9 unchanged sentences
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.
−Removed: The 1940 Act imposes numerous constraints on the operations of BDCs that do not apply to certain of the other investment vehicles managed by our Adviser and its affiliates.
+Added: The 1940 Act imposes numerous constraints on the operations of BDCs that do not apply to certain of the other investment vehicles advised by our Adviser and its affiliates.
BDCs are required, for example, to invest at least 70% of their total assets primarily in securities of U.S.
23 unchanged sentences
For several years, LIBOR has been the subject of national and international regulatory scrutiny.
−Removed: On March 5, 2021, the U.K.’s Financial Conduct Authority (“FCA”) publicly announced that all U.S.
−Removed: Dollar LIBOR settings will either cease to be provided by any administrator or no longer be representative (i) immediately after
−Removed: December 31, 2021 for one-week and two-month U.S.
+Added: On March 5, 2021, the U.K.’s Financial Conduct Authority, or the FCA, publicly announced that all U.S.
+Added: Dollar LIBOR settings will either cease to be provided by any administrator or no longer be representative (i) immediately after December 31, 2021 for one-week and two-month U.S.
Dollar LIBOR settings and (ii) immediately after June 30, 2023 for the remaining U.S.
2 unchanged sentences
regulators, some U.S.
−Removed: regulated entities will cease to enter into new LIBOR contracts after December 31, 2021.
−Removed: In accordance with announcements by the FCA and the ICE Benchmark Administration, which administers LIBOR publication, the publication of most non-U.S.
+Added: regulated entities ceased entering into new LIBOR contracts after December 31, 2021.
+Added: In accordance with announcements by the FCA and the
+Added: ICE Benchmark Administration, which administers LIBOR publication, the publication of most non-U.S.
dollar LIBOR rates ceased as of the end of December 2021.
1 unchanged sentence
Furthermore, while certain U.S.
−Removed: dollar LIBOR tenors are expected to continue to be published until June 30, 2023, the U.S.
−Removed: banking agencies and the FCA have issued guidance instructing banks to cease entering into new contracts referencing LIBOR no later than December 31, 2021, with certain exceptions.
−Removed: The Federal Reserve Bank of New York now publishes the Secured Overnight Financing Rate based on overnight U.S.
+Added: dollar LIBOR tenors are expected to continue to be published until June 30, 2023, subject to certain exceptions, since December 31, 2021, banks have been instructed by the U.S.
+Added: banking agencies and the FCA to cease entering into new contracts referencing LIBOR.
+Added: The Federal Reserve Bank of New York now publishes SOFR based on overnight U.S.
Treasury repurchase agreement transactions, which has been recommended as the alternative to U.S.
17 unchanged sentences
Other factors include the pace of the transition to replacement or reformed rates, timing mismatches between cash and derivative markets, the specific terms and parameters for and market acceptance of any alternative reference rate, market conventions for the use of any alternative reference rate in connection with a particular product (including the timing and market adoption of any conventions proposed or recommended by any industry or other group), prices of and the liquidity of trading markets for products based on alternative reference rates, and our ability to transition and develop appropriate systems and analytics for one or more alternative reference rates.
+Added: As of December 31, 2022, approximately 56% of our debt portfolio at fair value bore interest at a floating rate determined on the basis of LIBOR.
We depend upon our Adviser and Administrator for our success and upon their access to the investment professionals and partners of Morgan Stanley and its affiliates.
1 unchanged sentence
We depend on the diligence, skill and network of business contacts of the senior investment professionals of our Adviser to achieve our investment objective.
−Removed: We cannot assure you that we will replicate the historical results achieved for other Morgan Stanley funds, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods.
+Added: We cannot assure you that we will replicate
+Added: the historical results achieved for other Morgan Stanley funds, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods.
We expect that the Adviser will evaluate, negotiate, structure, close and monitor our investments in accordance with the terms of the Investment Advisory Agreement.
4 unchanged sentences
For the avoidance of doubt, we are not a subsidiary of or consolidated with Morgan Stanley.
−Removed: Furthermore, Morgan Stanley has no obligation, contractual or otherwise, to financially support us beyond the equity commitment to purchase our common stock pursuant to a subscription agreement entered into by MS Credit Partners Holdings described above.
−Removed: Morgan Stanley has no history of financially supporting any of the MS BDCs, even during periods of financial distress.
+Added: Furthermore, Morgan Stanley has no obligation, contractual or otherwise, to financially support us beyond the equity commitment to purchase our Common Stock pursuant to a subscription agreement entered into by MS Credit Partners Holdings.
+Added: See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — MS Credit Partners Holdings Investment .” Morgan Stanley has no history of financially supporting any of the BDCs on the MS Private Credit platform, even during periods of financial distress.
We depend on the diligence, skill and network of business contacts of the professionals available to our Administrator to carry out the administrative functions necessary for us to operate, including the ability to select and engage sub-administrators and third-party service providers.
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This could have a material adverse effect on our financial condition, results of operations and cash flows.
−Removed: Our business model depends to a significant extent upon strong referral relationships with sponsors.
+Added: Our business model depends to a significant extent upon strong referral relationships with private equity sponsors.
Any inability of the Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.
−Removed: 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.
+Added: We depend upon the Adviser’s and its affiliates’ relationships with private equity sponsors, and we intend to rely to a significant extent upon these relationships to provide us with potential investment opportunities.
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.
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.
−Removed: We are dependent on the Adviser ’ s key personnel in seeking to achieve our investment objectives.
+Added: We are dependent upon management personnel of our Adviser for our future success.
We do not have any internal management capacity or employees.
−Removed: 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.
−Removed: In particular, we depend on the continued services of certain senior management personnel of the Adviser.
+Added: The Adviser depends on the investment professionals of affiliates of Morgan Stanley and such investment professionals’ diligence, skill and network of business contacts.
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 Investment Committee, or by the Adviser or its affiliates.
−Removed: Our investments may differ from those of existing accounts that are or have been sponsored or managed by members of the Investment Committee, the Adviser or affiliates of the Adviser.
−Removed: Investors in our securities are not acquiring an interest in any accounts that are or have been sponsored or managed by members of the Investment Committee, the Adviser or affiliates of the Adviser.
−Removed: 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 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”) or other accounts sponsored or managed by members of the Investment Committee, the Adviser or its affiliates.
−Removed: Any such investments are subject to regulatory limitations and approvals by our Independent Directors.
+Added: The time and resources that individuals associated with our Adviser devote to us may be diverted, and we may face additional competition due to the fact that neither our Adviser nor its affiliates are prohibited from raising money for or managing another entity that makes the same types of investments that we target.
+Added: The Adviser and its affiliates currently serve as the investment adviser for various funds, accounts and strategies, including the funds and accounts on the MS Private Credit platform, including the MS BDCs, and are not prohibited from raising money for and managing future investment entities that make the same or similar types of investments as those we target.
+Added: As a result, the time and resources that our Adviser devotes to us may be diverted, and during times of intense activity in other investment programs they may devote less time and resources to our business than is necessary or appropriate.
+Added: In addition, we may compete with any such investment entity also advised by the Adviser or its affiliates for the same investors and investment opportunities.
+Added: We may not replicate the historical results achieved by other entities advised or sponsored by members of the Investment Committee, or by the Adviser or its affiliates.
+Added: Our investments may differ from those of existing accounts that are or have been sponsored or advised by members of the Investment Committee, the Adviser or affiliates of the Adviser.
+Added: Investors in our securities are not acquiring an interest in any accounts that are or have been sponsored or advised by members of the Investment Committee, the Adviser or affiliates of the Adviser.
+Added: Subject to the requirements of the 1940 Act and the provisions of the Order, we often co-invest in portfolio investments with other Affiliated Investment Accounts.
+Added: Any such investments are subject to regulatory limitations and approvals by the Independent Directors.
We can offer no assurance, however, that we will obtain such approvals or develop opportunities that comply with such limitations.
−Removed: We also cannot assure you that we will replicate the historical results achieved for other Morgan Stanley funds by members of the Investment Committee (including the Affiliated Investment Accounts), and we caution you that our investment returns could be substantially
−Removed: lower than the returns achieved by them in prior periods.
+Added: We also cannot assure you that we will replicate the historical results achieved for other Morgan Stanley funds by members of the Investment Committee (including the Affiliated Investment Accounts), and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods.
Additionally, all or a portion of the prior results may have been achieved in particular market conditions which may never be repeated.
−Removed: Moreover, current or future market volatility and regulatory uncertainty may have an adverse impact on our future performance.
+Added: Moreover, current or future market volatility and regulatory uncertainty
+Added: may have an adverse impact on our future performance.
Our financial condition and results of operation depend on our ability to manage future growth effectively.
2 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 the MS 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 the MS BDCs, which are advised by the Adviser.
Such demands on their time may distract them or slow our rate of investment.
6 unchanged sentences
There are significant potential conflicts of interest that could affect our investment returns.
−Removed: As a result of our arrangements with the Adviser and its affiliates and the Investment Committee, there may be times when the Adviser or such persons have interests that differ from those of our stockholders, giving rise to a conflict of interest.
+Added: As a result of our Adviser and Administrator’s affiliation with, and the Investment Committee members’ employment by, Morgan Stanley, there may be times when the Adviser, the Administrator or such persons have interests that differ from those of our stockholders, giving rise to a conflict of interest.
+Added: As a diversified global financial services firm, Morgan Stanley engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities.
+Added: In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley’s interests or the interests of its clients may conflict with the interests of our stockholders, notwithstanding Morgan Stanley’s participation as one of our investors.
+Added: Investors should be aware that potential and actual conflicts of interest between Morgan Stanley or any Affiliated Investment Account, on the one hand, and us, on the other hand, may exist and others may arise in connection with our operation.
+Added: Morgan Stanley’s employees may also have interests separate from those of Morgan Stanley and us.
+Added: There is no assurance that conflicts of interest will be resolved in favor of the Company’s stockholders, and, in fact, they may not be.
Conflicts related to obligations the 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 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.
−Removed: 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.
+Added: Morgan Stanley, the parent company of the Adviser, has advised and may advise clients and has sponsored, managed or advised other 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: In addition, Morgan Stanley routinely makes equity and debt investments in connection with its global business and operations.
+Added: MS Private Credit may also from time to time create new or successor Affiliated Investment Accounts that may compete with us and present similar conflicts of interest.
In serving in these multiple capacities, Morgan Stanley, including the Adviser, the Investment Committee and the Investment Team, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of us or our stockholders.
1 unchanged sentence
Our investment objective may overlap with the investment objectives of certain Affiliated Investment Accounts.
−Removed: For example, the Adviser currently serves as the investment adviser to the MS BDCs, each of which is pursuing an investment objective and investment strategy similar to ours.
−Removed: 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, including the MS BDCs, 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.
+Added: For example, the Adviser currently serves as the investment adviser to the MS BDCs.
+Added: As a result, the members of the Investment Committee may face conflicts in the allocation of investment opportunities among us and other Affiliated Investment Accounts.
+Added: Certain Affiliated Investment Accounts, including the MS BDCs, may provide for higher management fees, incentive fees, greater expense reimbursements or overhead allocations or may 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 Affiliated Investment 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 the 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.
−Removed: Subject to the requirements of the exemptive relief applicable to us, Morgan Stanley may offer investments that fall
−Removed: 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 the extent consistent with applicable law and/or exemptive relief, its Affiliated Investment Accounts will be permitted to invest in investment opportunities
+Added: without making such opportunities available to us beforehand.
+Added: Subject to the requirements of any applicable exemptive relief, 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.
In addition, to the extent permitted by applicable law, investment opportunities in companies in which certain Affiliated Investment Accounts have already invested may be available to the Company notwithstanding that the Company has no existing investments in such portfolio company, resulting in assets of the Company potentially providing value to, or otherwise supporting the investments of, other Affiliated Investment Accounts.
−Removed: All of the foregoing may reduce the number of investment opportunities available to us and may create conflicts of interest in allocating investment opportunities among the Company, itself and the Affiliated Investment Accounts.
−Removed: Our Adviser has established allocation policies and procedures and will allocate opportunities among one or more of the Company and such Affiliated Investment Accounts in accordance with the terms of such policies and procedures.
+Added: All of the foregoing may reduce the number of investment opportunities available to us and may create conflicts of interest in allocating investment opportunities among the Company, itself and the Affiliated Investment Accounts, including the MS BDCs.
+Added: Our Adviser has established allocation policies and procedures and will continue to allocate opportunities among one or more of the Company and such Affiliated Investment Accounts in accordance with the terms of such policies and procedures.
Investors should note that such allocation decisions may not be resolved to our advantage.
4 unchanged sentences
In addition, certain Affiliated Investment Accounts will be focused primarily on investing in other funds which may have strategies that overlap and/or directly conflict and compete with us.
+Added: In certain cases, we may be unable to invest in attractive opportunities because of the investment by these Affiliated Investment Accounts in such private equity or private credit sponsoring funds.
We do not expect to invest in, or hold securities of, companies that are controlled by an affiliate’s other clients.
5 unchanged sentences
In addition, to the extent that an affiliate’s other client holds a different class of securities than us as a result of such transactions, our interests may not be aligned.
−Removed: It should be noted that Morgan Stanley has, directly or indirectly, made investments in certain of its Affiliated Investment Accounts, and accordingly Morgan Stanley’s investment in us in itself may not determine the outcome in the resolution of any of the foregoing conflicts.
+Added: It should be noted that Morgan Stanley has, directly and indirectly, made investments in certain of its Affiliated Investment Accounts, and accordingly Morgan Stanley’s investment in us in itself may not determine the outcome in the resolution of any of the foregoing conflicts.
In the course of our investing activities, we pay management and incentive fees to the Adviser and reimburse certain expenses of the Administrator.
3 unchanged sentences
Principals of the Adviser and its affiliates and members of the Investment Committee may serve as directors of, or in a similar capacity with, companies in which we invest, the securities of which are purchased or sold on our behalf.
−Removed: In the event that material nonpublic information is obtained with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.
−Removed: The Adviser may also from time to time be subject to contractual “stand-still” obligations and/or confidentiality obligations that may restrict its ability to trade in certain investments on behalf of the Company.
+Added: In the event that material nonpublic information is obtained with respect to such companies, or we become subject to trading restrictions in order to comply with applicable law, regulatory restrictions or internal policies or procedures, including without limitation joint transaction restrictions pursuant to the 1940 Act, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.
+Added: The Adviser and/or Morgan Stanley may also from time to time be subject to contractual “stand-still” obligations and/or confidentiality obligations that may restrict the Adviser’s ability to trade in or make certain investments on behalf of the Company.
In addition, Morgan Stanley may be precluded from disclosing such information to the Investment Team, even in circumstances in which the information would benefit the Company if disclosed.
2 unchanged sentences
Furthermore, access to certain parts of Morgan Stanley may be subject to third party confidentiality obligations and to information barriers established by Morgan Stanley in order to manage potential conflicts of interest and regulatory restrictions, including without limitation joint transaction restrictions pursuant to the 1940 Act.
−Removed: Accordingly, the Company’s ability to source investments from other business units within Morgan Stanley may be limited and there can be no assurance that the Company will be able to source any investments from any one or more parts of the Morgan Stanley network.
+Added: Accordingly, the Company’s ability to
+Added: source investments from other business units within Morgan Stanley may be limited and there can be no assurance that the Company will be able to source any investments from any one or more parts of the Morgan Stanley network.
Our management fee and incentive fee structure may create incentives for the Adviser that are not fully aligned with the interests of our stockholders and may induce the Adviser to make speculative investments.
3 unchanged sentences
Because these fees are based on our average gross assets, the Adviser benefits when we incur debt or use leverage.
−Removed: Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor or our stockholders.
+Added: Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor us and our stockholders.
Additionally, the incentive fee payable by us to the Adviser may create an incentive for the Adviser to cause us to realize capital gains or losses that may not be in the best interests of us or our stockholders.
12 unchanged sentences
Under such circumstances, we may have difficulty meeting the Annual Distribution Requirement (as defined below) necessary to maintain RIC tax treatment under the Code.
+Added: See “ Item 1.
+Added: Business—Certain Material U.S.
+Added: Federal Income Tax Considerations—Election to be Taxed as a RIC.
” This difficulty in making the required distribution may be amplified to the extent that we are required to pay the incentive fee on income with respect to such accrued income.
3 unchanged sentences
Conflicts related to other arrangements with the Adviser and 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.” 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.
−Removed: These arrangements create conflicts of interest that our Board of Directors must monitor.
+Added: We have entered into a license agreement, or License Agreement, with Morgan Stanley Investment Management, Inc., an affiliate of our Adviser, under which Morgan Stanley Investment Management, Inc.
+Added: 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.
+Added: These arrangements create conflicts of interest that our Board of Directors monitors.
Our ability to enter into transactions with our affiliates is restricted.
2 unchanged sentences
The 1940 Act also prohibits certain “joint” transactions with certain of our affiliates, which in certain circumstances could include investments in the same portfolio company (whether at the same or different times to the extent the transaction involves a joint investment), without prior approval of our Board of Directors and, in some cases, the SEC.
−Removed: acquires more than 25% of our voting securities, we will be prohibited from buying or selling any security from or to such person or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC.
+Added: If a person acquires more than 25% of our voting securities, we will be prohibited from buying or selling any security from or to such person or
+Added: certain of that person’s affiliates, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC.
Similar restrictions limit our ability to transact business with our officers or directors or their affiliates.
The SEC has interpreted the BDC regulations governing transactions with affiliates to prohibit certain joint transactions involving entities that share a common investment adviser.
−Removed: As a result of these restrictions, we are prohibited from buying or selling any security from or to any portfolio company that is controlled by a fund managed by the Adviser or their respective affiliates without the prior approval of the SEC, which may limit the scope of investment opportunities that would otherwise be available to us.
+Added: As a result of these restrictions, we are prohibited from buying or selling any security from or to any portfolio company that is controlled by a fund advised by the Adviser or their respective affiliates without the prior approval of the SEC, which may limit the scope of investment opportunities that would otherwise be available to us.
We may, however, invest alongside our Adviser’s and/or its affiliates’ other clients, in certain circumstances where doing so is consistent with applicable law and SEC staff interpretations, guidance and exemptive relief orders.
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: 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: The SEC has granted us and our Adviser the Order 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.
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.
−Removed: In situations where 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.
+Added: In situations where 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 order 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.
4 unchanged sentences
We do not know at this time what circumstances will exist in the future, and therefore we do not know what factors our Board of Directors will consider in contemplating an Exchange Listing or other Liquidity Event in the future.
−Removed: We define a “Liquidity Event” as any of:
−Removed: (1) an Exchange Listing, (2) the sale of all or substantially all of our assets to, or other liquidity event with, another entity or (3) a transaction or series of transactions, including by way of merger, consolidation, recapitalization, reorganization, or sale of stock in each case for consideration of either cash and/or publicly listed securities of the acquirer.
As a result, even if we do complete an Exchange Listing to establish a secondary market for shares of our Common Stock, you may not receive a return of all of your invested capital.
31 unchanged sentences
See “ Item 1.
−Removed: Business—Certain U.S.
+Added: Business—Certain Material U.S.
Federal Income Tax Considerations—Taxation as a RIC .”
9 unchanged sentences
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.
−Removed: If we are not able to obtain such cash from other sources, we may fail to qualify
−Removed: as a RIC and thus be subject to corporate-level income tax.
−Removed: See “ Item 1.
−Removed: Business—Certain U.S.
−Removed: Federal Income Tax Considerations—Taxation as a RIC .”
−Removed: We will need to raise additional capital to grow because we must distribute most of our income.
−Removed: We will need additional capital to fund new investments and grow our portfolio of investments.
−Removed: We intend to access the capital markets periodically to issue debt or equity securities or borrow from financial institutions in order to obtain such additional capital.
−Removed: Unfavorable economic conditions 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: 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 ICTI, determined without regard to any deduction for dividends paid as dividends for U.S.
−Removed: federal income tax purposes, to our stockholders to maintain our ability to be subject to tax as a RIC.
−Removed: As a result, these earnings are not available to fund new investments.
−Removed: 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.
−Removed: 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.
+Added: If we are not able to obtain such cash from other sources, we may fail to qualify as a RIC and thus be subject to corporate-level income tax.
If we are not treated as a “publicly offered regulated investment company,” as defined in the Code, U.S.
12 unchanged sentences
See “ Item 1.
−Removed: Business—Certain U.S.
−Removed: Federal Income Tax Considerations—Taxation of U.S.
−Removed: Stockholders .”
+Added: Business—Certain Material U.S.
+Added: Federal Income Tax Considerations.
+Added: We will need to raise additional capital to grow because we must distribute most of our income.
+Added: We will need additional capital to fund new investments and grow our portfolio of investments.
+Added: We intend to access the capital markets periodically to issue debt or equity securities or borrow from financial institutions in order to obtain such additional capital.
+Added: Unfavorable economic conditions 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: A reduction in the availability of new capital could limit our ability to grow.
+Added: In addition, we are required to distribute each taxable year an amount at least equal to 90% of our ICTI, determined without regard to any deduction for dividends paid as dividends for U.S.
+Added: federal income tax purposes, to our stockholders to maintain our ability to be subject to tax as a RIC.
+Added: As a result, these earnings are not available to fund new investments.
+Added: 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.
+Added: This would have an adverse effect on the value of our securities.
+Added: 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.
Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital.
13 unchanged sentences
We are not generally able to issue and sell our Common Stock at a price below net asset value per share.
−Removed: We may, however, sell our Common Stock, or warrants, options or rights to acquire our Common Stock, at a price below the then-current net asset value
−Removed: per share of our Common Stock if our Board of Directors determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale.
+Added: We may, however, sell our Common Stock, or warrants, options or rights to acquire our Common Stock, at a price below the then-current net asset value per share of our Common Stock if our Board of Directors determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale.
In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board of Directors, closely approximates the market value of such securities (less any distributing commission or discount).
9 unchanged sentences
We cannot assure you that the SEC or any other regulatory authority will modify such regulations or provide administrative guidance that would give us greater flexibility to enter into securitizations.
−Removed: We may issue senior debt securities to banks, insurance companies and other lenders.
+Added: We have in the past and may in the future issue senior debt securities to banks, insurance companies and other lenders.
Lenders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default.
17 unchanged sentences
(25.8)% (15.1)% (4.4)% 6.2% 16.9%
−Removed: (1) Assumes $2,493.3 million in total assets, $1,249.9 million in debt outstanding and $1,188.6 million in net assets as of December 31, 2021, and an average cost of funds of 2.12%, which is our weighted average interest rate as of December 31, 2021, excluding unused fees and financing costs.
−Removed: Based on our outstanding indebtedness of $1,249.9 million as of December 31, 2021 and the effective weighted average annual interest rate of 2.12% as of that date (excluding unused fees and financing costs), our investment portfolio would have been required to experience an annual return of at least 1.06% to cover annual interest payments on the outstanding debt.
+Added: (1) Assumes $2,986.1 million in total assets, $1,532.3 million in debt outstanding and $1,397.3 million in net assets as of December 31, 2022, and an effective weighted average annual interest of 4.05% as of December 31, 2022 (excluding unused fees and financing costs).
+Added: Based on our outstanding indebtedness of $1,532.3 million as of December 31, 2022 and the effective weighted average annual interest rate of 4.05% (excluding unused fees and financing costs), our investment portfolio would have been required to experience an annual return of at least 2.08% to cover annual interest payments on the outstanding debt.
We are subject to risks associated with our Credit Facilities.
−Removed: We entered into a credit agreement with CIBC Bank USA as administrative agent and arranger and the various financial institutions party thereto on December 31, 2019, and most recently amended such facility on February 3, 2022 (as amended, the “CIBC Subscription Facility”).
−Removed: DLF Financing SPV, LLC, our wholly owned subsidiary and a Delaware limited liability company (“DLF LLC”), entered into a revolving credit and security agreement with BNP Paribas, as the administrative agent and lender, the Company, as the equity holder and as the servicer, and U.S.
−Removed: Bank National Association, as collateral agent, on October 14, 2020, and most recently amended such facility on March 2, 2021 (the “BNP Funding Facility”).
−Removed: Additionally, on July 16, 2021, we entered into a senior secured revolving credit agreement with Truist Bank, as administrative agent, and Truist Securities, Inc., as joint lead arranger and sole book runner (the “Truist Credit Facility”).
−Removed: We anticipate that we or a direct subsidiary of ours may enter into one or more additional senior secured revolving credit facilities.
+Added: We have entered into a Senior Secured Revolving Credit Agreement with Truist Bank, or the Truist Credit Facility and DLF Financing SPV LLC, our wholly owned subsidiary, or DLF LLC, has entered into a Revolving Credit and Security Agreement with BNP Paribas, or the BNP Funding Facility and, together with the Truist Credit Facility, the Credit Facilities.
+Added: We anticipate that we or a direct subsidiary of ours may enter into one or more additional Credit Facilities.
As a result of our current Credit Facilities and any future Credit Facility, we are subject to a variety of risks, including those set forth below.
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There can be no assurance that we would be able to renew, extend or replace any of our Credit Facilities upon its maturity on terms that are favorable to us, if at all.
−Removed: Our ability to renew, extend or replace such credit facilities would be constrained by then-current economic conditions affecting the credit markets.
+Added: Our ability to renew, extend or replace any such Credit Facilities would be constrained by then-current economic conditions affecting the credit markets.
In the event that we were not able to renew, extend or replace any of our Credit Facilities 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.
In addition to regulatory limitations on our ability to raise capital, each of our Credit Facilities 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.
−Removed: We have entered into the CIBC Subscription Facility and the Truist Credit Facility, and DLF LLC has entered into the BNP Funding Facility, and as a result, we are subject to certain risks.
−Removed: The CIBC Subscription Facility is secured by the unfunded commitments of certain investors of the Company.
−Removed: The Truist Credit Facility is guaranteed by certain domestic subsidiaries of the Company, and the Truist Credit Facility is secured by a first priority security interest in substantially all of the assets of the Company and each such guarantor, subject to certain exceptions.
+Added: We have entered into the Truist Credit Facility, and DLF LLC has entered into the BNP Funding Facility, and as a result, we are subject to certain risks.
+Added: The Truist Credit Facility is guaranteed by certain domestic subsidiaries of the Company, and the Truist Credit Facility is secured by a first priority security interest in substantially all of the assets of the Company and each such guarantor, subject
+Added: to certain exceptions.
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 each of the Credit Facilities depends on many factors, some of which are beyond our control.
−Removed: We can offer no assurances that we will continue to comply with these covenants.
−Removed: In the event of a default under the any of the Credit Facilities, the administrative agent under the applicable loan documents would have the right to call the capital commitments of our investors collateralizing such Credit Facilities in order to repay amounts outstanding under such Credit 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.
+Added: On February 11, 2022, we issued $425.0 million in aggregate principal amount of 4.50% notes due 2027.
+Added: Pursuant to a Registration Statement on Form N-14 (File No.
+Added: 333-264774), on July 20, 2022, we closed an exchange offer in which holders of our 2027 Notes that were restricted because they were issued in a private placement, or the Restricted 2027 Notes, were offered the opportunity to exchange such notes for new, registered notes with substantially identical terms, or the Unrestricted 2027 Notes, and, together with the Restricted 2027 Notes, the 2027 Notes.
+Added: On September 13, 2022, we issued $275.0 million in aggregate principal amount of the 7.55% Series A Senior Notes due September 13, 2025, or the 2025 Notes.
+Added: The indenture governing the 2027 Notes, or the Indenture, contains certain covenants, including covenants requiring us to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the 1940 Act, whether or not it is subject to those requirements, and to provide financial information to the holders of the 2027 Notes and the trustee if we are no longer subject to the reporting requirements under the Exchange Act.
+Added: These covenants are subject to important limitations and exceptions that are described in the Indenture.
+Added: The Note Purchase Agreement under which the 2025 Notes were issued, or the Note Purchase Agreement, contains certain representations and warranties, and various covenants and reporting requirements customary for agreements of this type, including, without limitation, information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, and certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business and permitted liens.
+Added: In addition, the Note Purchase Agreement contains the following financial covenants:
+Added: (a) maintaining a minimum shareholders’ equity, measured as of each fiscal quarter-end and (b) not permitting our asset coverage ratio, as of the date of the incurrence of any debt for borrowed money or the making of any cash dividend to shareholders, to be less than the statutory minimum then applicable to us under the 1940 Act.
+Added: Our continued compliance with the covenants under the Credit Facilities, the Indenture and the Note Purchase Agreement depends on many factors, some of which are beyond our control, and there can be no assurance that we will continue to comply with such covenants.
+Added: Our failure to satisfy the respective covenants could result in foreclosure by the lenders under the applicable credit facility or governing instrument or acceleration by the applicable lenders or noteholders, which would accelerate our repayment obligations under the relevant agreement 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: Because the Credit Facilities and the Note Purchase Agreement have, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness under the Credit Facilities or represented by the 2027 Notes or the 2025 Notes, or under any future credit facility, is accelerated, we may be unable to repay or finance the amounts due.
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 consolidated financial statements and treat the indebtedness of any such subsidiary as our leverage.
+Added: We consolidate the financial statements of our wholly owned subsidiaries 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.
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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 collateralized loan obligations (“CLOs”) we enter into to finance our investments.
+Added: We may be subject to risks associated with any collateralized loan obligations, or 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”).
24 unchanged sentences
If a buyer of securities under a reverse repurchase agreement were to file for bankruptcy or experience insolvency, we may be adversely affected.
−Removed: Also, in entering into reverse repurchase agreements, we would bear the risk of loss to the extent that the proceeds of such agreements
−Removed: at settlement are less than the fair value of the underlying securities being pledged.
+Added: Also, in entering into reverse repurchase agreements, we would bear the risk of loss to the extent that the proceeds of such agreements at settlement are less than the fair value of the underlying securities being pledged.
In addition, due to the interest costs associated with reverse repurchase agreements, our net asset value will decline, and, in some cases, we may be worse off than if we had not used such agreements.
2 unchanged sentences
See “ Item 1.
−Removed: Business—Regulation—Qualifying Assets .”
+Added: Business—Regulation as a Business Development Company—Qualifying Assets .”
In the future, we believe that most of our investments will constitute qualifying assets.
8 unchanged sentences
As a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940 Act which would significantly decrease our operating flexibility.
−Removed: The majority of our portfolio investments are recorded at fair value as determined in good faith by our Board of Directors and, as a result, there may be uncertainty as to the value of our portfolio investments.
+Added: Certain investors are limited in their ability to make significant investments in us.
+Added: Investment companies registered under the 1940 Act are restricted from acquiring directly or through a controlled entity more than 3% of our total outstanding voting stock (measured at the time of the acquisition), unless these funds comply with certain requirements under the 1940 Act that would restrict the amount that they are able to invest in our securities.
+Added: Private funds that are excluded from the definition of “investment company” either pursuant to Section 3(c)(1) or 3(c)(7) of the 1940 Act are also subject to these restrictions.
+Added: As a result, certain investors may be precluded from acquiring additional shares at a time that they might desire to do so.
+Added: The majority of our portfolio investments are recorded at fair value as determined in good faith by our Valuation Designee, under the supervision of our Board of Directors and, as a result, there may be uncertainty as to the value of our portfolio investments.
The majority of our portfolio investments take the form of securities for which no market quotations are readily available.
1 unchanged sentence
As discussed in more detail under “ Part II.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates ”, most, if not all, of our investments (other than cash and cash equivalents) are classified as Level 3 under ASC 820.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates ”, most, if not all, of our investments (other than cash and cash equivalents) are classified as Level 3 under ASC Topic 820, Fair Value Measurements (“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.
2 unchanged sentences
The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information.
−Removed: In connection with the determination of the fair value of our investments, investment professionals from the Adviser may provide our Board of Directors with portfolio company valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company.
+Added: The Board of Directors has delegated to the Adviser as a valuation designee, or the Valuation Designee, the responsibility of determining the fair value of the Company’s investment portfolio, subject to oversight of the Board of Directors, pursuant to Rule 2a-5 under the 1940 Act.
+Added: As such, the Valuation Designee is charged with determining the fair value of the Company’s investment portfolio, subject to oversight of the Board of Directors.
The participation of the Adviser’s investment professionals in our valuation process could result in a conflict of interest as the Adviser’s base management fee is based, in part, on our average adjusted gross assets and our incentive fees will be based, in part, on unrealized losses.
−Removed: We have retained the services of an independent service provider to review the valuation of these securities.
+Added: We have retained the services of independent service providers to review the valuation of these securities.
The valuation of all or portion of our portfolio investments for which a market quote is not readily available will be reviewed by an independent valuation firm each quarter and month-end.
−Removed: 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.
+Added: The types of factors that our Valuation Designee, under the supervision of 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.
Because such valuations, and in particular, the valuations of private securities and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed.
Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.
−Removed: We adjust quarterly (or as otherwise may be required by the 1940 Act in connection with the issuance of our shares) the valuation of our portfolio to reflect our Board of Directors’ determination of the fair value of each investment in our portfolio.
+Added: We adjust quarterly (or as otherwise may be required by the 1940 Act in connection with the issuance of shares of our Common Stock) the valuation of our portfolio to reflect our Board of Directors’ approval of the fair value of each investment in our portfolio, as determined by the Valuation Designee.
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.
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Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions.
−Removed: 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: Provisions of the Delaware General Corporation Law, as amended, or 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.
The DGCL contains provisions that may discourage, delay or make more difficult a change in control of us or the removal of our directors.
3 unchanged sentences
This section generally prohibits us from engaging in mergers and other business combinations with stockholders that beneficially own 15% or more of our voting stock, either individually or together with their affiliates, unless our directors or stockholders approve the business combination in the prescribed manner.
−Removed: Our Board of Directors has adopted a resolution exempting from Section 203 of the DGCL any business combination between us and any other person, subject to prior approval of such business combination by our Board of Directors, including approval by a majority of our directors who are not “interested persons.” If our Board of Directors later repeals such resolution exempting business combinations, or if our Board of Directors does not approve a business combination, Section 203 of the DGCL may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.
−Removed: We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our certificate of incorporation that classify our Board of Directors in three classes serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our Board of Directors to classify or reclassify shares of our preferred stock in one or more classes or series, to cause the issuance of additional shares of our stock, and to amend our certificate of incorporation, without stockholder approval, to increase or decrease the number of shares of stock that we have authority to issue.
+Added: Our Board of Directors has adopted a resolution exempting from Section 203 of the DGCL any business combination between us and any other person, subject to prior approval of such business combination by our Board of Directors, including approval by a majority of our Independent Directors.
+Added: If our Board of Directors later repeals such resolution exempting business combinations, or if our Board of Directors does not approve a business combination, Section 203 of the DGCL may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.
+Added: We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our certificate of incorporation that classify our Board of Directors in three classes serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our Board of Directors to classify or reclassify shares of our preferred stock in one or more classes or series, to cause the issuance of additional shares of our Common Stock, and to amend our certificate of incorporation, without stockholder approval, to increase or decrease the number of shares of Common Stock that we have authority to issue.
These provisions, as well as other provisions we have adopted in our certificate of incorporation and bylaws, may delay, defer or prevent a transaction or a change in control in circumstances that could give our stockholders the opportunity to realize a premium of the net asset value of shares of our Common Stock.
8 unchanged sentences
If the Administrator resigns, we may not be able to find a new administrator or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms, or at all.
−Removed: we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the value of our shares may decline.
+Added: If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the value of our shares may decline.
In addition, the coordination of our internal management and administrative activities is likely to suffer if we are unable to identify and reach an agreement with a service provider or individuals with the expertise possessed by the Administrator.
Even if we are able to retain a comparable service provider or individuals to perform such services, whether internal or external, their integration into our business and lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.
−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.
+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 and our portfolio may be concentrated in a limited number of industries.
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.
+Added: Additionally, our portfolio may be concentrated in a limited number of industries and a downturn in any particular industry in which we are invested could significantly impact the aggregate returns we realize.
+Added: To the extent that we assume large positions in the securities of a small number of issuers or our portfolio is concentrated in a limited number of industries, 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 or particular industry.
We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company.
2 unchanged sentences
To the extent that we operate as a non-diversified investment company, we may be subject to greater risk.
+Added: We may be subject to risks associated with our investments in the software industry.
+Added: We could invest in portfolio companies in the software industry and a downturn in the industry could significantly impact the aggregate returns we realize on such investments.
+Added: For example, portfolio companies in the software industry are subject to a number of risks.
+Added: The revenue, income (or losses) and valuations of software and other technology-related companies can and often do fluctuate suddenly and dramatically.
+Added: In addition, because of rapid technological change, the average selling prices of software products have historically decreased over their productive lives.
+Added: As a result, the average selling prices of software offered by our portfolio companies may decrease over time, which could adversely affect their operating results and, correspondingly, the value of any securities that we may hold.
+Added: Additionally, companies operating in the software industry are subject to vigorous competition, changing technology, changing client and end-consumer needs, evolving industry standards and frequent introductions of new products and services.
+Added: Our portfolio companies in the software industry could compete with companies that are larger and could be engaged in a greater range of businesses or have greater financial, technical, sales or other resources than our portfolio companies do.
+Added: Our portfolio companies could lose market share if their competitors introduce or acquire new products that compete with their software and related services or add new features to existing products.
+Added: Any deterioration in the results of our portfolio companies due to competition or otherwise could, in turn, materially adversely affect our business, financial condition and results of operations.
+Added: Laws and regulations regulating insurance activities are complex and could negatively affect the business of our portfolio companies in the insurance services industry, which could reduce their profitability and potentially limit their growth.
+Added: We could invest in portfolio companies in the insurance services industry and a downturn in the industry could significantly impact the aggregate returns we realize on such investments.
+Added: For example, the insurance industry in the United States is heavily regulated, and the insurance regulatory framework addresses, among other things:
+Added: (i) granting licenses to companies and agents to transact particular business activities and (ii) regulating trade, marketing, compensation, and claims practices.
+Added: Certain of our portfolio companies may be subject to laws and regulations applicable to insurance brokers and to the authority of the insurance regulators in their respective jurisdictions of operation.
+Added: The cost of compliance with such regulations or any non-compliance could impose material costs on our portfolio companies and negatively affect their business, marketing practices, and budgets.
+Added: Any of these factors could affect our portfolio company investments and, in turn, materially adversely affect our business, financial condition and results of operations.
+Added: Furthermore, the laws and regulations governing the sale of insurance may change in ways that adversely impact the business of our portfolio companies.
+Added: These changes could impact the manner in which our portfolio companies are permitted to conduct their businesses and could result in increased expenses and/or decreased revenues as well as negatively affect their marketing practices, budgets, and overall level of business, which could adversely impact our business, financial condition, operating results and cash flows.
+Added: We may be subject to risks associated with our investments in the commercial services and supplies industry.
+Added: We could invest in portfolio companies in the commercial services and supply industry and a downturn in the industry could significantly impact the aggregate returns we realize on such investments.
+Added: For example, the operating results and financial condition of our portfolio companies in the commercial services and supplies industry could be adversely affected due to a number of factors, including but not limited to a decrease in demand for their services or supplies relating to seasonality or market forces and various other factors.
+Added: In addition, there are risks involved with sales, marketing, managerial and related capabilities of our portfolio companies in the commercial services and supplies industry.
+Added: For example, recruiting and training a workforce is expensive and time-consuming and could delay the provision of commercial services, result in diminished services, or delay the delivery of supplies.
+Added: If our portfolio companies in the commercial services and supplies industry fail to devote resources and attention to sell and market their services or products effectively, they could fail to generate sufficient revenues and reach or sustain profitability and to repay interest or principal
+Added: on our debt investments.
+Added: Any of these factors could affect our portfolio company investments and, in turn, materially adversely affect our business, financial condition and results of operations.
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.
5 unchanged sentences
Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited.
−Removed: In November 2020, the SEC adopted a rulemaking regarding the ability of a BDC (or a registered investment company) to use derivatives and other transactions that create future payment or delivery obligations.
−Removed: Under the newly adopted rules, BDCs that use derivatives will be subject to a value-at-risk leverage limit, a derivatives risk management program and testing requirements and requirements related to board reporting.
−Removed: These new requirements will apply unless the BDC qualifies as a “limited derivatives user,” as defined under the adopted rules.
−Removed: Under the new rule, a BDC may enter into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has, among other things, a reasonable belief, at the time it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due.
+Added: In November 2020, the SEC adopted a revised version of Rule 18f-4, which is designed to modernize the regulation of the use of derivatives by registered investment companies and BDCs.
+Added: Among other things, Rule 18f-4 requires BDCs that use derivatives to be subject to a value-at-risk leverage limit and requires the adoption and implementation of a derivatives risk management program that is reasonably designed to identify, assess and manage its derivatives transaction trading risk, subject to certain exceptions.
+Added: Additionally, subject to certain conditions, funds that do not invest heavily in derivatives may be deemed limited derivatives users and would not be subject to the full requirements of Rule 18f-4.
+Added: The Company intends to operate under the limited derivatives user exemption of Rule 18f-4 and has adopted written policies and procedures reasonably designed to manage the Company’s derivatives risk pursuant to Rule 18f-4.
+Added: In connection with the adoption of Rule 18f-4, the SEC also eliminated the asset segregation and cover framework arising from prior SEC guidance for covering derivatives and certain financial instruments.
+Added: Compliance with Rule 18f-4 has been required since August 19, 2022.
Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts.
11 unchanged sentences
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 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
+Added: indication of having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest 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.
2 unchanged sentences
We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.
−Removed: We may invest in distressed or highly leveraged companies, which could cause you to lose all or part of your investment.
−Removed: We may make investments in restructurings that involve, or otherwise invest in the debt securities of, portfolio companies that are experiencing, or are expected to experience, severe financial difficulties.
−Removed: These severe financial difficulties may never be overcome and may cause such portfolio companies to become subject to bankruptcy proceedings.
−Removed: As such, these investments could subject us to certain additional potential liabilities that may exceed the value of our original investment.
−Removed: Under certain circumstances, payments to us may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, a preferential payment or a similar transaction under the applicable bankruptcy and insolvency laws.
−Removed: In addition, under certain circumstances, a lender that has inappropriately exercised control of the management and policies of a debtor may have its claims subordinated or disallowed, or may be found liable for damages suffered by parties as a result of such actions.
−Removed: We may also invest in highly leveraged companies.
−Removed: Investment in leveraged companies involves a number of significant risks.
−Removed: Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold.
−Removed: Such developments may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees that we may have obtained in connection with our investment.
−Removed: Smaller leveraged companies also may have less predictable operating results and may require substantial additional capital to support their operations, finance their expansion or maintain their competitive position.
−Removed: We may hold the debt securities of leveraged companies that may, due to the significant volatility of such companies, enter into bankruptcy proceedings.
−Removed: Leveraged companies may experience bankruptcy or similar financial distress.
+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.
+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: For more information, see “— We are operating in a period of capital markets volatility and economic uncertainty.
+Added: The conditions have materially and adversely affected debt and equity capital markets in the United States, and any future volatility or instability in capital markets may have a negative impact on our business and operations.
+Added: Inflation and supply chain risk could adversely impact our portfolio companies and our results of our operations.
+Added: Economic activity has accelerated across sectors and regions in recent periods.
+Added: Nevertheless, due to global supply chain issues, a rise in energy prices, strong consumer demand and other factors, inflation has accelerated in the U.S.
+Added: and globally.
+Added: Higher inflation is likely to continue in the near to medium-term, particularly in the U.S., with the possibility that monetary policy could continue to tighten in response.
+Added: Persistent inflationary pressures could affect our portfolio companies’ profit margins.
+Added: We may hold the debt securities of distressed companies that may enter into bankruptcy proceedings.
+Added: Companies that are financially distressed due to leverage or other factors may experience bankruptcy or similar financial distress.
The bankruptcy process has a number of significant inherent risks.
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If the proceeding is converted to a liquidation, the value of the issuer may not equal the liquidation value that was believed to exist at the time of the investment.
−Removed: The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s return on investment can
−Removed: be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective.
+Added: The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective.
The administrative costs of a bankruptcy proceeding are frequently high and would be paid out of the debtor’s estate prior to any return to creditors.
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This could occur even though we may have structured our investment as senior debt.
−Removed: 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 involve a number of significant risks.
+Added: Our investments in private middle-market portfolio companies are risky, and you could lose all or part of your investment.
+Added: Investments in private 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.
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We must therefore rely solely on the ability of the Adviser to obtain adequate information through due diligence to evaluate the creditworthiness and potential returns from investing in these companies, which information may not include all information or resources which may be available from other areas of Morgan Stanley.
−Removed: If the Adviser is unable to uncover all material information about these companies, it may not make a fully informed investment decision, and we may lose money on our investments.
+Added: If the Adviser is unable to uncover all material information about these companies, it may not make a fully informed investment decision, and we may lose money on our
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.
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Middle-market companies also may be parties to litigation and may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence.
−Removed: In addition, our executive officers, directors and the Adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies.
+Added: In addition, our executive officers, directors and the Adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments.
Subordinated liens on collateral securing debt investments that we will make to our portfolio companies may be subject to control by senior creditors with first priority liens.
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In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors.
−Removed: We can offer no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured
−Removed: debt obligations after payment in full of all secured debt obligations.
+Added: We can offer no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured debt obligations after payment in full of all secured debt obligations.
If such proceeds were not sufficient to repay the outstanding secured debt obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s remaining assets, if any.
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Certain loans in our portfolio may consist of “covenant-lite” loans.
−Removed: Such loans may not require the borrower to maintain debt service or other financial ratios and do not include terms which allow the lender to monitor the performance of the borrower and declare a default if certain criteria are breached.
+Added: Generally, covenant-lite loans permit borrowers more opportunity to negatively impact lenders because such loans may not require the borrower to maintain debt service or other financial ratios and do not include terms which allow the lender to monitor the performance of the borrower and declare a default if certain criteria are breached.
+Added: Accordingly, to the extent we invest in covenant-lite loans, we may have less protection from borrower actions and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance covenants.
Ownership of covenant-lite loans may expose us to different risks, including with respect to liquidity, ability to restructure loans, credit risks and less protective loan documentation, than is the case with loans that contain financial maintenance covenants.
−Removed: As of December 31, 2021, 16.6% of our portfolio, measured as percent of gross commitments, is in loans that are considered “covenant-lite.”
+Added: As of December 31, 2022, approximately 22% of our portfolio, measured as percent of gross commitments, is in loans that are considered “covenant-lite.”
The lack of liquidity in our investments may adversely affect our business.
−Removed: We may invest in companies that are experiencing financial difficulties, which difficulties may never be overcome.
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.
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Our investment in illiquid investments may restrict its ability to dispose of investments in a timely fashion and for a fair price.
−Removed: Furthermore, we likely will be limited in our ability to sell investments because Morgan Stanley may have material, non-public information regarding the issuers of such loans or investments or as a result of other Morgan Stanley policies.
+Added: Furthermore, we likely will be limited in our ability to sell investments because Morgan Stanley may have material, non-public information regarding the issuers of such loans or investments or as a result of measures established by Morgan Stanley in order to comply with applicable law, regulatory restrictions or internal policies or procedures, including without limitation joint transaction restrictions pursuant to the 1940 Act.
This limited ability to sell investments could materially adversely affect our investment results.
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Furthermore, certain types of investments expected to be made may require a substantial length of time to realize a return or fully liquidate.
−Removed: We may exit some investments through distributions in kind to the stockholders, after which such you will still bear the risks associated with holding the securities and must make your own disposition decisions.
+Added: We may exit some investments through distributions in kind to the common stockholders, after which such you will still bear the risks associated with holding the securities and must make your own disposition decisions.
Given the nature of the investments contemplated by the Company, there is a material risk that we will be unable to realize our investment objectives by sale or other disposition at attractive prices or will otherwise be unable to complete any exit strategy.
In particular, this risk could arise from changes in the financial condition or prospects of the portfolio company in which the investment is made, changes in national or international economic conditions, changes in debt and equity capital markets and changes in laws, regulations, fiscal policies or political conditions of countries in which investments are made.
−Removed: In connection with the disposition of an investment in a portfolio company, we may be required to make representations about the business and financial affairs of the portfolio company, or may be responsible for the contents of disclosure documents
−Removed: under applicable securities laws.
+Added: In connection with the disposition of an investment in a portfolio company, we may be required to make representations about the business and financial affairs of the portfolio company or may be responsible for the contents of disclosure documents under applicable securities laws.
We may also be required to indemnify the purchasers of such investment or underwriters to the extent that any such representations or disclosure documents turn out to be incorrect, inaccurate or misleading.
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Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation.
−Removed: As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by our Board of Directors.
+Added: As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by our Valuation Designee, under the supervision of our Board of Directors.
As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments:
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We record decreases in the market values or fair values of our investments as unrealized depreciation.
−Removed: Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized depreciation in our portfolio.
+Added: Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized
+Added: depreciation in our portfolio.
The effect of all of these factors on our portfolio may reduce our net asset value by increasing net unrealized depreciation in our portfolio.
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In addition, decreases in the market value or fair value of our investments will reduce our net asset value.
−Removed: 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.
−Removed: 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.
+Added: Our 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.
+Added: Our portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity.
This risk and the risk of default is increased to the extent that the loan documents do not require the portfolio companies to pay down the outstanding principal of such debt prior to maturity.
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Rising interest rates could also cause portfolio companies to shift cash from other productive uses to the payment of interest, which may have a material adverse effect on their business and operations and could, over time, lead to increased defaults.
−Removed: Investments with a deferred interest feature, such as original issue discount income and payment-in-kind interest, could represent a higher credit risk than investments that must pay interest in full in cash on a regular basis.
+Added: Investments with a deferred interest feature, such as OID and PIK interest, could represent a higher credit risk than investments that must pay interest in full in cash on a regular basis.
Any failure of one or more portfolio companies to repay or refinance its debt at or prior to maturity or the inability of one or more portfolio companies to make ongoing payments following an increase in contractual interest rates could have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: Our prospective portfolio companies may prepay loans, which may reduce our yields if capital returned cannot be invested in transactions with equal or greater expected yields.
+Added: Our portfolio companies may prepay loans, which may reduce our yields if capital returned cannot be invested in transactions with equal or greater expected yields.
The loans in our investment portfolio may be prepaid at any time, generally with little advance notice.
Whether a loan is prepaid will depend both on the continued positive performance of the portfolio company and the existence of favorable financing market conditions that allow such company the ability to replace existing financing with less expensive capital.
−Removed: As market conditions
−Removed: change, we do not know when, and if, prepayment may be possible for each portfolio company.
+Added: As market conditions change, we do not know when, and if, prepayment may be possible for each portfolio company.
In some cases, the prepayment of a loan may reduce our achievable yield if the capital returned cannot be invested in transactions with equal or greater expected yields, which could have a material adverse effect on our business, financial condition and results of operations.
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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.
−Removed: We may be exposed to sustainability risks in connection with our investments.
−Removed: “Sustainability Risk” means an ESG event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the Company.
−Removed: 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.
−Removed: The impacts following the occurrence of a Sustainability Risk may be numerous and vary depending on the specific risk, region and asset class.
−Removed: Sustainability Risks generally revolve around the following factors including but not limited to:
−Removed: • Climate change risks include both global warming driven by human emissions of greenhouse gases and the resulting large scale shifts in weather patterns.
−Removed: 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: Additionally, our portfolio companies may be subject to certain so-called sustainability risks or ESG events or conditions that, if they occur, could cause an actual or potential material impact on the value of the Company, including, but not limited to, the following:
• Natural resource risks including rising costs from resource scarcity or resource usage taxes and systemic risk from biodiversity loss;
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• Security and safety risks such as consumer security, data privacy and security;
−Removed: 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.
−Removed: 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.
−Removed: An investment may also suffer the impact of fines and other regulatory sanctions.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The occurrence of any such event could result in a reduction in the value of an investment, a negative impact on the ability
−Removed: of the investment to satisfy payment or repayment obligations to us in respect of an investment and/or could prejudice our ability to enforce on collateral underlying an investment.
−Removed: All of these factors could reduce the investment returns of the Company.
−Removed: A Sustainability Risk trend may arise and impact a specific investment or may have a broader impact on an economic sector (e.g.
−Removed: IT or health care), geography or political region or country.
−Removed: We have not yet identified all of the portfolio company investments we will acquire.
−Removed: We have not yet identified all of the potential investments for our portfolio that we will acquire with the proceeds of any sales of our securities or repayments of investments currently in our portfolio.
−Removed: 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.
+Added: • Other climate-related conditions and events that present risks related to the physical impacts of the climate and risks related to a potential transition to a lower carbon economy.
+Added: We have not yet identified all of the portfolio company investments we will acquire and we may have difficulty sourcing investment opportunities.
+Added: We have not yet identified all of the potential investments for our portfolio that we will acquire with the proceeds of any sales of our securities or repayments of investments currently in our portfolio, and we cannot assure investors that we will be able to locate a sufficient number of suitable investment opportunities to allow us to deploy all available capital successfully.
+Added: Privately negotiated investments in loans and illiquid securities of private, middle-market companies require substantial due diligence and structuring, and we cannot assure you that we will achieve our anticipated investment pace.
+Added: As a result, investors will be unable to evaluate any future portfolio company investments prior to purchasing our shares.
The Adviser selects all of our investments, and our stockholders will have no input with respect to such investment decisions.
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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.
+Added: To the extent we are unable to deploy all available capital, our investment income and, in turn, our results of operations, will likely be materially adversely affected.
+Added: There is no assurance that we will be able to consummate investment transactions or that such transactions will be successful.
Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
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Our portfolio companies may have, or be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest.
−Removed: Such subordinated investments are subject to greater risk of default than senior obligations as a result of adverse changes in the financial condition of the obligor or in general economic conditions.
+Added: Such subordinated investments are subject to greater risk of default than senior obligations as a result of adverse changes in the
+Added: financial condition of the obligor or in general economic conditions.
If we make a subordinated investment in a portfolio company, the portfolio company may be highly leveraged, and its relatively high debt-to-equity ratio may create increased risks that its operations might not generate sufficient cash flow to service all of its debt obligations.
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In the event of a default, those collateralized lenders would have priority over us with respect to the proceeds of a sale of the underlying assets.
−Removed: In cases described above, we may lack control over the underlying asset collateralizing our loan or the underlying assets of the portfolio company prior to a default, and as a result the value of the collateral may be reduced by acts or omissions by owners or managers of the assets.
+Added: In cases described above, we may lack control over the underlying asset collateralizing our loan or the underlying assets of the portfolio
+Added: company prior to a default, and as a result the value of the collateral may be reduced by acts or omissions by owners or managers of the assets.
In the event of bankruptcy of a portfolio company, we may not have full recourse to its assets in order to satisfy our loan, or our loan may be subject to “equitable subordination.” This means that depending on the facts and circumstances, including the extent to which we actually provided significant “managerial assistance,” if any, to that portfolio company, a bankruptcy court might re-characterize our debt holding and subordinate all or a portion of our claim to that of other creditors.
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We may invest in non-U.S.
−Removed: companies, including emerging market issuers, to the limited extent such investments are permitted under the 1940 Act.
+Added: companies to the limited extent such investments are permitted under the 1940 Act.
We expect that these investments would focus on the same types of investments that we make in U.S.
middle-market companies.
−Removed: Investing in securities of emerging market issuers involves many risks including economic, social, political, financial, tax and security conditions in the emerging market, potential inflationary economic environments, regulation by foreign governments, different accounting standards and political uncertainties.
−Removed: Economic, social, political, financial, tax and security conditions also could negatively affect the value of emerging market companies.
−Removed: These factors could include changes in the emerging market government’s economic and fiscal policies, the possible imposition of, or changes in, currency exchange laws or other laws or restrictions applicable to the emerging market companies or investments in their securities and the possibility of fluctuations in the rate of exchange between currencies.
+Added: Investing in securities of non-U.S.
+Added: companies involves many risks including economic, social, political, financial, tax and security conditions, potential inflationary economic environments, regulation by foreign governments, different accounting standards and political uncertainties.
+Added: These factors could include changes in economic and fiscal policies, the possible imposition of, or changes in, currency exchange laws or other laws or restrictions applicable to the non-U.S.
+Added: company or investments in their securities and the possibility of fluctuations in the rate of exchange between currencies.
We may engage in hedging transactions to the limited extent such transactions are permitted under the 1940 Act and applicable commodities laws.
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The success of any hedging transactions we may enter into will depend on our ability to correctly predict movements in currencies and interest rates.
−Removed: Therefore, while we may enter into hedging transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates could result in poorer overall investment
−Removed: performance than if we had not engaged in any such hedging transactions.
+Added: Therefore, while we may enter into hedging transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates could result in poorer overall investment performance than if we had not engaged in any such hedging transactions.
In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged could vary.
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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.
−Removed: Risks Relating to Investment in our Common Stock
+Added: Risks Relating to an Investment in our Common Stock
There is no public market for shares of our Common Stock, and there is no assurance that a public market of shares of our Common Stock will develop.
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Our Common Stock will have limited transferability which could delay, defer or prevent a transaction or a change of control of the Company that might involve a premium price for our securities or otherwise be in the best interest of our stockholders.
+Added: The net asset value of our Common Stock may fluctuate significantly.
+Added: The net asset value and liquidity, if any, of the market for our Common Stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance.
+Added: These factors include:
+Added: • Changes in the value of our portfolio of investments and derivative instruments as a result of changes in market factors, such as interest rate shifts, and also portfolio specific performance, such as portfolio company defaults, among other reasons;
+Added: • Changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs;
+Added: • Loss of RIC tax treatment or BDC status;
+Added: • Distributions that exceed our net investment income and net income as reported according to U.S.
+Added: • Changes in earnings or variations in operating results;
+Added: • Changes in accounting guidelines governing valuation of our investments;
+Added: • Any shortfall in revenue or net income or any increase in losses from levels expected by investors;
+Added: • Departure of our Adviser or certain of its key personnel;
+Added: • Inability of the Adviser to employ additional experienced investment professionals;
+Added: • General economic trends and other external factors;
+Added: • Loss of a major funding source;
+Added: • The economic and other impacts of disease outbreaks pandemics, or any other serious public health concern, such as the Coronavirus pandemic, in the United States as well as worldwide.
There is a risk that you may not receive distributions or that our distributions may not grow over time and a portion of our distributions may be a return of capital.
We intend to make periodic distributions to our stockholders out of assets legally available for distribution.
−Removed: We may fund our cash distributions to stockholders from any sources of funds available to us, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to us on account of preferred and common equity investments in portfolio companies and fee and expense
−Removed: reimbursement waivers from the Adviser or the Administrator, if any.
+Added: We may fund our cash distributions to stockholders from any sources of funds available to us, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to us on account of preferred and common equity investments in portfolio companies and fee and expense reimbursement waivers from the Adviser or the Administrator, if any.
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.
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The Adviser and the Administrator have no obligation to waive fees or receipt of expense reimbursements, if any.
−Removed: The net asset value of our Common Stock may fluctuate significantly.
−Removed: The net asset value and liquidity, if any, of the market for our Common Stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance.
−Removed: These factors include:
−Removed: Changes in the value of our portfolio of investments and derivative instruments as a result of changes in market factors, such as interest rate shifts, and also portfolio specific performance, such as portfolio company defaults, among other reasons;
−Removed: Changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs;
−Removed: Loss of RIC tax treatment or BDC status;
−Removed: Distributions that exceed our net investment income and net income as reported according to U.S.
−Removed: Changes in earnings or variations in operating results;
−Removed: Changes in accounting guidelines governing valuation of our investments;
−Removed: Any shortfall in revenue or net income or any increase in losses from levels expected by investors;
−Removed: Departure of our Adviser or certain of its key personnel;
−Removed: General economic trends and other external factors;
−Removed: Loss of a major funding source;
−Removed: The length and duration of the COVID-19 pandemic in the United States as well as worldwide and the magnitude of the resulting economic impact.
Our stockholders may experience dilution in their ownership percentage.
−Removed: Our stockholders do not have preemptive rights to any shares of our Common Stock we issue in the future.
+Added: Our stockholders do not have preemptive rights to purchase any shares of our Common Stock we issue in the future.
To the extent that we issue additional equity interests at or below net asset value your percentage ownership interest in us may be diluted.
−Removed: In addition, depending upon the terms and pricing of any future sales of Common Stock and the value of our investments, you may also experience dilution in the book value and fair value of your shares.
+Added: In addition, depending upon the terms and pricing of any future sales of Common Stock and the value of our investments, you may also experience dilution in the book value and fair value of your shares of Common Stock.
Under the 1940 Act, we generally are prohibited from issuing or selling shares of our Common Stock at a price below net asset value per share, which may be a disadvantage as compared with certain public companies.
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As a result, a stockholder generally would be subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the stockholder in the same manner as a cash dividend, even though most of the dividend was paid in shares of our Common Stock.
−Removed: We currently do not intend to pay dividends in shares of our Common Stock.
We may in the future determine to issue preferred stock, which could adversely affect the value of shares of Common Stock.
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Morgan Stanley has no obligation, contractual or otherwise, to financially support us beyond this equity commitment to purchase our Common Stock.
−Removed: Risks Relating to the Notes
+Added: Risks Related to the Notes
The Notes are unsecured and therefore are effectively subordinated to any secured indebtedness we may incur.
Additionally, the Notes are not guaranteed by Morgan Stanley.
−Removed: On February 11, 2022, we issued $425,000,000 in aggregate principal amount of 4.500% notes due 2028 (the “Notes”).
The Notes are not secured by any of our assets or any of the assets of our subsidiaries.
As a result, the Notes are effectively subordinated to any secured indebtedness we or our subsidiaries have outstanding or that we or our subsidiaries may incur in the future (or any indebtedness that is initially unsecured in respect of which we subsequently grant security) to the extent of the value of the assets securing such indebtedness.
−Removed: In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes.
−Removed: As of December 31, 2021, our total consolidated indebtedness was approximately $1.2 billion, all of which was secured by our assets or the undrawn capital commitments of our investors.
+Added: In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to
+Added: secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes.
+Added: As of December 31, 2022, our total consolidated indebtedness was approximately $1.5 billion, approximately $0.8 billion of which was secured by our assets.
The Notes are not obligations of Morgan Stanley nor are they guaranteed by Morgan Stanley and Morgan Stanley has no obligation to pay any amounts due on the Notes.
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Furthermore, Morgan Stanley has no obligation, contractual or otherwise, to financially support us beyond the equity commitment to purchase our Common Stock pursuant to a subscription agreement entered into by MS Credit Partners Holdings.
−Removed: Morgan Stanley has no history of financially supporting any of the MS BDCs, even during periods of financial distress.
+Added: Morgan Stanley has no history of financially any of the MS BDCs on the MS Private Credit platform, even during periods of financial distress.
The Notes are subordinated structurally to the indebtedness and other liabilities of our subsidiaries.
−Removed: The Notes are obligations exclusively of Morgan Stanley Direct Lending Fund and not of any of our subsidiaries.
+Added: The 2027 Notes are obligations exclusively of the Company and not of any of our subsidiaries.
None of our subsidiaries is a guarantor of the 2027 Notes and the 2027 Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future.
−Removed: As of December 31, 2021, approximately $939.5 million of the indebtedness required to be consolidated on our balance sheet was held through subsidiary financing vehicles and/or secured by assets of the Company and its subsidiaries.
+Added: Although the 2025 Notes are guaranteed by certain of our subsidiaries, the 2025 Notes are not secured by any of the assets of our subsidiaries and are effectively subordinated to any secured indebtedness our subsidiaries have outstanding or that our subsidiaries may incur in the future.
+Added: As of December 31, 2022, approximately $0.8 billion of the indebtedness required to be consolidated on our balance sheet was held through subsidiary financing vehicles and/or secured by assets of the Company and its subsidiaries.
Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors, including trade creditors, and holders of preferred stock, if any, of our subsidiaries will have priority over our claims (and therefore the claims of our creditors, including holders of the 2027 Notes) with respect to the assets of such subsidiaries.
−Removed: Even if we were recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims.
−Removed: Consequently, the Notes are subordinated structurally to all indebtedness and other liabilities of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish as financing vehicles or otherwise.
+Added: Even if we were recognized as a creditor of one or more of our subsidiaries, our claims (and therefore the claims of our creditors, including the holders of the Notes) would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims.
+Added: Consequently, the Notes are subordinated structurally to all existing indebtedness and other liabilities of any of our subsidiaries and the 2027 Notes are subordinated structurally to all indebtedness of any subsidiaries that we may in the future acquire or establish as financing vehicles or otherwise.
All of the existing indebtedness of our subsidiaries is structurally senior to the Notes.
7 unchanged sentences
None of the initial purchasers, us, or Morgan Stanley undertakes any obligation to maintain our credit ratings or to advise holders of the Notes of any changes in our credit ratings.
−Removed: The Notes are rated by Moody’s Investors Service and Fitch Ratings, Inc.
−Removed: There can be no assurance that their respective credit ratings will remain for any given period of time or that such credit ratings will not be lowered or withdrawn entirely by the applicable ratings agency if in its judgment future circumstances relating to the basis of the credit rating, such as adverse changes in our business, financial condition and results of operations, so warrant.
−Removed: An increase in market interest rates could result in a decrease in the market value of the Notes.
−Removed: The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on the market prices of the Notes.
+Added: The 2025 Notes and the 2027 Notes are rated by certain credit rating agencies.
+Added: There can be no assurance that the respective credit ratings will remain for any given period of time or that such credit ratings will not be lowered or withdrawn entirely by the applicable ratings agency if in its judgment future circumstances relating to the basis of the credit rating, such as adverse changes in our business, financial condition and results of operations, so warrant.
+Added: An increase in market interest rates could result in a decrease in the value of the Notes.
+Added: The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on the market prices, if any, or values of the Notes.
In general, as market interest rates rise, debt securities bearing interest at fixed rates of interest decline in value.
−Removed: Consequently, if an investor purchases Notes bearing interest at fixed rates and market interest rates increase, the market values of those Notes may decline.
+Added: Consequently, if an investor purchases Notes bearing interest at fixed rates and market interest rates increase, the market prices, if any, or values of those Notes may decline.
We cannot predict the future level of market interest rates.
3 unchanged sentences
In particular, the terms of the Indenture and the 2027 Notes do not place any restrictions on our or our subsidiaries’ ability to:
−Removed: issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Notes with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a)(1) and (2) of the 1940 Act or any successor provisions, as such obligations may be amended or superseded, giving effect to any exemptive relief granted to us by the SEC;
+Added: • issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the 2027 Notes, (2) any indebtedness or other obligations that would be
+Added: secured and therefore rank effectively senior in right of payment to the 2027 Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the 2027 Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the 2027 Notes with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a)(1) and (2) of the 1940 Act or any successor provisions, as such obligations may be amended or superseded, giving effect to any exemptive relief granted to us by the SEC;
• pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the 2027 Notes;
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In this circumstance, a holder of the Notes may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the Notes being redeemed.
−Removed: There is currently no public market for the Notes.
If an active trading market for the Notes does not develop or is not maintained, a noteholder may not be able to sell its Notes.
−Removed: The Notes have not been registered under the Securities Act.
−Removed: Accordingly, the Notes may only be offered or sold in transactions that are not subject to, or that are otherwise exempt from, the registration requirements of the Securities Act and applicable state securities laws or pursuant to an effective registration statement.
−Removed: The Notes are a new issue of debt securities for which there currently is no trading market.
+Added: The Unrestricted 2027 Notes have been registered for resale under the Securities Act.
+Added: However, the Restricted 2027 Notes and the 2025 Notes have not been registered under the Securities Act and may only be offered or sold in transactions that are not subject to, or that are otherwise exempt from, the registration requirements of the Securities Act and applicable state securities laws or pursuant to an effective registration statement.
+Added: We cannot provide any assurances that an active trading market for any of the Notes will exist in the future or that holders will be able to sell their Notes.
We do not currently intend to apply for listing of the Notes on any securities exchange or for quotation of the Notes on any automated dealer quotation system.
−Removed: If no active trading market develops, a noteholder may not be able to resell its Notes at their fair market value or at all.
−Removed: If the Notes are traded after their initial issuance, they may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors.
−Removed: The initial purchasers may discontinue any market-making in the Notes at any time at their sole discretion.
−Removed: Accordingly, there is no assurance that an active and liquid trading market will develop or continue for the Notes, that a noteholder will be able to sell its Notes at a particular time or that the price a noteholder receives when it sells will be favorable.
−Removed: To the extent an active trading market does not develop, the liquidity and trading price for the Notes may be harmed.
−Removed: Accordingly, a noteholder may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.
−Removed: There are significant restrictions on the ability to transfer or resell the Notes.
−Removed: The Notes have not been registered under the Securities Act.
−Removed: Accordingly, the Notes may only be offered or sold in transactions that are not subject to, or that are otherwise exempt from, the registration requirements of the Securities Act and applicable state securities laws or pursuant to an effective registration statement.
−Removed: Therefore, a noteholder may transfer or resell the Notes in the U.S.
−Removed: only in a transaction exempt from the registration requirements of Securities Act and applicable state securities laws or pursuant to an effective registration statement, and a noteholder may be required to bear the risk of its investment until the maturity of the Notes.
−Removed: We relied on exemptions from the registration and/or prospectus qualification requirements under the laws of other jurisdictions where the Notes are being offered and sold, and, therefore, the Notes may be transferred and resold by purchasers that are resident in or otherwise subject to the laws of those jurisdictions, to the extent applicable.
−Removed: Although under the registration rights agreement we are required to consummate an offer to exchange the Notes for substantially equivalent registered securities or to register the resale of the Notes, until the exchange offer is consummated or such a registration statement has been declared effective, as the case may be, holders of the Notes may not offer or sell the Notes except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws or pursuant to an effective registration statement.
−Removed: The SEC, however, has broad discretion to determine whether any registration statement will be declared effective and may delay or deny effectiveness of any such registration statement filed by us for a variety of reasons.
−Removed: Our ability to have declared effective by the SEC a registration statement pertaining to the registered exchange offer on a timely basis will depend upon our ability to resolve any issues that may be raised by the SEC.
−Removed: No assurance can be given as to when a registration statement with respect to the Notes will become effective.
−Removed: Failure to have the registration statement become effective could adversely affect the liquidity and price of the Notes.
+Added: Even if an active trading market does exist, the Notes may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, if any, general economic conditions, our financial condition, performance and prospects and other factors.
+Added: To the extent an active trading market does not exist, the liquidity and trading price for the Notes may be harmed.
+Added: Accordingly, a holder of the Notes may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.
+Added: There are significant restrictions on the ability to transfer or resell the Restricted 2027 Notes and the 2025 Notes.
+Added: The Restricted 2027 Notes and the 2025 Notes have not been registered under the Securities Act.
+Added: Accordingly, the Restricted 2027 Notes and the 2025 Notes may only be offered or sold in transactions that are not subject to, or that are otherwise exempt from, the registration requirements of the Securities Act and applicable state securities laws or pursuant to an effective registration statement.
+Added: Therefore, a noteholder may transfer or resell the Restricted 2027 Notes or the 2025 Notes in the U.S.
+Added: only in a transaction exempt from the registration requirements of Securities Act and applicable state securities laws or pursuant to an effective registration statement, and a noteholder may be required to bear the risk of its investment until the maturity of the Restricted 2027 Notes or 2025 Notes, as applicable.
+Added: We relied on exemptions from the registration and/or prospectus qualification requirements under the laws of other jurisdictions where the Restricted 2027 Notes and 2025 Notes are being offered and sold, and, therefore, the Restricted 2027 Notes and 2025 Notes may be transferred and resold by purchasers that are resident in or otherwise subject to the laws of those jurisdictions, to the extent applicable.
We may not be able to repurchase the Notes upon a Change of Control Repurchase Event.
−Removed: We may not be able to repurchase the Notes upon a Change of Control Repurchase Event (as defined in the indenture governing the Notes) because we may not have sufficient funds.
+Added: We may not be able to repurchase the Notes upon a Change of Control Repurchase Event (as defined in the indenture governing the 2027 Notes or the Note Purchase Agreement governing the 2025 Notes, as applicable) because we may not have sufficient funds.
Upon a Change of Control Repurchase Event, holders of the Notes may require us to repurchase for cash some or all of the Notes at a repurchase price equal to 100% of the aggregate principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date.
−Removed: Our failure to purchase such tendered Notes upon the occurrence of such Change of Control Repurchase Event would cause an event of default under the indenture governing the Notes and a cross-default under the agreements governing certain of our other indebtedness, which may result in the acceleration of such indebtedness requiring us to repay that indebtedness immediately.
+Added: Our failure to purchase such tendered Notes upon the occurrence of such Change of Control Repurchase Event would cause an event of default under the indenture governing the 2027 Notes or the Note Purchase Agreement governing the 2025 Notes, as applicable, and a cross-default under the agreements governing certain of our other indebtedness, which may result in the acceleration of such indebtedness requiring us to repay that indebtedness immediately.
If a Change of Control Repurchase Event were to occur, we may not have sufficient funds to repay any such accelerated indebtedness and/or to make the required repurchase of the Notes.
For the avoidance of doubt, except with respect to the subscription agreement entered into by MS Credit Partners Holdings to purchase our Common Stock described above, Morgan Stanley does not have any obligation to provide us with funding to repurchase the Notes upon a Change of Control Repurchase Event or otherwise.
−Removed: FATCA withholding may apply to payments to certain foreign entities.
−Removed: Payments made under the Notes to a foreign financial institution or non-financial foreign entity (including such an institution or entity acting as an intermediary) may be subject to a U.S.
−Removed: withholding tax of 30% under U.S.
−Removed: Foreign Account Tax Compliance Act provisions of the Code (commonly referred to as “FATCA”).
−Removed: This withholding tax may apply to certain payments of interest on the Notes unless the foreign financial institution or non-financial foreign entity complies with certain information reporting, withholding, identification, certification and related requirements imposed by FATCA.
General Risk Factors
−Removed: We are operating in a period of capital markets disruption and economic uncertainty.
−Removed: 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.
−Removed: From time to time, capital markets may experience periods of disruption and instability for a variety of reasons.
−Removed: 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.
−Removed: The Coronavirus pandemic may affect the portfolio companies in which we will invest.
−Removed: The Coronavirus outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things:
−Removed: (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;
−Removed: (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;
−Removed: (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;
−Removed: (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;
−Removed: (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;
−Removed: (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;
−Removed: (vii) reduction in certain interest rates by the U.S.
−Removed: Federal Reserve and other central banks and decreased LIBOR , SOFR and other benchmark rates;
−Removed: (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 to borrowers;
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Capital markets disruptions and instability have also occurred in the past and may occur in the future.
+Added: We are operating in a period of capital markets volatility and economic uncertainty.
+Added: The conditions have materially and adversely affected debt and equity capital markets in the United States, and any future volatility 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 volatility and instability for a variety of reasons.
+Added: We are currently operating in a period of market volatility, as a result of, among other factors, elevated levels of inflation.
+Added: Uncertainty remains as to the probability of, and length and depth of a global recession and the impact of actions taken by the Federal Reserve, foreign central banks and other U.S.
+Added: and global governmental entities.
+Added: Government spending, government policies, including recent increases in certain interest rates by the Federal Reserve, and disruptions in supply chains in the United States and elsewhere, in conjunction with other factors have led and could continue to lead to a continued inflationary economic environment that could affect the Company’s portfolio companies, the Company’s financial condition and the Company’s results of operations.
+Added: In addition to the factors described above, other factors described herein that may affect market, economic and geopolitical conditions, and thereby adversely affect the Company including, without limitation, economic slowdown in the United States and internationally, changes in interest rates and/or a lack of availability of credit in the United States and internationally, commodity price volatility and changes in law and/or regulation, and uncertainty regarding government and regulatory policy.
+Added: The full impact of any such risks is uncertain and difficult to predict.
+Added: Capital markets volatility and instability have also occurred in the past and may occur in the future.
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.
2 unchanged sentences
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.
+Added: Furthermore, uncertainty between the United States and other countries with respect to trade policies, treaties and tariffs, among other factors, have caused volatility in the global markets, and we cannot assure you that these market conditions will not continue or worsen in the future.
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.
4 unchanged sentences
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.
+Added: If we are unable to raise or refinance debt, stockholders may not benefit from the potential for increased returns on equity
+Added: resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.
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.
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These laws and regulations, as well as their interpretation, may change from time to time, including as the result of interpretive guidance or other directives from the relevant government agencies charged with implementing those laws and regulations, and new laws, regulations and interpretations may also come into effect.
−Removed: For example, because a Morgan Stanley affiliate is acting as the Investment Adviser and Morgan Stanley has a 5% or greater voting investment in us, we are subject to the certain federal banking and financial requirements, including the BHCA, regulations of the Federal Reserve, and certain provisions of the Dodd-Frank Act.
−Removed: See Item 1 - “ Regulation as a Business Development Company – Bank Holding Company Act and Dodd Frank and Volcker Rule Disclosure.
+Added: For example, because a Morgan Stanley affiliate is acting as the Adviser and Morgan Stanley has a 5% or greater voting investment in us, we are subject to the certain federal banking and financial requirements, including the BHCA, regulations of the Federal Reserve, and certain provisions of the Dodd-Frank Act.
+Added: See “ Regulation as a Business Development Company — Bank Holding Company Act and Dodd Frank and Volcker Rule Disclosure.
” Because we are controlled by Morgan Stanley for purposes of the BHCA, we must generally comply with the investment and activity restrictions applicable to Morgan Stanley under the BHCA.
2 unchanged sentences
The BHCA also permits well-capitalized, well- managed BHCs that have elected to be treated as a FHC to engage in expanded “financial in nature” activities without prior approval of the Federal Reserve.
−Removed: Such financial in nature activities include bona fide merchant banking activities, so long as (i) the FHC holds its merchant banking investments only for a period of time sufficient to enable the sale or disposition thereof on a reasonable basis (generally no more than 10 years) and (ii) the
−Removed: FHC does not routinely manage or operate the companies in which it invests except as necessary or required to obtain a reasonable return on its investment.
+Added: Such financial in nature activities include bona fide merchant banking activities, so long as (i) the FHC holds its merchant banking investments only for a period of time sufficient to enable the sale or disposition thereof on a reasonable basis (generally no more than 10 years) and (ii) the FHC does not routinely manage or operate the companies in which it invests except as necessary or required to obtain a reasonable return on its investment.
The BHCA does not, however, require Morgan Stanley to financially support us.
28 unchanged sentences
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: The current U.S.
−Removed: presidential administration has announced a number of tax law proposals that include, among other proposals, increases in the corporate and individual tax rates, and a minimum tax on book income and profits of certain multinational corporations.
−Removed: 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: To the extent that certain tax law changes announced but not yet enacted, including, among others, a minimum tax on book income and profits of certain multinational corporations, are subsequently enacted, such legislative changes, any other 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: Ongoing implementation of, or changes in, including changes in interpretation or enforcement of, laws and regulations could impose greater costs on us and on financial services companies and impact the value of assets we hold and our business, financial condition and results of operations.
+Added: In addition, uncertainty regarding legislation and regulations affecting the financial services industry or taxation could also adversely impact our business or the business of our portfolio companies.
+Added: If we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of our business and may be subject to civil fines and criminal penalties.
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.
4 unchanged sentences
In addition, due to the use of third-party vendors, agents, exchanges, clearing houses and other financial institutions and service providers, we, the Adviser and the Administrator could be adversely impacted if any of us are subject to a successful cyber-attack or other breach of our information.
−Removed: Although we, the Adviser and the Administrator have developed protocols, processes, internal controls and other protective measures to help mitigate cybersecurity risks and cyber intrusions, these measures, as well as our increased awareness of the nature and extent of the risk of a cyber incident, may be ineffective and do not guarantee that a cyber incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident.
+Added: Furthermore, in recent years cybersecurity risks for financial institutions have significantly increased in part because of the proliferation of new technologies, the use of the internet, mobile telecommunications and cloud technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external extremist parties, including foreign state actors in some circumstances as a means to promote political ends.
+Added: Global events and geopolitical instability may lead to increased nation state targeting of financial institutions in the U.S.
+Added: Any of these parties may also attempt to
+Added: fraudulently induce employees, customers, clients, vendors, or other third parties or users of the Company, the Adviser, the Administrator and their affiliates’ systems to disclose sensitive information in order to gain access to such parties’ data or that of their employees or clients.
+Added: Cybersecurity risks may also derive from human error, fraud or malice on the part of the Adviser or the Administrator and their affiliates’ employees or third parties, or may result from accidental technological failure.
+Added: Like other financial services firms, Morgan Stanley continues to be the subject of unauthorized access attacks, mishandling or misuse of information, computer viruses or malware, cyber attacks designed to obtain confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, denial of service attacks, data breaches, social engineering attacks and other events, and there can be no assurance that such unauthorized access, mishandling or misuse of information, or cyber incidents will not occur in the future, and they could occur more frequently and on a more significant scale.
+Added: Given Morgan Stanley’s global footprint and the high volume of transactions it processes, the large number of clients, partners, vendors and counterparties with which it does business, and the increasing sophistication of cyber attacks, a cyber attack, information or security breaches could occur and persist for an extended period of time without detection.
+Added: Although we, the Adviser, the Administrator and Morgan Stanley have developed protocols, processes, internal controls and other protective measures to help mitigate cybersecurity risks and cyber intrusions, these measures, as well as our increased awareness of the nature and extent of the risk of a cyber incident, may be ineffective and do not guarantee that a cyber incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident.
If any of the foregoing events occur, the confidential and other information of the Company, the Adviser, and the Administrator could be compromised.
Such events could also cause interruptions or malfunctions in the operations of the Company, the Adviser or the Administrator, and in particular the Adviser’s investment activities on our behalf and the provision of administrative services to us by the Administrator.
+Added: In addition, the Company, the Adviser, the Administrator or our portfolio companies could be required to make a significant investment to remedy the effects of any cybersecurity incident, harm to their reputations, legal claims that they and their respective affiliates may be subjected to, regulatory action or enforcement arising out of applicable privacy and other laws, adverse publicity, and other events that may affect their business and financial performance.
The increased use of mobile and cloud technologies can heighten these and other operational risks.
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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 Coronavirus.
+Added: For example, many countries have experienced outbreaks of infectious illnesses in recent decades, including polio, swine flu, avian influenza, SARS, coronaviruses and the monkeypox virus.
In February 2022, Russia launched a large-scale invasion of Ukraine.
1 unchanged sentence
dollar, are impossible to predict, but could be significant.
−Removed: Any such disruptions caused by Russian military or other actions (including cyberattacks and espionage) or resulting from actual or threatened responses to such actions could cause disruptions to any of our portfolio companies located in Europe or that have substantial business relationships with European or Russian companies.
−Removed: The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial.
+Added: Any such disruptions caused by Russian military or other actions (including cyberattacks, espionage or the use or threatened use of nuclear weapons) or resulting from actual or threatened responses to such actions could cause disruptions to any of our portfolio companies located in Europe or that have substantial business relationships with European or Russian companies.
+Added: It is not possible to predict the duration or extent of longer-term consequences of this conflict, which could include further sanctions, retaliatory and escalating measures taken by Russia, embargoes, regional instability, geopolitical shifts and adverse effects on or involving macroeconomic conditions, supply chains, inflation, security conditions, currency exchange rates and financial markets around the globe.
Any such market disruptions could affect our portfolio companies’ operations and, as a result, could have a material adverse effect on our business, financial condition and results of operations.
−Removed: 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 continue to be impacted by the outbreak and government and other measures seeking to contain its spread.
−Removed: In addition to these developments
−Removed: potentially having adverse consequences for certain portfolio companies and other issuers in or through which we may invest and the value of our investments therein, the operations of the Adviser (including those relating to us) have been, and could continue to be, adversely impacted, including through quarantine measures, business closures 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.
−Removed: Any of the foregoing events could materially and adversely affect our ability to source, manage and divest our investments and our ability to fulfill our investment objectives.
+Added: Market volatility has had 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 continue to be impacted by such events.
+Added: In addition to these and any future developments potentially having adverse consequences for certain portfolio companies and other issuers in or through which we may invest and the value of our investments therein, the operations of the Adviser (including those relating to us) have been, and could continue to be, adversely impacted.
+Added: Any of the foregoing events could materially and adversely affect our ability to source, manage
+Added: and divest our investments and our ability to fulfill our investment objectives.
Similar consequences could arise with respect to other comparable infectious diseases.
−Removed: As the 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: While the Adviser believes that we will be able to pursue our investment strategy during this pandemic, there is risk that our investment objectives may not be achieved.
−Removed: 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: 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.
These potential impacts, while uncertain, could adversely affect our operating results and the operating results of the portfolio companies in which we invest.
−Removed: 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.
+Added: There is a risk that any future disease outbreaks or health pandemics (including a recurrence of the Coronavirus) would impact our ability to achieve our investment objectives.
+Added: Further, if a future pandemic occurs 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.
−Removed: Uncertainties resulting from the United Kingdom’s decision to leave the European Union could adversely affect our business.
+Added: The United Kingdom’s exit from the European Union may create significant risks and uncertainty for global markets and our investments.
It is difficult to predict the future of the United Kingdom’s relationship with the European Union, 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.
13 unchanged sentences
We cannot predict for how long uncertain economic conditions will continue to impact markets adversely, or to what degree economic conditions will deteriorate further.
−Removed: Volatility in the global credit markets (and in particular, the recent uncertainty of the credit markets in Europe) may make it more difficult for issuers and borrowers to obtain favorable financing or refinancing arrangements that may be needed to execute our investment strategy.
+Added: Volatility in the global credit markets may make it more difficult for issuers and borrowers to obtain favorable financing or refinancing arrangements that may be needed to execute our investment strategy.
A Euro collapse could have an adverse effect on us by affecting the performance of our investments and our ability to fulfill our investment objectives.
5 unchanged sentences
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.
+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
+Added: encounter competition in our markets and general economic conditions.
In light of these factors, results for any period should not be relied upon as being indicative of our performance in future periods.
−Removed: Uncertainty resulting from the U.S.
−Removed: political climate could negatively impact our business, financial condition and results of operations.
−Removed: 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.
−Removed: 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.
We are an “emerging growth company,” and we do not know if such status will make our shares less attractive to investors.
4 unchanged sentences
• The last day of a fiscal year in which we (1) have an aggregate worldwide market value of our 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 a reporting company under the Exchange Act for at least one year (and filed at least one annual report under the Exchange Act).
−Removed: 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.
−Removed: For example, while we are an emerging growth company and/or a non-accelerated filer within the meaning of the Exchange Act, we may take advantage of exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.
+Added: As an “emerging growth company ” , we may take advantage of certain 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.
+Added: For example, while we are an emerging growth company and/or a non-accelerated filer within the meaning of the Exchange Act, we are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act, requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.
This may increase the risk that material weaknesses or other deficiencies in our internal control over financial reporting go undetected.
17 unchanged sentences
There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements.
−Removed: Confidence in the reliability of our financial statements could also suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting.
+Added: Confidence in the reliability of our
+Added: financial statements could also suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting.
This could materially adversely affect us.
4 unchanged sentences
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.
−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.
−Removed: Risks relating to compliance with the AIFMD
−Removed: The European Union Directive on Alternative Investment Fund Managers (the “AIFMD” or the “Directive”) regulates, and imposes regulatory obligations in respect of, the marketing in the European Economic Area (the “EEA”) by alternative investment fund managers (each an “AIFM”) (whether established in the EEA or elsewhere) of alternative investment funds (each an “AIF”) (whether established in the EEA or elsewhere).
−Removed: For these purposes, the Adviser is a non-EEA AIFM and we are a non-EEA AIF.
−Removed: Each European jurisdiction that has implemented the Directive has implemented a new and, in most cases, more restrictive private placement regime in connection with the implementation of the Directive.
−Removed: The AIFMD could have an adverse effect on the Adviser and us by, among other things, increasing the regulatory burden and costs of doing business in EEA member states.
−Removed: Except in limited circumstances, a non-EEA AIFM marketing its AIF to prospective EEA investors will be required to satisfy extensive disclosure obligations, including periodic disclosures to EEA regulators.
−Removed: The AIFMD could also limit the Adviser’s operating flexibility and our investment opportunities.
−Removed: The Directive imposes extensive disclosure obligations on the Adviser in respect of companies located in EEA member states, if any, in which we invest and potentially disadvantages us as an investor in private companies located in EEA member states when compared to non-AIF/AIFM competitors which may not be subject to the requirements of the AIFMD, thereby potentially restricting our ability to make investments in such companies.
−Removed: Further, the AIFMD may restrict certain of our activities in relation to EEA portfolio companies, including, in certain circumstances, our ability to recapitalize, refinance or potentially restructure an EEA portfolio company for the two year period following acquisition.
−Removed: The AIFMD may expose the Adviser or us to conflicting regulatory requirements in the United States and Europe and may require the restructuring of the Company and the Adviser and/or the relations among them.
−Removed: There is little guidance, and limited market practice, that has developed in respect of the AIFMD.
−Removed: Many of the provisions of the AIFMD require the adoption of delegated acts and regulatory technical standards, as well as the establishment of guidelines.
−Removed: Some, but not all, EEA member states have published the relevant acts, standards and guidelines.
−Removed: Where these acts, standards and guidelines have been implemented, their practical application is still uncertain.
−Removed: As such, it is difficult to predict the precise impact of the AIFMD on us and the Adviser.
−Removed: Any regulatory changes, arising from the transposition of the AIFMD into national law that impair the ability of the Adviser to manage us or our investments or limit the Adviser’s ability to market the Common Stock in the future, may materially adversely affect our ability to carry out our investment approach and achieve our investment objectives.
Unresolved Staff Comments
1 unchanged sentence
We believe that our office facilities are suitable and adequate for our business as it is contemplated to be conducted.
+Added: We do not own any real estate.
+Added: We believe that our office facilities are suitable and adequate for our business as it is contemplated to be conducted.
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.