7 unchanged sentences
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.
−Removed: The Investment Advisory Agreement entitles our Adviser to receive incentive compensation on income regardless of any capital losses.
+Added: The Amended and Restated Investment Advisory Agreement entitles our Adviser to receive incentive compensation on income regardless of any capital losses.
In such case, we may be required to pay our Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or if we incur a net loss for that quarter.
1 unchanged sentence
If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously included in the calculation of the incentive fee will become uncollectible.
−Removed: Pursuant to the Investment Advisory Agreement, our Adviser will not be under any obligation to reimburse us for any part of the incentive fee it received that was based on accrued income that we never received as a result of a default by an entity on the debt instrument that resulted in the accrual of such income, and such circumstances would result in our paying an incentive fee on income we never received.
+Added: Pursuant to the Amended and Restated Investment Advisory Agreement, our Adviser will not be under any obligation to reimburse us for any part of the incentive fee it received that was based on accrued income that we never received as a result of a default by an entity on the debt instrument that resulted in the accrual of such income, and such circumstances would result in our paying an incentive fee on income we never received.
Moreover, to the extent that we are required to recognize in our taxable income such interest income that has been accrued but not yet paid, our payment of incentive fees to the Adviser on such income may make it difficult to meet (or may further amplify existing difficulties in meeting) the Annual Distribution Requirement necessary to maintain RIC tax treatment under the Code.
12 unchanged sentences
The part of the incentive fee payable by us that relates to our pre-incentive fee net investment income is computed and paid on income that may include interest that is accrued but not yet received in cash.
−Removed: If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.
+Added: If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible which could affect our financial condition, business, and results of operations.
Our fee structure may induce our Adviser to make speculative investments or incur debt.
9 unchanged sentences
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.
−Removed: Our Adviser has the right to resign under the Investment Advisory Agreement at any time upon not less than 60 days’ written notice, whether we have found a replacement or not.
+Added: Our Adviser has the right to resign under the Amended and Restated Investment Advisory Agreement at any time upon not less than 60 days’ written notice, whether we have found a replacement or not.
If our Adviser were to resign, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all.
26 unchanged sentences
If we cannot satisfy the asset coverage test, we may be required to sell a portion of our investments and, depending on the nature of our debt financing, repay a portion of our indebtedness at a time when such sales and repayments may be disadvantageous.
+Added: As of December 31, 2023, our asset coverage calculated in accordance with the 1940 Act was 197%.
Under the 1940 Act, we generally are prohibited from issuing or selling our Common Stock at a price per share, after deducting selling commissions and dealer manager fees, that is below NAV per share, which may be a disadvantage as compared to other public companies.
22 unchanged sentences
Senior Secured Loans.
−Removed: When the Company makes a senior secured loan to a portfolio company, it will generally take a security interest in the available assets of the portfolio company, including the equity interests of its subsidiaries, which could help mitigate the risk that the Company will not be repaid.
−Removed: However, there is a risk that the collateral securing the Company’s loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise, and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the portfolio company to raise additional capital.
−Removed: In some circumstances, the Company’s lien could be subordinated to claims of other creditors.
+Added: When we make a senior secured loan to a portfolio company, it will generally take a security interest in the available assets of the portfolio company, including the equity interests of its subsidiaries, which could help mitigate the risk that we will not be repaid.
+Added: However, there is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise, and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the portfolio company to raise additional capital.
+Added: In some circumstances, our lien could be subordinated to claims of other creditors.
In addition, deterioration in a portfolio company’s financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan.
−Removed: Consequently, the fact that a loan is secured does not guarantee that the Company will receive principal and interest payments according to the loan’s terms, or at all, or that the Company will be able to collect on the loan should it be forced to enforce its remedies.
+Added: Consequently, the fact that a loan is secured does not guarantee that we will receive principal and interest payments according to the loan’s terms, or at all, or that we will be able to collect on the loan should it be forced to enforce its remedies.
Second Lien, or Other Subordinated Loans or Debt.
−Removed: The Company may invest in second lien or other subordinated loans.
+Added: We may invest in second lien or other subordinated loans.
In the event of a loss of value of the underlying assets that collateralize the loans, the subordinate portions of the loans may suffer a loss prior to the more senior portions suffering a loss.
−Removed: If a borrower defaults and lacks sufficient assets to satisfy the Company’s loan, the Company may suffer a loss of principal or interest.
−Removed: If a borrower declares bankruptcy, the Company may not have full recourse to the assets of the borrower, or the assets of the borrower may not be sufficient to satisfy the loan.
+Added: If a borrower defaults and lacks sufficient assets to satisfy our loan, we may suffer a loss of principal or interest.
+Added: If a borrower declares bankruptcy, we may not have full recourse to the assets of the borrower, or the assets of the borrower may not be sufficient to satisfy the loan.
Issuers of subordinated debt obligations may be highly leveraged and may not have available to them more traditional sources of financing.
During an economic downturn or a sustained period of rising interest rates, such issuers may be more likely to experience financial stress and may be unable to meet their obligations.
−Removed: In addition, certain of the Company’s loans may be subordinate to other debt of the borrower.
−Removed: As a result, if a borrower defaults on the Company’s loan or on debt senior to the Company’s loan, or in the event of the bankruptcy of a borrower, the Company’s loan will be satisfied only after all senior debt is paid in full.
−Removed: The Adviser’s ability to amend the terms of the Company’s loans, assign the Company’s loans, accept prepayments, exercise the Company’s remedies (through “standstill periods”) and control decisions made in bankruptcy proceedings relating to borrowers may be limited by intercreditor arrangements if debt senior to the Company’s loans exists.
+Added: In addition, certain of our loans may be subordinate to other debt of the borrower.
+Added: As a result, if a borrower defaults on our loan or on debt senior to our loan, or in the event of the bankruptcy of a borrower, our loan will be satisfied only after all senior debt is paid in full.
+Added: The Adviser’s ability to amend the terms of our loans, assign our loans, accept prepayments, exercise our remedies (through “standstill periods”) and control decisions made in bankruptcy proceedings relating to borrowers may be limited by intercreditor arrangements if debt senior to our loans exists.
Unsecured Loans or Debt.
−Removed: The Company may invest in unsecured loans which are not secured by collateral.
+Added: We may invest in unsecured loans which are not secured by collateral.
In the event of default on an unsecured loan, the first priority lien holder has first claim to the underlying collateral of the loan.
−Removed: It is possible that no collateral value would remain for an unsecured holder and therefore result in a loss of investment to the Company.
+Added: It is possible that no collateral value would remain for an unsecured holder and therefore result in a loss of investment to us.
Because unsecured loans are lower in priority of payment to secured loans, they are subject to the additional risk that the cash flow of the borrower may be insufficient to meet scheduled payments after giving effect to the secured obligations of the borrower.
1 unchanged sentence
Middle Market Companies.
−Removed: The Company will invest in the debt obligations or securities of middle market and/or less well-established companies.
+Added: We will invest in the debt obligations or securities of middle market and/or less well-established companies.
While middle market companies may have potential for rapid growth, they often involve higher risks.
−Removed: Middle market companies have more limited financial resources than larger companies and may be unable to meet their obligations under their debt securities that the Company holds, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of the Company realizing any guarantees it may have obtained in connection with its investment.
+Added: Middle market companies have more limited financial resources than larger companies and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees it may have obtained in connection with our investment.
Middle market companies also typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns.
1 unchanged sentence
They are more likely to depend on the management talents and efforts of a small group of persons;
−Removed: therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on the company and, in turn, on the Company.
+Added: therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on the company and, in turn, on us.
Middle market companies may also have less predictable operating results and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position.
2 unchanged sentences
Investments in Privately Held Companies.
−Removed: While not a primary strategy of the Company, the Company may acquire controlling or minority equity stakes in privately held companies, which may occur, among other ways, by reason of converting debt into equity.
−Removed: The success of the Company’s investments in privately held companies that it controls will depend in part on the Adviser’s ability to develop plans and strategies to exploit new business opportunities for such companies as well as the Adviser’s ability to restructure and effect improvements in the operations of such companies.
+Added: While not a primary strategy of ours, we may acquire controlling or minority equity stakes in privately held companies, which may occur, among other ways, by reason of converting debt into equity.
+Added: The success of our investments in privately held companies that it controls will depend in part on the Adviser’s ability to develop plans and strategies to exploit new business opportunities for such companies as well as the Adviser’s ability to restructure and effect improvements in the operations of such companies.
The activity of developing such plans and strategies and of identifying and implementing operational improvements at portfolio companies entails a high degree of uncertainty.
−Removed: There can be no assurance that the Company will be able to successfully identify and implement such plans, strategies or improvements.
−Removed: To the extent that the Company owns a controlling stake in, or is deemed an affiliate of, a particular company, it may also be subject to certain additional bankruptcy or securities laws restrictions that could affect both the liquidity of the Company’s interest and the Company’s ability to liquidate its interest without adversely impacting the price thereof, including insider trading restrictions, the affiliate sale restrictions of Rule 144 of the Securities Act and the disclosure requirements of Sections 13 and 16 of the Exchange Act.
−Removed: The exercise of control over a company, depending upon the amount and type of securities owned by the Company, contractual arrangements between the company and the Company, and other relevant factual circumstances, could result in an extension to one year of the 90-day bankruptcy preference period with respect to payments made to the Company.
−Removed: The exercise of control over a company may also provide grounds for challenges to the priority and enforceability of investments or other claims the Company may have against the company if it is subject to a bankruptcy case or other insolvency proceeding.
−Removed: The success of the Company’s investments in minority equity stakes of privately held companies will depend in part on the performance and abilities of such companies’ controlling shareholders.
−Removed: Because the Company will not control such companies, the Company’s ability to exit from such investments may be limited.
−Removed: Additionally, the Company is likely to have a reduced ability to influence management of such companies.
+Added: There can be no assurance that we will be able to successfully identify and implement such plans, strategies or improvements.
+Added: To the extent that we own a controlling stake in, or is deemed an affiliate of, a particular company, it may also be subject to certain additional bankruptcy or securities laws restrictions that could affect both the liquidity of our interest and our ability to liquidate our interest without adversely impacting the price thereof, including insider trading restrictions, the affiliate sale restrictions of Rule 144 of the Securities Act and the disclosure requirements of Sections 13 and 16 of the Exchange Act.
+Added: The exercise of control over a company, depending upon the amount and type of securities owned by us, contractual arrangements between the company and us, and other relevant factual circumstances, could result in an extension to one year of the 90-day bankruptcy preference period with respect to payments made to us.
+Added: The exercise of control over a company may also provide grounds for challenges to the priority and enforceability of investments or other claims we may have against the company if it is subject to a bankruptcy case or other insolvency proceeding.
+Added: The success of our investments in minority equity stakes of privately held companies will depend in part on the performance and abilities of such companies’ controlling shareholders.
+Added: Because we will not control such companies, our ability to exit from such investments may be limited.
+Added: Additionally, we are likely to have a reduced ability to influence management of such companies.
The Adviser may also have disagreements with controlling shareholders over the strategy and operations of such companies.
−Removed: As a result of the foregoing, the Company’s equity investments in such companies may perform poorly.
−Removed: The Company may invest a portion of its investments in loans originated by banks and other financial institutions.
−Removed: The loans in which the Company invests may include term loans and revolving loans, may pay interest at a fixed or floating rate and may be senior or subordinated.
+Added: As a result of the foregoing, our equity investments in such companies may perform poorly.
+Added: We may invest a portion of our investments in loans originated by banks and other financial institutions.
+Added: The loans in which we invest may include term loans and revolving loans, may pay interest at a fixed or floating rate and may be senior or subordinated.
Purchasers of bank loans are predominantly commercial banks, investment funds and investment banks.
1 unchanged sentence
There can be no assurance, however, that future levels of supply and demand in bank loan trading will provide an adequate degree of liquidity, that current levels of liquidity will persist and that the market will not experience periods of significant illiquidity in the future.
−Removed: In addition, the Company may make investments in stressed or distressed bank loans which are often less liquid than performing bank loans.
−Removed: The Company may acquire interests in bank loans either directly (by way of sale or assignment) or indirectly (by way of participation).
+Added: In addition, we may make investments in stressed or distressed bank loans which are often less liquid than performing bank loans.
+Added: We may acquire interests in bank loans either directly (by way of sale or assignment) or indirectly (by way of participation).
The purchaser of an assignment typically succeeds to all the rights and obligations of the assigning institution and becomes a lender under the credit agreement with respect to the debt obligation;
1 unchanged sentence
Participation interests in a portion of a debt obligation typically result in a contractual relationship only with the institution participating out the interest, not with the borrower.
−Removed: In purchasing participations, the Company generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of set-off against the borrower, and the Company may not directly benefit from the collateral supporting the debt obligation in which it has purchased the participation.
−Removed: As a result, the Company will assume the credit risk of both the borrower and the institution selling the participation.
+Added: In purchasing participations, we generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of set-off against the borrower, and we may not directly benefit from the collateral supporting the debt obligation in which it has purchased the participation.
+Added: As a result, we will assume the credit risk of both the borrower and the institution selling the participation.
The settlement process for the purchase of bank loans can take several days and, in certain instances, several weeks longer than a bond trade.
−Removed: The longer a trade is outstanding between the counterparties, the higher the possible risk of additional operational and settlement issues and the potential for the Company’s counterparty to fail to perform.
−Removed: In the event that the Company acquires fixed income securities and/or other instruments that are publicly traded, which may include securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated, the Company will be subject to certain inherent risks.
+Added: The longer a trade is outstanding between the counterparties, the higher the possible risk of additional operational and settlement issues and the potential for our counterparty to fail to perform.
+Added: In the event that we acquire fixed income securities and/or other instruments that are publicly traded, which may include securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated, we will be subject to certain inherent risks.
Below investment grade securities, which are often referred to as "high yield," "speculative" or "junk," have predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal.
−Removed: In some circumstances, the Company may be unable to obtain financial covenants or other contractual rights, including management rights, that it might otherwise be able to obtain in making privately-negotiated debt investments.
−Removed: Moreover, the Company may not have the same access to information in connection with investments in public instruments, either when investigating a potential investment or after making an investment, as compared to a privately-negotiated debt investment.
+Added: In some circumstances, we may be unable to obtain financial covenants or other contractual rights, including management rights, that it might otherwise be able to obtain in making privately-negotiated debt investments.
+Added: Moreover, we may not have the same access to information in connection with investments in public instruments, either when investigating a potential investment or after making an investment, as compared to a privately-negotiated debt investment.
Term Loans, Delayed Draw Term Loans, or Revolvers.
−Removed: The Company may invest in a variety of different types of debt, including but not limited to term loans, delayed draw term loans, bridge loans, and revolving loans.
+Added: We may invest in a variety of different types of debt, including but not limited to term loans, delayed draw term loans, bridge loans, and revolving loans.
A term loan is a loan that has a specified repayment schedule.
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Delayed draw term loans and revolving credit facilities usually provide for floating or variable rates of interest.
−Removed: If the Company enters into or acquires a commitment with a borrower regarding a delayed draw term loan or a revolver, the Company will be obligated on one or more dates in the future to lend the borrower monies (up to an aggregate stated amount) if called upon to do so by the borrower.
−Removed: These commitments may have the effect of requiring the Company to increase its investment in a borrower at a time when it might not otherwise decide to do so (including at a time when the company’s financial condition makes it unlikely that such amounts will be repaid).
+Added: If we enter into or acquires a commitment with a borrower regarding a delayed draw term loan or a revolver, we will be obligated on one or more dates in the future to lend the borrower monies (up to an aggregate stated amount) if called upon to do so by the borrower.
+Added: These commitments may have the effect of requiring us to increase our investment in a borrower at a time when it might not otherwise decide to do so (including at a time when the company’s financial condition makes it unlikely that such amounts will be repaid).
Delayed draw term loans and revolvers may be subject to restrictions on transfer, and only limited opportunities may exist to resell such instruments.
−Removed: As a result, the Company may be unable to sell such investments at an opportune time or may have to resell them at less than fair market value.
+Added: As a result, we may be unable to sell such investments at an opportune time or may have to resell them at less than fair market value.
Financially Troubled Companies.
−Removed: The Company may invest in the obligations of companies that are in weak financial condition, experiencing poor operating results, having substantial capital needs or negative net worth, or facing special competitive or product obsolescence problems, including companies involved in bankruptcy or other reorganization and liquidation proceedings.
+Added: We may invest in the obligations of companies that are in weak financial condition, experiencing poor operating results, having substantial capital needs or negative net worth, or facing special competitive or product obsolescence problems, including companies involved in bankruptcy or other reorganization and liquidation proceedings.
Investments in such financially troubled companies involve significantly greater risk than investments in non-troubled companies, and the repayment of obligations of financially troubled companies is subject to significant uncertainties.
Among the risks inherent in investments in troubled entities is the fact that it frequently may be difficult to obtain information as to the true condition of such issuers.
−Removed: Loans issued by companies in bankruptcy are also highly risky, as there are a number of significant rights throughout the bankruptcy process, which may result in losses to the Company.
+Added: Loans issued by companies in bankruptcy are also highly risky, as there are a number of significant rights throughout the bankruptcy process, which may result in losses to us.
Such investments may also be adversely affected by laws relating to, among other things, fraudulent transfers and other voidable transfers or payments, lender liability and the bankruptcy court’s power to disallow, reduce, subordinate or disenfranchise particular claims.
Such companies’ securities may be considered speculative, and the ability of such companies to pay their debts on schedule could be affected by adverse interest rate movements, changes in the general economic climate, economic factors affecting a particular industry or specific developments within such companies.
−Removed: Additionally, the Company could invest in the securities of financially troubled companies that are non-U.S.
+Added: Additionally, we could invest in the securities of financially troubled companies that are non-U.S.
Such non-U.S.
issuers may be subject to bankruptcy and reorganization processes and proceedings that are not comparable to those in the United States and that may be less favorable to the rights of lenders.
−Removed: There is no assurance that the Adviser or their affiliates will correctly evaluate the value of the assets underlying the securities or obligations purchased by the Company or the prospects for a successful reorganization or similar action.
−Removed: In any reorganization or liquidation proceeding relating to a company in which the Company invests, the Company may lose its entire investment, may be required to accept cash or securities with a value less than its original investment and/or may be required to accept payment over an extended period of time.
+Added: There is no assurance that the Adviser or their affiliates will correctly evaluate the value of the assets underlying the securities or obligations purchased by us or the prospects for a successful reorganization or similar action.
+Added: In any reorganization or liquidation proceeding relating to a company in which we invest, we may lose our entire investment, may be required to accept cash or securities with a value less than our original investment and/or may be required to accept payment over an extended period of time.
Under such circumstances, the returns generated may not compensate the shareholders adequately for the risks assumed.
In liquidation (both in and out of bankruptcy) and other forms of corporate reorganization, there exists the risk that the reorganization will be unsuccessful (due to, for example, failure to obtain requisite approvals), will be delayed (for example, until various liabilities, actual or contingent, have been satisfied) or will result in a distribution of cash or a new security the value of which will be less than the purchase price of the security in respect of which such distribution is made.
−Removed: In certain transactions, the Company may not be “hedged” against market fluctuations, or, in liquidation situations, may not accurately value the assets of the company being liquidated.
+Added: In certain transactions, we may not be “hedged” against market fluctuations, or, in liquidation situations, may not accurately value the assets of the company being liquidated.
This can result in losses, even if the proposed transaction is consummated.
High Yield Debt.
−Removed: The Company may invest in high yield debt, a substantial portion of which may be rated below investment-grade by one or more nationally recognized statistical rating organizations or which may be unrated but of comparable credit quality to obligations rated below investment-grade, and have greater credit and liquidity risk than more highly rated debt obligations.
+Added: We may invest in high yield debt, a substantial portion of which may be rated below investment-grade by one or more nationally recognized statistical rating organizations or which may be unrated but of comparable credit quality to obligations rated below investment-grade, and have greater credit and liquidity risk than more highly rated debt obligations.
High yield debt is generally unsecured and may be subordinate to other obligations of the obligor.
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High yield debt has historically experienced greater default rates than has been the case for investment-grade securities.
−Removed: The Company may also invest in equity securities issued by entities with unrated or below investment-grade debt.
+Added: We may also invest in equity securities issued by entities with unrated or below investment-grade debt.
High yield debt may also be in the form of zero-coupon or deferred interest bonds, which are bonds which are issued at a significant discount from face value.
3 unchanged sentences
Levered Entities.
−Removed: The Company may make investments whose capital structures have significant leverage.
+Added: We may make investments whose capital structures have significant leverage.
Such investments are inherently more sensitive to declines in revenues and asset values and to increases in expenses and interest rates.
The leveraged capital structure of such investments will increase the exposure of the investments to adverse economic factors such as downturns in the economy or deterioration in the condition of the investment, its underlying assets or its industry.
−Removed: Additionally, depending on the level in the capital structure in which the Company acquires investments, the Company may be subject to a greater risk of loss than if it acquires securities higher in a capital structure.
+Added: Additionally, depending on the level in the capital structure in which we acquire investments, we may be subject to a greater risk of loss than if it acquires securities higher in a capital structure.
Convertible Securities.
−Removed: The Company may invest in convertible securities, which are bonds, debentures, notes, preferred stocks or other securities that may be converted into or exchanged for a specified amount of common stock of the same or different issuer within a particular period of time at a specified price or formula.
+Added: We may invest in convertible securities, which are bonds, debentures, notes, preferred stocks or other securities that may be converted into or exchanged for a specified amount of common stock of the same or different issuer within a particular period of time at a specified price or formula.
A convertible security entitles the holder to receive interest that is generally paid or accrued on debt or a dividend that is paid or accrued on preferred stock until the convertible security matures or is redeemed, converted or exchanged.
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A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument.
−Removed: If a convertible security held by the Company is called for redemption, the Company will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third-party.
−Removed: Any of these actions could have an adverse effect on the Company’s ability to achieve its investment objective.
+Added: If a convertible security held by us is called for redemption, we will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third-party.
+Added: Any of these actions could have an adverse effect on our ability to achieve our investment objective.
Equity Securities.
−Removed: The Company may hold investments in equity securities.
+Added: We may hold investments in equity securities.
Equity securities may include common and preferred stocks and warrants, rights and equivalents.
−Removed: As with other investments that the Company may make, the value of equity securities held by the Company may be adversely affected by actual or perceived negative events relating to the issuer of such securities, the industry or geographic areas in which such issuer operates or the financial markets generally.
+Added: As with other investments that we may make, the value of equity securities held by us may be adversely affected by actual or perceived negative events relating to the issuer of such securities, the industry or geographic areas in which such issuer operates or the financial markets generally.
However, equity securities may be even more susceptible to such events given their subordinate position in the issuer’s capital structure.
3 unchanged sentences
Dividends paid to equity holders may be suspended or cancelled at any time, and minority owners may have limited protections.
−Removed: In addition, if an issuer of equity securities in which the Company has invested sells additional shares of its equity securities, the Company’s interest in the issuer will be diluted and the value of the Company’s investment may decrease.
−Removed: The Company may hold warrants or rights.
+Added: In addition, if an issuer of equity securities in which we have invested sells additional shares of its equity securities, our interest in the issuer will be diluted and the value of our investment may decrease.
+Added: We may hold warrants or rights.
Warrants and rights generally give the holder the right to receive, upon exercise, a security of the issuer at a stated price.
2 unchanged sentences
Warrants and rights are not likely to be as liquid as exchange-traded options backed by a recognized clearing agency.
−Removed: In addition, the terms of warrants or rights may limit the Company’s ability to exercise the warrants or rights at such time, or in such quantities, as the Company would otherwise wish.
+Added: In addition, the terms of warrants or rights may limit our ability to exercise the warrants or rights at such time, or in such quantities, as we would otherwise wish.
Covenant-Lite Loans.
−Removed: The Company may invest in covenant-lite loans, which contain limited, if any, financial covenants.
+Added: We may invest in covenant-lite loans, which contain limited, if any, financial covenants.
Generally, such loans either do not require the obligor to maintain debt service or other financial ratios or do not contain common restrictions on the ability of the obligor to change significantly its operations or to enter into other significant transactions that could affect its ability to repay such loans.
−Removed: As a result, the Company’s exposure to different risks may be increased, including with respect to liquidity, price volatility and ability to restructure loans, than is the case with loans that have such requirements and restrictions.
+Added: As a result, our exposure to different risks may be increased, including with respect to liquidity, price volatility and ability to restructure loans, than is the case with loans that have such requirements and restrictions.
Cash and Other Investments.
−Removed: The Company may invest all or a portion of its assets in cash or cash items for investment purposes, pending other investments or as provision of margin for derivatives contracts.
+Added: We may invest all or a portion of our assets in cash or cash items for investment purposes, pending other investments or as provision of margin for derivatives contracts.
These cash items may include money market instruments such as negotiable or non-negotiable securities issued by or short-term deposits with the U.S.
1 unchanged sentence
issuers deemed to be creditworthy by the Adviser.
−Removed: The Company may also hold interests in investment vehicles that hold cash or cash items.
+Added: We may also hold interests in investment vehicles that hold cash or cash items.
While investments in cash items generally involve relatively low risk levels, they may produce lower than expected returns, and could result in losses.
−Removed: Investments in cash items and money market funds may also provide less liquidity than anticipated by the Company at the time of investment.
+Added: Investments in cash items and money market funds may also provide less liquidity than we anticipated at the time of investment.
Our investments are subject to interest rate risk.
5 unchanged sentences
Our debt investments are subject to prepayment or refinancing risk.
−Removed: The terms of loans in which the Company invests may permit the borrowers to voluntarily prepay loans at any time, either with no or a nominal prepayment premium.
−Removed: This prepayment right could result in the borrower repaying the principal on an obligation held by the Company earlier than expected.
+Added: The terms of loans in which we invest may permit the borrowers to voluntarily prepay loans at any time, either with no or a nominal prepayment premium.
+Added: This prepayment right could result in the borrower repaying the principal on an obligation held by us earlier than expected.
This could happen when there is a decline in interest rates, when the borrower’s improved credit or operating or financial performance allows the refinancing of certain classes of debt with lower cost debt.
−Removed: The yield of the Company’s investment assets may be affected by the rate of prepayments differing from the Adviser’s expectations.
−Removed: Assuming an improvement in the credit market conditions, early repayments of the debt held by the Company could increase.
−Removed: To the extent early prepayments increase, they may have a material adverse effect on the Company’s investment objectives and profits.
−Removed: In addition, if the Company is unable to reinvest the proceeds of such prepayments received in investments expected to be as profitable, the proceeds generated by the Company will decline as compared to the Adviser’s expectations.
−Removed: The Company’s assets may include loans for which most or all of the principal is due at maturity.
+Added: The yield of our investment assets may be affected by the rate of prepayments differing from the Adviser’s expectations.
+Added: Assuming an improvement in the credit market conditions, early repayments of the debt held by us could increase.
+Added: To the extent early prepayments increase, they may have a material adverse effect on our investment objectives and profits.
+Added: In addition, if we are unable to reinvest the proceeds of such prepayments received in investments expected to be as profitable, the proceeds generated by us will decline as compared to the Adviser’s expectations.
+Added: Our assets may include loans for which most or all of the principal is due at maturity.
The ability of the obligor(s) under such loan to make such a large payment upon maturity could depend upon its ability to refinance the loan prior to maturity.
1 unchanged sentence
Additionally, middle market or smaller obligors generally have more limited access to capital and higher funding costs, may be in a weaker financial position, may need more capital to expand or compete, and may be unable to obtain financing from public capital markets or from more traditional sources, such as commercial banks.
−Removed: Consequently, such obligor may not have the ability to repay the loan at maturity and, unless it is able to refinance such loan, it could default in payment at maturity, which could result in losses to the Company and, indirectly, to the shareholders.
+Added: Consequently, such obligor may not have the ability to repay the loan at maturity and, unless it is able to refinance such loan, it could default in payment at maturity, which could result in losses to us and, indirectly, to the shareholders.
Significant numbers of obligors are expected to need to refinance their debt over the next few years, and significant numbers of collateralized loan obligation transactions (historically an important source of funding for loans) have reached or are close to reaching the end of their reinvestment periods or the final maturities of their own debt.
As a result, there could be significant pressure on the ability of obligors to refinance their debt over the next few years unless a significant volume of new collateralized loan obligation transactions or other sources of funding develop.
−Removed: If such sources of funding do not develop, significant defaults in the Company’s assets could occur, and there could be downward pressure on the prices and markets for debt instruments, including assets held by the Company.
−Removed: In certain circumstances, it may be in the Company’s interests to participate in a refinance, including later in the life of the Company, however, the ability of the Company to so participate depends on availability of Company capital.
−Removed: In addition, other funds may participate in a refinancing, which may cause conflicts of interest, and there is no guarantee that such conflicts would be resolved in the interests of the Company.
−Removed: The Company may determine to restructure investments in a manner that would extend the maturity of such investments.
+Added: If such sources of funding do not develop, significant defaults in our assets could occur, and there could be downward pressure on the prices and markets for debt instruments, including assets held by us.
+Added: In certain circumstances, it may be in our interest to participate in a refinance, including later in our life, however, our ability to so participate depends on availability of our capital.
+Added: In addition, other funds may participate in a refinancing, which may cause conflicts of interest, and there is no guarantee that such conflicts would be resolved in our interest.
+Added: We may determine to restructure investments in a manner that would extend the maturity of such investments.
Our investments are generally subject to credit risk.
−Removed: “Credit risk” refers to the likelihood that an issuer will default in the payment of principal and/or interest on an instrument, in which case the Company may lose some or all of its investment in that instrument, subject the Company to loss.
+Added: “Credit risk” refers to the likelihood that an issuer will default in the payment of principal and/or interest on an instrument, in which case we may lose some or all of our investment in that instrument, subject us to loss.
Financial strength and solvency of an issuer are the primary factors influencing credit risk.
1 unchanged sentence
Credit risk may change over the life of an instrument and securities which are rated by rating agencies are often reviewed and may be subject to downgrade.
−Removed: A significant downturn in the economy or a particular economic sector could have a significant impact on the business prospects of the companies to which the Company is invested and their ability to comply with their loan repayment obligations, or their ability to refinance such obligations.
−Removed: In addition, credit ratings may be assigned by various credit rating agencies to loans or other debt instruments that may be acquired by the Company reflect only the views of those agencies.
+Added: A significant downturn in the economy or a particular economic sector could have a significant impact on the business prospects of the companies to which we are invested and their ability to comply with their loan repayment obligations, or their ability to refinance such obligations.
+Added: In addition, credit ratings may be assigned by various credit rating agencies to loans or other debt instruments that may be acquired by us reflect only the views of those agencies.
Explanations of the significance of ratings should be obtained from such credit rating agencies.
14 unchanged sentences
(vi) the risk of nationalization or expropriation of assets or confiscatory taxation;
−Removed: (vii) social, economic and political uncertainty, including war and revolution;
+Added: (vii) social, economic and political uncertainty, including war, global or regional conflicts, and revolution;
(viii) dependence on exports and the corresponding importance of international trade;
−Removed: (ix) greater price fluctuations and market volatility, (x) less liquidity and smaller capitalization of securities markets;
+Added: (ix) greater price fluctuations and market volatility;
+Added: (x) less liquidity and smaller capitalization of securities markets;
(xi) higher rates of inflation;
(xii) controls on, and changes in controls on, non-U.S.
−Removed: investment and limitations on repatriation of invested capital and on the Company’s ability to exchange local currencies for U.S.
+Added: investment and limitations on repatriation of invested capital and on our ability to exchange local currencies for U.S.
(xiii) less extensive regulation of the securities markets;
5 unchanged sentences
securities settlements may in some instances be subject to delays and related administrative uncertainties.
−Removed: In some countries there are restrictions on investments or investors such that the only practicable way for the Company to invest in such markets is by entering into swaps or other derivative transactions with its prime brokers or others.
+Added: In some countries there are restrictions on investments or investors such that the only practicable way for us to invest in such markets is by entering into swaps or other derivative transactions with its prime brokers or others.
Such transactions involve counterparty risks which are not present in the case of direct investments and which may not be controllable by the Adviser.
Currency Exchange Risk.
−Removed: Investments or liabilities of the Company may be denominated in currencies other than the U.S.
+Added: Investments or liabilities of ours may be denominated in currencies other than the U.S.
dollar, and hence the value of such investments, or the amount of such liabilities, will depend in part on the relative strength of the U.S.
−Removed: The Company may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between foreign currencies and the U.S.
+Added: We may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between foreign currencies and the U.S.
Changes in foreign currency exchange rates may also affect the value of dividends and interest earned, and the level of gains and losses realized on the sale of securities.
2 unchanged sentences
These rates are also affected by the international balance of payments and other economic and financial conditions, government intervention, speculation and other factors.
−Removed: The Company is not obligated to engage in any currency hedging operations, and there can be no assurance as to the success of any hedging operations that the Company may implement.
−Removed: To the extent the Company enters into currency hedging operations, the Company may incur costs related to such hedging arrangements, which may be undertaken in exchange-traded or over-the-counter contexts, including futures, forwards, swaps, options and other instruments.
+Added: We are not obligated to engage in any currency hedging operations, and there can be no assurance as to the success of any hedging operations that we may implement.
+Added: To the extent we enter into currency hedging operations, we may incur costs related to such hedging arrangements, which may be undertaken in exchange-traded or over-the-counter contexts, including futures, forwards, swaps, options and other instruments.
The lack of liquidity in our investments may adversely affect our business.
−Removed: The lack of an established, liquid secondary market for the Company’s investments may have an adverse effect on the market value of the Company’s investments and on the Company’s ability to dispose of them.
−Removed: Additionally, the Company’s investments may be subject to certain transfer restrictions that would also contribute to illiquidity.
−Removed: Finally, Company assets that are typically traded in a liquid market may become illiquid if the applicable trading market tightens as a result of a significant macro-economic shock or for any other reason.
−Removed: Therefore, no assurance can be given that, if the Company is determined to dispose of a particular investment held by the Company, it could dispose of such investment at the prevailing market price or the current valuation of the investment.
−Removed: A portion of the Company’s investments may consist of securities that are subject to restrictions on resale by the Company because they were acquired in a “private placement” transaction or because the Company is deemed to be an affiliate of the issuer of such securities.
−Removed: Generally, the Company will be able to sell such securities only under Rule 144 under the Securities Act, which permits limited sales under specified conditions, or pursuant to a registration statement under the Securities Act.
−Removed: When restricted securities are sold to the public, the Company may be deemed to be an underwriter or possibly a controlling person with respect thereto for the purposes of the Securities Act and be subject to liability as such under the Securities Act.
−Removed: In addition, the Company may, from time to time, possess material, non-public information about a borrower or issuer or the Company may be an affiliate of a borrower or an issuer.
−Removed: Such information or affiliation may limit the ability of the Company to buy and sell investments.
−Removed: Due to the illiquid nature of the Company’s investments, the Company cannot predict with confidence what the exit strategy will ultimately be for any given position, or that one will definitely be available.
+Added: The lack of an established, liquid secondary market for our investments may have an adverse effect on the market value of our investments and on our ability to dispose of them.
+Added: Additionally, our investments may be subject to certain transfer restrictions that would also contribute to illiquidity.
+Added: Finally, our assets that are typically traded in a liquid market may become illiquid if the applicable trading market tightens as a result of a significant macro-economic shock or for any other reason.
+Added: Therefore, no assurance can be given that, if we are determined to dispose of a particular investment held by us, it could dispose of such investment at the prevailing market price or the current valuation of the investment.
+Added: A portion of our investments may consist of securities that are subject to restrictions on resale by us because they were acquired in a “private placement” transaction or because we are deemed to be an affiliate of the issuer of such securities.
+Added: Generally, we will be able to sell such securities only under Rule 144 under the Securities Act, which permits limited sales under specified conditions, or pursuant to a registration statement under the Securities Act.
+Added: When restricted securities are sold to the public, we may be deemed to be an underwriter or possibly a controlling person with respect thereto for the purposes of the Securities Act and be subject to liability as such under the Securities Act.
+Added: In addition, we may, from time to time, possess material, non-public information about a borrower or issuer or we may be an affiliate of a borrower or an issuer.
+Added: Such information or affiliation may limit the ability of us to buy and sell investments.
+Added: Due to the illiquid nature of our investments, we cannot predict with confidence what the exit strategy will ultimately be for any given position, or that one will definitely be available.
Exit strategies which appear to be viable when an investment is initiated may be precluded by the time the investment is ready to be realized due to economic, legal, political or other factors.
1 unchanged sentence
General interest rate fluctuations and changes in credit spreads on floating rate loans may have a substantial negative impact on our investments and investment opportunities and, accordingly, may have a material adverse effect on our rate of return on invested capital, our net investment income, our NAV and the market price of our Common Stock.
−Removed: The majority of our debt investments are expected to have variable interest rates that reset periodically based on benchmarks such as LIBOR or secured overnight financing rate (“SOFR”), so an increase in interest rates from their historically low present levels may make it more difficult for our portfolio companies to service their obligations under our debt investments and increase defaults even where our investment income increases.
+Added: The majority of our debt investments are expected to have variable interest rates that reset periodically based on benchmarks such as the London Interbank Offer Rate (“LIBOR”) or secured overnight financing rate (“SOFR”), so an increase in interest rates from their historically low present levels may make it more difficult for our portfolio companies to service their obligations under our debt investments and increase defaults even where our investment income increases.
In addition, any such increase in interest rates would make it more expensive to use debt to finance our investments.
12 unchanged sentences
In an effort to combat inflation, the U.S.
−Removed: Federal Reserve has increased the federal funds rate in 2022 and is widely expected to further increase the federal funds rate in 2023.
+Added: Federal Reserve has increased the federal funds rate in 2022 and 2023 and may further increase the federal funds rate in 2024.
Because we borrow money and may issue debt securities or preferred stock to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds.
In this period of rising interest rates, our interest income will increase as the majority of our portfolio bears interest at variable rates, see “ Item 7A.
−Removed: Qualitative and Quantitative Disclosures About Market Risk.” Conversely, if interest rates decrease, we may earn less interest income from investments and our cost of funds will also decrease, to a lesser extent, resulting in lower net investment income.
+Added: Qualitative and Quantitative Disclosures About Market Risk.
+Added: ” Conversely, if interest rates decrease, we may earn less interest income from investments and our cost of funds will also decrease, to a lesser extent, resulting in lower net investment income.
From time to time, we may also enter into certain hedging transactions to mitigate our exposure to changes in interest rates.
Rising interest rates may also increase the cost of debt for our underlying portfolio companies, which could adversely impact their financial performance and ability to meet ongoing obligations to us.
−Removed: We may from time to time incur contingent liabilities in connection with an investment that may adversely affect the Company.
−Removed: The Company may from time to time incur contingent liabilities in connection with an investment.
−Removed: For example, the Company may acquire a revolving credit or delayed draw term facility that has not yet been fully drawn.
−Removed: If the borrower subsequently draws down on the facility, the Company will be obligated to fund the amounts due.
−Removed: There can be no assurance that the Company will adequately reserve for such contingent liabilities and that such liabilities will not have an adverse effect on the Company.
−Removed: In connection with the disposition of the Company’s investment in a portfolio company, the Company may be required to make representations about the business and financial affairs of such company typical of those made in connection with the sale of a business.
−Removed: The Company also may be required to indemnify the purchasers of the Company’s investment to the extent that any such representations are inaccurate or with respect to certain potential liabilities.
−Removed: These arrangements may result in the incurrence of contingent liabilities for which the Company may establish reserves or escrows.
−Removed: In that regard, shareholders may be required to purchase shares of Common Stock pursuant to their Subscription Agreements in order to fund the Company’s obligations, including indemnity obligations.
+Added: We may from time to time incur contingent liabilities in connection with an investment that may adversely affect us.
+Added: We may from time to time incur contingent liabilities in connection with an investment.
+Added: For example, we may acquire a revolving credit or delayed draw term facility that has not yet been fully drawn.
+Added: If the borrower subsequently draws down on the facility, we will be obligated to fund the amounts due.
+Added: There can be no assurance that we will adequately reserve for such contingent liabilities and that such liabilities will not have an adverse effect on us.
+Added: In connection with the disposition of our investment in a portfolio company, we may be required to make representations about the business and financial affairs of such company typical of those made in connection with the sale of a business.
+Added: We also may be required to indemnify the purchasers of our investment to the extent that any such representations are inaccurate or with respect to certain potential liabilities.
+Added: These arrangements may result in the incurrence of contingent liabilities for which we may establish reserves or escrows.
+Added: In that regard, shareholders may be required to purchase shares of Common Stock pursuant to their Subscription Agreements in order to fund our obligations, including indemnity obligations.
We generally will not control our portfolio companies and may co-invest with third-parties.
We generally will not control our portfolio companies, even though we may have board representation or board observation rights, and debt agreements may contain certain restrictive covenants.
−Removed: As a result, the Company will be subject to the risk that a portfolio company in which it invests may make business decisions with which it disagrees and the management of such company, as representatives of the holders of their common equity, may take risks or otherwise act in ways that do not serve the Company’s interests as debt investors.
−Removed: Due to the lack of liquidity for investments in non-traded companies, the Company may not be able to dispose of interests in its portfolio companies as readily as it would like or at an appropriate valuation.
−Removed: As a result, a portfolio company may make decisions that could decrease the value of the Company’s portfolio holdings.
−Removed: The Company may co-invest with third-parties through partnerships, joint ventures or other entities.
−Removed: Such investments may involve risks not present in investments where a third-party is not involved, including the possibility that a third-party co-venturer or partner may at any time have economic or business interests or goals which are inconsistent with those of the Company, or may be in a position to take action contrary to the investment objective of the Company.
−Removed: In addition, the Company may in certain circumstances be liable for actions of its third-party co-venturer or partner.
+Added: As a result, we will be subject to the risk that a portfolio company in which it invests may make business decisions with which it disagrees and the management of such company, as representatives of the holders of their common equity, may take risks or otherwise act in ways that do not serve our interests as debt investors.
+Added: Due to the lack of liquidity for investments in non-traded companies, we may not be able to dispose of interests in our portfolio companies as readily as it would like or at an appropriate valuation.
+Added: As a result, a portfolio company may make decisions that could decrease the value of our portfolio holdings.
+Added: We may co-invest with third-parties through partnerships, joint ventures or other entities.
+Added: Such investments may involve risks not present in investments where a third-party is not involved, including the possibility that a third-party co-venturer or partner may at any time have economic or business interests or goals which are inconsistent with those of ours, or may be in a position to take action contrary to our investment objective.
+Added: In addition, we may in certain circumstances be liable for actions of our third-party co-venturer or partner.
Investments in a portfolio company, whether debt, equity, or a combination thereof, may lead to receiving material non-public information or obtaining “control” of the target company.
−Removed: The ability to exit an investment where the Company has material non-public information or control could be limited and could result in a realized loss on the investment.
−Removed: The Company may be provided with material non-public information that may restrict its ability to trade in the portfolio company’s securities or be subject to other limitations on trading.
−Removed: While the Company intends to comply with all applicable securities laws and to make judgments concerning restrictions on trading in good faith, the Company may trade in the portfolio company’s securities while engaged in the portfolio company’s restructuring activities.
−Removed: Such trading creates a risk of litigation and liability that may cause the Company to incur significant legal fees and potential losses.
−Removed: As the Company will indemnify any person serving on a committee on its behalf for claims arising from the breaches of those obligations, indemnification payments could adversely affect the return on the Company’s investment in a portfolio company.
−Removed: The Company may be subject to allegations of lender liability.
+Added: The ability to exit an investment where we have material non-public information or control could be limited and could result in a realized loss on the investment.
+Added: We may be provided with material non-public information that may restrict our ability to trade in the portfolio company’s securities or be subject to other limitations on trading.
+Added: While we intend to comply with all applicable securities laws and to make judgments concerning restrictions on trading in good faith, we may trade in the portfolio company’s securities while engaged in the portfolio company’s restructuring activities.
+Added: Such trading creates a risk of litigation and liability that may cause us to incur significant legal fees and potential losses.
+Added: As we will indemnify any person serving on a committee on its behalf for claims arising from the breaches of those obligations, indemnification payments could adversely affect the return on our investment in a portfolio company.
+Added: We may be subject to allegations of lender liability.
A number of judicial decisions in the United States have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories (collectively termed “lender liability”).
Generally, lender liability is founded upon the premise that an institutional lender has violated a duty (whether implied or contractual) of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in creation of a fiduciary duty owed to the borrower or its other creditors or shareholders.
−Removed: Because of the nature of certain of the Company’s investments, the Company could be subject to allegations of lender liability.
−Removed: In addition, under common law principles that in some cases form the basis for lender liability claims, if a lending institution (i) intentionally takes an action that results in the undercapitalization of a borrower to the detriment of other creditors of such borrower, (ii) engages in other inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (iv) uses its influence as a stockholder to dominate or control a borrower to the detriment of the other creditors of such borrower, a court may elect to subordinate the claim of the offending lending institution to the claims of the disadvantaged creditor or creditors, a remedy called “equitable subordination.” Because of the nature of certain of the Company’s and its affiliates’ investments, the Company could be subject to claims from creditors of an obligor that the Company’s investments issued by such obligor should be equitably subordinated.
−Removed: The Company may make investments in which it would not be the lead creditor.
−Removed: It is, accordingly, possible that lender liability or equitable subordination claims affecting the Company’s investment could arise without the direct involvement of the Company.
−Removed: The Company may be subject to risks due to borrower fraud.
+Added: Because of the nature of certain of our investments, we could be subject to allegations of lender liability.
+Added: In addition, under common law principles that in some cases form the basis for lender liability claims, if a lending institution (i) intentionally takes an action that results in the undercapitalization of a borrower to the detriment of other creditors of such borrower, (ii) engages in other inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (iv) uses its influence as a stockholder to dominate or control a borrower to the detriment of the other creditors of such borrower, a court may elect to subordinate the claim of the offending lending institution to the claims of the disadvantaged creditor or creditors, a remedy called “equitable subordination.” Because of the nature of certain of our and our affiliates’ investments, we could be subject to claims from creditors of an obligor that our investments issued by such obligor should be equitably subordinated.
+Added: We may make investments in which it would not be the lead creditor.
+Added: It is, accordingly, possible that lender liability or equitable subordination claims affecting our investment could arise without our direct involvement.
+Added: We may be subject to risks due to borrower fraud.
There is a risk of material misrepresentation or omission on the part of the borrower.
−Removed: Such inaccuracy or incompleteness may adversely affect the valuation of the collateral underlying the loans or may adversely affect the ability of the Company to perfect or effectuate a lien on any collateral securing the loan.
−Removed: The Company cannot guarantee the accuracy or completeness of representations made by and information provided by borrowers.
−Removed: The Company is subject to U.S.
+Added: Such inaccuracy or incompleteness may adversely affect the valuation of the collateral underlying the loans or may adversely affect the ability of us to perfect or effectuate a lien on any collateral securing the loan.
+Added: We cannot guarantee the accuracy or completeness of representations made by and information provided by borrowers.
+Added: We are subject to U.S.
federal and state and applicable foreign laws enacted for the protection of creditors.
−Removed: federal and state and applicable foreign laws enacted for the protection of creditors may apply to the purchase of the Company’s investments, which constitute the primary assets of the Company, by virtue of the Company’s role as a creditor with respect to the borrowers under such investments.
−Removed: In general, if payments on an investment are voidable, whether as fraudulent conveyances or preferences, such payments can be recaptured either from the initial recipient (such as the Company) or from subsequent transferees of such payments, including shareholders.
−Removed: The Company’s investment activities may subject us to the normal risks of becoming involved in litigation by third parties.
−Removed: The Company’s investment activities subject it to the normal risks of becoming involved in litigation by third parties.
−Removed: This risk is somewhat greater where the Company exercises control or significant influence over a company’s direction.
−Removed: The Company may also be subject to certain litigation and related risks associated with origination and servicing.
+Added: federal and state and applicable foreign laws enacted for the protection of creditors may apply to the purchase of our investments, which constitute our primary assets, by virtue of our role as a creditor with respect to the borrowers under such investments.
+Added: In general, if payments on an investment are voidable, whether as fraudulent conveyances or preferences, such payments can be recaptured either from the initial recipient (such as the us) or from subsequent transferees of such payments, including shareholders.
+Added: If any of these actions occurred, it would affect our financial condition, business, and results of operations.
+Added: Our investment activities may subject us to the normal risks of becoming involved in litigation by third parties.
+Added: Our investment activities subject us to the normal risks of becoming involved in litigation by third parties.
+Added: This risk is somewhat greater where we exercise control or significant influence over a company’s direction.
+Added: We may also be subject to certain litigation and related risks associated with origination and servicing.
Loan origination and servicing companies are routinely involved in legal proceedings concerning matters that arise in the ordinary course of their business.
2 unchanged sentences
Governmental investigations, examinations or regulatory actions, or private lawsuits, including purported class action lawsuits, may adversely affect such companies’ financial results.
−Removed: To the extent the Company seeks to engage in origination and/or servicing directly, or has a financial interest in, or is otherwise affiliated with, an origination or servicing company, the Company will be subject to enhanced risks of litigation, regulatory actions and other proceedings.
−Removed: The expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgments would generally be borne by the Company and would reduce net assets.
+Added: To the extent we seek to engage in origination and/or servicing directly, or has a financial interest in, or is otherwise affiliated with, an origination or servicing company, we will be subject to enhanced risks of litigation, regulatory actions and other proceedings.
+Added: The expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgments would generally be borne by us and would reduce net assets.
The effect of global climate change may impact the operations of our portfolio companies.
−Removed: There may be evidence of global climate change.
Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change.
6 unchanged sentences
In December 2015 the United Nations, of which the U.S.
−Removed: is a member, adopted a climate accord (the “Paris Agreement”) with the long-term goal of limiting global warming and the short-term goal of significantly reducing greenhouse gas emissions.
−Removed: subsequently ratified the Paris Agreement, and it entered into force on November 4, 2016.
−Removed: In June 2017, the U.S.
−Removed: announced an intention to withdraw from the agreement, but the earliest effective withdrawal date for the U.S.
−Removed: under the Paris Agreement is November 2020.
+Added: is a member, adopted a climate accord (the “Paris Agreement”), which the United States rejoined in 2021, with the long-term goal of limiting global warming and the short-term goal of significantly reducing greenhouse gas emissions.
+Added: Additionally, the Inflation Reduction Act of 2022 included several measures designed to combat climate change, including restrictions on methane emissions.
As a result, some of our portfolio companies may become subject to new or strengthened regulations or legislation which could increase their operating costs and/or decrease their revenues.
35 unchanged sentences
The calculation assumes (i) $889.4 million in total assets, (ii) a weighted average cost of funds of 7.76%, (iii) $400.0 million of debt outstanding (i.e.
−Removed: assumes that the full amount is available to us under our MS Credit Facility and MS Subscription Facility as of December 31, 2022) and (iv) $372.4 million in stockholders’ equity and (v) no incentive fees payable by the Company to the Adviser.
+Added: assumes that the full amount is available to us under our JPM Credit Facility as of December 31, 2023) and (iv) $388.1 million in stockholders’ equity and (v) no incentive fees payable by us to the Adviser.
In order to compute the “Corresponding return to stockholders,” the “Assumed Return on Our Portfolio (net of expenses)” is multiplied by the assumed total assets to obtain an assumed return to us.
1 unchanged sentence
The return available to stockholders is then divided by our stockholders’ equity to determine the “Corresponding return to stockholders.” Actual interest payments may be different.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Party Transactions and Agreements—Borrowings” for further information regarding our Borrowings.
Assumed Return on Our Portfolio (net of expenses)
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Shares of our Common Stock are illiquid assets for which there is not expected to be any secondary market nor is it expected that any will develop in the future.
−Removed: We intend to seek a liquidity event for our stockholders within four years following the end of the Initial Closing Period, provided that this period may be extended by up to two one-year extensions in the discretion of our Board of Directors.
+Added: We intend to seek a liquidity event for our stockholders within four years following the end of the Initial Closing Period, which has been extended by two one-year extensions by our Board of Directors.
However, there can be no assurance that we will complete a liquidity event within such time or at all.
We expect that our Board of Directors, in the exercise of its duties to us, will determine to pursue a liquidity event when it believes that then-current market conditions are favorable for a liquidity event, and that such an event is in our best interests.
−Removed: A liquidity event could include (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 IPO or an Exchange Listing of our 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.
+Added: A liquidity event could include (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 our 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.
In making a determination of what type of liquidity event is in our best interests, our Board of Directors, including our independent directors, may consider a variety of criteria, including, but not limited to, market conditions, portfolio diversification, portfolio performance, our financial condition, potential access to capital as a listed company, market conditions for the sale of our assets or listing of our Common Stock, internal management requirements to become a perpetual life company and the potential for stockholder liquidity.
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therefore, it will be difficult to sell shares of our Common Stock.
−Removed: We intend to seek a potential liquidity event for our stockholders within four years following the end of the Initial Closing Period, provided that this period may be extended by up to two one-year extensions in the discretion of our Board of Directors.
+Added: We intend to seek a potential liquidity event for our stockholders within four years following the end of the Initial Closing Period, which has been extended by two one-year extensions by our Board of Directors.
We expect that our Board of Directors, in the exercise of the requisite standard of care applicable to directors under Delaware law, will determine to pursue a liquidity event when it believes that then-current market conditions are favorable for a liquidity event, and that such a transaction is in our best interests.
−Removed: A liquidity event could include (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 IPO or an Exchange Listing of our 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.
+Added: A liquidity event could include (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 our 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.
However, there can be no assurance that we will complete a liquidity event within such time or at all.
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In addition, in any repurchase offer, if the amount requested to be repurchased in any repurchase offer exceeds the repurchase offer amount, repurchases of shares of Common Stock would generally be made on a pro rata basis (based on the number of shares of Common Stock put to us for repurchases), not on a first-come, first-served basis.
−Removed: There is no assurance that the Board of Directors will adopt a repurchase program at the end of the Drawdown Period or at all, and the Board of Directors may amend, suspend or terminate any such repurchase program at any time in its discretion.
+Added: There is no assurance that our Board of Directors will adopt a repurchase program at the end of the Drawdown Period or at all, and our Board of Directors may amend, suspend or terminate any such repurchase program at any time in its discretion.
Our stockholders may experience dilution in their ownership percentage, which could reduce the overall value of their investment.
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However, we may request capital contributions on a non-pro rata basis in accordance with the terms of the Subscription Agreements.
−Removed: To the extent an investor is required to purchase less than its pro rata share of a drawdown of investor capital commitments, such stockholder will experience dilution in their percentage ownership of the Company.
+Added: To the extent an investor is required to purchase less than its pro rata share of a drawdown of investor capital commitments, such stockholder will experience dilution in their percentage ownership of us.
Under the terms of our charter, our Board of Directors is authorized to issue shares of preferred stock with rights and privileges superior to common stockholders without common stockholder approval.
Under the terms of our charter, our Board of Directors is authorized to issue shares of preferred stock in one or more series without stockholder approval.
−Removed: The Board of Directors has discretion to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, and terms or conditions of redemption for each class or series of preferred stock.
+Added: Our Board of Directors has discretion to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, and terms or conditions of redemption for each class or series of preferred stock.
Every issuance of preferred stock will be required to comply with the requirements of the 1940 Act, including among other things, that (1) immediately after issuance and before any distribution is made with respect to our Common Stock and before any purchase of Common Stock is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such distribution or purchase price, as the case may be, and (2) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if distributions on such preferred stock are in arrears by two years or more.
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Our Board of Directors will adopt a resolution exempting from Section 203 of the DGCL any business combination between us and any other person, subject to prior approval of such business combination by our Board of Directors, including approval by a majority of our directors who are not “interested persons.” If our Board of Directors does not adopt, or adopts but later repeals such resolution exempting business combinations, or if our Board of Directors does not approve a business combination, Section 203 of the DGCL may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.
−Removed: We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our certificate of incorporation that classify our Board of Directors in three classes serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our Board of Directors to classify or reclassify shares of our preferred stock in one or more classes or series, to cause the issuance of additional shares of our stock, and to amend our certificate of incorporation, without stockholder approval, to increase or decrease the number of shares of stock that we have authority to issue.
+Added: We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our certificate of incorporation that classify our Board of Directors in three classes serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our Board of Directors to classify or reclassify shares of our preferred stock in one or more classes or series, to cause the issuance of additional shares of our Common Stock, and to amend our certificate of incorporation, without stockholder approval, to increase or decrease the number of shares of stock that we have authority to issue.
These provisions, as well as other provisions we have adopted in our certificate of incorporation and bylaws, may delay, defer or prevent a transaction or a change in control in circumstances that could give our stockholders the opportunity to realize a premium of the NAV of shares of our Common Stock.
The issuance of shares of our Series A Preferred Stock, par value $0.001 per share dilutes the relative voting power and ownership of holders of our Common Stock.
−Removed: The Series A Preferred Stock is convertible at the option of either the holder of Series A Preferred Stock or the Company at any time commencing six months following the closing date of a liquidity event.
+Added: Our Series A Preferred Stock is convertible at the option of either the holder of Series A Preferred Stock or us at any time commencing six months following the closing date of a liquidity event.
The holders of Series A Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our Common Stock on all matters submitted to a vote of the holders of our Common Stock, except for the election of our preferred directors.
−Removed: Therefore, the issuance of the Series A Preferred Stock effectively reduces the relative voting power of the holders of our Common Stock because the conversion of the Series A Preferred Stock into Common Stock would dilute the ownership interest of existing holders of our Common Stock.
−Removed: The Series A Preferred Stock may be unrated securities.
−Removed: The Company intends to achieve an investment grade rating for the Series A Preferred Stock from a nationally recognized statistical ratings organization (“NRSRO”) and to seek a second rating from another NRSRO within two years of the initial closing of the private placement of the Series A Preferred Stock.
−Removed: However, there is no assurance that the Company will receive a rating, or the desired rating, from a NRSRO and may remain unrated.
+Added: Therefore, the issuance of our Series A Preferred Stock effectively reduces the relative voting power of the holders of our Common Stock because the conversion of our Series A Preferred Stock into Common Stock would dilute the ownership interest of existing holders of our Common Stock.
+Added: Our Series A Preferred Stock may be unrated securities.
+Added: We intend to achieve an investment grade rating for our Series A Preferred Stock from a nationally recognized statistical ratings organization (“NRSRO”) and to seek a second rating from another NRSRO within two years of the initial closing of the private placement of our Series A Preferred Stock.
+Added: However, there is no assurance that we will receive a rating, or the desired rating, from a NRSRO and may remain unrated.
Our Series A Preferred Stock is subordinate to our existing and future indebtedness.
−Removed: While preferred stockholders, including holders of the Series A Preferred Stock, will have equal liquidation and distribution rights to any other series of preferred stock, they are subordinated to our existing and future indebtedness.
+Added: While preferred stockholders, including holders of our Series A Preferred Stock, will have equal liquidation and distribution rights to any other series of preferred stock, they are subordinated to our existing and future indebtedness.
Therefore, dividends, distributions and other payments to preferred stockholders in liquidation or otherwise may be subject to prior payments due to the holders of senior indebtedness.
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We may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose.
−Removed: If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax.
+Added: If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S.
+Added: federal income tax.
You may receive shares of our Common Stock as distributions which could result in adverse tax consequences to you.
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tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock.
−Removed: In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, then such sales may put downward pressure on the trading price of our stock.
+Added: In addition, if a significant number of our stockholders determine to sell shares of our Common Stock in order to pay taxes owed on dividends, then such sales may put downward pressure on the trading price of our Common Stock.
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.
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For non-corporate stockholders, including individuals, trusts, and estates, significant limitations generally apply to the deductibility of certain expenses of a non-publicly offered regulated investment company, including advisory fees.
−Removed: In particular, these expenses, referred to as miscellaneous itemized deductions, are not deductible after 2015 by individuals for before 2016.
−Removed: From 2026 and after, such expenses may be deductible only to the extent they exceed 2% of such a stockholder’s adjusted gross income.
+Added: In particular, these expenses, referred to as miscellaneous itemized deductions, are generally not deductible for taxable years beginning before 2026.
+Added: For taxable years beginning in 2026 and later, such expenses may be deductible only to the extent they exceed 2% of such a stockholder’s adjusted gross income.
Such expenses are not deductible by an individual for alternative minimum tax purposes.
−Removed: 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.
+Added: 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.
An investment in the shares by a Non-U.S.
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federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in our shares.
+Added: RISKS RELATING TO THE MERGERS
+Added: We may be unable to realize the benefits anticipated by the Mergers, including estimated cost savings, or it may take longer than anticipated to achieve such benefits.
+Added: The realization of certain benefits anticipated as a result of the Mergers will depend in part on the integration of FBLC’s investment portfolio with our investment portfolio and the integration of FBLC’s business with our business.
+Added: Though the Adviser believes it can integrate us and FBLC given the significant overlap in investment portfolios, operations and governance structure, there can be no assurance that FBLC’s investment portfolio or business can be operated profitably or integrated successfully into our operations in a timely fashion or at all.
+Added: The dedication of management resources to such integration may detract attention from the day-to-day business of the combined company and there can be no assurance that there will not be substantial costs associated with the transition process or there will not be other material adverse effects as a result of these integration efforts.
+Added: Such effects, including incurring unexpected costs or delays in connection with such integration and failure of FBLC’s investment portfolio to perform as expected, could have a material adverse effect on the financial results of the combined company.
+Added: We also expect to achieve certain synergies and cost savings from the Mergers when the two companies have fully integrated their portfolios.
+Added: It is possible that the estimates of these synergies and potential cost savings could ultimately be incorrect.
+Added: The cost savings estimates also assume we will be able to combine our operations and FBLC’s operations in a manner that permits those cost savings to be fully realized.
+Added: If the estimates turn out to be incorrect or if we are not able to successfully combine FBLC’s investment portfolio or business with our operations, the anticipated synergies and cost savings may not be fully realized or realized at all or may take longer to realize than expected.
GENERAL RISK FACTORS
Political, social and economic uncertainty creates and exacerbates risks.
−Removed: Social, political, economic and other conditions and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts and social unrest) will occur that create uncertainty and have significant impacts on issuers, industries, governments and other systems, including the financial markets, to which the Company and its investments are exposed.
+Added: Social, political, economic and other conditions and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts and social unrest) that occur will create uncertainty and have significant impacts on issuers, industries, governments and other systems, including the financial markets, to which us and our investments are exposed.
As global systems, economies and financial markets are increasingly interconnected, events that once had only local impact are now more likely to have regional or even global effects.
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increased risk of default (by both government and private obligors and issuers);
−Removed: further social, economic, and political instability;
+Added: further social, economic, and political instability, including global or regional conflicts;
nationalization of private enterprise;
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and difficulties in obtaining and/or enforcing legal judgments.
−Removed: In addition, disruptions in the capital markets caused by the the rising interest rate environment and fears of a recession have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets.
+Added: In addition, disruptions in the capital markets caused by the rising interest rate environment and fears of a recession have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets.
These and future market disruptions and/or illiquidity can be expected to have an adverse effect on our business, financial condition, results of operations and cash flows.
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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.
−Removed: capital markets have experienced extreme disruption since the global outbreak of COVID-19.
−Removed: Such disruptions have been evidenced by volatility in global stock markets as a result of, among other things, inflation and fears of a global recession.
−Removed: Despite actions of the U.S.
−Removed: federal government and foreign governments, these events have contributed to worsening general economic conditions that are materially and adversely impacting broader financial and credit markets and reducing the availability of debt and equity capital for the market as a whole.
−Removed: These conditions could continue for a prolonged period of time or worsen in the future.
−Removed: Significant changes or volatility in the capital markets may negatively affect, the valuations of our investments.
−Removed: While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan to hold an investment to maturity).
−Removed: Our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that may not reflect the full impact of the current economic environment.
−Removed: Any public health emergency, including the COVID-19 pandemic or an outbreak of other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments and our portfolio companies.
−Removed: Significant changes in the capital markets, such as the disruption in economic activity caused by rising interest rates, have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our and our portfolio companies’ operating results and the fair values of our debt and equity investments.
−Removed: Additionally, the recent disruption in economic activity caused by rising interest rates and a potential global recession has had, and may continue to have, a negative effect on the potential for liquidity events involving our investments.
−Removed: The illiquidity of our investments may make it difficult for us to sell such investments to access capital, if required.
−Removed: As a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them to increase our liquidity.
−Removed: An inability on our part to raise incremental capital, and any required sale of all or a portion of our investments as a result, could have a material adverse effect on our business, financial condition or results of operations.
−Removed: Further, current market conditions may make it difficult to raise equity capital, extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business.
−Removed: The debt capital available to us in the future, if available at all, may bear a higher interest rate and may be available only on terms and conditions less favorable than those of our existing debt and such debt may need to be incurred in a rising interest rate environment.
−Removed: If we are unable to raise new debt or refinance our existing debt, then our equity investors will not benefit from the potential for increased returns on equity resulting from leverage, and we may be unable to make new commitments or to fund existing commitments to our portfolio companies.
−Removed: Any inability to extend the maturity of or refinance our existing debt, or to obtain new debt, could have a material adverse effect on our business, financial condition or results of operations.
+Added: capital markets have experienced volatility and disruption in recent years following the spread of COVID-19 in the United States and globally.
+Added: Some economists and major investment banks have expressed concern that new outbreaks of the virus or another pandemic or epidemic could lead to a world-wide economic downturn.
+Added: Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets.
+Added: The federal government and the Federal Reserve, as well as foreign governments and central banks, have implemented, and may in the future implement, significant fiscal and monetary policies in response to these disruptions, and additional government and regulatory responses may be possible.
+Added: These actions, future market disruptions and illiquidity could have an adverse effect on our business, financial condition, results of operations and cash flows.
+Added: Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.
+Added: These events could limit our investment originations and our ability to grow, and could have a negative impact on our operating results and the fair values of our debt and equity investments.
+Added: We believe that attractive investment opportunities may present themselves during this volatile period as in other periods of market volatility, and we may have opportunities to make investments at compelling values.
+Added: However, periods of market disruption and instability, like the one we are experiencing currently, may adversely affect our access to sufficient debt and equity capital in order to take advantage of attractive investment opportunities that are created during these periods.
+Added: In addition, the debt capital that will be available in the future, if any, may be at a higher cost and on less favorable terms and conditions.
Inflation and Supply Chain Risk could adversely impact our portfolio companies and our results of our operations.
+Added: Inflation and fluctuations in inflation rates have had in the past, and may in the future have, negative effects on economies and financial markets, particularly in emerging economies.
+Added: For example, wages and prices of inputs increase during periods of inflation, which can negatively impact returns on investments.
+Added: In an attempt to stabilize inflation, countries may impose wage and price controls or otherwise intervene in the economy.
+Added: Governmental efforts to curb inflation often have negative effects on the level of economic activity.
+Added: There can be no assurance that inflation will not become a serious problem in the future and have an adverse impact on our returns.
Economic activity has continued to accelerate across sectors and regions.
−Removed: Nevertheless, due to global supply chain issues, a rise in energy prices and strong consumer demand as economies continue to reopen, inflation is showing signs of acceleration in the U.S.
−Removed: and globally.
−Removed: Inflation is likely to continue in the near to medium-term, particularly in the U.S., with the possibility that monetary policy may tighten in response.
−Removed: Persistent inflationary pressures could affect our portfolio companies’ profit margins.
−Removed: 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.
+Added: Nevertheless, global supply chain issues have, and may in the future, lead to a rise in energy prices.
+Added: Inflation may continue in the near to medium‐term, particularly in the U.S., with the possibility that monetary policy may tighten in response.
+Added: Persistent inflationary pressures could affect our obligors’ profit margins.
+Added: Additionally, the continuing trade dispute between the United States and China, pursuant to which both countries have, among other things, imposed tariffs on one another, has had an adverse economic effect on U.S.
+Added: markets and international trade more broadly.
+Added: This adverse economic effect is likely to become more pronounced if the dispute remains unresolved, which could have an adverse impact on our portfolio companies.
+Added: For example, existing and any additional supply chain and other laws, regulations, or executive orders by either country that restrict or prohibit transactions or impose requirements or limitations on business could impair the ability of U.S.-based companies (in which we are likely to invest) to expand into markets in China and the ability of such companies’ to produce or obtain component parts necessary for production.
+Added: Also, for the foreseeable future, the trade dispute will likely continue to be an ongoing source of instability, resulting in significant currency fluctuations, increased capital markets volatility, and other adverse effects on international markets, international trade agreements, and other existing cross-border cooperation arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise), which could present similar and additional potential risks and consequences for us and our portfolio companies.
+Added: Uncertainty with respect to the financial stability of the United States could have a significant adverse effect on our business, financial condition and results of operations.
debt ceiling and budget deficit concerns have increased the possibility of a downgrade of the U.S.
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In addition, we may be unable to enter into appropriate hedging transactions when desired and any hedging transactions we enter into may not be effective.
−Removed: As a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments, an increase in interest rates would make it easier for us to meet or exceed the hurdle rate applicable to the incentive fee and may result in a substantial increase in the amount of incentive fees payable to the Advisor with respect to Pre-Incentive Fee Net Investment Income.
+Added: As a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments, an increase in interest rates would make it easier for us to meet or exceed the hurdle rate applicable to the incentive fee and may result in a substantial increase in the amount of incentive fees payable to the Adviser with respect to Pre-Incentive Fee Net Investment Income.
Also, an increase in interest rates on investments available to investors could make investment in our Common Stock less attractive if we are not able to increase our distributions, which could materially reduce the value of our Common Stock.
−Removed: The replacement of LIBOR with an alternative reference rate may result in an overall increase to borrowing costs or cause other disruptions, which could have an effect on our results of operations, financial condition and cash flow.
−Removed: LIBOR was widely used as a reference for setting the interest rate on loans, bonds and derivatives globally.
−Removed: However, by June 2023, LIBOR is expected to be completely phased out as a reference rate.
−Removed: Federal Reserve, in conjunction with the Alternative Reference Rates Committee, has recommended a new reference rate derived from short-term repurchase agreements backed by Treasury securities, SOFR.
−Removed: Certain of the Company’s investments and/or other indebtedness of the Company’s portfolio companies have interest rates with a LIBOR reference.
−Removed: As a result, the transition away from LIBOR may impact the Company and/or the Company’s portfolio companies.
−Removed: Even if replacement conventions (e.g., SOFR) are adopted in the lending and bond markets, it is uncertain whether they might affect the Company’s floating-rate investments, including by:
−Removed: • Impacting the pricing, liquidity, value of, return on and trading for a broad array of financial products, including any LIBOR-linked securities, loans and derivatives that may be included in the Company’s assets;
−Removed: • Requiring extensive changes to documentation that governs or references LIBOR or LIBOR-based products, including, for example, pursuant to time-consuming renegotiations of documentation to modify the terms of investments;
−Removed: • Resulting in disputes, litigation or other actions with portfolio companies, or other counterparties, regarding the interpretation and enforceability of provisions in the Company’s LIBOR-based investments, such as fallback language or other related provisions, including, in the case of fallbacks to the alternative reference rates, any economic, legal, operational or other impact resulting from the fundamental differences between LIBOR and the various alternative reference rates;
−Removed: • Causing the Company to incur additional costs in relation to any of the above factors.
−Removed: In addition to the Company and portfolio companies potentially needing to renegotiate some of those instruments to address a transition away from LIBOR, there also may be different conventions that arise in different but related market segments, which could result in mismatches between different assets and liabilities and, in turn, cause possible unexpected gains and/or losses for the Company or portfolio companies.
−Removed: Some of these replacement rates may also be subject to compounding or similar adjustments that cause the amount of any payment referencing a replacement rate not to be determined until the end of the relevant calculation period, rather than at the beginning, which could lead to administrative challenges for the Company.
−Removed: Furthermore, the determination of such replacement rate may require further negotiation and there can be no assurance that an agreement between the parties will be reached.
−Removed: If the transition from LIBOR results in an overall increase to borrowing costs, higher interest expense could affect the financial results and valuations of our funds’ portfolio companies.
−Removed: There is no guarantee that a transition from LIBOR to an alternative will not result in significant increases or volatility in risk-free benchmark rates or borrowing costs to borrowers, any of which could have an impact on our results of operations, financial condition and cash flow.
The amount of any distributions we pay is uncertain.
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Furthermore, many of our competitors have greater experience operating under, or are not subject to, the regulatory restrictions that the 1940 Act imposes on us as a BDC.
−Removed: 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.
+Added: 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 share price.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company.
Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing in the BDC space recently.
−Removed: While we are currently not subject to any securities litigation or stockholder activism, due to the potential volatility of our stock price and for a variety of other reasons, we may in the future become the target of securities litigation or stockholder activism.
+Added: While we are currently not subject to any securities litigation or stockholder activism, due to the potential volatility of our share price and for a variety of other reasons, we may in the future become the target of securities litigation or stockholder activism.
Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert the attention of management and our Board of Directors’ attention and resources from our business.
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A significant portion of our investment portfolio is recorded at fair value as determined in good faith by our Adviser and, as a result, there is uncertainty as to the value of our portfolio investments.
−Removed: Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there are no readily available market quotations, at fair value, as determined by our Adviser, as Valuation Designee, subject to oversight by the Board of Directors.
+Added: Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there are no readily available market quotations, at fair value, as determined by our Adviser, as Valuation Designee, subject to oversight by our Board of Directors.
However, the majority of our investments are not publicly traded or actively traded on a secondary market.
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Our Board of Directors has the authority to modify or waive our current operating policies, investment criteria and strategies without prior notice and without stockholder approval if it determines that doing so will be in the best interests of stockholders.
−Removed: We cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, NAV, operating results and value of our stock.
+Added: We cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, NAV, operating results and value of our Common Stock.
However, the effects might be adverse, which could negatively impact our ability to pay distributions and cause stockholders to lose all or part of their investment.
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As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods.
−Removed: 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.
−Removed: Terrorist attacks, acts of war, natural disasters, disease outbreaks, pandemics, or other similar events may disrupt our operations, as well as the operations of our portfolio companies.
+Added: 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.
+Added: Terrorist attacks, acts of war, global or regional conflicts (such as those in the Middle East and Eastern Europe), natural disasters, disease outbreaks, pandemics, or other similar events may disrupt our operations, as well as the operations of our portfolio companies.
Such acts have created, and continue to create, economic and political uncertainties and have contributed to recent global economic instability.
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however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.
−Removed: UNRESOLVED STAFF COMMENTS
−Removed: We do not own any real estate or other physical properties materially important to our operation.
−Removed: Our executive offices are located at 9 West 57th Street, 49th Floor, Suite 4920, New York, NY 10019.
−Removed: We believe that our current office facilities are adequate for our business as we intend to conduct it.
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.