What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-04 compared with 2021-08-05 · 134 added, 78 removed, 309 unchanged (41% 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 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.

Since then, and through September 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 $231.0 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 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.

Depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain portfolio companies will experience financial distress and possibly default on their financial obligations to us and their other capital providers.

We also expect that some of our portfolio companies may significantly curtail business operations, furlough or lay off employees and terminate service providers, and defer capital expenditures if subjected to prolonged and severe financial distress, which would likely impair their business on a permanent basis.

These developments would likely result in a decrease in the value of our investment in any such portfolio company.

The COVID-19 pandemic and the related disruption and financial distress experienced by our portfolio companies may have material adverse effects on our investment income, particularly our interest income, received from our investments.

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.

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 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.

Further, any additional write downs in the value of our investments may reduce our net asset value.

These events may also limit our investment origination pipeline and may increase our future funding costs.

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 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 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.

Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased.

A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in in our operating expenses, including with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR.

Quantitative and Qualitative Disclosures About Market Risk” for an analysis of the impact of hypothetical base rate changes in interest rates.

There is an ongoing global outbreak of COVID-19, which has spread to over 200 countries and territories, including the United States, and has spread to every state in the United States.

The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19, including new variants, 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 have created disruption in global supply chains, and adversely impacted many industries.

The outbreak has had a continued adverse impact on economic and market conditions and has triggered a period of global economic slowdown.

Although vaccines have been widely distributed in the U.S., certain U.S.

states are planning on reopening and we believe the economy is beginning to rebound in certain respects, the uncertainty surrounding the COVID-19 pandemic, including uncertainty regarding new variants of COVID-19 and acceptance of vaccines and other factors have and may continue to contribute to significant volatility in the global markets.

COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our performance, financial condition, results of operations and ability to pay distributions.

LIBOR Developments

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.

On July 27, 2017, the U.K Financial Conduct Authority (“FCA”) announced that it would phase out 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 administrator of LIBOR announced a delay in the phase out of the majority of the USD LIBOR publications until June 30, 2023, with the remainder of LIBOR publications to still end on December 31, 2021.

This announcement has been confirmed by the Alternative Reference Rates Committee (ARRC) of the Federal Reserve Bank of New York as constituting a “benchmark transition event” and establishing “benchmark replacement dates” in ARRC standard LIBOR transition provisions that exist in many U.S.

law contracts using LIBOR.

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 USD 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.

The 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.

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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 December 31, 2021 is material.

dollar LIBOR, it is not possible at this time 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 discontinuation of LIBOR could have a significant impact on our business.

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.

Beyond these challenges, we anticipate there may be additional risks to our current processes and information systems that will need to be identified and evaluated by us.

Beyond these challenges, we anticipate there may be additional risks to our current processes and information systems that we will need to identify and evaluate.

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.

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

As of September 30, 2021, non-qualifying assets represented approximately 14.1% 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.

Our debt investments, whether in the form of mezzanine or senior secured loans, generally have a stated term of five to ten years and bear interest at a fixed rate or a floating rate usually determined on the basis of a benchmark, such as the London Interbank Offered Rate (“LIBOR”), the Euro Interbank Offered Rate (“EURIBOR”), the federal funds rate, or the prime rate.

Our debt investments, whether in the form of mezzanine or senior secured loans, generally have a stated term of five to ten years and bear interest at a fixed rate or a floating rate usually determined on the basis of a benchmark, such as the LIBOR, EURIBOR, the federal funds rate, or the prime rate.

Interest on debt securities is generally payable quarterly or semiannually and while U.S.

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Portfolio and Investment Activity

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

Three Months Ended June 30,

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

Three Months Ended September 30, Six Months Ended September 30,

(in millions)* 2021 2020 2021 2020

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* Totals may not foot due to rounding.

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

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

September 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 June 30, 2021, invested capital totaled $22.2 billion in 563 portfolio companies.

Since the initial public offering of Apollo Investment in April 2004 and through September 30, 2021, invested capital totaled $22.4 billion in 572 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 June 30, 2021, $2.48 billion or 99.6% of the Company’s investments were classified as Level 3.

As of September 30, 2021, $2.61 billion or 99.98% 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 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.

During the six months ended September 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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Results of Operations

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

Three Months Ended June 30,

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

Three Months Ended September 30, Six Months Ended September 30,

(in millions)* 2021 2020 2021 2020

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Total investment income $ 52.9 $ 54.9 $ 103.4 $ 111.4

Management and performance-based incentive fees, net of amounts waived $ 8.8 $ 9.5

Management and performance-based incentive fees $ 14.3 $ 9.3 $ 23.1 $ 18.8

Interest and other debt expenses, net of reimbursements 13.9 13.8 26.6 29.2

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Total Investment Income

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.

For the three months ended September 30, 2021 as compared to the three months ended September 30, 2020

The decrease in total investment income for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily driven by the decrease in total interest income (including PIK) of $4.3 million.

The decrease in total interest income (including PIK) was primarily due to a decrease in the yield from second lien secured debt.

The $1.5 million increase in dividend income was due to a increase in dividends received from MSEA Tankers LLC.

Furthermore, there was a increase in other income of $0.8 million due to higher amendment fees and bridge fees.

For the six months ended September 30, 2021 as compared to the six months ended September 30, 2020

The decrease in total investment income for the six months ended September 30, 2021 compared to the six months ended September 30, 2020 was primarily driven by the decrease in total interest income (including PIK) of $10.5 million.

The decrease in total interest income (including PIK) was primarily due to a decrease in the yield from second lien secured debt.

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 $2.3 million for the six months ended September 30, 2020 and $4.8 million for the for the six months ended September 30, 2021.

The $0.7 million increase in dividend income was primarily due to a increase in dividends received from MSEA Tankers LLC.

Furthermore, there was an increase in other income of $1.6 million due to higher amendment fees and bridge fees.

For the three months ended September 30, 2021 as compared to the three months ended September 30, 2020

The increase in net expenses for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to the increase in management and performance-based incentive fees.

The increase of $5.0 million in management and performance-based incentive fees was due to an increase in performance based incentive fees and an increase in the investment portfolio.

Furthermore, there was an increase in interest and other debt expenses which was attributed to an increase in total annualized cost of debt from 3.30% for the three months ended September 30, 2020 to 3.60% for the three months ended September 30, 2021.

This was partially offset by a decrease in the average debt outstanding and net leverage from $1.66 billion and 1.56x, respectively during the three months ended September 30, 2020, to $1.54 billion and 1.51x, respectively during the three months ended September 30, 2021.

For the six months ended September 30, 2021 as compared to the six months ended September 30, 2020

The increase in net expenses for the six months ended September 30, 2021 compared to the six months ended September 30, 2020 was primarily due to the increase in management and performance-based incentive fees.

The increase of $4.3 million in management and performance-based incentive fees was due to an increase in performance based incentive fees and an increase in the investment portfolio.

Furthermore there was a decrease in interest and other debt expenses, which was attributed to a decrease in the average debt outstanding and net leverage, from $1.73 billion and 1.56x, respectively during the six months ended September 30, 2020, to $1.50 billion and 1.51x, respectively during the six months ended September 30, 2021.

This was partially offset by an increase in the total annualized cost of debt from 3.36% for the six months ended September 30, 2020 to 3.54% for the six months ended September 30, 2021.

Net Realized Gains (Losses)

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:

For the three months ended September 30, 2021 as compared to the three months ended September 30, 2020

During the three months ended September 30, 2021, we recognized gross realized gains of $3.1 million and gross realized losses of $67.9 million, resulting in net realized losses of $64.8 million.

Significant realized gains (losses) for the three months ended September 30, 2021 are summarized below:

(in millions) Net Realized Gain (Loss)

Niacet Corporation $ 1.1

Spotted Hawk (44.4)

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) (20.9)

During the three months ended September 30, 2020, we recognized gross realized gains of $0.7 million and gross realized losses of $3.7 million, resulting in net realized losses of $3.0 million.

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

(in millions) Net Realized Gain (Loss)

KLO Holdings, LLC $ (3.7)

For the six months ended September 30, 2021 as compared to the six months ended September 30, 2020

During the six months ended September 30, 2021, we recognized gross realized gains of $3.4 million and gross realized losses of $68.1 million, resulting in net realized losses of $64.7 million.

Significant realized gains (losses) for the six months ended September 30, 2021 are summarized below:

(in millions) Net Realized Gain (Loss)

Niacet Corporation $ 1.1

Spotted Hawk (44.4)

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) (20.9)

During the six months ended September 30, 2020, we recognized gross realized gains of $0.9 million and gross realized losses of $12.3 million, resulting in net realized losses of $11.4 million.

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

(in millions) Net Realized Gain (Loss)

ZPower, LLC $ (6.1)

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

KLO Holdings, LLC (3.7)

Net Change in Unrealized Gains (Losses)

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:

For the three months ended September 30, 2021 as compared to the three months ended September 30, 2020

During the three months ended September 30, 2021, we recognized gross unrealized gains of $81.8 million and gross unrealized losses of $12.8 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 three months ended September 30, 2021 are summarized below:

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

Spotted Hawk $ 40.1

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) 22.7

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC) 9.1

Sequential Brands Group, Inc.

Dynamic Product Tankers (Prime), LLC (4.0)

MSEA Tankers LLC (2.3)

Niacet Corporation (1.3)

NFA Group (1.1)

During the three months ended September 30, 2020, we recognized gross unrealized gains of $34.3 million and gross unrealized losses of $26.0 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $8.4 million.

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

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

KLO Holdings, LLC $ 6.3

NFA Group 1.9

CARE Fertility 1.1

PIB Group 1.1

ProPharma 1.0

Merx Aviation Finance, LLC (5.9)

Spotted Hawk (4.7)

Paper Source (1.7)

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) (1.2)

For the six months ended September 30, 2021 as compared to the six months ended September 30, 2020

During the six months ended September 30, 2021, we recognized gross unrealized gains of $97.3 million and gross unrealized losses of $21.6 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $75.7 million.

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

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

Spotted Hawk $ 41.2

Dynamic Product Tankers (Prime), LLC (5.4)

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC) 18.9

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) 18.7

Paper Source 3.0

Sequential Brands Group, Inc.

US Legal Support 1.1

Dynamic Product Tankers (Prime), LLC (9.4)

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:

MSEA Tankers LLC (2.5)

Niacet Corporation (1.1)

NFA Group (1.0)

During the six months ended September 30, 2020, we recognized gross unrealized gains of $55.3 million and gross unrealized losses of $63.7 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses of $8.4 million.

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

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

KLO Holdings, LLC $ 6.4

ZPower, LLC 4.8

PAE Holding Corporation 1.1

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

Dynamic Product Tankers (Prime), LLC (9.2)

NFA Group 2.3

CT Technologies Intermediate Holdings, Inc 1.8

PIB Group 1.5

Arlington 1.4

CARE Fertility 1.3

ProPharma 1.2

Merx Aviation Finance, LLC (10.2)

Dynamic Product Tankers (Prime), LLC (9.5)

Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC) (9.1)

Spotted Hawk (5.2)

Glacier Oil & Gas Corp.

(f/k/a Miller Energy Resources, Inc.) (4.4)

Garden Fresh (2.4)

ChyronHego Corporation (2.5)

Paper Source (2.5)

Garden Fresh (2.4)

Solarplicity Group Limited (f/k/a AMP Solar UK) (1.4)

Learfield Communications (1.2)

Liquidity and Capital Resources

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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 June 30, 2021:

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

Payments Due by Period

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2025 Notes 350.0 — — 350.0 —

2026 Notes 125.0 — — 125.0 —

Total Debt Obligations $ 1,603.1 $ — $ — $ 1,603.1 $ —

____________________

(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.

(1) As of September 30, 2021, aggregate lender commitments under the Senior Secured Facility totaled $1.81 billion and $681.8 million of unused capacity.

As of September 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 months ended June 30, 2021 and 2020 totaled $23.5 million ($0.36 per share) and $29.4 million ($0.45 per share), respectively.

Distributions paid to stockholders during the three and six months ended September 30, 2021 totaled $23.4 million ($0.36 per share) and $46.9 million ($0.72 per share), respectively.

Distributions paid to stockholders during the three and six months ended September 30, 2020 totaled $29.3 million ($0.45 per share) and $58.7 million ($0.90 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 June 30, 2021 may include return of capital, the exact amount cannot be determined at this point.

Although the tax character of distributions paid to stockholders through September 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 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.

For the three and six months ended September 30, 2021, PIK income totaled $0.9 million and $2.5 million on total investment income of $52.9 million and $103.4 million respectively.

For the three and six months ended September 30, 2020, PIK income totaled $0.9 million and $2.8 million on total investment income of $54.9 million and $111.6 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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis