UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 814-01175
BAIN CAPITAL SPECIALTY FINANCE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
81-2878769
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification No.)
200 Clarendon Street, 37th Floor
Boston, MA
02116
(Address of Principal Executive Office)
(Zip Code)
(617) 516‑2000
(Registrant’s Telephone Number, Including Area Code)
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
BCSF
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒
As of November 5, 2024, the registrant had 64,562,265 shares of common stock outstanding.
TABLE OF CONTENTS
Page
PART I
FINANCIAL INFORMATION
3
Item 1.
Consolidated Financial Statements
Consolidated Statements of Assets and Liabilities as of September 30, 2024 (unaudited) and December 31, 2023
Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (unaudited)
4
Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2024 and 2023 (unaudited)
5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited)
6
Consolidated Schedules of Investments as of September 30, 2024 (unaudited) and December 31, 2023
7
Notes to Consolidated Financial Statements (unaudited)
44
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
114
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
133
Item 4.
Controls and Procedures
134
PART II
OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Default Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
135
Item 6.
Exhibits, Financial Statement Schedules
136
Signatures
141
i
FORWARD-LOOKING STATEMENTS
Statements contained in this Quarterly Report on Form 10-Q (the “Quarterly Report”) (including those relating to current and future market conditions and trends in respect thereof) that are not historical facts are based on current expectations, estimates, projections, opinions and/or beliefs of the Company, BCSF Advisors, LP (the “Advisor”) and/or Bain Capital Credit, LP and its affiliated advisers (collectively, “Bain Capital Credit”). Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. Certain information contained in this Quarterly Report constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors we identify in the section entitled Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2023 and in our filings with the Securities and Exchange Commission (the “SEC”).
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions may be based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this Quarterly Report because we are an investment company.
ii
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Bain Capital Specialty Finance, Inc.
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
As of
September 30, 2024
December 31, 2023
(Unaudited)
Assets
Investments at fair value:
Non-controlled/non-affiliate investments (amortized cost of $1,759,021 and $1,615,061, respectively)
$
1,754,245
1,593,360
Non-controlled/affiliate investment (amortized cost of $75,517 and $132,650, respectively)
80,035
147,971
Controlled affiliate investment (amortized cost of $578,475 and $554,123, respectively)
573,670
557,012
Cash and cash equivalents
25,336
42,995
Foreign cash (cost of $4,657 and $6,865, respectively)
5,125
6,405
Restricted cash and cash equivalents
29,292
63,084
Collateral on forward currency exchange contracts
9,675
7,613
Deferred financing costs
4,855
2,802
Interest receivable on investments
34,520
37,169
Receivable for sales and paydowns of investments
17,873
4,310
Prepaid insurance
383
210
Dividend receivable
8,673
9,417
Total Assets
2,543,682
2,472,348
Liabilities
Debt (net of unamortized debt issuance costs of $5,592 and $7,567, respectively)
1,300,607
1,255,933
Interest payable
13,170
13,283
Payable for investments purchased
17,280
11,453
Unrealized depreciation on forward currency exchange contracts
6,549
2,260
Base management fee payable
8,897
8,929
Incentive fee payable
7,020
7,327
Accounts payable and accrued expenses
14,518
9,581
Distributions payable
29,053
27,116
Total Liabilities
1,397,094
1,335,882
Commitments and Contingencies (See Note 10)
Net Assets
Common stock, par value $0.001 per share, 100,000,000,000 and 100,000,000,000 shares authorized, 64,562,265 and 64,562,265 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
65
Paid in capital in excess of par value
1,165,191
1,168,384
Total distributable loss
(18,668
)
(31,983
Total Net Assets
1,146,588
1,136,466
Total Liabilities and Total Net Assets
Net asset value per share
17.76
17.60
See Notes to Consolidated Financial Statements
Consolidated Statements of Operations
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2024
2023
Income
Investment income from non-controlled/non-affiliate investments:
Interest from investments
45,135
45,418
134,193
140,588
Dividend income
826
—
1,261
62
PIK income
5,231
4,926
15,941
15,015
Other income
5,704
1,008
14,100
8,178
Total investment income from non-controlled/non-affiliate investments
56,896
51,352
165,495
163,843
Investment income from non-controlled/affiliate investments:
120
2,412
2,980
7,375
85
950
906
3,955
655
458
1,677
Total investment income from non-controlled/affiliate investments
205
4,017
4,344
13,007
Investment income from controlled affiliate investments:
10,165
9,403
28,948
24,320
5,274
7,618
20,523
21,672
Total investment income from controlled affiliate investments
15,439
17,021
49,471
45,992
Total investment income
72,540
72,390
219,310
222,842
Expenses
Interest and debt financing expenses
18,117
20,775
53,804
60,784
Base management fee
9,140
26,484
27,166
Incentive fee
3,011
24,176
18,129
Professional fees
870
760
2,700
1,792
Directors fees
173
182
521
535
Other general and administrative expenses
2,454
2,234
7,374
5,386
Total expenses, net of fee waivers
37,531
36,102
115,059
113,792
Net investment income before taxes
35,009
36,288
104,251
109,050
Income tax expense, including excise tax
1,025
640
3,200
2,332
Net investment income
33,984
35,648
101,051
106,718
Net realized and unrealized gains (losses)
Net realized gain (loss) on non-controlled/non-affiliate investments
245
(50,873
(7,631
(61,753
Net realized gain on non-controlled/affiliate investments
3,008
7,727
Net realized loss on foreign currency transactions
(465
(673
(888
(5,207
Net realized gain (loss) on forward currency exchange contracts
20
(221
1,916
(2,606
Net change in unrealized appreciation on foreign currency translation
998
(279
967
3,615
Net change in unrealized appreciation on forward currency exchange contracts
(5,693
7,107
(4,289
5,792
Net change in unrealized appreciation on non-controlled/non-affiliate investments
(2,135
41,509
16,925
35,972
Net change in unrealized appreciation on non-controlled/affiliate investments
2,534
(1,067
(10,803
1,960
Net change in unrealized appreciation on controlled affiliate investments
600
2,705
(7,694
7,821
Total net losses
(1,792
(3,770
(14,406
Net increase in net assets resulting from operations
33,096
33,856
97,281
92,312
Basic and diluted net investment income per common share
0.53
0.55
1.57
1.65
Basic and diluted increase in net assets resulting from operations per common share
0.51
0.52
1.51
1.43
Basic and diluted weighted average common shares outstanding
64,562,265
Consolidated Statements of Changes in Net Assets
Operations:
Net realized gain (loss)
2,808
(51,767
1,124
(69,566
Net change in unrealized appreciation
(3,696
49,975
(4,894
55,160
Stockholder distributions:
Distributions from distributable earnings
(29,053
(27,116
(87,159
(76,184
Net decrease in net assets resulting from stockholder distributions
Capital share transactions:
Total increase in net assets
4,043
6,740
10,122
16,128
Net assets at beginning of period
1,142,545
1,125,779
1,116,391
Net assets at end of period
1,132,519
Net asset value per common share
17.54
Common stock outstanding at end of period
Consolidated Statements of Cash Flows
Cash flows from operating activities
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash used in operating activities:
Purchases of investments
(1,097,835
(646,136
Proceeds from principal payments and sales of investments
1,001,530
631,386
Net realized (gain) loss from investments
(96
61,753
888
5,207
4,289
(5,792
Net change in unrealized appreciation on investments
1,572
(45,753
(967
(3,615
Increase in investments due to PIK
(18,723
(15,825
Accretion of discounts and amortization of premiums
(3,791
(4,423
Amortization of deferred financing costs and debt issuance costs
3,095
2,669
Changes in operating assets and liabilities:
(2,062
(2,444
2,649
872
(173
(214
744
390
(113
2,886
(32
234
(307
(6,205
4,937
3,276
Net cash provided by (used in) operating activities
(7,114
70,578
Cash flows from financing activities
Borrowings on debt
565,000
328,000
Repayments on debt
(522,301
(345,000
Payments of financing costs
(3,173
Stockholder distributions paid
(85,222
(72,310
Net cash used in financing activities
(45,696
(89,310
Net decrease in cash, foreign cash, restricted cash and cash equivalents
(52,810
(18,732
Effect of foreign currency exchange rates
79
(1,592
Cash, foreign cash, restricted cash and cash equivalents, beginning of period
112,484
125,730
Cash, foreign cash, restricted cash and cash equivalents, end of period
59,753
105,406
Supplemental disclosure of cash flow information:
Cash interest paid during the period
50,822
55,229
Cash paid for income taxes, including excise taxes during the period
2,411
1,215
As of September 30,
Cash
65,212
Restricted cash
25,908
Foreign cash
14,286
Total cash, foreign cash, restricted cash, and cash equivalents shown in the consolidated statements of cash flows
Consolidated Schedule of Investments
As of September 30, 2024
(In thousands)
Portfolio Company
Investment Type
Index (1)
Spread
Interest Rate
Maturity Date
Principal/Shares (9)
Cost
Market Value
% of NAV (4)
Non-Controlled/Non-Affiliate Investments
Aerospace & Defense
ATS (3)(15)(19)
First Lien Senior Secured Loan - Revolver
SOFR
5.75%
10.87
%
7/12/2029
862
ATS (15)(19)(29)
First Lien Senior Secured Loan
11.05
19,369
19,131
19,127
BTX Precision (2)(3)(5)(18)(19)
First Lien Senior Secured Loan - Delayed Draw
7/25/2030
(82
(63
(27
(42
(36
(37
BTX Precision (15)(19)(29)
5.00%
9.85
24,474
24,261
24,260
BTX Precision (14)(19)(25)
Equity Interest
2
2,199
Forming Machining Industries Holdings, LLC (7)(14)(18)(19)(26)
Second Lien Senior Secured Loan
8.40% PIK
13.46
10/9/2026
7,173
6,874
628
Forming Machining Industries Holdings, LLC (18)(19)
4.40%
9.46
10/9/2025
15,985
15,963
12,388
Forward Slope (14)(19)(25)
930
1,440
Forward Slope (15)(19)
6.85%
11.45
8/22/2029
6,154
6,019
23,456
22,943
Forward Slope (3)(5)(18)(19)
(181
8,640
8,526
GSP (15)(19)(29)
5.65%
10.96
12/31/2024
1,129
1,116
1,118
GSP Holdings, LLC (15)(19)(29)
10.25
11/6/2025
9,599
9,590
9,503
GSP Holdings, LLC (3)(15)(19)
4,324
4,316
4,278
Kellstrom Aerospace Group, Inc (14)(19)(25)
1
1,963
1,375
Kellstrom Commercial Aerospace, Inc. (15)(19)
6.26%
11.58
7/1/2025
10,606
10,562
Kellstrom Commercial Aerospace, Inc. (3)(15)(19)(22)
48
57
Mach Acquisition R/C (3)(15)(19)
7.65%
12.40
10/19/2026
7,532
7,450
Mach Acquisition T/L (15)(19)(26)
6.65% (2.00% PIK)
13.93
34,420
34,130
Precision Ultimate Holdings, LLC (14)(19)(25)
1,417
1,849
Robinson Helicopter (14)(19)(25)
1,592
3,124
Robinson Helicopter (15)(19)(29)
6.60%
6/30/2028
14,145
13,919
Saturn Purchaser Corp. (15)(19)(29)
5.35%
10.20
7/23/2029
13,865
13,753
Saturn Purchaser Corp. (3)(5)(18)(19)
7/22/2029
(34
Whitcraft-Paradigm (3)(18)(19)
5.50%
10.10
2/15/2029
2,485
Whitcraft-Paradigm (15)(19)(29)
6.50%
11.35
11,822
11,730
11,821
Whitcraft-Paradigm (3)(18)(19)(23)
P
13.50
2/28/2029
1,126
1,110
Aerospace & Defense Total
222,538
216,307
18.9
Automotive
American Trailer Rental Group (19)(26)
Subordinated Debt
9.00% (4.50% PIK)
12/1/2027
5,289
5,244
5,130
16,316
16,115
15,827
20,375
20,123
19,764
Cardo (6)(18)(19)
5.25%
10.58
5/12/2028
98
97
Gills Point S (3)(15)(19)
10.77
5/17/2029
7,402
7,393
Gills Point S (15)(19)(29)
10.88
12,536
10.70
352
Gills Point S (15)(19)
10.60
1,254
1,237
1,253
Gills Point S (14)(19)(25)
184
224
Intoxalock (15)(19)(29)
5.10%
9.95
11/1/2028
12,036
11,945
Intoxalock (3)(5)(18)(19)
(23
JHCC Holdings, LLC (15)(19)(29)
9/9/2027
11,952
11,872
JHCC Holdings, LLC (3)(18)(19)
4.25%
12.25
921
889
Automotive Total
87,964
87,495
7.6
Banking, Finance, Insurance & Real Estate
Electronic Merchant Systems (3)(18)(19)
8/1/2030
Electronic Merchant Systems (16)(19)(29)
25,133
24,700
24,693
Electronic Merchant Systems (14)(19)(25)
148
1,596
1,573
Morrow Sodali (15)(19)(29)
5.60%
4/25/2028
2,606
2,593
Morrow Sodali (3)(15)(19)
4/25/2027
1,026
1,007
Sikich (19)(25)(26)
Preferred Equity
13.00% PIK
13.00
31
3,098
3,150
Sikich (14)(19)(25)
Warrants
170
596
Banking, Finance, Insurance & Real Estate Total
32,994
33,814
2.9
Beverage, Food & Tobacco
AgroFresh Solutions (15)(19)(29)
6.35%
11.20
3/31/2029
23,229
22,840
22,996
AgroFresh Solutions (15)(19)
3/31/2028
5,015
4,936
4,965
Arctic Glacier U.S.A., Inc. (19)(26)(31)
6.76% (4.00% PIK)
15.37
5/24/2028
12,328
12,135
11,773
Arctic Glacier U.S.A., Inc. (2)(3)(5)(19)(26)(31)
15.82
12
(22
(76
BCSF Project Aberdeen, LLC (14)(19)(25)
2,138
Hellers (6)(19)
15.00%
15.00
3/27/2031
NZ$
441
273
Hellers (6)(15)(19)
BBSY
10.23
9/27/2030
5,870
3,569
3,629
Hellers (2)(3)(5)(6)(18)(19)
(15
(16
NPC International, Inc. (14)(19)(25)(27)
308
461
PPX (14)(19)(25)
33
5,000
7,057
Beverage, Food & Tobacco Total
51,315
52,746
4.6
8
Capital Equipment
AXH Air Coolers (3)(5)(18)(19)
10/31/2029
(62
(47
AXH Air Coolers (15)(19)(29)
11.81
11,690
11,587
AXH Air Coolers (14)(19)(25)
3,417
5,770
DiversiTech (17)
4.01%
8.62
12/22/2028
East BCC Coinvest II, LLC (14)(19)(25)
1,419
463
Ergotron Acquisition LLC (16)(19)(29)
5.85%
7/6/2028
12,005
11,834
FCG Acquisitions, Inc. (14)(19)(25)
Jonathan Acquisition Company (18)(19)
9.10%
13.79
12/22/2027
8,000
7,883
TCFIII Owl Finance, LLC (19)(26)
12.00% PIK
12.00
1/30/2027
5,985
5,948
Capital Equipment Total
41,980
43,914
3.8
Chemicals, Plastics & Rubber
AP Plastics Group, LLC (16)(19)(29)
4.85%
10.05
8/10/2028
7,159
7,003
Duraco (3)(19)(32)
11.16
6/6/2029
597
569
577
Duraco (19)(29)(32)
11.49
15,975
15,742
15,815
V Global Holdings LLC (16)(19)
EURIBOR
9.29
€
102
103
V Global Holdings LLC (16)(19)(29)
5.90%
10.97
5,759
5,691
5,485
V Global Holdings LLC (3)(16)(19)
10.81
7,395
7,336
6,934
Chemicals, Plastics & Rubber Total
36,443
36,073
3.1
Construction & Building
Chase Industries, Inc. (15)(19)(26)
5.65% (1.50% PIK)
11.75
5/12/2025
23,775
23,180
22,587
4.40% (1.25% PIK)
2,326
2,265
2,210
Chase Industries, Inc. (3)(15)(19)(26)
979
877
893
Elk Parent Holdings, LP (14)(19)(25)
1,669
1,202
1,775
Service Master (15)(19)(26)
5.86% (1.00% PIK)
11.71
8/16/2027
6,565
6,512
Service Master (14)(19)(25)
301
169
222
Service Master (18)(19)(26)
6.01% (1.00% PIK)
12.11
919
910
3,167
7,589
7,518
Service Master (3)(18)(19)(26)
11.65
9,490
9,392
Construction & Building Total
55,204
57,387
5.0
Consumer Goods: Durable
New Milani Group LLC (15)(19)(29)
6/6/2026
11,239
11,180
Stanton Carpet (15)(19)
9.15%
14.47
11,434
11,279
11,435
Tangent Technologies Acquisition, LLC (15)(19)
9.00%
14.30
5/30/2028
8,915
8,794
TLC Holdco LP (14)(19)(25)
1,281
1,221
1,036
TLC Purchaser, Inc. (15)(19)(29)
5.76%
10/11/2027
21,942
21,573
TLC Purchaser, Inc. (3)(18)(19)
10.71
6,855
6,802
Consumer Goods: Durable Total
60,849
61,422
5.4
9
Consumer Goods: Non-Durable
Evriholder (19)(29)(32)
11.70
1/24/2028
6,094
6,042
6,064
Fineline Technologies, Inc. (14)(19)(25)
939
1,316
FL Hawk Intermediate Holdings, Inc. (15)(19)
9.01%
13.62
8/19/2028
12,613
12,377
RoC Skincare (15)(19)(29)
6.00%
11.13
2/21/2031
18,141
17,891
RoC Skincare (3)(5)(18)(19)
2/21/2030
(26
Solaray, LLC (15)(19)
11.53
12/15/2025
13,172
13,169
12,810
Solaray, LLC (15)(19)(29)
28,600
27,814
Solaray, LLC (3)(18)(19)
10.53
10,635
10,623
WU Holdco, Inc. (15)(19)
9.60
3/26/2027
1,666
1,649
WU Holdco, Inc. (15)(19)(29)
5.15%
36,995
36,780
WU Holdco, Inc. (3)(18)(19)
9.64
1,610
1,605
Consumer Goods: Non-Durable Total
129,649
129,664
11.3
Consumer Goods: Wholesale
WSP (15)(19)(26)
1.15% (4.00% PIK)
10.40
4/27/2028
3,135
3,126
2,524
WSP (7)(14)(19)(26)
8.00% PIK
8.00
2,003
1,995
626
WSP (14)(19)(25)
216
2,898
WSP (2)(3)(5)(18)(19)
4/27/2027
(2
(38
Consumer Goods: Wholesale Total
8,245
3,118
0.3
Containers, Packaging & Glass
ASP-r-pac Acquisition Co LLC (16)(19)(29)
11.52
12/29/2027
5,799
5,674
5,755
ASP-r-pac Acquisition Co LLC (3)(16)(19)
6.11%
2,019
1,972
1,993
Containers, Packaging & Glass Total
7,646
7,748
0.7
Energy: Electricity
WCI Gigawatt Purchaser (15)(19)(29)
6.01%
11/19/2027
1,416
1,397
WCI Gigawatt Purchaser (3)(15)(19)
5.86%
1,365
1,327
Energy: Electricity Total
2,724
2,781
0.2
10
Environmental Industries
Reconomy (6)(18)(19)
SONIA
£
68
83
91
6.25%
27
28
30
Reconomy (3)(5)(6)(18)(19)
(80
Titan Cloud Software, Inc (14)(19)(25)
3,532
4,582
Titan Cloud Software, Inc (18)(19)(26)
2.00% (4.60% PIK)
11.91
9/7/2029
26,342
26,150
Titan Cloud Software, Inc (3)(18)(19)
10.56
9/7/2028
857
820
11.54
11,742
Environmental Industries Total
42,275
43,724
FIRE: Finance
Allworth Financial Group, L.P. (15)(19)(29)
12/23/2027
859
850
1,478
1,467
Allworth Financial Group, L.P. (3)(5)(18)(19)
(7
Choreo (15)(19)
2/18/2028
2,488
Choreo (3)(18)(19)
Congress Wealth (3)(18)(19)(29)
6/30/2029
Congress Wealth (3)(15)(19)
317
315
Congress Wealth (3)(18)(19)
Congress Wealth (14)(19)(25)
16
323
433
Insigneo Financial Group LLC (14)(19)(25)
2,504
4,020
Insigneo Financial Group LLC (15)(19)
11.93
8/1/2028
267
261
Parmenion (6)(18)(19)
5/11/2029
295
369
396
TA/Weg Holdings (15)(19)(29)
10.52
10/2/2028
9,232
2,331
Wealth Enhancement Group (WEG) (3)(15)(19)
10.09
3,397
3,300
Wealth Enhancement Group (WEG) (3)(5)(18)(19)
(10
FIRE: Finance Total
23,418
25,218
2.2
11
FIRE: Insurance
Margaux Acquisition Inc. (16)(19)(29)
10.98
12/19/2025
11,951
11,938
Margaux Acquisition Inc. (3)(16)(19)
10.80
1,915
1,913
Margaux UK Finance Limited (3)(6)(18)(19)
10.57
274
367
McLarens Acquisition Inc. (3)(16)(19)
10.31
12/16/2025
549
545
MRHT (3)(6)(18)(19)
9.24
2/1/2029
3,956
4,229
4,410
MRHT (6)(15)(19)
10.08
956
1,019
1,066
PCF (3)(16)(19)
10.35
6,815
6,783
Simplicity (3)(18)(19)
12/2/2026
Simplicity (3)(15)(19)
475
471
Simplicity (15)(19)(29)
6.40%
11.00
12,066
11,828
Simplicity (3)(5)(18)(19)
FIRE: Insurance Total
39,067
39,614
3.5
Healthcare & Pharmaceuticals
AEG Vision (3)(18)(19)(29)
10.50
3/27/2026
11,498
11,299
AEG Vision (3)(5)(18)(19)(29)
(215
AEG Vision (18)(19)(29)
2,064
2,038
Apollo Intelligence (14)(19)(25)
3,293
3,402
Apollo Intelligence (16)(19)(29)
5/31/2028
15,116
15,177
Apollo Intelligence (3)(16)(19)
10.41
4,277
4,233
Apollo Intelligence (3)(5)(18)(19)
(60
Beacon Specialized Living (3)(5)(18)(19)
3/25/2028
(122
Beacon Specialized Living (15)(19)(29)
8,632
8,548
Beacon Specialized Living (3)(18)(19)
CB Titan Holdings, Inc. (14)(19)(25)
1,953
Datix Bidco Limited (3)(6)(18)(19)
10/28/2024
EHE Health (3)(18)(19)
-
8/7/2030
EHE Health (15)(19)(29)
10.63
35,646
35,293
35,290
EHE Health (14)(19)(25)
2,178
Great Expressions Dental Center PC (15)(19)(26)
1.25% (3.00% PIK)
8.90
9/30/2026
9,743
9,752
8,574
HealthDrive (15)(19)
6.10%
10.95
8/20/2029
271
HealthDrive (3)(15)(19)
609
601
HealthDrive (3)(18)(19)
HealthDrive (14)(19)(25)
18
1,822
Mertus 522. GmbH (6)(18)(19)(26)
6.25% (0.75% PIK)
5/28/2026
226
252
244
10.16
145
143
Nafinco (3)(5)(6)(18)(19)
8/29/2031
Nafinco (6)(18)(19)
8.72
8,052
8,698
8,774
5/30/2031
(4
Pharmacy Partners (19)(32)
11.56
1,694
1,675
Pharmacy Partners (3)(5)(18)(19)
(61
Premier Imaging, LLC (15)(19)(29)
8.26%
12.87
1/2/2025
7,711
7,701
7,017
Premier Imaging, LLC (15)(19)
11.61
2,098
2,096
1,909
SunMed Group Holdings, LLC (16)(19)(29)
10.85
6/16/2028
8,540
8,444
Sunmed Group Holdings, LLC (16)(19)
10.46
6/16/2027
1,229
1,222
Healthcare & Pharmaceuticals Total
128,116
125,287
10.9
High Tech Industries
Access (6)(18)(19)
6/28/2029
80
99
107
AMI US Holdings Inc. (6)(15)(19)(29)
10/1/2026
3,542
3,534
Applitools (2)(3)(5)(18)(19)
5/25/2028
(21
(51
Applitools (6)(16)(19)(26)
6.25% PIK
5/25/2029
18,964
18,854
18,679
Appriss Holdings, Inc. (14)(19)(25)
2,136
1,606
1,743
Appriss Holdings, Inc. (15)(19)
7.25%
12.08
5/6/2027
11,081
10,966
Appriss Holdings, Inc. (3)(15)(19)
12.09
38
AQ Software Corporation (14)(19)(25)
1,107
1,084
1,844
1,806
507
496
CB Nike IntermediateCo Ltd (3)(6)(18)(19)
10/31/2025
Cloud Technology Solutions (CTS) (6)(14)(19)(25)
4,408
5,360
5,694
Eagle Rock Capital Corporation (14)(19)(25)
3,345
5,470
Element Buyer, Inc. (15)(19)(29)
7/19/2026
19,768
19,789
Element Buyer, Inc. (3)(5)(18)(19)
(14
Eleven Software (14)(19)(25)
109
127
896
1,046
Eleven Software (18)(19)
8.25%
12.85
7,439
7,394
8.10%
13.20
9/25/2026
1,488
1,481
E-Tech Group (3)(15)(19)
4.50%
12.50
4/9/2030
130
118
117
FNZ UK Finco Limited (6)(18)(19)
BBSW
5.80%
10.37
AUD
81
56
Gluware (14)(19)(25)
4,307
478
Gluware (7)(14)(19)(26)
4.50% (10.00% PIK)
14.50
10/15/2025
21,978
21,078
17,251
5,972
5,720
4,688
LogRhythm (2)(3)(5)(18)(19)
7/2/2029
(12
(25
NearMap (3)(5)(6)(18)(19)
12/9/2029
(67
Revalize, Inc. (14)(19)(25)
1,431
Revalize, Inc. (15)(19)(29)
11.15
4/15/2027
5,263
5,234
5,092
13
Revalize, Inc. (15)(19)
2,009
1,998
1,944
Revalize, Inc. (3)(15)(19)
737
731
693
SAM (19)(26)
12.75% PIK
12.75
5/9/2028
35,936
35,739
SensorTower (14)(19)(25)
156
2,400
2,997
SensorTower (19)(29)(31)
7.50%
12.44
3/15/2029
24,068
23,729
23,827
SensorTower (2)(3)(5)(18)(19)
(11
SoftCo (6)(14)(19)(25)
500
542
604
SoftCo (6)(15)(19)
7.00%
10.51
2/22/2031
2,000
2,145
2,230
Solifi (19)(25)(26)
14.50% PIK
11,760
Superna Inc. (2)(3)(5)(6)(18)(19)
3/6/2028
(39
Superna Inc. (6)(14)(19)(25)
1,463
1,580
Superna Inc. (6)(15)(19)
11.44
2,713
2,677
2,673
Utimaco (6)(14)(19)(25)
2,223
1,979
Utimaco (6)(18)(19)
10.00
5/14/2029
92
101
Utimaco (6)(16)(19)
6.68%
11.99
128
125
262
260
257
Ventiv Holdco, Inc. (14)(19)(25)
529
2,833
909
VPARK BIDCO AB (6)(18)(19)
CIBOR
4.00%
7.32
3/10/2025
DKK
570
93
NIBOR
8.64
NOK
740
70
High Tech Industries Total
202,013
197,812
17.3
Hotel, Gaming & Leisure
Aimbridge Acquisition Co., Inc. (18)(19)
7.61%
12.82
2/1/2027
14,193
14,020
13,767
Awayday (3)(18)(19)
9/6/2031
Awayday (2)(3)(5)(18)(19)
9/6/2030
(35
Awayday (15)(19)(29)
10.49
60,745
60,144
60,137
City BBQ (2)(3)(5)(18)(19)
9/4/2030
(41
City BBQ (15)(19)(29)
10.55
38,225
37,898
37,891
City BBQ (14)(19)(25)
1,271
City BBQ (3)(18)(19)
Concert Golf Partners Holdco (16)(19)(29)
4.75%
9.63
4/1/2030
6,709
6,609
Concert Golf Partners Holdco LLC (16)(19)
4,137
4,062
Concert Golf Partners Holdco LLC (3)(5)(18)(19)
4/2/2029
(29
Pyramid Global Hospitality (19)(24)(29)
4.90%
10.15
1/19/2028
9,850
9,667
Pyramid Global Hospitality (3)(5)(18)(19)
Hotel, Gaming & Leisure Total
133,506
133,686
11.7
14
Media: Advertising, Printing & Publishing
AdThrive (18)
4.36%
9.21
3/23/2028
4,974
4,893
4,956
Kpler (6)(15)(19)
11.21
3/3/2030
100
106
111
Kpler (6)(18)(19)
OGH Bidco Limited (3)(6)(18)(19)
6/29/2029
2,217
2,496
OGH Bidco Limited (6)(18)(19)
139
164
176
TGI Sport Bidco Pty Ltd (6)(17)(19)
6/24/2029
6,769
8,605
9,072
TGI Sport Bidco Pty Ltd (6)(18)(19)
4/30/2026
76
7.11%
12.37
4,187
2,866
Media: Advertising, Printing & Publishing Total
19,542
19,990
1.7
Media: Broadcasting & Subscription
Lightning Finco Limited (6)(16)(19)
5.93%
8/31/2028
1,443
1,436
Lightning Finco Limited (6)(18)(19)
9.17
1,300
1,427
1,450
Media: Broadcasting & Subscription Total
2,863
2,893
Media: Diversified & Production
Aptus 1724 Gmbh (6)(19)(21)(26)
6.15% (1.50% PIK)
12.60
2/23/2028
5,023
4,521
Efficient Collaborative Retail Marketing Company, LLC (15)(19)(26)
7.76% (1.50% PIK)
13.87
12/31/2025
11,144
9,293
17,173
14,227
13,738
Efficient Collaborative Retail Marketing Company, LLC (3)(15)(19)
6.61%
11.46
961
Music Creation Group Bidco GmbH (6)(18)(19)(26)
4,092
4,027
3,683
Media: Diversified & Production Total
33,531
31,818
2.8
Retail
Galeria (6)(19)(26)
15.00% PIK
12/28/2029
8,638
9,255
9,437
Galeria (6)(14)(19)(25)
22
23
New Look Vision Group (6)(15)(19)
CORRA
5.82%
9.75
5/26/2028
CAD
21
New Look Vision Group (3)(6)(15)(19)
9.83
5/26/2026
313
220
214
54
40
New Look Vision Group (6)(18)(19)(26)
4.15% (2.00% PIK)
11.48
386
382
Thrasio, LLC (15)(19)(26)
10.11% (PIK)
15.54
6/18/2029
4,388
4,397
3,861
Thrasio, LLC (14)(19)(25)
777
289
5,563
6,997
2,591
1,430
Retail Total
23,555
18,288
1.6
15
Services: Business
ACAMS (14)(19)(25)
3,337
2,473
Advanced Aircrew (3)(15)(19)
7/26/2030
46
Advanced Aircrew (15)(19)
5,107
5,056
Advanced Aircrew (14)(19)(25)
592
Allbridge (3)(5)(18)(19)
6/5/2030
Allbridge (15)(19)(29)
14,176
14,072
Allbridge (3)(18)(19)
Avalon Acquiror, Inc. (15)(19)(29)
3/10/2028
14,317
14,220
14,174
Avalon Acquiror, Inc. (3)(15)(19)
11.37
5,882
5,773
5,798
Beneficium (2)(3)(6)(18)(19)
6/28/2031
(48
Beneficium (6)(15)(19)
10.45
7,497
9,386
9,997
Brook Bidco (6)(14)(19)(25)
5,675
7,784
9,188
Brook Bidco (6)(18)(19)(26)
4.00% (3.50% PIK)
12.57
7/10/2028
841
1,134
1,128
Caribou Bidco Limited (3)(6)(18)(19)
Chamber Bidco Limited (6)(18)(19)
11.32
6/2/2028
213
212
Cube (3)(6)(18)(19)
2/20/2025
5/20/2031
Darcy Partners (14)(19)(25)
359
360
457
Darcy Partners (18)(19)
7.75%
13.08
6/1/2028
1,499
Darcy Partners (3)(18)(19)
12.56
52
Datix Bidco Limited (2)(3)(5)(6)(18)(19)
4/30/2031
(43
10/30/2030
Datix Bidco Limited (17)(19)
22,626
22,202
22,287
Discovery Senior Living (15)(19)
10.76
3/18/2030
2,830
2,800
Discovery Senior Living (3)(5)(18)(19)
(65
DSN (Dealer Services Network) (15)(19)
2/9/2027
8,750
8,666
8,663
DTIQ (2)(3)(5)(18)(19)
9/30/2029
(40
DTIQ (3)(18)(19)
DTIQ (13)(19)(29)
12.35
33,777
33,186
DTIQ (14)(19)(25)
3,995
Elevator Holdco Inc. (14)(19)(25)
2,448
4,141
iBanFirst (6)(18)(19)(26)
10.00% PIK
13.71
7/13/2028
3,544
3,681
3,951
96
3,726
3,822
4,153
iBanFirst Facility (6)(14)(19)(25)
7,112
8,137
22,742
ImageTrend (15)(19)
1/31/2029
17,000
16,793
ImageTrend (3)(15)(19)
1,000
957
Learning Pool (6)(16)(19)(26)
337
443
445
159
masLabor (14)(19)(25)
450
masLabor (18)(19)
7/1/2027
8,341
8,197
Opus2 (6)(14)(19)(25)
2,272
2,900
3,487
Opus2 (6)(18)(19)
5.53%
10.79
5/5/2028
123
168
Parcel2Go (2)(3)(6)(7)(14)(18)(19)
7/17/2028
50
Parcel2Go (6)(14)(19)(25)
3,605
4,237
Parcel2Go (6)(7)(14)(18)(19)
126
42
Rydoo (6)(15)(19)
6.75%
9/12/2031
1,556
1,721
1,717
Rydoo (6)(14)(19)(25)
200
466
520
519
Smartronix (15)(19)(29)
11/23/2028
12,412
12,253
Smartronix (3)(5)(18)(19)
11/23/2027
(75
Smartronix (15)(19)
3,669
3,591
2,426
2,374
Spring Finco BV (3)(6)(18)(19)
7/15/2029
TEI Holdings Inc. (17)(29)
9.35
4/9/2031
2,647
2,634
2,658
TES Global (3)(6)(18)(19)
1/27/2029
Webcentral (3)(6)(18)(19)
9.41
12/18/2030
336
344
355
Services: Business Total
206,160
221,796
19.3
Services: Consumer
MZR Aggregator (14)(19)(25)
798
428
MZR Buyer, LLC (15)(19)(29)
12/22/2026
11,811
11,704
11,456
MZR Buyer, LLC (15)(19)
11.31
5,210
5,171
5,053
Spotless Brands (3)(15)(19)
7/25/2028
844
842
Surrey Bidco Limited (6)(18)(19)(26)
6.28% PIK
11.23
5/11/2026
78
Services: Consumer Total
18,607
17,855
17
InterestRate
MaturityDate
MarketValue
% ofNAV (4)
Telecommunications
Meriplex Communications, Ltd. (16)(19)(29)
12,075
11,905
11,894
Meriplex Communications, Ltd. (16)(19)
7,193
7,125
7,085
2,824
2,788
2,782
Taoglas (14)(19)(25)
2,259
2,037
Taoglas (15)(19)(29)
11.85
10,004
9,918
9,804
Taoglas (2)(3)(18)(19)
(73
Taoglas (3)(6)(15)(19)
1,211
1,184
Taoglas (6)(15)(19)
439
Telecommunications Total
35,665
35,172
Transportation: Cargo
A&R Logistics, Inc. (15)(19)
6.90%
12.22
8/3/2026
2,355
2,348
2,261
A&R Logistics, Inc. (19)(31)
2,640
2,635
5,806
5,793
5,574
A&R Logistics, Inc. (15)(19)(29)
12,876
12,838
12,361
A&R Logistics, Inc. (3)(15)(19)
11.97
4,638
4,572
4,395
ARL Holdings, LLC (14)(19)(25)
411
Grammer Investment Holdings LLC (14)(19)(25)
122
1,011
Grammer Investment Holdings LLC (19)(25)(26)
1,095
Gulf Winds International (15)(19)
7.60%
12.45
12/16/2028
6,079
6,022
5,958
Gulf Winds International (15)(19)(29)
11,754
11,795
Gulf Winds International (3)(15)(19)
2,381
2,270
2,276
REP Coinvest III- A Omni, L.P. (14)(19)(25)
1,377
1,047
RoadOne (15)(19)(29)
11.10
12/29/2028
11,749
RoadOne (3)(18)(19)
174
RoadOne (18)(19)
941
926
Transportation: Cargo Total
65,026
63,311
5.5
Transportation: Consumer
PrimeFlight Acquisition LLC (15)(19)
5/1/2029
4,065
4,006
PrimeFlight Acquisition LLC (15)(19)(29)
12,097
11,896
837
Transportation: Consumer Total
16,739
16,999
1.5
Utilities: Water
Vessco Water (3)(16)(19)
9.50
7/24/2031
489
473
Vessco Water (2)(3)(5)(16)(19)
Vessco Water (16)(19)
13,687
13,552
13,551
Utilities: Water Total
14,014
14,013
1.2
Wholesale
Abracon Group Holding, LLC. (16)(19)(29)
6.15%
14,105
14,101
11,284
Abracon Group Holding, LLC. (16)(19)
11.43
2,018
1,615
Hultec (14)(19)(25)
651
730
SureWerx (3)(5)(18)(19)
SureWerx (3)(16)(19)
671
Wholesale Total
17,373
14,300
Non-Controlled/Non-Affiliate Investments Total
1,759,021
153.0
19
Non-Controlled/Affiliate Investments
Ansett Aviation Training (6)(10)(14)(19)(25)
5,119
3,842
Ansett Aviation Training (6)(10)(18)(19)
4.69%
9.19
9/24/2031
7,072
5,308
4,907
9,150
14,574
1.3
ADT Pizza, LLC (10)(14)(19)(25)
6,720
6,732
9,398
0.8
Walker Edison (10)(14)(19)(25)
60
5,592
Walker Edison (7)(10)(14)(15)(19)(26)
6.90% PIK
12.20
3/31/2027
6,628
6,433
2,983
Walker Edison (10)(15)(19)
3,182
11.50
900
873
405
Walker Edison (3)(7)(10)(14)(15)(19)(26)
1,904
1,861
769
17,941
7,339
0.6
Energy: Oil & Gas
Blackbrush Oil & Gas, L.P. (10)(14)(19)(25)
1,198
Energy: Oil & Gas Total
0.0
DC Blox (10)(19)(25)(26)
5,435
37,842
3,851
5,447
DC Blox (10)(14)(19)(25)
51
41,693
48,724
4.3
Non-Controlled/Affiliate Investments Total
75,517
7.0
Controlled Affiliate Investments
BCC Jetstream Holdings Aviation (Off I), LLC (6)(10)(11)(14)(19)(20)(25)
11,863
11,862
10,893
BCC Jetstream Holdings Aviation (On II), LLC (10)(11)(14)(19)(20)(25)
BCC Jetstream Holdings Aviation (On II), LLC (10)(11)(14)(19)(20)
8,013
6,622
Gale Aviation (Offshore) Co (6)(10)(11)(19)(25)
77,395
77,394
75,001
98,385
92,516
8.1
Legacy Corporate Lending HoldCo, LLC (10)(11)(14)(19)(25)
37
36,900
37,800
3.3
Investment Vehicles
Bain Capital Senior Loan Program, LLC (6)(10)(11)(18)(19)
Subordinated Note Investment Vehicles
12/27/2033
146,495
Bain Capital Senior Loan Program, LLC (6)(10)(11)(25)
Preferred Equity Interest Investment Vehicles
Equity Interest Investment Vehicles
5,594
(1,839
International Senior Loan Program, LLC (6)(10)(11)(18)(19)
8.00%
13.33
2/22/2028
190,729
International Senior Loan Program, LLC (6)(10)(11)(25)
63,587
60,615
56,476
Investment Vehicles Total
403,443
391,871
34.1
Lightning Holdings B, LLC (6)(10)(11)(14)(19)(25)
38,536
38,847
51,483
4.5
Controlled Affiliate Investments Total
578,475
50.0
Investments Total
2,413,013
2,407,950
210.0
Cash Equivalents
Goldman Sachs Financial Square Government Fund Institutional Share Class
4.85
4,501
Goldman Sachs US Treasury Liquid Reserves Fund (30)
4.87
23,587
Cash Equivalents Total
28,088
2.5
Investments and Cash Equivalents Total
2,441,101
2,436,038
212.5
Forward Foreign Currency Exchange Contracts
Currency Purchased
Currency Sold
Counterparty
Settlement Date
Unrealized Appreciation(8)
US DOLLARS 308
CANADIAN DOLLAR 390
Bank of New York Mellon
12/13/2024
US DOLLARS 1,533
AUSTRALIAN DOLLARS 2,240
12/30/2024
US DOLLARS 2,976
NEW ZEALAND DOLLAR 4,750
(46
US DOLLARS 19,948
POUND STERLING 14,990
1/9/2025
147
US DOLLARS 10,482
POUND STERLING 8,110
Wells Fargo
389
US DOLLARS 27,735
POUND STERLING 23,100
Citibank
(3,232
US DOLLARS 129
EURO 0
129
US DOLLARS 71
NORWEGIAN KRONE 740
1/24/2025
US DOLLARS 2,743
AUSTRALIAN DOLLARS 4,180
2/12/2025
(158
US DOLLARS 9,831
POUND STERLING 7,900
4/23/2025
(744
US DOLLARS 6,096
EURO 5,600
5/15/2025
(207
US DOLLARS 9,158
AUSTRALIAN DOLLARS 13,980
5/27/2025
(534
US DOLLARS 192
CANADIAN DOLLAR 260
(1
US DOLLARS 32,539
EURO 29,350
(513
US DOLLARS 2,949
EURO 2,670
(58
US DOLLARS 9
POUND STERLING 0
6/10/2025
US DOLLARS 358
EURO 310
US DOLLARS 4,792
EURO 4,380
6/12/2025
(143
US DOLLARS 5,908
EURO 5,480
6/13/2025
(267
US DOLLARS 18,073
POUND STERLING 14,250
6/23/2025
(987
US DOLLARS 8,321
POUND STERLING 6,450
7/23/2025
(302
US DOLLARS 2,762
AUSTRALIAN DOLLARS 3,739
7/28/2025
172
US DOLLARS 5,159
EURO 4,680
(123
US DOLLARS 1,029
POUND STERLING 800
7/29/2025
US DOLLARS 8,880
EURO 7,870
8/22/2025
US DOLLARS 2,442
EURO 2,190
9/10/2025
(6,549
Investment
Acquisition Date
ACAMS
3/10/2022
ADT Pizza, LLC
10/29/2018
Ansett Aviation Training
3/24/2022
Apollo Intelligence
6/1/2022
Appriss Holdings, Inc.
5/3/2021
AQ Software Corporation
12/10/2021
4/14/2022
12/29/2022
ARL Holdings, LLC
5/3/2019
AgroFresh
7/3/2024
AXH Air Coolers
10/31/2023
Bain Capital Senior Loan Program, LLC
12/27/2021
BCC Jetstream Holdings Aviation (Off I), LLC
6/1/2017
BCC Jetstream Holdings Aviation (On II), LLC
Blackbrush Oil & Gas, L.P.
9/3/2020
Brook Bidco
7/8/2021
BTX Precision
7/25/2024
CB Titan Holdings, Inc.
5/1/2017
City BBQ
9/4/2024
Cloud Technology Solutions (CTS)
12/15/2022
Congress Wealth
6/30/2023
Darcy Partners
DTIQ
9/30/2024
DC Blox
9/23/2024
Eagle Rock Capital Corporation
12/9/2021
East BCC Coinvest II, LLC
7/23/2019
EHE Health
8/7/2024
Electronic Merchant Systems
7/12/2024
Elevator Holdco Inc.
12/23/2019
Eleven Software
4/25/2022
3/20/2024
Elk Parent Holdings, LP
11/1/2019
FCG Acquisitions, Inc.
1/24/2019
Fineline Technologies, Inc.
2/22/2021
Forward Slope
3/15/2024
Galeria
8/1/2024
Gale Aviation (Offshore) Co
1/2/2019
7/31/2019
8/14/2019
Gills Point S
5/17/2023
24
Gluware
10/15/2021
Grammer Investment Holdings LLC
10/1/2018
HealthDrive
8/18/2023
Hultec
3/31/2023
iBanFirst Facility
7/13/2021
Insigneo Financial Group LLC
8/1/2022
International Senior Loan Program, LLC
Kellstrom Aerospace Group, Inc
7/1/2019
Legacy Corporate Lending HoldCo, LLC
4/21/2023
Lightning Holdings B, LLC
1/2/2020
8/19/2021
11/12/2021
9/2/2021
9/17/2021
9/12/2024
masLabor
7/1/2021
MZR Aggregator
12/22/2020
9/17/2024
NPC International, Inc.
4/1/2021
Opus2
6/16/2021
Parcel2Go
7/15/2021
PPX
7/29/2021
Precision Ultimate Holdings, LLC
11/6/2019
REP Coinvest III- A Omni, L.P.
2/5/2021
Revalize, Inc.
Robinson Helicopter
6/30/2022
Rydoo
9/26/2024
SensorTower
Service Master
8/16/2021
Sikich
5/6/2024
Solifi
5/24/2024
SoftCo
3/1/2024
Superna Inc.
3/8/2022
Taoglas
2/28/2023
6/27/2024
Titan Cloud Software, Inc
11/4/2022
TLC Holdco LP
10/11/2019
Thrasio, LLC
12/18/2020
Utimaco
6/28/2022
Ventiv Holdco, Inc.
9/3/2019
Walker Edison
3/1/2023
WSP
5/20/2024
8/31/2021
25
As of December 31, 2023
Interest
Maturity
Principal /
Market
% of
Spread (1)
Rate
Date
Shares (9)
Value
NAV (4)
Forming Machining Industries Holdings, LLC (18)(19)(26)
7.89% PIK
6,630
6,600
5,437
9.79
16,100
16,059
13,685
6,201
6,051
6,046
12.23
23,634
23,060
23,043
Forward Slope (3)(15)(19)
12.17
4,738
4,529
4,516
12.24
19,950
19,653
19,451
11.25
35,241
35,429
33,567
GSP Holdings, LLC (3)(18)(19)
2,306
2,292
2,088
1,044
Kellstrom Commercial Aerospace, Inc. (15)(19)(26)
6.00% (0.75% PIK)
29,630
29,313
28,889
Kellstrom Commercial Aerospace, Inc. (2)(3)(15)(19)(23)(26)
5.61% (0.50% PIK)
14.61
47
13.02
7,420
6,879
14.05
34,143
33,752
31,924
1,242
2,359
11.96
14,735
14,464
11.01
26,329
26,085
11,912
11,805
146
241,619
233,231
20.5
5,112
5,060
15,772
15,535
19,695
19,390
10.54
12.38
12,632
7.10%
12.51
692
682
12,128
12,023
Intoxalock (3)(15)(19)
343
10.75
9/9/2025
12,073
12,015
JHCC Holdings, LLC (3)(5)(15)(19)
77,911
78,757
6.9
26
5.63%
11.09
2,626
2,611
2,600
Morrow Sodali (15)(19)
2,218
2,164
2,196
532
509
510
5,284
5,306
0.5
6.50% (4.00% PIK)
16.14
12,912
12,672
12,653
Arctic Glacier U.S.A., Inc. (2)(3)(5)(19)(31)
6,505
18,099
19,228
AXH Air Coolers (2)(3)(5)(15)(19)
(71
AXH Air Coolers (3)(15)(19)
12.19
1,101
27,992
27,719
27,712
Ergotron Acquisition LLC (18)(19)(29)
11,898
Jonathan Acquisition Company (15)(19)
7,866
5,462
5,415
5,298
58,710
57,960
5.1
AP Plastics Group, LLC (18)(19)(29)
10.19
7,212
7,032
5,803
5,614
12/22/2025
3,978
3,881
3,663
16,735
16,411
1.4
23,734
22,545
22,073
2,208
2,167
Chase Industries, Inc. (2)(3)(5)(15)(19)
(224
(120
1,040
1,672
6.00% (1.00% PIK)
12.65
885
724
6.11% (1.00% PIK)
12.47
11,689
Service Master (3)(15)(19)(26)
11,537
11,392
YLG Holdings, Inc. (15)(19)
10.48
4,970
4,968
YLG Holdings, Inc. (15)(19)(29)
16,962
16,911
YLG Holdings, Inc. (3)(5)(18)(19)
71,731
73,830
6.5
6/6/2024
11,329
11,197
14.56
11,256
14.44
8,776
8,759
376
TLC Purchaser, Inc. (15)(19)(26)
2.26% (6.25% PIK)
14.15
10/13/2025
37,562
37,149
35,214
6.51%
11.86
3,123
3,031
2,528
72,630
69,640
6.1
1,004
9.26%
8/22/2028
12,347
RoC Opco LLC (15)(19)(29)
12.95
2/25/2025
14,887
14,799
RoC Opco LLC (3)(5)(15)(19)
14,016
14,028
13,350
30,435
28,989
Solaray, LLC (3)(15)(19)
11,344
11,343
3/26/2026
1,678
1,657
1,653
37,287
36,991
36,728
3/26/2025
3,043
3,030
2,958
125,527
123,526
434
WSP (15)(19)(26)(29)
6.40% (0.75% PIK)
12.53
5,521
5,449
4,748
WSP (2)(3)(5)(15)(19)
(5
8,558
11.64
4,042
3,983
3,900
ASP-r-pac Acquisition Co LLC (2)(3)(5)(16)(19)
(114
Iris Holding, Inc. (17)(29)
6/28/2028
12,887
12,346
11,941
16,286
15,727
1,425
1,402
1,410
WCI Gigawatt Purchaser (2)(3)(5)(15)(19)
(19
11.14
WCI Gigawatt Purchaser (15)(19)
3,465
3,431
4,739
4,790
0.4
29
Reconomy (3)(6)(18)(19)
6/25/2029
987
1,149
1,256
82
86
9.93
4,161
Titan Cloud Software, Inc (15)(19)
25,714
25,495
11,429
11,339
Titan Cloud Software, Inc (3)(5)(15)(19)
(45
41,580
42,676
12/23/2026
865
854
1,490
1,475
Allworth Financial Group, L.P. (2)(3)(5)(18)(19)
(9
(24
320
294
325
2,341
2,357
3,825
3,746
7,667
7,478
Parmenion (6)(15)(19)
10.69
368
10/4/2027
9,304
2,349
2,342
28,529
29,100
2.6
12/19/2024
16,497
16,426
Margaux Acquisition Inc. (3)(5)(15)(19)
11.29
Margaux UK Finance Limited (3)(5)(6)(18)(19)
11.06
Margaux UK Finance Limited (6)(18)(19)
7,396
9,603
9,415
MRHT (2)(3)(5)(6)(15)(19)
(28
10.72
1,050
Paisley Bidco Limited (6)(18)(19)
9.45
11/26/2028
32
36
35
Simplicity (18)(19)(29)
16,641
16,222
16,392
Simplicity (2)(3)(5)(18)(19)
(131
43,106
43,257
3,162
2,951
Apollo Intelligence (18)(19)(29)
11.12
15,232
15,145
15,156
Apollo Intelligence (3)(18)(19)
4,565
4,512
Apollo Intelligence (2)(3)(5)(16)(19)
CPS Group Holdings, Inc. (15)(19)(29)
3/3/2025
34,417
34,334
34,416
CPS Group Holdings, Inc. (3)(18)(19)
578
9.69
Datix Bidco Limited (6)(18)(19)
12.94
4/27/2026
121
165
155
4/28/2025
1.15% (3.00% PIK)
9.33
9,523
9,520
7,713
1,928
268
2,062
11.03
250
243
10.90
132
142
7,069
7,028
6,963
1,906
1,888
8,606
8,499
Sunmed Group Holdings, LLC (3)(5)(16)(19)
91,171
87,604
7.7
10.44
6/4/2029
4/1/2025
3,816
3,796
Applitools (2)(3)(5)(16)(19)
Applitools (6)(19)(32)
17,360
17,236
17,056
1,576
12.32
11,179
11,033
Appriss Holdings, Inc. (3)(5)(15)(19)
(8
1,876
516
CB Nike IntermediateCo Ltd (3)(6)(15)(19)
5,504
Cloud Technology Solutions (CTS) (6)(18)(19)(26)
4.00% (4.00% PIK)
13.19
1/3/2030
8,247
10,007
10,499
4,295
Element Buyer, Inc. (15)(19)
878
36,242
36,327
Element Buyer, Inc. (3)(5)(15)(19)
(6
840
Eleven Software (15)(19)
13.60
7,384
7,365
1,479
1,473
L
55
511
Gluware (19)(26)
9.00% (5.50% PIK)
20,604
20,146
19,367
Gluware (18)(19)(26)
5,599
5,555
5,487
NearMap (3)(5)(15)(19)
(78
NearMap (6)(18)(19)
12.61
11,601
11,393
Onventis (6)(15)(19)
11.47
1/12/2030
8,919
9,596
9,845
1,472
5,304
5,267
Revalize, Inc. (18)(19)
1,996
1,959
High Tech Industries Continued
335
327
302
33,699
33,481
33,447
Superna Inc. (2)(3)(5)(6)(15)(19)
(18
(92
1,196
11.88
2,734
2,692
2,639
2,123
1,414
10.28
256
Ventiv Holdco, Inc. (15)(19)(26)(29)
5.60% (1.00% PIK)
11.95
9/3/2025
13,902
13,834
Ventiv Holdco, Inc. (3)(18)(19)(26)
681
662
Ventiv Topco, Inc. (14)(19)(25)
2,307
VPARK BIDCO AB (6)(16)(19)
7.87
84
8.54
73
218,876
217,507
19.2
12.97
13,971
13,270
3/30/2029
6,761
6,650
Concert Golf Partners Holdco LLC (3)(16)(19)
3,798
3,715
Concert Golf Partners Holdco LLC (3)(5)(16)(19)
Pyramid Global Hospitality (15)(19)(29)
1/19/2027
9,925
9,686
Pyramid Global Hospitality (3)(5)(15)(19)
Saltoun (7)(14)(18)(19)(26)(29)
13.75% PIK
13.75
4/11/2028
5,183
5,011
2,747
Saltoun (7)(14)(19)(26)
784
Saltoun (18)(19)(26)
339
291
Saltoun (19)(26)
1,108
42,086
39,023
3.4
11.69
4,412
5,269
5,617
15,081
15,684
16,648
3,346
3,547
3,694
11.36
67
27,442
28,892
11.24
1,432
9.39
1,423
1,435
2,855
2,878
9 Story Media Group Inc. (3)(6)(18)(19)
CDOR
10.67
90
66
9 Story Media Group Inc. (6)(16)(19)
10.74
1,279
991
966
9 Story Media Group Inc. (6)(18)(19)
579
613
639
Aptus 1724 Gmbh (6)(19)(21)
11.78
4,971
4,822
Efficient Collaborative Retail Marketing Company, LLC (7)(14)(15)(19)(26)
7.50% (1.50% PIK)
14.45
11,099
10,103
7,408
17,101
15,537
11,415
Efficient Collaborative Retail Marketing Company, LLC (3)(15)(19)(26)
5.00% (1.50% PIK)
Music Creation Group Bidco GmbH (6)(19)(21)
3,990
3,943
36,382
29,372
Media: Publishing
2,592
2,430
Media: Publishing Total
2,756
2,598
34
10.93
New Look Vision Group (2)(3)(5)(6)(15)(19)
New Look Vision Group (6)(18)(19)
41
374
Thrasio, LLC (7)(14)(15)(19)
12/18/2026
12,335
11,152
4,934
11,590
5,324
AMCP Clean Acquisition Company, LLC (18)
6/16/2025
7,810
7,739
7,373
2,246
2,229
2,121
Avalon Acquiror, Inc. (18)(19)(29)
11.60
14,427
14,316
14,030
11.62
5,042
4,909
4,811
7,783
8,443
7.37% PIK
1,059
997
Chamber Bidco Limited (6)(17)(19)
11.57
6/7/2028
211
Darcy Partners (19)(32)
13.12
1,511
1,498
1,496
Darcy Partners (2)(3)(15)(19)
(3
4,318
iBanFirst (6)(19)(26)(32)
13.91
3,194
3,295
3,526
3,357
3,412
3,705
8,136
20,328
13.13
20,000
19,729
ImageTrend (3)(5)(15)(19)
7.51% PIK
12.81
7/7/2028
407
413
112
772
Services: Business Continued
masLabor (15)(19)
12.83
8,405
8,228
3,447
5.03%
10.22
Parcel2Go (3)(6)(18)(19)(26)
3.00% (3.00% PIK)
11.19
39
2,231
Parcel2Go (6)(18)(19)(26)
3.25% (3.00% PIK)
171
150
Refine Intermediate, Inc. (15)(19)(29)
4.60%
3/3/2027
1,037
1,024
Refine Intermediate, Inc. (3)(5)(18)(19)
9/3/2026
(55
12,508
12,326
12,383
Smartronix (2)(3)(5)(15)(19)
(88
11.59
3,697
3,607
3,660
11.76
8,209
8,009
8,127
SumUp Holdings Luxembourg S.à.r.l. (6)(19)(32)
12.21
2/17/2026
6,805
8,145
7,512
TEI Holdings Inc. (15)(19)(29)
24,925
24,712
TEI Holdings Inc. (3)(5)(18)(19)
12/23/2025
154,646
167,623
14.7
586
11,903
11,766
MZR Buyer, LLC (3)(15)(19)
12.18
2,952
Surrey Bidco Limited (6)(17)(19)(26)
7.28% PIK
61
Zeppelin BidCo Pty Limited (6)(18)(19)
9.15
206
140
15,675
15,643
DC Blox Inc. (14)(19)(25)
5,040
124
177
DC Blox Inc. (15)(19)(26)
14.49
3/22/2026
32,879
32,724
12,163
11,964
12,041
Meriplex Communications, Ltd. (3)(16)(19)
10.42
7,261
7,128
7,139
Meriplex Communications, Ltd. (2)(3)(5)(16)(19)
1,999
10,080
9,986
9,727
Taoglas (2)(3)(15)(19)
(127
807
Taoglas (6)(18)(19)
453
437
69,120
69,867
5/5/2025
2,362
11.98
2,661
2,651
5,852
5,824
5,823
12,978
12,899
12,913
A&R Logistics, Inc. (3)(15)(19)(24)
2,597
2,514
2,567
701
166
546
Grammer Investment Holdings LLC (19)(25)
10.00%
792
1,009
Grammer Purchaser, Inc. (15)(19)(29)
10.39
3,790
3,730
Grammer Purchaser, Inc. (3)(15)(19)(29)
10.21
591
Gulf Winds International (18)(19)(29)
12.46
11,808
12,127
Gulf Winds International (3)(5)(15)(19)
Omni Intermediate (15)(19)
11/23/2026
1,662
Omni Intermediate (3)(15)(19)(22)
11/30/2026
572
14.54
12/30/2027
8,770
8,768
8,771
2,060
RoadOne (18)(19)(29)
11.72
157
948
902
69,751
71,664
6.3
12.28
15,406
15,114
843
Toro Private Investments II, L.P. (14)(19)(25)
3,090
19,047
16,249
Abracon Group Holding, LLC. (18)(19)(29)
14,212
14,066
12,436
1,988
1,766
Abracon Group Holding, LLC. (2)(3)(5)(16)(19)
(31
(278
Blackbird Purchaser, Inc. (16)(19)
10.86
12/19/2030
5,418
SureWerx (3)(5)(16)(19)
554
22,620
20,558
1.8
1,615,061
140.2
7,516
4,817
12,333
1.1
12,801
421
Walker Edison (10)(15)(19)(26)
6.85% PIK
6.35% PIK
Walker Edison (3)(10)(15)(19)
Walker Edison (10)(18)(19)(26)
821
15,567
10,396
0.9
3,618
1,106
3,498
3,499
BCC Middle Market CLO 2018-1, LLC (6)(10)(19)(25)
Structured Products
10/20/2030
25,635
24,050
22,618
Fire: Finance Total
2.0
Direct Travel, Inc. (10)(14)(19)(25)
10,280
Direct Travel, Inc. (10)(18)(19)(26)
4.65% (2.00% PIK)
10/2/2025
59,944
3,500
Direct Travel, Inc. (10)(18)(19)
6.65%
4,841
Direct Travel, Inc. (10)(18)(19)(26)(28)
1,782
Direct Travel, Inc. (10)(18)(19)(28)
202
Direct Travel, Inc. (3)(10)(18)(19)(28)
5,775
76,044
86,324
132,650
13.0
10,944
6/2/2024
8,012
6,619
89,295
89,294
88,419
110,285
105,982
9.3
810
34,875
35,685
Bain Capital Senior Loan Program, LLC (6)(10)(11)(19)
115,995
(1,793
(379
International Senior Loan Program, LLC (6)(10)(11)(15)(19)
13.55
66,140
372,943
370,692
32.7
34,899
35,210
44,653
3.9
554,123
49.0
2,301,834
2,298,343
202.2
5.25
19,292
54,378
73,670
2,375,504
2,372,013
208.7
Unrealized
Appreciation(8)
US DOLLARS 78
1/18/2024
77
US DOLLARS 367
1/24/2024
366
US DOLLARS 1,082
NORWEGIAN KRONE 2,060
1/26/2024
879
US DOLLARS 10
2/7/2024
US DOLLARS 1,990
AUSTRALIAN DOLLARS 3,080
2/12/2024
US DOLLARS 9,711
3/5/2024
167
US DOLLARS 41
US DOLLARS 1,866
CANADIAN DOLLAR 2,440
US DOLLARS 52,372
EURO 48,560
(1,407
US DOLLARS 40
US DOLLARS 10,773
EURO 9,890
5/17/2024
(213
US DOLLARS 94
6/21/2024
94
US DOLLARS 356
6/24/2024
US DOLLARS 6,998
POUND STERLING 5,830
(427
US DOLLARS 10,567
POUND STERLING 8,290
8/5/2024
US DOLLARS 1,338
CANADIAN DOLLAR 1,790
US DOLLARS 30,865
POUND STERLING 25,560
(1,765
US DOLLARS 4,483
EURO 4,000
US DOLLARS 5,309
EURO 4,800
(115
US DOLLARS 5,371
EURO 5,000
(280
203
(2,260
BCC Middle Market CLO 2018-1, LLC
2/28/2022
DC Blox Inc.
3/22/2021
3/23/2021
Direct Travel, Inc.
10/2/2020
Toro Private Investments II, L.P.
4/2/2019
Ventiv Topco, Inc.
43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization
Bain Capital Specialty Finance, Inc. (the “Company”, “we”, “our” and “us”) was formed on October 5, 2015 and commenced investment operations on October 13, 2016. The Company has elected to be treated and is regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes the Company has elected to be treated and intends to operate in a manner so as to continuously qualify as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is externally managed by BCSF Advisors, LP (the “Advisor”), our investment adviser that is registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Advisor also provides the administrative services necessary for the Company to operate (in such capacity, the “Administrator”).
On November 19, 2018, the Company closed its initial public offering (the “IPO”), which was a Qualified IPO, issuing 7,500,000 shares of common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018.
The Company’s primary focus is capitalizing on opportunities within the Advisor’s Senior Direct Lending Strategy, which seeks to provide risk-adjusted returns and current income to its stockholders by investing primarily in middle-market companies with between $10.0 million and $150.0 million in annual earnings before interest, taxes, depreciation and amortization ("EBITDA"). The Company focuses on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. The Company generally seeks to retain voting control in respect of the loans or particular classes of securities in which the Company invests through maintaining affirmative voting positions or negotiating consent rights that allow the Company to retain a blocking position. The Company may also invest in mezzanine debt and other junior securities and in secondary purchases of assets or portfolios, as described below. Investments are likely to include, among other things, (i) senior first lien, stretch senior, senior second lien, unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. The Company may also invest, from time to time, in equity securities, distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities.
Our operations comprise only a single reportable segment.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The Company’s consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10‑Q and Regulation S-X. These consolidated financial statements reflect adjustments that in the opinion of the Company are necessary for the fair statement of the financial position and results of operations for the periods presented herein and are not necessarily indicative of the full fiscal year. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC 946”). The functional currency of the Company is U.S. dollars and these consolidated financial statements have been prepared in that currency. Certain prior period information has been reclassified to conform to the current period presentation and this had no effect on the Company’s consolidated financial position or the consolidated results of operations as previously reported.
The information included in this Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Basis of Consolidation
The Company will generally consolidate any wholly, or substantially, owned subsidiary when the design and purpose of the subsidiary is to act as an extension of the Company’s investment operations and to facilitate the execution of the Company’s investment
strategy. Accordingly, the Company consolidated the results of its subsidiaries BCSF I, BCSF II C, BCSF CFSH, LLC, BCSF CFS, LLC and BCC Middle Market CLO 2019‑1, LLC in its consolidated financial statements. All intercompany transactions and balances have been eliminated in consolidation. Since the Company is an investment company, portfolio investments held by the Company are not consolidated into the consolidated financial statements. The portfolio investments held by the Company (including its investments held by consolidated subsidiaries) are included on the consolidated statements of assets and liabilities as investments at fair value.
Use of Estimates
The preparation of the consolidated financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.
Valuation of Portfolio Investments
The Advisor shall value the investments owned by the Company, subject at all times to the oversight of the Company's Board of Directors (the “Board”). The Advisor shall follow its own written valuation policies and procedures as approved by the Board when determining valuations. A short summary of the Advisor’s valuation policies is below.
Investments for which market quotations are readily available are typically valued at such market quotations. Pursuant to Rule 2a-5 under the 1940 Act, the Board designates the Advisor as Valuation Designee to perform fair value determinations for the Company for investments that do not have readily available market quotations. Market quotations are obtained from an independent pricing service, where available. If a price cannot be obtained from an independent pricing service or if the independent pricing service is not deemed to be current with the market, certain investments held by the Company will be valued on the basis of prices provided by principal market makers. Generally, investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available will be valued at a price that reflects such security’s fair value.
With respect to unquoted portfolio investments, the Company will value each investment considering, among other measures, discounted cash flow models, comparable company multiple models, comparisons of financial ratios of peer companies that are public, and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will use the pricing indicated by the external event to corroborate and/or assist us in its valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
With respect to investments for which market quotations are not readily available, in particular, illiquid/hard to value assets, the Advisor will typically undertake a multi-step valuation process, which includes among other things, the below:
In following this approach, the types of factors that are taken into account in the fair value pricing of investments include, as relevant, but are not limited to: comparison to publicly traded securities, including factors such as yield, maturity and measures of credit quality; the enterprise value of a portfolio company; the nature and realizable value of any collateral; the portfolio company’s ability to make payments and its earnings and discounted cash flows; and the markets in which the portfolio company does business. In cases where an independent valuation firm provides fair valuations for investments, the independent valuation firm provides a fair valuation
45
report, a description of the methodology used to determine the fair value and their analysis and calculations to support their concluded ranges.
The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value in accordance with US GAAP and required disclosures of fair value measurements. The fair value of a financial instrument is the amount that would be received in an orderly transaction between market participants at the measurement date. The Company determines the fair value of investments consistent with its valuation policy. The Company discloses the fair value of its investments in a hierarchy which prioritizes and ranks the level of market observability used in the determination of fair value. In accordance with ASC 820, these levels are summarized below:
A financial instrument’s level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuations of Level 2 investments are generally based on quotations received from pricing services, dealers or brokers. Consideration is given to the source and nature of the quotations and the relationship of recent market activity to the quotations provided.
Transfers between levels, if any, are recognized at the beginning of the reporting period in which the transfers occur. The Company evaluates the source of inputs used in the determination of fair value, including any markets in which the investments, or similar investments, are trading. When the fair value of an investment is determined using inputs from a pricing service (or principal market makers), the Company considers various criteria in determining whether the investment should be classified as a Level 2 or Level 3 investment. Criteria considered includes the pricing methodologies of the pricing services (or principal market makers) to determine if the inputs to the valuation are observable or unobservable, as well as the number of prices obtained and an assessment of the quality of the prices obtained. The level of an investment within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment.
The fair value assigned to these investments is based upon available information and may fluctuate from period to period. In addition, it does not necessarily represent the amount that might ultimately be realized upon sale. Due to inherent uncertainty of valuation, the estimated fair value of investments may differ from the value that would have been used had a ready market for the security existed, and the difference could be material.
Securities Transactions, Revenue Recognition and Expenses
The Company records its investment transactions on a trade date basis. The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specified identification method. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium to par value on investments acquired are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Commitment fees are recorded on an accrual basis and recognized as interest income. Loan origination fees, original issue discount and market discount or premium are capitalized and amortized against or accreted into interest income using the effective interest method or straight-line method, as applicable. For the Company’s investments in revolving bank loans, the cost basis of the investment purchased is adjusted for the cash received for the discount on the total balance committed. The fair value is also adjusted for price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative value until it is offset by the future amounts called and funded. Upon prepayment of a loan or debt security, any prepayment premium, unamortized upfront loan origination fees and unamortized discount are recorded as interest income.
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Distributions received from an equity interest, limited liability company or a limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.
Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer. PIK is recorded as interest or dividend income, as applicable. For the three and nine months ended September 30, 2024, the Company recorded $6.2 million and $22.7 million, respectively, of dividend income, of which, $0.9 million and $0.9 million, respectively, related to PIK dividends. For the three and nine months ended September 30, 2023, the Company recorded $8.6 million and $25.7 million, respectively, of dividend income, of which none related to PIK dividends. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status.
Certain structuring fees and amendment fees are recorded as other income when earned. Administrative agent fees received by the Company are recorded as other income when the services are rendered.
Expenses are recorded on an accrual basis.
Non-Accrual Loans
Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest are paid and, in management’s judgment, principal and interest payments are likely to remain current. The Company may make exceptions to this treatment if a loan has sufficient collateral value and is in the process of collection. As of September 30, 2024, there were nine loans from five issuers on non-accrual. As of December 31, 2023, there were five loans from three issuers on non-accrual.
Distributions
Distributions to common stockholders are recorded on the record date. The amount to be distributed, if any, is determined by the Board each quarter, and is generally based upon the earnings estimated by the Advisor. Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with US GAAP. The Company may pay distributions to its stockholders in a year in excess of its investment company taxable income and net capital gain for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. This excess generally would be a tax-free return of capital in the period and generally would reduce the stockholder’s tax basis in its shares. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent; they are charged or credited to paid-in capital in excess of par, accumulated undistributed net investment income or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses.
The Company intends to timely distribute to its stockholders substantially all of its annual taxable income for each year, except that the Company may retain certain net capital gains for reinvestment and, depending upon the level of the Company’s taxable income earned in a year, the Company may choose to carry forward taxable income for distribution in the following year and incur applicable U.S. federal excise tax and pay a 4% tax on such income, as required. To the extent that we determine that our estimated current year taxable income will be in excess of estimated dividend distributions for the current year from such income, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For the three months ended September 30, 2024 and 2023, we recorded an expense of $1.0 million and $0.6 million, respectively for U.S. federal excise tax. For the nine months ended September 30, 2024 and 2023, we recorded an expense of $3.1 million and $1.9 million, respectively for U.S. federal excise tax.
The specific tax characteristics of the Company’s distributions will be reported to stockholders after the end of the calendar year. All distributions will be subject to available funds, and no assurance can be given that the Company will be able to declare such distributions in future periods.
The Company distributes net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, the Company may decide in the future to retain such capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to stockholders.
Dividend Reinvestment Plan
The Company has adopted a dividend reinvestment plan that provides for the reinvestment of cash dividends and distributions. Stockholders who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.
Offering Costs
Offering costs consist primarily of fees and expenses incurred in connection with the offering of shares, legal, printing and other costs associated with the preparation and filing of applicable registration statements. To the extent such expenses relate to equity offerings, these expenses are charged as a reduction of paid-in-capital upon each such offering.
Cash, Restricted Cash, and Cash Equivalents
Cash and cash equivalents consist of deposits held at custodian banks, and highly liquid investments, such as money market funds, with original maturities of three months or less. Cash and cash equivalents are carried at cost or amortized cost, which approximates fair value. The Company may deposit its cash and cash equivalents in financial institutions and, at certain times, such balances may exceed the Federal Deposit Insurance Corporation insurance limits. Cash equivalents are presented separately on the consolidated schedules of investments. Restricted cash is collected and held by the trustee who has been appointed as custodian of the assets securing certain of the Company’s financing transactions.
Foreign Currency Translation
The accounting records of the Company are maintained in U.S. dollars. The fair values of foreign securities, foreign cash and other assets and liabilities denominated in foreign currency are translated to U.S. dollars based on the current exchange rates at the end of each business day. Income and expenses denominated in foreign currencies are translated at current exchange rates when accrued or incurred. Unrealized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates are included in the net change in unrealized appreciation on foreign currency translation on the consolidated statements of operations. Net realized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to changes in foreign currency exchange rates are included in net realized gain (loss) on foreign currency transactions on the consolidated statements of operations. The portion of both realized and unrealized gains and losses on investments that result from changes in foreign currency exchange rates is not separately disclosed, but is included in net realized gain (loss) on investments and net change in unrealized appreciation on investments, respectively, on the consolidated statements of operations.
Forward Currency Exchange Contracts
The Company may enter into forward currency exchange contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations in the value of foreign currencies. A forward currency exchange contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The Company does not utilize hedge accounting and as such the Company recognizes the value of its derivatives at fair value on the consolidated statements of assets and liabilities with changes in the net unrealized appreciation on forward currency exchange contracts recorded on the consolidated statements of operations. Forward currency exchange contracts are valued using the prevailing forward currency exchange rate of the underlying currencies. Unrealized appreciation on forward currency exchange contracts are recorded on the consolidated statements of assets and liabilities by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Cash collateral maintained in accounts held by counterparties is included in collateral on forward currency exchange contracts on the consolidated statements of assets and liabilities. Notional amounts and the gross fair value of forward currency exchange contracts assets and liabilities are presented separately on the consolidated schedules of investments.
Changes in net unrealized appreciation are recorded on the consolidated statements of operations in net change in unrealized appreciation on forward currency exchange contracts. Net realized gains and losses are recorded on the consolidated statements of operations in net realized gain (loss) on forward currency exchange contracts. Realized gains and losses on forward currency exchange contracts are determined using the difference between the fair market value of the forward currency exchange contract at the time it was opened and the fair market value at the time it was closed or covered. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms.
Deferred Financing Costs and Debt Issuance Costs
The Company records costs related to issuance of revolving debt obligations as deferred financing costs. These costs are deferred and amortized using the straight-line method over the stated maturity life of the obligation. The Company records costs related
to the issuance of term debt obligations as debt issuance costs. These costs are deferred and amortized using the effective interest method. These costs are presented as a reduction to the outstanding principal amount of the term debt obligations on the consolidated statements of assets and liabilities. In the event that we modify or extinguish our debt before maturity, the Company follows the guidance in ASC Topic 470‑50, Modification and Extinguishments. For modifications to or exchanges of our revolving debt obligations, any unamortized deferred financing costs related to lenders who are not part of the new lending group are expensed. For extinguishments of our term debt obligations, any unamortized debt issuance costs are deducted from the carrying amount of the debt in determining the gain or loss from the extinguishment.
Income Taxes
The Company has elected to be treated for U.S. federal income tax purposes as a RIC under the Code. So long as the Company maintains its status as a RIC, it will generally not be subject to corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually as dividends to its stockholders. As a result, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s stockholders and will not be reflected in the consolidated financial statements of the Company.
The Company intends to comply with the applicable provisions of the Code pertaining to RICs and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the consolidated financial statements. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to stockholders through September 30, 2024 may include return of capital, however, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until the Company files our tax return for the tax year ending December 31, 2024. The character of income and gains that the Company distributes is determined in accordance with income tax regulations that may differ from US GAAP. BCSF CFSH, LLC, BCSF CFS, LLC, and BCC Middle Market CLO 2019‑1, LLC are disregarded entities for tax purposes and are consolidated with the tax return of the Company.
The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes, if any, are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. Management has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits related to uncertain tax positions on returns to be filed by the Company for all open tax years should be recorded. The Company identifies its major tax jurisdiction as the United States, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. As of September 30, 2024, the tax years that remain subject to examination are from 2020 forward.
Recent Accounting Pronouncements
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), which affects all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction. The amendments in ASU 2022-03 clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring the fair value. The amendments also require additional disclosures for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The effective date for the amendments in ASU 2022-03 are for fiscal years beginning after December 15, 2024 and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU 2022-03 on its financial statements, however, the Company does not expect a material impact on its consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”),” which enhances disclosure requirements about significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”). ASU 2023-07, among other things, (i) requires a single segment public entity to provide all of the disclosures as required by Topic 280, (ii) requires a public entity to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources and (iii) provides the ability for a public entity to elect more than one performance measure. ASU 2023-07 is effective for the fiscal years beginning after December 15, 2023, and interim periods beginning with the first quarter ended March 31, 2025. Early adoption is permitted and retrospective adoption is required for all prior periods presented. The Company is currently evaluating the impact of the adoption of ASU 2023-07 on its financial statements.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures
49
(“ASU 2023-09”),” which intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. The Company is currently assessing the impact of the adoption of ASU 2023-09 on its financial statements.
Note 3. Investments
The following table shows the composition of the investment portfolio, at amortized cost and fair value as of September 30, 2024 (with corresponding percentage of total portfolio investments):
Amortized Cost
Percentage ofTotal Portfolio
Fair Value
1,540,482
63.9
1,521,521
63.2
61,227
55,358
2.3
47,703
46,979
142,986
5.9
171,277
7.1
216,694
9.0
220,178
9.1
766
Subordinated Note in Investment Vehicles (1)
337,224
14.0
Preferred Equity Interest in Investment Vehicles (1)
Equity Interest in Investment Vehicles (1)
66,209
2.7
54,637
Total
100.0
The following table shows the composition of the investment portfolio, at amortized cost and fair value as of December 31, 2023 (with corresponding percentage of total portfolio investments):
First Lien Senior Secured Loans
1,495,237
65.0
1,464,423
63.8
Second Lien Senior Secured Loans
69,749
3.0
68,439
45,400
45,877
1.0
86,766
104,428
Equity Interests
207,209
221,355
9.6
480
Subordinated Notes in Investment Vehicles (1)
306,724
13.3
(0.1
Equity Interests in Investment Vehicles (1)
65,761
The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of September 30, 2024 (with corresponding percentage of total portfolio investments):
USA
2,169,855
89.8
2,135,462
88.6
Cayman Islands
116,241
4.8
126,484
5.2
United Kingdom
37,449
34,991
Belgium
18,538
33,767
Germany
19,626
18,508
Australia
12,025
17,508
Ireland
12,207
13,754
Luxembourg
9,621
9,815
Netherlands
8,668
Canada
4,401
4,450
New Zealand
3,827
3,886
Guernsey
Sweden
186
Israel
The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of December 31, 2023 (with corresponding percentage of total portfolio investments):
2,025,572
88.0
1,998,863
87.1
124,504
133,072
5.8
39,439
53,619
40,119
39,035
23,550
27,007
24,677
23,326
9,394
10,001
5,844
5,340
404
The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of September 30, 2024 (with corresponding percentage of total portfolio investments):
Investment Vehicles (2)
16.8
16.4
330,073
13.7
323,397
13.4
8.5
9.2
8.4
8.2
5.6
5.3
103,873
114,794
3.6
77,358
3.2
83,896
78,790
68,761
FIRE: Finance (1)
61,218
63,018
58,047
2.4
62,144
FIRE: Insurance (1)
Consumer goods: Wholesale
0.1
The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 2023 (with corresponding percentage of total portfolio investments):
16.2
16.0
361,054
15.7
351,546
15.3
9.5
6.7
7.3
104,961
116,317
95,091
4.1
102,573
4.0
88,264
87,403
88,197
80,036
1.9
24,831
32,029
On February 9, 2021, the Company and Pantheon (“Pantheon”), a leading global alternative private markets manager, formed the International Senior Loan Program, LLC (“ISLP”), an unconsolidated joint venture. ISLP invests primarily in non-US first lien senior secured loans. ISLP was formed as a Delaware limited liability company. The Company and Pantheon committed to initially provide $138.3 million of debt and $46.1 million of equity capital, to ISLP. Equity contributions will be called from each member on a pro-rata basis, based on their equity commitments. Pursuant to the terms of the transaction, Pantheon invested $50.0 million to acquire a 29.5% stake in ISLP. The Company contributed debt investments of $317.1 million for a 70.5% stake in ISLP, and received a one-time gross distribution of $190.2 million in cash in consideration of contributing such investments. On December 14, 2023, the Company and Pantheon entered into the second amendment to the amended and restated limited liability company agreement which, among other things, increased capital commitments and changed the proportionate share ownership. The Company and Pantheon agreed to contribute an additional $5.0 million and $45.3 million, respectively, which resulted in new ownership stakes of 64.0% and 36.0%, respectively. As of September 30, 2024, the Company’s investment in ISLP consisted of subordinated notes of $190.7 million and equity interests of $56.5 million. As of December 31, 2023, the Company’s investment in ISLP consisted of subordinated notes of $190.7 million and equity interests of $66.1 million.
53
As of September 30, 2024, the Company had commitments with respect to its equity and subordinated note interests of ISLP in the aggregate amount of $254.3 million. The Company has contributed $254.3 million in capital and has $0.0 million in unfunded capital contributions. As of September 30, 2024, Pantheon had commitments with respect to its equity and subordinated note interests of ISLP in the aggregate amount of $149.2 million. Pantheon had contributed $149.2 million in capital and has $0.0 million in unfunded capital contributions.
As of December 31, 2023, the Company had commitments with respect to its equity and subordinated note interests of ISLP in the aggregate amount of $254.3 million. The Company had contributed $254.3 million in capital and had $0.0 million in unfunded capital contributions. As of December 31, 2023, Pantheon had commitments with respect to its equity and subordinated note interests of ISLP in the aggregate amount of $149.2 million. Pantheon had contributed $149.2 million in capital and had $0.0 million in unfunded capital contributions.
In future periods, the Company may sell certain of its investments or a participating interest in certain of its investments to ISLP. Since inception, the Company has sold $1,032.3 million of its investments to ISLP. The sale of the investments met the criteria set forth in ASC 860, Transfers and Servicing for treatment as a sale.
The Company has determined that ISLP is an investment company under ASC 946; however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a wholly or substantially owned investment company subsidiary, which is an extension of the operations of the Company, or a controlled operating company whose business consists of providing services to the Company. The Company does not consolidate its investments in ISLP as it is not a substantially wholly owned investment company subsidiary. In addition, the Company does not control ISLP due to the allocation of voting rights among ISLP members. The Company measures the fair value of ISLP in accordance with ASC 820, using the net asset value (or its equivalent) as a practical expedient. The Company and Pantheon each appointed two members to ISLP’s four-person Member Designees’ Committee. All material decisions with respect to ISLP, including those involving its investment portfolio, require unanimous approval of a quorum of Member Designees’ Committee.
As of September 30, 2024, ISLP had $691.7 million in debt and equity investments, at fair value. As of December 31, 2023, ISLP had $709.8 million in debt and equity investments, at fair value.
Additionally, ISLP, through a wholly-owned subsidiary, entered into a $300.0 million senior secured revolving credit facility which bears interest at LIBOR (or an alternative risk-free interest rate index) plus 225 basis points with JP Morgan (the “ISLP Credit Facility Tranche A”).
On February 4, 2022, ISLP entered into the second amended and restated credit agreement, which among other things formed an additional tranche (“ISLP Credit Facility Tranche B” and collectively with ISLP Credit Facility Tranche A, the “ISLP Credit Facilities”) with an initial financing limit of $50.0 million on May 31, 2022, and $200.0 million on August 31, 2022, bringing the total facility size to $500.0 million.
On June 30, 2023, ISLP entered into the third amendment and restated credit agreement, which among other things, replaced LIBOR with Term SOFR and consolidated Tranche A and Tranche B, with a size of $500.0 million.
On September 11, 2023, ISLP entered into the fourth amended and restated credit agreement, which among other things, extended the maturity to February 9, 2027, modified concentration limitations and changed the interest rate to SOFR (or an alternative risk-free interest rate index) plus 246 basis points.
As of September 30, 2024, the ISLP Credit Facilities had $311.9 million of outstanding debt under the credit facility. As of December 31, 2023 the ISLP Credit Facilities had $320.5 million of outstanding debt under the credit facility. The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for the nine months ended September 30, 2024 and year ended December 31, 2023 were 7.5% and 6.6%, respectively.
Below is a summary of ISLP’s portfolio at fair value:
Total investments
691,702
709,846
Weighted average yield on investments
11.1
Number of borrowers in ISLP
Largest portfolio company investment
52,721
47,432
Total of five largest portfolio company investments
208,009
206,779
Unfunded commitments
11,496
Below is a listing of ISLP’s individual investments as of September 30, 2024:
% of Members
Equity (4)
Australian Dollar
Ansett Aviation Training (18)(19)
4.69
14,144
9,831
9,814
Ansett Aviation Training (14)(19)
10,238
7,115
19,335
16,946
29,149
33.7
FNZ UK Finco Limited (18)(19)
5.80
7,660
4,993
5,315
TGI Sport Bidco Pty Ltd (18)(19)
7.00
9,730
7,090
6,752
7.8
Australian Dollar Total
29,029
41,216
47.6
British Pound
Reconomy (18)(19)
6.50
6,050
7,046
8,108
6.25
6,578
8,094
8,480
Reconomy (3)(18)(19)
3,577
4,489
4,539
19,629
21,127
24.5
Parmenion (18)(19)
5.50
29,070
35,324
38,960
45.0
Margaux UK Finance Limited (16)(19)
7,337
9,269
9,834
11.4
Datix Bidco Limited (2)(3)(18)(19)
Access (18)(19)
7,880
9,113
10,561
9,764
11,887
13,086
Cloud Technology Solutions (CTS) (15)(19)(26)
7.00% (1.00% PIK)
9,042
11,430
12,118
32,430
35,765
41.3
Kpler (15)(19)
4,312
5,495
5,779
OGH Bidco Limited (18)(19)
9/2/2029
5,172
6,073
13,160
15,218
16,623
26,786
28,076
32.4
Beneficium (15)(19)
9,714
Brook Bidco (18)(19)(26)
25,884
34,803
34,690
Datix Bidco Limited (18)(19)
8,160
10,468
10,772
Learning Pool (16)(19)(26)
5,707
7,541
7,540
7,941
10,491
Opus2 (18)(19)
5.53
12,151
16,495
16,285
Parcel2Go (7)(14)(18)(19)(26)
6.00
12,674
16,883
4,247
Parcel2Go (2)(3)(7)(14)(18)(19)
3,910
5,135
(1,433
TES Global (3)(18)(19)
TES Global (18)(19)
5.00
10.30
14,364
17,642
19,154
129,172
111,735
129.1
Surrey Bidco Limited (18)(19)(26)
6,771
8,368
6,896
8.0
British Pound Total
260,978
252,374
291.7
Canadian Dollar
New Look (Delaware) Corporation (15)(19)(26)
4.32% (2.00% PIK)
17,913
14,684
13,130
New Look Vision Group (15)(19)
5.82
1,177
908
1,622
1,656
.
17,214
15,648
18.1
Canadian Dollar Total
Danish Krone
VPARK BIDCO AB (18)(19)
4.00
56,429
9,231
8,440
9.8
Danish Krone Total
European Currency
5.75
9,212
9,325
11.2
2,440
2,475
2,720
MRHT (15)(19)
12,000
12,989
13,378
9.77
5,069
5,489
5,650
18,478
19,028
22.0
58
Mertus 522. GmbH (18)(19)(26)
13,125
15,893
14,120
22,413
27,145
24,112
Pharmathen (18)(19)
First Lien Senior Secured Loan- Revolver
5.73
9.40
10/25/2028
13,492
15,073
15,041
Pharmathen (3)(18)(19)
2,239
2,405
2,500
60,516
55,773
64.4
Onventis (15)(19)
7.25
10.94
1/14/2030
15,094
15,517
Utimaco (18)(19)
8,250
8,355
9,013
23,449
24,530
28.4
14,981
16,242
16,701
Kpler (18)(19)
3,246
3,519
3,619
19,761
20,320
23.5
Lightning Finco Limited (18)(19)
2,619
2,920
Aptus 1724. Gmbh (19)(21)(26)
6.00% (1.50% PIK)
35,370
41,712
35,488
41.0
iBanFirst (18)(19)(26)
13,646
15,339
15,212
Webcentral (18)(19)
3,423
3,777
19,116
19,008
European Currency Total
197,783
189,517
219.0
Norwegian Krone
73,280
8,651
6,962
Spring Finco BV (18)(19)
10.14
174,360
16,601
16,566
19.1
Norwegian Krone Total
25,252
23,528
27.1
59
U.S. Dollar
Cardo (18)(19)
9,653
9,600
5.90
23,102
22,005
25.4
4,953
CB Nike IntermediateCo Ltd (3)(18)(19)
NearMap (15)(19)
23,401
23,221
Utimaco (16)(19)
6.68
16,450
16,335
16,121
8,550
8,490
8,379
48,046
47,901
55.4
Lightning Finco Limited (16)(19)
5.93
23,907
23,785
Media: Broadcasting and Subscription Total
27.6
Aptus 1724 Gmbh (19)(21)(26)
10,106
10,067
9,095
10.5
Avalon Acquiror, Inc. (15)(19)
11,660
11,613
Chamber Bidco Limited (18)(19)
21,081
20,966
6.10
10,724
10,639
43,265
43,418
50.2
U.S. Dollar Total
162,818
160,979
186.1
702,305
799.4
Settlement
AUSTRALIAN DOLLARS 480
EURO 292
Morgan Stanley
06/10/2025
EURO 3,061
AUSTRALIAN DOLLARS 4,980
EURO 2,199
AUSTRALIAN DOLLARS 3,690
Standard Chartered
EURO 2,034
AUSTRALIAN DOLLARS 3,280
10/15/2024
AUSTRALIAN DOLLARS 1,780
US DOLLARS 1,200
US DOLLARS 679
AUSTRALIAN DOLLARS 1,035
03/20/2025
US DOLLARS 13,555
AUSTRALIAN DOLLARS 19,560
US DOLLARS 7,026
AUSTRALIAN DOLLARS 10,830
(482
US DOLLARS 8,569
AUSTRALIAN DOLLARS 12,625
(189
EURO 230
BRITISH POUNDS 200
01/21/2025
EURO 3,118
BRITISH POUNDS 2,840
06/12/2025
(286
EURO 4,556
BRITISH POUNDS 3,850
EURO 755
BRITISH POUNDS 682
11/10/2025
(54
EURO 231
BRITISH POUNDS 290
EURO 344
BRITISH POUNDS 550
EURO 628
BRITISH POUNDS 1,060
US DOLLARS 1,379
Goldman Sachs
US DOLLARS 1,833
BRITISH POUNDS 1,447
(106
US DOLLARS 2,734
BRITISH POUNDS 2,170
02/14/2025
(174
US DOLLARS 751
BRITISH POUNDS 590
US DOLLARS 2,797
BRITISH POUNDS 2,220
05/13/2025
(175
US DOLLARS 13,374
BRITISH POUNDS 10,983
(1,319
US DOLLARS 1,000
BRITISH POUNDS 840
(124
US DOLLARS 502
BRITISH POUNDS 402
US DOLLARS 8,384
BRITISH POUNDS 6,490
(319
CANADIAN DOLLARS 195
EURO 130
EURO 316
CANADIAN DOLLARS 471
03/21/2025
EURO 515
CANADIAN DOLLARS 765
CANADIAN DOLLARS 730
US DOLLARS 535
US DOLLARS 1,356
CANADIAN DOLLARS 1,830
US DOLLARS 2,010
CANADIAN DOLLARS 2,735
DANISH KRONE 380
EURO 51
EURO 959
DANISH KRONE 7,153
DANISH KRONE 1,410
US DOLLARS 208
US DOLLARS 3,856
DANISH KRONE 26,367
(95
EURO 930
NORWEGIAN KRONE 10,868
EURO 1,614
US DOLLARS 1,790
01/09/2025
EURO 16,565
US DOLLARS 18,170
394
EURO 666
US DOLLARS 740
06/18/2025
EURO 611
US DOLLARS 680
06/23/2025
EURO 13,473
US DOLLARS 14,710
EURO 4,308
US DOLLARS 4,730
10/23/2024
EURO 4,299
US DOLLARS 4,650
163
NORWEGIAN KRONE 1,860
EURO 158
US DOLLARS 6,640
EURO 6,081
(152
EURO 3,300
US DOLLARS 3,657
12/18/2024
US DOLLARS 634
EURO 580
02/12/2025
US DOLLARS 4,795
EURO 4,371
02/28/2025
(111
US DOLLARS 23,690
EURO 21,780
(849
US DOLLARS 29,735
EURO 27,270
(717
US DOLLARS 1,425
EURO 1,290
US DOLLARS 30,672
EURO 27,695
(336
NORWEGIAN KRONE 6,865
US DOLLARS 642
US DOLLARS 3,740
NORWEGIAN KRONE 40,062
(66
(4,711
63
Below is a listing of ISLP’s individual investments as of December 31, 2023:
9,830
9,635
15,033
16,945
24,668
23.9
4,952
5,218
4.50
4,169
2,840
TGI Sport Bidco Pty Ltd (17)(19)
7,056
6.4
Zeppelin BidCo Pty Limited (18)(19)
20,415
16,126
13,907
13.5
48,374
53,261
51.7
7,045
7,702
8,285
15,139
15,987
15.5
Parmenion (15)(19)
35,256
37,009
35.9
Paisley Bidco Limited (18)(19)
6,373
8,019
Datix Bidco Limited (3)(18)(19)
773
813
7.75
12,013
16,916
15,293
17,689
16,106
15.6
64
9,100
10,032
12,431
20,987
22,463
21.8
15,196
15,916
11.80
5,744
21,269
21,660
21.0
24,106
32,510
30,689
Caribou Bidco Limited (18)(19)
27,570
34,013
35,099
Caribou Bidco Limited (3)(18)(19)
1,955
2,007
5,299
7,002
9,741
5.03
16,442
15,470
Parcel2Go (18)(19)(26)
12,488
16,856
14,864
Parcel2Go (3)(18)(19)(26)
3,854
5,133
4,361
123,652
119,233
115.8
Surrey Bidco Limited (17)(19)(26)
5,997
7,317
6,107
249,328
246,762
239.5
9 Story Media Group Inc. (16)(19)
6,729
5,342
5,081
9 Story Media Group Inc. (3)(18)(19)
5,357
5,096
4.9
New Look (Delaware) Corporation (18)(19)(26)
4.00% (2.00% PIK)
17,776
13,087
1,186
915
New Look Vision Group (18)(19)
2,277
1,633
17,122
15,637
15.2
22,479
20,733
20.1
VPARK BIDCO AB (16)(19)
8,356
Chemicals, Plastics, & Rubber
9,259
9,355
9,633
Chemicals, Plastics, & Rubber Total
9.4
2,694
6.75
12,973
13,181
3,178
3,367
3,508
16,340
16,689
13,029
15,766
14,023
22,328
27,014
24,032
9.62
15,030
14,894
1,754
1,874
1,937
59,684
54,886
53.2
7.50
5,321
5,520
8,344
8,902
13,665
14,422
2,891
9 Story Media Group Inc. (18)(19)
3,627
4,004
Aptus 1724 Gmbh (18)(19)
9.96
35,000
41,354
37,477
45,766
41,481
40.3
iBanFirst (19)(26)(32)
12,297
13,843
13,574
SumUp Holdings Luxembourg S.à.r.l. (19)(32)
8.25
30,900
35,497
34,111
49,340
47,685
46.3
199,576
190,381
184.8
7,204
10.12
16,600
17,140
16.6
25,251
24,344
23.6
5.15
9,589
23,280
22,523
21.9
4,944
Consumer Goods: Non-durable
RoC Opco LLC (15)(19)
7.60
15,714
Consumer Goods: Non-durable Total
CB Nike IntermediateCo Ltd (3)(15)(19)
NearMap (18)(19)
11,800
11,593
16,079
8,481
8,358
36,390
36,237
35.2
23,761
23.2
Aptus 1724 Gmbh (19)(21)
10,000
9,953
9,700
Avalon Acquiror, Inc. (18)(19)
11,820
11,735
11,495
Chamber Bidco Limited (17)(19)
20,942
5.85
10,807
10,705
10,699
43,382
43,275
41.9
167,013
166,009
161.2
721,252
689.0
69
BRITISH POUNDS 2,245
US DOLLARS 2,731
07/18/2024
US DOLLARS 17,258
BRITISH POUNDS 13,990
(560
EURO 477
AUSTRALIAN DOLLARS 785
01/17/2024
US DOLLARS 1,837
AUSTRALIAN DOLLARS 2,735
(30
158
EURO 259
BRITISH POUNDS 225
01/24/2024
(100
US DOLLARS 1,795
BRITISH POUNDS 1,410
US DOLLARS 311
BRITISH POUNDS 250
02/13/2024
US DOLLARS 1,199
BRITISH POUNDS 960
02/14/2024
US DOLLARS 2,717
05/10/2024
(110
(636
EURO 426
CANADIAN DOLLARS 619
03/25/2024
US DOLLARS 1,778
CANADIAN DOLLARS 2,400
US DOLLARS 960
EURO 890
US DOLLARS 4,864
EURO 4,600
(220
US DOLLARS 604
EURO 560
US DOLLARS 818
(17
(44
EURO 889
AUSTRALIAN DOLLARS 1,400
EURO 1,803
AUSTRALIAN DOLLARS 2,872
US DOLLARS 3,774
AUSTRALIAN DOLLARS 5,435
US DOLLARS 1,395
AUSTRALIAN DOLLARS 2,040
US DOLLARS 7,048
AUSTRALIAN DOLLARS 11,118
(573
EURO 1,266
BRITISH POUNDS 1,095
06/17/2024
EURO 4,582
BRITISH POUNDS 4,130
(157
US DOLLARS 1,484
BRITISH POUNDS 1,140
(72
US DOLLARS 6,519
BRITISH POUNDS 5,180
(79
EURO 321
CANADIAN DOLLARS 480
US DOLLARS 1,390
CANADIAN DOLLARS 1,860
EURO 919
DANISH KRONE 6,844
US DOLLARS 3,988
DANISH KRONE 26,496
EURO 824
NORWEGIAN KRONE 9,517
432
EURO 3,005
US DOLLARS 3,309
06/18/2024
EURO 18,034
US DOLLARS 20,330
(245
US DOLLARS 2,580
EURO 2,340
EURO 2,285
US DOLLARS 2,504
EURO 3,700
US DOLLARS 3,941
149
EURO 940
US DOLLARS 1,042
EURO 3,120
US DOLLARS 3,521
US DOLLARS 4,132
EURO 3,730
US DOLLARS 24,515
EURO 22,640
(508
US DOLLARS 29,878
EURO 29,700
(3,199
(397
US DOLLARS 3,566
NORWEGIAN KRONE 36,843
(69
(6,052
71
Below is the financial information for ISLP:
Selected Balance Sheet Information
Investments at fair value (amortized cost of $702,305 and $721,252, respectively)
4,650
9,006
Foreign cash (cost of $8,907 and $22,237, respectively)
9,077
22,528
Collateral on foreign currency exchange contracts
4,383
Deferred financing costs (net of accumulated amortization of $2,787 and $2,026, respectively)
2,393
3,154
15,464
11,244
Total assets
723,300
760,161
Debt
311,926
320,491
Subordinated notes payable to members
302,088
301,426
Interest payable on debt
5,473
5,841
Interest payable on subordinated notes
10,266
18,501
4,711
6,052
1,973
3,931
340
Total liabilities
636,777
657,142
Members’ equity
86,523
103,019
Total liabilities and members’ equity
72
Selected Statements of Operations Information
For the Three Months Ended
For the Nine Months Ended
September 30, 2023
Investment income
Interest income
19,091
18,965
60,528
54,314
6,092
6,500
19,158
18,189
Interest expense on members subordinated notes
10,274
9,046
30,116
26,203
General and administrative expenses
754
765
2,361
2,327
Total expenses
17,120
16,311
51,635
46,719
1,971
2,654
8,893
7,595
Net realized gain (loss) on investments
627
(1,967
(7,702
(5,124
Net realized gain (loss) on foreign currency transactions
(90
2,579
1,012
(4,267
(3,423
95
(15,703
9,454
(15,297
1,869
(613
2,596
1,341
1,314
22,136
(16,065
803
2,956
Net gain (loss) on investments
2,090
(3,326
(16,495
2,122
Net increase (decrease) in members’ equity resulting from operations
4,061
(672
(7,602
9,717
Bain Capital Senior Loan Program, LLC (“SLP”)
On February 9, 2022, the Company, and an entity advised by Amberstone Co., Ltd. (“Amberstone”), a credit focused investment manager that advises institutional investors, committed capital to a newly formed joint venture, SLP. Pursuant to an amended and restated limited liability company agreement (the “LLC Agreement”) between the Company and Amberstone, each such party has a 50% economic ownership interest in SLP. Amberstone’s initial capital commitments to SLP are $179.0 million, with each party expected to maintain their pro rata proportionate share for each capital contribution. SLP will seek to invest primarily in senior secured first lien loans of U.S. borrowers. Through these capital contributions, SLP acquired 70% of the membership equity interests of the Company’s 2018‑1 portfolio (“2018‑1”). The Company retained 30% of the 2018‑1 membership equity interests as a non-controlling equity interest. As of September 30, 2024, the Company’s investment in SLP consisted of subordinated notes of $146.5 million, preferred equity interests of $10 thousand and equity interests of ($1.8) million. As of December 31, 2023, the Company’s investment in SLP consisted of subordinated notes of $116.0 million, preferred equity interests of ($1.8) million and equity interests of ($0.4) million.
In future periods, the Company may sell certain of its investments or a participating interest in certain of its investments to SLP. Since inception, the Company has sold $1,433.8 million of its investments to SLP. The sale of the investments met the criteria set forth in ASC 860, Transfers and Servicing for treatment as a sale.
The Company has determined that SLP is an investment company under ASC 946; however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a wholly or substantially owned investment company subsidiary, which is an extension of the operations of the Company, or a controlled operating company whose business consists of providing services to the Company. The Company does not consolidate its investments in SLP as it is not a substantially wholly owned investment company subsidiary. In addition, the Company does not control SLP due to the allocation of voting rights among SLP members. The Company measures the fair value of SLP in accordance with ASC 820, using the net asset value (or its equivalent) as a practical expedient. The Company and Amberstone each appointed two members to SLP’s four-person Member Designees’ Committee. All material decisions with respect to SLP, including those involving its investment portfolio, require unanimous approval of a quorum of Member Designees’ Committee.
On March 7, 2022, SLP acquired 70% of the Company’s membership interests in BCC Middle Market CLO 2018‑1 LLC (the “2018‑1 Issuer”). The Company received $56.1 million in proceeds resulting in a realized gain of $1.2 million, which is included in net realized gain in non-controlled/non-affiliate investments. The sale of the investments met the criteria set forth in ASC 860, Transfers
and Servicing for treatment as a sale. Through this acquisition, the 2018‑1 Issuer became a consolidated subsidiary of SLP and was deconsolidated from the Company’s consolidated financial statements. The Company retained the remaining 30% of the 2018‑1 membership interests as a non-controlling equity interest. Please see Note 6 for additional details on the formation of the 2018‑1 Issuer and the related CLO Transaction.
On June 15, 2023, the Company entered into a First Supplemental Indenture (“2018-1 Supplemental Indenture”), dated as of June 15, 2023, pursuant to Section 8.1(xxxi) of the Indenture, dated as of September 28, 2018, between BCC Middle Market CLO 2018-1, LLC, as issuer, and Wells Fargo Bank, National Association, as trustee. The 2018-1 Supplemental Indenture provides for, among other things, an adoption of an alternate reference rate of Term SOFR plus 0.26%, effective July 1, 2023.
On March 13, 2024, SLP refinanced the 2018-1 Issuer through a private placement of $500 million of senior secured and senior deferrable notes consisting of (i) $290.0 million of Class A-1-R Senior Secured Floating Rate Notes, which currently bear interest at the applicable reference rate plus 2.25% per annum; (ii) $20.0 million of Class A‑J‑R Senior Secured Floating Rate Notes, which bear interest at the applicable reference rate plus 2.70% per annum; (iii) $30.0 million of Class A-2-R Senior Secured Floating Rate Notes, which bear interest at the applicable reference rate plus 2.90% per annum; (iv) $40.0 million of Class B-R Mezzanine Secured Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 3.90% per annum; (v) $30.0 million of Class C-R Mezzanine Secured Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 5.90% per annum; and (vi) $30.0 million of Class D-R Junior Secured Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 8.32% per annum (collectively, the “2018‑1 CLO Reset Notes”). The membership interests are eliminated in consolidation on SLP’s consolidated financial statements. The 2018‑1 CLO Reset Notes are scheduled to mature on April 20, 2036 and the reinvestment period ends April 20, 2028. The transaction resulted in a realized loss on the extinguishment of debt of $1.3 million from the acceleration of unamortized debt issuance costs. The obligations of the 2018-1 Issuer under the 2018-1 CLO Transaction are non-recourse to the Company.
As part of the refinancing transaction, SLP bought the Company's membership interests of the 2018-1 Issuer for $22.4 million, making SLP the sole owner of the membership interests.
Below is a table summary of the 2018‑1 CLO Reset Notes as of September 30, 2024:
Interest rate at
2018-1 Notes
Principal Amount
Spread above Index
Class A-1-R
290,000
2.25
% + 3 Month SOFR
7.53
Class A-J-R
2.70
7.98
Class A-2-R
30,000
2.90
8.18
Class B-R
40,000
3.90
9.18
Class C-R
11.18
Class D-R
8.32
Membership Interests
60,000
Non-interest bearing
Not applicable
Total 2018-1 Notes
500,000
On August 24, 2022, SLP, through a wholly-owned subsidiary, entered into a $225.0 million senior secured revolving credit facility which bore interest at SOFR plus 210 basis points with Wells Fargo, subject to leverage and borrowing base restrictions (the “MM_22_2 Credit Facility”). The maturity date of the MM_22_2 Credit Facility was August 24, 2025. On August 9, 2023, the MM_22_2 Credit Facility was terminated.
On August 9, 2023, (the “2023-1 Closing Date”), SLP, through BCC Middle Market CLO 2023‑1 LLC (the “2023‑1 Issuer”), a Delaware limited liability company and a wholly-owned and consolidated subsidiary of SLP, completed a $400.0 million term debt securitization (the “2023-1 CLO Transaction”). The Class A, B-1, B-2, C, D, and E 2023-1 notes issued in connection with the 2023-1 CLO Transaction (the “2023-1 Notes”) are secured by a diversified portfolio of the 2023-1 Issuer consisting primarily of middle market loans and participation interests in middle market loans, the majority of which are senior secured loans (the “2023-1 Portfolio”). At the 2023-1 Closing Date, the 2023-1 Portfolio was comprised of assets transferred from SLP and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2023-1 CLO Transaction.
74
The 2023‑1 Notes are scheduled to mature on July 20, 2035 and are included in SLP’s consolidated financial statements. The membership interests are eliminated in consolidation on SLP’s consolidated financial statements. Below is a table summary of the 2023-1 Notes as of September 30, 2024
2023-1 Debt
Class A Notes
234,000
2.55
% + SOFR
7.83
Class B-1 Notes
29,000
3.80
9.08
Class B-2 Notes
9,000
Class C Notes
32,000
4.55
Class D Notes
24,000
6.65
Class E Notes
9.84
15.12
Total 2023-1 Notes
352,000
45,636
397,636
On September 27, 2023, SLP, through a wholly-owned subsidiary, entered into a $140.0 million senior secured revolving credit facility which bore interest at SOFR plus 285 basis points with NatWest Markets PLC, subject to leverage and borrowing base restrictions (the “MM_23_3 Credit Facility”). The maturity date of the MM_23_3 Credit Facility was September 27, 2027. On July 10, 2024, the MM_23_3 Credit Facility was terminated.
On July 10, 2024 (the “2024-1 Closing Date”), SLP, through BCC Middle Market CLO 2024‑1 LLC (the “2024‑1 Issuer”), a Delaware limited liability company and a wholly-owned and consolidated subsidiary of SLP, completed a $450.4 million term debt securitization (the “2024-1 CLO Transaction”). The Class A-1, A-2, B, C, D, and E 2024-1 notes issued in connection with the 2024-1 CLO Transaction (the “2024-1 Notes”) are secured by a diversified portfolio of the 2024-1 Issuer consisting primarily of middle market loans and participation interests in middle market loans, the majority of which are senior secured loans (the “2024-1 Portfolio”). At the 2024-1 Closing Date, the 2024-1 Portfolio was comprised of assets transferred from SLP and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2024-1 CLO Transaction.
The 2024‑1 Notes are scheduled to mature on July 17, 2036 and are included in SLP’s consolidated financial statements. The membership interests are eliminated in consolidation on SLP’s consolidated financial statements. Below is a table summary of the 2024-1 Notes as of September 30, 2024
2024-1 Debt
Class A-1 Notes
250,750
1.75
6.96
Class A-2 Notes
12,750
1.95
7.16
Class B Notes
25,500
2.05
7.26
34,000
2.75
7.96
9.71
Total 2024-1 Notes(1)
348,500
76,395
424,895
(1)As of September 30, 2024, there were no Class E Notes outstanding
75
The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding as of September 30, 2024 was 8.4%. The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for the year ended December 31, 2023 was 7.7%.
Below is a summary of SLP’s portfolio at fair value:
1,132,919
879,930
12.1
Number of borrowers in SLP
32,701
32,283
155,493
151,954
1,744
3,734
Below is a listing of SLP’s individual investments as of September 30, 2024:
Senior Loan Program, LLC
Principal (9)
U.S. Dollars
ATS (15)(19)(35)
6,000
5,925
BTX Precision (15)(19)(35)
Forward Slope (12)(15)(19)
6.85
11,160
10,982
Forward Slope (15)(19)(34)(35)
18,562
GSP Holdings, LLC (12)(15)(19)(34)(35)
5.65
25,222
24,549
24,968
Kellstrom Commercial Aerospace, Inc. (12)(15)(19)(35)
6.26
18,418
18,167
Robinson Helicopter (12)(15)(19)(34)(35)
6.60
30,319
30,036
Saturn Purchaser Corp. (12)(15)(19)(34)(35)
5.35
30,936
30,861
Whitcraft-Paradigm (15)(19)(34)
9,775
153,813
155,094
1931.7
Cardo (12)(18)(19)
10,800
Gills Point S (12)(15)(19)(34)
9,875
Intoxalock (12)(15)(19)(34)
5.10
16,970
16,847
16,969
JHCC Holdings, LLC (15)(19)(34)(35)
8,186
8,121
JHCC Holdings, LLC (12)(15)(19)(34)
16,323
16,192
61,835
62,153
774.1
Morrow Sodali Global LLC (12)(18)(19)
5.60
2,201
2,181
Morrow Sodali Global LLC (12)(15)(19)
7,780
7,708
9,889
9,981
124.3
AgroFresh Solutions (15)(19)(35)
6.35
7,980
7,902
7,900
98.4
AXH Air Coolers (12)(15)(19)(34)(35)
22,899
22,779
DiversiTech (12)(17)
4.01
1,984
1,987
1,991
24,766
24,890
310.0
Duraco (19)(32)(35)
8,868
8,910
INEOS US Petrochem (12)(18)
3.85
8.70
3/14/2030
1,985
1,989
Prince\Ferro (12)(17)
4.25
4/23/2029
1,970
1,940
V Global Holdings LLC (12)(16)(19)(34)
19,962
19,886
19,014
32,711
31,853
396.7
Service Master (18)(19)(26)(34)(35)
18,727
233.2
New Milani Group LLC (12)(15)(19)(35)
9,843
Stanton Carpet (12)(15)(19)
4,939
TLC Purchaser, Inc. (12)(15)(19)(34)(35)
5.76
27,015
25,980
40,762
41,858
521.3
Evriholder (12)(19)(32)(35)
16,035
15,890
15,955
FL Hawk Intermediate Holdings, Inc. (12)(15)(19)
9.01
5,004
RoC Skincare (12)(15)(19)(35)
16,169
15,940
Solaray, LLC (12)(15)(19)
9,616
WU Holdco, Inc. (12)(15)(19)
6,428
6,411
6,205
59,339
59,360
739.3
3,212
3,185
2,585
2,039
1,978
637
5,163
3,222
40.1
ASP-r-pac Acquisition Co LLC (12)(16)(19)(34)(35)
22,644
22,501
22,475
Iris Holding, Inc. (12)(17)(34)
10,584
10,206
10,017
32,707
32,492
404.7
WCI Gigawatt Purchaser (12)(15)(19)(34)
6.01
20,305
20,115
WCI Gigawatt Purchaser (15)(19)(35)
4,644
11.38
3,398
28,157
28,414
353.9
Allworth Financial Group, L.P. (12)(15)(19)
2,101
2,095
8,280
Citadel (12)(18)
7.10
7/29/2030
1,990
Congress Wealth (15)(19)(34)
4,684
Hudson River Trading (12)(18)(35)
3.26
3/20/2028
4,967
4,955
Insigneo Financial Group LLC (12)(15)(19)
7,400
11.68
33,237
33,242
414.0
Acrisure LLC (12)(18)
3.25
8.21
11/6/2030
1,956
Asurion LLC (12)(18)(34)
4.10
8.95
3,975
3,940
3,916
Margaux Acquisition Inc. (16)(19)(34)
8,942
Margaux Acquisition Inc. (12)(16)(19)(34)(35)
15,582
Simplicity (12)(15)(19)
6.40
5,429
Simplicity (12)(15)(19)(34)(35)
24,108
23,735
59,600
59,933
746.5
Forest Products & Paper
Multi-Color Corp (12)(17)(35)
10/29/2028
3,974
3,884
3,893
Forest Products & Paper Total
48.5
AEG Vision (12)(18)(19)(34)(35)
1,167
Apollo Intelligence (12)(16)(19)(35)
10,518
Beacon Specialized Living (12)(15)(19)(35)
8,978
8,890
HealthDrive (15)(19)(34)(35)
18,563
Pharmacy Partners (12)(19)(32)(34)(35)
21,890
21,639
SunMed Group Holdings, LLC (12)(16)(19)
9,460
WellSky (16)(34)
3.36
72,235
72,631
904.6
AMI US Holdings Inc. (3)(12)(18)(19)
AMI US Holdings Inc. (15)(19)(34)
2,584
AMI US Holdings Inc. (18)(19)(34)
Applitools (16)(19)(26)
12,020
11,840
E-Tech Group (12)(15)(19)(35)
7,979
Gainwell Acquisition (12)(16)
10/1/2027
2,752
2,650
2,627
Element Buyer, Inc. (12)(15)(19)(35)
16,187
Element Buyer, Inc. (12)(15)(19)(34)
10,767
Logrhythm (15)(19)(35)
12.10
7,955
7,722
7,717
NearMap (15)(19)(34)(35)
16,247
16,093
Proofpoint (12)(17)
3.00
7.85
1,986
SensorTower (12)(19)(31)(34)(35)
21,536
21,267
21,320
Superna Inc. (12)(15)(19)(34)(35)
33,199
32,911
137,611
137,470
1712.2
Aimbridge Acquisition Co., Inc. (12)(18)(19)
7.61
5,774
5,820
Concert Golf Partners Holdco (12)(16)(19)(34)(35)
4.75
20,332
20,058
Pyramid Global Hospitality (12)(19)(24)(34)(35)
4.90
15,760
15,473
41,305
41,912
522.0
Internet Brands (12)(17)
9.10
5/3/2028
2,977
2,967
2,962
36.9
New Look (Delaware) Corporation (12)(15)(19)
9,482
9,387
Petco (12)(16)
3.51
8.12
3/3/2028
1,867
10.11% PIK
3,232
2,844
1,054
Thrasio, LLC (14)(19)
5,369
1,908
4,098
21,331
17,312
215.6
Allbridge (12)(15)(19)(35)
17,479
17,351
Avalon Acquiror, Inc. (12)(15)(19)(34)(35)
32,136
31,932
31,815
Discovery Senior Living (12)(15)(19)(35)
16,915
16,767
Smartronix (12)(15)(19)(34)
12,837
12,679
Smartronix (12)(15)(19)
5,721
Smartronix (15)(19)(35)
8,684
8,501
TEI Holdings Inc. (17)(35)
10,589
10,636
10,633
103,587
104,084
1296.4
Eagle Parent Corp (12)(17)(19)
8.85
3,286
3,131
MZR Buyer, LLC (12)(15)(19)(34)(35)
27,300
27,256
26,481
30,542
29,612
368.8
Inmarsat (12)(17)
9/27/2029
1,886
1,872
Meriplex Communications, Ltd. (12)(16)(19)(34)
14,830
14,677
14,607
Taoglas (12)(15)(19)(34)(35)
18,512
18,258
18,142
34,821
34,621
431.2
A&R Logistics, Inc. (12)(15)(19)(34)(35)
6.90
27,839
Gulf Winds International (12)(15)(19)(34)
14,123
13,876
13,841
Gulf Winds International (12)(15)(19)(35)
10,954
10,884
10,735
RoadOne (15)(19)(34)
6,916
6,765
RoadOne (18)(19)(34)
1,063
1,062
61,587
60,394
752.2
PrimeFlight Acquisition LLC (12)(15)(19)
6,539
PrimeFlight Acquisition LLC (12)(15)(19)(34)(35)
29,014
29,482
367.2
Abracon Group Holding, LLC. (16)(19)(34)
6.15
11,609
9,408
Blackbird Purchaser, Inc. (16)(19)(35)
5,378
Hultec (12)(15)(19)(34)
6,401
6,246
SureWerx (16)(19)(34)(35)
8,240
8,081
31,314
29,427
366.5
1,138,806
14110.30
Below is a listing of SLP's individual investments as of December 31, 2023:
% ofMembers
18,703
18,235
31,582
31,229
Saturn Purchaser Corp. (15)(19)(34)(35)
21,142
21,050
9,836
80,818
80,884
529.7
Gills Point S (15)(19)(34)
9,950
Intoxalock (15)(19)(34)(35)
17,099
16,953
JHCC Holdings, LLC (19)(34)(35)
8,248
8,177
16,488
16,352
62,232
62,585
409.9
5.63
7,840
7,752
7,761
50.8
Hultec (15)(19)(34)
11.79
6,450
6,273
6,257
20,021
19,461
26,294
25,718
168.4
AXH Air Coolers (15)(19)(34)(35)
18,750
Service Master (15)(19)(26)(34)
9,965
YLG Holdings, Inc. (12)(15)(19)(34)
20,349
20,348
48,877
48,876
320.1
New Milani Group LLC (15)(19)(35)
9,921
4,928
TLC Purchaser, Inc. (12)(15)(19)(26)
10,521
9,964
9,863
24,813
24,784
162.3
9.26
RoC Opco LLC (12)(15)(19)
10,524
10,024
6,461
6,363
6,254
6,160
36,906
36,214
237.2
WSP (12)(15)(19)(26)
5,627
5,564
4,840
31.7
ASP-r-pac Acquisition Co LLC (12)(16)(19)(34)
22,819
22,641
22,020
Iris Holding, Inc. (17)(34)
9,505
32,146
31,170
204.1
2,112
8,345
8,261
Congress Wealth (18)(19)(34)
4,719
15,176
15,070
98.7
9,012
Margaux Acquisition Inc. (12)(16)(19)(34)
11,254
Simplicity (18)(19)(34)(35)
19,900
19,393
19,601
39,659
39,867
261.1
Apollo Intelligence (12)(18)(19)(35)
10,665
10,585
10,612
CPS Group Holdings, Inc. (12)(15)(19)(34)
19,603
19,574
9,533
58,395
58,451
382.8
AMI US Holdings Inc. (3)(12)(15)(19)
AMI US Holdings Inc. (12)(15)(19)(34)
2,784
6,026
Applitools (19)(32)
11,003
10,915
10,811
Element Buyer, Inc. (15)(19)(34)
9,974
NearMap (18)(19)(34)(35)
16,071
33,454
33,100
Ventiv Holdco, Inc. (12)(15)(19)(26)
9,891
88,761
88,016
576.5
5,701
5,610
Concert Golf Partners Holdco (12)(16)(19)(34)
20,488
20,166
Pyramid Global Hospitality (15)(19)(34)(35)
13.41
15,880
15,496
Saltoun (7)(12)(18)(19)(26)
11,454
11,045
6,071
52,408
48,049
314.7
New Look (Delaware) Corporation (15)(19)(34)
9,555
9,227
9,316
Thrasio, LLC (7)(12)(15)(19)
9,085
3,634
18,312
12,950
84.8
AMCP Clean Acquisition Company, LLC (18)(35)
4.40
7/10/2025
8,275
7,744
7,812
1,647
1,541
1,554
Avalon Acquiror, Inc. (12)(18)(19)(34)(35)
32,382
32,132
31,492
Refine Intermediate, Inc. (12)(15)(19)(34)
4.60
19,712
12,936
12,748
12,807
8,532
TEI Holdings Inc. (12)(15)(19)(34)
18,389
20,433
20,197
20,229
4,663
4,700
125,658
125,358
821.0
Eagle Parent Corp (12)(16)
3,310
3,301
27,513
27,453
30,754
30,799
201.7
Meriplex Communications, Ltd. (16)(19)(34)(35)
14,937
14,753
14,788
Taoglas (15)(19)(34)(35)
18,653
18,354
18,000
33,107
32,788
214.8
5/3/2025
29,230
29,084
Grammer Purchaser, Inc. (3)(12)(15)(19)
237
Grammer Purchaser, Inc. (12)(15)(19)
3,428
Gulf Winds International (18)(19)(34)(35)
14,231
13,938
Omni Intermediate (15)(19)(34)
Omni Intermediate (12)(15)(19)
RoadOne (19)(34)
6,969
6,790
RoadOne (3)(18)(19)(34)
1,071
1,068
66,850
67,179
440.0
19,351
130.3
Abracon Group Holding, LLC. (18)(19)(34)
11,850
11,668
10,369
SureWerx (18)(19)(34)
8,302
8,120
19,788
18,671
122.3
893,621
5762.9
Below is the financial information for SLP:
Investments at fair value (amortized cost of $1,138,806 and $893,621, respectively)
52,114
10,303
254,697
89,516
Prepaid expenses
4,364
4,718
Deferred financing costs (net of accumulated amortization of $0 and $46, respectively)
654
9,204
6,808
Receivable for capital call
1,453,298
991,929
19,321
18,669
7,399
5,929
Debt (net of unamortized debt issuance costs of $7,537 and $4,628, respectively)
1,132,963
713,494
293,000
232,000
3,213
5,068
3,928
1,503
1,500
1,461,327
976,660
Members’ deficit
(8,029
(7,211
Noncontrolling interests
22,480
Total members' equity (deficit)
15,269
Selected Statement of Operations Information
35,878
25,002
94,317
62,658
23,666
12,329
59,127
29,185
Interest expense on members' subordinated notes
7,387
19,429
13,396
Professional fees and other expenses
1,731
1,164
4,795
2,896
32,784
19,422
83,351
45,477
3,094
5,580
17,181
(952
(879
Net realized loss on extinguishment of debt
(1,139
(1,785
1,383
7,807
(1,992
(1,706
431
(1,034
(2,871
Net increase from operations
1,388
6,011
9,932
14,310
Less: net increase (decrease) attributable to noncontrolling interests
(1,055
(3,517
Net increase in members' capital from operations
9,998
10,793
Note 4. Fair Value Measurements
Fair Value Disclosures
The following table presents fair value measurements of investments by major class, cash equivalents and derivatives as of September 30, 2024, according to the fair value hierarchy:
Fair Value Measurements
Level 1
Level 2
Level 3
Measured at Net Asset Value (2)
Investments:
7,615
1,513,906
Subordinated Note Investment Vehicles (1)
Preferred Equity Interest Investment Vehicles (1)
Equity Interest Investment Vehicles (1)
Total Investments
2,345,688
54,647
Cash equivalents
Forward currency exchange contracts (liability)
The following table presents fair value measurements of investments by major class, cash equivalents and derivatives as of December 31, 2023, according to the fair value hierarchy:
Measured at
Net Asset
Value (2)
21,435
1,442,988
Preferred Equity
Preferred Equity Interests in Investment Vehicles (1)
2,212,940
63,968
87
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2024:
First Lien
Second Lien
Subordinated
Senior
Notes in
Secured
Equity
Structured
Preferred
Loans
Interests
Vehicles (1)
Products
Investments
Balance as of January 1, 2024
Purchases of investments and other adjustments to cost
923,099
30,500
56,922
1,035,138
Paid-in-kind interest income
16,130
400
1,924
18,722
Net accretion of discounts (amortization of premiums)
3,470
3,680
Principal repayments and sales of investments
(878,391
(18,900
(8,774
(22,414
(3,470
(931,949
10,883
(10,663
(4,560
1,433
10,634
(1,201
(4,273
3,909
(1,637
2,363
Balance as of September 30, 2024
Change in unrealized appreciation attributable to investments still held at September 30, 2024
2,159
(4,000
(4,567
14,215
6,862
Transfers between levels, if any, are recognized at the beginning of the year in which transfers occur. For the nine months ended September 30, 2024, transfers from Level 2 to Level 3, if any, were primarily due to decreased price transparency. For the nine months ended September 30, 2024, transfers from Level 3 to Level 2, if any, were primarily due to increased price transparency.
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the twelve months ended December 31, 2023:
Balance as of January 1, 2023
1,554,258
210,689
93,950
237,974
22,763
80,945
43,922
524
2,245,025
691,211
19,868
68,750
40,331
820,160
Paid-in-kind interest
20,521
272
1,516
22,309
4,288
131
4,746
(815,383
(3,347
(28,157
(29,677
(876,564
36,970
(6,648
2,861
(145
(6,177
(13
27,156
Net realized gains (losses) on investments
(56,396
793
(814
19,006
(37,411
Transfers to Level 3
7,519
Balance as of December 31, 2023
Change in unrealized appreciation attributable to investments still held at December 31, 2023
2,726
(5,708
(456
(9,340
Transfers between levels, if any, are recognized at the beginning of the year in which transfers occur. For the twelve months ended December 31, 2023, transfers from Level 2 to Level 3 were primarily due to decreased price transparency. For the twelve months ended December 31, 2023, transfers from Level 3 to Level 2, if any, were primarily due to increased price transparency.
Significant Unobservable Inputs
ASC 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. Disclosure of this information is not required in circumstances where a valuation (unadjusted) is obtained from a third-party pricing service and the information regarding the unobservable inputs is not reasonably available to the Company and as such, the disclosures provided below exclude those investments valued in that manner.
88
The valuation techniques and significant unobservable inputs used in Level 3 fair value measurements of assets as of September 30, 2024 were as follows:
Significant
Range of Significant
Fair Value of
Unobservable
Unobservable Inputs
Level 3 Assets (1)
Valuation Technique
Inputs
(Weighted Average (2))
1,138,484
Discounted cash flows
Comparative Yields
7.9
18.8
(10.8%)
41,563
Comparable company multiple
EBITDA Multiple
6.8
x
10.0
(7.9x)
21,939
Revenue Multiple
Discount Rate
16.3
Collateral coverage
Recovery Rate
54,730
12.8
(12.9%)
Subordinated Notes in Investment Vehicles
46,706
(15.5%)
(15.1%)
64,241
24.3
(12.2x)
9,205
(7.0x)
Preferred equity
68,313
14.5
(10.9x)
44,267
(7.2x)
16,562
15.9
(15.2%)
25.0
1,992,236
The Company used the income approach and market approach to determine the fair value of certain Level 3 assets as of September 30, 2024. The significant unobservable inputs used in the income approach are the comparative yield and discount rate. The comparative yield and discount rate are used to discount the estimated future cash flows expected to be received from the underlying investment. An increase/decrease in the comparative yield or discount rate would result in a decrease/increase, respectively, in the fair value. The significant unobservable inputs used in the market approach are the comparable company multiple and the recovery rate. The multiple is used to estimate the enterprise value of the underlying investment. An increase/decrease in the multiple would result in an increase/decrease, respectively, in the fair value. The recovery rate represents the extent to which proceeds can be recovered. An increase/decrease in the recovery rate would result in an increase/decrease, respectively, in the fair value.
89
The valuation techniques and significant unobservable inputs used in Level 3 fair value measurements of assets as of December 31, 2023 were as follows:
1,238,070
(11.8%)
66,833
23.0
(14.2x)
Probably weighting of alternative outcomes
75.0
9,975
(14.6%)
14.4
(14.3%)
133,493
(15.4%)
65,820
(11.7x)
51,143
(10.5x)
4,990
11.6
18.0
(9.8x)
2,118,666
The Company used the income approach and market approach to determine the fair value of certain Level 3 assets as of December 31, 2023. The significant unobservable inputs used in the income approach are the comparative yield and discount rate. The comparative yield and discount rate are used to discount the estimated future cash flows expected to be received from the underlying investment. An increase/decrease in the comparative yield or discount rate would result in a decrease/increase, respectively, in the fair value. The significant unobservable inputs used in the market approach are the comparable company multiple and the recovery rate. The multiple is used to estimate the enterprise value of the underlying investment. An increase/ decrease in the multiple would result in an increase/decrease, respectively, in the fair value. The recovery rate represents the extent to which proceeds can be recovered. An increase/decrease in the recovery rate would result in an increase/decrease, respectively, in the fair value.
Debt Not Carried at Fair Value
Fair value is estimated by using market quotations or discounting remaining payments using applicable current market rates, which take into account changes in the Company’s marketplace credit ratings, or market quotes, if available. If the Company’s debt obligations were carried at fair value, the fair value and level would have been as follows:
Level
2019-1 Debt
352,830
343,136
March 2026 Notes
289,234
279,596
October 2026 Notes
284,736
270,903
Sumitomo Credit Facility
353,699
311,000
Total Debt
1,280,499
1,204,635
Note 5. Related Party Transactions
Investment Advisory Agreement
The Company entered into the first amended and restated investment advisory agreement as of November 14, 2018 (the “Prior Advisory Agreement”) with the Advisor, pursuant to which the Advisor manages the Company’s investment program and related activities. On November 28, 2018, the Board, including a majority of the Independent Directors, approved a second amended and restated advisory agreement (the “Amended Advisory Agreement”) between the Company and the Advisor. On February 1, 2019, Shareholders approved the Amended Advisory Agreement which replaced the Prior Advisory Agreement.
Base Management Fee
The Company pays the Advisor a base management fee (the “Base Management Fee”), accrued and payable quarterly in arrears. The Base Management Fee is calculated at an annual rate of 1.5% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters. Such amount shall be appropriately adjusted (based on the actual number of days elapsed relative to the total number of days in such calendar quarter) for any share issuance or repurchases by the Company during a calendar quarter. The Base Management Fee for any partial quarter will be appropriately prorated. Effective February 1, 2019, the base management fee has been revised to a tiered management fee structure so that the base management fee of 1.5% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will continue to apply to assets held at an asset coverage ratio down to 200%, but a lower base management fee of 1.0% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will apply to any amount of assets attributable to leverage decreasing the Company’s asset coverage ratio below 200%.
For the three months ended September 30, 2024 and 2023, management fees were $8.9 million and $9.1 million, respectively. For the nine months ended September 30, 2024 and 2023, management fees were $26.5 million and $27.2 million, respectively.
As of September 30, 2024 and December 31, 2023, $8.9 million and $8.9 million, respectively, remained payable related to the base management fee accrued in base management fee payable on the consolidated statements of assets and liabilities.
Incentive Fee
The incentive fee consists of two parts that are determined independently of each other such that one component may be payable even if the other is not.
The first part, the Incentive Fee based on income is calculated and payable quarterly in arrears as detailed below.
The second part, the capital gains incentive fee, is determined and payable in arrears as detailed below.
Incentive Fee on Pre-Incentive Fee Net Investment Income
Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the Base Management Fee, any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature such as market discount, original issue discount (“OID”), debt instruments with PIK interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.
Pre-incentive fee net investment income does not include any realized or unrealized capital gains or losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the Hurdle rate for a quarter, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses.
The incentive fee based on income is calculated and payable quarterly in arrears based on the aggregate pre-incentive fee net investment income in respect of the current calendar quarter and the eleven preceding calendar quarters (the “Trailing Twelve Quarters”). This calculation is referred to as the “Three-Year Lookback.”
Pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters is compared to a “Hurdle Amount” equal to the product of (i) the hurdle rate of 1.5% per quarter (6% annualized) and (ii) the sum of our net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The Hurdle Amount will be calculated after making appropriate adjustments to our NAV at the beginning of each applicable calendar quarter for our subscriptions (which shall include all issuances by us of shares of our Common Stock, including issuances pursuant to the Company’s dividend reinvestment plan) and distributions during the applicable calendar quarter.
The quarterly incentive fee based on income is calculated, subject to the Incentive Fee Cap (as defined below), based on the amount by which (A) aggregate pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters exceeds (B) the Hurdle Amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount.” The incentive fee based on income that is paid to the Advisor in respect of a particular calendar quarter will equal the Excess Income Amount less the aggregate incentive fees based on income that were paid to the Advisor in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.
The incentive fee based on income for each calendar quarter is determined as follows:
Incentive Fee Cap
The incentive fee based on income is subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in respect of any calendar quarter is an amount equal to 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters less the aggregate incentive fees based on income that were paid to the Advisor in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.
“Cumulative Net Return” during the relevant Trailing Twelve Quarters means (x) the pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters less (y) any Net Capital Loss, if any, in respect of the relevant Trailing Twelve Quarters. If, in any quarter, the Incentive Fee Cap is zero or a negative value, the Company will pay no incentive fee based on income to the Advisor in respect of that quarter. If, in any quarter, the Incentive Fee Cap for such quarter is a positive value but is less than the incentive fee based on income that is payable to the Advisor for such quarter calculated as described above, the Company will pay an incentive fee based on income to the Advisor equal to the Incentive Fee Cap in respect of such quarter. If, in any quarter, the Incentive Fee Cap for such quarter is equal to or greater than the incentive fee based on income that is payable to the Advisor for such quarter calculated as described above, the Company will pay an incentive fee based on income to the Advisor equal to the incentive fee calculated as described above for such quarter without regard to the Incentive Fee Cap.
“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in respect of such period and (ii) aggregate capital gains, whether realized or unrealized, in respect of such period.
For the three months ended September 30, 2024 and 2023, the Company incurred $7.0 million and $3.0 million, respectively, of income incentive fees (before waivers), which are included in incentive fees on the consolidated statements of operations.
For the nine months ended September 30, 2024 and 2023, the Company incurred $24.2 million and $18.1 million, respectively, of income incentive fees (before waivers), which are included in incentive fees on the consolidated statements of operations.
As of September 30, 2024 and December 31, 2023, there was $7.0 million and $7.3 million, respectively, related to the income incentive fee accrued in incentive fee payable on the consolidated statements of assets and liabilities.
The Amended Advisory Agreement approved by Stockholders on February 1, 2019 incorporates (i) a three-year lookback provision and (ii) a cap on quarterly income incentive fee payments based on net realized or unrealized capital loss, if any, during the applicable three-year lookback period.
Annual Incentive Fee Based on Capital Gains
The second part of the incentive fee is a capital gains incentive fee that will be determined and payable in arrears in cash as of the end of each fiscal year (or upon termination of the Amended Advisory Agreement, as of the termination date), and equals to 17.5% of our realized capital gains as of the end of the fiscal year. In determining the capital gains incentive fee payable to the Advisor, the Company calculates the cumulative aggregate realized capital gains and cumulative aggregate realized capital losses since our inception, and the aggregate unrealized capital depreciation as of the date of the calculation, as applicable, with respect to each of the investments in our portfolio. For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the cost of such investment. Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the cost of such investment. Aggregate unrealized capital depreciation equals the sum of the difference, if negative, between the valuation of each investment as of the applicable calculation date and the cost of such investment. At the end of the applicable year, the amount of capital gains that serves as the basis for our calculation of the capital gains incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less aggregate unrealized capital depreciation, with respect to our portfolio of investments. If this number is positive at the end of such year, then the capital gains incentive fee for such year will equal to 17.5% of such amount, less the aggregate amount of any capital gains incentive fees paid in respect of our portfolio in all prior years.
There was no capital gains incentive fee payable to the Advisor under the Amended Advisory Agreement as of September 30, 2024 and December 31, 2023.
US GAAP requires that the incentive fee accrual consider the cumulative aggregate unrealized capital appreciation of investments or other financial instruments in the calculation, as an incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Amended Advisory Agreement (“GAAP Incentive Fee”). There can be no assurance that such unrealized appreciation will be realized in the future. Accordingly, such fee, as calculated and accrued, would not necessarily be payable under the Amended Advisory Agreement, and may never be paid based upon the computation of incentive fees in subsequent period.
For the three months ended September 30, 2024 and 2023, the Company accrued $0.0 million and $0.0 million of incentive fees related to the GAAP Incentive Fee, which is included in incentive fees on the consolidated statements of operations. For the nine months ended September 30, 2024 and 2023, the Company accrued $0.0 million and $0.0 million of incentive fees related to the GAAP Incentive Fee, which is included in incentive fees on the consolidated statements of operations. As of September 30, 2024 and December 31, 2023, there was $0.0 million and $0.0 million related to the GAAP Incentive Fee accrued in incentive fee payable on the consolidated statements of assets and liabilities, respectively.
Administration Agreement
The Company has entered into an administration agreement (the “Administration Agreement”) with the advisor, pursuant to which the Administrator will provide the administrative services necessary for us to operate, and the Company will utilize the Administrator’s office facilities, equipment and recordkeeping services. Pursuant to the Administration Agreement, the Administrator has agreed to oversee our public reporting requirements and tax reporting and monitor our expenses and the performance of professional services rendered to us by others. The Administrator has also hired a sub-administrator to assist in the provision of administrative services. The Company will reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to the business and affairs of the Company, and will be subject to oversight by the Board.
The Company incurred expenses related to the Administrator of $0.7 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Company incurred expenses related to the Administrator of $1.8 million and $0.8 million for the nine
months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. As of September 30, 2024 and December 31, 2023, respectively, there were $0.7 million and $0.4 million related to the Administrator that were payable and included in “accounts payable and accrued expenses” in the consolidated statements of assets and liabilities. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. The Company incurred expenses related to the sub-administrator of $0.1 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Company incurred expenses related to the sub-administrator of $0.4 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Administrator will not seek reimbursement in the event that any such reimbursements would cause any distributions to our stockholders to constitute a return of capital. In addition, the Administrator is permitted to delegate its duties under the Administration Agreement to affiliates or third parties and the Company will reimburse the expenses of these parties incurred and paid by the Advisor on our behalf.
Resource Sharing Agreement
The Company’s investment activities are managed by the Advisor, an investment adviser that is registered with the SEC under the Advisers Act. The Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis.
The Advisor has entered into a Resource Sharing Agreement (the “Resource Sharing Agreement”) with Bain Capital Credit, LP (“Bain Capital Credit”), pursuant to which Bain Capital Credit provides the Advisor with experienced investment professionals (including the members of the Advisor’s Credit Committee) and access to the resources of Bain Capital Credit so as to enable the Advisor to fulfill its obligations under the Amended Advisory Agreement. Through the Resource Sharing Agreement, the Advisor intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Bain Capital Credit’s investment professionals. There can be no assurance that Bain Capital Credit will perform its obligations under the Resource Sharing Agreement. The Resource Sharing Agreement may be terminated by either party on 60 days’ notice, which if terminated may have a material adverse consequence on the Company’s operations.
Co-investments
The Company will invest alongside our affiliates, subject to compliance with applicable regulations and our allocation procedures. Certain types of negotiated co-investments will be made only in accordance with the terms of the exemptive order the Company received from the SEC initially on August 23, 2016, as amended on March 23, 2018 and December 22, 2021 (the “Order”). Under the terms of the Order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our Board’s approved criteria. In certain situations where co-investment with one or more funds managed by the Advisor or its affiliates is not covered by the Order, the personnel of the Advisor or its affiliates will need to decide which funds will proceed with the investment. Such personnel will make these determinations based on policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations.
Revolving Advisor Loan
On March 27, 2020, the Company entered into an unsecured revolving loan agreement (the “Revolving Advisor Loan”) with the Advisor. The Revolving Advisor Loan had a maximum credit limit of $50.0 million and matured on March 27, 2023. The Revolving Advisor Loan accrued interest at the Applicable Federal Rate from the date of such loan until the loan was repaid in full. Please see Note 6 for additional details.
Related Party Commitments
As of September 30, 2024 and December 31, 2023, the Advisor held 14,064.30 and 449,699.30 shares of the Company’s common stock, respectively. An affiliate of the Advisor is the investment manager to certain pooled investment vehicles which are investors in the Company. These investors held 13,541,810.66 and 12,875,920.66 shares of the Company at September 30, 2024 and December 31, 2023, respectively.
Non-Controlled/Affiliate and Controlled Affiliate Investments
Transactions during the nine months ended September 30, 2024 in which the issuer was either an Affiliated Person or an Affiliated Person that the Company is deemed to Control are as follows:
Fair Valueas ofDecember 31,2023
GrossAdditions
GrossReductions
Change inUnrealizedAppreciation
RealizedGains(Losses)
Fair Valueas ofSeptember 30,2024
Dividend,Interest, andPIK Income
OtherIncome
Non-Controlled/affiliate investment
ADT Pizza, LLC Equity Interest (1)
(3,403
Ansett Aviation Training First Lien Senior Secured Loan
290
Ansett Aviation Training Equity Interest (1)
2,151
BCC Middle Market CLO 2018-1, LLC Equity Interest
(22,415
(1,636
Blackbrush Oil & Gas, L.P. Equity Interest (1)
Blackbrush Oil & Gas, L.P. Preferred Equity (1)
(2,391
DC Blox Preferred Equity
DC Blox Equity Interest (1)
Direct Travel, Inc First Lien Senior Secured Loan
(4,841
138
Direct Travel, Inc First Lien Senior Secured Loan - Delayed Draw
(3,500
(1,782
(59,944
2,027
(5,775
151
(202
Direct Travel, Inc Equity Interest (1)
(6,999
(10,281
7,000
Walker Edison Equity Interest (1)
(421
Walker Edison First Lien Senior Secured Loan (1)
(3,450
384
Walker Edison First Lien Senior Secured Loan - Revolver
Walker Edison First Lien Senior Secured Loan - Delayed Draw (1)
1,862
(1,093
(468
Total Non-Controlled/affiliate investment
44,068
(108,928
Controlled affiliate investment
Bain Capital Senior Loan Program, LLC Subordinated Note Investment Vehicles
9,823
Bain Capital Senior Loan Program, LLC Preferred Equity Interest Investment Vehicles
1,803
1,623
Bain Capital Senior Loan Program, LLC Equity Interest Investment Vehicles
(1,460
4,598
BCC Jetstream Holdings Aviation (On II), LLC First Lien Senior Secured Loan (1)
BCC Jetstream Holdings Aviation (On II), LLC Equity Interest (1)
BCC Jetstream Holdings Aviation (Off I), LLC Equity Interest
Gale Aviation (Offshore) Co Equity Interest
(11,900
(1,518
8,599
International Senior Loan Program, LLC Equity Interest Investment Vehicles
(9,664
5,703
International Senior Loan Program, LLC Subordinated Note Investment Vehicles
19,125
Legacy Corporate Lending HoldCo, LLC Equity Interest (1)
Legacy Corporate Lending HoldCo, LLC Preferred Equity (1)
2,025
Lightning Holdings B, LLC Equity Interest (1)
3,637
3,193
Total Controlled affiliate investment
36,252
704,983
80,320
(120,828
(18,497
653,705
53,815
(1)Non-income producing.
Transactions during the year ended December 31, 2023 in which the issuer was either an Affiliated Person or an Affiliated Person that the Company is deemed to Control are as follows:
as of
Change in
Realized
Dividend,
December 31,
Gross
Gains
Interest, and
Other
2022
Additions
Reductions
Appreciation
(Losses)
PIK Income
ADT Pizza, LLC, Equity Interest (1)
14,581
(1,791
4,818
5,310
2,206
(159
BCC Middle Market CLO 2018-1, LLC. Equity Interest
4,814
Blackbrush Oil & Gas, L.P. First Lien Senior Secured Loan
9,040
(9,178
978
30,785
(16,616
Direct Travel, Inc. First Lien Senior Secured Loan
574
Direct Travel, Inc. First Lien Senior Secured Loan - Delayed Draw
3,440
444
1,741
221
58,721
1,223
4,125
1,650
583
Direct Travel, Inc. Equity Interest (1)
13,033
(2,753
Walker Edison First Furniture Company LLC Equity Interest (1)
(5,171
Walker Edison First Furniture Company LLC First Lien Senior Secured Loan
555
Walker Edison First Furniture Company LLC First Lien Senior Secured Loan - Revolver
330
Walker Edison First Furniture Company LLC First Lien Senior Secured Loan - Delayed Draw
173,400
18,691
(38,855
(24,271
17,013
50,995
65,000
9,626
Bain Capital Senior Loan Program, LLC Class A Preferred Equity Interests Investment Vehicles
(644
(1,149
2,623
Bain Capital Senior Loan Program, LLC Class B Equity Interests Investment Vehicles
3,347
(3,726
7,433
BCC Jetstream Holdings Aviation (On II), LLC, First Lien Senior Secured Loan (1)
6,400
219
(1,010
BCC Jetstream Holdings Aviation (On II), LLC, Equity Interest (1)
BCC Jetstream Holdings Aviation (Off I), LLC, Equity Interest (1)
10,388
556
Gale Aviation (Offshore) Co, Equity Interest
91,326
(1,155
(1,752
12,352
International Senior Loan Program, LLC, Equity Interest Investment Vehicle
62,630
1,250
8,736
International Senior Loan Program, LLC, Subordinated Note Investment Vehicle
186,979
3,750
25,161
Legacy Corporate Lending HoldCo, LLC Class A Common Equity (1)
(225
Legacy Corporate Lending HoldCo, LLC Class B Common Equity (1)
Lightning Holdings Equity Interest (1)
27,209
7,809
438,630
115,320
4,217
64,696
612,030
134,011
(40,010
(20,054
81,709
Note 6. Debt
In accordance with applicable SEC staff guidance and interpretations, as a BDC, with certain exceptions, effective February 2, 2019, the Company is permitted to borrow amounts such that its asset coverage ratio is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required. As of September 30, 2024 and December 31, 2023, the Company’s asset coverage ratio based on aggregated borrowings outstanding was 187.8% and 189.9%, respectively.
The Company’s outstanding borrowings as of September 30, 2024 and December 31, 2023 were as follows:
Total Aggregate
Principal
Amount
Carrying
Committed
Outstanding
Value (1)
352,500
351,326
351,229
300,000
298,371
297,522
297,211
296,182
Sumitomo Credit Facility (2)
855,000
665,000
1,807,500
1,306,199
1,617,500
1,263,500
The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for the nine months ended September 30, 2024 and year ended December 31, 2023 were 5.1% and 5.2%, respectively.
The combined weighted average borrowings outstanding for the nine months ended September 30, 2024 and year ended December 31, 2023 were $1.3 billion and $1.4 billion, respectively.
The following table shows the contractual maturities of our debt obligations as of September 30, 2024:
Payments Due by Period
Less than
More than
1 year
1 — 3 years
3 — 5 years
5 years
Total Debt Obligations
600,000
2019‑1 Debt
On August 28, 2019, the Company, through BCC Middle Market CLO 2019‑1 LLC (the “2019‑1 Issuer”), a Cayman Islands limited liability company and a wholly-owned and consolidated subsidiary of the Company, and BCC Middle Market CLO 2019‑1 Co-Issuer, LLC (the “Co-Issuer” and, together with the Issuer, the “Co-Issuers”), a Delaware limited liability company, completed its $501.0 million term debt securitization (the “2019‑1 CLO Transaction”). The notes issued in connection with the 2019‑1 CLO Transaction (the “2019‑1 Notes”) are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market loans, the majority of which are senior secured loans (the “2019‑1 Portfolio”). The Co-Issuers also issued Class A‑1L Loans (the “Loans” and, together with the 2019‑1 Notes, the “2019‑1 Debt”). The Loans are also secured by the 2019‑1 Portfolio. At the 2019‑1 closing date, the 2019‑1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2019‑1 CLO Transaction.
On November 30, 2021, the Co-Issuers refinanced the 2019‑1 CLO Transaction through a private placement of $410 million of senior secured and senior deferrable notes consisting of: (i) $282.5 million of Class A‑1‑R Senior Secured Floating Rate Notes, which currently bear interest at the applicable reference rate plus 1.50% per annum; (ii) $55 million of Class A‑2‑R Senior Secured Floating Rate Notes, which bear interest at the applicable reference rate plus 2.00% per annum; (iii) $47.5 million of Class B-R Senior Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 2.60% per annum; and (iv) $25.0 million of Class C-R Senior Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 3.75% per annum (collectively, the “2019‑1 CLO Reset Notes”). As part of the transactions, the 2019-1 Issuer was redomiciled from Cayman to Jersey. The 2019‑1 CLO Reset Notes are scheduled to mature on October 15, 2033 and the reinvestment period ends October 15, 2025. The Company retained $32.5 million of the Class B-R Notes and $25.0 million of the Class C-R Notes. The retained notes by the Company are eliminated in consolidation. The transaction resulted in a realized loss on the extinguishment of debt of $2.3 million from the acceleration of
unamortized debt issuance costs. The obligations of the 2019-1 Issuer under the 2019-1 CLO Transaction are non-recourse to the Company.
On June 15, 2023, the Company entered into a Second Supplemental Indenture (“2019-1 Supplemental Indenture”), dated as of June 15, 2023, pursuant to Section 8.1(xxxi) of the Indenture, dated as of November 30, 2021, between BCC Middle Market CLO 2019-1, LTD, as issuer, and Wells Fargo Bank, National Association, as trustee. The 2019-1 Supplemental Indenture provides for, among other things, an adoption of an alternate reference rate of Term SOFR plus 0.26%, effective July 1, 2023.
The 2019‑1 CLO Reset Notes was executed through a private placement of the following 2019‑1 Debt:
282,500
1.50
7.06
55,000
2.00
7.56
15,000
2.60
8.16
Total 2019-1 Debt
102,250
454,750
The Company serves as portfolio manager of the 2019‑1 Issuer pursuant to a portfolio management agreement between the Company and the 2019‑1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.
During the reinvestment period, pursuant to the indenture and loan agreement governing the 2019‑1 Notes and Loans, respectively, all principal collections received on the underlying collateral may be used by the 2019‑1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2019‑1 Issuer and in accordance with the 2019‑1 Issuer investment strategy and the terms of the indenture and loan agreement, as applicable.
The Company has agreed to hold on an ongoing basis the membership interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2019‑1 Co-Issuers for so long as the 2019‑1 Debt remains outstanding.
The 2019‑1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2019‑1 Issuer.
As of September 30, 2024, there were 56 first lien senior secured loans with a total fair value of approximately $470.8 million and cash of $23.6 million securing the 2019-1 Debt. As of December 31, 2023, there were 49 first lien and second lien senior secured loans with a total fair value of approximately $453.7 million and cash of $52.8 million securing the 2019-1 Debt. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As of September 30, 2024, the Company was in compliance with its covenants related to the 2019-1 Debt.
Costs of the offering of $1.5 million were incurred in connection with the 2019‑1 CLO Reset Notes which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019‑1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life using the effective interest method. The balance of the unamortized debt issuance costs was $1.2 million and $1.3 million as of September 30, 2024 and December 31, 2023, respectively.
For the three months ended September 30, 2024 and 2023, the components of interest expense related to the 2019‑1 Co-Issuers were as follows:
Borrowing interest expense
6,478
Amortization of deferred financing costs and upfront commitment fees
Total interest and debt financing expenses
6,511
6,466
For the nine months ended September 30, 2024 and 2023, the components of interest expense related to the 2019‑1 Co-Issuers were as follows:
19,333
18,038
19,430
18,135
On March 27, 2020, the Company entered into the Revolving Advisor Loan with the Advisor. The Revolving Advisor Loan had a maximum credit limit of $50.0 million and matured on March 27, 2023. The Revolving Advisor Loan accrued interest at the Applicable Federal Rate from the date of such loan until the loan was repaid in full.
For the three and nine months ended September 30, 2024 and 2023, the Revolving Advisor Loan did not incur any interest expense.
On March 10, 2021, the Company and U.S. Bank National Association (the “Trustee”), entered into an Indenture (the “Base Indenture”) and First Supplemental Indenture (the “First Supplemental Indenture,” and together with the Base Indenture, the “Indenture”) between the Company and the Trustee. The First Supplemental Indenture relates to the Company’s issuance of $300.0 million aggregate principal amount of its 2.95% notes due 2026 (the “March 2026 Notes”).
The March 2026 Notes will mature on March 10, 2026 and may be redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the Indenture. The March 2026 Notes bear interest at a rate of 2.95% per year payable semi-annually on March 10th and September 10th of each year, commencing on September 10, 2021. The March 2026 Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the March 2026 Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.
The net proceeds to the Company were approximately $294.3 million, after deducting the underwriting discounts and commissions of $4.4 million and offering expenses of $1.3 million.
As of September 30, 2024 and December 31, 2023, the components of the carrying value of the March 2026 Notes were as follows:
Principal amount of debt
Unamortized debt issuance cost
(934
(1,421
Original issue discount, net of accretion
(695
(1,057
Carrying value of March 2026 Notes
For the three months ended September 30, 2024 and 2023, the components of interest expense related to the March 2026 Notes were as follows:
2,212
2,213
Amortization of debt issuance cost
Accretion of original issue discount
2,497
For the nine months ended September 30, 2024 and 2023, the components of interest expense related to the March 2026 Notes were as follows:
6,638
487
485
362
7,487
7,483
On October 13, 2021, the Company and the Trustee entered into a Second Supplemental Indenture (the “Second Supplemental Indenture”) to the Indenture between the Company and the Trustee. The Second Supplemental Indenture relates to the Company’s issuance of $300.0 million aggregate principal amount of its 2.55% notes due 2026 (the “October 2026 Notes,” and together with the March 2026 Notes, the “2026 Notes”).
The October 2026 Notes will mature on October 13, 2026 and may be redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the Indenture. The October 2026 Notes bear interest at a rate of 2.55% per year payable semi-annually on April 13 and October 13 of each year, commencing on April 13, 2022. The October 2026 Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the October 2026 Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.
The net proceeds to the Company were approximately $293.1 million, after deducting the underwriting discounts and commissions of $6.2 million and offering expenses of $0.7 million.
As of September 30, 2024 and December 31, 2023, the components of the carrying value of the October 2026 Notes were as follows:
(1,487
(2,035
(1,302
(1,783
Carrying value of October 2026 Notes
For the three months ended September 30, 2024 and 2023, the components of interest expense related to the October 2026 Notes were as follows:
161
162
2,258
For the nine months ended September 30, 2024 and 2023, the components of interest expense related to the October 2026 Notes were as follows:
5,738
548
481
479
6,767
6,763
On December 24, 2021, the Company entered into a senior secured revolving credit agreement (as amended to date, the “Sumitomo Credit Agreement” or the “Sumitomo Credit Facility”) as Borrower, with Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sole Book Runner, and with Sumitomo Mitsui Banking Corporation and MUFG Union Bank, N.A., as Joint Lead Arrangers. The Credit Agreement is effective as of December 24, 2021.
The facility amount under the Sumitomo Credit Agreement is $300.0 million with an accordion provision to permit increases to the total facility amount up to $1.0 billion. Proceeds of the loans under the Sumitomo Credit Agreement may be used for general corporate purposes of the Company, including, without limitation, repaying outstanding indebtedness, making distributions, contributions and investments, and acquisition and funding, and such other uses as permitted under the Sumitomo Credit Agreement. The maturity date is December 24, 2026.
On July 6, 2022, the Company entered into the First Amendment to the Sumitomo Credit Agreement. The First Amendment provides for an upsize in the total commitments from lenders under the revolving credit facility governed by the Sumitomo Credit Agreement from $300.0 million to $385.0 million. The First Amendment also replaced the LIBOR benchmark provisions under the Sumitomo Credit Agreement with SOFR benchmark provisions, including applicable credit spread adjustments.
On July 22, 2022, the Company entered into the Increasing Lender/Joinder Lender Agreement (the “Joinder Agreement”), dated as of July 22, 2022, pursuant to Section 2.08(e) of the Sumitomo Credit Agreement. The Joinder Agreement provides for, among other things, an upsize in the total commitments from lenders under the revolving credit facility governed by the Sumitomo Credit Agreement from $385.0 million to $485.0 million.
On August 24, 2022, the Company entered into the Second Amendment, which provides for, among other things, an upsize in the total commitments from lenders under the Sumitomo Credit Agreement from $485.0 million to $635.0 million.
On December 14, 2022, the Company entered into a second Increasing Lender/Joinder Lender Agreement (the “Second Joinder Agreement”), dated as of December 14, 2022, pursuant to Section 2.08(e) of the Sumitomo Credit Agreement. The Second Joinder Agreement provides for, among other things, an upsize in the total commitments from lenders under the revolving credit facility governed by the Sumitomo Credit Agreement from $635.0 million to $665.0 million.
On May 20, 2024, the Company entered into the Third Amendment to Senior Secured Revolving Credit Agreement and First Amendment to Guarantee and Security Agreement (the “Third Amendment”), which amends the Sumitomo Credit Agreement. The Third Amendment provides for, among other things, (i) an extension of the revolver availability period from December 24, 2025 to May 19, 2028, (ii) an extension of the scheduled maturity date from December 24, 2026 to May 18, 2029, (iii) the conversion of a portion of the existing revolver availability into term loan availability, (iv) an upsize in the total facility amount from $665,000,000 to $855,000,000, (v) an increase in the accordion provision to permit increases to a total facility amount of up to $1,500,000,000, (vi) the reduction of the credit adjustment spread for term benchmark loans denominated in Dollars, from 0.10% for one-month tenor loans, 0.15% for three-month tenor loans and 0.25% for six-month tenor loans to 0.10% for all loan tenors, and (vii) the joinder of new lenders to the Sumitomo Credit Agreement.
Interest under the Sumitomo Credit Agreement for (i) loans for which the Company elects the base rate option, (A) if the borrowing base is equal to or greater than the product of 1.60 and the revolving credit exposure, is payable at an “alternate base rate” (which is the greater of zero and the highest of (a) the prime rate as published in the print edition of The Wall Street Journal, Money Rates Section, (b) the federal funds effective rate plus 0.5% and (c) the one-month Eurocurrency rate plus 1% per annum) plus 0.75% per annum and (B) if the borrowing base is less than the product of 1.60 and the revolving credit exposure, the alternate base rate plus 0.875% per annum; (ii) loans for which the Company elects the Eurocurrency option, (A) if the borrowing base is equal to or greater than the product of 1.60 and the revolving credit exposure, is payable at a rate equal to the Eurocurrency rate plus 1.75% per annum and (B) if the borrowing base is less than the product of 1.60 and the revolving credit exposure, is payable at a rate equal to the Eurocurrency rate plus 1.875% per annum; and (iii) loans for which the Company elects the risk-free-rate option, (A) if the borrowing base is equal to or greater than the product of 1.60 and the revolving credit exposure, is payable at a rate equal to risk-free-rate plus 1.8693% per annum and (B) if the borrowing base is less than the product of 1.60 and the revolving credit exposure, is payable at a rate equal to risk-free-rate plus 1.9943% per annum. The Company pays a used commitment fee of 37.5 basis points (0.375%) on the average daily unused amount of the dollar commitment.
The Sumitomo Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature. As of September 30, 2024, the Company was in compliance with its covenants related to the Sumitomo Credit Facility.
As of September 30, 2024 and December 31, 2023, there were $353.7 million and $311.0 million of borrowings under the Sumitomo Credit Facility.
For the three months ended September 30, 2024 and 2023, the components of interest expense related to the Sumitomo Credit Facility were as follows:
9,152
Unused facility fee
508
264
236
6,851
9,553
For the nine months ended September 30, 2024 and 2023, the components of interest expense related to the Sumitomo Credit Facility were as follows:
17,738
27,271
1,262
430
1,120
702
20,120
28,403
Note 7. Derivatives
The Company is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by the Company may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency.
The Company may enter into forward currency exchange contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations in the value of foreign currencies, as described in Note 2. The fair value of derivative contracts open as of September 30, 2024 and December 31, 2023 is included on the consolidated schedules of investments by contract. The Company had collateral receivable of $9.7 million for September 30, 2024 and collateral receivable of $7.6 million for December 31, 2023 with the counterparties on foreign currency exchange contracts. Collateral amounts posted are included in collateral on forward currency exchange contracts on the consolidated statements of assets and liabilities. Collateral payable is included in collateral payable on forward currency exchange contracts on the consolidated statements of assets and liabilities.
For the three and nine months ended September 30, 2024, the Company’s average U.S. dollar notional exposure to forward currency exchange contracts were $126.8 million and $129.0 million, respectively.
For the three and nine months ended September 30, 2023 the Company's average U.S. dollar notional exposure to forward currency exchange contracts were $199.5 million and $192.1 million, respectively.
By using derivative instruments, the Company is exposed to the counterparty’s credit risk—the risk that derivative counterparties may not perform in accordance with the contractual provisions offset by the value of any collateral received. The Company’s exposure to credit risk associated with counterparty non-performance is limited to collateral posted and the unrealized gains inherent in such transactions that are recognized in the consolidated statements of assets and liabilities. The Company minimizes counterparty credit risk through credit monitoring procedures, executing master netting arrangements and managing margin and collateral requirements, as appropriate.
The Company presents forward currency exchange contracts on a net basis by counterparty on the consolidated statements of assets and liabilities. The Company has elected not to offset assets and liabilities in the consolidated statements of assets and liabilities that may be received or paid as part of collateral arrangements, even when an enforceable master netting arrangement or other arrangement is in place that provides the Company, in the event of counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.
The following table presents both gross and net information about derivative instruments eligible for offset in the consolidated statements of assets and liabilities as of September 30, 2024:
Net amount of
Gross amount of
assets or
(liabilities)
Account in the
assets on the
on the
presented on the
consolidated
statements of
Cash Collateral
assets
assets and
paid
Net
and liabilities
liabilities
(received) (1)
Amounts (2)
Bank of New York
Unrealized depreciation on forward currency contracts
(3,623
(3,138
0 (3)
(568
(179
The following table presents both gross and net information about derivative instruments eligible for offset in the consolidated statements of assets and liabilities as of December 31, 2023:
Unrealized appreciation on forward currency contracts
(2,247
(947
(2,192
(1,313
The effect of transactions in derivative instruments to the consolidated statements of operations during the three months ended September 30, 2024 and 2023 was as follows:
Net change in unrealized appreciation (depreciation) on forward currency exchange contracts
Total net realized and unrealized gain (loss) on forward currency exchange contracts
(5,673
6,886
Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of $5.6 million and ($6.3) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the three months ended September 30, 2024 and 2023, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($5.7) million and $6.9 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is ($0.1) million and $0.5 million for the three months ended September 30, 2024 and 2023, respectively.
The effect of transactions in derivative instruments to the consolidated statements of operations during the nine months ended September 30, 2024 and 2023 was as follows:
Net realized gains (losses) on forward currency exchange contracts
Total net realized and unrealized gains (losses) on forward currency exchange contracts
(2,373
3,186
104
Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of $3.3 million and ($1.7) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the nine months ended September 30, 2024 and 2023, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($2.4) million and $3.2 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is $0.9 million and $1.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Note 8. Distributions
The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the nine months ended September 30, 2024:
Date Declared
Record Date
Payment Date
Per Share
February 27, 2024
March 28, 2024
April 30, 2024
0.42
0.03
(1)
May 6, 2024
June 28, 2024
July 29, 2024
August 6, 2024
October 31, 2024
Total distributions declared
1.35
87,159
(1) Represents a special dividend.
The distributions declared during the nine months ended September 30, 2024 were derived from investment company taxable income and net capital gain, if any.
The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the nine months ended September 30, 2023:
February 28, 2023
March 31, 2023
April 28, 2023
0.38
24,534
May 9, 2023
June 30, 2023
July 31, 2023
August 8, 2023
September 29, 2023
October 31, 2023
1.18
76,184
The distributions declared during the nine months ended September 30, 2023 were derived from investment company taxable income and net capital gain, if any.
The federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscal year-end based upon the Company’s investment company taxable income for the full fiscal year and distributions paid during the full year.
Note 9. Common Stock/Capital
The Company has authorized 100,000,000,000 shares of common stock with a par value of $0.001 per share. The Company has authorized 10,000,000,000 shares of its preferred stock with a par value of $0.001 per share. Shares of preferred stock have not been issued.
Prior to the IPO, the Company had issued 43,982,137.46 shares in the private placement of the Company’s common shares (the “Private Offering”). Each investor had entered into a separate subscription agreement relating to the Company’s common stock (the “Subscription Agreements”). Each investor had made a capital commitment to purchase shares of the Company’s common stock pursuant to the Subscription Agreements. Investors were required to make capital contributions to purchase shares of the Company’s common stock each time the Company delivered a drawdown notice, which were delivered at least 10 business days prior to the required funding date in an aggregate amount not to exceed their respective capital commitments. The number of shares to be issued to a stockholder was determined by dividing the total dollar amount of the contribution by a stockholder by the net asset value per share of the common stock as of the last day of the Company’s fiscal quarter or such other date and price per share as determined by the Board in accordance with the requirements of the 1940 Act. As of December 31, 2018, aggregate commitments relating to the Private Offering
105
were $1.3 billion. All outstanding commitments related to these Subscription Agreements were cancelled due to the completion of the IPO on November 15, 2018. As of September 30, 2024 and December 31, 2023, the Advisors contributed in aggregate $8.9 million and $8.9 million to the Company and received 488,212.35 and 488,212.35 shares of the Company, respectively. At September 30, 2024 and December 31, 2023, the Advisor owned 0.02% and 0.70%, respectively, of the outstanding common stock of the Company.
On November 19, 2018, the Company closed its IPO issuing 7,500,000 shares of common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018. The offering generated proceeds, before expenses, of $147.3 million. All outstanding commitments were cancelled due to the completion of the initial public offering.
There have been no shares issued or proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements, issuance of common stock, or shares issued pursuant to the dividend reinvestment plan during the three months ended September 30, 2024 and 2023. There have been no shares issued or proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements, issuance of common stock, or shares issued pursuant to the dividend reinvestment plan during the nine months ended September 30, 2024 and 2023.
On May 7, 2019, the Board authorized the Company to repurchase up to $50 million of its outstanding common stock in accordance with safe harbor rules under the Exchange Act. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As of September 30, 2024, there have been no repurchases of common stock.
Note 10. Commitments and Contingencies
Commitments
The Company’s investment portfolio may contain debt investments that are in the form of lines of credit and unfunded delayed draw commitments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements.
As of September 30, 2024, the Company had $432.2 million of unfunded commitments under loan and financing agreements as follows:
Portfolio Company & Investment
Expiration Date(1)
Unfunded Commitments(2)
A&R Logistics, Inc. - Revolver
1,458
Advanced Aircrew - Revolver
650
AEG Vision - Delayed Draw
4,881
17,813
Allbridge - Delayed Draw
2,841
Allbridge - Revolver
Allworth Financial Group, L.P. - Revolver
Apollo Intelligence - Delayed Draw
9,611
Apollo Intelligence - Revolver
2,931
Applitools - Revolver
3,430
Appriss Holdings, Inc. - Revolver
715
Arctic Glacier U.S.A., Inc. - Revolver
1,941
ASP-r-pac Acquisition Co LLC - Revolver
1,462
ATS - Revolver
2,010
Avalon Acquiror, Inc. - Revolver
2,521
Awayday - Delayed Draw
7,914
Awayday - Revolver
3,518
AXH Air Coolers - Delayed Draw
AXH Air Coolers - Revolver
Beacon Specialized Living - Delayed Draw
12,836
Beacon Specialized Living - Revolver
1,282
Beneficium - Delayed Draw
9,658
BTX Precision - Delayed Draw
8,424
5,616
BTX Precision - Revolver
4,211
Caribou Bidco Limited - Delayed Draw
CB Nike IntermediateCo Ltd - Revolver
Chase Industries, Inc. - Revolver
Choreo - Delayed Draw
City BBQ - Delayed Draw
13,267
City BBQ - Revolver
Concert Golf Partners Holdco LLC - Revolver
2,492
Congress Wealth - Delayed Draw
1,334
10,751
Congress Wealth - Revolver
1,102
Cube - Delayed Draw
Cube - First Lien Senior Secured Loan
Darcy Partners - Revolver
297
Datix Bidco Limited - Delayed Draw
Datix Bidco Limited - Revolver
2,283
Discovery Senior Living - Revolver
2,360
DTIQ - Delayed Draw
5,375
DTIQ - Revolver
4,032
Duraco - Revolver
1,394
Efficient Collaborative Retail Marketing Company, LLC - Revolver
EHE Health - Revolver
Electronic Merchant Systems - Revolver
Element Buyer, Inc. - Revolver
4,250
E-Tech Group - Revolver
1,168
Forward Slope - Revolver
8,884
Galeria - Delayed Draw
4/8/2029
11,806
Gills Point S - Delayed Draw
6,580
Gills Point S - Revolver
GSP Holdings, LLC - Revolver
227
Gulf Winds International - Revolver
2,911
HealthDrive - Delayed Draw
HealthDrive - Revolver
2,754
Hellers - Delayed Draw
525
ImageTrend - Revolver
3,000
Intoxalock - Revolver
JHCC Holdings, LLC - Revolver
Kellstrom Commercial Aerospace, Inc. - Revolver
4,265
LogRhythm - Revolver
835
Mach Acquisition R/C - Revolver
2,511
Margaux Acquisition Inc. - Revolver
Margaux UK Finance Limited - Revolver
McLarens Acquisition Inc. - Delayed Draw
6,451
Morrow Sodali - Revolver
MRHT - Revolver
16,102
Nafinco - Delayed Draw
2,394
Nafinco - Revolver
897
NearMap - Revolver
4,652
New Look Vision Group - Revolver
1,591
OGH Bidco Limited - Delayed Draw
5,281
Parcel2Go - Delayed Draw
PCF - Delayed Draw
Pharmacy Partners - Revolver
5,491
Pyramid Global Hospitality - Revolver
3,482
Reconomy - Delayed Draw
9,381
Revalize, Inc. - Revolver
603
RoadOne - Revolver
4,119
108
RoC Skincare - Revolver
1,871
Saturn Purchaser Corp. - Revolver
4,883
SensorTower - Revolver
1,057
Service Master - Revolver
10,126
Simplicity - Delayed Draw
1,783
Simplicity - Revolver
1,454
Smartronix - Revolver
6,321
Solaray, LLC - Revolver
2,115
Spotless Brands - Delayed Draw
16,499
Spring Finco BV - Delayed Draw
4,142
Superna Inc. - Delayed Draw
2,631
Superna Inc. - Revolver
SureWerx - Delayed Draw
2,013
SureWerx - Revolver
486
Taoglas - Delayed Draw
3,636
Taoglas - Revolver
TES Global - Delayed Draw
Titan Cloud Software, Inc - Revolver
4,857
TLC Purchaser, Inc. - Revolver
2,666
V Global Holdings LLC - Revolver
2,295
Vessco Water - Delayed Draw
2,847
Vessco Water - Revolver
1,112
Walker Edison - Delayed Draw
WCI Gigawatt Purchaser - Revolver
3,754
Wealth Enhancement Group (WEG) - Delayed Draw
8,427
Wealth Enhancement Group (WEG) - Revolver
736
Webcentral - Delayed Draw
3,441
Whitcraft-Paradigm - Delayed Draw
4,640
Whitcraft-Paradigm - Revolver
WSP - Revolver
248
WU Holdco, Inc. - Revolver
4,025
432,206
As of December 31, 2023, the Company had $266.1 million of unfunded commitments under loan and financing agreements as follows:
Expiration Date (1)
Unfunded Commitments (2)
9 Story Media Group Inc. - Revolver
Abracon Group Holding, LLC. - Delayed Draw
2,221
2,643
753
1,925
3,253
3,361
4,404
1,720
Concert Golf Partners Holdco LLC - Delayed Draw
CPS Group Holdings, Inc. - Revolver
4,341
349
Direct Travel, Inc. - Delayed Draw
975
2,267
4,146
518
Grammer Purchaser, Inc. - Revolver
5,292
1,297
6,284
4,000
3,087
110
4,261
2,872
635
Meriplex Communications, Ltd. - Delayed Draw
Meriplex Communications, Ltd. - Revolver
1,595
MRHT - Delayed Draw
5,595
MZR Buyer, LLC - Revolver
2,257
1,859
5,017
Omni Intermediate - Revolver
160
7,118
Refine Intermediate, Inc. - Revolver
1,005
RoadOne - Delayed Draw
1,707
RoC Opco LLC - Revolver
10,241
7,991
1,406
4,285
Sunmed Group Holdings, LLC - Revolver
550
TEI Holdings Inc. - Revolver
4,528
5,714
6,398
5,712
Ventiv Holdco, Inc. - Revolver
3,218
1,901
2,048
449
YLG Holdings, Inc. - Revolver
8,545
266,115
Contingencies
In the normal course of business, the Company may enter into certain contracts that provide a variety of indemnities. The Company’s maximum exposure under these indemnities is unknown as it would involve future claims that may be made against the Company. Currently, the Company is not aware of any such claims and no such claims are expected to occur. As such, the Company does not consider it necessary to record a liability in this regard.
Note 11. Financial Highlights
The following is a schedule of financial highlights for the nine months ended September 30, 2024 and 2023:
Per share data:
Net asset value at beginning of period
17.29
Net investment income (1)
Net realized gain (loss) (1)(7)
0.02
(1.07
Net change in unrealized appreciation (1)(2)(8)
(0.08
0.85
Net increase in net assets resulting from operations (1)(9)(10)
Shareholder distributions from income (3)
(1.35
(1.18
Net asset value at end of period
Shares outstanding at end of period
Per share market value at end of period
16.60
15.31
Total return based on market value (12)
19.60
40.24
Total return based on net asset value (4)
8.79
8.46
Ratios:
Ratio of net investment income to average net assets (5)(11)(13)
12.64
13.34
Ratio of total expenses to average net assets (5)(11)(13)
13.04
13.23
Supplemental data:
Ratio of interest and debt financing expenses to average net assets (5)(13)
6.30
Ratio of expenses (without incentive fees) to average net assets (5)(11)(13)
10.92
Ratio of incentive fees and management fees, net of contractual and voluntary waivers, to average net assets (5)(11)(13)
5.22
4.86
Average principal debt outstanding
1,268,012
1,466,088
Portfolio turnover (6)
43.51
25.69
Note 12. Subsequent Events
The Company’s management has evaluated the events and transactions that have occurred through November 5, 2024, the issuance date of the consolidated financial statements, and noted no items requiring disclosure in this Form 10-Q or adjustment of the consolidated financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. The discussion and analysis contained in this section refers to our financial condition, results of operations and cash flows. The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. Please see “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with this discussion and analysis. Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Forward-Looking Statements” appearing elsewhere in this report.
Overview
Bain Capital Specialty Finance, Inc. (the “Company”, “we”, “our” and “us”) is an externally managed specialty finance company focused on lending to middle market companies. We have elected to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “1940 Act”). We are managed by the Advisor, a subsidiary of Bain Capital Credit, LP (“Bain Capital Credit”). Our Advisor is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Our Advisor also provides the administrative services necessary for us to operate (in such capacity, our “Administrator”). Since we commenced operations on October 13, 2016 through September 30, 2024, we have invested approximately $8,132.9 million in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. We seek to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last-out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds.
On November 19, 2018, we closed our initial public offering (the “IPO”) issuing 7,500,000 shares of our common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018.
Our primary focus is capitalizing on opportunities within our Senior Direct Lending strategy, which seeks to provide risk-adjusted returns and current income to our stockholders by investing primarily in middle-market companies with between $10.0 million and $150.0 million in annual earnings before interest, taxes, depreciation and amortization (“EBITDA”). However, we may, from time to time, invest in larger or smaller companies. We generally seek to retain effective voting control in respect of the loans or particular classes of securities in which we invest through maintaining affirmative voting positions or negotiating consent rights that allow us to retain a blocking position. We focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. We may also invest in mezzanine debt and other junior securities, including common and preferred equity, on an opportunistic basis, and in secondary purchases of assets or portfolios but such investments are not the principal focus of our investment strategy. In addition, we may invest, from time to time, in distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities.
We generate revenues primarily through receipt of interest income from the investments we hold. In addition, we generate income from various loan origination and other fees, dividends on direct equity investments and capital gains on the sales of investments. The companies in which we invest use our capital for a variety of reasons, including to support organic growth, to fund changes of control, to fund acquisitions, to make capital investments and for refinancing and recapitalizations.
Our level of investment activity may vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the level of investment and capital expenditures of such companies, the general economic environment, the amount of capital we have available to us and the competitive environment for the type of investments we make.
As a BDC, we may not acquire any assets other than “qualifying assets” specified in the 1940 Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Pursuant to rules adopted by the SEC, “eligible portfolio companies” include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.
As a BDC, we may also invest up to 30% of our portfolio opportunistically in “non-qualifying” portfolio investments, such as investments in non-U.S. companies.
Revenues
We primarily generate revenue in the form of interest income on debt investments and distributions on equity investments and, to a lesser extent, capital gains, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments or payment-in-kind (“PIK”) interest. The principal amount of the debt investments and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts into or against income over the life of the loan. We record contractual prepayment premiums on loans and debt securities as interest income.
Our debt investment portfolio consists of primarily floating rate loans. As of September 30, 2024 and December 31, 2023, 90.8% and 93.8%, respectively, of our debt investments, based on fair value, bore interest at floating rates, which may be subject to interest rate floors. Variable-rate investments subject to a floor generally reset periodically to the applicable floor, only if the floor exceeds the index. Trends in base interest rates, such as SOFR, may affect our net investment income over the long term. In addition, our results may vary from period to period depending on the interest rates of new investments made during the period compared to investments that were sold or repaid during the period; these results reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macroeconomic trends.
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.
Our primary operating expenses include the payment of fees to our Advisor under the Amended Advisory Agreement, our allocable portion of overhead expenses under the administration agreement (the “Administration Agreement”) and other operating costs, including those described below. The Base Management Fee and Incentive Fee compensate our Advisor for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other out-of-pocket costs and expenses of our operations and transactions, including:
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To the extent that expenses to be borne by us are paid by the Administrator, we will generally reimburse the Administrator for such expenses. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to the Administrator. We will also reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain rent and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment and fees paid to third-party providers for goods or services. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to our business and affairs, and will be subject to oversight by our Board. We incurred expenses related to the Administrator of $0.7 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. We incurred expenses related to the Administrator of $1.8 million and $0.8 million for the nine months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. We incurred expenses related to the sub-administrator of $0.1 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. We incurred expenses related to the sub-administrator of $0.4 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Administrator will not be reimbursed to the extent that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of the foregoing expenses are ultimately borne by our stockholders.
Leverage
We may borrow money from time to time. However, our ability to incur indebtedness (including by issuing preferred stock), is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150%. In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook. As of September 30, 2024, the Company’s asset coverage was 187.8%.
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Investment Decision Process
The Advisor’s investment process can be broken into five processes: (1) Sourcing and Idea Generation, (2) Investment Diligence & Recommendation, (3) Credit Committee Approval, (4) Portfolio Construction and (5) Portfolio & Risk Management.
Sourcing and Idea Generation
The investment decision-making process begins with sourcing ideas. Bain Capital Credit’s Private Credit Group interacts with a broad and deep set of global sourcing contacts, enabling the group to generate a large set of middle-market investment opportunities. Further enhancing the sourcing capability of the core Private Credit Group are Bain Capital Credit’s industry groups, Trading Desk, and the Bain Capital Special Situations team. The team has extensive contacts with private equity firms. Relationships with banks, a variety of advisors and intermediaries and a handful of unique independent sponsors compose the remainder of the relationships. Through these sourcing efforts the Private Credit Group has built a sustainable deal funnel, which has generated hundreds of opportunities to review annually.
Investment Diligence & Recommendation
Our Advisor utilizes Bain Capital Credit’s bottom-up approach to investing, and it starts with the due diligence. The Private Credit Group works with the close support of Bain Capital Credit’s industry groups on performing due diligence. This process typically begins with a detailed review of the offering memorandum as well as Bain Capital Credit’s own independent diligence efforts, including in-house materials and expertise, third-party independent research and interviews, and hands-on field checks where appropriate. For deals that progress beyond an initial stage, the team will schedule one or more meetings with company management, facilities visits and also meetings with the sponsor in order to ask more detailed questions and to better understand the sponsor’s view of the business and plans for it going forward. The team’s diligence work is summarized in investment memorandums and accompanying credit packs. Work product also includes full models and covenant analysis. The approval process itself is iterative, involving multiple levels of discussion and approval.
Credit Committee Approval
Given Bain Capital Credit’s broad and diverse range of investment strategies, we tailor our investment decision-making process by strategy to provide a robust and comprehensive discussion of both individual investments and the applicable portfolio(s) under consideration. We believe that this flexible approach provides a rigorous investment decision-making process that allows us to be nimble across a variety of market environments while still maintaining high credit underwriting standards.
Our investments require approval from at least the Private Credit Investment Committee, which includes three Partners in the Private Credit Group as standing members: Michael Ewald, Mike Boyle, and Carolyn Hastings. Ad hoc members may also be included in the Private Credit Investment Committee for certain types of investments.
Portfolio Construction
Portfolio construction is largely the responsibility of the portfolio managers. The portfolio managers will construct the portfolio using a set of approved investments. While the decision to buy generally requires approval from at least the Private Credit Investment Committee, the decision to sell securities is at the sole discretion of the portfolio managers. For middle-market holdings, the path to exit an investment is discussed at credit committee meetings, including restructurings, acquisitions and sale to strategic buyers. Since most middle-market investments are illiquid, exits are driven primarily by a sale of the portfolio company or a refinancing of the portfolio company’s debt.
Portfolio & Risk Management
Our Advisor utilizes Bain Capital Credit’s Private Credit Group for the daily monitoring of its respective credits after an investment has been made. Our Advisor believes that the ongoing monitoring of financial performance and market developments of portfolio investments is critical to successful investment management. Accordingly, our Advisor is actively involved in an on-going portfolio review process and attends board meetings. To the extent a portfolio investment is not meeting our Advisor’s expectations, our Advisor takes corrective action when it deems appropriate, which may include raising interest rates, gaining a more influential role on its board, taking warrants and, where appropriate, restructuring the balance sheet to take control of the company. Our Advisor will utilize the Bain Capital Credit Risk and Oversight Committee. The Risk and Oversight Committee is responsible for monitoring and reviewing risk management, including portfolio risk, counterparty risk and firm-wide risk issues. In addition to the methods noted above, there are a number of proprietary methods and tools used through all levels of Bain Capital Credit to manage portfolio risk.
Portfolio and Investment Activity
During the three months ended September 30, 2024, we invested $413.1 million, including PIK, in 83 portfolio companies, and had $248.0 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $165.1 million for the period. Of the $413.1 million invested during the three months ended September 30, 2024, $86.2 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
During the three months ended September 30, 2023, we invested $114.2 million, including PIK, in 59 portfolio companies, and had $102.8 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $11.4 million for the period. Of the $114.2 million invested during the three months ended September 30, 2023, $47.2 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
During the nine months ended September 30, 2024, we invested $1,122.9 million, including PIK, in 134 portfolio companies, and had $1,017.6 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $105.2 million for the period. Of the $1,122.9 million invested during the nine months ended September 30, 2024, $186.9 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
During the nine months ended September 30, 2023, we invested $630.8 million, including PIK, in 91 portfolio companies, and had $616.2 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $14.6 million for the period. Of the $630.8 million invested during the nine months ended September 30, 2023, $160.1 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
The following table shows the composition of the investment portfolio and associated yield data as of September 30, 2024 (dollars in thousands):
Weighted Average
Yield (1)
at
Percentage of
Amortized
Total Portfolio
11.9
14.3
13.8
N/A
Subordinated Note in Investment Vehicles (2)
Preferred Equity Interest in Investment Vehicles (2)
Equity Interests in Investment Vehicles (2)
18.6
22.5
The following table shows the composition of the investment portfolio and associated yield data as of December 31, 2023 (dollars in thousands):
12.2
12.4
14.6
14.9
13.6
17.2
18.3
14.2
Subordinated Notes in Investment Vehicles (2)
Preferred Equity Interests in Investment Vehicles (2)
27.2
27.4
13.1
The following table presents certain selected information regarding our investment portfolio as of September 30, 2024:
Number of portfolio companies
Percentage of debt bearing a floating rate (1)
90.8
Percentage of debt bearing a fixed rate (1)
The following table presents certain selected information regarding our investment portfolio as of December 31, 2023:
137
93.8
6.2
The following table shows the amortized cost and fair value of our performing and non-accrual investments as of September 30, 2024 (dollars in thousands):
Percentage atAmortized Cost
Percentage atFair Value
Performing
2,367,959
98.1
2,380,572
98.9
Non-accrual
45,054
27,378
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The following table shows the amortized cost and fair value of our performing and non-accrual investments as of December 31, 2023 (dollars in thousands):
Percentage at
2,258,601
2,271,055
98.8
43,233
27,288
Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection. As of September 30, 2024, there were nine loans from five issuers placed on non-accrual in the Company’s portfolio. As of December 31, 2023, there were five loans from three issuers placed on non-accrual in the Company’s portfolio.
The following table shows the amortized cost and fair value of the investment portfolio, cash and cash equivalents and foreign cash as of September 30, 2024 (dollars in thousands):
AmortizedCost
Percentageof Total
FairValue
62.3
61.8
8.8
8.9
4,657
2,472,298
2,467,703
The following table shows the amortized cost and fair value of the investment portfolio, cash and cash equivalents and foreign cash as of December 31, 2023 (dollars in thousands):
61.9
60.9
8.6
12.7
6,865
2,414,778
2,410,827
Our Advisor monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action for each company. The Advisor has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:
Our Advisor rates the investments in our portfolio at least quarterly and it is possible that the rating of a portfolio investment may be reduced or increased over time. For investments rated 3 or 4, our Advisor enhances its level of scrutiny over the monitoring of such portfolio company. Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments.
The following table shows the composition of our portfolio on the 1 to 4 rating scale as of September 30, 2024 (dollars in thousands):
Investment Performance Rating
Number ofCompanies (1)
2,298,486
95.5
91.8
61,532
45,440
The following table shows the composition of our portfolio on the 1 to 4 rating scale as of December 31, 2023 (dollars in thousands):
Number of
Companies(1)
2,465
2,186,211
95.1
91.2
80,530
29,137
Results of Operations
Our operating results for the three months ended September 30, 2024 and 2023 were as follows (dollars in thousands):
September 30,
Less: Income taxes, including excise tax
Net realized (gain) loss
Our operating results for the nine months ended September 30, 2024 and 2023 were as follows (dollars in thousands):
Net increase in net assets resulting from operations can vary from period to period as a result of various factors, including additional financing, new investment commitments, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. Due to these factors, comparisons may not be meaningful.
Investment Income
The composition of our investment income for the three months ended September 30, 2024 and 2023 was as follows (dollars in thousands):
55,420
57,233
6,185
8,568
5,581
Interest income from investments, which includes interest and accretion of discounts and fees, decreased to $55.4 million for the three months ended September 30, 2024 from $57.2 million for the three months ended September 30, 2023, primarily due to a decrease in the investment portfolio. Dividend income decreased to $6.2 million for the three months ended September 30, 2024 from $8.6 million for the three months ended September 30, 2023, primarily due to no dividend income from the 2018-1 Issuer interests, which were sold to SLP in the first quarter, and a decrease in dividend income on Gale Aviation in the third quarter. Other income increased to approximately $5.7 million for the three months ended September 30, 2024 from $1.0 million for the three months ended September 30, 2023, primarily due to an increase in commitment, closing and consent fees earned on certain investments.
The composition of our investment income for the nine months ended September 30, 2024 and 2023 was as follows (dollars in thousands):
166,121
172,283
22,690
25,689
16,399
16,692
Interest income from investments, which includes interest and accretion of discounts and fees, decreased to $166.1 million for the nine months ended September 30, 2024 from $172.3 million for the nine months ended September 30, 2023, primarily due to a decrease in the investment portfolio. Dividend income decreased to $22.7 million for the nine months ended September 30, 2024 from $25.7 million for the nine months ended September 30, 2023, primarily due to a decrease in dividend income from the 2018-1 Issuer interests which were sold to SLP during the first quarter of 2024, and a decrease in dividend income on Gale Aviation in the third quarter. Other income increased to approximately $14.1 million for the nine months ended September 30, 2024 from $8.2 million for the nine months ended September 30, 2023, primarily due to an increase in amendment, closing and consent fees earned on certain
investments. As of September 30, 2024, the weighted average yield of our investment portfolio decreased to 12.1% from 12.9% as of September 30, 2023, at amortized cost.
Operating Expenses
The composition of our operating expenses for the three months ended September 30, 2024 and 2023 were as follows (dollars in thousands):
The composition of our operating expenses for the nine months ended September 30, 2024 and 2023 were as follows (dollars in thousands):
Interest and Debt Financing Expenses
Interest and debt financing expenses on our borrowings totaled approximately $18.1 million and $20.8 million for the three months ended September 30, 2024 and 2023, respectively. Interest and debt financing expense for the three months ended September 30, 2024 as compared to September 30, 2023 decreased primarily due to decreased usage of our Sumitomo Credit Facility. Interest and debt financing expenses on our borrowings totaled approximately $53.8 million and $60.8 million for the nine months ended September 30, 2024 and 2023, respectively. Interest and debt financing expense for the nine months ended September 30, 2024 as compared to September 30, 2023 decreased primarily due to decreased usage of our Sumitomo Credit Facility. The weighted average principal debt balance outstanding for the three months ended September 30, 2024 was $1.3 billion compared to $1.4 billion for the three months ended September 30, 2023. The weighted average principal debt balance outstanding for the nine months ended September 30, 2024 was $1.3 billion compared to $1.5 billion for the nine months ended September 30, 2023.
Management Fee
Management fee (net of waivers) decreased to $8.9 million for the three months ended September 30, 2024 from $9.1 million for the three months ended September 30, 2023. Management fee (gross of waivers) decreased to $8.9 million for the three months ended September 30, 2024 from $9.1 million for the three months ended September 30, 2023, primarily due to a decrease in total assets throughout the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Management fee waived for the three months ended September 30, 2024 and 2023 were $0.0 million and $0.0 million, respectively.
Management fee (net of waivers) decreased to $26.5 million for the nine months ended September 30, 2024 from $27.2 million for the nine months ended September 30, 2023. Management fee (gross of waivers) decreased to $26.5 million for the nine months
ended September 30, 2024 from $27.2 million for the nine months ended September 30, 2023, primarily due to a decrease in total assets throughout the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Management fee waived for the nine months ended September 30, 2024 and 2023 were $0.0 million and $0.0 million, respectively.
Incentive fee (net of waivers) increased to $7.0 million for the three months ended September 30, 2024 from $3.0 million for the three months ended September 30, 2023 primarily due to the mechanics of the Trailing Twelve Quarters aspect of the incentive fee calculation. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the three months ended September 30, 2024 and $0.0 million for the three months ended September 30, 2023. For the three months ended September 30, 2024, there were no incentive fees related to the GAAP Incentive Fee. Incentive fee (net of waivers) increased to $24.2 million for the nine months ended September 30, 2024 from $18.1 million for the nine months ended September 30, 2023 primarily due to the mechanics of the Trailing Twelve Quarters aspect of the incentive fee calculation. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the nine months ended September 30, 2024 and $0.0 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, there were no incentive fees related to the GAAP Incentive Fee.
Professional Fees and Other General and Administrative Expenses
Professional fees and other general and administrative expenses increased to $3.3 million for the three months ended September 30, 2024 from $3.0 million for the three months ended September 30, 2023, primarily due to an increase in costs associated with servicing our investment portfolio.
Professional fees and other general and administrative expenses increased to $10.1 million for the nine months ended September 30, 2024 from $7.2 million for the nine months ended September 30, 2023, primarily due to an increase in costs associated with servicing our investment portfolio.
Net Realized and Unrealized Gains and Losses
The following table summarizes our net realized and unrealized gains (losses) for the three months ended September 30, 2024 and 2023 (dollars in thousands):
Net realized gain on investments
4,637
729
Net realized loss on investments
(1,384
(51,602
Net realized gain on foreign currency transactions
(474
Net realized gain on forward currency exchange contracts
Net realized loss on forward currency exchange contracts
(512
Net realized gains (losses)
Change in unrealized appreciation on investments
30,838
68,734
Change in unrealized depreciation on investments
(29,839
(25,587
999
43,147
Unrealized appreciation on foreign currency translation
Unrealized appreciation on forward currency exchange contracts
Net change in unrealized appreciation on foreign currency and forward currency exchange contracts
(4,695
6,828
For the three months ended September 30, 2024 and 2023, we had net realized gains (losses) on investments of $3.3 million and ($50.9) million, respectively, which was primarily driven by full or partial sales or paydowns of our investments. For the three months ended September 30, 2024 and 2023, we had net realized (losses) on foreign currency transactions of ($0.5) million and ($0.7) million, respectively. For the three months ended September 30, 2024 and 2023, we had realized gains (losses) on forward currency contracts of $0.0 million and ($0.2) million, respectively, primarily as a result of settling GBP forward contracts.
For the three months ended September 30, 2024, we had $30.8 million in unrealized appreciation on 83 portfolio company investments, which was offset by $29.8 million in unrealized depreciation on 78 portfolio company investments. Unrealized appreciation for the three months ended September 30, 2024 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the three months ended September 30, 2024 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments.
For the three months ended September 30, 2023, we had $68.7 million in unrealized appreciation on 62 portfolio company investments, which was offset by $25.6 million in unrealized depreciation on 81 portfolio company investments. Unrealized depreciation for the three months ended September 30, 2023 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments. Unrealized appreciation for the three months ended September 30, 2023 resulted from an increase in fair value, primarily due to positive valuation adjustments.
For the three months ended September 30, 2024 and 2023, we had unrealized appreciation on forward currency exchange contracts of ($5.7) million and $7.1 million, respectively. For the three months ended September 30, 2024, unrealized depreciation on forward currency exchange contracts was primarily due to GBP, EUR and AUD forward contracts.
The following table summarizes our net realized and unrealized gains (losses) for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
13,868
(13,772
(64,332
1,949
410
(33
(3,016
63,458
77,649
(65,030
(31,896
(1,572
45,753
(3,322
9,407
For the nine months ended September 30, 2024 and 2023, we had net realized gains (losses) on investments of $0.1 million and ($61.8) million, respectively, which was primarily driven by full or partial sales or paydowns of our investments. For the nine months ended September 30, 2024 and 2023, we had net realized losses on foreign currency transactions of ($0.9) million and ($5.2) million, respectively. For the nine months ended September 30, 2024 and 2023, we had net realized gains (losses) on forward currency contracts of $1.9 million and ($2.6) million, respectively, primarily as a result of settling AUD, CAD, EUR, GBP and NOK forward contracts.
For the nine months ended September 30, 2024, we had $63.5 million in unrealized appreciation on 92 portfolio company investments, which was offset by $65.0 million in unrealized depreciation on 76 portfolio company investments. Unrealized appreciation for the nine months ended September 30, 2024 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the nine months ended September 30, 2024 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments.
For the nine months ended September 30, 2023, we had $77.6 million in unrealized appreciation on 80 portfolio company investments, which was offset by ($31.9) million in unrealized depreciation on 68 portfolio company investments. Unrealized depreciation for the nine months ended September 30, 2023 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments. Unrealized appreciation for the nine months ended September 30, 2023 resulted from an increase in fair value, primarily due to positive valuation adjustments.
For the nine months ended September 30, 2024 and 2023, we had unrealized appreciation on forward currency exchange contracts of ($4.3) million and $5.8 million, respectively. For the nine months ended September 30, 2024, unrealized depreciation on forward currency exchange contracts was primarily due to AUD, GBP, and NOK forward contracts.
The following table summarizes the impact of foreign currency for the three months ended September 30, 2024 and 2023 (dollars in thousands):
Net change in unrealized appreciation on investments due to foreign currency
4,034
(5,512
Net realized gain on investments due to foreign currency
1,014
Foreign currency impact to net increase (decrease) in net assets resulting from operations
543
Included in total net losses on the consolidated statements of operations were gains (losses) of $5.6 million and ($6.3) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the three months ended September 30, 2024 and 2023, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($5.7) million and $6.9 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is ($0.1) million and $0.5 million for the three months ended September 30, 2024 and 2023, respectively.
The following table summarizes the impact of foreign currency for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
2,351
(1,096
832
1,016
Foreign currency impact to net increase in net assets resulting from operations
1,514
Included in total net losses on the consolidated statements of operations were gains (losses) of $3.3 million and ($1.7) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the nine months ended September 30, 2024 and 2023, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($2.4) million and $3.2 million, respectively, included in the above table, the net impact of foreign currency on total net gains on the consolidated statements of operations is $0.9 million and $1.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Net Increase (Decrease) in Net Assets Resulting from Operations
For the three months ended September 30, 2024 and 2023, the net increase in net assets resulting from operations was $33.1 million and $33.9 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended September 30, 2024 and 2023, our per share net increase in net assets resulting from operations was $0.51 and $0.52, respectively.
For the nine months ended September 30, 2024 and 2023, the increase in net assets resulting from operations was $97.3 million and $92.3 million, respectively. Based on the weighted average shares of common stock outstanding for the nine months ended September 30, 2024 and 2023, our per share net increase in net assets resulting from operations was $1.51 and $1.43, respectively.
Financial Condition, Liquidity and Capital Resources
Our liquidity and capital resources are derived primarily from proceeds from equity issuances, advances from our credit facilities, 2019‑1 Debt, March 2026 Notes, October 2026 Notes, the Sumitomo Credit Facility and cash flows from operations. The primary uses of our cash are for (1) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements; (2) the cost of operations (including payments to the Advisor under the Investment Advisory and Administration Agreements); (3) debt service, repayment, and other financing costs; and (4) cash distributions to the holders of our common shares.
We intend to continue to generate cash primarily from cash flows from operations, future borrowings and future offerings of securities. We may from time to time raise additional equity or debt capital through registered offerings, enter into additional debt facilities, or increase the size of existing facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. We are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities. As of September 30, 2024 and December 31, 2023, our asset coverage ratio was 187.8% and 189.9%, respectively.
At September 30, 2024 and December 31, 2023, we had $59.8 million and $112.5 million in cash, foreign cash, restricted cash and cash equivalents, respectively.
At September 30, 2024, we had approximately $501.3 million of availability on our Sumitomo Credit Facility, subject to existing terms and regulatory requirements. At December 31, 2023 we had approximately $343.3 million of availability on our Sumitomo Credit Facility subject to existing terms and regulatory requirements.
For the nine months ended September 30, 2024, cash, foreign cash, restricted cash, and cash equivalents decreased by $52.7 million. During the nine months ended September 30, 2024, we used ($7.1) million in cash for operating activities. The increase in cash used in operating activities was primarily related to purchases of investments of $1,097.8 million, which was offset by proceeds from principal payments and sales of investments of $1,001.5 million and a net increase in assets resulting from operations of $97.3 million.
During the nine months ended September 30, 2024, we used $45.7 million for financing activities, primarily on repayments of our Sumitomo Credit Facility of $522.3 million and distributions paid during the period of $85.2 million, partially offset by borrowings of $565.0 million.
For the nine months ended September 30, 2023, cash, foreign cash, restricted cash, and cash equivalents decreased by $20.3 million. During the nine months ended September 30, 2023, we provided $70.6 million in cash for operating activities. The increase in cash provided by operating activities was primarily related to cash generated from earnings of $92.3 million outpacing net increase in investments of $14.6 million.
During the nine months ended September 30, 2023, we used $89.3 million for financing activities, primarily due to borrowings and repayments on our Sumitomo Credit Facility and paying our quarterly dividend to shareholders.
On November 19, 2018, we closed our IPO issuing 7,500,000 shares of common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018. The offering generated net proceeds, after expenses, of $145.4 million. All outstanding capital commitments from the Company’s Private Offering were cancelled as of the completion of the IPO.
During the nine months ended September 30, 2024, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan. During the nine months ended September 30, 2023, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan.
On May 7, 2019, the Company’s Board authorized the Company to repurchase up to $50 million of its outstanding common stock in accordance with safe harbor rules under the Exchange Act. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As of September 30, 2024, there have been no repurchases of common stock.
Distribution Policy
The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the nine months ended September 30, 2024 (dollars in thousands, except per share):
The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the nine months ended September 30, 2023 (dollars in thousands, except per share):
Distributions to common stockholders are recorded on the record date. To the extent that we have income available, we intend to distribute quarterly distributions to our stockholders. Our quarterly distributions, if any, will be determined by the Board. Any distributions to our stockholders will be declared out of assets legally available for distribution.
We have elected to be treated, and intend to operate in a manner so as to continuously qualify, as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our taxable year ended December 31, 2016. To qualify for and maintain RIC tax treatment, among other things, we must distribute dividends to our stockholders in respect of each taxable year of an amount generally at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses. In order to avoid the imposition of certain excise taxes imposed on RICs, we must distribute dividends to our stockholders in respect of each calendar year of an amount at least equal to the sum of: (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for such calendar year; (2) 98.2% of our capital gains in excess of capital losses, adjusted for certain ordinary losses, generally for the one-year period ending on October 31 of such calendar year; and (3) the sum of any net ordinary income plus capital gains net income for preceding years that were not distributed during such years and on which we paid no federal income tax.
We intend to distribute net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain all or a portion of our net capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to our stockholders.
We have adopted a dividend reinvestment plan that provides for the reinvestment of cash dividends and distributions. Prior to the IPO, stockholders who “opted in” to our dividend reinvestment plan had their cash dividends and distributions automatically reinvested in additional shares of our common stock, rather than receiving cash dividends and distributions. Subsequent to the IPO, stockholders who do not “opt out” of our dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of our common stock, rather than receiving cash dividends and distributions. Stockholders could elect to “opt in” or “opt out” of our dividend reinvestment plan in their subscription agreements, through the private offering. The elections of stockholders prior to the IPO shall remain effective after the IPO.
The U.S. federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscal year-end based upon our investment company taxable income for the full fiscal year and distributions paid during the full year.
Commitments and Off-Balance Sheet Arrangements
We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to fund investments and to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized on the statements of assets and liabilities.
Related Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the Amended Advisory Agreement and the Administration Agreement.
In addition to the aforementioned agreements, we, our Advisor and Bain Capital Credit have been granted exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments if the Board determines that it would be advantageous for us to co-invest with other Bain Capital Credit Clients in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent Bain Capital Credit Clients funds, accounts and investment vehicles managed by Bain Capital Credit may afford us additional investment opportunities and an ability to achieve greater diversification. Accordingly, our exemptive order permits us to invest with Bain Capital Credit Clients in the same portfolio companies under circumstances in which such investments would otherwise not be permitted by the 1940 Act. Our exemptive relief permitting co-investment transactions generally applies only if our Independent Directors and Directors who have no financial interest in such transaction review and approve in advance each co-investment transaction. The exemptive relief imposes other conditions with which we must comply to engage in co-investment transactions.
Recent Developments
See “Item 1. Financial Statements - Notes to Consolidated Financial Statements - Note 12. Subsequent Events” for a summary of recent developments.
Significant Accounting Estimates and Critical Accounting Policies
The Company’s unaudited consolidated financial statements have been prepared in accordance with US GAAP. The Company’s unaudited consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10‑Q and Articles 1, 6, 10 and 12 of Regulation S-X. These consolidated financial statements reflect adjustments that in the opinion of the Company are necessary for the fair statement of the financial position and results of operations for the periods presented herein and are not necessarily indicative of the full fiscal year. We have determined we meet the definition of an investment company and follow the accounting and reporting guidance in the FASB Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC 946”). Our financial currency is U.S. dollars and these consolidated financial statements have been prepared in that currency.
The preparation of the consolidated financial statements in conformity with US GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.
Revenue Recognition
We record our investment transactions on a trade date basis. We record realized gains and losses based on the specific identification method. We record interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Discount and premium to par value on investments acquired are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Loan origination fees, original issue discount and market discount or premium are capitalized and amortized into or against interest income using the effective interest method or straight-line method, as applicable. We record any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts received upon prepayment of a loan or debt security as interest income.
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for such distributions in the case of private portfolio companies, and on the ex-dividend date for publicly traded portfolio companies. Distributions received from a limited liability company or limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.
Certain investments may have contractual PIK interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer. We record PIK as interest or dividend income, as applicable. If at any point we believe PIK may not be realized, we place the investment generating PIK on non-accrual status.
Certain structuring fees and amendment fees are recorded as other income when earned. We record administrative agent fees received as other income when the services are rendered.
The Advisor shall value the investments owned by the Company, subject at all times to the oversight of the Board. The Advisor shall follow its own written valuation policies and procedures as approved by the Board when determining valuations. A short summary of the Advisor’s valuation policies is below.
With respect to unquoted portfolio investments, the Company will value each investment considering, among other measures, discounted cash flow models, comparable company multiple models, comparisons of financial ratios of peer companies that are public, and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will use the pricing indicated by the external event to corroborate and/or assist us in our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
In following this approach, the types of factors that are taken into account in the fair value pricing of investments include, as relevant, but are not limited to: comparison to publicly traded securities, including factors such as yield, maturity and measures of credit quality; the enterprise value of a portfolio company; the nature and realizable value of any collateral; the portfolio company’s ability to make payments and its earnings and discounted cash flows; and the markets in which the portfolio company does business. In cases where an independent valuation firm provides fair valuations for investments, the independent valuation firm provides a fair valuation report, a description of the methodology used to determine the fair value and their analysis and calculations to support their concluded ranges.
Contractual Obligations
We have entered into the Amended Advisory Agreement with our Advisor (which supersedes the Prior Investment Advisory Agreement dated November 14, 2018 we had previously entered into). Our Advisor has agreed to serve as our investment adviser in accordance with the terms of the Amended Advisory Agreement. Under the Amended Advisory Agreement, we have agreed to pay an annual base management fee as well as an incentive fee based on our investment performance.
On November 28, 2018, our Board, including a majority of our Independent Directors, approved the Amended Advisory Agreement. On February 1, 2019 the Company’s stockholders approved the Amended Advisory Agreement. Pursuant to this Agreement, effective February 1, 2019, the base management fee of 1.5% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will continue to apply to assets held at an asset coverage ratio of 200%, but a lower base management fee of 1.0% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will apply to any amount of assets attributable to leverage decreasing the Company’s asset coverage ratio below 200%. The Amended Advisory Agreement incorporates (i) a three-year lookback provision and (ii) a cap on quarterly income incentive fee payments based on net realized or unrealized capital loss, if any, during the applicable three-year lookback period.
We have entered into an Administration Agreement with the Administrator pursuant to which the Administrator will furnish us with administrative services necessary to conduct our day-to-day operations. We reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement,
including certain compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment.
If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under our Amended Advisory Agreement and Administration Agreement.
The following table shows the contractual maturities of our debt obligations as of September 30, 2024 (dollars in thousands):
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates. We will generally invest in illiquid loans and securities including debt and equity securities of middle-market companies. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by the Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. There have been no material quantitative changes in reported market risk exposures in comparison to the information reported in the prior period.
Assuming that the statement of financial condition as of September 30, 2024 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates (dollars in thousands):
Net Increase
Increase
(Decrease) in Net
(Decrease) in
Change in Interest Rates
Interest Income
Interest Expense
Down 100 basis points
(17,189
(7,062
(8,355
Down 200 basis points
(34,071
(14,124
(16,456
Down 300 basis points
(50,726
(21,186
(24,371
Up 100 basis points
17,189
7,062
Up 200 basis points
34,378
14,124
16,710
Up 300 basis points
51,567
21,186
25,064
From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at the balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of September 30, 2024 (the end of the period covered by this report), our management has carried out an evaluation, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a‑15 and 15d‑15(e) under the Exchange Act). Based on that evaluation our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal control over financial reporting, as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act, that occurred during our most recently completed fiscal quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors described below and discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties are not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
The Company did not engage in any unregistered sales of equity securities, issue any common stock under the Company's dividend reinvestment plan, or purchase any common stock during the three months ended September 30, 2024.
Item 3. Default Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended September 30, 2024, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
Item 6. Exhibits, Financial Statement Schedules
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2024 (and are numbered in accordance with Item 601 of Regulation S-K under the Securities Act).
ExhibitNumber
Description of Document
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 (File No. 000‑55528) filed on October 6, 2016).
Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 10 (File No. 000‑55528) filed on October 6, 2016).
Dividend Reinvestment Plan (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form 10 (File No. 000‑55528) filed on October 6, 2016).
10.1
Second Amended and Restated Investment Advisory Agreement, dated November 28, 2018, by and between the Company and the Advisor (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K (File No. 814‑01175), filed on February 1, 2019).
10.2
Administration Agreement, dated October 6, 2016, by and between the Company and the Administrator (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form 10 (File No. 000‑55528) filed on October 6, 2016).
10.3
Form of Advisory Fee Waiver Agreement by and between the Company and the Advisor (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form 10 (File No. 000‑55528) filed on October 6, 2016).
10.4
Form of Custodian Agreement by and between the Company and U.S. Bank National Association (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form 10 (File No. 000‑55528) filed on October 6, 2016).
Indenture, dated as of September 28, 2018, between BCC Middle Market CLO 2018‑1, LLC, as issuer, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on October 17, 2018).
10.6
Portfolio Management Agreement, dated as of September 28, 2018, by and between BCC Middle Market CLO 2018‑1, LLC, as issuer, and Bain Capital Specialty Finance, Inc., as portfolio manager (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on October 17, 2018).
10.7
Loan Sale Agreement, dated as of September 28, 2018, by and between BCC Middle Market CLO 2018‑1, LLC, as issuer, and Bain Capital Specialty Finance, Inc., as the transferor (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on October 17, 2018).
10.8
Collateral Administration Agreement, dated as of September 28, 2018, by and between BCC Middle Market CLO 2018‑1, LLC, as issuer, Bain Capital Specialty Finance, Inc., as portfolio manager, and Wells Fargo Bank, National Association, as collateral administrator (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on October 17, 2018).
Master Participation Agreement, dated as of September 28, 2018, by and between BCSF I, LLC, as financing subsidiary, and BCC Middle Market CLO 2018‑1, LLC, as issuer (incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on October 17, 2018).
Amended and Restated Indenture, dated as of November 30, 2021, between BCC Middle Market CLO 2019-1, LLC, as issuer, BCC Middle Market CLO 2019-1 Co-Issuer, LLC, as co-issuer and Wells Fargo Bank, National Association, as trustee. (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on May 5, 2022).
10.11
First Supplemental Indenture, dated as of August 2, 2022, between BCC Middle Market CLO 2019-1, LTD. (f/k/a BCC Middle Market CLO 2019-1, LLC), as Issuer, and Bain Capital Specialty Finance, in its capacity as Portfolio Manager under the Agreement on behalf of the Issuer, and together with its successors in such capacity, the “Portfolio Manager” (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 28, 2023).
Amended and Restated Portfolio Management Agreement, dated as of November 30, 2021, by and between BCC Middle Market CLO 2019-1, LLC, as issuer, and Bain Capital Specialty Finance, Inc., as portfolio manager. (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on May 5, 2022)
10.13
First Amendment to Amended and Restated Portfolio Management Agreement, dated as of August 2, 2022, between BCC Middle Market CLO 2019-1, LTD. (f/k/a BCC Middle Market CLO 2019-1, LLC), as Issuer, BCC Middle Market CLO 2019-1 Co-Issuer, LLC, as Co-Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 28, 2023).
Loan Sale Agreement, dated as of August 28, 2019, by and between BCC Middle Market CLO 2019‑1, LLC, as issuer, and Bain Capital Specialty Finance, Inc., as the transferor (incorporated by reference to Exhibit 10.18 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on November 6, 2019).
Collateral Administration Agreement, dated as of August 28, 2019, by and between BCC Middle Market CLO 2019‑1, LLC, as issuer, Bain Capital Specialty Finance, Inc., as portfolio manager, and Wells Fargo Bank, National Association, as collateral administrator (incorporated by reference to Exhibit 10.19 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on November 6, 2019).
Master Participation Agreement, dated as of August 28, 2019, by and between BCSF I, LLC, as financing subsidiary, and BCC Middle Market CLO 2019‑1, LLC, as issuer (incorporated by reference to Exhibit 10.20 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on November 6, 2019).
10.17
Master Participation Agreement, dated as of August 28, 2019, by and between BCSF II-C, LLC, as financing subsidiary, and BCC Middle Market CLO 2019‑1, LLC, as issuer (incorporated by reference to Exhibit 10.21 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on November 6, 2019).
10.18
Revolving Loan Agreement, dated March 27, 2020, by and between the Company, as Borrower, and BCSF Advisors, LP, as Lender (incorporated by reference to Exhibit 10.26 to the Company’s Quarterly Report on Form 10‑Q (File No. 814‑01175), filed on May 4, 2020).
Amended and Restated Limited Liability Company Agreement, dated February 9, 2021, of International Senior Loan Program, LLC, by and among the Company, Pantheon Private Debt Program SCSp SICAV—RAIF—Pantheon Senior Debt Secondaries II (USD), Pantheon Private Debt Program SCSp SICAV—RAIF—Tubera Credit 2020, Solutio Premium Private Debt I SCSp and Solutio Premium Private Debt II Master SCSp (incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 24, 2021).
Underwriting Agreement, dated March 3, 2021, by and among Bain Capital Specialty Finance, Inc., BCSF Advisors, LP and Goldman Sachs & Co. LLC, as the representative of the underwriters (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on March 5, 2021).
Indenture, dated as of March 10, 2021, by and between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on March 10, 2021).
First Supplemental Indenture, dated as of March 10, 2021, relating to the 2.950% Notes due 2026, by and between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on March 10, 2021).
Form of 2.950% Notes due 2026 (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on March 10, 2021).
10.24
Underwriting Agreement, dated October 5, 2021, by and among Bain Capital Specialty Finance, Inc., BCSF Advisors, LP, and Goldman Sachs & Co. LLC and SMBC Nikko Securities America Inc., as the representative of the underwriters (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on October 6, 2021).
Second Supplemental Indenture, dated as of October 13, 2021, relating to the 2.550% Notes due 2026, by and between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on October 13, 2021).
10.26
Form of 2.550% Notes due 2026 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on October 13, 2021).
10.27
Revolving Credit Agreement, dated as of December 24, 2021, by and among the Company as Borrower, with Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sole Book Runner, and with Sumitomo Mitsui Banking Corporation and MUFG Union Bank, N.A., as Joint Lead Arrangers (incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 23, 2022).
First Amendment dated as of July 6, 2022 to Revolving Credit Agreement, dated as of December 24, 2021, by and among the Company as Borrower, with Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sole Book Runner, and with Sumitomo Mitsui Banking Corporation and MUFG Union Bank, N.A., as Joint Lead Arrangers. (incorporated by reference to Exhibit 10.26 to the Company’s Quarterly Report on Form 10-Q (File No.814-01175) filed on November 9, 2022).
10.29
Increasing Lender/Joinder Lender Agreement, dated as of December 14, 2022, between the Company, the Lenders and Issuing Banks from time to time party thereto and Sumitomo Mitsui Banking Corporation, as Administrative Agent (in such capacity, the “Administrative Agent”); and (b) the Notice of Commitment Increase Request, dated as of December 14, 2022, provided by the Company to the Administrative Agent (the “Notice”) (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 28, 2023).
Increasing Lender/Joinder Lender Agreement dated as of July 22, 2022, pursuant to Section 2.08(e) of the Revolving Credit Agreement, dated as of December 24, 2021, by and among the Company as Borrower, with Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sole Book Runner, and with Sumitomo Mitsui Banking Corporation and MUFG Union Bank, N.A., as Joint Lead Arrangers. (Incorporated by reference to Exhibit 10.28 to the Company’s Quarterly Report on Form 10 Q (File No. 814 01175), filed on August 3, 2022).
Second Amendment dated as of August 24, 2022 to Revolving Credit Agreement, dated as of December 24, 2021, by and among the Company as Borrower, with Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sole Book Runner, and with Sumitomo Mitsui Banking Corporation and MUFG Union Bank, N.A., as Joint Lead Arrangers. (incorporated by reference to Exhibit 10.28 to the Company’s Quarterly Report on Form 10-Q (File No.814-01175) filed on November 9, 2022).
10.32
Third Amendment dated as of May 20, 2024 to Revolving Credit Agreement, dated as of December 24, 2021, by and among the Company as Borrower, with Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sole Book Runner, and with Sumitomo Mitsui Banking Corporation and MUFG Union Bank, N.A., as Joint Lead Arrangers. (incorporated by reference to Exhibit 10.32 to the Company’s Quarterly Report on Form 10-Q (File No.814-01175) filed on August 6, 2024).
10.33
Amended and Restated Limited Liability Company Agreement, dated December 27, 2021, of Bain Capital Senior Loan Program, LLC. (incorporated by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 23, 2022).
10.34
First Supplemental Indenture dated as of June 15, 2023 among BCC Middle Market CLO 2018-1, LLC, as issuer, and Wells Fargo Bank, National Association, as trustee. (incorporated by reference to Exhibit 10.33 to the Company’s Quarterly Report on Form 10-Q (File No.814-01175) filed on August 8, 2023).
Second Supplemental Indenture dated as of June 15, 2023 among BCC Middle Market CLO 2019-1, Ltd., as issuer, BCC Middle Market CLO 2019-1 Co-Issuer, LLC, as co-issuer, and Wells Fargo Bank, National Association, as trustee. (incorporated by reference to Exhibit 10.34 to the Company’s Quarterly Report on Form 10-Q (File No.814-01175) filed on August 8, 2023).
10.36
Amendment dated September 11, 2023 to the Amended and Restated Limited Liability Company Agreement, dated February 9, 2021, of International Senior Loan Program, LLC, by and among the Company, Pantheon Private Debt Program SCSp SICAV—RAIF—Pantheon Senior Debt Secondaries II (USD), Pantheon Private Debt Program SCSp SICAV—RAIF—Tubera Credit 2020, Solutio Premium Private Debt I SCSp and Solutio Premium Private Debt II Master SCSp. (incorporated by reference to Exhibit 10.35 to the Company’s Quarterly Report on Form 10-Q (File No.814-01175) filed on November 6, 2023).
Second Amendment dated December 14, 2023 to the Amended and Restated Limited Liability Company Agreement, dated February 9, 2021, as amended on September 8, 2021 of International Senior Loan Program, LLC, by and among the Company, Pantheon Private Debt Program SCSp SICAV—RAIF—Pantheon Senior Debt Secondaries II (USD), Pantheon Private Debt Program SCSp SICAV—RAIF—Tubera Credit 2020, Solutio Premium Private Debt I SCSp, Solutio Premium Private Debt II Master SCSp, Pantheon Private Debt Program SICAV—RAIF—Pantheon Senior Debt Secondaries II (EUR) and Pantheon Private Debt Program SICAV—RAIF—Pantheon Senior Debt Secondaries II (GBP) (filed herewith). (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 27, 2024).
10.38
International Senior Loan Program, LLC Consolidated Financial Statements for year ending December 31, 2023. (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 27, 2024).
23.1
Consent of Independent Registered Public Accounting Firm (incorporated by reference to Exhibit 23.1 to the Company’s Annual Report on Form 10-K (File No. 814-01175) filed on February 27, 2024).
24.1
Powers of Attorney (incorporated by reference to Exhibit 24.1 to the Company’s Annual Report on Form 10-Q (File No. 814-01175) filed on May 6, 2024).
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a‑14 under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a‑14 under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.
32*
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.
101.INS*
XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
* Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 5, 2024
By:
/s/ Michael A. Ewald
Name:
Michael A. Ewald
Title:
Chief Executive Officer
/s/ Amit Joshi
Amit Joshi
Chief Financial Officer