Investment Strategy and Risk Management - The Senior Loan Investment Team regularly assesses the risk profile of Senior Loan investments, while the Junior Capital Investment Team does the same for Junior Capital Investments, employing a proactive monitoring approach[62] - The Company expects to co-invest with affiliates, enhancing investment opportunities and diversification[82] - The Company faces competition from larger entities with greater resources, which may impact its business and financial condition[65] ESG Policy and Compliance - Churchill's ESG policy evaluates ESG-related risks that could impact a company's operations and reputation, using a proprietary ESG rating template for investment opportunities[63] - The ESG policy is updated as needed to reflect changing practices and industry standards, but does not imply a specific ESG investment strategy[64] Company Structure and Growth - The Company is classified as an emerging growth company and expects to remain so for up to five years post-IPO, with specific revenue thresholds for transitioning out of this status[66] - The Company may seek an Exchange Listing and complete an IPO within five years of the Initial Closing, with provisions for winding down if unsuccessful[69] Financial Requirements and Compliance - The Company must maintain at least 70% of its total assets in qualifying assets as defined under the 1940 Act[71] - The Company has established a 150% asset coverage ratio requirement for issuing senior securities, allowing it to borrow $2 for every $1 of equity[77] - The Company is required to provide annual reports containing audited financial statements and comply with periodic reporting requirements[98] - To qualify as a RIC, the Company must distribute at least 90% of its investment company taxable income annually[101] - The Company must derive at least 90% of gross income from specific sources to qualify as a RIC, including dividends and interest[109] - The Company must maintain compliance with the 1940 Act to avoid jeopardizing its RIC status[104] - The Company is subject to periodic examinations by the SEC for compliance with the 1940 Act[84] - The Company must designate a chief compliance officer and implement policies to prevent violations of federal securities laws[86] Taxation and Distribution Requirements - The Company may face a 4% excise tax on undistributed income unless it meets specific distribution requirements[103] - Financial covenants in debt agreements may restrict the Company's ability to make distributions to shareholders[107] - The Company may need to borrow funds or sell assets to meet the Annual Distribution Requirement, which could limit its ability to dispose of assets advantageously[108] - The Company may realize gains or losses from liquidating investments to meet distribution requirements, potentially leading to larger capital gain distributions[110] - A failure to qualify as a RIC would subject the Company to U.S. federal income tax at regular corporate rates, impacting shareholder distributions[111] Interest Rate Risk - The Company is subject to interest rate risk, which affects net investment income due to fluctuations in borrowing rates[417] - As of December 31, 2022, approximately 4.58% of the Company's debt investments bear interest at a fixed rate, while 95.42% bear interest at a floating rate[419] - Interest income could increase by $11,493,000 if interest rates rise by 100 basis points, resulting in a net income of $4,439,000[422] - If interest rates increase by 300 basis points, interest income could rise to $34,479,000, leading to a net income of $13,316,000[422] - The Federal Reserve's interest rate hikes could increase the Company's cost of funds, reducing net investment income if not offset by higher interest income[418] - The Company must monitor its transactions to mitigate potential adverse tax effects from complex federal income tax provisions[109] Capital Raising and Financing - The Private Offering allows the Company to raise capital from accredited investors without a limit on the number of shares or capital raised, with the fundraising period extended to March 13, 2022[68] - The Company currently has a revolving credit facility and may enter into additional credit facilities and term debt securitizations in the future[79] - The SEC granted the Company a permanent amendment to allow follow-on investments with certain private fund affiliates[83] Ethical Standards - The Company has adopted a code of ethics that restricts personal securities transactions by its officers and employees[80]
Nuveen Churchill Direct Lending(NCDL) - 2022 Q4 - Annual Report