What changed in this filing

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Item 1A. Risk Factors

2021-03-16 compared with 2020-03-17 · 135 added, 80 removed, 556 unchanged (28% of the section changed)

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We cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, net asset value, operating results and value of our stock.

However, the effects might be adverse, which could negatively impact our ability to pay investors distributions and cause investors to lose all or part of their investment.

However, the effects might be adverse, which could negatively impact our ability to pay shareholders distributions and cause shareholders to lose all or part of their investment.

Price declines in the medium- and large-sized U.S.

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Conditions in the medium- and large-sized U.S.

corporate debt market may deteriorate, as seen during the financial crisis, which may cause pricing levels to similarly decline or be volatile.

corporate debt market may deteriorate, as seen during the 2008 financial crisis and the 2020 outbreak of the COVID-19 pandemic, which may cause pricing levels to similarly decline or be volatile.

During the financial crisis, many institutions were forced to raise cash by selling their interests in performing assets in order to satisfy margin requirements or the equivalent of margin requirements imposed by their lenders and/or, in the case of hedge funds and other investment vehicles, to satisfy widespread redemption requests.

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corporate debt market, our net asset value could decline through an increase in unrealized depreciation and incurrence of realized losses in connection with the sale of our investments, which could have a material adverse impact on our business, financial condition and results of operations.

Further downgrades in the U.S.

and certain European credit ratings, and the economic crisis in Europe, could materially adversely affect our business, financial condition and results of operations.

In August 2011, Standard and Poor’s lowered its long-term sovereign credit rating on the U.S.

from “AAA” to “AA+,” which was affirmed by Standard and Poor’s in June 2018.

In January 2012, Standard and Poor’s lowered its long-term sovereign credit ratings for France, Italy, Spain and six other European countries, which negatively impacted global markets and economic conditions.

During subsequent periods, Standard and Poor’s further lowered its long-term sovereign credit rating for Spain.

Standard and Poor’s subsequently raised its long-term sovereign credit rating on Spain to “BBB,” but its current credit rating still signifies significant ongoing risk.

budget deficit concerns, together with signs of deteriorating sovereign debt conditions in Europe, have increased the possibility of additional credit-rating downgrades and economic slowdowns.

The impact of any further downgrade to the U.S.

government’s sovereign credit rating, or its perceived creditworthiness, and the impact of the current crisis in Europe with respect to the ability of certain European Union countries to continue to service their sovereign debt obligations is inherently unpredictable and could adversely affect the U.S.

and global financial markets and economic conditions.

In addition, the economic downturn and the significant government interventions into the financial markets and fiscal stimulus spending over the last several years have contributed to significantly increased U.S.

budget deficits.

There can be no assurance that future fiscal or monetary measures to aid economic recovery will be effective.

These developments and reactions of the credit markets to these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to obtain debt financing on favorable terms.

In addition, any adverse economic conditions resulting from any further downgrade of the U.S.

government’s sovereign credit rating or the economic crisis in Europe could have a material adverse effect on our business, financial condition and results of operations.

Global markets could enter a period of severe disruption and instability due to catastrophic events, such as terrorist attacks, acts of war, natural disasters, and outbreaks of epidemic, pandemic or contagious diseases, which could impair our portfolio companies’ financial positions and operating results and affect the industries in which we invest and, in turn, harm our operating results.

and global markets have, from time to time, experienced periods of disruption due to events such as terrorist attacks;

natural disasters, such as earthquakes, tsunamis, fires, floods or hurricanes;

and outbreaks of epidemic, pandemic or contagious diseases.

Such events have created, and continue to create, economic and political uncertainties and have contributed to recent global economic instability.

In particular, outbreaks of epidemic, pandemic or contagious diseases may cause serious harm to our business, operating results and financial condition.

Historically, disease pandemics such as the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome or the H1N1 virus, have diverted resources and priorities towards the treatment of such diseases.

In December 2019, a strain of novel coronavirus causing respiratory illness, or the Wuhan Coronavirus, emerged in the city of Wuhan in the Hubei province of China.

We are closely monitoring the developments in China, the U.S.

and throughout the world, and continually assessing the potential impact on our business and the business of our portfolio companies, including the effects described below.

However, the full impact of this outbreak is unknown as of the date of this report.

Any prolonged disruptions in the business of our portfolio companies, including a disruption in their supply chains may adversely affect their ability to obtain the necessary raw materials or components to make their products or cause a decline in the demand for their products or services, leading to a negative impact on their operating results.

In addition, such events may lead to restrictions on travel to and from the affected areas, making it more difficult for our portfolio companies to conduct their businesses.

As a result of pandemic outbreaks, including the Wuhan Coronavirus, businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and individuals can become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions.

Governmental mandates may require forced shutdowns of our portfolio companies’ facilities for extended or indefinite periods.

In addition, these widespread outbreaks of illness, particularly in China, North America, Europe, or other locations significant to the operations of our portfolio companies, could adversely affect their workforce, resulting in serious health issues and absenteeism, and may cause serious harm to our results of operations, business, or prospects.

Furthermore, future terrorist activities, military or security operations, natural disasters, disease outbreaks, pandemics or other similar events could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact our portfolio companies.

During these periods of disruption, general economic conditions may deteriorate with material and adverse consequences for the broader financial and credit markets, and the availability of debt and equity capital for the market as a whole, and financial services firms in particular.

Such economic adversity could impair our portfolio companies’ financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our operating results.

These conditions may reoccur for a prolonged period of time or materially worsen in the future.

Our ability to achieve our investment objective depends on the ability of CIM to manage and support our investment process.

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On January 2, 2018, we entered into an expense support and conditional reimbursement agreement with CIM for the primary purpose of replacing CIG and AIM with CIM as the expense support provider pursuant to the terms of the expense support and conditional reimbursement agreement.

On December 20, 2019, we amended and restated the expense support and conditional reimbursement agreement with CIM for purposes of extending the termination date from December 31, 2019 to December 31, 2020.

In addition, through December 31, 2014, a portion of our distributions resulted from expense support from CIG, and future distributions may result from expense support from CIM.

For the year ended December 31, 2017, none of our distributions resulted from expense support from CIG or AIM.

On December 9, 2020, we further amended and restated the expense support and conditional reimbursement agreement with CIM for purposes of extending the termination date from December 31, 2020 to December 31, 2021.

For the years ended December 31, 2018, 2019 and 2020, none of our distributions resulted from expense support from CIM.

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We have not established any limit on the amount of funds we may use from available sources, such as borrowings, if any, to fund distributions (which may reduce the amount of capital we ultimately invest in assets).

Through December 31, 2014, a portion of our distributions resulted from expense support from CIG, and future distributions may result from expense support from CIM, which is subject to repayment by us within three years.

For the year ended December 31, 2017, none of our distributions resulted from expense support from CIG or AIM.

For the years ended December 31, 2018, 2019 and 2020, none of our distributions resulted from expense support from CIM.

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In the event that we are unable to develop or maintain an effective system of internal controls and maintain or achieve compliance with the Sarbanes-Oxley Act and related rules, we may be adversely affected.

The impact of financial reform legislation on us is uncertain.

In light of recent conditions in the U.S.

and global financial markets and the U.S.

and global economy, legislators, the presidential administration and regulators have increased their focus on the regulation of the financial services industry.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, institutes a wide range of reforms that will have an impact on all financial institutions.

Many of the requirements called for in the Dodd-Frank Act will be implemented over time, most of which will be subject to implementing regulations over the course of the next several years.

Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies and through regulations, the full impact such requirements will have on our business, results of operations or financial condition is unclear.

The changes resulting from the Dodd-Frank Act may require us to invest significant management attention and resources to evaluate and make necessary changes in order to comply with new statutory and regulatory requirements.

Failure to comply with any such laws, regulations or principles, or changes thereto, may negatively impact our business, results of operations and financial condition.

While we cannot predict what effect any changes in the laws or regulations or their interpretations would have on us as a result of the Dodd-Frank Act, these changes could be materially adverse to us and our shareholders.

We may experience fluctuations in our quarterly results.

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In addition, decreases in the market value or fair value of our investments will reduce our net asset value.

Recent legislation may allow us to incur additional leverage.

As a BDC, we are generally not permitted to incur indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets).

On March 23, 2018, an amendment to Section 61(a) of the 1940 Act was signed into law to permit BDCs to reduce the minimum “asset coverage” ratio to 150% from 200% and, as a result, to potentially increase the ratio of a BDC’s debt to equity to a maximum 2-to-1 from a maximum of 1-to-1, so long as certain approval and disclosure requirements are satisfied.

Specifically, a BDC is permitted to apply a lower minimum asset coverage ratio of 150% if:

(1) the BDC complies with certain additional asset coverage disclosure requirements;

and (2)(A) a “required majority” of the BDC’s directors, as defined in Section 57(o) of the 1940 Act, approves the application of such a lower minimum asset coverage ratio to the BDC, in which case the 150% minimum asset coverage ratio will become effective on the date that is one year after the date of such independent director approval;

or (B) the BDC obtains, at a special or annual meeting of its shareholders at which a quorum is present, the approval of more than 50% of the votes cast for the application of such a lower minimum asset coverage ratio to the BDC, in which case the 150% minimum asset coverage ratio will become effective on the first day after the date of such shareholder approval.

As a result, we may be able to incur additional indebtedness in the future, and, therefore, your risk of an investment in us may increase.

We currently have not determined whether to seek to utilize such additional leverage.

If we choose to take advantage of such leverage, we will act in accordance with the requirements set forth in the amended legislation.

Risks Related to CIM and its Affiliates;

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As a result of the annual distribution requirement to qualify as a RIC, we may need to periodically access the capital markets to raise cash to fund new investments.

We may issue “senior securities,” as defined under the 1940 Act, including borrowing money from banks or other financial institutions only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after such incurrence or issuance (or 150% if we obtain the requisite shareholder approval and otherwise satisfy disclosure requirements in accordance with the 1940 Act).

Our ability to issue different types of securities is also limited.

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Under the 1940 Act, we generally are prohibited from issuing or selling our common stock at a price per share, after deducting selling commissions and dealer manager fees, that is below our net asset value per share, which may be a disadvantage as compared with other public companies.

We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the current net asset value of our common stock if our board of directors, including our independent directors, determine that such sale is in our best interests and the best interests of our shareholders, and our shareholders, as well as those shareholders that are not affiliated with us, approve such sale.

However, in 2020 we obtained, and in 2021 we intend to seek, the approval of our shareholders to issue shares of our common stock at prices below the then current NAV per share of our common stock in accordance with the 1940 Act.

We may also, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the current net asset value of our common stock if our board of directors, including our independent directors, determine that such sale is in our best interests and the best interests of our shareholders, and our shareholders, as well as those shareholders that are not affiliated with us, approve such sale.

In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the fair value of such securities.

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The net proceeds from the sale of common stock was used for our investment opportunities, operating expenses and for payment of various fees and expenses such as base management fees, incentive fees and other expenses.

Any working capital reserves we maintain may not be sufficient for investment purposes, and we may require debt or equity financing to operate.

Any working capital reserves we maintain may not be sufficient for investment purposes, and we may require additional debt or equity financing to operate.

Accordingly, in the event that we develop a need for additional capital in the future for investments or for any other reason, these sources of funding may not be available to us.

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Our investments in prospective portfolio companies may be risky, and we could lose all or part of our investment.

We invest or intend to invest in the following types of loans of private and thinly-traded U.S.

We invest and intend to invest in the following types of loans of private and thinly-traded U.S.

middle-market companies.

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It is expected that a transition away from the widespread use of LIBOR and similar reference rates to alternative rates based on observable market transactions and other potential interest rate benchmark reforms will occur over the course of the next few years.

The Alternative Reference Rates Committee, established by the Federal Reserve, announced the replacement of LIBOR with a new index calculated by short-term repurchase agreements collateralized by U.S.

At this time, no consensus appears to exist as to what rate or rates will become accepted alternatives to LIBOR, although the Alternative Reference Rates Committee, established by the Federal Reserve, announced the replacement of LIBOR with a new index calculated by short-term repurchase agreements collateralized by U.S.

Treasury securities, called the Secured Overnight Financing Rate, or SOFR.

The Federal Reserve Bank of New York began publishing SOFR in April 2018.

It is uncertain whether SOFR will attain sufficient market traction to supplant LIBOR.

Given the inherent differences between LIBOR and SOFR, or any other alternative benchmark rate that may be established, there are many uncertainties regarding a transition from LIBOR, including, but not limited to, the need to amend all contracts with LIBOR as the referenced rate and how this will impact the cost of variable rate debt and certain derivative financial instruments.

In addition, SOFR or other replacement rates may fail to gain market acceptance.

Because the future of LIBOR is uncertain, the impact to us of a transition away from LIBOR cannot presently be determined.

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Additionally, prepayments, net of prepayment fees, could negatively impact our return on equity.

Risks Relating to Debt Financing

Risks Relating to Debt Financings

Recent legislation may allow us to incur additional leverage.

As a BDC, we are generally not permitted to incur indebtedness unless immediately after such borrowings we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets).

On March 23, 2018, an amendment to Section 61(a) of the 1940 Act was signed into law to permit BDCs to reduce the minimum “asset coverage” ratio from 200% to 150% and, as a result, to potentially increase the ratio of a BDC’s debt to equity from a maximum of 1-to-1 to a maximum 2-to-1, so long as certain approval and disclosure requirements are satisfied.

Specifically, a BDC is permitted to apply a lower minimum asset coverage ratio of 150% if:

(1) the BDC complies with certain additional asset coverage disclosure requirements;

In 2021, we intend to seek the approval of our shareholders to reduce our minimum "asset coverage" ratio from 200% to 150% in accordance with the 1940 Act.

As a result, we may be able to incur additional indebtedness in the future, and, therefore, your risk of an investment in us may increase.

Since we have borrowed money, the potential for loss on amounts invested in us is magnified and may increase the risk of investing in us.

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The use of borrowings, also known as leverage, increases the volatility of investments by magnifying the potential for loss on invested equity capital.

Since we have used leverage to partially finance our investments, through borrowing from banks, shareholders experience increased risks of investing in our common stock.

Since we have used leverage to partially finance our investments, through borrowing from banks and other institutional investors, shareholders experience increased risks of investing in our common stock.

If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged.

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This could have a material adverse effect on our operations and investment activities.

Recent legislation has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met.

See “Risks Relating to Our Business and Structure - Recent legislation may allow us to incur additional leverage” for more information.

See "Recent legislation may allow us to incur additional leverage” above for more information.

Moreover, our ability to make distributions to shareholders may be significantly restricted or we may not be able to make any such distributions whatsoever.

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Illustration .

The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of ex penses.

The following table illus trates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses.

The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below.

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Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase in the amount of incentive fees payable to CIM with respect to pre-incentive fee net investment income.

The 2026 Notes are unsecured and therefore are effectively subordinated to any secured indebtedness we have currently incurred or may incur in the future.

The 2026 Notes are generally not secured by any of our assets or any of the assets of our subsidiaries.

As a result, the 2026 Notes are effectively subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness.

In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the 2026 Notes.

As a result, the indebtedness under the JPM Credit Facility and the UBS facility is therefore effectively senior in right of payment to our 2026 Notes to the extent of the value of such assets.

Federal Income Tax Risks

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Risks Relating to an Investment in our Common Stock

In 2020 we obtained, and in 2021 we intend to seek, the approval of our shareholders to issue shares of our common stock at prices below the then current NAV per share of our common stock.

If we issue such shares and again receive such approval from shareholders in the future, we may issue shares of our common stock at a price below the then current NAV per share of common stock.

Any such issuance could materially dilute your interest in our common stock and reduce our NAV per share.

In August 2020, we obtained approval from our shareholders authorizing us to issue shares of our common stock at prices below the then current NAV per share of our common stock in one or more offerings for a 12-month period.

We have not issued any such shares as of the date of this report and do not currently intend to do so through August 2021 (the 12-month anniversary of such shareholder approval).

In 2021, we intend to seek to obtain from our shareholders and they may approve a proposal that again authorizes us to issue shares of our common stock at prices below the then current NAV per share of our common stock in one or more offerings for a 12-month period.

Such approval would allow us to access the capital markets in a way that we were previously unable to do as a result of restrictions that, absent shareholder approval, apply to BDCs under the 1940 Act.

Any sale or other issuance of shares of our common stock at a price below NAV per share will result in an immediate dilution to your interest in our common stock and a reduction of our NAV per share.

This dilution would occur as a result of a proportionately greater decrease in a shareholder’s interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance.

Because the number of future shares of common stock that may be issued below our NAV per share and the price and timing of such issuances are not currently known, we cannot predict the actual dilutive effect of any such issuance.

We also cannot determine the resulting reduction in our NAV per share of any such issuance at this time.

We caution you that such effects may be material, and we undertake to describe all the material risks and dilutive effects of any actual offerings we may make at a price below our then current NAV in the future.

The determination of NAV in connection with an offering of shares of common stock will involve the determination by our board of directors or a committee thereof that we are not selling shares of our common stock at a price below the then current NAV of our common stock at the time at which the sale is made or otherwise in violation of the 1940 Act, unless we have previously received the consent of the majority of our shareholders to do so and the board of directors decides such an offering is in the best interests of our shareholders.

Whenever we do not have current shareholder approval to issue shares of our common stock at a price per share below our then current NAV per share, the offering price per share (after any sales commission or discounts (if applicable)) will equal or exceed our then current NAV per share, based on the value of our portfolio securities and other assets determined in good faith by our board of directors.

Our common stock is not currently listed on an exchange or quoted through a quotation system.

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Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities – Share Repurchase Program” for a detailed description of our share repurchase program.

In making the decision to apply for listing of our common stock, our board of directors will try to determine whether listing our common stock or liquidating our assets will result in greater value for our shareholders.

In making a determination of what type of liquidity event is in the best interest of our shareholders, our board of directors, including our independent directors, may consider a variety of criteria, including, but not limited to, maintaining a broad portfolio of investments, portfolio performance, our financial condition, potential access to capital as a listed company, the investment advisory experience of CIM and market conditions for the sale of our assets or listing of our common stock and the potential for shareholder liquidity.

If we determine to pursue a listing of our common stock on a national securities exchange in the future, at that time we may consider either an internal or an external management structure.

Although our shares are not currently listed for trading on a national securities exchange, we intend to seek to complete a liquidity event by listing on such an exchange within nine to eighteen months following the date on which this Annual Report on Form 10-K was filed with the SEC, or at such earlier or later time as our board of directors may determine, taking into consideration market conditions and other factors.

In making the decision to apply for listing of our common stock, our board of directors will try to determine whether listing our common stock will result in greater value for our shareholders.

In making this determination, our board of directors, including our independent directors, may consider a variety of criteria, including, but not limited to, maintaining a broad portfolio of investments, portfolio performance, our financial condition, potential access to capital as a listed company, the investment advisory experience of CIM and market conditions for the listing of our common stock and the potential for shareholder liquidity.

There can be no assurance that we will complete a liquidity event.

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As a result, shareholders have limited opportunities to sell their shares of our common stock and, to the extent they are able to sell their shares of our common stock under the program, they may not be able to recover the amount of their investment in our common stock.

Beginning in the first quarter of 2014, we commenced tender offers to allow shareholders to tender their shares of common stock on a quarterly basis at a price equal to 90% of our public offering price in effect on the date of repurchase;

provided that, solely for our quarterly repurchase offer for the fourth quarter of 2015, we repurchased shares from tendering shareholders at a price that was (i) not less than the net asset value per share and (ii) not more than 2.5% greater than the net asset value per share.

Beginning in the first quarter of 2014, we commenced tender offers to allow shareholders to tender their shares of common stock on a quarterly basis.

Commencing with our quarterly repurchase offer for the fourth quarter of 2016 and on a quarterly basis thereafter, we repurchase shares from tendering shareholders at a price equal to the estimated net asset value per share on the date of repurchase.

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• loss of a major funding source.

General Risk Factors

The impact of financial reform legislation on us is uncertain.

In light of recent conditions in the U.S.

and global financial markets and the U.S.

and global economy, legislators, the presidential administration and regulators have increased their focus on the regulation of the financial services industry.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, institutes a wide range of reforms that will have an impact on all financial institutions.

Many of the requirements called for in the Dodd-Frank Act will be implemented over time, most of which will be subject to implementing regulations over the course of the next several years.

Failure to comply with any such laws, regulations or principles, or changes thereto, may negatively impact our business, results of operations and financial condition.

and global markets have, from time to time, experienced periods of disruption due to events such as terrorist attacks;

natural disasters, such as earthquakes, tsunamis, fires, floods or hurricanes;

and outbreaks of epidemic, pandemic or contagious diseases.

Such events have created, and continue to create, economic and political uncertainties and have contributed to recent global economic instability.

In particular, outbreaks of epidemic, pandemic or contagious diseases may cause serious harm to our business, operating results and financial condition.

Historically, disease pandemics such as the Ebola virus, Middle East Respiratory Syndrome, and Severe Acute Respiratory Syndrome (or the H1N1 virus), have diverted resources and priorities towards the treatment of such diseases.

During the first quarter of 2020, there was a global outbreak of a novel coronavirus, or COVID-19, which spread to over 100 countries, including the United States, and spread to every state in the United States.

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

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

Such actions created and will continue to create disruption in global supply chains, and adversely impacted global commercial activity and a number of industries.

See “Item 1A.

Risk Factors - Risks Related to Our Business and Structure - The outbreak of COVID-19 has caused severe disruptions in the U.S.

and global economy, and initially had and may again have a materially adverse impact on our financial condition and results of operations.”

Any prolonged disruptions in the business of our portfolio companies, including a disruption in their supply chains, may adversely affect their ability to obtain the necessary raw materials or components to make their products or cause a decline in the demand for their products or services, leading to a negative impact on their operating results.

In addition, such events may lead to restrictions on travel to and from the affected areas, making it more difficult for our portfolio companies to conduct their businesses.

As a result of pandemic outbreaks, including COVID-19, businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and individuals can become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions.

Governmental mandates may require forced shutdowns of our portfolio companies’ facilities for extended or indefinite periods.

In addition, these widespread outbreaks of illness, particularly in North America, Europe, or other locations significant to the operations of our portfolio companies, could adversely affect their workforce, resulting in serious health issues and absenteeism, and may cause serious harm to our results of operations, business, or prospects.

These conditions may reoccur for a prolonged period of time or materially worsen in the future.

The outbreak of COVID-19 has caused severe disruptions in the U.S.

and global economy, and initially had and may again have a materially adverse impact on our financial condition and results of operations.

During the first quarter of 2020, there was a global outbreak of a novel coronavirus, COVID-19, which spread to over 100 countries, including the United States, and spread to every state in the United States.

On March 11, 2020, the World Health Organization designated COVID-19 as a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.

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

Such actions created and will continue to create disruption in global supply chains, and adversely impacted many industries, including industries in which our portfolio companies operate.

The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown.

The outbreak of COVID-19 initially had, and may again have, a material adverse impact on our NAV, financial condition, liquidity, results of operations, and the businesses of our portfolio companies, among other factors.

We expect that the impacts of the pandemic on the U.S.

and global economy are likely to continue to some extent as the outbreak persists and potentially even longer.

Although many or all facets of our business have been or could be impacted by COVID-19, we currently believe the following impacts to be the most material to us:

• During the first quarter of 2020, our NAV significantly decreased as a result of the outbreak;

our NAV per share was $7.29 as of March 31, 2020 as compared to $8.40 as of December 31, 2019.

Our NAV per share has steadily increased to $7.75 as of December 31, 2020.

We expect our NAV per share in the future will be different, and possibly materially different, from our December 31, 2020 NAV per share.

The decrease during the first quarter of 2020 was the result of significant mark downs in the fair value of our investment portfolio, including our quoted syndicated loan investments and our private loan and other investments.

The fair value of these investments deteriorated as a result of market conditions triggered by COVID-19, including increased credit risk for our portfolio companies as their businesses were impacted by the outbreak and technical selling pressure as other market participants began selling assets in an effort to realize liquidity.

It is possible that the fair value of our investments, and therefore our NAV per share, could begin to decrease again during this continued period of the COVID-19 outbreak and potentially longer.

We believe our investments in portfolio companies in certain industries were most affected by the COVID-19 outbreak, but the majority of our investments were not materially affected by the outbreak.

• On March 19, 2020, our board of directors, including the independent directors, temporarily suspended our share repurchase program commencing with the second quarter of 2020 and included the third quarter of 2020.

On November 13, 2020, we recommenced the share repurchase program for the fourth quarter of 2020.

Also, beginning on March 19, 2020, we temporarily suspended the payment of distributions to shareholders commencing with the month ended April 30, 2020, whether in cash or pursuant to our distribution reinvestment plan.

On July 15, 2020, our board of directors determined to recommence the payment of distributions to shareholders in August 2020.

Any future uncertainty caused by the continued outbreak of COVID-19 could cause limitations on our ability to make distributions to and/or repurchase shares from our shareholders due to potential material adverse impacts on our cash flows from operations or liquidity.

• The portfolio companies adversely affected by the COVID-19 pandemic that are borrowers of our loans may not be able to make interest payments, which would adversely impact our net income and results of operations.

Many of these portfolio companies’ businesses are adversely affected by COVID-19 and are experiencing lost revenue as quarantines and other social disruption have slowed or stopped purchases of their products or services or have forced them to limit or suspend operations.

Furthermore, although most of our loans are secured by first lien security interests in the applicable portfolio company’s assets, if a portfolio company defaults on its loan there is no guarantee we will be able to recover the principal amount of the loan.

• Disruption in the financial markets caused by the COVID-19 outbreak may restrict our access to financing.

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

Furthermore, if there are declining values of certain of our assets, we may need to post additional unencumbered assets to secure certain of our financing arrangements, leaving less remaining unencumbered assets for future financing.

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

Additionally, we may experience other negative impacts to our business as a result of COVID-19 or a related or future pandemic that could exacerbate other risks described in this report, including:

• weakening financial conditions of or the bankruptcy or insolvency of portfolio companies, which may result in the inability of such portfolio companies to meet debt obligations, delays in collecting accounts receivable, defaults, or forgiveness or deferral of interest payments from such portfolio companies;

• deteriorations in credit and financing market conditions, which may adversely impact our ability to access financing for our investments on favorable terms or at all;

• operational impacts on our service providers, vendors and counterparties, including our lenders and other providers of financing, brokers and other counterparties that we purchase and sell assets to and from, and legal and diligence professionals that we rely on for acquiring our investments;

• limitations on our ability to ensure business continuity in the event our, or our third-party service providers’, continuity of operations plan is not effective or improperly implemented or deployed during a disruption;

• the availability of key personnel of our service providers as they face changed circumstances and potential illness during the pandemic;

• difficulty in valuing our assets in light of significant changes in the financial markets, including difficulty in forecasting discount rates and making market comparisons, and circumstances affecting our service providers’ personnel during the pandemic;

• limitations on our ability to raise new capital;

• significant changes to the valuations of pending investments;

• limitations on our ability to make distributions to and/or repurchase shares from our shareholders due to material adverse impacts on our cash flows from operations or liquidity.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions, and, as a result, present material uncertainty and risk with respect to us and the performance of our investments.

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

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

We are subject to risks associated with cybersecurity and cyber incidents.

Our business relies on secure information technology systems.

These systems are subject to potential attacks, including through adverse events that threaten the confidentiality, integrity, or availability of our information resources (i.e., cyber incidents).

These attacks could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption and result in disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, any of which could have a material adverse effect on our business, financial condition and results of operations.

As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by CIM and third-party service providers.

We, along with CIM, have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of the risk of a cyber incident, may be ineffective and do not guarantee that a cyber incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident.

In addition, the costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means.

Furthermore, cybersecurity has become a top priority for regulators around the world, and some jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data.

If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of our businesses, liability to investors, regulatory intervention, or reputational damage.

Unresolved Staff Comments

4 unchanged sentences

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 1A. Risk Factors