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Item 5. Market for Registrant’s Common Equity

2021-02-24 compared with 2020-03-04 · 594 added, 1524 removed, 273 unchanged (89% of the section changed)

MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY

Market Information

Our Common Stock is traded on

NASDAQ under the symbol CCAP. Prior to the listing of the Common Stock on NASDAQ on February 3, 2020, our Common Stock was offered and sold in transactions exempt from registration under the Securities Act under

Our common stock

is traded on NASDAQ under the symbol CCAP. Prior to the listing of the Common Stock on NASDAQ on February 3, 2020, our Common Stock was offered and sold in transactions exempt from registration under the Securities Act under

Section 4(a)(2) and Regulation D, as well as under Regulation S under the Securities Act.

As of December 31, 2019, there was no established public trading market for our Common Stock.

As of December 31, 2019, there were 174

holders of record of our common stock.

The following table sets forth, for each fiscal

quarter since the listing of the Common Stock on NASDAQ, the range of high and low sales prices of the Common Stock as reported on NASDAQ, the premium (discount) of sales price to our net asset value, or NAV, and the distributions declared by us for

each fiscal quarter.

Per Share (3)

Year ended December 31, 2020

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Net asset value per share is determined as of the last day in the relevant quarter and therefore does not

reflect the net asset value per share disclosed to the market on the date of the high and low closing sales prices.

The net asset values shown are based on outstanding shares at the end of the relevant quarter.

Calculated as the respective high or low closing sales price less net asset value, divided by net asset value

(in each case, as of the applicable quarter).

Represents the dividend or distribution declared in the relevant quarter.

The last reported price for our common stock on February 23, 2021 was $16.10 per share, which represented a 19.0% discount to our NAV as of

December 31, 2020.

Stock Performance Graph

This graph compares the stockholder return on our common stock from February 3, 2020 (the date our common stock commenced trading on NASDAQ) to

December 31, 2020 with that of the Standard & Poors 500 Stock Index, Standard & Poors BDC Index and Russell 2000 Financial Services Index.

This graph assumes that on February 3, 2020, $100 was invested in our

common stock, Standard & Poors 500 Stock Index, Standard & Poors BDC Index and Russell 2000 Financial Services Index.

The graph also assumes the reinvestment of all cash dividends prior to any tax effect.

The graph and other information furnished under this Part II Item 5 of this Annual Report on Form 10-K shall not be deemed to be soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C under, or to the liabilitie s of Section 18 of, the Exchange Act.

stock price performance included in the below graph is not necessarily indicative of future stock performance.

December 31, 2020, there were 195 holders of record of our common stock (excluding Cede & Co).

Distribution Policy

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The following tables summarize our dividends declared and payable for the years ended December 31,

2019, 2018, 2017, 2016 and the period from February 5, 2015 to December 31, 2015 (1) :

2020, 2019, and 2018:

( $ in millions except per share amounts )

Date Declared

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January 15, 2021

September 27, 2019

October 18, 2019

June 28, 2019

July 18, 2019

March 29, 2019

April 12, 2019

December 31, 2018

January 15, 2019

September 27, 2018

August 7, 2020

September 30, 2020

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June 30, 2020

June 20, 2018

July 15, 2020

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April 15, 2020

December 28, 2017

November 8, 2019

December 30, 2019

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January 15, 2019

December 12, 2016

December 13, 2016

December 19, 2016

September 27, 2018

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April 13, 2018

December 29, 2015

December 30, 2015

January 15, 2016

September 29, 2015

September 30, 2015

October 15, 2015

We were formed on February 5, 2015 and commenced operations on June 26, 2015.

Dividend Reinvestment Plan

We have adopted a dividend

reinvestment plan that will provide for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a stockholder elects to receive cash.

As a result, if our Board authorizes, and we declare, a cash dividend or other

distribution, then stockholders who are participating in the dividend reinvestment plan, will have their cash dividends and distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash dividends and

distributions.

Prior to February 3, 2020, which is the date of our listing on NASDAQ, only stockholders who opted in to the dividend

reinvestment plan had their cash dividends and distributions automatically reinvested in additional shares of Common Stock.

After February 3, 2020, stockholders who do not opt out of the dividend reinvestment plan will have their

cash dividends and distributions automatically reinvested in additional shares of our common stock.

The elections of stockholders that made an election prior to February 3, 2020 remain effective.

Recent Sales of Unregistered Securities and Use of Proceeds

Except as previously reported us on our Current Reports on Form 8-K, we did not sell any securities during the

period covered by this Form 10-K that were not registered under the Securities Act.

We have adopted a dividend reinvestment plan that will provide for reinvestment of our dividends and other distributions on behalf of our stockholders, unless

a stockholder elects to receive cash.

As a result, if our Board authorizes, and we declare, a cash dividend or other distribution, then stockholders who are participating in the dividend reinvestment plan, will have their cash dividends and

distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash dividends and distributions.

Recent Sales of

Unregistered Securities and Use of Proceeds

Except as previously reported us on our Current Reports on

Form 8-K, we did not sell any securities during the period covered by this Form 10-K that were not registered under the Securities Act.

SELECTED FINANCIAL DATA

The tables below set forth our selected consolidated historical financial data for the periods indicated.

The selected consolidated historical financial data

for the years ended December 31, 2019, December 31, 2018, December 31, 2017 and December 31, 2016, and for the period from February 5, 2015, or Inception, to December 31, 2015 have been derived from our audited

consolidated financial statements, which are included in Consolidated Financial Statements and Supplementary Data in Part II, Item 8 of this Form 10-K.

The selected consolidated financial information and other data presented below should be read in conjunction with the information contained in

Part II, Item 7 of this Form 10-K Managements Discussion and Analysis of Financial Condition and Results of Operations , the audited consolidated financial

statements and the notes thereto included in Part II, Item 8 of this Form 10-K, Consolidated Financial Statements and Supplementary Data .

For the years ended

For the period from

February 5, 2015

(Inception) to

December 31, 2019

December 31, 2018

December 31, 2017

December 31, 2016

December 31, 2015 (1)

Consolidated Statements of Operations Data

Total investment income

Net expenses and income and excise taxes

Net investment income (loss)

Net realized gain (loss) on

investmentsnon-controlled/non-affiliated (2)

Net change in unrealized appreciation (depreciation) on investmentsnon-controlled/non-affiliated (2)

Net change in unrealized appreciation (depreciation) on

investmentscontrolled/affiliated

Net change in unrealized appreciation (depreciation) on foreign currency forward

Net realized and unrealized gains (losses) on investments

Benefit/(Provision) for taxes on realized gain on investments

Benefit/(Provision) for taxes on unrealized appreciation (depreciation) on investments

Benefit/(Provision) benefit for taxes on realized and unrealized gain/loss on

Net increase (decrease) in net asset resulting from operations

Per Common Share Data

Net asset value

Earnings Per Share (3)

Net investment income after tax

Net realized gain (loss) on investments net of taxes

Net change in unrealized appreciation (depreciation) on investments net of taxes

Net change in unrealized appreciation (depreciation) on foreign currency forward

Net increase (decrease) in net assets resulting from operations (basic and diluted)

Per share distributions declared (4)

From net investment income

From capital gains

From return of capital

Dollar amount of distributions declared

From net investment income

From capital gains

From return of capital

We were formed on February 5, 2015 and commenced operations on June 26, 2015.

Includes foreign exchange translation activity.

Earnings per share data is divided by the weighted average shares outstanding for the applicable periods.

The per share data for distributions per share reflects the actual amount of distributions declared per share

for the applicable periods.

December 31, 2019

December 31, 2018

December 31, 2017

December 31, 2016

December 31, 2015 (1)

Consolidated Statements of Assets and Liabilities Data

Investmentsat fair value

Cash, cash equivalents and foreign

Total liabilities

Total net assets

Number of portfolio companies at year end

Average funded investments in portfolio companies (at fair value)

Total return based on net asset

Weighted average yield of debt investments at amortized cost (4)

We were formed on February 5, 2015 and commenced operations on June 26, 2015.

Excludes deferred financing costs.

Total return based on net asset value is calculated as the change in net asset value per share during the

period plus declared dividends per share, divided by the beginning net asset value per share.

Weighted average yield on debt investments at fair value is computed as (a) the annual stated interest

rate or yield earned plus additional interest, if any, as a result of arrangements between us and other lenders in any syndication plus the net annual amortization of original issue discount and market discount earned on accruing debt investments,

divided by (b) total debt investments at fair value.

Weighted average yield on debt investments at amortized cost is computed as (a) the annual stated interest rate or yield earned plus additional interest, if any, as a result of

arrangements between us and other lenders in any syndication plus the net annual amortization of original issue discount and market discount earned on accruing debt investments, divided by (b) total debt investments at amortized cost.

inclusive of a return on other income producing investments in GACP II for the years ended December 31, 2019 and 2018 and the Senior Loan Fund for the year ended December 31, 2019.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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qualifying assets, source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

We are managed by our Advisor, Crescent Cap Advisors, LLC (and formerly, CBDC Advisors, LLC), an investment adviser that is registered with the SEC under the

Our Administrator, CCAP Administration LLC (and formerly, CBDC Administration, LLC) provides the administrative services necessary for us to operate.

Company management consists of investment and administrative professionals from the

Advisor and Administrator along with our Board.

The Advisor directs and executes our investment operations and capital raising activities subject to oversight from the Board, which sets our broad policies.

The Board has delegated investment

management of our investment assets to the Advisor.

The Board consists of six directors, four of whom are independent.

Our primary investment objective

is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and related equity investments.

We seek to achieve our investment objectives by investing primarily in secured debt (including

senior secured first lien, unitranche and senior secured second-lien debt) and unsecured debt (including senior unsecured, mezzanine and subordinated debt), as well as related equity securities of private U.S.

We are managed by the Adviser, an investment adviser that is registered with the SEC under the 1940 Act.

The Administrator provides the administrative

services necessary for us to operate.

Company management consists of investment and administrative professionals from the Adviser and Administrator along with our Board.

The Adviser directs and executes our investment operations and capital raising

activities subject to oversight from the Board, which sets our broad policies.

The Board has delegated investment management of our investment assets to the Adviser.

The Board consists of five directors, four of whom are independent.

Our primary investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and

related equity investments.

We seek to achieve our investment objectives by investing primarily in secured debt (including senior secured first lien, unitranche and senior secured second-lien debt) and unsecured debt (including senior unsecured,

mezzanine and subordinated debt), as well as related equity securities of private U.S.

middle-market companies.

purchase interests in loans or make debt investments, either (i) directly from our target companies as primary market or private credit investments ( i.e.

, private credit transactions), or (ii) primary or secondary market bank loan

or high yield transactions in the broadly syndicated over-the-counter market ( i.e.

We may purchase interests in loans or make debt investments, either (i) directly from our target companies as primary market or

private credit investments ( i.e.

, private credit transactions), or (ii) primary or secondary market bank loan or high yield transactions in the broadly syndicated

over-the-counter market ( i.e.

, broadly syndicated loans and bonds).

Although our focus is to

invest in less liquid private credit transactions, broadly syndicated loans and bonds are generally more liquid than and complement our private credit transactions.

A first lien loan is typically senior on a lien basis to other liabilities in the issuers capital structure and has the benefit of a

first-priority security interest in assets of the issuer.

The security interest ranks above the security interest of any second-lien lenders in those assets.

Unitranche loans are first lien loans that may extend deeper in a companys capital structure than traditional first lien debt and may

provide for a waterfall of cash flow priority among different lenders in the unitranche loan.

In certain instances, we may find another lender to provide the first out portion of such loan and retain the last out portion of

such loan, in which case, the first out portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the last out portion that we would continue

Although our focus is to invest in less liquid private credit transactions, we may

from time to time invest in more liquid broadly syndicated loans and bonds to complement our private credit transactions.

investments are senior loans on a lien basis to other liabilities in the issuers capital structure that have the benefit of a first-priority security interest in assets of the issuer.

The security interest ranks above the security interest of

any second-lien lenders in those assets.

Unitranche first lien investments are loans that may extend deeper in a companys capital

structure than traditional first lien debt and may provide for a waterfall of cash flow priority among different lenders in the unitranche loan.

In certain instances, we may find another lender to provide the first out portion of such

loan and retain the last out portion of such loan, in which case, the first out portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the

last out portion that we would continue to hold.

In exchange for the greater risk of loss, the last out portion earns a higher interest rate.

Second lien investments are

loans with a second priority lien on the assets of the portfolio company.

We obtain security interests in the assets of the portfolio company that serve as collateral in support of the repayment of such loans.

This collateral serves as collateral in

support of the repayment of these loans.

The term mezzanine refers to an investment in a company that, among other factors, includes debt

that generally ranks senior to a borrowers equity securities and junior in right of payment to such borrowers other indebtedness.

We may make multiple investments in the same portfolio company.

From Inception through June 25, 2015, we devoted substantially all of our efforts to establishing the business and raising capital commitments from

private investors.

On June 26, 2015, we entered into subscription agreements with several investors, including Crescent Capital Group LP and its affiliates (CCG LP), providing for the private placement of our common stock.

commenced investment operations on June 26, 2015.

Alcentra Acquisition

On August 12, 2019, we entered into the Merger Agreement to acquire Alcentra Capital, in a cash and stock transaction.

The board of directors of both

companies each unanimously approved the Alcentra Acquisition and on January 29, 2020, Alcentra Capitals stockholders approved the merger and our stockholders approved the issuance of shares of our common stock to Alcentra Capitals

stockholders.

See Recent Developments, for more information on the Alcentra Acquisition.

Unaudited Pro Forma Condensed Statement of Assets

and Liabilities

See Recent Developments below for a summary of the consideration received by Alcentra Capital stockholders in conjunction

with the consummation of the Alcentra Acquisition.

The following unaudited pro forma condensed consolidated financial information and explanatory notes illustrate the effect of the Alcentra Acquisition on our financial position and results of

operations based upon our and Alcentra Capitals respective historical financial positions and results of operations under the acquisition method of accounting with us treated as the acquirer.

The unaudited pro forma condensed consolidated

financial information has been derived from and should be read in conjunction with (i) our historical consolidated financial statements and the related notes, which are included elsewhere in this Annual Report and (ii) the historical

consolidated financial statements and the related notes of Alcentra Capital, which are included in our joint proxy statement/prospectus, as amended, with the SEC on December 11, 2019.

In accordance with GAAP, the acquired assets and assumed liabilities of Alcentra Capital will be recorded by us at their estimated fair values as of the

effective time.

The unaudited pro forma condensed consolidated financial information of us and Alcentra Capital reflects the unaudited pro forma condensed consolidated balance sheet as of December 31, 2019.

The unaudited pro forma condensed

consolidated balance sheet as of December 31, 2019 assumes the Alcentra Acquisition had been completed on December 31, 2019.

The unaudited pro

forma condensed consolidated financial information is presented for illustrative purposes only and does not necessarily indicate the results of operations or the combined financial position that would have resulted had the Alcentra Acquisition been

completed at the beginning of the applicable period presented, nor the impact of potential expense efficiencies of the Alcentra Acquisition, certain potential asset dispositions and other factors.

In addition, as explained in more detail in the

accompanying notes to the unaudited pro forma condensed consolidated financial information, the allocation of the pro forma purchase price reflected in the unaudited pro forma condensed consolidated financial information involves estimates, is

subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the Alcentra Acquisition.

Additionally, the unaudited pro forma condensed consolidated financial data does not

include any estimated net increase (decrease) in stockholders equity resulting from operations or other asset sales and repayments that are not already reflected that may have occurred between December 31, 2019 and the completion of the

Second lien investments are loans with a second priority lien on all existing and future assets of the portfolio company.

The security interest

ranks below the security interests of any first lien and unitranche first lien lenders in those assets.

Mezzanine or unsecured

debt investments are loans that generally rank senior to a borrowers equity securities and junior in right of payment to such borrowers other senior indebtedness.

Alcentra Acquisition

Pro Forma Condensed Consolidated Statements of Assets and Liabilities

As of December 31, 2019

(in millions, except per share

Investments at fair value

Cash and cash equivalents

Other liabilities

Total Liabilities

Total Liabilities and Net Assets

Total Shares Outstanding

Net Asset Value per Share

Basis of Pro Forma Presentation

The unaudited pro forma condensed consolidated financial information related to the Alcentra Acquisition is included as of December 31, 2019.

August 12, 2019, we and Alcentra Capital entered into the Merger Agreement (as subsequently amended on September 27, 2019).

For the purposes of the pro forma condensed consolidated financial information, in exchange for approximately

12.9 million shares of Alcentra Capital common stock, Alcentra Capitals stockholders received approximately (i) $19.3 million in cash, or $1.50 per share, from us, less $10.3 million, or $0.80 per share, spillover dividend paid

by Alcentra Capital before consummation of the merger;

(ii) 5.2 million shares of our Common Stock;

and (iii) $21.6 million in cash, or $1.68 per share, from the Advisor.

The merger of Alcentra Capital with and into us is expected to be accounted for as an asset acquisition in

accordance with the asset acquisition method of accounting as detailed in ASC 805-50, Business CombinationsRelated Issues , with the fair value of total consideration paid in

conjunction with the merger being allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of the merger.

To the extent that the fair value of the net assets acquired (as calculated using our

valuation procedures) exceeds the fair value of the merger consideration paid by us, amounts paid by the Advisor pursuant to the transaction support agreement with the Advisor may be included in total consideration, up to approximately

$21.6 million.

Any such amounts will be recorded as deemed contributions from the Advisor as of the acquisition date.

Based on the preliminary purchase price allocation calculated as of January 31, 2020, the estimated fair value of the net

assets acquired approximates the estimated fair value of the merger consideration paid by us.

The final allocation of the purchase price will be

determined after completion of a final analysis to determine (i) the fair value of total consideration to be paid in conjunction with the mergers;

and (ii) the fair values of Alcentra Capitals acquired assets and assumed liabilities

as of the acquisition date.

Accordingly, the final purchase accounting adjustments may differ materially from the pro forma adjustments presented in this document.

Under the 1940 Act and the American Institute of Certified Public Accountants Audit and Accounting Guide for Investment Companies, we are precluded from

consolidating any entity other than another investment company or an operating company which provides substantially all of its services and benefits to us.

Our statement of assets and liabilities include our accounts and the accounts of all of our

consolidated subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates:

preparation of the unaudited pro forma condensed consolidated statement of assets and liabilities 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 statement of assets and liabilities.

Actual results could differ from those estimates.

Many of the amounts have been rounded, and all amounts are in millions, except share and per share amounts.

On August 12, 2019, we entered

into the Merger Agreement to acquire Alcentra Capital, in a cash and stock transaction.

The board of directors of both companies each unanimously approved the Alcentra Acquisition and on January 29, 2020, Alcentra Capitals stockholders

approved the merger and our stockholders approved the issuance of shares of our common stock to Alcentra Capitals stockholders.

On January 31,

2020, we completed the Alcentra Acquisition, pursuant to the terms and conditions of the Merger Agreement.

To effect the acquisition, Acquisition Sub merged with and into Alcentra Capital, with Alcentra Capital surviving the merger as our wholly

owned subsidiary.

Immediately thereafter and as a single integrated transaction, Alcentra Capital consummated the Second Merger, whereby it merged with and into us, with Crescent Capital BDC surviving the merger.

Pursuant to the Merger Agreement,

Alcentra Capital stockholders received the right to the following merger consideration in exchange for each share of Alcentra Capital common stock outstanding immediately prior to January 31, 2020, (a) $3.1784 per share in cash

consideration (less the $0.8000 final dividend declared by Alcentra Capital) and (b) stock consideration at the fixed exchange ratio of 0.4041 shares of Common Stock.

This resulted in our then-existing stockholders owning approximately 82% of

us and Alcentra Capitals then-existing stockholders owning approximately 18% of us.

The aggregate cash consideration was comprised of (i) $19.3 million in cash, or $1.5023 per share,

from us (less $10.3 million or $0.8000 per share in final dividends paid by Alcentra Capital on January 31, 2020) and (ii) $21.6 million in cash, or $1.6761 per share, in transaction support provided by the Adviser.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis

of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).

The preparation of

these financial statements requires management 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 materially.

The critical accounting policies should be read in connection with our risk factors as disclosed herein.

In addition to the discussion below, our critical accounting policies are further described in Note 2.

Summary of Significant Accounting Policies to our

consolidated financial statements.

Investment Valuation

We apply Financial Accounting Standards Board ASC 820, Fair Value Measurement (ASC 820), as amended, which establishes a framework for

measuring fair value in accordance with 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

In accordance with ASC 820, we consider our 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 the determination of fair value.

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

Level 1Valuations based on

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

Level 2Valuations based

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

Level 3Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Investments in investment companies are valued at fair value.

Fair values are generally determined utilizing the net asset value (NAV) supplied

by, or on behalf of, management of each investment company, which is net of management and incentive fees or allocations charged by the investment company and is in accordance with the practical expedient, as defined by ASC 820.

received by, or on behalf of, management of each investment company are based on the fair value of the investment companys underlying investments in accordance with policies established by management of each investment company, as described in

each of their financial statements and offering memorandum.

Investments which are valued using NAV as a practical expedient are excluded from the above hierarchy.

Investments for which market quotations are readily available are typically valued at those market quotations.

market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations.

Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith

by the Board, based on, among other things, the input of the Advisor, the audit committee of the Board (the Audit Committee) and, with certain de minimis exceptions, independent third-party valuation firms engaged at the direction of the

To validate market quotations, we utilize a

number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations.

Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued

at fair value as determined in good faith by the Board, based on, among other things, the input of the Adviser, our Audit Committee and independent third-party valuation firms engaged at the direction of the Board.

The Board oversees and supervises a multi-step valuation process, which includes, among other procedures, the following:

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responsible for the portfolio investment in conjunction with the portfolio management team.

The Advisors management reviews the preliminary valuations with the investment professionals.

valuation recommendations are presented to the Audit Committee.

The Advisers management and Crescents alternative investment valuation committee reviews the

preliminary valuations with the investment professionals.

Agreed upon valuation recommendations are presented to the Audit Committee.

The Audit Committee reviews the valuations presented and recommends values for each investment to the Board.

The Board reviews the recommended valuations and determines the fair value of each investment.

valuations that

are not based on readily available market quotations are valued in good faith based on, among other things, the input of the Advisor, the Audit Committee and, where applicable, other third parties.

We apply Financial Accounting Standards Board ASC 820, Fair Value Measurement (ASC

820), as amended, which establishes a framework for measuring fair value in accordance with GAAP and required disclosures of fair value measurements.

ASC 820 determines fair value to be the price that would be received for an investment in a current

sale, which assumes an orderly transaction between market participants on the measurement date.

Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are

independent, knowledgeable, and willing and able to transact.

In accordance with ASC 820, we consider our 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 the determination of fair value.

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

Level 1Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.

Level 2Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable,

either directly or indirectly.

Level 3Valuations based on inputs that are unobservable and significant to the overall fair

value measurement.

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

with ASC 820.

In connection with debt and equity securities that are valued at fair value in good faith by the Board, the Board will periodically

engage independent third-party valuation firms to estimate a range of fair values for a sample of investments, which are used to corroborate managements fair value estimates.

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 inputs, including any markets in which our 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), we subject those prices to various criteria in making the determination as to whether a particular investment would qualify for

classification as a Level 2 or Level 3 investment.

For example, we review pricing methodologies provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

additional factors considered include the number of prices obtained as well as an assessment as to their quality.

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

Income Taxes:

We have elected to be treated for U.S.

federal income tax purposes, and intend to qualify annually, as a RIC under

Subchapter M of the Code.

To qualify for and maintain qualification as a RIC, we must, among other things, meet certain source-of-income and asset

diversification requirements, as well as distribute to its stockholders, for each tax year, at least 90% of our investment company taxable income, which is generally our net ordinary income plus the excess, if any, of realized net

short-term capital gains over realized net long-term capital losses, determined without regard to any deduction for distributions paid.

As a RIC, we will not have to pay corporate-level U.S.

federal income taxes on any income that it distributes to

its stockholders.

We intend to make distributions in an amount sufficient to qualify for and maintain our RIC tax status each tax year and to not pay any U.S.

federal income taxes on income so distributed.

We are also subject to nondeductible

federal excise taxes if we do not distribute in respect of each calendar year an amount at least equal to the sum of 98% of net ordinary income, 98.2% of any capital gain net income, if any, and any recognized and undistributed income from prior

years for which we paid no U.S.

federal income taxes.

Transaction Costs:

We and Alcentra Capital have each incurred direct transaction costs

resulting from the Alcentra Acquisition.

Alcentra Capital expensed its transaction costs as incurred.

We, as the acquirer in an asset acquisition, should include transaction costs as a component of consideration transferred and allocate such

consideration to the acquired assets and liabilities on a relative fair value basis.

Since including transaction costs in total consideration would result in assigning an amount greater than fair value to Alcentra Capitals financial

instruments and other non-qualifying assets, such costs have been shown as a reduction in net assets for purposes of the pro forma statement of assets and liabilities.

We are expecting to incur approximately $5.2 million in estimated transaction costs (net of $1.4 million of transaction support received from the

We expect to incur additional $0.7 million in incremental insurance costs, which is presented as other liabilities on the proforma Statement of Assets and Liabilities.

These estimated costs are presented as pro forma adjustments to

cash on the pro forma balance sheet, representing unpaid transaction costs as of the date of Alcentra Acquisition.

Preliminary Purchase Price

Accounting Allocations

The unaudited pro forma condensed consolidated financial information includes the unaudited pro forma condensed consolidated

balance sheet as of December 31, 2019 assuming the Alcentra Acquisition had been completed on December 31, 2019.

The unaudited pro forma

condensed consolidated financial information reflects the issuance of approximately 5.2 million shares of Common Stock pursuant to the Merger Agreement.

The Alcentra Acquisition will be accounted for using the asset acquisition method of accounting.

Accordingly, the merger consideration paid by us in connection with the Alcentra Acquisition will be allocated to the acquired assets and assumed liabilities of Alcentra Capital at their relative fair values estimated by us as of the effective date.

The excess fair value of the net assets acquired over the fair value of the merger consideration paid by us will be allocated against the assets acquired and liabilities assumed of Alcentra Capital by us.

Accordingly, the pro forma purchase price

has been allocated to the assets acquired and the liabilities assumed based on our estimate of relative fair values as summarized in the following table:

Common stock issued by Crescent Capital BDC

Cash consideration paid by Crescent Capital BDC

Alcentra spillover dividend

Total purchase price from Crescent Capital BDC

Assets acquired:

Investments, at fair value

Cash and cash equivalents

Total assets acquired

Other liabilities assumed

Net assets acquired

Excludes $21.6 million in cash from the Advisor, paid to Alcentra Capitals stockholders.

Preliminary Pro Forma Adjustments

(A) Represents the fair value of the consideration paid by us allocated to the assets acquired and liabilities assumed based on their relative fair values as

of the date of acquisition, under the application of the asset acquisition method of accounting.

An adjustment of $8.6 million to Other assets relates to the allocation of the purchase price against Alcentra Capitals recorded deferred tax

asset $4.3 million and deferred financing cost of $1.3 million and recognition of proforma deferred merger expense of $5.2 million, inclusive of additional $2.2 million expense incurred subsequent to December 31, 2019.

An adjustment of $9.8

million to investments is based upon our estimates of fair value determined using the valuation methodology summarized in Note 1.

An adjustment of $3.7 million to other liabilities relates to $3.0 million of additional expenses incurred in

connection with the merger and an incremental $0.7 million of merger expenses incurred by Alcentra Capital subsequent to December 31, 2019.

The pro forma adjustment to cash reflects $44.9 million capital contribution from our investors, net of a $10.3 million spillover dividend paid by Alcentra Capital, the net purchase price paid in connection by us in connection with the Alcentra

Acquisition of $9.0 million and additional liquidity of $6.4 million funded via a draw on Alcentra Capitals revolving credit facility.

pro forma adjustment reflects an increase in net assets of $3.5 million in connection with the consummation of the Alcentra Acquisition.

The increase in net assets is comprised of the following:

(i) total consideration from us of

$110.5 million is comprised of cash consideration of $19.3 million less $10.3 million Alcentra Capital spillover dividend, estimated stock consideration of $101.5 million based on our December 31, 2019 net asset value and

5.2 million of newly issued CCAP shares in connection with a conversion of the Alcentra shares at a ratio of 0.4041 per share, less (ii) net assets acquired of $114.0 million, which is comprised of gross net assets of

$140.4 million less adjustments discussed in (A) related to fair value adjustments, the spillover dividend payment and adjustments to other assets and liabilities, net of liquidity needs.

(D) The pro forma adjustment reflects issuance of 2.3 million shares in connection with our final $44.9 million capital call and dividend

reinvestment plan issuance, which both occurred subsequent to December 31, 2019 but prior to the January 31, 2020 closing of the Alcentra Acquisition.

KEY COMPONENTS OF OPERATIONS

We expect our investment activity to vary

substantially from period to period depending on many factors, the general economic environment, the amount of capital we have available to us, the level of merger and acquisition activity for middle-market companies, including the amount of debt

and equity capital available to such companies and the competitive environment for the type 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.

We must not invest in any assets other than qualifying assets specified in the 1940 Act, unless, at the

time the investments are made, at least 70% of our total assets are qualifying assets (with certain limited exceptions).

When a security

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 classification as a Level 2 or Level 3 investment.

For example, we review pricing methodologies 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.

Transfers between levels, if any, are recognized at the beginning of the period in which the transfers

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, we 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.

Investments and Note 5.

Fair Value of Financial Instruments for additional

information on our investment portfolio.

Interest and Dividend Income Recognition

Interest income is recorded on an accrual basis and includes the amortization of purchase discounts and premiums.

Discounts and premiums to par value on

securities purchased are accreted or amortized into interest income over the contractual life of the respective securities using the effective yield method.

The amortized cost of investments represents the original cost adjusted for the accretion

and amortization of discounts and 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.

Dividend income from common equity securities is recorded on the record date for private portfolio companies or on the

ex-dividend date for publicly-traded portfolio companies.

Dividend income from 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.

Each distribution received from an equity investment is evaluated to determine if the distribution should be recorded as dividend income or a return of capital.

Generally, we will not record distributions from

equity investments as dividend income unless there is sufficient current or accumulated earnings prior to the distribution.

Distributions that are classified as a return of capital are recorded as a reduction of capital are recorded as a reduction

in the cost basis of the investment.

Certain investments have contractual

payment-in-kind (PIK) interest or dividends.

PIK represents accrued interest or accumulated dividends that are added to the loan principal or cost basis of

the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer.

PIK is recorded as interest or dividend income, as applicable.

point we believe PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status.

Accrued PIK interest or dividends are generally reversed through interest or dividend

income, respectively, when an investment is placed on non-accrual status.

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected 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

managements judgment regarding collectability.

Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in managements judgment, are likely to

remain current.

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

We have elected to be treated as a BDC

under the 1940 Act.

We also have elected to be treated as a RIC under the Internal Revenue Code.

So long as we maintain our status as a RIC, we will generally not pay corporate-level U.S.

federal income or excise taxes on any ordinary income or

capital gains that we distribute at least annually to our stockholders as dividends.

As a result, any tax liability related to income earned and distributed by us represents obligations of our stockholders and will not be reflected in our

consolidated financial statements.

We evaluate tax positions taken or expected to be taken in the course of preparing our consolidated financial

statements to determine whether the tax positions are more-likely-than-not to be sustained by the applicable tax authority.

Tax positions not deemed to meet the

more-likely-than-not threshold are reversed 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

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.

We account for income taxes in conformity with ASC 740 Income Taxes (ASC 740).

ASC 740 provides guidelines for how uncertain tax positions should be recognized, measured,

presented and disclosed in financial statements.

In order for us not to be subject to federal excise taxes, we must distribute annually an amount at least

equal to the sum of (i) 98% of our ordinary income (taking into account certain deferrals and elections), (ii) 98.2% of our net capital gains from the current year and (iii) any undistributed ordinary income and net capital gains from

preceding years.

We, at our discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% excise tax on this income.

If we choose to do so, this generally would increase expenses and reduce the amount available to be

distributed to stockholders.

We accrue excise tax on estimated undistributed taxable income as required on a quarterly basis.

CBDC Universal Equity, Inc.

is a taxable entity (Taxable Subsidiary).

The Taxable Subsidiary permits us to hold equity investments in portfolio companies which are pass through entities for tax purposes and continue to comply with the source

income requirements contained in RIC tax provisions of the Code.

The Taxable Subsidiary is not consolidated with us for income tax purposes and may generate income tax expense, benefit, and the related tax assets and liabilities, as a result

of their ownership of certain portfolio investments.

The income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in our consolidated financial statements.

We intend to comply with the applicable provisions of the Code, pertaining to regulated investment companies and to make distributions of taxable income

sufficient to relieve it from substantially all federal income taxes.

As of December 31, 2020, we are subject to examination by U.S.

federal tax authorities for returns filed for the three most recent calendar years and by state tax authorities

for returns filed for the four most recent calendar years.

We may generate qualified net interest income or qualified net short-term capital gains that

may be exempt from U.S.

withholding tax when distributed to foreign stockholders.

A RIC is permitted to designate distributions of qualified net interest income and qualified short-term capital gains as exempt from U.S.

withholding tax when paid to non-U.S.

shareholders with proper documentation.

As of December 31, 2020, the percentage of 2020 income estimated as qualified interest income for tax purposes was 98.0%.

New Accounting Pronouncements

In March 2020, the FASB

issued Accounting Standard Update (ASU) No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU

provides optional exceptions for applying GAAP to contract modifications, hedging relationships and other transactions affected reference rate reform if certain criteria are met.

ASU 2020-04 is elective and

can be adopted between March 12, 2020 and December 31, 2022.

We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

The SEC issued final rules that, among other things, amended the financial disclosure requirements of Regulation S-X

for acquired and disposed businesses and the significance tests for a significant subsidiary as applicable to BDCs and amended certain forms used by BDCs.

The amendments are intended to assist BDCs in making more meaningful

determinations as to whether a subsidiary or an acquired or disposed entity is significant and improve the financial disclosure requirements applicable to acquisitions and dispositions of investment companies and BDCs.

The Company early adopted the

updated rules for the year ended December 31, 2020 which did not result in any new significant subsidiaries being identified.

COMPONENTS OF

We expect our investment

activity to vary substantially from period to period depending on many factors, the general economic environment, the amount of capital we have available to us, the level of merger and acquisition activity for middle-market companies, including the

amount of debt and equity capital available to such companies and the competitive environment for the type 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.

We may not invest in any assets other than qualifying assets specified in the 1940 Act, unless,

at the time the investments are made, at least 70% of our total assets are qualifying assets (with certain limited exceptions).

Qualifying assets include investments in eligible portfolio companies. Pursuant to rules adopted by the SEC,

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capitalization is less than $250 million.

The Investment Advisor

Our investment activities are managed by the Advisor, which will be responsible for originating prospective investments, conducting research and due diligence

The Investment Adviser

Our investment activities are managed by the Adviser, which is responsible for originating prospective investments, conducting research and due diligence

investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis.

The Advisor has entered into a Resource Sharing

Agreement (the Resource Sharing Agreement) with Crescent Capital Group LP (CCG LP), pursuant to which CCG LP will provide the Advisor with experienced investment professionals (including the members of the Advisors

investment committee) and access to the resources of CCG LP so as to enable the Advisor to fulfill its obligations under the Prior Investment Advisory Agreement.

Through the Resource Sharing Agreement, the Advisor intends to capitalize on the deal

origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of CCG LPs investment professionals.

In connection with the 2018 Annual Meeting of Stockholders, we received stockholder approval to extend the period during which capital may be called from

stockholders (the Commitment Period).

The Commitment Period was extended to the earlier of (i) that date of an initial public offering of our Common Stock that results in an unaffiliated public float of at least the lower of

(i) $75 million and (ii) 15% of the aggregate capital commitments received by us prior to the date of such initial public offering (a Qualified IPO ) and (ii) June 30, 2020.

In exchange for the Commitment Period

extension, the Advisor agreed to waive its rights under the Investment Advisory Agreement to the Income Incentive Fee for the period from April 1, 2018 through February 3, 2020, which is the date of our listing on the NASDAQ stock exchange.

We generate revenue primarily in the form

of interest income on debt investments and, to a lesser extent, capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies.

The Adviser has entered into a resource sharing

agreement with Crescent, pursuant to which Crescent provides the Adviser with experienced investment professionals (including the members of the Advisers investment committee) and access to Crescents resources so as to enable the Adviser

to fulfill its obligations under the Investment Advisory Agreement.

Through the resource sharing agreement, the Adviser intends to capitalize on the deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio

management and monitoring experience of Crescents investment professionals.

On January 5, 2021, Sun Life Financial Inc.

(together with its subsidiaries

and joint ventures, Sun Life) acquired a majority interest in Crescent (the Sun Life Transaction).

There were no changes to our investment objective, strategies and

process or to the Crescent team responsible for the investment operations as a result of the Sun Life Transaction.

We generate revenue primarily in the form of interest income on debt investments, capital gains and distributions, if any, on equity securities that we may

acquire in portfolio companies.

Certain investments may have contractual PIK interest or dividends.

represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being

called by the issuer.

PIK represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or

dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer.

PIK is recorded as interest or dividend income, as applicable.

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

In addition, we may receive fees for services provided to

portfolio companies by the Advisor under the Prior Investment Advisory Agreement.

The services that the Advisor provides vary by investment, but generally include syndication, structuring or diligence fees, and fees for providing managerial

assistance to our portfolio companies.

Dividend income from common equity securities is recorded on the record date for private portfolio companies or on the

ex-dividend date for publicly-traded portfolio companies.

Dividend income from 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.

We may receive other income, which may include income such as consent, waiver, amendment, underwriting, and arranger

fees associated with our investment activities as well as any fees for managerial assistance services rendered to the portfolio companies.

Such fees are recognized as income when earned or the services are rendered.

We also generate revenue in the form of commitment or origination fees.

Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts

into income over the life of the loan.

Fees for providing managerial assistance to our portfolio companies are generally non-recurring and are recognized as revenue when services are provided.

instances where we are invited to participate as a co-lender in a transaction and do not provide significant services in connection with the investment, all or a portion of any loan fees received by us in such

situations will be deferred and amortized over the investments life using the effective yield method.

Our primary operating expenses include the payment of Management fees and Incentive fees to the Advisor under the Investment Advisory Agreement, our allocable

portion of overhead expenses under the administration agreement with our Administrator (the Initial Administration Agreement), operating costs associated with our sub-administration, custodian and

transfer agent agreements with State Street Bank and Trust Company (the Sub-Administration Agreements) and other operating costs described below.

The Management and Incentive fees compensate the

Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments.

We bear all other out-of-pocket costs and expenses of our

operations and transactions, including:

allocated organization costs from the Advisor incurred prior to the Commencement of Operations up to a maximum of

$1.5 million;

Loan origination fees, original issue discount and market discount or premium are

capitalized, and we accrete or amortize such amounts into income over the life of the loan using the effective yield method.

Our primary operating expenses include the payment of management fees and incentive fees to the Adviser under the Investment Advisory Agreement, as amended,

our allocable portion of overhead expenses under the administration agreement with our Administrator (the Administration Agreement), operating costs associated with our sub-administration agreement

with State Street Bank and Trust Company and other operating costs described below.

The management and incentive fees compensate the Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments.

other out-of-pocket costs and expenses of our operations and transactions, including:

the cost of calculating our net asset value, including the cost of any third-party valuation services;

fidelity bond, directors and officers liability insurance and other insurance premiums;

direct costs, such as printing, mailing, long distance telephone and staff;

fees and expenses associated with independent audits and outside legal costs;

independent directors fees and expenses;

administration fees and expenses, if any, payable under the Initial Administration Agreement (including payments

based upon our allocable portion of the Administrators overhead in performing its obligations under the Initial Administration Agreement, rent and the allocable portion of the cost of certain professional services provided to us, including but

not limited to, our Chief Compliance Officer, Chief Financial Officer and their respective staffs);

administration fees and expenses, if any, payable under the Administration Agreement (including payments based

upon our allocable portion of the Administrators overhead in performing its obligations under the Administration Agreement, rent and the allocable portion of the cost of certain professional services provided to us, including but not limited

to, our compliance professionals, our legal counsel and other professionals);

federal, state and local taxes;

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all other expenses reasonably incurred by us in connection with making investments and administering our

We have agreed to repay the Advisor for initial organization costs and equity offering costs incurred prior to the

Commencement of Operations up to a maximum of $1.5 million on a pro rata basis over the first $350 million of invested capital not to exceed 3 years from the initial capital commitment.

The Advisor had agreed to extend the reimbursement

period for the initial organization costs and equity offering costs to June 30, 2019.

The Advisor is responsible for organization and private equity offerings costs in excess of $1.5 million.

We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during periods of asset growth and to

increase during periods of asset declines.

Incentive Fees and costs relating to future offerings of securities would be incremental.

We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during

periods of asset growth and to increase during periods of asset declines.

Our financing facilities allow us to borrow money and lever our investment portfolio, subject to the limitations of the 1940 Act, with the objective of

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The use of leverage involves significant risks.

As a BDC, with certain limited exceptions, we will only be permitted to borrow

amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 2 to 1 after such borrowing.

Short-term credits necessary for the settlement of securities transactions and arrangements with respect to securities lending will

not be considered borrowings for these purposes.

The amount of leverage that we employ will depend on our Advisors and our Boards assessment of market conditions and other factors at the time of any proposed borrowing.

The SBCAA, which was signed into law on March 23, 2018, among other things, amended Section 61(a)

of the 1940 Act to add a new Section 61(a)(2) that reduces the asset coverage requirement applicable to a BDC from 200% to 150% so long as the BDC meets certain disclosure requirements and obtains certain approvals.

The reduced asset coverage

requirement would permit a BDC to have a ratio of total consolidated assets to outstanding indebtedness of 2:1 as compared to a maximum of 1:1 under the 200% asset coverage requirement.

On March 3, 2020, the Board, including a required

majority (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirement set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCAA.

result, effective on March 3, 2021 (unless we receive earlier stockholder approval), our asset coverage requirement applicable to senior securities will be reduced from 200% to 150%.

Prior to the Small Business Credit Availability Act being signed into law, a BDC generally was not permitted to incur indebtedness unless immediately after

such borrowing it has an asset coverage for total borrowings of at least 200%.

The Small Business Credit Availability Act, signed into law on March 23, 2018, contains a provision that grants a BDC the option, subject to certain conditions and

disclosure obligations, to reduce the asset coverage requirement to 150%.

On March 3, 2020, our Board of Directors approved, and on May 4, 2020, at an annual meeting of our stockholders, our stockholders approved, the application to us of

the reduced asset coverage requirements in Section 61(a) of the 1940 Act.

The application of the reduced asset coverage requirement, which became effective on May 4, 2020, permits us, provided certain requirements are satisfied, to double

the maximum amount of leverage that it is permitted to incur by reducing the asset coverage requirement applicable to us from 200% to 150% (i.e., we are permitted to borrow up to two dollars for every dollar we have in assets less all liabilities

and indebtedness not represented by senior securities issued by us) in order to issue senior securities.

Short-term credits necessary for the settlement of securities transactions and arrangements with respect to securities lending will not be

considered borrowings for these purposes.

The amount of leverage that we employ depends on our Advisers and our Boards assessment of market conditions and other factors at the time of any proposed borrowing.

PORTFOLIO INVESTMENT ACTIVITY

We seek to create a broad

and varied portfolio that generally includes senior secured first lien, unitranche, senior secured second lien and subordinated loans and minority equity securities of U.S.

and diversified portfolio that generally includes senior secured first lien, unitranche, senior secured second lien and subordinated loans and minority equity securities of U.S.

middle market companies.

The size of our individual investments will vary

proportionately with the size of our capital base.

The size of our individual investments will

vary proportionately with the size of our capital base.

We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated.

These securities have

speculative characteristics with respect to the issuers capacity to pay interest and repay principal.

In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay down

principal prior to maturity.

These securities

have speculative characteristics with respect to the issuers capacity to pay interest and repay principal.

In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay

down principal prior to maturity.

As of December 31, 2020 and 2019, our portfolio at fair value was comprised of the following:

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Unsecured Debt

Preferred Stock

Common Stock and Other (1)

Equity & Other

LLC/LP Equity Interests

Total investments

Includes investments in CBDC Senior Loan Fund, LLC and GACP II LP.

The following table shows the asset mix of investments made at cost, inclusive of revolver and delayed draw fundings, during the years ended December 31,

2019, 2018, and 2017:

December 31, 2019

The following table shows our investment activity by investment type:

($ in millions)

December 31, 2020 (1)

December 31, 2019

($ in millions)

Investment Type

New investments at cost:

Senior Secured First Lien

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Unsecured Debt

Preferred Stock

Common Stock and Other (1)

Total investments

Includes investments in CBDC Senior Loan Fund, LLC and GACP II LP.

For the year ended December 31, 2019, we had principal repayments of $110.0 million and sales of securities in fourteen portfolio companies

aggregating approximately $35.8 million.

For the year ended December 31, 2019, we had a portfolio increase of $228.4 million based on amortized cost.

For the year ended December 31, 2018, we had principal repayments of $105.9 million and sales of

securities in five portfolio companies aggregating approximately $3.8 million.

For the year ended December 31, 2018, we had a portfolio increase of $183.5 million based on amortized cost.

The following table presents certain selected information regarding our investment portfolio as of December 31, 2019 and December 31, 2018:

Equity & Other

LLC/LP Equity Interests

Proceeds from investments sold or repaid:

Senior Secured First Lien

Unitranche First Lien

Unitranche First Lien - Last Out

Senior Secured Second Lien

Unsecured Debt

Equity & Other

LLC/LP Equity Interests

Net increase (decrease) in portfolio

Excludes $195.7 million of assets at cost acquired in connection with the Alcentra Acquisition.

acquired, at cost, were comprised of $82.2 million of senior secured first lien, $45.0 million of unitranche first lien, $53.0 million of senior secured second lien, $1.2 million of unsecured debt and $14.3 million of equity

The following table presents certain selected information regarding our investment portfolio as of December 31, 2020

and December 31, 2019:

December 31, 2020

December 31, 2019

Weighted average yield of debt and other income producing securities (at cost) (1)

Weighted average yield on income producing securities (at cost) (1)

Percentage of debt bearing a floating rate (at fair value)

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Number of portfolio companies

Yield is inclusive of a return on other income producing investments in GACP II for the years ended

December 31, 2019 and 2018 and the Senior Loan Fund for the year ended December 31, 2019.

The following table shows the

amortized cost of our performing and non-accrual debt and income producing debt securities as of December 31, 2019 and 2018.

Yield excludes investments on non-accrual status.

Prior period updated to conform to current period methodology.

The following table shows the amortized cost of our performing and non-accrual debt and income producing debt

securities as of December 31, 2020 and 2019.

December 31, 2020

December 31, 2019

($ in millions)

Amortized Cost

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

As of December 31, 2019, we had one portfolio company with three investment positions on non-accrual status,

which represented 1.9% and 1.0% of the total debt investments at cost and fair value, respectively.

As of December 31, 2018, we had one portfolio company with two investment positions on non-accrual

status, which represented 2.5% and 1.4% of total debt investments at cost and fair value, respectively.

The remaining debt investments were performing and current on their interest payments as of December 31, 2019 and December 31, 2018.

The Advisor monitors our portfolio companies on an ongoing basis.

The Advisor 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 Advisor has a number of methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

As of December 31, 2020, we had investments in two portfolio companies with three investment positions

on non-accrual status, which represented 1.7% and 1.3% of the total debt investments at cost and fair value, respectively.

As of December 31, 2019, we had an investment in one portfolio company with three

investment positions on non-accrual status, which represented 1.9% and 1.0% of total debt investments at cost and fair value, respectively.

The remaining debt investments were performing and current on their

interest payments as of December 31, 2020 and 2019.

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 and fair

value of our investments, which may include the following:

assessment of success of the portfolio company in adhering to its business plan and compliance with covenants;

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comparisons to other companies in the industry;

possible attendance at, and participation in, board meetings.

As part of the monitoring process, the Advisor regularly assesses the risk profile of each of our investments and, on a quarterly basis, grades each

attendance and participation in board meetings.

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.

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Most or all of the debt covenants are out of compliance and payments are substantially delinquent.

Loans rated 5 are not anticipated to be repaid in full and the fair market value of the loan should

be reduced to the anticipated recovery amount.

Loans with an investment rating of 5 should be placed on non-accrual status.

The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of

December 31, 2019 and December 31, 2018.

Investment performance ratings are accurate only as of those dates and may change due to subsequent developments relating to a portfolio companys business or financial condition, market

conditions or developments, and other factors.

Loans rated 5 are not anticipated to be repaid in full and the fair market values of the loans are

generally reduced to the anticipated recovery amounts.

Loans with an investment rating of 5 are generally placed on non-accrual status.

The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of December 31, 2020 and

Investment performance ratings are accurate only as of those dates and may change due to subsequent developments relating to a portfolio companys business or financial condition, market conditions or developments, and other factors.

($ in millions)

December 31, 2020

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Investments at

($ in millions)

Percentage of

1 unchanged sentence

Investments at

($ in millions)

Percentage of

5 unchanged sentences

December 31, 2019

December 31, 2017

($ in millions)

1 unchanged sentence

Total net expenses

Net investment income before taxes

Income and excise taxes

Net investment income after taxes

Net realized gain (loss) on investments

Net unrealized appreciation (depreciation) on investments (1)

Net unrealized appreciation (depreciation) on foreign currency forward contracts

Net investment income

Net realized gain (loss) on

investments (1)

Net unrealized appreciation (depreciation) on

investments (1) (2)

Net realized and unrealized gains (losses) on investments

Provision for taxes on realized gain on investments

Benefit/(Provision) for taxes on unrealized appreciation (depreciation) on investments

(Provision) benefit for taxes on realized and unrealized gain (loss) on investments

Net increase in net assets resulting from operations

Includes foreign currency transactions and translation.

Realized loss on asset acquisition

Benefit/(Provision) for taxes on realized and unrealized appreciation (depreciation) on

Net increase (decrease) in net assets resulting from operations

Includes gains and losses related to foreign currency transactions and translation.

Includes gains and losses related to foreign currency forward contracts.

Investment Income

2 unchanged sentences

December 31, 2019

December 31, 2017

($ in millions)

1 unchanged sentence

Dividend Income

Other investment income

Total investment income

Interest from investments, which includes amortization of upfront fees, increased from $32.1 million for the year ended

December 31, 2018 to $47.7 million for the year ended December 31, 2019, due to an increase in the size of our portfolio.

Included in interest from investments for the years ended December 31, 2019 and December 31, 2018 are

$1.4 million and $1.0 million in accelerated accretion of OID, respectively.

Dividend income increased from $0.6 million for the year

ended December 31, 2018 to $5.0 million for the year ended December 31, 2019 due to our investments in GACP II and the Senior Loan Fund, along with dividend payments as it relates to equity

co-investments.

Other investment income which includes prepayment fees, amortization of loan administration fees earned as the administration agent, and other miscellaneous fee income, remained relatively

Interest income, which includes amortization of upfront fees, increased from $47.7 million for the year ended

December 31, 2019 to $71.1 million for the year ended December 31, 2020, due to an increase in the size of our portfolio related to the Alcentra Acquisition and organic net deployment.

Included in interest from investments for the

years ended December 31, 2020 and 2019 are $2.3 million and $1.4 million of accelerated accretion of OID, respectively.

Dividend income

remained relatively flat for the years ended December 31, 2020 and 2019.

Other income which includes amendment fees, amortization of loan administration fees and other fees increased modestly as a result of a growing investment portfolio.

For the years ended

1 unchanged sentence

December 31, 2019

December 31, 2017

($ in millions)

Interest and debt financing costs

Interest and other debt financing costs

Management fees

Income incentive fees

Other general and administrative expenses

Incentive fees

Professional fees

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Organization expenses

Other general and administrative expenses

Total expenses

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Income and excise taxes

Interest and Credit Facility Expenses

Interest and debt financing costs include interest, amortization of deferred financing costs, upfront commitment fees and unused fees on the Revolving Credit

Facility II, SPV Asset Facility, and Corporate Revolving Facility.

We first drew on the SPV Asset Facility in April 2016, the Revolving Credit Facility II in June 2017 (the facility was terminated in August 2019), and the Corporate Revolving

Facility in August 2019.

Interest and debt financing costs increased from $8.4 million for the year ended December 31, 2018 to $13.4 million for the year ended December 31, 2019.

This increase was primarily due to an increase in

the weighted average debt outstanding from $182.3 million for the year ended December 31, 2018 to $275.9 million for the year ended December 31, 2019 and an increase in the average interest rate (excluding deferred upfront

financing costs and unused fees) on the weighted average debt outstanding from 4.1% for the year ended December 31, 2018 to 4.4% for the year ended December 31, 2019.

Management fees

Management fees are calculated and payable quarterly in arrears at an annual rate of 1.5% of our gross assets, including assets acquired through the incurrence

of debt but excluding any cash and cash equivalents.

The Advisor, however, has agreed to waive its right to receive management fees in excess of the sum of (i) 0.25% of the aggregate committed but undrawn capital and (ii) 0.75% of the aggregate

gross assets excluding cash and cash equivalents (including capital drawn to pay our expenses) during any period prior to a Qualified IPO.

Additionally,

under the terms of the Transaction Support Agreement, among other things, we agreed to enter into an amendment to our Investment Advisory Agreement to (i) permanently reduce the management fee from 1.50% to 1.25% and (ii) waive a portion

of the base management fee from February 1, 2020 through July 31, 2021 such that the base management fee shall be charged at an annual rate of 0.75% of our gross assets for such time period.

These amendments contemplated by the Transaction

Support Agreement went into effect with the completion of the Alcentra Acquisition, which closed on January 31, 2020.

Management fees, net of waived

management fees, increased from $3.4 million for the year ended December 31, 2018 to $4.7 million for the year ended December 31, 2019 due to the increase in total assets, which increased from an average of $409.4 million

for the year ended December 31, 2018 to an average of $478.7 million for the year ended December 31, 2019.

Waived management fees for the years ended December 31, 2019 and December 31, 2018 were approximately

$4.5 million and $2.6 million, respectively.

The Advisor is not permitted to recoup waived amounts at any time.

Income incentive fees

The income incentive fee, is calculated and payable quarterly in arrears and (a) equals 100% of the excess of the

pre-incentive fee net investment income (as defined below) for the immediately preceding calendar quarter, over a preferred return of 1.5% per quarter (6% annualized) (the Hurdle), and a catch-up feature until the Advisor has received, (i) prior to a Qualified IPO, 15%, or (ii) after a Qualified IPO, 17.5%, of the pre-incentive fee net investment

income for the current quarter up to, (i) prior to a Qualified IPO, 1.7647%, or (ii) after a Qualified IPO, 1.8182% (the Catch-up), and (b)(i) prior to a Qualified IPO, 15% or

(ii) after a Qualified IPO, 17.5%, of all remaining pre-incentive fee net investment income above the Catch-up.

Pre-Incentive Fee Net Investment Income means interest income, dividend income and any other income

(including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies, but excluding fees for providing managerial assistance) accrued during the calendar

quarter, minus operating expenses for the calendar quarter (including the base management fee, taxes, any expenses payable under the Investment Advisory Agreement and the Initial Administration Agreement and any interest expense, but excluding the

Incentive fee).

Pre-Incentive Fee Net Investment Income includes accrued income that we have not yet received in cash, such as debt instruments with PIK interest, preferred stock with PIK dividends and zero

coupon securities.

Net income incentive fees were $0.5 million and zero for the years ended December 31, 2018 and December 31, 2019,

Interest and other debt financing costs

Interest and other debt financing costs include interest, amortization of deferred financing costs including upfront commitment fees and unused fees on our

credit facilities.

For the years ended December 31, 2020 and 2019 interest and debt financing costs were $15.5 million and $13.4 million, respectively.

The increase between the periods is due to an increase in the debt outstanding in

connection with financing needs of a growing investment portfolio.

The increase in the debt outstanding was partially offset by a decrease in the average benchmark rates during the year ended December 31, 2020.

Base Management Fees

For the years ended

December 31, 2020 and 2019, we incurred management fees of $6.7 million and $4.7 million, respectively, which are net of a waived amounts of $4.7 million and $4.5 million, respectively.

As of December 31, 2020 and 2019,

$1.9 million and $1.3 million of management fees, respectively, remained payable.

The increase in net management fees is driven by growing assets under management.

The Adviser has voluntarily waived its right to receive management fees on our investment in GACP II LP for any period in which GACP II LP remains in the

investment portfolio.

For the years ended December 31, 2020 and 2019, $0.1 million and $0.1 million of management fees waived were attributable to our investment in GACP II LP.

Incentive Fees

For the years ended December 31,

2020 and 2019 we incurred income incentive fees of $8.6 million and $4.8 million, of which $8.6 million and $4.8 million, respectively, were waived.

$0 was payable as of December 31, 2020 and 2019, respectively.

years ended December 31, 2020 and 2019 we accrued no incentive fee on cumulative unrealized capital appreciation.

Professional Fees and Other

General and Administrative Expenses

Professional fees generally include expenses from independent auditors, tax advisors, legal counsel and third

party valuation agents.

Other general and administrative expenses generally include expenses from the sub-administration agreement, insurance premiums, overhead and staffing costs allocated from the

Administrator and other miscellaneous general and administrative costs associated with our operations and investment activity.

For the years ended December 31, 2020 and 2019, professional fees were $1.5 million and $0.9 million,

respectively.

The decrease was due to us receiving stockholder approval to extend the end of the Commitment Period to February 3, 2020, which is the date of our listing on the NASDAQ stock exchange, which in exchange, the Advisor agreed to waive its

right under the Investment Advisory Agreement to the income incentive fee.

Under the terms of the Transaction Support Agreement that went into effect on

January 31, 2020, among other things, the Advisor agreed to (i) increase the incentive fee hurdle from 6% to 7% annualized and (ii) waive the income based portion of the incentive fee from February 1, 2020 through July 31,

Professional Fees and Other General and Administrative Expenses

Professional fees generally include expenses from independent auditors, tax advisors, legal counsel and third party valuation agents.

Other general and

administrative expenses generally include expenses from the Sub-Administration Agreements, insurance premiums, overhead and staffing costs allocated from the Administrator and other miscellaneous general and

administrative costs associated with our operations and investment activity.

Professional fees increased from $0.8 million for the year ended December 31, 2018 to $1.0 million for the year ended December 31, 2019, while other

general and administrative expenses increased from $1.8 million for the year ended December 31, 2018 to $2.2 million for the year ended December 31, 2019.

The net increase in expenses was due to an increase in costs associated

with servicing a growing investment portfolio.

For the years ended December 31, 2020 and 2019, other general and administrative expenses were $2.6 million and $2.2 million, respectively.

The net increase in expenses was due to an increase in costs associated with

servicing a growing investment portfolio.

Organization expenses

We agreed to repay the Advisor for the organization costs and offering costs (not to exceed $1.5 million) on a pro rata basis over the first $350 million

of capital contributed to us.

The Advisor is responsible for organization costs and offering costs in excess of $1.5 million.

At the 2018 Annual Meeting of Stockholders, we received stockholder approval to extend the period during which capital

may be called from stockholders (the Commitment Period).

The Commitment Period was extended to the date of the merger, which occurred on January 31, 2020.

With the approval of the Commitment Period extension, the Advisor agreed to

extend the reimbursement period for the initial organization costs and offering costs to June 30, 2019.

For the year ended December 31, 2019,

we called $146.0 million and the Advisor allocated $0.1 million of organization costs to us, which was included in the Consolidated Statements of Operations.

For the year ended December 31, 2019, the Advisor also allocated

$0.2 million of equity offering costs to us that were recorded as an offset to Paid-in capital in excess of par value on the Consolidated Statement of Assets and Liabilities.

For the year ended December 31, 2018, we called $95.0 million and the Advisor allocated $0.2 million of organization costs to us, which was

included in the Consolidated Statements of Operations.

For the year ended December 31, 2018, the Advisor also allocated $0.2 million of equity offering costs to us that were recorded as an offset to

Paid-in capital in excess of par value on the Consolidated Statement of Assets and Liabilities.

Since Inception,

the Advisor allocated $0.6 million of organization costs and $0.8 million of equity offering costs to us.

Income Tax Expense, Including

We have elected to be treated as a RIC under the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs.

qualify as a RIC, we must generally (among other requirements) timely distribute to our stockholders at least 90% of our investment company taxable income, as defined by the Code, for each year.

In order to maintain our RIC status, we intend to make

the requisite distributions to our stockholders which will generally relieve us from corporate-level income taxes.

In order to not to be subject to

federal excise taxes, we must distribute annually an amount at least equal to the sum of (i) 98% of our ordinary income (taking into account certain deferrals and elections), (ii) 98.2% of our net capital gains from the current year and

(iii) any undistributed ordinary income and net capital gains from preceding years.

Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend

distributions into the next tax year and pay a 4% excise tax on such income, as required.

If we determine that our estimated current year taxable income will be in excess of estimated dividend distributions for the current year from such income, we

accrue excise tax on estimated excess taxable income as such taxable income is earned.

For the years ended December 31, 2019 and December 31, 2018 we expensed an excise tax of $0.1 million and $0.1 million, respectively, of which

$0.1 million and $0.1 million remained payable at the end of each year, respectively.

Net Realized and Unrealized Gains and Losses

We value our portfolio investments quarterly and any changes in fair value are recorded as unrealized appreciation (depreciation) on investments.

For the years

ended December 31, 2019, December 31, 2018 and December 31, 2017, net realized gains (losses) and net unrealized appreciation (depreciation) on our investment portfolio were comprised of the following:

We agreed to repay the Adviser for initial organization costs and equity offering costs incurred prior to the commencement of our operations up to a maximum of

$1.5 million on a pro rata basis over the first $350.0 million of invested capital not to exceed 3 years from the initial capital commitment on June 26, 2015.

The initial 3 year term was later extended to June 30, 2019, with

shareholder approval.

To the extent such costs related to equity offerings, these costs were charged as a reduction of capital upon the issuance of common shares.

To the extent such costs related to organization costs, these costs were expensed in

the Consolidated Statements of Operations upon the issuance of common shares.

The Adviser was responsible for organization and private equity offerings costs in excess of $1.5 million.

During the reimbursement period which began on

June 26, 2015 and expired on June 30, 2019, the Adviser had allocated to us $0.8 million of equity offering costs and $0.6 million of organization costs.

Income and Excise Taxes

For the years ended December 31, 2020 and 2019, we expensed income and excise taxes of $0.5 million and $0.2 million, respectively.

December 31, 2020 and 2019, $0.4 million and $0.1 million of excise taxes remained payable, respectively.

Net Realized and Unrealized

Gains and Losses

We value our portfolio investments quarterly and any changes in fair value are recorded as unrealized appreciation (depreciation) on

For the years ended December 31, 2020 and 2019, net realized gains (losses) and net unrealized appreciation (depreciation) on our investment portfolio were comprised of the following:

For the years ended

1 unchanged sentence

December 31, 2019

December 31, 2017

($ in millions)

Realized losses on investments

Realized gains on investments

Realized gains on foreign currency transactions

Realized losses on non-controlled and non-affiliated investments

Realized gains on non-controlled and non-affiliated investments

Realized losses on non-controlled and affiliated

Realized gains on non-controlled and affiliated

Realized losses on controlled and affiliated investments

Realized gains on controlled and affiliated investments

Realized losses on foreign currency transactions

Net realized gains (losses)

Change in unrealized depreciation on non-controlled and non-affiliated investments

Change in unrealized appreciation on non-controlled and non-affiliated investments

Change in unrealized depreciation on foreign currency translation

Change in unrealized appreciation on foreign currency translation

Change in unrealized depreciation on controlled and affiliated investments

Change in unrealized appreciation on controlled and affiliated investments

Change in unrealized appreciation on foreign currency forwards

Change in unrealized depreciation on foreign currency forwards

Realized gains on foreign currency transactions

Net realized gains (losses) on investments

Change in unrealized depreciation on non-controlled and

non-affiliated investments

Change in unrealized appreciation on non-controlled and

non-affiliated investments

Change in unrealized depreciation on foreign currency

Change in unrealized appreciation on foreign currency

Change in unrealized depreciation on non-controlled and

affiliated investments

Change in unrealized appreciation on non-controlled and

affiliated investments

Change in unrealized depreciation on controlled and

affiliated investments

Change in unrealized appreciation on controlled and

affiliated investments

Change in unrealized depreciation on foreign currency

Change in unrealized appreciation on foreign currency

Net unrealized appreciation (depreciation)

Realized loss on asset acquisition

Net realized and unrealized gains (losses) on investments

and asset acquisition

We may, but are

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strategy we employ will be successful.

During the years ended December 31, 2019 and December 31, 2018, our average U.S.

Dollar notional

exposure to foreign currency forward contracts were $23.3 million and $7.9 million, respectively.

For the years ended December 31, 2018

During the years ended December 31, 2020 and 2019, our average U.S.

Dollar notional exposure to foreign

currency forward contracts were $35.8 million and $23.3 million, respectively.

For the years ended December 31, 2019 and 2018

The comparison of the fiscal years ended December 31, 2019 and 2018 can be found in our annual report on Form 10-K for the fiscal year ended December 31, 2019 located within Part II, Item 7.

Managements Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated by reference

Senior Loan Fund

The Senior Loan Fund, an unconsolidated limited liability company, was formed on September 26, 2018 and commenced operations in February 2019.

together with Masterland Enterprise Holdings Ltd.

(Masterland) through the Senior Loan Fund.

Masterland is a wholly owned subsidiary of China Orient Asset Management (International) Holding Limited (HK).

The Senior Loan Funds

principal purpose is to make investments, either directly or indirectly through its wholly owned subsidiary, CBDC Senior Loan Sub LLC.

We and Masterland have each subscribed to fund $40 million.

Except under certain circumstances, contributions

to the Senior Loan Fund cannot be redeemed.

The Senior Loan Fund is managed by a four member board of managers, on which we and Masterland have equal representation.

Investment decisions generally must be unanimously approved by a quorum of the

board of managers.

Since we do not have a controlling financial interest in the Senior Loan Fund, we do not consolidate our non-controlling interest in the Senior Loan Fund.

The Senior Loan Fund is an

investment company and measured using the net asset value per share as a practical expedient for fair value.

As of December 31, 2019, we and

Masterland had each subscribed to fund and contributed the following to the Senior Loan Fund:

($ in millions)

December 31, 2019

The Senior Loan Fund is capitalized pro rata with LLC equity interest as transactions are completed.

The Senior Loan Fund has

a revolving credit facility with Royal Bank of Canada (the RBC Facility), which permitted up to $300.0 million of borrowings as of December 31, 2019.

Borrowings under the RBC Facility are secured by all assets of CBDC Senior

Loan Sub LLC.

As of December 31, 2019, the Senior Loan Fund had total investments in senior secured debt at fair value of $275.1 million.

Below is a summary of the Senior Loan Funds portfolio, followed by a listing of the individual loans in the Senior Loan Funds portfolio as of

December 31, 2019:

($ in millions)

Total senior secured debt (1)

Weighted average current interest rate on senior secured debt (2)

Number of borrowers in the Senior Loan Funds portfolio

Largest loan to a single borrower

At par amount, including unfunded commitments.

Computed as (a) the annual stated interest rate on accruing senior secured debt, divided by (b) total

senior secured debt at par amount, excluding fully unfunded commitments.

CBDC SENIOR LOAN FUND LLC

Consolidated Schedule of Investments

December 31, 2019

Company/Security/Country ***

Investment Type

Value or Shares

United States

Debt Investments

Aerospace & Defense

Dynasty Acquisition Co., Inc.

Senior Secured First Lien

TransDigm, Inc.

Senior Secured First Lien

TransDigm, Inc.

Senior Secured First Lien

TransDigm, Inc.

Senior Secured First Lien

Air Transport

American Airlines, Inc.

Senior Secured First Lien

Mister Car Wash Holdings, Inc.

Senior Secured First Lien

Mister Car Wash Holdings, Inc.

Senior Secured First Lien

OEConnection LLC

Senior Secured First Lien

OEConnection LLC (4) (5)

Senior Secured First Lien

Wand NewCo 3, Inc.

Senior Secured First Lien

Building & Development

Cushman & Wakefield U.S.

Borrower, LLC

Senior Secured First Lien

Forest City Enterprises, L.P.

Senior Secured First Lien

Realogy Group LLC

Senior Secured First Lien

Business Equipment & Services

Almonde, Inc.

Senior Secured First Lien

AqGen Ascensus, Inc.

Senior Secured First Lien

AVSC Holding Corp.

Senior Secured First Lien

AVSC Holding Corp.

Senior Secured First Lien

Belfor Holdings, Inc.

Senior Secured First Lien

Brand Energy & Infrastructure Services, Inc.

Senior Secured First Lien

Creative Artists Agency, LLC

Senior Secured First Lien

EAB Global, Inc.

Senior Secured First Lien

IG Investment Holdings, LLC

Senior Secured First Lien

IRI Holdings, Inc.

Senior Secured First Lien

Jane Street Group, LLC

Senior Secured First Lien

MA FinanceCo., LLC

Senior Secured First Lien

Netsmart, Inc.

Senior Secured First Lien

Prime Security Services Borrower, LLC

Senior Secured First Lien

CBDC SENIOR LOAN FUND LLC

Consolidated Schedule of Investments

December 31, 2019

Company/Security/Country ***

Investment Type

Value or Shares

Seattle Spinco, Inc.

Senior Secured First Lien

Sotera Health Holdings, LLC

Senior Secured First Lien

Spin Holdco, Inc.

Senior Secured First Lien

TruGreen Limited Partnership

Senior Secured First Lien

USIC Holdings, Inc.

Senior Secured First Lien

Cable & Satellite Television

Charter Communications Operating, LLC

Senior Secured First Lien

CSC Holdings, LLC

Senior Secured First Lien

CSC Holdings, LLC

Senior Secured First Lien

Virgin Media Bristol LLC

Senior Secured First Lien

Chemicals & Plastics

Fuller Company

Senior Secured First Lien

Ineos US Finance LLC

Senior Secured First Lien

Messer Industries GmbH

Senior Secured First Lien

PMHC II, Inc.

Senior Secured First Lien

PQ Corporation

Senior Secured First Lien

Consumer Services

Pre-Paid Legal Services, Inc.

Senior Secured First Lien

Containers & Glass Products

Anchor Packaging, Inc.

Senior Secured First Lien

Anchor Packaging, Inc.

Senior Secured First Lien

Berlin Packaging LLC

Senior Secured First Lien

Berry Global, Inc.

Senior Secured First Lien

BWAY Holding Company

Senior Secured First Lien

Consolidated Container Company LLC

Senior Secured First Lien

Pro Mach Group, Inc.

Senior Secured First Lien

Reynolds Group Holdings, Inc.

Senior Secured First Lien

Sabert Corporation

Senior Secured First Lien

Diversified Insurance

Acrisure, LLC

Senior Secured First Lien

Albany Molecular Research, Inc.

Senior Secured First Lien

Amneal Pharmaceuticals LLC

Senior Secured First Lien

CBDC SENIOR LOAN FUND LLC

Consolidated Schedule of Investments

December 31, 2019

Company/Security/Country ***

Investment Type

Value or Shares

Electronics/Electrical

Blackhawk Network Holdings, Inc.

Senior Secured First Lien

CommScope, Inc.

Senior Secured First Lien

Compuware Corporation

Senior Secured First Lien

DCert Buyer, Inc.

Senior Secured First Lien

Dell International LLC

Senior Secured First Lien

ON Semiconductor Corporation

Senior Secured First Lien

Sabre GLBL, Inc.

Senior Secured First Lien

SS&C Technologies, Inc.

Senior Secured First Lien

Verifone Systems, Inc.

Senior Secured First Lien

Western Digital Corporation

Senior Secured First Lien

Financial Intermediaries

Apollo Commercial Real Estate Finance, Inc

Senior Secured First Lien

Avolon TLB Borrower 1 (US) LLC

Senior Secured First Lien

Citadel Securities LP

Senior Secured First Lien

Edelman Financial Center, LLC

Senior Secured First Lien

Focus Financial Partners, LLC

Senior Secured First Lien

Jefferies Finance LLC

Senior Secured First Lien

Kestra Advisor Services Holdings A, Inc.

Senior Secured First Lien

RPI Finance Trust

Senior Secured First Lien

Sedgwick Claims Management Services, Inc.

Senior Secured First Lien

Starwood Property Trust, Inc.

Senior Secured First Lien

VFH Parent LLC

Senior Secured First Lien

Victory Capital Holdings, Inc.

Senior Secured First Lien

Food products

Dole Food Company, Inc.

Senior Secured First Lien

Hearthside Food Solutions, LLC

Senior Secured First Lien

CBDC SENIOR LOAN FUND LLC

Consolidated Schedule of Investments

December 31, 2019

Company/Security/Country ***

Investment Type

Value or Shares

Aramark Services,

Senior Secured First Lien

IRB Holding Corp

Senior Secured First Lien

Whatabrands LLC

Senior Secured First Lien

Food/Drug Retailers

BJs Wholesale Club, Inc.

Senior Secured First Lien

Athenahealth, Inc.

Senior Secured First Lien

ATI Holdings Acquisition, Inc.

Senior Secured First Lien

Avantor, Inc.

Senior Secured First Lien

Comet Acquisition, Inc.

Senior Secured First Lien

Da Vinci Purchaser Corp.

Senior Secured First Lien

Emerald TopCo Inc.

Senior Secured First Lien

Envision Healthcare Corporation

Senior Secured First Lien

Gentiva Health Services, Inc.

Senior Secured First Lien

Heartland Dental, LLC

Senior Secured First Lien

Heartland Dental, LLC (4) (9)

Senior Secured First Lien

Parexel International Corporation (8)

Senior Secured First Lien

RegionalCare Hospital Partners Holdings, Inc.

Senior Secured First Lien

Surgery Center Holdings, Inc.

Senior Secured First Lien

Syneos Health, Inc.

Senior Secured First Lien

Tecomet, Inc.

Senior Secured First Lien

Renal Care, Inc.

Senior Secured First Lien

Verscend Holding Corp.

Senior Secured First Lien

Viant Medical Holdings, Inc.

Senior Secured First Lien

Industrial Equipment

Clark Equipment Company

Senior Secured First Lien

Dynacast International LLC

Senior Secured First Lien

LTI Holdings, Inc.

Senior Secured First Lien

MHI Holdings, LLC

Senior Secured First Lien

Sabre Industries, Inc.

Senior Secured First Lien

CBDC SENIOR LOAN FUND LLC

Consolidated Schedule of Investments

December 31, 2019

Company/Security/Country ***

Investment Type

Value or Shares

Leisure Goods/Activities/Movies

Crown Finance US, Inc.

Senior Secured First Lien

Crown Finance US, Inc.

Senior Secured First Lien

Hoya Midco, LLC

Senior Secured First Lien

Six Flags Theme Parks, Inc.

Senior Secured First Lien

SP PF Buyer LLC

Senior Secured First Lien

UFC Holdings, LLC

Senior Secured First Lien

Varsity Brands, Inc.

Senior Secured First Lien

Lodging & Casinos

Golden Nugget, Inc.

Senior Secured First Lien

MGM Growth Properties Operating Partnership LP

Senior Secured First Lien

Scientific Games International, Inc.

Senior Secured First Lien

Seminole Tribe of Florida

Senior Secured First Lien

VICI Properties 1 LLC

Senior Secured First Lien

Wyndham Hotels & Resorts, Inc.

Senior Secured First Lien

Blackstone CQP Holdco LP

Senior Secured First Lien

Delek US Holdings, Inc.

Senior Secured First Lien

Prairie ECI Acquiror LP

Senior Secured First Lien

Property & Casualty Insurance

AssuredPartners, Inc.

Senior Secured First Lien

Meredith Corporation

Senior Secured First Lien

Merrill Communications, LLC

Senior Secured First Lien

Nielsen Finance LLC

Senior Secured First Lien

Radio & Television

Diamond Sports Group, LLC

Senior Secured First Lien

Gray Television, Inc.

Senior Secured First Lien

Mission Broadcasting, Inc.

Senior Secured First Lien

Nexstar Broadcasting, Inc.

Senior Secured First Lien

Nexstar Broadcasting, Inc.

Senior Secured First Lien

CBDC SENIOR LOAN FUND LLC

Consolidated Schedule of Investments

December 31, 2019

Company/Security/Country ***

Investment Type

Value or Shares

Sinclair Television Group, Inc.

Senior Secured First Lien

Terrier Media Buyer, Inc.

Senior Secured First Lien

Rail Industries

Genesee & Wyoming Inc.

Senior Secured First Lien

Retailers (except Food & Drug)

Bass Pro Group, LLC

Senior Secured First Lien

Mens Wearhouse, Inc.

Senior Secured First Lien

Staples, Inc.

Senior Secured First Lien

Surface Transport

Avis Budget Car Rental, LLC

Senior Secured First Lien

XPO Logistics, Inc.

Senior Secured First Lien

XPO Logistics, Inc.

Senior Secured First Lien

Telecommunications

Senior Secured First Lien

CenturyLink, Inc.

Senior Secured First Lien

Level 3 Financing, Inc.

Senior Secured First Lien

Sprint Communications, Inc.

Senior Secured First Lien

Brookfield WEC Holdings, Inc.

Senior Secured First Lien

Calpine Corporation

Senior Secured First Lien

Calpine Corporation

Senior Secured First Lien

Eastern Power, LLC

Senior Secured First Lien

Granite Generation LLC

Senior Secured First Lien

Nautilus Power, LLC

Senior Secured First Lien

Talen Energy Supply, LLC

Senior Secured First Lien

Vistra Operations Company LLC

Senior Secured First Lien

Total Debt Investments

United States

Total United States

Debt Investments

Aerospace & Defense

Unlimited Liability Company

Senior Secured First Lien

Kestrel Bidco, Inc.

Senior Secured First Lien

CBDC SENIOR LOAN FUND LLC

Consolidated Schedule of Investments

December 31, 2019

Company/Security/Country ***

Investment Type

Value or Shares

Air Transport

Senior Secured First Lien

Panther BF Aggregator 2 LP

Senior Secured First Lien

Business Equipment & Services

Garda World Security Corporation

Senior Secured First Lien

Unlimited Liability Company

Senior Secured First Lien

DentalCorp Perfect Smile ULC

Senior Secured First Lien

Industrial Equipment

Titan Acquisition Limited (8)

Senior Secured First Lien

NorthRiver Midstream Finance LP

Senior Secured First Lien

Total Debt Investments

Debt Investments

Belron Finance US LLC

Senior Secured First Lien

Belron Finance US LLC

Senior Secured First Lien

Cosmetics/Toiletries

Sunshine Luxembourg VII SARL

Senior Secured First Lien

Endo Luxembourg Finance Company I S.a r.l.

Senior Secured First Lien

Mallinckrodt International Finance S.A.

Senior Secured First Lien

Electronics/Electrical

SS&C Technologies Holdings Europe S.A.R.L.

Senior Secured First Lien

Total Debt Investments

Total Luxembourg

United Kingdom

Debt Investments

Boing US Holdco, Inc.

Senior Secured First Lien

Total Debt Investments

United Kingdom

Total United Kingdom

Debt Investments

Chemicals & Plastics

Starfruit Finco B.V

Senior Secured First Lien

CBDC SENIOR LOAN FUND LLC

Consolidated Schedule of Investments

December 31, 2019

Company/Security/Country ***

Investment Type

Value or Shares

Electronics/Electrical

Avast Software B.V.

Senior Secured First Lien

Food products

Jacobs Douwe Egberts International B.V.

Senior Secured First Lien

Total Debt Investments

Total Netherlands

Debt Investments

Telecommunications

Speedcast International Limited

Senior Secured First Lien

Total Debt Investments Australia

Total Australia

Debt Investments

Business Equipment & Services

Capri Finance LLC

Senior Secured First Lien

Retailers (except Food & Drug)

Titan AcquisitionCo New Zealand Limited

Senior Secured First Lien

Total Debt Investments New Zealand

Total New Zealand

Total Investments

The majority of the investments bear interest at a rate that may be determined by reference to London Interbank

Offered Rate (LIBOR or L), which resets daily, monthly, quarterly or semiannually.

We have provided the spread over LIBOR and the weighted average current interest rate in effect at December 31, 2019.

Certain investments

are subject to a LIBOR interest rate floor.

For fixed rate loans, a spread above a reference rate is not applicable.

Percentage is based on net assets of $68,883,439 as of December 31, 2019.

All investments are pledged as collateral for loans payable unless otherwise noted.

Represents fair value in accordance with ASC Topic 820.

The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate.

The 3 month LIBOR as of December 31, 2019 was 1.91%.

The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR plus a base rate.

The 1 month LIBOR as of December 31, 2019 was 1.76%.

Represents a delayed draw commitment of $71,802, of which $71,802 was unfunded as of December 31, 2019.

Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 0.50% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

The negative cost, if applicable, is the result of the capitalized discount or unfunded commitment being

greater than the principal amount outstanding on the loan.

The negative fair value, if applicable, is the result of the capitalized discount or unfunded commitment on the loan.

Represents a delayed draw commitment of $103,896, of which $103,896 was unfunded as of December 31, 2019.

Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 0.50% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

The interest rate on these loans is subject to the greater of a LIBOR floor or 6 month LIBOR plus a base rate.

The 6 month LIBOR as of December 31, 2019 was 1.91%.

Represents a delayed draw commitment of $180,744, of which $180,744 was unfunded as of December 31, 2019.

Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 0.50% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Position or portion thereof unsettled as of December 31, 2019.

Represents a delayed draw commitment of $27,349, of which $27,349 was unfunded as of December 31, 2019.

Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 0.50% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Below is selected balance sheet information for the Senior Loan Fund as of December 31, 2019:

($ in millions)

Selected Balance Sheet Information:

Total investments, at fair value

Cash and cash equivalents

Debt (net of deferred financing costs of $211,251)

Other liabilities

Total liabilities

Members Capital

Total liabilities and members capital

Below is selected statements of operations information for the Senior Loan Fund for the year ended December 31, 2019:

($ in millions)

For the period

from February 28,

(commencement

Selected Statement of Operations Information:

Total investment income

Interest and other debt financing costs

Professional fees

Other general and administrative expenses

Total expenses

Net investment income (loss)

Net realized gain (loss) on investments

Net change in unrealized appreciation (depreciation) on investments

Net increase (decrease) in members capital

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2019, we had $13.4 million in cash on hand.

The primary uses of our cash and cash equivalents are for (1) investments in

portfolio companies and other investments;

(2) the cost of operations (including paying the Advisor);

The primary uses of our cash and cash equivalents are for (1) investments in portfolio companies and other investments;

(2) the cost of operations

(including paying the Adviser);

(3) debt service, repayment, and other financing costs;

and, (4) cash distributions to the holders of our common shares.

We expect to generate additional cash from (1) future offerings of our common or preferred shares;

(2) borrowings from our SPV Asset Facility and

Corporate Revolving Facility and from other banks, lenders, or future issuances of debt securities;

and (4) cash distributions to the holders of our common stock.

We expect to generate additional liquidity from (1) borrowings from our SPV Asset

Facility, Corporate Revolving Facility, Unsecured Notes, and from other banks, lenders, or future issuances of debt and equity securities;

and, (2) cash flows from operations.

hand of $13.4 million combined with our uncalled capital commitments of $44.3 million, $29.3 million undrawn amount on our SPV Asset Facility, and $95.3 undrawn amount on our Corporate Revolving Facility is expected to be sufficient

for the cash consideration and other closing costs in connection with the Alcentra Acquisition, our investing activities, and to conduct our operations for the foreseeable future.

As of December 31, 2020, we had $14.8 million in cash and cash equivalents and restricted cash and cash equivalents and $139.9 million of

undrawn capacity on our senior unsecured notes and revolving credit and special purpose vehicle asset facilities, subject to borrowing base and other limitations.

As of December 31, 2020, the undrawn capacity under our facilities is in excess

of our unfunded commitments.

As of December 31, 2020, we were in compliance with our asset coverage requirements under the 1940 Act.

In addition, we

were in compliance with all the financial covenant requirements of our credit facilities as of December 31, 2020.

However, any continued increase in realized losses or unrealized depreciation of our investment portfolio or further significant

reductions in our net asset value as a result of the effects of the COVID-19 pandemic, increase the risk of breaching the relevant covenants requirements.

Any breach of these requirements may adversely affect

the access to sufficient debt and equity capital.

We expect that the market and business disruption created by the

COVID-19 pandemic will continue to impact certain aspects of our liquidity, and we are therefore continuously and critically monitoring our operating results, liquidity and anticipated capital requirements.

is impossible at this time to determine the full scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on

our liquidity and overall performance .

Capital Share Activity

Between June 26, 2015

(Commencement) and January 31, 2020, the date we completed the Alcentra Acquisition, we entered into subscription agreements (collectively, the Subscription Agreements) with several investors, including CCG LP, providing for the

private placement of our common shares.

Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase our common shares up to the amount of their respective capital commitments on an as-needed basis with a minimum of 10 business days prior notice.

At December 31, 2019, we had received capital commitments totaling $456.3 million, of which $10.0 million was from CCG LP.

Between June 26, 2015 (Commencement) and December 31, 2019, pursuant to the Subscription Agreements, we issued 20,862,314 of common shares for

aggregate proceeds of $412.0 million.

Proceeds from the issuance were used to fund our investing activities and for other general corporate purposes.

As of December 31, 2019, we have received all amounts relating to the issued capital

drawdown notices.

During the year ended December 31, 2019, we issued 76,969 shares of our common stock to investors who have opted into our dividend

reinvestment plan for proceeds of $1.5 million.

During the year ended December 31, 2018, we issued 29,914 shares of our common stock to investors who have opted into our dividend reinvestment plan for proceeds of $0.6 million.

the year ended December 31, 2017, we issued 6,520 shares of our common stock to investors who have opted into our dividend reinvestment plan for proceeds of $0.1 million.

Debt consisted of the following as of

December 31, 2019 and 2018:

Between June 26, 2015, commencement of operations, and January 31, 2020, the date of Alcentra Acquisition, we entered into subscription agreements

(collectively, the Subscription Agreements) with several investors, including Crescent, providing for the private placement of our common shares.

Pursuant to the Subscription Agreements, between June 26, 2015 and January 31,

2020, we issued 23,127,335 common shares for aggregate proceeds of $456.3 million, of which $10.0 million was from Crescent.

Proceeds from the issuances were used to fund our investing activities and for other general corporate purposes.

Subsequently, on January 31, 2020, we issued 5,203,016 shares in connection with the Alcentra Acquisition.

Upon closing of the Alcentra Acquisition, all unfunded commitments of stockholders subscribing in private offering were terminated.

During the years ended December 31, 2020 and 2019 we issued 30,128 shares and 76,969 shares of our common stock, respectively, to investors who have

opted into our dividend reinvestment plan for proceeds of $0.6 million and $1.5 million, respectively.

Debt consisted of the following as of December 31, 2020 and 2019:

December 31, 2020

($ in millions)

Aggregate Principal

3 unchanged sentences

Corporate Revolving Facility

Unsecured Notes

InterNotes ®

December 31, 2019

($ in millions)

Aggregate Principal

Amount Committed

1 unchanged sentence

SPV Asset Facility

Revolving Credit Facility II (3)(5)(6)

Corporate Revolving Facility

The amount available is subject to any limitations related to the respective debt facilities borrowing

bases and foreign currency translation adjustments.

The difference between the drawn amount and the carrying value is attributable to the effect of foreign

currency rates as of the balance sheet dates versus foreign currency rates at the time of the respective non-USD borrowings.

Carrying value excludes unamortized deferred financing costs.

We had outstanding debt denominated in Pound Sterling (GBP) of 2.5 million on its Revolving Credit

For borrowings in non-USD, the drawn amount represents the USD

equivalent at the time of borrowing (i.e.

Total drawn amount payable after the effect of foreign currency translation as of December 31, 2018, was

$77.8 million.

We had outstanding debt denominated in Euro (EUR) of 1.8 million on its Revolving Credit Facility II.

Amount presented excludes netting of deferred financing costs.

SPV Asset Facility

March 28, 2016 Crescent Capital BDC Funding, LLC (CCAP SPV), a Delaware limited liability company and our wholly owned and consolidated subsidiary, entered into a loan and security agreement (the SPV Asset Facility) with

us as the collateral manager, seller and equity holder, CCAP SPV as the borrower, the banks and other financial institutions from time to time party thereto as lenders, and Wells Fargo Bank, National Association (Wells Fargo), as

administrative agent, collateral agent, and lender.

The SPV Asset Facility is effective as of March 28, 2016.

On February 8, 2017 we amended the SPV Asset Facility increasing the facility limit from $75 million to $125 million.

On September 28, 2018 we further amended the SPV Asset Facility increasing the facility limit from $125 million to $175 million and extending the maturity date to September 28, 2023.

On April 9, 2019 we further amended the

SPV Asset Facility increasing the facility limit from $175 million to $250 million.

The maximum commitment amount under the SPV Asset Facility

is $250 million, and may be increased with the consent of Wells Fargo or reduced upon our request.

Proceeds of the Advances under the SPV Asset Facility may be used to acquire portfolio investments, to make distributions to us in accordance

with the SPV Asset Facility, and to pay related expenses.

The maturity date is the earlier of:

(a) the date the borrower voluntarily reduces the commitments to zero, (b) the Facility Maturity Date (September 28, 2023) and (c) the date

upon which Wells Fargo declares the obligations due and payable after the occurrence of an Event of Default.

Borrowings under the SPV Asset Facility bear interest at London Interbank Offered Rate (LIBOR) plus a margin with no LIBOR

On March 28, 2016, Crescent

Capital BDC Funding, LLC (CCAP SPV), a wholly owned subsidiary of CCAP, entered into a loan and security agreement, as amended (the SPV Asset Facility) with us as the collateral manager, seller and equity holder, CCAP SPV as

the borrower, the banks and other financial institutions from time to time party thereto as lenders, and Wells Fargo Bank, National Association (Wells Fargo), as administrative agent, collateral agent, and lender.

We consolidate CCAP SPV

in our consolidated financial statements and no gain or loss is recognized from the transfer of assets to and from CCAP SPV.

Between February 8, 2017 and March 10, 2020, we have entered into multiple amendments to the SPV Asset Facility

to, among other things, increase the facility limit from $75 million to $350 million.

The maximum commitment amount under the SPV Asset

Facility is $350 million, and may be increased with the consent of Wells Fargo or reduced upon our request.

Proceeds of the Advances under the SPV Asset Facility may be used to acquire portfolio investments, to make distributions to us in

accordance with the SPV Asset Facility, and to pay related expenses.

The maturity date is the earlier of (a) the date the borrower voluntarily reduces the commitments to zero, (b) March 10, 2025 (the Facility Maturity Date) and

(c) the date upon which Wells Fargo declares the obligations due and payable after the occurrence of an Event of Default.

Borrowings under the SPV Asset Facility bear interest at LIBOR plus a margin with no LIBOR floor.

The margin is between

1.65% and 2.20% as determined by the proportion of liquid and illiquid loans pledged to the SPV Asset Facility.

We pay unused facility fees of 0.50% per annum on committed but undrawn amounts under the SPV Asset Facility.

The SPV Asset Facility includes customary covenants, including certain limitations on the incurrence of additional indebtedness and

liens, as well as usual and customary events of default for revolving credit facilities of this nature.

Also on March 28, 2016, we, as seller, and

CCAP SPV, as purchaser, entered into a loan sale agreement whereby we will sell certain assets to CCAP SPV.

We consolidate CCAP SPV in our consolidated financial statements and no gain or loss is expected to result from the sale of assets to CCAP

We retain a residual interest in assets contributed to or acquired by CBDC SPV through our 100% ownership of CCAP SPV.

The facility size is subject to availability under the borrowing base, which is based on the amount of CCAP SPVs assets

from time to time, and satisfaction of certain conditions, including an asset coverage test and certain concentration limits.

Corporate Revolving

On August 20, 2019, we entered into the Corporate Revolving Facility with Ally Bank (Ally), as Administrative

Agent and Arranger.

The SPV Asset Facility

includes customary covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.

The facility size is subject to availability under the borrowing base, which is based on the amount of CCAP SPVs assets from time to time, and

satisfaction of certain conditions, including an asset coverage test and certain concentration limits.

Corporate Revolving Facility

On August 20, 2019, we entered into the Corporate Revolving Facility with Ally Bank (Ally), as Administrative Agent and Arranger.

Proceeds of the advances under the Revolving Credit Agreement may be used to acquire portfolio investments, to make distributions to us in accordance with the Revolving Credit Agreement and to pay related expenses.

principal amount of the Corporate Revolving Facility is $200 million, subject to availability under the borrowing base.

Borrowings under the

Corporate Revolving Facility bear interest at LIBOR plus a margin.

The maximum principal amount of

the Corporate Revolving Facility is $200 million, subject to availability under the borrowing base.

Borrowings under the Corporate Revolving

Facility bear interest at LIBOR plus a 2.35% margin, which includes a 0.05% utilization fee, with no LIBOR floor.

We pay unused facility fees of 0.50% per annum on committed but undrawn amounts under the Corporate Revolving Facility.

Interest is payable monthly in arrears.

Any amounts borrowed

under the Corporate Revolving Facility, and all accrued and unpaid interest, will be due and payable, on August 20, 2024.

Revolving Credit

On June 29, 2017, we entered into the Revolving Credit Facility II with Capital One, National Association, as

Administrative Agent, Lead Arranger, Managing Agent and Committed Lender.

Proceeds from the Revolving Credit Facility II may be used for investment activities, expenses, working capital requirements and general corporate purposes.

principal amount of the Revolving Credit Facility II was $75 million, subject to availability under the borrowing base.

Borrowings under the

Revolving Credit Facility II bore interest at London Interbank Offered Rate (LIBOR) plus a margin with no LIBOR floor.

We may elect either the LIBOR or prime rate at the time of draw-down, and loans may be converted from one rate to

another at any time, subject to certain conditions.

We pay unused facility fees of 0.20% per annum on committed but undrawn amounts under the Revolving Credit Facility II.

Interest is payable in arrears.

On June 28, 2018, we amended the

Revolving Credit Facility II increasing the facility limit from $75 million to $85 million and extending the maturity date to June 29, 2019.

On June 13, 2019, we further amended the Revolving Credit Facility II by extending the

maturity date to September 29, 2019.

We paid down in full and terminated the Revolving Credit Facility II on August 20, 2019.

The summary information regarding the SPV Asset Facility, Corporate Revolving Facility, and Revolving Credit

Facility II for the years ended December 31, 2019, December 31, 2018 and December 31, 2017, were as follows:

For the years ended

is payable quarterly in arrears.

Any amounts borrowed under the Corporate Revolving Facility, and all accrued and unpaid interest, will be due and payable, on August 20, 2024.

The Corporate Revolving Facility replaced the prior corporate revolving facility with Capital One, National Association.

The maximum principal amount of the

prior corporate revolving facility was $85 million, subject to availability under the borrowing base.

Borrowings under the prior corporate revolving facility bore interest at LIBOR plus a 1.55% margin with no LIBOR floor.

We paid unused

facility fees of 0.20% per annum on committed but undrawn amounts.

Interest was payable monthly in arrears.

We paid down in full and terminated the prior corporate revolving facility on August 20, 2019.

Unsecured Notes

On July 30, 2020, we completed a

private offering of $50.0 million aggregate principal amount of 5.95% senior unsecured notes due July 30, 2023 (the Unsecured Notes).

The Unsecured Notes have a delayed draw feature.

The initial issuance of $25.0 million

of Unsecured Notes closed July 30, 2020.

The issuance of the remaining $25.0 million of Unsecured Notes closed on October 28, 2020.

The Unsecured Notes will mature on July 30, 2023 and may be redeemed in whole or in part, at our

option, at any time or from time to time at par plus a make-whole premium, if applicable.

Interest on the Unsecured Notes is due and payable semiannually in arrears on

January 30 th and July 30 th of each year, commencing on January 30, 2021.

As of December 31, 2020, we were in compliance

with the terms of the note purchase agreement governing the Unsecured Notes.

Costs incurred in connection with issuing the Unsecured Notes are recorded

as deferred financing costs and are being amortized over the life of the Unsecured Notes on an effective yield basis.

InterNotes ®

On January 31, 2020, in connection with the Alcentra Acquisition, we assumed direct

unsecured fixed interest rate obligations or InterNotes ®

The majority of InterNotes ®

were issued by Alcentra Corporation

between January 2015 and January 2016.

Each series of notes has been issued by a separate trust administered by U.S.

As of December 31, 2020, the outstanding InterNotes ®

interest at fixed interest rates ranging between 6.25% and 6.75% and offer a variety of maturities ranging between February 15, 2021 and April 15, 2022.

The summary of costs incurred in connection with the SPV Asset Facility, Corporate Revolving Facility,

InterNotes ®

, Unsecured Notes, and prior corporate revolving facility for the years ended December 31, 2020 and 2019, were as follows:

($ in millions)

December 31, 2019

For the years ended

December 31, 2020

4 unchanged sentences

Total interest and credit facility expenses

Weighted average interest rate

Weighted average outstanding balance

To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if

the market for debt financing presents attractively priced debt financing opportunities, or if our Board otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into

credit facilities in addition to our SPV Asset Facility and Corporate Revolving Facility.

We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral.

The pricing and

other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors.

In accordance with applicable SEC staff guidance and interpretations, as a

BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, is at least 2 to 1 after such borrowing.

The SBCAA, which was signed into law on March 23, 2018, among other things, amended Section 61(a) of the 1940 Act to add a new Section 61(a)(2)

that reduces the asset coverage requirement applicable to a BDC from 200% to 150% so long as the BDC meets certain disclosure requirements and obtains certain approvals.

The reduced asset coverage requirement would permit a BDC to have a ratio of

total consolidated assets to outstanding indebtedness of 2:1 as compared to a maximum of 1:1 under the 200% asset coverage requirement.

On March 3, 2020, the Board, including a required majority (as such term is defined in

Section 57(o) of the 1940 Act of the Board, approved the modified asset coverage requirements under the SBCAA.

As a result, our asset coverage requirements for senior securities will be changed from 200% to 150%, effective as of March 3,

2021, unless approved earlier by a vote of our stockholders, in which case the 150% minimum asset coverage ratio will be effective on the day after such approval.

As of December 31, 2019 and December 31, 2018, our asset coverage ratio was 2.25 to 1 and 2.08 to 1, respectively.

We may also refinance or repay

any of our indebtedness at any time based on our financial condition and market conditions.

the market for debt financing presents attractively priced opportunities, or if our Board otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into new debt

financing opportunities in addition to our existing debt.

The pricing and other terms of any such opportunities would depend upon market conditions and the performance of our business, among other factors.

In accordance with applicable SEC staff guidance and interpretations, effective May 5, 2020 with shareholder approval, we, as a BDC, are permitted to

borrow amounts such that our asset coverage ratio is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required.

Short-term credits necessary for the settlement of securities transactions and

arrangements with respect to securities lending will not be considered borrowings for these purposes.

The amount of leverage that we employ depends on our Advisers and our Boards assessment of market conditions and other factors at the

time of any proposed borrowing.

As of December 31, 2020 and 2019, our asset coverage ratio was 217% and 225%, respectively.

We may also refinance or

repay any of our indebtedness at any time based on our financial condition and market conditions.

Debt to our consolidated financial statements for more detail on the debt facilities.

OFF BALANCE SHEET ARRANGEMENTS

Information on our off

balance sheet arrangements is contained in Note 8.

Commitments, Contingencies and Indemnifications to our consolidated financial statements.

ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which

have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).

The preparation of these financial statements requires management 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 materially.

accounting policies should be read in connection with our risk factors as disclosed herein.

In addition to the discussion below, our critical accounting

policies are further described in Note 2.

Summary of Significant Accounting Policies to our consolidated financial statements.

Investment Valuation

We apply Financial Accounting Standards Board ASC 820, Fair Value Measurement (ASC 820), as amended, which establishes a framework for measuring fair

value in accordance with 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.

accordance with ASC 820, we consider our 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 the

determination of fair value.

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

Level 1Valuations based on quoted

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

Level 2Valuations based on

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

Level 3Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

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 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), we subject those prices to various criteria in making the determination as to whether a particular investment would qualify for classification as a

Level 2 or Level 3 investment.

For example, we review pricing methodologies 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.

Transfers between levels, if any, are recognized at the beginning of the period in which the transfers occur.

During the year ended December 31,

2019, we recorded $18.1 million in transfers from Level 3 to Level 2 and $4.7 million in transfers from Level 2 to Level 3 due to an increase and a decrease in observable inputs in market data.

During the year ended

December 31, 2018, we recorded $0 in transfers from Level 3 to Level 2 and $27.1 million in transfers from Level 2 to Level 3 due to an increase and a decrease in observable inputs in market data, respectively.

the year ended December 31, 2017, we recorded $5.2 million in transfers from Level 3 to Level 2 and $11.8 million in transfers from Level 2 to Level 3 due to an increase and a decrease in observable inputs in

market data, respectively.

Investments in investment companies are valued at fair value.

Fair values are generally determined utilizing the net asset

value (NAV) supplied by, or on behalf of, management of each investment company, which is net of management and incentive fees or allocations charged by the investment company and is in accordance with the practical

expedient, as defined by ASC 820.

NAVs received by, or on behalf of, management of each investment company are based on the fair value of the investment companys underlying investments in accordance with policies established by

management of each investment company, as described in each of their financial statements and offering memorandum.

Investments which are valued using NAV as a practical expedient are excluded from the above hierarchy.

Investments for which market quotations are readily available are typically valued at those market quotations.

To validate market quotations, we utilize a

number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations.

Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued

at fair value as determined in good faith by the Board, based on, among other things, the input of the Advisor, our Audit Committee and independent third-party valuation firms engaged at the direction of the Board.

The Board oversees and supervises a multi-step valuation process, which includes, among other procedures, the following:

The valuation process begins with each investment being initially valued by the investment professionals

responsible for the portfolio investment in conjunction with the portfolio management team.

The Advisors management reviews the preliminary valuations with the investment professionals.

valuation recommendations are presented to the Audit Committee.

The Audit Committee reviews the valuations presented and recommends values for each investment to the Board.

The Board reviews the recommended valuations and determines the fair value of each investment;

valuations that

are not based on readily available market quotations are valued in good faith based on, among other things, the input of the Advisor, Audit Committee and, where applicable, other third parties.

We currently conduct this valuation process on a quarterly basis.

In connection with debt and equity securities that are valued at fair value in good faith by the Board, the Board will engage independent third-party

valuation firms to perform certain limited procedures that the Board has identified.

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.

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.

Investments and Note 5.

Fair Value of Financial Instruments for additional information on our investment portfolio.

Equity Offering and Organization Expenses

We have agreed

to repay the Advisor for initial organization costs and equity offering costs incurred prior to the commencement of our operations up to a maximum of $1.5 million on a pro rata basis over the first $350 million of invested capital not to

exceed 3 years from the initial capital commitment on June 26, 2015.

To the extent such costs relate to equity offerings, these costs are charged as a reduction of capital upon the issuance of common shares.

As of July 2019, we have repaid such

initial organization costs and equity offering costs.

At the 2018 Annual Meeting of Stockholders, we received stockholder approval to extend the period during which capital may be called from stockholders (the Commitment Period).

Commitment Period was extended to the earlier of (i) a Qualified IPO and (ii) June 30, 2020.

With the approval of the Commitment Period extension, the Advisor agreed to extend the reimbursement period for the initial organization

costs and equity offering costs to June 30, 2019.

Commitments, Contingencies and Indemnifications for additional discussion of certain related party transactions with the Advisor.

The Advisor incurred costs on our behalf of $0.8 million of equity offering costs and $0.6 million of organization costs through Commencement of

For the year ended December 31, 2019, the Advisor allocated to us $0.2 million of equity offering costs and $0.1 million of organization costs, of which none was included in Due to Advisor on the Consolidated Statements of

Assets and Liabilities at December 31, 2019.

Since June 26, 2015, the date of Commencement of Operations, the Advisor has allocated to us $0.8 million of equity offering costs and $0.6 million of organization costs.

Interest and Dividend Income Recognition

Interest income

is recorded on an accrual basis and includes the amortization of purchase discounts and premiums.

Discounts and premiums to par value on securities purchased are accreted or amortized into interest income over the contractual life of the respective

security using the effective yield method.

The amortized cost of investments represents the original cost adjusted for the accretion and amortization of discounts and 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.

Dividend income from 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 from common equity securities is recorded on the record date for private portfolio

companies or on the ex-dividend date for publicly-traded portfolio companies.

Each distribution received from an equity investment is evaluated to determine if the distribution should be recorded as dividend

income or a return of capital.

Generally, we will not record distributions from equity investments as dividend income unless there is sufficient current or accumulated earnings prior to the distribution.

Distributions that are classified as a return

of capital are recorded as a reduction of capital are recorded as a reduction in the cost basis of the investment.

To date, all distributions have been classified as dividend income.

Certain investments have contractual payment-in-kind (PIK)

interest or dividends.

PIK represents accrued interest or accumulated dividends that are added to the loan principal or cost basis of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally

becomes due at maturity or upon being called by the issuer.

PIK is recorded as interest or dividend income, as applicable.

If at any point we believe PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status.

Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days

or more or when there is reasonable doubt that principal or interest will be collected 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 managements judgment regarding collectability.

Non-accrual loans

are restored to accrual status when past due principal and interest is paid current and, in managements judgment, are likely to remain current.

Management may determine to not place a loan on non-accrual

status if the loan has sufficient collateral value and is in the process of collection.

As of December 31, 2019, we had one portfolio company with three investment positions on non-accrual status, which

represented 1.9% and 1.0% of the total debt investments at cost and fair value, respectively.

As of December 31, 2018, we had one portfolio company with two investment positions on non-accrual status,

which represented 2.5% and 1.4% of the total debt investments at cost and fair value, respectively.

We have elected to be treated as a BDC under the 1940 Act.

We also have elected to be treated as a RIC under the Internal Revenue Code.

So long as we

maintain our status as a RIC, we will generally not pay corporate-level U.S.

federal income or excise taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends.

As a result, any tax liability

related to income earned and distributed by us represents obligations of our stockholders and will not be reflected in our consolidated financial statements.

We evaluate tax positions taken or expected to be taken in the course of preparing our consolidated financial statements to determine whether the tax

positions are more-likely-than-not to be sustained by the applicable tax authority.

Tax positions not deemed to meet the more-likely-than-not

threshold are reversed 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.

We account for income taxes in conformity with ASC Topic

740 Income Taxes (ASC Topic 740).

ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements.

In order for us not to be subject to federal excise taxes, we must distribute annually an amount at least equal to the sum of (i) 98% of our ordinary income

(taking into account certain deferrals and elections), (ii) 98.2% of our net capital gains from the current year and (iii) any undistributed ordinary income and net capital gains from preceding years.

At our discretion, we may carry forward

taxable income in excess of calendar year dividends and pay a 4% excise tax on this income.

If we choose to do so, this generally would increase expenses and reduce the amount available to be distributed to stockholders.

We will accrue excise tax on

estimated undistributed taxable income as required on an annual basis.

For the year ended December 31, 2019, we expensed an excise tax of $0.1 million, of which $0.1 million remains payable.

For the year ended December 31, 2018,

we expensed an excise tax of $0.1 million, of which $0.1 million remained payable.

For the year ended December 31, 2017 we expensed an excise tax of $0.0 million, of which $0.0 million remained payable.

As of December 31, 2019, all of our tax filings since the inception on February 5, 2015 remain subject to examination by federal tax authorities.

such examinations are currently pending.

CBDC Universal Equity, Inc.

is a taxable entity.

The Taxable Subsidiary permits us to hold equity investments in

portfolio companies which are pass through entities for tax purposes and continue to comply with the source income requirements contained in RIC tax provisions of the Code.

The Taxable Subsidiary is not consolidated with us

for income tax purposes and may generate income tax expense, benefit, and the related tax assets and liabilities, as a result of its ownership of certain portfolio investments.

The income tax expense, or benefit, if any, and related tax assets and

liabilities are reflected in our consolidated financial statements.

For the year ended December 31, 2019, we recognized a benefit/(provision) for taxes of $(0.2) million on unrealized appreciation/(depreciation) on investments and net operating

losses and federal tax credits related to the Taxable Subsidiary.

For the year ended December 31, 2019, we recognized a tax provision of $0.1 million on realized gain on investments.

As of December 31, 2019, $0.9 million was

included in deferred tax liability on the Consolidated Statements of Assets and Liabilities primarily relating to deferred taxes on unrealized gains on investments held in our corporate subsidiaries and other temporary book to tax differences of the

corporate subsidiaries.

As of December 31, 2019, $0.4 million of deferred tax assets were included in deferred tax assets on the Consolidated Statements of Assets and Liabilities relating to net operating loss carryforwards and unrealized

losses on investments and other temporary book to tax differences that are expected to be used in future periods.

For the year ended December 31,

2018, we recognized a benefit/(provision) for taxes of $(0.1) million on unrealized appreciation/(depreciation) on investments and net operating losses and federal tax credits related to the Taxable Subsidiary.

As of December 31, 2018 there is

a corresponding net deferred tax liability of $0.3 million related to the Taxable Subsidiary, which was the net effect of (i) a deferred tax liability of $0.6 million resulting from unrealized appreciation on investments held by the

Taxable Subsidiary and (ii) a deferred tax asset of $0.3 million resulting from unrealized depreciation on investments and net operating losses and federal tax credits from the Taxable Subsidiary.

For the year ended December 31, 2017, we recognized a benefit/(provision) for income taxes of $(0.2) million, which was the net effect of a deferred tax

liability of $0.3 million resulting from unrealized appreciation on investments held by the Taxable Subsidiary and a deferred tax asset of $0.1 million resulting from unrealized depreciation on investments of the Taxable Subsidiary.

For the years ended December 31, 2018 and 2017, there was no tax provision required on realized gain on

We intend to comply with the applicable provisions of the Code, pertaining to regulated investment companies and to make distributions of

taxable income sufficient to relieve it from substantially all federal income taxes.

As of December 31, 2019, all our tax filings since the inception on February 5, 2015 remain subject to examination by federal tax authorities.

examinations are currently pending.

New Accounting Standards

In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows (Topic 230):

Restricted Cash, which provides guidance regarding the presentation of restricted cash in the statement of cash flows and will require entities to include the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the

beginning and ending cash balances in the statement of cash flows.

The new guidance reduces diversity in how entities present changes in restricted cash and restricted cash equivalents with respect to the statement of cash flows.

The guidance is

applied retrospectively and is effective for fiscal years beginning after December 15, 2018.

We adopted this guidance for the year ended December 31, 2019.

In March 2017, the FASB issued ASU 2017-08, Premium Amortization of Purchased Callable Debt Securities, or ASU 2017-08, which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date.

ASU 2017-08 is effective for fiscal

years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

Early adoption is permitted, including adoption during an interim period.

If we early adopt the amendments during an

interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes such interim period.

We adopted this guidance during the year ended December 31, 2019.

The adoption of this guidance did not have a material

impact to our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 Changes to

the Disclosure for Fair Value Measurement which modifies disclosure requirements for fair value measurements.

The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal

We adopted this guidance during the year ended December 31, 2019.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

Recent Developments

Alcentra Capital Transaction

On January 31, 2020, we completed the Alcentra Acquisition, pursuant to the terms and conditions of the Merger Agreement.

To effect the

acquisition, Acquisition Sub merged with and into Alcentra Capital, with Alcentra Capital surviving the merger as our wholly owned subsidiary.

Immediately thereafter and as a single integrated transaction, Alcentra Capital consummated the Second

Merger, whereby it merged with and into us, with Crescent Capital BDC surviving the merger.

Pursuant to the Merger Agreement, Alcentra Capital stockholders received the right to the following merger consideration in exchange for each share of

Alcentra Capital common stock outstanding immediately prior to January 31, 2020, in accordance with the Merger Agreement:

(a) $3.1784 per share in cash consideration (less the $0.80 final dividend declared by Alcentra Capital) and

(b) stock consideration at the fixed exchange ratio of 0.4041 shares of Common Stock, thereby resulting in our then-existing stockholders owning approximately 82% of us and Alcentra Capitals then-existing stockholders owning approximately

The aggregate cash consideration included (i) $19.3 million in cash, or $1.50 per share, from us (less $10.3 million or $0.80 per share in final dividends paid by Alcentra Capital on January 31, 2020) and (ii)

$21.6 million in cash, or $1.68 per share, in transaction support provided by the Advisor.

Investment Advisory Agreement

On August 12, 2019, we entered into the Transaction Support Agreement in connection with the Alcentra Acquisition.

Under the terms of the Transaction

Support Agreement, among other things, we agreed to enter into an amendment to our Investment Advisory Agreement to (i) permanently reduce the management fee from 1.50% to 1.25%, (ii) waive a portion of the base management fee from

February 1, 2020 through July 31, 2021 such that the base management fee shall be charged at an annual rate of 0.75% of our gross assets for such time period, (iii) increase the incentive fee hurdle from 6% to 7% annualized and

(iv) waive the income based portion of the incentive fee from February 1, 2020 through July 31, 2021.

These amendments contemplated by the Transaction Support Agreement went into effect through the completion of the Alcentra

Acquisition, which closed on January 31, 2020.

Administration Agreement

On February 1, 2020, we entered into the Amended and Restated Administration Agreement (as amended and restated, the Administration Agreement)

by and between us and the Administrator.

Pursuant to the Administration Agreement, the Administrator has agreed to provide a variety of services, including 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 performance of administrative and professional services rendered by others.

The Administrator has also hired a sub-administrator to assist in the provision of administrative services.

We will reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its

obligations under the Administration Agreement, including compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide

services to us, operations staff who provide services to us, and any other staff, to the extent they perform a role in our Sarbanes-Oxley internal control assessment.

Our allocable portion of overhead is determined by the Administrator, which

expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to our business and affairs, and is subject to oversight by the Board.

sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement.

The Administrator will waive its right to be reimbursed in the event that any such reimbursements would cause any distributions to our stockholders to constitute a return of capital.

In addition, the Administrator is permitted to delegate its duties

under the Administration Agreement to affiliates or third parties.

To the extent the Administrator outsources any of its functions, we will pay the fees associated with such functions on a direct basis, without incremental profit to the

Administrator.

The Administration Agreement has been approved by our Board.

Unless earlier terminated as described below, the Administration Agreement

will remain in effect for a period of two years from their effective date and will remain in effect from year to year thereafter if approved annually by (i) the vote of our Board, or by the vote of a majority of our outstanding voting

securities, and (ii) the vote of a majority of our independent directors.

The Administration Agreement will automatically terminate in the event of assignment.

The Administration Agreement may be terminated by either party without penalty upon

not less than 60 days written notice to the other.

NASDAQ Listing

On February 3, 2020, our Common Stock began publicly trading on NASDAQ under the symbol CCAP.

STOCK REPURCHASE PROGRAM

In connection with the closing

of the Alcentra Acquisition, we entered into a repurchase plan, pursuant to which we agreed to repurchase in open market transactions, subject to compliance with any of our liquidity, covenant, leverage and regulatory requirements and the approval

and continuation of such program by the Board in light of its duties under applicable law, shares of our common stock in an aggregate amount of up to $20.0 million at market prices at any time the shares of our common stock trade below ninety

percent (90%) of our then-most recently disclosed net asset value per share.

The $20.0 million maximum repurchase amount will be reduced by any amounts provided for under Rule 10b5-1 plans

entered into by certain of our affiliates with respect to our common stock for a similar time period at the same price.

Pursuant to the terms of the repurchase plan, repurchases began on March 2, 2020, subject to the trading price of our common

stock on that date, and the repurchase plan will be in effect through January 31, 2021.

Asset Coverage

On March 3, 2020, our Board recommended that stockholders approve a proposal to reduce our required minimum asset coverage ratio applicable to business

development companies under the Investment Company Act of 1940, as amended (the 1940 Act) from 200% to 150%.

We expect to hold our Annual Meeting in May 2020, at which time stockholders will vote, amongst other items, on this proposal.

In addition, the Board, including a required majority (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements to be effective one year after such

Board approval and as a result, our asset coverage requirements for senior securities will be changed from 200% to 150%, effective March 3, 2021.

However, if the stockholder proposal is passed at the Annual Meeting, we would be subject to the

modified asset coverage requirements the day after the Annual Meeting.

On March 3, 2020, our Board of Directors declared a regular cash dividend of $0.41 per share, which will be paid on or about April 15, 2020 to

On January 31, 2020, we

entered into a $20.0 million repurchase plan which allowed us to purchase shares in the open market any time our common stock traded below 90% of the most recently disclosed net asset value per share.

The plan was subject to compliance with our

liquidity, covenant, leverage and regulatory requirements.

Pursuant to the terms of the repurchase plan, repurchases began on March 2, 2020.

On April 9, 2020, our Board of Directors unanimously approved the termination of the stock

repurchase program.

For the year ended December 31, 2020, we repurchased 192,415 shares at an average price per share, including commissions, of

There were no stock repurchased for the years ended December 31, 2019.

OFF BALANCE SHEET ARRANGEMENTS

Our investment portfolio may contain investments that are in the form of lines of credit or unfunded commitments which require us to provide funding when

requested by portfolio companies in accordance with the terms of the underlying agreements.

Unfunded commitments to provide funds to portfolio companies are not reflected on our Consolidated Statements of Assets and Liabilities.

These commitments are subject to the same underwriting and ongoing portfolio maintenance as are the on-balance sheet financial instruments that we hold.

Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

As of December 31, 2020 and 2019, we had aggregate unfunded commitments totaling

$80.8 million and $82.7 million, respectively.

The foreign denominated commitments were converted to USD at each balance sheet date.

On January 5, 2021, Sun Life Financial Inc.

acquired a majority interest in Crescent.

Consummation of the Sun Life Transaction

resulted in a change of control of Crescent.

There were no changes to our investment objective, strategies and process or to the Crescent team responsible for the investment operations as a result of the Sun Life Transaction.

On February 15, 2021, $5.4 million of InterNotes®

matured and were redeemed at par.

We provided notice to redeem the remaining

$11.0 million of InterNotes®

which is expected to be paid off on March 19, 2021.

On February 17, 2021, we completed a private offering

of $135.0 million aggregate principal amount of 4.00% senior unsecured notes due February 17, 2026 (the 2026 Unsecured Notes).

The 2026 Unsecured Notes have a delayed draw feature.

The initial issuance of $50.0 million of

Unsecured Notes closed February 17, 2021.

The issuance of the remaining $85.0 million of 2026 Unsecured Notes is expected to close on or before May 17, 2021.

On February 22, 2021, our Board of Directors declared a regular cash dividend of $0.41 per share, which will be paid on April 15, 2021 to

stockholders of record as of March 31, 2021.

On February 22, 2021, the Adviser notified the Board of Directors of its intent to voluntarily

waive incentive fees to the extent net investment income falls short of the declared dividend on a full dollar basis.

The waiver will become effective upon expiration of the current waivers on July 31, 2021 and will continue through

December 31, 2022.

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 5. Market for Registrant’s Common Equity