What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-02-04 · 73 added, 162 removed, 314 unchanged (43% of the section changed)

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We commenced operations on April 8, 2004 upon completion of our initial public offering that raised $870 million in net proceeds from selling 62 million shares of common stock at a price of $15.00 per share (20.7 million shares at a price of $45.00 per share adjusted for the one-for-three reverse stock split).

Since then, and through December 31, 2020, we have raised approximately $2.21 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for $223.1 million.

Since then, and through June 30, 2021, we have raised approximately $2.21 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for $225.1 million.

Apollo Investment Management, L.P.

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COVID-19 Developments

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) a pandemic, which has resulted in uncertainty and disruption in the global economy and financial markets.

The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses.

Such actions are creating disruption in global supply chains, and adversely impacting many industries.

The outbreak has had and could continue to have an adverse impact on economic and market conditions and some economists, investment banks and The World Bank have indicated that current indicators point to a global recession that started in February 2020.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) a pandemic, which resulted in uncertainty and disruption in the global economy and financial markets.

The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19, as well as new strains, such as the new Delta strain, have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses.

Such actions created disruption in global supply chains, and adversely impacted many industries.

Even though vaccines have been distributed nationally in the United States and restrictions in the United States and several other countries are being lifted, the outbreak has had and could continue to have an adverse impact on economic and market conditions and some economists, investment banks and The World Bank have indicated that current indicators point to a global recession that started in February 2020.

While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic, containment measures, and the availability of effective vaccines, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as that of our portfolio companies, for an indefinite period of time.

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In connection with the adverse effects of the COVID-19 pandemic, we may need to restructure our investments in some of our portfolio companies, which could result in reduced interest payments, an increase in the amount of PIK interest we receive, or result in permanent impairments on our investments.

As of December 31, 2020, the fair value of our investments has been adversely impacted by the COVID-19 pandemic.

Our investment valuations are inherently less certain than they would be absent the current and potential impacts of COVID-19 and the values assigned as of this date may materially differ from the values that may ultimately be realized.

The downturn in the aviation industry from COVID-19 has resulted in Merx recording impairment losses related to aircraft leasing and impacted its financial condition.

The downturn in the aviation industry from COVID-19 has resulted in Merx Aviation recording impairment losses related to aircraft leasing and impacted its financial condition.

This may result in the further unrealized depreciation in value on the Company’s investments in Merx.

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A significant reduction in our net change in unrealized gains/losses may result due to decreases in the fair value of some of our portfolio company investments due to the immediate adverse economic effects of the COVID-19 pandemic and the continuing uncertainty surrounding its long-term impact.

We believe that the COVID-19 pandemic represents an extraordinary circumstance that materially impacts the fair value of our investments.

As a result, the fair value of our portfolio investments may be further negatively impacted after December 31, 2020 by by continued duration of the adverse market, as well as circumstances and events that are not yet known.

We believe that the COVID-19 pandemic represents an extraordinary circumstance that could materially impact the fair value of our investments.

As a result, the fair value of our portfolio investments may be further negatively impacted after June 30, 2021 by continued duration of the adverse market, as well as circumstances and events that are not yet known.

We are also subject to financial risks, including changes in market interest rates.

As of December 31, 2020, all of our debt portfolio investments bore interest at variable rates, which generally are LIBOR-based (or based on an equivalent applicable currency rate), and many of which are subject to certain floors.

As of June 30, 2021, all of our debt portfolio investments bore interest at variable rates, which generally are LIBOR-based (or based on an equivalent applicable currency rate), and many of which are subject to certain floors.

In connection with the COVID-19 pandemic, the U.S.

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LIBOR Developments

On July 27, 2017, the Financial Conduct Authority (“FCA”) announced that it would phase out the London Interbank Offered Rate (“LIBOR”) as a benchmark by the end of 2021 and the FCA has indicated that market participants should not rely on LIBOR being available after 2021.

As an alternative to LIBOR, for example, the U.S.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, is considering replacing U.S.-dollar LIBOR with the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements, backed by Treasury securities.

Abandonment of or modifications to LIBOR could have adverse impacts on newly issued financial instruments and our existing financial instruments which reference LIBOR.

Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR, or any changes announced with respect to such reforms, may result in a sudden or prolonged increase or decrease in the reported LIBOR rates and the value of LIBOR-based loans and securities, including those of other issuers we or our funds currently own or may in the future own.

It remains uncertain how such changes would be implemented and the effects such changes would have on us, issuers of instruments in which we invest and financial markets generally.

On July 27, 2017, the U.K.

Financial Conduct Authority (“FCA”) announced that it would phase out the London Interbank Offered Rate (“LIBOR”) as a benchmark by the end of 2021 and the FCA has indicated that market participants should not rely on LIBOR being available after 2021.

On March 5 2021, the FCA and ICE Benchmark Administration formally announced the dates after which the LIBOR rates will no longer be representative and subsequently cease publication.

The Alternative Reference Rates Committee (“ARRC”), a U.S.-based group convened by the U.S.

Federal Reserve Board and the Federal Reserve Bank of New York to identify a successor rate for U.S.

dollar LIBOR, confirmed that this announcement constitutes a “Benchmark Transition Event”.

The publication of all EUR and CHF LIBOR settings, the Spot Next/Overnight, 1 week, 2 month and 12 month JPY and GBP LIBOR settings, and the 1 week and 2 months US dollar LIBOR settings will cease after December 31, 2021.

The publication of the overnight, 1 month, 3 month, 6 month, and 12 months USD LIBOR settings will cease after June 30, 2023.

The FCA plans to consult the market on creating “synthetic” 1 month, 3 month and 6 month rates for GBP and JPY LIBOR, to be published for a limited time.

New York State legislation was signed into law to aid “tough legacy” LIBOR contracts.

Other legislative solutions are being pursued at the Federal level, in the U.K., and in Europe.

Federal banking agencies have also issued guidance encouraging banking and global organizations to cease reference to USD LIBOR as soon as practicable and in any event by December 31, 2021.

Benchmarks Regulation imposed conditions under which only compliant benchmarks may be used in new contracts after 2021.

The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR.

SOFR is a measure of the cost of borrowing cash overnight, collateralized by the U.S.

Treasury securities, and is based on directly observable U.S.

Treasury-backed repurchase transactions.

However, the COVID-19 pandemic may adversely impact the timing of many firms’ transition planning, and we continue to assess the potential impact of the COVID-19 pandemic on our transition plans.

Although SOFR appears to be the preferred replacement rate for U.S.

dollar LIBOR, at this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates, whether the COVID-19 pandemic will have further effect on LIBOR transition timelines or plans, or other reforms to LIBOR that may be enacted in the United States, United Kingdom or elsewhere.

The expected discontinuation of LIBOR could have a significant impact on our business.

The dollar amount of our outstanding debt investments and borrowings that are linked to LIBOR with maturity dates after the anticipated discontinuation date of 2021 is material.

The dollar amount of our outstanding debt investments and borrowings that are linked to LIBOR with maturity dates after the anticipated discontinuation date of December 31, 2021 is material.

We anticipate significant operational challenges for the transition away from LIBOR including, but not limited to, amending existing loan agreements with borrowers on investments that may have not been modified with fallback language and adding effective fallback language to new agreements in the event that LIBOR is discontinued before maturity.

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Due to the uncertainty of the replacement for LIBOR, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined.

In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market value for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us and could have a material adverse effect on our business, financial condition and results of operations.

In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us and could have a material adverse effect on our business, financial condition and results of operations.

Our investment objective is to generate current income and capital appreciation.

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Our portfolio also includes equity interests such as common stock, preferred stock, warrants or options.

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, and the competitive environment for the types of investments we make.

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, the competitive environment for the types of investments we make and, more recently, market disruptions due to COVID-19.

As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions).

As of December 31, 2020, non-qualifying assets represented approximately 16.8% of the total assets of the Company.

As of June 30, 2021, non-qualifying assets represented approximately 15.5% of the total assets of the Company.

We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment securities that we may acquire in portfolio companies.

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Portfolio and Investment Activity

Our portfolio and investment activity during the three and nine months ended December 31, 2020 and 2019 was as follows:

Three Months Ended December 31, Nine Months Ended December 31,

Our portfolio and investment activity during the three months ended June 30, 2021 and 2020 was as follows:

Three Months Ended June 30,

(in millions)* 2021 2020

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* Totals may not foot due to rounding.

Our portfolio composition and weighted average yields as of December 31, 2020 and March 31, 2020 were as follows:

December 31, 2020 March 31, 2020

Our portfolio composition and weighted average yields as of June 30, 2021 and March 31, 2021 were as follows:

June 30, 2021 March 31, 2021

Portfolio composition, at fair value:

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(4) The interest rate type information is calculated using the Company’s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status.

Since the initial public offering of Apollo Investment in April 2004 and through December 31, 2020, invested capital totaled $21.6 billion in 548 portfolio companies.

Since the initial public offering of Apollo Investment in April 2004 and through June 30, 2021, invested capital totaled $22.2 billion in 563 portfolio companies.

Over the same period, Apollo Investment completed transactions with more than 100 different financial sponsors.

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Because of the inherent uncertainties of valuation, the values reflected in the financial statements may differ materially from the values that would be received upon an actual disposition of such investments.

As of December 31, 2020, $2.48 billion or 99.98% of the Company’s investments were classified as Level 3.

As of June 30, 2021, $2.48 billion or 99.6% of the Company’s investments were classified as Level 3.

The high proportion of Level 3 investments relative to our total investments is directly related to our investment philosophy and target portfolio, which consists primarily of long-term secured debt, as well as unsecured and mezzanine positions of private middle-market companies.

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When readily available, broker quotations and/or quotations provided by pricing services are considered in the valuation process of independent valuation firms.

During the nine months ended December 31, 2020, there were no significant changes to the Company’s valuation techniques and related inputs considered in the valuation process.

During the three months ended June 30, 2021, there were no significant changes to the Company’s valuation techniques and related inputs considered in the valuation process.

Investment Income Recognition

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As such any unforeseen event in these underlying pools of assets might impact the expected recovery and future accrual of income.

Expenses include management fees, performance-based incentive fees, insurance expenses, administrative service fees, legal fees, directors’ fees, audit and tax service expenses, third-party valuation fees and other general and administrative expenses.

Expenses include management fees, performance-based incentive fees, interest expense, insurance expenses, administrative service fees, legal fees, directors’ fees, audit and tax service expenses, third-party valuation fees and other general and administrative expenses.

Expenses are recognized on an accrual basis.

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Results of Operations

Operating results for the three and nine months ended December 31, 2020 and 2019 were as follows:

Three Months Ended December 31, Nine Months Ended December 31,

Operating results for the three months ended June 30, 2021 and 2020 were as follows:

Three Months Ended June 30,

(in millions)* 2021 2020

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Total Investment Income

For the three months ended December 31, 2020 as compared to the three months ended December 31, 2019

The decrease in total investment income for the three months ended December 31, 2020 compared to the three months ended December 31, 2019 was primarily driven by the decrease in total interest income (including PIK) of $12.0 million and the decrease in dividend income of $2.1 million.

The decrease in total interest income (including PIK) was due to a decrease in the average yield for the total debt portfolio, from 9.2% for three months ended December 31, 2019 to 8.1% for three months ended December 31, 2020, and a lower income-bearing investment portfolio.

Furthermore, there was a decrease in prepayment fees and income recognized from the acceleration of discount, premium, or deferred fees on repaid investments which totaled $2.8 million and $2.4 million for the three months ended December 31, 2019 and three months ended December 31, 2020, respectively.

The decrease in dividend income was due to a decrease in dividends received from Merx Aviation Finance, LLC and MSEA Tankers LLC.

For the nine months ended December 31, 2020 as compared to the nine months ended December 31, 2019

The decrease in total investment income for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019 was primarily driven by the decrease in total interest income (including PIK) of $33.9 million and the decrease in dividend income of $3.0 million.

The decrease in total interest income (including PIK) was primarily due to a decrease in the average yield for the total debt portfolio, from 9.6% for nine months ended December 31, 2019 to 8.4% for nine months ended December 31, 2020, and a lower income-bearing investment portfolio.

Additionally, there was a decrease in prepayment fees and income recognized from the acceleration of discount, premium, or deferred fees on repaid investments which totaled $7.7 million and $4.7 million for the nine months ended December 31, 2019 and nine months ended December 31, 2020, respectively.

The decrease in dividend income was primarily due to a decrease in dividends received from Merx Aviation Finance, LLC.

Furthermore, there was a decrease in other income of $2.5 million due to lower bridge fees and structuring fees.

For the three months ended December 31, 2020 as compared to the three months ended December 31, 2019

The decrease in net expenses for the three months ended December 31, 2020 compared to the three months ended December 31, 2019 was due to the decrease in interest and other debt expenses of $5.0 million and a decrease in management and performance-based incentive fees (net of amounts waived) of $1.5 million.

The decrease in interest and other debt expenses was attributed to a decrease in total annualized cost of debt from 4.55% for the three months ended December 31, 2019 to 3.42% for the three months ended December 31, 2020.

The decrease in management and performance-based incentive fees (net of amounts waived) was due to a decrease in the investment portfolio and an incentive fee cap for fees paid in prior periods.

Furthermore, the increase in other general and administrative services expenses, from $2.2 million for the three months ended December 31, 2019 to $2.8 million for the three months ended December 31, 2020, was due to a increase in legal fees and valuation fees.

For the nine months ended December 31, 2020 as compared to the nine months ended December 31, 2019

The decrease in net expenses for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019 was primarily due to the decrease in interest and other debt expenses of $11.9 million and the decrease of management and performance-based incentive fees (net of amounts waived) of $4.3 million.

The decrease in interest and other debt expenses was was primarily attributed to a decrease in total annualized cost of debt from 5.00% for the nine months ended December 31, 2019 to 3.38% for the nine months ended December 31, 2020.

This was partially offset by an increase in the average debt outstanding.

The decrease in management and performance-based incentive fees (net of amounts waived) was due to to a decrease in the investment portfolio and an incentive fee cap for fees paid in prior periods.

The decrease in total investment income for the three months ended June 30, 2021 compared to the three months ended June 30, 2020 was primarily driven by the decrease in total interest income (including PIK) of $6.2 million.

The decrease in total interest income (including PIK) was due to a lower income-bearing investment portfolio and a decrease in the average yield for the total debt portfolio, from 8.1% for the three months ended June 30, 2020 to 7.9% for the three months ended June 30, 2021.

This was partially offset by an increase in prepayment fees and income recognized from the acceleration of discount, premium, or deferred fees on repaid investments, which totaled $0.3 million for the three months ended June 30, 2020 and $4.0 million for the three months ended June 30, 2021.

Furthermore, the decrease in dividend income of $0.7 million was due to an decrease in dividends received from MSEA Tankers LLC.

There was also an increase in other income of $0.8 million due to higher amendment fees.

The decrease in net expenses for the three months ended June 30, 2021 compared to the three months ended June 30, 2020 was primarily driven by the decrease in interest and other debt expenses of $2.7 million.

The decrease in interest and other debt expenses was attributed to a decrease in average debt outstanding and net leverage, from $1.79 billion and 1.66x, respectively during the three months ended June 30, 2020, to $1.46 billion and 1.39x, respectively during the three months ended June 30, 2021.

Furthermore, the decrease of $0.7 million in management and performance-based incentive fees (net of amounts waived) was due to a decrease in the investment portfolio.

Net Realized Gains (Losses)

For the three months ended December 31, 2020 as compared to the three months ended December 31, 2019

During the three months ended December 31, 2020, we recognized gross realized gains of $4.6 million and gross realized losses of $11.3 million, resulting in net realized losses of $6.7 million.

Significant realized gains (losses) for the three months ended December 31, 2020 are summarized below:

(in millions) Net Realized Gain (Loss)

AMP Solar Group, Inc.

KLO Holdings, LLC (4.8)

Garden Fresh (2.5)

Learfield Communications (1.9)

FiscalNote (1.5)

During the three months ended December 31, 2019, we recognized gross realized gains of $17.6 million and gross realized losses of $13.7 million, resulting in net realized gains of $3.8 million.

Significant realized gains (losses) for the three months ended December 31, 2019 are summarized below:

(in millions) Net Realized Gain (Loss)

Asset Repackaging Trust Six B.V.

(Israel Electric) $ 7.0

Renew Financial LLC (f/k/a Renewable Funding, LLC) 2.8

NFA Group 1.0

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC) (9.0)

Solarplicity Group Limited (f/k/a AMP Solar UK) (4.7)

For the nine months ended December 31, 2020 as compared to the nine months ended December 31, 2019

During the nine months ended December 31, 2020, we recognized gross realized gains of $5.3 million and gross realized losses of $23.5 million, resulting in net realized losses of $18.1 million.

Significant realized gains (losses) for the nine months ended December 31, 2020 are summarized below:

During the three months ended June 30, 2021, we recognized gross realized gains of $0.3 million and gross realized losses of $0.2 million, resulting in net realized gains of $0.1 million.

During the three months ended June 30, 2020, we recognized gross realized gains of $0.4 million and gross realized losses of $8.8 million, resulting in net realized losses of $8.4 million.

Significant realized gains (losses) for the three months ended June 30, 2020 are summarized below:

(in millions) Net Realized Gain (Loss)

AMP Solar Group, Inc.

KLO Holdings, LLC (8.5)

ZPower, LLC $ (6.1) *

Garden Fresh (2.5)

Learfield Communications (1.9)

FiscalNote (1.5)

During the nine months ended December 31, 2019, we recognized gross realized gains of $18.2 million and gross realized losses of $24.5 million, resulting in net realized loss of $6.3 million.

Significant realized gains (losses) for the nine months ended December 31, 2019 are summarized below:

(in millions) Net Realized Gain (Loss)

Asset Repackaging Trust Six B.V.

(Israel Electric) $ 7.0

Renew Financial LLC (f/k/a Renewable Funding, LLC) 2.8

SquareTwo (CA Holdings, Collect America, Ltd.) 1.2

NFA Group 1.0

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC (9.0)

Crowne Automotive (6.4)

Solarplicity Group Limited (f/k/a AMP Solar UK) (4.7)

* ZPower, LLC was written down during the quarter and the realized loss was previously recorded as an unrealized loss.

Net Change in Unrealized Gains (Losses)

For the three months ended December 31, 2020 as compared to the three months ended December 31, 2019

During the three months ended December 31, 2020, we recognized gross unrealized gains of $49.6 million and gross unrealized losses of $38.0 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $11.6 million.

Significant changes in unrealized gains (losses) for the three months ended December 31, 2020 are summarized below:

During the three months ended June 30, 2021, we recognized gross unrealized gains of $25.2 million and gross unrealized losses of $18.5 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $6.7 million.

Significant changes in unrealized gains (losses) for the three months ended June 30, 2021 are summarized below:

(in millions) Net Change in Unrealized Gain (Loss)

ChyronHego Corporation $ 5.7

KLO Holdings, LLC 5.2

Garden Fresh 2.5

NFA Group 2.5

MSEA Tankers LLC 2.0

Learfield Communications 1.9

CARE Fertility 1.8

PIB Group 1.5

AMP Solar Group, Inc.

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC) $ 9.8

Paper Source 3.0

Spotted Hawk 1.2

Ambrosia Buyer Corp.

Renew Financial LLC (f/k/a Renewable Funding, LLC) (2.4)

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) (2.2)

Dynamic Product Tankers (Prime), LLC (5.4)

Sonar Entertainment (1.1)

During the three months ended December 31, 2019, we recognized gross unrealized gains of $13.8 million and gross unrealized losses of $53.6 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized loss of $39.8 million.

Significant changes in unrealized gains (losses) for the three months ended December 31, 2019 are summarized below:

(in millions) Net Change in Unrealized Gain (Loss)

Merx Aviation Finance, LLC $ 2.1

NFA Group 2.0

CARE Fertility 1.4

PIB Group 1.0

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) (4.0)

Asset Repackaging Trust Six B.V.

(Israel Electric) (7.4)

Renew Financial LLC (f/k/a Renewable Funding, LLC) (5.6)

Spotted Hawk (4.5)

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC) (2.9)

For the nine months ended December 31, 2020 as compared to the nine months ended December 31, 2019

During the nine months ended December 31, 2020, we recognized gross unrealized gains of $91.3 million and gross unrealized losses of $88.1 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $3.2 million.

Significant changes in unrealized gains (losses) for the nine months ended December 31, 2020 are summarized below:

Ambrosia Buyer Corp.

Merx Aviation Finance, LLC (1.2)

During the three months ended June 30, 2020, we recognized gross unrealized gains of $26.0 million and gross unrealized losses of $42.8 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses of $16.8 million.

Significant changes in unrealized gains (losses) for the three months ended June 30, 2020 are summarized below:

(in millions) Net Change in Unrealized Gain (Loss)

KLO Holdings, LLC $ 11.6

ZPower, LLC $ 4.8

NFA Group 4.8

ChyronHego Corporation 3.2

CARE Fertility 3.1

CT Technologies Intermediate Holdings, Inc 3.0

PIB Group 3.0

MSEA Tankers LLC 2.3

Spotted Hawk (14.6)

Dynamic Product Tankers (Prime), LLC (11.3)

Merx Aviation Finance, LLC (9.1)

PAE Holding Corporation 1.1

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC) (10.0)

Ambrosia Buyer Corp.

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) (6.5)

Paper Source (2.3)

Renew Financial LLC (f/k/a Renewable Funding, LLC) (1.8)

Sonar Entertainment (1.2)

Solarplicity Group Limited (f/k/a AMP Solar UK) (1.1)

During the nine months ended December 31, 2019, we recognized gross unrealized gains of $25.5 million and gross unrealized losses of $94.5 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $69.0 million.

Significant changes in unrealized gains (losses) for the nine months ended December 31, 2019 are summarized below:

(in millions) Net Change in Unrealized Gain (Loss)

Crowne Automotive $ 6.8

Dynamic Product Tankers (Prime), LLC (9.2)

Merx Aviation Finance, LLC (4.3)

NFA Group 2.7

Sprint Industrial Holdings, LLC.

AMP Solar Group, Inc.

Spotted Hawk (23.8)

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) (3.2)

KLO Holdings, LLC (9.2)

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC) (7.6)

Renew Financial LLC (f/k/a Renewable Funding, LLC) (6.8)

Asset Repackaging Trust Six B.V.

(Israel Electric) (6.2)

CT Technologies Intermediate Holdings, Inc (1.4)

Golden Bear (1.2)

Securus Technologies Holdings, Inc.

Garden Fresh (2.4)

ChyronHego Corporation (2.4)

Solarplicity Group Limited (f/k/a AMP Solar UK) (1.2)

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See Note 6 to the financial statements for information on the Company’s debt.

The following table shows the contractual maturities of our debt obligations as of December 31, 2020:

The following table shows the contractual maturities of our debt obligations as of June 30, 2021:

Payments Due by Period

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____________________

(1) As of December 31, 2020, aggregate lender commitments under the Senior Secured Facility totaled $1.81 billion and $643.5 million of unused capacity.

As of December 31, 2020, there were $0.2 million of letters of credit issued under the Senior Secured Facility as shown as part of total commitments in Note 8 to the financial statements.

(1) As of June 30, 2021, aggregate lender commitments under the Senior Secured Facility totaled $1.81 billion and $667.5 million of unused capacity.

As of June 30, 2021, there were $0.2 million of letters of credit issued under the Senior Secured Facility as shown as part of total commitments in Note 8 to the financial statements.

Stockholders’ Equity

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Distributions

Distributions paid to stockholders during the three and nine months ended December 31, 2020 totaled $23.5 million ($0.36 per share) and $82.2 million ($1.26 per share), respectively.

Distributions paid to stockholders during the three and nine months ended December 31, 2019 totaled $30.2 million ($0.45 per share) and $91.8 million ($1.35 per share), respectively.

Distributions paid to stockholders during the three months ended June 30, 2021 and 2020 totaled $23.5 million ($0.36 per share) and $29.4 million ($0.45 per share), respectively.

For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof.

Although the tax character of distributions paid to stockholders through December 31, 2020 may include return of capital, the exact amount cannot be determined at this point.

Although the tax character of distributions paid to stockholders through June 30, 2021 may include return of capital, the exact amount cannot be determined at this point.

The final determination of the tax character of distributions will not be made until we file our tax return for the tax year ended March 31, 2022.

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With respect to the distributions to stockholders, income from origination, structuring, closing, commitment and other upfront fees associated with investments in portfolio companies is treated as taxable income and accordingly, distributed to stockholders.

For the three and nine months ended December 31, 2020, PIK income totaled $1.6 million and $4.8 million on total investment income of $54.4 million and $165.9 million respectively.

For the three and nine months ended December 31, 2019, PIK income totaled $2.6 million and $9.8 million on total investment income of $68.5 million and $205.3 million respectively.

For the three months ended June 30, 2021 and 2020, PIK income totaled $1.5 million and $1.5 million on total investment income of $50.6 million and $56.7 million, respectively.

In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders annually in the form of distributions, even though the Company has not yet collected the cash.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis