UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Not applicable
Former name, former address and former fiscal year, if changed since last report.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ |
Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of the registrant’s common stock, $.01 par value per share, outstanding at August 3, 2023 was
1
SIXTH STREET SPECIALTY LENDING, INC.
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INDEX |
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PAGE NO. |
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PART I. |
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4 |
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Item 1. |
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4 |
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Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022 |
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4 |
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5 |
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Consolidated Schedules of Investments as of June 30, 2023 (Unaudited) and December 31, 2022 |
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6 |
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21 |
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Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (Unaudited) |
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22 |
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23 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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46 |
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Item 3. |
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65 |
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Item 4. |
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66 |
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PART II. |
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67 |
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Item 1. |
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67 |
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Item 1A. |
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67 |
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Item 2. |
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70 |
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Item 3. |
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70 |
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Item 4. |
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70 |
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Item 5. |
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70 |
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Item 6. |
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71 |
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72 |
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2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.
In addition to factors previously identified elsewhere in the reports and other documents Sixth Street Specialty Lending, Inc. has filed with the Securities and Exchange Commission, or SEC, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.
The “TSLX” and “TAO” marks are marks of Sixth Street.
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Sixth Street Specialty Lending, Inc.
Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)
(Unaudited)
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June 30, |
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December 31, |
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2023 |
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2022 |
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Assets |
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Investments at fair value |
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Non-controlled, non-affiliated investments (amortized cost of $ |
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$ |
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$ |
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Controlled, affiliated investments (amortized cost of $ |
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Total investments at fair value (amortized cost of $ |
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Cash and cash equivalents (restricted cash of $ |
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Interest receivable |
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Prepaid expenses and other assets |
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Total Assets |
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$ |
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$ |
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Liabilities |
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Debt (net of deferred financing costs of $ |
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$ |
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$ |
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Management fees payable to affiliate |
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Incentive fees on net investment income payable to affiliate |
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Incentive fees on net capital gains accrued to affiliate |
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Other payables to affiliate |
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Other liabilities |
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Total Liabilities |
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Net Assets |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Treasury stock at cost; |
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Distributable earnings |
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Total Net Assets |
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Total Liabilities and Net Assets |
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$ |
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$ |
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Net Asset Value Per Share |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
4
Sixth Street Specialty Lending, Inc.
Consolidated Statements of Operations
(Amounts in thousands, except share and per share amounts)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, 2023 |
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June 30, 2022 |
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June 30, 2023 |
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June 30, 2022 |
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Income |
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Investment income from non-controlled, non-affiliated investments: |
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Interest from investments |
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$ |
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$ |
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$ |
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$ |
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Paid-in-kind interest income |
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Dividend income |
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Other income |
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Total investment income from non-controlled, non-affiliated investments |
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Investment income from non-controlled, affiliated investments: |
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Interest from investments |
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— |
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— |
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— |
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Total investment income from non-controlled, affiliated investments |
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— |
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— |
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— |
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Investment income from controlled, affiliated investments: |
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Interest from investments |
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Other income |
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Total investment income from controlled, affiliated investments |
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Total Investment Income |
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Expenses |
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Interest |
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Management fees |
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Incentive fees on net investment income |
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Incentive fees on net capital gains |
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Professional fees |
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Directors’ fees |
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Other general and administrative |
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Total expenses |
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Management fees waived (Note 3) |
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( |
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( |
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Net Expenses |
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Net Investment Income Before Income Taxes |
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Income taxes, including excise taxes |
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Net Investment Income |
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Unrealized and Realized Gains (Losses) |
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Net change in unrealized gains (losses): |
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Non-controlled, non-affiliated investments |
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( |
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Non-controlled, affiliated investments |
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— |
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— |
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— |
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( |
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Controlled, affiliated investments |
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( |
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( |
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( |
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Translation of other assets and liabilities in foreign currencies |
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( |
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Interest rate swaps |
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( |
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( |
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Total net change in unrealized gains (losses) |
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Realized gains (losses): |
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Non-controlled, non-affiliated investments |
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Non-controlled, affiliated investments |
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— |
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— |
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— |
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Foreign currency transactions |
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( |
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Total net realized gains (losses) |
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Total Net Unrealized and Realized Gains (Losses) |
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( |
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Increase (Decrease) in Net Assets Resulting from Operations |
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$ |
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$ |
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$ |
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$ |
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Earnings (Loss) per common share—basic |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares of common stock outstanding—basic |
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Earnings per common share—diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares of common stock outstanding—diluted |
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The accompanying notes are an integral part of these consolidated financial statements.
5
Sixth Street Specialty Lending, Inc.
Consolidated Schedule of Investments as of June 30, 2023
(Amounts in thousands, except share amounts)
(Unaudited)
Company (1)(6) |
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Investment |
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Initial |
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Reference |
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Interest Rate |
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Amortized |
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Fair Value (9) |
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Percentage |
Debt Investments |
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Automotive |
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Bestpass, Inc. (3)(5) |
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First-lien loan ($ |
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SOFR + |
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$ |
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$ |
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Carlstar Group, LLC (3) |
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First-lien loan ($ |
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SOFR + |
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Business Services |
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Acceo Solutions, Inc. (3)(4)(5) |
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First-lien loan (CAD |
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C + |
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Alpha Midco, Inc. (3)(5) |
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First-lien loan ($ |
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SOFR + |
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BCTO Ignition Purchaser, Inc. (3) |
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First-lien holdco loan ($ |
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SOFR + |
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Dye & Durham Corp. (3)(4) |
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First-lien loan (CAD |
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C + |
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First-lien revolving loan (CAD |
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C + |
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ExtraHop Networks, Inc. (3)(5) |
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First-lien loan ($ |
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SOFR + |
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ForeScout Technologies, Inc. (3) |
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First-lien loan ($ |
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L + |
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First-lien loan ($ |
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L + |
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Galileo Parent, Inc. (3) |
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First-lien loan ($ |
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SOFR + |
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First-lien revolving loan ($ |
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SOFR + |
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Hornetsecurity Holding GmbH (3)(4) |
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First-lien loan (EUR |
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E + |
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Information Clearinghouse, LLC and MS Market Service, LLC (3)(5) |
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First-lien loan ($ |
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SOFR + |
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Mitnick Corporate Purchaser, Inc. (3)(9) |
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First-lien loan ($ |
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SOFR + |
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Netwrix Corp. (3) |
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First-lien loan ($ |
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SOFR + |
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First-lien revolving loan ($ |
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SOFR + |
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OutSystems Luxco SARL(3)(4)(5) |
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First-lien loan (EUR |
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E + |
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ReliaQuest Holdings, LLC (3)(5) |
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First-lien loan ($ |
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SOFR + |
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TIBCO Software Inc. (9) |
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First-lien note ($ |
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First-lien loan ($ |
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SOFR + |
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Chemicals |
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Erling Lux Bidco SARL(3)(4) |
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First-lien loan (EUR |
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E + |
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First-lien loan (GBP |
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S + |
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Communications |
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Banyan Software Holdings, LLC (3)(4) |
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First-lien loan ($ |
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SOFR + |
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Celtra Technologies, Inc. (3)(5) |
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First-lien loan ($ |
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SOFR + |
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IntelePeer Holdings, Inc. |
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First-lien loan ($ |
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SOFR + |
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Convertible note ($ |
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Education |
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Astra Acquisition Corp. (3) |
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Second-lien loan ($ |
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SOFR + |
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Destiny Solutions Parent Holding Company (3)(5) |
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First-lien loan ($ |
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SOFR + |
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EMS Linq, Inc. (3) |
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First-lien loan ($ |
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SOFR + |
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First-lien revolving loan ($ |
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SOFR + |
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Financial Services |
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Alaska Bidco Oy (3)(4) |
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First-lien loan (EUR |
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E + |
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BTRS Holdings, Inc.(3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Bear OpCo, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
BlueSnap, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Ibis Intermediate Co. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Ibis US Blocker Co. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
6
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
Jonas Collections and Recovery, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Kyriba Corp.(3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien loan (EUR |
|
|
E + |
|
|
|
|
|
|
|
||||
|
|
First-lien revolving loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan (EUR |
|
|
E + |
|
|
|
|
|
|
|
||||
Passport Labs, Inc. |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
Convertible Promissory Note A ($ |
|
|
|
|
|
|
|
|
||||||
Ping Identity Holding Corp. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
PrimeRevenue, Inc. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
TradingScreen, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
Delayed draw term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Healthcare |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCTO Ace Purchaser, Inc. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
Second-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Caris Life Sciences, Inc. |
|
Convertible note ($ |
|
|
|
|
|
|
|
|
||||||
Edge Bidco B.V (3)(4)(5) |
|
First-lien loan (EUR |
|
|
E + |
|
|
|
|
|
|
|
||||
Homecare Software Solutions, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Integrated Practice Solutions, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Merative L.P. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Raptor US Buyer II Corp. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel, Gaming and Leisure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASG II, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
IRGSE Holding Corp. (3)(6) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Human Resource Support Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axonify, Inc. (3)(4)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
bswift, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Elysian Finco Ltd. (3)(4)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Employment Hero Holdings Pty Ltd. (3)(4) |
|
First-lien loan (AUD |
|
|
B + |
|
|
|
|
|
|
|
||||
HireVue, Inc.(3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
PageUp People, Ltd. (3)(4)(5) |
|
First-lien loan (AUD |
|
|
B + |
|
|
|
|
|
|
|
||||
|
|
First-lien loan (GBP |
|
|
S + |
|
|
|
|
|
|
|
||||
|
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
PayScale Holdings, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
PrimePay Intermediate, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Workwell Acquisition Co. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disco Parent, Inc. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Internet Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arrow Buyer, Inc. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Bayshore Intermediate #2, L.P. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Coupa Holdings, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
CrunchTime Information, Systems, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
EDB Parent, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Higher Logic, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
LeanTaaS Holdings, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Lithium Technologies, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
7
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
Lucidworks, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Piano Software, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
SMA Technologies Holdings, LLC(3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Manufacturing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avalara, Inc (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Office Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USR Parent, Inc. (3)(5) |
|
ABL FILO term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Oil, Gas and Consumable Fuels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laramie Energy, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Murchison Oil and Gas, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
TRP Assets, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Omnigo Software, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Retail and Consumer Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99 Cents Only Stores LLC (3) |
|
ABL FILO term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
American Achievement, Corp. (3)(14) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
Subordinated note ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Bed Bath and Beyond Inc. (3)(15) |
|
ABL FILO term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
Roll Up DIP term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
Super-Priority DIP term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Cordance Operations, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Neuintel, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Project P Intermediate 2, LLC (3) |
|
ABL FILO term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Tango Management Consulting, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan ($ |
|
|
P + |
|
|
|
( |
|
|
( |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Transportation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project44, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Total Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity and Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dye & Durham, Ltd. (4)(10) |
|
Common Shares ( |
|
|
|
|
|
|
|
|
|
|
|
|||
Mitnick TA Aggregator, LP (11)(13) |
|
Membership Interest ( |
|
|
|
|
|
|
|
|
|
|
||||
ReliaQuest, LLC (11)(13) |
|
Class A-1 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Class A-2 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
Sprinklr, Inc. (10)(11) |
|
Common Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celtra Technologies, Inc. (11) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
IntelePeer Holdings, Inc. (11) |
|
Series C Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Series D Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
|
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Education |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Astra 2L Holdings II LLC (11) |
|
Membership Interest ( |
|
|
|
|
|
|
|
|
|
|
||||
EMS Linq, Inc. (11) |
|
Class B Units ( |
|
|
|
|
|
|
|
|
|
|
||||
RMCF IV CIV XXXV, |
|
Partnership Interest ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AvidXchange, Inc. (10)(11) |
|
Common Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
Newport Parent Holdings, LP (11) |
|
Class A-2 Units ( |
|
|
|
|
|
|
|
|
|
|
8
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
Oxford Square Capital Corp. (4)(10) |
|
Common Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
Passport Labs, Inc. (11) |
|
|
|
|
|
|
|
|
|
|
|
|||||
TradingScreen, Inc. (11)(13) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Healthcare |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caris Life Sciences, Inc. (11) |
|
Series C Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Series D Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Merative L.P. (11)(13) |
|
|
|
|
|
|
|
|
|
|
|
|||||
Raptor US Buyer II Corp. (11)(12) |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel, Gaming and Leisure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IRGSE Holding Corp. (7)(11) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Class C-1 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Human Resource Support Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axonify, Inc. (4)(11)(13) |
|
Class A-1 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
bswift, LLC (11)(12) |
|
Class A-1 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
ClearCompany, LLC (11)(13) |
|
Series A Preferred Units ( |
|
|
|
|
|
|
|
|
|
|
||||
DaySmart Holdings, LLC (11)(13) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
Employment Hero Holdings Pty Ltd. (4)(11) |
|
Series E Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Internet Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bayshore Intermediate #2, L.P. (11)(13) |
|
Common Units ( |
|
|
|
|
|
|
|
|
|
|
||||
Lucidworks, Inc. (11) |
|
Series F Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
Piano Software, Inc. (11) |
|
Series C-1 Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Series C-2 Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
SMA Technologies Holdings, LLC (11)(12) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Class B Units ( |
|
|
|
|
|
|
|
— |
|
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Marketing Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Validity, Inc. (11) |
|
Series A Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
Oil, Gas and Consumable Fuels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murchison Oil and Gas, LLC (13) |
|
|
|
|
|
|
|
|
|
|
|
|||||
TRP Assets, LLC (11)(12)(13) |
|
Partnership Interest ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Pharmaceuticals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TherapeuticsMD, Inc. (4)(11) |
|
|
|
|
|
|
|
|
|
|
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail and Consumer Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Achievement, Corp. (11) |
|
Class A Units ( |
|
|
|
|
|
|
|
— |
|
|
|
|||
Copper Bidco, LLC (9) |
|
Trust Certificates ( |
|
|
|
|
|
|
|
— |
|
|
|
|||
|
|
Trust Certificates ( |
|
|
|
|
|
|
|
|
|
|
||||
Neuintel, LLC (11)(13) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structured Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allegro CLO Ltd, Series 2018-1A, (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
American Money Management Corp CLO Ltd, Series 2016-18A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Ares CLO Ltd, Series 2021-59A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Ares Loan Funding I Ltd, Series 2021-ALFA, Class E (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Bain Capital Credit CLO Ltd, Series 2018-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
9
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
Battalion CLO Ltd, Series 2021-21A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Benefit Street Partners CLO Ltd, Series 2015-BR (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Benefit Street Partners CLO Ltd, Series 2015-8A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Carlyle Global Market Strategies CLO Ltd, Series 2014-4RA (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Carlyle Global Market Strategies CLO Ltd, Series 2016-1, Ltd (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Carlyle Global Market Strategies CLO Ltd, Series 2018-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
CarVal CLO III Ltd, Series 2019-2A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Cedar Funding CLO Ltd, Series 2018-7A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
CIFC CLO Ltd, Series 2018-3A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
CIFC CLO Ltd, Series 2021-4A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Crown Point CLO Ltd, Series 2021-10A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Dryden Senior Loan Fund, Series 2018-55A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Dryden Senior Loan Fund, Series 2020-86A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Eaton CLO Ltd, Series 2015-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Eaton CLO Ltd, Series 2020-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
GoldenTree CLO Ltd, Series 2020-7A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Gulf Stream Meridian, Series 2021-4A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Gulf Stream Meridian, Series 2021-6A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Jefferson Mill CLO Ltd, Series 2015-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
KKR CLO Ltd, 49A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Madison Park CLO, Series 2018-28A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Magnetite CLO Ltd, Series 2021-30A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
MidOcean Credit CLO Ltd, Series 2016-6A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
MidOcean Credit CLO Ltd, Series 2018-9A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Octagon 57 LLC, Series 2021-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Octagon Investment Partners 18 Ltd, Series 2018-18A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Octagon Investment Partners 38 Ltd, Series 2018-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Park Avenue Institutional Advisers CLO Ltd, Series 2018-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Pikes Peak CLO, Series 2021-9A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
RR Ltd, Series 2020-8A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Shackelton CLO Ltd, Series 2015-7RA (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Signal Peak CLO LLC, Series 2018-5A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Southwick Park CLO Ltd, Series 2019-4A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Stewart Park CLO Ltd, Series 2015-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Voya CLO Ltd, Series 2018-3A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Whitebox CLO I Ltd, Series 2020-2A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Wind River CLO Ltd, Series 2014-2A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Wind River CLO Ltd, Series 2017-1A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
10
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
Wind River CLO Ltd, Series 2018-3A (3)(4)(9) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total Equity and Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total Investments |
|
|
|
|
|
|
|
|
|
$ |
|
$ |
|
|
|
Interest Rate Swaps as of June 30, 2023 |
|
|||||||||||||||||||
|
|
Company |
|
Company |
|
Maturity Date |
|
Notional |
|
|
Fair |
|
|
Upfront |
|
|
Change in |
|
||||
Interest rate swap (a)(d)(e) |
|
L + |
|
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||||
Interest rate swap |
|
SOFR + |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
||
Total Non Hedge Accounting Swaps |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap (a)(b)(c)(e) |
|
|
L + |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||||
Interest rate swap |
|
|
SOFR + |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
||
Interest rate swap (a)(b)(c)(e) |
|
|
L + |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||||
Interest rate swap |
|
|
SOFR + |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
||
Interest rate swap (a)(b)(e) |
|
|
L + |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||||
Interest rate swap |
|
|
SOFR + |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
||
Total Hedge Accounting Swaps |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
Cash collateral |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
Total derivatives |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
11
12
Controlled, Affiliated Investments during the six months ended June 30, 2023
Company |
|
Fair |
|
|
Gross |
|
|
Gross |
|
|
Net Change |
|
|
Realized |
|
|
Transfers |
|
|
Fair |
|
|
Other |
|
|
Interest |
|
|||||||||
IRGSE Holding Corp. |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
13
Sixth Street Specialty Lending, Inc.
Consolidated Schedule of Investments as of December 31, 2022
(Amounts in thousands, except share amounts)
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carlstar Group, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
$ |
|
$ |
|
|||||
Business services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceo Solutions, Inc. (3)(4)(5) |
|
First-lien loan (CAD |
|
|
C + |
|
|
|
|
|
|
|
||||
Alpha Midco, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Dye & Durham Corp. (3)(4) |
|
First-lien loan (CAD |
|
|
C + |
|
|
|
|
|
|
|
||||
|
|
First-lien revolving loan (CAD |
|
|
P + |
|
|
|
|
|
|
|
||||
ExtraHop Networks, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
ForeScout Technologies, Inc. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Hornetsecurity Holding GmbH (3)(4) |
|
First-lien loan (EUR |
|
|
E + |
|
|
|
|
|
|
|
||||
Information Clearinghouse, LLC and MS Market Service, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Mitnick Corporate Purchaser, Inc. (3)(10) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Netwrix Corp. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
OutSystems Luxco SARL(3)(4)(5) |
|
First-lien loan (EUR |
|
|
E + |
|
|
|
|
|
|
|
||||
ReliaQuest Holdings, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
TIBCO Software Inc. (10) |
|
First-lien note ($ |
|
|
|
|
|
|
|
|
||||||
|
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
WideOrbit, Inc. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Chemicals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Erling Lux Bidco SARL(3)(4) |
|
First-lien loan (EUR |
|
|
E + |
|
|
|
|
|
|
|
||||
|
|
First-lien loan (GBP |
|
|
S + |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celtra Technologies, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
IntelePeer Holdings, Inc. |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
Convertible note ($ |
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Education |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Astra Acquisition Corp. (3) |
|
Second-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Destiny Solutions Parent Holding Company (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
EMS Linq, Inc. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BTRS Holdings, Inc.(3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Bear OpCo, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
BlueSnap, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
G Treasury SS, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Ibis Intermediate Co. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Ibis US Blocker Co. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Jonas Collections and Recovery, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Kyriba Corp.(3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien loan (EUR |
|
|
E + |
|
|
|
|
|
|
|
||||
|
|
First-lien revolving loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan (EUR |
|
|
E + |
|
|
|
|
|
|
|
||||
Passport Labs, Inc. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Ping Identity Holding Corp. (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
PrimeRevenue, Inc. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
TradingScreen, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
Healthcare |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCTO Ace Purchaser, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Caris Life Sciences, Inc. |
|
First-lien loan ($ |
|
|
|
|
|
|
|
|
||||||
|
|
First-lien loan ($ |
|
|
|
|
|
|
|
|
||||||
|
|
Convertible note ($ |
|
|
|
|
|
|
|
|
||||||
Homecare Software Solutions, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Integrated Practice Solutions, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Merative L.P. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel, Gaming and Leisure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASG II, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
IRGSE Holding Corp. (3)(7) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Human Resource Support Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axonify, Inc. (3)(4)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
bswift, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Elysian Finco Ltd. (3)(4)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Employment Hero Holdings Pty Ltd. (3)(4) |
|
First-lien loan (AUD |
|
|
B + |
|
|
|
|
|
|
|
||||
PageUp People, Ltd. (3)(4)(5) |
|
First-lien loan (AUD |
|
|
B + |
|
|
|
|
|
|
|
||||
|
|
First-lien loan (GBP |
|
|
S + |
|
|
|
|
|
|
|
||||
|
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
PayScale Holdings, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
PrimePay Intermediate, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Modern Hire, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Workwell Acquisition Co. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Internet Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bayshore Intermediate #2, L.P. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
CrunchTime Information, Systems, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
EDB Parent, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Higher Logic, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
LeanTaaS Holdings, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Lithium Technologies, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
First-lien revolving loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Lucidworks, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Piano Software, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
SMA Technologies Holdings, LLC(3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Manufacturing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avalara, Inc (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Office Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USR Parent, Inc. (3)(5) |
|
ABL FILO term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Oil, Gas and Consumable Fuels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murchison Oil and Gas, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
TRP Assets, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Omnigo Software, LLC (3)(5) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Retail and Consumer Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99 Cents Only Stores LLC (3) |
|
ABL FILO term loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
American Achievement, Corp. (3) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
15
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
|
|
Subordinated note ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Bed Bath and Beyond Inc. (3) |
|
ABL FILO term loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Cordance Operations, LLC (3) |
|
First-lien loan ($ |
|
|
SOFR + |
|
|
|
|
|
|
|||||
Neuintel, LLC (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Project P Intermediate 2, LLC (3) |
|
ABL FILO term loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Tango Management Consulting, LLC (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Transportation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project44, Inc. (3)(5) |
|
First-lien loan ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Total Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity and Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dye & Durham, Ltd. (4)(11) |
|
Common Shares ( |
|
|
|
|
|
|
|
|
|
|
|
|||
Mitnick TA Aggregator, LP (12)(13)(14) |
|
Membership Interest ( |
|
|
|
|
|
|
|
|
|
|
||||
ReliaQuest, LLC (12)(14) |
|
Class A-1 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Class A-2 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
Sprinklr, Inc. (11)(12) |
|
Common Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
WideOrbit, Inc. (12) |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celtra Technologies, Inc. (12) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
IntelePeer Holdings, Inc. (12) |
|
Series C Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Series D Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
|
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Education |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Astra 2L Holdings II LLC (12)(13) |
|
Membership Interest ( |
|
|
|
|
|
|
|
|
|
|
||||
EMS Linq, Inc. (12) |
|
Class B Units ( |
|
|
|
|
|
|
|
|
|
|
||||
RMCF IV CIV XXXV, |
|
Partnership Interest ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AvidXchange, Inc. (11)(12) |
|
Common Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
Newport Parent Holdings, LP (12) |
|
Class A-2 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
Oxford Square Capital Corp. (4)(11) |
|
Common Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
Passport Labs, Inc. (12) |
|
|
|
|
|
|
|
|
|
|
|
|||||
TradingScreen, Inc. (12)(14) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Healthcare |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caris Life Sciences, Inc. (12) |
|
Series C Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Series D Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Merative L.P. (12)(13)(14) |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel, Gaming and Leisure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IRGSE Holding Corp. (7)(12) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Class C-1 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Human Resource Support Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axonify, Inc. (4)(12)(14) |
|
Class A-1 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
bswift, LLC (12)(13) |
|
Class A-1 Units ( |
|
|
|
|
|
|
|
|
|
|
||||
ClearCompany, LLC (12)(14) |
|
Series A Preferred Units ( |
|
|
|
|
|
|
|
|
|
|
||||
DaySmart Holdings, LLC (12)(14) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
Employment Hero Holdings Pty Ltd. (4)(12)(13) |
|
Series E Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Internet Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bayshore Intermediate #2, L.P. (12)(14) |
|
Common Units ( |
|
|
|
|
|
|
|
|
|
|
||||
Lucidworks, Inc. (12) |
|
Series F Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
Piano Software, Inc. (12) |
|
Series C-1 Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Series C-2 Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
16
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
SMA Technologies Holdings, LLC (12)(13) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Class B Units ( |
|
|
|
|
|
|
|
— |
|
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Marketing Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Validity, Inc. (12) |
|
Series A Preferred Shares ( |
|
|
|
|
|
|
|
|
|
|
||||
Oil, Gas and Consumable Fuels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murchison Oil and Gas, LLC (13)(14) |
|
|
|
|
|
|
|
|
|
|
|
|||||
TRP Assets, LLC (12)(13)(14) |
|
Partnership Interest ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Pharmaceuticals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TherapeuticsMD, Inc. (4)(12) |
|
|
|
|
|
|
|
|
|
|
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
||
Retail and Consumer Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Achievement, Corp. (12) |
|
Class A Units ( |
|
|
|
|
|
|
|
— |
|
|
|
|||
Copper Bidco, LLC (10) |
|
Trust Certificates ( |
|
|
|
|
|
|
|
— |
|
|
|
|||
|
|
Trust Certificates ( |
|
|
|
|
|
|
|
|
|
|
||||
Neuintel, LLC (12)(14) |
|
Class A Units ( |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structured Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allegro CLO Ltd, Series 2018-1A, (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
American Money Management Corp CLO Ltd, Series 2016-18A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Ares CLO Ltd, Series 2021-59A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Ares Loan Funding I Ltd, Series 2021-ALFA, Class E (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Bain Capital Credit CLO Ltd, Series 2018-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Battalion CLO Ltd, Series 2021-21A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Benefit Street Partners CLO Ltd, Series 2015-BR (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Benefit Street Partners CLO Ltd, Series 2015-8A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Carlyle Global Market Strategies CLO Ltd, Series 2014-4RA (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Carlyle Global Market Strategies CLO Ltd, Series 2018-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
CarVal CLO III Ltd, Series 2019-2A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Cedar Funding CLO Ltd, Series 2018-7A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
CIFC CLO Ltd, Series 2018-3A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
CIFC CLO Ltd, Series 2021-4A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Crown Point CLO Ltd, Series 2021-10A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Dryden Senior Loan Fund, Series 2018-55A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Dryden Senior Loan Fund, Series 2020-86A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Eaton CLO Ltd, Series 2015-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Eaton CLO Ltd, Series 2020-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
GoldenTree CLO Ltd, Series 2020-7A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Gulf Stream Meridian, Series 2021-4A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Gulf Stream Meridian, Series 2021-6A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Jefferson Mill CLO Ltd, Series 2015-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
KKR CLO Ltd, 49A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Madison Park CLO, Series 2018-28A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
17
Company (1)(6) |
|
Investment |
|
Initial |
|
Reference |
|
Interest Rate |
|
|
Amortized |
|
|
Fair Value (9) |
|
Percentage |
Magnetite CLO Ltd, Series 2021-30A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
MidOcean Credit CLO Ltd, Series 2016-6A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
MidOcean Credit CLO Ltd, Series 2018-9A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Octagon 57 LLC, Series 2021-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Octagon Investment Partners 18 Ltd, Series 2018-18A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Octagon Investment Partners 38 Ltd, Series 2018-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Park Avenue Institutional Advisers CLO Ltd, Series 2018-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Pikes Peak CLO, Series 2021-9A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
RR Ltd, Series 2020-8A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Shackelton CLO Ltd, Series 2015-7RA (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Signal Peak CLO LLC, Series 2018-5A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Southwick Park CLO Ltd, Series 2019-4A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Stewart Park CLO Ltd, Series 2015-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Voya CLO Ltd, Series 2018-3A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Whitebox CLO I Ltd, Series 2020-2A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Wind River CLO Ltd, Series 2014-2A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Wind River CLO Ltd, Series 2017-1A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
Wind River CLO Ltd, Series 2018-3A (3)(4)(10) |
|
Structured Product ($ |
|
|
L + |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total Equity and Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total Investments |
|
|
|
|
|
|
|
|
|
$ |
|
$ |
|
|
|
Interest Rate Swaps as of December 31, 2022 |
|
|||||||||||||||||||
|
|
Company |
|
Company |
|
Maturity Date |
|
Notional |
|
|
Fair |
|
|
Upfront |
|
|
Change in |
|
||||
Interest rate swap (a) |
|
|
L + |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|||
Interest rate swap (a)(e) |
|
L + |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||||
Interest rate swap (a)(b) |
|
|
L + |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Interest rate swap (a)(b) |
|
|
L + |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Interest rate swap (a)(b) |
|
|
L + |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Interest rate swap (a)(b) |
|
L + |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|||
Interest rate swap (a)(b) |
|
L + |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|||
Interest rate swap (a)(b) |
|
L + |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|||
Interest rate swap (a)(b) |
|
L |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Total Non Hedge Accounting Swaps |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap (a)(c)(d) |
|
|
L + |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|||
Interest rate swap (a)(c)(d) |
|
|
L + |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|||
Interest rate swap (a)(c) |
|
|
L + |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|||
Total Hedge Accounting Swaps |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Cash collateral |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
Total |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
18
Non-controlled, Affiliated Investments during the year ended December 31, 2022
Company |
|
Fair |
|
|
Gross |
|
|
Gross |
|
|
Net Change |
|
|
Realized |
|
|
Transfers |
|
|
Fair |
|
|
Other |
|
|
Interest |
|
|||||||||
MD America Energy, |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Total |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
19
Controlled, Affiliated Investments during the year ended December 31, 2022
Company |
|
Fair |
|
|
Gross |
|
|
Gross |
|
|
Net Change |
|
|
Realized |
|
|
Transfers |
|
|
Fair |
|
|
Other |
|
|
Interest |
|
|||||||||
IRGSE Holding Corp. |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Mississippi Resources, |
|
— |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
20
Sixth Street Specialty Lending, Inc.
Consolidated Statements of Changes in Net Assets
(Amounts in thousands, except share amounts)
(Unaudited)
|
|
Common Stock |
|
|
Treasury Stock |
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Shares |
|
|
Par |
|
|
Shares |
|
|
Cost |
|
|
Paid in Capital in |
|
|
Distributable |
|
|
Total Net |
|
|||||||
Balance at December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net increase (decrease) in net assets resulting from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net investment income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Net change in unrealized gains (losses) on investments and |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Net realized gains (losses) on investments and foreign |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Dividends to stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock issued in connection with dividend reinvestment plan |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Dividends declared from distributable earnings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Tax reclassification of stockholders' equity in accordance with |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
Balance at March 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net increase (decrease) in net assets resulting from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net investment income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Net change in unrealized gains (losses) on investments and |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Net realized gains (losses) on investments and foreign |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Increase (decrease) in Net Assets Resulting from Capital Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Issuance of common stock, net of offering and |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Dividends to stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock issued in connection with dividend reinvestment plan |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Dividends declared from distributable earnings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
Common Stock |
|
|
Treasury Stock |
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Shares |
|
|
Par |
|
|
Shares |
|
|
Cost |
|
|
Paid in Capital in |
|
|
Distributable |
|
|
Total Net |
|
|||||||
Balance at December 31, 2021 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net increase (decrease) in net assets resulting from operations: |
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|
|
|
|
|
|
|
|
|
|
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|
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|
|||||||
Net investment income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Net change in unrealized gains (losses) on investments and |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Net realized gains (losses) on investments and foreign |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Dividends to stockholders: |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
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|||||||
Stock issued in connection with dividend reinvestment plan |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Dividends declared from distributable earnings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Tax reclassification of stockholders' equity in accordance with |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
Balance at March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net increase (decrease) in net assets resulting from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net investment income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Net change in unrealized gains (losses) on investments and |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Net realized gains (losses) on investments and foreign |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Dividends to stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock issued in connection with dividend reinvestment plan |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Dividends declared from distributable earnings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
21
Sixth Street Specialty Lending, Inc.
Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
|
|
Six Months Ended |
|
|
Six Months Ended |
|
||
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||
Cash Flows from Operating Activities |
|
|
|
|
|
|
||
Increase (decrease) in net assets resulting from operations |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile increase (decrease) in net assets resulting from operations |
|
|
|
|
|
|
||
Net change in unrealized (gains) losses on investments |
|
|
( |
) |
|
|
|
|
Net change in unrealized (gains) losses on foreign currency transactions |
|
|
|
|
|
( |
) |
|
Net change in unrealized (gains) losses on interest rate swaps |
|
|
( |
) |
|
|
|
|
Net realized (gains) losses on investments |
|
|
( |
) |
|
|
( |
) |
Net realized (gains) losses on foreign currency transactions |
|
|
( |
) |
|
|
( |
) |
Net amortization of discount on investments |
|
|
( |
) |
|
|
( |
) |
Amortization of deferred financing costs |
|
|
|
|
|
|
||
Amortization of discount on debt |
|
|
|
|
|
|
||
Purchases and originations of investments, net |
|
|
( |
) |
|
|
( |
) |
Proceeds from investments, net |
|
|
|
|
|
|
||
Repayments on investments |
|
|
|
|
|
|
||
Paid-in-kind interest |
|
|
( |
) |
|
|
( |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Interest receivable |
|
|
( |
) |
|
|
( |
) |
Interest receivable paid-in-kind |
|
|
( |
) |
|
|
|
|
Prepaid expenses and other assets |
|
|
|
|
|
( |
) |
|
Management fees payable to affiliate |
|
|
|
|
|
|
||
Incentive fees on net investment income payable to affiliate |
|
|
( |
) |
|
|
( |
) |
Incentive fees on net capital gains accrued to affiliate |
|
|
|
|
|
( |
) |
|
Payable to affiliate |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
( |
) |
|
Net Cash Provided by (Used in) Operating Activities |
|
|
( |
) |
|
|
( |
) |
Cash Flows from Financing Activities |
|
|
|
|
|
|
||
Borrowings on debt |
|
|
|
|
|
|
||
Repayments on debt |
|
|
( |
) |
|
|
( |
) |
Deferred financing costs |
|
|
( |
) |
|
|
( |
) |
Equity offering expenses |
|
|
( |
) |
|
|
— |
|
Public offering |
|
|
|
|
|
— |
|
|
Dividends paid to stockholders |
|
|
( |
) |
|
|
( |
) |
Net Cash Provided by (Used in) Financing Activities |
|
|
|
|
|
|
||
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
|
|
|
|
||
Cash, Cash Equivalents, and Restricted Cash, End of Period |
|
$ |
|
|
$ |
|
||
Supplemental Information: |
|
|
|
|
|
|
||
Interest paid during the period |
|
$ |
|
|
$ |
|
||
Excise and other taxes paid during the period |
|
$ |
|
|
$ |
|
||
Dividends declared during the period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Non-Cash Financing Activities: |
|
|
|
|
|
|
||
Reinvestment of dividends during the period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
22
Sixth Street Specialty Lending, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
(Amounts in thousands, unless otherwise indicated)
1. Organization and Basis of Presentation
Organization
Sixth Street Specialty Lending, Inc. (the “Company”) is a Delaware corporation formed on July 21, 2010. The Company was formed primarily to lend to, and selectively invest in, middle-market companies in the United States. The Company has elected to be regulated as a business development company (“BDC”) under the 1940 Act. In addition, for tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is managed by Sixth Street Specialty Lending Advisers, LLC (the “Adviser”). On June 1, 2011, the Company formed a wholly-owned subsidiary, TC Lending, LLC, a Delaware limited liability company. On March 22, 2012, the Company formed a wholly-owned subsidiary, Sixth Street SL SPV, LLC, a Delaware limited liability company. On May 19, 2014, the Company formed a wholly-owned subsidiary, Sixth Street SL Holding, LLC, a Delaware limited liability company. On December 9, 2020, the Company formed a wholly-owned subsidiary, Sixth Street Specialty Lending Sub, LLC, a Cayman Islands limited liability company.
On March 21, 2014, the Company completed its initial public offering (“IPO”) and the Company’s shares began trading on the New York Stock Exchange (“NYSE”) under the symbol “TSLX.”
Basis of Presentation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and include the accounts of the Company and its subsidiaries. In the opinion of management, all adjustments considered necessary for the fair presentation of the consolidated financial statements for the periods presented have been included. The results of operations for interim periods are not indicative of results to be expected for the full year. All intercompany balances and transactions have been eliminated in consolidation.
Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with U.S. GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (“SEC”), on February 16, 2023.
The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies.
Fiscal Year End
The Company’s fiscal year ends on December 31.
2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual amounts could differ from those estimates and such differences could be material.
Cash and Cash Equivalents
Cash and cash equivalents may consist of demand deposits, highly liquid investments (e.g., money market funds, U.S. Treasury notes, and similar type instruments) with original maturities of three months or less, and restricted cash pledged as collateral for certain centrally cleared derivative instruments. Cash and cash equivalents denominated in U.S. dollars are carried at cost, which approximates fair value. The Company deposits its cash and cash equivalents with highly-rated banking corporations and, at times, cash deposits may exceed the insured limits under applicable law.
23
Investments at Fair Value
Loan originations are recorded on the date of the binding commitment, which is generally the funding date. Investment transactions purchased through the secondary markets 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 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 and also includes 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 those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of 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 the Company’s Board of Directors (the “Board”), based on, among other things, the input of the Adviser, the Company’s Audit Committee and independent third-party valuation firms 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 its investments, including and in combination of: the estimated enterprise value of a portfolio company (that is, the total value of the portfolio company’s net 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:
The Company conducts this valuation process on a quarterly basis.
The Board has engaged independent third-party valuation firms to perform certain limited procedures that the Board has identified and requested them to perform in connection with the valuation process of investments for which no market quotations are readily available. At June 30, 2023, the independent third-party valuation firms performed their procedures over substantially all of the Company’s investments. Upon completion of such limited procedures, the third-party valuation firms concluded that the fair value, as determined by the Board, of those investments subjected to their limited procedures, appeared reasonable.
The Company applies Financial Accounting Standards Board Accounting Standards Codification Topic 820, Fair Value Measurement (“ASC Topic 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC Topic 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 Topic 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC Topic 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 Topic 820, these levels are summarized below:
24
Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. In addition to using the above inputs in investment valuations, the Company applies the valuation policy approved by its Board that is consistent with ASC Topic 820. Consistent with the valuation policy, the Company evaluates the source of inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When a security is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), the Company subjects those prices to various additional 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, the Company reviews pricing provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs. Some additional factors considered include the number of prices obtained as well as an assessment as to their quality, such as the depth of the relevant market relative to the size of the Company’s position.
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 the Company’s 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 the Company 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 including the impact of changes in broader market indices and credit spreads 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.
Financial and Derivative Instruments
The Company recognizes all derivative instruments as assets or liabilities at fair value in its consolidated financial statements, pursuant to ASC Topic 815 Derivatives and Hedging, further clarified by the FASB’s issuance of the Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging, which was adopted in 2019 by the Company. For all derivative instruments designated in a hedge accounting relationship, the entire change in the fair value of the hedging instrument shall be recorded in the same line item of the Consolidated Statements of Operations as the hedged item. The Company uses certain interest rate swaps as derivative instruments to hedge the Company’s fixed rate debt, and therefore both the periodic payment and the change in fair value for the effective hedge, if applicable, will be recognized as components of interest expense in the Consolidated Statements of Operations. For derivative contracts entered into by the Company that are not designated in a hedge accounting relationship, the Company presents changes in the fair value through current period earnings.
In the normal course of business, the Company has commitments and risks resulting from its investment transactions, which may include those involving derivative instruments. Derivative instruments are measured in terms of the notional contract amount and derive their value based upon one or more underlying instruments. While the notional amount gives some indication of the Company’s derivative activity, it generally is not exchanged, but is only used as the basis on which interest and other payments are exchanged. Derivative instruments are subject to various risks similar to non-derivative instruments including market, credit, liquidity, and operational risks. The Company manages these risks on an aggregate basis as part of its risk management process.
Derivatives, including the Company’s interest rate swaps, for which broker quotes are available are typically valued at those broker quotes.
Offsetting Assets and Liabilities
Foreign currency forward contract and interest rate swap receivables or payables pending settlement are offset, and the net amount is included with receivable or payable for foreign currency forward contracts or interest rate swaps in the consolidated balance sheets when, and only when, they are with the same counterparty, the Company has the legal right to offset the recognized amounts, and it intends to either settle on a net basis or realize the asset and settle the liability simultaneously.
Foreign Currency
Foreign currency amounts are translated into U.S. dollars on the following basis:
25
Although net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. The Company’s current approach to hedging the foreign currency exposure in its non-U.S. dollar denominated investments is primarily to borrow the par amount in local currency under the Company’s Revolving Credit Facility to fund these investments. Fluctuations arising from the translation of foreign currency borrowings are included with the net change in unrealized gains (losses) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations.
Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.
Equity Offering Expenses
The Company records expenses related to equity offerings as a reduction of capital upon completion of an offering of registered securities. The costs associated with renewals of the Company’s shelf registration statement are expensed as incurred.
Debt Issuance Costs
The Company records origination and other expenses related to its debt obligations as deferred financing costs, which are presented as a direct deduction from the carrying value of the related debt liability. These expenses are deferred and amortized using the effective interest method, or straight-line method, over the stated maturity of the debt obligation.
Interest and Dividend Income Recognition
Interest income is recorded on an accrual basis and includes the amortization of discounts and premiums. Discounts and premiums to par value on securities purchased or originated are amortized into interest income over the contractual life of the respective security using the effective interest method. The amortized cost of investments represents the original cost adjusted for the amortization of discounts and premiums, if any.
Unless providing services in connection with an investment, such as syndication, structuring or diligence, all or a portion of any loan fees received by the Company will be deferred and amortized over the investment’s life using the effective interest method.
Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when management has reasonable doubt that the borrower will pay principal or interest in full. Accrued and unpaid 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 has been paid and, in management’s judgment, the borrower is likely to make principal and interest payments in the future. Management may determine to not place a loan on non-accrual status if, notwithstanding any failure to pay, the loan has sufficient collateral value and is in the process of collection.
Dividend income on preferred equity securities is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.
Other Income
From time to time, the Company may receive fees for services provided to portfolio companies by the Adviser. The services that the Adviser provides vary by investment, but may include syndication, structuring, diligence fees, or other service-based fees and fees for providing managerial assistance to our portfolio companies and are recognized as revenue when earned.
Earnings per share
The Company's earnings per share (“EPS”) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Basic EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock assuming all potential shares had been issued and the additional shares of common stock were dilutive. Diluted EPS reflects the potential dilution, using the if-converted method for convertible debt, which could occur if all potentially dilutive securities were exercised.
26
Reimbursement of Transaction-Related Expenses
The Company may receive reimbursement for certain transaction-related expenses in pursuing investments. Transaction-related expenses, which are expected to be reimbursed by third parties, are typically deferred until the transaction is consummated and are recorded in Prepaid expenses and other assets on the date incurred. The transaction-related costs of pursuing investments not otherwise reimbursed are borne by the Company and for successfully completed investments included as a component of the investment’s cost basis.
Cash advances received in respect of transaction-related expenses are recorded as Cash and cash equivalents with an offset to Other liabilities or Other payables to affiliates. Other liabilities or Other payables to affiliates are relieved as reimbursable expenses are incurred.
Income Taxes, Including Excise Taxes
The Company has elected to be treated as a RIC under Subchapter M of the Code, and the Company intends to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must, among other things, distribute to its stockholders in each taxable year generally at least
The Company evaluates tax positions taken or expected to be taken in the course of preparing its 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.
Depending on the level of taxable income earned in a tax year, the Company 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
For the three and six months ended June 30, 2023, the Company recorded a net expense of $
Dividends to Common Stockholders
Dividends to common stockholders are recorded on the record date. The amount to be paid out as a dividend is determined by the Board and is generally based upon the earnings estimated by the Adviser. Net realized long-term capital gains, if any, would generally be distributed at least annually, although the Company may decide to retain such capital gains.
The Company has adopted a dividend reinvestment plan that provides for reinvestment of any dividends declared in cash on behalf of stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes, and it declares, a cash dividend, then the stockholders who have not “opted out” of the dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash dividend. The Company expects to use newly issued shares to satisfy the dividend reinvestment plan.
Recent Accounting Standards and Regulatory Updates
In December 2022, the Financial Accounting Standards Board issued Accounting Standards Update 2022-06 (“ASU 2022-06”) “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” Topic 848 provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. ASU 2022-06 defers the sunset date of Topic 848 from
27
3. Agreements and Related Party Transactions
Administration Agreement
On March 15, 2011, the Company entered into the Administration Agreement with the Adviser. Under the terms of the Administration Agreement, the Adviser provides administrative services to the Company. These services include providing office space, equipment and office services, maintaining financial records, preparing reports to stockholders and reports filed with the SEC, and managing the payment of expenses and the oversight of the performance of administrative and professional services rendered by others. Certain of these services are reimbursable to the Adviser under the terms of the Administration Agreement. In addition, the Adviser is permitted to delegate its duties under the Administration Agreement to affiliates or third parties and the Company pays or reimburses the Adviser for certain expenses incurred by any such affiliates or third parties for work done on its behalf.
In February 2017, the Board of Directors of the Company and the Adviser entered into an amended and restated administration agreement (the “Administration Agreement”) reflecting certain clarifications to the agreement to provide greater detail regarding the scope of the reimbursable costs and expenses of the Administrator’s services.
In November 2022, the Board renewed the Administration Agreement. Unless earlier terminated as described below, the Administration Agreement will remain in effect until November 2023, and may be extended subject to required approvals. The Administration Agreement may be terminated by either party without penalty on
No person who is an officer, director or employee of the Adviser or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Adviser (or its affiliates) for the allocable portion of the costs of compensation, benefits, and related administrative expenses of the Company’s officers who provide operational and administrative services to the Company pursuant to the Administration Agreement, their respective staffs and other professionals who provide services to the Company (including, in each case, employees of the Adviser or an affiliate). Such reimbursable amounts include the allocable portion of the compensation paid by the Adviser or its affiliates to the Company’s Chief Financial Officer, Chief Compliance Officer, and other professionals who provide operational and administrative services to the Company pursuant to the Administration Agreement, including individuals who provide “back office” or “middle office” financial, operational, legal and/or compliance services to the Company. The Company reimburses the Adviser (or its affiliates) for the allocable portion of the compensation paid by the Adviser (or its affiliates) to such individuals based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company and in acting on behalf of the Company. The Company may also reimburse the Adviser or its affiliates for the allocable portion of overhead expenses (including rent, office equipment and utilities) attributable thereto. Directors who are not affiliated with the Adviser receive compensation for their services and reimbursement of expenses incurred to attend meetings.
For the three and six months ended June 30, 2023 the Company incurred expenses of $
Investment Advisory Agreement
On April 15, 2011, the Company entered into the Investment Advisory Agreement with the Adviser. The Investment Advisory Agreement was subsequently amended on December 12, 2011. Under the terms of the Investment Advisory Agreement, the Adviser provides investment advisory services to the Company. The Adviser’s services under the Investment Advisory Agreement are not exclusive, and the Adviser is free to furnish similar or other services to others so long as its services to the Company are not impaired. Under the terms of the Investment Advisory Agreement, the Company will pay the Adviser the Management Fee and may also pay certain Incentive Fees.
The Management Fee is calculated at an annual rate of
For the three and six months ended June 30, 2023 Management Fees (gross of waivers) were $
Any waived Management Fees are not subject to recoupment by the Adviser.
The Adviser intends to waive a portion of the Management Fee payable under the Investment Advisory Agreement by reducing the Management Fee on assets financed using leverage over
28
“Leverage Waiver”). Pursuant to the Leverage Waiver, the Adviser intends to waive the portion of the Management Fee in excess of an annual rate of
The Incentive Fee consists of two parts, as follows:
Pre-Incentive Fee net investment income means dividends, interest and fee income accrued by the Company during the calendar quarter, minus the Company’s operating expenses for the quarter (including the Management Fee, expenses payable under the Administration Agreement to the Administrator, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay-in-kind interest and zero coupon securities), accrued income that the Company may not have received in cash. Pre-Incentive Fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital gains or losses.
For purposes of determining whether pre-Incentive Fee net investment income exceeds the hurdle rate, pre-Incentive Fee net investment income is expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter.
Section 205(b)(3) of the Investment Advisers Act of 1940, as amended, or the Advisers Act, prohibits the Adviser from receiving the payment of fees on unrealized gains until those gains are realized, if ever. There can be no assurance that such unrealized gains will be realized in the future.
For three and six months ended June 30, 2023, Incentive Fees were $
Any waived Incentive Fees are not subject to recoupment by the Adviser.
Since the Company’s IPO, with the exception of its waiver of Management Fees and certain Incentive Fees attributable to the Company’s ownership of certain investments and the Leverage Waiver, the Adviser has not waived its right to receive any Management Fees or Incentive Fees payable pursuant to the Investment Advisory Agreement.
29
In November 2022, the Board renewed the Investment Advisory Agreement. Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect until November 2023, and may be extended subject to required approvals. The Investment Advisory Agreement will automatically terminate in the event of an assignment and may be terminated by either party without penalty on 60 days’ written notice to the other party.
From time to time, the Adviser may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Adviser for such amounts paid on its behalf. Amounts payable to the Adviser are settled in the normal course of business without formal payment terms.
4. Investments at Fair Value
Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled, affiliated investments is contained in the accompanying consolidated financial statements, including the consolidated schedules of investments. The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are non-controlled, non-affiliated; non-controlled, affiliated; or controlled, affiliated investments.
Investments at fair value consisted of the following at June 30, 2023 and December 31, 2022:
|
|
June 30, 2023 |
|
|||||||||
|
|
Amortized Cost (1) |
|
|
Fair Value |
|
|
Net Unrealized |
|
|||
First-lien debt investments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Second-lien debt investments |
|
|
|
|
|
|
|
|
( |
) |
||
Mezzanine debt investments |
|
|
|
|
|
|
|
|
|
|||
Equity and other investments |
|
|
|
|
|
|
|
|
|
|||
Structured credit investments |
|
|
|
|
|
|
|
|
( |
) |
||
Total Investments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
December 31, 2022 |
|
|||||||||
|
|
Amortized Cost (1) |
|
|
Fair Value |
|
|
Net Unrealized |
|
|||
First-lien debt investments |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Second-lien debt investments |
|
|
|
|
|
|
|
|
( |
) |
||
Mezzanine debt investments |
|
|
|
|
|
|
|
|
|
|||
Equity and other investments |
|
|
|
|
|
|
|
|
|
|||
Structured credit investments |
|
|
|
|
|
|
|
|
( |
) |
||
Total Investments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
30
The industry composition of investments at fair value at June 30, 2023 and December 31, 2022 is as follows:
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Automotive |
|
|
% |
|
|
% |
||
Business Services |
|
|
% |
|
|
% |
||
Chemicals |
|
|
% |
|
|
% |
||
Communications |
|
|
% |
|
|
% |
||
Education |
|
|
% |
|
|
% |
||
Financial Services |
|
|
% |
|
|
% |
||
Healthcare |
|
|
% |
|
|
% |
||
Hotel, Gaming and Leisure |
|
|
% |
|
|
% |
||
Human Resource Support Services |
|
|
% |
|
|
% |
||
Insurance |
|
|
% |
|
|
— |
|
|
Internet Services |
|
|
% |
|
|
% |
||
Manufacturing |
|
|
% |
|
|
% |
||
Marketing Services |
|
|
% |
|
|
% |
||
Office Products |
|
|
% |
|
|
% |
||
Oil, Gas and Consumable Fuels |
|
|
% |
|
|
% |
||
Other |
|
|
% |
|
|
% |
||
Retail and Consumer Products |
|
|
% |
|
|
% |
||
Transportation |
|
|
% |
|
|
% |
||
Total |
|
|
% |
|
|
% |
||
The geographic composition of investments at fair value at June 30, 2023 and December 31, 2022 is as follows:
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
United States |
|
|
|
|
|
|
||
Midwest |
|
|
% |
|
|
% |
||
Northeast |
|
|
% |
|
|
% |
||
South |
|
|
% |
|
|
% |
||
West |
|
|
% |
|
|
% |
||
Australia |
|
|
% |
|
|
% |
||
Canada |
|
|
% |
|
|
% |
||
Finland (1) |
|
|
% |
|
|
— |
|
|
Germany |
|
|
% |
|
|
% |
||
Luxembourg |
|
|
% |
|
|
% |
||
Netherlands |
|
|
% |
|
|
— |
|
|
Norway |
|
|
% |
|
|
% |
||
United Kingdom |
|
|
% |
|
|
% |
||
Total |
|
|
% |
|
|
% |
||
5. Derivatives
Interest Rate Swaps
The Company enters into interest rate swap transactions from time to time to hedge fixed rate debt obligations and certain fixed rate debt investments. The Company’s interest rate swaps are all with one counterparty and are centrally cleared through a registered commodities exchange. Refer to the consolidated schedule of investments for additional disclosure regarding these interest rate swaps.
31
The following tables present the amounts paid and received on the Company’s interest rate swap transactions, excluding upfront fees, for the three and six months ended June 30, 2023 and 2022:
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2023 |
|
|
For the Six Months Ended June 30, 2023 |
|
|||||||||||||||||||
|
|
Maturity Date |
|
Notional Amount |
|
|
Paid |
|
|
Received |
|
|
Net |
|
|
Paid |
|
|
Received |
|
|
Net |
|
|||||||
Interest rate swap (1) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
|
|
( |
) |
||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Total |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2022 |
|
|
For the Six Months Ended June 30, 2022 |
|
|||||||||||||||||||
|
|
Maturity Date |
|
Notional Amount |
|
|
Paid |
|
|
Received |
|
|
Net |
|
|
Paid |
|
|
Received |
|
|
Net |
|
|||||||
Interest rate swap |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Interest rate swap |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Total |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
For the three and six months ended June 30, 2023, the Company recognized $
For the three and six months ended June 30, 2022, the Company recognized $
As of June 30, 2023, the swap transactions had a fair value of $(
The Company is required under the terms of its derivatives agreements to pledge assets as collateral to secure its obligations underlying the derivatives. The amount of collateral required varies over time based on the mark-to-market value, notional amount and remaining term of the derivatives, and may exceed the amount owed by the Company on a mark-to-market basis. Any failure by the Company to fulfill any collateral requirement (e.g., a so-called “margin call”) may result in a default. In the event of a default by a counterparty, the Company would be an unsecured creditor to the extent of any such overcollateralization.
32
As of June 30, 2023, $
The Company may enter into other derivative instruments and incur other exposures with the same or other counterparties in the future.
6. Fair Value of Financial Instruments
Investments
The following tables present fair value measurements of investments as of June 30, 2023 and December 31, 2022:
|
|
Fair Value Hierarchy at June 30, 2023 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
First-lien debt investments |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Second-lien debt investments |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Mezzanine debt investments |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Equity and other investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Structured credit investments |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total investments at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest rate swaps |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Fair Value Hierarchy at December 31, 2022 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
First-lien debt investments |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Second-lien debt investments |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Mezzanine debt investments |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Equity and other investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Structured credit investments |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total investments at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest rate swaps |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.
The following tables present the changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and six months ended June 30, 2023:
|
|
As of and for the Three Months Ended |
|
|||||||||||||||||
|
|
June 30, 2023 |
|
|||||||||||||||||
|
|
First-lien |
|
|
Second-lien |
|
|
Mezzanine |
|
|
Equity |
|
|
Total |
|
|||||
Balance, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Purchases or originations |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Repayments / redemptions |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Sales Proceeds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Paid-in-kind interest |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|||
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Net amortization of discount on securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Transfers into (out of) Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance, End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
33
|
|
As of and for the Six Months Ended |
|
|||||||||||||||||
|
|
June 30, 2023 |
|
|||||||||||||||||
|
|
First-lien |
|
|
Second-lien |
|
|
Mezzanine |
|
|
Equity |
|
|
Total |
|
|||||
Balance, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Purchases or originations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Repayments / redemptions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Sales Proceeds |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Paid-in-kind interest |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Net amortization of discount on securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Transfers into (out of) Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance, End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Copper Bidco, LLC was transferred into Level 3 from Level 2 for fair value measurement purposes during the three months ended June 30, 2023, as a result of changes in observability of inputs into the security valuation for this portfolio company.
The following tables present the changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and six months ended June 30, 2022:
|
|
As of and for the Three Months Ended |
|
|||||||||||||||||
|
|
June 30, 2022 |
|
|||||||||||||||||
|
|
First-lien |
|
|
Second-lien |
|
|
Mezzanine |
|
|
Equity |
|
|
Total |
|
|||||
Balance, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Purchases or originations |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Repayments / redemptions |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Sales Proceeds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Paid-in-kind interest |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Net amortization of discount on securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Balance, End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
As of and for the Six Months Ended |
|
|||||||||||||||||
|
|
June 30, 2022 |
|
|||||||||||||||||
|
|
First-lien |
|
|
Second-lien |
|
|
Mezzanine |
|
|
Equity |
|
|
Total |
|
|||||
Balance, beginning of period |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Purchases or originations |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Repayments / redemptions |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Sale Proceeds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Paid-in-kind interest |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||||
Net amortization of discount on securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Transfers within Level 3 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
Transfers into (out of) Level 3 |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance, End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
34
Astra Acquisition Corp. was transferred into Level 3 from Level 2 for fair value measurement purposes during the six months ended June 30, 2022, as a result of changes in the observability of inputs into the security valuation for this portfolio company.
The following table presents information with respect to the net change in unrealized gains or losses on investments for which Level 3 inputs were used in determining fair value that are still held by the Company at June 30, 2023 and 2022:
|
|
Net Change in Unrealized |
|
|
Net Change in Unrealized |
|
||
|
|
Gains or (Losses) |
|
|
Gains or (Losses) |
|
||
|
|
for the Three Months Ended |
|
|
for the Three Months Ended |
|
||
|
|
June 30, 2023 on |
|
|
June 30, 2022 on |
|
||
|
|
Investments Held at |
|
|
Investments Held at |
|
||
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||
First-lien debt investments |
|
$ |
|
|
$ |
( |
) |
|
Second-lien debt investments |
|
|
( |
) |
|
|
( |
) |
Mezzanine debt investments |
|
|
( |
) |
|
|
( |
) |
Equity and other investments |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
( |
) |
|
|
|
Net Change in Unrealized |
|
|
Net Change in Unrealized |
|
||
|
|
Gains or (Losses) |
|
|
Gains or (Losses) |
|
||
|
|
for the Six Months Ended |
|
|
for the Six Months Ended |
|
||
|
|
June 30, 2023 on |
|
|
June 30, 2022 on |
|
||
|
|
Investments Held at |
|
|
Investments Held at |
|
||
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||
First-lien debt investments |
|
$ |
|
|
$ |
( |
) |
|
Second-lien debt investments |
|
|
( |
) |
|
|
( |
) |
Mezzanine debt investments |
|
|
|
|
|
( |
) |
|
Equity and other investments |
|
|
( |
) |
|
|
|
|
Total |
|
$ |
|
|
$ |
( |
) |
|
The following tables present the fair value of Level 3 Investments at fair value and the significant unobservable inputs used in the valuations as of June 30, 2023 and December 31, 2022. The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.
|
|
June 30, 2023 |
||||||||||
|
|
|
|
|
Valuation |
|
Unobservable |
|
Range (Weighted |
|
Impact to Valuation |
|
|
|
Fair Value |
|
|
Technique |
|
Input |
|
Average) |
|
Increase to Input |
|
First-lien debt investments |
|
$ |
|
|
Income approach (1) |
|
Discount rate |
|
|
Decrease |
||
Second-lien debt investments |
|
|
|
|
Income approach (2) |
|
Discount rate |
|
|
Decrease |
||
Mezzanine debt investments |
|
|
|
|
Income approach |
|
Discount rate |
|
|
Decrease |
||
Equity and other investments |
|
|
|
|
Market Multiple (3) |
|
Comparable multiple |
|
|
Increase |
||
Total |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2022 |
||||||||||
|
|
|
|
|
Valuation |
|
Unobservable |
|
Range (Weighted |
|
Impact to Valuation |
|
|
|
Fair Value |
|
|
Technique |
|
Input |
|
Average) |
|
Increase to Input |
|
First-lien debt investments |
|
$ |
|
|
Income approach (1) |
|
Discount rate |
|
|
Decrease |
||
Second-lien debt investments |
|
|
|
|
Income approach |
|
Discount rate |
|
|
Decrease |
||
Mezzanine debt investments |
|
|
|
|
Income approach (2) |
|
Discount rate |
|
|
Decrease |
||
Equity and other investments |
|
|
|
|
Market Multiple (3) |
|
Comparable multiple |
|
|
Increase |
||
Total |
|
$ |
|
|
|
|
|
|
|
|
|
|
35
The Company typically determines the fair value of its performing Level 3 debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to the expected life, portfolio company performance since close, and other terms and risks associated with an investment. Among other factors, a determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio company’s capital structure.
Significant unobservable quantitative inputs typically considered in the fair value measurement of the Company’s Level 3 debt investments primarily include current market yields, including relevant market indices, but may also include quotes from brokers, dealers, and pricing services as indicated by comparable investments. If debt investments are credit impaired, an enterprise value analysis may be used to value such debt investments; however, in addition to the methods outlined above, other methods such as a liquidation or wind-down analysis may be utilized to estimate enterprise value. For the Company’s Level 3 equity investments, multiples of similar companies’ revenues, earnings before income taxes, depreciation and amortization (“EBITDA”) or some combination thereof and comparable market transactions are typically used.
Financial Instruments Not Carried at Fair Value
Debt
The fair value of the Company’s Revolving Credit Facility, which is categorized as Level 3 within the fair value hierarchy, as of June 30, 2023 and December 31, 2022, approximates its carrying value as the outstanding balance is callable at carrying value.
The following table presents the fair value of the Company’s 2023 Notes, 2024 Notes and 2026 Notes, as of June 30, 2023 and December 31, 2022.
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||
|
|
Outstanding |
|
|
Fair |
|
|
Outstanding |
|
|
Fair |
|
||||
2023 Notes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
2024 Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2026 Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other Financial Assets and Liabilities
The carrying amounts of the Company’s assets and liabilities, other than investments at fair value and the 2023 Notes, 2024 Notes and 2026 Notes, approximate fair value due to their short maturities or their close proximity of the originations to the measurement date. Under the fair value hierarchy, cash and cash equivalents are classified as Level 1 while the Company’s other assets and liabilities, other than investments at fair value and Revolving Credit Facility, are classified as Level 2.
7. Debt
Revolving Credit Facility
On August 23, 2012, the Company entered into a senior secured revolving credit agreement with Truist Bank (as a successor by merger to SunTrust Bank), as administrative agent, and J.P. Morgan Chase Bank, N.A., as syndication agent, and certain other lenders (as amended and restated, the “Revolving Credit Facility”).
As of March 31, 2023, aggregate commitments under the facility were $
Pursuant to the Fourteenth Amendment, with respect to $
36
The Company may borrow amounts in U.S. dollars or certain other permitted currencies. As of June 30, 2023, the Company had outstanding debt denominated in Australian dollars (AUD) of
The Revolving Credit Facility also provides for the issuance of letters of credit up to an aggregate amount of $
Amounts drawn under the Revolving Credit Facility, including amounts drawn in respect of letters of credit, bear interest at either the applicable reference rate plus an applicable credit spread adjustment, plus a margin of either
The Revolving Credit Facility is guaranteed by Sixth Street SL SPV, LLC, TC Lending, LLC and Sixth Street SL Holding, LLC. The Revolving Credit Facility is secured by a perfected first-priority security interest in substantially all the portfolio investments held by the Company and each guarantor. Proceeds from borrowings may be used for general corporate purposes, including the funding of portfolio investments.
The Revolving Credit Facility includes customary events of default, as well as customary covenants, including restrictions on certain distributions and financial covenants. In accordance with the terms of the Thirteenth Amendment, the financial covenants require:
The Revolving Credit Facility also contains certain additional concentration limits in connection with the calculation of the borrowing base, based on the Obligor Asset Coverage Ratio.
As of June 30, 2023 and December 31, 2022, the Company was in compliance with the terms of the Revolving Credit Facility.
2022 Convertible Notes
In February 2017, the Company issued in a private offering $
On August 1, 2022, the 2022 Convertible Notes matured in accordance with the governing indenture. Holders of $
37
shares of common stock, or $
2023 Notes
In January 2018, the Company issued $
2024 Notes
In November 2019, the Company issued $
On February 5, 2020, the Company issued an additional $
In connection with the 2024 Notes offering and the reopening of the 2024 Notes, the Company entered into interest rate swaps to align the interest rates of its liabilities with the Company’s investment portfolio, which consists of predominately floating rate loans. The notional amount of the two interest rates swaps is $
During the year ended December 31, 2020, the Company repurchased on the open market and extinguished $
2026 Notes
On February 3, 2021, the Company issued $
38
In connection with the issuance of the 2026 Notes, the Company entered into an interest rate swap to align the interest rates of its liabilities with the Company’s investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swap is $
For the three and six months ended June 30, 2023 and 2022, the components of interest expense related to the 2023 Notes, 2024 Notes and 2026 Notes were as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||||
Interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Accretion of original issue discount |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of deferred financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Interest Expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total interest expense in the table above does not include the effect of the interest rate swaps related to the 2023 Notes, 2024 Notes and 2026 Notes. During the three and six months ended June 30, 2023, the Company received $
As June 30, 2023 and December 31, 2022, the components of the carrying value of the 2023 Notes, 2024 Notes and 2026 Notes and the stated interest rate were as follows:
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||
|
|
2024 Notes |
|
|
2026 Notes |
|
|
2023 Notes |
|
|
2024 Notes |
|
|
2026 Notes |
|
|||||
Principal amount of debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Original issue discount, net of accretion |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Deferred financing costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Fair value of an effective hedge |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
( |
) |
||
Carrying value of debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Stated interest rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|||||
The stated interest rate in the table above does not include the effect of the interest rate swaps. As of June 30, 2023, the Company’s swap-adjusted interest rate on the 2024 Notes and 2026 Notes was three month LIBOR plus
As of June 30, 2023, the Company was in compliance with the terms of the indentures governing the 2024 Notes and 2026 Notes. As of December 31, 2022, the Company was in compliance with the terms of the indentures governing the 2023 Notes, 2024 Notes and 2026 Notes.
In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 150% after such borrowing. As of June 30, 2023 and December 31, 2022, the Company’s asset coverage was
39
Debt obligations consisted of the following as of June 30, 2023 and December 31, 2022:
|
|
June 30, 2023 |
|
|||||||||||||
|
|
Aggregate |
|
|
Outstanding |
|
|
Amount |
|
|
Carrying |
|
||||
Revolving Credit Facility |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2024 Notes |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
2026 Notes |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total Debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
December 31, 2022 |
|
|||||||||||||
|
|
Aggregate |
|
|
Outstanding |
|
|
Amount |
|
|
Carrying |
|
||||
Revolving Credit Facility |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2023 Notes |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
2024 Notes |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
2026 Notes |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total Debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
For the three and six months ended June 30, 2023 and 2022, the components of interest expense were as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||||
Interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commitment fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of deferred financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accretion of original issue discount |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Swap settlement |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total Interest Expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Average debt outstanding (in millions) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average interest rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
8. Commitments and Contingencies
Portfolio Company Commitments
From time to time, the Company may enter into commitments to fund investments; such commitments are incorporated into the Company’s assessment of its liquidity position. The Company’s senior secured revolving loan commitments are generally available on a borrower’s demand and may remain outstanding until the maturity date of the applicable loan. The Company’s senior secured delayed draw term loan commitments are generally available on a borrower’s demand and, once drawn, generally have the same
40
remaining term as the associated loan agreement. Undrawn senior secured delayed draw term loan commitments generally have a shorter availability period than the term of the associated loan agreement.
As of June 30, 2023 and December 31, 2022, the Company had the following commitments to fund investments in current portfolio companies:
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Alaska Bidco Oy - Delayed Draw & Revolver |
|
$ |
|
|
$ |
— |
|
|
Alpha Midco, Inc. - Delayed Draw |
|
|
|
|
|
|
||
American Achievement, Corp. - Revolver |
|
|
|
|
|
|
||
Arrow Buyer, Inc. - Delayed Draw |
|
|
|
|
— |
|
||
ASG II, LLC - Delayed Draw |
|
|
|
|
|
|
||
Avalara, Inc. - Revolver |
|
|
|
|
|
|
||
Axonify, Inc. - Delayed Draw |
|
|
|
|
|
|
||
Banyan Software Holdings, LLC - Delayed Draw |
|
|
|
|
— |
|
||
Bayshore Intermediate #2, L.P. - Revolver |
|
|
|
|
|
|
||
BCTO Ace Purchaser, Inc. - Delayed Draw |
|
|
|
|
|
|
||
Bear OpCo, LLC - Delayed Draw |
|
|
|
|
|
|
||
BlueSnap, Inc. - Delayed Draw & Revolver |
|
|
|
|
|
|
||
BTRS Holdings, Inc. - Delayed Draw & Revolver |
|
|
|
|
|
|
||
Carlstar Group, LLC - Revolver |
|
|
|
|
|
|
||
Cordance Operations, LLC - Delayed Draw & Revolver |
|
|
|
|
|
|
||
Coupa Holdings, LLC - Delayed Draw & Revolver |
|
|
|
|
— |
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||
CrunchTime Information Systems, Inc. - Delayed Draw |
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||
Disco Parent, Inc. - Revolver |
|
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— |
|
||
Dye & Durham Corp. - Delayed Draw & Revolver |
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||
EDB Parent, LLC - Delayed Draw |
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|
||
Edge Bidco B.V. - Delayed Draw & Revolver |
|
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— |
|
||
Elysian Finco Ltd. - Delayed Draw & Revolver |
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Employment Hero Holdings Pty Ltd. - Delayed Draw & Revolver |
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EMS Linq, Inc. - Revolver |
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||
Erling Lux Bidco SARL - Delayed Draw & Revolver |
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||
ExtraHop Networks, Inc. - Delayed Draw |
|
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|
||
ForeScout Technologies, Inc. - Delayed Draw & Revolver |
|
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|
||
G Treasury SS, LLC - Delayed Draw |
|
— |
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||
Galileo Parent, Inc. - Revolver |
|
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— |
|
||
Hirevue, Inc. - Revolver |
|
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— |
|
||
Hornetsecurity Holding GmbH - Delayed Draw & Revolver |
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Ibis Intermediate Co. - Delayed Draw |
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IRGSE Holding Corp. - Revolver |
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||
Kyriba Corp. - Delayed Draw & Revolver |
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Laramie Energy, LLC - Delayed Draw |
|
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— |
|
||
LeanTaaS Holdings, Inc. - Delayed Draw |
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||
Lithium Technologies, LLC - Revolver |
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Lucidworks, Inc. - Delayed Draw |
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Murchison Oil and Gas, LLC - Delayed Draw |
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Netwrix Corp. - Delayed Draw & Revolver |
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Neuintel, LLC - Delayed Draw |
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— |
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|
||
OutSystems Luxco SARL - Delayed Draw |
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PageUp People, Ltd. - Delayed Draw & Revolver |
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— |
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Passport Labs, Inc. - Delayed Draw & Revolver |
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Ping Identity Holding Corp. - Revolver |
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PrimePay Intermediate, LLC - Delayed Draw |
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— |
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PrimeRevenue, Inc. - Delayed Draw & Revolver |
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Project44, Inc. - Delayed Draw |
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ReliaQuest Holdings, LLC - Delayed Draw |
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Tango Management Consulting, LLC - Delayed Draw & Revolver |
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TRP Assets, LLC - Delayed Draw & Membership Interest |
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|
||
WideOrbit, Inc. - Revolver |
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— |
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||
Total Portfolio Company Commitments (1)(2) |
|
$ |
|
|
$ |
|
||
41
Other Commitments and Contingencies
As of June 30, 2023 and December 31, 2022, the Company did
From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of June 30, 2023 and December 31, 2022, management is not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.
9. Net Assets
On February 23, 2021, the Company issued a total of
During the three months ended December 31, 2021, the Company issued a total of
On August 1, 2022, the Company issued a total of
On May 15, 2023, the Company issued a total of
The Company has a dividend reinvestment plan, whereby the Company may buy shares of its common stock in the open market or issue new shares in order to satisfy dividend reinvestment requests. The number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the cash dividend or distribution payable to a stockholder by the market price per share of the Company’s common stock at the close of regular trading on the NYSE 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, the Company will issue shares at the greater of (i) the most recently computed net asset value per share and (ii)
Pursuant to the Company’s dividend reinvestment plan, the following tables summarize the shares issued to stockholders who have not opted out of the Company’s dividend reinvestment plan during the six months ended June 30, 2023 and 2022. All shares issued to stockholders in the tables below are newly issued shares.
|
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Six Months Ended |
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June 30, 2023 |
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Date |
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Date Declared |
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Dividend (1) |
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Record Date |
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Shares Issued |
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Shares Issued |
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Supplemental |
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||||
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Base |
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Supplemental |
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Base |
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Total Shares Issued |
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Six Months Ended |
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June 30, 2022 |
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Date |
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Date Declared |
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Dividend (1) |
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Record Date |
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Shares Issued |
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Shares Issued |
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Base |
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Supplemental |
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Base |
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Supplemental |
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Total Shares Issued |
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42
On August 4, 2015, the Company's Board authorized the Company to acquire up to $
10. Earnings per share
The following table sets forth the computation of basic and diluted earnings per common share for the three and six months ended June 30, 2023 and 2022:
|
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Three Months Ended |
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Six Months Ended |
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June 30, 2023 |
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June 30, 2022 |
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June 30, 2023 |
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June 30, 2022 |
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Earnings per common share—basic |
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Numerator for basic earnings per share |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Denominator for basic weighted average shares |
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Earnings per common share—basic |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Earnings per common share—diluted |
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Numerator for increase in net assets per share |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Adjustment for interest expense and |
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— |
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— |
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Numerator for diluted earnings per share |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Denominator for basic weighted average shares |
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Adjustment for dilutive effect of 2022 |
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— |
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— |
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Denominator for diluted weighted average shares |
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||||
Earnings per common share—diluted |
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$ |
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$ |
( |
) |
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$ |
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$ |
|
|||
The 2022 Convertible Notes were convertible into a combination of cash and shares of the Company’s common stock, which could have been dilutive to common stockholders. Diluted earnings (losses) per share is the amount of earnings (losses) available to each share of common stock outstanding during the reporting period including any additional shares of common stock that would be issued if all potentially dilutive securities were exercised. Upon adoption of ASU 2020-06 during the period ended March 31, 2021, the Company was required to disclose diluted EPS using the if-converted method. The if-converted method is a method of computing EPS that assumes conversion of convertible securities at the beginning of the reporting period and is intended to show the maximum dilution effect to common stockholders regardless of how the conversion can occur.
For the purpose of calculating diluted earnings per common share, the average closing price of the Company’s common stock for the three and six months ended June 30, 2022 was greater than the estimated adjusted conversion price for the 2022 Convertible Notes outstanding as of June 30, 2022. Therefore, for this period presented in the consolidated financial statements the Company applied the if-converted method for purposes of calculating diluted earnings per common share.
43
11. Dividends
The Company has historically paid a dividend to stockholders on a quarterly basis. The Company has a dividend framework that provides for a quarterly base dividend and a variable supplemental dividend, subject to satisfaction of certain measurement tests and the approval of the Board.
The following tables summarize dividends declared during the six months ended June 30, 2023 and 2022:
|
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Six Months Ended |
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|||||||
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June 30, 2023 |
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Date Declared |
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Dividend |
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Record Date |
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Payment Date |
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Dividend per Share |
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$ |
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|||||
Total Dividends Declared |
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$ |
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Six Months Ended |
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June 30, 2022 |
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Date Declared |
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Dividend |
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Record Date |
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Payment Date |
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Dividend per Share |
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$ |
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|||||
Total Dividends Declared |
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$ |
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|
The dividends declared during the six months ended June 30, 2023 and 2022 were derived from net investment income, determined on a tax basis.
44
12. Financial Highlights
The following per share data and ratios have been derived from information provided in the consolidated financial statements. The following are the financial highlights for one share of common stock outstanding during the six months ended June 30, 2023 and 2022.
|
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Six Months Ended |
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Six Months Ended |
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June 30, 2023 |
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June 30, 2022 |
|
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Per Share Data (8) |
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||
Net asset value, beginning of period |
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$ |
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$ |
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||
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Net investment income (1) |
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Net realized and unrealized |
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( |
) |
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Total from operations |
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Issuance of common stock, net of |
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||
Dividends declared from net |
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( |
) |
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( |
) |
Total increase (decrease) in net assets |
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( |
) |
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Net Asset Value, End of Period |
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$ |
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|
$ |
|
||
Per share market value at end of |
|
$ |
|
|
$ |
|
||
Total return based on market value |
|
|
% |
|
( |
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||
Total return based on market value (4) |
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% |
|
( |
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||
Total return based on net asset |
|
|
% |
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% |
||
Shares Outstanding, End of Period |
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||
Ratios / Supplemental Data (6) |
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||
Ratio of net expenses to average |
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% |
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% |
||
Ratio of net investment income |
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% |
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% |
||
Portfolio turnover |
|
|
% |
|
|
% |
||
Net assets, end of period |
|
$ |
|
|
$ |
|
||
13. Subsequent Events
The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events, except as already disclosed, that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three and six months ended June 30, 2023.
45
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward-Looking Statements” set forth on page 3 of this Quarterly Report on Form 10-Q.
Overview
Sixth Street Specialty Lending, Inc. is a Delaware corporation formed on July 21, 2010. The Adviser is our external manager. We have four wholly owned subsidiaries, TC Lending, LLC, a Delaware limited liability company, which holds a California finance lender and broker license, Sixth Street SL SPV, LLC, a Delaware limited liability company, in which we hold assets that were previously used to support our asset-backed credit facility, Sixth Street SL Holding, LLC, a Delaware limited liability company, in which we hold certain investments, and Sixth Street Specialty Lending Sub, LLC, a Cayman Islands limited liability company, in which we plan to hold certain investments.
We have elected to be regulated as a BDC under the 1940 Act and as a RIC under the Code. We made our BDC election on April 15, 2011. As a result, we are required to comply with various statutory and regulatory requirements, such as:
Our shares are listed on the NYSE under the symbol “TSLX.”
Our Investment Framework
We are a specialty finance company focused on lending to middle-market companies. Since we began our investment activities in July 2011, through June 30, 2023, we have originated more than $27.6 billion aggregate principal amount of investments and retained approximately $9.6 billion aggregate principal amount of these investments on our balance sheet prior to any subsequent exits and repayments. We seek to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine and unsecured loans and investments in corporate bonds, equity securities, and other instruments.
By “middle-market companies,” we mean companies that have annual EBITDA, which we believe is a useful proxy for cash flow, of $10 million to $250 million, although we may invest in larger or smaller companies on occasion. As of June 30, 2023, our core portfolio companies, which exclude certain investments that fall outside of our typical borrower profile and represent 91.3% of our total investments based on fair value, had weighted average annual revenue of $205.3 million and weighted average annual EBITDA of $67.3 million.
We invest in first-lien debt, second-lien debt, mezzanine and unsecured debt and equity and other investments. Our first-lien debt may include stand-alone first-lien loans; “last out” first-lien loans, which are loans that have a secondary priority behind super-senior “first out” first-lien loans; “unitranche” loans, which are loans that combine features of first-lien, second-lien and mezzanine debt, generally in a first-lien position; and secured corporate bonds with similar features to these categories of first-lien loans. Our second-lien debt may include secured loans, and, to a lesser extent, secured corporate bonds, with a secondary priority behind first-lien debt.
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 as defined by Standard & Poor’s and Moody’s Investors Services, respectively), which is often referred to as “junk.”
The companies in which we invest use our capital to support organic growth, acquisitions, market or product expansion and recapitalizations (including restructurings). As of June 30, 2023, the largest single investment based on fair value represented 2.5% of our total investment portfolio.
As of June 30, 2023, the average investment size in each of our portfolio companies was approximately $23.8 million based on fair value. Portfolio companies includes investments in structured credit investments, which include each series of collateralized loan obligation as a portfolio company investment. When excluding investments in structured credit investments the average investment in our remaining portfolio companies was approximately $35.3 million as of June 30, 2023.
46
Through our Adviser, we consider potential investments utilizing a four-tiered investment framework and against our existing portfolio as a whole:
Business and sector selection. We focus on companies with enterprise value between $50 million and $1 billion. When reviewing potential investments, we seek to invest in businesses with high marginal cash flow, recurring revenue streams and where we believe credit quality will improve over time. We look for portfolio companies that we think have a sustainable competitive advantage in growing industries or distressed situations. We also seek companies where our investment will have a low loan-to-value ratio.
We currently do not limit our focus to any specific industry and we may invest in larger or smaller companies on occasion. We classify the industries of our portfolio companies by end-market (such as healthcare, and business services) and not by the products or services (such as software) directed to those end-markets.
As of June 30, 2023, the largest industry represented 15.7% of our total investment portfolio based on fair value.
Investment Structuring. We focus on investing at the top of the capital structure and protecting that position. As of June 30, 2023, approximately 91.9% of our portfolio was invested in secured debt, including 90.6% in first-lien debt investments. We carefully perform diligence and structure investments to include strong investor covenants. As a result, we structure investments with a view to creating opportunities for early intervention in the event of non-performance or stress. In addition, we seek to retain effective voting control in investments over the loans or particular class of securities in which we invest through maintaining affirmative voting positions or negotiating consent rights that allow us to retain a blocking position. We also aim for our loans to mature on a medium term, between two to six years after origination. For the six months ended June 30, 2023, the weighted average term on new investment commitments in new portfolio companies was 6.7 years.
Deal Dynamics. We focus on, among other deal dynamics, direct origination of investments, where we identify and lead the investment transaction. A substantial majority of our portfolio investments are sourced through our direct or proprietary relationships.
Risk Mitigation. We seek to mitigate non-credit-related risk on our returns in several ways, including call protection provisions to protect future interest income. As of June 30, 2023, we had call protection on 76.6% of our debt investments based on fair value, with weighted average call prices of 107.0% for the first year, 103.6% for the second year and 101.2% for the third year, in each case from the date of the initial investment. As of June 30, 2023, 99.2% of our debt investments based on fair value bore interest at floating rates, with 100.0% of these subject to interest rate floors, which we believe helps act as a portfolio-wide hedge against inflation.
Relationship with our Adviser and Sixth Street
Our Adviser is a Delaware limited liability company. Our Adviser acts as our investment adviser and administrator and is a registered investment adviser with the SEC under the Advisers Act. Our Adviser sources and manages our portfolio through a dedicated team of investment professionals predominately focused on direct lending, which we refer to as our Investment Team. Our Investment Team is led by our Chairman and Chief Executive Officer and our Adviser’s Co-Chief Investment Officer Joshua Easterly and our Adviser’s Co-Chief Investment Officer Alan Waxman, both of whom have substantial experience in credit origination, underwriting and asset management. Our investment decisions are made by our Investment Review Committee, which includes senior personnel of our Adviser and affiliates of Sixth Street Partners, LLC, or “Sixth Street.”
Sixth Street is a global investment business with over $65 billion of assets under management as of June 30, 2023. Sixth Street’s core platforms include Sixth Street Specialty Lending, Sixth Street Lending Partners, which is aimed at U.S. upper middle-market loan originations, Sixth Street Specialty Lending Europe, which is aimed at European middle-market loan originations, Sixth Street TAO, which has the flexibility to invest across all of Sixth Street’s private credit market investments, Sixth Street Opportunities, which focuses on actively managed opportunistic investments across the credit cycle, Sixth Street Credit Market Strategies, which is the firm’s “public-side” credit investment platform focused on investment opportunities in broadly syndicated leveraged loan markets, Sixth Street Growth, which provides financing solutions to growing companies, Sixth Street Fundamental Strategies, which primarily invests in secondary credit, and Sixth Street Agriculture, which invests in niche agricultural opportunities. Sixth Street has a long-term oriented, highly flexible capital base that allows it to invest across industries, geographies, capital structures and asset classes. Sixth Street has extensive experience with highly complex, global public and private investments executed through primary originations, secondary market purchases and restructurings, and has a team of over 520 investment and operating professionals. As of June 30, 2023, forty-nine (49) of these personnel are dedicated to direct lending, including thirty-seven (37) investment professionals.
Our Adviser consults with Sixth Street in connection with a substantial number of our investments. The Sixth Street platform provides us with a breadth of large and scalable investment resources. We believe we benefit from Sixth Street’s market expertise, insights into industry, sector and macroeconomic trends and intensive due diligence capabilities, which help us discern market conditions that vary across industries and credit cycles, identify favorable investment opportunities and manage our portfolio of
47
investments. Sixth Street and its affiliates will refer all middle-market loan origination activities for companies domiciled in the United States to us and conduct those activities through us. The Adviser will determine whether it would be permissible, advisable or otherwise appropriate for us to pursue a particular investment opportunity allocated to us.
On December 16, 2014, we were granted an exemptive order from the SEC that allows us to co-invest, subject to certain conditions and to the extent the size of an investment opportunity exceeds the amount our Adviser has independently determined is appropriate to invest, with certain of our affiliates (including affiliates of Sixth Street) in middle-market loan origination activities for companies domiciled in the United States and certain “follow-on” investments in companies in which we have already co-invested pursuant to the order and remain invested. On January 16, 2020, we filed a further application for co-investment exemptive relief with the SEC to better align our existing co-investment relief with more recent SEC exemptive orders. Subsequent further applications were also made, most recently as June 29, 2022. On August 3, 2022, the SEC granted the new order in response to our application.
We believe our ability to co-invest with Sixth Street affiliates is particularly useful where we identify larger capital commitments than otherwise would be appropriate for us. We expect that with the ability to co-invest with Sixth Street affiliates we will continue to be able to provide “one-stop” financing to a potential portfolio company in these circumstances, which may allow us to capture opportunities where we alone could not commit the full amount of required capital or would have to spend additional time to locate unaffiliated co-investors.
Under the terms of the Investment Advisory Agreement and Administration Agreement, the Adviser’s services are not exclusive, and the Adviser is free to furnish similar or other services to others, so long as its services to us are not impaired. Under the terms of the Investment Advisory Agreement, we will pay the Adviser the base management fee, or the Management Fee, and may also pay certain incentive fees, or the Incentive Fees.
Under the terms of the Administration Agreement, the Adviser also provides administrative services to us. These services include providing office space, equipment and office services, maintaining financial records, preparing reports to stockholders and reports filed with the SEC, and managing the payment of expenses and the oversight of the performance of administrative and professional services rendered by others. Certain of these services are reimbursable to the Adviser under the terms of the Administration Agreement.
Key Components of Our Results of Operations
Investments
We focus primarily on the direct origination of loans to middle-market companies domiciled in the United States.
Our level of investment activity (both the number of investments and the size of each investment) can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital generally 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 certain levels of investments through partial sales or syndication to additional investors.
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 direct equity investments, capital gains on the sale of investments and various loan origination and other fees. Our debt investments typically have a term of two to six years, and, as of June 30, 2023, 99.2% of these investments based on fair value bore interest at a floating rate, with 100.0% of these subject to interest rate floors. Interest on debt investments is generally payable monthly or quarterly. Some of our investments provide for deferred interest payments or PIK interest. For the three and six months ended June 30, 2023, 4.3% and 3.7%, respectively, of our total investment income was comprised of PIK interest.
Changes in our net investment income are primarily driven by the spread between the payments we receive from our investments in our portfolio companies against our cost of funding, rather than by changes in interest rates. Our investment portfolio primarily consists of floating rate loans, and our credit facilities, 2024 Notes and 2026 Notes, after taking into account the effect of the interest rate swaps we have entered into in connection with these securities, all bear interest at floating rates. Macro trends in base interest rates like SOFR or other reference rates may affect our net investment income over the long term. However, because we generally originate loans to a limited number of portfolio companies each quarter, and those investments also 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
48
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.
In addition to interest income, our net investment income is also driven by prepayment and other fees, which also can vary significantly from quarter to quarter. The level of prepayment fees is generally correlated to the movement in credit spreads and risk premiums, but also will vary based on corporate events that may take place at an individual portfolio company in a given period—e.g., merger and acquisition activity, initial public offerings and restructurings. As noted above, generally a small but varied number of portfolio companies may make prepayments in any quarter, meaning that changes in the amount of prepayment fees received can vary significantly between periods and can vary without regard to underlying credit trends.
Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income using the effective interest 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. We record prepayment premiums on loans as interest income when earned. We also may generate revenue in the form of commitment, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees. The frequency or volume of these items of revenue may fluctuate significantly.
Dividend income on common equity investments is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.
Our portfolio activity also reflects the proceeds of 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 Statements of Operations.
Expenses
Our primary operating expenses include the payment of fees to our Adviser under the Investment Advisory Agreement, expenses reimbursable under the Administration Agreement and other operating costs described below. Additionally, we pay interest expense on our outstanding debt. We bear all other costs and expenses of our operations, administration and transactions, including those relating to:
49
We expect that during periods of asset growth, our general and administrative expenses will be relatively stable or will decline as a percentage of total assets, and will increase as a percentage of total assets during periods of asset declines.
Leverage
While as a BDC the amount of leverage that we are permitted to use is limited in significant respects, we use leverage to increase our ability to make investments. 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, however, under the 1940 Act, our total borrowings are limited so that our asset coverage ratio cannot fall below 150% immediately after any borrowing, as defined in the 1940 Act. 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 leverage over time within the limits of the 1940 Act. In addition, we may dedicate assets as collateral to financing facilities from time to time.
Market Trends
We believe trends in the middle-market lending environment, including the limited availability of capital from traditional regulated financial institutions, strong demand for debt capital and specialized lending requirements, are likely to continue to create favorable opportunities for us to invest at attractive risk-adjusted rates.
Subsequent to the global financial crisis, the implementation of regulatory changes such as Basel III requirements, Leverage Lending Guidance, and the Volcker Rule, tightened risk appetites and reduced the capacity of traditional lenders to serve middle-market companies. We believe that these dynamics create a significant opportunity for us to directly originate investments. We also believe that the large amount of uninvested capital held by private equity firms will continue to drive deal activity, which may in turn create additional demand for debt capital.
This market dynamic is further exacerbated by the specialized due diligence and underwriting capabilities, as well as extensive ongoing monitoring, required for middle-market lending. We believe middle-market lending is generally more labor-intensive than lending to larger companies due to smaller investment sizes and the lack of publicly available information on these companies. As a result, the opportunities for dedicated private lenders such as us has continued to expand.
An imbalance between the supply of, and demand for, middle-market debt capital creates attractive pricing dynamics for investors such as BDCs. The negotiated nature of middle-market financings also generally provides for more favorable terms to the lenders, including stronger covenant and reporting packages, better call protection and lender-protective change of control provisions. We believe that BDCs have flexibility to develop loans that reflect each borrower’s distinct situation, provide long-term relationships and a potential source for future capital, which renders BDCs, including us, attractive lenders.
Portfolio and Investment Activity
As of June 30, 2023, our portfolio based on fair value consisted of 90.6% first-lien debt investments, 1.3% second-lien investments, 1.3% mezzanine debt investments, 5.0% equity and other investments and 1.8% structured credit investments. As of December 31, 2022, our portfolio based on fair value consisted of 90.3% first-lien debt investments, 1.5% second-lien debt investments, 0.4% mezzanine investments, 6.0% equity and other investments and 1.8% structured credit investments.
As of June 30, 2023 and December 31, 2022, our weighted average total yield of debt and income producing securities at fair value (which includes interest income and amortization of fees and discounts) was 14.0% and 13.5%, respectively, and our weighted
50
average total yield of debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 14.1% and 13.4%, respectively.
As of June 30, 2023 and December 31, 2022, we had investments in 130 portfolio companies (including 44 structured credit investments, which include each series of collateralized loan obligation as a separate portfolio company investment) and 121 portfolio companies (including 43 structured credit investments, which include each series of collateralized loan obligation as a separate portfolio company investment), respectively, with an aggregate fair value of $3,089.0 million and $2,787.9 million, respectively.
For the three months ended June 30, 2023, the principal amount of new investments funded was $240.0 million in six new portfolio companies and four existing portfolio companies. For this period, we had $114.0 million aggregate principal amount in exits and repayments.
For the three months ended June 30, 2022, the principal amount of new investments funded was $324.8 million in 30 new portfolio companies and two existing portfolio companies. For this period, we had $212.0 million aggregate principal amount in exits and repayments.
Our investment activity for the six months ended June 30, 2023 and 2022 is presented below (information presented herein is at par value unless otherwise indicated).
|
|
Three Months Ended |
|
|||||
($ in millions) |
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||
New investment commitments: |
|
|
|
|
|
|
||
Gross originations (1) |
|
$ |
1,522.9 |
|
|
$ |
1,569.3 |
|
Less: Syndications/sell downs (1) |
|
|
1,262.5 |
|
|
|
1,190.4 |
|
Total new investment commitments |
|
$ |
260.4 |
|
|
$ |
378.9 |
|
Principal amount of investments funded: |
|
|
|
|
|
|
||
First-lien |
|
$ |
209.3 |
|
|
$ |
267.5 |
|
Second-lien |
|
|
30.0 |
|
|
|
— |
|
Mezzanine |
|
|
— |
|
|
|
— |
|
Equity and other |
|
|
0.7 |
|
|
|
57.3 |
|
Structured Credit |
|
|
— |
|
|
|
— |
|
Total |
|
$ |
240.0 |
|
|
$ |
324.8 |
|
Principal amount of investments sold or repaid: |
|
|
|
|
|
|
||
First-lien |
|
$ |
112.3 |
|
|
$ |
211.6 |
|
Second-lien |
|
|
— |
|
|
|
— |
|
Mezzanine |
|
|
— |
|
|
|
— |
|
Equity and other |
|
|
1.7 |
|
|
|
0.4 |
|
Structured Credit |
|
|
— |
|
|
|
— |
|
Total |
|
$ |
114.0 |
|
|
$ |
212.0 |
|
Number of new investment commitments in |
|
|
6 |
|
|
|
30 |
|
Average new investment commitment amount in |
|
$ |
41.3 |
|
|
$ |
12.0 |
|
Weighted average term for new investment |
|
|
6.7 |
|
|
|
5.7 |
|
Percentage of new debt investment commitments |
|
|
100.0 |
% |
|
|
100.0 |
% |
Weighted average interest rate of new |
|
|
12.6 |
% |
|
|
9.2 |
% |
Weighted average spread over reference rate of new |
|
|
7.3 |
% |
|
|
7.3 |
% |
Weighted average interest rate on investments |
|
|
15.6 |
% |
|
|
9.1 |
% |
51
As of June 30, 2023 and December 31, 2022, our investments consisted of the following:
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||
($ in millions) |
|
Fair Value |
|
|
Amortized Cost |
|
|
Fair Value |
|
|
Amortized Cost |
|
||||
First-lien debt investments |
|
$ |
2,800.2 |
|
|
$ |
2,783.5 |
|
|
$ |
2,517.9 |
|
|
$ |
2,529.3 |
|
Second-lien debt investments |
|
|
39.7 |
|
|
|
47.8 |
|
|
|
40.8 |
|
|
|
42.7 |
|
Mezzanine debt investments |
|
|
40.2 |
|
|
|
37.5 |
|
|
|
10.1 |
|
|
|
7.5 |
|
Equity and other investments |
|
|
154.7 |
|
|
|
141.6 |
|
|
|
167.7 |
|
|
|
142.1 |
|
Structured credit investments |
|
|
54.2 |
|
|
|
55.0 |
|
|
|
51.4 |
|
|
|
53.1 |
|
Total |
|
$ |
3,089.0 |
|
|
$ |
3,065.4 |
|
|
$ |
2,787.9 |
|
|
$ |
2,774.7 |
|
The following tables show the fair value and amortized cost of our performing and non-accrual investments as of June 30, 2023 and December 31, 2022:
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||
($ in millions) |
|
Fair Value |
|
|
Percentage |
|
|
Fair Value |
|
|
Percentage |
|
||||
Performing |
|
$ |
3,069.6 |
|
|
|
99.4 |
% |
|
$ |
2,787.7 |
|
|
|
100.0 |
% |
Non-accrual (1) |
|
|
19.4 |
|
|
|
0.6 |
|
|
|
0.2 |
|
|
|
0.0 |
|
Total |
|
$ |
3,089.0 |
|
|
|
100.0 |
% |
|
$ |
2,787.9 |
|
|
|
100.0 |
% |
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||
($ in millions) |
|
Amortized Cost |
|
|
Percentage |
|
|
Amortized Cost |
|
|
Percentage |
|
||||
Performing |
|
$ |
3,037.2 |
|
|
|
99.1 |
% |
|
$ |
2,772.8 |
|
|
|
99.9 |
% |
Non-accrual (1) |
|
|
28.2 |
|
|
|
0.9 |
|
|
|
1.9 |
|
|
|
0.1 |
|
Total |
|
$ |
3,065.4 |
|
|
|
100.0 |
% |
|
$ |
2,774.7 |
|
|
|
100.0 |
% |
The weighted average yields and interest rates of our performing debt investments at fair value as of June 30, 2023 and December 31, 2022 were as follows:
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Weighted average total yield of debt and income |
|
|
14.0 |
% |
|
|
13.5 |
% |
Weighted average interest rate of debt and income |
|
|
13.8 |
% |
|
|
13.1 |
% |
Weighted average spread over reference rate of all floating |
|
|
8.3 |
% |
|
|
8.7 |
% |
The Adviser monitors our portfolio companies on an ongoing basis. The Adviser monitors the financial trends of each portfolio company to determine if it is meeting its business plans and to assess the appropriate course of action for each company. The Adviser has a number of methods of evaluating and monitoring the performance of our investments, which may include the following:
52
As part of the monitoring process, the Adviser regularly assesses the risk profile of each of our investments and, on a quarterly basis, grades each investment on a risk scale of 1 to 5. Risk assessment is not standardized in our industry and our risk assessment may not be comparable to ones used by our competitors. Our assessment is based on the following categories:
The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of June 30, 2023 and December 31, 2022. Investment performance ratings are accurate only as of those dates and may change due to subsequent developments relating to a portfolio company’s business or financial condition, market conditions or developments, and other factors.
|
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
|||||||||||
Investment |
|
|
Investments at |
|
|
|
|
|
Investments at |
|
|
|
|
|||||
Performance |
|
|
Fair Value |
|
|
Percentage of |
|
|
Fair Value |
|
|
Percentage of |
|
|||||
Rating |
|
|
($ in millions) |
|
|
Total Portfolio |
|
|
($ in millions) |
|
|
Total Portfolio |
|
|||||
|
1 |
|
|
$ |
2,718.5 |
|
|
|
88.0 |
% |
|
$ |
2,472.8 |
|
|
|
88.7 |
% |
|
2 |
|
|
|
295.4 |
|
|
|
9.6 |
|
|
|
293.6 |
|
|
|
10.5 |
|
|
3 |
|
|
|
55.7 |
|
|
|
1.8 |
|
|
|
21.3 |
|
|
|
0.8 |
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
5 |
|
|
|
19.4 |
|
|
|
0.6 |
|
|
|
0.2 |
|
|
|
0.0 |
|
Total |
|
|
$ |
3,089.0 |
|
|
|
100.0 |
% |
|
$ |
2,787.9 |
|
|
|
100.0 |
% |
|
Results of Operations
Operating results for the three and six months ended June 30, 2023 and 2022 were as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
($ in millions) |
|
June 30, 2023 |
|
|
June 30, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||||
Total investment income |
|
$ |
107.6 |
|
|
$ |
63.9 |
|
|
$ |
204.1 |
|
|
$ |
131.3 |
|
Less: Net expenses |
|
|
57.9 |
|
|
|
22.3 |
|
|
|
111.1 |
|
|
|
53.7 |
|
Net investment income before income taxes |
|
|
49.7 |
|
|
|
41.6 |
|
|
|
93.0 |
|
|
|
77.6 |
|
Less: Income taxes, including excise taxes |
|
|
0.9 |
|
|
|
0.8 |
|
|
|
1.3 |
|
|
|
1.1 |
|
Net investment income |
|
|
48.8 |
|
|
|
40.8 |
|
|
|
91.7 |
|
|
|
76.5 |
|
Net realized gains (losses) (1) |
|
|
1.5 |
|
|
|
0.4 |
|
|
|
6.7 |
|
|
|
14.1 |
|
Net change in unrealized gains (losses) (1) |
|
|
2.8 |
|
|
|
(54.7 |
) |
|
|
7.6 |
|
|
|
(63.2 |
) |
Net increase (decrease) in net assets resulting from operations |
|
$ |
53.1 |
|
|
$ |
(13.5 |
) |
|
$ |
106.0 |
|
|
$ |
27.4 |
|
53
Investment Income
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
($ in millions) |
|
June 30, 2023 |
|
|
June 30, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||||
Interest from investments |
|
$ |
102.7 |
|
|
$ |
61.2 |
|
|
$ |
195.9 |
|
|
$ |
126.6 |
|
Dividend income |
|
|
0.8 |
|
|
|
1.1 |
|
|
|
1.4 |
|
|
|
1.4 |
|
Other income |
|
|
4.1 |
|
|
|
1.6 |
|
|
|
6.8 |
|
|
|
3.3 |
|
Total investment income |
|
$ |
107.6 |
|
|
$ |
63.9 |
|
|
$ |
204.1 |
|
|
$ |
131.3 |
|
Interest from investments, which includes amortization of upfront fees and prepayment fees, increased from $61.2 million for the three months ended June 30, 2022 to $102.7 million for the three months ended June 30, 2023. The increase in interest from investments was primarily the result of an increase in interest earned due to an increase in reference rates for the period ended June 30, 2023 compared to the same period in 2022 and an increase in amendment fees. Accelerated amortization of upfront fees, which were primarily from unscheduled paydowns, decreased from $1.7 million for the three months ended June 30, 2022 to $0.7 million for the three months ended June 30, 2023. Prepayment fees decreased from $1.5 million for the three months ended June 30, 2022 to $0.3 million for the three months ended June 30, 2023. Accelerated amortization of upfront fees and prepayment fees primarily resulted from full paydowns on three portfolio investments, a partial paydown on three portfolio investment, realizations on one portfolio investments, and earning prepayment fees on one portfolio investments during the three months ended June 30, 2022 and from full paydowns on two portfolio investments, partial paydowns on two portfolio investments, a partial realization of two portfolio investments and earning prepayment fees on one portfolio investment during the three months ended June 30, 2023. Other income increased from $1.6 million for the three months ended June 30, 2022 to $4.1 million for the three months ended June 30, 2023, primarily due to increased amendment fees during the three months ended June 30, 2023 compared to the same period in 2022.
Interest from investments, which includes amortization of upfront fees and prepayment fees, increased from $126.6 million for the six months ended June 30, 2022 to $195.9 million for the six months ended June 30, 2023. The increase in interest from investments was primarily the result of an increase in interest earned due to an increase in reference rates for the period ended June 30, 2023 compared to the same period in 2022 and an increase in amendment fees. Accelerated amortization of upfront fees from unscheduled paydowns decreased from $3.4 million for the six months ended June 30, 2022 to $1.6 million for the six months ended June 30, 2022. Prepayment fees decreased from $6.6 million for the six months ended June 30, 2022 to $0.3 million for the six months ended June 30, 2023. Accelerated amortization of upfront fees and prepayment fees primarily resulted from full paydowns on seven portfolio investments, partial paydowns on seven portfolio investments, a partial realization of one portfolio investment, a realization of one portfolio investments and earning prepayment fees on eight portfolio investments during the six months ended June 30, 2022 and full paydowns on four portfolio investments, partial paydowns on four portfolio investments, a partial realization of three portfolio investments and earning prepayment fees on two portfolio investments during the six months ended June 30, 2023. Other income increased from $3.3 million for the six months ended June 30, 2022 to $6.8 million for the six months ended June 30, 2023, primarily due to increased miscellaneous fees earned during the six months ended June 30, 2023 compared to the same period in 2022.
Expenses
Operating expenses for the three and six months ended June 30, 2023 and 2022 were as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
($ in millions) |
|
June 30, 2023 |
|
|
June 30, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||||
Interest |
|
$ |
32.4 |
|
|
$ |
11.9 |
|
|
$ |
60.9 |
|
|
$ |
21.6 |
|
Management fees (net of waivers) |
|
|
11.1 |
|
|
|
9.5 |
|
|
|
21.6 |
|
|
|
18.8 |
|
Incentive fees related to pre-incentive fee net investment |
|
|
10.5 |
|
|
|
6.7 |
|
|
|
20.0 |
|
|
|
14.6 |
|
Incentive fees related to realized/unrealized capital gains |
|
|
0.7 |
|
|
|
(9.1 |
) |
|
|
2.5 |
|
|
|
(7.7 |
) |
Professional fees |
|
|
1.8 |
|
|
|
1.8 |
|
|
|
3.5 |
|
|
|
3.3 |
|
Directors fees |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.4 |
|
|
|
0.4 |
|
Other general and administrative |
|
|
1.2 |
|
|
|
1.3 |
|
|
|
2.2 |
|
|
|
2.7 |
|
Net Expenses |
|
$ |
57.9 |
|
|
$ |
22.3 |
|
|
$ |
111.1 |
|
|
$ |
53.7 |
|
54
Interest
Interest expense, including other debt financing expenses, increased from $11.9 million for the three months ended June 30, 2022 to $32.4 million for the three months ended June 30, 2023. This increase was primarily due to an increase in the average interest rate on our debt outstanding and an increase in the average debt outstanding from $1,156.4 million for the three months ended June 30, 2022 to $1,713.0 million for the three months ended June 30, 2023. The average interest rate on our debt outstanding increased from 3.1% for the three months ended June 30, 2022 to 7.1% for the three months ended June 30, 2023.
Interest expense, including other debt financing expenses, increased from $21.6 million for the six months ended June 30, 2022 to $60.9 million for the six months ended June 30, 2023. This increase was primarily due to an increase in the average interest rate on our debt outstanding and an increase in the average debt outstanding from $1,183.6 million for the six months ended June 30, 2022 to $1,641.8 million for the six months ended June 30, 2023. The average interest rate on our debt outstanding increased from 2.7% for the six months ended June 30, 2022 to 6.9% for the six months ended June 30, 2023.
Management Fees
Management Fees (gross of waivers) increased from $9.5 million for the three months ended June 30, 2022 to $11.4 million for the three months ended June 30, 2023 due to an increase in average assets for the three months ended June 30, 2023 compared to the same period in 2022. Management Fees (net of waivers) increased from $9.5 million for the three months ended June 30, 2022 to $11.1 million for the three months ended June 30, 2023. The Adviser waived Management Fees of $0.3 million for the three months ended June 30, 2023 pursuant to the Leverage Waiver. The Adviser waived Management Fees of less than $0.1 million, respectively, for the six months ended June 30, 2022 pursuant to the Leverage Waiver.
Management Fees (gross of waivers) increased from $18.8 million for the six months ended June 30, 2022 to $11.4 million for the six months ended June 30, 2023 due to an increase in average assets for the six months ended June 30, 2023 compared to the same period in 2022. Management Fees (net of waivers) increased from $18.8 million for the six months ended June 30, 2022 to $22.1 million for the six months ended June 30, 2023. The Adviser waived Management Fees of $0.6 million for the six months ended June 30, 2023 pursuant to the Leverage Waiver. The Adviser waived Management Fees of less than $0.1 million, respectively, for the six months ended June 30, 2022 pursuant to the Leverage Waiver.
Any waived Management Fees are not subject to recoupment by the Adviser.
Incentive Fees
Incentive Fees related to pre-Incentive Fee net investment income increased from $6.7 million for the three months ended June 30, 2022 to $10.5 million for the three months ended June 30, 2023. This increase resulted from an increase in reference rates for the three months ended June 30, 2023. The Adviser did not waive any Incentive Fees related to pre-Incentive Fee net investment income for the three months ended June 30, 2023 or 2022. For the three months ended June 30, 2023 and 2022, $0.7 million and $(9.1) million, respectively, of Incentive Fees were accrued related to Capital Gains Fees. As of June 30, 2023, these accrued Incentive Fees are not contractually payable to the Adviser.
Incentive Fees related to pre-Incentive Fee net investment income increased from $7.9 million for the six months ended June 30, 2022 to $29.0 million for the six months ended June 30, 2023. This increase resulted from an increase in reference rates for the six months ended June 30, 2023. The Adviser did not waive any Incentive Fees related to pre-Incentive Fee net investment income for the six months ended June 30, 2023 or 2022. For the six months ended June 30, 2023 and 2022, $2.5 million and $(7.7) million, respectively, of Incentive Fees were accrued related to Capital Gains Fees. As of June 30, 2023, these accrued Incentive Fees are not contractually payable to the Adviser.
Professional Fees and Other General and Administrative Expenses
Professional fees remained constant from $1.8 million for the three months ended June 30, 2022 to $1.8 million for the three months ended June 30, 2023. Other general and administrative expenses decreased from $1.3 million for the three months ended June 30, 2022 to $1.2 million for the three months ended June 30, 2023.
Professional fees increased from $3.3 million for the six months ended June 30, 2022 to $3.5 million for the six months ended June 30, 2023. Other general and administrative expenses decreased from $2.7 million for the six months ended June 30, 2022 to $2.2 million for the six months ended June 30, 2023.
55
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 as a RIC, we must, among other things, distribute to our stockholders 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 RIC status, we, among other things, have made and intend to continue to make the requisite distributions to our stockholders, which generally relieve us from corporate-level U.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 accrue excise tax on estimated excess taxable income.
For the three and six months ended June 30, 2023, we recorded a net expense of $0.9 million and $1.3 million, respectively, for U.S. federal excise tax and other taxes. For the three and six months ended June 30, 2022, we recorded a net expense of $0.8 million and $1.1 million, respectively, for U.S. federal excise tax and other taxes.
Net Realized and Unrealized Gains and Losses
The following table summarizes our net realized and unrealized gains (losses) for the three and six months ended June 30, 2023 and 2022:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
($ in millions) |
|
June 30, 2023 |
|
|
June 30, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||||
Net realized gains (losses) on investments |
|
$ |
1.6 |
|
|
$ |
0.4 |
|
|
$ |
6.4 |
|
|
$ |
14.1 |
|
Net realized gains (losses) on foreign currency transactions |
|
|
(0.1 |
) |
|
|
(0.0 |
) |
|
|
0.1 |
|
|
|
(0.0 |
) |
Net realized gains (losses) on foreign currency investments |
|
|
(0.0 |
) |
|
|
0.0 |
|
|
|
(0.0 |
) |
|
|
0.1 |
|
Net realized gains (losses) on foreign currency borrowings |
|
|
(0.0 |
) |
|
|
0.0 |
|
|
|
0.2 |
|
|
|
(0.1 |
) |
Net Realized Gains (Losses) |
|
$ |
1.5 |
|
|
$ |
0.4 |
|
|
$ |
6.7 |
|
|
$ |
14.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in unrealized gains on investments |
|
$ |
18.0 |
|
|
$ |
5.8 |
|
|
$ |
40.0 |
|
|
$ |
22.5 |
|
Change in unrealized (losses) on investments |
|
|
(13.1 |
) |
|
|
(66.6 |
) |
|
|
(29.6 |
) |
|
|
(87.0 |
) |
Net Change in Unrealized Gains (Losses) on |
|
$ |
4.9 |
|
|
$ |
(60.8 |
) |
|
$ |
10.4 |
|
|
$ |
(64.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized gains (losses) on foreign currency borrowings |
|
|
(2.0 |
) |
|
|
7.7 |
|
|
|
(2.7 |
) |
|
|
5.9 |
|
Unrealized gains (losses) on foreign currency cash |
|
|
0.0 |
|
|
|
(0.0 |
) |
|
|
(0.3 |
) |
|
|
(0.0 |
) |
Unrealized gains (losses) on interest rate swaps |
|
|
(0.1 |
) |
|
|
(1.6 |
) |
|
|
0.2 |
|
|
|
(4.6 |
) |
Net Change in Unrealized Gains (Losses) on Foreign |
|
$ |
(2.1 |
) |
|
$ |
6.1 |
|
|
$ |
(2.8 |
) |
|
$ |
1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Change in Unrealized Gains (Losses) |
|
$ |
2.8 |
|
|
$ |
(54.7 |
) |
|
$ |
7.6 |
|
|
$ |
(63.2 |
) |
For the three and six months ended June 30, 2023, we had net realized gains on investments of $1.6 million and $6.4 million, respectively, primarily driven by one investment and one investment, respectively. For the three and six months ended June 30, 2023, we had net realized losses of $(0.1) million and net realized gains of $0.1 million, respectively on foreign currency transactions, primarily as a result of translating foreign currency related to our non-USD denominated investments. For the three and six months ended June 30, 2023, we had net realized losses of less than $(0.1) million, respectively, on foreign currency investments. For the three and six months ended June 30, 2023, we had net realized losses of less than $(0.1) million and net realized gains of $0.2 million on foreign currency borrowings. The net realized gains and losses on foreign currency borrowings were a result of payments on our revolving credit facility.
For the three months ended June 30, 2023, we had $18.0 million in unrealized gains on 102 portfolio company investments, which was offset by $(13.1) million in unrealized losses on 30 portfolio company investments. Unrealized gains resulted from an increase in fair value, primarily due to positive portfolio company specific developments. Unrealized losses primarily resulted from widening credit spreads, and also lesser impacts from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments. For the six months ended June 30, 2023, we had $40.0 million in unrealized gains on 108 portfolio company investments, which was offset by $(29.6) million in unrealized losses on 26 portfolio company investments. Unrealized
56
gains resulted from an increase in fair value, primarily due to positive portfolio company specific developments. Unrealized losses primarily resulted from widening credit spreads, and also lesser impacts from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments.
For the three and six months ended June 30, 2023, we had unrealized losses on foreign currency borrowings of $(2.0) million and $(2.7) million, respectively, on foreign currency borrowings, as a result of fluctuations in the AUD, CAD, EUR and GBP exchange rates. For the three and six months ended June 30, 2023, we had unrealized gains on foreign currency cash of less than $0.1 million and unrealized losses of $(0.3) million, respectively. For the three and six months ended June 30, 2023, we had unrealized losses on interest rate swaps of $(0.1) million and unrealized gains of $0.2 million, respectively, due to fluctuations in interest rates and the periodic settlement of interest rate swaps.
For the three and six months ended June 30, 2022, we had net realized gains on investments of $0.4 million and $14.1 million, respectively, primarily driven by one investment and one investment, respectively. For the three and six months ended June 30, 2022, we had net realized losses of less than $(0.1) million on foreign currency transactions, primarily as a result of translating foreign currency related to our non-USD denominated investments. For the three and six months ended June 30, 2022, we had net realized gains of less than $0.1 million and $0.1 million, respectively, on foreign currency investments. For the three months ended June 30, 2022, we had net realized gains of less than $0.1 million on foreign currency borrowings and for the six months ended June 30, 2022 we had net realized losses of $(0.1) million on foreign currency borrowings. The net realized gains and losses on foreign currency borrowings were a result of payments on our revolving credit facility.
For the three months ended June 30, 2022, we had $5.8 million in unrealized gains on 6 portfolio company investments, which was offset by $(66.6) million in unrealized losses on 90 portfolio company investments. Unrealized gains resulted from an increase in fair value, primarily due to positive portfolio company specific developments. Unrealized losses primarily resulted from widening credit spreads, and also lesser impacts from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments. For the six months ended June 30, 2022, we had $22.5 million in unrealized gains on 9 portfolio company investments, which was offset by $(87.0) million in unrealized losses on 91 portfolio company investments. Unrealized gains resulted from an increase in fair value, primarily due to positive portfolio company specific developments. Unrealized losses primarily resulted from widening credit spreads, and also lesser impacts from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments.
For the three and six months ended June 30, 2022, we had unrealized gains on foreign currency borrowings of $7.7 million and $5.9 million, respectively, on foreign currency borrowings, as a result of fluctuations in the AUD, CAD, EUR and GBP exchange rates. For the three and six months ended June 30, 2022, we had unrealized losses on foreign currency cash of less than $(0.1) million. For the three and six months ended June 30, 2022, we had unrealized losses on interest rate swaps of $(1.6) million and $(4.6) million, respectively, due to fluctuations in interest rates and the periodic settlement of interest rate swaps.
Realized Gross Internal Rate of Return
Since we began investing in 2011 through June 30, 2023, weighted by capital invested, our exited investments have generated an average realized gross internal rate of return to us of 17.5% (based on total capital invested of $6.8 billion and total proceeds from these exited investments of $8.5 billion). Ninety percent of these exited investments resulted in a realized gross internal rate of return to us of 10% or greater.
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 stockholders. Initial investments are assumed to occur at time zero, and all cash flows are deemed to occur on the fifteenth of each month in which they occur.
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 stockholders, and would be lower if it did.
Average gross IRR is the average of the gross IRR for each of our exited investments (each calculated as described above), weighted by the total capital invested for each of those investments.
Average 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.
Internal rate of return, or 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
57
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. Capital invested also includes realized losses on hedging activity, with respect to an investment, which represents any inception-to-date realized losses on foreign currency forward contracts allocable to the investment, if any.
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, administrative fees, agent fees, amendment fees, accrued interest, and other fees and proceeds. Realized returns also include realized gains on hedging activity, with respect to an investment, which represents any inception-to-date realized gains on foreign currency forward contracts allocable to the investment, if any.
Interest Rate and Foreign Currency Hedging
We use interest rate swaps to hedge our fixed rate debt and certain fixed rate investments. We have designated certain interest rate swaps to be in a hedge accounting relationship. See Note 2 for additional disclosure regarding our accounting for derivative instruments designated in a hedge accounting relationship. See Note 5 for additional disclosure regarding these derivative instruments and the interest payments paid and received. See Note 7 for additional disclosure regarding the carrying value of our debt.
Our current approach to hedging the foreign currency exposure in our non-U.S. dollar denominated investments is primarily to borrow the par amount in local currency under our Revolving Credit Facility to fund these investments. For the six months ended June 30, 2023 and 2022, we had $(2.7) million of unrealized losses and $5.9 million of unrealized gains, respectively, on the translation of our non-U.S. dollar denominated debt into U.S. dollars; such amounts approximate the corresponding unrealized gains and losses on the translation of our non-U.S. dollar denominated investments into U.S. dollars for the six months ended June 30, 2023 and 2022. See Note 2 for additional disclosure regarding our accounting for foreign currency. See Note 7 for additional disclosure regarding the amounts of outstanding debt denominated in each foreign currency at June 30, 2023. See our consolidated schedule of investments for additional disclosure regarding the foreign currency amounts (in both par and fair value) of our non-U.S. dollar denominated investments.
Financial Condition, Liquidity and Capital Resources
Our liquidity and capital resources are derived primarily from proceeds from equity issuances, advances from our credit facilities, and cash flows from operations. The primary uses of our cash and cash equivalents are:
We intend to continue to generate cash primarily from cash flows from operations, future borrowings and future offerings of securities. We may from time to time enter into additional debt facilities, increase the size of existing facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. 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 150%. For more information, see “Key Components of Our Results of Operations — Leverage” above. As of June 30, 2023 and December 31, 2022, our asset coverage ratio was 186.1% and 188.6%, respectively. We carefully consider our unfunded commitments for the purpose of planning our capital resources and ongoing liquidity, including our financial leverage. Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation under the 1940 Act and the asset coverage limitation under our credit facilities to cover any outstanding unfunded commitments we are required to fund.
Cash and cash equivalents as of June 30, 2023, taken together with cash available under our credit facilities, is expected to be sufficient for our investing activities and to conduct our operations in the near term. As of June 30, 2023, we had approximately $0.5 billion of availability on our Revolving Credit Facility, subject to asset coverage limitations.
As of June 30, 2023, we had $25.9 million in cash and cash equivalents, including $15.1 million of restricted cash, an increase of $0.2 million from December 31, 2022. During the six months ended June 30, 2023, cash used in operating activities was $(186.6)
58
million, primarily attributable to funding portfolio investments of $455.6 million, which was offset by repayments and proceeds from investments of $176.6 million and an increase in net assets resulting from operations of $106.0 million. Cash provided by financing activities was $186.8 million during the period due to borrowings of $750.1 million, which was offset by paydowns on our Revolving Credit Facility of $571.1 million and change in dividends payable of $76.4 million.
Equity
On February 23, 2021, we issued a total of 4,000,000 shares of common stock at $21.30 per share. Net of underwriting fees and offering costs, we received total cash proceeds of $84.9 million. Subsequent to the offering we issued an additional 49,689 shares on March 24, 2021 pursuant to the overallotment option granted to underwriters and received, net of underwriting fees, total cash proceeds of $1.0 million.
During the three months ended December 2021, we issued a total of 2,324,820 shares of common stock, or $42.3 million, as settlement for the conversion of $42.8 million principal amount of the 2022 Convertible Notes.
On August 1, 2022, we issued a total of 4,360,125 share of common stock, or $78.1 million, as settlement for the conversion of $79.2 million principal amount of the 2022 Convertible Notes.
On May 15, 2023, we issued a total of 4,500,000 shares of common stock at $17.60 per share. Net of underwriting fees and offering costs, we received total cash proceeds of $77.6 million. Subsequent to the offering we issued an additional 675,000 shares on June 12, 2023 pursuant to the overallotment option granted to underwriters and received, net of underwriting fees, total cash proceeds of $11.7 million.
During the six months ended June 30, 2023 and 2022, we also issued 676,944 and 567,973 shares of our common stock, respectively, to investors who have not opted out of our dividend reinvestment plan for proceeds of $5.6 million and $12.6 million, respectively.
On August 4, 2015, our Board authorized us to acquire up to $50 million in aggregate of our common stock from time to time over an initial six month period, and has continued to authorize the refreshment of the $50 million amount authorized under and extension of the stock repurchase program prior to its expiration since that time, most recently as of May 8, 2023. The amount and timing of stock repurchases under the program may vary depending on market conditions, and no assurance can be given that any particular amount of common stock will be repurchased.
No shares were repurchased for the three months ended June 30, 2023 and 2022.
Debt
Revolving Credit Facility
On August 23, 2012, we entered into a senior secured revolving credit agreement with Truist Bank (as a successor by merger to SunTrust Bank), as administrative agent, and J.P. Morgan Chase Bank, N.A., as syndication agent, and certain other lenders (as amended and restated, the “Revolving Credit Facility”).
As of March 31, 2023, aggregate commitments under the facility were $1.585 billion. Pursuant to an amendment to the Revolving Credit Facility dated as of June 12, 2023 (the “Fourteenth Amendment”), the aggregate commitments under the facility were increased to $1.710 billion. The facility includes an uncommitted accordion feature that allows the Company, under certain circumstances, to increase the size of the facility to up to $2.0 billion.
Pursuant to the Fourteenth Amendment, with respect to $1.465 billion in commitments, the revolving period, during which period the Company, subject to certain conditions, may make borrowings under the facility, was extended to June 11, 2027 and the stated maturity date was extended to June 12, 2028. For the remaining $245.0 million of commitments, (A) with respect to $25.0 million of commitments, the revolving period ends January 31, 2024 and the stated maturity is January 31, 2025, (B) with respect to $50.0 million of commitments, the revolving period ends on February 4, 2025 and the stated maturity is February 4, 2026 and (C) with respect to $170.0 million of commitments, the revolving period ends April 24, 2026 and the stated maturity is April 23, 2027.
We may borrow amounts in U.S. dollars or certain other permitted currencies. As of June 30, 2023, we had outstanding debt denominated in Australian Dollars (AUD) of 67.5 million, British pounds (GBP) of 14.0 million, Canadian Dollars (CAD) of 101.7 million, and Euro (EUR) of 28.0 million on our Revolving Credit Facility, included in the outstanding principal amount in the table above.
59
The Revolving Credit Facility also provides for the issuance of letters of credit up to an aggregate amount of $75.0 million. As of June 30, 2023 and December 31, 2022 the Company had $0.2 million and less than $0.1 million letters of credit issued through the Revolving Credit Facility. The amount available for borrowing under the Revolving Credit Facility is reduced by any letters of credit issued through the Revolving Credit Facility.
Amounts drawn under the Revolving Credit Facility, including amounts drawn in respect of letters of credit, bear interest at either the applicable reference rate plus an applicable credit spread adjustment, plus a margin of either 1.75% or 1.875%, or the base rate plus a margin of either 0.75% or 0.875%, in each case, based on the total amount of the borrowing base relative to the sum of the total commitments (or, if greater, the total exposure) under the Revolving Credit Facility plus certain other designated secured debt. We may elect either the applicable reference rate or base rate at the time of drawdown, and loans may be converted from one rate to another at any time, subject to certain conditions. We also pay a fee of 0.375% on undrawn amounts and, in respect of each undrawn letter of credit, a fee and interest rate equal to the then applicable margin while the letter of credit is outstanding.
The Revolving Credit Facility is guaranteed by Sixth Street SL SPV, LLC, TC Lending, LLC and Sixth Street SL Holding, LLC. The Revolving Credit Facility is secured by a perfected first-priority security interest in substantially all the portfolio investments held by us and each guarantor. Proceeds from borrowings may be used for general corporate purposes, including the funding of portfolio investments.
The Revolving Credit Facility includes customary events of default, as well as customary covenants, including restrictions on certain distributions and financial covenants. In accordance with the terms of the Fourteenth Amendment, the financial covenants require:
The Revolving Credit Facility also contains certain additional concentration limits in connection with the calculation of the borrowing base, based on the Obligor Asset Coverage Ratio.
2022 Convertible Notes
In February 2017, we issued in a private offering $
On August 1, 2022, the 2022 Convertible Notes matured in accordance with the governing indenture. Holders of $79.2 million aggregate principal amount of notes provided valid notice of conversion and were subject to the combination settlement method previously elected by us, with a specified cash amount (as defined in the indenture governing the 2022 Convertible Notes) of $20.00 per $1,000 principal amount of the 2022 Convertible Notes and any additional amounts in stock based on the applicable conversion rate as described in the indenture. In accordance with the settlement method, we issued a total of 4,360,125 shares of common stock, or $77.6 million at the adjusted conversion price per share of $17.92. The remaining balance of the notes that were not converted into newly issued shares of common stock were settled with existing cash resources, including through utilization of our Revolving Credit Facility. The interest rate swaps associated with the principal amount of the notes outstanding were terminated on the date of maturity of the 2022 Convertible Notes.
60
2023 Notes
In January 2018, we issued $
2024 Notes
In November 2019, we issued $
On February 5, 2020, we issued an additional $
In connection with the 2024 Notes offering and reopening of the 2024 Notes, we entered into interest rate swaps to align the interest rates of our liabilities with our investment portfolio, which consists of predominately floating rate loans. The notional amount of the two interest rates swaps is $300.0 million and $50.0 million, respectively, each of which matures on November 1, 2024, matching the maturity date of the 2024 Notes. As a result of the swaps, our effective interest rate on the 2024 Notes is three-month LIBOR plus 2.28% (on a weighted average basis).
During the year ended December 31, 2020, we repurchased on the open market and extinguished $2.5 million in aggregate principal amount of the 2024 Notes for $2.4 million. These repurchases resulted in a gain on extinguishment of debt of less than $0.1 million. This gain is included in the extinguishment of debt in the accompanying Consolidated Statements of Operations. In connection with the repurchase of the 2024 Notes, we entered into a floating-to-fixed interest rate swap with a notional amount equal to the amount of 2024 Notes repurchased, which had the effect of reducing the notional exposure of the fixed-to-floating interest rate swaps, which were entered into in connection with the issuance of the 2024 Notes, to match the remaining principal amount of the 2024 Notes outstanding. As a result of the swap, our effective interest rate on the outstanding 2024 Notes is three-month LIBOR plus 2.28% (on a weighted average basis). Due to the Index Cessation Event, each Legacy LIBOR Instrument referenced herein will transition to 3-month SOFR plus the relevant tenor spread adjustment effective September 25, 2023. As a result of the transition, our effective interest rate will be three-month SOFR plus 2.54% (on a weighted average basis).
2026 Notes
On February 3, 2021, we issued $
In connection with the issuance of the 2026 Notes, we entered into an interest rate swap to align the interest rates of our liabilities with our investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swap is $300.0 million, which matures on August 1, 2026, matching the maturity date of the 2026 Notes. As a result of the swap, our effective interest rate on the 2026 Notes is three-month LIBOR plus 1.91%. Due to the Index Cessation Event, each Legacy LIBOR Instrument referenced herein will transition to 3-month SOFR plus the relevant tenor spread adjustment effective September 25, 2023. As a result of the transition, our effective interest rate will be three-month SOFR plus 2.17%.
61
Debt obligations consisted of the following as of June 30, 2023 and December 31, 2022:
|
|
June 30, 2023 |
|
|||||||||||||
|
|
Aggregate Principal |
|
|
Outstanding |
|
|
Amount |
|
|
Carrying |
|
||||
($ in millions) |
|
Amount Committed |
|
|
Principal |
|
|
Available (1) |
|
|
Value (2)(3) |
|
||||
Revolving Credit Facility |
|
$ |
1,710.0 |
|
|
$ |
1,050.8 |
|
|
$ |
659.2 |
|
|
$ |
1,033.9 |
|
2024 Notes |
|
|
347.5 |
|
|
|
347.5 |
|
|
— |
|
|
|
328.0 |
|
|
2026 Notes |
|
|
300.0 |
|
|
|
300.0 |
|
|
— |
|
|
|
261.4 |
|
|
Total Debt |
|
$ |
2,357.5 |
|
|
$ |
1,698.3 |
|
|
$ |
659.2 |
|
|
$ |
1,623.3 |
|
|
|
December 31, 2022 |
|
|||||||||||||
|
|
Aggregate Principal |
|
|
Outstanding |
|
|
Amount |
|
|
Carrying |
|
||||
($ in millions) |
|
Amount Committed |
|
|
Principal |
|
|
Available (1) |
|
|
Value (2)(3) |
|
||||
Revolving Credit Facility |
|
$ |
1,585.0 |
|
|
$ |
719.3 |
|
|
$ |
865.7 |
|
|
$ |
706.2 |
|
2023 Notes |
|
|
150.0 |
|
|
|
150.0 |
|
|
— |
|
|
|
149.9 |
|
|
2024 Notes |
|
|
347.5 |
|
|
|
347.5 |
|
|
— |
|
|
|
325.5 |
|
|
2026 Notes |
|
|
300.0 |
|
|
|
300.0 |
|
|
— |
|
|
|
260.2 |
|
|
Total Debt |
|
$ |
2,382.5 |
|
|
$ |
1,516.8 |
|
|
$ |
865.7 |
|
|
$ |
1,441.8 |
|
As of June 30, 2023 and December 31, 2022, we were in compliance with the terms of our debt arrangements. We intend to continue to utilize our credit facilities to fund investments and for other general corporate purposes.
Off-Balance Sheet Arrangements
Portfolio Company Commitments
From time to time, we may enter into commitments to fund investments. We incorporate these commitments into our assessment of our liquidity position. Our senior secured revolving loan commitments are generally available on a borrower’s demand and may remain outstanding until the maturity date of the applicable loan. Our senior secured delayed draw term loan commitments are generally available on a borrower’s demand and, once drawn, generally have the same remaining term as the associated loan agreement. Undrawn senior secured delayed draw term loan commitments generally have a shorter availability period than the term of
62
the associated loan agreement. As of June 30, 2023 and December 31, 2022, we had the following commitments to fund investments in current portfolio companies:
($ in millions) |
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Alaska Bidco Oy - Delayed Draw & Revolver |
|
$ |
0.3 |
|
|
$ |
— |
|
Alpha Midco, Inc. - Delayed Draw |
|
|
0.7 |
|
|
|
0.9 |
|
American Achievement, Corp. - Revolver |
|
|
2.4 |
|
|
|
2.4 |
|
Arrow Buyer, Inc. - Delayed Draw |
|
|
7.6 |
|
|
— |
|
|
ASG II, LLC - Delayed Draw |
|
|
5.2 |
|
|
|
7.0 |
|
Avalara, Inc. - Revolver |
|
|
3.9 |
|
|
|
3.9 |
|
Axonify, Inc. - Delayed Draw |
|
|
4.1 |
|
|
|
6.1 |
|
Banyan Software Holdings, LLC - Delayed Draw |
|
|
20.0 |
|
|
— |
|
|
Bayshore Intermediate #2, L.P. - Revolver |
|
|
1.9 |
|
|
|
1.6 |
|
BCTO Ace Purchaser, Inc. - Delayed Draw |
|
|
3.6 |
|
|
|
6.6 |
|
Bear OpCo, LLC - Delayed Draw |
|
|
1.9 |
|
|
|
2.6 |
|
BlueSnap, Inc. - Delayed Draw & Revolver |
|
|
2.5 |
|
|
|
2.5 |
|
BTRS Holdings, Inc. - Delayed Draw & Revolver |
|
|
6.0 |
|
|
|
8.6 |
|
Carlstar Group, LLC - Revolver |
|
|
8.5 |
|
|
|
8.5 |
|
Cordance Operations, LLC - Delayed Draw & Revolver |
|
|
5.7 |
|
|
|
12.0 |
|
Coupa Holdings, LLC - Delayed Draw & Revolver |
|
|
6.8 |
|
|
— |
|
|
CrunchTime Information Systems, Inc. - Delayed Draw |
|
|
0.2 |
|
|
|
7.1 |
|
Disco Parent, Inc. - Revolver |
|
|
0.5 |
|
|
— |
|
|
Dye & Durham Corp. - Delayed Draw & Revolver |
|
|
2.6 |
|
|
|
6.3 |
|
EDB Parent, LLC - Delayed Draw |
|
|
14.8 |
|
|
|
18.0 |
|
Edge Bidco B.V. - Delayed Draw & Revolver |
|
|
1.4 |
|
|
— |
|
|
Elysian Finco Ltd. - Delayed Draw & Revolver |
|
|
5.7 |
|
|
|
6.8 |
|
Employment Hero Holdings Pty Ltd. - Delayed Draw & Revolver |
|
|
5.8 |
|
|
|
8.8 |
|
EMS Linq, Inc. - Revolver |
|
|
8.7 |
|
|
|
8.8 |
|
Erling Lux Bidco SARL - Delayed Draw & Revolver |
|
|
3.5 |
|
|
|
5.6 |
|
ExtraHop Networks, Inc. - Delayed Draw |
|
|
13.8 |
|
|
|
17.1 |
|
ForeScout Technologies, Inc. - Delayed Draw & Revolver |
|
|
3.4 |
|
|
|
3.4 |
|
G Treasury SS, LLC - Delayed Draw |
|
— |
|
|
|
3.3 |
|
|
Galileo Parent, Inc. - Revolver |
|
|
5.6 |
|
|
— |
|
|
Hirevue, Inc. - Revolver |
|
|
6.9 |
|
|
— |
|
|
Hornetsecurity Holding GmbH - Delayed Draw & Revolver |
|
|
2.1 |
|
|
|
2.0 |
|
Ibis Intermediate Co. - Delayed Draw |
|
|
6.3 |
|
|
|
6.3 |
|
IRGSE Holding Corp. - Revolver |
|
|
1.9 |
|
|
|
0.3 |
|
Kyriba Corp. - Delayed Draw & Revolver |
|
— |
|
|
— |
|
||
Laramie Energy, LLC - Delayed Draw |
|
|
7.7 |
|
|
— |
|
|
LeanTaaS Holdings, Inc. - Delayed Draw |
|
|
41.1 |
|
|
|
47.2 |
|
Lithium Technologies, LLC - Revolver |
|
|
1.0 |
|
|
|
2.0 |
|
Lucidworks, Inc. - Delayed Draw |
|
|
0.8 |
|
|
|
0.8 |
|
Murchison Oil and Gas, LLC - Delayed Draw |
|
|
3.3 |
|
|
|
9.8 |
|
Netwrix Corp. - Delayed Draw & Revolver |
|
|
12.7 |
|
|
|
13.9 |
|
Neuintel, LLC - Delayed Draw |
|
— |
|
|
|
4.2 |
|
|
OutSystems Luxco SARL - Delayed Draw |
|
|
2.2 |
|
|
|
2.1 |
|
PageUp People, Ltd. - Delayed Draw & Revolver |
|
— |
|
|
|
5.8 |
|
|
Passport Labs, Inc. - Delayed Draw & Revolver |
|
|
2.8 |
|
|
|
2.8 |
|
Ping Identity Holding Corp. - Revolver |
|
|
2.3 |
|
|
|
2.3 |
|
PrimePay Intermediate, LLC - Delayed Draw |
|
— |
|
|
|
2.5 |
|
|
PrimeRevenue, Inc. - Delayed Draw & Revolver |
|
|
6.2 |
|
|
|
6.3 |
|
Project44, Inc. - Delayed Draw |
|
|
19.9 |
|
|
|
19.9 |
|
ReliaQuest Holdings, LLC - Delayed Draw |
|
|
13.9 |
|
|
|
22.7 |
|
Tango Management Consulting, LLC - Delayed Draw & Revolver |
|
|
16.8 |
|
|
|
26.6 |
|
TRP Assets, LLC - Delayed Draw & Membership Interest |
|
|
4.3 |
|
|
|
7.8 |
|
WideOrbit, Inc. - Revolver |
|
— |
|
|
|
4.8 |
|
|
Total Portfolio Company Commitments (1)(2) |
|
$ |
299.3 |
|
|
$ |
338.0 |
|
Other Commitments and Contingencies
As of June 30, 2023 and December 31, 2022, we did not have any unfunded commitments to fund new investments to new borrowers that were not current portfolio companies as of such date.
63
From time to time, we may become a party to certain legal proceedings incidental to the normal course of our business. As of June 30, 2023, management is not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.
We have certain contracts under which we have material future commitments. Under the Investment Advisory Agreement, our Adviser provides us with investment advisory and management services. For these services, we pay the Management Fee and the Incentive Fee.
Under the Administration Agreement, our Adviser furnishes us with office facilities and equipment, provides us clerical, bookkeeping and record keeping services at such facilities and provides us with other administrative services necessary to conduct our day-to-day operations. We reimburse our Adviser for the allocable portion (subject to the review and approval of our Board) of expenses incurred by it in performing its obligations under the Administration Agreement, the fees and expenses associated with performing compliance functions and our allocable portion of the compensation of our Chief Compliance Officer, Chief Financial Officer and other professionals who spend time on those related activities (based on a percentage of time those individuals devote, on an estimated basis, to our business and affairs). Our Adviser also offers on our behalf significant managerial assistance to those portfolio companies to which we are required to offer to provide such assistance.
Contractual Obligations
A summary of our contractual payment obligations as of June 30, 2023 is as follows:
|
|
Payments Due by Period |
|
|||||||||||||||||
|
|
|
|
|
Less than |
|
|
|
|
|
|
|
|
|
|
|||||
($ in millions) |
|
Total |
|
|
1 year |
|
|
1-3 years |
|
|
3-5 years |
|
|
After 5 years |
|
|||||
Revolving Credit Facility |
|
$ |
1,050.8 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,050.8 |
|
|
$ |
— |
|
2024 Notes |
|
|
347.5 |
|
|
|
347.5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
2026 Notes |
|
|
300.0 |
|
|
|
— |
|
|
|
300.0 |
|
|
|
— |
|
|
|
— |
|
Total Contractual Obligations |
|
$ |
1,698.3 |
|
|
$ |
347.5 |
|
|
$ |
300.0 |
|
|
$ |
1,050.8 |
|
|
$ |
— |
|
In addition to the contractual payment obligations in the tables above, we also have commitments to fund investments and to pledge assets as collateral under the terms of our derivatives agreements.
Distributions
We have elected and qualified to be treated for U.S. federal income tax purposes as a RIC under subchapter M of the Code. To maintain our RIC status, we must distribute (or be treated as distributing) in each taxable year dividends for tax purposes equal to at least 90 percent of the sum of our:
As a RIC, we (but not our stockholders) generally will not be subject to U.S. federal income tax on investment company taxable income and net capital gains that we distribute to our stockholders.
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 may choose to retain our net capital gains or any investment company taxable income, and pay the U.S. federal excise tax 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. To avoid this tax, we must distribute (or be treated as distributing) during each calendar year an amount at least equal to the sum of:
64
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 to avoid entirely the imposition of this tax. In that 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 dividends to our stockholders out of assets legally available for distribution. All dividends will be paid at the discretion of our Board and will depend on our earnings, financial condition, maintenance of our RIC status, 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 stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should read any 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 stockholders. As a result, if we declare a cash dividend or other distribution, each stockholder 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 dividends. Stockholders 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.
Related-Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following:
Critical Accounting Policies
The preparation of our 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 parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023, and elsewhere in our filings with the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to financial market risks, including valuation risk, interest rate risk and currency risk.
Valuation Risk
We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of private companies. Most of our investments will not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board in accordance with our valuation policy. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.
Interest Rate Risk
Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. We also fund portions of our investments with borrowings. Our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. Accordingly, we cannot assure you that a significant change in market interest rates will not have a material adverse effect on our net investment income.
65
We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate-sensitive assets to our interest rate-sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.
As of June 30, 2023, 99.2% of our debt investments based on fair value in our portfolio bore interest at floating rates, with 100.0% of these subject to interest rate floors. Our credit facilities also bear interest at floating rates, and in connection with our 2024 Notes and 2026 Notes, which bear interest at fixed rates, we entered into fixed-to-floating interest rate swaps in order to align the interest rates of our liabilities with our investment portfolio.
Assuming that our consolidated balance sheet as of June 30, 2023 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates (considering interest rate floors for floating rate instruments):
($ in millions) |
|
|
|
|
|
|
|
|
|
|||
Basis Point Change |
|
Interest Income |
|
|
Interest Expense |
|
|
Net Interest Income |
|
|||
Up 300 basis points |
|
$ |
88.4 |
|
|
$ |
50.9 |
|
|
$ |
37.5 |
|
Up 200 basis points |
|
$ |
58.9 |
|
|
$ |
34.0 |
|
|
$ |
24.9 |
|
Up 100 basis points |
|
$ |
29.5 |
|
|
$ |
17.0 |
|
|
$ |
12.5 |
|
Down 25 basis points |
|
$ |
(7.4 |
) |
|
$ |
(4.2 |
) |
|
$ |
(3.2 |
) |
Down 50 basis points |
|
$ |
(14.7 |
) |
|
$ |
(8.5 |
) |
|
$ |
(6.2 |
) |
Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments that could affect our net income. Accordingly, we cannot assure you that actual results would not differ materially from the analysis above.
We may in the future hedge against interest rate fluctuations by using hedging instruments such as additional interest rate swaps, futures, options and forward contracts. While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of changes in interest rates with respect to our portfolio investments.
Currency Risk
From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at each balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates. We also have the ability to borrow in certain foreign currencies under our Revolving Credit Facility. Instead of entering into a foreign exchange forward contract in connection with loans or other investments we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment. To the extent the loan or investment is based on a floating rate other than a rate under which we can borrow under our Revolving Credit Facility, we may seek to utilize interest rate derivatives to hedge our exposure to changes in the associated rate.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Exchange Act.
Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
66
PART II – OTHER INFORMATION
ITEM 1. Legal Proceedings
From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.
Item 1A. Risk Factors.
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the risk factors set forth below, which could materially affect our business, financial condition and/or operating results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Pursuant to Section 61(a)(2)(C)(ii) of the 1940 Act, the principal risk factors associated with our senior securities are set forth below. However, since we already use leverage in optimizing our investment portfolio, the principal risk factors associated with our senior securities do not represent material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Legislation allows us to incur additional leverage.
Under the 1940 Act, a BDC generally is not permitted to incur borrowings, issue debt securities or issue preferred stock unless 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%. However, under the SBCAA, which became law in March 2018, BDCs have the ability to elect to become subject to a lower asset coverage requirement of 150%, subject to the receipt of the requisite board or stockholder approvals under the SBCAA and satisfaction of certain other conditions.
On October 8, 2018, our stockholders approved the application of the minimum asset coverage ratio of 150% to us, as set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCAA. As a result and subject to certain additional disclosure requirements, as of October 9, 2018, our minimum asset coverage ratio was reduced from 200% to 150%. In other words, pursuant to Section 61(a) of the 1940 Act, as amended by the SBCAA, we are permitted to potentially increase our maximum debt-to-equity ratio from an effective level of one-to-one to two-to-one.
As a result, you may face increased investment risk. We may not be able to implement our strategy to utilize additional leverage successfully. Any impact on returns or equity or our business associated with additional leverage may not outweigh the additional risk. See “—We borrow money, which magnifies the potential for gain or loss and increases the risk of investing in us.”
Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital.
The 1940 Act imposes numerous constraints on the operations of BDCs. See “ITEM 1. BUSINESS—Regulation as a Business Development Company” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023, for a discussion of BDC limitations. For example, BDCs are required to invest at least 70% of their total assets in securities of nonpublic or thinly traded U.S. companies, cash, cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less. These constraints may hinder the Adviser’s ability to take advantage of attractive investment opportunities and to achieve our investment objective.
We may need to periodically access the debt and equity capital markets to raise cash to fund new investments in excess of our repayments, and we may also need to access the capital markets to refinance existing debt obligations to the extent such maturing obligations are not repaid with availability under our revolving credit facilities or cash flows from operations.
Regulations governing our operation as a BDC affect our ability to raise additional capital, and the ways in which we can do so. Raising additional capital may expose us to risks, including the typical risks associated with leverage, and may result in dilution to our current stockholders. The 1940 Act limits our ability to incur borrowings and issue debt securities and preferred stock, which we refer to as senior securities, requiring that after any borrowing or issuance the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 150%.
We may need to continue to borrow from financial institutions and issue additional securities to fund our growth. Unfavorable economic or capital market conditions may increase our funding costs, limit our access to the capital markets or could result in a decision by lenders not to extend credit to us. An inability to successfully access the capital markets may limit our ability to refinance
67
our existing debt obligations as they come due and/or to fully execute our business strategy and could limit our ability to grow or cause us to have to shrink the size of our business, which could decrease our earnings, if any. Consequently, if the value of our assets declines or we are unable to access the capital markets we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when this may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. If we borrow money or issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss.
If we issue preferred stock, the preferred stock would rank senior to common stock in our capital structure. Preferred stockholders would have separate voting rights on certain matters and may have other rights, preferences or privileges more favorable than those of our common stockholders. The issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in your best interest. Holders of our common stock will directly or indirectly bear all of the costs associated with offering and servicing any preferred stock that we issue. In addition, any interests of preferred stockholders may not necessarily align with the interests of holders of our common stock and the rights of holders of shares of preferred stock to receive dividends would be senior to those of holders of shares of our common stock.
Our Board may decide to issue additional common stock to finance our operations rather than issuing debt or other senior securities. However, we generally are not able to issue and sell our common stock at a price below net asset value per share. We may, however, elect to issue and sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if our Board determines that the sale is in our best interests and the best interests of our stockholders, and our stockholders have approved our policy and practice of making these sales within the preceding 12 months. Pursuant to approval granted at a special meeting of stockholders held on May 25, 2023, we are currently permitted to sell or otherwise issue shares of our common stock at a price below our then-current net asset value per share, subject to the approval of our Board and certain other conditions. Such stockholder approval expires on May 25, 2024. We may in the future seek such approval again; however, there is no assurance such approval will be obtained. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board, closely approximates the market value of those securities (less any distribution commission or discount). In the event we sell shares of our common stock at a price below net asset value per share, existing stockholders will experience net asset value dilution. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and would cause a proportionately greater decrease in the stockholders’ interest in our earnings and assets and their voting interest in us than the increase in our assets resulting from such issuance. As a result of any such dilution, our market price per share may decline. Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted.
In addition to issuing securities to raise capital as described above, we could securitize our investments to generate cash for funding new investments. To securitize our investments, we likely would create a wholly owned subsidiary, contribute a pool of loans to the subsidiary and have the subsidiary issue primarily investment grade debt securities to purchasers who we would expect would be willing to accept a substantially lower interest rate than the loans earn. We would retain all or a portion of the equity in the securitized pool of loans. Our retained equity would be exposed to any losses on the portfolio of investments before any of the debt securities would be exposed to the losses. An inability to successfully securitize our investment portfolio could limit our ability to grow or fully execute our business and could adversely affect our earnings, if any. The successful securitization of our investment could expose us to losses because the portions of the securitized investments that we would typically retain tend to be those that are riskier and more apt to generate losses. The 1940 Act also may impose restrictions on the structure of any securitization. In connection with any future securitization of investments, we may incur greater set-up and administration fees relating to such vehicles than we have in connection with financing of our investments in the past.
We borrow money, which magnifies the potential for gain or loss and increases the risk of investing in us.
As part of our business strategy, we borrow from and may in the future issue additional senior debt securities to banks, insurance companies and other lenders. Holders of these loans or senior securities would have fixed-dollar claims on our assets that have priority over the claims of our stockholders. If the value of our assets decreases, leverage will cause our net asset value to decline more sharply than it otherwise would have without leverage. Similarly, any decrease in our income would cause our net income to decline more sharply than it would have if we had not borrowed. This decline could negatively affect our ability to make dividend payments on our common stock. Our ability to service our borrowings depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. In addition, the Management Fee is payable based on our gross assets, including cash and assets acquired through the use of leverage, which may give our Adviser an incentive to use leverage to make additional investments. The amount of leverage that we employ will depend on our Adviser’s and our Board’s assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.
68
Our credit facilities and indentures governing our indebtedness also impose financial and operating covenants that restrict our business activities, remedies on default and similar matters. As of June 30, 2023, we are in compliance with the covenants of our credit facilities and indentures. However, our continued compliance with these covenants depends on many factors, some of which are beyond our control. Accordingly, although we believe we will continue to be in compliance, we cannot assure you that we will continue to comply with the covenants in our credit facilities and indentures. Failure to comply with these covenants could result in a default. If we were unable to obtain a waiver of a default from the lenders or holders of that indebtedness, as applicable, those lenders or holders could accelerate repayment under that indebtedness. An acceleration could have a material adverse impact on our business, financial condition and results of operations. Lastly, we may be unable to obtain additional leverage, which would, in turn, affect our return on capital.
As of June 30, 2023, we had $1,698.3 million of outstanding indebtedness, which had an annualized interest cost of 7.13% under the terms of our debt, excluding fees (such as fees on undrawn amounts and amortization of upfront fees) and giving effect to the swap-adjusted interest rates on our 2024 Notes and 2026 Notes. As of June 30, 2023, as adjusted to give effect to the interest rate swaps, the interest rate on the 2024 Notes was three-month LIBOR plus 2.28% (on a weighted-average basis), and the interest rate on the 2026 Notes was three-month LIBOR plus 1.91%. On September 25, 2023, the swap-adjusted interest rate on the 2024 Notes and 2026 Notes will transition to three-month SOFR plus 2.54% (on a weighted average basis), and three-month SOFR plus 2.17%, respectively.
For us to cover these annualized interest payments on indebtedness, we must achieve annual returns on our investments of at least 3.9%. Since we generally pay interest at a floating rate on our debt, an increase in interest rates will generally increase our borrowing costs. We expect that our annualized interest cost and returns required to cover interest will increase if we issue additional debt securities.
In order to assist investors in understanding the effects of leverage, the following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. Leverage generally magnifies the return of stockholders when the portfolio return is positive and magnifies their losses when the portfolio return is negative. Actual returns may be greater or less than those appearing in the table. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below.
Effects of Leverage Based on Actual Amount of Borrowings Incurred by us as of June 30, 2023
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Assumed Return on Our Portfolio (net of expenses) (1) |
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-5% |
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0% |
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Our indebtedness could adversely affect our business, financial conditions or results of operations.
We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our credit facilities or otherwise in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before it matures. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets or seeking additional equity. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would not be disadvantageous to our stockholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.
69
Even in the event the value of your investment declines, the Management Fee and, in certain circumstances, the Incentive Fee will still be payable to the Adviser.
Even in the event the value of your investment declines, the Management Fee and, in certain circumstances, the Incentive Fee will still be payable to the Adviser. The Management Fee is calculated as a percentage of the value of our gross assets at a specific time, which would include any borrowings for investment purposes, and may give our Adviser an incentive to use leverage to make additional investments. In addition, the Management Fee is payable regardless of whether the value of our gross assets or your investment have decreased. The use of increased leverage may increase the likelihood of default, which would disfavor holders of our common stock. Given the subjective nature of the investment decisions that our Adviser will make on our behalf, we may not be able to monitor this potential conflict of interest.
The Incentive Fee is calculated as a percentage of pre-Incentive Fee net investment income. Since pre-Incentive Fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital gains or losses, it is possible that we may pay an Incentive Fee in a quarter in which we incur a loss. For example, if we receive pre-Incentive Fee net investment income in excess of the quarterly minimum hurdle rate, we will pay the applicable Incentive Fee even if we have incurred a loss in that quarter due to realized and unrealized capital losses. In addition, because the quarterly minimum hurdle rate is calculated based on our net assets, decreases in our net assets due to realized or unrealized capital losses in any given quarter may increase the likelihood that the hurdle rate is reached in that quarter and, as a result, that an Incentive Fee is paid for that quarter. Our net investment income used to calculate this component of the Incentive Fee is also included in the amount of our gross assets used to calculate the Management Fee.
Also, one component of the Incentive Fee is calculated annually based upon our realized capital gains, computed net of realized capital losses and unrealized capital losses on a cumulative basis. As a result, we may owe the Adviser an Incentive Fee during one year as a result of realized capital gains on certain investments, and then incur significant realized capital losses and unrealized capital losses on the remaining investments in our portfolio during subsequent years. Incentive Fees earned in prior years cannot be clawed back even if we later incur losses.
In addition, the Incentive Fee payable by us to the Adviser may create an incentive for the Adviser to make investments on our behalf that are risky or more speculative than would be the case in the absence of such a compensation arrangement. The Adviser receives the Incentive Fee based, in part, upon capital gains realized on our investments. Unlike the portion of the Incentive Fee that is based on income, there is no hurdle rate applicable to the portion of the Incentive Fee based on capital gains. As a result, the Adviser may have an incentive to invest more in companies whose securities are likely to yield capital gains, as compared to income-producing investments. Such a practice could result in our making more speculative investments than would otherwise be the case, which could result in higher investment losses, particularly during cyclical economic downturns.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the three months ended June 30, 2023,
70
Item 6. Exhibits.
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71
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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SIXTH STREET SPECIALTY LENDING, INC. |
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Date: August 3, 2023 |
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/s/ Joshua Easterly |
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Joshua Easterly |
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Chief Executive Officer |
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Date: August 3, 2023 |
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By: |
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/s/ Ian Simmonds |
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Ian Simmonds |
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Chief Financial Officer |
72
Exhibit 10.1
EXECUTION COPY
FOURTEENTH AMENDMENT
TO SECOND AMENDED AND RESTATED SENIOR SECURED REVOLVING CREDIT AGREEMENT
THIS FOURTEENTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED REVOLVING CREDIT AGREEMENT, dated as of June 12, 2023 (this “Amendment”), to the Existing Credit Agreement (capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in Article I) is among SIXTH STREET SPECIALTY LENDING, INC., a Delaware corporation (the “Borrower”), the LENDERS and ISSUING BANKS party hereto and TRUIST BANK, as Administrative Agent (the “Administrative Agent”).
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent are parties to the Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of February 27, 2014 (as amended by the First Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of June 3, 2014, the Second Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of June 27, 2014, the Third Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of October 17, 2014, the Fourth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of October 2, 2015, the Fifth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of December 22, 2016, the Sixth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of February 20, 2018, the Seventh Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of November 5, 2018, the Eighth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of February 14, 2019, the Ninth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of January 31, 2020, the Tenth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of February 5, 2021, the Eleventh Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of December 14, 2021, the Twelfth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of April 25, 2022, and the Thirteenth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of May 19, 2022 (the “Existing Credit Agreement”), and by this Amendment and as the same may be further amended, supplemented, amended and restated or otherwise modified from time to time, the “Credit Agreement”); and
WHEREAS, the Borrower has requested that the Lenders agree to amend the Existing Credit Agreement, and the Lenders party hereto are willing, on the terms and subject to the conditions hereinafter set forth, to agree to the amendment set forth below and the other terms hereof;
NOW, THEREFORE, the parties hereto hereby covenant and agree as follows:
DEFINITIONS
“Amendment” is defined in the preamble.
“Borrower” is defined in the preamble.
“Credit Agreement” is defined in the first recital.
“Existing Credit Agreement” is defined in the first recital.
“Fourteenth Amendment Effective Date” is defined in Article IV.
JOINDER OF NEW LENDERS
AMENDMENTS TO EXISTING CREDIT AGREEMENT
2
CONDITIONS TO EFFECTIVENESS
MISCELLANEOUS
3
(a) On the Fourteenth Amendment Effective Date, the Borrower shall (A) prepay the outstanding Loans and (B) simultaneously borrow new Loans in an amount equal to such prepayment; provided that with respect to subclauses (A) and (B), (x) the prepayment to, and borrowing from, any Lender shall be effected by book entry to the extent that any portion of the
4
amount prepaid to such Lender will be subsequently borrowed from such Lender, (y) the Lenders shall make and receive payments among themselves, in a manner acceptable to the Administrative Agent, so that, after giving effect thereto, the Loans of each Class are held ratably by the Lenders of such Class in accordance with each Lender’s Applicable Percentage of Commitments and portion of Loans, which, for the purposes of the Credit Agreement and each other Loan Document, will be as set forth opposite such Person’s name on Schedule 1.01(b) to the Credit Agreement and (z) each Lender party hereto hereby agrees that no amounts shall be required to be paid to such Lender under Section 2.15 of the Credit Agreement in connection with the reallocation described in this Section 5.9(a). Concurrently therewith, the Lenders of each Class shall be deemed to have adjusted their participation interests in any outstanding Letters of Credit of such Class so that such interests are held ratably in accordance with their Applicable Percentage of Commitments of such Class.
(b) Each of the Lenders hereby acknowledges and agrees that (i) no Lender nor the Administrative Agent has made any representations or warranties or assumed any responsibility with respect to (A) any statements, warranties or representations made by any Obligor in or in connection with this Amendment, the Credit Agreement or any other Loan Document or, with respect to any Obligor, the execution, legality, validity, enforceability, genuineness or sufficiency of this Amendment, the Credit Agreement or any other Loan Document or (B) the financial condition of any Obligor or the performance by any Obligor of its obligations hereunder or under the Credit Agreement or any other Loan Document; (ii) it has received such information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment; and (iii) it has made and continues to make its own credit decisions in taking or not taking action under the Loan Documents, independently and without reliance upon the Administrative Agent or any other Lender.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written.
BORROWER: SIXTH STREET SPECIALTY LENDING, INC.
By: /s/ Ian Simmonds
Name: Ian Simmonds
Title: Chief Financial Officer
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
LENDERS: TRUIST BANK,
as Administrative Agent, Swingline Lender, Issuing Bank and as a Lender
By: /s/ Hays Wood
Name: Hays Wood
Title: Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
JPMORGAN CHASE BANK, N.A.,
as Issuing Bank and as a Lender
By: /s/ Alevtina Dudyreva
Name: Alevtina Dudyreva
Title: Vice President
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
MUFG BANK, LTD., as a Lender
By: /s/ Jorge Campos
Name: Jorge Campos
Title: Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
STATE STREET BANK AND TRUST COMPANY, as a Lender
By: /s/ John Doherty
Name: John Doherty
Title: Vice President
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
SUMITOMO MITSUI BANKING CORPORATION, as a Lender
By: /s/ Shane Klein
Name: Shane Klein
Title: Managing Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
BANK OF AMERICA, N.A., as a Lender
By: /s/ Sidhima Daruka
Name: Sidhima Daruka
Title: Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED, NEW YORK BRANCH, as a Lender
By: /s/ Huacheng Lin
Name: Huacheng Lin
Title: AVP
By: /s/ Charles Inkeles
Name: Charles Inkeles
Title: Executive Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
MIZUHO BANK, LTD., as a Lender
By: /s/ Donna DeMagistris
Name: Donna DeMagistris
Title: Executive Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender
By: /s/ Michael Kusner
Name: Michael Kusner
Title: Managing Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
HSBC BANK USA, N.A., as a Lender
By: /s/ Johann Matthai
Name: Johann Matthai
Title: Managing Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
CITIBANK, N.A., as a Lender
By: /s/ Patrick Marsh
Name: Patrick Marsh
Title: Vice President
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
CIT FINANCE LLC, as a Lender
By: /s/ Robert L. Klein
Name: Robert L. Klein
Title: Managing Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
GOLDMAN SACHS BANK USA, as a Lender
By: /s/ William E. Briggs IV
Name: William E. Briggs IV
Title: Authorized Signatory
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
MORGAN STANLEY BANK, N.A., as a Lender
By: /s/ Michael King
Name: Michael King
Title: Authorized Signatory
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
APPLE BANK FOR SAVINGS, as a Lender
By: /s/ Burt Feinberg
Name: Burt Feinberg
Title: Managing Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
ROYAL BANK OF CANADA, as a Lender
By: /s/ Alex Figueroa
Name: Alex Figueroa
Title: Authorized Signatory
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
COMERICA BANK, as a Lender
By: /s/ Robert Wilson
Name: Robert Wilson
Title: Senior Vice President
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
STIFEL BANK & TRUST, as a Lender
By: /s/ Joseph L. Sooter, Jr.
Name: Joseph L. Sooter, Jr.
Title: Senior Vice President
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
SANTANDER BANK, N.A., as a Lender
By: /s/ Vikas Jhaveri
Name: Vikas Jhaveri
Title: Senior Vice President
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
INVESTORS BANK, as a Lender
By: /s/ John F. Carlin
Name: John F. Carlin
Title: Managing Director
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
BANKUNITED, N.A., as a Lender
By: /s/ Craig Kincade
Name: Craig Kincade
Title: Senior Vice President
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
Agreed and acknowledged solely with respect to Section 5.8.
TC LENDING, LLC
By: /s/ Ian Simmonds
Name: Ian Simmonds
Title: Chief Financial Officer
SIXTH STREET SL HOLDING, LLC
By: /s/ Ian Simmonds
Name: Ian Simmonds
Title: Chief Financial Officer
SIXTH STREET SL SPV, LLC
By: /s/ Ian Simmonds
Name: Ian Simmonds
Title: Chief Financial Officer
SIGNATURE PAGE TO FOURTEENTH AMENDMENT
Exhibit A
[Attached.]
Exhibit B
[Attached.]
Exhibit A to Fourteenth Amendment, dated as of June 12, 2023
Exhibit C
[Attached.]
SECOND AMENDED AND RESTATED
SENIOR SECURED
REVOLVING CREDIT AGREEMENT
dated as of
February 27, 2014
as amended by the First Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of June 3, 2014, the Second Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of June 27, 2014, the Third Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of October 17, 2014, the Fourth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of October 2, 2015, the Fifth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of December 22, 2016, the Sixth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of February 20, 2018, the Seventh Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of November 5, 2018, the Eighth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of February 14, 2019, the Ninth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of January 31, 2020, the Tenth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of February 5, 2021, the Eleventh Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of December 14, 2021, the Twelfth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of April 25, 2022, the Thirteenth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of May 19, 2022, and the
753176866 11299570
Fourteenth Amendment to Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of June 12, 2023
among
SIXTH STREET SPECIALTY LENDING, INC.
as Borrower
The LENDERS Party Hereto
and
TRUIST BANK
as Administrative Agent
JPMORGAN CHASE BANK, N.A.
as Syndication Agent
$1,710,000,000
__________________
TRUIST SECURITIES, INC.
JPMorgan Chase Bank, N.A.
as Joint Lead Arrangers and Joint Book Runners
MUFG BANK, LTD.
SUMITOMO MITSUI BANKING CORPORATION
STATE STREET BANK AND TRUST COMPANY
as Joint Lead Arrangers
753176866 11299570
Table of Contents
Page
ARTICLE I DEFINITIONS
SECTION 1.01. Defined Terms 2
SECTION 1.02. Classification of Loans and Borrowings 48
SECTION 1.03. Terms Generally 48
SECTION 1.04. Accounting Terms; GAAP 49
SECTION 1.05. Currencies; Currency Equivalents. 49
SECTION 1.06. Rates 50
ARTICLE II THE CREDITS
SECTION 2.01. The Commitments 51
SECTION 2.02. Loans and Borrowings. 51
SECTION 2.03. Requests for Syndicated Borrowings. 52
SECTION 2.04. Swingline Loans. 54
SECTION 2.05. Letters of Credit. 56
SECTION 2.06. Funding of Borrowings. 61
SECTION 2.07. Interest Elections. 61
SECTION 2.08. Termination, Reduction or Increase of the Commitments. 63
SECTION 2.09. Repayment of Loans; Evidence of Debt. 66
SECTION 2.10. Prepayment of Loans. 68
SECTION 2.11. Fees. 71
SECTION 2.12. Interest. 73
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Table of Contents
(continued)
Page
SECTION 2.13. Inability to Determine Interest Rates. 74
SECTION 2.14. Increased Costs. 75
SECTION 2.15. Break Funding Payments 77
SECTION 2.16. Taxes. 77
SECTION 2.17. Payments Generally; Pro Rata Treatment: Sharing of Set-offs. 81
SECTION 2.18. Mitigation Obligations; Replacement of Lenders. 83
SECTION 2.19. Defaulting Lenders. 84
SECTION 2.20. Reallocation Following a Non-Extended Commitment Termination Date 88
SECTION 2.21. Effect of Benchmark Transition Event 89
ARTICLE III REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers 92
SECTION 3.02. Authorization; Enforceability 92
SECTION 3.03. Governmental Approvals; No Conflicts 92
SECTION 3.04. Financial Condition; No Material Adverse Change. 93
SECTION 3.05. Litigation 93
SECTION 3.06. Compliance with Laws and Agreements 93
SECTION 3.07. Taxes 93
SECTION 3.08. ERISA 94
SECTION 3.09. Disclosure 94
SECTION 3.10. Investment Company Act; Margin Regulations. 94
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Table of Contents
(continued)
Page
SECTION 3.11. Material Agreements and Liens. 94
SECTION 3.12. Subsidiaries and Investments. 95
SECTION 3.13. Properties. 95
SECTION 3.14. Affiliate Agreements 95
SECTION 3.15. Sanctions 95
SECTION 3.16. Patriot Act 96
SECTION 3.17. Collateral Documents 96
SECTION 3.18. EEA Financial Institutions 96
ARTICLE IV CONDITIONS
SECTION 4.01. Effective Date 97
SECTION 4.02. Each Credit Event 97
ARTICLE V AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information 98
SECTION 5.02. Notices of Material Events 100
SECTION 5.03. Existence: Conduct of Business 101
SECTION 5.04. Payment of Obligations 101
SECTION 5.05. Maintenance of Properties; Insurance 101
SECTION 5.06. Books and Records; Inspection and Audit Rights 101
SECTION 5.07. Compliance with Laws 101
SECTION 5.08. Certain Obligations Respecting Subsidiaries; Further Assurances. 102
SECTION 5.09. Use of Proceeds 103
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Table of Contents
(continued)
Page
SECTION 5.10. Status of RIC and BDC 103
SECTION 5.11. Investment Policies 103
SECTION 5.12. Portfolio Valuation and Diversification Etc. 103
SECTION 5.13. Calculation of Borrowing Base. 107
ARTICLE VI NEGATIVE COVENANTS
SECTION 6.01. Indebtedness 112
SECTION 6.02. Liens 113
SECTION 6.03. Fundamental Changes 114
SECTION 6.04. Investments 116
SECTION 6.05. Restricted Payments 116
SECTION 6.06. Certain Restrictions on Subsidiaries 117
SECTION 6.07. Certain Financial Covenants 118
SECTION 6.08. Transactions with Affiliates 118
SECTION 6.09. Lines of Business 118
SECTION 6.10. No Further Negative Pledge 118
SECTION 6.11. Modifications of Longer-Term Indebtedness Documents 119
SECTION 6.12. Payments of Longer-Term Indebtedness, the 2024 Notes and the 2026 Notes 119
SECTION 6.13. Accounting Changes 120
SECTION 6.14. SBIC Guarantee 120
ARTICLE VII EVENTS OF DEFAULT
ARTICLE VIII THE ADMINISTRATIVE AGENT
SECTION 8.01. Appointment of the Administrative Agent 124
SECTION 8.02. Capacity as Lender 125
SECTION 8.03. Limitation of Duties; Exculpation 125
SECTION 8.04. Reliance 125
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Table of Contents
(continued)
Page
SECTION 8.05. Sub-Agents 125
SECTION 8.06. Resignation; Successor Administrative Agent 126
SECTION 8.07. Reliance by Lenders 126
SECTION 8.08. Modifications to Loan Documents 127
SECTION 8.09. Erroneous Payments. 127
ARTICLE IX MISCELLANEOUS
SECTION 9.01. Notices; Electronic Communications. 130
SECTION 9.02. Waivers; Amendments. 133
SECTION 9.03. Expenses; Indemnity; Damage Waiver. 135
SECTION 9.04. Successors and Assigns. 137
SECTION 9.05. Survival 142
SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution. 142
SECTION 9.07. Severability 143
SECTION 9.08. Right of Setoff 143
SECTION 9.09. Governing Law; Jurisdiction; Etc. 143
SECTION 9.10. WAIVER OF JURY TRIAL 144
SECTION 9.11. Judgment Currency 144
SECTION 9.12. Headings 145
SECTION 9.13. Treatment of Certain Information; No Fiduciary Duty; Confidentiality. 145
SECTION 9.14. USA PATRIOT Act 147
SECTION 9.15. Effect of Amendment and Restatement of the Existing Credit Agreement 147
SECTION 9.16. [Reserved] 147
SECTION 9.17. Acknowledgement and Consent to Bail-In of Affected Financial Institutions 147
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Table of Contents
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Page
SECTION 9.18. Certain ERISA Matters 148
SECTION 9.19. Acknowledgement Regarding Any Supported QFCs 149
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SCHEDULE 1.01(a) - Approved Dealers and Approved Pricing Services
SCHEDULE 1.01(b) - Commitments
SCHEDULE 1.01(c) - Industry Classification Group List
SCHEDULE 2.04 - Swingline Lender Swingline Sublimit
SCHEDULE 2.05 - Issuing Bank LC Exposure
SCHEDULE 3.11 - Material Agreements and Liens
SCHEDULE 3.12(a) - Subsidiaries
SCHEDULE 3.12(b) - Investments
SCHEDULE 6.08 - Transactions with Affiliates
EXHIBIT A - Form of Assignment and Assumption
EXHIBIT B - Form of Borrowing Base Certificate
EXHIBIT C - Form of Borrowing Request
753176866 11299570
SECOND AMENDED AND RESTATED SENIOR SECURED REVOLVING CREDIT AGREEMENT dated as of February 27, 2014, as amended as of June 3, 2014, as of June 27, 2014, as of October 17, 2014, as of October 2, 2015, as of December 22, 2016, as of February 20, 2018, as of November 5, 2018, as of February 14, 2019, as of January 31, 2020, February 5, 2021, December 14, 2021, April 25, 2022, May 19, 2022, and June 12, 2023 (this “Agreement”), among SIXTH STREET SPECIALTY LENDING, INC. (F/K/A TPG Specialty Lending, Inc.), a Delaware corporation (the “Borrower”), the LENDERS party hereto, and TRUIST BANK, as Administrative Agent.
The original Senior Secured Revolving Credit Agreement was dated as of August 23, 2012 and was amended and restated pursuant to the Amended and Restated Senior Secured Revolving Credit Agreement dated as of July 2, 2013 (as amended, supplemented or otherwise modified prior to the Effective Date, the “Existing Credit Agreement”), among the Borrower, the lenders party thereto (collectively, the “Existing Lenders”) and the Administrative Agent, the Existing Lenders agreed to make extensions of credit to the Borrower on the terms and conditions set forth therein, including making loans (the “Existing Loans”) to the Borrower.
The Borrower has requested that the Existing Credit Agreement be amended and restated in its entirety to become effective and binding on the Borrower pursuant to the terms of this Agreement, and the Lenders (including certain of the Existing Lenders) have agreed (subject to the terms of this Agreement) to amend and restate the Existing Credit Agreement in its entirety to read as set forth in this Agreement, and it has been agreed by the parties to the Existing Credit Agreement that (a) the commitments which the Existing Lenders have agreed to extend to the Borrower under the Existing Credit Agreement shall be extended or advanced upon the amended and restated terms and conditions contained in this Agreement; and (b) the Existing Loans and other obligations outstanding under the Existing Credit Agreement shall be governed by and deemed to be outstanding under the amended and restated terms and conditions contained in this Agreement on and after the date hereof, with the intent that the terms of this Agreement shall supersede the terms of the Existing Credit Agreement (each of which shall hereafter have no further effect upon the parties thereto, other than for accrued and unpaid fees and expenses, and indemnification provisions accrued and owing, under the terms of the Existing Credit Agreement on or prior to the Effective Date or arising (in the case of indemnification) under the terms of the Existing Credit Agreement).
The parties hereto hereby agree to amend and restate the Existing Credit Agreement, and the Existing Credit Agreement is hereby amended and restated in its entirety as follows:
DEFINITIONS
“2024 Notes” means the Borrower’s $350,000,000 aggregate principal amount notes due November 2024.
“2026 Notes” means the Borrower’s $300,000,000 aggregate principal amount notes due August 2026.
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan is, or the Loans constituting such Borrowing are, denominated in Dollars and bearing interest at a rate determined by reference to the Alternate Base Rate.
“Adjusted Covered Debt Balance” means, on any date, the aggregate Covered Debt Amount on such date minus the aggregate amount of Cash and Cash Equivalents included in the Portfolio Investments held by the Obligors (provided that Cash Collateral for outstanding Letters of Credit shall not be treated as a portion of the Portfolio Investments).
“Adjusted Term Benchmark Rate” means an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the Term Benchmark Rate for such Interest Period for such Currency.
“Administrative Agent” means Truist, in its capacity as administrative agent for the Lenders hereunder.
“Administrative Agent’s Account” means, for each Currency, an account in respect of such Currency designated by the Administrative Agent in a notice to the Borrower and the Lenders.
“Administrative Agent Appraisal Testing Period” has the meaning assigned to such term in Section 5.12(b)(ii)(E)(y).
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Advance Rate” has the meaning assigned to such term in Section 5.13.
“Affected Currency” has the meaning assigned to such term in Section 2.13.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person at any time, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified at such time. Anything herein to the contrary notwithstanding, the term “Affiliate” shall not include any Person that constitutes an Investment held by any Obligor or Financing Subsidiary in the ordinary course of business; provided that the term “Affiliate” shall include any Financing Subsidiary.
“Affiliate Agreements” means collectively, (a) the Administration Agreement dated as of March 15, 2011 between the Borrower and the External Manager, (b) the Amended and Restated Investment Advisory and Management Agreement dated as of December 12, 2011 between the Borrower and the External Manager and (c) the License Agreement dated as of March 14, 2011 between the Borrower and Tarrant Capital IP, LLC.
“Agreed Foreign Currency” means, at any time, (i) any of Canadian Dollars, Sterling, Euros, Japanese Yen, Australian Dollars, Swiss Francs, Swedish Krona and New Zealand Dollars, and (ii) with the agreement of each Multicurrency Lender, any other Foreign Currency, so long as, in respect of any such specified Foreign Currency or other Foreign Currency, at such time (a) such Foreign Currency is freely transferable and convertible into Dollars in the relevant local market, and (b) no central bank or other governmental authorization in the country of issue of such Foreign Currency (including, in the case of the Euro, any authorization by the European Central Bank) is required to permit use of such Foreign Currency by any Multicurrency Lender for making any Loan hereunder and/or to permit the Borrower to borrow and repay the principal thereof and to pay the interest thereon, unless such authorization has been obtained and is in full force and effect.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a) zero and (b) the highest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate for such day plus 1/2 of 1% and (iii) the rate per annum equal to 1% plus Term SOFR for an interest period of one (1) month for such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or Term SOFR (or successor therefor) as set forth above shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or Term SOFR (or successor thereof), respectively.
“Applicable Dollar Percentage” means, with respect to any Dollar Lender, the percentage of the total Dollar Commitments represented by such Dollar Lender’s Dollar Commitment. If the Dollar Commitments have terminated or expired, the Applicable Dollar Percentages shall be determined based upon the Dollar Commitments most recently in effect, giving effect to any assignments; provided that, for the avoidance of doubt, on and after the Non-Extended Commitment Termination Date for any Non-Extending Lender, the Applicable Dollar Percentage of such Non-Extending Lender that is a Dollar Lender shall be 0%.
“Applicable Financial Statements” means, as at any date, the most-recent audited financial statements of the Borrower delivered to the Lenders; provided that if immediately prior to the delivery to the Lenders of new audited financial statements of the Borrower a Material Adverse Change (the “Pre-existing MAC”) shall exist (regardless of when it occurred), then the “Applicable Financial Statements” as at said date means the Applicable Financial Statements in effect immediately prior to such delivery until such time as the Pre-existing MAC shall no longer exist.
“Applicable Multicurrency Percentage” means, with respect to any Multicurrency Lender, the percentage of the total Multicurrency Commitments represented by such Multicurrency Lender’s Multicurrency Commitment. If the Multicurrency Commitments have terminated or expired, the Applicable Multicurrency Percentages shall be determined based upon the Multicurrency Commitments most recently in effect, giving effect to any assignments; provided that, for the avoidance of doubt, on and after the Non-Extended Commitment
Termination Date for any Non-Extending Lender, the Applicable Multicurrency Percentage of such Non-Extending Lender that is a Multicurrency Lender shall be 0%.
“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments; provided that, for the avoidance of doubt, on and after the Non-Extended Commitment Termination Date for any Non-Extending Lender, the Applicable Percentage of such Non-Extending Lender shall be 0%.
“Approved Dealer” means (a) in the case of any Portfolio Investment that is not a U.S. Government Security, a bank or a broker-dealer registered under the Securities Exchange Act of 1934, as amended, of nationally recognized standing or an Affiliate thereof, (b) in the case of a U.S. Government Security, any primary dealer in U.S. Government Securities, and (c) in the case of any foreign Portfolio Investment, any foreign bank or broker-dealer of internationally recognized standing or an Affiliate thereof, in the case of each of clauses (a), (b) and (c) above, as set forth on Schedule 1.01(a) or any other bank or broker-dealer or Affiliate thereof acceptable to the Administrative Agent in its reasonable determination.
“Approved Pricing Service” means a pricing or quotation service as set forth in Schedule 1.01(a) or any other pricing or quotation service approved by the Board of Directors of the Borrower and designated in writing to the Administrative Agent (which designation shall be accompanied by a copy of a resolution of the Board of Directors of the Borrower that such pricing or quotation service has been approved by the Borrower).
“Approved Third-Party Appraiser” means any Independent nationally recognized third-party appraisal firm (a) designated by the Borrower in writing to the Administrative Agent (which designation shall be accompanied by a copy of a resolution of the Board of Directors of the Borrower that such firm has been approved by the Borrower for purposes of assisting the Board of Directors of the Borrower in making valuations of portfolio assets to determine the Borrower’s compliance with the applicable provisions of the Investment Company Act) and (b) acceptable to the Administrative Agent. It is understood and agreed that Houlihan Lokey Howard & Zukin Capital, Inc., Duff & Phelps LLC, Murray, Devine and Company, Lincoln International LLC (formerly known as Lincoln Partners LLC) and Valuation Research Corporation are acceptable to the Administrative Agent. As used in Section 5.12 hereof, an “Approved Third-Party Appraiser selected by the Administrative Agent” shall mean any of the firms identified in the preceding sentence and any other Independent nationally recognized third-party appraisal firm identified by the Administrative Agent and consented to by the Borrower (such consent not to be unreasonably withheld).
“Assignment and Assumption” means an Assignment and Assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A (with adjustments thereto to reflect the Classes of Commitments and/or Loans being assigned or outstanding at the time of the respective assignment) or any other form approved by the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower.
“Assuming Lender” has the meaning assigned to such term in Section 2.08(e)(i).
“ASU” has the meaning assigned to such term in Section 1.04.
“Australian Dollars” means the lawful currency of The Commonwealth of Australia.
“Availability Period” means (a) in the case of any Extending Lender (with respect to such Extending Lender’s Extended Loans), the Extended Availability Period or (b) in the case of any Non-Extending Lender (with respect to such Non-Extending Lender’s Non-Extended Loans), the Non-Extended Availability Period for such Non-Extending Lender, as applicable.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark for any Currency, as applicable, (x) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.21(d).
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Base Rate Term SOFR Determination Day” has the meaning set forth in the definition of “Term SOFR”.
“Benchmark” means, initially, with respect to any Loans denominated in (a) Dollars, the Term SOFR Reference Rate, (b) Sterling or Swiss Francs, the Daily Simple RFR for such Currency, and (c) any other Agreed Foreign Currency, the Adjusted Term Benchmark Rate for such Currency; provided that if a Benchmark Transition Event or an Other Benchmark Rate Election and its related Benchmark Replacement Date have occurred with respect to the Term SOFR Reference Rate, the Daily Simple RFR or the Adjusted Term Benchmark Rate for such Currency or the then current Benchmark, as applicable, then “Benchmark” shall mean the applicable Benchmark Replacement for such Currency to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) of Section 2.21.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event for any then-current Benchmark or Other Benchmark Rate Election, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date; provided that, other than in the case of the replacement of the Term SOFR Reference Rate, but including in connection with any Other Benchmark Rate Election, such alternative shall be the alternative set forth in clause (2) below:
(1) the sum of (i) Daily Simple SOFR and (ii) 0.10%; and
(2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Currency giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for syndicated credit facilities denominated in the applicable Currency and (b) the related Benchmark Replacement Adjustment.
If the Benchmark Replacement as determined pursuant to clause (1) or (2) of this definition would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark for a Currency with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any such setting of such Unadjusted Benchmark Replacement (excluding, for the avoidance of doubt, Daily Simple SOFR), the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for such Currency giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for syndicated credit facilities denominated in the applicable Currency in the U.S. syndicated loan market at such time.
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of
(a) the date of the public statement or publication of information referenced therein; and
(b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by or on behalf of the administrator of such Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date; or
(3) in the case of an Other Benchmark Rate Election, the fifth (5th) Business Day after the date notice of such Other Benchmark Rate Election is provided to the Lenders, so long as the Administrative Agent has not received, by such time, written notice of objection to such Other Benchmark Rate Election, as applicable, from Lenders comprising the Required Lenders.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) of this definition with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, with respect to any then-current Benchmark, the occurrence of one or more of the following events with respect to such Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board or the Federal Reserve Bank of New York, as applicable, the central bank for the Currency applicable to such Benchmark, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component thereof), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component thereof) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component thereof), which states that the administrator of such Benchmark (or such component thereof) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) or the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, with respect to any then-current Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred with respect to such Benchmark if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any other Loan Document in accordance with Section 2.21 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any other Loan Document in accordance with Section 2.21.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“Board” means the Board of Governors of the Federal Reserve System of the United States of America (or any successor thereof).
“Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“Borrower Asset Coverage Ratio” means the ratio, determined for the Obligors, without duplication, of (a) (i) Total Assets minus (ii) Total Assets Concentration Limitation to (b) Total Secured Debt.
“Borrowing” means (a) all Syndicated ABR Loans of the same Class made, converted or continued on the same date, (b) all Term Benchmark Loans of the same Class denominated in the same Currency that have the same Interest Period, (c) all RFR Loans of the same Class and Type denominated in the same Currency that have the same Interest Period or (d) a Swingline Loan.
“Borrowing Base” has the meaning assigned to such term in Section 5.13.
“Borrowing Base Certificate” means a certificate of a Financial Officer of the Borrower, substantially in the form of Exhibit B (or such other form as shall be reasonably satisfactory to the Administrative Agent) and appropriately completed.
“Borrowing Base Deficiency” means, at any date on which the same is determined, the amount, if any, that (a) the aggregate Covered Debt Amount as of such date exceeds (b) the Borrowing Base as of such date.
“Borrowing Request” means a request by the Borrower for a Syndicated Borrowing in accordance with Section 2.03, which, if in writing, shall be substantially in the form of Exhibit C.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed, provided that (a) when used in relation to Term Benchmark Loans or any interest rate settings, fundings, disbursements, settlements or payments of any such Term Benchmark Loan, or any other dealings in the applicable Currency of such Term Benchmark Loan, the term “Business Day” shall also exclude any day that is not a Term Benchmark Banking Day for such Currency and (b) when used in relation to RFR Loans or any interest rate settings, fundings, disbursements, settlements or payments of any such RFR Loan, or any other dealings in the applicable Currency of such RFR Loan, the term “Business Day” shall also exclude any day that is not a RFR Business Day for such Currency.
“Calculation Amount” shall mean, as of the end of any Testing Period, an amount equal to the greater of: (a) (i) 125% of the Adjusted Covered Debt Balance (as of the end of such Testing Period) minus (ii) the aggregate Value of all Quoted Investments included in the Borrowing Base (as of the end of such Testing Period) and (b) 10% of the aggregate Value of all Unquoted Investments included in the Borrowing Base (as of the end of such Testing Period); provided that in no event shall more than 25% (or, if clause (b) applies, 10%, or as near thereto as reasonably practicable) of the aggregate Value of the Unquoted Investments in the Borrowing Base be tested in respect of any applicable Testing Period.
“CAM Exchange” means the exchange of the Lenders’ interests provided for in Article VII.
“CAM Exchange Date” means the date on which any Event of Default referred to in clause (j) of Article VII shall occur or the date on which the Borrower receives written notice from the Administrative Agent that any Event of Default referred to in clause (i) of Article VII has occurred.
“CAM Percentage” means, as to each Lender, a fraction, expressed as a decimal, of which (a) the numerator shall be the aggregate Dollar Equivalent of the Designated Obligations owed to such Lender (whether or not at the time due and payable) immediately prior to the CAM Exchange Date and (b) the denominator shall be the aggregate Dollar Equivalent amount of the Designated Obligations owed to all the Lenders (whether or not at the time due and payable) immediately prior to the CAM Exchange Date.
“Canadian Dollars” means the single currency of Canada.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“Cash” means any immediately available funds in Dollars or in any currency other than Dollars (measured in terms of the Dollar Equivalent thereof) which is a freely convertible currency.
“Cash Collateralize” means, in respect of a Letter of Credit or any obligation hereunder, to provide and pledge cash collateral pursuant to Section 2.05(k), at a location and pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent and each Issuing Bank. “Cash Collateral”, “Cash Collateralized” and “Cash Collateralization” shall have meanings correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“Cash Equivalents” means investments (other than Cash) that are one or more of the following obligations:
(a) U.S. Government Securities, in each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper or other short-term corporate obligations maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, a credit rating of at least A‑1 from S&P and at least P‑1 from Moody’s (or if only one of S&P or Moody’s provides such rating, such investment shall also have an equivalent credit rating from any other rating agency);
(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof (i) issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof or under the laws of the jurisdiction or any constituent jurisdiction thereof of any Agreed Foreign Currency; provided that such certificates of deposit, banker’s acceptances and time deposits are held in a securities account (as defined in the Uniform Commercial Code) through which the Collateral Agent can perfect a security interest therein and (ii) having, at such date of acquisition, a credit rating of at least A‑1 from S&P and at least P‑1 from Moody’s (or if only one of S&P or Moody’s provides such rating, such investment shall also have an equivalent credit rating from any other rating agency);
(d) fully collateralized repurchase agreements with a term of not more than 30 days from the date of acquisition thereof for U.S. Government Securities and entered into with (i) a financial institution satisfying the criteria described in clause (c) of this definition or (ii) an Approved Dealer having (or being a member of a consolidated group having) at such date of acquisition, a credit rating of at least A‑1 from S&P and at least P‑1 from Moody’s (or if only one of S&P or Moody’s provides such rating, such investment shall also have an equivalent credit rating from any other rating agency);
(e) investments in money market funds that invest solely, and which are restricted by their respective charters to invest solely, in investments of the type described in the immediately preceding clauses (a) through (d) above (including as to credit quality and maturity);
(f) money market funds that have, at all times, credit ratings of “Aaa” and “MR1+” by Moody’s and “AAAm” or “Aam-G” by S&P, respectively; and
(g) any of the following offered by State Street Bank and Trust Company (or any successor custodian or other entity acting in a similar capacity with respect to the Borrower) (I) money market deposit accounts, (II) eurodollar time deposits, (III) commercial eurodollar sweep services or (IV) open commercial paper services, in each case having, at such date of acquisition, a credit rating at least A-1 from S&P and at least P-1 from Moody’s and maturing not later than 270 days from the date of acquisition thereof;
provided that (i) in no event shall Cash Equivalents include any obligation that provides for the payment of interest alone (for example, interest-only securities or “IOs”); (ii) if any of Moody’s or S&P changes its rating system, then any ratings included in this definition shall be deemed to be an equivalent rating in a successor rating category of Moody’s or S&P, as the case may be; (iii) Cash Equivalents (other than U.S. Government Securities, repurchase agreements or the money market funds described in clause (e) of this definition of Cash Equivalents) shall not include any such investment of more than 10% of total assets of the Borrower and its Subsidiaries in any single issuer; and (iv) in no event shall Cash Equivalents include any obligation that is not denominated in Dollars or an Agreed Foreign Currency.
“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) other than TSSP Management Holdings, L.P or any of its Affiliates that are in the business of managing and advising clients, of shares representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the requisite members of the board of directors of the Borrower nor (ii) appointed by a majority of the directors so nominated; (c) the acquisition of direct or indirect Control of the Borrower by any Person or group other than TSSP Management Holdings, L.P or any of its Affiliates that are in the business of managing and advising clients; or (d) the External Manager ceases to be Controlled by TSSP Management Holdings, L.P. (or any of its Affiliates).
“Change in Law” means the occurrence, after the date of this Agreement (or with respect to a Person becoming a Lender by assignment or joinder after the date of this Agreement, the effective date thereof), of (a) the adoption of any law, treaty or governmental rule or regulation or any change in any law, treaty or governmental rule or regulation or in the interpretation, administration or application thereof (regardless of whether the underlying law, treaty or governmental rule or regulation was issued or enacted prior to the date hereof (or with respect to a Person becoming a Lender by assignment or joinder after the date of this Agreement, the effective date thereof)), but excluding proposals thereof, or any determination of a court or Governmental
Authority, (b) any guideline, request or directive by any Governmental Authority (whether or not having the force of law) or any implementation rules or interpretations of previously issued guidelines, requests or directives, in each case that is issued or made after the date hereof (or with respect to a Person becoming a Lender by assignment or joinder after the date of this Agreement, the effective date thereof) or (c) compliance by any Lender (or its applicable lending office) or any company controlling such Lender with any guideline, request or directive regarding capital adequacy or liquidity (whether or not having the force of law) of any such Governmental Authority, in each case adopted after the date hereof (or with respect to a Person becoming a Lender by assignment or joinder after the date of this Agreement, the effective date thereof). For the avoidance of doubt, all requests, rules, guidelines or directives concerning liquidity and capital adequacy issued (i) by any United States regulatory authority under or in connection with the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and (ii) by any Governmental Authority in connection with the implementation of the recommendations of the Bank for International Settlements or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority), in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date adopted, issued, promulgated or implemented.
“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan is, or the Loans constituting such Borrowing are, Syndicated Dollar Loans, Syndicated Multicurrency Loans or Swingline Loans; when used in reference to any Lender’s (i) Class of Commitment, refers to whether such Lender is a Dollar Lender or a Multicurrency Lender and (ii) Class of Final Maturity Date, refers to whether such Lender is an Extending Lender or a Non-Extending Lender; and, when used in reference to any Commitment, refers to whether such Commitment is a Dollar Commitment or a Multicurrency Commitment. The “Class” of a Letter of Credit refers to whether such Letter of Credit is a Dollar Letter of Credit or a Multicurrency Letter of Credit.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” has the meaning assigned to such term in the Guarantee and Security Agreement.
“Collateral Agent” means Truist in its capacity as Collateral Agent under the Guarantee and Security Agreement, and includes any successor Collateral Agent thereunder.
“Collateral Pool” means, at any time, each Portfolio Investment that has been Delivered (as defined in the Guarantee and Security Agreement) to the Collateral Agent and is subject to the Lien of the Guarantee and Security Agreement, and then only for so long as such Portfolio Investment continues to be Delivered as contemplated therein and in which the Collateral Agent has a first-priority perfected Lien as security for the Secured Obligations (as such term is defined in the Guarantee and Security Agreement) (subject to any Lien permitted by Section 6.02 hereof); provided that in the case of any Portfolio Investment in which the Collateral Agent has a first-priority perfected security interest pursuant to a valid Uniform Commercial Code filing (and for which no other method of perfection with a higher priority is possible), such Portfolio Investment may be included in the Borrowing Base so long as all remaining actions to complete “Delivery” are satisfied in full within seven (7) days of such inclusion.
“Combined Debt Amount” means, as of any date, (i) the aggregate amount of Commitments as of such date (or, if greater, the Revolving Credit Exposures of all Lenders as of such date) plus (ii) the aggregate amount of outstanding Designated Indebtedness (as such term is defined in the Guarantee and Security Agreement) and, without duplication, the aggregate amount of unused commitments under any Designated Indebtedness (as such term is defined in the Guarantee and Security Agreement).
“Commitment Increase” has the meaning assigned to such term in Section 2.08(e)(i).
“Commitment Increase Date” has the meaning assigned to such term in Section 2.08(e)(i).
“Commitment Termination Date” means the Extended Commitment Termination Date or the relevant Non-Extended Commitment Termination Date, as applicable.
“Commitments” means, collectively, the Dollar Commitments and the Multicurrency Commitments.
“Conforming Changes” means with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Term Benchmark Rate”, the definition of “Alternate Base Rate”, the definition of “Business Day”, the definition of “Term Benchmark Banking Day”, the definition of “U.S. Government Securities Business Day”, the definition of “Daily Simple RFR”, the definition of “RFR”, the definition of “RFR Business Day”, the definition of “RFR Interest Day”, the definition of “RFR Reference Day”, the definition of “Interest Period” or any similar or analogous definition, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 2.15 and other technical, administrative or operational matters) that the Administrative Agent, after consultation with the Borrower, decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent (after consultation with the Borrower) decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Consolidated Asset Coverage Ratio” means the ratio, determined on a consolidated basis for Borrower and its Subsidiaries, without duplication, of (a) the value of total assets of the Borrower and its Subsidiaries, less all liabilities and indebtedness not represented by senior securities to (b) the aggregate amount of senior securities representing indebtedness of Borrower and its Subsidiaries (including this Agreement), in each case as determined pursuant to the Investment Company Act and any orders of the Securities and Exchange Commission issued
to or with respect to Borrower thereunder, including any exemptive relief granted by the Securities and Exchange Commission with respect to the indebtedness of any SBIC Subsidiary.
“Consolidated Group” has the meaning assigned to such term in Section 5.13(a).
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlled” has a meaning correlative thereto; provided, however, “Control” shall not include “negative” control or “blocking” rights whereby action cannot be taken without the vote or consent of any Person.
“Covered Debt Amount” means, on any date, the sum of (x) all of the Revolving Credit Exposures of all Lenders on such date plus (y) the aggregate amount of Other Covered Indebtedness, the 2024 Notes, the 2026 Notes, Special Unsecured Indebtedness and Unsecured Longer-Term Indebtedness on such date minus (z) the LC Exposures fully Cash Collateralized on such date pursuant to Section 2.05(k) and the last paragraph of Section 2.09(a); provided that the 2024 Notes, the 2026 Notes, Special Unsecured Indebtedness and Unsecured Longer-Term Indebtedness shall be excluded from the calculation of the Covered Debt Amount, in each case, until the date that is nine (9) months prior to the scheduled maturity date of the 2024 Notes, the 2026 Notes, Special Unsecured Indebtedness or such Unsecured Longer-Term Indebtedness, as applicable (provided that, to the extent, but only to the extent, any portion of the 2024 Notes, the 2026 Notes, Special Unsecured Indebtedness or Unsecured Longer-Term Indebtedness is subject to a contractually scheduled amortization payment or other principal payment or mandatory redemption earlier than six (6) months after the Final Maturity Date (in the case of the 2024 Notes, the 2026 Notes and Unsecured Longer-Term Indebtedness) or earlier than the original final maturity date of such Indebtedness (in the case of Special Unsecured Indebtedness), such portion of such Indebtedness, to the extent then outstanding, shall be included in the calculation of the Covered Debt Amount beginning upon the date that is the later of (i) nine (9) months prior to such scheduled amortization payment or other principal payment or mandatory redemption and (ii) the date the Borrower becomes aware that such Indebtedness is required to be paid or redeemed).
“Currency” means Dollars or any Foreign Currency.
“Daily Simple RFR” means, for any day (an “RFR Interest Day”), an interest rate per annum equal to (a) for any RFR Loan denominated in Sterling, the greater of (i) SONIA for the day (the “RFR Reference Day”) that is five (5) RFR Business Days prior to (A) if such RFR Interest Day is an RFR Business Day, such RFR Interest Day or (B) if such RFR Interest Day is not an RFR Business Day, the RFR Business Day immediately preceding such RFR Interest Day, in each case, plus the applicable RFR Applicable Credit Adjustment Spread for the Interest Period in which such RFR Interest Day occurs and (ii) 0.00%; and (b) for any RFR Loan denominated in Swiss Francs, the greater of (i) SARON for the RFR Reference Day that is five (5) Business Days prior to (A) if such RFR Interest Day is an RFR Business Day, such RFR Interest Day or (B) if such RFR Interest Day is not an RFR Business Day, the RFR Business Day immediately preceding such RFR Interest Day, in each case, plus the applicable RFR Applicable Credit Adjustment Spread for the Interest Period in which such RFR Interest Day occurs and (ii) 0.00%. If by 5:00 pm (local time for the applicable RFR), on the second RFR Business Day immediately following any RFR Reference Day, the applicable RFR Rate in respect of such RFR Reference Day has not
been published on the applicable RFR Administrator’s Website and a Benchmark Replacement Date with respect to the applicable Daily Simple RFR has not occurred, then the RFR Rate for such RFR Reference Day will be the RFR Rate as published in respect of the first preceding RFR Business Day for which such RFR Rate was published on the RFR Administrator’s Website; provided that any RFR Rate as determined pursuant to this sentence shall be utilized for purposes of calculating the Daily Simple RFR for no more than three (3) consecutive RFR Interest Days. Any change in Daily Simple RFR due to a change in the applicable RFR Rate shall be effective from and including the effective date of such change in such RFR Rate without notice to the Borrower.
“Daily Simple SOFR” means, for any day (a “Daily Simple SOFR Interest Day”) the greater of (i) SOFR for the day that is five (5) Business Days prior to (A) if such Daily Simple SOFR Interest Day is a Business Day, such Daily Simple SOFR Interest Day, (B) if such Daily Simple SOFR Interest Day is not a Business Day, the Business Day immediately preceding such Daily Simple SOFR Interest Day and (ii) 0.00%.
“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Defaulting Lender” means, subject to Section 2.19(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans or participations in Letters of Credit or Swingline Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s reasonable determination that one or more conditions precedent to funding (each of which conditions precedent, together with the applicable default, if any, shall be specifically identified in detail in such writing) has not been satisfied or has not otherwise been waived in accordance with the terms of this Agreement, or (ii) pay to the Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two (2) Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, any Issuing Bank or any Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s reasonable determination that a condition precedent to funding (which condition precedent, together with the applicable default, if any, shall be specifically identified in detail in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Administrative Agent and Borrower), or (d) Administrative Agent has received notification that such Lender has become, or has a direct or indirect parent company that is, (i) insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, (ii) other than via an Undisclosed Administration, the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or
the like has been appointed for such Lender or its direct or indirect parent company, or such Lender or its direct or indirect parent company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment or (iii) the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority or instrumentality so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.19(b)) upon such determination (and the Administrative Agent shall deliver written notice of such determination to the Borrower, each Issuing Bank and each Lender and each Swingline Lender).
“Designated Obligations” means all obligations of the Borrower with respect to (a) principal of and interest on the Loans and (b) accrued and unpaid fees under the Loan Documents.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith; provided that the term “Disposition” or “Dispose” shall not include the disposition of Investments originated by the Borrower and immediately transferred to a Financing Subsidiary pursuant to a transaction not prohibited hereunder.
“Dollar Commitment” means, with respect to each Dollar Lender during such Dollar Lender’s Availability Period, the commitment of such Dollar Lender to make Syndicated Loans, and to acquire participations in Letters of Credit and Swingline Loans, denominated in Dollars hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Dollar Credit Exposure hereunder, as such commitment may be (a) reduced or increased from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The amount of each Lender’s Dollar Commitment is, as of the Fourteenth Amendment Effective Date, set forth on Schedule 1.01(b), or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Dollar Commitment, as applicable. The aggregate amount of the Lenders’ Dollar Commitments as of the Fourteenth Amendment Effective Date is $560,000,000.
“Dollar Equivalent” means, on any date of determination, with respect to an amount denominated in any Foreign Currency, the amount of Dollars that would be required to purchase such amount of such Foreign Currency on the date two (2) Business Days prior to such date, based upon the spot selling rate at which the Administrative Agent offers to sell such Foreign Currency for Dollars in the Principal Financial Center for such Foreign Currency at approximately 11:00 a.m., local time in such Principal Financial Center, for delivery two (2) Business Days later.
“Dollar LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Dollar Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements in respect of such Letters of Credit that have not yet been reimbursed by or on behalf of the Borrower at such time. The Dollar LC Exposure of any Lender at any time shall be its Applicable Dollar Percentage of the total Dollar LC Exposure at such time.
“Dollar Lender” means the Persons listed on Schedule 1.01(b) as having Dollar Commitments and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption that provides for it to assume a Dollar Commitment or to acquire Revolving Dollar Credit Exposure, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Dollar Letters of Credit” means Letters of Credit that utilize the Dollar Commitments.
“Dollar Loan” means a Loan denominated in Dollars.
“Dollars” or “$” refers to lawful money of the United States of America.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02), which date is February 27, 2014.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests or equivalents (however designated, including any instrument treated as equity for U.S. federal income tax purposes) in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code,
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
“Erroneous Payment” has the meaning assigned to it in Section 8.09(a).
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 8.09(d).
“Erroneous Payment Impacted Class” has the meaning assigned to it in Section 8.09(d).
“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 8.09(d).
“Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 8.09(d).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“EURIBOR Screen Rate” has the meaning set forth in the definition of “Term Benchmark Rate”.
“Euro” means a single currency of the Participating Member States.
“Event of Default” has the meaning assigned to such term in Article VII.
“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) Taxes imposed on (or measured by) its net income
(however denominated), net profits, franchise Taxes and branch profits or any similar Taxes, in each case, (i) imposed by the United States of America (or any state or political subdivision thereof), or by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) any Taxes imposed by any jurisdiction by reason of the recipient having any present or former connection with such jurisdiction (other than a connection arising solely from entering into, receiving any payment under or enforcing its rights under this Agreement or any other Loan Document or selling or assigning an interest in any Loan or Loan Document), (b) in the case of a Lender, any Taxes that are U.S. withholding taxes imposed on amounts payable to such Lender (i) at the time such Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)) becomes a party to this Agreement or designates a new lending office, except to the extent that such Lender’s assignor or such Lender was entitled to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16, at the time of such assignment or designation (other than to the extent such withholding is as a result of a CAM Exchange), or (ii) that is attributable to such Lender’s failure or inability to comply with Section 2.16(f), (c) any U.S. federal, state or local backup withholding Taxes imposed on payments made under any Loan Document, and (d) any Taxes that are imposed under FATCA.
“Existing Credit Agreement” has the meaning assigned to such term in the recitals to this Agreement.
“Existing Lenders” has the meaning assigned to such term in the recitals to this Agreement.
“Existing Loans” has the meaning assigned to such term in the recitals to this Agreement.
“Extended Applicable Margin” means, with respect to any Extending Lender: (a) if the Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is equal to or greater than 1.60 times the Combined Debt Amount, (i) with respect to any ABR Loan, 0.75% per annum; (ii) with respect to any Term Benchmark Loan, 1.75% per annum; and (iii) with respect to any RFR Loan 1.75% per annum; and (b) if the Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is less than 1.60 times the Combined Debt Amount (i) with respect to any ABR Loan, 0.875% per annum; (ii) with respect to any Term Benchmark Loan, 1.875% per annum; and (iii) with respect to any RFR Loan 1.875% per annum. Any change in the Extended Applicable Margin due to a change in the ratio of the Borrowing Base to the Combined Debt Amount as set forth in any Borrowing Base Certificate shall be effective from and including the day immediately succeeding the date of delivery of such Borrowing Base Certificate; provided that if any Borrowing Base Certificate has not been delivered in accordance with Section 5.01(d), then from and including the day immediately succeeding the date on which such Borrowing Base Certificate was required to be delivered, the Extended Applicable Margin shall be the Extended Applicable Margin set forth in clause (b) above to and including the date on which the required Borrowing Base Certificate is delivered.
“Extended Availability Period” means, with respect to any Extending Lender, the period from and including the Effective Date to but excluding the earlier of the Extended Commitment Termination Date and the date of termination of the Commitments.
“Extended Commitment Termination Date” means, with respect to each Extending Lender, June 11, 2027.
“Extended Final Maturity Date” means, with respect to each Extending Lender, June 12, 2028.
“Extended Loans” means Loans or Borrowings of any Extending Lender maturing on the Extended Final Maturity Date.
“Extending Lender” means each Lender designated as an “Extending Lender” on Schedule 1.01(b).
“External Manager” means Sixth Street Specialty Lending Advisers, LLC.
“Extraordinary Receipts” means any cash received by or paid to any Obligor on account of any foreign, United States, state or local tax refunds, pension plan reversions, judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, condemnation awards (and payments in lieu thereof), indemnity payments received not in the ordinary course of business and any purchase price adjustment received not in the ordinary course of business in connection with any purchase agreement and proceeds of insurance (excluding, however, for the avoidance of doubt, proceeds of any issuance of Equity Interests and issuances of Indebtedness by any Obligor); provided that Extraordinary Receipts shall not include any (x) amounts that the Borrower receives from the Administrative Agent or any Lender pursuant to Section 2.16(f), or (y) cash receipts to the extent received from proceeds of insurance, condemnation awards (or payments in lieu thereof), indemnity payments or payments in respect of judgments or settlements of claims, litigation or proceedings to the extent that such proceeds, awards or payments are received by any Person in respect of any unaffiliated third party claim against or loss by such Person and promptly applied to pay (or to reimburse such Person for its prior payment of) such claim or loss and the costs and expenses of such Person with respect thereto.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any regulations promulgated thereunder and official interpretations thereof and any foreign legislation implemented to give effect to any intergovernmental agreements entered into thereunder and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
“Final Maturity Date” means (i) in the case of any Extending Lender (with respect to such Extending Lender’s Extended Loans), the Extended Final Maturity Date or (ii) in the case of any Non-Extending Lender (with respect to such Non-Extending Lender’s Non-Extended Loans), such Non-Extending Lender’s Non-Extended Final Maturity Date, as applicable.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.
“Financing Subsidiary” means an SPE Subsidiary or an SBIC Subsidiary.
“Floor” means a rate of interest equal to zero percent (0.00%).
“Foreign Currency” means at any time any Currency other than Dollars.
“Foreign Currency Equivalent” means, with respect to any amount in Dollars, the amount of any Foreign Currency that could be purchased with such amount of Dollars using the reciprocal of the foreign exchange rate(s) specified in the definition of the term “Dollar Equivalent”, as determined by the Administrative Agent.
“Foreign Lender” means any Lender that is not a “United States person” as defined under Section 7701(a)(30) of the Code.
“Foreign Subsidiary” means any (a) direct or indirect Subsidiary of the Borrower that is organized under the laws of any jurisdiction other than the United States or its territories or possessions and that is treated as a corporation for United States federal income tax purposes, (b) direct or indirect Subsidiary of the Borrower which is a “controlled foreign corporation” within the meaning of the Code or (c) direct or indirect Subsidiary that is disregarded as an entity that is separate from its owner for United States federal income tax purposes and substantially all of its assets consist of the Capital Stock of one or more direct or indirect Foreign Subsidiaries.
“Fourteenth Amendment Effective Date” means June 12, 2023.
“Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to any Issuing Bank, such Defaulting Lender’s (a) Applicable Dollar Percentage of the outstanding Dollar LC Exposure and (b) Applicable Multicurrency Percentage of the outstanding Multicurrency LC Exposure, in each case with respect to Letters of Credit issued by such Issuing Bank other than Dollar LC Exposure or Multicurrency LC Exposure, as the case may be, as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
“GAAP” means generally accepted accounting principles in the United States of America.
“Governmental Authority” means the government of the United States of America, or of any other nation, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank, supranational authority or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantee” of, or “Guaranteed” by, any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term Guarantee shall not include (i) endorsements for collection or deposit in the ordinary course of business or (ii) customary indemnification agreements entered into in the ordinary course of business, provided that such indemnification obligations are unsecured, such Person has determined that any liability thereunder is remote and such indemnification obligations are not the functional equivalent of the guaranty of a payment obligation of the primary obligor.
“Guarantee and Security Agreement” means that certain Amended and Restated Guarantee and Security Agreement dated as of July 2, 2013 among the Borrower, the Administrative Agent, each Subsidiary of the Borrower from time to time party thereto, each holder (or a representative or trustee therefor) from time to time of any Secured Longer-Term Indebtedness or Secured Shorter-Term Indebtedness, and the Collateral Agent, as the same shall be amended, restated, modified and supplemented and in effect from time to time.
“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement substantially in the form of Exhibit B to the Guarantee and Security Agreement between the Collateral Agent and an entity that pursuant to Section 5.08 is required to become a “Subsidiary Guarantor” under the Guarantee and Security Agreement (with such changes as the Administrative Agent shall request consistent with the requirements of Section 5.08).
“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange protection agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.
“Immaterial Subsidiaries” means those Subsidiaries of the Borrower that are “designated” as Immaterial Subsidiaries by the Borrower from time to time (it being understood that the Borrower may at any time change any such designation); provided that such designated Immaterial Subsidiaries shall collectively meet all of the following criteria as of the date of the most recent balance sheet required to be delivered pursuant to Section 5.01: (a) the aggregate assets of such Subsidiaries and their Subsidiaries (on a consolidated basis) as of such date do not exceed an amount equal to 3% of the consolidated assets of the Borrower and its Subsidiaries as of such date; and (b) the aggregate revenues of such Subsidiaries and their Subsidiaries (on a consolidated basis) for the fiscal quarter ending on such date do not exceed an amount equal to 3% of the consolidated revenues of the Borrower and its Subsidiaries for such period.
“Increasing Lender” has the meaning assigned to such term in Section 2.08(e)(i).
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments representing extensions of credit, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person (excluding accounts payable and accrued expenses incurred in the ordinary course of business), (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable and accrued expenses incurred in the ordinary course of business), (e) all Indebtedness of others secured by any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (with the value of such Indebtedness being the lower of the outstanding amount of such Indebtedness and the fair market value of the property subject to such Lien), (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, “Indebtedness” shall not include (x) escrows or purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset or Investment to satisfy unperformed obligations of the seller of such asset or Investment or (y) a commitment arising in the ordinary course of business to make a future Portfolio Investment.
“Indemnified Taxes” means Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under this Agreement.
“Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Independent” when used with respect to any specified Person means that such Person (a) does not have any direct financial interest or any material indirect financial interest in the Borrower or any of its Subsidiaries or Affiliates (including its investment advisor or any Affiliate thereof) and (b) is not connected with the Borrower or of its Subsidiaries or Affiliates (including its investment advisor or any Affiliate thereof) as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions.
“Industry Classification Group” means (a) any of the classification groups set forth in Schedule 1.01(c) hereto, together with any such classification groups that may be subsequently established by Moody’s and provided by the Borrower to the Lenders, and (b) up to three additional industry group classifications established by the Borrower pursuant to Section 5.12.
“Interest Election Request” means a request by the Borrower to convert or continue a Syndicated Borrowing in accordance with Section 2.07.
“Interest Payment Date” means (a) with respect to any Syndicated ABR Loan, each Quarterly Date, (b) with respect to any Term Benchmark Loan or RFR Loan, in each case, in
respect of which the Borrower has selected a one- or three-month Interest Period, the last day of such Interest Period therefor and, in the case of any Term Benchmark Loan with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at three-month intervals after the first day of such Interest Period and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.
“Interest Period” means, for any Term Benchmark Loan or Borrowing or any RFR Loan or Borrowing, the period commencing on the date of such Loan or Borrowing and ending on the numerically corresponding day in the calendar month that is one month, three months or, except with respect to Term Benchmark Loans denominated in Canadian Dollars and RFR Loans, six months thereafter or, with respect to such portion of any Term Benchmark Loan or Borrowing or any RFR Loan or Borrowing denominated in a Foreign Currency that is scheduled to be repaid on the applicable Final Maturity Date, a period of less than one month’s duration commencing on the date of such Loan or Borrowing and ending on the applicable Final Maturity Date, as specified in the applicable Borrowing Request or Interest Election Request; provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) any Interest Period (other than an Interest Period pertaining to a Term Benchmark Borrowing denominated in a Foreign Currency or RFR Borrowing that ends on the applicable Final Maturity Date that is permitted to be of less than one month’s duration as provided in this definition) that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period, and (iii) no tenor that has been removed from this definition pursuant to Section 2.21(d) shall be available for specification in such Borrowing Request or notice of conversion or continuation unless or until it is reinstated pursuant to Section 2.21(d). For purposes hereof, the date of a Loan initially shall be the date on which such Loan is made and thereafter shall be the effective date of the most recent conversion or continuation of such Loan, and the date of a Syndicated Borrowing comprising Loans that have been converted or continued shall be the effective date of the most recent conversion or continuation of such Loans.
“Investment” means, for any Person: (a) Equity Interests, bonds, notes, debentures or other securities of any other Person or any agreement to acquire any Equity Interests, bonds, notes, debentures or other securities of any other Person (and any rights or proceeds in respect of (x) any “short sale” of securities or (y) any sale of any securities at a time when such securities are not owned by such Person); (b) deposits, advances, loans or other extensions of credit made to any other Person (including purchases of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person); or (c) Hedging Agreements.
“Investment Company Act” means the Investment Company Act of 1940, as amended from time to time.
“Investment Policies” means the investment objectives, policies, restrictions and limitations set forth in the “BUSINESS” section of its Registration Statement, and as the same may be changed, altered, expanded, amended, modified, terminated or restated from time to time.
“Issuing Bank” means Truist, JPMorgan Chase Bank, N.A. and any other Issuing Bank designated pursuant to Section 2.05(l), in their capacity as the issuers of Letters of Credit hereunder, and their respective successors in such capacity as provided in Section 2.05(j). In the case of any Letter of Credit to be issued in an Agreed Foreign Currency, Truist and JPMorgan Chase Bank, N.A., respectively, may designate any of their respective affiliates as the “Issuing Bank” for purposes of such Letter of Credit.
“Japanese Yen” means the lawful currency of Japan.
“Joint Lead Arrangers” means Truist Securities, Inc., JPMorgan Chase Bank, N.A., MUFG Union Bank, N.A., Sumitomo Mitsui Banking Corporation and State Street Bank and Trust Company.
“LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter of Credit.
“LC Exposure” means, at any time, the sum of the Dollar LC Exposure and the Multicurrency LC Exposure.
“Lenders” means, collectively, the Dollar Lenders and the Multicurrency Lenders. Unless the context otherwise requires, the term “Lenders” includes each Swingline Lender.
“Letter of Credit” means any letter of credit issued pursuant to this Agreement.
“Letter of Credit Collateral Account” has the meaning assigned to such term in Section 2.05(k).
“Letter of Credit Documents” means, with respect to any Letter of Credit, collectively, any application therefor and any other agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations, each as the same may be modified and supplemented and in effect from time to time.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities, except in favor of the issuer thereof (and in the case of Investments that are securities, excluding customary drag-along, tag-along, right of first refusal and other similar rights in favor of the equity holders of the same issuer).
“Loan Documents” means, collectively, this Agreement, the Letter of Credit Documents, the Security Documents and the First Amendment to this Agreement dated as of June 3, 2014, the Second Amendment to this Agreement dated as of June 27, 2014, the Third Amendment to this Agreement dated as of October 17, 2014, the Fourth Amendment to this Agreement dated as of October 2, 2015, the Fifth Amendment to this Agreement dated as of
December 22, 2016, the Sixth Amendment to this Agreement dated as of February 20, 2018, the Seventh Amendment to this Agreement dated as of November 5, 2018, the Eighth Amendment to this Agreement dated as of February 14, 2019, the Ninth Amendment to this Agreement dated as of January 31, 2020, the Tenth Amendment to this Agreement dated as of February 5, 2021, the Eleventh Amendment to this Agreement dated as of December 14, 2021, the Twelfth Amendment to this Agreement dated as of April 25, 2022, the Thirteenth Amendment to this Agreement dated as of May 19, 2022, and the Fourteenth Amendment to this Agreement dated as of June 12, 2023.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X.
“Material Adverse Change” has the meaning assigned to such term in Section 3.04(b).
“Material Adverse Effect” means a material adverse effect on (a) the business, Portfolio Investments and other assets, liabilities and financial condition of the Borrower or the Borrower and its Subsidiaries (other than Financing Subsidiaries) taken as a whole (excluding in any case a decline in the net asset value of the Borrower or a change in general market conditions or values of the Portfolio Investments), or (b) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Collateral Agent, the Administrative Agent and the Lenders thereunder.
“Material Indebtedness” means (a) Indebtedness (other than the Loans, Letters of Credit and Hedging Agreements), of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $50,000,000 and (b) obligations in respect of one or more Hedging Agreements under which the maximum aggregate amount (giving effect to any netting agreements) that the Borrower and its Subsidiaries would be required to pay if such Hedging Agreement(s) were terminated at such time would exceed $50,000,000.
“Minimum Collateral Amount” means, at any time, with respect to Cash Collateral consisting of Cash or deposit account balances, an amount equal to 100% of the Fronting Exposure of each Issuing Bank with respect to Letters of Credit issued and outstanding at such time.
“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.
“Multicurrency Commitment” means, with respect to each Multicurrency Lender during such Multicurrency Lender’s Availability Period, the commitment of such Multicurrency Lender to make Syndicated Loans, and to acquire participations in Letters of Credit and Swingline Loans, denominated in Dollars and in Agreed Foreign Currencies hereunder, during such Multicurrency Lender’s Availability Period, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Multicurrency Credit Exposure hereunder, as such commitment may be (a) reduced or increased from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The amount of each Lender’s Multicurrency Commitment is, as of the Fourteenth Amendment Effective Date, set forth on Schedule 1.01(b), or in the Assignment and Assumption
pursuant to which such Lender shall have assumed its Multicurrency commitment, as applicable. The aggregate amount of the Lenders’ Multicurrency Commitments as of the Fourteenth Amendment Effective Date is $1,150,000,000.
“Multicurrency LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Multicurrency Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements in respect of such Letters of Credit that have not yet been reimbursed by or on behalf of the Borrower at such time. The Multicurrency LC Exposure of any Lender at any time shall be its Applicable Multicurrency Percentage of the total Multicurrency LC Exposure at such time.
“Multicurrency Lender” means the Persons listed on Schedule 1.01(b) as having Multicurrency Commitments and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption that provides for it to assume a Multicurrency Commitment or to acquire Revolving Multicurrency Credit Exposure, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Multicurrency Letters of Credit” means Letters of Credit that utilize the Multicurrency Commitments.
“Multicurrency Loan” means a Loan denominated in Dollars or an Agreed Foreign Currency.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“National Currency” means the currency, other than the Euro, of a Participating Member State.
“Net Cash Proceeds” means:
(a) with respect to any Disposition by the Borrower or any of its Subsidiaries (other than Financing Subsidiaries), or any Extraordinary Receipt received or paid to the account of the Borrower or any of its Subsidiaries (other than Financing Subsidiaries) (in each case, which requires a payment of the Loans under Section 2.10(d)), an amount equal to (a) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) minus (b) the sum of (i) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents), (ii) the reasonable out-of-pocket fees, costs and expenses incurred by the Borrower or such Subsidiary in connection with such transaction, (iii) the taxes paid or reasonably estimated to be actually payable within two years of the date of the relevant transaction in connection with such transaction; provided that, if the amount of any estimated taxes pursuant to clause (iii) exceeds the amount of taxes actually required to be paid in cash in respect of such Disposition, the aggregate amount of such excess shall constitute Net Cash Proceeds (as of the date the Borrower determines such excess exists) and (iv) any reasonable costs, fees, commissions, premiums and expenses incurred by the Borrower or any of its Subsidiaries in connection with such Disposition; and
(b) with respect to the sale or issuance of any Equity Interest by the Borrower or any of its Subsidiaries (other than any Financing Subsidiary) (including, for the avoidance of doubt, cash received by the Borrower or any of its Subsidiaries (other than any Financing Subsidiaries) for the sale by the Borrower or such Subsidiary of any Equity Interest of a Financing Subsidiary but specifically excluding any sale of any Equity Interest by a Financing Subsidiary or cash received by a Financing Subsidiary in connection with the sale of any Equity Interest), or the incurrence or issuance of any Indebtedness by the Borrower or any of its Subsidiaries (other than Financing Subsidiaries) (in each case, which requires a payment of the Loans under Section 2.10(d)), an amount equal to (i) the sum of the cash and Cash Equivalents received in connection with such transaction minus (ii) the sum of (1) reasonable out-of-pocket fees, costs and expenses, incurred by the Borrower or such Subsidiary in connection therewith plus (2) any reasonable costs, fees, commissions, premiums, expenses, or underwriting discounts or commissions incurred by the Borrower or any of its Subsidiaries in connection with such sale or issuance.
“New Zealand Dollars” means the lawful currency of New Zealand.
“Ninth Amendment Effective Date” means January 31, 2020.
“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(d).
“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting Lender at such time.
“Non-Extended Applicable Margin” means:
(a) with respect to each Non-Extending Lender to which the Non-Extended Final Maturity Date of January 31, 2025 is applicable, (i) if the Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is equal to or greater than 1.85 times the Combined Debt Amount, (A) with respect to any ABR Loan, 0.75% per annum; (B) with respect to any Term Benchmark Loan, 1.75% per annum; and (C) with respect to any RFR Loan, 1.75% per annum plus the RFR Applicable Credit Adjustment Spread; and (ii) if the Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is less than 1.85 times the Combined Debt Amount (A) with respect to any ABR Loan, 0.875% per annum; (B) with respect to any Term Benchmark Loan, 1.875% per annum; and (C) with respect to any RFR Loan, 1.875% per annum plus the RFR Applicable Credit Adjustment Spread;
(b) with respect to each Non-Extending Lender to which the Non-Extended Final Maturity Date of February 4, 2026 is applicable, (i) if the Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is equal to or greater than 1.85 times the Combined Debt Amount, (A) with respect to any ABR Loan, 0.75% per annum; (B) with respect to any Term Benchmark Loan, 1.75% per annum; and (C) with respect to any RFR Loan, 1.75% per annum plus the RFR Applicable Credit Adjustment Spread; and (ii) if the Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is less than 1.85 times the Combined Debt Amount (A) with respect to any ABR Loan, 0.875% per annum; (B) with respect to any Term Benchmark Loan, 1.875% per annum; and (C) with respect to any RFR Loan, 1.875% per annum plus the RFR Applicable Credit Adjustment Spread; and
(c) with respect to each Non-Extending Lender to which the Non-Extended Final Maturity Date of April 23, 2027 is applicable, (i) if the Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is equal to or greater than 1.60 times the Combined Debt Amount, (A) with respect to any ABR Loan, 0.75% per annum; (B) with respect to any Term Benchmark Loan, 1.75% per annum; and (C) with respect to any RFR Loan 1.75% per annum; and (ii) if the Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is less than 1.60 times the Combined Debt Amount (A) with respect to any ABR Loan, 0.875% per annum; (B) with respect to any Term Benchmark Loan, 1.875% per annum; and (C) with respect to any RFR Loan 1.875% per annum.
Any change in the Non-Extended Applicable Margin due to a change in the ratio of the Borrowing Base to the Combined Debt Amount as set forth in any Borrowing Base Certificate shall be effective from and including the day immediately succeeding the date of delivery of such Borrowing Base Certificate; provided that if any Borrowing Base Certificate has not been delivered in accordance with Section 5.01(d), then from and including the day immediately succeeding the date on which such Borrowing Base Certificate was required to be delivered, the Non-Extended Applicable Margin shall be the Non-Extended Applicable Margin set forth in clause (a)(ii), clause (b)(ii) or clause (c)(ii) above, as applicable, to and including the date on which the required Borrowing Base Certificate is delivered.
“Non-Extended Availability Period” means, with respect to any Non-Extending Lender, the period from and including the Effective Date to but excluding the earlier of the Non-Extended Commitment Termination Date for such Non-Extending Lender and the date of termination of the Commitments.
“Non-Extended Commitment Termination Date” means, with respect to each Non-Extending Lender, the “Non-Extended Commitment Termination Date” set forth next to such Non-Extending Lender’s name on Schedule 1.01(b).
“Non-Extended Final Maturity Date” means, with respect to each Non-Extending Lender, the “Non-Extended Final Maturity Date” set forth next to such Non-Extending Lender’s name on Schedule 1.01(b).
“Non-Extended Loans” means Loans or Borrowings of any Non-Extending Lender maturing on the Non-Extended Final Maturity Date for such Non-Extending Lender.
“Non-Extending Lender” means each Lender designated as a “Non-Extending Lender” on Schedule 1.01(b).
“Non-Public Information” means material non-public information (within the meaning of United States federal, state or other applicable securities laws) with respect to Borrower or its Affiliates or their Securities.
“Obligor” means, collectively, the Borrower and the Subsidiary Guarantors.
“Original Currency” has the meaning assigned to such term in Section 2.17.
“Original Effective Date” means July 3, 2013.
“Other Benchmark Rate Election” means, with respect to any Loan denominated in Dollars, if a Benchmark Replacement for the Term SOFR Reference Rate has been determined in accordance with clause (1) of the definition of “Benchmark Replacement”, that the Administrative Agent, in its sole discretion, and the Borrower have jointly elected to trigger a fallback from the then-current Benchmark and the Administrative Agent has provided written notice of such election to the Borrower and the Lenders.
“Other Covered Indebtedness” means, collectively, Secured Longer-Term Indebtedness, Secured Shorter-Term Indebtedness and Unsecured Shorter-Term Indebtedness; provided that “Other Covered Indebtedness” shall not include any Indebtedness secured by a Lien on Portfolio Investments permitted under Section 6.02(e).
“Other Permitted Indebtedness” means (a) accrued expenses and current trade accounts payable incurred in the ordinary course of the Borrower’s business which are not overdue for a period of more than 90 days or which are being contested in good faith by appropriate proceedings, (b) Indebtedness (other than Indebtedness for borrowed money) arising in connection with transactions in the ordinary course of the Borrower’s business in connection with its securities transactions, derivatives transactions, reverse repurchase agreements or dollar rolls to the extent such transactions are permitted under the Investment Company Act and the Borrower’s Investment Policies (after giving effect to any Permitted Policy Amendments), provided that such Indebtedness does not arise in connection with the purchase of Portfolio Investments other than Cash Equivalents and U.S. Government Securities and (c) Indebtedness in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as such judgments or awards do not constitute an Event of Default under clause (l) of Article VII.
“Other Taxes” means any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document, excluding (i) any such Taxes, charges or similar levies resulting from an assignment by any Lender in accordance with Section 9.04 hereof (unless such assignment is made pursuant to Section 2.18(b)) or (ii) any Taxes imposed by any jurisdiction by reason of the recipient of any payment on or account of this Agreement having any present or former connection with such jurisdiction (other than a connection arising solely from entering into, receiving any payment under or enforcing its rights under this Agreement or any other Loan Document).
“Participant” has the meaning assigned to such term in Section 9.04(f).
“Participant Register” has the meaning assigned to such term in Section 9.04(f).
“Participating Member State” means any member state of the European Community that adopts or has adopted the Euro as its lawful currency in accordance with the legislation of the European Union relating to the European Monetary Union.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Periodic Term SOFR Determination Day” has the meaning set forth in the definition of “Term SOFR”.
“Permitted Equity Interests” means common stock of the Borrower that after its issuance is not subject to any agreement between the holder of such common stock and the Borrower where the Borrower is required to purchase, redeem, retire, acquire, cancel or terminate any such common stock.
“Permitted Liens” means (a) Liens imposed by any Governmental Authority for taxes, assessments or charges not yet due or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower in accordance with GAAP; (b) Liens of clearing agencies, broker-dealers and similar Liens incurred in the ordinary course of business, provided that such Liens (i) attach only to the securities (or proceeds) being purchased or sold and (ii) secure only obligations incurred in connection with such purchase or sale, and not any obligation in connection with margin financing; (c) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmens’, storage and repairmen’s Liens and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money) not yet due or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower in accordance with GAAP; (d) Liens incurred or pledges or deposits made to secure obligations incurred in the ordinary course of business under workers’ compensation laws, unemployment insurance or other similar social security legislation (other than liens in respect of employee benefit plans arising under ERISA) or to secure public or statutory obligations; (e) Liens securing the performance of, or payment in respect of, bids, insurance premiums, deductibles or co-insured amounts, tenders, government or utility contracts (other than for the repayment of borrowed money), surety, stay, customs and appeal bonds and other obligations of a similar nature incurred in the ordinary course of business; (f) Liens arising out of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as such judgments or awards do not constitute an Event of Default under clause (l) of Article VII; (g) customary rights of setoff and liens upon (i) deposits of cash in favor of banks or other depository institutions in which such cash is maintained in the ordinary course of business, (ii) cash and financial assets held in securities accounts in favor of banks and other financial institutions with which such accounts are maintained in the ordinary course of business and (iii) assets held by a custodian in favor of such custodian in the ordinary course of business securing payment of fees, indemnities and other similar obligations; (h) Liens arising solely from precautionary filings of financing statements under the Uniform Commercial Code of the applicable jurisdictions in respect of operating leases entered into by the Borrower or any of its Subsidiaries in the ordinary course of business; (i) deposits of money securing leases to which Borrower is a party as lessee made in the ordinary course of business; (j) easements, rights of way, zoning restrictions and similar encumbrances on real property and minor irregularities in the title thereto that do not (i) secure obligations for the payment of money or (ii) materially impair the value of such property or its use by any Obligor or any of its Subsidiaries in the normal conduct of such Person’s business; and (k) Liens in favor of any escrow agent solely on and in respect of any cash earnest money deposits made by any Obligor in connection with any letter of intent or purchase agreement (to the extent that the acquisition or disposition with respect thereto is otherwise permitted hereunder).
“Permitted Policy Amendment” means any change, alteration, expansion, amendment, modification, termination or restatement of the Investment Policies that is either (a) approved in writing by the Administrative Agent (with the consent of the Required Lenders), (b)
required by applicable law, rule, regulation or Governmental Authority, or (c) not materially adverse to the rights, remedies or interests of the Lenders in the reasonable discretion of the Administrative Agent (for the avoidance of doubt, no change, alteration, expansion, amendment, modification, termination or restatement of the Investment Policies shall be deemed “material” if investment size proportionately increases as the size of the Borrower’s capital base changes).
“Permitted SBIC Guarantee” means a guarantee by the Borrower of Indebtedness of an SBIC Subsidiary on the SBA’s then applicable form, provided that the recourse to the Borrower thereunder is expressly limited only to periods after the occurrence of an event or condition that is an impermissible change in the control of such SBIC Subsidiary (it being understood that, as provided in clause (s) of Article VII, it shall be an Event of Default hereunder if any such event or condition giving rise to such recourse occurs).
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Platform” has the meaning set forth in Section 5.01(i).
“Portfolio Investment” means any Investment held by the Obligors in their asset portfolio (and solely for purposes of determining the Borrowing Base, Cash). Without limiting the generality of the foregoing, the following Investments shall not be considered Portfolio Investments under this Agreement or any other Loan Document: (a) any Investment by an Obligor in any Subsidiary or Affiliate of such Obligor or any Financing Subsidiary (including, for the avoidance of doubt, any Investment by an Obligor in an entity constituting a portfolio investment of such Obligor or an Affiliate of such Obligor); (b) any Investment that provides in favor of the obligor in respect of such Portfolio Investment an express right of rescission, set-off, counterclaim or any other defenses; (c) any Investment, which if debt, is an obligation (other than a revolving loan or delayed draw term loan) pursuant to which any future advances or payments to the Obligor may be required to be made by the Borrower; (d) any Investment which is made to a bankrupt entity (other than a debtor-in-possession financing and current pay obligations); and (e) any Investment, Cash or account in which a Financing Subsidiary has an interest.
“Prime Rate” means the rate which is quoted as the “prime rate” in the print edition of The Wall Street Journal, Money Rates Section.
“Principal Financial Center” means, in the case of any Currency, the principal financial center where such Currency is cleared and settled, as determined by the Administrative Agent.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” means Lenders that do not wish to receive Non-Public Information with respect to the Borrower or any of its Subsidiaries or their Securities.
“Quarterly Dates” means the last Business Day of March, June, September and December in each year, commencing on September 30, 2013.
“Quoted Investments” means a Portfolio Investment with a value assigned by the Borrower pursuant to Section 5.12(b)(ii)(A).
“Register” has the meaning set forth in Section 9.04(c).
“Registration Statement” means the Registration Statement filed by the Borrower with the Securities and Exchange Commission on March 14, 2011.
“Regulations D, T, U and X” means, respectively, Regulations D, T, U and X of the Board, as the same may be modified and supplemented and in effect from time to time.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective partners, directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
“Relevant Governmental Body” means (a) with respect to a Benchmark Replacement in respect of obligations, interest, fees, commissions or other amounts owing hereunder denominated in, or calculated with respect to Dollars, the Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board and/or the Federal Reserve Bank of New York or, in each case, any successor thereto, (b) with respect to a Benchmark Replacement in respect of obligations, interest, fees, commissions or other amounts owing hereunder denominated in, or calculated with respect to, Sterling, the Bank of England, or a committee officially endorsed or convened by the Bank of England or, in each case, any successor thereto, (c) with respect to a Benchmark Replacement in respect of obligations, interest, fees, commissions or other amounts owing hereunder denominated in, or calculated with respect to, Euro, the European Central Bank, or a committee officially endorsed or convened by the European Central Bank or, in each case, any successor thereto, and (d) with respect to a Benchmark Replacement in respect of obligations, interest, fees, commissions or other amounts owing hereunder denominated in, or calculated with respect to, any Currency (other than Dollars, Sterling or Euro), (1) the central bank for the Currency in which such obligations, interest, fees, commissions or other amounts are denominated, or calculated with respect thereto, or any central bank or other supervisor which is responsible for supervising either (A) such Benchmark Replacement or (B) the administrator of such Benchmark Replacement or (2) any working group or committee officially endorsed or convened by (A) the central bank for the Currency in which such obligations, interest, fees, commissions or other amounts are denominated, or calculated with respect to, (B) any central bank or other supervisor that is responsible for supervising either (i) such Benchmark Replacement or (ii) the administrator of such Benchmark Replacement, (C) a group of those central banks or other supervisors or (D) the Financial Stability Board or any part thereof.
“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total
Revolving Credit Exposures and unused Commitments at such time; provided that the Revolving Credit Exposures and unused Commitments of any Defaulting Lender shall be disregarded in the determination of Required Lenders. The Required Lenders of a Class (which shall include the terms “Required Dollar Lenders” and “Required Multicurrency Lenders”) means Lenders having Revolving Credit Exposures and unused Commitments of such Class representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments of such Class at such time. Notwithstanding the foregoing, the Revolving Credit Exposure and unused Commitments of any Defaulting Lender shall be disregarded in the determination of Required Lenders or Required Lenders of a Class.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of an Obligor.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of capital stock of the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower or any option, warrant or other right to acquire any such shares of capital stock of the Borrower (it being understood that none of: (w) the conversion features under convertible notes; (x) the triggering and/or settlement thereof; or (y) any cash payment made by the Borrower in respect thereof, shall constitute a Restricted Payment hereunder).
“Return of Capital” means (a) any net cash amount received by any Obligor in respect of the outstanding principal of any Portfolio Investment (whether at stated maturity, by acceleration or otherwise), (b) without duplication of amounts received under clause (a), any net cash proceeds received by any Obligor from the sale of any property or assets pledged as collateral in respect of any Portfolio Investment to the extent such net cash proceeds are less than or equal to the outstanding principal balance of such Portfolio Investment, (c) any net cash amount received by any Obligor in respect of any Portfolio Investment that is an Equity Interest (x) upon the liquidation or dissolution of the issuer of such Portfolio Investment, (y) as a distribution of capital made on or in respect of such Portfolio Investment, or (z) pursuant to the recapitalization or reclassification of the capital of the issuer of such Portfolio Investment or pursuant to the reorganization of such issuer or (d) any similar return of capital received by any Obligor in cash in respect of any Portfolio Investment (in the case of clauses (a), (b), (c) and (d), net of any fees, costs, expenses and taxes payable with respect thereto).
“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Dollar Credit Exposure and Revolving Multicurrency Credit Exposure at such time.
“Revolving Dollar Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Syndicated Loans, and its LC Exposure and Swingline Exposure, at such time made or incurred under the Dollar Commitments.
“Revolving Multicurrency Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Syndicated Loans, and its LC Exposure and Swingline Exposure, at such time made or incurred under the Multicurrency Commitments.
“Revolving Percentage” means, as of any date of determination, the result, expressed as a percentage, of the Revolving Credit Exposure on such date divided by the aggregate outstanding Covered Debt Amount on such date.
“RFR”, when used in reference to any Loan or Borrowing, refers to whether such Loan is, or the Loans constituting such Borrowing are, bearing interest at a rate determined by reference to the Daily Simple RFR for the applicable Currency.
“RFR Administrator” means the SONIA Administrator or the SARON Administrator, as applicable.
“RFR Administrator’s Website” means the SONIA Administrator’s Website or the SARON Administrator’s Website, as applicable.
“RFR Applicable Credit Adjustment Spread” means, (a) with respect to RFR Loans denominated in Sterling, (i) with an Interest Period of three months, 0.1193% and (ii) with an Interest Period of one month, 0.0326%, and (b) with respect to RFR Loans denominated in Swiss Francs (i) with an Interest Period of three months, 0.0031% and (ii) with an Interest Period of one month, -0.0571%.
“RFR Business Day” means, for any Loans, Borrowings, interest, fees, commissions or other amounts denominated in, or calculated with respect to, (a) Sterling, any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which banks are closed for general business in London, and (b) Swiss Francs, any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which banks are closed for the settlement of payments and foreign exchange transactions in Zurich.
“RFR Interest Day” has the meaning specified in the definition of “Daily Simple RFR”.
“RFR Rate” means, for any Loans, Borrowings, interest, fees, commissions or other amounts denominated in, or calculated with respect to (a) Sterling, SONIA, and (b) Swiss Francs, SARON.
“RFR Reference Day” has the meaning specified in the definition of “Daily Simple RFR”.
“RIC” means a person qualifying for treatment as a “regulated investment company” under the Code.
“S&P” means S&P Global Ratings or any successor thereto.
“Sanctioned Country” means, at any time, a country, territory or region that is the subject or the target of country-wide or territory-wide Sanctions broadly prohibiting dealings with
such country, territory or region (currently, Cuba, Iran, North Korea and Syria, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic and non-government-controlled areas of the Zaporizhzhia and Kherson Regions of Ukraine).
“Sanctions” has the meaning assigned to such term in Section 3.15(a).
“SARON” means a rate equal to the Swiss Average Rate Overnight as administered by the SARON Administrator.
“SARON Administrator” means the SIX Swiss Exchange AG (or any successor administrator of the Swiss Average Rate Overnight).
“SARON Administrator’s Website” means SIX Swiss Exchange AG’s website, currently at https://www.six-group.com, or any successor source for the Swiss Average Rate Overnight identified as such by the SARON Administrator from time to time.
“SBA” means the United States Small Business Administration.
“SBIC Equity Commitment” means a commitment by the Borrower to make one or more capital contributions to an SBIC Subsidiary.
“SBIC Subsidiary” means any direct or indirect Subsidiary (including such Subsidiary’s general partner or managing entity to the extent that the only material asset of such general partner or managing entity is its equity interest in the SBIC Subsidiary) of the Borrower licensed as a small business investment company under the Small Business Investment Act of 1958, as amended, (or that has applied for such a license and is actively pursuing the granting thereof by appropriate proceedings promptly instituted and diligently conducted) and which is designated by the Borrower (as provided below) as an SBIC Subsidiary, so long as (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of such Subsidiary: (i) is Guaranteed by any Obligor (other than a Permitted SBIC Guarantee), (ii) is recourse to or obligates any Obligor in any way (other than in respect of any SBIC Equity Commitment or Permitted SBIC Guarantee), or (iii) subjects any property of any Obligor, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than Equity Interests in any SBIC Subsidiary pledged to secure such Indebtedness, and (b) no Obligor has any obligation to maintain or preserve such Subsidiary’s financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Borrower shall be effected pursuant to a certificate of a Financial Officer delivered to the Administrative Agent, which certificate shall include a statement to the effect that, to the best of such officer’s knowledge, such designation complied with the foregoing conditions.
“Secured Longer-Term Indebtedness” means, as at any date, Indebtedness (other than Indebtedness hereunder) of an Obligor (which may be Guaranteed by Subsidiary Guarantors) that (a) has no scheduled amortization (other than for amortization in an amount not greater than 1% of the aggregate initial principal amount of such Indebtedness per annum, provided that amortization in excess of 1% per annum shall be permitted so long as the amount of such amortization in excess of 1% is permitted to be incurred pursuant to Section 6.01(i) and 6.01(o)) prior to, and a final maturity date not earlier than, six months after the Extended Final Maturity Date (it being understood that none of: (w) the conversion features under convertible notes; (x) the
triggering and/or settlement thereof; or (y) any cash payment made in respect thereof, shall constitute “amortization” for purposes of this clause (a)), (b) is incurred pursuant to documentation that is substantially comparable to market terms for substantially similar debt of other similarly situated borrowers as determined by the Borrower in its reasonable judgment and (c) is not secured by any assets of any Obligor other than pursuant to this Agreement or the Security Documents and the holders of which (or an authorized agent, representative or trustee of such holders) have either executed (i) a joinder agreement to the Guarantee and Security Agreement or (ii) such other document or agreement, in a form reasonably satisfactory to the Administrative Agent and the Collateral Agent, pursuant to which the holders (or an authorized agent, representative or trustee of such holders) of such Secured Longer-Term Indebtedness shall have become a party to the Guarantee and Security Agreement and assumed the obligations of a Financing Agent or Designated Indebtedness Holder (in each case, as defined in the Guarantee and Security Agreement).
“Secured Shorter-Term Indebtedness” means, collectively, (a) any Indebtedness of an Obligor that is secured by any assets of any Obligor and that does not constitute Secured Longer-Term Indebtedness, (b) any Indebtedness of an Obligor that is not secured by any assets of any Obligor other than pursuant to this Agreement or the Security Documents and the holders of which (or an authorized agent, representative or trustee of such holders) have either executed (i) a joinder agreement to the Guarantee and Security Agreement or (ii) such other document or agreement, in a form reasonably satisfactory to the Administrative Agent and the Collateral Agent, pursuant to which the holders (or an authorized agent, representative or trustee of such holders) of such Secured Shorter-Term Indebtedness shall have become a party to the Guarantee and Security Agreement and assumed the obligations of a Financing Agent or Designated Indebtedness Holder (in each case, as defined in the Guarantee and Security Agreement) and (c) any Indebtedness that is designated as “Secured Shorter-Term Indebtedness” pursuant to Section 6.11(a).
“Security Documents” means, collectively, the Guarantee and Security Agreement, all Uniform Commercial Code financing statements filed with respect to the security interests in personal property created pursuant to the Guarantee and Security Agreement and all other assignments, pledge agreements, security agreements, control agreements and other instruments executed and delivered on or after the date hereof by any of the Obligors pursuant to the Guarantee and Security Agreement or otherwise providing or relating to any collateral security for any of the Secured Obligations under and as defined in the Guarantee and Security Agreement.
“Shareholders’ Equity” means, at any date, the amount determined on a consolidated basis, without duplication, in accordance with GAAP, of shareholders equity for the Borrower and its Subsidiaries at such date.
“SOFR” means a rate per annum equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SONIA” means a rate equal to the Sterling Overnight Index Average as administered by the SONIA Administrator.
“SONIA Administrator” means the Bank of England (or any successor administrator of the Sterling Overnight Index Average).
“SONIA Administrator’s Website” means the Bank of England’s website, currently at http://www.bankofengland.co.uk, or any successor source for the Sterling Overnight Index Average identified as such by the SONIA Administrator from time to time.
“SPE Subsidiary” means a direct or indirect Subsidiary of the Borrower to which any Obligor sells, conveys or otherwise transfers (whether directly or indirectly) Portfolio Investments, which engages in no material activities other than in connection with the purchase, holding, disposition or financing of such assets and which is designated by the Borrower (as provided below) as an SPE Subsidiary:
(a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is Guaranteed by any Obligor (other than Guarantees in respect of Standard Securitization Undertakings), (ii) is recourse to or obligates any Obligor in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property of any Obligor, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings or any Guarantee thereof,
(b) with which no Obligor has any material contract, agreement, arrangement or understanding other than on terms, taken as a whole, not materially less favorable to such Obligor than those that might be obtained at the time from Persons that are not Affiliates of any Obligor, other than fees payable in the ordinary course of business in connection with servicing receivables, and
(c) to which no Obligor has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Borrower shall be effected pursuant to a certificate of a Financial Officer delivered to the Administrative Agent, which certificate shall include a statement to the effect that, to the best of such officer’s knowledge, such designation complied with the foregoing conditions. Each Subsidiary of an SPE Subsidiary shall be deemed to be an SPE Subsidiary and shall comply with the foregoing requirements of this definition.
“Special Equity Interest” means any Equity Interest that is subject to a Lien in favor of creditors of the issuer of such Equity Interest provided that (a) such Lien was created to secure Indebtedness owing by such issuer to such creditors, (b) such Indebtedness was (i) in existence at the time the Obligors acquired such Equity Interest, (ii) incurred or assumed by such issuer substantially contemporaneously with such acquisition or (iii) already subject to a Lien granted to such creditors and (c) unless such Equity Interest is not intended to be included in the Collateral, the documentation creating or governing such Lien does not prohibit the inclusion of such Equity Interest in the Collateral.
“Special Unsecured Indebtedness” means Indebtedness of an Obligor issued after the Fourteenth Amendment Effective Date (which may be Guaranteed by Subsidiary Guarantors) that (a) has no amortization (other than for amortization in an amount not greater than 1% of the aggregate initial principal amount of such Indebtedness per annum, provided that amortization in
excess of 1% per annum shall be permitted so long as the amount of such amortization in excess of 1% is permitted to be incurred pursuant to Section 6.01(m) and Section 6.01(o)) prior to, and a final maturity date not earlier than, five years from the date such Indebtedness is issued (it being understood that (A) none of: (w) the conversion features under convertible notes; (x) the triggering and/or settlement thereof or (y) any cash payment made in respect thereof, shall constitute “amortization” for purposes of this clause (a); and (B) any mandatory amortization that is contingent upon the happening of an event that is not certain to occur (including a change of control or bankruptcy) shall not in and of itself be deemed to disqualify such Indebtedness under this clause (a)), (b) is incurred pursuant to documentation containing (i) covenants and events of default that are not materially more burdensome on the Borrower than those set forth in the Loan Documents or (ii) terms substantially comparable to market terms for substantially similar debt of other similarly situated borrowers as determined by the Borrower in its reasonable judgment and (c) is not secured by any assets of any Obligor; provided that Special Unsecured Indebtedness shall not include any Indebtedness permitted pursuant to Section 6.01(l).
“Specified Event of Default” means an Event of Default under Section 7.01(a), (b), (i), (j) and (k).
“Standard Securitization Undertakings” means, collectively, (a) customary arms-length servicing obligations (together with any related performance guarantees), (b) obligations (together with any related performance guarantees) to refund the purchase price or grant purchase price credits for dilutive events or misrepresentations (in each case unrelated to the collectibility of the assets sold or the creditworthiness of the associated account debtors) and (c) representations, warranties, covenants and indemnities (together with any related performance guarantees) of a type that are reasonably customary in accounts receivable securitizations.
“Sterling” means the lawful currency of the United Kingdom.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Anything herein to the contrary notwithstanding, the term “Subsidiary” shall not include any Person that constitutes an Investment held by the Borrower in the ordinary course of business and that is not, under GAAP, consolidated on the financial statements of the Borrower and its Subsidiaries. Unless otherwise specified, “Subsidiary” means a Subsidiary of the Borrower.
“Subsidiary Guarantor” means any Subsidiary that is a Guarantor under the Guarantee and Security Agreement. It is understood and agreed that no Financing Subsidiary, Immaterial Subsidiary, Foreign Subsidiary or a Subsidiary of a Foreign Subsidiary shall be a Subsidiary Guarantor.
“Swedish Krona” means the lawful currency of Sweden.
“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be the sum of (a)(i) in the case of any Dollar Lender, its Applicable Dollar Percentage of the total Swingline Exposure at such time incurred under the Dollar Commitments and (ii) in the case of any Multicurrency Lender, its Applicable Multicurrency Percentage of the total Swingline Exposure at such time incurred under the Multicurrency Commitments (excluding, for purpose of this clause (a), in the case of any Lender that is a Swingline Lender, Swingline Loans made by it that are outstanding at such time to the extent that the other Lenders under such Lender’s Class of Commitments shall not have funded their participations in such Swingline Loans), adjusted, in each case, to give effect to any reallocation under Section 2.19 of the Swingline Exposure of Defaulting Lenders in effect at such time, plus (b) in the case of any Lender that is a Swingline Lender, the aggregate principal amount of all Swingline Loans made by such Lender outstanding at such time, less the amount of participations funded by the other Lenders under such Lender’s Class of Commitments in such Swingline Loans.
“Swingline Lender” means any of Truist, JPMorgan Chase Bank, N.A., MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation or State Street Bank and Trust Company, in its capacity as lender of Swingline Loans hereunder, and its successors in such capacity as provided in Section 2.04(d).
“Swingline Loan” means a Loan made pursuant to Section 2.04.
“Swiss Franc” means the lawful currency of Switzerland.
“Syndicated”, when used in reference to any Loan or Borrowing, refers to whether such Loan is, or the Loans constituting such Borrowing are, made pursuant to Section 2.01.
“TARGET Day” means any day on which the Trans-European Automated Real-time Gross Settlement Express Transfer payment system (or any successor settlement system as determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euros.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings (including backup withholding), assessments, fees, or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Benchmark”, when used in reference to any Loan or Borrowing, refers to whether such Loan is, or the Loans constituting such Borrowing are, bearing interest at a rate determined by reference to the Adjusted Term Benchmark Rate.
“Term Benchmark Banking Day” means for Term Benchmark Loans, Term Benchmark Borrowings, interest, fees, commissions or other amounts denominated in, or calculated with respect to:
(a) Dollars, a U.S. Government Securities Business Day;
(b) Euros, a TARGET Day;
(c) Canadian Dollars, any day (other than a Saturday or Sunday) on which banks are open for business in Toronto, Canada;
(d) Australian Dollars, any day (other than a Saturday or Sunday) on which banks are open for business in Melbourne, Australia;
(e) New Zealand Dollars, any day (other than a Saturday or Sunday) on which banks are open for business in Auckland, New Zealand;
(f) Swedish Krona, any day (other than a Saturday or Sunday) on which banks are open for business in Stockholm, Sweden; or
(g) Japanese Yen, any day (other than a Saturday or Sunday) on which banks are open for business in Tokyo, Japan.
“Term Benchmark Rate” means, for any Interest Period:
(a) in the case of Term Benchmark Borrowings denominated in Dollars, Term SOFR for such Interest Period;
(b) in the case of Term Benchmark Borrowings denominated in Euros, the rate per annum equal to the Euro Interbank Offered Rate as administered by the European Money Markets Institute (or any other Person that takes over the administration of such rate) for a period equal in length to such Interest Period, as displayed on the applicable Bloomberg page (or on any successor or substitute page or service providing such quotations as determined by the Administrative Agent from time to time) at approximately 11:00 a.m. (Brussels time) two (2) Term Benchmark Banking Days for Euros prior to the first day of such Interest Period (the “EURIBOR Screen Rate”);
(c) in the case of Term Benchmark Borrowings denominated in Canadian Dollars, the rate per annum equal to the average of the annual yield rates applicable to Canadian Dollar banker’s acceptances at or about 10:00 a.m. (Toronto, Ontario time) on the first day of such Interest Period (or if such day is not a Term Benchmark Banking Day, then on the immediately preceding Term Benchmark Banking Day) as reported on the “CDOR Page” (or any display substituted therefor) of Reuters Monitor Money Rates Service (or such other page or commercially available source displaying Canadian interbank bid rates for Canadian Dollar bankers’ acceptances as may be designated by the Administrative Agent from time to time in its reasonable discretion) for a term equivalent to such Interest Period (or if such Interest Period is not equal to a number of months, for a term equivalent to the number of months closest to such Interest Period);
(d) in the case of Term Benchmark Borrowings denominated in Australian Dollars, the rate per annum equal to the Bank Bill Swap Reference Bid rate or a successor thereto approved by the Administrative Agent (“BBSY”) as published by Reuters (or such other page or commercially available source providing BBSY (Bid) quotations as may be designated by the Administrative Agent from time to time) at or about 10:30 a.m. (Melbourne, Australia time) on the day that is two (2) Term Benchmark Banking Days for Australian Dollars prior to the first day
of the Interest Period (or if such day is not an Term Benchmark Banking Day for Australian Dollars, then on the immediately preceding Term Benchmark Banking Day for Australian Dollars) with a term equivalent to such Interest Period;
(e) in the case of Term Benchmark Borrowings denominated in New Zealand Dollars, the rate per annum equal to the Bank Bill Reference Bid Rate or a successor thereto approved by the Administrative Agent (“BKBM”) as published by Reuters (or such other page or commercially available source providing BKBM (Bid) quotations as may be designated by the Administrative Agent from time to time) at or about 10:45 a.m. (Auckland, New Zealand time) on the day that is two (2) Term Benchmark Banking Days for New Zealand Dollars prior to the first day of the Interest Period (or if such day is not an Term Benchmark Banking Day for New Zealand Dollars, then on the immediately preceding Term Benchmark Banking Day for New Zealand Dollars) with a term equivalent to such Interest Period;
(f) in the case of Term Benchmark Borrowings denominated in Swedish Krona, the rate per annum equal to the Stockholm Interbank Offered Rate or a successor thereto approved by the Administrative Agent (“STIBOR”) as published by Reuters (or such other page or commercially available source providing STIBOR quotations as may be designated by the Administrative Agent from time to time) at or about 11:00 a.m. (Stockholm, Sweden time) on the day that is two (2) Term Benchmark Banking Days for Swedish Krona prior to the first day of the Interest Period (or if such day is not an Term Benchmark Banking Day for Swedish Krona, then on the immediately preceding Term Benchmark Banking Day for Swedish Krona) with a term equivalent to such Interest Period; and
(g) in the case of Term Benchmark Borrowings denominated in Japanese Yen, the rate per annum equal to the Tokyo Interbank Offered Rate as administered by the Ippan Shadan Hojin JBA TIBOR Administration (or any other Person that takes over the administration of such rate) for a period equal in length to such Interest Period, as displayed on the applicable Bloomberg page (or on any successor or substitute page or service providing such quotations as determined by the Administrative Agent from time to time) at approximately 11:00 a.m. (Tokyo time) two (2) Term Benchmark Banking Days for Japanese Yen prior to the first day of such Interest Period;
provided, in each case, if such rate for any Currency is less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Term SOFR” means,
(a) for any calculation with respect to a Term Benchmark Loan denominated in Dollars for any Interest Period, the sum of (i) the Term SOFR Credit Adjustment Spread and (ii) the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the
first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and
(b) for any calculation with respect to an ABR Loan on any day, the sum of (i) the Term SOFR Credit Adjustment Spread and (ii) the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided that if as of 5:00 p.m. (New York City time) on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Base Rate Term SOFR Determination Day.
“Term SOFR Administrator” means the CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Credit Adjustment Spread” means 0.10%.
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Termination Date” means the earliest to occur of (i) the Extended Final Maturity Date, (ii) the date of the termination of the Commitments in full pursuant to Section 2.08(c), or (iii) the date on which the Commitments are terminated pursuant to Article VII.
“Testing Period” has the meaning assigned to such term in Section 5.12(b)(ii)(E)(x).
“Testing Quarter” has the meaning assigned to such term in Section 5.12(b)(ii)(B).
“Total Assets” means, as of any date of determination, the value of the total assets of the Obligors, less all liabilities and indebtedness not represented by senior securities, in each case, as of such date of determination.
“Total Assets Concentration Limitation” means, as of any date of determination, the amount by which the aggregate value of Equity Interests in Financing Subsidiaries held by the Obligors as of such date of determination exceeds 15% of the Total Assets as of such date of determination.
“Total Secured Debt” means, as of any date of determination, the aggregate amount of senior securities representing secured indebtedness of the Obligors as of such date of determination.
“Transactions” means the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.
“Truist” means Truist Bank.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans constituting such Borrowing, is determined by reference to the Adjusted Term Benchmark Rate, the Daily Simple RFR or the Alternate Base Rate.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unasserted Contingent Obligations” means all (i) unasserted contingent indemnification obligations not then due and payable and (ii) unasserted expense reimbursement obligations not then due and payable. For the avoidance of doubt, “Unasserted Contingent Obligations” shall not include any reimbursement obligations in respect of any Letter of Credit.
“Undisclosed Administration” means, in relation to a Lender, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.
“Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York.
“Unquoted Investments” means a Portfolio Investment with a value assigned by the Borrower pursuant to Section 5.12(b)(ii)(B).
“Unsecured Longer-Term Indebtedness” means any Indebtedness of an Obligor (which may be Guaranteed by Subsidiary Guarantors) that (a) has no amortization (other than for amortization in an amount not greater than 1% of the aggregate initial principal amount of such
Indebtedness per annum, provided that amortization in excess of 1% per annum shall be permitted so long as the amount of such amortization in excess of 1% is permitted to be incurred pursuant to Section 6.01(m) and Section 6.01(o)) prior to, and a final maturity date not earlier than, six months after the Extended Final Maturity Date (it being understood that (A) none of: (w) the conversion features under convertible notes; (x) the triggering and/or settlement thereof or (y) any cash payment made in respect thereof, shall constitute “amortization” for purposes of this clause (a); and (B) any mandatory amortization that is contingent upon the happening of an event that is not certain to occur (including a change of control or bankruptcy) shall not in and of itself be deemed to disqualify such Indebtedness under this clause (a)), (b) is incurred pursuant to documentation that is substantially comparable to market terms for substantially similar debt of other similarly situated borrowers as determined by the Borrower in its reasonable judgment and (c) is not secured by any assets of any Obligor.
“Unsecured Shorter-Term Indebtedness” means, collectively, (a) any Indebtedness of an Obligor that is not secured by any assets of any Obligor and that does not constitute Unsecured Longer-Term Indebtedness and (b) any Indebtedness that is designated as “Unsecured Shorter-Term Indebtedness” pursuant to Section 6.11(a); provided that Unsecured Shorter-Term Indebtedness shall not include any Indebtedness permitted pursuant to Section 6.01(l).
“U.S. Government Securities” means securities that are direct obligations of, and obligations the timely payment of principal and interest on which is fully guaranteed by, the United States or any agency or instrumentality of the United States the obligations of which are backed by the full faith and credit of the United States and in the form of conventional bills, bonds, and notes.
“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“Value” has the meaning assigned to such term in Section 5.13.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that
any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Without prejudice to the respective liabilities of the Borrower to the Lenders and the Lenders to the Borrower under or pursuant to this Agreement, each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time, in consultation with the Borrower, reasonably specify to be necessary or appropriate to reflect the introduction or changeover to the Euro in any country that becomes a Participating Member State after the date hereof; provided that the Administrative Agent shall provide the Borrower and the Lenders with prior notice of the proposed change with an explanation of such change in sufficient time to permit the Borrower and the Lenders an opportunity to respond to such proposed change.
THE CREDITS
Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Syndicated Loans.
Subject to the foregoing and Section 2.20, each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph (c) is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments of the
respective Class, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable Swingline Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the relevant Swingline Lender. Any amounts received by a Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by such Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the applicable Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.
Subject to Section 2.20, in consideration and in furtherance of the foregoing, each Lender of a Class of Commitment hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for account of each Issuing Bank, such Lender’s Applicable Dollar Percentage or Applicable Multicurrency Percentage, as the case may be, of each LC Disbursement made by such Issuing Bank in respect of Letters of Credit of such Class promptly upon the request of such Issuing Bank at any time from the time of such LC Disbursement until such LC
Disbursement is reimbursed by the Borrower or at any time after any reimbursement payment is required to be refunded to the Borrower for any reason. Such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each such payment shall be made in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to the next following paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that the Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.
If the Borrower fails to make such payment when due, the Administrative Agent shall notify each applicable Lender with a Commitment then in effect of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Dollar Percentage or Applicable Multicurrency Percentage, as the case may be, thereof.
Neither the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit by such Issuing Bank or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of such Issuing Bank; provided that the foregoing shall not be construed to excuse any Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s fraud, gross negligence or willful misconduct when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that:
(x) the Administrative Agent shall have received on or prior to 11:00 a.m., New York City time, on such Commitment Increase Date (or on or prior to a time on an earlier date specified by the Administrative Agent) a certificate of a duly authorized officer of the Borrower stating that each of the applicable conditions to
such Commitment Increase set forth in the foregoing paragraph (i) has been satisfied; and
(y) each Assuming Lender or Increasing Lender shall have delivered to the Administrative Agent, on or prior to 11:00 a.m., New York City time on such Commitment Increase Date (or on or prior to a time on an earlier date specified by the Administrative Agent), an agreement, in form and substance satisfactory to the Borrower and the Administrative Agent, pursuant to which such Lender shall, effective as of such Commitment Increase Date, undertake a Commitment or an increase of Commitment in each case of the respective Class, duly executed by such Assuming Lender or Increasing Lender, as applicable, and the Borrower and acknowledged by the Administrative Agent.
Promptly following satisfaction of such conditions, the Administrative Agent shall notify the Lenders of such Class (including any Assuming Lenders) thereof and of the occurrence of the Commitment Increase Date by facsimile transmission or electronic messaging system.
In addition, on the Extended Commitment Termination Date, the Borrower shall deposit Cash into the Letter of Credit Collateral Account (denominated in the Currency of the Letter of Credit under which such LC Exposure arises) in an amount equal to 100% of the undrawn face amount of all Letters of Credit outstanding on the close of business on the Extended Commitment Termination Date, such deposit to be held by the Administrative Agent as collateral security for the LC Exposure under this Agreement in respect of the undrawn portion of such Letters of Credit.
For purposes hereof “Currency Valuation Notice” means a notice given by the Required Multicurrency Lenders to the Administrative Agent stating that such notice is a “Currency Valuation Notice” and requesting that the Administrative Agent determine the aggregate Revolving Multicurrency Credit Exposure. The Administrative Agent shall not be required to make more than one valuation determination pursuant to Currency Valuation Notices within any rolling three month period.
Any prepayment pursuant to this paragraph shall be applied, first to Swingline Multicurrency Loans outstanding, second, to Syndicated Multicurrency Loans outstanding and third, as cover for Multicurrency LC Exposure.
Notwithstanding the foregoing, (I) Net Cash Proceeds and Return of Capital required to be applied to the prepayment of the Loans pursuant to this Section 2.10(d) shall (A) (I) from the period commencing on any Non-Extended Commitment Termination Date and ending on the Extended Commitment Termination Date, be applied ratably among the Non-Extending Lenders for which any Non-Extended Commitment Termination Date shall have occurred and (II) from the Extended Commitment Termination Date to the Extended Final Maturity Date, be applied in accordance with the Guarantee and Security Agreement and (B) exclude the amount necessary for the Borrower to make all required distributions (which shall be no less than the amount estimated in good faith by Borrower under Section 6.05(b) herein) to maintain the status of a RIC under the Code and a “business development company” under the Investment Company Act for so long as the Borrower retains such status and to avoid payment by the Borrower of federal excise Taxes imposed by Section 4982 of the Code for so long as the Borrower retains the status of a RIC under the Code and (II) if the Loans to be prepaid pursuant to this Section 2.10(d) are Term Benchmark Loans, the Borrower may defer such prepayment until the last day of the Interest Period applicable to such Loans owed to such Lender or Lenders, so long as the Borrower deposits an amount equal to such Net Cash Proceeds, no later than the fifth Business Day following the receipt of such Net Cash Proceeds, into a segregated collateral account in the name and under the dominion and control of the Administrative Agent, pending application of such amount to the prepayment of the Loans on the last day of such Interest Period; provided, further, that the Administrative Agent may direct the application of such deposits as set forth in Section 2.09(b) at any time and if the Administrative Agent does so, no amounts will be payable by the Borrower pursuant to Section 2.15.
then the Administrative Agent shall give written notice thereof (or telephonic notice, promptly confirmed in writing) to the Borrower and the affected Lenders as promptly as practicable thereafter. Until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Syndicated Borrowing to, or the continuation of any Syndicated Borrowing as, a Term Benchmark Borrowing or RFR Borrowing denominated in the Affected Currency shall be ineffective and, if the Affected Currency is Dollars, such Syndicated Borrowing (unless prepaid) shall be continued as, or converted to, a Syndicated ABR Borrowing at the end of the applicable Interest Period, (ii) if the Affected Currency is Dollars and any Borrowing Request requests a Term Benchmark Borrowing denominated in Dollars, such Borrowing shall be made as a Syndicated ABR Borrowing, and (iii) if the Affected Currency is a Foreign Currency, (A) any Borrowing Request that requests a Term Benchmark Borrowing or RFR Borrowing denominated in the Affected Currency shall be ineffective, and (B) any outstanding Term Benchmark Borrowing or RFR Borrowing in the Affected Currency, at the Borrower’s election shall either (1) be converted into a Syndicated ABR Borrowing denominated in Dollars (in an amount equal to the Dollar Equivalent of such Affected Currency) immediately in the case of an RFR Borrowing or, in the case of a Term Benchmark Borrowing, at the end of the applicable Interest Period, or (2) be prepaid in full immediately in the case of an RFR Borrowing or, in the case of a Term Benchmark Borrowing, at the end of the applicable Interest Period; provided that if no election is made by the Borrower by the date that is three (3) Business Days after receipt by the Borrower of
such notice or, in the case of a Term Benchmark Borrowing, the last day of the current Interest Period for the applicable Term Benchmark Loan, if earlier, the Borrower shall be deemed to have elected clause (1) above.
and the result of any of the foregoing shall be to increase the cost to such Lenders of making, converting to, continuing or maintaining any Term Benchmark Loan or RFR Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then upon the request of such Lender or such Issuing Bank the Borrower will pay to such Lender or such Issuing Bank, as the case may be, in Dollars, such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered; provided that no Lender will claim the payment of any of the amounts referred to in this paragraph if not generally claiming similar compensation from its other similar customers in similar circumstances (it being understood that no Lender shall be required to disclose price sensitive information or any other information).
Payment under this Section shall be made upon written request of a Lender delivered to the Borrower not later than five (5) Business Days following the payment, conversion, or failure to borrow, convert, continue or prepay that gives rise to a claim under this Section accompanied by a written certificate of such Lender setting forth in reasonable detail the basis for and the calculation of the amount or amounts that such Lender is entitled to receive pursuant to this Section, which certificate shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) Business Days after receipt thereof.
(w) duly completed and executed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E or any successor form claiming eligibility for benefits of an income tax treaty to which the United States is a party,
(x) duly completed copies of Internal Revenue Service Form W-8ECI or any successor form certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States,
(y) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (1) a certificate to the effect that such Foreign Lender is not (1) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (2) duly completed and executed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E (or any successor form) certifying that the Foreign Lender is not a U.S. Person, or
(z) any other form including Internal Revenue Service Form W-8IMY as applicable prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.
All amounts owing under this Agreement (including commitment fees, payments required under Section 2.14, and payments required under Section 2.15 relating to any Loan denominated in Dollars, but not including principal of and interest on any Loan denominated in any Foreign Currency or payments relating to any such Loan required under Section 2.15, which are payable in such Foreign Currency) or under any other Loan Document (except to the extent otherwise provided therein) are payable in Dollars. Notwithstanding the foregoing, if the Borrower shall fail to pay any principal of any Loan when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), the unpaid portion of such Loan shall, if such Loan is not denominated in Dollars, automatically be redenominated in Dollars on the due date thereof (or, if such due date is a day other than the last day of the Interest Period therefor, on the last day of such Interest Period) in an amount equal to the Dollar Equivalent thereof on the date of such redenomination and such principal shall be payable on demand; and if the Borrower shall fail to pay any interest on any Loan that is not denominated in Dollars, such interest shall automatically be redenominated in Dollars on the due date therefor (or, if such due date is a day other than the last day of the Interest Period therefor, on the last day of such Interest Period) in an amount equal to the Dollar Equivalent thereof on the date of such redenomination and such interest shall be payable on demand.
Notwithstanding the foregoing provisions of this Section, if, after the making of any Borrowing in any Foreign Currency, currency control or exchange regulations are imposed in the country which issues such currency with the result that the type of currency in which the Borrowing was made (the “Original Currency”) no longer exists or the Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in such Original Currency, then all payments to be made by the Borrower hereunder in such currency shall instead be made when due in Dollars in an amount equal to the Dollar Equivalent (as of the date of repayment) of such payment due, it being the intention of the parties hereto that the Borrower takes all risks of the imposition of any such currency control or exchange regulations.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
CONDITIONS
(iv) Officer’s Certificate. A certificate, dated the Effective Date and signed by the President, the Chief Executive Officer, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in the lettered clauses of the first sentence of Section 4.02.
Each Borrowing (but, for the avoidance of doubt, not a continuation or conversion thereof) and each issuance, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in the preceding sentence.
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of and accrued interest on each Loan and all fees payable hereunder (other than Unasserted Contingent Obligations) shall have been paid in full and all Letters of Credit shall have expired, been terminated, Cash Collateralized or backstopped and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:
Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
(w) in the case of public and 144A securities, the average of the bid prices as determined by two Approved Dealers selected by the Borrower,
(x) in the case of bank loans, the bid price as determined by one Approved Dealer selected by the Borrower,
(y) in the case of any Portfolio Investment traded on an exchange, the closing price for such Portfolio Investment most recently posted on such exchange, and
(z) in the case of any other Portfolio Investment, the fair market value thereof as determined by an Approved Pricing Service selected by the Borrower; and
(x) the Value of any such Portfolio Investment (i.e., a Portfolio Investment for which market quotations are not readily available) acquired shall be deemed to be equal to the cost of such Portfolio Investment until such time as the fair market value of such Portfolio Investment is determined in accordance with the foregoing provisions of this sub-clause (B) as at the last day of the next succeeding Testing Quarter with respect to such Portfolio Investment;
(y) notwithstanding the foregoing, the Board of Directors of the Borrower may, without the assistance of an Approved Third-Party Appraiser, determine the fair market value of such unquoted Portfolio Investment so long as the aggregate Value thereof of all such Portfolio Investments so determined does not at any time exceed 10% of the aggregate Borrowing Base, except that the fair market value of any Portfolio Investment that has been determined without the assistance of an Approved Third-Party Appraiser as at the last day of any Testing Quarter with respect to such Portfolio Investment shall be deemed to be zero as at the last day of the immediately succeeding Testing Quarter with respect to such Portfolio Investment (but effective upon the date upon which the Borrowing Base Certificate for such last day is required to be delivered hereunder) if an Approved Third-Party Appraiser has not assisted the Board of Directors of the Borrower in determining the fair market value of such Portfolio Investments, as at such date; and
(z) no Testing Quarter with respect to any Portfolio Investment for which market quotations are not readily available shall end more than six months following the end of the immediately preceding Testing Quarter for such Portfolio Investment.
(x) For the second calendar month immediately following the end of each fiscal quarter (the last such fiscal quarter is referred to herein as, the “Testing Period”), the Administrative Agent shall cause an Approved Third-Party Appraiser selected by the Administrative Agent to value such number of Unquoted Investments (selected by the Administrative Agent) that collectively have an aggregate Value approximately equal to the Calculation Amount. The Administrative Agent agrees to notify the Borrower of the Unquoted Investments selected by the Administrative Agent to be tested in each Testing Period. If there is a difference between the Borrower’s valuation and the Approved Third-Party Appraiser’s valuation of any Unquoted Investment, the Value of such Unquoted Investment for Borrowing Base purposes shall be established as set forth in sub-clause (F) below.
(y) For the avoidance of doubt, the valuation of any Approved Third-Party Appraiser selected by the Administrative Agent would not be as of, or delivered at, the end of any fiscal quarter. Any such valuation would be as of the end of the second month immediately following any fiscal quarter (the “Administrative Agent Appraisal Testing Period”) and would be reflected in the Borrowing Base Certificate for such month (provided that such Approved Third-Party Appraiser delivers such valuation at least seven (7) Business Days before the 20th day after the end of the applicable monthly accounting period and, if such valuation is delivered after such time, it shall be included in the Borrowing Base Certificate for the following monthly period and applied to the then applicable balance of the related Portfolio Investment). For illustrative purposes, if the given fiscal quarter is the fourth quarter ending on December 31, 2012, then (A) the Administrative Agent would initiate the testing of Values using the December 31, 2012 Calculation Values for purposes of determining the scope of the testing under clauses (E)(x) during the month of February with the anticipation of receiving the valuations from the applicable Approved Third-Party Appraiser(s) on or after February 28, 2013 and (B)(xx) if such valuations were received before the 7th Business Day before March 20, 2013, such valuations would be included in the March 20, 2013 Borrowing Base Certificate covering the month of February, or (yy) if such valuations were received after such time, they would be included in the April 20, 2013 Borrowing Base Certificate for the month of March.
For the avoidance of doubt, all calculations of value pursuant to this Section 5.12(b)(ii)(E) shall be determined without application of the Advance Rates.
As used herein, the following terms have the following meanings:
“Advance Rate” means, as to any Portfolio Investment and subject to adjustment as provided in Section 5.13(a), (b) and (c), the following percentages with respect to such Portfolio Investment:
Portfolio Investment |
Quoted |
Unquoted |
Cash, Cash Equivalents and Short-Term U.S. Government Securities |
|
|
Long-Term U.S. Government Securities |
95% |
0% |
Performing First Lien Bank Loans |
85% |
75% |
Performing Unitranche Loans |
80% |
70% |
Performing Second Lien Bank Loans |
75% |
65% |
Performing Cash Pay High Yield Securities |
70% |
60% |
Performing Cash Pay Mezzanine Investments |
65% |
55% |
Performing Non-Cash Pay High Yield Securities |
60% |
50% |
Performing Non-Cash Pay Mezzanine Investments |
55% |
45% |
Non-Performing First Lien Bank Loans |
45% |
45% |
Non-Performing Unitranche Loans |
40% |
40% |
Non-Performing Second Lien Bank Loans |
40% |
30% |
Non-Performing High Yield Securities |
30% |
30% |
Non-Performing Cash Pay Mezzanine Investments |
30% |
25% |
Performing Common Equity (and zero cost or penny warrants with performing debt) |
30% |
20% |
Non-Performing Common Equity |
0% |
0% |
Structured Finance Obligations and Finance Leases |
0% |
0% |
“Bank Loans” means debt obligations (including term loans, notes, revolving loans, debtor-in-possession financings, the funded and unfunded portion of revolving credit lines and letter of credit facilities and other similar loans and investments including interim loans and senior subordinated loans) which are generally under a loan or credit facility (whether or not syndicated) or note purchase agreement.
“Capital Stock” of any Person means any and all shares of corporate stock (however designated) of and any and all other Equity Interests and participations representing ownership interests (including membership interests and limited liability company interests) in, such Person.
“Cash” has the meaning assigned to such term in Section 1.01 of this Agreement.
“Cash Equivalents” has the meaning assigned to such term in Section 1.01 of this Agreement.
“Finance Lease” means any transaction representing the obligation of a lessee to pay rent or other amounts under a lease which is required to be classified and accounted for as a capital lease on the balance sheet of such lessee under GAAP.
“First Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a first lien and first priority perfected security interest (subject to Liens for “ABL” revolvers and customary encumbrances) on a substantial portion of the assets of the respective borrower and guarantors obligated in respect thereof.
“High Yield Securities” means debt Securities and Preferred Stock, in each case (a) issued by public or private issuers, (b) issued pursuant to an effective registration statement or pursuant to Rule 144A under the Securities Act (or any successor provision thereunder) or other exemption to the Securities Act and (c) that are not Cash Equivalents, Mezzanine Investments or Bank Loans.
“Long-Term U.S. Government Securities” means U.S. Government Securities maturing more than one year from the applicable date of determination.
“Mezzanine Investments” means debt Securities (including convertible debt Securities (other than the “in-the-money” equity component thereof)) and Preferred Stock in each case (a) issued by public or private issuers, (b) issued without registration under the Securities Act, (c) not issued pursuant to Rule 144A under the Securities Act (or any successor provision thereunder), (d) that are not Cash Equivalents and (e) contractually subordinated in right of payment to other debt of the same issuer.
“Non-Performing Common Equity” means Capital Stock (other than Preferred Stock) and warrants of an issuer having any debt outstanding that is non-Performing.
“Non-Performing First Lien Bank Loans” means First Lien Bank Loans other than Performing First Lien Bank Loans.
“Non-Performing High Yield Securities” means High Yield Securities other than Performing High Yield Securities.
“Non-Performing Mezzanine Investments” means Mezzanine Investments other than Performing Mezzanine Investments.
“Non-Performing Portfolio Investment” means Portfolio Investments for which the issuer is in default of any payment obligations of principal or interest in respect thereof after the expiration of any applicable grace period.
“Non-Performing Second Lien Bank Loans” means Second Lien Bank Loans other than Performing Second Lien Bank Loans.
“Non-Performing Unitranche Loans” means Unitranche Loans other than Performing Unitranche Loans.
“Performing” means (a) with respect to any Portfolio Investment that is debt, the issuer of such Portfolio Investment is not in default of any payment obligations in respect thereof after the expiration of any applicable grace period and (b) with respect to any Portfolio Investment that is Preferred Stock, the issuer of such Portfolio Investment has not failed to meet any scheduled redemption obligations or to pay its latest declared cash dividend, after the expiration of any applicable grace period.
“Performing Cash Pay High Yield Securities” means High Yield Securities (a) as to which, at the time of determination, not less than 2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly, quarterly, semiannual or annual period (as applicable) is payable in cash and (b) which are Performing.
“Performing Cash Pay Mezzanine Investments” means Mezzanine Investments (a) as to which, at the time of determination, not less than 2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly, quarterly, semi-annual or annual period (as applicable) is payable in cash and (b) which are Performing.
“Performing Common Equity” means Capital Stock (other than Preferred Stock) and warrants of an issuer all of whose outstanding debt is Performing.
“Performing First Lien Bank Loans” means First Lien Bank Loans which are Performing.
“Performing Non-Cash Pay High Yield Securities” means Performing High Yield Securities other than Performing Cash Pay High Yield Securities.
“Performing Non-Cash Pay Mezzanine Investments” means Performing Mezzanine Investments other than Performing Cash Pay Mezzanine Investments.
“Performing Second Lien Bank Loans” means Second Lien Bank Loans which are Performing.
“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to any shares (or other interests) of other Capital Stock of such Person, and shall include, without limitation, cumulative preferred, non-cumulative preferred, participating preferred and convertible preferred Capital Stock.
“Second Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a second lien and second priority perfected security interest (subject to customary encumbrances) on specified assets of the respective Borrower and guarantors obligated in respect thereof.
“Securities” means common and preferred stock, units and participations, member interests in limited liability companies, partnership interests in partnerships, notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, including debt instruments of public and private issuers and tax-exempt securities (including warrants, rights, put and call options and other options relating thereto, representing rights, or any combination thereof) and other property or interests commonly regarded as securities or any form of interest or participation therein, but not including Bank Loans.
“Securities Act” means the United States Securities Act of 1933, as amended.
“Short-Term U.S. Government Securities” means U.S. Government Securities maturing within one year of the applicable date of determination.
“Structured Finance Obligation” means any obligation issued by a special purpose vehicle and secured directly by, referenced to, or representing ownership of, a pool of receivables or other financial assets of any obligor, including collateralized debt obligations and mortgaged-backed securities. For the avoidance of doubt, if an obligation satisfies the definition of “Structured Finance Obligation”, such obligation shall not (a) qualify as any other category of Portfolio Investment and (b) be included in the Borrowing Base.
“U.S. Government Securities” has the meaning assigned to such term in Section 1.01.
“Unitranche Loan” means a Bank Loan that is a First Lien Bank Loan, a portion of which is, in effect, subject to superpriority rights of other lenders following an event of default (such portion, a “second out” portion). The Borrower’s investment in the second out portion shall be treated as a Unitranche Loan for purposes of determining the applicable Advance Rate for such Portfolio Investment under this Agreement.
“Value” means, with respect to any Portfolio Investment, the lower of:
(i) the most recent internal market value as determined pursuant to Section 5.12(b)(ii)(C) and
(ii) the most recent external market value as determined pursuant to Section 5.12(b)(ii)(A) and (B).
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and accrued interest on each Loan and all fees payable hereunder (other than Unasserted Contingent Obligations) have been paid in full and all Letters of Credit have expired, been terminated, Cash Collateralized or backstopped and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:
Notwithstanding the foregoing provisions of this Section:
For purposes of clause (f) of this Section, the aggregate amount of an Investment at any time shall be deemed to be equal to (A) the aggregate amount of cash, together with the aggregate fair market value of property, loaned, advanced, contributed, transferred or otherwise invested that gives rise to such Investment minus (B) the aggregate amount of dividends, distributions or other payments received in cash in respect of such Investment; provided that in no event shall the aggregate amount of such Investment be deemed to be less than zero; the amount of an Investment shall not in any event be reduced by reason of any write-off of such Investment nor increased by any increase in the amount of earnings retained in the Person in which such Investment is made that have not been dividended, distributed or otherwise paid out.
Nothing herein shall be deemed to prohibit the payment of Restricted Payments by any Subsidiary of the Borrower to the Borrower or to any other Subsidiary Guarantor.
EVENTS OF DEFAULT
If any of the following events (“Events of Default”) shall occur and be continuing:
then, and in every such event (other than an event with respect to the Borrower described in clause (i) or (j) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder and under the other Loan Documents, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (i) or (j) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder and under the other Loan Documents, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
In the event that the Loans shall be declared, or shall become, due and payable pursuant to the immediately preceding paragraph then, upon notice from the Administrative Agent or Lenders with LC Exposure representing more than 50% of the total LC Exposure demanding the deposit of Cash Collateral pursuant to this paragraph, the Borrower shall immediately deposit into the Letter of Credit Collateral Account cash in an amount equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (i) or (j) of this Article.
Notwithstanding anything to the contrary contained herein, on the CAM Exchange Date, to the extent not otherwise prohibited by law, (a) the Lenders shall automatically and without further act be deemed to have exchanged interests in the Designated Obligations such that, in lieu of the interests of each Lender in the Designated Obligations under each Loan in which it shall participate as of such date, such Lender shall own an interest equal to such Lender’s CAM Percentage in the Designated Obligations under each of the Loans and (b) simultaneously with the deemed exchange of interests pursuant to clause (a) above, the interests in the Designated Obligations to be received in such deemed exchange shall, automatically and with no further action required, be converted into the Dollar Equivalent of such amount (as of the Business Day immediately prior to the CAM Exchange Date) and on and after such date all amounts accruing and owed to the Lenders in respect of such Designated Obligations shall accrue and be payable in Dollars at the rate otherwise applicable hereunder. Each Lender, each Person acquiring a participation from any Lender as contemplated by Section 9.04 and the Borrower hereby consents and agrees to the CAM Exchange. The Borrower and the Lenders agree from time to time to execute and deliver to the Administrative Agent all such promissory notes and other instruments and documents as the Administrative Agent shall reasonably request to evidence and confirm the respective interests and obligations of the Lenders after giving effect to the CAM Exchange, and each Lender agrees to surrender any promissory notes originally received by it in connection with its Loans hereunder to the Administrative Agent against delivery of any promissory notes so executed and delivered; provided that the failure of the Borrower to execute or deliver or of any Lender to accept any such promissory note, instrument or document shall not affect the validity or effectiveness of the CAM Exchange. As a result of the CAM Exchange, on and after the CAM Exchange Date, each payment received by the Administrative Agent pursuant to any Loan Document in respect of the Designated Obligations shall be distributed to the Lenders pro rata in accordance with their respective CAM Percentages (to be redetermined as of each such date of payment).
THE ADMINISTRATIVE AGENT
Any resignation by Truist as Administrative Agent pursuant to this Section shall also constitute its resignation as an Issuing Bank and a Swingline Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank and Swingline Lender, (b) the retiring Issuing Bank and Swingline Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.
Each Lender, by delivering its signature page to this Agreement or any Assignment and Assumption and funding any Loan shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be approved by the Administrative Agent, Required Lenders or Lenders.
MISCELLANEOUS
Sixth Street Specialty Lending, Inc.
888 Seventh Avenue, 41st Floor
New York, New York 10019
Attention: Ian Simmonds
Telecopy Number: (212) 430-4639
Telephone: (212) 601-4739
Truist Bank
3333 Peachtree Road, 8th Floor
Atlanta, Georgia 30326
Attention: Hays Wood
Telecopy Number: (404) 836-5879
with a copy to:
Truist Bank
303 Peachtree Street, NE, 25th Floor
Atlanta, GA 30308
Attention: Karen Weich
Email:agency.services@truist.com
Telecopy Number: 801-453-4108
Truist Bank
303 Peachtree Street, NE, 25th Floor
Atlanta, GA 30308
Attention: Karen Weich
Email:agency.services@truist.com
Telecopy Number: 801-453-4108
JPMorgan Chase Bank, N.A.
Ground floor, 1st to 6th floors, Platina 3, Kodbis, Floor 03
Bengaluru, 560 103, India
Attention: Sneha Machani
Telecopy Number: (201) 244-3885
Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).
(i) Notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
Each party hereto understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with
such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the fraud, willful misconduct or gross negligence of Administrative Agent, any Lender or their respective Related Parties, as determined by a final, non-appealable judgment of a court of competent jurisdiction. The Platform and any electronic communications media approved by the Administrative Agent as provided herein are provided “as is” and “as available”. None of the Administrative Agent or its Related Parties warrant the accuracy, adequacy, or completeness of such media or the Platform and each expressly disclaims liability for errors or omissions in the Platform and such media. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Administrative Agent and any of its Related Parties in connection with the Platform or the electronic communications media approved by the Administrative Agent as provided for herein.
provided further that (x) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Banks or the Swingline Lenders hereunder without the prior written consent of the Administrative Agent, the Issuing Banks or the Swingline Lenders, as the case may be and (y) the consent of Lenders holding not less than two-thirds of the Revolving Credit Exposure and unused Commitments will be required (A) for any adverse change affecting the provisions of this Agreement relating to the determination of the Borrowing Base (excluding changes to the provisions of Section 5.12(b)(ii)(E) and (F), but including changes to the provisions of Section 5.12(c)(ii) and the definitions set forth in Section 5.13), and (B) for any release of any material portion of the Collateral other than for fair value or as otherwise permitted hereunder or under the other Loan Documents.
Anything in this Agreement to the contrary notwithstanding, no waiver or modification of any provision of this Agreement or any other Loan Document that could reasonably be expected to adversely affect the Lenders of any Class in a manner that does not
affect all Classes equally shall be effective against the Lenders of such Class unless the Required Lenders of such Class shall have concurred with such waiver or modification. Anything in this Agreement to the contrary notwithstanding, this Agreement may be amended by the Borrower with the consent of the Administrative Agent and any Non-Extending Lender (but without the consent of the Required Lenders) for the sole purpose of extending the Commitments of such Non-Extending Lender so that such Non-Extending Lender becomes an Extending Lender hereunder.
The Borrower shall not be liable to any Indemnitee for any special, indirect, consequential or punitive damages arising out of, in connection with, or as a result of the Transactions asserted by an Indemnitee against the Borrower or any other Obligor; provided that the foregoing limitation shall not be deemed to impair or affect the obligations of the Borrower under the preceding provisions of this subsection.
Each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceedings under the laws of the United States or any State thereof, in respect of claims arising out of this Agreement; provided that the Granting Lender for
each SPC hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage and expense arising out of their inability to institute any such proceeding against its SPC. In addition, notwithstanding anything to the contrary contained in this Section, any SPC may (i) without the prior written consent of the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to its Granting Lender or to any financial institutions providing liquidity and/or credit facilities to or for the account of such SPC to fund the Loans made by such SPC or to support the securities (if any) issued by such SPC to fund such Loans (but nothing contained herein shall be construed in derogation of the obligation of the Granting Lender to make Loans hereunder); provided that neither the consent of the SPC or of any such assignee shall be required for amendments or waivers hereunder except for those amendments or waivers for which the consent of participants is required under paragraph (f) below, and (ii) disclose on a confidential basis (in the same manner described in Section 9.13(b)) any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of a surety, guarantee or credit or liquidity enhancement to such SPC.
For purposes of this Section, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent any Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries; provided that, in the case of Information received from the Borrower or any of its Subsidiaries after the date hereof; such Information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
(ii) “Covered Entity” means any of the following:
(A) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(B) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(C) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
(iii) “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
(iv) “QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
Exhibit 31.1
CEO CERTIFICATION
I, Joshua Easterly, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Sixth Street Specialty Lending, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 3, 2023 |
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By: |
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/s/ Joshua Easterly |
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Joshua Easterly |
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Chief Executive Officer |
Exhibit 31.2
CFO CERTIFICATION
I, Ian Simmonds, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Sixth Street Specialty Lending, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 3, 2023 |
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By: |
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/s/ Ian Simmonds |
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Ian Simmonds |
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Chief Financial Officer |
Exhibit 32
Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the quarterly report on Form 10-Q of Sixth Street Specialty Lending, Inc. (the “Company”) for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Joshua Easterly as Chief Executive Officer of the Company, and Ian Simmonds, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Joshua Easterly |
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Name: |
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Joshua Easterly |
Title: |
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Chief Executive Officer |
Date: |
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August 3, 2023 |
/s/ Ian Simmonds |
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Name: |
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Ian Simmonds |
Title: |
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Chief Financial Officer |
Date: |
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August 3, 2023 |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.