What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-15 · 154 added, 113 removed, 724 unchanged (27% of the section changed)

Forward Looking Statements

This report, and other statements that we may make, may contain forward-looking statements with respect to future financial or business performance, strategies, or expectations.

Forward-looking statements are typically identified by words or phrases such as “ trend, ” “ opportunity, ” “ pipeline, ” “ believe, ” “ comfortable, ” “ expect, ” “ anticipate, ” “ current, ” “ intention, ” “ estimate, ” “ position, ” “ assume, ” “ potential, ” “ outlook, ” “ continue, ” “ remain, ” “ maintain, ” “ sustain, ” “ seek, ” “ achieve, ” and similar expressions, or future conditional verbs such as “ will, ” “ would, ” “ should, ” “ could, ” “ may, ” or similar expressions.

Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time.

Forward-looking statements speak only as of the date they are made, and we assume no duty to and do not undertake to update forward-looking statements.

Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to factors previously disclosed in our U.S.

Securities and Exchange Commission (“SEC”) reports and those identified elsewhere in this report, including the “Risk Factors” section, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:

• our future operating results;

• changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including the effect of rising interest rates and a potential global recession;

• the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflicts in the Middle East and Eastern Europe;

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

• the ability of our portfolio companies to achieve their objectives;

• our contractual arrangements and relationships with third parties;

• our expected financings and investments;

• the adequacy of our cash resources and working capital;

• the timing of cash flows, if any, from the operations of our portfolio companies;

• our repurchase of shares;

• actual and potential conflicts of interest with our Adviser (as defined below) and its affiliates;

• the dependence of our future success on the general economy and its effect on the industries in which we invest;

• the ability to qualify and maintain our qualifications as a regulated investment company (“RIC”) and a business development company (“BDC”);

• the timing, form, and amount of any distributions;

• the impact of fluctuations in interest rates on our business;

• the valuation of any investments in portfolio companies, particularly those having no liquid trading market;

• the impact of changes to generally accepted accounting principles;

• the impact of changes to tax legislation and, generally, our tax position;

• the ability of our Adviser to locate suitable investments for us and to monitor and administer our investments;

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

• the ability to realize the anticipated benefits of the Mergers (as defined below);

• the effects of disruption on our business from the Mergers;

• the combined company’s plans, expectations, objectives and intentions as a result of the Mergers.

You should not place undue reliance on these forward-looking statements.

The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made.

We undertake no obligations to update any forward-looking statement to reflect events or circumstances occurring after the date of this Annual Report on Form 10-K.

SUMMARY OF RISK FACTORS

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• 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.

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• 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 (as defined below) and its affiliates’ ability to manage and support our investment process.

• 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;

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• 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;

• Terrorist attacks, acts of war, global or regional conflicts (such as those in the Middle East and Eastern Europe), 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;

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• 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;

• 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;

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

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• 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;

• We may be unable to realize the benefits anticipated by the Mergers (as defined below), including estimated cost savings, or it may take longer than anticipated to achieve such benefits;

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.”

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 BDC and have elected to be treated for U.S.

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

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Risk Factors .”

We may co-invest, subject to the conditions included in the exemptive order received by affiliates of our Adviser from the U.S.

Securities and Exchange Commission (the “SEC”), with certain of our affiliates.

We may co-invest, subject to the conditions included in the exemptive order received by affiliates of our Adviser from the SEC, with certain of our affiliates.

Business — “Potential Conflicts of Interests;

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As a result, we are subject to the reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act, which permit a BDC to double the maximum amount of leverage that it is permitted to incur by reducing the asset coverage requirements applicable to such BDC from 200% to 150%.

As of December 31, 2023, our asset coverage calculated in accordance with the 1940 Act was 197%.

On January 24, 2024, we consummated the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”) with Franklin BSP Lending Corporation, a Maryland corporation (“FBLC”), Franklin BSP Merger Sub, Inc., a Maryland corporation and our direct wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, the Adviser.

In connection therewith, Merger Sub merged with and into FBLC (the “Merger”), with FBLC continuing as the surviving company and as our wholly-owned subsidiary, followed by FBLC merging with and into us (together with the Merger, the “Mergers”), and with us continuing as the surviving company.

See “ Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations—Mergers ” for further information regarding the Mergers.

About Our Adviser, BSP, and Franklin Templeton

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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.

Our Adviser’s investment committee consists of Thomas Gahan, Chairman and Chief Investment Officer of BSP, Blair D.

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

Franklin Resources, Inc.

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Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions.

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 75 years of investment experience and approximately $1.5 trillion in assets under management as of January 31, 2023.

Through its specialist investment managers, the company offers specialization on a global scale, bringing extensive capabilities in fixed income, equity, alternatives, and multi-asset solutions.

With more than 1,300 investment professionals, and offices in major financial markets around the world, the California-based company has more than 75 years of investment experience and approximately $1.6 trillion in assets under management as of January 31, 2024.

Investment Strategy

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Mezzanine debt is subordinated to senior loans and is generally unsecured.

1 Assets under management represent all credit funds and separately managed accounts managed and administered by Benefit Street Partners or Alcentra.

Benefit Street Partners acquired Alcentra on November 1, 2022.

In seeking this objective, we intend to target a differentiated investment strategy comprised of six key components:

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• maintaining downside protection through risk management and diversification;

1 Assets under management represent all credit funds and separately managed accounts managed and administered by Benefit Street Partners or Alcentra.

Benefit Street Partners acquired Alcentra on November 1, 2022.

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

Sourcing of primarily private debt opportunities.

At the heart of implementing the Company’s investment strategy is the Adviser’s approach to sourcing attractive private debt opportunities by capitalizing on Benefit Street Partners’ extensive relationships and insights.

At the heart of implementing our investment strategy is the Adviser’s approach to sourcing attractive private debt opportunities by capitalizing on Benefit Street Partners’ extensive relationships and insights.

This differentiated transaction-sourcing framework comprises hundreds of close, long-standing personal relationships that have been forged over the course of several decades and hundreds of transactions.

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Having said that, deals without private equity backing tend to be more sporadic in nature than sponsor deals.

As such, the Company also expects to invest in private equity-backed loans with a focus on targeting non-competitive transactions.

As such, we also expect to invest in private equity-backed loans with a focus on targeting non-competitive transactions.

Ultimately, BSP evaluates the risk-reward profile of every investment on a case-by-case basis, and its primary aim is to participate in transactions where BSP has influence over terms, covenants and governance of these investments.

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Additionally, even though our investments are made from the bottom up, we aim to produce a broad portfolio of assets, which together are reflective of the types of risk we think are appropriate in any given environment.

The Adviser intends to target investments for the Company where attractive returns and upside potential is accompanied by solid, reliable and measurable downside protection.

In addition to downside protection that comes from the contractual nature of returns inherent in all debt structures, the Adviser plans to employ a wide range of investment-specific mechanisms to provide further downside protection in many of the Company’s investments, such as influencing financial covenants, reporting obligations or other specific terms of an investment.

The Adviser intends to target investments for us where attractive returns and upside potential is accompanied by solid, reliable and measurable downside protection.

In addition to downside protection that comes from the contractual nature of returns inherent in all debt structures, the Adviser plans to employ a wide range of investment-specific mechanisms to provide further downside protection in many of our investments, such as influencing financial covenants, reporting obligations or other specific terms of an investment.

Fund-level downside protection via risk management and broad based investment strategy.

Transcending all components of the Company’s investment strategy is the overarching goal of downside protection at the fund-level through experienced portfolio management.

Transcending all components of our investment strategy is the overarching goal of downside protection at the fund-level through experienced portfolio management.

Our Adviser seeks to accomplish this objective through disciplined application of risk management best practices across the portfolio combined with a broad based investment approach at the fund-level, and diversification across several discrete dimensions.

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Investment Restrictions .

The Company will not make any investment, directly or indirectly, in coal-related companies, oil or gas reserves or invest in portfolio companies primarily engaged in directly investing in the exploration for, or the production of, coal, oil and gas reserves.

We will not make any investment, directly or indirectly, in coal-related companies, oil or gas reserves or invest in portfolio companies primarily engaged in directly investing in the exploration for, or the production of, coal, oil and gas reserves.

Market Opportunity

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In our view, middle market companies provide attractive current yields and significant downside protection.

The Company also aims to target investments presented by the large, persistent and compelling market opportunity that has been created by a structural supply/demand imbalance for private credit, predominantly in North America.

We also aim to target investments presented by the large, persistent and compelling market opportunity that has been created by a structural supply/demand imbalance for private credit, predominantly in North America.

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’ approximately $77 1 billion in assets under management 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 our target market segment represents a large opportunity set for us, given Benefit Street Partners’ approximately $75 1 billion in assets under management 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:

Large, persistent and compelling market opportunity .

The fundamental premise underpinning the Company’s investment thesis is that there is a compelling near- and medium-term opportunity to provide capital to middle market companies on attractive terms.

The fundamental premise underpinning our investment thesis is that there is a compelling near- and medium-term opportunity to provide capital to middle market companies on attractive terms.

This opportunity is a function of the size and growth rate of the middle market segment of the U.S.

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Investment Process

The investment process utilized by the Adviser for the Company’s investments consists of several distinct phases as summarized below:

The investment process utilized by the Adviser for our investments consists of several distinct phases as summarized below:

The BSP credit team’s investment process typically begins with sourcing private debt opportunities through our extensive proprietary networks and other relationships (see “Item 1.

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

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.

Gahan, Faulstich, Mahajan, Jang, and Leong.

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

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

At least three of the five 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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The weighted average risk rating of our investments based on fair value was 2.3 and 2.1 as of December 31, 2023 and 2022, respectively.

As of December 31, 2022 and 2021, the company had no portfolio companies on non-accrual status, respectively.

As of December 31, 2023 and 2022, we had no portfolio companies on non-accrual status, respectively.

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, 2023 and 2022 (dollars in thousands):

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3 188,154 24.9 86,536 11.1

4 32,842 4.3 — —

5 2,769 0.4 — —

Not Rated (1)

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(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.

Our 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.

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The Adviser and its affiliates engage in a broad range of activities, including investment activities for their own account and for the account of other investment funds or accounts.

In the ordinary course of conducting its activities, the interests of the Company may conflict with the interests of the Adviser, or other funds advised by the Adviser or its affiliates and there is no guarantee that such conflicts will ultimately be resolved in favor of the Company.

In the ordinary course of conducting our activities, our interests may conflict with the interests of the Adviser, or other funds advised by the Adviser or its affiliates and there is no guarantee that such conflicts will ultimately be resolved in our favor.

A description of certain of these potential conflicts of interest is provided below.

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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, 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 our 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.

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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.

The Board of Directors renewed the Investment Advisory Agreement on January 30, 2023.

On October 2, 2023, our Board of Directors approved an amendment and restatement (the “Amended and Restated Investment Advisory Agreement”) of the Investment Advisory Agreement, which went into effect on January 24, 2024 in connection with the consummation of the Mergers.

Except as described below, none of the other material terms changed in the Amended and Restated Investment Advisory Agreement as compared to the Investment Advisory Agreement, including the services to be provided.

Management Fee

The Management Fee is payable quarterly in arrears and is calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters, where gross assets includes the total assets of the Company, including any borrowings for investment purposes.

Prior to a liquidity event, the Management Fee payable under the Investment Advisory Agreement will be calculated at an annual rate of 0.5% of the Company’s average gross assets.

We pay the Adviser a base management fee (the “Management Fee”), which is payable quarterly in arrears and is calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters, where gross assets includes our total assets, including any borrowings for investment purposes.

Prior to a liquidity event, the Management Fee payable under the Investment Advisory Agreement was calculated at an annual rate of 0.5% of our average gross assets.

A “liquidity event” is defined as any of:

(1) a merger or another transaction approved by the Board of Directors in which the Company’s stockholders will receive cash or shares of a publicly traded company (or a company that becomes publicly traded concurrently with the closing of such transaction), which may include an entity advised by the Adviser or its affiliates, (2) an initial public offering (“IPO”) or a listing (an “Exchange Listing”) of the Common Stock on a national securities exchange, or (3) the sale of all or substantially all of the Company’s assets either on a complete portfolio basis or individually followed by a liquidation.

After a liquidity event, the Management Fee payable under the Investment Advisory Agreement will be calculated at an annual rate of 1.50% of the Company’s average gross assets, provided, that the Management Fee will be calculated at an annual rate of 1.00% of the Company’s average gross assets purchased with borrowed funds above 1.0x debt-to-equity (equivalent to $1 of debt outstanding for each $1 of equity), and provided further that for a period of 15 months commencing on the date of the closing of a liquidity event, the Adviser will irrevocably waive Management Fees in excess of 0.5% of the Company’s average gross assets.

Any fees waived under the Investment Advisory Agreement are not subject to reimbursement to the Adviser.

(1) a merger or another transaction approved by our Board of Directors in which our stockholders will receive cash or shares of a publicly traded company (or a company that becomes publicly traded concurrently with the closing of such transaction), which may include an entity advised by the Adviser or its affiliates, (2) an initial public offering (“IPO”) or a listing (an “Exchange Listing”) of the Common Stock on a national securities exchange, or (3) the sale of all or substantially all of our assets either on a complete portfolio basis or individually followed by a liquidation.

After a liquidity event, the Management Fee payable under the Investment Advisory Agreement would have been calculated at an annual rate of 1.50% of our average gross assets, provided, that the Management Fee will be calculated at an annual rate of 1.00% of our average gross assets purchased with borrowed funds above 1.0x debt-to-equity (equivalent to $1 of debt outstanding for each $1 of equity), and provided further that for a period of 15 months commencing on the date of the closing of a liquidity event, the Adviser would have irrevocably waived Management Fees in excess of 0.5% of our average gross assets.

Any fees waived under the Investment Advisory Agreement would not have been subject to reimbursement to the Adviser.

Under the Amended and Restated Investment Advisory Agreement, effective upon the closing of the Mergers on January 24, 2024, (i) the Management Fee increased to an annual rate of 1.50% of our average gross assets, provided, that the Management Fee will be calculated at an annual rate of 1.00% of our average gross assets purchased with borrowed funds above 1.0x debt-to-equity (equivalent to $1.0 of debt outstanding for each $1.0 of equity).

The Management Fees payable under the Amended and Restated Investment Advisory Agreement are calculated in the same manner as the post-liquidity event calculation under the Investment Advisory Agreement.

Incentive Fee

The Company will also pay the Adviser an Incentive Fee consisting of two parts, which are described below.

Notwithstanding anything herein to the contrary, the Adviser will waive all Incentive Fees for the first twelve calendar quarters of operations of the Company.

The incentive fee consists of two parts.

The first part is referred to as the “incentive fee on income” and it is calculated and payable quarterly in arrears based on the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter.

“Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the Management Fee, expenses payable under the Administration Agreement (as defined below) and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments with payment-in-kind (“PIK”) interest and zero coupon securities), accrued income that the Company has not yet received in cash.

We will also pay the Adviser an incentive fee consisting of two parts (together, the “Incentive Fee”), each of which is described below.

The first part is referred to as the “incentive fee on income” and it is calculated and payable quarterly in arrears based on our “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter.

“Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the Management Fee, expenses payable under the Administration Agreement (as defined below) and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

For purposes of computing the Company’s Pre-Incentive Fee Net Investment Income, the calculation methodology will look through total return swaps as if the Company owned the referenced assets directly.

For periods ending on or prior to the date of the closing of a liquidity event, the incentive fee on income with respect to the Company’s Pre-Incentive Fee Net Investment Income will be calculated as follows:

• No incentive fee on income in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the preferred return rate of 1.50%, or 6.00% annualized (the “Preferred Return”), on net assets;

For purposes of computing our Pre-Incentive Fee Net Investment Income, the calculation methodology will look through total return swaps as if we owned the referenced assets directly.

Under the Investment Advisory Agreement, for periods ending on or prior to the date of the closing of a liquidity event, the incentive fee on income with respect to our Pre-Incentive Fee Net Investment Income was calculated as follows:

• No incentive fee on income in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the preferred return rate of 1.50%, or 6.00% annualized (the “Preferred Return”), on net assets;

• 100% of Pre-Incentive Fee Net Investment Income, if any, that exceeds the Preferred Return but is less than or equal to 1.765% in any calendar quarter (7.06% annualized).

This portion of the incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 15% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches 1.765% (7.06% annualized) in any calendar quarter;

• For any quarter in which Pre-Incentive Fee Net Investment Income exceeds 1.765% (7.06% annualized), the incentive fee on income equals 15% of the amount of Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved.

For any period ending after the closing of a liquidity event, the incentive fee on income for each quarter will be calculated as follows:

• No incentive fee on income in any calendar quarter in which Pre-Incentive Fee Net Investment Income does not exceed the Preferred Return of 1.50%, or 6.00% annualized, on net assets;

• 100% of Pre-Incentive Fee Net Investment Income, if any, that exceeds the Preferred Return but is less than or equal to 1.8175% in any calendar quarter (7.27% annualized), which portion of the incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 17.5% on all of Pre-Incentive Fee Net Investment Income when Pre-Incentive Fee Net Investment Income reaches 1.8175% (7.27% annualized) in any calendar quarter;

This portion of the incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 15% on all of our Pre-Incentive Fee Net Investment Income when our Pre-Incentive Fee Net Investment Income reaches 1.765% (7.06% annualized) in any calendar quarter;

Notwithstanding the foregoing, for a period of 15 months commencing on the date of the closing of a liquidity event, the Adviser will irrevocably waive any incentive fee on income otherwise payable in excess of any amounts calculated at the pre-IPO or pre-Exchange Listing rates.

Any fees waived under the Investment Advisory Agreement are not subject to reimbursement to the Adviser.

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 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.

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 BDC.

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 our cumulative realized capital gains 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).

Under the Investment Advisory Agreement, prior to a liquidity event this fee equaled 15% of our incentive fee capital gains, which equaled our realized capital gains on a cumulative basis from the date of our 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.

Under the Amended and Restated Investment Advisory Agreement, effective upon the closing of the Mergers on January 24, 2024, (i) the incentive fee on income increased to a catch-up of 1.8175% (7.27% annualized), 17.5% of the amount of our pre-incentive fee net investment income, if any, that exceeds the catch-up, with the preferred return to investors each quarter remaining the same as under the Investment Advisory Agreement, and (ii) the incentive fee on capital gains increased to 17.5% of our incentive fee capital gains calculated as under the Investment Advisory Agreement for periods ending after the date of the Amended and Restated Advisory Agreement, on a cumulative basis from the date of our election to be regulated as a BDC.

The incentive fees payable under the Amended and Restated Investment Advisory Agreement are calculated in the same manner as the post-liquidity event calculation under the Investment Advisory Agreement.

Duration and termination

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 most recently approved the Investment Advisory Agreement in January 2023, and unless terminated earlier, it will remain 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.

The Investment Advisory Agreement may be terminated by us without penalty upon not less than 60 days’ written notice and by the Adviser upon not less than 60 days' written notice.

The Adviser serves as our investment adviser pursuant to the Amended and Restated Investment Advisory Agreement, which was approved by our Board of Directors in October 2023.

Unless terminated earlier, it will remain 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 Amended and Restated Investment Advisory Agreement will automatically terminate in the event of its assignment.

The Amended and Restated Investment Advisory Agreement may be terminated by us without penalty upon not less than 60 days’ written notice and by the Adviser upon not less than 60 days' written notice.

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

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.

In determining to approve the Amended and Restated 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.

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 Amended and Restated Investment Advisory Agreement as being in the best interests 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.

The Amended and Restated 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 Amended and Restated Investment Advisory Agreement or otherwise as our investment adviser.

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.

Pursuant to the Administration Agreement with our Administrator, the Administrator will provide the Company with office facilities and certain administrative services necessary for the Company to conduct its business.

The Company will reimburse the Administrator for expenses incurred in administering the Company’s business, including the Company’s allocable portion of overhead and certain other expenses incurred by the Administrator in performing its obligations under the Administration Agreement.

Our Board of Directors, including a majority of the independent directors, will review the reimbursement of costs and expenses to the Administrator to determine if the provisions of the Administration Agreement are carried out satisfactorily and to determine whether the reimbursement of costs and expenses under the Administration Agreement are reasonable and appropriate.

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.

Pursuant to the Administration Agreement with our Administrator, the Administrator will provide us with office facilities and certain administrative services necessary for us to conduct our business.

We will reimburse BSP quarterly for all administrative costs and expenses incurred by the Adviser in performing its obligations and providing personnel and facilities under the Administration Agreement and annually for overhead expenses incurred in the course of performing its obligations under the Administration Agreement, including rent, travel, and the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs, including operations and tax professionals, and administrative staff providing support services in respect of us.

Our Board of Directors, including a majority of the independent directors, will review the reimbursement of costs and expenses to our Administrator to determine if the provisions of the Administration Agreement are carried out satisfactorily and to determine whether the reimbursement of costs and expenses under the Administration Agreement are reasonable and appropriate.

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

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

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The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC.

The SEC staff has granted the Company exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with its investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”).

Pursuant to the Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of its eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Company and the Company's stockholders and do not involve overreaching in respect of the Company or the Company's stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies.

The SEC staff has granted us exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with its investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”).

Pursuant to the Order, we are permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of its eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

Private Placement

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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 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.

On December 16, 2022, the Board of Directors extended the Initial Closing Period to December 18, 2023.

Drawdowns of Capital Commitments are made at the discretion of the Adviser until the earlier of (i) a liquidity event 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:

(a) pay Company expenses, including any amounts that may become due under any borrowings or other financings or similar obligations, any indemnity obligations or other liabilities and including expenses under the Administration Agreement or Investment Advisory Agreement, and/or (b) complete portfolio investments with respect to which commitments have been made or for which the Company has entered into a letter of intent, memorandum of understanding, written bid letter, written agreement in principle or other binding written agreement as of the end of the Drawdown Period and/or prior to the start of any suspension of the Drawdown Period (including investments that are funded in phases).

All purchases will generally be made pro rata in accordance with the investors’ Capital Commitments, at a per-share price as determined by our Board of Directors in accordance with the limitations under Section 23 of the 1940 Act, provided that we retain the right to make non-pro rata capital drawdowns for any reason in our sole discretion, including, without limitation, if we determine 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”), we 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 were expected to occur, from time to time, during the 12 month period following the Initial Closing (the “Initial Closing Period”), provided that our Board of Directors may extend the Initial Closing Period in its sole discretion.

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

On December 16, 2022, our Board of Directors extended the Initial Closing Period to December 18, 2023.

Drawdowns of Capital Commitments are made at the discretion of the Adviser until the earlier of (i) a liquidity event 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 our Board of Directors (the “Drawdown Period”).

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

(a) pay our expenses, including any amounts that may become due under any borrowings or other financings or similar obligations, any indemnity obligations or other liabilities and including expenses under the Administration Agreement or Investment Advisory Agreement, and/or (b) complete portfolio investments with respect to which commitments have been made or for which we have entered into a letter of intent, memorandum of understanding, written bid letter, written agreement in principle or other binding written agreement as of the end of the Drawdown Period and/or prior to the start of any suspension of the Drawdown Period (including investments that are funded in phases).

We define a “liquidity event” as any of:

(1) a merger or another transaction approved by our Board of Directors in which our stockholders will receive cash or shares of a publicly traded company (or a company that becomes publicly traded concurrently with the closing of such transaction), which may include an entity advised by the Adviser or its affiliates, (2) an IPO or an Exchange Listing of the Common Stock on a national securities exchange, or (3) the sale of all or substantially all of our assets either on a complete portfolio basis or individually followed by a liquidation.

There can be no assurance of when or if a liquidity event will occur.

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

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

• Each portfolio company or investment will be valued by our Valuation Designee, with assistance from one or more independent valuation firms engaged by our Board of Directors;

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

• Our Valuation Designee, under the supervision of the Board of Directors, determines the fair value of each investment, in good faith, based on the input of the Adviser and independent valuation firm (to the extent applicable) and our Valuation Designee’s own analysis.

Our Valuation Designee also has established a Valuation Committee to assist our Valuation Designee in carrying out its designated responsibilities, subject to oversight of the Board of Directors.

• Our Valuation Designee, under the supervision of our Board of Directors, determines the fair value of each investment, in good faith, based on the input of the Adviser and independent valuation firm (to the extent applicable) and our Valuation Designee’s own analysis.

Our Valuation Designee also has established a valuation committee (the “Valuation Committee”) to assist our Valuation Designee in carrying out its designated responsibilities, subject to oversight of our Board of Directors.

Determination of fair values involves subjective judgments and estimates.

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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 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.

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 our 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.

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We and our Adviser have adopted and implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws, and our Board of Directors is required to review these compliance policies and procedures annually to assess their adequacy and the effectiveness of their implementation.

We have designated Guy F.

Talarico as our chief compliance officer.

We have designated George Talarico as our Chief Compliance Officer.

Proxy Voting Policies and Procedures

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You may obtain information, without charge, regarding how we voted proxies with respect to our portfolio securities by making a written request for proxy voting information to:

Chief Financial Officer, 9 West 57th Street, 49th Floor, Suite 4920, New York, NY 10019.

Chief Financial Officer, Franklin BSP Capital Corporation, 9 West 57th Street, 49th Floor, Suite 4920, New York, NY 10019.

Privacy Notice

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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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This may increase the risk that material weaknesses or other deficiencies in our internal control over financial reporting go undetected.

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.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.

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dollar, persons who mark-to-market our shares and persons who hold our shares as part of a “straddle”, “hedge” or “conversion” transaction.

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

This summary assumes that investors hold our Common Stock as capital assets (within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”)).

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.

We have not sought and will not seek any ruling from the Internal Revenue Service (the “IRS”) with respect to an investment in our Common Stock, regarding this follow-on offering.

This summary does not discuss any aspects of U.S.

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We will be subject to a 4% nondeductible U.S.

federal excise tax on certain undistributed income of RICs unless we distribute in a timely manner an amount at least equal to the sum of:

federal excise tax on certain of our undistributed income unless we distribute in a timely manner an amount at least equal to the sum of:

(1) 98% of our ordinary income for each calendar year;

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and (ii) no more than 25% of the value of our assets is invested in the securities, other than U.S.

Government securities or securities of other RICs, (i) of one issuer (ii) of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) of one or more “qualified publicly traded partnerships,” or the Diversification Tests.

To the extent that we invest in entities treated as partnerships for U.S.

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taxes paid by us.

If we purchase shares in a “passive foreign investment company,” or PFIC, we may be subject to U.S.

If we purchase shares in a passive foreign investment company (“PFIC”), we may be subject to U.S.

federal income tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend by us to our stockholders.

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federal income tax on net capital gain at the maximum 21% rate also applied to ordinary income.

Noncorporate stockholders with net capital loss for a year (which we define as capital loss in excess of capital gain) generally may deduct up to $3,000 of such losses against their ordinary income each year;

Noncorporate U.S.

stockholders with net capital loss for a year (which we define as capital loss in excess of capital gain) generally may deduct up to $3,000 of such losses against their ordinary income each year;

any net capital loss of a noncorporate stockholder in excess of $3,000 generally may be carried forward and used in subsequent years as provided in the Code.

Corporate stockholders generally may not deduct any net capital loss for a year, but may carry back such losses for three years or carry forward such losses for five years.

When we are not a publicly offered regulated investment company for any taxable year, a non-corporate U.S.

shareholder’s pro rata portion of our affected expenses, including our management fees, will be treated as an additional dividend to the shareholder and will be deductible by such shareholder only to the extent permitted under the limitations described below.

Corporate U.S.

stockholders generally may not deduct any net capital loss for a year, but may carry back such losses for three years or carry forward such losses for five years.

When we are not a publicly offered regulated investment company for any taxable year, a noncorporate U.S.

stockholder’s pro rata portion of our affected expenses, including our management fees, will be treated as an additional dividend to the stockholder and will be deductible by such stockholder only to the extent permitted under the limitations described below.

A “publicly offered regulated investment company” is a regulated investment company whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market or (iii) held by at least 500 persons at all times during the taxable year.

For taxable years beginning before 2026, certain expenses (including advisory fees), referred to as miscellaneous itemized deductions generally are not deductible by non-corporate U.S.

shareholders, including individuals, trusts, and estates.

stockholders, including individuals, trusts, and estates.

For taxable years beginning in 2026 or later, miscellaneous itemized deductions generally are deductible by a non-corporate U.S.

shareholder (such as an individual, trust or estate) only to the extent that the aggregate of such U.S.

shareholder’s miscellaneous itemized deductions exceeds 2% of such U.S.

shareholder’s adjusted gross income for U.S.

stockholder (such as an individual, trust or estate) only to the extent that the aggregate of such U.S.

stockholder’s miscellaneous itemized deductions exceeds 2% of such U.S.

stockholder’s adjusted gross income for U.S.

federal income tax purposes, are not deductible for purposes of the alternative minimum tax and are subject to the overall limitation on itemized deductions under Section 68 of the Code.

We do not anticipate that we will initially constitute a publicly offered regulated investment company although it is possible that we may qualify at some point in the future.

While we anticipate that we will constitute a publicly offered regulated investment company for our current tax year, there can be no assurance that we will in fact so qualify for any of our taxable years.

We (or the applicable withholding agent) will send to each of our U.S.

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federal income tax, or backup withholding, from all distributions to any noncorporate U.S.

stockholder (1) who fails to furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding or (2) with respect to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect.

stockholder (1) who fails to furnish us with a correct taxpayer identification number or a certificate that such U.S.

stockholder is exempt from backup withholding or (2) with respect to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect.

An individual’s taxpayer identification number is his or her social security number.

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Taxation of Non-U.S.

Whether an investment in the shares is appropriate for a Non-U.S.

Whether an investment in our Common Stock is appropriate for a Non-U.S.

stockholder will depend upon that person’s particular circumstances.

An investment in the shares by a Non-U.S.

An investment in our Common Stock by a Non-U.S.

stockholder may have adverse tax consequences.

stockholders should consult their tax advisers before investing in our Common Stock.

stockholders should consult their tax advisors before investing in our Common Stock.

Distributions of our “investment company taxable income” to Non-U.S.

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federal income tax return.

Accordingly, investment in the shares may not be appropriate for a Non-U.S.

Accordingly, investment in our Common Stock may not be appropriate for a Non-U.S.

Distributions of our “investment company taxable income” and net capital gain (including deemed distributions) to Non-U.S.

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stockholders may also be subject to an additional branch profits tax at a rate of 30% imposed by the Code (or lower rate provided by an applicable treaty).

In the case of a non-corporate Non-U.S.

In the case of a noncorporate Non-U.S.

stockholder, we may be required to withhold U.S.

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stockholder entitled to claim the benefits of an applicable tax treaty may differ from those described herein.

stockholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in our shares.

stockholders are advised to consult their own tax advisors with respect to the particular tax consequences to them of an investment in our shares.

stockholder who is a nonresident alien individual may be subject to information reporting and backup withholding of U.S.

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persons should consult their own tax advisors with respect to the U.S.

federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in the shares.

federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in our Common Stock.

Failure to Obtain RIC Tax Treatment

If we were unable to obtain tax treatment as a RIC, we would be subject to tax on all of our taxable income at regular corporate rates.

If we were unable to obtain tax treatment as a RIC, we would be subject to tax on all of our taxable income at U.S.

federal income tax corporate rates.

We would not be able to deduct distributions to stockholders, nor would they be required to be made.

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Prospective investors should recognize that the present U.S.

federal income tax treatment of an investment in our stock may be modified by legislative, judicial or administrative action at any time, and that any such action may affect investments and commitments previously made.

federal income tax treatment of an investment in our Common Stock may be modified by legislative, judicial or administrative action at any time, and that any such action may affect investments and commitments previously made.

The rules dealing with U.S.

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Revisions in U.S.

federal tax laws and interpretations thereof could adversely affect the tax consequences of an investment in our stock.

federal tax laws and interpretations thereof could adversely affect the tax consequences of an investment in our Common Stock.

The discussion set forth herein does not constitute tax advice, and potential investors should consult their own tax advisors concerning the tax considerations relevant to their particular situation.

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We file with or submit to the SEC annual, quarterly, and current periodic reports, proxy statements and other information meeting the informational requirements of the Exchange Act.

The SEC maintains an Internet website that contains reports, proxy and information statements, and other information filed electronically by us with the SEC at http://www.sec.gov .

This information is available free of charge on our website at www.fbccbdc.com/financials/sec-filings/ .

Information contained on our website is not incorporated into this Annual Report on Form 10-K and you should not consider such information to be part of this Annual Report on Form 10-K.

Such information is also available from the EDGAR database on the SEC’s website at http://www.sec.gov .

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