What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-11 compared with 2022-05-12 · 121 added, 85 removed, 337 unchanged (38% of the section changed)

10 unchanged sentences

• our future operating results;

• our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives as a result of COVID-19;

• our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives as a result of COVID-19, inflation and supply-chain disruptions;

• the impact of the investments that we expect to make;

8 unchanged sentences

• the ability of CIM and its affiliates to attract and retain highly talented professionals;

• the dependence of our future success on the general economy and its impact on the industries in which we invest, including COVID-19 and the related economic disruptions caused thereby;

• the dependence of our future success on the general economy and its impact on the industries in which we invest, including COVID-19, inflation and supply-chain disruptions and the related economic disruptions caused thereby;

• the effects of a changing interest rate environment;

65 unchanged sentences

Recent Developments

First Amendment to the Third Amended JPM Credit Facility

On March 28, 2022, 34th Street entered into the JPM First Amendment.

Under the JPM First Amendment, the aggregate principal amount available for borrowings was increased from $575,000 to $675,000, subject to conditions described in the JPM First Amendment.

Additional advances of up to $100,000 under the JPM First Amendment bear interest at a floating rate equal to the three-month SOFR, plus a credit spread of 3.10% per year, and a LIBOR to SOFR credit spread adjustment of 0.15%.

34th Street incurred certain customary costs and expenses in connection with the JPM First Amendment.

No other material terms of the Third Amended JPM Credit Facility were revised in connection with the JPM First Amendment.

2022 More Term Loan

On April 27, 2022, we entered into the More Term Loan Agreement with More Provident, which provided for an unsecured term loan to us in an aggregate principal amount of $50,000.

On April 27, 2022, we drew down $50,000 of borrowings under the 2022 More Term Loan.

After the deduction of fees and other financing expenses, we received net borrowings of approximately $49,000, which we used for working capital and other general corporate purposes.

Advances under the 2022 More Term Loan bear interest at a floating rate equal to the three-month SOFR, plus a credit spread of 3.50% per year and subject to a 1.0% SOFR floor, payable quarterly in arrears.

Advances under the 2022 More Term Loan mature on April 27, 2027.

We have the right to, at our option, prepay all or any portion of advances then outstanding together with a prepayment fee equal to the higher of (i) zero, or (ii) the discounted present value of all remaining interest payments that would have been paid by us through the maturity date with respect to the principal amount of such advance that is to be prepaid or becomes due and payable pursuant to the More Term Loan Agreement.

The discounted present value portion of the prepayment fee is calculated by applying a discount rate on the same periodic basis as that on which interest on advances is payable equal to the three-month SOFR plus 2.00%.

Advances under the 2022 More Term Loan are our general unsecured obligations that rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by us, rank effectively junior to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by certain of our subsidiaries, financing vehicles or similar facilities.

The More Term Loan Agreement contains other terms and conditions, including, without limitation, affirmative and negative covenants such as (i) information reporting, (ii) maintenance of our status as a BDC within the meaning of the Investment Company Act of 1940, as amended, (iii) minimum shareholders’ equity of 60% of our net asset value as of the year ended December 31, 2021 plus 50% of the net cash proceeds of the sale of certain equity interests by us after April 27, 2022, if any, (iv) a minimum asset coverage ratio of not less than 150%, and (v) an unencumbered asset coverage ratio of 1.25 to 1.00, provided that (a) first lien senior secured loans and cash represent more than 65% of the total value of unencumbered assets used by us for purposes of the ratio and (b) equity interests or structured products in the aggregate represent less than 15% of the total value of unencumbered assets used by us for purposes of the ratio.

In addition, the More Term Loan Agreement contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or derivative securities in an outstanding aggregate principal amount of at least $25,000, certain judgments and orders, and certain events of bankruptcy.

The rapid spread of COVID-19, and associated impacts on the U.S.

and global economies and the financial and credit markets, initially had negatively impacted, and may again negatively impact, our business operations and the business operations of some of our portfolio companies.

We cannot at this time fully predict the impact of COVID-19, including new variants, such as Delta and Omicron, on our business or the business of our portfolio companies, its duration or magnitude or the extent to which it will negatively impact our portfolio companies’ operating results or our own results of operations or financial condition, including, without limitation, our ability to pay distributions to our shareholders.

We expect that certain of our portfolio companies will continue to experience economic distress for the foreseeable future and may significantly limit business operations if subjected to prolonged economic distress.

These developments could result in a decrease in the value of certain of our investments.

COVID-19 initially had adverse effects on our investment income and may again have adverse effects in the future.

These adverse effects may require us to restructure certain of our investments, which could result in reductions to our investment income or in impairments on our investments.

In addition, disruptions in the capital markets have resulted in illiquidity in certain market areas.

These market disruptions and illiquidity initially had an adverse effect on our business, financial condition, results of operations and cash flows.

These events initially limited our investment originations, which may occur again in the future, and may also have a material negative impact on our operating results.

We will continue to carefully monitor the impact of COVID-19 on our business and the business of our portfolio companies.

Because the full effects of COVID-19 are not capable of being known at this time, we cannot estimate the impacts of COVID-19 on our future financial condition, results of operations or cash flows, including its effects on us with respect to our compliance with covenants in our financing arrangements with lenders.

Portfolio Investment Activity for the Three Months Ended March 31, 2022 and 2021 and the Year Ended December 31, 2021

The following table summarizes our investment activity, excluding short term investments and PIK securities, for the three months ended March 31, 2022 and 2021 and the year ended December 31, 2021:

Share Repurchase Policy

On June 24, 2022, our board of directors, including the independent directors, increased the amount of shares of our common stock that may be repurchased under our existing share repurchase policy by $10 million to up to an aggregate of $60 million.

Additionally, we expect to enter into a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act to facilitate repurchases under the share repurchase policy during our first available trading window after the filing of this report.

Under the share repurchase policy, we expect to purchase shares of our common stock through various means such as open market transactions, including block purchases, and privately negotiated transactions.

The number of shares repurchased and the timing, manner, price and amount of any repurchases will be determined at our discretion.

Factors are expected to include, but are not limited to, share price, trading volume and general market conditions, along with our general business conditions.

The share repurchase policy may be suspended or discontinued at any time and does not obligate us to acquire any specific number of shares of our common stock.

The 10b5-1 trading plan will be entered into by us and adopted in accordance with Rule 10b5-1 of the Exchange Act based in part on historical trading data with respect to our shares.

The 10b5-1 trading plan would permit common stock to be repurchased at a time that we might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.

The 10b5-1 trading plan will be administered by an independent broker and will be subject to price, market volume and timing restrictions.

Portfolio Investment Activity for the Three Months Ended June 30, 2022 and 2021 and the Year Ended December 31, 2021

The following table summarizes our investment activity, excluding short term investments and PIK securities, for the three months ended June 30, 2022 and 2021 and the year ended December 31, 2021:

Three Months Ended

March 31, Year Ended

June 30, Year Ended

Net Investment Activity 2022 2021 2021

1 unchanged sentence

Senior secured first lien debt $ 170,379 $ 221,361 $ 868,031

Senior secured second lien debt 1,836 — —

Unsecured debt — — 20,000

2 unchanged sentences

Net portfolio activity $ 63,671 $ 125,270 $ 92,081

The following tables summarize the composition of our investment portfolio at amortized cost and fair value as of March 31, 2022 and December 31, 2021:

March 31, 2022

The following tables summarize the composition of our investment portfolio at amortized cost and fair value as of June 30, 2022 and December 31, 2021:

June 30, 2022

Investments Cost(1) Investments Fair

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(3) The gross annual portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees and does not consider the cost of leverage.

The following table summarizes the composition of our investment portfolio by the type of interest rate as of March 31, 2022 and December 31, 2021, excluding short term investments of $15,763 and $87,917, respectively:

March 31, 2022 December 31, 2021

The following table summarizes the composition of our investment portfolio by the type of interest rate as of June 30, 2022 and December 31, 2021, excluding short term investments of $14,345 and $87,917, respectively:

June 30, 2022 December 31, 2021

Interest Rate Allocation Investments Cost Investments Fair Value Percentage of

5 unchanged sentences

Total investments $ 1,861,628 $ 1,791,107 100.0 % $ 1,704,387 $ 1,666,122 100.0 %

The following table shows the composition of our investment portfolio by industry classification and the percentage, by fair value, of the total assets in such industries as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

The following table shows the composition of our investment portfolio by industry classification and the percentage, by fair value, of the total assets in such industries as of June 30, 2022 and December 31, 2021:

June 30, 2022 December 31, 2021

Industry Classification Investments Fair Value Percentage of

5 unchanged sentences

Consumer 135,972 7.6 % 119,365 7.2 %

Chemicals, Plastics & Rubber 107,079 6.2 % 109,860 6.6 %

Diversified Financials 99,465 5.6 % 101,032 6.1 %

Chemicals, Plastics & Rubber 86,531 4.8 % 109,860 6.6 %

Retail 83,579 4.7 % 56,726 3.4 %

High Tech Industries 82,547 4.6 % 65,544 3.9 %

Capital Equipment 83,305 4.8 % 82,795 5.0 %

Advertising, Printing & Publishing 78,936 4.4 % 94,610 5.7 %

Oil & Gas 60,937 3.4 % 32,164 1.9 %

Capital Equipment 59,982 3.3 % 82,795 5.0 %

Consumer Goods:

Durable 58,203 3.2 % 58,124 3.5 %

Retail 57,066 3.3 % 56,726 3.4 %

Hotel, Gaming & Leisure 52,426 2.9 % 50,855 3.0 %

Beverage, Food & Tobacco 45,822 2.6 % 49,054 2.9 %

Banking, Finance, Insurance & Real Estate 40,233 2.3 % 40,634 2.4 %

Aerospace & Defense 38,531 2.2 % 38,279 2.3 %

Oil & Gas 37,073 2.1 % 32,164 1.9 %

Banking, Finance, Insurance & Real Estate 38,378 2.1 % 40,634 2.4 %

Construction & Building 37,645 2.1 % 27,585 1.7 %

Consumer Goods:

Non-Durable 34,660 1.9 % 45,682 2.7 %

Construction & Building 27,270 1.6 % 27,585 1.7 %

Telecommunications 20,066 1.1 % 24,649 1.5 %

Automotive 17,147 1.0 % 14,367 0.9 %

Metals & Mining 15,775 0.9 % 10,927 0.7 %

Transportation:

Cargo 12,374 0.7 % 14,106 0.8 %

Metals & Mining 11,008 0.6 % 10,927 0.7 %

Subtotal/total percentage 1,791,107 100.0 % 1,666,122 100.0 %

2 unchanged sentences

Our investment portfolio may contain senior secured investments that are in the form of lines of credit, delayed draw term loans, revolving credit facilities, or unfunded commitments, which may require us to provide funding when requested in accordance with the terms of the underlying agreements.

As of March 31, 2022 and December 31, 2021, our unfunded commitments amounted to $95,995 and $107,247 , respectively.

As of May 5, 2022, our unfunded commitments amount ed to $105,147.

As of June 30, 2022 and December 31, 2021, our unfunded commitments amounted to $96,129 and $107,247 , respectively.

As of August 4, 2022, our unfunded commitments amount ed to $81,369.

Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for us.

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For investments rated 3, 4, or 5, CIM enhances its level of scrutiny over the monitoring of such portfolio company.

The following table summarizes the composition of our investment portfolio based on the 1 to 5 investment rating scale at fair value as of March 31, 2022 and December 31, 2021, excluding short term investments of $15,763 and $87,917, respectively:

March 31, 2022 December 31, 2021

The following table summarizes the composition of our investment portfolio based on the 1 to 5 investment rating scale at fair value as of June 30, 2022 and December 31, 2021, excluding short term investments of $14,345 and $87,917, respectively:

June 30, 2022 December 31, 2021

Investment Rating Investments

12 unchanged sentences

Current Investment Portfolio

The following table summarizes the composition of our investment portfolio at fair value as of May 5, 2022:

The following table summarizes the composition of our investment portfolio at fair value as of August 4, 2022:

Investments Fair

15 unchanged sentences

(2) The gross annual portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees and does not consider the cost of leverage.

Results of Operations for the Three Months Ended March 31, 2022 and 2021

Our results of operations for the three months ended March 31, 2022 and 2021 were as follows:

Results of Operations for the Three Months Ended June 30, 2022 and 2021

Our results of operations for the three months ended June 30, 2022 and 2021 were as follows:

Three Months Ended

2 unchanged sentences

Net investment income after taxes 19,288 18,686

Net realized loss on investments and foreign currency (69) (4,128)

Net realized gain on investments and foreign currency 180 441

Net change in unrealized (depreciation) appreciation on investments (20,734) 8,842

Net increase in net assets resulting from operations $ 7,889 $ 49,714

Net (decrease) increase in net assets resulting from operations $ (1,266) $ 27,969

Investment Income

For the three months ended March 31, 2022 and 2021, we generated investment income of $41,683 and $36,303, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 112 and 107 portfolio companies held during each respective period.

Our average investment portfolio size, excluding our short term investments, increased $187,917, from $1,514,911 for the three months ended March 31, 2021 to $1,702,828 for the three months ended March 31, 2022.

For the three months ended June 30, 2022 and 2021, we generated investment income of $43,552 and $38,021, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 113 and 123 portfolio companies held during each respective period.

Our average investment portfolio size, excluding our short term investments, increased $160,519, from $1,604,801 for the three months ended June 30, 2021 to $1,765,321 for the three months ended June 30, 2022.

In addition, LIBOR and SOFR rates were higher during the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Operating Expenses and Income Taxes

The composition of our operating expenses and income taxes for the three months ended March 31, 2022 and 2021 was as follows:

The composition of our operating expenses and income taxes for the three months ended June 30, 2022 and 2021 was as follows:

Three Months Ended

6 unchanged sentences

Total operating expenses and income taxes $ 24,264 $ 19,335

The increase in subordinated incentive fee on income was primarily the result of entering into the (i) amended and restated investment advisory agreement in August 2021, which changed the calculation of the subordinated incentive fee to express the hurdle rate required for CIM to earn, and be paid, the incentive fee as a percentage of our net assets rather than adjusted capital, and (ii) the second amended and restated investment advisory agreement in October 2021, which reduced the hurdle rate applicable to the subordinated incentive fee.

The decrease in management fees was also primarily due to entering into the second amended and restated investment advisory agreement in October 2021, which reduced the annual rate from 2.0% to 1.5%.

The increase in interest expense was primarily the result of higher average borrowings during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

The composition of our general and administrative expenses for the three months ended March 31, 2022 and 2021 was as follows:

The increase in subordinated incentive fee on income was primarily the result of entering into (i) the amended and restated investment advisory agreement in August 2021, which changed the calculation of the subordinated incentive fee to express the hurdle rate required for CIM to earn, and be paid, the incentive fee as a percentage of our net assets rather than adjusted capital, and (ii) the second amended and restated investment advisory agreement in October 2021, which reduced the hurdle rate applicable to the subordinated incentive fee.

The increase in interest expense was primarily the result of (a) higher average borrowings under our financing arrangements during the three months ended June 30, 2022 compared to the three months ended June 30, 2021, and (b) higher LIBOR and SOFR rates during the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

The decrease in management fees was also primarily due to entering into the second amended and restated investment advisory agreement in October 2021, which among other things reduced the annual rate from 2.0% to 1.5%.

The composition of our general and administrative expenses for the three months ended June 30, 2022 and 2021 was as follows:

Three Months Ended

Professional fees $ 519 $ 1,213

Dues and subscriptions 535 169

Transfer agent expense 303 253

1 unchanged sentence

Valuation expense 212 269

Director fees and expenses 161 111

Accounting and administrative costs 145 175

Dues and subscriptions 80 27

Printing and marketing expense 28 355

Other expenses 10 23

Total general and administrative expense $ 1,712 $ 2,563

Net Investment Income After Taxes

Our net investment income after taxes totaled $19,288 and $18,686 for the three months ended June 30, 2022 and 2021, respectively.

The increase in our investment income during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was partially offset by an increase in our operating expenses during the same period, which was driven primarily by increases in the subordinated incentive fee on income and interest expense.

Net Realized Gain on Investments and Foreign Currency

Our net realized gain on investments and foreign currency totaled $180 and $441 for the three months ended June 30, 2022 and 2021, respectively, which was driven primarily by less sale activity during the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Net Change in Unrealized (Depreciation) Appreciation on Investments

The net change in unrealized (depreciation) appreciation on our investments totaled $(20,734) and $8,842 for the three months ended June 30, 2022 and 2021, respectively.

This change was driven primarily by widening credit spreads and decreased multiples in equity markets as well as the underperformance of certain portfolio companies during the three months ended June 30, 2022 that negatively impacted the fair value of certain of our investments, as compared to tightening credit spreads and increased multiples in equity markets during the three months ended June 30, 2021 that positively impacted the fair value of certain of our investments.

Net (Decrease) Increase in Net Assets Resulting from Operations

For the three months ended June 30, 2022 and 2021, we recorded a net (decrease) increase in net assets resulting from operations of $(1,266) and $27,969, respectively, as a result of our operating activity for the respective periods.

Results of Operations for the Six Months Ended June 30, 2022 and 2021

Our results of operations for the six months ended June 30, 2022 and 2021 were as follows:

Six Months Ended

Investment income $ 85,235 $ 74,324

Operating expenses and income taxes 46,464 38,039

Net investment income after taxes 38,771 36,285

Net realized gain (loss) on investments and foreign currency 111 (3,687)

Net change in unrealized (depreciation) appreciation on investments (32,259) 45,085

Net increase in net assets resulting from operations $ 6,623 $ 77,683

Investment Income

For the six months ended June 30, 2022 and 2021, we generated investment income of $85,235 and $74,324, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 119 and 127 portfolio companies held during each respective period.

Our average investment portfolio size, excluding our short term investments, increased $142,951, from $1,585,664 for the six months ended June 30, 2021 to $1,728,615 for the six months ended June 30, 2022.

Additionally, the increase in LIBOR rates during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 also contributed to the increase in interest income generated on our investments.

Operating Expenses and Income Taxes

The composition of our operating expenses and income taxes for the six months ended June 30, 2022 and 2021 was as follows:

Six Months Ended

Management fees $ 13,494 $ 16,026

Administrative services expense 1,501 1,381

Subordinated incentive fee on income 8,224 —

General and administrative 3,934 5,241

Interest expense 19,300 15,376

Income tax expense, including excise tax 11 15

Total operating expenses and income taxes $ 46,464 $ 38,039

The increase in interest expense was primarily the result of (a) higher average borrowings under our financing arrangements during the six months ended June 30, 2022 compared to the six months ended June 30, 2021, and (b) higher LIBOR rates during the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The composition of our general and administrative expenses for the six months ended June 30, 2022 and 2021 was as follows:

Six Months Ended

Professional fees $ 1,152 $ 2,478

Dues and subscriptions 615 196

Transfer agent expense 594 675

Insurance expense 505 269

Valuation expense 391 521

Director fees and expenses 315 214

Accounting and administrative costs 302 412

Printing and marketing expense 33 399

1 unchanged sentence

Total general and administrative expense $ 3,934 $ 5,241

The decrease in general and administrative expenses was primarily the result of (i) higher professional fees incurred during the six months ended June 30, 2021 associated with the listing of our shares on the NYSE with no comparable listing-related fees during the six months ended June 30, 2022, and (ii) higher printing and marketing expense incurred during the six months ended June 30, 2021 compared to the six months ended June 30, 2022 associated with shareholder proxy solicitation costs.

Net Investment Income After Taxes

Our net investment income after taxes totaled $19,483 and $17,599 for the three months ended March 31, 2022 and 2021, respectively.

The increase in our investment income after taxes during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was partially offset by an increase in our operating expenses during the same period, which was driven primarily by an increase in the subordinated incentive fee on income.

Net Realized Loss on Investments and Foreign Currency

Our net realized loss on investments and foreign currency totaled $(69) and $(4,128) for the three months ended March 31, 2022 and 2021, respectively, which was driven primarily by realized losses on the liquidation of our investments in certain portfolio companies during the three months ended March 31, 2021.

Our net investment income after taxes totaled $85,235 and $74,324 for the six months ended June 30, 2022 and 2021, respectively.

The increase in our investment income during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was partially offset by an increase in our operating expenses during the same period, which was driven primarily by increases in the subordinated incentive fee on income and interest expense.

Net Realized Gain (Loss) on Investments and Foreign Currency

Our net realized gain (loss) on investments and foreign currency totaled $111 and $(3,687) for the six months ended June 30, 2022 and 2021, respectively, which were driven primarily by losses realized on the exit of certain investments during the six months ended June 30, 2021.

Net Change in Unrealized (Depreciation) Appreciation on Investments

The net change in unrealized (depreciation) appreciation on our investments totaled $(11,525) and $36,243 for the three months ended March 31, 2022 and 2021, respectively.

This change was driven primarily by widening credit spreads and decreased multiples in equity markets as well as the underperformance of certain portfolio companies during the three months ended March 31, 2022 that negatively impacted the fair value of certain of our investments, as compared to tightening credit spreads and increased multiples in equity markets during the three months ended March 31, 2021 that positively impacted the fair value of certain of our investments.

The net change in unrealized (depreciation) appreciation on our investments totaled $(32,259) and $45,085 for the six months ended June 30, 2022 and 2021, respectively.

This change was driven primarily by widening credit spreads and decreased multiples in equity markets during the six months ended June 30, 2022 that negatively impacted the fair value of certain of our investments, as compared to tightening credit spreads and increased multiples in equity markets during the six months ended June 30, 2021 that positively impacted the fair value of certain of our investments.

Net Increase in Net Assets Resulting from Operations

For the three months ended March 31, 2022 and 2021, we recorded a net increase in net assets resulting from operations of $7,889 and $49,714, respectively, as a result of our operating activity for the respective periods.

For the six months ended June 30, 2022 and 2021, we recorded a net increase in net assets resulting from operations of $6,623 and $77,683, respectively, as a result of our operating activity for the respective periods.

Financial Condition, Liquidity and Capital Resources

6 unchanged sentences

The pre-Listing share repurchase program terminated upon the Listing on October 5, 2021.

On August 9, 2021, our shareholders approved a proposal that 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 following such shareholder approval.

As of the date of this report, we have not issued any shares at prices below our NAV per share pursuant to this authorization.

On August 9, 2021, our shareholders approved a proposal that authorized 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 following such shareholder approval, which authorization expired on August 9, 2022.

We did not issue any such shares through the expiration date.

We are currently seeking approval from our shareholders to again authorize us to issue shares below the then current NAV per share in one or more offerings for an additional 12-month period following such shareholder approval.

There can be no assurance that such approval will be received from our shareholders.

On September 15, 2021, our co-chief executive officers changed the timing of declaring and paying regular distributions to shareholders from monthly to quarterly commencing with the fourth quarter of 2021.

On March 8, 2022, our co-chief executive officers declared a regular quarterly distribution of $0.28 per share for the second quarter of 2022 payable on June 8, 2022 to shareholders of record as of June 1, 2022.

On August 9, 2022, our co-chief executive officers declared a regular quarterly distribution of $0.31 per share for the third quarter of 2022 payable on September 8, 2022 to shareholders of record as of September 1, 2022.

We intend to make distributions in an amount sufficient to maintain RIC status each year and to avoid any federal income taxes on income.

3 unchanged sentences

On September 15, 2021, our board of directors, including the independent directors, approved a share repurchase policy authorizing us to repurchase up to $50 million of our outstanding common stock after the Listing.

On June 24, 2022, our board of directors, including the independent directors, increased the amount of shares of our common stock that may be repurchased under the share repurchase policy by $10 million to up to an aggregate of $60 million.

Under the share repurchase policy, we may purchase shares of our common stock through various means such as open market transactions, including block purchases, and privately negotiated transactions.

2 unchanged sentences

The policy may be suspended or discontinued at any time and does not obligate us to acquire any specific number of shares of our common stock.

As part of the share repurchase policy, we intend to enter into a trading plan in the near future adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, based in part on historical trading data with respect to our shares.

As part of the share repurchase policy, we intend to enter into a trading plan during our first available trading window after the filing of this report adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, based in part on historical trading data with respect to our shares.

The 10b5-1 trading plan would permit common stock to be repurchased at a time that we might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.

The 10b5-1 trading plan will be administered by an independent broker and will be subject to price, market volume and timing restrictions.

Since we have not yet entered into a 10b5-1 trading plan, during the period from September 15, 2021 to May 5, 2022, we did not repurchase any shares of common stock pursuant to the share repurchase policy.

Since we have not yet entered into a 10b5-1 trading plan, during the period from September 15, 2021 to August 5, 2022, we did not repurchase any shares of common stock pursuant to the share repurchase policy.

As further described in Note 1 and Note 4 to our consolidated financial statements included in this report, the second amended and restated investment advisory agreement (i) reduced the annual base management fees payable by us to CIM and (ii) amended the way the subordinated incentive fee on income and the capital gains incentive fee is payable by us to CIM by reducing the hurdle and incentive fee rates and expressing the hurdle rate as a percentage of our net assets rather than our adjusted capital.

1 unchanged sentence

These changes, in the aggregate, may lead to the payment of higher advisory fees to CIM depending upon our performance.

As of March 31, 2022 and December 31, 2021, we had $15,763 and $87,917 in short term investments, respectively, invested in a fund that primarily invests in U.S.

As of June 30, 2022 and December 31, 2021, we had cash of $42,542 and $3,774, respectively.

As of June 30, 2022 and December 31, 2021, we had $14,345 and $87,917 in short term investments, respectively, invested in a fund that primarily invests in U.S.

government securities.

JPM Credit Facility

As of March 31, 2022 and May 5, 2022, our aggregate outstanding borrowings under the Third Amended JPM Credit Facility and the JPM First Amendment were $595,000 and $600,000, respectively, and the aggregate unfunded principal amount in connection with the Third Amended JPM Credit Facility and the JPM First Amendment was $80,000 and $75,000, respectively.

For a detailed discussion of our Third Amended JPM Credit Facility and the JPM First Amendment, refer to Note 8 to our consolidated financial statements included in this report.

As of March 31, 2022 and May 5, 2022, our outstanding borrowings under the Amended UBS Facility were $125,000 and $142,500, respectively, and the aggregate unfunded principal amount in connection with the Amended UBS Facility was $25,000 and $7,500, respectively.

As of June 30, 2022 and August 4, 2022, our aggregate outstanding borrowings under the JPM First Amendment were $600,000 and the aggregate unfunded principal amount in connection with the JPM First Amendment was $75,000.

For a detailed discussion of our JPM First Amendment, refer to Note 8 to our consolidated financial statements included in this report.

As of June 30, 2022 and August 4, 2022, our outstanding borrowings under the Amended UBS Facility were $142,500 and the aggregate unfunded principal amount in connection with the Amended UBS Facility was $7,500.

For a detailed discussion of our Amended UBS Facility, refer to Note 8 to our consolidated financial statements included in this report.

As of March 31, 2022 and May 5, 2022, we had $125,000 in aggregate principal amount of 2026 Notes outstanding and there was no unfunded principal amount in connection with the 2026 Notes.

As of June 30, 2022 and August 4, 2022, we had $125,000 in aggregate principal amount of 2026 Notes outstanding and there was no unfunded principal amount in connection with the 2026 Notes.

For a detailed discussion of our 2026 Notes, refer to Note 8 to our consolidated financial statements included in this report.

2021 More Term Loan

As of March 31, 2022 and May 5, 2022, our outstanding borrowings under the 2021 More Term Loan were $30,000 and there was no unfunded principal amount in connection with the 2021 More Term Loan.

As of June 30, 2022 and August 4, 2022, our outstanding borrowings under the 2021 More Term Loan were $30,000 and there was no unfunded principal amount in connection with the 2021 More Term Loan.

For a detailed discussion of our 2021 More Term Loan, refer to Note 8 to our consolidated financial statements included in this report.

2022 More Term Loan

As of May 5, 2022, our outstanding borrowings under the 2022 More Term Loan were $50,000 and there was no unfunded principal amount in connection with the 2022 More Term Loan.

As of June 30, 2022 and August 4, 2022, our outstanding borrowings under the 2022 More Term Loan were $50,000 and there was no unfunded principal amount in connection with the 2022 More Term Loan.

For a detailed discussion of our 2022 More Term Loan, refer to Note 8 to our consolidated financial statements included in this report.

Unfunded Commitments

As of March 31, 2022 and May 5, 2022, our unfunded commitments amounted to $95,995 and $105,147, respectively.

As of June 30, 2022 and August 4, 2022, our unfunded commitments amounted to $96,129 and $81,369, respectively.

For a detailed discussion of our unfunded commitments, refer to Note 11 to our consolidated financial statements included in this report.

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To qualify for and maintain RIC tax treatment, we must, among other things, distribute in respect of each taxable year at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.

We will incur certain excise taxes imposed on RICs to the extent we do not distribute in respect of each calendar year an amount at least equal to the sum of (1) 98.0% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses, or capital gain net income (adjusted for certain ordinary losses), for the one-year period ending on October 31 of the calendar year and (3) any net ordinary income and capital gain net income from preceding years that were not distributed during such years and on which we paid no federal income tax.

We will incur an excise tax of 4% imposed on RICs to the extent we do not distribute in respect of each calendar year an amount at least equal to the sum of (1) 98.0% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses, or capital gain net income (adjusted for certain ordinary losses), for the one-year period ending on October 31 of the calendar year and (3) any net ordinary income and capital gain net income from preceding years that were not distributed during such years and on which we paid no federal income tax.

For an additional discussion of our RIC status and distributions, refer to Note 2 and Note 5, respectively, of our consolidated financial statements included in this report.

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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-Q

Item 2. Management’s Discussion and Analysis