Financial Performance - Net investment income for the quarter was $34,000,000, or $0.48 per share, down from $37,100,000, or $0.52 per share in the previous quarter, reflecting a decrease of 8.38% in income per share[7] - Total Investment Income for Q4 2024 was $56.34 million, up 32.5% from $42.69 million in Q4 2023[18] - Net Investment Income for Q4 2024 increased to $34.02 million, compared to $22.43 million in Q4 2023, representing a growth of 51.7%[18] - Basic and diluted net investment income per common share for Q4 2024 was $0.48, down 11.1% from $0.54 in Q4 2023[18] - Net Increase in Net Assets Resulting from Operations for the year ended December 31, 2024 was $131.94 million, compared to $77.08 million in 2023, reflecting a growth of 71.2%[18] Debt and Leverage - The total debt outstanding at principal rose to $858,000,000, up from $788,000,000, indicating a 8.87% increase[4] - The total debt-to-equity ratio increased to 0.72x from 0.66x, indicating a rise in leverage[4] - The company expects to achieve the low end of its targeted debt-to-equity ratio of 1.0x to 1.25x by the second or third quarter of 2025[12] Investment Portfolio - For the quarter ended December 31, 2024, the investment portfolio at fair value increased to $1,995,143,000 from $1,943,439,000 as of September 30, 2024, representing a growth of 2.66%[4] - The company added 8 new investments during the fourth quarter, maintaining its strategy of lending to stable industries[2] - New private credit and equity co-investment commitments totaled $230,631,000, with net funded private credit and equity investment increasing by $69,400,000[5] Income and Expenses - Total Expenses for Q4 2024 were $28.66 million, a 41.5% increase from $20.26 million in Q4 2023[18] - Management fees for Q4 2024 were $4.95 million, a 65.1% increase from $2.99 million in Q4 2023[18] - Incentive fees for Q4 2024 rose to $5.10 million, compared to $2.50 million in Q4 2023, marking a 104.0% increase[18] - Interest expense for Q4 2024 was $16.55 million, up 19.0% from $13.92 million in Q4 2023[18] Investment Quality - Non-accrual investments at fair value increased to $25,079,000, representing 1.3% of debt investments at fair value, up from 1.0% in the previous quarter[9] - The weighted average yield on private middle market loans decreased to 11.1% from 11.9%, while the yield on the total debt portfolio fell to 10.6% from 11.3%[9] Company Strategy - The company focuses on first lien senior secured loans and aims to generate current income and capital appreciation[19]

Investment Valuation and Strategy - The majority of the company's portfolio investments are classified as Level 3 under ASC Topic 820, indicating that valuations are based on unobservable inputs and significant management judgment [216]. - The company intends to use an independent valuation firm to review the fair value of certain instruments at least once annually, which may lead to fluctuations in valuations over short periods [217]. - The company may need to alter its investment strategy due to changes in regulations governing its operations, which could adversely affect its results and investment value [221]. - The company incurs significant costs related to compliance with the Exchange Act and Sarbanes-Oxley Act, which may strain its resources [230]. - The company relies on due diligence processes that may not uncover all relevant facts, exposing it to investment risks [246]. - The company may invest in portfolio companies with second priority liens on collateral, which may not be sufficient to satisfy debt obligations if liquidation occurs [261]. - The company may face limitations on rights regarding collateral due to intercreditor agreements with senior debt holders [263]. - The company is required to value investments at market or fair value, considering factors such as enterprise value and financial performance [265]. - Quick liquidation of investments may result in realizing significantly less than previously recorded values [266]. - The company may be restricted from selling investments due to contractual obligations or market conditions [268]. Regulatory and Economic Risks - Changes in laws and regulations, particularly those stemming from Dodd-Frank, could materially adversely affect the company's operations and financial condition [219]. - The U.S. Federal Reserve's unprecedented actions since the 2008-2009 financial crisis and the COVID-19 pandemic may lead to greater market risks due to limited government intervention in future market disruptions [220]. - New credit risk retention requirements in the U.S. and Europe may increase the company's cost of funds or prevent future securitization transactions [222]. - The Economic Growth, Regulatory Relief, and Consumer Protection Act has recalibrated regulatory thresholds, which could negatively impact the company's operations and financial condition [224]. - Increased regulatory attention on non-bank credit extension could impose additional costs and intensify regulatory supervision, adversely affecting the company's business [225]. - Global economic and political conditions, including conflicts and trade tensions, may significantly impact the company's business and financial condition [325]. Financial Performance and Market Conditions - Rising interest rates could adversely affect the value of the company's investments and make it more difficult for portfolio companies to make loan payments [242]. - The current inflationary environment has led to increased borrowing costs, potentially reducing returns to stockholders [243]. - The U.S. Federal Reserve has raised interest rates sharply, remaining near their highest levels in over twenty years, which could impact the company's financial condition [244]. - Strain on the banking system may adversely affect the company's business and its portfolio companies' access to cash and credit facilities [245]. - The company invests in highly leveraged companies, which may lead to significant risks and potential loss of investments [250]. - Investments in below investment grade securities, often referred to as "junk bonds," carry a high level of risk and volatility [252]. - The company is subject to risks associated with unitranche secured loans, which combine senior and junior debt characteristics [253]. - Defaults by portfolio companies could harm the company's operating results and lead to additional expenses for recovery efforts [259]. - Illiquidity and price declines in investments could adversely affect the company's business and net asset value (NAV) through increased net unrealized depreciation [264]. - The company's share price may be volatile and could trade at a discount to net asset value, impacting marketability post-IPO [304]. - Significant volatility in the market price and trading volume of securities may occur, which is not necessarily related to the company's operating performance [311]. Shareholder Considerations - The company has authorized a share repurchase program for up to $100 million within one year of the IPO, which may influence the market price of its common stock [239]. - The company intends to make periodic distributions to stockholders, but cannot assure a specified level of cash distributions or year-to-year increases [314]. - The company may issue additional shares, which could dilute existing stockholders' interests [317]. - Under the 1940 Act, the company is generally prohibited from issuing shares below NAV per share, which may disadvantage it compared to certain public companies [319]. - The company may declare a large portion of dividends in shares instead of cash, which could have tax implications for stockholders [322]. - The company does not currently anticipate issuing preferred stock, which could affect the value of common stock [323]. Environmental and Social Risks - Environmental risks associated with portfolio companies could lead to substantial liabilities affecting investment performance [275]. - The company faces risks related to environmental, social, and governance (ESG) activities, which could impact brand value and operational costs [336]. Interest Rate Sensitivity - Interest rate sensitivity affects net investment income, with potential material adverse effects from significant changes in market interest rates [454]. - A hypothetical 200 basis points increase in interest rates could result in a net investment income increase of $23.4 million, while a decrease of the same magnitude could lead to a decrease of $39.1 million [456]. - The company may use hedging instruments to mitigate interest rate fluctuations, but this could limit benefits from lower interest rates on fixed-rate investments [457].

Core Viewpoint - The Zacks SBIC & Commercial Finance industry is poised to benefit from increased demand for personalized financing solutions as interest rates decline, leading to growth in total investment income and refinancing activity, supported by favorable regulatory changes [1][6][8]. Industry Overview - The Zacks SBIC & Commercial Finance industry consists of companies that provide financing to small and midsized privately held firms, often underserved by traditional banks. These companies offer customized financing solutions, including senior debt instruments and equity capital, targeting ownership changes, strategic buyouts, recapitalizations, and growth initiatives [3][4]. Key Themes - **Asset Quality**: The industry faced challenges post-COVID-19, but government stimulus and economic recovery helped maintain asset quality. However, prolonged high interest rates may lead to asset quality deterioration as portfolio companies struggle with debt servicing [4][5]. - **Declining Interest Rates**: The Federal Reserve has reduced interest rates by 75 basis points, with expectations for an additional 25-bps cut. This decline is anticipated to boost demand for SBIC & Commercial Finance products, driving total investment income [6][7]. - **Regulatory Changes**: The 2018 amendment to the Investment Company Act allowed increased leverage for SBIC companies, enhancing their funding flexibility and growth opportunities [8]. Industry Performance - The Zacks SBIC & Commercial Finance industry ranks 127 out of over 250 Zacks industries, placing it in the bottom 49%. This ranking reflects a discouraging earnings outlook and underperformance compared to the S&P 500 and the broader finance sector, with the industry rising only 8.8% over the past year compared to 30% for the S&P 500 [9][10][12]. Valuation Metrics - The industry has a trailing 12-month price-to-tangible book (P/TB) ratio of 0.95X, significantly lower than the S&P 500's 14.47X and the Zacks Finance sector's 5.19X, indicating a solid discount relative to the market [15][17]. Investment Opportunities - **Kayne Anderson BDC, Inc. (KBDC)**: This company has invested nearly $11 billion since its inception in 2021, with total investments of $1.94 billion in 110 portfolio companies as of September 30, 2024. KBDC has a market cap of $1.15 billion and a debt-to-equity ratio of 0.66, targeting a ratio of 1.0 to 1.25 [19][20][21][22]. - **Bain Capital Specialty Finance, Inc. (BCSF)**: BCSF focuses on U.S. middle-market companies and had a total investment portfolio valued at $2.41 billion as of September 30, 2024. The company has a market cap of $1.07 billion and has seen a 10.2% increase in shares this year [24][25][26][27].

Financial Performance - Net investment income for Q3 2024 was $37.1 million, or $0.52 per share, an increase from $34.4 million, or $0.51 per share in Q2 2024[6]. - Total investment income for Q3 2024 was $57.8 million, compared to $52.5 million in Q2 2024, driven by portfolio additions[5]. - Total investment income for the quarter was $57,819,000, up from $41,197,000 in the same quarter last year, reflecting a year-over-year increase of 40.4%[15]. - Net investment income for the quarter was $37,053,000, compared to $21,369,000 in the prior year, marking a significant increase of 73.5%[15]. - Interest income from non-controlled, non-affiliated investments was $57,541,000, compared to $41,041,000, an increase of 40.4%[15]. Asset and Liability Management - Total assets as of September 30, 2024, were $2,028,245, up from $1,909,850 as of June 30, 2024[3]. - Total assets increased to $2,028,245,000 as of September 30, 2024, compared to $1,423,666,000 on December 31, 2023, representing a growth of 42.5%[13]. - Total liabilities increased to $842,040,000 from $740,610,000, which is an increase of 13.7%[13]. - The company's debt-to-equity ratio increased to 0.66x from 0.53x, with total debt outstanding at $788 million[3][10]. Investment Commitments - New private credit and equity investment commitments totaled $182.6 million, with fundings of $184.6 million and net funded investments increasing by $101.8 million[2]. - The company had $437 million of undrawn commitments available on its credit facilities as of September 30, 2024[9]. Shareholder Returns - The regular dividend declared was $0.40 per share, to be paid on January 15, 2025[11]. - The company reported a total of $28,420,000 in distributions payable, compared to $22,050,000 in the previous period, an increase of 29.0%[13]. Valuation Metrics - Net asset value per share increased to $16.70 from $16.57 as of June 30, 2024, primarily due to excess net investment income[3]. - Net asset value per common share rose to $16.70 from $16.42, indicating a 1.7% increase[13]. Operational Efficiency - Management fees for the quarter were $4,764,000, up from $2,905,000, representing a 64.3% increase[15]. - Cash and cash equivalents increased to $39,083,000 from $34,069,000, a rise of 14.8%[13]. Investment Quality - The weighted average yield on private middle market loans was 11.9%, down from 12.3% in the previous quarter[8]. - Non-accrual investments at fair value were $19,229,000, representing 1.0% of debt investments at fair value[8].

Investment Portfolio - As of September 30, 2024, the company had investments in 110 portfolio companies with an aggregate fair value of approximately $1,943 million and unfunded commitments of $179 million[239]. - The average position size for private credit investments was $21.3 million as of September 30, 2024[242]. - The company had two debt investments on non-accrual status, representing 1.0% and 1.2% of total debt investments at fair value and cost, respectively[244]. - The company reported net investment commitments of $100.1 million for the three months ended September 30, 2024, compared to a net commitment of $(7.0) million for the same period in 2023[249]. - The company had called all capital related to $1,046.9 million in existing subscription agreements with investors through a private offering[273]. Financial Performance - Total investment income for the three months ended September 30, 2024, was $57.8 million, up from $41.2 million in the same period of 2023, representing a 40.0% increase[258]. - Net investment income for the nine months ended September 30, 2024, was $95.2 million, compared to $62.4 million for the same period in 2023, reflecting a 52.7% increase[258]. - Operating expenses for the three months ended September 30, 2024, totaled $27.5 million, compared to $19.8 million in 2023, indicating a 38.9% increase[260]. - The company reported total expenses of $72.9 million for the nine months ended September 30, 2024, compared to $55.9 million for the same period in 2023, a 30.5% increase[260]. Dividends and Shareholder Returns - A regular dividend of $0.40 per share was paid on October 15, 2024, totaling $28.4 million, with $4.5 million reinvested through open market purchases[235]. Debt and Leverage - As of September 30, 2024, 100% of the company's debt investments had floating interest rates[241]. - The weighted average leverage ratio for private middle market loans was 4.4x, and the weighted average interest coverage ratio was 2.9x[245]. - The asset coverage ratio as of September 30, 2024, was 251%, significantly above the required minimum of 150%[269]. - The company intends to target an asset coverage of 200% to 180%, equating to a debt-to-equity ratio of 1.0x to 1.25x[269]. - Total contractual obligations related to outstanding indebtedness at September 30, 2024, amounted to $788 million[279]. Interest Rate Sensitivity - The Company is subject to financial market risks, including changes in interest rates, which can materially affect net investment income[299]. - A hypothetical 200 basis points decrease in interest rates would result in a decrease of $23.9 million in net investment income[301]. - A hypothetical 100 basis points increase in interest rates would result in an increase of $12.0 million in net investment income[301]. - The Company may hedge against interest rate fluctuations using standard hedging instruments, which may limit participation in benefits of lower interest rates[302]. IPO and Capital Structure - The company completed its IPO on May 24, 2024, issuing 6,000,000 shares at a public offering price of $16.63 per share, resulting in net cash proceeds of $92.4 million[233]. - The Corporate Credit Facility has a total commitment of $400 million, with a maturity date of February 18, 2027, and an interest rate of Term SOFR plus 2.35% per annum[274]. - The Revolving Funding Facility has a commitment of $600 million, with an interest rate reduced to SOFR plus 2.375% - 2.50% per annum[276]. - As of September 30, 2024, the company had $75 million in senior unsecured notes outstanding and $713 million borrowed under credit facilities, with cash and cash equivalents of $61.8 million[271]. Valuation and Fair Value - The Company has appointed an Advisor as the valuation designee for fair value determinations as permitted by Rule 2a-5 under the 1940 Act[287]. - The Audit Committee will meet quarterly to review the fair value determinations and processes of the Advisor[287]. - The base management fee under the Amended Investment Advisory Agreement is set at an annual rate of 1.00% following the IPO Date[293]. - The incentive fee on income is subject to a twelve-quarter lookback hurdle rate of 1.50%[293]. Unrealized Gains and Losses - Net unrealized gains on investments for the three months ended September 30, 2024, were $0.5 million, compared to a loss of $7.5 million in the same period of 2023[262]. - The largest contributor to unrealized gains for the three months ended September 30, 2024, was American Soccer Company, Incorporated (SCORE) with $1.6 million[263]. - For the nine months ended September 30, 2024, the total change in unrealized gains (losses), net was $1.4 million, with unrealized gains from other portfolio companies amounting to $10.4 million and unrealized losses totaling $(7.9) million[266].

Financial Performance - Net investment income for the quarter ended June 30, 2024, was $34.4 million, or $0.51 per share, compared to $23.8 million, or $0.52 per share for the previous quarter[4] - Total investment income increased to $52.5 million for the quarter ended June 30, 2024, up from $46.5 million in the prior quarter[7] - Total investment income for the three months ended June 30, 2024, was $52,453,000, an increase of 28.5% compared to $40,746,000 for the same period in 2023[18] - Net investment income for the three months ended June 30, 2024, was $34,393,000, up 58.2% from $21,733,000 in the prior year[18] - Management fees for the three months ended June 30, 2024, were $4,251,000, an increase of 49.4% from $2,848,000 in the same period last year[18] - The company reported a net increase in net assets resulting from operations of $31,180,000 for the three months ended June 30, 2024, compared to $21,002,000 in the prior year[18] Asset and Liability Management - Total assets as of June 30, 2024, amounted to $1,909,850,000, compared to $1,423,666,000 as of December 31, 2023, reflecting a growth of 34.1%[17] - Total liabilities decreased to $731,674,000 as of June 30, 2024, from $740,610,000 at the end of 2023, a reduction of 1.3%[17] - Cash and cash equivalents decreased to $20,271,000 as of June 30, 2024, from $34,069,000 at the end of 2023, a decline of 40.5%[17] Investment Activity - New private credit investment commitments totaled $141.8 million, with fundings of $136.2 million and net funded portfolio increase of $95.7 million[4] - The investment portfolio at fair value increased to $1,847.1 million from $1,784.0 million as of March 31, 2024[5] - The company has a focus on investing in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to middle market companies[19] Shareholder Returns - The company declared a regular dividend of $0.40 per share, to be paid on October 15, 2024, to stockholders of record as of September 30, 2024[4] Valuation Metrics - The company's net asset value per share decreased to $16.57 from $16.63 as of March 31, 2024, reflecting a $0.11 per share dilution from the IPO[4] - Net asset value per common share increased to $16.57 as of June 30, 2024, from $16.42 at the end of 2023[17] Debt Management - The debt-to-equity ratio as of June 30, 2024, was 0.53x, with a target range of 1.0x to 1.25x[15] Market Conditions - The weighted average yield on private middle market loans was 12.3%, slightly down from 12.4% in the previous quarter[11] - The company had $603 million of undrawn commitments available on its credit facilities as of June 30, 2024[12] Unrealized Losses - The company experienced a net change in unrealized losses of $3.1 million, primarily due to changes in the fair value of certain investments[9] Share Count - The weighted average common shares outstanding increased to 67,426,904 for the three months ended June 30, 2024, compared to 38,905,173 in the same period last year[18]

Investment Portfolio - As of June 30, 2024, the company had investments in 106 portfolio companies with an aggregate fair value of approximately $1,847 million and unfunded commitments of $179 million[219] - The portfolio consisted of 97.8% first lien senior secured loans, 1.2% subordinated debt, and 1.0% equity investments[219] - The average position size based on commitment was $19.3 million as of June 30, 2024[222] - The company had two debt investments on non-accrual status, representing 1.0% and 1.2% of total debt investments at fair value and cost, respectively[224] - The company had $178.5 million in unfunded commitments to provide debt financing to portfolio companies as of June 30, 2024[258] Financial Performance - Total investment income for the three months ended June 30, 2024, was $52.4 million, up from $40.7 million in the same period of 2023, representing a 28.0% increase[236] - Net investment income for the six months ended June 30, 2024, was $58.1 million, compared to $41.0 million for the same period in 2023, reflecting a 41.5% increase[236] - Operating expenses for the three months ended June 30, 2024, totaled $22.6 million, an increase from $19.0 million in the same period of 2023, marking a 18.9% rise[238] - Interest and debt financing expenses for the six months ended June 30, 2024, were $28.9 million, up from $24.5 million in the same period of 2023, indicating a 17.9% increase[238] - The company recorded net unrealized gains of $9.9 million for the six months ended June 30, 2024, compared to $6.6 million for the same period in 2023, a 50.0% increase[240] IPO and Capital Structure - The company closed its initial public offering on May 24, 2024, issuing 6,000,000 shares at a public offering price of $16.63 per share, resulting in net cash proceeds of $93.8 million[214] - A regular dividend of $0.40 per share was paid on July 15, 2024, totaling $28.4 million, with $4.4 million reinvested into the company[216] - The company has an asset coverage ratio of 289% as of June 30, 2024, significantly above the required minimum of 150%[247] - The company has $603 million of undrawn commitments available on its credit facilities as of June 30, 2024[249] - The company increased its revolving funding facility commitment from $455 million to $600 million on April 3, 2024[254] Debt and Financing - As of June 30, 2024, the company had $75 million in senior unsecured notes outstanding and $640 million borrowed under credit facilities, with cash and cash equivalents of $15.1 million[249] - Total contractual obligations related to outstanding indebtedness as of June 30, 2024, amount to $622 million[257] - The interest rate on the corporate credit facility is based on Term SOFR plus an applicable spread of 2.35% per annum[252] - The company does not have any off-balance sheet financings or liabilities other than contractual commitments and legal contingencies[258] Management and Administration - The base management fee is calculated at an annual rate of 1.00% following the IPO, with an incentive fee on income subject to a twelve-quarter lookback hurdle rate of 1.50%[271] - The Company will reimburse the Administrator for costs incurred under the Administration Agreement, which may include office facilities and compensation for officers[273] - The Administrator has engaged Ultimus Fund Solutions, LLC for fund administration and accounting services, with fees constituting reimbursable expenses[274] - The Administration Agreement has been extended through March 15, 2025, allowing for continued administrative support[272] Interest Rate Sensitivity - Interest rate sensitivity indicates that a 200 basis point decrease in interest rates could lead to a net decrease in investment income of $25.4 million[278] - A 100 basis point increase in interest rates could result in a net increase in investment income of $12.6 million[278] - The Company may hedge against interest rate fluctuations using standard hedging instruments, which could limit benefits from lower interest rates[279] - The Company does not include investments on non-accrual status in its interest rate sensitivity calculations[277] Incentive Fees and Waivers - The Advisor implemented waivers of the income incentive fee for three quarters and a portion of the base management fee for one year post-IPO[271] - The Advisor's income incentive fee may be reduced if the portfolio experiences aggregate write-downs or net capital losses during the trailing twelve quarters[271]

Regulatory and Legal Risks - Changes in laws and regulations, particularly those stemming from Dodd-Frank, could materially adversely affect the company's operations and financial condition [262]. - The U.S. Risk Retention Rules, effective December 24, 2016, may increase financing costs and impact the company's ability to complete future securitization transactions [266]. - The Economic Growth, Regulatory Relief, and Consumer Protection Act significantly recalibrated regulatory thresholds, which could negatively impact the company's operations and cash flows [267]. - Increased regulatory attention on non-bank credit extension may impose additional costs and adversely affect the company's financial condition [268]. - The Inflation Reduction Act of 2022 introduced a 15% book minimum tax on larger corporations, which may have uncertain impacts on the company and its stockholders [364]. Cybersecurity and Operational Risks - Cybersecurity risks pose a significant threat to the company's operations and could lead to operational disruptions and negatively affect financial performance [280]. - The company is highly dependent on information systems, and any cyber incidents could materially affect the value of its securities and ability to pay distributions [279]. Financial and Market Risks - The Federal Open Market Committee raised the target range for the federal funds rate eleven times since March 2022, currently at 5.25% to 5.50% [288]. - Rising interest rates could increase the cost of borrowings and reduce returns to stockholders, potentially leading to lower dividend payments [287]. - The company is dependent on bank relationships, and recent strains in the banking system may adversely impact its financial condition and results of operations [289]. - Borrowings under credit facilities and senior unsecured notes increase investment volatility and risk, potentially affecting cash available for debt servicing and stockholder distributions [345][346]. - The company is subject to risks associated with liquid credit investments, including liquidity, price volatility, and interest rate risk, which may impact net asset value (NAV) [348]. - The company has not taken actions to alter its existing interest rate sensitivity, which could expose it to significant changes in market interest rates [464]. - Interest rate sensitivity indicates that a 200 basis point decrease in interest rates could lead to a net decrease of $14.5 million in net investment income [466]. Investment Risks - The majority of the company's portfolio investments are classified as Level 3 under ASC Topic 820, indicating that valuations are based on unobservable inputs and significant management judgment [258]. - The company intends to use an independent valuation firm to review the fair value of certain instruments at least annually, which may lead to fluctuations in valuations over short periods [259]. - Investments are typically in highly leveraged companies, which may have limited financial resources and could lead to partial or total loss of investments [294]. - The company may invest in companies not subject to public reporting requirements, complicating the assessment of prior performance and increasing investment risk [292]. - The company may face significant net unrealized depreciation in its portfolio due to declines in prices and liquidity in the corporate debt markets [310]. - Prepayment of loans in the investment portfolio may reduce achievable yields if returned capital cannot be reinvested in transactions with equal or greater expected yields [312]. - The debt investments are typically below investment grade, indicating predominantly speculative characteristics and resulting in above-average risk and volatility [296]. - Defaults by portfolio companies could harm operating results and lead to potential termination of loans and foreclosure on assets [297]. - A failure of portfolio companies to meet debt obligations could materially adversely affect the company's business, financial condition, and cash flows [315]. - The company may incur contingent liabilities related to representations about portfolio companies, which could adversely affect its financial condition [311]. - The company may make follow-on investments to maintain or increase its position in portfolio companies, but failure to do so could impair portfolio value [322]. - The company may invest in subordinated loans, which carry a higher risk of default due to potential adverse changes in the financial condition of portfolio companies [328]. - Unsecured loans made by the company may not benefit from collateral, increasing the risk of loss if portfolio companies face liquidation [331]. - The company may face contingent liabilities related to private securities investments, which could result in funding obligations if representations made during sales turn out to be inaccurate [334]. - The company may not realize gains from equity investments, and any gains may not offset other losses experienced [343]. Environmental and Geopolitical Risks - Investments may expose the company to environmental risks, potentially leading to liabilities for removal or remediation costs [316]. - Global economic and political conditions, including the conflict in Ukraine, may adversely affect the company's business and financial condition [371]. - The company does not currently have portfolio investments with direct exposure to the Middle East, China, Taiwan, Russia, or Ukraine, mitigating potential geopolitical risks [373]. - Political, social, and economic uncertainties, including those related to the COVID-19 pandemic, create risks that could adversely impact the company's investments and operations [374]. - The interconnectedness of global economies means that events in one region can increasingly impact issuers in other markets, including established markets like the U.S. [374]. Dividend and Shareholder Risks - The company may declare a large portion of dividends in shares instead of cash, affecting stockholders' tax liabilities [365]. - The company may issue additional shares, leading to potential dilution of existing stockholders' interests [359]. - There is no public market for the company's common stock, which may limit liquidity for stockholders [349]. Economic Impact Risks - The COVID-19 pandemic has caused significant disruptions in the U.S. credit markets, leading to increased defaults and volatility, which could adversely impact the company's loan origination and investment returns [376]. - Loan delinquencies and non-accruals may increase if public health uncertainties and market disruptions persist, potentially leading to higher costs and reduced income [378]. - Increased public scrutiny related to environmental, social, and governance (ESG) activities poses risks to the company's brand and operational costs [380].

Investment Portfolio - As of September 30, 2023, the company had investments in 72 portfolio companies with an aggregate fair value of approximately $1,278 million and unfunded commitments of $109 million[179]. - The portfolio consisted of 97.7% first lien senior secured loans, 1.7% junior debt, and 0.6% equity investments[179]. - The largest industries in the portfolio were Trading Companies & Distributors (13.8%), Food Products (10.9%), and Commercial Services & Supplies (10.5%) based on fair value[181]. - The average position size based on commitment was $19.5 million, with a weighted average and median last twelve months (LTM) EBITDA of $55.8 million and $43.4 million, respectively[182]. - The weighted average loan-to-value (LTV) of debt investments at the time of initial investment was 44.5%[183]. - As of September 30, 2023, the company had one investment on non-accrual status, comprising 1.9% of total debt investments at cost[184]. Investment Income and Expenses - Total investment income for the three months ended September 30, 2023, was $41.2 million, a 100% increase from $20.5 million in the same period of 2022[199]. - Net investment income for the three months ended September 30, 2023, was $21.4 million, compared to $11.3 million for the same period in 2022, reflecting an increase of 89%[199]. - Total expenses for the three months ended September 30, 2023, were $19.8 million, significantly higher than $9.2 million in the same period of 2022, marking a 115% increase[201]. - Interest and debt financing expenses for the three months ended September 30, 2023, were $13.9 million, up from $5.5 million in the same period of 2022, reflecting a 153% increase[201]. - Investment income for the nine months ended September 30, 2023, totaled $118.3 million, up from $45.4 million in the same period of 2022, representing a 160% increase[200]. - Net investment income for the nine months ended September 30, 2023, was $62.4 million, compared to $24.6 million for the same period in 2022, indicating a 154% increase[199]. Unrealized Gains and Losses - Net unrealized losses on investments for the three months ended September 30, 2023, were $(7.5) million, compared to unrealized gains of $3.3 million in the same period of 2022[204]. - The total unrealized appreciation (depreciation) for the three months ended September 30, 2023, was $(7.5) million, compared to $7.3 million in unrealized gains for the same period in 2022[204]. - The top contributor to unrealized gains for the three months ended September 30, 2023, was Genuine Cable Group, LLC, with $0.7 million[205]. - Total unrealized appreciation (depreciation), net for the nine months ended September 30, 2023, was $(8.1) million, reflecting a challenging investment environment[208]. Financial Position and Commitments - As of September 30, 2023, the company had $75 million in senior unsecured notes outstanding and $523 million borrowed under credit facilities, with cash and cash equivalents of $29 million[212]. - The asset coverage ratio was 214% as of September 30, 2023, compared to 203% as of December 31, 2022, indicating strong leverage management[210]. - The company has aggregate capital commitments of $988.2 million, with $329.9 million undrawn from investors, representing 66.6% funding[213]. - The Corporate Credit Facility has a total commitment of $400 million, with a potential increase to $550 million under certain conditions[214]. - The Revolving Funding Facility has a total commitment of $455 million, with a maturity date of February 18, 2027[216]. - The company expects cash and cash equivalents, along with undrawn capital commitments, to be sufficient for anticipated investment activities over the next twelve months[211]. - The company has $598 million in total contractual obligations related to outstanding indebtedness as of September 30, 2023[218]. - The company anticipates that its cash and liquidity needs will continue to be met by cash generated from ongoing operations and financing activities beyond twelve months[211]. Management and Fees - The Investment Advisory Agreement was renewed for one year through March 15, 2024, with payments consisting of a base management fee and an incentive fee based on performance[230]. - The base management fee is calculated as a percentage of the fair market value of investments, excluding cash and certain securities[231]. - The Administration Agreement was also renewed for one year through March 15, 2024, with the Administrator reimbursed for administrative expenses incurred[233]. - The Administrator has engaged U.S. Bank Global Fund Services and Ultimus Fund Solutions, LLC for sub-administration services effective in 2023[233]. - Incentive fees earned by the Advisor will only be payable upon an Exchange Listing or sale of the company[232]. Interest Rate Sensitivity - Interest rate sensitivity indicates that net investment income may be adversely affected by changes in interest rates due to the use of borrowings for investments[235]. - A hypothetical decrease of 200 basis points in interest rates would result in a decrease of $14.7 million in net investment income[237]. - Conversely, a hypothetical increase of 200 basis points in interest rates would lead to an increase of $14.7 million in net investment income[237]. - The company may use hedging instruments to mitigate interest rate fluctuations, but this could limit benefits from lower interest rates[238]. - The company does not include non-accrual and non-income producing investments in its interest rate sensitivity calculations[236].

Investment Performance - Total investment income for the three months ended June 30, 2023, was $40.7 million, compared to $13.0 million for the same period in 2022, representing a 213% increase[199] - Net investment income for the three months ended June 30, 2023, was $21.7 million, up from $7.1 million in the same period of 2022, reflecting a 205% increase[199] - The weighted average total yield to maturity of debt and income-producing securities at fair value was 12.3% as of June 30, 2023[188] - The net unrealized gains on investments for the three months ended June 30, 2023, were $4.4 million, compared to $2.0 million for the same period in 2022, reflecting a 120% increase[204] - The total unrealized appreciation for the six months ended June 30, 2023, was $6.6 million, up from $2.8 million in the same period of 2022, indicating a 136% increase[210] Investment Commitments - The company made gross new investment commitments of $57.2 million for the three months ended June 30, 2023, compared to $118.3 million for the same period in 2022[191] - The average new investment commitment amount for the three months ended June 30, 2023, was $5.7 million, compared to $4.7 million in the same period of 2022[191] - As of June 30, 2023, the company had subscription agreements with investors for an aggregate capital commitment of $887.0 million, of which $228.7 million is undrawn[185] - Unfunded commitments to provide debt financing to portfolio companies were $116.1 million as of June 30, 2023[227] Financial Position - As of June 30, 2023, the company had 157 debt investments and 13 equity investments in 73 portfolio companies, with an aggregate fair value of approximately $1,284 million[187] - Cash and cash equivalents as of June 30, 2023, totaled $28.0 million, down from $14.9 million as of August 10, 2023[220] - The company had $75 million in senior unsecured notes outstanding as of June 30, 2023, with $25 million due in June 2027 and $50 million due in June 2028[221] - Total contractual obligations amount to $641 million, with $632 million due after one year[226] Operating Expenses - Operating expenses for the three months ended June 30, 2023, were $19.0 million, significantly up from $5.9 million in the same period of 2022, representing a 221% increase[201] Leadership Changes - The company accepted the resignation of its CEO and appointed two Co-CEOs effective August 16, 2023[186] Interest Rate Sensitivity - The company is subject to interest rate sensitivity, with a potential decrease in net investment income of $14.4 million if interest rates rise by 200 basis points[243][245] - The company may hedge against interest rate fluctuations using standard hedging instruments, which could limit benefits from lower interest rates[246] Credit Facilities - As of June 30, 2023, the Corporate Credit Facility has a total commitment of $400 million, with a potential increase to $550 million under certain circumstances[222] - The Revolving Funding Facility has a total commitment of $455 million, with an interest rate of daily SOFR plus 2.75% per annum[224] - The Subscription Credit Agreement allows borrowing up to $125 million, with an interest rate of Term SOFR plus 1.975%[225] - The company has a commitment fee of 0.375% per annum on any unused portion of the Corporate Credit Facility[222] - The interest rate on the Subscription Credit Agreement is subject to a 0.275% floor[225] Accounting Estimates - The company’s critical accounting estimates affect the reported amounts of assets, liabilities, revenues, and expenses, which could lead to actual results differing from estimates[228] Shareholder Distributions - The company declared a distribution of $0.53 per share to common stockholders, totaling $20.7 million, with $1.4 million reinvested into the company[184]