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Risks Relating to Our Business and Structure
−Removed: We are a new company with no operating history.
−Removed: We were formed on May 30, 2019 and commenced investment activities in January 2020.
−Removed: We are subject to all of the business risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objective, that we will not qualify or maintain our qualification to be treated as a RIC, and that the value of your investment could decline substantially.
+Added: We have a limited operating history.
+Added: We were formed on May 30, 2019 and commenced investment operations in January 2020.
+Added: We are subject to all of the business risks and uncertainties associated with any business with a limited operating history, including the risk that we will not achieve our investment objective, that we will not maintain our qualification to be treated as a RIC, and that the value of your investment could decline substantially.
We anticipate, based on the amount of proceeds raised in the initial or subsequent closings, that it could take some time to invest substantially all of the capital we expect to raise due to market conditions generally and the time necessary to identify, evaluate, structure, negotiate and close suitable investments in private middle-market companies.
In order to comply with the RIC diversification requirements during the startup period, we may invest proceeds in temporary investments, such as cash, cash equivalents, U.S.
−Removed: government securities and other high-quality debt Investments that mature in one year or less from the time of investment, which we expect will earn yields substantially lower than the interest, dividend or other income that we seek to receive in
−Removed: respect of suitable portfolio investments.
+Added: government securities and other high-quality debt Investments that mature in one year or less from the time of investment, which we expect will earn yields substantially lower than the interest, dividend or other income that we seek to receive in respect of suitable portfolio investments.
We may not be able to pay any significant distributions during this period, and any such distributions may be substantially lower than the distributions we expect to pay when our portfolio is fully invested.
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If the base management fee and our other expenses exceed the return on the temporary investments, our equity capital will be eroded.
−Removed: Capital markets may experience periods of disruption and instability.
−Removed: Such market conditions may materially and adversely affect debt and equity capital markets in the United States, which may have a negative impact on our business and operations.
−Removed: From time to time, capital markets may experience periods of disruption and instability for a variety of reasons.
−Removed: For example, from 2008 to 2009, the global capital markets were unstable as evidenced by the lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions.
−Removed: Despite actions of the U.S.
−Removed: federal government and various foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular.
−Removed: There have been more recent periods of volatility and there can be no assurance that adverse market conditions will not repeat themselves in the future.
−Removed: Furthermore, uncertainty between the United States and other countries with respect to trade policies, treaties and tariffs, among other factors, have caused disruptions in the global markets, and we cannot assure you that these market conditions will not continue or worsen in the future.
−Removed: Terrorist acts, acts of war, natural disasters, or disease outbreaks, pandemics or other public health crises may cause periods of market instability and volatility and may disrupt the operations of us and our portfolio companies for extended periods of time.
−Removed: If similar adverse and volatile market conditions repeat in the future, we and other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital in order to grow.
−Removed: Equity capital may be particularly difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of Common Stock at a price less than the net asset value per share without first obtaining approval for such issuance from our stockholders and our Board of Directors, including all of our directors who are not "interested persons" of the Company, as defined in the 1940 Act.
−Removed: Moreover, the re-appearance of market conditions similar to those experienced from 2008 through 2009 for any substantial length of time or worsened market conditions, including as a result of United States government shutdowns or the perceived creditworthiness of the United States, could make it difficult for us to borrow money or to extend the maturity of or refinance any indebtedness we may have under similar terms and any failure to do so could have a material adverse effect on our business.
−Removed: The debt capital that will be available to us in the future, if any, may be at a higher cost and on less favorable terms and conditions than would currently be available.
−Removed: If we are unable to raise or refinance debt, stockholders may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.
−Removed: Given the periods of extreme volatility and dislocation in the capital markets from time to time, many BDCs have faced, and may in the future face, a challenging environment in which to raise or access capital.
−Removed: In addition, significant changes in the capital markets, including the extreme volatility and disruption over the past several years, has had, and may in the future have, a negative effect on asset valuations and on the potential for liquidity events.
−Removed: While most of our investments will not be 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 on holding an investment through to maturity).
−Removed: As a result, volatility in the capital markets can adversely affect the valuations of our investments.
−Removed: Further, 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 for liquidity purposes.
−Removed: In addition, a prolonged period of market illiquidity may cause us to reduce the volume of loans and debt securities we originate and/or fund and adversely affect the value of our portfolio investments, which could have a material and adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: An inability to raise or access capital could have a material adverse impact on our business, financial condition or results of operations.
−Removed: In addition, U.S.
−Removed: governments have enacted or may enact various regulations that may impact Morgan Stanley or the Company, its investments, its opportunities and the investors.
−Removed: New regulations, changing regulatory schemes and the burdens of regulatory compliance may have a material negative impact on the performance of the Company and portfolio companies.
−Removed: For example, recent proposals relating to the activities of bank holding companies may adversely affect Morgan Stanley's (including the Adviser's) ability to sponsor and/or invest in private funds, including the Company.
−Removed: Operating as BDC imposes numerous constraints on us and significantly reduces our operating flexibility.
+Added: Operating as a BDC imposes numerous constraints on us and significantly reduces our operating flexibility.
In addition, if we fail to maintain our status as a BDC, we might be regulated as a closed-end investment company, which would subject us to additional regulatory restrictions.
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Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations.
−Removed: You should also be aware that a rise in the general level of interest rates typically will lead to higher interest rates applicable to our debt investments, which may increase the amount of incentive fees payable to our Adviser.
−Removed: Also, an increase in interest rates available to investors could make an investment in shares of our Common Stock less attractive if we are not able to increase our distribution rate, which could reduce the value of shares of our Common Stock.
Changes in LIBOR, or its discontinuation, may adversely affect our business and results of operations.
−Removed: Many financial instruments use or may use a floating rate based on the London Interbank Offered Rate, or LIBOR, which is the offered rate for short-term Eurodollar deposits between major international banks.
+Added: Many financial instruments use or may use a floating rate based on LIBOR, which is the offered rate for short-term Eurodollar deposits between major international banks.
For several years, LIBOR has been the subject of national and international regulatory scrutiny.
1 unchanged sentence
As a result, central banks around the world, including the Federal Reserve, have commissioned working groups of market participants and official sector representatives with the goal of finding suitable replacements for LIBOR and replacements or reforms of other interest rate benchmarks.
−Removed: Other interbank
−Removed: offered rates, as well as select other interest rate benchmarks besides LIBOR (such as EURIBOR and EONIA in Europe), are also being evaluated in their respective jurisdictions for potential reform.
+Added: Other interbank offered rates, as well as select other interest rate benchmarks besides LIBOR (such as EURIBOR and EONIA in Europe), are also being evaluated in their respective jurisdictions for potential reform.
It is expected that a transition away from the widespread use of LIBOR and such other reference rates to alternative rates based on observable market transactions and other potential interest rate benchmark reforms will occur over the course of the next few years.
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in fact, the FCA has indicated it will not compel panel banks to continue to contribute to LIBOR after the end of 2021.
+Added: On November 30, 2020, the ICE Benchmark Administration Limited (the “IBA”), the administrator of LIBOR, announced that it will consult in early December 2020 to consider extending the LIBOR transition deadline to the end of June 2023.
+Added: Following consultations in December 2020 and January 2021, the IBA announced that (i) it intends to cease publication of 1-week and 2-month U.S.
+Added: dollar LIBOR at the end of 2021 and (ii) subject to compliance with applicable regulations, it intends to continue publication of the remaining U.S.
+Added: dollar LIBOR tenors until June 30, 2023, effectively extending the LIBOR transition period to June 30, 2023.
+Added: There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate.
The committee established by the Federal Reserve, the Alternative Reference Rates Committee, announced the replacement of LIBOR with a new index, based on overnight repurchase agreements collateralized by U.S.
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The Federal Reserve Bank of New York began publishing SOFR in April 2018.
−Removed: At this time, it is not possible to predict whether SOFR will attain market traction as a LIBOR replacement tool, and the future of LIBOR is still uncertain.
+Added: Other jurisdictions have also proposed their own alternative to LIBOR, including the Sterling Overnight Index Average for Sterling markets, the Euro Short Term Rate for Euros and Tokyo Overnight Average Rate for Japanese Yens.
+Added: Although SOFR appears to be the preferred replacement rate for U.S.
+Added: dollar LIBOR, at this time, it is not possible to predict whether SOFR will attain market traction as a LIBOR replacement tool, and the future of LIBOR is still uncertain.
The effect of any such changes, any establishment of alternative reference rates or any other reforms to LIBOR or other reference rates that may be enacted in the United Kingdom or elsewhere cannot be predicted at this time, and it is not possible to predict whether LIBOR will continue to be viewed as an acceptable market benchmark, what rate or rates may become accepted alternatives to LIBOR, or what the effect of any such changes in views or alternatives may have on the financial markets for financial instruments based on LIBOR.
−Removed: If LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established.
+Added: To date, certain of the loan agreements with our portfolio companies have already been amended to include fallback language providing a mechanism for the parties to negotiate a new reference interest rate in the event that LIBOR ceases to exist.
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, tax position and results of operations.
3 unchanged sentences
• Require extensive changes to documentation that governs or references LIBOR or LIBOR-based products, including, for example, pursuant to time-consuming renegotiations of existing documentation to modify the terms of outstanding investments and hedging transactions;
−Removed: Result in a population of products with documentation that governs or references IBOR or IBOR-based products but that cannot be amended due to an inability to obtain sufficient consent from counterparties or product owners;
+Added: • Result in a population of products with documentation that governs or references LIBOR or LIBOR-based products but that cannot be amended due to an inability to obtain sufficient consent from counterparties or product owners;
• Result in inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of LIBOR with one or more alternative reference rates;
• Result in disputes, litigation or other actions with portfolio companies, or other counterparties, regarding the interpretation and enforceability of provisions in our 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: Require the transition and/or development of appropriate systems and analytics to effectively transition our risk management processes from LIBOR-based products to those based on one or more alternative reference rates, which may prove challenging given the limited history of the proposed alternative reference rates;
+Added: • Require the transition and/or development of appropriate systems and analytics to effectively transition our risk management processes from LIBOR-based products to those based on one or more alternative reference rates in a timely manner, including by quantifying value and risk for various alternative reference rates, which may prove challenging given the limited history of the proposed alternative reference rates;
• Cause us to incur additional costs in relation to any of the above factors.
+Added: Alteration of the terms of a debt instrument or a modification of the terms of other types of contracts to replace an interbank offered rate with a new reference rate could result in a taxable exchange and the realization of income and gain/loss for U.S.
+Added: federal income tax purposes.
+Added: The IRS has issued proposed regulations regarding the tax consequences of the transition from interbank offered rates to new reference rates in debt instruments and non-debt contracts.
+Added: Under the proposed regulations, to avoid such alteration or modification of the terms of a debt instrument being treated as a taxable exchange, among other requirements, the fair market value of the modified instrument or contract must be substantially equivalent to its fair market value before the qualifying change was made.
+Added: The IRS may withdraw, amend or finalize, in whole or part, these proposed regulations and/or provide additional guidance, with potential retroactive effect.
Depending on several factors, including those set forth above, our business, financial condition and results of operations could be materially adversely impacted by the market transition or reform of certain reference rates and benchmarks.
11 unchanged sentences
We can offer no assurance, however, that the professionals of the Administrator will continue to provide administrative services to us.
−Removed: In addition, we can offer no assurance that the resources, relationships and expertise of Morgan Stanley will be available throughout the term of the Company.
+Added: In addition, we can offer no assurance that the resources, relationships and expertise of Morgan Stanley will be available to the Administrator throughout the term of the Company.
This could have a material adverse effect on our financial condition, results of operations and cash flows.
2 unchanged sentences
We depend upon the Adviser’s and its affiliates relationships with sponsors, and we intend to rely to a significant extent upon these relationships to provide us with potential investment opportunities.
−Removed: If the Adviser fails to maintain such relationships, or to develop new relationships with other sponsors or sources of investment opportunities, we will not be able to grow our investment portfolio.
+Added: If the Adviser fails to maintain such relationships, or to
+Added: develop new relationships with other sponsors or sources of investment opportunities, we will not be able to grow our investment portfolio.
In addition, individuals with whom the principals of the Adviser and its affiliates have relationships are not obligated to provide us with investment opportunities, and, therefore, we can offer no assurance that these relationships will generate investment opportunities for us in the future.
2 unchanged sentences
Through staffing agreements, the Adviser depends on the investment professionals of affiliates of Morgan Stanley and such investment professionals' diligence, skill and network of business contacts.
+Added: In particular, we depend on the continued services of certain senior management personnel of the Adviser.
Our success will depend to a significant extent on the continued service and coordination of our executive officers and members of the investment committee.
The diversion of time by, or departure of, any of these individuals could have a material adverse effect on our ability to achieve our investment objectives.
−Removed: We may not replicate the historical results achieved by other entities managed or sponsored by members of the Adviser's Investment Committee, or by the Adviser's or its affiliates.
+Added: We may not replicate the historical results achieved by other entities managed or sponsored by members of the Adviser ’ s Investment Committee, or by the Adviser or its affiliates.
Our investments may differ from those of existing accounts that are or have been sponsored or managed by members of the Adviser's Investment Committee, the Adviser or affiliates of the Adviser.
Investors in our securities are not acquiring an interest in any accounts that are or have been sponsored or managed by members of the Adviser's Investment Committee, the Adviser or affiliates of the Adviser.
−Removed: Subject to the requirements of the 1940 Act, we may consider co-investing in portfolio investments with other accounts sponsored or managed by members of the Adviser's Investment Committee, the Adviser or its affiliates.
+Added: Subject to the requirements of the 1940 Act and the provisions of the co-investment exemptive order applicable to us, we may consider co-investing in portfolio investments with Affiliated Investment Accounts (as defined below) or other accounts sponsored or managed by members of the Adviser's Investment Committee, the Adviser or its affiliates.
Any such investments are subject to regulatory limitations and approvals by directors who are not "interested persons," as defined in the 1940 Act.
1 unchanged sentence
We also cannot assure you that we will replicate the historical results achieved for other Morgan Stanley funds by members of the Investment Committee, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods.
−Removed: Additionally, all or a portion of the prior results may have been achieved in particular market conditions which may never be
+Added: Additionally, all or a portion of the prior results may have been achieved in particular market conditions which may never be repeated.
Moreover, current or future market volatility and regulatory uncertainty may have an adverse impact on our future performance.
4 unchanged sentences
We can offer no assurance that any current or future employees of the Adviser will contribute effectively to the work of, or remain associated with, the Adviser.
−Removed: We caution you that the principals of our Adviser or Administrator may also be called upon to provide managerial assistance to our portfolio companies and those of other investment vehicles, including other BDCs, which are managed by the Adviser.
+Added: We caution you that the principals of our Adviser or Administrator may also be called upon to provide managerial assistance to our portfolio companies and those of other investment vehicles, including other BDCs, such as SLIC, which are managed by the Adviser.
Such demands on their time may distract them or slow our rate of investment.
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Conflicts related to obligations the Adviser ’ s Investment Committee, the Adviser or its affiliates have to other clients and conflicts related to fees and expenses of such other clients.
−Removed: Morgan Stanley, the parent company of the Adviser, has advised clients and has sponsored, managed or advised other alternative investment funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, programs, accounts or businesses, the "Affiliated Investment Accounts") with a wide variety of investment objectives that in some instances may overlap or conflict with our investment objectives and present conflicts of interest.
+Added: Morgan Stanley, the parent company of the Adviser, has advised clients and has sponsored, managed or advised other alternative investment funds, regulated funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, program, accounts or business, the “Affiliated Investment Accounts”) with a wide variety of investment objectives that in some instances may overlap or conflict with our investment objectives and present conflicts of interest.
In addition, Morgan Stanley may also from time to time create new or successor Affiliated Investment Accounts that may compete with us and present similar conflicts of interest.
1 unchanged sentence
Our investment objective may overlap with the investment objectives of certain Affiliated Investment Accounts.
+Added: For example, the Adviser currently serves as the investment adviser to SLIC, a BDC which is pursuing an investment objective and investment strategy similar to ours.
As a result, the members of the Investment Committee may face conflicts in the allocation of investment opportunities among us and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser.
−Removed: Certain Affiliated Investment Accounts may provide for higher management or incentive fees, greater expense reimbursements or overhead allocations, or permit the Adviser and its affiliates to receive higher origination and other transaction fees, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts.
+Added: Certain Affiliated Investment Accounts, including SLIC, may provide for higher management fees, incentive fees, greater expense reimbursements or overhead allocations, or permit the Adviser and its affiliates to receive higher origination and other transaction fees, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts.
For example, the 1940 Act restricts the Adviser from receiving more than a 1% fee in connection with loans that we acquire, or originate, a limitation that does not exist for certain other accounts.
Morgan Stanley currently invests and plans to continue to invest on its own behalf and on behalf of its Affiliated Investment Accounts in a wide variety of investment opportunities in North America, Europe and elsewhere.
−Removed: Morgan Stanley and, to extent consistent with applicable law and/or any exemptive relief that may be granted to us by the SEC and the Adviser's allocation policies and procedures, its Affiliated Investment Accounts will be permitted to invest in investment opportunities without making such opportunities available to us beforehand.
−Removed: Subject to the requirements of any applicable exemptive relief that may be granted by the SEC, Morgan Stanley may offer investments that fall into the investment objectives of an Affiliated Investment Account to such account or make such investment on its own behalf, even though such investment also falls within our investment objectives.
+Added: Morgan Stanley and, to extent consistent with applicable law and/or the exemptive relief applicable to us and the Adviser's allocation policies and procedures, its Affiliated Investment Accounts will be permitted to invest in investment opportunities without making such opportunities available to us beforehand.
+Added: Subject to the requirements of the exemptive relief applicable to us, Morgan Stanley may offer investments that fall into the investment objectives of an Affiliated Investment Account to such account or make such investment on its own behalf, even though such investment also falls within our investment objectives.
We may invest in opportunities that Morgan Stanley and/or one or more Affiliated Investment Accounts has declined, and vice versa.
3 unchanged sentences
There can be no assurance that we will have an opportunity to participate in certain opportunities that fall within our investment objectives.
−Removed: Our application for exemptive relief has not yet been granted, and there is no assurance that such relief will be granted subject to the terms and conditions we have requested or at all.
−Removed: To the extent we do not obtain a co-investment exemptive order or if the granting of such order is delayed, we may only be able to participate in certain negotiated investment opportunities on a rotational basis.
It is possible that Morgan Stanley or an Affiliated Investment Account will invest in a company that is or becomes a competitor of a portfolio company of the Company.
3 unchanged sentences
To the extent permitted by law, it should be noted that Morgan Stanley has, directly or indirectly, made large investments in certain of its Affiliated Investment Accounts, and accordingly Morgan Stanley's investment in us may not be a determining factor in the outcome of any of the foregoing conflicts.
+Added: In the course of our investing activities, we pay management fees to the Adviser and reimburse certain expenses of the Administrator.
+Added: As a result, investors in shares of our Common Stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than one might achieve through direct investments.
+Added: As a result of this arrangement, there may be times when the Adviser has interests that differ from those of our common stockholders, giving rise to a conflict.
The Adviser ’ s investment professionals are engaged in other investment activity on behalf of other clients.
−Removed: Certain investment professionals who are involved in our activities remain responsible for the investment activities of other Affiliated Investment Accounts managed by the Adviser and its affiliates, and they will devote time to the management of such investments and other newly created Affiliated Investment Accounts (whether in the form of funds, separate accounts or other vehicles), as well as their own investments.
+Added: Certain investment professionals who are involved in our activities remain responsible for the investment activities of other Affiliated Investment Accounts managed by the Adviser and its affiliates, and they will devote time to the management of such investments and other newly created Affiliated Investment Accounts (whether in the form of funds, separate accounts or other
+Added: vehicles), as well as their own investments.
+Added: For example, our directors and officers also serve as directors and officers of SLIC, a BDC that is advised by the Adviser and is pursuing an investment objective and investment strategy similar to ours.
In addition, in connection with the management of investments for other Affiliated Investment Accounts, members of Morgan Stanley and its affiliates may serve on the boards of directors of or advise companies which may compete with our portfolio investments.
7 unchanged sentences
As a result, investors in shares of our Common Stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than one might achieve through direct investments.
−Removed: Because these fees are based on our average
−Removed: gross assets, the Adviser benefits when we incur debt or use leverage.
+Added: Because these fees are based on our average gross assets, the Adviser benefits when we incur debt or use leverage.
Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor or our stockholders.
9 unchanged sentences
Conflicts related to other arrangements with the Adviser or its affiliates.
−Removed: We have entered into a license agreement with the Adviser under which the Adviser has granted us a non-exclusive, royalty-free license to use the name "Morgan Stanley." See " Item 7.
−Removed: Certain Relationships and Related Transactions, and Director Independence—License Agreement ." In addition, we pay to the Administrator our allocable portion of certain expenses incurred by the Administrator in performing its obligations under the Administration Agreement, such as our allocable portion of the cost of our chief financial officer and chief compliance officer.
+Added: We have entered into a license agreement with the Adviser under which the Adviser has granted us a non-exclusive, royalty-free license to use the name “Morgan Stanley.” In addition, we pay to the Administrator our allocable portion of certain expenses incurred by the Administrator in performing its obligations under the Administration Agreement, such as our allocable portion of the cost of our chief financial officer and chief compliance officer.
These arrangements create conflicts of interest that our Board of Directors must monitor.
−Removed: Our ability to enter into transactions with our affiliates will be restricted.
−Removed: We are prohibited under the 1940 Act from participating in certain transactions with certain of our affiliates without the prior approval of a majority of our independent directors and, in some cases, the SEC.
+Added: Our ability to enter into transactions with our affiliates is restricted.
+Added: As a BDC, we are prohibited under the 1940 Act from participating in certain transactions with certain of our affiliates without the prior approval of a majority of our independent directors and, in some cases, the SEC.
Any person that owns, directly or indirectly, 5% or more of our outstanding voting securities is our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any securities from or to such affiliate on a principal basis, absent the prior approval of our Board of Directors and, in some cases, the SEC.
6 unchanged sentences
However, although the Adviser endeavors to fairly allocate investment opportunities in the long-run, we can offer no assurance that investment opportunities will be allocated to us fairly or equitably in the short-term or over time.
−Removed: We have filed an application with the SEC seeking exemptive relief
−Removed: that, if granted, would permit us to co-invest with affiliates of our Adviser in privately negotiated transactions.
−Removed: However, our exemptive relief application has not yet been granted, and we can offer no assurance that such relief will be granted.
−Removed: In situations when co-investment with affiliates' other clients is not permitted under the 1940 Act and related rules, existing or future staff guidance, or the terms and conditions of any exemptive relief that may be granted to us by the SEC (as discussed above), our Adviser will need to decide which client or clients will proceed with the investment.
+Added: The SEC has granted our Adviser exemptive relief that allows us to enter into certain negotiated co-investment transactions alongside certain Affiliated Investment Accounts in a manner consistent with our investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with the Order.
+Added: Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.
+Added: In situations when co-investment with affiliates' other clients is not permitted under the 1940 Act and related rules, existing or future staff guidance, or the terms and conditions of the exemptive relief granted to us by the SEC (as discussed above), our Adviser will need to decide which client or clients will proceed with the investment.
Generally, we will not have an entitlement to make a co-investment in these circumstances and, to the extent that another client elects to proceed with the investment, we will not be permitted to participate.
14 unchanged sentences
Also, shares of closed-end investment companies and BDCs frequently trade at a discount from their net asset value.
−Removed: This characteristic of closed-end investment companies is separate and distinct from the risk that our net asset value per Share may decline.
−Removed: We cannot predict whether shares of our Common Stock, if listed on a national securities exchange, will trade at, above or below net asset value.
−Removed: We may be the target of litigation.
−Removed: We may be the target of securities litigation in the future, particularly if the value of shares of our Common Stock fluctuates significantly.
−Removed: We could also generally be subject to litigation, including derivative actions by our stockholders.
−Removed: Any litigation could result in substantial costs and divert management's attention and resources from our business and cause a material adverse effect on our business, financial condition and results of operations.
+Added: This characteristic of closed-end investment companies and BDCs is separate and distinct from the risk that our net asset value per Share may decline.
+Added: We cannot predict whether shares of our Common Stock, if listed on a national securities exchange, would trade at, above or below net asset value.
We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.
The business of identifying and structuring investments of the types contemplated by us is competitive and involves a high degree of uncertainty.
−Removed: We are competing for investments with other investment funds, as well as more traditional lending institutions and private credit-focused competitors.
+Added: We are competing for investments with other investment funds, including SLIC, as well as more traditional lending institutions and private credit-focused competitors.
Over the past several years, an increasing number of funds have been formed, with investment objectives similar to, or overlapping with, our investment objectives (and many such existing funds have grown substantially in size).
9 unchanged sentences
The distribution requirement for a RIC is satisfied if we distribute to our stockholders dividends for U.S.
−Removed: federal income tax purposes of an amount generally at least equal to 90% of our investment company taxable income, which is generally our net ordinary income plus the excess of our net short-term capital gains in excess of our net long-term capital losses, determined without regard to any deduction for dividends paid, to our stockholders on an annual basis.
+Added: federal income tax purposes of an amount generally at least equal to 90% of our ICTI, which is generally our net ordinary income plus the excess of our net short-term capital gains in excess of our net long-term capital losses, determined without regard to any deduction for dividends paid, to our stockholders on an annual basis.
We are subject, to the extent we use debt financing, to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC.
13 unchanged sentences
A reduction in the availability of new capital could limit our ability to grow.
−Removed: In addition, we will be required to distribute each taxable year an amount at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, or investment company taxable income, determined without regard to any deduction for dividends paid as dividends for U.S.
+Added: In addition, we will be required to distribute each taxable year an amount at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, or ICTI, determined without regard to any deduction for dividends paid as dividends for U.S.
federal income tax purposes, to our stockholders to maintain our ability to be subject to tax as a RIC.
1 unchanged sentence
An inability to access the capital markets successfully could limit our ability to grow our business and execute our business strategy fully and could decrease our earnings, if any.
−Removed: This would have an adverse effect on the value of our securities.
+Added: This would have an
+Added: adverse effect on the value of our securities.
If we are not able to raise capital and are at or near our targeted leverage ratios, we may receive smaller allocations, if any, on new investment opportunities under the Adviser's allocation policies and procedures.
7 unchanged sentences
Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement in a given taxable year to distribute to our stockholders dividends for U.S.
−Removed: federal income tax purposes an amount at least equal to 90% of our investment company taxable income, determined without regard to any deduction for dividends paid, to our stockholders to qualify and maintain our ability to be subject to tax as a RIC.
+Added: federal income tax purposes an amount at least equal to 90% of our ICTI, determined without regard to any deduction for dividends paid, to our stockholders to qualify and maintain our ability to be subject to tax as a RIC.
In such a case, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements.
5 unchanged sentences
stockholders that are individuals, trusts or estates will be taxed as though they received a distribution of some of our expenses.
−Removed: While we expect to be treated initially as a "publicly offered regulated investment company" on the Initial Drawdown Date, if we are not treated as a "publicly offered regulated investment company" as a result of either (1) shares of our Common Stock and our preferred stock collectively being held by at least 500 persons at all times during a taxable year, (2) shares of our Common Stock are continuously offered pursuant to a public offering (within the meaning of Section 4 of the Securities Act) or (3) shares of our Common Stock being treated as regularly traded on an established securities market, each U.S.
+Added: While we expect to be treated as a “publicly offered regulated investment company,” if we are not so treated as a result of either (1) shares of our Common Stock and our preferred stock collectively being held by at least 500 persons at all times during a taxable year, (2) shares of our Common Stock are continuously offered pursuant to a public offering (within the meaning of Section 4 of the Securities Act) or (3) shares of our Common Stock being treated as regularly traded on an established securities market, each U.S.
stockholder that is an individual, trust or estate will be treated as having received a dividend for U.S.
22 unchanged sentences
In the absence of an event of default, no person or entity from which we borrow money has a veto right or voting power over our ability to set policy, make investment decisions or adopt investment strategies.
−Removed: If we issue preferred stock, which is another form of leverage, the preferred stock would rank "senior" to Common Stock in our capital structure, preferred stockholders would have separate voting rights on certain matters and might have other rights, preferences or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our Common Stock or otherwise be in the best interest of our
−Removed: common stockholders.
+Added: If we issue preferred stock, which is another form of leverage, the preferred stock would rank “senior” to Common Stock in our capital structure, preferred stockholders would have separate voting rights on certain matters and might have other rights, preferences or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our Common Stock or otherwise be in the best interest of our common stockholders.
Holders of our Common Stock will directly or indirectly bear all of the costs associated with offering and servicing any preferred stock that we issue.
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This could have a material adverse effect on our operations, and we may not be able to make distributions in amounts sufficient to maintain our status as a RIC, or at all.
−Removed: We are subject to risks associated with the CIBC Subscription Facility and any other Credit Facility.
−Removed: On December 31, 2019, we entered into the CIBC Subscription Facility with CIBC Bank USA as administrative agent and arranger.
+Added: The following table illustrates the effect of leverage on returns from an investment in our common stock as of December 31, 2020, assuming various annual returns, net of expenses.
+Added: The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.
+Added: Assumed Return on Our Portfolio (Net of Expenses)
+Added: -10% -5% 0% 5% 10%
+Added: Corresponding return to common stockholder assuming actual asset coverage as of December 31, 2020 (1)
+Added: -23.9 % -13.0 % -2.1 % 8.7 % 19.6 %
+Added: (1) Assumes $656.8 million in total assets, $333.9 million in debt outstanding and $301.6 million in net assets as of December 31, 2020, and an average cost of funds of 1.93%, which is our weighted average interest rate as of December 31, 2020, excluding unused fees and financing costs.
+Added: Based on our outstanding indebtedness of $333.9 million as of December 31, 2020 and the effective annual interest rate of 1.93% as of that date, our investment portfolio would have been required to experience an annual return of at least 0.98% to cover annual interest payments on the outstanding debt.
+Added: We are subject to risks associated with the CIBC Subscription Facility, the BNP Funding Facility and any other Credit Facility.
+Added: We originally entered into the CIBC Subscription Facility with CIBC Bank USA as administrative agent and arranger on December 31, 2019, and most recently amended such facility on November 17, 2020.
+Added: Additionally, DLF Financing SPV, LLC, our wholly owned subsidiary and a Delaware limited liability company (“DLF LLC”), entered into the BNP Funding Facility on October 14, 2020, and subsequently amended such facility on December 11, 2020.
We anticipate that we or a direct subsidiary of ours may enter into one or more additional senior secured revolving credit facilities (each, a “Credit Facility”).
−Removed: As a result of the CIBC Subscription Facility and any future Credit Facility, we are subject to a variety of risks, including those set forth below.
−Removed: Any inability to renew, extend or replace the CIBC Subscription Facility or any other Credit Facility could adversely impact our liquidity and ability to find new investments or maintain distributions to our stockholders.
−Removed: There can be no assurance that we would be able to renew, extend or replace the CIBC Credit Facility or any other Credit Facility upon its maturity on terms that are favorable to us, if at all.
−Removed: Our ability to renew, extend or replace the Credit Facility would be constrained by then-current economic conditions affecting the credit markets.
−Removed: In the event that we were not able to renew, extend or replace the CIBC Subscription Facility or any other Credit Facility at the time of its maturity, this could have a material adverse effect on our liquidity and ability to fund new investments, our ability to make distributions to our stockholders and our ability to qualify as a RIC.
−Removed: In addition to regulatory limitations on our ability to raise capital, the CIBC Subscription Facility contains various covenants, which, if not complied with, could accelerate our repayment obligations under the CIBC Subscription Facility, thereby materially and adversely affecting our liquidity, financial condition, results of operations and ability to pay distributions.
−Removed: We have entered into the CIBC Subscription Facility and as a result, we are subject to certain risks.
+Added: As a result of the CIBC Subscription Facility, the BNP Funding Facility and any future Credit Facility, we are subject to a variety of risks, including those set forth below.
+Added: Any inability to renew, extend or replace the CIBC Subscription Facility, the BNP Funding Facility or any other Credit Facility could adversely impact our liquidity and ability to find new investments or maintain distributions to our stockholders.
+Added: There can be no assurance that we would be able to renew, extend or replace the CIBC Credit Facility, the BNP Funding Facility or any other Credit Facility upon its maturity on terms that are favorable to us, if at all.
+Added: Our ability to renew, extend or replace such credit facilities would be constrained by then-current economic conditions affecting the credit markets.
+Added: In the event that we were not able to renew, extend or replace the CIBC Subscription Facility, the BNP Funding Facility or any other Credit Facility at the time of its maturity, this could have a material adverse effect on our liquidity and ability to fund new investments, our ability to make distributions to our stockholders and our ability to qualify as a RIC.
+Added: In addition to regulatory limitations on our ability to raise capital, each of the CIBC Subscription Facility and the BNP Funding Facility contains various covenants, which, if not complied with, could accelerate our repayment obligations under such facilities, thereby materially and adversely affecting our liquidity, financial condition, results of operations and ability to pay distributions.
+Added: We have entered into the CIBC Subscription Facility, and DLF LLC has entered into the BNP Funding Facility, and as a result, we are subject to certain risks.
The CIBC Subscription Facility is secured by the unfunded commitments of certain investors of the Company.
We have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.
−Removed: Our continued compliance with the covenants contained in the CIBC Subscription Agreement depends on many factors, some of which are beyond our control.
+Added: Our continued compliance with the covenants contained in each of the CIBC Subscription Agreement and the BNP Funding Facility depends on many factors, some of which are beyond our control.
We can offer no assurances that we will continue to comply with these covenants.
−Removed: In the event of a default under the CIBC Subscription Agreement documents, CIBC Bank USA, in its capacity as administrative agent under the CIBC Subscription Agreement documents, would have the right to call the capital commitments of our investors collateralizing the CIBC Subscription Agreement in order to repay amounts outstanding under the CIBC Subscription Agreement, which would reduce the amount of capital commitments available to us for investment purposes and thereby have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders.
+Added: In the event of a default under the CIBC Subscription Agreement and/or the BNP Funding Facility documents, CIBC Bank USA and/or BNP, as applicable, in each of their respective capacities as administrative agent under the applicable loan documents, would have the right to call the capital commitments of our investors collateralizing the CIBC Subscription Agreement and/or the BNP Funding Facility documents in order to repay amounts outstanding under such facilities, which would reduce the amount of capital commitments available to us for investment purposes and thereby have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders.
Our interests in any subsidiary that enters into a Credit Facility would be subordinated, and we may not receive cash on our equity interests from any such subsidiary.
−Removed: We would consolidate the financial statements of any such subsidiary in our financial statements and treat the indebtedness of any such subsidiary as our leverage.
+Added: We would consolidate the financial statements of any such subsidiary in our consolidated financial statements and treat the indebtedness of any such subsidiary as our leverage.
Our interests in any wholly owned direct or indirect subsidiary of ours would be subordinated in priority of payment to every other obligation of any such subsidiary and would be subject to certain payment restrictions set forth in the Credit Facility.
−Removed: We would receive cash distributions on our equity interests in any such subsidiary only if such subsidiary had made all required cash interest payments to the lenders and no default exists under the Credit Facility.
+Added: We would receive cash distributions on our equity interests in any such subsidiary only if
+Added: such subsidiary had made all required cash interest payments to the lenders and no default exists under the Credit Facility.
We cannot assure you that distributions on the assets held by any such subsidiary would be sufficient to make any distributions to us or that such distributions would meet our expectations.
12 unchanged sentences
As a result, there may be times or circumstances during which we would be unable to sell investments or take other actions that might be in our best interests.
−Removed: We may be subject to risks associated with any CLOs we enter into to finance our investments.
+Added: We may be subject to risks associated with any collateralized loan obligations (“CLOs”) we enter into to finance our investments.
We may enter into CLOs through a direct or indirect subsidiary of ours (any such subsidiary, an “MS Issuer”).
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The fair value of securities and other investments that are not publicly traded may not be readily determinable, and we value these securities at fair value as determined in good faith by our Board of Directors, including to reflect significant events affecting the value of our securities.
−Removed: As discussed in more detail under Critical Accounting Policies , most, if not all, of our investments (other than cash and cash equivalents) are classified as Level 3.
+Added: As discussed in more detail under “ Part II.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies ”, most, if not all, of our investments (other than cash and cash equivalents) are classified as Level 3 under ASC 820.
This means that our portfolio valuations are based on unobservable inputs and our own assumptions about how market participants would price the asset or liability in question.
5 unchanged sentences
We have retained the services of an independent service provider to review the valuation of these securities.
−Removed: At least once on a rolling twelve-month basis, the valuation for each portfolio investment for which a market quote is not readily available will be
−Removed: reviewed by an independent valuation firm.
+Added: At least once on a rolling twelve-month basis, the valuation for each portfolio investment for which a market quote is not readily available will be reviewed by an independent valuation firm.
The types of factors that our Board of Directors may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly traded securities, including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company's ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant factors.
3 unchanged sentences
Any changes in fair value are recorded in the aggregate in our consolidated statement of operations as a net change in unrealized appreciation or depreciation.
−Removed: We may experience fluctuations in our quarterly operating results.
−Removed: We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt securities we acquire, the default rate on such securities, the number and size of investments we originate or acquire, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions.
−Removed: In light of these factors, results for any period should not be relied upon as being indicative of our performance in future periods.
Our activities may be limited as a result of potentially being deemed to be controlled by a BHC.
14 unchanged sentences
The effects of Dodd-Frank on the financial services industry will depend, in large part, upon the extent to which regulators exercise the authority granted to them and the approaches taken in implementing regulations.
−Removed: President Trump and certain members of Congress have indicated that they will seek to amend or repeal portions of Dodd-Frank, among other federal laws, which may create regulatory uncertainty in the near term.
+Added: Any statements from the U.S.
+Added: President or members of Congress regarding amendments, expansion or repeal of Dodd-Frank, among other federal laws, may create regulatory uncertainty in the near term.
While the impact of this legislation on us and our portfolio companies may not be known for some time, Dodd-Frank, including future rules implementing its provisions and the interpretation of those rules, along with other legislative and regulatory proposals directed at the financial services industry that are proposed or pending in the U.S.
−Removed: Congress, may negatively impact the operations,
−Removed: cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.
+Added: Congress, may negatively impact the operations, cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.
Laws that apply to us, either now or in the future, are often highly complex and may include licensing requirements.
3 unchanged sentences
Additionally, changes to the laws and regulations governing our operations, including those associated with RICs, may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities or result in the imposition of corporate-level taxes on us.
−Removed: Such changes could result in material differences to our strategies and plans and may shift our investment focus from the areas of expertise of the Adviser to other types of investments in which the Adviser may have little or no expertise or experience.
+Added: Such changes could result in material differences to our strategies and plans and may shift our investment focus from
+Added: the areas of expertise of the Adviser to other types of investments in which the Adviser may have little or no expertise or experience.
Any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.
1 unchanged sentence
If we or the Adviser were to operate subject to CFTC regulation, we may incur additional expenses and would be subject to additional regulation.
−Removed: In addition, certain regulations applicable to debt securitizations implementing credit risk retention requirements that have taken effect or will take effect in both the U.S.
−Removed: and in Europe may adversely affect or prevent us from entering into any future securitization transaction.
+Added: In addition, certain regulations applicable to debt securitizations implementing credit risk retention requirements that have taken effect or will take effect in both the United States and in Europe may adversely affect or prevent us from entering into any future securitization transaction.
These risk retention rules may cause an increase in our cost of funds under or may prevent us from completing any future securitization transactions.
7 unchanged sentences
Any associated increase in financing costs would ultimately be borne by our common stockholders.
−Removed: On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law.
−Removed: The Tax Cuts and Jobs Act makes significant changes to the U.S.
−Removed: income tax rules applicable to both individuals and entities, including corporations.
−Removed: The Tax Cuts and Jobs Act includes provisions that, among other things, reduce the U.S.
−Removed: corporate tax rate from 35 percent to 21 percent, introduce a capital investment deduction, limit the interest deduction, limit the use of net operating losses to offset future taxable income, repeal the corporate AMT and make extensive changes to the U.S.
−Removed: international tax system.
−Removed: The Tax Cuts and Jobs Act also authorizes the IRS to issue regulations with respect to the new provisions.
−Removed: Among other things, the Tax Cuts and Jobs Act may limit the ability of borrowers to fully deduct interest expense.
−Removed: This could potentially affect the loan market, for example by impacting the demand for loans available from us or the terms of such loans.
−Removed: The changes to interest deductibility, utility of net operating losses and other provisions of the Tax Cuts and Jobs Act could also in certain circumstances increase the U.S.
−Removed: tax burden on our portfolio assets which, in turn, could negatively impact their ability to service their interest expense obligations to us.
−Removed: On May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act, which leaves the architecture and core features of Dodd-Frank intact but significantly recalibrates applicability thresholds, revises various post-crisis regulatory requirements, and provides targeted regulatory relief to certain financial institutions.
+Added: On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Reform Act”) was enacted into law, which leaves the architecture and core features of Dodd-Frank intact but significantly recalibrates applicability thresholds, revises various post-crisis regulatory requirements, and provides targeted regulatory relief to certain financial institutions.
Among the most significant of its amendments to Dodd-Frank are a substantial increase in the $50 billion asset threshold for automatic regulation of BHCs as “systemically important financial institutions” an exemption from the Volcker Rule for insured depository institutions with less than $10 billion in consolidated assets and lower levels of trading assets and liabilities, as well as amendments to the liquidity leverage ratio and supplementary leverage ratio requirements.
1 unchanged sentence
The effect of this change and any further rules or regulations are and could be complex and far-reaching, and the change and any future laws or regulations or changes thereto could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.
+Added: In July 2019, U.S.
+Added: federal regulatory agencies adopted amendments to the Volcker Rule regulations to implement the Reform Act.
+Added: In addition, in 2019 such U.S.
+Added: federal regulatory agencies adopted targeted amendments to the Volcker Rule regulations to simplify and tailor certain compliance requirements relating to the Volcker Rule.
+Added: In June 2020, U.S.
+Added: federal regulatory agencies adopted additional revisions to the Volcker Rule’s current restrictions on banking entities sponsoring and investing in certain covered hedge funds and private equity funds, including by adopting new exemptions allowing banking entities to sponsor and invest without limit in credit funds, venture capital funds, customer facilitation funds and family wealth management vehicles.
+Added: The ultimate consequences of the Reform Act and such regulatory developments remain uncertain, and it remains unclear whether any other legislative or regulatory proposals will be enacted or adopted.
Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that some portion of the non-bank financial sector will be subject to new regulation.
While it cannot be known at this time whether any regulation will be implemented or what form it will take, increased regulation of non-bank credit extension could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.
−Removed: Uncertainty resulting from the U.S.
−Removed: political climate could negatively impact our business, financial condition and results of operations.
−Removed: The outcome of the 2016 U.S.
−Removed: presidential election and the 2018 midterm election created uncertainty with respect to legal, tax and regulatory regimes in which the Company and its portfolio entities, as well as the Adviser, the Administrator, Morgan Stanley and their affiliates operate.
−Removed: Any significant changes in economic or tax policy and/or government programs could have a material adverse impact on us and on our investments.
−Removed: Our Board of Directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval .
+Added: Our Board of Directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval, and we may temporarily deviate from our regular investment strategy .
Our Board of Directors has the authority, except as otherwise provided in the 1940 Act, to modify or waive our investment objective and certain of our operating policies and strategies without prior notice and without stockholder approval.
2 unchanged sentences
Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions.
−Removed: Provisions of the Delaware General Corporation Law and of our certificate of incorporation and bylaws could deter takeover attempts and have an adverse effect on the price of shares of Common Stock.
−Removed: The Delaware General Corporation Law, as amended (the "DGCL"), contains provisions that may discourage, delay or make more difficult a change in control of us or the removal of our directors.
−Removed: Our certificate of incorporation and bylaws contain provisions that limit liability and provide for indemnification of our directors and officers.
+Added: Provisions of the Delaware General Corporation Law, as amended (the “DGCL”), and of our Certificate of Incorporation and bylaws could deter takeover attempts and have an adverse effect on the price of shares of Common Stock.
+Added: The DGCL contains provisions that may discourage, delay or make more difficult a change in control of us or the removal of our directors.
+Added: Our certificate of incorporation and bylaws contain provisions that limit liability and provide for indemnification of our
+Added: directors and officers.
These provisions and others which we may adopt also may have the effect of deterring hostile takeovers or delaying changes in control or management.
6 unchanged sentences
The 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.
−Removed: If the Adviser resigns, we may not be able to find a new investment adviser or
−Removed: hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all.
+Added: If the Adviser resigns, 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.
If we are unable to do so quickly, our operations are likely to experience a disruption, our business, financial condition, results of operations and cash flows as well as our ability to pay distributions are likely to be adversely affected and the value of our shares may decline.
9 unchanged sentences
We are an “emerging growth company,” as defined in the JOBS Act, until the earliest of:
−Removed: the last day of the fiscal year ending after the fifth anniversary of any initial public offer of shares of Common Stock;
+Added: • the last day of the fiscal year ending after the fifth anniversary of any initial public offering of shares of Common Stock;
• the year in which our total annual gross revenues first exceed $1.07 billion;
• the date on which we have, during the prior three-year period, issued more than $1.0 billion in non-convertible debt;
−Removed: the last day of a fiscal year in which we (1) have an aggregate worldwide market value of shares of our Common Stock held by non-affiliates of $700 million or more, computed at the end of the last business day of the second fiscal quarter in such fiscal year and (2) have been an Exchange Act reporting company for at least one year (and filed at least one annual report under the Exchange Act).
+Added: • the last day of a fiscal year in which we (1) have an aggregate worldwide market value of shares of our Common Stock held by non-affiliates of $700 million or more, computed at the end of the last business day of the second fiscal quarter in such
+Added: fiscal year and (2) have been a reporting company under the Exchange Act for at least one year (and filed at least one annual report under the Exchange Act).
Although we are still evaluating the JOBS Act, we may take advantage of some or all of the reduced regulatory and disclosure requirements permitted by the JOBS Act and, as a result, some investors may consider shares of our Common Stock less attractive.
1 unchanged sentence
This may increase the risk that material weaknesses or other deficiencies in our internal control over financial reporting go undetected.
−Removed: We will incur significant costs as a result of being registered under the Exchange Act.
−Removed: We will incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act and other rules implemented by the SEC.
Efforts to comply with the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with the Sarbanes-Oxley Act would adversely affect us and the value of shares of our Common Stock.
−Removed: We are required to comply with certain requirements of the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC but will not have to comply with certain requirements until we have been registered under the Exchange Act for a
−Removed: specified period of time or cease to be an "emerging growth company." Because shares of our Common Stock are registered under the Exchange Act, we are subject to the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC, and our management is required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.
+Added: We are required to comply with certain requirements of the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC but will not have to comply with certain requirements until we have been registered under the Exchange Act for a specified period of time or cease to be an "emerging growth company." Because shares of our Common Stock are registered under the Exchange Act, we are subject to the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC, and our management is required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.
We are required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our internal control over financial reporting.
23 unchanged sentences
We are highly dependent on information systems, and systems failures could significantly disrupt our business, which may, in turn, negatively affect the value of shares of our Common Stock and our ability to pay distributions.
−Removed: The operations of the Company, the Adviser, the Administrator and any third-party service provider to any of the foregoing are susceptible to risks from cybersecurity attacks and incidents due to reliance on the secure processing, storage and transmission of
−Removed: confidential and other information in the relevant computer systems and networks.
+Added: The operations of the Company, the Adviser, the Administrator and any third-party service provider to any of the foregoing are susceptible to risks from cybersecurity attacks and incidents due to reliance on the secure processing, storage and transmission of confidential and other information in the relevant computer systems and networks.
In particular, cyber security incidents and cyber-attacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future.
9 unchanged sentences
However, we, the Adviser and the Administrator may not be able to ensure secure capabilities with all of our clients, vendors, service providers, counterparties and other third parties to protect the confidentiality of the information.
−Removed: Terrorist attacks, acts of war, natural disasters, outbreaks or pandemics may impact our portfolio companies and our Adviser and harm our business, operating results and financial condition.
+Added: In addition, the systems and technology resources used by us, our Adviser, our Administrator and our and their respective affiliates could be strained by extended periods of remote working by our Adviser, our Administrator and their affiliate’s employees and such extended remote working could introduce operational risks, including heightened cybersecurity risk.
+Added: Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts.
+Added: Terrorist attacks, acts of war, natural disasters, outbreaks or pandemics, such as the Coronavirus pandemic, may impact our portfolio companies and our Adviser and harm our business, operating results and financial condition.
Terrorist acts, 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 and our Adviser.
Such acts have created, and continue to create, economic and political uncertainties and have contributed to recent global economic instability.
−Removed: For example, many countries have experienced outbreaks of infectious illnesses in recent decades, including swine flu, avian influenza, SARS and the COVID-19 (the “Coronavirus”).
−Removed: In December 2019, an initial outbreak of the Coronavirus was reported in Hubei, China.
−Removed: Since then, a large and growing number of cases have been confirmed around the world.
−Removed: The Coronavirus outbreak has resulted in numerous deaths and the imposition of both local and more widespread “work from home” and other quarantine measures, border closures and other travel restrictions, causing social unrest and commercial disruption on a global scale.
−Removed: In March 2020, the World Health Organization declared the Coronavirus outbreak a pandemic.
+Added: For example, many countries have experienced outbreaks of infectious illnesses in recent decades, including swine flu, avian influenza, SARS and Coronavirus.
The ongoing spread of the Coronavirus has had, and will continue to have, a material adverse impact on local economies in the affected jurisdictions and also on the global economy, as cross border commercial activity and market sentiment are increasingly impacted by the outbreak and government and other measures seeking to contain its spread.
−Removed: In addition to these developments having adverse consequences for certain portfolio companies and other issuers in or through which the Company invests] and the value of the Company’s investments therein, the operations of the Adviser (including those relating to the Company) have been, and could continue to be, adversely impacted, including through quarantine measures and travel restrictions imposed on Morgan Stanley personnel or service providers based or temporarily located in affected countries, or any related health issues of such personnel or service providers.
+Added: In addition to these developments potentially having adverse consequences for certain portfolio companies and other issuers in or through which the Company invests and the value of the Company’s investments therein, the operations of the Adviser (including those relating to the Company) have been, and could continue to be, adversely impacted, including through quarantine measures and travel restrictions imposed on Morgan Stanley personnel or service providers based or temporarily located in affected countries, or any related health issues of such personnel or service providers.
Any of the foregoing events could materially and adversely affect the Company’s ability to source, manage and divest its investments and its ability to fulfill its investment objectives.
Similar consequences could arise with respect to other comparable infectious diseases.
−Removed: As the potential impact of the Coronavirus is difficult to predict, the extent to which the Coronavirus and/or other disease outbreaks or health pandemics may negatively affect our and our portfolio companies' operating results, or the duration of any potential business or supply-chain disruption, is uncertain.
−Removed: Any potential impact to our
−Removed: results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of the Coronavirus and the actions taken by authorities and other entities to contain the Coronavirus or treat its impact, all of which are beyond our control.
−Removed: These potential impacts, while uncertain, could adversely affect our and our portfolio companies' operating results.
+Added: As the potential impact of the Coronavirus is difficult to predict, the extent to which the Coronavirus
+Added: and/or other disease outbreaks or health pandemics may negatively affect our and our portfolio companies' operating results, or the duration of any potential business or supply-chain disruption, is uncertain.
+Added: While the Adviser believes that we will be able to pursue our investment strategy during this pandemic, there is an increased risk that our investment objectives may not be achieved.
+Added: Any potential impact to our results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of the Coronavirus and the actions taken by authorities and other entities to contain the Coronavirus or treat its impact, all of which are beyond our control.
+Added: These potential impacts, while uncertain, could adversely affect our operating results and the operating results of the portfolio companies in which we invest.
+Added: Further, if a future pandemic occurs (including a recurrence of the Coronavirus) during a period when our investments are maturing, we may not be able to realize our investments within the Company’s term, or at all.
In addition, future terrorist activities, military or security operations, natural disasters, disease outbreaks, pandemics or other similar events could weaken the domestic/global economies and create additional uncertainties, which may negatively impact our portfolio companies and, in turn, could have a material adverse impact on our business, operating results and financial condition.
Uncertainties resulting from the United Kingdom’s decision to leave the European Union could adversely affect our business.
−Removed: On June 23, 2016, the United Kingdom voted to leave the European Union, a decision popularly known as "Brexit." The United Kingdom left the European Union on January 31, 2020, governed by transitional terms that will expire on December 31, 2020.
−Removed: The longer term economic, legal, political, regulatory and social framework to be put in place between the United Kingdom and the European Union remain unclear and may lead to ongoing political and economic uncertainty and periods of exacerbated volatility in both the United Kingdom and in wider European markets for some time.
+Added: It is difficult to predict the future of the U.K.’s relationship with the E.U., the uncertainty of which may increase the volatility in the global financial markets in the short- and medium-term and may negatively disrupt regional and global financial markets.
+Added: Additionally, depending on the outcome, such uncertainty may adversely affect the manner in which Morgan Stanley operate certain of its businesses in Europe.
+Added: On January 31, 2020, the U.K.
+Added: withdrew from the E.U.
+Added: under the terms of a withdrawal agreement between the U.K.
+Added: The withdrawal agreement provided for a transition period to the end of December 2020, during which time the U.K.
+Added: would continue to apply E.U.
+Added: law as if it were a member state, and U.K.
+Added: firms' passporting rights to provide financial services in E.U.
+Added: jurisdictions continued.
+Added: On December 24, 2020 the U.K.
+Added: announced they had reached agreement on the terms of a trade and cooperation agreement to govern the future relationship between the parties.
+Added: The agreement consists of three main pillars including trade, citizens’ security and governance, covering a variety of arrangements in several areas.
+Added: The agreement is provisionally applicable with effect from January 1, 2021 pending formal ratification by the E.U.
+Added: With respect to financial services, although the U.K.
+Added: chose to grant the E.U.
+Added: equivalence in a number of key areas under European financial regulations, the E.U.
+Added: only made certain more limited equivalence decisions, leaving decisions on equivalence and adequacy to be determined by each of the U.K.
+Added: unilaterally in due course.
+Added: As a result, U.K.
+Added: licensed entities are unable to provide regulated services in a number of E.U.
+Added: jurisdictions from the end of December 2020, absent regulatory relief or other measures implemented by individual countries.
+Added: Such agreement is untested and may lead to ongoing political and economic uncertainty and periods of exacerbated volatility in both the United Kingdom and in wider European and global markets for some time.
As such, it is difficult to predict the precise impact of Brexit on us.
This uncertainty is likely to continue to adversely affect the global economic climate and may affect companies or assets, including with respect to opportunity, pricing, regulation, value or exit, especially companies based in, doing business in, or having service or other significant relationships in or with the United Kingdom or the European Union.
−Removed: The future application of certain legislation to Morgan Stanley and to us may depend on how the United Kingdom negotiates its future relationship with the European Union.
−Removed: We can offer no assurance that any negotiated terms or regulations will not have an adverse impact on Morgan Stanley, on us or our investments, in particular regarding portfolio companies established in or with business relations to the United Kingdom, including on our ability to achieve its investment objectives.
−Removed: Depending on the outcome of the negotiations between the United Kingdom and the European Union, Morgan Stanley may be subject to different rules and requirements in respect of its fund management business when the United Kingdom ceases to be a member of the European Union.
−Removed: Brexit may also have an adverse effect on the tax treatment of the Company and its investments.
−Removed: In particular, the European Union Directives preventing withholding taxes being imposed on intra-group dividends, interest and royalties may no longer apply to payments made into and out of the United Kingdom, meaning that the United Kingdom's double tax treaty network will need to be relied on.
−Removed: Not all double tax treaties fully eliminate withholding tax.
−Removed: Further, there may be changes to the operation of VAT.
−Removed: Changes in market conditions and the development of new regulatory regimes may have an adverse impact on Morgan Stanley, on us and our transactions, particularly those occurring in or affected by conditions in the United Kingdom and Europe.
−Removed: This uncertainty is likely to continue to adversely impact the global economic climate and may impact companies or assets, including with respect to opportunity, pricing, regulation, value or exit, in particular for companies based in, doing business in, or having service or other significant relationships in or with, the United Kingdom or the European Union.
In addition, the long-term stability of certain European financial markets remains uncertain and the possibility of defaults and/or bankruptcies by sovereign states in Europe in respect of their obligations remains a concern, which could have an impact on economic conditions and market activity in the European Union.
−Removed: Given current market conditions of relatively weak growth in many European Union member states, there is a risk that default of certain participating member states of the European Union may lead to the collapse of the Eurozone as it is constituted today, that certain member states of the European Union may cease to use the Euro as their national currency or that one or more member states may seek to withdraw from EU membership, which would likely have an adverse impact on us.
+Added: Given current market conditions of relatively weak growth in many European Union member states, there is a risk that default of certain participating member states of the European Union may lead to the collapse of the Eurozone as it is constituted today, that certain member states of the European Union may cease to use the Euro as their national currency or that one or more member states may seek to withdraw from EU membership, which would likely have an adverse impact on the Company.
Moreover, financial and economic developments in one European Union member state may impact economic and financial conditions among other European Union member states.
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Moreover, this could have a detrimental effect on the performance of investments both in those countries that may experience a default on liabilities and other countries which are economically connected with the European Union.
+Added: We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.
+Added: We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer.
+Added: To the extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than
+Added: that of a diversified investment company as a result of changes in the financial condition or the market's assessment of the issuer.
+Added: We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company.
+Added: Beyond our asset diversification requirements as a RIC under the Code, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies.
+Added: Although we are classified as a non-diversified investment company within the meaning of the 1940 Act, we maintain the flexibility to operate as a diversified investment company.
+Added: To the extent that we operate as a non-diversified investment company, we may be subject to greater risk.
+Added: The liability of each of the Adviser and the Administrator is limited, and we have agreed to indemnify each against certain liabilities, which may lead them to act in a riskier manner on our behalf than each would when acting for its own account.
+Added: Under the Investment Advisory Agreement, the Adviser does not assume any responsibility to us other than to render the services called for under that agreement, and it is not responsible for any action of our Board of Directors in following or declining to follow the Adviser’s advice or recommendations.
+Added: Under the terms of the Investment Advisory Agreement, the Adviser, its officers, members, personnel and any person controlling or controlled by the Adviser are not liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary's stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misconduct, bad faith or reckless disregard of the Adviser’s duties under the Investment Advisory Agreement.
+Added: In addition, we have agreed to indemnify the Adviser and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory Agreement, except where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person's duties under the Investment Advisory Agreement.
+Added: Under the Administration Agreement, the Administrator and certain specified parties providing administrative services pursuant to that agreement are not liable to us or our stockholders for, and we have agreed to indemnify them for, any claims or losses arising out of the good faith performance of their duties or obligations under the Administration Agreement, except those liabilities resulting primarily attributable to gross negligence, willful misconduct, bad faith or reckless disregard of the Administrator's duties under the Administration Agreement.
+Added: These protections may lead the Adviser or the Administrator to act in a riskier manner when acting on our behalf than it would when acting for its own account.
Risks relating to compliance with the AIFMD
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EEA AIFMs are regulated in a different way to non-EEA AIFMs as a consequence of the AIFMD.
−Removed: Broadly, an EEA AIFM is subject to extensive regulatory obligations and has access to a pan-European 'marketing passport' in respect of its AIFs (ie, the marketing passport is utilized in lieu of relying on the various private placement regimes in the European jurisdictions).
+Added: Broadly, an EEA AIFM is subject to extensive regulatory obligations and has access to a pan-European 'marketing passport' in respect of its AIFs (i.e., the marketing passport is utilized in lieu of relying on the various private placement regimes in the European jurisdictions).
The full scope of the AIFMD ultimately may be extended to non-EEA AIFMs who wish to market an AIF within the EEA pursuant to the pan-European marketing passport regime.
−Removed: In addition to satisfying the obligations described above, a non-EEA AIFM that obtains a pan-European marketing passport will have to satisfy additional obligations including, among other things, in respect of rules relating to the remuneration of certain personnel (potentially requiring the Adviser to change its compensation structures for key personnel, such that the Adviser's ability to recruit and retain these personnel may be affected), minimum regulatory capital requirements and independent valuation of an AIF's assets.
+Added: In addition to satisfying the obligations described above, a non-EEA AIFM that obtains a pan-European marketing passport will have to satisfy additional obligations including, among other things, in respect of rules relating to the remuneration of certain personnel (potentially requiring the Adviser to change its compensation structures for key personnel, such
+Added: that the Adviser's ability to recruit and retain these personnel may be affected), minimum regulatory capital requirements and independent valuation of an AIF's assets.
There is little guidance, and limited market practice, that has developed in respect of the AIFMD.
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To the extent required by laws implementing the Directive in any relevant EEA member state, the information in respect of the Company required to be disclosed pursuant to Article 23(4) and (5) of the Directive will be made available to each investor as follows:
−Removed: Any new arrangements for managing our liquidity, without undue delay in a disclosure notice delivered to each investor.
−Removed: Our current risk profile and the risk management systems employed by the Adviser to manage those risks, in each annual report.
−Removed: Any changes to the maximum level of leverage which the Adviser may employ on our behalf as well as any right of the reuse of collateral or any guarantee granted under the leveraging arrangement, without undue delay in a disclosure notice delivered to each investor.
+Added: (a) Any new arrangements for managing our liquidity, without undue delay in a disclosure notice delivered to each investor.
+Added: (b) Our current risk profile and the risk management systems employed by the Adviser to manage those risks, in each annual report.
+Added: (c) Any changes to the maximum level of leverage which the Adviser may employ on our behalf as well as any right of the reuse of collateral or any guarantee granted under the leveraging arrangement, without undue delay in a disclosure notice delivered to each investor.
Please note, we do not intend to employ collateral and asset reuse arrangements.
−Removed: The total amount of leverage employed by us, in each annual report.
+Added: (d) The total amount of leverage employed by us, in each annual report.
Risks Relating to Our Investments
−Removed: Economic recessions or downturns could impair our portfolio companies and defaults by our portfolio companies will harm our operating results.
−Removed: Many of our portfolio companies are susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods.
−Removed: Therefore, our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods.
−Removed: Adverse economic conditions may decrease the value of collateral securing some of our loans and the value of our equity investments.
−Removed: Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets.
−Removed: 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.
−Removed: These events could prevent us from increasing our investments and harm our operating results.
−Removed: A portfolio company's failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company's ability to meet its obligations under the debt securities that we hold.
−Removed: We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company.
−Removed: In addition, lenders in certain cases can be subject to lender liability claims for actions taken by them when they become too involved in the borrower's business or exercise control over a borrower.
−Removed: It is possible that we could become subject to a lender's liability claim, including as a result of actions taken if we render managerial assistance to the borrower.
Limitations of investment due diligence expose us to investment risk.
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Our debt investments may be risky and we could lose all or part of our investments.
−Removed: The debt instruments in which we invest are typically not initially rated by any rating agency, but we believe that if such investments were rated, they would be below investment grade (rated lower than "Baa3" by Moody's Investors Service, lower than "BBB–" by Fitch Ratings or lower than "BBB–" by Standard & Poor's Ratings Services), which under the guidelines established by these entities is an indication of having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal.
+Added: The debt instruments in which we invest are typically not initially rated by any rating agency, but we believe that if such investments were rated, they would be below investment grade (rated lower than “Baa3” by Moody’s Investors Service, lower than “BBB–” by Fitch Ratings or lower than “BBB–” by Standard & Poor's Ratings Services), which under the guidelines established by these entities is an indication of having predominantly speculative characteristics with respect to the issuer's capacity to pay interest
+Added: and repay principal.
Bonds that are rated below investment grade are sometimes referred to as “high yield bonds” or “junk bonds.” Therefore, our investments may result in an above average amount of risk and volatility or loss of principal.
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Our investments in private and middle-market portfolio companies are risky, and you could lose all or part of your investment.
−Removed: Investments in private and middle-market companies involves a number of significant risks.
+Added: Investments in private and middle-market companies involve a number of significant risks.
Generally, little public information exists about these companies, and we rely on the ability of the Adviser’s investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies.
1 unchanged sentence
Middle-market companies generally have less predictable operating results and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position.
−Removed: Middle-market companies may have limited financial resources, may have
−Removed: difficulty accessing the capital markets to meet future capital needs 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 our realizing any guarantees we may have obtained in connection with our investment.
−Removed: In addition, such companies 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.
+Added: Middle-market companies may have limited financial resources, may have difficulty accessing the capital markets to meet future capital needs 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 our realizing any guarantees we may have obtained in connection with our investment.
+Added: In addition, such
+Added: companies 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.
Additionally, middle-market companies are more likely to depend on the management talents and efforts of a small group of persons.
28 unchanged sentences
Our investments will be illiquid in most cases, and we can offer no assurance that we will be able to realize on such investments in a timely manner.
−Removed: A substantial portion of our investments in leveraged companies are and will be subject to legal and other restrictions on
−Removed: resale or will otherwise be less liquid than more broadly traded public securities.
+Added: A substantial portion of our investments in leveraged companies are and will be subject to legal and other restrictions on resale or will otherwise be less liquid than more broadly traded public securities.
The illiquidity of these investments may make it difficult for us to sell such investments if the need arises.
4 unchanged sentences
Investments may be illiquid and long-term.
−Removed: Illiquidity may result from the absence of an established or liquid market for investments as well as legal and contractual restrictions on their resale by the Company.
+Added: Illiquidity may result from the absence of an established or liquid market for investments as well as legal and contractual restrictions on their resale by us.
It is generally expected that we will hold assets to maturity, and the amount of “discretionary sales” of investments generally will be limited.
2 unchanged sentences
This limited ability to sell investments could materially adversely affect our investment results.
−Removed: As a result, our exposure to losses, including a potential loss of principal, as a result of which you could potentially lose all or a portion of your investment in the Company, may be increased due to the illiquidity of our investments generally.
+Added: As a result, our exposure to losses, including a potential loss of principal, as a result of which you could potentially lose all or a portion of your investment in us, may be increased due to the illiquidity of our investments generally.
In certain cases, we may also be prohibited by contract from selling our investments for a period of time or otherwise be restricted from disposing of our investments.
22 unchanged sentences
Depending on market conditions, we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: Our prospective portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity, and rising interests rates may make it more difficult for portfolio companies to make periodic payments on their loans.
+Added: Our prospective portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity, and rising interest rates may make it more difficult for portfolio companies to make periodic payments on their loans.
The portfolio companies in which we expect to invest may be unable to repay or refinance outstanding principal on their loans at or prior to maturity.
16 unchanged sentences
Moreover, failure to comply with any such requirements could have a material adverse effect on an investment, and we can offer no assurance that the portfolio investments will at all times comply with all applicable environmental laws, regulations and permit requirements.
+Added: Sustainability Risk
+Added: Sustainability Risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the Company.
+Added: Such Sustainability Risks are integrated into investment decision making and risk monitoring to the extent that they represent potential or actual material risks and/or opportunities to maximizing the long-term risk-adjusted returns of the Company.
+Added: The impacts following the occurrence of a Sustainability Risk may be numerous and vary depending on the specific risk, region and asset class.
+Added: Sustainability Risks generally revolve around the following factors including but not limited to:
+Added: • Climate change risks include both global warming driven by human emissions of greenhouse gases and the resulting large scale shifts in weather patterns.
+Added: Risks associated with climate change include transition risks (policy changes, reputational impacts and shifts in market preferences, norms and technology) and physical risk (physical impacts of climate change such as droughts, floods or thawing ground);
+Added: • Natural Resource risks including rising costs from resource scarcity or resource usage taxes and systemic risk from biodiversity loss;
+Added: • Pollution and waste risks including liabilities associated with contamination and waste management costs;
+Added: • Human capital risks include declining employee productivity, attrition and turnover costs, pandemics and supply chain reputational risks or disruption;
+Added: • Community risks factors including loss of license to operate, operational disruptions caused by protests or boycotts and systematic inequality and instability;
+Added: • Security and safety risks such as consumer security, data privacy and security.
+Added: In general, where a Sustainability Risk occurs in respect of an investment or the collateral underlying an investment, there could be a negative impact on, or entire loss of, its value.
+Added: Such a decrease in the value of an asset may occur for an investment as a result of damage to its reputation resulting in a consequential fall in demand for its products or services, loss of key personnel, exclusion from potential business opportunities, increased costs of doing business and/or increased cost of capital.
+Added: An investment may also suffer the impact of fines and other regulatory sanctions.
+Added: The time and resources of an investment’s management team may be diverted from furthering its business into dealing with the Sustainability Risk event, including changes to business practices and dealing with investigations and litigation.
+Added: Sustainability Risks events may also give rise to loss of assets and/or physical loss including damage to real estate and infrastructure, including damage to physical assets that represent collateral underlying investments.
+Added: The utility and value of assets held by an investment to which the Company is exposed may also be adversely impacted by a Sustainability Risk event.
+Added: The occurrence of any such event could result in a reduction in the value of an investment, a negative impact on the ability of the investment to satisfy payment or repayment obligations to the Company in respect of an investment and/or could prejudice the ability of the Company to enforce on collateral underlying an investment.
+Added: All of these factors could reduce the investment returns of the Company.
+Added: A Sustainability Risk trend may arise and impact a specific investment or may have a broader impact on an economic sector (e.g.
+Added: IT or health care), geography or political region or country.
We have not yet identified all of the portfolio company investments we will acquire.
1 unchanged sentence
Privately negotiated investments in illiquid securities or private middle-market companies require substantial due diligence and structuring, and we cannot assure you that we will achieve our anticipated investment pace.
−Removed: The Adviser selects all of our investments, and our stockholders will have no input with respect to such
−Removed: investment decisions.
+Added: The Adviser selects all of our investments, and our stockholders will have no input with respect to such investment decisions.
These factors increase the uncertainty, and thus the risk, of investing in our securities.
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As a result, any distributions we make during this period may be substantially smaller than the distributions that we expect to pay when our portfolio is fully invested.
−Removed: We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.
−Removed: We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer.
−Removed: To the extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market's assessment of the issuer.
−Removed: We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company.
−Removed: Beyond our asset diversification requirements as a RIC under the Code, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies.
−Removed: Although we are classified as a non-diversified investment company within the meaning of the 1940 Act, we maintain the flexibility to operate as a diversified investment company.
−Removed: To the extent that we operate as a non-diversified investment company, we may be subject to greater risk.
Our portfolio may initially be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.
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The day-to-day operations of each portfolio company in which we invest will be the responsibility of that portfolio company's management team.
−Removed: Although we will be responsible for monitoring the performance of each investment and generally intends to invest in portfolio companies operated by strong management, we can offer no assurance that the existing management team, or any successor, will be able to operate any such portfolio company in accordance with our expectations.
+Added: Although we will be responsible for monitoring the performance of each investment and generally intend to invest in portfolio companies operated by strong management, we can offer no assurance that the existing management team, or any successor, will be able to operate any such portfolio company in accordance with our expectations.
We can offer no assurance that a portfolio company will be successful in retaining key members of its management team, the loss of whom could have a material adverse effect on us.
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Similarly, investments in “last out” pieces of tranched first lien loans will be similar to second lien loans in that such investments will be junior in priority to the “first out” piece of the same tranched first lien loan with respect to payment of principal, interest and other amounts.
−Removed: We can offer no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens or the "last out" pieces of the tranched first lien loans after payment in full of all obligations secured by the first priority liens on the collateral.
−Removed: If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens or the "last out" pieces
−Removed: of unitranche loans, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company's remaining assets, if any.
+Added: We can offer no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens or the “last out” pieces of the
+Added: tranched first lien loans after payment in full of all obligations secured by the first priority liens on the collateral.
+Added: If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens or the "last out" pieces of unitranche loans, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company's remaining assets, if any.
We may make unsecured loans to portfolio companies, meaning that such loans will not benefit from any interest in collateral of such companies.
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We may not have the ability to control or direct such actions, even if our rights as junior lenders are adversely affected.
−Removed: The liability of each of the Adviser and the Administrator is limited, and we have agreed to indemnify each against certain liabilities, which may lead them to act in a riskier manner on our behalf than each would when acting for its own account.
−Removed: Under the Investment Advisory Agreement, the Adviser does not assume any responsibility to us other than to render the services called for under that agreement, and it is not responsible for any action of our Board of Directors in following or declining to follow the Adviser's advice or recommendations.
−Removed: Under the terms of the Investment Advisory Agreement, the Adviser, its officers, members, personnel and any person controlling or controlled by the Adviser are not liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary's stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misconduct, bad faith or reckless disregard of the Adviser's duties under the Investment Advisory Agreement.
−Removed: In addition, we have agreed to indemnify the Adviser and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory Agreement, except where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person's duties under the Investment Advisory Agreement.
−Removed: Under the Administration Agreement, the Administrator and certain specified parties providing administrative services pursuant to that agreement are not liable to us or our stockholders for, and we have agreed to indemnify them for, any claims or losses arising out of the good faith performance of their duties or obligations under the Administration Agreement, except those liabilities resulting primarily attributable to gross negligence, willful misconduct, bad faith or reckless disregard of the Administrator's duties under the Administration Agreement.
−Removed: These protections may lead the Adviser or the Administrator to act in a riskier manner when acting on our behalf than it would when acting for its own account.
We may be subject to risks under hedging transactions and may become subject to risks if we invest in foreign securities.
31 unchanged sentences
To the extent we participate substantially in the conduct of the management of certain of our portfolio companies, such as designating directors to serve on the boards of directors of certain portfolio companies, such designation of representatives and other measures contemplated could expose our assets to claims by a portfolio company in which we invest, its security-holders and its creditors, including claims that we are a controlling person and thus are liable for securities laws violations of a portfolio company.
−Removed: These measures also could result in certain liabilities in the event of the bankruptcy or reorganization of a portfolio company, could result in claims against us if a designated director violates their fiduciary or other duties to a portfolio company or fail to exercise
−Removed: appropriate levels of care under applicable corporate or securities laws, environmental laws or other legal principles, and could expose us to claims that we have interfered in management to the detriment of a portfolio company.
+Added: These measures also could result in certain liabilities in the event of the bankruptcy or reorganization of a portfolio company, could result in claims against us if a designated director violates their fiduciary or other duties to a portfolio company or fail to exercise appropriate levels of care under applicable corporate or securities laws, environmental laws or other legal principles, and could expose us to claims that we have interfered in management to the detriment of a portfolio company.
Risks Relating to Our Common Stock
11 unchanged sentences
We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions.
−Removed: Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this report.
+Added: Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors
+Added: described in this report.
Due to the asset coverage test applicable to us under the 1940 Act as a BDC, we may be limited in our ability to make distributions.
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As a result, our stockholders that did not "opt in" to our DRIP will experience dilution in their ownership percentage of our Common Stock over time.
−Removed: See "Distributions" and "Dividend Reinvestment Plan" for a description of our dividend policy and obligations.
+Added: See “ Item 5.
+Added: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Distribution Policy and Dividend Reinvestment Plan ” for a description of our dividend policy and obligations.
Our stockholders may receive shares of our Common Stock as dividends, which could result in adverse tax consequences to them.
In order to satisfy the Annual Distribution Requirement applicable to RICs, we will have the ability to declare a large portion of a dividend in shares of our Common Stock instead of in cash.
+Added: Revenue Procedures issued by the IRS allow a publicly offered regulated investment company (as defined above) to distribute its own stock as a dividend for the purpose of fulfilling its distribution requirements, if certain conditions are satisfied.
As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend) and certain requirements are met, the entire distribution will be treated as a dividend for U.S.
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Beneficial ownership for these purposes is determined in accordance with the rules of the SEC, and includes having voting or investment power over the securities.
−Removed: Although we will provide in our quarterly financial statements the amount of outstanding stock and the amount of the investor's stock,
−Removed: the responsibility for determining the filing obligation and preparing the filing remains with the investor.
+Added: Although we will provide in our quarterly financial statements the amount of outstanding stock and the amount of the investor's stock, the responsibility for determining the filing obligation and preparing the filing remains with the investor.
In addition, owners of 10% or more of our Common Stock are subject to reporting obligations under Section 16(a) of the Exchange Act.
2 unchanged sentences
Disposition of shares of our Common Stock by MS Credit Partners Holdings may negatively impact our performance and the price of our Common Stock.
−Removed: MS Credit Partners Holdings has entered into a subscription agreement to provide 20% of total capital commitments up to $200 million in capital commitments to the Company.
+Added: MS Credit Partners Holdings, an affiliate of our Investment Adviser, has entered into a subscription agreement to provide 20% of total capital commitments up to $200 million in capital commitments to the Company.
However, MS Credit Partners Holdings is not obligated to maintain its investment in the Company and, to the extent MS Credit Partners Holdings determines to dispose of its shares of our Common Stock and to the extent such disposition is permissible, the disposition of a large number of shares of our Common Stock may negatively impact our performance and, if there is a market for shares of our Common Stock, the share price of such Common Stock.
+Added: General Risk Factors
+Added: We are operating in a period of capital markets disruption and economic uncertainty.
+Added: The conditions have materially and adversely affected debt and equity capital markets in the United States, and any future disruptions or instability in capital markets may have a negative impact on our business and operations.
+Added: From time to time, capital markets may experience periods of disruption and instability for a variety of reasons.
+Added: The outbreak of Coronavirus beginning in late 2019 and subsequently spreading across the world, including to the United States, has had and could continue to lead to extreme volatility and disruptions in local, regional, national and global markets and economies affected thereby.
+Added: The Coronavirus pandemic may affect the portfolio companies in which we will invest.
+Added: The Coronavirus outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things:
+Added: (i) imposition by various local, state, and federal governmental authorities of various forms of travel restrictions, business closures and other quarantine measures, resulting in significant disruption to the businesses of many middle-market companies including supply chains, demand and practical aspects of their operations, as well as in lay-offs or furloughs of employees and deferral of capital expenditures, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent;
+Added: (ii) potential adverse impacts on the ability of borrowers to meet loan covenants, post margin or repay loans on a timely basis and on the value of their collateral;
+Added: (iii) increased draws by borrowers on revolving lines of credit, which lenders, including the Company, may not have the ability under the applicable credit agreement to refuse to fund without the Company being in default and suffering financial penalties;
+Added: (iv) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans;
+Added: (v) potential increased disputes with counterparties who assert that failure to perform (or delay in performing) might be excused under so called “material adverse change,” force majeure and similar provisions in such contracts;
+Added: (vi) volatility and disruption of markets including greater volatility in pricing and spreads, difficulty in valuing loans during periods of increased volatility, and liquidity issues;
+Added: (vii) reduction in certain interest rates by the U.S.
+Added: Federal Reserve and other central banks and decreased LIBOR;
+Added: (viii) unfavorable economic conditions that would be expected to increase borrowers’ funding costs, limit borrowers’ access to the capital markets or result in a decision by lenders not to extend credit
+Added: to borrowers;
+Added: and (ix) rapidly evolving proposals and/or actions by local, state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle-market companies.
+Added: In this environment, there is a heightened likelihood of government intervention or regulation and/or changes in law, including by way of example laws and regulations requiring lenders such as the Company to waive payments from borrowers, defer maturities on loans and/or cancel or delay foreclosures on a borrower’s assets, any of which could have a material adverse effect on the Company and its investments.
+Added: Moreover, the ability, or willingness, of a party (including the Company, a borrower or a counterparty or service provider to the Company or a borrower) to perform its obligations under its contracts may be adversely affected by an outbreak of the Coronavirus or other infectious disease and the resulting economic impact, which may raise concerns over whether such failure to perform (or delay in performing) might be excused under so called “material adverse change,” force majeure or similar provisions in such contracts.
+Added: As a result, borrowers, counterparties and service providers to the Company may fail to perform (or delay the performance of) their obligations to the Company, some expected transactions may not close on time or at all, the Company, the Adviser or a borrower may be forced (or may elect) to breach certain agreements, and any of such events could have a material adverse effect on the Company and its investments.
+Added: Capital markets disruptions and instability have also occurred in the past and may occur in the future.
+Added: For example, from 2008 to 2009, the global capital markets were unstable as evidenced by the lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions.
+Added: Despite actions of the U.S.
+Added: federal government and various foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular.
+Added: There have been more recent periods of volatility and there can be no assurance that adverse market conditions will not repeat themselves in the future.
+Added: Furthermore, uncertainty between the United States and other countries with respect to trade policies, treaties and tariffs, among other factors, have caused disruptions in the global markets, and we cannot assure you that these market conditions will not continue or worsen in the future.
+Added: Terrorist acts, acts of war, natural disasters, or disease outbreaks, pandemics or other public health crises may cause periods of market instability and volatility and may disrupt the operations of us and our portfolio companies for extended periods of time.
+Added: If similar adverse and volatile market conditions repeat in the future, we and other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital in order to grow.
+Added: Equity capital may be particularly difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of Common Stock at a price less than the net asset value per share without first obtaining approval for such issuance from our stockholders and our Board of Directors, including all of our directors who are not “interested persons” of the Company, as defined in the 1940 Act.
+Added: Moreover, the re-appearance of market conditions similar to those experienced from 2008 through 2009 for any substantial length of time or worsened market conditions, including as a result of U.S.
+Added: government shutdowns or the perceived creditworthiness of the United States, could make it difficult for us to borrow money or to extend the maturity of or refinance any indebtedness we may have under similar terms and any failure to do so could have a material adverse effect on our business.
+Added: The debt capital that will be available to us in the future, if any, may be at a higher cost and on less favorable terms and conditions than would currently be available.
+Added: If we are unable to raise or refinance debt, stockholders may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.
+Added: Given the periods of extreme volatility and dislocation in the capital markets from time to time, many BDCs have faced, and may in the future face, a challenging environment in which to raise or access capital.
+Added: In addition, significant changes in the capital markets, including the extreme volatility and disruption over the past several years, has had, and may in the future have, a negative effect on asset valuations and on the potential for liquidity events.
+Added: While most of our investments will not be 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 on holding an investment through to maturity).
+Added: As a result, volatility in the capital markets can adversely affect the valuations of our investments.
+Added: Further, the illiquidity of our investments may make it difficult for us to sell such investments to access capital if required.
+Added: 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 for liquidity purposes.
+Added: In addition, a prolonged period of market illiquidity may cause us to reduce the volume of loans and debt securities we originate and/or fund and adversely affect the value of our portfolio investments, which could have a material and adverse effect on our business, financial condition, results of operations and cash flows.
+Added: An inability to raise or access capital could have a material adverse impact on our business, financial condition or results of operations.
+Added: We may be the target of litigation.
+Added: We may be the target of securities litigation in the future, particularly if the value of shares of our Common Stock fluctuates significantly.
+Added: We could also generally be subject to litigation, including derivative actions by our stockholders.
+Added: Any litigation could
+Added: result in substantial costs and divert management’s attention and resources from our business and cause a material adverse effect on our business, financial condition and results of operations.
+Added: We may experience fluctuations in our quarterly operating results.
+Added: We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt securities we acquire, the default rate on such securities, the number and size of investments we originate or acquire, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions.
+Added: In light of these factors, results for any period should not be relied upon as being indicative of our performance in future periods.
+Added: Uncertainty resulting from the U.S.
+Added: political climate could negatively impact our business, financial condition and results of operations.
+Added: Elections in the United States, including the 2020 elections, have created uncertainty with respect to legal, tax and regulatory regimes in which the Company and its portfolio entities, as well as the Adviser, the Administrator, Morgan Stanley and their affiliates operate.
+Added: Any significant changes in economic or tax policy and/or government programs as well as any future such changes could have a material adverse impact on us and on our investments.
+Added: We incur significant costs as a result of being registered under the Exchange Act.
+Added: We incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act and other rules implemented by the SEC.
+Added: Economic recessions or downturns could impair our portfolio companies and defaults by our portfolio companies will harm our operating results.
+Added: Many of our portfolio companies are susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods.
+Added: Therefore, our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods.
+Added: Adverse economic conditions may decrease the value of collateral securing some of our loans and the value of our equity investments.
+Added: Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets.
+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 prevent us from increasing our investments and harm our operating results.
+Added: A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company's ability to meet its obligations under the debt securities that we hold.
+Added: We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company.
+Added: In addition, lenders in certain cases can be subject to lender liability claims for actions taken by them when they become too involved in the borrower’s business or exercise control over a borrower.
+Added: It is possible that we could become subject to a lender's liability claim, including as a result of actions taken if we render managerial assistance to the borrower.
Unresolved Staff Comments
2 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.