % Movies & Entertainment 7,960 7,880 6,846 (4)
First Lien Term Loan,
LIBOR+3.75% cash due
Anastasia Parent, LLC 8/11/2025 Personal Products 2,828 2,282 1,248 (6)
First Lien Term Loan,
LIBOR+7.25% cash due
Apptio, Inc. 1/10/2025 8.25 % Application Software 4,615 4,550 4,526 (4)
First Lien Revolver,
LIBOR+7.25% cash due
1/10/2025 Application Software - (5) (8) (4)(5)
Total Apptio, Inc. 4,545 4,518 First Lien Term Loan, LIBOR+6.00% cash due Aurora Lux Finco S.À.R.L. 12/24/2026 7.00 % Airport Services 6,468 6,324 6,015
(4)
First Lien Term Loan,
Blackhawk Network Holdings, LIBOR+3.00% cash due Data Processing &
Inc. 6/15/2025 3.15 % Outsourced Services 9,775 9,758 9,251
First Lien Term Loan,
LIBOR+4.25% cash due
Boxer Parent Company Inc. 10/2/2025 4.40 % Systems Software 7,532 7,448 7,331 (4)
First Lien Term Loan,
LIBOR+4.00% cash due Oil & Gas Equipment &
Brazos Delaware II, LLC 5/21/2025 4.16 % Services 7,331 7,306 5,600
Data Processing &
C5 Technology Holdings, LLC 171 Common Units Outsourced Services - - (4)
Data Processing &
7,193,539.63 Preferred Units Outsourced Services 7,194 5,683 (4)
Total C5 Technology
Holdings, LLC 7,194 5,683
First Lien Term Loan,
Carrols Restaurant Group, LIBOR+6.25% cash due
Inc. 4/30/2026 7.25 % Restaurants 3,990 3,792 3,960
First Lien Term Loan,
LIBOR+5.00% cash due Oil & Gas Refining &
CITGO Petroleum Corp. 3/28/2024 6.00 % Marketing 7,184 7,112 6,842 (4)
First Lien Term Loan,
Clear Channel Outdoor LIBOR+3.50% cash due
Holdings, Inc. 8/21/2026 3.76 % Advertising 331 290 302
First Lien Term Loan,
LIBOR+4.50% cash due
Connect U.S. Finco LLC 12/11/2026 5.50 % Alternative Carriers 7,437 7,262 7,228
First Lien Term Loan,
LIBOR+3.75% cash due
Curium Bidco S.à.r.l. 7/9/2026 3.97 % Biotechnology 5,940 5,895 5,895
First Lien Term Loan,
LIBOR+4.00% cash due Internet Services &
Dcert Buyer, Inc. 10/16/2026 4.15 % Infrastructure 7,960 7,940 7,879
First Lien Term Loan,
LIBOR+4.25% cash due
Dealer Tire, LLC 12/12/2025 4.40 % Distributors 943 902 924
First Lien Term Loan,
LIBOR+4.50% cash due
eResearch Technology, Inc. 2/4/2027 5.50 % Application Software 7,481 7,406 7,461
First Lien Term Loan, Integrated
Frontier Communications PRIME+2.75% cash due Telecommunication
Corporation 6/15/2024 6.00 % Services 3,939 3,901 3,887
First Lien Term Loan,
LIBOR+4.25% cash due
Gigamon, Inc. 12/27/2024 5.25 % Systems Software 7,781 7,734 7,684
87--------------------------------------------------------------------------------
Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
First Lien Term Loan,
Global Medical Response , LIBOR+4.75% cash due
Inc. 10/2/2025 5.75 % Health Care Services $ 2,231 $ 2,187 $ 2,185
Second Lien Term Loan,
LIBOR+8.00% cash due Research & Consulting
Guidehouse LLP 5/1/2026 8.15 % Services 6,000 5,979 5,790 (4)
First Lien Term Loan,
Helios Software Holdings , LIBOR+4.25% cash due
Inc. 10/24/2025 4.52 % Systems Software 3,970 3,930 3,923
First Lien Term Loan,
Intelsat Jackson Holdings PRIME+4.75% cash due
S.A. 11/27/2023 8.00 % Alternative Carriers 3,568 3,541 3,598
First Lien Delayed Draw
Term Loan, LIBOR+5.50%
cash due 7/13/2022 6.50 % Alternative Carriers 971 801 1,011 (5)
Total Intelsat Jackson
Holdings S.A. 4,342 4,609
First Lien Term Loan,
LIBOR+4.00% cash due
KIK Custom Products Inc. 5/15/2023 5.00 % Household Products 5,322 5,308 5,302
First Lien Term Loan,
LIBOR+4.75% cash due
LogMeIn, Inc. 8/31/2027 4.91 % Application Software 5,000 4,876 4,842
First Lien Term Loan,
LIBOR+7.00% cash 1.5% PIK Internet Services &
Mindbody, Inc. due 2/14/2025 8.00 % Infrastructure 4,546 4,481 4,192 (4)
First Lien Revolver,
LIBOR+8.00% cash due Internet Services &
2/14/2025 Infrastructure - (7) (38) (4)(5)
Total Mindbody, Inc. 4,474 4,154
First Lien Term Loan,
LIBOR+5.50% cash due
MRI Software LLC 2/10/2026 6.50 % Application Software 3,830 3,795 3,737 (4)
First Lien Delayed Draw
Term Loan, LIBOR+5.50%
cash due 2/10/2026 Application Software - (1) (4) (4)(5)
First Lien Revolver,
LIBOR+5.50% cash due
2/10/2026 Application Software - (3) (8) (4)(5)
Total MRI Software LLC 3,791 3,725
First Lien Term Loan,
LIBOR+4.00% cash due
Navicure, Inc. 10/22/2026 4.15 % Health Care Technology 5,970 5,940 5,849
First Lien Term Loan,
LIBOR+5.00% cash due Oil & Gas Equipment &
New IPT, Inc. 3/17/2021 6.00 % Services 1,006 1,006 786 (4)
21.876 Class A Common
Units in New IPT Oil & Gas Equipment &
Holdings, LLC Services - - (4)
Total New IPT, Inc. 1,006 786
First Lien Term Loan,
Northern Star Industries LIBOR+4.75% cash due Electrical Components &
Inc. 3/31/2025 5.75 % Equipment 6,825 6,803 6,518
First Lien Term Loan,
LIBOR+5.50% cash due Integrated
Northwest Fiber, LLC 4/30/2027 5.66 % Telecommunication Services 2,400 2,314 2,403
First Lien Term Loan,
LIBOR+5.00% cash due
Novetta Solutions, LLC 10/17/2022 6.00 % Application Software 5,931 5,909 5,827
First Lien Term Loan,
LIBOR+4.00% cash due
OEConnection LLC 9/25/2026 4.15 % Application Software 7,455 7,418 7,371
First Lien Delayed Draw
Term Loan, LIBOR+4.00%
cash due 9/25/2026 Application Software - (2) (5) (5)
Total OEConnection LLC 7,416 7,366
First Lien Term Loan,
LIBOR+6.50% cash due
Olaplex, Inc. 1/8/2026 7.50 % Personal Products 4,938 4,851 4,938 (4)
First Lien Revolver,
LIBOR+6.50% cash due
1/8/2025 7.50 % Personal Products 270 261 270 (4)(5)
Total Olaplex, Inc. 5,112 5,208
First Lien Term Loan,
LIBOR+4.25% cash due Specialized Consumer
PetVet Care Centers, LLC 2/14/2025 5.25 % Services 2,743 2,736 2,747
First Lien Term Loan,
LIBOR+4.50% cash due
PG&E Corporation 6/23/2025 5.50 % Electric Utilities 5,985 5,899 5,875
First Lien Term Loan,
LIBOR+4.25% cash due
Recorded Books, Inc. 8/31/2025 4.75 % Publishing 6,000 5,940 5,940
First Lien Term Loan,
LIBOR+4.50% cash due
Sabert Corporation 12/10/2026 5.50 % Metal & Glass Containers 2,828 2,800 2,791
88
--------------------------------------------------------------------------------
Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
First Lien Term Loan,
LIBOR+6.50% cash due
Salient CRGT, Inc. 2/28/2022 7.50 % Aerospace & Defense $ 2,111 $ 2,099 $ 1,963 (4)
First Lien Term Loan,
LIBOR+3.00% cash PIK
SHO Holding I Corporation 2.25% due 4/27/2024 4.00 % Footwear 8,396 8,380 5,898
First Lien Term Loan,
LIBOR+4.50% cash due
Signify Health, LLC 12/23/2024 5.50 % Health Care Services 9,750 9,690 9,409
First Lien Term Loan,
LIBOR+5.50% cash due Diversified Support
Sirva Worldwide, Inc. 8/4/2025 5.65 % Services 4,781 4,709 3,992
First Lien Term Loan,
LIBOR+4.25% cash due
Star US Bidco LLC 3/17/2027 5.25 % Industrial Machinery 3,718 3,532 3,551
First Lien Term Loan,
Sunshine Luxembourg VII LIBOR+4.25% cash due
SARL 10/1/2026 5.25 % Personal Products 7,940 7,900 7,911
First Lien Term Loan,
LIBOR+3.75% cash due
Supermoose Borrower, LLC 8/29/2025 3.90 % Application Software 4,888 4,575 4,407 (4)
First Lien Term Loan,
Surgery Center Holdings, LIBOR+3.25% cash due
Inc. 9/3/2024 4.25 % Health Care Facilities 4,962 4,943 4,691 (4)
First Lien Term Loan,
LIBOR+4.00% cash due
Uber Technologies, Inc. 4/4/2025 5.00 % Application Software 2,997 2,959 2,980
First Lien Term Loan,
LIBOR+3.25% cash due
UFC Holdings, LLC 4/29/2026 4.25 % Movies & Entertainment 2,856 2,816 2,814
First Lien Term Loan,
LIBOR+5.50% cash due
Veritas US Inc. 9/1/2025 6.50 % Application Software 6,500 6,371 6,375
First Lien Term Loan,
LIBOR+4.50% cash due
Verscend Holding Corp. 8/27/2025 4.65 % Health Care Technology 4,112 4,080 4,084 (4)
First Lien Term Loan,
LIBOR+3.25% cash due Data Processing &
VM Consolidated, Inc. 2/28/2025 3.40 % Outsourced Services 10,487 10,495 10,291
First Lien Term Loan, Integrated
Windstream Services II, LIBOR+6.25% cash due Telecommunication
LLC 9/21/2027 7.25 % Services 7,980 7,662 7,744 (4)
Second Lien Term Loan,
LIBOR+7.75% cash due
WP CPP Holdings, LLC 4/30/2026 8.75 % Aerospace & Defense 6,000 5,956 4,680 (4)
$ 307,579 $ 311,428 $ 298,771 __________________
(1) Represents the interest rate as ofSeptember 30, 2020 . All interest rates are payable in cash, unless otherwise noted. (2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is inU.S. dollars. As ofSeptember 30, 2020 , the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%. (3) Represents the current determination of fair value as ofSeptember 30, 2020 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company's Board of Directors' valuation process described elsewhere herein. (4) This investment was held by both the Company and SLF JV I as ofSeptember 30, 2020 . (5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. (6) This investment was on cash non-accrual status as ofSeptember 30, 2020 . Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable. Both the cost and fair value of our debt investment in the SLF JV I were$96.3 million as of each ofDecember 31, 2020 andSeptember 30, 2020 . We earned interest income of$1.8 million and$2.2 million on our investments in the SLF JV I Subordinated Notes for the three months endedDecember 31, 2020 and 2019, respectively. The SLF JV I Subordinated Notes bear interest at a rate of one-month LIBOR plus 7.0% per annum and mature onDecember 29, 2028 . The cost and fair value of the LLC equity interests in SLF JV I held by us was$49.3 million and$29.3 million , respectively, as ofDecember 31, 2020 and$49.3 million and$21.2 million , respectively, as ofSeptember 30, 2020 . We did not earn dividend income for the three months endedDecember 31, 2020 and 2019 with respect to our investment in the LLC equity interests of SLF JVI. The LLC equity interests of SLF JV I are dividend producing to the extent SLF JV I has residual cash to be distributed on a quarterly basis. 89 --------------------------------------------------------------------------------
Below is certain summarized financial information for SLF JV I as of
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