What changed in this filing

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Item 1. Business

2022-03-17 compared with 2021-03-29 · 114 added, 106 removed, 722 unchanged (23% of the section changed)

Franklin BSP Capital Corporation (including, for periods prior the Conversion (as defined below), Franklin BSP Capital L.L.C., a Delaware limited liability company, “FBCC,” or the “Company,” which may also be referred to as “we,” “us,” or “our”) is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (“BDC”) and intends to elect to be treated for U.S.

federal income tax purposes, and to qualify annually thereafter, as a regulated investment company (“RIC”).

SUMMARY OF RISK FACTORS

The following is a summary of the principal risk factors associated with an investment in us:

• Global economic, political and market conditions may adversely affect our business, results of operations and financial condition, including our revenue growth and profitability;

• Events beyond our control, including public health crises, could adversely impact our portfolio companies and our results of our operations;

• The capital markets are currently in a period of disruption and economic uncertainty.

Such market conditions have adversely affected debt and equity capital markets, which have had, and may continue to have, a negative impact on our business and operations;

• Future disruptions or instability in capital markets could negatively impact our ability to raise capital, and have a material adverse effect on our business, financial condition, and results of operations;

• The discontinuation of London Interbank Offered Rate (“LIBOR”) and the transition to any new reference rates may affect the value of our LIBOR-indexed portfolio investments and may increase the cost of borrowing under our credit facilities, which in each case could affect our results of operations or financial condition;

• The amount of any distributions we pay is uncertain.

Our distributions to our stockholders may exceed our earnings.

Therefore, portions of the distributions that we pay may represent a return of capital to you which will lower your tax basis in your shares and reduce the amount of funds we have for investment in targeted assets.

We may not be able to pay you distributions, and our distributions may not grow over time;

• Price declines in the large corporate leveraged loan market may adversely affect the fair value of debt securities we hold, reducing our net asset value (“NAV”) through increased net unrealized depreciation;

• Our ability to achieve our investment objective depends on our Adviser’s and its affiliates’ ability to manage and support our investment process.

If our Adviser were to lose any members of its senior management team, our ability to achieve our investment objective could be significantly harmed;

• Because our business model depends to a significant extent upon relationships with investment banks, business brokers, loan syndication and trading desks, and commercial banks, the inability of our Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business;

• A significant portion of our investment portfolio is recorded at fair value as determined in good faith by our board of directors (the “Board of Directors”) and, as a result, there is and will be uncertainty as to the value of our portfolio investments;

• Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse;

• We are subject to risks related to corporate social responsibility;

• Efforts to comply with the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with the Sarbanes-Oxley Act may adversely affect us;

• Terrorist attacks, acts of war, natural disasters, disease outbreaks or pandemics may impact our portfolio companies and harm our business, operating results and financial condition;

• We are highly dependent on information systems and systems failures or interruption could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock (the “Common Stock”) and our ability to pay dividends and other distributions;

• Our business could suffer in the event our Adviser or any other party that provides us with services essential to our operations experiences system failures or cyber-incidents or a deficiency in cybersecurity;

• To the extent that our Adviser serves as a “joint bookrunner” in connection with the underwriting of a loan or other security to be acquired, it may be subject to underwriter liability under the federal securities laws.

This liability can be managed principally through the exercise of due diligence regarding any such offering.

In addition, if it acts as joint bookrunner for a loan or other securities offering and is not successful in syndicating the loan or offering, our Adviser may acquire a larger amount of the subject securities than it had planned, and it may be required to hold such loan or security for a longer period than it had anticipated;

• We could potentially be involved in litigation arising out of our operations in the normal course of business;

• The time and resources that individuals and the executive officers of our Adviser devote to us may be diverted, and we may face additional competition due to the fact that neither our Adviser, nor its affiliates, is prohibited from raising money for or managing another entity that makes the same types of investments that we target;

• There are significant potential conflicts of interest that could impact our investment returns;

• Our fee structure may induce our Adviser to make speculative investments or incur debt;

• In selecting and structuring investments appropriate for us, our Adviser will consider our investment and tax objectives and those of our stockholders as a whole, not the investment, tax or other objectives of any stockholder individually;

• Our Adviser can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business, and results of operations;

• Our failure to invest a sufficient portion of our assets in qualifying assets could result in our failure to maintain our status as a business development company (“BDC”);

• Regulations governing our operation as a BDC and regulated investment company (“RIC”) will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth;

• We are uncertain of our sources for funding our future capital needs;

if we cannot obtain debt or equity financing on acceptable terms, our ability to acquire investments and to expand our operations will be adversely affected;

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

• There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims;

• Second priority liens on collateral securing our loans may be subject to control by senior creditors with first priority liens.

If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us;

• We generally will not control our portfolio companies;

• The effect of global climate change may impact the operations of our portfolio companies;

• The lack of liquidity in our investments may adversely affect our business;

• Because we borrow money, the potential for gain or loss on amounts invested in us will be magnified and may increase the risk of investing in us;

• Your interest in us will be diluted if we issue additional shares, which could reduce the overall value of your investment;

• Our shares will not be listed on an exchange or quoted through a quotation system for the foreseeable future, if ever.

Therefore, you will have limited liquidity and may not receive a full return of your invested capital if you sell your shares;

• We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income;

• You may have current tax liability on distributions you elect to reinvest in our Common Stock but would not receive cash from such distributions to pay such tax liability.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our business, financial condition and/or operating results.

For a more detailed discussion of the risks that you should consider prior to investing in our securities, see the section below entitled “Risk Factors.”

federal income tax purposes, and to qualify annually thereafter, as a RIC.

We were formed as a Delaware limited liability company on January 29, 2020 with the name Franklin BSP Capital L.L.C.

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Our Adviser oversees the management of our activities and is responsible for making investment decisions with respect to our portfolio.

On December 18, 2020, we initiated our initial closing (“Initial Closing”) of capital commitments to purchase shares of our common stock, par value $0.001 per share (the “Common Stock”), in a private placement in reliance on exemptions from the registration requirements of the Securities Act of 1933 (“Securities Act”) pursuant to subscription agreements with investors.

On December 22, 2020, the Company delivered a drawdown notice to investors relating to the sale of 1,333,333 shares of Common Stock for an aggregate offering price of $20.0 million.

The shares of Common Stock were issued on January 7, 2021.

On February 25, 2021, the Company delivered an additional drawdown notice to investors relating to the sale of 1,333,333 shares of Common Stock for an aggregate offering price of $20.0 million.

The shares of Common Stock were issued on March 11, 2021.

On December 18, 2020, we initiated our initial closing (“Initial Closing”) of capital commitments (the “Capital Commitments”) to purchase shares of our Common Stock, par value $0.001 per share, in a private placement in reliance on exemptions from the registration requirements of the Securities Act of 1933 (“Securities Act”) pursuant to subscription agreements (“Subscription Agreement”) with investors.

Since our Initial Closing, we held additional closings and received additional Capital Commitments to purchase Common Stock.

As of December 31, 2021, total Capital Commitments of Common Stock were approximately $573.8 million.

On August 25, 2021, we filed the Certificate of Designation for the series A preferred stock (the “Series A Preferred Stock”).

On the same day, we entered into subscription agreements (collectively the “Preferred Subscription Agreements”) with certain investors (the “Investors,” and each, an “Investor”), pursuant to which Investors made new capital commitments to purchase shares of our Series A Preferred Stock.

As of December 31, 2021, total capital commitments of Series A Preferred Stock were $27.5 million.

Our investment objective is to generate both current income and capital appreciation through debt and equity investments.

We intend to invest primarily in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S.

We invest primarily in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S.

middle market companies.

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The Adviser is a subsidiary of BSP and is also registered as an investment adviser under the Advisers Act.

BSP is a leading credit-focused alternative asset management firm with $30 billion in assets under management as of January 31, 2021.

BSP is a leading credit-focused alternative asset management firm with over $38 billion in assets under management as of January 31, 2022.

Established in 2008, the BSP platform manages funds for institutions and high-net-worth investors across various credit funds and complementary strategies, including private/opportunistic debt, structured credit, high yield, special situations, and commercial real estate debt.

These strategies complement each other as they all leverage the sourcing, analytical, compliance, and operational capabilities that encompass BSP’s robust platform.

Our Adviser’s investment committee consists of Thomas Gahan, Chief Executive Officer of BSP, Michael Paasche, Senior Managing Director of BSP, Blair D.

Faulstich, Senior Portfolio Manager for Private Debt of BSP, and Saahil Mahajan, Managing Director of BSP, each with substantial experience in originating, underwriting and structuring credit investments.

Franklin Resources, Inc.

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Through its specialist investment managers, the company brings extensive capabilities in equity, fixed income, alternatives and custom multi-asset solutions.

With offices in over 30 countries and 1,300 investment professionals, the company has more than 70 years of investment experience and over $1.4 trillion in assets under management as of December 31, 2020.

Our Adviser’s investment committee consists of Thomas Gahan, Chief Executive Officer of BSP, Michael Paasche, Senior Managing Director of BSP, and Blair D.

Faulstich, Senior Portfolio Manager for Private Debt at BSP, each with over 20 years of experience in the financial services industry and substantial experience in originating, underwriting and structuring credit investments.

With offices in over 30 countries and 1,300 investment professionals, the company has more than 70 years of investment experience and approximately $1.6 trillion in assets under management as of December 31, 2021.

Investment Strategy

Our investment objective is to generate both current income and capital appreciation through debt and equity investments.

We intend to invest primarily in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S.

We invest primarily in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S.

middle market companies.

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• optimization of investment level risk/return profile;

• maintaining downside protection through risk management and diversification;

1 Assets under management represent combined assets of Franklin Templeton Investments, Legg Mason, and subsidiary investment management groups.

Franklin Templeton Investments acquired Legg Mason on July 31, 2020.

• maintaining downside protection through risk management and diversification;

• ability to take advantage of opportunities Benefit Street Partners believes are mispriced.

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This imbalance is driven by substantial long-term changes in the debt capital markets following the credit crisis.

Benefit Street Partners believes that the Company’s target market segment represents a large opportunity set for the Company, given Benefit Street Partners’ $30 billion in assets under management, of which $13 billion is in private debt as of January 31, 2021, which it believes can offer greater efficiencies with respect to research and origination, deep credit markets experience, and access to proprietary sourcing networks.

Benefit Street Partners believes that the Company’s target market segment represents a large opportunity set for the Company, given Benefit Street Partners’ over $38 billion in assets under management, of which $13 billion is in private debt as of January 31, 2022, which it believes can offer greater efficiencies with respect to research and origination, deep credit markets experience, and access to proprietary sourcing networks.

Our current opportunity is highlighted by the following factors:

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The current investment committee for the Adviser is composed of Messrs.

Gahan, Paasche and Faulstich.

Gahan, Paasche, Faulstich and Mahajan.

The investment committee member will then either decline the opportunity or approve that the proposed investment proceed to full due diligence.

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In addition to considering the proposed investment on its standalone merits, the investment committee considers the overall fit of the proposed investment within the portfolio.

At least two of the three members of the investment committee must approve the transaction in order for the investment to go in the portfolio.

At least three of the four members of the investment committee must approve the transaction in order for the investment to go in the portfolio.

Investment and Monitoring.

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Our Adviser’s internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments.

The weighted average risk rating of our investments based on fair value was 2.00 as of December 31, 2021.

As of December 31, 2021, we did not have any portfolio companies on non-accrual status.

We commenced our investment operations on January 7, 2021;

therefore, had no investment activity for the year ended December 31, 2020.

The following table shows the distribution of our investments on the 1 to 5 internal performance rating scale at fair value as of December 31, 2021 (dollars in thousands):

December 31, 2021

Internal Performance Rating Investments at Fair Value Percentage of Total Investments

2 485,488 93.9 %

Not Rated (1)

Total $ 517,300 100.0 %

(1) Includes equity investment(s).

The Company’s core strategy is to source and structure debt investments that will deliver strong returns when held to maturity or refinanced prior to maturity.

However, we will consider, on a selective and opportunistic basis, exiting an investment earlier if we believe the accessible exit value has exceeded intrinsic value.

Summary of Risk Factors

The following is a summary of the principal risk factors associated with an investment in us:

• We may be obligated to pay our Adviser incentive compensation even if we incur a net loss due to a decline in the value of our portfolio;

• The time and resources that individuals and the executive officers of our Adviser devote to us may be diverted and we may face additional competition due to the fact that neither our Adviser nor its affiliates are prohibited from raising money for or managing another entity that makes the same types of investments that we target;

• There are significant potential conflicts of interest that could impact our investment returns;

• Our fee structure may induce our Adviser to make speculative investments or incur debt;

• Our Administrator can resign on 60 days’ notice, and we may not be able to find a suitable replacement, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations;

• Our failure to invest a sufficient portion of our assets in qualifying assets could result in our failure to maintain our status as a BDC;

• Regulations governing our operation as a BDC and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth;

• Our ability to enter into transactions with our affiliates is restricted;

• We are uncertain of our sources for funding our future capital needs;

if we cannot obtain debt or equity financing on acceptable terms, our ability to acquire investments and to expand our operations will be adversely affected;

• Our investments may be risky, and we could lose all or part of our investment;

• Our investments will be subject to interest rate risk;

• Our debt investments will be subject to prepayment or refinancing risk;

• Our investments will generally be subject to credit risk;

• The lack of liquidity in our investments may adversely affect our business;

• Because we expect to borrow money, the potential for gain or loss on amounts invested in us will be magnified and may increase the risk of investing in us;

• Changes in interest rates may affect our cost of capital and net investment income;

• Shares of our Common Stock will not be listed on an exchange or quoted through a quotation system for the foreseeable future, if ever.

Therefore, stockholders will have limited liquidity and may not receive a full return of their invested capital if they sell shares of our Common Stock;

• Our stockholders may experience dilution in their ownership percentage, which could reduce the overall value of their investment;

• You may have current tax liability on distributions you elect to reinvest in our common stock but would not receive cash from such distributions to pay such tax liability;

• Global economic, political and market conditions may adversely affect our business, results of operations and financial condition, including our revenue growth and profitability;

• Changes to U.S.

tariff and import/export regulations may affect our portfolio companies, and may negatively impact our business, results of operations or financial condition;

• Events beyond our control, including public health crises, could adversely impact our portfolio companies and our results of our 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;

• Uncertainty with respect to the financial stability of the United States and several countries in the European Union (“EU”) could have a significant adverse effect on our business, financial condition and results of operations;

• The discontinuation of LIBOR and the transition to any new reference rates may affect the value of our LIBOR-indexed portfolio investments and may increase the cost of borrowing under our credit facilities, which in each case could affect our results of operations or financial condition;

• The amount of any distributions we pay is uncertain.

Our distributions to our stockholders may exceed our earnings;

• Price declines in the large corporate leveraged loan market may adversely affect the fair value of debt securities we hold, reducing our net asset value through increased net unrealized depreciation;

• Our ability to achieve our investment objective depends on our Adviser’s and its affiliates’ ability to manage and support our investment process.

If our Adviser were to lose any members of its senior management team, our ability to achieve our investment objective could be significantly harmed;

• Because our business model depends, to a significant extent, upon relationships with investment banks, business brokers, loan syndication and trading desks, and commercial banks, the inability of our Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business;

• We may face increasing competition for investment opportunities, which could delay deployment of our capital, reduce returns and result in losses;

• Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of investment strategy and impact our stock price;

• A significant portion of our investment portfolio will be recorded at fair value as determined in good faith by our board of directors and, as a result, there is uncertainty as to the value of our portfolio investments;

• Our board of directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse;

• New or modified laws or regulations governing our operations may adversely affect our business;

• We are subject to risks related to corporate social responsibility;

• Efforts to comply with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) will involve significant expenditures, and non-compliance with the Sarbanes-Oxley Act may adversely affect us;

• We may experience fluctuations in our quarterly results;

• Terrorist attacks, acts of war, natural disasters, disease outbreaks or pandemics may impact our portfolio companies and harm our business, operating results and financial condition;

• The capital markets are currently in a period of disruption and economic uncertainty.

Such market conditions have adversely affected debt and equity capital markets, which have had, and may continue to have, a negative impact on our business and operations;

This liability can be managed principally through the exercise of due diligence regarding any such offering.

• We could potentially be involved in litigation arising out of our operations in the normal course of business.

For a more detailed discussion of the risks that you should consider prior to investing in our securities, see the section below entitled “Risk Factors.”

Potential Conflicts of Interest;

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Investment Advisory Agreement

We entered into an investment advisory agreement (the “Investment Advisory Agreement”), dated September 23, 2020, with our Adviser in which the Adviser, subject to the overall supervision of the Company’s board of directors (the “Board of Directors”), manages the day-to-day operations of, and provides investment advisory services to us.

We entered into an investment advisory agreement (the “Investment Advisory Agreement”), dated September 23, 2020, with our Adviser in which the Adviser, subject to the overall supervision of the Company’s Board of Directors, manages the day-to-day operations of, and provides investment advisory services to us.

The Adviser and its affiliates also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours.

The Adviser and its affiliates serve as investment adviser or sub-adviser to private funds and registered open-end funds, and serves as an investment adviser to a public real estate investment trust.

The Adviser and its affiliates serve as investment adviser or sub-adviser to private funds, registered open-end funds, a BDC and a public real estate investment trust.

In addition, any affiliated fund currently formed or formed in the future and managed by the Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us.

However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Adviser or its affiliates.

As of December 31, 2020, no management fee or incentive fees were accrued or paid to the Adviser.

Management Fee

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The second part of the incentive fee, referred to as the “incentive fee on capital gains during operations,” is an incentive fee on capital gains earned on cumulative realized capital gains of the Company net of cumulative realized capital losses and unrealized capital depreciation and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, if earlier).

Prior to a Liquidity Event, this fee equals 15% of the Company’s incentive fee capital gains, which equals realized capital gains of the Company on a cumulative basis from the date of the Company’s election to be regulated as a business development company, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fee on capital gains during operations.

Following a Liquidity Event, the incentive fee on capital gains during operations equals 17.5% of the Company’s incentive fee capital gains calculated as described above, on a cumulative basis from the date of the Company’s election to be regulated as a business development company.

Prior to a Liquidity Event, this fee equals 15% of the Company’s incentive fee capital gains, which equals realized capital gains of the Company on a cumulative basis from the date of the Company’s election to be regulated as a BDC, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fee on capital gains during operations.

Duration and termination

The Adviser serves as our investment adviser pursuant to the Investment Advisory Agreement, which was approved by our Board of Directors on March 11, 2020.

Unless terminated earlier, it will remain in effect until September 2022 and then continue in effect from year to year if approved annually by our Board of Directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not interested persons.

The Adviser serves as our investment adviser pursuant to the Investment Advisory Agreement, which was initially approved by our Board of Directors in March 2020.

The Board renewed the Investment Advisory Agreement on January 31, 2022.

Unless terminated earlier, it will remain in effect until February 2023 and shall continue in effect from year to year if approved annually by our Board of Directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not interested persons.

The Investment Advisory Agreement will automatically terminate in the event of its assignment.

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Any termination by us must be authorized either by our Board of Directors or by vote of our stockholders.

Indemnification

The Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties and obligations, the Adviser and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons, and any other person or entity affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of the Adviser’s services under the Investment Advisory Agreement or otherwise as our investment adviser.

Board Approval of Investment Advisory Agreement

In determining to approve the Investment Advisory Agreement, our Board of Directors requested information from the Adviser that enabled it to evaluate a number of factors relevant to its determination.

These factors included the nature, extent and quality of services provided to us by the Adviser, the costs of providing services to us, the profitability of the relationship between us and the Adviser, comparative information on fees and expenses borne by other comparable BDCs or registered investment companies and, as applicable, other advised accounts, and the extent to which economies of scale would be realized as we grow and whether fee levels reflect these economies of scale for the benefit of our investors.

Based on the information reviewed and the considerations detailed above, our Board of Directors, including all of our directors who are not interested persons of us or the Adviser, concluded that the investment advisory fee rates and terms are fair and reasonable in relation to the services provided and approved the Investment Advisory Agreement as being in the best interests of our stockholders.

Administration Agreement

Based on the information reviewed and the considerations detailed above, our Board of Directors, including all of our directors who are not interest persons of us or the Adviser, concluded that the investment advisory fee rates and terms are fair and reasonable in relation to the services provided and approved the Investment Advisory Agreement as being in the best interests of our stockholders.

Indemnification

Administration Agreements

We entered into an administration agreement with Benefit Street Partners, dated as of September 23, 2020 (the “Administration Agreement”), in which Benefit Street Partners (in such capacity, the "Administrator") provided us with office facilities and certain administrative services.

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Our Board of Directors will also review the methodology employed in determining how costs and expenses are allocated to the Company and the proposed allocation of administrative expenses among the Company and affiliates of the Administrator.

On January 5, 2020, we entered into a fund administration servicing agreement and a fund accounting servicing agreement with U.S.

Bancorp Fund Services, LLC (the “USB Administrator”).

USB Administrator provides the administrative services, such as accounting, financial reporting, legal, and compliance support, and investor relations support, necessary for us to operate.

Co-Investment Relief

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Private Placement

Our initial private placement of shares of Common Stock is expected to be conducted in reliance on Regulation D under the Securities Act (“Regulation D”) or Regulation S under the Securities Act (“Regulation S”).

Investors in our initial private placement will be required to be “accredited investors” as defined in Regulation D of the Securities Act or non-U.S.

Our initial private placement of shares of Common Stock is conducted in reliance on Regulation D under the Securities Act (“Regulation D”) or Regulation S under the Securities Act (“Regulation S”).

Investors in our initial private placement are required to be “accredited investors” as defined in Regulation D of the Securities Act or non-U.S.

persons under Regulation S.

Each investor in the private placement will make a capital commitment (the “Capital Commitments”) to purchase shares of Common Stock pursuant to a subscription agreement (a “Subscription Agreement”).

Investors will be required to make capital contributions to purchase shares of Common Stock (the “Drawdown Purchase Price”) each time we deliver a drawdown notice (the “Drawdown Notice”), which will be delivered at least ten business days prior to the required funding date, in an aggregate amount not to exceed their respective Capital Commitments.

Each investor in the private placement made a Capital Commitment to purchase shares of Common Stock pursuant to the Subscription Agreement.

Investors are required to make capital contributions to purchase shares of Common Stock (the “Drawdown Purchase Price”) each time we deliver a drawdown notice (the “Drawdown Notice”), which will be delivered at least ten business days prior to the required funding date, in an aggregate amount not to exceed their respective Capital Commitments.

All purchases will generally be made pro rata in accordance with the investors’ Capital Commitments, at a per-share price as determined by the Board of Directors in accordance with the limitations under Section 23 of the 1940 Act, provided that the Company retains the right to make non-pro rata capital drawdowns for any reason in the Company’s sole discretion, including, without limitation, if the Company determines that it is necessary or advisable in light of applicable legal, tax, regulatory and other considerations.

As set forth in each Subscription Agreement, in the event that an investor fails to pay all or any portion of a Drawdown Purchase Price pursuant to a Drawdown Notice, and such default remains uncured for a period of thirty days (such investor, a “Defaulting Subscriber”), the Company will be permitted to pursue any remedies against the Defaulting Subscriber available under the Subscription Agreement or at law or at equity, including prohibiting the Defaulting Subscriber from purchasing additional shares of Common Stock or causing the Defaulting Subscriber to forfeit 50% of the Defaulting Subscriber’s shares of Common Stock to the other stockholders.

Closings of our private placement are expected to occur, from time to time, during the 12 month period following the Initial Closing (the “Initial Closing Period”), provided that the Board of Directors may extend the Initial Closing Period in its sole discretion.

Closings of our private placement were expected to occur, from time to time, during the 12 month period following the Initial Closing (the “Initial Closing Period”), provided that the Board of Directors may extend the Initial Closing Period in its sole discretion.

On November 9, 2021, the Board of Directors extended the Initial Closing Period to December 18, 2022.

After the Initial Closing Period, the Company may permit one or more additional closings with the approval of the Board of Directors.

Drawdowns of Capital Commitments will be made at the discretion of the Adviser until the earlier of (i) a Liquidity Event (as defined below) or (ii) the two-year anniversary of the end of the Initial Closing Period, provided that this period may be extended by an additional one-year extension in the discretion of the Board of Directors (the “Drawdown Period”).

Drawdowns of Capital Commitments are made at the discretion of the Adviser until the earlier of (i) a Liquidity Event (as defined below) or (ii) the two-year anniversary of the end of the Initial Closing Period, provided that this period may be extended by an additional one-year extension in the discretion of the Board of Directors (the “Drawdown Period”).

After the end of the Drawdown Period, the Company may draw down Capital Commitments to the extent necessary to:

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Valuation Procedures

The Adviser, acting pursuant to delegated authority from, and under the oversight of our Board of Directors, assists the Board of Directors in its determination of the net asset value (“NAV”) of our investment portfolio each quarter and at such other times as may be required by law.

The Adviser, acting pursuant to delegated authority from, and under the oversight of our Board of Directors, assists the Board of Directors in its determination of the NAV of our investment portfolio each quarter and at such other times as may be required by law.

The NAV per share of our outstanding shares of Common Stock is determined quarterly by dividing the value of total assets minus liabilities by the total number of shares outstanding.

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With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:

• Each portfolio company or investment will be valued by the Adviser, with assistance from one or more independent valuation firms engaged by our Board of Directors or as noted below, with respect to investments in an investment fund;

• Each portfolio company or investment will be valued by the Adviser, with assistance from one or more independent valuation firms engaged by the Company’s Board of Directors;

• The independent valuation firm(s) conduct independent appraisals and make an independent assessment of the value of each investment;

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This establishes requirements for determining fair value in good faith for purposes of the 1940 Act.

We will comply with the new rule’s valuation requirements on or before the SEC’s compliance date in 2022.

We will comply with the new rule’s valuation requirements on or before the SEC’s compliance date in September 2022.

Regulation as a Business Development Company

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The 1940 Act defines “a majority of the outstanding voting securities” as the lesser of (i) 67% or more of the voting securities present at a meeting if the holders of more than 50% of our outstanding voting securities are present or represented by proxy or (ii) 50% of our voting securities.

We are generally not able to issue and sell our Common Stock at a price below net asset value per share.

We are generally not able to issue and sell our Common Stock at a price below NAV per share.

See “Item 1A.

Risk Factors — Risks Related to Business Development Companies — Regulations governing our operation as a BDC and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth.” We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then current net asset value of our common stock if the Board of Directors determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale.

In addition, we may generally issue new shares of our Common Stock at a price below net asset value in rights offerings to existing stockholders, in payment of dividends and in certain other limited circumstances.

Risk Factors — Risks Related to Business Development Companies — Regulations governing our operation as a BDC and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth.” We may, however, sell our Common Stock, or warrants, options or rights to acquire our Common Stock, at a price below the then current NAV of our Common Stock if the Board of Directors determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale.

In addition, we may generally issue new shares of our Common Stock at a price below NAV in rights offerings to existing stockholders, in payment of dividends and in certain other limited circumstances.

We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement.

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We also may collect investors’ personal information from other sources, such as our affiliates 2 or other non-affiliated companies.

2 Our affiliates are companies related to us by common ownership or control and can include both financial and nonfinancial companies.

Non-affiliates are companies not related to us by common ownership or control and can include both financial and nonfinancial companies.

All financial companies need to share customers’ personal information to run their everyday business and we use the personal information we collect from investors for our everyday business purposes or as permitted by law.

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These measures include computer safeguards and secured files and buildings.

2 Our affiliates are companies related to us by common ownership or control and can include both financial and nonfinancial companies.

Non-affiliates are companies not related to us by common ownership or control and can include both financial and nonfinancial companies.

We currently are and expect to remain an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), until the earliest of:

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This summary assumes that investors hold our Common Stock as capital assets (within the meaning of the Code).

The discussion is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as of the date of this prospectus and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion.

The discussion is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as of the date of this filing and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion.

We have not sought and will not seek any ruling from the Internal Revenue Service, or the IRS, regarding this follow-on offering.

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Election to Be Taxed as a RIC

We intend to elect to be treated as a RIC under Subchapter M of the Code.

We have elected to be treated as a RIC under Subchapter M of the Code, commencing with our taxable year ended December 31, 2020 and intend to qualify annually thereafter as a RIC.

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

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federal income tax.

We expect to form consolidated subsidiaries that are consolidated for financial reporting purposes although not for income tax purposes (the “Consolidated Holding Companies”).

We have formed consolidated subsidiaries that are consolidated for financial reporting purposes although not for income tax purposes (the “Consolidated Holding Companies”).

These Consolidated Holding Companies enable us to hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code.

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meet the Annual Distribution Requirement;

or other income derived with respect to our business of investing in such stock, securities or currencies and net income derived from an interest in a “qualified publicly traded partnership” as defined in the Code (the “90% Income Test”);

derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock or other securities or currencies or other income derived with respect to our business of investing in such stock, securities or currencies and net income derived from an interest in a “qualified publicly traded partnership” as defined in the Code (the “90% Income Test”);

and diversify our holdings so that at the end of each quarter of the taxable year:

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We may be required to recognize taxable income in circumstances in which we do not receive a corresponding payment in cash.

For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with payment-in-kind interest or, in certain cases, increasing interest rates or issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year.

For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with PIK interest or, in certain cases, increasing interest rates or issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year.

We may also have to include in income other amounts that we have not yet received in cash, such as deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock.

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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-K

Item 1. Business