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Item 7. Management’s Discussion and Analysis

2022-02-28 compared with 2021-03-04 · 157 added, 176 removed, 330 unchanged (50% of the section changed)

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The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto in Part II, Item 8 of this Form 10-K “Consolidated Financial Statements and Supplementary Data.” This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in Part I, Item 1A of this Form 10-K “Risk Factors.” Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Form 10-K.

The year ended December 31, 2018 represents the period from November 20, 2018 (commencement of operations) to December 31, 2018.

Overview and Investment Framework

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Our investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation.

Under normal market conditions, we generally invest at least 80% of our total assets (net assets plus borrowings for investment purposes) in secured debt investments (including investments that are secured by equity interests) and our portfolio is composed primarily of first lien senior secured and unitranche loans (including first out/last out loans), generally with total investment sizes less than $300 million, which criteria may change from time to time.

To a lesser extent, we have and may continue to also invest in second lien, third lien, unsecured or subordinated loans, generally with total investment sizes less than $100 million, which criteria may change from time to time, and other debt and equity securities.

Under normal market conditions, we generally invest at least 80% of our total assets (net assets plus borrowings for investment purposes) in secured debt investments and our portfolio is composed primarily of first lien senior secured and unitranche loans.

To a lesser extent, we have and may continue to also invest in second lien, third lien, unsecured or subordinated loans and other debt and equity securities.

We do not currently focus on investments in issuers that are distressed or in need of rescue financing.

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The proceeds from the Initial Drawdown and availability under our credit facilities provided us with the necessary seed capital to commence operations.

See “—Financial Condition, Liquidity and Capital Resources—Borrowings .” We anticipate raising additional equity capital for investment purposes through additional closings under the Private Offering.

See “—Financial Condition, Liquidity and Capital Resources—Borrowings .”

On October 28, 2021, the Company priced its IPO, issuing 9,180,000 of its common shares of beneficial interest at a public offering price of $26.15 per share.

Net of underwriting fees, the Company received net cash proceeds, before offering expenses, of $230.6 million.

On November 4, 2021, the underwriters exercised their option to purchase an additional 1,377,000 shares of common shares, which resulted in net cash proceeds, before offering expenses, of $33.8 million.

The Company’s common shares began trading on the NYSE under the symbol “BXSL” on October 28, 2021.

Key Components of Our Results of Operations

We focus primarily on loans and securities, including syndicated loans, of private U.S.

companies, specifically small and middle market companies, which we define as companies with annual revenue of $50 million to $2.5 billion, at the time of investment.

Specifically, for our originated investments, we target companies with $25 million to $75 million of EBITDA.

companies, which includes small and middle market companies.

In many market environments, we believe such a focus offers an opportunity for superior risk-adjusted returns.

Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment, trading prices of loans and other securities and the competitive environment for the types of investments we make.

We generate revenues in the form of interest income from the debt securities we hold and dividends and capital appreciation on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights.

We generate revenues in the form of interest income from the debt securities we hold and dividends.

Our debt investments typically have a term of five to eight years and bear interest at floating rates on the basis of a benchmark such as LIBOR.

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The principal amount of loans and any accrued but unpaid interest generally become due at the maturity date.

In addition, we generate revenue in the form of commitment, loan origination, structuring or diligence fees, fees for providing managerial assistance to our portfolio companies, and possibly consulting fees.

In addition, we generate revenue from various fees in the ordinary course of business such as in the form of structuring, consent, waiver, amendment, syndication and other miscellaneous fees as well as fees for managerial assistance rendered by us.

Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory services to us, and the base compensation, bonus and benefits, and the routine overhead expenses, of such personnel allocable to such services, will be provided and paid for by the Adviser.

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and (iii) any internal audit group personnel of Blackstone or any of its affiliates;

and (c) all other expenses of our operations and transactions.

With respect to costs incurred in connection with the Company's organization and offering costs, if actual organization and offering costs incurred exceed 0.10% of our total Capital Commitments, the Adviser or its affiliates will bear the excess costs.

To the extent our Capital Commitments later increase, the Adviser or its affiliates may be reimbursed for past payments of excess organization and offering costs made on our behalf provided that the total organization and offering costs borne by us do not exceed 0.10% of total Capital Commitments and provided further that the Adviser or its affiliates may not be reimbursed for payment of excess organization and offering expenses that were incurred more than three years prior to the proposed reimbursement.

Any sales load, platform fees, servicing fees or similar fees or expenses charged directly to an investor in our Private Offering by a placement agent or similar party will not be considered organization or offering expenses of the Company for purposes of our cap on organization and offering expenses.

and (c) all other expenses of our operations, administrations and transactions.

From time to time, the Adviser, the Administrator or their affiliates may pay third-party providers of goods or services.

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However, the Administrator may seek reimbursement for such costs in future periods.

All of the foregoing expenses will ultimately be borne by our shareholders, subject to the cap on organization and offering expenses described above.

Costs and expenses of the Administrator and the Adviser that are eligible for reimbursement by us will be reasonably allocated to the Company on the basis of time spent, assets under management, usage rates, proportionate holdings, a combination thereof or other reasonable methods determined by the Administrator in accordance with policies adopted by the Board.

All of the foregoing expenses will ultimately be borne by our shareholders.

Costs and expenses of the Administrator and the Adviser that are eligible for reimbursement by us will be reasonably allocated on the basis of time spent, assets under management, usage rates, proportionate holdings, a combination thereof or other reasonable methods determined by the Administrator in accordance with policies adopted by the Board.

On December 12, 2018, we entered into an Expense Support Agreement with the Adviser.

The Expense Support Agreement provides that, at such times as the Adviser determines, the Adviser may pay certain Expense Payments of the Company, provided that no portion of the payment will be used to pay any of our interest expense.

The Expense Support Agreement provides that, at such times as the Adviser determines, the Adviser may pay certain Expense Payments on behalf of us, provided that no portion of the payment will be used to pay any of our interest expense.

Such Expense Payment must be made in any combination of cash or other immediately available funds no later than forty-five days after a written commitment from the Adviser to pay such expense, and/or by an offset against amounts due from us to the Adviser or its affiliates.

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The Adviser may waive its right to receive all or a portion of any Reimbursement Payment in any particular calendar quarter, so that such Reimbursement Payment may be reimbursable in a future calendar quarter.

As of December 31, 2021 there were no unreimbursed Expense Payments remaining.

Portfolio and Investment Activity

For the year ended December 31, 2021, we acquired $8,378.7 million aggregate principal amount of investments (including $1,672.1 million of unfunded commitments), $8,189.5 million of which was first lien debt, $70.8 million of which was second lien debt, $52.5 million of which was unsecured debt and $65.9 million of which was equity.

For the year ended December 31, 2020, we acquired $4,912.8 million aggregate principal amount of investments (including $580.2 million of unfunded commitments), $4,729.6 million of which was first lien debt, $35.4 million of which was second lien debt, $129.9 million of which was unsecured debt and $17.9 million of which was equity.

For the year ended December 31, 2019, we acquired $3,298.8 million aggregate principal amount of investments (including $173.0 million of unfunded commitments), $3,243.2 million of which was first lien debt, $42.1 million of which was second lien debt and $13.5 million of which was equity.

For the year ended December 31, 2018, we acquired $616.9 million aggregate principal amount of investments (including $54.7 million of unfunded commitments), $610.5 million of which was first lien debt and $6.4 million of which was second lien debt.

Our investment activity is presented below (information presented herein is at amortized cost unless otherwise indicated) (dollar amounts in thousands):

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Unsecured debt 52,670 129,933 —

Equity 17,852 13,487 —

Equity investments 90,286 17,852 13,487

Total $ 6,884,436 $ 4,619,525 $ 3,160,377

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Unsecured debt (52,537) (131,629) —

Equity (715) — —

Equity investments (932) (715) —

Total $ (2,734,419) $ (2,074,506) $ (572,830)

Number of portfolio companies 148 81 56

Number of new investment commitments in new portfolio companies 117 40 38

Average new investment commitment amount $ 58,841 $ 115,488 $ 83,168

Weighted average yield of new investment commitments

7.03 % 7.42 % 7.88 %

Weighted average yield on investments fully sold or paid down 7.45 % 7.81 % 7.44 %

Weighted average yield on debt and income producing investments, at amortized cost (1)(2)

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7.21 % 7.68 % 8.57 %

Average loan to value (LTV) (3)

44.0 % 45.8 % 54.3 %

Percentage of debt investments bearing a floating rate 99.9 % 100.0 % 100.0 %

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The weighted average total portfolio yield at fair value was 7.08%, 7.64% and 8.53%, respectively.

(3) Includes all private debt investments for which fair value is determined by our Board in conjunction with a third-party valuation firm and excludes quoted assets.

Average loan-to-value represents the net ratio of loan-to-value for each portfolio company, weighted based on the fair value of total applicable private debt investments.

Loan-to-value is calculated as the current total net debt through each respective loan tranche divided by the estimated enterprise value of the portfolio company as of the most recent quarter end.

As of December 31, 2021, our portfolio companies had a weighted average annual revenue of $462 million and weighted average annual EBITDA of $116 million.

These calculations include all private debt investments for which fair value is determined by the Board of Trustees in conjunction with a third-party valuation firm and excludes quoted assets.

Amounts are weighted based on fair market value of each respective investment.

Amounts were derived from the most recently available portfolio company financial statements, have not been independently by us, and may reflect a normalized or adjusted amount.

Accordingly, we make no representation or warranty in respect of this information.

Our investments consisted of the following (dollar amounts in thousands):

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Results of Operations

The following table represents our operating results (dollar amounts in thousands):

The following table represents the operating results (dollar amounts in thousands):

For The Year Ended December 31,

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Payment-in-kind interest income 8,188 7,119 988

Dividend income 219 — —

Fee income 5,785 725 680

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The size of our investment portfolio at fair value increased to $9,855.4 million at December 31, 2021 from $5,585.9 million at December 31, 2020.

Additionally, for the year ended December 31, 2020, we accrued $48.9 million of non-recurring income (e.g.

prepayment premiums, accelerated accretion of upfront loan origination fees and unamortized discounts and ticking fees) as compared to $3.7 million in the prior year.

Total investment income increased to $148.0 million for the year ended December 31, 2019 from $3.2 million in the prior year primarily driven by our deployment of capital, increased balance of our investments and a full year of operations as compared to the partial period in the prior year.

Additionally, for the year ended December 31, 2021, we recorded $60.9 million of non-recurring interest income (e.g.

prepayment premiums, accelerated accretion of upfront loan origination fees and unamortized discounts, etc.) as compared to $48.9 million in the prior year.

Total investment income increased to $389.6 million for the year ended December 31, 2020 from $148.0 million in the prior year primarily driven by our deployment of capital and the increased balance of our investments, higher level of prepayment related income, partially offset by lower weighted average yield on our investments.

The size of our investment portfolio at fair value increased to $5,585.9 million at December 31, 2020 from $3,092.4 million at December 31, 2019.

Additionally, for the year ended December 31, 2019, we

accrued $3.7 million of non-recurring income (e.g.

prepayment premiums, accelerated accretion of upfront loan origination fees and unamortized discounts and ticking fees) as compared to $0.0 million in the prior year.

The COVID-19 pandemic could cause operational and/or liquidity issues at our portfolio companies which could restrict their ability to make cash interest payments.

Additionally, for the year ended December 31, 2020, we recorded $48.9 million of non-recurring interest income (e.g.

prepayment premiums, accelerated accretion of upfront loan origination fees and unamortized discounts, etc.) as compared to $3.7 million in the prior year.

As the impact of COVID-19 persists, it could cause operational and/or liquidity issues at our portfolio companies which could restrict their ability to make cash interest payments.

Additionally, we may experience full or partial losses on our investments which may ultimately reduce our investment income in future periods.

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Other general and administrative 4,794 4,166 3,033

Organization costs — — 670

Amortization of offering costs — 1,509 1,090

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Total expenses (including excise tax expense) 279,552 148,594 73,964

Management fees waived (4,195) — —

Incentive fees waived (2,333) — —

Expense support — — (570)

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Interest Expense

Total interest expense (including unused fees and other debt financing expenses), increased to $65.9 million for the year ended December 31, 2020 from $35.4 million in the prior year primarily driven by increased borrowings under our credit facilities and our unsecured bond issuances.

Total interest expense (including unused fees and other debt financing expenses), increased to $120.5 million for the year ended December 31, 2021 from $65.9 million in the prior year primarily driven by increased borrowings under our credit facilities and our unsecured bond issuances resulting from increased deployment of capital for investments.

The average principal debt outstanding increased to $4,000.8 million for the year ended December 31, 2021 from $1,902.7 million in the prior year, partially offset by a decrease in our weighted average interest rate to 2.92% for the year ended December 31, 2021 from 3.26% in the prior year.

Total interest expense (including unused fees and other debt financing expenses), increased to $35.4 million for the year ended December 31, 2019 from $1.4 million in the prior year primarily driven by increased borrowings under our credit facilities related to increased deployment of capital for investments and a full year of operations as compared to a partial period in the prior year.

The average principal debt outstanding increased to $1,902.7 million for the year ended December 31, 2020 from $776.6 million in the prior year, partially offset by a decrease in our weighted average interest rate to 3.26% for the year ended December 31, 2020 from 4.36% in the prior year.

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Management fees increased to $62.4 million for the year ended December 31, 2021 from $32.9 million in the prior year primarily due to an increase in gross assets.

The Adviser voluntarily waived management fees following the IPO such that the management fee will remain at 0.75% for a period of two years following the IPO (versus the contractual rate of 1.00%),

which resulted in waivers of $4.2 million and $0.0 million for the year ended December 31, 2021 and December 31, 2020, respectively.

Our total gross assets increased to $10,177.5 million at December 31, 2021 from $5,950.9 million at December 31, 2020.

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Income based incentive fees increased to $67.3 million for the year ended December 31, 2021 from $42.0 million in the prior year primarily due to our deployment of capital.

The Adviser voluntarily waived incentive fees following the IPO such that the fee will remain at 15.0% for a period of two years following the IPO (versus the contractual rate of 17.5%), which resulted in waivers of $2.3 million and $0.0 million for the year ended December 31, 2021 and December 31, 2020, respectively.

Pre-incentive fee net investment income increased to $432.9 million for the year ended December 31, 2021 from $279.9 million in the prior year.

Income based incentive fees increased to $13.8 million for the year ended December 31, 2019 from $0.0 million in the prior year primarily due to our deployment of capital and a full year of operations as compared to a partial period in the prior year which resulted in higher pre-incentive fee income returns.

Capital Gains Based Incentive Fees

We accrued capital gains incentive fees of $(3.1) million for the year ended December 31, 2020 compared to $4.2 million for the prior year.

The reversal of previously accrued incentive fees was attributable to net realized and unrealized losses in the current year.

Income based incentive fees increased to $42.0 million for the year ended December 31, 2020 from $13.8 million in the prior year primarily due to our deployment of capital.

Pre-incentive fee net investment income increased to $279.9 million for the year ended December 31, 2020 from $92.1 million in the prior year.

Capital Gains Incentive Fees

We accrued capital gains incentive fees of $16.3 million for the year ended December 31, 2021 compared to $(3.1) million for the prior year, none of which was payable under the Investment Advisory Agreement as of each respective year end.

The accrual for any capital gains incentive fee under U.S.

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Other Expenses

Organization costs and offering costs include expenses incurred in our initial formation and our Private Offering.

Professional fees include legal, rating agencies, audit, tax, valuation, technology and other professional fees incurred related to the management of us.

Administrative service fees represent fees paid to the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our executive officers, their respective staff and other non-investment professionals that perform duties for us.

Prior to the IPO, offering costs included costs associated with our private offering.

Other general and administrative expenses include insurance, filing, research, our sub-administrator, subscriptions and other costs.

Total other expenses increased to $10.9 million for the year ended December 31, 2020 from $7.9 million in the prior year primarily driven by an increase in certain general and administrative expenses and administrative service expense in the prior year.

Total other expenses increased to $10.6 million for the year ended December 31, 2021 from $10.4 million in the prior year primarily driven by an increase in professional fees and certain general and administrative expenses, partially offset by a reduction in offering costs.

The increase in costs was attributable to servicing a growing investment portfolio.

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Net unrealized gain (loss) on investments $ 104,178 $ (16,582) $ 28,329

For the year ended December 31, 2021, the net unrealized gain was primarily driven by an increase in fair value of our debt investments as compared to December 31, 2020.

The fair value of our debt investments as a percentage of principal increased by 1.0% as compared to a 0.6% decrease in fair value of our debt investments in the prior year.

The unrealized gains were mainly driven by a recovery from the COVID-19 pandemic as credit spreads tightened, individual company fundamentals and the private and syndicated leverage loan markets significantly rebounded from the March 2020 lows.

For the year ended December 31, 2020, the net unrealized loss was primarily driven by a decrease in fair value of our debt investments as compared to December 31, 2019.

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To the extent that the credit risk of our portfolio companies increases as a result of financial impacts due to COVID-19, we may incur additional unrealized losses in the future.

For the year ended December 31, 2019, the net unrealized gain was primarily driven by an increase in the fair value of our debt investments as compared to December 31, 2018.

The fair value of our debt investments as a percentage of principal increased by 1.2% for the year ended December 31, 2019.

Net Realized Gain (Loss)

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Net realized gain (loss) on foreign currency transactions (3,217) 17 61

Net realized gain (loss) on derivative — — (581)

Net realized gain (loss) on investments $ 4,568 $ (4,361) $ 4,023

For the year ended December 31, 2021, we generated realized gains of $18.2 million, respectively, partially offset by realized losses of $10.4 million, respectively, primarily from full or partial sales of our debt investments.

For the year ended December 31, 2020, we generated realized gains of $20.9 million, where were more than offset by realized losses of $25.3 million, primarily from full or partial sales of quoted loans, including a $20.5 million loss relating to Travelport Finance S.A.R.L.

For the year ended December 31, 2019, we generated realized gains of $4.8 million, partially offset by realized losses of $0.9 million, primarily from full or partial sales of quoted loans.

For the year ended December 31, 2018, we generated realized losses of $0.6 million relating to our acquisition of the Syndicated Warehouse.

The COVID-19 pandemic may cause us to experience full or partial losses on our investments upon the exit or restructuring of our investments.

As the impact of COVID-19 persists, it may cause us to experience full or partial losses on our investments upon the exit or restructuring of our investments.

Financial Condition, Liquidity and Capital Resources

We generate cash from the net proceeds from the drawdown of Capital Commitments, issuances of unsecured debt, proceeds from net borrowings on our credit facilities and income earned on our debt investments.

Our liquidity and capital resources are generated primarily from cash flows from interest, dividends and fees earned from our investments and principal repayments, our credit facilities, debt securitization transactions, and other secured and unsecured debt.

We may also generate cash flow from operations, future borrowings and future offerings of securities including public and/or private issuances of debt and/or equity securities through both registered offerings and private offerings.

The primary uses of our cash and cash equivalents are for (i) originating loans and purchasing senior secured debt investments, (ii) funding the costs of our operations (including fees paid to our Adviser and expense reimbursements paid to our Administrator), (iii) debt service, repayment and other financing costs of our borrowings and (iv) cash distributions to the holders of our shares.

As of December 31, 2020 and December 31, 2019, we had four and four revolving credit facilities outstanding, respectively.

During the year ended December 31, 2020, we also issued two unsecured bonds totaling $1.2 billion in aggregate principal amount.

Refer to “— Borrowings ” below.

As of December 31, 2021 and December 31, 2020, we had four and four revolving credit facilities outstanding and we had five and two issuances of unsecured bonds outstanding, respectively.

We may from time to time enter into additional credit facilities, increase the size of our existing credit facilities or issue further debt securities.

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Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation to cover any outstanding unfunded commitments we are required to fund.

Cash and cash equivalents as of December 31, 2020, taken together with our $1,055.4 million of available capacity under our credit facilities (subject to borrowing base availability) and our $713.3 million of uncalled Capital Commitments is expected to be sufficient for our investing activities and to conduct our operations in the near term.

Although we were able to issue unsecured debt during the year ended December 31, 2020, a continued disruption in the financial markets caused by the COVID-19 outbreak could restricted our access to financing in the future.

We may not be able to find new financing for future investments or liquidity needs and, even if we are able to obtain such financing, such financing will likely not be on as favorable terms as we could have obtained prior to the outbreak of the pandemic.

Cash and cash equivalents as of December 31, 2021, taken together with our $705.7 million of available capacity under our credit facilities (subject to borrowing base availability) is expected to be sufficient for our investing activities and to conduct our operations in the near term.

Additionally, we held $354.1 million of Level 2 debt investments as of December 31, 2021, which could provide additional liquidity if necessary.

Although we were able to issue unsecured debt during the year ended December 31, 2021, a continued disruption in the financial markets caused by the COVID-19 outbreak or any other negative economic development could restrict our access to financing in the future.

We may not be able to find new financing for future investments or liquidity needs and, even if we are able to obtain such financing, such financing may not be on as favorable terms as we have recently obtained.

These factors may limit our ability to make new investments and adversely impact our results of operations.

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During the year ended December 31, 2021, cash used in operating activities was $3,828.5 million, primarily as a result of funding portfolio investments of $6,824.3 million, partially offset by proceeds from sale of investments of $2,734.4 million .

Cash provided by financing activities was $3,713.4 million during the period, which was primarily as a result of net borrowings on our credit facilities and our unsecured debt issuances of $2,998.8 million ;

our proceeds from issuance of common shares of $981.1 million ;

and partially offset by dividends paid in cash of $253.8 million.

As of December 31, 2020 , we had $218.0 million in cash and cash equivalents.

During the year ended December 31, 2020 , cash used in operating activities was $2,320.2 million, primarily as a result of funding portfolio investments of $4,485.2 million, partially offset by proceeds from sale of investments of $2,030.8 million.

Cash provided by financing activities was $2,472.7 million during the period, which was primarily the result of proceeds from the issuance of shares of $1,582.5 million and net borrowings on our credit facilities and our unsecured debt issuances of $1,044.6 million, partially offset by dividends paid in cash of $145.1 million.

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Cash provided by financing activities was $2,617.6 million during the period, which was primarily the result of proceeds from the issuance of shares of $1,387.8 million and net borrowings on our credit facilities of $1,269.2 million, partially offset by dividends paid in cash of $35.4 million.

As of December 31, 2018, we had $6.2 million in cash and cash equivalents.

During the year ended December 31, 2018, cash used in operating activities was $349.8 million, primarily as a result of funding portfolio investments of $428.1 million, the purchase of the equity interests in the Syndicated Warehouse (discussed below), net of cash of $24.0 million;

partially offset by a decrease in receivables for investments sold of $12.0 million and an increase in payables for investments purchased of $86.8 million.

Cash provided by financing activities was $356.0 million during the period, which was the result of proceeds from the issuance of shares of $239.3 million and net borrowings on our credit facilities of $120.0 million, partially offset by deferred financing costs paid of $2.6 million.

On October 28, 2021, the Company priced its IPO, issuing 9,180,000 of its common shares of beneficial interest at a public offering price of $26.15 per share.

Net of underwriting fees, the Company received net cash proceeds, before offering expenses, of $230.6 million.

The Company’s common shares began trading on the NYSE under the symbol “BXSL” on October 28, 2021.

In connection with the listing of the Company’s common shares on the NYSE, the Board decided to eliminate any outstanding fractional common shares (the “Fractional Shares” ), as permitted by Delaware law by rounding down the number of Fractional Shares held by each of our shareholders to the nearest whole share and paying each shareholder cash for such Fractional Shares.

The following table summarizes the total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements and IPO for the year ended December 31, 2021 (dollar amounts in millions, except share amounts):

Common Share Issuance Date Number of Common Shares Issued Aggregate Offering Price

June 8, 2021 13,869,637 $ 357.0

September 8, 2021 13,723,035 356.3

November 2021 (1)

10,557,000 264.4

Total 38,149,672 $ 977.7

(1) Includes proceeds (net of any underwriting fees) from our initial public offering and the underwriter's exercise of the overallotment option.

The following table summarizes the total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the year ended December 31, 2020 (dollar amounts in millions, except share amounts):

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(1) On December 1, 2020, the Company issued a capital call and delivered capital drawdown notices totaling $571.2 million, of which $3.4 million was received subsequent to December 31, 2020 and recorded as a subscription receivable on the Consolidated Statements of Assets and Liabilities.

The following table summarizes the total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the year ended December 31, 2019 (dollar amounts in millions, except share amounts):

Common Share Issuance Date Number of Common Shares Issued Aggregate Offering Price

The following table summarizes the total shares issued and proceeds received related to our initial capitalization and capital drawdowns delivered pursuant to the Subscription Agreements for the year ended December 31, 2019 (dollar amounts in millions, except share amounts):

Common Share Issuance Date Number of

Shares Issued Aggregate

Offering Price

January 24, 2019 5,666,095 $ 142.1

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December 16, 2019 10,474,169 271.1

10,474,169 271.1

Total 54,499,759 $ 1,393.8

(1) On December 2, 2019, the Company issued a capital call and delivered capital drawdown notices totaling $271.1 million, of which $5.9 million was received subsequent to December 31, 2019 and recorded as a subscription receivable on the Consolidated Statements of Assets and Liabilities.

The following table summarizes the total shares issued and proceeds received related to our initial capitalization and capital drawdowns delivered pursuant to the Subscription Agreements for the year ended December 31, 2018 (dollar amounts in millions, except share amounts):

Common Share Issuance Date Number of Common Shares Issued Aggregate Offering Price

September 14, 2018 60 $ —

November 20, 2018 5,671,181 141.8

December 13, 2018 3,950,078 97.5

Total 9,621,319 $ 239.3

Distributions and Dividend Reinvestment

The following table summarizes our distributions declared and payable for the year ended December 31, 2020 (dollar amounts in thousands, unless otherwise noted):

The following table summarizes our distributions declared and payable for the year ended December 31, 2021 (dollar amounts in thousands, except per share amounts):

Date Declared Record Date Payment Date Per Share Amount Total Amount

February 24, 2021 March 31, 2021 May 14, 2021 $ 0.5000 $ 65,052

June 7, 2021 June 7, 2021 August 13, 2021 0.3736 48,734

June 7, 2021 June 30, 2021 August 13, 2021 0.1264 18,241

September 7, 2021 September 7, 2021 November 12, 2021 0.3750 54,250

September 7, 2021 September 30, 2021 November 12, 2021 0.1250 19,800

October 18, 2021 December 31, 2021 January 31, 2022 0.5300 89,715

Total distributions $ 2.0300 $ 295,792

On October 18, 2021, our Board also declared the following special distributions:

Record Date Payment Date Per Share Amount

January 18, 2022 May 13, 2022 $ 0.1000

March 16, 2022 May 13, 2022 0.1500

May 16, 2022 August 12, 2022 0.2000

July 18, 2022 November 14, 2022 0.2000

Total distributions $ 0.6500

The following table summarizes our distributions declared and payable for the year ended December 31, 2020 (dollars in thousands, except per share amounts):

Date Declared Record Date Payment Date Per Share Amount Total Amount

January 29, 2020 January 29, 2020 May 15, 2020 $ 0.1593 $ 10,241

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shareholders.

During the year ended December 31, 2018, we did not declare or pay any distributions.

With respect to distributions, we have adopted an “opt out” dividend reinvestment plan for shareholders.

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federal, state and local tax consequences as if they received cash distributions.

Refer to Note 8 to the consolidated financial statements for more information on our dividend reinvestment program.

The following table summarizes the amounts received and shares issued to shareholders who have not opted out of our dividend reinvestment plan during the year ended December 31, 2021 (dollars in thousands, except share amounts):

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November 12, 2021 9,944 327,082

Total distributions $ 38,939 1,462,775

The following table summarize the amounts received and shares issued to shareholders who have not opted out of our dividend reinvestment plan during the year ended December 31, 2020 (dollars in thousands, except share amounts):

Payment Date DRIP Shares Value DRIP Shares Issued

January 30, 2020 $ 2,882 112,302

May 15, 2020 4,244 194,694

August 14, 2020 5,437 229,591

November 13, 2020 6,182 248,194

Total $ 18,745 784,781

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Total $ 4,318 168,664

During the year ended December 31, 2018, we did not declare or pay any distributions.

Share Repurchase Plan

On October 18, 2021, the Board approved a share repurchase plan (the “ Company 10b5-1 Plan ”) to acquire up to approximately $262 million (representing the net proceeds from the IPO) in the aggregate of the Company’s common shares at prices below net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act.

The Company put the 10b5-1 Plan in place because it believes that, in the current market conditions, if its common shares are trading below its then-current net asset value per share, it is in the best interest of the Company’s shareholders for the Company to reinvest in its portfolio.

For the year ended December 31, 2021, the Company did not repurchase any of its shares under the Share Repurchase Plan.

Our outstanding debt obligations were as follows (dollar amounts in thousands):

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800,000 800,000 792,757 — —

New 2026 Notes (5)

700,000 700,000 691,662 — —

2027 Notes (5)

650,000 650,000 635,860 — —

2028 Notes (5)

650,000 650,000 637,324 — —

Total $ 6,250,000 $ 5,544,328 $ 5,498,633 $ 705,672 $ 567,292

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Available (2)

Subscription Facility $ 400,000 $ 119,752 $ 119,752 $ 280,248 $ 280,248

Jackson Hole Funding Facility (3)

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Big Sky Funding Facility 400,000 200,346 200,346 199,654 117,599

Revolving Credit Facility (4)

745,000 182,901 182,901 562,099 562,099

2023 Notes (5)

400,000 400,000 394,549 — —

2026 Notes (5)

800,000 800,000 791,281 — —

Total $ 3,570,000 $ 2,514,563 $ 2,500,393 $ 1,055,437 $ 973,382

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dollars or certain other permitted currencies.

As of December 31, 2021, the Company had borrowings denominated in Canadian Dollars (CAD), Euros (EUR) and British Pounds (GBP) of 256.3 million, 18.6 million and 49.8 million, respectively.

As of December 31, 2020, the Company had borrowings denominated in Canadian Dollars (CAD) of 138.1 million.

(5) The carrying value of the Company's 2023 Notes, 2026 Notes, New 2026 Notes, 2027 Notes and 2028 Notes is presented net of unamortized debt issuance costs of $3.3 million, $7.2 million, $8.3 million, $14.1 million and $12.7 million, respectively, as of December 31, 2021.

The carrying value of the Company's 2023 Notes and 2026 Notes is presented net of unamortized debt issuance costs of $5.5 million and $8.7 million, respectively, as of December 31, 2020.

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Consolidated Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 6.

Off-Balance Sheet Arrangements

Portfolio Company Commitments

Our investment portfolio contains and is expected to continue to contain debt investments which are in the form of lines of credit or delayed draw commitments, which require us to provide funding when requested by portfolio companies in accordance with underlying loan agreements.

As of December 31, 2020 and December 31, 2019, we had unfunded delayed draw term loans and revolvers with an aggregate principal amount of $432.3 million and $179.4 million, respectively.

Warehousing Transactions

We entered into two Warehousing Transactions whereby we agreed, subject to certain conditions, to purchase certain assets from parties unaffiliated with the Adviser.

Such Warehousing Transactions were designed to assist us in deploying capital upon receipt of drawdown proceeds.

The Middle Market Warehouse related primarily to originated or anchor investments in middle market loans.

The Syndicated Warehouse related primarily to broadly syndicated loans prior to the acquisition of the equity interests of the Syndicated Warehouse by us and merger of the Syndicated Warehouse with our wholly-owned subsidiary, as described below.

See—“ Item 1A .— Risk Factors — Risks Related to an Investment in the Shares — Risks related to the Warehousing Transactions.

For additional information on our Warehousing Transactions see Item 8.

Consolidated Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 7.

Commitments and Contingencies.

Other Commitments and Contingencies

From time to time, we may become a party to certain legal proceedings incidental to the normal course of its business.

At December 31, 2020 and December 31, 2019, management is not aware of any pending or threatened litigation.

Contractual Obligations

Our contractual obligations consisted of the following as of December 31, 2020 (dollar amounts in thousands):

Payments Due by Period

Total Less than

1 year 1-3 years 3-5 years After 5 years

Jackson Hole Funding Facility $ 362,316 $ — $ 362,316 $ — $ —

Breckenridge Funding Facility 569,000 — 569,000 — —

Big Sky Funding Facility 200,346 — 200,346 — —

Revolving Credit Facility 182,901 — — 182,901 —

2023 Notes 400,000 — 400,000 — —

2026 Notes 800,000 — — — 800,000

Total Contractual Obligations $ 2,514,563 $ — $ 1,531,662 $ 182,901 $ 800,000

Related-Party Transactions

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• Expense Support and Conditional Reimbursement Agreement.

In addition to the aforementioned agreements, we, our Adviser and certain of our Adviser’s affiliates have been granted exemptive relief by the SEC to co-invest with other funds managed by our Adviser or its affiliates in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.

In addition to the aforementioned agreements, we, our Adviser and certain of our Adviser’s affiliates have been granted exemptive relief by the SEC to co-invest with other funds managed by our Adviser or its affiliates in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.

See “ Item 8.

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There is an ongoing global outbreak of COVID-19, which has spread to over 200 countries and territories, including the United States, and has spread to every state in the United States.

The World Health Organization has designated COVID-19 as a pandemic, and numerous countries, including the United States, have declared national emergencies with respect to COVID-19.

The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses.

Such actions are creating disruption in global supply chains, and adversely impacting many industries.

The outbreak has had a continued adverse impact on economic and market conditions and has triggered a period of global economic slowdown.

The outbreak of COVID-19 has had and may continue to have a material adverse impact on our financial condition, liquidity, results of operations and NAV, among other factors.

We expect that these impacts are likely to continue to some extent as the outbreak persists and potentially even longer.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the novel coronavirus on economic and market conditions, and, as a result, present material uncertainty and risk with respect to us and the performance of our investments.

The full extent of the impact and effects of COVID-19 will depend on future developments, including, among other factors, the duration and spread of the outbreak, along with related travel advisories, quarantines and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, the availability of effective vaccines and uncertainty with respect to the duration of the global economic slowdown.

The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19, including new variants, have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses.

Such actions have created disruption in global supply chains, and adversely impacted many industries.

The COVID-19 pandemic (including the restrictive measures taken in response thereto) has to date (i) created temporary business disruption issues for certain of our portfolio companies, and (ii) materially and adversely impacted the value and performance of certain of our portfolio companies in previous periods.

More recently, robust economic activity in the U.S.

has supported a continued recovery, which nevertheless may remain uneven with dispersion across sectors and regions.

Although vaccines have been widely distributed in the U.S., new restrictions and delays in the reopening of establishments and businesses have occurred in some parts of the country.

We believe the economy is continuing to rebound in certain respects, but the uncertainty surrounding the COVID-19 pandemic, including uncertainty regarding new variants of COVID-19 that have emerged in, at least, the United Kingdom, South Africa, India and Brazil, and other factors have and may continue to contribute to significant volatility in the global markets.

COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our performance, financial condition, results of operations and ability to pay distributions.

Critical Accounting Policies

Critical Accounting Estimates

The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ.

Our critical accounting policies should be read in connection with our risk factors described in “Item 1A.

Our critical accounting policies and estimates should be read in connection with our risk factors described in “Item 1A.

Risk Factors.”

Fair Value Measurements

The Company is required to report its investments for which current market values are not readily available at fair value.

The Company values its investments in accordance with Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the applicable measurement date.

The Company values its investments in accordance with FASB ASC 820, Fair Value Measurements (“ ASC 820 ”), which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the applicable measurement date.

ASC 820 prioritizes the use of observable market prices derived from such prices over entity-specific inputs.

Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material.

Consolidated Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 5.

See “– Note 5.

Fair Value Measurements.

Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters.

The Company utilizes mid-market pricing (i.e.

mid-point of average bid and ask prices) to value these investments.

The Company utilizes mid-market pricing (i.e., mid-point of average bid and ask prices) to value these investments.

These market quotations are obtained from independent pricing services, if available;

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Examples of events that would cause market quotations to not reflect fair value could include cases when a security trades infrequently or not at all, causing a quoted purchase or sale price to become stale, or in the event of a “fire sale” by a distressed seller.

All price overrides require approval from the Company’s Board.

All price overrides require approval from the Board.

Where prices or inputs are not available or, in the judgment of the Board, not reliable, valuation techniques based on the facts and circumstances of the particular investment will be utilized.

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These valuation approaches involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments’ complexity.

The Company’s Board undertakes a multi-step valuation process each quarter in connection with determining the fair value of the Company’s investments for which market quotations are not readily available, or are available but deemed not reflective of the fair value of an investment, which includes, among other procedures, the following:

The Company’s Board undertakes a multi-step valuation process each quarter in connection with determining the fair value of the Company’s investments for which reliable market quotations are not readily available, or are available but deemed not reflective of the fair value of an investment, which includes, among other procedures, the following:

• The valuation process begins with each investment being preliminarily valued by the Adviser’s valuation team in conjunction with the Adviser’s investment professionals responsible for each portfolio investment;

• In addition, independent valuation firms engaged by the Board prepare valuations of all the Company’s investments over a de minimis threshold.

• In addition, independent valuation firms engaged by the Board prepare quarter-end valuations of such investments except de minimis investments, as determined by the Adviser.

The independent valuation firms provide a final range of values on such investments to the Board and the Adviser.

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• The Adviser’s Valuation Committee reviews each valuation recommendation to confirm they have been calculated in accordance with the valuation policy and compares such valuations to the independent valuation firms’ valuation ranges to ensure the Adviser’s valuations are reasonable;

• The Valuation Committee makes valuation recommendations to the Audit Committee;

• The Audit Committee reviews the valuation recommendations made by the Adviser's Valuation Committee, including the independent valuation firms' valuations, and once approved, recommends them for approval by the Board;

• The Adviser’s Valuation Committee makes valuation recommendations to the Audit Committee;

• The Audit Committee reviews the valuation recommendations made by the Adviser's Valuation Committee, including the independent valuation firms' quarterly valuations, and once approved, recommends them for approval by the Board;

• The Board reviews the valuation recommendations of the Audit Committee and determines the fair value of each investment in the portfolio in good faith based on the input of the Audit Committee, the Adviser's Valuation Committee and, where applicable, the independent valuation firms and other external service providers.

Valuation of each of our investments will generally be made as described above as of the end of each fiscal quarter.

In cases where we determine our NAV at times other than a quarter end, we intend to update the value of securities with market quotations to the most recent market quotation.

For securities without market quotations, non-quarterly valuations will generally be the most recent quarterly valuation unless a material event has occurred since the most recent quarter end with respect to the investment.

Independent valuation firms are generally not used for non-quarterly valuations.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of its investments, many of which are loans, including and in combination, as relevant, of:

In cases where the Company determines its net asset value ( "NAV" ) at times other than a quarter end, the Company updates the value of securities with market quotations to the most recent market quotation.

For securities without market quotations, non-quarterly valuations will generally be the most recent quarterly valuation unless the Adviser determines that a significant observable change has occurred since the most recent quarter end with respect to the investment (which determination may be as a result of a material event at a portfolio company, material change in market spreads, secondary market transaction in the securities of an investment or otherwise).

If the Adviser determines such a change has occurred with respect to one or more investments, the Adviser will determine whether to update the value for each relevant investment using a range of values from an independent valuation firm, where applicable, in accordance with the Company's valuation policy, pursuant to authority delegated by the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of the Company's investments for which reliable market quotations are not readily available, many of which are loans, including and in combination, as relevant, of:

(i) the estimated enterprise value of a portfolio company, (ii) the nature and realizable value of any collateral, (iii) the portfolio company’s ability to make payments based on its earnings and cash flow, (iv) the markets in which the portfolio company does business, (v) a comparison of the portfolio company’s securities to any similar publicly traded securities, and (vi) 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 or debt sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

The Company applies ASC 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 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date.

Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact.

In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity.

ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value.

In accordance with ASC 820, these levels are summarized below:

Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.

Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfer occurred.

In addition to using the above inputs in investment valuations, we apply the valuation policy approved by our Board that is consistent with ASC 820.

Consistent with the valuation policy, we evaluate the source of the inputs, including any markets in which our investments are trading (or any markets in which securities with similar attributes are trading), in determining fair

When an investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), we subject those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment.

For example, we, or the independent valuation firm(s), review pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period.

Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized.

Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale.

If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.

Interest and Dividend Income Recognition

Interest income is recorded on an accrual basis and includes the accretion of discounts and amortizations of premiums.

Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method.

The amortized cost of debt investments represents the original cost, including loan origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any.

Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full.

Accrued interest is generally reversed when a loan is placed on non-accrual status.

Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status.

Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.

Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current.

Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected.

Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

Fee income (such as structuring, consent, waiver, amendment, syndication fees as well as fees for managerial assistance rendered by the Company) is recognized as income when earned or the services are rendered.

Distributions

To the extent that the Company has taxable income available, the Company intends to make quarterly distributions to its shareholders.

Distributions to shareholders are recorded on the record date.

All distributions will be paid at the discretion of the Board and will depend on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as the Board may deem relevant from time to time.

The Company has adopted a dividend reinvestment plan, pursuant to which it will reinvest all cash dividends declared by the Board on behalf of its shareholders who do not elect to receive their dividends in cash as provided below.

As a result, if the Board and the Company declares, a cash dividend or other distribution, then the Company’s shareholders who have not opted out of its dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares as described below, rather than receiving the cash dividend or other distribution.

Distributions on fractional shares will be credited to each participating shareholder’s account to three decimal places.

A participating shareholder will receive an amount of shares equal to the amount of the distribution on that participant’s shares divided by the most recent quarter-end NAV per share that is available on the date such distribution was paid (unless the Board determines to use the NAV per share as of another

Shareholders who receive distributions in the form of shares will generally be subject to the same U.S.

federal, state and local tax consequences as if they received cash distributions;

however, since their cash distributions will be reinvested, those shareholders will not receive cash with which to pay any applicable taxes.

The Company intends to use newly issued shares to implement the plan.

Shares issued under the dividend reinvestment plan will not reduce outstanding Capital Commitments.

The Company has elected to be treated as a BDC under the 1940 Act.

The Company also has elected to be treated as a RIC under the Code.

So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S.

federal income taxes on any ordinary income or capital gains that it distributes at least annually to its shareholders as dividends.

Rather, any tax liability related to income earned and distributed by the Company would represent obligations of the Company’s investors and would not be reflected in the consolidated financial statements of the Company.

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.

In addition, based on the excise tax distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner in each taxable year an amount at least equal to the sum of (1) 98% of its ordinary income for the calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in prior years.

For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed.

See “ —Note 5.

Fair Value Measurements .”

The Board has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of the Company’s portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board may reasonably rely on that assistance.

However, the Board is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to the Company’s valuation policy and a consistently applied valuation process.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis