BLUE OWL CAPITAL CORPORATION The information contained in this section should be read in conjunction with "ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA". This discussion contains forward-looking statements, which relate to future events or the future performance or financial condition ofOwl Rock Capital Corporation and involves numerous risks and uncertainties, including, but not limited to, those described in "ITEM 1A. RISK FACTORS." This discussion also should be read in conjunction with the "Cautionary Statement Regarding Forward Looking Statements" set forth on page 1 of this Annual Report on Form 10-K. Actual results could differ materially from those implied or expressed in any forward-looking statements.
Overview
Owl Rock Capital Corporation (the "Company", "we", "us" or "our") is aMaryland corporation formed onOctober 15, 2015 . We were formed primarily to originate and make loans to, and make debt and equity investments in,U.S. middle market companies. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company's common equity. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. We are managed byOwl Rock Capital Advisors LLC ("the Adviser" or "our Adviser"). The Adviser is registered with theSEC as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). Subject to the overall supervision of our board of directors ("the Board" or "our Board"), the Adviser manages our day-to-day operations, and provides investment advisory and management services to us. The Adviser or its affiliates may engage in certain origination activities and receive attendant arrangement, structuring or similar fees. The Adviser is responsible for managing our business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring our investments, and monitoring our portfolio companies on an ongoing basis through a team of investment professionals. The Board consists of eight directors, five of whom are independent. OnJuly 22, 2019 , we closed our initial public offering ("IPO"), issuing 10 million shares of our common stock at a public offering price of$15.30 per share, and onAugust 2, 2019 , the underwriters exercised their option to purchase an additional 1.5 million shares of common stock at a purchase price of$15.30 per share. Net of underwriting fees and offering costs, we received total cash proceeds of$164.0 million . Our common stock began trading on theNew York Stock Exchange ("NYSE") under the symbol "ORCC" onJuly 18, 2019 . In connection with the IPO, onJuly 22, 2019 , we entered into a stock repurchase plan (the "Company 10b5-1 Plan"), to acquire up to$150 million in the aggregate of our common stock at prices below its net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under the Company 10b5-1 Plan, we acquired 12,515,624 shares for approximately$150 million . The Company 10b5-1 Plan commenced onAugust 19, 2019 and was exhausted onAugust 4, 2020 .
The Adviser also serves as investment adviser to
The Adviser is under common control withOwl Rock Technology Advisors LLC ("ORTA"),Owl Rock Capital Private Fund Advisors LLC ("ORPFA") andOwl Rock Diversified Advisors LLC ("ORDA"), which also are investment advisers and subsidiaries ofOwl Rock Capital Partners . ORTA serves as investment adviser toOwl Rock Technology Finance Corp. and ORDA serves as investment adviser to Owl Rock Capital Corporation III. The Adviser, ORTA, ORPFA and ORDA are referred to as the "Owl Rock Advisers" and together withOwl Rock Capital Partners are referred to, collectively, as "Owl Rock." OnDecember 23, 2020 ,Owl Rock Capital Group, LLC ("Owl Rock Capital Group "), the parent of the Adviser (and a subsidiary ofOwl Rock Capital Partners ), andDyal Capital Partners ("Dyal") announced they are merging to formBlue Owl Capital Inc. ("Blue Owl"). Blue Owl will enter the public market via its acquisition by Altimar Acquisition Corporation (NYSE:ATAC) ("Altimar"), a special purpose acquisition company (the "Transaction"). If the Transaction is consummated, there will be no changes to the Company's investment strategy or the Adviser's investment team or investment process with respect to the Company; however, the Transaction will result in a change in control of the Adviser, which will be deemed an assignment of the Investment Advisory Agreement in accordance with the 1940 Act. As a result, the Board, after considering the Transaction and subsequent change in control, has determined that upon consummation of the Transaction and subject to the approval of the Company's shareholders at a special meeting expected to be held onMarch 17, 2021 , the Company should enter into a third amended and restated investment advisory agreement with the Adviser on terms that are identical to the Investment Advisory Agreement. The Board also determined that upon consummation of the Transaction, the Company should enter into an amended and restated administration agreement with the Adviser on terms that are identical to the Administration Agreement. See "Item 1. Business - The Adviser and Administrator -Owl Rock Capital Advisors LLC ."
We may be prohibited under the 1940 Act from participating in certain
transactions with our affiliates without the prior approval of our directors who
are not interested persons and, in some cases, the prior approval of the
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affiliates have been granted exemptive relief by the SEC to permit us to
co-invest with other funds managed by our Adviser or certain of its affiliates,
including the Owl Rock Clients, in a manner consistent with our investment
objective, positions, policies, strategies and restrictions as well as
regulatory requirements and other pertinent factors. Pursuant to such exemptive
relief, we generally are permitted to co-invest with certain of our affiliates
if a "required majority" (as defined in Section 57(o) of the Investment Company
Act of 1940, as amended (the "1940 Act")) of our independent directors make
certain conclusions in connection with a co-investment transaction, including
that (1) the terms of the transactions, including the consideration to be paid,
are reasonable and fair to us and our shareholders and do not involve
overreaching by us or our shareholders on the part of any person concerned, (2)
the transaction is consistent with the interests of our shareholders and is
consistent with our investment objective and strategies, and (3) the investment
by our affiliates would not disadvantage us, and our participation would not be
on a basis different from or less advantageous than that on which our affiliates
are investing. In addition, pursuant to an exemptive order issued by the SEC on
April 8, 2020 and applicable to all BDCs, through December 31, 2020 , we were
permitted, subject to the satisfaction of certain conditions, to complete
follow-on investments in our existing portfolio companies with certain private
funds managed by the Adviser or its affiliates and covered by our exemptive
relief, even if such private funds had not previously invested in such existing
portfolio company. Without this order, private funds would generally not be able
to participate in such follow-on investments with us unless the private funds
had previously acquired securities of the portfolio company in a co-investment
transaction with us. Although the conditional exemptive order has expired, the
SEC's Division of Investment Management has indicated that until March 31, 2021 ,
it will not recommend enforcement action, to the extent that any BDC with an
existing coinvestment order continues to engage in certain transactions
described in the conditional exemptive order, pursuant to the same terms and
conditions described therein. The Owl Rock Advisers' allocation policy seeks to
ensure equitable allocation of investment opportunities over time between us and
other funds managed by our Adviser or its affiliates. As a result of the
exemptive relief, there could be significant overlap in our investment portfolio
and the investment portfolio of other funds established by the Adviser or its
affiliates that could avail themselves of the exemptive relief.
On April 27, 2016 , we formed a wholly-owned subsidiary, OR Lending LLC , a
Delaware limited liability company, which holds a California finance lenders
license. OR Lending LLC makes loans to borrowers headquartered in California .
For time to time we may form wholly-owned subsidiaries to facilitate our normal
course of business.
Certain consolidated subsidiaries of ours are subject to
We have elected to be regulated as a BDC under the 1940 Act and as a regulated
investment company ("RIC") for tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"). As a result, we are required to comply with
various statutory and regulatory requirements, such as:
• the requirement to invest at least 70% of our assets in "qualifying
assets", as such term is defined in the 1940 Act;
• source of income limitations;
• asset diversification requirements; and
• the requirement to distribute (or be treated as distributing) in each
taxable year at least 90% of our investment company taxable income and
tax-exempt interest for that taxable year.
COVID-19 Developments
InMarch 2020 , the outbreak of COVID -19 was recognized as a pandemic by theWorld Health Organization . Shortly thereafter, the President ofthe United States declared a National Emergency throughoutthe United States attributable to such outbreak. The outbreak has become increasingly widespread inthe United States , including in the markets in which we operate, and in response to the outbreak, our Adviser instituted a work from home policy until it is deemed safe to return to the office. We have and continue to assess the impact of COVID-19 on our portfolio companies. We cannot predict the full impact of the COVID-19 pandemic, including its duration inthe United States and worldwide, the effectiveness of governmental responses designed to mitigate strain to businesses and the economy and the magnitude of the economic impact of the outbreak. The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, cancellations of events and travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both globally and inthe United States . Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter. While several countries, as well as certain states, counties and cities inthe United States , have relaxed the initial public health restrictions with a view to partially or fully reopening their economies, many cities world-wide have since experienced a surge in the reported number of cases, hospitalizations and deaths related to the COVID-19 pandemic. These increases have led to the re-introduction of restrictions and business shutdowns in certain states, counties and cities inthe United States and globally and could continue to lead to the re-introduction of such restrictions and business shutdowns elsewhere. Additionally, as of lateDecember 2020 , travelers fromthe United States are not allowed to visitCanada ,Australia or the majority of countries inEurope ,Asia ,Africa and 83
--------------------------------------------------------------------------------South America . These continued travel restrictions may prolong the global economic downturn. In addition, although theFederal Food and Drug Administration authorized vaccines for emergency use starting inDecember 2020 , it remains unclear how quickly the vaccines will be distributed nationwide and globally or when "herd immunity" will be achieved and the restrictions that were imposed to slow the spread of the virus will be lifted entirely. The delay in distributing the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. Even after the COVID-19 pandemic subsides, theU.S. economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession inthe United States and other major markets.
Some economists and major investment banks have expressed concerns that the continued spread of the virus globally could lead to a world-wide economic downturn.
We are unable to predict the duration of any business and supply-chain disruptions, the extent to which COVID-19 will negatively affect our portfolio companies' operating results or the impact that such disruptions may have on our results of operations and financial condition. Though the magnitude of the impact remains to be seen, we expect our portfolio companies and, by extension, our operating results to be adversely impacted by COVID-19 and depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain portfolio companies will experience financial distress and possibly default on their financial obligations to us and their other capital providers. Some of our portfolio companies have significantly curtailed business operations, furloughed or laid off employees and terminated service providers and deferred capital expenditures, which could impair their business on a permanent basis and we except that additional portfolio companies may take similar actions. We have built out our portfolio management team to include workout experts and continue to closely monitor our portfolio companies, which includes assessing each portfolio company's operational and liquidity exposure and outlook. We have executed amendments to our loan documents which provide covenant modifications or additional liquidity, sometimes by allowing a portion of our loan to be paid in PIK rather than cash and in connection with these amendments we may receive increased economics. Any of these developments would likely result in a decrease in the value of our investment in any such portfolio company. In addition, to the extent that the impact to our portfolio companies results in reduced interest payments or permanent impairments on our investments, we could see a decrease in our net investment income which could result in an increase in the percentage of our cash flows dedicated to our debt obligations and could require us to reduce the future amount of distributions to our shareholders. During the year endedDecember 31, 2020 , we experienced a decrease in originations, which reflects the lower levels of private equity deal activity in that time period; however, for the three months endedDecember 31, 2020 , we experienced an increase in originations compared to prior quarter. For the three months endingMarch 31, 2021 , we expect the performance of our portfolio companies to continue to be impacted by COVID-19 and the related economic slowdown, and therefore, while we have highlighted our liquidity and available capital, we are focused on preserving that capital for our existing portfolio companies in order to protect the value of our investments.
Our Investment Framework
We are aMaryland corporation organized primarily to originate and make loans to, and make debt and equity investments in,U.S. middle market companies. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. Since our Adviser and its affiliates began investment activities inApril 2016 throughDecember 31, 2020 , our Adviser and its affiliates have originated$27.7 billion aggregate principal amount of investments, of which$25.8 billion of aggregate principal amount of investments prior to any subsequent exits or repayments, was retained by either us or a corporation or fund advised by our Adviser or its affiliates. We seek to generate current income primarily inU.S. middle market companies through direct originations of senior secured loans or originations of unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, investments in equity and equity-related securities including warrants, preferred stock and similar forms of senior equity. We define "middle market companies" generally to mean companies with earnings before interest expense, income tax expense, depreciation and amortization, or "EBITDA," between$10 million and$250 million annually and/or annual revenue of$50 million to$2.5 billion at the time of investment, although we may on occasion invest in smaller or larger companies if an opportunity presents itself. We generally seek to invest in companies with a loan-to-value ratio of 50% or below. We expect that generally our portfolio composition will be majority debt or income producing securities, which may include "covenant-lite" loans (as defined below), with a lesser allocation to equity or equity-linked opportunities. In addition, we may invest a portion of our portfolio in opportunistic investments, which will not be our primary focus, but will be intended to enhance returns to our shareholders. These investments may include high-yield bonds and broadly-syndicated loans. In addition, we generally do not intend to invest more than 20% of our total assets in companies whose principal place of business is outsidethe United States , although we do not generally intend to invest in companies whose principal place of business is in an emerging market. Our portfolio composition may fluctuate from time to time based on market conditions and interest rates. 84
-------------------------------------------------------------------------------- Covenants are contractual restrictions that lenders place on companies to limit the corporate actions a company may pursue. Generally, the loans in which we expect to invest will have financial maintenance covenants, which are used to proactively address materially adverse changes in a portfolio company's financial performance. However, to a lesser extent, we may invest in "covenant-lite" loans. We use the term "covenant-lite" to refer generally to loans that do not have a complete set of financial maintenance covenants. Generally, "covenant-lite" loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrower's financial condition. Accordingly, to the extent we invest in "covenant-lite" loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance covenants. As ofDecember 31, 2020 , our average debt investment size in each of our portfolio companies was approximately$90.2 million based on fair value. As ofDecember 31, 2020 , our portfolio companies, excluding the investment inSebago Lake and certain investments that fall outside of our typical borrower profile and represent 93.8% of our total debt portfolio based on fair value, had weighted average annual revenue of$460 million and weighted average annual EBITDA of$100 million . The companies in which we invest use our capital to support their growth, acquisitions, market or product expansion, refinancings and/or recapitalizations. The debt in which we invest typically is not rated by any rating agency, but if these instruments were rated, they would likely receive a rating of below investment grade (that is, below BBB- or Baa3), which is often referred to as "high yield" or "junk".
Key Components of Our Results of Operations
Investments
We focus primarily on the direct origination of loans to middle market companies
domiciled in
Our level of investment activity (both the number of investments and the size of each investment) can and will 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 general economic environment and the competitive environment for the types of investments we make.
In addition, as part of our risk strategy on investments, we may reduce the levels of certain investments through partial sales or syndication to additional lenders.
Revenues We generate revenues primarily in the form of interest income from the investments we hold. In addition, we may generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. Our debt investments typically have a term of three to ten years. As ofDecember 31, 2020 , 99.9% of our debt investments based on fair value bear interest at a floating rate, subject to interest rate floors, in certain cases. Interest on our debt investments is generally payable either monthly or quarterly. Our investment portfolio consists primarily of floating rate loans, and our credit facilities bear interest at floating rates. Macro trends in base interest rates like London Interbank Offered Rate ("LIBOR") may affect our net investment income over the long term. However, because we generally originate loans to a small number of portfolio companies each quarter, and those investments vary in size, our results in any given period, including the interest rate on investments that were sold or repaid in a period compared to the interest rate of new investments made during that period, often are idiosyncratic, and 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 macro trends. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts underU.S. generally accepted accounting principles ("U.S. GAAP") as interest income using the effective yield method for term instruments and the straight-line method for revolving or delayed draw instruments. Repayments of our debt investments can reduce interest income from period to period. The frequency or volume of these repayments may fluctuate significantly. We record prepayment premiums on loans as interest income. We may also generate revenue in the form of commitment, loan origination, structuring, or due diligence fees, fees for providing managerial assistance to our portfolio companies and possibly consulting fees.
Dividend income on equity investments is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded companies.
Our portfolio activity also reflects the proceeds from sales of investments. We
recognize realized gains or losses on investments based on the difference
between the net proceeds from the disposition and the amortized cost basis of
the investment without regard to unrealized gains or losses previously
recognized. We record current period changes in fair value of investments that
are measured at fair value as a component of the net change in unrealized gains
(losses) on investments in the consolidated statement of operations.
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--------------------------------------------------------------------------------Expenses
Our primary operating expenses include the payment of the management fee and, when the incentive fee waiver expires, the incentive fee, and expenses reimbursable under the Administration Agreement and Investment Advisory Agreement. The management fee and incentive fee compensate our Adviser for work in identifying, evaluating, negotiating, closing, monitoring and realizing our investments. The incentive fee waiver expired onOctober 18, 2020 . Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory and management services to us, the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser. We bear our allocable portion of the compensation paid by the Adviser (or its affiliates) to our Chief Compliance Officer and Chief Financial Officer and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs). We bear all other costs and expenses of our operations, administration and transactions, including, but not limited to (i) investment advisory fees, including management fees and incentive fees, to the Adviser, pursuant to the Investment Advisory Agreement; (ii) our allocable portion of overhead and other expenses incurred by the Adviser in performing its administrative obligations under the Administration Agreement; and (iii) all other costs and expenses of its operations and transactions including, without limitation, those relating to:
• the cost of our organization and offerings;
• the cost of calculating our net asset value, including the cost of any
third-party valuation services;
• the cost of effecting any sales and repurchases of our common stock and
other securities;
• fees and expenses payable under any dealer manager agreements, if any;
• debt service and other costs of borrowings or other financing arrangements;
• costs of hedging;
• expenses, including travel expense, incurred by the Adviser, or members
of the investment team, or payable to third parties, performing due
diligence on prospective portfolio companies and, if necessary, enforcing
our rights;
• transfer agent and custodial fees;
• fees and expenses associated with marketing efforts;
• federal and state registration fees, any stock exchange listing fees and
fees payable to rating agencies;
• federal, state and local taxes;
• independent directors' fees and expenses including certain travel expenses;
• costs of preparing financial statements and maintaining books and records
and filing reports or other documents with the
bodies) and other reporting and compliance costs, including registration
and listing fees, and the compensation of professionals responsible for
the preparation of the foregoing;
• the costs of any reports, proxy statements or other notices to our
shareholders (including printing and mailing costs), the costs of any
shareholder or director meetings and the compensation of investorrelations personnel responsible for the preparation of the foregoing and
related matters;
• commissions and other compensation payable to brokers or dealers;
• research and market data;
• fidelity bond, directors' and officers' errors and omissions liability
insurance and other insurance premiums;
• direct costs and expenses of administration, including printing, mailing,
long distance telephone and staff;
• fees and expenses associated with independent audits, outside legal and
consulting costs;
• costs of winding up;
• costs incurred in connection with the formation or maintenance of
entities or vehicles to hold our assets for tax or other purposes;
• extraordinary expenses (such as litigation or indemnification); and
• costs associated with reporting and compliance obligations under the 1940
Act and applicable federal and state securities laws.
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-------------------------------------------------------------------------------- We expect, but cannot assure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets during such periods.
Leverage
The amount of leverage we use in any period depends on a variety of factors, including cash available for investing, the cost of financing and general economic and market conditions. Generally, our total borrowings are limited so that we cannot incur additional borrowings, including through the issuance of additional debt securities, if such additional indebtedness would cause our asset coverage ratio to fall below 200% or 150%, if certain requirements are met. This means that generally, we can borrow up to$1 for every$1 of investor equity (or, if certain conditions are met, we can borrow up to$2 for every$1 of investor equity). In any period, our interest expense will depend largely on the extent of our borrowing, and we expect interest expense will increase as we increase our debt outstanding. In addition, we may dedicate assets to financing facilities. OnMarch 31, 2020 , our Board, including a "required majority" (as such term is defined in Section 57(o) of the 1940 Act) of our Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the Investment Company Act, as amended by the Small Business Credit Availability Act. OnJune 8, 2020 , the date of our shareholder meeting, we received shareholder approval for the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act. As a result, effective onJune 9, 2020 , our asset coverage requirement applicable to senior securities was reduced from 200% to 150% and our current target leverage ratio is 0.90x-1.25x.
Market Trends
We believe the middle-market lending environment provides opportunities for us to meet our goal of making investments that generate attractive risk-adjusted returns based on a combination of the following factors, which continue to remain true in the current environment, with the economic shutdown resulting from the COVID-19 national health emergency. Limited Availability of Capital for Middle-Market Companies. We believe that regulatory and structural changes in the market have reduced the amount of capital available toU.S. middle-market companies. In particular, we believe there are currently fewer providers of capital to middle market companies. We believe that many commercial and investment banks have, in recent years, de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital markets transactions. In addition, these lenders may be constrained in their ability to underwrite and hold bank loans and high yield securities for middle-market issuers as they seek to meet existing and future regulatory capital requirements. We also believe that there is a lack of market participants that are willing to hold meaningful amounts of certain middle-market loans. As a result, we believe our ability to minimize syndication risk for a company seeking financing by being able to hold its loans without having to syndicate them, coupled with reduced capacity of traditional lenders to serve the middle-market, present an attractive opportunity to invest in middle-market companies. Capital Markets Have Been Unable to Fill the Void inU.S. Middle Market Finance Left by Banks. While underwritten bond and syndicated loan markets have been robust in recent years, middle market companies are less able to access these markets for reasons including the following: High Yield Market - Middle market companies generally are not issuing debt in an amount large enough to be an attractively sized bond. High yield bonds are generally purchased by institutional investors who, among other things, are focused on the liquidity characteristics of the bond being issued. For example, mutual funds and exchange traded funds ("ETFs") are significant buyers of underwritten bonds. However, mutual funds and ETFs generally require the ability to liquidate their investments quickly in order to fund investor redemptions and/or comply with regulatory requirements. Accordingly, the existence of an active secondary market for bonds is an important consideration in these entities' initial investment decision. Because there is typically little or no active secondary market for the debt ofU.S. middle market companies, mutual funds and ETFs generally do not provide debt capital toU.S. middle market companies. We believe this is likely to be a persistent problem and creates an advantage for those like us who have a more stable capital base and have the ability to invest in illiquid assets. Syndicated Loan Market - While the syndicated loan market is modestly more accommodating to middle market issuers, as with bonds, loan issue size and liquidity are key drivers of institutional appetite and, correspondingly, underwriters' willingness to underwrite the loans. Loans arranged through a bank are done either on a "best efforts" basis or are underwritten with terms plus provisions that permit the underwriters to change certain terms, including pricing, structure, yield and tenor, otherwise known as "flex", to successfully syndicate the loan, in the event the terms initially marketed are insufficiently attractive to investors. Furthermore, banks are generally reluctant to underwrite middle market loans because the arrangement fees they may earn on the placement of the debt generally are not sufficient to meet the banks' return hurdles. Loans provided by companies such as ours provide certainty to issuers in that we can commit to a given amount of debt on specific terms, at stated coupons and with agreed upon fees. As we are the ultimate holder of the loans, we do not require market "flex" or other arrangements that banks may require when acting on an agency basis. 87 -------------------------------------------------------------------------------- Robust Demand forDebt Capital . We believeU.S. middle market companies will continue to require access to debt capital to refinance existing debt, support growth and finance acquisitions. In addition, we believe the large amount of uninvested capital held by funds of private equity firms, estimated byPreqin Ltd. , an alternative assets industry data and research company, to be$1.5 trillion as ofOctober 2020 , will continue to drive deal activity. We expect that private equity sponsors will continue to pursue acquisitions and leverage their equity investments with secured loans provided by companies such as us. The Middle Market is a Large Addressable Market. According toGE Capital's National Center for the Middle Market 4th quarter 2020 Middle Market Indicator, there are approximately 200,000U.S. middle market companies, which have approximately 48 million aggregate employees. Moreover, theU.S. middle market accounts for one-third of private sector gross domestic product ("GDP").GE definesU.S. middle market companies as those between$10 million and$1 billion in annual revenue, which we believe has significant overlap with our definition ofU.S. middle market companies. Attractive Investment Dynamics. An imbalance between the supply of, and demand for, middle market debt capital creates attractive pricing dynamics. We believe the directly negotiated nature of middle market financings also generally provides more favorable terms to the lender, including stronger covenant and reporting packages, better call protection, and lender-protective change of control provisions. Additionally, we believe BDC managers' expertise in credit selection and ability to manage through credit cycles has generally resulted in BDCs experiencing lower loss rates thanU.S. commercial banks through credit cycles. Further, we believe that historical middle market default rates have been lower, and recovery rates have been higher, as compared to the larger market capitalization, broadly distributed market, leading to lower cumulative losses. Lastly, we believe that in the current environment, as the economy reopens following the economic shutdown resulting from the COVID-19 national health emergency, lenders with available capital may be able to take advantage of attractive investment opportunities as the economy reopens and may be able to achieve improved economic spreads and documentation terms. Conservative Capital Structures. Following the credit crisis, which we define broadly as occurring between mid-2007 and mid-2009, lenders have generally required borrowers to maintain more equity as a percentage of their total capitalization, specifically to protect lenders during economic downturns. With more conservative capital structures,U.S. middle market companies have exhibited higher levels of cash flows available to service their debt. In addition,U.S. middle market companies often are characterized by simpler capital structures than larger borrowers, which facilitates a streamlined underwriting process and, when necessary, restructuring process. Attractive Opportunities in Investments in Loans. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities. We believe that opportunities in senior secured loans are significant because of the floating rate structure of most senior secured debt issuances and because of the strong defensive characteristics of these types of investments. Given the current low interest rate environment, we believe that debt issues with floating interest rates offer a superior return profile as compared with fixed-rate investments, since floating rate structures are generally less susceptible to declines in value experienced by fixed-rate securities in a rising interest rate environment. Senior secured debt also provides strong defensive characteristics. Senior secured debt has priority in payment among an issuer's security holders whereby holders are due to receive payment before junior creditors and equity holders. Further, these investments are secured by the issuer's assets, which may provide protection in the event of a default.
Portfolio and Investment Activity
As ofDecember 31, 2020 , based on fair value, our portfolio consisted of 77.5% first lien senior secured debt investments (of which 37% we consider to be unitranche debt investments (including "last out" portions of such loans)), 18.5% second lien senior secured debt investments, 0.5% unsecured investments, 2.5% equity investments, and 1.0% investment funds and vehicles. As ofDecember 31, 2020 , our weighted average total yield of the portfolio at fair value and amortized cost was 8.1% and 8.0%, respectively, and our weighted average yield of accruing debt and income producing securities at fair value and amortized cost was 8.3% and 8.2%, respectively.
As of
Based on current market conditions, the pace of our investment activities may vary.
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Our investment activity for the years ended December 31, 2020 , 2019 and 2018 is
presented below (information presented herein is at par value unless otherwise
indicated).
For the Years Ended December 31,
($ in thousands) 2020 2019 2018
New investment commitments
Gross originations $ 3,667,048 4,625,939 5,814,181
Less: Sell downs (222,276 ) (191,277 ) (618,040 )
Total new investment commitments
Principal amount of investments
funded:
First-lien senior secured debt
investments
3,388,527
Second-lien senior secured debt 518,480 596,421 799,701 investments Unsecured debt investments 55,873 - 23,000 Equity investments 119,780 1,991 11,215 Investment funds and vehicles 18,950 -
26,110
Total principal amount of$ 2,845,500 $ 3,682,189
investments funded
Principal amount of investments
sold or repaid:
First-lien senior secured debt
investments
Second-lien senior secured debt (90,686 ) (116,700 ) (341,600 ) investments Unsecured debt investments - (23,000 ) - Equity investments (867 ) (1,991 ) (2,760 ) Investment funds and vehicles - (2,250 ) - Total principal amount of$ (1,151,905 ) $ (964,543 ) $ (881,075 ) investments sold or repaid Number of new investment 30 38 44
commitments in new portfolio
companies(1)
Average new investment commitment
amount
Weighted average term for new 5.9 6.3
6.2
investment commitments (in years)
Percentage of new debt investment 96.3 % 100.0 %
99.6 %
commitments at
floating rates
Percentage of new debt investment 3.7 % 0.0 %
0.4 %
commitments at
fixed rates
Weighted average interest rate of 7.8 % 8.0 %
8.8 %
new investment
commitments(2)
Weighted average spread over LIBOR 6.9 % 6.1 %
6.0 %
of new floating rate investment
commitments ________________
(1) Number of new investment commitments represents commitments to a
particular portfolio company.
(2) Assumes each floating rate commitment is subject to the greater of the
interest rate floor (if applicable) or 3-month LIBOR, which was 0.24%,
1.91% and 2.81% as of
89
-------------------------------------------------------------------------------- As ofDecember 31, 2020 andDecember 31, 2019 , our investments consisted of the following: December 31, 2020 December 31, 2019 ($ in thousands) Amortized Cost Fair Value Amortized Cost Fair Value First-lien senior secured$ 8,483,799 (3)$ 8,404,754 $ 7,136,866 (3)$ 7,113,356 debt investments Second-lien senior secured 2,035,151 2,000,471 1,590,439 1,584,917 debt investments Unsecured debt investments 56,473 59,562 - - Equity investments(1) 245,458 271,739 12,663 12,875 Investment funds and 107,837 105,546 88,888 88,077 vehicles(2) Total Investments$ 10,928,718 $ 10,842,072 $ 8,828,856 $ 8,799,225 ________________ (1) Includes investment in Wingspire. (2) Includes investment inSebago Lake .
(3) 37% and 43% of which we consider unitranche loans as of
and December 31, 2019 , respectively.
The table below describes investments by industry composition based on fair
value as of
December 31, 2020 December 31, 2019
Advertising and media 1.0 % 2.6 %
Aerospace and defense 2.7 3.3
Automotive 1.6 1.7
Buildings and real estate 5.6 6.6
Business services 5.7 5.4
Chemicals 2.2 2.6
Consumer products 2.3 2.7
Containers and packaging 2.0 2.1
Distribution 6.3 8.6
Education 2.6 3.5
Energy equipment and services 0.1 0.2
Financial services (1) 2.9 1.6
Food and beverage 8.7 7.2
Healthcare equipment and services 3.7 8.3
Healthcare providers and services 5.2 - Healthcare technology 3.6 3.4 Household products 1.4 1.5 Human resource support services (3) 0.0 - Infrastructure and environmental services 1.8
2.7
Insurance 8.9
5.7
Internet software and services 11.1
8.1
Investment funds and vehicles (2) 1.0 1.0 Leisure and entertainment 2.0 2.0 Manufacturing 5.3 2.9 Oil and gas 1.7 2.3 Professional services 5.6 8.1 Specialty retail 2.1 2.7 Telecommunications 0.5 0.5 Transportation 2.4 2.7 Total 100.0 % 100.0 % ________________
(1) Includes investment in Wingspire. (2) Includes investment inSebago Lake . (3) Rounds to less than 0.1%. 90
--------------------------------------------------------------------------------
The table below describes investments by geographic composition based on fair
value as of
December 31, 2020 December 31, 2019
United States:
Midwest 18.2 % 19.5 %
Northeast 16.7 18.7
South 42.3 42.8
West 17.2 15.3
Belgium 0.8 1.0
Canada 1.0 0.9
Israel 0.4 -
United Kingdom 3.4 1.8
Total 100.0 % 100.0 %
The weighted average yields and interest rates of our investments at fair value
as of
December 31, 2020 December 31, 2019
Weighted average total yield of portfolio 8.1 % 8.7 %
Weighted average total yield of accruing 8.3 % 8.7 %
debt and income
producing securities Weighted average interest rate of accruing 7.4 % 8.1 % debt securities Weighted average spread over LIBOR of all 6.6 % 6.3 % accruing floating rate investments The weighted average yield of our accruing debt and income producing securities is not the same as a return on investment for our shareholders but, rather, relates to our investment portfolio and is calculated before the payment of all of our and our subsidiaries' fees and expenses. The weighted average yield was computed using the effective interest rates as of each respective date, including accretion of original issue discount and loan origination fees, but excluding investments on non-accrual status, if any. There can be no assurance that the weighted average yield will remain at its current level. Our Adviser 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 with respect to each portfolio company. Our Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:
• assessment of success of the portfolio company in adhering to its
business plan and compliance with covenants;
• periodic and regular contact with portfolio company management and, if
appropriate, the financial or strategic sponsor, to discuss financial
position, requirements and accomplishments;
• comparisons to other companies in the portfolio company's industry; and
• review of monthly or quarterly financial statements and financial
projections for portfolio companies.
91
-------------------------------------------------------------------------------- As part of the monitoring process, our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser rates the credit risk of all investments on a scale of 1 to 5. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors. The rating system is as follows:
Investment Rating Description
1 Investments rated 1 involve the least amount of risk to our
initial cost basis. The borrower is performing above
expectations, and the trends and risk factors for this
investment since origination or acquisition are generally
favorable;
2 Investments rated 2 involve an acceptable level of risk that is
similar to the risk at the time of origination or acquisition.
The borrower is generally performing as expected and the risk
factors are neutral to favorable. All investments or acquired
investments in new portfolio companies are initially assessed a
rating of 2;
3 Investments rated 3 involve a borrower performing below
expectations and indicates that the loan's risk has increased
somewhat since origination or acquisition;
4 Investments rated 4 involve a borrower performing materially
below expectations and indicates that the loan's risk has
increased materially since origination or acquisition. In
addition to the borrower being generally out of compliance with
debt covenants, loan payments may be past due (but generally not
more than 120 days past due); and
5 Investments rated 5 involve a borrower performing substantially
below expectations and indicates that the loan's risk has
increased substantially since origination oracquisition. Most
or all of the debt covenants are out of compliance and payments
are substantially delinquent. Loans rated 5 are not anticipated
to be repaid in full and we will reduce the fair market value of
the loan to the amount we anticipate will be recovered.
Our Adviser 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, 4 or 5, our Adviser enhances its level of
scrutiny over the monitoring of such portfolio company.
The following table shows the composition of our portfolio on the 1 to 5 rating
scale as of
December 31, 2020 December 31, 2019 Investments Percentage of
Investments Percentage of
Investment Rating at Fair Value Total Portfolio at Fair Value Total Portfolio
($ in thousands)
1 $ 1,093,318 10.1 % $ 753,619 8.6 %
2 8,628,248 79.6 7,576,022 86.1
3 904,018 8.3 469,584 5.3
4 216,488 2.0 - -
5 - - - -
Total $ 10,842,072 100.0 % $ 8,799,225 100.0 %
The increase in investments rated by our Adviser as a 3, 4 and 5 as of
92
--------------------------------------------------------------------------------
The following table shows the amortized cost of our performing and non-accrual
debt investments as of
December 31, 2020 December
31, 2019
($ in thousands) Amortized Cost Percentage Amortized Cost
Percentage
Performing $ 10,518,059 99.5 % $ 8,727,305 100.0 %
Non-accrual 57,364 0.5 % - - %
Total $ 10,575,423 100.0 % $ 8,727,305 100.0 %
Loans are generally placed on non-accrual status when there is reasonable doubt
that principal or interest will be collected in full. Accrued interest is
generally reversed when a loan is placed on non-accrual status. Interest
payments received on non-accrual loans may be recognized as income or applied to
principal depending upon management's judgment regarding collectability.
Non-accrual loans are restored to accrual status when past due principal and
interest is paid current and, in management's judgment, are likely to remain
current. Management may make exceptions to this treatment and determine to not
place a loan on non-accrual status if the loan has sufficient collateral value
and is in the process of collection.
Portfolio Companies
The following table sets forth certain information regarding each of the portfolio companies in which we had a debt or equity investment as ofDecember 31, 2020 . We offer to make available significant managerial assistance to our portfolio companies. We may receive rights to observe the meetings of our portfolio companies' board of directors. Other than these investments, our only relationships with our portfolio companies are the managerial assistance we may separately provide to our portfolio companies, which services would be ancillary to our investments. As ofDecember 31, 2020 , other thanSebago Lake LLC ,Wingspire Capital Holdings LLC andSwipe Acquisition Corp. (dba PLI), we did not "control" and are not an "affiliate" of any of our portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, we would "control" a portfolio company if we owned 25.0% or more of its voting securities and would be an "affiliate" of a portfolio company if we owned five percent or more of its voting securities. 93
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest Dissolution Diluted Number of Amortized
Company Industry Investment Rate Date Basis Units Cost Fair Value
3ES Innovation Inc. (dba Internet First lien L + 5.75% 5/13/2025 0.0 % 39,728 39,346 38,536
Aucerna)(1)(4) software and senior
Suite 800, 250 - 2nd services secured loan
Street S.W.
Calgary, Alberta, Canada
3ES Innovation Inc. (dba Internet First lien L + 5.75% 5/13/2025 0.0 % - (35 ) (117 )
Aucerna)(1)(12) software and senior
Suite 800, 250 - 2nd services secured
Street S.W. revolving
Calgary, Alberta, Canada loan
ABB/Con-cise Optical Group Distribution First lien L + 5.00% 6/15/2023 0.0 % 75,620 75,053 68,815
LLC(1)(5) senior
12301 NW 39th Street secured loan
Coral Springs, FL 33065
ABB/Con-cise Optical Group Distribution Second lien L + 9.00% 6/17/2024 0.0 % 25,000 24,604 21,875
LLC(1)(5) senior
12301 NW 39th Street secured loan
Coral Springs, FL 33065
Accela, Inc.(1)(2) Internet First lien L + 9/28/2023 0.0 % 22,090 21,871 22,090
2633 Camino Ramon, Suite software and senior 4.92% (incl.
500 services secured loan 1.67% PIK)
San Ramon, CA 94583
Accela, Inc.(1)(12) Internet First lien L + 7.00% 9/28/2023 0.0 % - - -
2633 Camino Ramon, Suite software and senior
500 services secured
San Ramon, CA 94583 revolving
loan
Access CIG, LLC(1)(2) Business Second lien L + 7.75% 2/27/2026 0.0 % 58,760 58,260 57,732
6818 A Patterson Pass Road services senior
Livermore, CA 94550 secured loan
Amspec Services Inc.(1)(4) Professional First lien L + 5.75% 7/2/2024 0.0 % 111,404 110,080 108,896
1249 S River Rd services senior
Cranbury, NJ 08512 secured loan
Amspec Services Professional First lien L + 4.75% 7/2/2024 0.0 % - (148 ) (325 )
Inc.(1)(12) services senior
1249 S River Rd secured
Cranbury, NJ 08512 revolving
loan
Apptio, Inc.(1)(5) Internet First lien L + 7.25% 1/10/2025 0.0 % 50,916 49,975 50,662
11100 NE 8th Street, Suite software and senior
600 services secured loan
Bellevue, WA 98004
Apptio, Inc.(1)(12) Internet First lien L + 7.25% 1/10/2025 0.0 % - (37 ) (14 )
11100 NE 8th Street, Suite software and senior
600 services secured
Bellevue, WA 98004 revolving
loan
Aramsco, Inc.(1)(2) Distribution First lien L + 5.25% 8/28/2024 0.0 % 56,477 55,561 55,912
PO Box 29 senior
Thorofare, NJ 08086 secured loan
Aramsco, Inc.(1)(12) Distribution First lien L + 5.25% 8/28/2024 0.0 % - (128 ) (84 )
PO Box 29 senior
Thorofare, NJ 08086 secured
revolving
loan
Ardonagh Midco 2 PLC Insurance Unsecured 12.75% PIK 1/15/2027 0.0 % 9,300 9,213 9,951
1 Minster Court, Mincing notes
Lane
London EC3R 7AA
United Kingdom
94
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest Dissolution Diluted Number of Amortized
Company Industry Investment Rate Date Basis Units Cost Fair Value
Ardonagh Midco 3 Insurance First lien G + 7/14/2026 0.0 % 95,791 83,893 95,791
PLC(1)(11) senior 8.25%
1 Minster Court, Mincing secured loan (incl.
Lane 2.81%
London EC3R 7AA PIK)
United Kingdom
Ardonagh Midco 3 Insurance First lien E + 7/14/2026 0.0 % 10,924 9,720 10,924
PLC(1)(10) senior 8.25%
1 Minster Court, Mincing secured loan (incl.
Lane 2.81%
London EC3R 7AA PIK)
United Kingdom
Ardonagh Midco 3 Insurance First lien G + 7/14/2022 0.0 % 3,390 2,730 3,390
PLC(1)(11)(12) senior 8.25%
1 Minster Court, Mincing secured (incl.
Lane delayed draw 2.81%
London EC3R 7AA term loan PIK)
United Kingdom
Aruba Investments Chemicals Second lien L + 11/24/2028 0.0 % 10,000 9,854 9,850
Holdings LLC (dba Angus senior 7.75%
Chemical Company)(1)(5) secured loan
1500 E Lake Cook Road
Buffalo Grove, IL 60089
Associations, Inc.(1)(4) Buildings First lien L + 7/30/2024 0.0 % 307,333 304,807 305,795
5401 North Central and real senior 7.00%
Expressway, Suite 300 estate secured loan (incl.
Dallas, TX 75205 3.00%
PIK)
Associations, Buildings First lien L + 7/30/2021 0.0 % 59,153 58,724 58,849
Inc.(1)(4)(12) and real senior 7.00%
5401 North Central estate secured (incl.
Expressway, Suite 300 delayed draw 3.00%
Dallas, TX 75205 term loan PIK)
0.0 % 11,543 11,457 11,427
5401 North Central and real senior 6.00%
Expressway, Suite 300 estate secured
Dallas, TX 75205 revolving
loan
0.0 % 50,450 50,235 50,768
648 Grassmere Park senior 6.50% Nashville, TN 37211 secured loan
Aviation Solutions Aerospace First lien L +
0.0 % 210,719 207,743 183,326
Midco, LLC (dba STS and defense senior 9.25%
Aviation)(1)(4) secured loan (incl.
2000 NE Jensen Beach 9.25%
Blvd PIK)
Jensen Beach, FL 34957
AxiomSL Group, Financial First lien L + 12/3/2027 0.0 % 78,659 77,490 77,479
Inc.(1)(4) services senior 6.50%
45 Broadway, 27th Floor secured loan
New York, NY, 10006
AxiomSL Group, Financial First lien L + 12/3/2025 0.0 % - (138 ) (140 )
Inc.(1)(12) services senior 6.50%
45 Broadway, 27th Floor secured
New York, NY, 10006 revolving
loan
Barracuda Dental LLC Healthcare First lien L + 10/27/2025 0.0 % 62,048 60,974 60,937
(dba National providers senior 7.00%
Dentex)(1)(4) and services secured loan11601 Kew Gardens Ave , Suite 200Palm Beach Gardens, FL 33410 95
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of
Dissolution Diluted Number of
Industry Investment Interest Rate Date Basis Units Cost Fair Value
6/30/2022 0.0 % - (105 ) (164 ) National Dentex)(1)(12) providers and senior 11601 Kew Gardens Ave, services secured Suite 200 delayed draw Palm Beach Gardens, FL term loan 33410 Barracuda Dental LLC (dba Healthcare First lien L + 7.00% 10/27/2025 0.0 % 3,512 3,351
3,344
National Dentex)(1)(4)(12) providers and senior 11601 Kew Gardens Ave, services secured Suite 200 revolving Palm Beach Gardens, FL loan 33410 BCPE Nucleon (DE) SPV, Internet First lien L + 7.00% 9/24/2026 0.0 % 213,500 210,318 210,297 LP(1)(4) software and senior 4001 Kennett Pike, Suite services secured loan 302 Wilmington, DE 19807 BCTO BSI Buyer, Inc. (dba Internet First lien L + 7.00% 12/23/2026 0.0 % 44,643 44,198 44,196 Buildertrend)(1)(4) software and senior 11811 I St. services secured loan Omaha, NE 68137 BCTO BSI Buyer, Inc. (dba Internet First lien L + 7.00%
12/23/2026 0.0 % - (53 ) (54 )
Buildertrend)(1)(12) software and senior
11811 I St. services secured
Omaha, NE 68137 revolving
loan
BIG Buyer, LLC(1)(5) Specialty First lien L + 6.50% 11/20/2023 0.0 % 49,952 49,240 48,954
631 North 400 West Retail senior
Salt Lake City, UT 84103 secured loan
2/28/2021 0.0 % - (72 ) (14 )
631 North 400 West Retail senior
Salt Lake City, UT 84103 secured
delayed draw
term loan
BIG Buyer, LLC(1)(2)(12) Specialty First lien L + 6.50% 11/20/2023 0.0 % 1,750 1,681 1,675
631 North 400 West Retail senior
Salt Lake City, UT 84103 secured
revolving
loan
Black Mountain Sand Eagle Oil and gas First lien L + 8.25% 8/17/2022 0.0 % 46,883 46,683 42,429Ford LLC (1)(4) senior 420 Commerce Street, Suite secured loan 500 Fort Worth, TX 76102 Blackhawk Network Financial Second lien L + 7.00% 6/15/2026 0.0 % 106,400 105,644 99,750 Holdings, Inc.(1)(2) services senior 6220 Stoneridge Mall Road secured loanPleasanton, CA 94588 Bracket Intermediate Healthcare First lien L + 4.25% 9/5/2025 0.0 % 521 485 512 Holding Corp.(1)(4) technology senior 575 East Swedesford Road, secured loan Suite 200 Wayne, PA 19087 Bracket Intermediate Healthcare Second lien L + 8.13% 9/7/2026 0.0 % 26,250 25,838 25,594 Holding Corp.(1)(4) technology senior 575 East Swedesford Road, secured loan Suite 200 Wayne, PA 19087 96
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest
Dissolution Diluted Number of
Industry Investment Rate Date Basis Units Cost Fair Value
11/3/2025 0.0 % 175,347 173,881 176,224 City Brewing)(1)(2) senior 5.75% 925 S. 3rd St. secured loanLa Crosse, WI 54601 Caiman Merger Sub LLC (dba Food and beverage First lien L + 11/1/2024 0.0 % - (99 ) - City Brewing)(1)(12) senior 5.75% 925 S. 3rd St. secured La Crosse, WI 54601 revolving loan Cardinal US Holdings, Professional First lien L + 7/31/2023 0.0 % 89,273 86,998 88,827 Inc.(1)(4) services senior 5.00% De Kleetlaan 6A secured loan 1831 Machelen Brussels, Belgium CIBT Global, Inc.(1)(4) Business services First lien L + 6/3/2024 0.0 % 843 660 599 1600 International Drive, senior 3.75% Suite 600 secured loan McLean, VA 22102 CIBT Global, Inc.(1)(4) Business services Second lien L + 6/2/2025 0.0 % 62,621 57,364 32,563 1600 International Drive, senior 7.75% Suite 600 secured loan (incl. McLean, VA 22102 6.75% PIK) CM7 Restaurant Holdings, Food and beverage First lien L + 5/22/2023 0.0 % 38,507 37,937 37,352 LLC(1)(2) senior 8.00% 18900 Dallas Parkway secured loan Dallas, TX 75287 CM7 Restaurant Holdings, Food and beverage LLC Interest N/A N/A 0.1 % 340 340 340 LLC18900 Dallas Parkway , TX 75287 Confluent Health, Healthcare First lien L + 6/24/2026 0.0 % 17,730 17,589 17,331 LLC.(1)(2) providers and senior 5.00% 175 S English Station Rd services secured loan Ste. 218 Louisville, KY ConnectWise, LLC(1)(4) Business services First lien L + 2/28/2025 0.0 % 178,653 176,981
178,653
4110 George Rd., Suite 200 senior 5.25% Tampa, FL, 33634 secured loan
2/28/2025 0.0 % 5,001 4,824 5,001
4110 George Rd., Suite 200 senior 5.25%
Tampa, FL, 33634 secured
revolving
loan4/3/2025 0.0 % 47,409 46,920 47,172 Inc.(1)(2) senior 8.00% 400 South Akard Street, secured loan Suite 100 Dallas, TX 75202 Definitive Healthcare Healthcare First lien L + 7/16/2026 0.0 % 197,734 196,131 195,756 Holdings, LLC(1)(4) technology senior 5.50% 550 Cochituate Rd. secured loanFramingham, MA 01701 97
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest Dissolution Diluted Number of Amortized
Company Industry Investment Rate Date Basis Units Cost Fair Value
0.0 % 7,807 7,531 7,728
Holdings, LLC(1)(4)(12) technology senior 5.50%
550 Cochituate Rd. secured
Framingham, MA 01701 delayed draw
term loan
0.0 % - (77 ) (109 )
Holdings, LLC(1)(12) technology senior 5.50%
550 Cochituate Rd. secured
Framingham, MA 01701 revolving
loan
0.0 % 15,000 14,927 14,925
Infoblox, Inc.)(1)(5) software and senior 7.25%
3111 Coronado Dr. services secured loan
Santa Clara, CA 95054
DMT Solutions Global Professional First lien L + 7/2/2024 0.0 % 57,150 55,677 54,864
Corporation(1)(4) services senior 7.50%
37 Executive Dr secured loan
Danbury, CT 06810
Douglas Products and Chemicals First lien L + 10/19/2022 0.0 % 97,939 97,530 95,980
Packaging Company senior 5.75%
LLC(1)(4) secured loan
1550 E. Old 210 Highway
Liberty, MO 64068
Douglas Products and Chemicals First lien P + 10/19/2022 0.0 % 3,028 3,000 2,846
Packaging Company senior 4.75%
LLC(1)(8)(12) secured
1550 E. Old 210 Highway revolving
Liberty, MO 64068 loan
Endries Acquisition, Distribution First lien L + 12/10/2025 0.0 % 202,219 199,557 198,680
Inc.(1)(6) senior 6.25%
714 West Ryan Street, secured loan
P.O. Box 69
Brillion, Wisconsin USA
54110-0069
Endries Acquisition, Distribution First lien L + 12/10/2024 0.0 % - (310 ) (473 )
Inc.(1)(12) senior 6.25%
714 West Ryan Street, secured
P.O. Box 69 revolving
Brillion, Wisconsin USA loan
54110-0069
Entertainment Benefits Business First lien L +
0.0 % 81,250 80,262 71,500
Group, LLC(1)(4) services senior 8.25% 19495 Biscayne Boulevard, secured loan (incl. Suite 300, Aventura, 2.50% FL 33180 PIK)
Entertainment Benefits Business First lien L +
0.0 % 10,096 9,971 8,752
secured (incl.
Suite 300, Aventura, revolving 2.50%
FL 33180 loan PIK)
EW Holdco, LLC (dba Specialty First lien L + 9/25/2024 0.0 % 71,297 70,818 67,732
European Wax)(1)(2) Retail senior 5.50%
P.O. Box 802208 secured loan
Aventura, FL 33280
Feradyne Outdoors, Consumer First lien L + 5/25/2023 0.0 % 88,400 87,920 86,632
LLC(1)(4) products senior 6.25%
1230 Poplar Avenue secured loan
Superior, WI 54880
98
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest Dissolution Diluted Number of Amortized
Company Industry Investment Rate Date Basis Units Cost Fair Value
Forescout Technologies, Internet First lien L + 8/17/2026 0.0 % 49,834 49,032 49,211
Inc.(1)(4) software and senior 9.50% (
190 W. Tasman Drive services secured loan incl.
San Jose, CA 95134 9.50%
PIK)
Forescout Technologies, Internet First lien L + 8/18/2025 0.0 % - (87 ) (67 )
Inc.(1)(12) software and senior 8.50%
190 W. Tasman Drive services secured
San Jose, CA 95134 revolving
loan
FR Arsenal Holdings II Infrastructure First lien L +
0.0 % 121,900 120,927 115,805
Corp. (dba and senior 7.50% Applied-Cleveland environmental secured loan Holdings, Inc.)(1)(4) services370690 East Old Highway 64 Cleveland, OK 74020 Galls, LLC(1)(4) Specialty First lien L + 1/31/2025 0.0 % 105,272 104,288 101,061 1340 Russell Cave Road Retail senior 6.75% P.O. Box 54308 secured loan (incl. Lexington, KY 40505 0.50% PIK) Galls, LLC(1)(4)(12) Specialty First lien L + 1/31/2024 0.0 % 9,916 9,741 9,072 1340 Russell Cave Road Retail senior 6.75% P.O. Box 54308 secured (incl. Lexington, KY 40505 revolving 0.50% loan PIK) GC Agile Holdings Limited Professional First lien L + 6/15/2025 0.0 % 158,862 156,717 156,081 (dba Apex Fund services senior 7.00% Services)(1)(4) secured loan Veritas House, 125 Finsbury PavementLondon, England , EC2A 1NQ GC Agile Holdings Limited Professional First lien L + 6/15/2023 0.0 % 3,462 3,299 3,280 (dba Apex Fund services senior 7.00% Services)(1)(4)(12) secured Veritas House, 125 revolving Finsbury Pavement loan
0.0 % 18,315 18,085 17,629
(dba Procare software and senior 4.00% Software)(1)(4) services secured loan1 West Main St. , Ste 201 Medford, OR 97501 Genesis Acquisition Co. Internet First lien L + 7/31/2024 0.0 % 2,637 2,606
2,538
(dba Procare software and senior 4.00%
Software)(1)(4) services secured
1 West Main St., Ste 201 revolving
Medford, OR 97501 loan
Gerson Lehrman Group, Professional First lien L + 12/12/2024 0.0 % 195,899 194,541 195,899
Inc.(1)(4) services senior 4.75%
60 East 42nd Street, 3rd secured loan
Floor
New York, NY 10165
Gerson Lehrman Group, Professional First lien L + 12/12/2024 0.0 % - (142 ) -
Inc.(1)(12) services senior 4.75%
60 East 42nd Street, 3rd secured
Floor revolving
New York, NY 10165 loan
99
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest Dissolution Diluted Number of Amortized
Company Industry Investment Rate Date Basis Units Cost Fair Value
0.0 % 135,400 134,357 133,708
(fka GI Chill Acquisition providers and senior 7.50% LLC)(1)(4) services secured loan611 Gateway Blvd , Suite 820South San Francisco, CA 94080 Gloves Buyer, Inc. (dba Manufacturing Second lien L +
12/29/2028 0.0 % 29,250 28,519 28,519 Protective Industrial senior 8.25% Products)(1)(2) secured loan968 Albany Shaker Road Latham, NY 12110 Gloves Holdings, LP (dba Manufacturing LP Interest N/A N/A 0.6 % 3,250 3,250 3,250Protective Industrial Products)968 Albany Shaker Road Latham, NY 12110 Granicus, Inc.(1)(5) Internet First lien L + 8/21/2026 0.0 % 41,756 40,760
42,173
services secured loan
0.0 % - (62 ) -
services secured
revolving
loan
H&F Opportunities LUX III Internet First lien L +
0.0 % 42,250 41,100 42,144
S.À R.L (dba software and senior 7.75%
Checkmarx)(1)(5) services secured loan
Amot Atrium Tower , 2
Jabotinsky Street
Ramat Gan 520501
Israel
H&F Opportunities LUX III Internet First lien L + 4/16/2026 0.0 % - (429 ) (41 )
S.À R.L (dba software and senior 7.75%
Checkmarx)(1)(12) services secured
Amot Atrium Tower, 2 revolving
Jabotinsky Street loan
Ramat Gan 520501
Israel
Hayward Industries, Household First lien L + 8/5/2024 0.0 % 918 899 906
Inc.(1)(2) products senior 3.50%
620 Division Street secured loan
0.0 % 52,149 51,458 51,628
Inc.(1)(2) products senior 8.25%
620 Division Street secured loan
Elizabeth, NJ 07201
Hercules Borrower, Business First lien L + 12/15/2026 0.0 % 180,043 177,358 177,343
LLC(1)(5) services senior 6.50%
412 Georgia Avenue #300 secured loan
Chattanooga, TN 37403
Hercules Borrower, Business First lien L + 12/15/2026 0.0 % - (311 ) (314 )
LLC(1)(12) services senior 6.50%
412 Georgia Avenue #300 secured
Chattanooga, TN 37403 revolving
loan
0.0 % 5,112 5,112 5,112
412 Georgia Avenue #300 services notes (inc.
Chattanooga, TN 37403 0.48%
PIK)
100
--------------------------------------------------------------------------------
Percentage
of Class
Held on a Principal
Maturity / Fully Number of
($ in thousands) Type of Interest Dissolution Diluted Shares / Number Amortized
Company Industry Investment Rate Date Basis of Units Cost Fair Value
Hercules Buyer, LLC Business Common Units N/A N/A 1.0 % 2,190,000 2,190 2,190
412 Georgia Avenue #300 services
Chattanooga, TN 37403
H-Food Holdings, LLC(1)(2) Food and First lien L + 5/23/2025 0.0 % 12,861 12,768 12,656
3500 Lacey Road, Suite 300 beverage senior 4.00%
Downers Grove IL 60515 secured loan
H-Food Holdings, LLC(1)(2) Food and Second lien L + 3/2/2026 0.0 % 121,800 119,542 119,060
3500 Lacey Road, Suite 300 beverage senior 7.00%
Downers Grove IL 60515 secured loan
H-Food Holdings, LLC Food and LLC Interest N/A N/A 0.9 % 10,875 10,875 11,159
3500 Lacey Road, Suite beverage
300, Downers Grove IL
60515
Hg Genesis 8 Sumoco Financial Unsecured G + 8/28/2025 0.0 % 43,841 42,148 44,499
Limited(1)(11) services facility 7.50%
2 More London Riverside (incl.
London SE1 2AP 7.50%
United Kingdom PIK)
HGH Purchaser, Inc. (dba Household First lien L + 11/3/2025 0.0 % 76,982 76,015 74,673
Horizon Services)(1)(4) products senior 6.75%
320 Century Blvd secured loan
Wilmington, DE 19808
HGH Purchaser, Inc. (dba Household First lien L + 11/1/2021 0.0 % 26,993 26,394 26,090
Horizon products senior 6.75%
Services)(1)(4)(12) secured
320 Century Blvd delayed draw
Wilmington, DE 19808 term loan
HGH Purchaser, Inc. (dba Household First lien L + 11/3/2025 0.0 % 972 855 680
Horizon products senior 6.75%
Services)(1)(4)(12) secured
320 Century Blvd revolving
Wilmington, DE 19808 loan
Hometown Food Food and First lien L + 8/31/2023 0.0 % 21,388 21,145 21,388
Company(1)(2) beverage senior 5.00%
1 Strawberry Lane secured loan
Orrville, Ohio 44667-0280
Hometown Food Food and First lien L + 8/31/2023 0.0 % 565 520 565
Company(1)(2)(12) beverage senior 5.00%
1 Strawberry Lane secured
Orrville, Ohio 44667-0280 revolving
loan
Hyland Software, Internet Second lien L + 7/7/2025 0.0 % 24,705 24,372 24,848
Inc.(1)(2) software and senior 7.00%
28500 Clemens Road services secured loan
Westlake, OH 44145
Ideal Tridon Holdings, Manufacturing First lien L + 7/31/2024 0.0 % 53,310 52,757 52,111
Inc.(1)(4) senior 5.75%
8100 Tridon Drive secured loan
Smyrna, TN USA 37167-6603
Ideal Tridon Holdings, Manufacturing First lien L + 7/31/2023 0.0 % 900 858 771
Inc.(1)(2)(12) senior 5.75%
8100 Tridon Drive secured
Smyrna, TN USA 37167-6603 revolving
loan
101
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Dissolution Diluted Number of Amortized
Company Industry Investment Interest Rate Date Basis Units Cost Fair Value
Individual Foodservice Distribution First lien L + 6.25% 11/22/2025 0.0 % 156,900 154,129 154,547
Holdings, LLC(1)(5) senior
5496 Lindbergh Lane secured loan
Bell, CA 90201
Individual Foodservice Distribution First lien L + 6.25% 6/30/2022 0.0 % 12,587 11,912 12,012
Holdings, LLC(1)(5)(12) senior
5496 Lindbergh Lane secured
Bell, CA 90201 delayed draw
term loan
Individual Foodservice Distribution First lien L + 6.25% 11/22/2024 0.0 % 5,276 4,877 4,919
Holdings, LLC(1)(2)(12) senior
5496 Lindbergh Lane secured
Bell, CA 90201 revolving
loan
Innovative Water Care Chemicals First lien L + 5.00% 2/27/2026 0.0 % 147,375 139,223 129,690
Global Corporation(1)(4) senior
1400 Bluegrass Lakes Pkwy secured loan
Alpharetta, GA 30004
Instructure, Inc.(1)(4) Education First lien L + 7.00% 3/24/2026 0.0 % 84,660 83,400 84,660
6330 South 3000 East, senior
Suite 700 secured loan
Salt Lake City, UT 84121
Instructure, Inc.(1)(12) Education First lien L + 7.00% 3/24/2026 0.0 % - (60 ) -
6330 South 3000 East, senior
Suite 700 secured
Salt Lake City, UT 84121 revolving
loan
Integrity Marketing Insurance First lien L + 5.75% 8/27/2025 0.0 % 221,109 218,033 217,792
Acquisition, LLC(1)(5) senior
9111 Cypress Waters Blvd secured loan
Suite 450
Coppell, TX 75019
Integrity Marketing Insurance First lien L + 5.75% 8/27/2025 0.0 % - (172 ) (222 )
Acquisition, LLC(1)(12) senior
9111 Cypress Waters Blvd secured
Suite 450 revolving
Coppell, TX 75019 loan
Intelerad Medical Systems Healthcare First lien L + 6.25% 2/20/2026 0.0 % 67,852 67,092 66,834
Incorporated (fka technology senior
11849573 Canada secured loan
Inc.)(1)(4)
800 Boulevard de
Maisonneuve East 12th
floor
Montreal, Quebec H2L 4L8,
Canada
Intelerad Medical Systems Healthcare First lien L + 6.25% 2/20/2026 0.0 % 1,126 1,066 1,041
Incorporated (fka technology senior
11849573 Canada secured
Inc.)(1)(4)(12) revolving
800 Boulevard de loan
Maisonneuve East 12th
floor
Montreal, Quebec H2L 4L8,
Canada
102
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Dissolution Diluted Number of Amortized
Company Industry Investment Interest Rate Date Basis Units Cost Fair Value
Interoperability Bidco, Healthcare First lien L + 5.75%
0.0 % 76,042 75,260 73,571
Inc.(1)(4) technology senior
100 High Street, Suite secured loan
1560
0.0 % - (8 ) (170 )
Inc.(1)(12) technology senior
100 High Street, Suite secured
1560 delayed draw
Boston, MA 02110 term loan
Interoperability Bidco, Healthcare First lien L + 5.75%
0.0 % 4,000 3,965 3,870
Inc.(1)(4) technology senior
100 High Street, Suite secured
1560 revolving
Boston, MA 02110 loan
0.0 % 189,956 188,084 188,531
Beeline)(1)(4) software and senior
12724 Gran Bay Parkway services secured loan
West, Suite 200
Jacksonville, FL
32258-4467
IQN Holding Corp. (dba Internet First lien L + 5.50% 8/21/2023 0.0 % - (179 ) (170 )
Beeline)(1)(12) software and senior
12724 Gran Bay Parkway services secured
West, Suite 200 revolving
Jacksonville, FL loan
32258-4467
0.0 % 7,130 7,076 7,058
150 North Clinton Street and media senior Chicago, IL 60661-1416 secured loan Storm Chaser Intermediate Distribution First lien L + 7.50% 7/25/2022 0.0 % 114,964 114,167 114,676 II Holding Corporation senior (dba JM Swank, secured loan LLC) (1)(4)21333 Haggerty Rd. Suite 100 Novi, MI 48375 KS Management Services, Healthcare First lien L + 4.25% 1/9/2026 0.0 % 123,750 122,422 123,751 L.L.C.(1)(2) providers senior 2727 West Holcombe and services secured loan Boulevard Houston, TX 77025 KWOR Acquisition, Inc. Insurance First lien L + 4.00% 6/3/2026 0.0 % 20,312 19,780 19,804 (dba Worley Claims senior Services)(1)(2) secured loan Post Office Box 249 Hammond, LA 70404 KWOR Acquisition, Inc. Insurance First lien L + 4.00%
6/3/2021 0.0 % - (52 ) (52 )
(dba Worley Claims senior
Services)(1)(12) secured
Post Office Box 249 delayed draw
Hammond, LA 70404 term loan
KWOR Acquisition, Inc. Insurance First lien L + 4.00% 6/3/2024 0.0 % - (80 ) (130 )
(dba Worley Claims senior
Services)(1)(12) secured
Post Office Box 249 revolving
Hammond, LA 70404 loan
KWOR Acquisition, Inc. Insurance Second lien L + 7.75% 12/3/2026 0.0 % 49,600 48,976 48,732
(dba Worley Claims senior
Services)(1)(2) secured loan
Post Office Box 249
Hammond, LA 70404
103
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Dissolution Diluted Number of Amortized
Company Industry Investment Interest Rate Date Basis Units Cost Fair Value
Lazer Spot G B Holdings, Transportation First lien L + 5.75% 12/9/2025 0.0 % 145,530 143,377 144,439
Inc.(1)(4) senior
6525 Shiloh Rd #900 secured loan
Alpharetta, GA 30005
Lazer Spot G B Holdings, Transportation First lien L + 5.75% 12/9/2025 0.0 % - (381 ) (201 )
Inc.(1)(12) senior
6525 Shiloh Rd #900 secured
Alpharetta, GA 30005 revolving
loan
Learning Care Group (US) Education Second lien L + 7.50% 3/13/2026 0.0 % 26,967 26,606 23,731
No. 2 Inc.(1)(5) senior
21333 Haggerty Rd., Suite secured loan
100
Novi, MI 48375
Liberty Oilfield Services Energy First lien L + 7.63% 9/19/2022 0.0 % 13,759 13,661 13,587
LLC(1)(2) equipment and senior
950 17th Street, Suite services secured loan
2000, 20th Floor
Denver, CO 80202
Lightning Midco, LLC (dba Internet First lien L + 5.50% 11/21/2025 0.0 % 138,905 137,883 138,209
Vector Solutions)(1)(5) software and senior
4890 W. Kennedy Blvd, Suite services secured loan
300
Tampa, FL 33609
Lightning Midco, LLC (dba Internet First lien L + 5.50% 11/21/2023 0.0 % 4,409 4,332 4,343
Vector Solutions)(1)(5)(12) software and senior
4890 W. Kennedy Blvd, Suite services secured
300 revolving
Tampa, FL 33609 loan
LineStar Integrity Services Infrastructure First lien L + 7.25%
2/12/2024 0.0 % 88,851 87,950 78,189
LLC(1)(5) and senior
5391 Bay Oaks Dr. environmental secured loan
Pasadena, TX 77505 services
Litera Bidco LLC(1)(2) Internet First lien L + 5.43% 5/29/2026 0.0 % 84,186 83,185 83,766
services secured loan
5/30/2025 0.0 % - (56 ) (29 )
300 S Riverside Plaza #800 software and senior
Chicago, IL 60606 services secured
revolving
loan
Lytx, Inc.(1)(2) Transportation First lien L + 6.00% 2/28/2026 0.0 % 53,614 52,804 52,675
9785 Towne Centre Drive senior
San Diego, CA 92121 secured loan
Lytx, Inc.(1)(2)(12) Transportation First lien L + 6.00% 2/28/2022 0.0 % 4,662 4,524 4,334
9785 Towne Centre Drive senior
San Diego, CA 92121 secured
delayed draw
term loan
Manna Development Group, Food and First lien L + 6.75% 10/24/2022 0.0 % 52,764 52,426 49,598
LLC(1)(2) beverage senior
2339 11th Street secured loan
Encinitas, CA 92024
Manna Development Group, Food and First lien L + 6.75% 10/24/2022 0.0 % 3,183 3,132 2,992
LLC(1)(2) beverage senior
2339 11th Street secured
Encinitas, CA 92024 revolving
loan
104
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest Dissolution Diluted Number of Amortized
Company Industry Investment Rate Date Basis Units Cost Fair Value
Mavis Tire Express Automotive First lien L + 3/20/2025 0.0 % 864 813 847
Services Corp.(1)(4) senior 3.25%
358 Saw Mill River Road, secured loan
Suite 17
Millwood, NY 10546
Mavis Tire Express Automotive Second lien L + 3/20/2026 0.0 % 179,905 177,149 176,776
Services Corp.(1)(4) senior 7.57%
358 Saw Mill River Road, secured loan
Suite 17
Millwood, NY 10546
Mavis Tire Express Automotive Second lien L + 3/20/2021 0.0 % - - (48 )
Services Corp.(1)(12) senior 8.00%
358 Saw Mill River Road, secured
Suite 17 delayed draw
Millwood, NY 10546 term loan
MHE Intermediate Holdings, Manufacturing First lien L + 3/8/2024 0.0 % 23,726 23,571 23,014
LLC (dba Material Handling senior 5.00%
Services)(1)(4) secured loan
3201 Levis Commons Blvd
Perrysburg, OH 43551
MINDBODY, Inc.(1)(5) Internet First lien L + 2/14/2025 0.0 % 58,187 57,761 53,532
651 Tank Farm Road software and senior 8.50%
San Luis Obispo, CA services secured loan (incl.
1.50%
PIK)
MINDBODY, Inc.(1)(5)(12) Internet First lien L + 2/14/2025 0.0 % - (42 ) (486 )
651 Tank Farm Road software and senior 7.00%
San Luis Obispo, CA services secured
revolving
loan
Windows Entities Manufacturing LLC Units N/A N/A 22.5 % 31,822 58,495 72,538
6201 E 43rd St
Tulsa, OK 74135
Motus, LLC and Runzheimer Transportation First lien L + 1/17/2024 0.0 % 59,282 58,430 59,282
International LLC(1)(4) senior 6.36%
Two Financial Center secured loan
60 South Street,
Boston, MA 02111
Nelipak Holding Healthcare First lien L + 7/2/2026 0.0 % 47,521 46,742 46,333
Company(1)(5) equipment and senior 4.25%
21 Amflex Drive services secured loan
Cranston, RI , 02921, USA
Nelipak Holding Healthcare First lien L + 7/2/2024 0.0 % 4,422 4,319 4,238
Company(1)(4)(12) equipment and senior 4.25%
21 Amflex Drive services secured
Cranston, RI, 02921, USA revolving
loan
Nelipak Holding Healthcare First lien E + 7/2/2024 0.0 % 492 147 290
Company(1)(8)(12) equipment and senior 4.50%
21 Amflex Drive services secured
Cranston, RI, 02921, USA revolving
loan
Nelipak Holding Healthcare Second lien L + 7/2/2027 0.0 % 67,006 66,135 65,331
Company(1)(5) equipment and senior 8.25%
21 Amflex Drive services secured loan
Cranston, RI , 02921, USA
105
--------------------------------------------------------------------------------
Percentage
of Class
Held on a Principal
Maturity / Fully Number of
($ in thousands) Type of
Dissolution Diluted Shares / Number
Industry Investment Interest Rate Date Basis of Units Cost Fair Value
Nelipak Holding Healthcare Second lien E + 8.50% 7/2/2027 0.0 % 73,536 66,385 70,595
Company(1)(8) equipment and senior
21 Amflex Drive services secured loan
Cranston, RI , 02921, USA
Nellson Nutraceutical, Food and beverage First lien L + 5.25% 12/23/2023 0.0 % 27,498 26,480 26,536
LLC(1)(4) senior
5115 E. La Palma Ave. secured loan
Anaheim, CA 92807
NMI Acquisitionco, Inc. Financial services First lien L + 5.00% 9/6/2022 0.0 % 27,904 27,640 27,625
(dba Network senior
Merchants)(1)(2) secured loan
201 Main St.
Roselle, IL 60172
NMI Acquisitionco, Inc. Financial services First lien L + 5.00% 9/6/2022 0.0 % - (6 ) (6 )
(dba Network senior
Merchants)(1)(12) secured
201 Main St. revolving
Roselle, IL 60172 loan
Norvax, LLC (dba Insurance First lien L + 6.50% 9/15/2025 0.0 % 199,357 195,089 199,856
GoHealth)(1)(4) senior
214 West Huron St. secured loan
Chicago, IL 60654
Norvax, LLC (dba Insurance First lien L + 6.50% 9/13/2024 0.0 % - (136 ) -
GoHealth)(1)(12) senior
214 West Huron St. secured
Chicago, IL 60654 revolving
loan
Norvax, LLC (dba GoHealth) Insurance Common Stock N/A N/A 0.45 % 1,439,481 7,315 19,275
214 West Huron St. Chicago, IL 60654 Nutraceutical International Food and beverage First lien L + 7.00% 9/30/2026 0.0 % 217,255 214,110 215,083 Corporation(1)(2) senior 1777 Sun Peak Drive secured loanPark City, UT 84098 Nutraceutical International Food and beverage First lien L + 7.00% 9/30/2025 0.0 % - (193 ) (136 ) Corporation(1)(12) senior 1777 Sun Peak Drive secured Park City, UT 84098 revolving loan Offen, Inc.(1)(2) Distribution First lien L + 5.00% 6/22/2026 0.0 % 19,780 19,620 19,285 5100 East 78th Avenue senior Commerce City, CO 80022 secured loan Packaging Coordinators Healthcare Second lien L + 8.25% 11/30/2028 0.0 % 195,044 191,173 191,143 Midco, Inc.(1)(5) equipment and senior 3001 Red Lion Road services secured loanPhiladelphia, PA 19114 KPCI Holdings, LP Healthcare LP Interest N/A N/A 2.7 % 25,285 25,285 25,285 3001 Red Lion Road equipment and Philadelphia, PA 19114 services Park Place Technologies, Telecommunications First lien L + 5.00% 11/10/2027 0.0 % 9,000 8,646 8,640 LLC(1)(2) senior 5910 Landerbrook Drive secured loan Cleveland, OH 44124 106
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of
Dissolution Diluted Number of
Industry Investment Interest Rate Date Basis Units Cost Fair Value
3/31/2026 0.0 % 123,891 122,224 123,891 Insurance Services, senior LLC(1)(5) secured loan6200 Canoga Avenue , Suite 325Woodland Hills, CA 91367 Peter C. Foy & Associated Insurance First lien L + 6.25% 9/30/2021 0.0 % 12,044 11,636 12,044 Insurance Services, senior LLC(1)(4)(12) secured 6200 Canoga Avenue, Suite delayed draw 325 term loanWoodland Hills, CA 91367 Peter C. Foy & Associated Insurance First lien L + 6.25%
3/31/2026 0.0 % 2,531 2,414 2,531 Insurance Services, senior LLC(1)(5)(12) secured 6200 Canoga Avenue, Suite revolving 325 loanWoodland Hills, CA 91367 PHM Netherlands Midco B.V. Manufacturing First lien L + 4.50% 7/31/2026 0.0 % 794 737 780 (dba Loparex)(1)(4) senior 1255 Crescent Green Suite secured loan 400 Cary, NC 27518 PHM Netherlands Midco B.V. Manufacturing Second lien L + 8.75% 8/2/2027 0.0 % 112,000 105,126 106,960 (dba Loparex)(1)(4) senior 1255 Crescent Green Suite secured loan 400 Cary, NC 27518 Pregis Topco LLC(1)(2) Containers First lien L + 3.75% 7/31/2026 0.0 % 863 819
859
secured loan
Deerfield, IL 60015 USA
Pregis Topco LLC(1)(2) Containers Second lien L + 7.75% 7/30/2027 0.0 % 215,033 211,223 213,959
secured loan
Deerfield, IL 60015 USA
Premier Imaging, LLC (dba Healthcare First lien L + 5.50% 1/2/2025 0.0 % 33,320 32,851 32,737
LucidHealth)(1)(2) providers and senior
100 E. Campus View Blvd., services secured loan
Suite 100
Columbus, Ohio 43235
Professional Plumbing Manufacturing First lien L + 6.75% 4/16/2024 0.0 % 51,681 51,210 49,873
Group, Inc.(1)(4) senior
2951 E HWY 501 secured loan
Conway, SC 29526
Professional Plumbing Manufacturing First lien L + 6.75% 4/16/2023 0.0 % 6,643 6,582 6,209
Group, Inc.(1)(4)(12) senior
2951 E HWY 501 secured
Conway, SC 29526 revolving
loan5/14/2026 0.0 % 45,553 45,039 45,097 (dba PEC-Veriforce)(1)(4) senior 233 General Patton Ave. secured loanMandeville, LA 70471 107
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest
Dissolution Diluted Number of
Industry Investment Rate Date Basis Units Cost Fair Value
Project Power Buyer, LLC Oil and gas First lien L + 5/14/2025 0.0 % - (29 ) (32 )
(dba PEC-Veriforce)(1)(12) senior 6.25%
233 General Patton Ave. secured
Mandeville, LA 70471 revolving
loan
Project Ruby Ultimate Healthcare First lien L +
0.0 % 2,906 2,863 2,863
Parent Corp.(1)(2) technology senior 4.25%
11300 Switzer Road secured loan
0.0 % 9,457 9,268 9,268
Parent Corp.(1)(2) technology senior 8.25%
11300 Switzer Road secured loan
Overland Park, KS 66210
QC Supply, LLC(1)(2) Distribution First lien L + 12/29/2022 0.0 % 34,568 34,248 29,037
574 Road 11 senior 7.00%
Schuyler, NE 68661 secured loan (incl.
1.00%
PIK)
QC Supply, LLC(1)(2)(12) Distribution First lien L + 12/29/2021 0.0 % 4,336 4,311 3,541
574 Road 11 senior 7.00%
Schuyler, NE 68661 secured
revolving
loan
Recipe Acquisition Corp. Food and Second lien L + 12/1/2022 0.0 % 32,000 31,771 26,560
(dba Roland beverage senior 9.00%
Corporation)(1)(4) secured loan
71 West 23rd Street
New York, NY 10010
Reef (fka Cheese Buildings and First lien L + 11/28/2024 0.0 % 134,253 132,953 128,212
Acquisition, LLC)(1)(5) real estate senior 5.75%
233 Peachtree Street NE secured loan (incl.
Harris Tower, Suite 2600 1.00%
Atlanta, GA 30303 PIK)
Imperial Parking Buildings and First lien C + 11/28/2024 0.0 % 27,749 26,561 26,501
Canada(1)(7) real estate senior 6.25%
233 Peachtree Street NE secured loan (incl.
Harris Tower, Suite 2600 1.25%
Atlanta, GA 30303 PIK)
Reef (fka Cheese Buildings and First lien L + 11/28/2023 0.0 % 10,987 10,893 10,251
Acquisition, real estate senior 4.75%
LLC)(1)(2)(12) secured
233 Peachtree Street NE revolving
Harris Tower, Suite 2600 loan
0.0 % 89,872 88,536 88,524
Inc.(1)(4) providers and senior 6.50%
320 1st Street North, services secured loan
Suite 712
Jacksonville Beach, FL
32250
Refresh Parent Holdings, Healthcare First lien L + 6/9/2022 0.0 % - (73 ) (74 )
Inc.(1)(12) providers and senior 6.50%
320 1st Street North, services secured
Suite 712 delayed draw
Jacksonville Beach, FL term loan
32250
0.0 % 3,060 2,900 2,899
Inc.(1)(4)(12) providers and senior 6.50%
320 1st Street North, services secured
Suite 712 revolving
Jacksonville Beach, FL loan
32250
108
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Dissolution Diluted Number of Amortized
Company Industry Investment Interest Rate Date Basis Units Cost Fair Value
Restore OMH Intermediate Healthcare Senior N/A N/A 4.6 % 2,284 22,163 22,157
Holdings, Inc. providers and Preferred
320 1st Street North, services Stock
Suite 712
Jacksonville Beach, FL
32250
RSC Acquisition, Inc (dba Insurance First lien L + 5.50% 10/30/2026 0.0 % 53,649 52,845 52,441
Risk Strategies)(1)(4) senior
160 Federal Street, 4th secured loan
Floor
Boston, Massachusetts
02110
RSC Acquisition, Inc (dba Insurance First lien L + 5.50% 10/30/2026 0.0 % - (28 ) (38 )
Risk Strategies)(1)(12) senior
160 Federal Street, 4th secured
Floor revolving
Boston, Massachusetts loan
02110
Safety Products/JHC Manufacturing First lien L + 4.50% 6/28/2026 0.0 % 13,345 13,237 12,110
Acquisition Corp. (dba senior
Justrite Safety secured loan
Group)(1)(2)
3921 DeWitt Ave
Mattoon, IL 61938 U.S.A.
Safety Products/JHC Manufacturing First lien L + 4.50% 6/28/2021 0.0 % 721 708 569
Acquisition Corp. (dba senior
Justrite Safety secured
Group)(1)(2)(12) delayed draw
3921 DeWitt Ave term loan
Mattoon, IL 61938 U.S.A.
Sara Lee Frozen Bakery, Food and First lien L + 4.50% 7/30/2025 0.0 % 44,313 43,705 42,430
LLC (fka KSLB Holdings, beverage senior
LLC)(1)(2) secured loan
3500 Lacey Rd
Downers Grove, IL 60515
Sara Lee Frozen Bakery, Food and First lien L + 4.50% 7/30/2023 0.0 % 4,560 4,456 4,178
LLC (fka KSLB Holdings, beverage senior
LLC)(1)(2)(12) secured
3500 Lacey Rd revolving
Downers Grove, IL 60515 loan
Sebago Lake LLC(13) Investment LLC Interest N/A N/A 50.0 % 107,837 107,837 105,546
399 Park Avenue, 38th funds and
Floor vehicles
New York, NY 10022
Severin Acquisition, LLC Education Second lien L + 6.75% 8/3/2026 0.0 % 112,000 111,259 109,480
(dba PowerSchool)(1)(2) senior
150 Parkshore Dr. secured loan
Folsom, CA 95630
Shearer's Foods, LLC(1)(4) Food and Second lien L + 7.75% 9/22/2028 0.0 % 120,000 118,829 119,400
100 Lincoln Way East beverage senior
Massillon, Ohio 44646 secured loan
Sonny's Enterprises, Manufacturing First lien L + 7.00% 8/5/2026 0.0 % 226,625 222,327 223,225
LLC(1)(2) senior
5605 Hiatus Road secured loan
Tamarac, FL 33321
Sonny's Enterprises, Manufacturing First lien L + 7.00% 8/5/2025 0.0 % - (330 ) (270 )
LLC(1)(12) senior
5605 Hiatus Road secured
Tamarac, FL 33321 revolving
loan
109
--------------------------------------------------------------------------------
Percentage
of Class
Held on a
Maturity / Fully Principal Number
($ in thousands) Type of Dissolution Diluted of Shares /
Company Industry Investment Interest Rate
Date Basis Number of Units Amortized Cost
0.0 % 40,385 39,458 39,981
Abingdon Science Park software and senior Abingdon OX14 3YP United services secured loan Kingdom Swipe Acquisition Advertising First lien L + 8.00% 6/29/2024 0.0 % 50,045 49,050 49,044 Corporation (dba and media senior PLI)(1)(4)(13) secured loan 1220 Trade DriveNorth Las Vegas, NV 89030 Swipe Acquisition Advertising First lien L + 8.00% 12/31/2021 0.0 % 2,669 2,669 2,246 Corporation (dba and media senior PLI)(1)(3)(12)(13) secured 1220 Trade Drive delayed draw North Las Vegas, NV 89030 term loan Swipe Acquisition Advertising Letter of L + 8.00% 6/29/2024 0.0 % - 4 - Corporation (dba and media Credit PLI)(1)(12)(13) 1220 Trade DriveNorth Las Vegas, NV 89030 New PLI Holdings, LLC(13) Advertising Class A N/A N/A 0.0 % 86,745 48,007
48,007
1220 Trade Drive and media Common UnitsNorth Las Vegas, NV 89030 Tall Tree Foods, Food and First lien L + 7.25% 8/12/2022 0.0 % 48,284 48,103 47,438 Inc.(1)(2) beverage senior 1190 West Loop South secured loan
0.0 % 83,324 82,427 83,324
TrialCard)(1)(4) providers senior
2250 Perimeter Park Dr and services secured loan
#300,
Morrisville, NC 27560
TC Holdings, LLC (dba Healthcare First lien L + 4.50% 11/14/2022 0.0 % - (58 ) -
TrialCard)(1)(12) providers senior
2250 Perimeter Park Dr and services secured
#300, revolving
Morrisville, NC 27560 loan
The Ultimate Software Human Second lien L + 6.75% 5/3/2027 0.0 % 1,592 1,578 1,624
Group, Inc.(1)(4) resource senior
2000 Ultimate Way support secured loan
Weston, FL 33326 services
THG Acquisition, LLC (dba Insurance First lien L + 5.89% 12/2/2026 0.0 % 81,921 80,061 80,246
Hilb)(1)(6) senior
6802 Paragon Place, Suite secured loan
200
Richmond, Virginia 23230
THG Acquisition, LLC (dba Insurance First lien L + 5.78% 12/2/2021 0.0 % 17,938 17,082 17,452
Hilb)(1)(4)(12) senior
6802 Paragon Place, Suite secured
200 delayed draw
Richmond, Virginia 23230 term loan
THG Acquisition, LLC (dba Insurance First lien L + 5.75% 12/2/2025 0.0 % - (189 ) (193 )
Hilb)(1)(12) senior
6802 Paragon Place, Suite secured
200 revolving
Richmond, Virginia 23230 loan
110
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Interest Dissolution Diluted Number of Amortized
Company Industry Investment Rate Date Basis Units Cost Fair Value
0.0 % 132,566 131,507 131,240
(fka Dominion Web software and senior 6.25%
Solutions, LLC)(1)(4) services secured loan
150 Granby Street
Norfolk, VA 23510-1604
Trader Interactive, LLC Internet First lien L + 6/15/2023 0.0 % 1,916 1,876 1,852
(fka Dominion Web software and senior 6.25%
revolving
Norfolk, VA 23510-1604 loan
0.0 % 219,112 216,856 218,564
15044 N. Scottsdale Road, entertainment senior 5.50%
Suite 300 secured term (TLA: L
Scottsdale, AZ 85254 loan A and B + 3.5%;
TLB: L +
5.98%)
Troon Golf, Leisure and First lien L + 3/29/2025 0.0 % - (99 ) (36 )
L.L.C.(1)(8)(12) entertainment senior 5.50%
15044 N. Scottsdale Road, secured
Suite 300 revolving
Scottsdale, AZ 85254 loan
TSB Purchaser, Inc. (dba Education First lien L + 5/14/2024 0.0 % 61,581 60,634 61,120
Teaching Strategies, senior 6.00%
Inc.)(1)(4) secured loan
4500 East-West Highway
Suite 300
Bethesda, MD 20814
TSB Purchaser, Inc. (dba Education First lien L + 5/14/2024 0.0 % - (59 ) (32 )
Teaching Strategies, senior 6.00%
Inc.)(1)(12) secured
4500 East-West Highway revolving
Suite 300 loan
0.0 % 26,460 26,043 26,064
Midco, LLC(1)(2) beverage senior 4.00%
828 Kasota Ave SE secured loan
0.0 % 445 385 368
Midco, LLC(1)(2)(12) beverage senior 4.00%
828 Kasota Ave SE secured
Minneapolis, MN 55414 revolving
loan
Valence Surface Aerospace and First lien L + 6/28/2025 0.0 % 98,500 97,340 90,129
secured loan
Ste. 300
The Woodlands, TX 77380
Valence Surface Aerospace and First lien L + 6/28/2021 0.0 % 23,820 23,515 21,285
Technologies defense senior 5.75%
LLC(1)(4)(12) secured
1790 Hughes Landing Blvd delayed draw
Ste. 300 term loan
The Woodlands, TX 77380
111
--------------------------------------------------------------------------------
Percentage
of Class Principal
Held on a Number of
Maturity / Fully Shares /
($ in thousands) Type of Dissolution Diluted Number of Amortized
Company Industry Investment Interest Rate Date Basis Units Cost Fair Value
Valence Surface Aerospace First lien L + 5.75% 6/28/2025 0.0 % - (112 ) (850 )
Technologies LLC(1)(12) and defense senior
1790 Hughes Landing Blvd secured
Ste. 300 revolving
The Woodlands, TX 77380 loan
Velocity Commercial Buildings First lien L + 7.50%
0.0 % 63,980 63,369 63,181
Capital, LLC(1)(4) and real senior
Russell Ranch Rd. Suite estate secured
295 loan
Westlake Village ,
CA 91362
Vestcom Parent Holdings, Business Second lien L + 8.00% 12/19/2024 0.0 % 78,987 78,321 78,987
Inc.(1)(2) services senior 2800 Cantrell Rd #500 secured Little Rock, AR 72202 loan Wingspire Capital Financial LLC N/A N/A 75.0 % 67,538 67,538 67,538 Holdings LLC(12)(13) services Interest8000 Avalon Blvd. , Suite 100 Alpharetta, GA 30009 WU Holdco, Inc. (dba Consumer First lien L + 5.25% 3/26/2026 0.0 % 158,495 155,981 157,702 Weiman Products, products senior LLC)(1)(4) secured 705 Tri State Pkwy loan
0.0 % 3,182 2,986 3,112
Weiman Products, products senior
LLC)(1)(4)(12) secured
705 Tri State Pkwy revolving
Gurnee, IL 60031 loan
Zenith Energy U.S. Oil and gas First lien L + 6.50% 12/20/2024 0.0 % 95,365 93,991 94,410
Logistics Holdings, LLC senior
(1)(4) secured
3900 Essex Lane Suite loan
950
Houston, TX 77027
________________
(1) Loan contains a variable rate structure and may be subject to an interest
rate floor. Variable rate loans bear interest at a rate that may be
determined by reference to either the London Interbank Offered Rate
("LIBOR" or "L") (which can include one-, two-, three- or six-month LIBOR)
or an alternate base rate (which can include the Federal Funds Effective
Rate or the Prime Rate), at the borrower's option, and which reset
periodically based on the terms of the loan agreement.
(2) The interest rate on these loans is subject to 1 month LIBOR, which as of
(3) The interest rate on these loans is subject to 2 month LIBOR, which as of
(4) The interest rate on these loans is subject to 3 month LIBOR, which as of
(5) The interest rate on these loans is subject to 6 month LIBOR, which as of
(6) The interest rate on these loans is subject to 12 month LIBOR, which as of
December 31, 2020 was 0.34%. (7) The interest rate on this loan is subject to 6 month Canadian Dollar
Offered Rate ("CDOR" or "C"), which as of
(8) The interest rate on these loans is subject to Prime, which as of
December 31, 2020 was 3.25%.
(9) The interest rate on these loans is subject to 3 month EURIBOR, which as of
(10) The interest rate on these loans is subject to 6 month EURIBOR, which as
of
(11) The interest rate on this loan is subject to 6 month GBPLIBOR, which as
of was 0.03%.
(12) Position or portion thereof is an unfunded loan commitment. See "ITEM 15.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Note 7. Commitments and
Contingencies."
(13) As defined in the 1940 Act, the Company is deemed to be both an
"Affiliated Person" and has "Control" of this portfolio company as the
Company owns more than 25% of the portfolio company's outstanding voting
securities or has the power to exercise control over management or
policies of such portfolio company (including through a management
agreement). Other than for purposes of the 1940 Act, the Company does not
believe that it has control over this portfolio company.
112
--------------------------------------------------------------------------------
Sebago Lake, aDelaware limited liability company, was formed as a joint venture between us and The Regents of theUniversity of California ("Regents") and commenced operations onJune 20, 2017 . Sebago Lake's principal purpose is to make investments, primarily in senior secured loans that are made to middle-market companies or in broadly syndicated loans. Both we and Regents (the "Members") have a 50% economic ownership inSebago Lake . Except under certain circumstances, contributions to Sebago Lake cannot be redeemed. Each of the Members initially agreed to contribute up to$100 million to Sebago Lake. OnJuly 26, 2018 , each of the Members increased their contribution to Sebago Lake up to an aggregate of$125 million . As ofDecember 31, 2020 , each Member has funded$107.8 million of their respective$125 million commitments. Sebago Lake is managed by the Members, each of which have equal voting rights. Investment decisions must be approved by each of the Members. We have determined that Sebago Lake is an investment company under Accounting Standards Codification ("ASC") 946, however, in accordance with such guidance, we will generally not consolidate our investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to us. Accordingly, we do not consolidate our non-controlling interest inSebago Lake . As ofDecember 31, 2020 andDecember 31, 2019 , Sebago Lake had total investments in senior secured debt at fair value of$554.7 million and$478.5 million , respectively. The determination of fair value is in accordance withFinancial Accounting Standards Board ("FASB") Accounting Standards Codification 820, Fair Value Measurements ("ASC 820"), as amended; however, such fair value is not included in our Board's valuation process. The following table is a summary of Sebago Lake's portfolio as well as a listing of the portfolio investments inSebago Lake's portfolio as ofDecember 31, 2020 andDecember 31, 2019 : ($ in thousands) December 31, 2020 December 31, 2019 Total senior secured debt investments(1) $ 563,555 $
484,439
Weighted average spread over LIBOR(1) 4.45 % 4.56 %
Number of portfolio companies 17 16
Largest funded investment to a single
borrower(1) $ 49,625 $ 50,000
________________
(1) At par.
113
--------------------------------------------------------------------------------
Sebago Lake's Portfolio as of December 31, 2020
($ in thousands)
Amortized Percentage of
Company(1)(2)(4)(5) Investment Interest Maturity Date Par / Units Cost(3) Fair Value Members' Equity
Debt Investments
Aerospace and defense
Applied Composites First lien senior L + 5.25% 12/21/2023 $ 34,829 $ 34,455 $ 34,671 16.4 %
Holdings, LLC (fka AC&A secured loan
Enterprises Holdings ,
LLC)(7)
Applied Composites First lien senior L + 5.25% 12/21/2022 3,000 2,977 2,986 1.4 %
Holdings, LLC (fka AC&A secured revolving
Enterprises Holdings, loan
LLC)(7)(14)
Bleriot US Bidco First lien senior L + 4.75% 10/30/2026 14,888 14,762 14,827 6.9 %
Inc.(7)(10) secured loan
Dynasty Acquisition First lien senior L + 3.50% 4/4/2026 39,500 39,345 35,826 17.0 %
Co., Inc. (dba secured loan
StandardAero
Limited)(7)
92,217 91,539 88,310 41.7 %
Business Services
Vistage Worldwide, First lien senior L + 4.00% 2/10/2025 16,584 16,513 16,418 7.8 %
Inc.(7) secured loan
Distribution
Dealer Tire, LLC First lien senior L + 4.25% 12/12/2025 36,630 36,449 36,293 17.2 %
(6)(10) secured loan
Education34,212 34,140 32,456 15.4 % Inc. (fka SSH Group secured loanHoldings, Inc. )(7) Food and beverage DecoPac, Inc.(7) First lien senior L + 4.25% 9/30/2024 20,561 20,503 20,561 9.7 % secured loan DecoPac, First lien senior L + 4.25% 9/29/2023 - (8 ) (55 ) - % Inc.(11)(12)(14) secured revolving loan FQSR, LLC (dba KBP First lien senior L + 5.00% 5/15/2023 24,259 24,086 24,213 11.5 % Investments)(7) secured loan FQSR, LLC (dba KBP First lien senior L + 5.00% 9/10/2021 17,987 17,778 17,943 8.5 %
Investments)(8)(11)(13) secured delayed draw
term loan
Sovos Brands First lien senior L + 4.75% 11/20/2025 44,100 43,780 44,100 20.9 %
Intermediate, Inc.(7) secured loan
106,907 106,139 106,762 50.6 %
Healthcare equipment
and services
Cadence, Inc.(6) First lien senior L + 4.50% 5/21/2025 26,990 26,543 26,446 12.5 %
secured loan
Cadence, First lien senior P + 3.50% 5/21/2025 2,936 2,848 2,788 1.3 %
Inc.(9)(11)(14) secured revolving
loan
29,926 29,391 29,234 13.8 %
Healthcare technology
VVC Holdings Corp. (dba First lien senior L + 4.50% 2/11/2026 17,309 17,041 17,262 8.2 %Athenahealth, secured loan Inc.)(6)(10) Infrastructure and environmental services CHA Holding, Inc.(7) First lien senior L + 4.50% 4/10/2025
41,145 40,861 40,857 19.4 %
secured loan
Insurance
30,055 29,987 30,014 14.2 %
secured loan
Integro Parent First lien senior L + 4.50% 4/30/2022 - (7 ) (28 ) - %
Inc.(11)(12)(14) secured revolving
loan
USRP Holdings, Inc. First lien senior L + 4.25% 3/29/2025 40,149 39,502 39,446 18.7 %
(dba U.S. Retirement secured loan
and Benefits
Partners)(8)
114
--------------------------------------------------------------------------------
Sebago Lake's Portfolio as of December 31, 2020
($ in thousands)
Amortized Percentage of
Company(1)(2)(4)(5) Investment Interest Maturity Date Par / Units Cost(3) Fair Value Members' Equity
USRP Holdings, Inc. First lien senior L + 4.25% 3/29/2024 - (84 ) (131 ) (0.1 ) %
(dba U.S. Retirement secured revolving
and Benefits loan
Partners)(11)(12)(14)
70,204 69,398 69,301 32.8 %
Internet software and
services
DCert Buyer, Inc. (dba First lien senior L + 4.00% 10/16/2026 49,625 49,466 49,511 23.5 %
DigiCert)(6)(10) secured loan
Manufacturing
Engineered Machinery First lien senior L + 4.25% 7/19/2024 44,397 44,071 43,841 20.8 %
Holdings (dba secured loan
Duravant)(7)
Transportation
Uber Technologies, First lien senior L + 4.00% 4/4/2025 24,399 24,290 24,465 11.6 %
Inc.(6)(10) secured loanTotal Debt Investments 563,555 559,298 554,710 262.8 % Total Investments$ 563,555 $ 559,298 $ 554,710 262.8 % ________________
(1) Certain portfolio company investments are subject to contractual
restrictions on sales.
(2) Unless otherwise indicated, Sebago Lake's investments are pledged ascollateral supporting the amounts outstanding under Sebago Lake's credit
facility.
(3) The amortized cost represents the original cost adjusted for theamortization of discounts and premiums, as applicable, on debt investments
using the effective interest method.
(4) Unless otherwise indicated, all investments are considered Level 3
investments.
(5) Unless otherwise indicated, loan contains a variable rate structure, and
may be subject to an interest rate floor. Variable rate loans bear interest
at a rate that may be determined by reference to either the
Interbank Offered Rate ("LIBOR" or "L") (which can include one-, two-,
three- or six-month LIBOR) or an alternate base rate (which can include the
Federal Funds Effective Rate or the Prime Rate), at the borrower's option,
and which reset periodically based on the terms of the loan agreement.
(6) The interest rate on these loans is subject to 1 month LIBOR, which as of
(7) The interest rate on these loans is subject to 3 month LIBOR, which as of
(8) The interest rate on these loans is subject to 6 month LIBOR, which as of
December 31, 2020 was 0.26%. (9) The interest rate on these loans is subject to Prime, which as ofDecember 31, 2020 was 3.25%. (10) Level 2 investment. (11) Position or portion thereof is an unfunded loan commitment.
(12) The negative cost is the result of the capitalized discount being greater
than the principal amount outstanding on the loan. The negative fair value
is the result of the capitalized discount on the loan.
(13) The date disclosed represents the commitment period of the unfunded term
loan. Upon expiration of the commitment period, the funded portion of the
term loan may be subject to a longer maturity date.
(14) Investment is not pledged as collateral under Sebago Lake's credit
facility.
115
--------------------------------------------------------------------------------
Sebago Lake's Portfolio as of December 31, 2019
($ in thousands)
Amortized Percentage of
Company(1)(2)(4)(5) Investment Interest Maturity Date Par / Units Cost(3) Fair Value Members' Equity
Debt Investments
Aerospace and defense
Applied Composites First lien senior L + 5.25% 12/21/2023 $ 35,188 $ 34,690 $ 34,805 19.8 %
Holdings, LLC (fka secured loan
AC&A Enterprises
Holdings, LLC)(7)
Applied Composites First lien senior L + 5.25% 12/21/2022 - (36 ) (31 ) - %
Holdings, LLC (fka secured revolving
AC&A Enterprises loan
Holdings,
LLC)(9)(10)(12)
Bleriot US Bidco First lien senior L + 4.75% 10/31/2026 12,973 12,844 12,843 7.3 %
Inc.(7) secured term loan
Bleriot US Bidco First lien senior L + 4.75% 10/31/2020 - (20 ) (20 ) - %
Inc.(9)(10)(11)(12) secured delayed draw
term loan
Dynasty Acquisition First lien senior L + 4.00% 4/4/2026
39,900 39,717 39,707 22.6 %
Co., Inc. (dba secured loan
StandardAero
Limited)(7)
88,061 87,195 87,304 49.7 %
Education
Spring Education First lien senior L + 4.25% 7/30/2025 34,562 34,475 34,488 19.5 %
Group, Inc. (fka SSH secured loan
Group Holdings,
Inc.)(7)
Food and beverage
DecoPac, Inc.(7) First lien senior L + 4.25% 9/30/2024 20,561 20,489 20,561 11.7 %
secured loan
DecoPac, First lien senior L + 4.25% 9/29/2023 - (11 ) - - %
Inc.(9)(10)(12) secured revolving
loan
FQSR, LLC (dba KBP First lien senior L + 5.50% 5/14/2023 24,507 24,246 24,236 13.7 %
Investments)(7) secured loan
FQSR, LLC (dba KBP First lien senior L + 5.50% 9/10/2021 8,373 8,075 8,115 4.6 %Investments)(7)(9)(11) secured delayed draw
term loan
Give & Go Prepared First lien senior L + 4.25% 7/29/2023 24,438 24,398 23,093 13.0 %
Foods Corp.(7) secured loan
Sovos Brands First lien senior L + 5.00% 11/20/2025 44,550 44,171 44,143 25.1 %
122,429 121,368 120,148 68.1 %
Healthcare equipment
and services
Cadence, Inc.(6) First lien senior L + 4.50% 5/21/2025 27,266 26,727 26,749 15.2 %
secured loan
Cadence, First lien senior L + 4.50% 5/21/2025 - (124 ) (139 ) (0.1 ) %
Inc.(9)(10)(12) secured revolving
loan
27,266 26,603 26,610 15.1 %
Healthcare technology
VVC Holdings Corp. First lien senior L + 4.50% 2/11/2026 19,850 19,491 19,925 11.3 %
(dba Athenahealth, secured loan
Inc.)(7)(8)
Infrastructure and
environmental services
CHA Holding, Inc.(7) First lien senior L + 4.50% 4/10/2025 29,816 29,709 29,694 16.8 %
secured loan
Insurance
30,520 30,416 30,224 17.2 %
secured loan
Integro Parent First lien senior L + 4.50% 10/30/2021 - (16 ) (54 ) - %
Inc.(9)(10)(12) secured revolving
loan
USRP Holdings, Inc. First lien senior L + 4.25% 3/29/2025 34,475 33,800 33,406 19.0 %
(dba U.S. Retirement secured loan
and Benefits
Partners)(7)
116
--------------------------------------------------------------------------------
Sebago Lake's Portfolio as of December 31, 2019
($ in thousands)
Amortized Percentage of
Company(1)(2)(4)(5) Investment Interest Maturity Date
Par / Units Cost(3) Fair Value
1,875 1,754 1,690 1.0 %
(dba U.S. Retirement secured revolving
and Benefits loan
Partners)(7)(9)(12)
6,085 5,923 5,817 3.3 % (dba U.S. Retirement secured delayed draw and Benefits term loan
Partners)(7)(9)(11)
72,955 71,877 71,083 40.5 %
Internet software and
services
DCert Buyer, Inc.(6) First lien senior L + 4.00% 10/16/2026 50,000 49,816 49,878 28.3 %
secured loan
Manufacturing
14,850 14,596 14,801 8.3 % Holdings(7)(8) secured loan Transportation Uber Technologies, First lien senior L + 4.00% 4/4/2025 24,650 24,517 24,578 14.0 % Inc.(6)(8) secured loan
Total Debt Investments 484,439 479,647 478,509 271.6 % Total Investments$ 484,439 $ 479,647 $ 478,509 271.6 % ________________
(1) Certain portfolio company investments are subject to contractual
restrictions on sales.
(2) Unless otherwise indicated, Sebago Lake's investments are pledged ascollateral supporting the amounts outstanding under Sebago Lake's credit
facility.
(3) The amortized cost represents the original cost adjusted for theamortization of discounts and premiums, as applicable, on debt investments
using the effective interest method.
(4) Unless otherwise indicated, all investments are considered Level 3
investments.
(5) Unless otherwise indicated, loan contains a variable rate structure, and
may be subject to an interest rate floor. Variable rate loans bear interest
at a rate that may be determined by reference to either the
Interbank Offered Rate ("LIBOR" or "L") (which can include one-, two-,
three- or six-month LIBOR) or an alternate base rate (which can include the
Federal Funds Effective Rate or the Prime Rate), at the borrower's option,
and which reset periodically based on the terms of the loan agreement.
(6) The interest rate on these loans is subject to 1 month LIBOR, which as of
(7) The interest rate on these loans is subject to 3 month LIBOR, which as of
December 31, 2019 was 1.9%. (8) Level 2 investment. (9) Position or portion thereof is an unfunded loan commitment.
(10) The negative cost is the result of the capitalized discount being greater
than the principal amount outstanding on the loan. The negative fair value
is the result of the capitalized discount on the loan.
(11) The date disclosed represents the commitment period of the unfunded term
loan. Upon expiration of the commitment period, the funded portion of the
term loan may be subject to a longer maturity date.
(12) Investment is not pledged as collateral under Sebago Lake's credit
facility.
117
-------------------------------------------------------------------------------- Below is selected balance sheet information for Sebago Lake as ofDecember 31, 2020 andDecember 31, 2019 : ($ in thousands) December 31, 2020 December 31, 2019 Assets Investments at fair value (amortized cost of$559,298 and$479,647 , respectively) $ 554,710 $ 478,509 Cash 9,385 34,104 Interest receivable 992 1,281 Prepaid expenses and other assets 237 162 Total Assets $ 565,324 $ 514,056
Liabilities
Debt (net of unamortized debt issuance costs of$2,415 and$3,895 , respectively) $ 347,564 $ 330,289 Distributions payable 4,694 4,950 Accrued expenses and other liabilities 1,975 2,663 Total Liabilities $ 354,233 $ 337,902 Members' Equity Members' Equity 211,091 176,154 Members' Equity 211,091 176,154 Total Liabilities and Members' Equity $ 565,324 $ 514,056
Below is selected statement of operations information for Sebago Lake for the
years ended
Years Ended December 31,
($ in thousands) 2020 2019 2018
Investment Income
Interest income $ 32,163 $ 38,841 $ 37,760
Other income 281 348 671
Total Investment Income 32,444 39,189 38,431
Expenses
Loan origination and structuring fee - - 4,871
Interest expense 12,611 17,426 16,228
Professional fees 691 718 821
Total Expenses 13,302 18,144 21,920
Net Investment Income Before Taxes 19,142 21,045 16,511
Taxes 533 967 285
Net Investment Income After Taxes $ 18,609 $ 20,078 $ 16,226
Net Realized and Change in Unrealized Gain
(Loss) on Investments
Net change in unrealized gain (loss) on (3,450 ) 7,423 (9,703 )
investments
Net realized gain (loss) on investments 4 - 61
Total Net Realized and Change in (3,446 ) 7,423 (9,642 )
Unrealized Gain (Loss) on Investments
Net Increase (Decrease) in Members' Equity $ 15,163 $ 27,501 $ 6,584
Resulting from Operations
118
-------------------------------------------------------------------------------- OnAugust 9, 2017 ,Sebago Lake Financing LLC andSL Lending LLC , wholly-owned subsidiaries of Sebago Lake, entered into a credit facility withGoldman Sachs Bank USA .Goldman Sachs Bank USA serves as the sole lead arranger, syndication agent and administrative agent, andState Street Bank and Trust Company serves as the collateral administrator and agent. The credit facility includes a maximum borrowing capacity of$400 million . As ofDecember 31, 2020 , there was$350.0 million outstanding under the credit facility. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense were as follows: Years Ended December 31, ($ in thousands) 2020 2019 2018 Interest expense$ 10,962 $ 15,782 $ 14,663
Amortization of debt issuance costs 1,649 1,644
1,565
Total Interest Expense $ 12,611 $ 17,426 $ 16,228
Average interest rate 3.1 % 4.7 % 4.4 %
Average daily borrowings $ 352,505 $ 337,491 $326,902
Loan Origination and Structuring Fees
If the loan origination and structuring fees earned by Sebago Lake during a fiscal period exceed Sebago Lake's expenses and other obligations (excluding financing costs), such excess is allocated to the Member(s) responsible for the origination of the loans pro rata in accordance with the total loan origination and structuring fees earned by Sebago Lake with respect to the loans originated by such Member; provided, that in no event will the amount allocated to a Member exceed 1% of the par value of the loans originated by such Member in any fiscal year. The loan origination and structuring fee is accrued quarterly and included in other income from controlled, affiliated investments on our Consolidated Statements of Operations and paid annually. OnFebruary 27, 2019 , the Members agreed to amend the terms of Sebago Lake's operating agreement to eliminate the allocation of excess loan origination and structuring fees to the Members. As such, for the years endedDecember 31, 2020 and 2019, we accrued no income based on loan origination and structuring fees. For the year endedDecember 31, 2018 , the Company accrued income based on loan origination and structuring fees of$4.9 million . Results of Operations
The following table represents the operating results for the years ended
For the Years Ended December 31,
($ in millions) 2020 2019 2018
Total Investment Income $ 803.3 $ 718.0 $ 388.7
Less: Net operating expenses 283.8 217.1 142.2
Net Investment Income (Loss) Before
$ 246.5 Taxes Less: Income taxes (benefit), 2.0 2.0 1.1 including excise taxes Net Investment Income (Loss) After$ 517.5 $ 498.9$ 245.4 Taxes Net change in unrealized gain (76.0 ) (3.7 ) (43.6 )
(loss)
Net realized gain (loss) (53.8 ) 2.8 0.4
Net Increase (Decrease) in Net
$ 202.2 Assets Resulting from Operations Net increase (decrease) in net assets resulting from operations can vary from period to period as a result of various factors, including the level of new investment commitments, expenses, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. 119
--------------------------------------------------------------------------------
Investment Income
Investment income for the years endedDecember 31, 2020 , 2019 and 2018 were as follows: For the Years Ended December 31, ($ in millions) 2020 2019 2018 Interest income from investments$ 769.0 $ 691.9 $ 366.8 Dividend income 19.5 10.0 8.4 Other income 14.8 16.1 13.5 Total investment income$ 803.3 $ 718.0
For the years ended
Investment income increased to$803.3 million for the year endedDecember 31, 2020 from$718.0 million for the same period in prior year primarily due to an increase in our investment portfolio, which, at par, increased from$8.9 billion as ofDecember 31, 2019 , to$10.7 billion as ofDecember 31, 2020 , partially offset by a decrease in our portfolio's weighted average yield from 8.6% as ofDecember 31, 2019 to 8.0% as ofDecember 31, 2020 . Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns. Period over period, income generated from these fees represented$23.6 million and$21.1 million , for the years endedDecember 31, 2020 and 2019, respectively. In addition to the growth in the portfolio, the incremental increase in investment income was primarily due to an increase in dividend income earned from our investment inMoore Holdings, LLC of$10.2 million , that was not earned in 2019, partially offset by a decrease in dividend income from Sebago Lake of$0.9 million period over period. Other income decreased period-over-period due to a decrease in incremental fee income, which are fees that are generally available to us as a result of closing investments and normally paid at the time of closing. For the year endedDecember 31, 2020 , the increase in investment income was partially driven by increased origination activity as a result of significant merger activity which has since leveled off. We expect that investment income will vary based on a variety of factors including the pace of our originations and repayments.
For the years ended
Investment income increased to$718.0 million for the year endedDecember 31, 2019 from$388.7 million for the same period in prior year primarily due to an increase in our investment portfolio, which, at par, increased from$5.9 billion as ofDecember 31, 2018 , to$8.9 billion as ofDecember 31, 2019 , partially offset by a decrease in our portfolio's weighted average yield from 9.4% as ofDecember 31, 2018 to 8.7% as ofDecember 31, 2019 . Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns. Period over period, income generated from these fees represented$21.1 million and$16.3 million , for the years endedDecember 31, 2019 and 2018, respectively. In addition to the growth in the portfolio, the incremental increase in investment income was due to an increase in dividend income earned from our investment inSebago Lake of$1.6 million period-over-period. Other income increased period-over-period due to an increase in incremental fee income, which are fees that are generally available to us as a result of closing investments and normally paid at the time of closing, of$7.5 million , offset by$4.9 million of Sebago Lake fee income received for the year endedDecember 31, 2018 that is no longer received subsequent toDecember 31, 2018 (Refer to "Note 4. Investments - Loan Origination and Structuring Fees" for additional information). We expect that investment income will continue to increase provided that our investment portfolio continues to increase.
Expenses
Expenses for the years endedDecember 31, 2020 , 2019 and 2018 were as follows: For the Years Ended December 31, ($ in millions) 2020 2019 2018 Interest expense$ 152.9 $ 136.5 $ 76.8 Management fee 144.5 89.9 52.1 Performance based incentive fees 93.9 45.1 - Professional fees 14.7 10.0 7.8 Directors' fees 0.8 0.6 0.5 Other general and administrative 7.9 8.4 5.0 Total operating expenses$ 414.7 $ 290.5 $ 142.2 Management and incentive fees waived (130.9 ) (73.4 ) - Net operating expenses$ 283.8 $ 217.1 $ 142.2 120
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Under the terms of the Administration Agreement, we reimburse the Adviser for services performed for us. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and we reimburse the Adviser for any services performed for us by such affiliate or third party.
For the years ended
Total expenses increased to$283.8 million for the year endedDecember 31, 2020 from$217.1 million for the same period in the prior year primarily due to an increase in interest expense and increase in gross management fees and incentive fees, coupled with the expiration of the management fee and incentive fee waivers. The increase in interest expense of$16.4 million was driven by an increase in average daily borrowings to$3.8 billion from$2.6 billion period over period, partially offset by a decrease in the average interest rate to 3.5% from 4.8% period over period. Interest expense increased period over period, and we would expect it to continue to increase as we re-deploy leverage and our asset coverage ratio decreases. As ofDecember 31, 2019 , our asset coverage ratio was 293% compared to 206% as ofDecember 31, 2020 . Gross management fees and incentive fees increased primarily due to an increase in our investment portfolio, which at par, increased from$8.9 billion as ofDecember 31, 2019 , to$10.7 billion as ofDecember 31, 2020 , and were partially offset by the management and incentive fee waivers, which expiredOctober 18, 2020 .
For the years ended
Total expenses increased to$217.1 million for the year endedDecember 31, 2019 from$142.2 million for the same period in the prior year primarily due to an increase in interest expense. The increase in interest expense of$59.7 million was driven by both an increase in average daily borrowings to$2.6 billion from$1.6 billion period over period, and an increase in the average interest rate to 4.8% from 4.3% period over period. The average stated interest rate increased as a result of the subscription facility terminating in June of 2019. Interest expense increased period over period, and we would expect it to continue to increase as we re-deploy leverage and our asset coverage ratio decreases. As ofDecember 31, 2018 , our asset coverage ratio was 225% compared to 293% as ofDecember 31, 2019 .
Income Taxes, Including Excise Taxes
We have elected to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, we must, among other things, distribute to our shareholders in each taxable year generally at least 90% of our investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our shareholders, which generally relieves us from corporate-levelU.S. federal income taxes. Depending on the level of taxable income earned in a tax year, we can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4%U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, we will accrue excise tax on estimated excess taxable income. For the years endedDecember 31, 2020 , 2019 and 2018 we recordedU.S. federal income tax expense/(benefit) of$2.0 million ,$2.0 million and$1.1 million , respectively, includingU.S. federal excise tax expense/(benefit) of$(0.1) million ,$2.0 million and$1.1 million , respectively. Certain of our consolidated subsidiaries are subject toU.S. federal and state income taxes. For the year endedDecember 31, 2020 , we recorded a net tax expense of$2.1 million . For the years endedDecember 31, 2019 and 2018, we did not record a net tax expense, for these subsidiaries. The income tax expense for our taxable consolidated subsidiaries will vary depending on the level of investment income earnings and realized gains from the exits of investments held by such taxable subsidiaries during the respective periods. 121 --------------------------------------------------------------------------------
Net Unrealized Gains (Losses)
We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the years endedDecember 31, 2020 , 2019 and 2018, net unrealized gains (losses) were comprised of the following: For the Years Ended December 31, ($ in millions) 2020 2019 2018 Net change in unrealized gain $ (76.9 ) $ (3.5 )$ (43.5 ) (loss) on investments Income tax (provision) benefit (3.7 ) - - Net change in translation of 4.6 (0.2 ) (0.1 )
assets and liabilities in
foreign currencies Net change in unrealized gain $ (76.0 ) $ (3.7 )$ (43.6 ) (loss)
For the years ended
For the year endedDecember 31, 2020 , the net unrealized loss was primarily driven by a decrease in the fair value of our debt investments as compared toDecember 31, 2019 . As ofDecember 31, 2020 , the fair value of our debt investments as a percentage of principal was 97.3% as compared to 98.0% as ofDecember 31, 2019 . The primary driver of our portfolio's net unrealized loss was due to current market conditions and credit spreads widening, the impact of which was primarily seen in the first quarter of 2020, but which has subsequently improved in the second, third and fourth quarters as the average fair value of the portfolio has improved. See "COVID-19 Developments" for additional information. The ten largest contributors to the change in net unrealized gain (loss) on investments during the year endedDecember 31, 2020 consisted of the following: Portfolio Company Net Change in Unrealized ($ in millions) Gain (Loss) Norvax, LLC (dba GoHealth) $ 16.9 Windows Entities 14.0 Feradyne Outdoors, LLC 11.4 Remaining portfolio companies (25.6 ) Aviation Solutions Midco, LLC (dba STS Aviation) (25.3 ) CIBT Global, Inc. (25.3 ) LineStar Integrity Services LLC (10.0 ) Entertainment Benefits Group, LLC (9.9 )Valence Surface Technologies LLC
(9.7 )
(6.9 )
Blackhawk Network Holdings, Inc. (6.5 )
Total $ (76.9 )
For the years ended
For the year endedDecember 31, 2019 , the net unrealized loss was primarily driven by a decrease in the fair value of our debt investments as compared toDecember 31, 2018 . For the year endedDecember 31, 2019 , the fair value of our debt investments as a percentage of principal was 98.0%, as compared to 97.9% for the period endedDecember 31, 2018 .
Net Realized Gains (Losses)
The realized gains and losses on fully exited and partially exited portfolio companies during the years endedDecember 31, 2020 , 2019 and 2018 were comprised of the following: For the Years Ended December 31, ($ in millions) 2020 2019 2018 Net realized gain (loss) on $ 2.6 investments$ (51.4 ) $ 0.3 Net realized gain (loss) on foreign (2.4 ) 0.2 0.1 currency transactions Net realized gain (loss)$ (53.8 ) $ 2.8 $ 0.4 122
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For the years ended
For the year endedDecember 31, 2020 , we had net realized losses on investments of$51.4 million , primarily driven bySwipe Acquisition Corporation , and for the years endedDecember 31, 2019 and 2018, we had net realized gains on investments of$2.6 million and$0.3 million , respectively. For the year endedDecember 31, 2020 , we had net realized losses of$2.3 million and for the years endedDecember 31 2019 , and 2018, we had net realized gains of$0.2 million and$0.1 million , respectively, on foreign currency transactions, primarily as a result of translating foreign currency related to our non-USD denominated investments.
Realized Gross Internal Rate of Return
Since we began investing in 2016 throughDecember 31, 2020 , our exited investments have resulted in an aggregate cash flow realized gross internal rate of return to us of over 11.9% (based on total capital invested of$2.9 billion and total proceeds from these exited investments of$3.3 billion ). Over seventy percent of these exited investments resulted in an aggregate cash flow realized gross internal rate of return ("IRR") to us of 10% or greater. IRR, is a measure of our discounted cash flows (inflows and outflows). Specifically, IRR is the discount rate at which the net present value of all cash flows is equal to zero. That is, IRR is the discount rate at which the present value of total capital invested in each of our investments is equal to the present value of all realized returns from that investment. Our IRR calculations are unaudited. Capital invested, with respect to an investment, represents the aggregate cost basis allocable to the realized or unrealized portion of the investment, net of any upfront fees paid at closing for the term loan portion of the investment. Realized returns, with respect to an investment, represents the total cash received with respect to each investment, including all amortization payments, interest, dividends, prepayment fees, upfront fees (except upfront fees paid at closing for the term loan portion of an investment), administrative fees, agent fees, amendment fees, accrued interest, and other fees and proceeds. Gross IRR, with respect to an investment, is calculated based on the dates that we invested capital and dates we received distributions, regardless of when we made distributions to our shareholders. Initial investments are assumed to occur at time zero. Gross IRR reflects historical results relating to our past performance and is not necessarily indicative of our future results. In addition, gross IRR does not reflect the effect of management fees, expenses, incentive fees or taxes borne, or to be borne, by us or our shareholders, and would be lower if it did. Aggregate cash flow realized gross IRR on our exited investments reflects only invested and realized cash amounts as described above, and does not reflect any unrealized gains or losses in our portfolio.
Financial Condition, Liquidity and Capital Resources
Our liquidity and capital resources are generated primarily from cash flows from interest, dividends and fees earned from our investments and principal repayments, our credit facilities, debt securitization transactions, and other secured and unsecured debt. We may also generate cash flow from operations, future borrowings and future offerings of securities including public and/or private issuances of debt and/or equity securities through both registered offerings off of our shelf registration statement and private offerings. The primary uses of our cash are (i) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements, (ii) the cost of operations (including paying or reimbursing our Adviser), (iii) debt service, repayment and other financing costs of any borrowings and (iv) cash distributions to the holders of our shares. We may from time to time enter into additional debt facilities, increase the size of our existing credit facilities, enter into additional debt securitization transactions, or issue additional debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 200% (or 150% if certain conditions are met). Our asset coverage requirement applicable to senior securities was reduced from 200% to 150% and our current target ratio is 0.90x-1.25x. As ofDecember 31, 2020 andDecember 31, 2019 , our asset coverage ratio was 206% and 293%, respectively. We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage. Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation to cover any outstanding unfunded commitments we are required to fund. Cash and restricted cash as ofDecember 31, 2020 , taken together with our available debt, is expected to be sufficient for our investing activities and to conduct our operations in the near term. As ofDecember 31, 2020 , we had$1.6 billion available under our credit facilities. 123 -------------------------------------------------------------------------------- As ofDecember 31, 2020 , we had$357.9 million in cash and restricted cash. During the year endedDecember 31, 2020 , we used$1.6 billion in cash for operating activities, primarily as a result of funding portfolio investments of$3.9 billion , partially offset by sell downs and repayments of$1.8 billion and other operating activity of$0.5 billion . Lastly, cash provided by financing activities was$1.6 billion during the period, which was the result of net borrowings on our credit facilities of$2.3 billion , partially offset by repurchase of common stock under the Company 10b5-1 Plan of$0.2 billion and distributions paid of$0.5 billion .
Equity
IPO, Subscriptions and Drawdowns
We have the authority to issue 500,000,000 common shares at
OnJuly 22, 2019 , we closed our initial public offering ("IPO"), issuing 10 million shares of our common stock at a public offering price of$15.30 per share, and onAugust 2, 2019 , the underwriters exercised their option to purchase an additional 1.5 million shares of common stock at a purchase price of$15.30 per share. Net of underwriting fees and offering costs, we received total cash proceeds of$164.0 million . Our common stock began trading on theNew York Stock Exchange ("NYSE") under the symbol "ORCC" onJuly 18, 2019 . OnJuly 7, 2019 , our Board of Directors determined to eliminate any outstanding fractional shares of our common stock (the "Fractional Shares"), as permitted by the Maryland General Corporation Law and onJuly 8, 2019 , we eliminated such Fractional Shares by rounding down the number of Fractional Shares held by each shareholder to the nearest whole share and paying each shareholder cash for such Fractional Shares based on a price of$15.27 per whole share. Prior toMarch 2, 2018 , we entered into subscription agreements (the "Subscription Agreements") with investors providing for the private placement of our common shares. Under the terms of the Subscription Agreements, investors were required to fund drawdowns to purchase our common shares up to the amount of their respective Capital Commitment on an as-needed basis each time we delivered a drawdown notice to our investors. As ofJune 4, 2019 , all Capital Commitments had been drawn.
On
During the year ended
Common Share Aggregate
Issuance Number of Common Offering Price
Capital Drawdown Notice Date Date Shares Issued ($ in millions)
June 17, 103,504,284
June 4, 2019 2019 $ 1,580.5
March 21, 19,267,823
March 8, 2019 2019 300.0
February 12, 29,220,780
January 30, 2019 2019 450.0
Total 151,992,887 2,330.5
Distributions
The following table reflects the distributions declared on shares of our common
stock during the year ended
December 31, 2020
Distribution per
Date Declared Record Date Payment Date Share
December 31, $ 0.31
November 3, 2020 2020 January 19, 2020
December 31, $ 0.08
May 28, 2019 (special dividend) 2020 January 19, 2020
September $ 0.31
August 4, 2020 30, 2020 November 13, 2020
September $ 0.08
June 30, $ 0.31
May 5, 2020 2020 August 14, 2020
June 30, $ 0.08
May 28, 2019 (special dividend) 2020 August 14, 2020
March 31, $ 0.31
February 19, 2020 2020 May 15, 2020
March 31, $ 0.08
May 28, 2019 (special dividend) 2020 May 15, 2020
On
124
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During certain periods, our distributions may exceed our earnings. As a result,
it is possible that a portion of the distributions we make may represent a
return of capital. A return of capital generally is a return of a shareholder's
investment rather than a return of earnings or gains derived from our investment
activities. Each year a statement on Form 1099-DIV identifying the sources of
the distributions will be mailed to our shareholders. No portion of the
distributions paid during the years ended December 31, 2020 , 2019 or 2018
represented a return of capital.
The following table reflects the distributions declared on shares of our common
stock during the year ended
December 31, 2019
Distribution per
Date Declared Record Date Payment Date Share
December 31, $ 0.31
October 30, 2019 2019 January 31, 2020
December 31, $ 0.04
May 28, 2019 (special dividend) 2019 January 31, 2020
September $ 0.31
May 28, 2019 30, 2019 November 15, 2019
September $ 0.02
June 14, $ 0.44
June 4, 2019 2019 August 15, 2019
March 31, $ 0.33
February 27, 2019 2019 May 14, 2019
125
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The following table reflects the distributions declared on shares of our common
stock during the year ended
December 31, 2018
Date Declared Record Date Payment Date Distribution per Share
November 6, 2018 December 31, 2018 January 31, 2019 $ 0.36
August 7, 2018 September 30, 2018 November 15, 2018 $ 0.39
June 22, 2018 June 30, 2018 August 15, 2018 $ 0.34
March 2, 2018 March 31, 2018 April 30, 2018 $ 0.33
Dividend Reinvestment
We have adopted a dividend reinvestment plan, pursuant to which we will reinvest
all cash distributions declared by the Board on behalf of our shareholders who
do not elect to receive their distribution in cash as provided below. As a
result, if the Board authorizes, and we declare, a cash dividend or other
distribution, then our shareholders who have not opted out of our dividend
reinvestment plan will have their cash distributions automatically reinvested in
additional shares of our common stock as described below, rather than receiving
the cash dividend or other distribution. Any fractional share otherwise issuable
to a participant in the dividend reinvestment plan will instead be paid in cash.
In connection with our IPO, we entered into our second amended and restated
dividend reinvestment plan, pursuant to which, if newly issued shares are used
to implement the dividend reinvestment plan, the number of shares to be issued
to a shareholder will be determined by dividing the total dollar amount of the
cash dividend or distribution payable to a shareholder by the market price per
share of our common stock at the close of regular trading on the New York Stock
Exchange on the payment date of a distribution, or if no sale is reported for
such day, the average of the reported bid and ask prices. However, if the market
price per share on the payment date of a cash dividend or distribution exceeds
the most recently computed net asset value per share, we will issue shares at
the greater of (i) the most recently computed net asset value per share and (ii)
95% of the current market price per share (or such lesser discount to the
current market price per share that still exceeded the most recently computed
net asset value per share). For example, if the most recently computed net asset
value per share is $15.00 and the market price on the payment date of a cash
dividend is $14.00 per share, we will issue shares at $14.00 per share. If the
most recently computed net asset value per share is $15.00 and the market price
on the payment date of a cash dividend is $16.00 per share, we will issue shares
at $15.20 per share (95% of the current market price). If the most recently
computed net asset value per share is $15.00 and the market price on the payment
date of a cash dividend is $15.50 per share, we will issue shares at $15.00 per
share, as net asset value is greater than 95% ($14.73 per share) of the current
market price. Pursuant to our second amended and restated dividend reinvestment
plan, if shares are purchased in the open market to implement the dividend
reinvestment plan, the number of shares to be issued to a shareholder shall be
determined by dividing the dollar amount of the cash dividend payable to such
shareholder by the weighted average price per share for all shares purchased by
the plan administrator in the open market in connection with the dividend.
Shareholders who receive distributions in the form of shares of common stock
will be subject to the same U.S. federal, state and local tax consequences as if
they received cash distributions.
The following table reflects the common stock issued pursuant to the dividend
reinvestment plan during the year ended
Date Declared Record Date Payment Date Shares
August 4, 2020 September 30, 2020 November 13, 2020 1,738,817
May 5, 2020 June 30, 2020 August 14, 2020 3,541,285
Feburary 19, 2020 March 31, 2020 May 15, 2020 2,249,543
October 30, 2019 December 31, 2019 January 31, 2020 2,823,048
In conjunction with the distribution paid on January 19, 2021 for shareholders
of record as of December 31, 2020 , the Company issued 1,435,099 shares of common
stock pursuant to the dividend reinvestment plan.
The following table reflects the common stock issued pursuant to the dividend
reinvestment plan during the year ended
126
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Date Declared Record Date Payment Date Shares
May 28, 2019 September 30, 2019 November 15, 2019 2,974,103
June 4, 2019 June 14, 2019 August 15, 2019 3,965,754
February 27, 2019 March 31, 2019 May 14, 2019 2,882,297
November 6, 2018 December 31, 2018 January 31, 2019 2,613,223
The following table reflects the common stock issued pursuant to the dividend
reinvestment plan during the year ended
Date Declared Record Date Payment Date Shares
August 7, 2018 September 30, 2018 November 15, 2018 2,323,165
June 22, 2018 June 30, 2018 August 15, 2018 1,539,516
March 2, 2018 March 31, 2018 April 30, 2018 1,310,272Stock Repurchase Plan (the "Company 10b5-1 Plan")
OnJuly 7, 2019 , our Board approved the Company 10b5-1 Plan, to acquire up to$150 million in the aggregate of our common stock at prices below our net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Company 10b5-1 Plan commenced onAugust 19, 2019 and was exhausted onAugust 4, 2020 . The Company 10b5-1 Plan was intended to allow us to repurchase our common stock at times when we otherwise might be prevented from doing so under insider trading laws. The Company 10b5-1 Plan requiredGoldman Sachs & Co. LLC , as our agent, to repurchase shares of common stock on our behalf when the market price per share was below the most recently reported net asset value per share (including any updates, corrections or adjustments publicly announced by us to any previously announced net asset value per share). Under the Company 10b5-1 Plan, the agent would increase the volume of purchases made as the price of our common stock declined, subject to volume restrictions. The purchase of shares pursuant to the Company 10b5-1 Plan was intended to satisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act, and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances. The following table provides information regarding purchases of our common stock byGoldman, Sachs & Co. , as agent, pursuant to the 10b5-1 plan for each month in the year endedDecember 31, 2020 : Approximate Approximate Dollar Value of Dollar Value Shares that of Shares that Period Total Number have been May Yet Be
($ in millions, except share of Shares Average Price Purchased Under Purchased Under and per share amounts)
Repurchased Paid per Share the Plans the Plan
January 1, 2020 - January 31, - $ - $ - $ 150.0
2020
February 1, 2020 - February 87,328 $ 15.17 $ 1.4 $ 148.6 29, 2020 March 1, 2020 - March 31, 4,009,218 $ 12.46 $ 46.6 $ 102.0
2020
April 1, 2020 - April 30, 6,235,497 $ 11.95 $ 74.3 $ 27.7 2020 May 1, 2020 - May 31, 2020 2,183,581 $ 12.76 $ 27.7 $ - June 1, 2020 - June 30, 2020 - $ - $ - $ - July 1, 2020 - July 31, 2020 - $ - August 1, 2020 - August 31, - $ - 2020 Total 12,515,624 $ 150.0 OnNovember 3, 2020 , the Board approved a repurchase program under which we may repurchase up to$100 million of our outstanding common stock. Under the program, purchases may be made at management's discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. Unless extended by the Board, the repurchase program 127 --------------------------------------------------------------------------------
will terminate 12-months from the date it was approved. As of
128
--------------------------------------------------------------------------------Debt Aggregate Borrowings Debt obligations consisted of the following as ofDecember 31, 2020 andDecember 31, 2019 : December 31, 2020 Aggregate Principal Outstanding Amount Net Carrying ($ in thousands) Committed Principal Available(1) Value(2) Revolving Credit Facility(3)(5)$ 1,355,000 $ 252,525 $ 1,075,636 $ 243,143 SPV Asset Facility II 350,000 100,000 250,000 95,654 SPV Asset Facility III 500,000 375,000 125,000 373,238 SPV Asset Facility IV 450,000 295,000 155,000 291,644 CLO I 390,000 390,000 - 386,708 CLO II 260,000 260,000 - 257,686 CLO III 260,000 260,000 - 257,744 CLO IV 252,000 252,000 - 247,745 CLO V 196,000 196,000 - 194,128 2023 Notes(4) 150,000 150,000 - 151,889 2024 Notes(4) 400,000 400,000 - 418,372 2025 Notes 425,000 425,000 - 418,154 July 2025 Notes 500,000 500,000 - 492,095 2026 Notes 500,000 500,000 - 489,176 July 2026 Notes 1,000,000 1,000,000 - 975,346 Total Debt$ 6,988,000 $ 5,355,525 $ 1,605,636 $ 5,292,722 ________________
(1) The amount available reflects any limitations related to each credit
facility's borrowing base.
(2) The carrying value of the Company's Revolving Credit Facility, SPV Asset
Facility II, SPV Asset Facility III, SPV Asset Facility IV, CLO I,
Notes, 2026 Notes and
financing costs of
million,
million, respectively.
(3) Includes the unrealized translation gain (loss) on borrowings denominated
in foreign currencies.
(4) Inclusive of change in fair market value of effective hedge.
(5) The amount available is reduced by
credit.
129
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December 31, 2019
Aggregate
Principal Outstanding Amount Net Carrying
($ in thousands) Committed Principal Available(1) Value(2)
Revolving Credit Facility(3)(5) $ 1,170,000 $ 480,861 $ 664,410 $ 473,655
SPV Asset Facility I 400,000 300,000 100,000 297,246
SPV Asset Facility II 350,000 350,000 - 346,395
SPV Asset Facility III 500,000 255,000 245,000 251,548
SPV Asset Facility IV 300,000 60,250 239,750 57,201
CLO I 390,000 390,000 - 386,405
CLO II 260,000 260,000 - 258,028
2023 Notes(4) 150,000 150,000 - 150,113
2024 Notes(4) 400,000 400,000 - 400,955
2025 Notes 425,000 425,000 - 416,686
Total Debt $ 4,345,000 $ 3,071,111 $ 1,249,160 $ 3,038,232
________________
(1) The amount available reflects any limitations related to each credit
facility's borrowing base.
(2) The carrying value of the Company's Revolving Credit Facility, SPV Asset
Facility I, SPV Asset Facility II, SPV Asset Facility III, SPV Asset
Facility IV, CLO I,
presented net of deferred financing costs of
million,
unrealized translation gain (loss) on borrowings denominated in foreign
currencies.
(3) Inclusive of change in fair market value of effective hedge.
(4) The amount available is reduced by
credit.
For the years ended December 31, 2020 , 2019 and 2018, the components of interest
expense were as follows:
For the Years Ended December 31,
($ in thousands) 2020 2019 2018
Interest expense $ 136,387 $ 125,311 $ 71,441
Amortization of debt issuance 17,178 12,152 5,333
costs
Net change in unrealized gain (626 ) (1,018 ) -
(loss) on effective
interest rate swaps and hedged
items(1) Total Interest Expense$ 152,939 $ 136,445 $ 76,774 Average interest rate 3.5 % 4.8 % 4.3 % Average daily borrowings$ 3,815,270 $ 2,576,121 $ 1,649,191 ________________
(1) Refer to "ITEM 1. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - Notes to
Consolidated Financial Statements - Note 6. Debt - 2023 Notes and 2024
Notes" for details on each facility's interest rate swap.
Credit Facilities
Our credit facilities contain customary covenants, including certain limitations
on the incurrence by us of additional indebtedness and on our ability to make
distributions to our shareholders, or redeem, repurchase or retire shares of
stock, upon the occurrence of certain events, and customary events of default
(with customary cure and notice provisions).
Revolving Credit Facility
OnFebruary 1, 2017 , we entered into a senior secured revolving credit agreement (and as amended by that certain First Amendment to Senior Secured Revolving Credit Agreement, dated as ofJuly 17, 2017 , the First Omnibus Amendment to Senior Secured Revolving Credit Agreement and Guarantee and Security Agreement, dated as ofMarch 29, 2018 , the Third Amendment to Senior Secured Revolving Credit Agreement, dated as ofJune 21, 2018 , the Fourth Amendment to Senior Secured Revolving Credit Agreement, dated as ofApril 2, 2019 , the Fifth Amendment to Senior Secured Revolving Credit Agreement, dated as ofMay 7, 2020 , and the Sixth Amendment to Senior Secured Revolving Credit Agreement, dated as ofSeptember 3, 2020 , the "Revolving Credit Facility"). The parties to the Revolving Credit Facility include us, as Borrower, the lenders from time to time parties thereto (each a "Lender" and collectively, the "Lenders") andTruist Securities, Inc. andING Capital LLC as Joint Lead Arrangers and Joint Book 130 --------------------------------------------------------------------------------
Runners,
The Revolving Credit Facility is guaranteed byOR Lending LLC , our subsidiary, and will be guaranteed by certain domestic subsidiaries of ours that are formed or acquired by us in the future (collectively, the "Guarantors"). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. The maximum principal amount of the Revolving Credit Facility is$1.46 billion (increased from$1.40 billion onFebruary 8, 2021 ; increased from$1.36 billion onJanuary 8, 2021 ; increased from$1.335 billion onSeptember 3, 2020 ; increased from$1.295 billion onJune 12, 2020 ; increased from$1.24 billion onMay 27, 2020 ; increased from$1.195 onMay 7, 2020 ; increased from$1.17 billion onFebruary 11, 2020 ; increased from$1.1 billion onAugust 27, 2019 ; increased from$1.0 billion onJuly 26, 2019 ), subject to availability under the borrowing base, which is based on our portfolio investments and other outstanding indebtedness. As amended onSeptember 3, 2020 , maximum capacity under the Revolving Credit Facility may be increased to$2.0 billion through our exercise of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility includes a$50 million limit for swingline loans and is secured by a perfected first-priority interest in substantially all of the portfolio investments held by us and each Guarantor, subject to certain exceptions. The availability period under the Revolving Credit Facility will terminate onSeptember 3, 2024 , with respect to$1.295 billion of commitments, and onMarch 31, 2023 , which respect to the remaining commitments (together, the "Revolving Credit Facility Commitment Termination Date"). The Revolving Credit Facility will mature onSeptember 3, 2025 , with respect to 1.295 billion of commitments, and onApril 2, 2024 , with respect to the remaining commitments (together, the "Revolving Credit Facility Maturity Date"). During the period from the earliest Revolving Credit Facility Commitment Termination Date to the final Revolving Credit Facility Maturity Date, we will be obligated to make mandatory prepayments under the Revolving Credit Facility out of the proceeds of certain asset sales and other recovery events and equity and debt issuances. We may borrow amounts inU.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility will bear interest at either LIBOR plus 2.00%, or the prime rate plus 1.00%. We may elect either the LIBOR or prime rate at the time of drawdown, and loans may be converted from one rate to another at any time at our option, subject to certain conditions. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. We also pay a fee of 0.375% on undrawn amounts under the Revolving Credit Facility. The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default. The agreement requires a minimum asset coverage ratio of 150% with respect to our consolidated assets and our subsidiaries, measured at the last day of any fiscal quarter and a minimum asset coverage ratio of no less than 200% with respect to our consolidated assets and our subsidiary guarantors (including certain limitations on the contribution of equity in financing subsidiaries as specified therein) to our secured debt and our subsidiary guarantors (the "Obligor Asset Coverage Ratio"), measured at the last day of each fiscal quarter. The agreement concentration limits in connection with the calculation of the borrowing base, based upon the Obligor Asset Coverage Ratio.
Subscription Credit Facility
OnAugust 1, 2016 , we entered into a subscription credit facility (as amended, the "Subscription Credit Facility") withWells Fargo Bank, National Association ("Wells Fargo"), as administrative agent (the "Subscription Credit Facility Administrative Agent") and letter of credit issuer, and Wells Fargo,State Street Bank and Trust Company and the banks and financial institutions from time to time party thereto, as lenders. The Subscription Credit Facility permitted us to borrow up to$900 million , subject to availability under the borrowing base which is calculated based on the unused Capital Commitments of the investors meeting various eligibility requirements. EffectiveJune 19, 2019 , the outstanding balance of the Subscription Credit Facility was paid in full and the facility was terminated pursuant to its terms. Borrowings under the Subscription Credit Facility bore interest, at our election at the time of drawdown, at a rate per annum equal to (i) in the case of LIBOR rate loans, an adjusted LIBOR rate for the applicable interest period plus 1.60% or (ii) in the case of reference rate loans, the greatest of (A) a prime rate plus 0.60%, (B) the federal funds rate plus 1.10%, and (C) one-month LIBOR plus 1.60%. Loans may have been converted from one rate to another at any time at our election, subject to certain conditions. We predominantly borrowed utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. We paid an unused commitment fee of 0.25% per annum on the unused commitments. 131 --------------------------------------------------------------------------------
SPV Asset Facilities
Certain of our wholly owned subsidiaries are parties to credit facilities (the "SPV Asset Facilities"). Pursuant to the SPV Asset Facilities, we sell and contribute certain investments to these wholly owned subsidiaries pursuant to sale and contribution agreements by and between us and the wholly owned subsidiaries. No gain or loss is recognized as a result of these contributions. Proceeds from the SPV Asset Facilities are used to finance the origination and acquisition of eligible assets by the wholly owned subsidiary, including the purchase of such assets from us. We retain a residual interest in assets contributed to or acquired to the wholly owned subsidiary through our ownership of the wholly owned subsidiary. The SPV Asset Facilities are secured by a perfected first priority security interest in the assets of these wholly owned subsidiaries and on any payments received by such wholly owned subsidiaries in respect of those assets. Assets pledged to lenders under the SPV Asset Facilities will not be available to pay our debts.
The SPV Asset Facilities contain customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).
SPV Asset Facility I
OnDecember 21, 2017 (the "SPV Asset Facility I Closing Date"),ORCC Financing LLC ("ORCC Financing"), aDelaware limited liability company and our subsidiary, entered into a Loan and Servicing Agreement (as amended, the "SPV Asset Facility I"), with ORCC Financing as Borrower, us as Transferor and Servicer, the lenders from time to time parties thereto (the "SPV Lenders"),Morgan Stanley Asset Funding Inc. as Administrative Agent,State Street Bank and Trust Company asCollateral Agent andCortland Capital Market Services LLC as Collateral Custodian. From time to time, we sold and contributed certain investments to ORCC Financing pursuant to a Sale and Contribution Agreement by and between us and ORCC Financing. No gain or loss was recognized as a result of the contribution. Proceeds from the SPV Asset Facility I were used to finance the origination and acquisition of eligible assets by ORCC Financing, including the purchase of such assets from us. We retained a residual interest in assets contributed to or acquired by ORCC Financing through its ownership of ORCC Financing. The maximum principal amount of the SPV Asset Facility I was$400 million ; the availability of this amount was subject to a borrowing base test, which was based on the value of ORCC Financing's assets from time to time, and satisfaction of certain conditions, including certain concentration limits. The SPV Asset Facility I provided for the ability to draw and redraw amounts under the SPV Asset Facility I for a period of up to three years after the SPV Asset Facility I Closing Date (the "SPV Asset Facility I Commitment Termination Date"). The SPV Asset Facility I was terminated onJune 2, 2020 (the "SPV Asset Facility I Termination Date"). Prior to the SPV Asset Facility I Termination Date, proceeds received by ORCC Financing from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. On the SPV Asset Facility I Termination Date, ORCC Financing repaid in full all outstanding fees and expenses and all principal and interest on outstanding borrowings. Amounts drawn bore interest at LIBOR plus a spread of 2.25% until the six-month anniversary of the SPV Asset Facility I Closing Date, increasing to 2.50% thereafter, until the SPV Asset Facility I Commitment Termination Date. We predominantly borrowed utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. After a ramp-up period, there was an unused fee of 0.75% per annum on the amount, if any, by which the undrawn amount under the SPV Asset Facility I exceeded 25% of the maximum principal amount of the SPV Asset Facility I. The SPV Asset Facility I contained customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility I was secured by a perfected first priority security interest in the assets of ORCC Financing and on any payments received by ORCC Financing in respect of those assets. Assets pledged to the SPV Lenders were not available to pay our debts.
SPV Asset Facility II
OnMay 22, 2018 , our subsidiary,ORCC Financing II LLC ("ORCC Financing II"), aDelaware limited liability company and our subsidiary, entered into a Credit Agreement (as amended, the "SPV Asset Facility II"), with ORCC Financing II, as Borrower, the lenders from time to time parties thereto, Natixis,New York Branch, as Administrative Agent,State Street Bank and Trust Company , as Collateral Agent, andCortland Capital Market Services LLC as Document Custodian. The parties to the SPV Asset Facility II have entered into various amendments, including to admit new lenders, increase or decrease the maximum principal amount available under the facility, extend the availability period and maturity date, change the interest rate and make various other changes. The following describes the terms of SPV Asset Facility II amended throughMarch 17, 2020 (the "SPV Asset Facility II Fifth Amendment Date"). 132 -------------------------------------------------------------------------------- The maximum principal amount of the SPV Asset Facility II following the SPV Asset Facility II Fifth Amendment Date is$350 million (which includes terms loans of$100 million and revolving commitments of$250 million ); the availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing II's assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests. The SPV Asset Facility II provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility II for a period of up to 18 months after SPV Asset Facility II Fifth Amendment Date unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility II (the "SPV Asset Facility II Commitment Termination Date"). Unless otherwise terminated, the SPV Asset Facility II will mature onMay 22, 2028 (the "SPV Assert Facility II Stated Maturity"). Prior to the SPV Asset Facility II Stated Maturity, proceeds received by ORCC Financing II from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. OnOctober 10, 2026 , ORCC Financing II must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to us. With respect to revolving loans, amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%) plus a spread that steps up from 2.20% to 2.50% during the period from the SPV Asset Facility II Fifth Amendment Date to the six month anniversary of the Reinvestment Period End Date. With respect to term loans, amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%) plus a spread that steps up from 2.25% to 2.55% during the same period. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. From the SPV Asset Facility II Fifth Amendment Date to the SPV Asset Facility II Commitment Termination Date, there is a commitment fee ranging from 0.50% to 0.75% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility II. For further details, see "ITEM 8. - Notes to Consolidated Financial Statements - Note 6. Debt." SPV Asset Facility III OnDecember 14, 2018 ,ORCC Financing III LLC ("ORCC Financing III"), aDelaware limited liability company and our subsidiary, entered into a Loan Financing and Servicing Agreement (the "SPV Asset Facility III"), with ORCC Financing III, as borrower, ourselves, as equity holder and services provider, the lenders from time to time parties thereto, Deutsche Bank AG,New York Branch, as Facility Agent,State Street Bank and Trust Company , asCollateral Agent andCortland Capital Market Services LLC , as Collateral Custodian. OnDecember 10, 2019 , the parties to SPV Asset Facility III amended certain terms of the facility, including those relating to the undrawn fee and make-whole fee. The following describes the terms of SPV Asset Facility III as amended throughDecember 10, 2019 . The maximum principal amount of the SPV Asset Facility III is$500 million ; the availability of this amount is subject to a borrowing base test, which is based on the value of ORCC Financing III's assets from time to time, and satisfaction of certain conditions, including interest spread and weighted average coupon tests, certain concentration limits and collateral quality tests. The SPV Asset Facility III provides for the ability to borrow, reborrow, repay and prepay advances under the SPV Asset Facility III for a period of up to three years afterDecember 14, 2018 unless such period is extended or accelerated under the terms of the SPV Asset Facility III (the "SPV Asset Facility III Revolving Period"). Unless otherwise extended, accelerated or terminated under the terms of the SPV Asset Facility III, the SPV Asset Facility III will mature on the date that is two years after the last day of the SPV Asset Facility III Revolving Period (the "SPV Asset Facility III Stated Maturity"). Prior to the SPV Asset Facility III Stated Maturity, proceeds received by ORCC Financing III from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding advances, and the excess may be returned to us, subject to certain conditions. On the SPV Asset Facility III Stated Maturity, ORCC Financing III must pay in full all outstanding fees and expenses and all principal and interest on outstanding advances, and the excess may be returned to us. Amounts drawn bear interest at LIBOR (or, in the case of certain SPV Lenders III that are commercial paper conduits, the lower of (a) their cost of funds and (b) LIBOR, such LIBOR not to be lower than zero) plus a spread equal to 2.20% per annum, which spread will increase (a) on and after the end of the SPV Asset Facility III Revolving Period by 0.15% per annum if no event of default has occurred and (b) by 2.00% per annum upon the occurrence of an event of default (such spread, the "Applicable Margin"). LIBOR may be replaced as a base rate under certain circumstances. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. During the Revolving Period, ORCC Financing III will pay an undrawn fee ranging from 0.25% to 0.50% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility III. During the Revolving Period, if the undrawn commitments are in excess of a certain portion (initially 20% and increasing in stages to 75%) of the total commitments under the SPV Asset Facility III, ORCC Financing III will also pay a make-whole fee equal to the Applicable Margin multiplied by such excess undrawn commitment amount, reduced by the undrawn fee payable on such excess. For further details, see "ITEM 8. - Notes to Consolidated Financial Statements - Note 6. Debt. "Unsecured Notes." 133 --------------------------------------------------------------------------------
SPV Asset Facility IV
OnAugust 2, 2019 (the "SPV Asset Facility IV Closing Date"),ORCC Financing IV LLC ("ORCC Financing IV"), aDelaware limited liability company and newly formed subsidiary, entered into a Credit Agreement (the "SPV Asset Facility IV"), with ORCC Financing IV, as borrower, Société Générale, as initial Lender and as Administrative Agent,State Street Bank and Trust Company , as Collateral Agent, Collateral Administrator and Custodian, andCortland Capital Market Services LLC as Document Custodian and the lenders from time to time party thereto pursuant to Assignment and Assumption Agreements. OnNovember 22, 2019 (the "SPV Asset Facility IV Amendment Date"), the parties to the SPV Asset Facility IV amended the SPV Asset Facility IV to increase the maximum principal amount of the SPV Asset Facility IV to$450 million in periodic increments throughMarch 22, 2020 . From time to time, we expect to sell and contribute certain investments to ORCC Financing IV pursuant to a Sale and Contribution Agreement by and between us and ORCC Financing IV. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility IV will be used to finance the origination and acquisition of eligible assets by ORCC Financing IV, including the purchase of such assets from us. We retain a residual interest in assets contributed to or acquired by ORCC Financing IV through our ownership of ORCC Financing IV. The maximum principal amount of the Credit Facility is currently$450 million , subject to a ramp period; the availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing IV's assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests. The SPV Asset Facility IV provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility IV for a period of up to two years after the Closing Date unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility IV (the "Commitment Termination Date"). Unless otherwise terminated, the SPV Asset Facility IV will mature onAugust 2, 2029 (the "SPV Asset Facility IV Stated Maturity"). Prior to the SPV Asset Facility IV Stated Maturity, proceeds received by ORCC Financing IV from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. On the SPV Asset Facility IV Stated Maturity, ORCC Financing IV must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to us. Amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%) plus a spread ranging from 2.15% to 2.50%. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. From the Closing Date to the Commitment Termination Date, there is a commitment fee ranging from 0.50% to 1.00% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility IV. The SPV Asset Facility IV contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing IV, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility IV is secured by a perfected first priority security interest in the assets of ORCC Financing IV and on any payments received by ORCC Financing IV in respect of those assets. Assets pledged to the Lenders will not be available to pay our debts. CLOs CLO I On May 28, 2019 (the "CLO I Closing Date"), we completed a $596 million term debt securitization transaction (the "CLO I Transaction"), also known as a collateralized loan obligation transaction. The secured notes and preferred shares issued in the CLO I Transaction and the secured loan borrowed in the CLO I Transaction were issued and incurred, as applicable, by our consolidated subsidiaries Owl Rock CLO I, Ltd., an exempted company incorporated in theCayman Islands with limited liability (the "CLO I Issuer"), and Owl Rock CLO I, LLC, aDelaware limited liability company (the "CLO I Co-Issuer" and together with the CLO I Issuer, the "CLO I Issuers") ") and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO I Issuer. In the CLO I Transaction the CLO I Issuers (A) issued the following notes pursuant to an indenture and security agreement dated as of the Closing Date (the "CLO I Indenture"), by and among the CLO I Issuers andState Street Bank and Trust Company : (i) $242 million ofAAA (sf) Class A Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $30 million ofAAA (sf) Class A-F Notes, which bear interest at a fixed rate of 4.165%, and (iii) $68 million of AA(sf) ClassB Notes , which bear interest at three-month LIBOR plus 2.70% (together, the "CLO I Notes") and (B) borrowed $50 million under floating rate loans (the "Class A Loans" and together with the CLO I Notes, the "CLO I Debt"), which bear interest at three-month LIBOR plus 1.80%, under a credit agreement (the "CLO I Credit Agreement"), dated as of the CLO I Closing Date, by and among the CLO I Issuers, as borrowers, various financial institutions, as lenders, andState Street Bank and Trust Company , as collateral trustee and loan agent. The Class A Loans may be exchanged by the lenders for Class A Notes at any time, subject to certain conditions under the CLO I Credit Agreement and the Indenture. The CLO I Debt is scheduled to mature on May 20, 2031. The CLO I Notes were privately placed byNatixis Securities Americas, LLC andSG Americas Securities, LLC . 134
-------------------------------------------------------------------------------- Concurrently with the issuance of the CLO I Notes and the borrowing under the Class A Loans, the CLO I Issuer issued approximately $206.1 million of subordinated securities in the form of 206,106 preferred shares at an issue price of U.S.$1,000 per share (the "CLO I Preferred Shares"). The CLO I Preferred Shares were issued by the CLO I Issuer as part of its issued share capital and are not secured by the collateral securing the CLO I Debt. We own all of the CLO I Preferred Shares, and as such, are eliminated in consolidation. We act as retention holder in connection with the CLO I Transaction for the purposes of satisfying certainU.S. andEuropean Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO I Preferred Shares. The Adviser serves as collateral manager for the CLO I Issuer under a collateral management agreement dated as of the CLO I Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO I Issuers' equity or notes that we own. The CLO I Debt is secured by all of the assets of the CLO I Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO I Transaction, we and ORCC Financing II LLC sold and contributed approximately $575 million par amount of middle market loans to the CLO I Issuer on the CLO I Closing Date. Such loans constituted the initial portfolio assets securing the CLO I Debt. We and ORCC Financing II LLC each made customary representations, warranties, and covenants to the CLO I Issuer regarding such sales and contributions under a loan sale agreement. Through May 20, 2023, a portion of the proceeds received by the CLO I Issuer from the loans securing the CLO I Debt may be used by the CLO I Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager in the CLO I Transaction. The CLO I Debt is the secured obligation of the CLO I Issuers, and the CLO I Indenture and the CLO I Credit Agreement include customary covenants and events of default. Assets pledged to holders of the Secured Debt and the other secured parties under the Indenture will not be available to pay our debts. The CLO I Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The CLO I Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold inthe United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") as applicable. For further details, see "ITEM 8. - Notes to Consolidated Financial Statements - Note 6. Debt."
On December 12, 2019 (the "CLO II Closing Date"), we completed a $396.6 million term debt securitization transaction (the "CLO II Transaction"), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by us. The secured notes and preferred shares issued in the CLO II Transaction were issued by our consolidated subsidiaries Owl Rock CLO II, Ltd., an exempted company incorporated in theCayman Islands with limited liability (the "CLO II Issuer"), and Owl Rock CLO II, LLC, aDelaware limited liability company (the "CLO II Co-Issuer" and together with the Issuer, the "CLO II Issuers") and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the Issuer. The CLO II Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the "CLO II Indenture"), by and among the Issuers andState Street Bank and Trust Company : (i) $157 million ofAAA (sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.75%, (ii) $40 million ofAAA (sf) Class A-1F Notes, which bear interest at a fixed rate of 3.44%, (iii) $20 million ofAAA (sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.20%, (iv) $40 million of AA(sf) Class B-L Notes, which bear interest at three-month LIBOR plus 2.75% and (v) $3 million of AA(sf) Class B-F Notes, which bear interest at a fixed rate of 4.46% (together, the "CLO II Debt"). The CLO II Debt is scheduled to mature on January 20, 2031. The CLO II Debt was privately placed byDeutsche Bank Securities Inc. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO II Debt. Concurrently with the issuance of the CLO II Debt, the CLO II Issuer issued approximately $136.6 million of subordinated securities in the form of 136,600 preferred shares at an issue price of U.S.$1,000 per share (the "CLO II Preferred Shares"). The CLO II Preferred Shares were issued by the CLO II Issuer as part of its issued share capital and are not secured by the collateral securing the CLO II Debt. We purchased all of the CLO II Preferred Shares. We act as retention holder in connection with the CLO II Transaction for the purposes of satisfying certainU.S. andEuropean Union regulations requiring sponsors of securitization 135
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transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO II Preferred Shares.
The Adviser serves as collateral manager for the CLO II Issuer under a collateral management agreement dated as of the CLO II Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO II Issuers' equity or notes that we own. The CLO II Debt is secured by all of the assets of the CLO II Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO II Transaction, we and ORCC Financing III LLC sold and contributed approximately $400 million par amount of middle market loans to the CLO II Issuer on the CLO II Closing Date. Such loans constituted the initial portfolio assets securing the CLO II Debt. We and ORCC Financing III LLC each made customary representations, warranties, and covenants to the CLO II Issuer regarding such sales and contributions under a loan sale agreement. Through January 20, 2022, a portion of the proceeds received by the CLO II Issuer from the loans securing the CLO II Debt may be used by the CLO II Issuer to purchase additional middle market loans under the direction of the Adviser as collateral manager for the CLO II Issuer and in accordance with the our investing strategy and ability to originate eligible middle market loans. The CLO II Debt is the secured obligation of the CLO II Issuers, and the CLO II Indenture includes customary covenants and events of default. Assets pledged to holders of the Secured Debt and the other secured parties under the Indenture will not be available to pay our debts. The CLO II Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO II Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold inthe United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable. For further details, see "ITEM 8. - Notes to Consolidated Financial Statements - Note 6. Debt."CLO III On March 26, 2020 (the "CLO III Closing Date"), we completed a $395.31 million term debt securitization transaction (the "CLO III Transaction"), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by us. The secured notes and preferred shares issued in the CLO III Transaction were issued by our consolidated subsidiaries Owl Rock CLO III, Ltd., an exempted company incorporated in theCayman Islands with limited liability (the "CLO III Issuer"), and Owl Rock CLO III, LLC, aDelaware limited liability company (the "CLO III Co-Issuer" and together with the CLO III Issuer, the "CLO III Issuers") and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO III Issuer. The CLO III Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the CLO III Closing Date (the "CLO III Indenture"), by and among the CLO III Issuers andState Street Bank and Trust Company : (i) $166 million ofAAA (sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $40 million ofAAA (sf) Class A-1F Notes, which bear interest at a fixed rate of 2.75%, (iii) $20 million ofAAA (sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.00%, and (iv) $34 million of AA(sf) ClassB Notes , which bear interest at three-month LIBOR plus 2.45% (together, the "CLO III Debt"). The CLO III Debt is scheduled to mature on April 20, 2032. The CLO III Debt was privately placed bySG Americas Securities, LLC . Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO III Debt. Concurrently with the issuance of the CLO III Debt, the CLO III Issuer issued approximately $135.31 million of subordinated securities in the form of 135,310 preferred shares at an issue price of U.S.$1,000 per share (the "CLO III Preferred Shares"). The CLO III Preferred Shares were issued by the CLO III Issuer as part of its issued share capital and are not secured by the collateral securing the CLO III Debt. We own all of the CLO III Preferred Shares, and as such, these securities are eliminated in consolidation. We act as retention holder in connection with the CLO III Transaction for the purposes of satisfying certainU.S. andEuropean Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO III Preferred Shares. The Adviser serves as collateral manager for the CLO III Issuer under a collateral management agreement dated as of the CLO III Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee 136
-------------------------------------------------------------------------------- payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO III Issuers' equity or notes that we own. The CLO III Debt is secured by all of the assets of the CLO III Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO III Transaction, we and ORCC Financing IV LLC sold and contributed approximately $400 million par amount of middle market loans to the CLO III Issuer on the CLO III Closing Date. Such loans constituted the initial portfolio assets securing the CLO III Debt. Us and ORCC Financing IV LLC each made customary representations, warranties, and covenants to the CLO III Issuer regarding such sales and contributions under a loan sale agreement. Through April 20, 2024, a portion of the proceeds received by the CLO III Issuer from the loans securing the CLO III Debt may be used by the CLO III Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager for the CLO III Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans. The CLO III Debt is the secured obligation of the CLO III Issuers, and the CLO III Indenture includes customary covenants and events of default. Assets pledged to holders of the CLO III Debt and the other secured parties under the CLO III Indenture will not be available to pay our debts. The CLO III Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO III Debt has not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold inthe United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.
On May 28, 2020 (the "CLO IV Closing Date"), we completed a $438.9 million term debt securitization transaction (the "CLO IV Transaction"), also known as a collateralized loan obligation transaction, which is a form of secured financing. The secured notes and preferred shares issued in the CLO IV Transaction were issued by our consolidated subsidiaries Owl Rock CLO IV, Ltd., an exempted company incorporated in theCayman Islands with limited liability (the "CLO IV Issuer"), and Owl Rock CLO IV, LLC, aDelaware limited liability company (the "CLO IV Co-Issuer" and together with the CLO IV Issuer, the "CLO IV Issuers") and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO IV Issuer. The CLO IV Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the "CLO IV Indenture"), by and among the CLO IV Issuers andState Street Bank and Trust Company : (i) $236.5 million ofAAA (sf) Class A-1 Notes, which bear interest at three-month LIBOR plus 2.62% and (ii) $15.5 million ofAAA (sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 3.40% (together, the "CLO IV Secured Notes"). The CLO IV Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the CLO IV Issuer. The CLO IV Secured Notes are scheduled to mature on May 20, 2029. The CLO IV Secured Notes were privately placed byNatixis Securities Americas LLC . Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO IV Secured Notes. Concurrently with the issuance of the CLO IV Secured Notes, the CLO IV Issuer issued approximately $186.9 million of subordinated securities in the form of 186,900 preferred shares at an issue price of U.S.$1,000 per share (the "CLO IV Preferred Shares"). The CLO IV Preferred Shares were issued by the CLO IV Issuer as part of its issued share capital and are not secured by the collateral securing the CLO IV Secured Notes. We purchased all of the CLO IV Preferred Shares. We act as retention holder in connection with the CLO IV Transaction for the purposes of satisfying certainU.S. andEuropean Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO IV Preferred Shares. As part of the CLO IV Transaction, we entered into a loan sale agreement with the CLO IV Issuer dated as of the CLO IV Closing Date, which provided for the sale and contribution of approximately $275.07 million par amount of middle market loans to the CLO IV Issuer on the CLO IV Closing Date and for future sales to the CLO IV Issuer on an ongoing basis. Such loans constituted part of the initial portfolio of assets securing the CLO IV Secured Notes. The remainder of the initial portfolio assets securing the CLO IV Secured Notes consisted of approximately $174.92 million par amount of middle market loans purchased by the CLO IV Issuer from ORCC Financing II LLC, our wholly-owned subsidiary, under an additional loan sale agreement executed on the CLO IV Closing Date between the Issuer and ORCC Financing II LLC. We and ORCC Financing II LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement. Through November 20, 2021, a portion of the proceeds received by the CLO IV Issuer from the loans securing the CLO IV Secured Notes may be used by the CLO IV Issuer to purchase additional middle market loans under the direction of the Adviser, in its 137
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capacity as collateral manager for the CLO IV Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.
The Secured Notes are the secured obligation of the CLO IV Issuers, and the CLO IV Indenture includes customary covenants and events of default. The CLO IV Secured Notes have not been registered under the Securities Act, or any state securities (e.g., "blue sky") laws, and may not be offered or sold inthe United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration. The Adviser will serve as collateral manager for the CLO IV Issuer under a collateral management agreement dated as of the CLO IV Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO IV Issuers' equity or notes that we own.
CLO V
On November 20, 2020 (the "CLO V Closing Date"), we completed a $345.45 million term debt securitization transaction (the "CLO V Transaction"), also known as a collateralized loan obligation transaction, which is a form of secured financing. The secured notes and preferred shares issued in the CLO V Transaction were issued by our consolidated subsidiaries Owl Rock CLO V, Ltd., an exempted company incorporated in theCayman Islands with limited liability (the "CLO V Issuer"), and Owl Rock CLO V, LLC, aDelaware limited liability company (the "CLO V Co-Issuer" and together with the CLO V Issuer, the "CLO V Issuers") and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO V Issuer. The CLO V Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the "CLO V Indenture"), by and among the CLO V Issuers andState Street Bank and Trust Company : (i) $182 million ofAAA (sf)/AAAsf Class A-1 Notes, which bear interest at three-month LIBOR plus 1.85% and (ii) $14 million ofAAA (sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.20% (together, the "CLO V Secured Notes"). The CLO V Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the CLO V Issuer. The CLO V Secured Notes are scheduled to mature on November 20, 2029. The CLO V Secured Notes were privately placed byNatixis Securities Americas LLC . Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO V Secured Notes. Concurrently with the issuance of the CLO V Secured Notes, the CLO V Issuer issued approximately $149.45 million of subordinated securities in the form of 149,450 preferred shares at an issue price of U.S.$1,000 per share (the "CLO V Preferred Shares"). The CLO V Preferred Shares were issued by the CLO V Issuer as part of its issued share capital and are not secured by the collateral securing the CLO V Secured Notes. We purchased all of the CLO V Preferred Shares. We act as retention holder in connection with the CLO V Transaction for the purposes of satisfying certainU.S. andEuropean Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO V Preferred Shares. As part of the CLO V Transaction, we entered into a loan sale agreement with the CLO V Issuer dated as of the CLO V Closing Date, which provided for the sale and contribution of approximately $201.75 million par amount of middle market loans to the CLO V Issuer on the CLO V Closing Date and for future sales to the CLO V Issuer on an ongoing basis. Such loans constituted part of the initial portfolio of assets securing the CLO V Secured Notes. The remainder of the initial portfolio assets securing the CLO V Secured Notes consisted of approximately $84.74 million par amount of middle market loans purchased by the CLO V Issuer from ORCC Financing II LLC, our wholly-owned subsidiary, under an additional loan sale agreement executed on the CLO V Closing Date between the Issuer and ORCC Financing II LLC. We and ORCC Financing II LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement. Through July 20, 2022, a portion of the proceeds received by the CLO V Issuer from the loans securing the CLO V Secured Notes may be used by the CLO V Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO V Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans. The Secured Notes are the secured obligation of the CLO V Issuers, and the CLO V Indenture includes customary covenants and events of default. The CLO V Secured Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities (e.g., "blue sky") laws, and may not be offered or sold inthe United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration. 138
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The Adviser will serve as collateral manager for the CLO V Issuer under a
collateral management agreement dated as of the CLO V Closing Date. The Adviser
is entitled to receive fees for providing these services. The Adviser has waived
its right to receive such fees but may rescind such waiver at any time;
provided, however, that if the Adviser rescinds such waiver, the management fee
payable to the Adviser pursuant to the Investment Advisory Agreement will be
offset by the amount of the collateral management fee attributable to the CLO V
Issuers' equity or notes that we own.
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--------------------------------------------------------------------------------Unsecured Notes 2023 Notes On December 21, 2017, we entered into a Note Purchase Agreement governing the issuance of $150 million in aggregate principal amount of unsecured notes (the "2023 Notes") to institutional investors in a private placement. The 2023 Notes have a fixed interest rate of 4.75% and are due on June 21, 2023. Interest on the 2023 Notes will be due semiannually. This interest rate is subject to increase (up to a maximum interest rate of 5.50%) in the event that, subject to certain exceptions, the 2023 Notes cease to have an investment grade rating. We are obligated to offer to repay the 2023 Notes at par if certain change in control events occur. The 2023 Notes are general unsecured obligations of us that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us. The Note Purchase Agreement for the 2023 Notes contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act and a RIC under the Code, minimum shareholders equity, minimum asset coverage ratio and prohibitions on certain fundamental changes at us or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of us or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy. The 2023 Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The 2023 Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold inthe United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable. In connection with the offering of the 2023 Notes, on December 21, 2017 we entered into a centrally cleared interest rate swap to continue to align the interest rates of our liabilities with our investment portfolio, which consists predominately of floating rate loans. The notional amount of the interest rate swap is $150 million. We will receive fixed rate interest semi-annually at 4.75% and pay variable rate interest monthly based on 1-month LIBOR plus 2.545%. The interest rate swap matures on December 21, 2021. For the years ended December 31, 2020, 2019 and 2018, we made periodic payments of $4.8 million, $7.4 million and $6.8 million, respectively. The interest expense related to the 2023 Notes is equally offset by proceeds received from the interest rate swap. The swap adjusted interest expense is included as a component of interest expense in our Consolidated Statements of Operations. As of December 31, 2020 and December 31, 2019, the interest rate swap had a fair value of $3.0 million and $1.7 million, respectively. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on our Consolidated Statements of Assets and Liabilities. The change in fair value of the interest rate swap is offset by the change in fair value of the 2023 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations. For further details, see "ITEM 8. - Notes to Consolidated Financial Statements - Note 6. Debt."
2024 Notes
On April 10, 2019, we issued $400 million aggregate principal amount of notes
that mature on April 15, 2024 (the "2024 Notes"). The 2024 Notes bear interest
at a rate of 5.250% per year, payable semi-annually on April 15 and October 15
of each year, commencing on October 15, 2019. We may redeem some or all of the
2024 Notes at any time, or from time to time, at a redemption price equal to the
greater of (1) 100% of the principal amount of the 2024 Notes to be redeemed or
(2) the sum of the present values of the remaining scheduled payments of
principal and interest (exclusive of accrued and unpaid interest to the date of
redemption) on the 2024 Notes to be redeemed, discounted to the redemption date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) using the applicable Treasury Rate plus 50 basis points, plus, in each
case, accrued and unpaid interest to the redemption date; provided, however,
that if we redeem any 2024 Notes on or after March 15, 2024 (the date falling
one month prior to the maturity date of the 2024 Notes), the redemption price
for the 2024 Notes will be equal to 100% of the principal amount of the 2024
Notes to be redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the date of redemption.
In connection with the issuance of the 2024 Notes, on April 10, 2019 we entered
into centrally cleared interest rate swaps to continue to align interest rates
of its liabilities with the investment portfolio, which consists of
predominantly floating rate loans. The notional amount of the interest rate
swaps is $400 million. We will receive fixed rate interest at 5.25% and pay
variable rate interest based on one-month LIBOR plus 2.937%. The interest rate
swaps mature on April 10, 2024. For the years ended December 31, 2020 and 2019,
we made periodic payments of $19.3 million and $10.8 million, respectively. The
interest expense related to the 2024 Notes is equally offset by the proceeds
received from the interest rate swaps. The swap adjusted interest expense is
included as a component of interest expense on our Consolidated Statements of
Operations. As of December 31, 2020 and December 31, 2019, the interest rate
swap had a fair value of $26.9 million and $10.8 million, respectively.
Depending on the nature of the balance at period end, the fair value of the
interest rate swap is either included as a component of accrued expenses and
other liabilities or prepaid expenses and other assets on our Consolidated
Statements of Assets and Liabilities. The change in fair value of the interest
rate swap is offset by
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-------------------------------------------------------------------------------- the change in fair value of the 2024 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations. For further details, see "ITEM 8. - Notes to Consolidated Financial Statements - Note 6. Debt." 2025 Notes On October 8, 2019, we issued $425 million aggregate principal amount of notes that mature on March 30, 2025 (the "2025 Notes"). The 2025 Notes bear interest at a rate of 4.00% per year, payable semi-annually on March 30 and September 30 of each year, commencing on March 30, 2020. We may redeem some or all of the 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 40 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2025 Notes on or after February 28, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the 2025 Notes will be equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. "ITEM 8. - Notes to Consolidated Financial Statements - Note 6. Debt." July 2025 Notes On January 22, 2020, we issued $500 million aggregate principal amount of notes that mature on July 22, 2025 (the "July 2025 Notes"). The July 2025 Notes bear interest at a rate of 3.75% per year, payable semi-annually on January 22 and July 22, of each year, commencing on July 22, 2020. We may redeem some or all of the July 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the July 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the July 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any July 2025 Notes on or after June 22, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the July 2025 Notes will be equal to 100% of the principal amount of the July 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
2026 Notes
On July 23, 2020, we issued $500 million aggregate principal amount of notes that mature on January 15, 2026 (the "2026 Notes"). The 2026 Notes bear interest at a rate of 4.25% per year, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2021. We may redeem some or all of the 2026 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2026 Notes on or after December, 15 2025 (the date falling one month prior to the maturity date of the 2026 Notes), the redemption price for the 2026 Notes will be equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
July 2026 Notes
On December 8, 2020, we issued $1.0 billion aggregate principal amount of notes
that mature on July 15, 2026 (the "July 2026 Notes"). The July 2026 Notes bear
interest at a rate of 3.40% per year, payable semi-annually on January 15 and
July 15 of each year, commencing on July 15, 2021. We may redeem some or all of
the July 2026 Notes at any time, or from time to time, at a redemption price
equal to the greater of (1) 100% of the principal amount of the July 2026 Notes
to be redeemed or (2) the sum of the present values of the remaining scheduled
payments of principal and interest (exclusive of accrued and unpaid interest to
the date of redemption) on the July 2026 Notes to be redeemed, discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) using the applicable Treasury Rate plus 50 basis points,
plus, in each case, accrued and unpaid interest to the redemption date;
provided, however, that if we redeem any July 2026 Notes on or after June 15,
2026 (the date falling one month prior to the maturity date of the July 2026
Notes), the redemption price for the July 2026 Notes will be equal to 100% of
the principal amount of the July 2026 Notes to be redeemed, plus accrued and
unpaid interest, if any, to, but excluding, the date of redemption.
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Off-Balance Sheet Arrangements
Portfolio Company Commitments
From time to time, we may enter into commitments to fund investments. As of December 31, 2020 and December 31, 2019, we had the following outstanding commitments to fund investments in current portfolio companies:
Portfolio Company Investment December 31, 2020 December 31, 2019 ($ in thousands) Intelerad Medical Systems First lien senior secured 4,530 - Incorporated (fka 11849573 revolving loan Canada Inc.) 3ES Innovation Inc. (dba First lien senior secured
3,893 3,893
Aucerna) revolving loan
Accela, Inc. First lien senior secured 3,000 -
revolving loan
Amspec Services Inc. First lien senior secured 14,462 9,038
revolving loan
Apptio, Inc. First lien senior secured 2,779 2,779
revolving loan
Aramsco, Inc. First lien senior secured 8,378 6,842
revolving loan
Ardonagh Midco 3 PLC First lien senior secured 16,950 -
delayed draw term loan
Associations, Inc. First lien senior secured 866 17,949
delayed draw term loan
Associations, Inc. First lien senior secured - 11,543
revolving loan
AxiomSL Group, Inc. First lien senior secured 9,341 -
revolving loan
Barracuda Dental LLC (dba First lien senior secured 30,437 -
National Dentex) delayed draw term loan
Barracuda Dental LLC (dba First lien senior secured 5,854 -
National Dentex) revolving loan
BCTO BSI Buyer, Inc. (dba First lien senior secured 5,357 -
Buildertrend) revolving loan
BIG Buyer, LLC First lien senior secured 5,625 11,250
delayed draw term loan
BIG Buyer, LLC First lien senior secured 2,000 3,750
revolving loan
Caiman Merger Sub LLC (dba First lien senior secured 12,881 12,881
City Brewing) revolving loan
ConnectWise, LLC First lien senior secured 15,004 20,005
revolving loan
Covenant Surgical Partners, First lien senior secured - 2,800
Inc. delayed draw term loan
Definitive Healthcare First lien senior secured 35,651 43,478
Holdings, LLC delayed draw term loan
Definitive Healthcare First lien senior secured 10,870 10,870
Holdings, LLC revolving loan
Douglas Products and First lien senior secured 6,055 7,872
Packaging Company LLC revolving loan
Endries Acquisition, Inc. First lien senior secured - 51,638
delayed draw term loan
Endries Acquisition, Inc. First lien senior secured 27,000 27,000
revolving loan
Entertainment Benefits First lien senior secured 1,104 9,600
Group, LLC revolving loan
Forescout Technologies, Inc. First lien senior secured 5,345 -
revolving loan
Galls, LLC First lien senior secured 11,204 3,719
revolving loan
Galls, LLC First lien senior secured - 29,181
delayed draw term loan
GC Agile Holdings Limited First lien senior secured 6,924 10,386
(dba Apex Fund Services) revolving loan
Genesis Acquisition Co. (dba First lien senior secured - 4,745
Procare Software) delayed draw term loan
Genesis Acquisition Co. (dba First lien senior secured - 1,714
Procare Software) revolving loan
Gerson Lehrman Group, Inc. First lien senior secured 21,563 21,563
revolving loan
Granicus, Inc. First lien senior secured 2,636 -
revolving loan
H&F Opportunities LUX III First lien senior secured 16,250 -
S.À R.L (dba Checkmarx) revolving loan
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Portfolio Company Investment December 31, 2020 December 31, 2019
Hercules Buyer LLC (dba The First lien senior secured 20,916 -
Vincit Group) revolving loan
HGH Purchaser, Inc. (dba First lien senior secured 5,346 32,400
Horizon Services) delayed draw term loan
HGH Purchaser, Inc. (dba First lien senior secured 8,748 7,938
Horizon Services) revolving loan
Hometown Food Company First lien senior secured 3,671 4,235
revolving loan
Ideal Tridon Holdings, Inc. First lien senior secured - 381
delayed draw term loan
Ideal Tridon Holdings, Inc. First lien senior secured 4,828 5,400
revolving loan
Individual Foodservice First lien senior secured 25,781 42,500
Holdings, LLC delayed draw term loan
Individual Foodservice First lien senior secured 18,465 24,225
Holdings, LLC revolving loan
Instructure, Inc. First lien senior secured 5,554 -
revolving loan
Integrity Marketing First lien senior secured - 16,587
Acquisition, LLC delayed draw term loan
Integrity Marketing First lien senior secured - 32,573
Acquisition, LLC delayed draw term loan
Integrity Marketing First lien senior secured 14,832 14,832
Acquisition, LLC revolving loan
Interoperability Bidco, Inc. First lien senior secured 8,000 8,000
delayed draw term loan
Interoperability Bidco, Inc. First lien senior secured - 4,000
revolving loan
IQN Holding Corp. (dba First lien senior secured 22,672 15,532
Beeline) revolving loan
KWOR Acquisition, Inc. (dba First lien senior secured 2,063 2,428
Worley Claims Services) delayed draw term loan KWOR Acquisition, Inc. (dba First lien senior secured
5,200 5,200
Worley Claims Services) revolving loan
Lazer Spot G B Holdings, First lien senior secured - 13,417
Inc. delayed draw term loan
Lazer Spot G B Holdings, First lien senior secured 26,833 24,687
Inc. revolving loan
Lightning Midco, LLC (dba First lien senior secured - 1,764
Vector Solutions) delayed draw term loan
Lightning Midco, LLC (dba First lien senior secured 8,953 5,318
Vector Solutions) revolving loan
Litera Bidco LLC First lien senior secured 5,738 5,738
revolving loan
Lytx, Inc. First lien senior secured - 2,033
revolving loan
Lytx, Inc. First lien senior secured 14,092 -
delayed draw term loan
Manna Development Group, LLC First lien senior secured - 3,469
revolving loan
Mavis Tire Express Services Second lien senior secured 11,376 34,831
Corp. delayed draw term loan
MINDBODY, Inc. First lien senior secured 6,071 6,071
revolving loan
Nelipak Holding Company First lien senior secured 2,948 4,690
revolving loan
Nelipak Holding Company First lien senior secured 7,597 6,970
revolving loan
NMI Acquisitionco, Inc. (dba First lien senior secured 646 646
Network Merchants) revolving loan
Norvax, LLC (dba GoHealth) First lien senior secured 12,273 12,273
revolving loan
Nutraceutical International First lien senior secured 13,578 -
Corporation revolving loan
Offen, Inc. First lien senior secured - 5,310
delayed draw term loan
Peter C. Foy & Associated First lien senior secured 37,955 -
Insurance Services, LLC delayed draw term loan
Peter C. Foy & Associated First lien senior secured 8,194 -
Insurance Services, LLC revolving loan
Project Power Buyer, LLC First lien senior secured 3,188 3,188
(dba PEC-Veriforce) revolving loan
Professional Plumbing Group, First lien senior secured 5,757 5,757
Inc. revolving loan
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Portfolio Company Investment December 31, 2020 December 31, 2019
QC Supply, LLC First lien senior secured 633 -
revolving loan
Reef Global, Inc. (fka First lien senior secured 5,377 16,364
Cheese Acquisition, LLC) revolving loan
Refresh Parent Holdings, First lien senior secured 29,482 -
Inc. delayed draw term loan
Refresh Parent Holdings, First lien senior secured 7,716 -
Inc. revolving loan
RSC Acquisition, Inc (dba First lien senior secured - 10,894
Risk Strategies) delayed draw term loan
RSC Acquisition, Inc (dba First lien senior secured 1,702 1,702
Risk Strategies) revolving loan
RxSense Holdings, LLC First lien senior secured - 4,047
revolving loan
Safety Products/JHC First lien senior secured 924 924Acquisition Corp. (dba delayed draw term loan Justrite Safety Group) Sara Lee Frozen Bakery, LLC First lien senior secured
4,440 3,480
(fka KSLB Holdings, LLC) revolving loan
Sonny's Enterprises LLC First lien senior secured 17,969 -
revolving loan
Swipe Acquisition First lien senior secured 18,461 -
Corporation (dba PLI) delayed draw term loan
Swipe Acquisition Letter of Credit 7,118 -
Corporation (dba PLI)
TC Holdings, LLC (dba First lien senior secured 7,685 7,685
TrialCard) revolving loan
THG Acquisition, LLC (dba First lien senior secured 36,302 16,841
Hilb) delayed draw term loan
THG Acquisition, LLC (dba First lien senior secured 8,608 5,614
Hilb) revolving loan
Trader Interactive, LLC (fka First lien senior secured 4,471 6,387
Dominion Web Solutions, LLC) revolving loan
Troon Golf, L.L.C. First lien senior secured 14,426 14,426
revolving loan
TSB Purchaser, Inc. (dba First lien senior secured 4,239 3,010
Teaching Strategies, Inc.) revolving loan
Ultimate Baked Goods Midco, First lien senior secured 4,638 4,066
LLC revolving loan
Valence Surface Technologies First lien senior secured 6,000 30,000
LLC delayed draw term loan
Valence Surface Technologies First lien senior secured 10,000 10,000
LLC revolving loan
Wingspire Capital Holdings LLC Interest 82,462 48,552
LLC
WU Holdco, Inc. (dba Weiman First lien senior secured 10,739 13,920 Products, LLC) revolving loan WU Holdco, Inc. (dba Weiman First lien senior secured - 16,943 Products, LLC) delayed draw term loan Total Unfunded Portfolio $ 880,626 $ 891,744 Company Commitments
We maintain sufficient borrowing capacity to cover outstanding unfunded portfolio company commitments that we may be required to fund. We seek to carefully consider our unfunded portfolio company commitments for the purpose of planning our ongoing financial leverage. Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation to cover any outstanding portfolio company unfunded commitments we are required to fund.
Other Commitments and Contingencies
We had raised $5.5 billion in total Capital Commitments from investors, of which $112.4 million was from executives of Owl Rock. As of June 17, 2019, all outstanding Capital Commitments had been drawn.
In connection with the IPO, on July 22, 2019, we entered into the Company 10b5-1 Plan, to acquire up to $150 million in the aggregate of our common stock at prices below its net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Company 10b5-1 Plan commenced on August 19, 2019.Goldman, Sachs & Co. , as agent has repurchased an aggregate of 12,515,624 shares of our common stock pursuant to the Company 10b5-1 Plan for an aggregate of approximately $150 million. The 10b5-1 Plan was exhausted on August 4, 2020. 144
-------------------------------------------------------------------------------- On November 3, 2020, our Board approved a repurchase program under which we may repurchase up to $100 million of our outstanding common stock. Under the program, purchases may be made at management's discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. Unless extended by our Board, the repurchase program will terminate 12-months from the date it was approved. As of December 31, 2020, no repurchases were made under the Repurchase Plan. From time to time, we may become a party to certain legal proceedings incidental to the normal course of its business. At December 31, 2020, we were not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.
Contractual Obligations
A summary of our contractual payment obligations under our credit facilities as of December 31, 2020, is as follows:
Payments Due by Period
Less than 1
($ in millions) Total year 1-3 years 3-5 years After 5 years
Revolving Credit Facility $ 252.5 $ - $ - 252.5 -
SPV Asset Facility II 100.0 - - - 100.0
SPV Asset Facility III 375.0 - 375.0 - -
SPV Asset Facility IV 295.0 - - - 295.0
CLO I 390.0 - - - 390.0
CLO II 260.0 - - - 260.0
CLO III 260.0 - - - 260.0
CLO IV 252.0 - - - 252.0
CLO V 196.0 - - - 196.0
2023 Notes 150.0 - 150.0 - -
2024 Notes 400.0 - - 400.0 -
2025 Notes 425.0 - - 425.0 -
July 2025 Notes 500.0 - - 500.0 -
2026 Notes 500.0 - - - 500.0
July 2026 Notes 1,000.0 - - - 1,000.0Total Contractual Obligations $ 5,355.5 $ - $ 525.0
$ 1,577.5 $ 3,253.0 Related-Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following:
• the Investment Advisory Agreement; • the Administration Agreement; and • the License Agreement. In addition to the aforementioned agreements, we, our Adviser and certain of our Adviser's affiliates have been granted exemptive relief by theSEC to co-invest with other funds managed by he Owl Rock Advisers, including the Owl Rock Clients, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. See "ITEM 1. - Notes to Consolidated Financial Statements - Note 3. Agreements and Related Party Transactions" for further details. We invest through Wingspire and, together with Regents, through Sebago Lake, controlled affiliated investments as defined in the 1940 Act. See "ITEM 1. - Notes to Consolidated Financial Statements - Note 3. Agreements and Related Party Transactions" for further details.
Critical Accounting Policies
The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets, and any other
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--------------------------------------------------------------------------------parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies should be read in connection with our risk factors as described in "ITEM 1A. RISK FACTORS."
Investments at Fair Value
Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period. Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of our investments, are valued at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our audit committee and independent third-party valuation firm(s) engaged at the direction of the Board. As part of the valuation process, the Board takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company's debt and equity), the nature and realizable value of any collateral, the portfolio company's ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company's securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.
The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:
• With respect to investments for which market quotations are readily
available, those investments will typically be valued at the bid price of
those market quotations;
• With respect to investments for which market quotations are not readily
available, the valuation process begins with the independent valuation
firm(s) providing a preliminary valuation of each investment to the
Adviser's valuation committee;
• Preliminary valuation conclusions are documented and discussed with the
Adviser's valuation committee. Agreed upon valuation recommendations are
presented to the Audit Committee;
• The Audit Committee reviews the valuation recommendations and recommends
values for each investment to the Board; and
• The Board reviews the recommended valuations and determines the fair
value of each investment.
We conduct this valuation process on a quarterly basis.
We apply ASC 820, which establishes a framework for measuring fair value in accordance withU.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, we consider its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below: • Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. • Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. • Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfer occurred. In addition to using the above inputs in investment valuations, we apply the valuation policy approved by our Board that is consistent with ASC 820. Consistent with the valuation policy, we evaluate the source of the inputs, including any markets in which our investments are trading 146
-------------------------------------------------------------------------------- (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), we subject those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, we, or the independent valuation firm(s), review pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.
Rule 2a-5 under the 1940 Act was recently adopted by theSEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act. We are evaluating the impact of adopting Rule 2a-5 on the consolidated financial statements and intend to comply with the new rule's requirements on or before the compliance date in September 2022.
Interest and Dividend Income Recognition
Interest income is recorded on the accrual basis and includes amortization of
discounts or premiums. Certain investments may have contractual payment-in-kind
("PIK") interest or dividends. PIK interest represents accrued interest that is
added to the principal amount of the investment on the respective interest
payment dates rather than being paid in cash and generally becomes due at
maturity. Discounts to par value on securities purchased are amortized into
interest income over the contractual life of the respective security using the
effective yield method. Premiums to par value on securities purchased are
amortized to first call date. The amortized cost of investments represents the
original cost adjusted for the amortization of discounts or premiums, if any.
Upon prepayment of a loan or debt security, any prepayment premiums, unamortized
upfront loan origination fees and unamortized discounts are recorded as interest
income in the current period.
Loans are generally placed on non-accrual status when there is reasonable doubt
that principal or interest will be collected in full. Accrued interest is
generally reversed when a loan is placed on non-accrual status. Interest
payments received on non-accrual loans may be recognized as income or applied to
principal depending upon management's judgment regarding collectability. If at
any point we believe PIK interest is not expected to be realized, the investment
generating PIK interest will be placed on non-accrual status. When a PIK
investment is placed on non-accrual status, the accrued, uncapitalized interest
or dividends are generally reversed through interest income. Non-accrual loans
are restored to accrual status when past due principal and interest is paid
current and, in management's judgment, are likely to remain current. Management
may make exceptions to this treatment and determine to not place a loan on
non-accrual status if the loan has sufficient collateral value and is in the
process of collection.
Dividend income on preferred equity securities is recorded on the 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 securities is
recorded on the record date for private portfolio companies or on the
ex-dividend date for publicly-traded portfolio companies.
Distributions
We have elected to be treated for
• investment company taxable income (which is generally our ordinary income
plus the excess of realized short-term capital gains over realized net
long-term capital losses), determined without regard to the deduction for
dividends paid, for such taxable year; and
• net tax-exempt interest income (which is the excess of our gross
tax-exempt interest income over certain disallowed deductions) for such
taxable year.
As a RIC, we (but not our shareholders) generally will not be subject to U.S.
federal tax on investment company taxable income and net capital gains that we
distribute to our shareholders.
We intend to distribute annually all or substantially all of such income. To the
extent that we retain our net capital gains or any investment company taxable
income, we generally will be subject to corporate-level U.S. federal income tax.
We can be expected to
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-------------------------------------------------------------------------------- carry forward our net capital gains or any investment company taxable income in excess of current year dividend distributions, and pay theU.S. federal excise tax as described below. Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4%U.S. federal excise tax payable by us. We may be subject to a nondeductible 4%U.S. federal excise tax if we do not distribute (or are treated as distributing) during each calendar year an amount at least equal to the sum of:
• 98% of our net ordinary income excluding certain ordinary gains or losses
for that calendar year;
• 98.2% of our capital gain net income, adjusted for certain ordinary gains
and losses, recognized for the twelve-month period ending on October 31
of that calendar year; and
• 100% of any income or gains recognized, but not distributed, in preceding
years.
While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4%U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed and as a result, in such cases, the excise tax will be imposed. In such an event, we will be liable for this tax only on the amount by which we do not meet the foregoing distribution requirement. We intend to pay quarterly distributions to our shareholders out of assets legally available for distribution. All distributions will be paid at the discretion of our Board and will depend on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as our Board may deem relevant from time to time. To the extent our current taxable earnings for a year fall below the total amount of our distributions for that year, a portion of those distributions may be deemed a return of capital to our shareholders forU.S. federal income tax purposes. Thus, the source of a distribution to our shareholders may be the original capital invested by the shareholder rather than our income or gains. Shareholders should read written disclosure carefully and should not assume that the source of any distribution is our ordinary income or gains. We have adopted an "opt out" dividend reinvestment plan for our common shareholders. As a result, if we declare a cash dividend or other distribution, each shareholder that has not "opted out" of our dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of our common stock rather than receiving cash distributions. Shareholders who receive distributions in the form of shares of common stock will be subject to the sameU.S. federal, state and local tax consequences as if they received cash distributions.
Income Taxes
We have elected to be treated as a BDC under the 1940 Act. We have also elected to be treated as a RIC under the Code beginning with the taxable year ending December 31, 2016 and intend to continue to qualify as a RIC. So long as we maintain our tax treatment as a RIC, we generally will not pay corporate-levelU.S. federal income taxes on any ordinary income or capital gains that we distribute at least annually to our shareholders as distributions. Rather, any tax liability related to income earned and distributed by us represents obligations of our investors and will not be reflected in our consolidated financial statements. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, we must distribute to our shareholders, for each taxable year, at least 90% of our "investment company taxable income" for that year, which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses. In order for us to not be subject toU.S. federal excise taxes, we must distribute annually an amount at least equal to the sum of (i) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. We, at our discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductibleU.S. excise tax on this income.
Certain consolidated subsidiaries of ours are subject to
We evaluate tax positions taken or expected to be taken in the course of preparing our 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 reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes 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. There were no material uncertain tax positions through December 31, 2020. The 2017 through 2019 tax years remain subject to examination byU.S. federal, state and local tax authorities. 148
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