What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-09 · 92 added, 166 removed, 331 unchanged (44% of the section changed)

9 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 inflation, rising interest rates, supply-chain disruptions and the risk of recession;

• our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives as a result of inflation, high interest rates and the risk of recession;

• 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 inflation, rising interest rates and supply-chain disruptions 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 inflation and high interest rates and the related economic disruptions caused thereby;

• the effects of a changing interest rate environment;

27 unchanged sentences

The Listing accomplished our goal of providing our shareholders with greatly enhanced liquidity.

On February 26, 2023, our shares of common stock also listed and commenced trading on the TASE under the ticker symbol “CION”.

On February 26, 2023, our shares of common stock and our Series A Notes listed and commenced trading in Israel on the TASE under the ticker symbol “CION” and "CION B1", respectively.

We are managed by CIM, our affiliate and a registered investment adviser.

1 unchanged sentence

On August 7, 2023, our board of directors, including a majority of directors who are not interested persons, approved the renewal of the second amended and restated investment advisory agreement with CIM for a period of twelve months, commencing August 9, 2023.

We have also entered into an administration agreement with CIM to provide us with administrative services necessary for us to operate.

We and CIM previously engaged AIM to act as our investment sub-adviser.

26 unchanged sentences

Recent Developments

Regular and Supplemental Distributions

On August 7, 2023, our co-chief executive officers declared a supplemental distribution of $0.05 per share for both the third and fourth quarters of 2023, paid on October 16, 2023 and payable on January 15, 2024, respectively, to shareholders of record as of September 29, 2023 and December 29, 2023, respectively.

On November 6, 2023, our co-chief executive officers declared a regular quarterly distribution of $0.34 per share for the fourth quarter of 2023, payable on December 15, 2023 to shareholders of record as of December 1, 2023.

Additional Series A Notes

On October 10, 2023, we issued $ 33,146 in aggregate principal amount of Additional Series A Notes to institutional investors in Israel.

The Additional Series A Notes were issued pursuant to the Deed of Trust and were issued by way of expanding, and have the same terms and conditions as, the existing Series A Notes that we issued on February 28, 2023 (as described in further detail in Note 8 to our consolidated financial statements included in this report).

After the deduction of fees and other offering expenses, we received net proceeds of $ 32,317 , which we intend to use to make investments in portfolio companies in accordance with our investment objectives and for working capital and general corporate purposes.

The Additional Series A Notes are rated A1.il by Midroog Ltd., an affiliate of Moody’s, and commenced trading on the TASE on October 10, 2023.

The Additional Series A Notes will mature on August 31, 2026 and may be redeemed in whole or in part at our option at par plus a “make-whole” premium, if applicable, as set forth in the Deed of Trust.

The Additional Series A Notes bear interest at a floating rate equal to SOFR plus a credit spread of 3.82% per year, which will be paid quarterly on February 28, May 31, August 31, and November 30 of each year, commencing on November 30, 2023.

The Additional Series A Notes are our general unsecured obligations that rank senior in right of payment to all of our existing and future indebtedness that is expressly subordinated in right of payment to the Additional Series A Notes, 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 our subsidiaries, financing vehicles or similar facilities.

On November 8, 2023, we entered into the 2027 Note Purchase Agreement with certain institutional investors, in connection with our issuance of $100,000 aggregate principal amount of 2027 Notes, at a purchase price equal to 99.25% of the principal amount of the 2027 Notes.

The net proceeds to us were approximately $99,000, after the deduction of placement agent fees and other financing expenses, which we intend to use to primarily repay debt under our senior secured financing arrangements, make investments in portfolio companies in accordance with our investment objectives, and for working capital and general corporate purposes.

The 2027 Notes are rated BBB (low) by DBRS, Inc.

The 2027 Notes mature on November 8, 2027.

The 2027 Notes bear interest at a floating rate equal to the three-month SOFR plus a credit spread of 4.75% per year and subject to a 2.00% SOFR floor, which will be paid quarterly on February 15, May 15, August 15, and November 15 of each year, commencing on February 15, 2024.

We have the right to, at our option, redeem all or a part that is not less than 10% of the 2027 Notes (i) on or before August 8, 2027, at a redemption price equal to 100% of the principal amount of 2027 Notes to be redeemed plus an applicable “make-whole” amount equal to (x) the discounted value of the remaining scheduled payments with respect to the principal of such 2027 Note that is to be prepaid or becomes due and payable pursuant to the 2027 Note Purchase Agreement over (y) the amount of such called principal, plus accrued and unpaid interest, if any, and (ii) after August 8, 2027, at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any.

For any redemptions occurring on or before August 8, 2027, the discounted value portion of the “make whole amount” is calculated by applying a discount rate on the same periodic basis as that on which interest on the 2027 Notes is payable equal to the sum of 0.50% plus the yield to maturity of the most recently issued U.S.

Treasury securities having a maturity equal to the remaining average life of the 2027 Notes, or if there are no such U.S.

Treasury securities, using such implied yield to maturity determined in accordance with the terms of the 2027 Note Purchase Agreement.

The 2027 Notes are general unsecured obligations of ours 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 2027 Note Purchase 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 business development company within the meaning of the 1940 Act, (iii) minimum shareholders’ equity of $543.6 million, (iv) a minimum asset coverage ratio of not less than 150%, (v) a minimum interest coverage ratio of 1.25 to 1.00 and (vi) 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.

The 2027 Note Purchase Agreement also contains a “most favored lender” provision in favor of the purchasers in respect of any new credit facilities, loans, notes or unsecured indebtedness in excess of $25 million incurred by us, which indebtedness contains a financial covenant not contained in, or more restrictive against us than those contained, in the 2027 Note Purchase Agreement.

In addition, the 2027 Note Purchase 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 other indebtedness or derivative securities of ours in an outstanding aggregate principal amount of at least $25 million, certain judgments and orders, and certain events of bankruptcy.

Portfolio Investment Activity for the Three and Nine Months Ended September 30, 2023 and 2022 and the Year Ended December 31, 2022

The following table summarizes our investment activity, excluding short term investments and PIK securities, for the three and nine months ended September 30, 2023 and 2022 and the year ended December 31, 2022:

Q2 Base Distribution

On May 6, 2024, our co-chief executive officers declared a quarterly base distribution of $0.36 per share for the second quarter of 2024, payable on June 17, 2024 to shareholders of record as of June 3, 2024.

Portfolio Investment Activity for the Three Months Ended March 31, 2024 and 2023 and the Year Ended December 31, 2023

The following table summarizes our investment activity, excluding short term investments and PIK securities, for the three months ended March 31, 2024 and 2023 and the year ended December 31, 2023:

Three Months Ended

September 30, Nine Months Ended

September 30, Year Ended

March 31, Year Ended

Net Investment Activity 2024 2023 2023

1 unchanged sentence

Senior secured first lien debt $ 101,895 $ 22,221 $ 340,704

Senior secured second lien debt — 18,108 — 19,944 19,932

Unsecured debt 1,096 — 4,200

2 unchanged sentences

Net portfolio activity $ (95,985) $ (42,053) $ 49,937

The following tables summarize the composition of our investment portfolio at amortized cost and fair value as of September 30, 2023 and December 31, 2022:

September 30, 2023

The following tables summarize the composition of our investment portfolio at amortized cost and fair value as of March 31, 2024 and December 31, 2023:

March 31, 2024

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 September 30, 2023 and December 31, 2022, excluding short term investments of $116,934 and $10,869, respectively:

September 30, 2023 December 31, 2022

The following table summarizes the composition of our investment portfolio by the type of interest rate as of March 31, 2024 and December 31, 2023, excluding short term investments of $130,137 and $113,446, respectively:

March 31, 2024 December 31, 2023

Interest Rate Allocation Investments Cost Investments Fair Value Percentage of

1 unchanged sentence

Floating interest rate investments $ 1,424,104 $ 1,376,221 79.1 % $ 1,521,848 $ 1,475,126 80.1 %

Fixed interest rate investments 148,595 124,978 7.3 % 166,297 157,006 9.0 %

Non-income producing investments 192,596 230,314 13.2 % 154,419 184,175 10.0 %

Fixed interest rate investments 157,150 131,307 7.5 % 155,244 131,533 7.2 %

Other income producing investments 4,622 2,858 0.2 % 30,673 49,990 2.7 %

Total investments $ 1,778,472 $ 1,740,700 100.0 % $ 1,862,184 $ 1,840,824 100.0 %

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 September 30, 2023 and December 31, 2022:

September 30, 2023 December 31, 2022

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, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

Industry Classification Investments Fair Value Percentage of

3 unchanged sentences

Healthcare & Pharmaceuticals 219,792 12.6 % 238,624 13.0 %

Retail 140,298 8.1 % 135,000 7.3 %

Diversified & Production 135,536 7.8 % 135,037 7.3 %

Consumer 123,875 7.1 % 107,195 5.8 %

Advertising, Printing & Publishing 100,528 5.8 % 116,100 6.3 %

Beverage, Food & Tobacco 91,436 5.3 % 68,780 3.7 %

Construction & Building 84,885 4.9 % 104,727 5.7 %

Consumer 105,805 6.1 % 115,849 6.6 %

Retail 101,301 5.9 % 74,718 4.3 %

Chemicals, Plastics & Rubber 82,501 4.8 % 66,753 3.8 %

Diversified Financials 79,995 4.6 % 85,733 4.7 %

2 unchanged sentences

Durable 58,885 3.4 % 59,955 3.3 %

Beverage, Food & Tobacco 52,414 3.0 % 45,396 2.6 %

Banking, Finance, Insurance & Real Estate 57,477 3.3 % 52,272 2.8 %

Hotel, Gaming & Leisure 50,820 2.9 % 50,906 2.8 %

Chemicals, Plastics & Rubber 42,557 2.4 % 82,597 4.5 %

Capital Equipment 42,340 2.4 % 49,571 2.7 %

1 unchanged sentence

Non-Durable 41,661 2.4 % 42,381 2.3 %

Banking, Finance, Insurance & Real Estate 38,125 2.2 % 43,836 2.5 %

High Tech Industries 33,762 2.0 % 56,501 3.2 %

Hotel, Gaming & Leisure 27,158 1.6 % 46,739 2.7 %

Containers, Packaging & Glass 18,455 1.1 % 18,480 1.0 %

High Tech Industries 18,307 1.0 % 22,671 1.2 %

Telecommunications 17,360 1.0 % 17,768 1.0 %

1 unchanged sentence

Environmental Industries 15,297 0.9 % 15,336 0.8 %

Automotive 14,471 0.8 % 16,255 0.9 %

Aerospace & Defense 12,681 0.7 % 38,842 2.2 %

Transportation:

Cargo 12,363 0.7 % 12,201 0.7 %

Aerospace & Defense 12,000 0.7 % 12,000 0.6 %

Automotive 11,177 0.6 % 12,403 0.7 %

Forest Products & Paper 8 — — —

Subtotal/total percentage 1,740,700 100.0 % 1,840,824 100.0 %

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 September 30, 2023 and December 31, 2022, our unfunded commitments amounted to $59,170 and $71,420 , respectively.

As of November 3, 2023, our unfunded commitments amount ed to $57,644.

As of March 31, 2024 and December 31, 2023, our unfunded commitments amounted to $60,632 and $47,349 , respectively.

As of May 1, 2024, our unfunded commitments amount ed to $82,946, which includes $20,000 to a controlled investment, David's Bridal, Inc.

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 September 30, 2023 and December 31, 2022, excluding short term investments of $116,934 and $10,869, respectively:

September 30, 2023 December 31, 2022

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, 2024 and December 31, 2023, excluding short term investments of $130,137 and $113,446, respectively:

March 31, 2024 December 31, 2023

Investment Rating Investments

12 unchanged sentences

Current Investment Portfolio

The following table summarizes the composition of our investment portfolio at fair value as of November 3, 2023:

The following table summarizes the composition of our investment portfolio at fair value as of May 1, 2024:

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 September 30, 2023 and 2022

Our results of operations for the three months ended September 30, 2023 and 2022 were as follows:

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Our results of operations for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

September 30,

Investment income $ 73,554 $ 64,975

2 unchanged sentences

Net realized loss on investments and foreign currency (9,736) (4,525)

Net change in unrealized appreciation on investments 25,606 25,595

Net increase in net assets resulting from operations $ 47,473 $ 33,983

Net change in unrealized depreciation on investments (16,412) (56,378)

Net increase (decrease) in net assets resulting from operations $ 6,445 $ (31,045)

Investment Income

For the three months ended September 30, 2023 and 2022, we generated investment income of $67,540 and $54,163, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 101 and 116 portfolio companies held during each respective period.

The increase in investment income was primarily due to higher SOFR and LIBOR rates during the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

For the three months ended March 31, 2024 and 2023, we generated investment income of $73,554 and $64,975, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 95 and 102 portfolio companies held during each respective period.

The increase in total investment income was primarily driven by an increase in base rates and origination fees, as well as additional investment income generated from restructured investments and yield-enhancement provisions from repayments on certain investments during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

These increases were partially offset by a reduction in dividend income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Operating Expenses and Income Taxes

The composition of our operating expenses and income taxes for the three months ended September 30, 2023 and 2022 was as follows:

The composition of our operating expenses and income taxes for the three months ended March 31, 2024 and 2023 was as follows:

Three Months Ended

September 30,

Management fees $ 6,864 $ 6,676

3 unchanged sentences

Interest expense 24,302 19,309

Income tax (benefit) expense, including excise tax (237) 14

Income tax expense, including excise tax 5 5

Total operating expenses and income taxes $ 40,961 $ 35,117

The increase in interest expense was primarily the result of (a) higher SOFR and LIBOR rates during the three months ended September 30, 2023 compared to the three months ended September 30, 2022 and (b) higher average borrowings under our financing arrangements during the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

The increase in subordinated incentive fee on income was primarily the result of the increase in investment income during the three months ended September 30, 2023 compared to the three months ended September 30, 2022, which was partially offset by the increase in interest expense during the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

The composition of our general and administrative expenses for the three months ended September 30, 2023 and 2022 was as follows:

The increase in interest expense was primarily the result of (a) higher SOFR and LIBOR rates during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 and (b) higher average borrowings under our financing arrangements during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

The increase in subordinated incentive fee on income was primarily the result of the increase in investment income during the three months ended March 31, 2024 compared to the three months ended March 31, 2023, which was partially offset by the increase in interest expense during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

The composition of our general and administrative expenses for the three months ended March 31, 2024 and 2023 was as follows:

Three Months Ended

September 30,

Professional fees $ 521 $ 526

Printing and marketing expense 284 672

Accounting and administrative costs 282 180

Valuation expense 212 199

Transfer agent expense 189 296

Dues and subscriptions 435 429

Director fees and expenses 171 169

Insurance expense 169 167

Dues and subscriptions 162 112

Other expenses 52 26

Total general and administrative expense $ 1,931 $ 2,027

Net Investment Income After Taxes

Our net investment income after taxes totaled $29,990 and $25,557 for the three months ended September 30, 2023 and 2022, respectively.

The increase in net investment income was a result of an increase in our investment income during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, which was partially offset by an increase in our operating expenses during the same period, which was driven primarily by increases in interest expense and the subordinated incentive fee on income.

Net Realized Loss on Investments and Foreign Currency

Our net realized loss on investments and foreign currency totaled $(8,123) and $(17,169) for the three months ended September 30, 2023 and 2022, respectively.

The decrease in net realized loss on investments and foreign currency was driven primarily by realized gains on a certain investment during the three months ended September 30, 2023 that offset realized losses due to the write-off of certain investments during the same period.

During the three months ended September 30, 2022, there were no significant realized gains to offset realized losses due to the write-off of certain investments.

Net Change in Unrealized Appreciation on Investments

The net change in unrealized appreciation on our investments totaled $25,606 and $25,595 for the three months ended September 30, 2023 and 2022, respectively.

In both periods, the net change in unrealized appreciation was primarily driven by the restructure or write-off of certain investments that were previously recorded as unrealized losses.

Net Increase in Net Assets Resulting from Operations

For the three months ended September 30, 2023 and 2022, we recorded a net increase in net assets resulting from operations of $47,473 and $33,983, respectively, as a result of our operating activity for the respective periods.

Results of Operations for the Nine Months Ended September 30, 2023 and 2022

Our results of operations for the nine months ended September 30, 2023 and 2022 were as follows:

Nine Months Ended

September 30,

Investment income $ 191,011 $ 139,398

Operating expenses and income taxes 107,747 75,070

Net investment income after taxes 83,264 64,328

Net realized loss on investments and foreign currency (31,576) (17,058)

Net change in unrealized depreciation on investments (7,366) (6,664)

Net increase in net assets resulting from operations $ 44,322 $ 40,606

Investment Income

For the nine months ended September 30, 2023 and 2022, we generated investment income of $191,011 and $139,398, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 107 and 128 portfolio companies held during each respective period.

The increase in SOFR and LIBOR rates during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 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 nine months ended September 30, 2023 and 2022 was as follows:

Nine Months Ended

September 30,

Management fees $ 19,963 $ 20,436

Administrative services expense 2,743 2,234

Subordinated incentive fee on income 17,662 13,645

General and administrative 5,960 5,961

Interest expense 61,533 32,769

Income tax (benefit) expense, including excise tax (114) 25

Total operating expenses and income taxes $ 107,747 $ 75,070

The increase in interest expense was primarily the result of (a) higher SOFR and LIBOR rates during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 and (b) higher average borrowings under our financing arrangements during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

The increase in subordinated incentive fee on income was primarily the result of the increase in investment income during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, which was partially offset by the increase in interest expense during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

The composition of our general and administrative expenses for the nine months ended September 30, 2023 and 2022 was as follows:

Nine Months Ended

September 30,

Professional fees $ 1,576 $ 1,375

Transfer agent expense 736 890

Valuation expense 637 590

Dues and subscriptions 635 727

Accounting and administrative costs 162 166

Valuation expense 144 173

Transfer agent expense 123 268

Printing and marketing expense 3 5

Director fees and expenses 525 477

Insurance expense 504 662

Other expenses 56 52

1 unchanged sentence

Net Investment Income After Taxes

Our net investment income after taxes totaled $83,264 and $64,328 for the nine months ended September 30, 2023 and 2022, respectively.

The increase in our net investment income was a result of an increase in our investment income during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, which was partially offset by an increase in our operating expenses during the same period, which was driven primarily by increases in interest expense and the subordinated incentive fee on income.

Our net investment income after taxes totaled $32,593 and $29,858 for the three months ended March 31, 2024 and 2023, respectively.

The increase in net investment income was a result of an increase in our investment income during the three months ended March 31, 2024 compared to the three months ended March 31, 2023, which was partially offset by an increase in our operating expenses during the same period, which was driven primarily by increases in interest expense and the subordinated incentive fee on income.

Net Realized Loss on Investments and Foreign Currency

Our net realized loss on investments and foreign currency totaled $(31,576) and $(17,058) for the nine months ended September 30, 2023 and 2022, respectively.

This increase was driven primarily by realized losses on the restructure and write-off of certain investments during the nine months ended September 30, 2023.

Our net realized loss on investments and foreign currency totaled $(9,736) and $(4,525) for the three months ended March 31, 2024 and 2023, respectively.

The increase was driven primarily by higher realized losses on the restructure of certain investments during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Net Change in Unrealized Depreciation on Investments

The net change in unrealized depreciation on our investments totaled $(7,366) and $(6,664) for the nine months ended September 30, 2023 and 2022, respectively.

The net change in unrealized depreciation during the nine months ended September 30, 2023 was primarily due to the decline in fair value of certain investments from mark-to-market adjustments, which was partially offset by realized losses recorded on the restructure of certain investments that were previously recorded as unrealized losses.

During the nine months ended September 30, 2022, the net change in unrealized depreciation was primarily the result of widening credit spreads and decreased multiples in equity markets that negatively impacted the fair value of certain of our investments.

Net Increase in Net Assets Resulting from Operations

For the nine months ended September 30, 2023 and 2022, we recorded a net increase in net assets resulting from operations of $44,322 and $40,606, respectively, as a result of our operating activity for the respective periods.

The net change in unrealized depreciation on our investments totaled $(16,412) and $(56,378) for the three months ended March 31, 2024 and 2023, respectively.

This decrease was driven primarily by realized losses on certain investments with previously unrealized depreciation during the three months ended March 31, 2024, as well as larger mark-to-market declines in certain investments during the three months ended March 31, 2023 as compared to the three months ended March 31, 2024.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended March 31, 2024 and 2023, we recorded a net increase (decrease) in net assets resulting from operations of $6,445 and $(31,045), respectively, as a result of our operating activity for the respective periods.

Financial Condition, Liquidity and Capital Resources

2 unchanged sentences

As a result, we also generate cash from our existing financing arrangements and may generate cash from future borrowings, as well as future offerings of securities including public and/or private issuances of debt and/or equity securities.

We use cash primarily to (i) purchase investments in new and existing portfolio companies, (ii) pay for the cost of operations (including paying advisory fees to and/or reimbursing CIM), (iii) make debt service payments related to any of our financing arrangements and (iv) pay cash distributions to the holders of our shares.

We use cash primarily to (i) purchase investments in new and existing portfolio companies, (ii) pay for the cost of operations (including paying advisory fees to and reimbursing CIM), (iii) make debt service payments related to any of our financing arrangements and (iv) pay cash distributions to the holders of our shares.

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 of 2-to-1, so long as certain approval and disclosure requirements are satisfied.

2 unchanged sentences

Any increase to our leverage would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.

As of September 30, 2023 and December 31, 2022, our asset coverage ratio was 1.85 and 1.92, respectively.

We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage.

As of March 31, 2024 and December 31, 2023, our asset coverage ratio was 1.81 and 1.81, respectively.

We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage and liquidity requirements.

On September 15, 2023, our shareholders authorized us to issue shares of our common stock at prices below the then current NAV per share in one or more offerings for a 12-month period following such shareholder approval.

As of the date of this report, we are not engaged in discussions to issue any such shares.

As of September 30, 2023, we had cash of $6,805 and short term investments of $116,934 invested in a fund that primarily invests in U.S.

As of March 31, 2024, we had cash of $48,482 and short term investments of $130,137 invested in a fund that primarily invests in U.S.

government securities.

Cash and short term investments as of September 30, 2023, taken together with our available debt, is expected to be sufficient for our investing and financing activities and to conduct our operations in the near term.

As of September 30, 2023, we had $102 million available under our financing arrangements.

Cash and short term investments as of March 31, 2024, taken together with our available debt, is expected to be sufficient for our investing and financing activities and to conduct our operations in the near term.

As of March 31, 2024, we had $175 million available under our secured financing arrangements.

Our short-term cash needs include the funding of additional portfolio investments, the payment of operating expenses including interest expense, management fees, incentive fees, administrative services expense and general and administrative expenses, as well as paying distributions to our shareholders.

10 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.

On August 29, 2023, as part of the share repurchase policy, we entered into a trading plan with an independent broker, Wells Fargo, 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.

On August 29, 2023, as part of the share repurchase policy, we entered into a new trading plan with an independent broker, Wells Fargo, 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 permits 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 expires on August 29, 2024, and is subject to price, market volume and timing restrictions.

During the nine months ended September 30, 2023, we repurchased an aggregate of 834,680 shares under the 10b5-1 trading plan for an aggregate purchase price of $8,619, or an average purchase price of $10.33 per share.

From October 1, 2023 to November 3, 2023, we repurchased an aggregate of 165,317 shares of common stock under the 10b5-1 trading plan for an aggregate purchase price of $1,669, or an average purchase price of $10.10 per share.

From the inception of the 10b5-1 trading plan in August 2022 through November 3, 2023, we repurchased an aggregate of 2,658,968 shares of common stock under the 10b5-1 trading plan for an aggregate purchase price of $25,586, or an average purchase price of $9.62 per share.

Distributions

During the three months ended March 31, 2024, we repurchased an aggregate of 424,031 shares under the 10b5-1 trading plan for an aggregate purchase price of $4,670, or an average purchase price of $11.01 per share.

From April 1, 2024 to May 1, 2024, we repurchased an aggregate of 171,481 shares of common stock under the 10b5-1 trading plan for an aggregate purchase price of $1,911, or an average purchase price of $11.14 per share.

From the inception of the 10b5-1 trading plan in August 2022 through May 1, 2024, we repurchased an aggregate of 3,369,316 shares of common stock under the 10b5-1 trading plan for an aggregate purchase price of $33,545, or an average purchase price of $9.96 per share.

RIC Status and Distributions

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 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.

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

Therefore, subject to applicable legal restrictions and the sole discretion of our board of directors, we intend to authorize, declare, and pay regular distributions on a quarterly basis.

Regular and special distributions in respect of future periods will be evaluated by management and our board of directors based on circumstances and expectations existing at the time of consideration.

The following table presents distributions per share that were declared during the year ended December 31, 2022 and the nine months ended September 30, 2023:

Therefore, subject to applicable legal restrictions and the sole discretion of our board of directors, we intend to authorize, declare, and pay base distributions on a quarterly basis.

Base and any supplemental and/or special distributions in respect of future periods will be evaluated by management and our board of directors based on circumstances and expectations existing at the time of consideration.

The following table presents distributions per share that were declared during the year ended December 31, 2023 and the three months ended March 31, 2024:

Distributions

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June 30, 2023 (one record date) 0.34 18,614

September 30, 2022 (one record date) 0.31 17,604

December 31, 2022 (two record dates) 0.58 32,074

September 30, 2023 (two record dates) 0.39 21,276

December 31, 2023 (three record dates) 0.54 29,290

Total distributions for the year ended December 31, 2023 $ 1.61 $ 87,867

March 31, 2024 (one record date) $ 0.34 $ 18,279

June 30, 2023 (one record date) 0.34 18,614

September 30, 2023 (two record dates) 0.39 21,276

Total distributions for the nine months ended September 30, 2023 $ 1.07 $ 58,577

Total distributions for the three months ended March 31, 2024 $ 0.34 $ 18,279

On May 6, 2024, our co-chief executive officers declared a quarterly base distribution of $0.36 per share for the second quarter of 2024 payable on June 17, 2024 to shareholders of record as of June 3, 2024.

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.

JPM Credit Facility

As of September 30, 2023 and November 3, 2023, our aggregate outstanding borrowings under the JPM Credit Facility were $600,000 and $575,000, respectively, and the aggregate unfunded principal amount in connection with the JPM Credit Facility was $75,000 and $100,000, respectively.

As of March 31, 2024 and May 1, 2024, our aggregate outstanding borrowings under the JPM Credit Facility were $550,000 and the aggregate unfunded principal amount in connection with the JPM Credit Facility was $125,000.

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

As of September 30, 2023 and November 3, 2023, our outstanding borrowings under the Amended UBS Facility were $122,500 and the aggregate unfunded principal amount in connection with the Amended UBS Facility was $27,500.

As of March 31, 2024 and May 1, 2024, our outstanding borrowings under the Amended UBS Facility were $100,000 and the aggregate unfunded principal amount in connection with the Amended UBS Facility was $50,000.

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

As of September 30, 2023 and November 3, 2023, 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 March 31, 2024 and May 1, 2024, 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 September 30, 2023 and November 3, 2023, 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 March 31, 2024 and May 1, 2024, 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 September 30, 2023 and November 3, 2023, 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 March 31, 2024 and May 1, 2024, 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.

Series A Notes

As of September 30, 2023 and November 3, 2023, we had $80,712 and $113,858, respectively, in aggregate principal amount of Series A Notes and Additional Series A Notes outstanding and there was no unfunded principal amount in connection with either the Series A Notes or the Additional Series A Notes.

For a detailed discussion of our Series A Notes and Additional Series A Notes, refer to Note 8 and Note 14, respectively, to our consolidated financial statements included in this report.

As of March 31, 2024 and May 1, 2024, we had approximately $114,844 in aggregate principal amount of Series A Notes outstanding and there was no unfunded principal amount in connection with either the Series A Notes.

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

As of March 31, 2024 and May 1, 2024, we had $100,000 in aggregate principal amount of 2027 Notes outstanding and there was no unfunded principal amount in connection with the 2027 Notes.

For a detailed discussion of our 2027 Notes, refer to Note 8 to our consolidated financial statements included in this report.

Unfunded Commitments

As of September 30, 2023 and November 3, 2023, our unfunded commitments amounted to $59,170 and $57,644, respectively.

As of March 31, 2024 and May 1, 2024, our unfunded commitments amounted to $60,632 and $82,946, 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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With respect to investments for which market quotations are not readily available, CIM, as the valuation designee of our board of directors, undertakes a multi-step valuation process each quarter, as described below:

• the quarterly valuation process generally begins with each portfolio company or investment either being sent directly to an independent valuation firm or initially valued by certain of CIM’s investment professionals and certain members of its management team, with such valuation taking into account information received from various sources, including independent valuation firms, if applicable;

• preliminary valuation conclusions are then documented and discussed by members of CIM’s management team;

• our quarterly valuation process generally begins with each portfolio company or investment either being sent directly to an independent valuation firm or initially valued by certain of CIM’s investment professionals and certain members of its management team, with such valuation taking into account information received from various sources, including independent valuation firms, if applicable;

• preliminary valuation conclusions are then documented and discussed with members of CIM’s management team;

• designated members of CIM’s management team review the preliminary valuation, and, if applicable, deliver such preliminary valuation to an independent valuation firm for its review;

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We shall promptly (but no later than five business days after we become aware) report to our board of directors in writing on the occurrence of matters that materially affect the fair value of the designated portfolio of investments.

Material matters in this instance include a significant deficiency or material weakness in the design or effectiveness of CIM’s fair value determination process resulting in a material error in the calculation of net asset value of $0.01 per share or greater.

In addition to the foregoing, certain investments for which a market price is not readily available are evaluated on a quarterly basis by an independent valuation firm and certain other investments are on a rotational basis reviewed by an independent valuation firm.

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Related Party Transactions

For a discussion of our relationship with related parties including CIM and CIG, and amounts incurred under agreements with such related parties, refer to Note 4 to our consolidated financial statements included in this report.

For a discussion of our relationship with related parties including CIM, CIG, and AIA and amounts incurred under agreements with such related parties, refer to Note 4 to our consolidated financial statements included in this report.

For a discussion of our relationship with CION/EagleTree, refer to Note 7 to our consolidated financial statements included in this report.

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See Note 8 to our consolidated financial statements for a more detailed description of the 2021 More Term Loan.

On April 27, 2022, we entered into the 2022 More Term Loan with More Provident.

On April 27, 2022, we entered into the 2022 More Term Loan with More.

See Note 8 to our consolidated financial statements for a more detailed description of the 2022 More Term Loan.

On February 28, 2023, we entered into a Deed of Trust with Mishmeret Trust Company Ltd., as trustee, pursuant to which we issued our Series A Notes and Additional Series A Notes.

See Notes 8 and 14 to our consolidated financial statements for a more detailed description of the Deed of Trust, the Series A Notes and the Additional Series A Notes.

On February 28, 2023, we entered into a Deed of Trust with Mishmeret Trust Company Ltd., as trustee, pursuant to which we issued our Series A Notes.

See Notes 8 to our consolidated financial statements for a more detailed description of the Deed of Trust and the Series A Notes.

On November 8, 2023, we entered into the 2027 Note Purchase Agreement with purchasers of the 2027 Notes.

See Note 8 to our consolidated financial statements for a more detailed description of the 2027 Notes.

Commitments and Contingencies

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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