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Item 7. Management’s Discussion and Analysis

2023-03-09 compared with 2022-03-18 · 186 added, 163 removed, 289 unchanged (55% of the section changed)

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The discussion and analysis contained in this section refers to our financial condition, results of operations and cash flows.

The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto in Part II, Item 8 of this Form 10-K, “Financial Statements and Supplementary Data.” This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in Part I, Item 1A of this Form 10-K, “Risk Factors.” Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Form 10-K.

We are an externally managed specialty finance company focused on lending to middle-market companies.

The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto in Part II, Item 8 of this Form 10-K, “Consolidated Financial Statements and Supplementary Data.” This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in Part I, Item 1A of this Form 10-K, “Risk Factors.” Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Form 10-K.

We are a non-diversified, externally managed specialty finance company focused on lending to middle-market companies.

We have elected to be regulated as a BDC under the 1940 Act.

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Our investment objective is to achieve attractive risk-adjusted returns via current income and, to a lesser extent, capital appreciation by investing primarily in directly originated senior secured term loans issued by U.S.

middle-market companies backed by financial sponsors.

For the purposes of this report, “middle-market companies” refers to companies that, in general, generate annual EBITDA in the range of approximately $15 million to $100 million, which we believe is a useful proxy for cash flow although not all of our portfolio companies will meet this criteria.

middle-market companies backed by private equity sponsors.

For the purposes of this report, “middle-market companies” refers to companies that, in general, generate annual EBITDA in the range of approximately $15 million to $200 million, although not all of our portfolio companies will meet this criteria.

We invest primarily in directly originated senior secured term loans including first lien senior secured term loans (including unitranche loans) and second lien senior secured term loans, with the balance of our investments expected to be in higher-yielding assets such as mezzanine debt, unsecured debt, equity investments and other opportunistic asset purchases.

Typical middle-market senior loans may be issued by middle-market companies in the context of LBOs, acquisitions, debt refinancings, recapitalizations, and other similar transactions.

We generally expect our debt investments to have a stated term of five to eight years and typically bear interest at a floating rate usually determined on the basis of a benchmark such as the LIBOR or SOFR.

We generally expect our debt investments to have a stated term of five to eight years and typically bear interest at a floating rate usually determined on the basis of a benchmark (historically, LIBOR and currently, SOFR).

We generate revenues primarily in the form of interest income from investments we hold.

In addition, we generate income from dividends on any direct equity investments, capital gains on the sales of loans and debt and equity investments and various other loan origination and other fees, including commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.

On September 18, 2020, the SEC granted us the Order that allows us to enter into certain negotiated co-investment transactions alongside certain Affiliated Investment Accounts (as defined in the Order) 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.

In addition, we generate income from dividends or distributions of income on any direct equity investments, capital gains on the sale of loans and equity investments and various other loan origination and other fees, including commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.

Pursuant to the Order, we are able to enter into certain negotiated co-investment transactions alongside certain Regulated Funds and Affiliated Funds (each as defined in the Order) 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.

Recent Market Developments

The current inflationary environment and uncertainty as to the probability of, and length and depth of a global recession could affect our portfolio companies.

Government spending, government policies, including recent increases in certain interest rates by the Federal Reserve and other global central banks, volatile energy prices and disruptions in supply chains in the United States and elsewhere, in conjunction with other factors, including those described elsewhere in this report and in other filings we have made with the SEC could affect our portfolio companies, our financial condition and our results of operations.

We will continue to monitor the evolving market environment.

In these circumstances, developments outside our control could require us to adjust our plan of operations and could impact our financial condition, results of operations or cash flows in the future.

Despite these factors, we believe we and our portfolio are well positioned to manage the current environment.

KEY COMPONENTS OF OUR RESULTS OF OPERATIONS

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We generate revenue primarily in the form of interest income on debt investments we hold.

In addition, we generate income from dividends on direct equity investments, capital gains on the sales of loans and debt and equity securities and various loan origination and other fees.

Our debt investments generally have a stated term of five to eight years and generally bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR or SOFR.

Interest on these debt investments is generally

paid quarterly.

In addition, we generate income from dividends or distributions of income on direct equity investments, capital gains on the sales of loans and equity securities and various

loan origination and other fees.

Our debt investments generally have a stated term of five to eight years and typically bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR or SOFR.

Interest on these debt investments is generally paid quarterly.

In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances.

In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date.

In addition, we may receive repayments of some of our debt investments prior to their scheduled maturity date.

The frequency or volume of these repayments fluctuates significantly from period to period.

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• costs associated with our initial private offering;

• costs of any other offerings of our Common Stock and other securities, if any;

• costs of any other offerings of our Common Stock and other securities;

• calculating individual asset values and our net asset value (including the cost and expenses of any third-party valuation services);

• out of pocket expenses, including travel expenses, incurred by the Adviser, or members of its investment team or payable to third parties, performing due diligence on prospective portfolio companies and monitoring actual portfolio companies and, if necessary, enforcing our rights;

• base management fee and any incentive fee payable under the Investment Advisory Agreement;

• out of pocket expenses, including travel expenses, incurred by the Investment Adviser, or members of its investment team or payable to third parties, performing due diligence on prospective portfolio companies and monitoring actual portfolio companies and, if necessary, enforcing our rights;

• base management fee and any incentive fees payable under the Investment Advisory Agreement;

• certain costs and expenses relating to distributions paid by us;

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• debt service and other costs of borrowings or other financing arrangements;

• the allocated costs incurred by the Adviser in providing managerial assistance to those portfolio companies that request it;

• the allocated costs incurred by the Investment Adviser in providing managerial assistance to those portfolio companies that request it;

• amounts payable to third parties relating to, or associated with, making or holding investments;

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• independent director fees and expenses;

• costs of preparing financial statements and maintaining books and records, costs of preparing tax returns, costs of Sarbanes-Oxley Act compliance and attestation and costs of filing reports or other documents with the SEC (or other regulatory bodies), and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation or review of the foregoing;

• costs of preparing consolidated financial statements and maintaining books and records, costs of preparing tax returns, costs of Sarbanes-Oxley Act compliance and attestation and costs of filing reports or other documents with the SEC (or other regulatory bodies), and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation or review of the foregoing;

• the costs of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholders’ meetings, and costs and expenses of preparation for the foregoing and related matters;

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• cost of winding up;

• all other expenses incurred by either the Administrator or us in connection with administering our business, including payments under the Administration Agreement based upon our allocable portion of the compensation paid to our Chief Financial Officer and Chief Compliance Officer and reimbursing third-party expenses incurred by the Administrator in carrying out its administrative services including, but not limited to, the fees and expenses associated with performing compliance functions.

carrying out its administrative services including, but not limited to, the fees and expenses associated with performing compliance functions.

We reimburse the Administrator or its affiliates for amounts paid or costs borne that properly constitute Company expenses as set forth in the Administration Agreement or otherwise.

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As of December 31, 2022, we had investments in 150 portfolio companies across 30 industries.

Based on fair value as of December 31, 2021, 99.9% of our debt portfolio was invested in debt bearing a floating interest rate, which primarily are subject to interest rate floors.

Approximately 99.3% of our debt portfolio at fair value had a LIBOR floor.

The weighted average LIBOR floor across our floating-rate portfolio was approximately 0.9% as of December 31, 2021.

These floors allow us to mitigate (to a degree) any impact of spread widening on the valuation of our investments.

As of December 31, 2021, our weighted average total yield of debt securities at amortized cost was 7.2%.

Based on fair value as of December 31, 2022, approximately 100% of our debt portfolio was invested in debt bearing a floating interest rate, which floating rate debt investments primarily are subject to interest rate floors.

Approximately 99.4% of our debt portfolio at fair value had an interest rate floor denoted in LIBOR or SOFR.

Our weighted average total yield of investments in debt securities at amortized cost was 10.9%.

Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2022.

Approximately 98.5% of our debt investments were in loans and other debt issued by middle market companies backed by private equity sponsors, approximately 79.2% of which were loans and other debt in support of LBOs and acquisitions.

In addition, our debt portfolio displayed the following characteristics, as of the closing date of each of our investments 2,3 unless otherwise noted:

Borrower Characteristics

• Weighted average last 12-month EBITDA of approximately $124 million;

• Weighted average of approximately 6.0x net leverage through tranche 4 ;

• Weighted average of approximately 44% loan to value 5 ;

Portfolio Characteristics as of December 31, 2022

• Weighted average yield on debt investments, at amortized cost, of 10.9% 6 ;

• Approximately 78% of debt investments with one or more financial covenants;

• Approximately 6.5% of our debt portfolio is in loans that the Investment Adviser believes may be subject to business cycle volatility;

• No realized losses as a result of loan defaults and/or credit deterioration since January 31, 2020 (commencement of investment operations) through December 31, 2022;

• One investment of $1.5 million, or approximately 0.1% of total investments at amortized cost on non-accrual;

• The average position size of our investments was approximately $19.2 million, or 0.7% of total fair value and our top ten portfolio companies represented approximately 22.0% of total fair value.

As of December 31, 2021, we had investments in 98 portfolio companies across 27 industries.

Based on fair value as of December 31, 2020, 99.8% of our debt portfolio was invested in debt bearing a floating interest rate, which primarily are subject to interest rate floors.

Approximately 95.2% of our debt portfolio at fair value had a LIBOR floor.

The weighted average LIBOR floor across our floating-rate portfolio was approximately 0.9% as of December 31, 2020.

Based on fair value as of December 31, 2021, approximately 100% of our debt portfolio was invested in debt bearing a floating interest rate, which primarily are subject to interest rate floors.

As of December 31, 2021 , approximately 99.3% of our debt portfolio at fair value had an interest rate floor denoted in LIBOR.

The weighted average interest rate floor across our floating-rate portfolio was approximately 0.9% as of December 31, 2021.

These floors allow us to mitigate (to a degree) any impact of spread widening on the valuation of our investments.

As of December 31, 2020, our weighted average total yield of debt securities at amortized cost was 7.5%.

Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2020.

Our portfolio as of December 31, 2021 and December 31, 2020 is presented below:

As of December 31, 2021, our weighted average total yield of investments in debt securities at amortized cost was 7.2%.

Weighted average

2 Calculated as a percentage of gross debt commitments (funds and unfunded).

Weighted average EBITDA, net leverage and loan to value exclude recurring revenue investments, which are investments in portfolio companies in which the Company lends based on a multiple of recurring revenue generated by the portfolio company and not based on a multiple of EBITDA.

3 Amounts were derived from investment due diligence information provided by the portfolio company.

Such amounts have not been independently estimated by us, and accordingly, we take no responsibility for such numbers and make no representation or warranty in respect of this information.

4 Net leverage is the ratio of total debt minus cash divided by EBITDA and taking into account leverage through the tranche that we are a lender, excluding recurring revenue investments.

5 Calculated using total outstanding debt through the tranche that the Company is a lender divided by enterprise value from the private equity sponsor or market comparables.

6 Weighted average yield includes the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2022.

yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2021.

Our portfolio is presented below:

December 31, 2022 December 31, 2021

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Total $ 2,939,646 $ 2,873,588 100.0 % $ 2,373,435 $ 2,387,374 100.0 %

Our investment activities for the year ended December 31, 2021 and December 31, 2020 are presented below (information presented herein is at amortized cost unless otherwise indicated):

Our investment activity was presented below (information presented herein is at amortized cost unless otherwise indicated):

As of and For the Year Ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

New Investments Committed/Purchased

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Other securities (2)

8,315 38,184 2,959

Total $ 962,391 $ 2,143,390 $ 736,838

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Total $ 207,907 $ 345,539 $ 90,106

Weighted average yield on debt and income producing investments, at cost (3)

Weighted average yield on debt and income producing investments, at fair value (3)

Weighted average yield on debt investments, at cost (3)

10.9 % 7.2 % 7.5 %

Weighted average yield on debt investments, at fair value (3)

11.2 % 7.1 % 7.4 %

Number of portfolio companies 150 98 36

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(2) Represents dollar amount of other securities funded.

(3) Computed as (a) the annual stated spread, plus Prime/LIBOR or Floor, as applicable, plus the annual accretion of discounts, as applicable, on accruing debt securities, divided by (b) total debt investments (at fair value or cost, as applicable) included in such securities.

(3) Computed as (a) the annual stated spread, plus reference rate, as applicable, plus the annual accretion of discounts, as applicable, on debt securities, divided by (b) total debt investments (at fair value or cost, as applicable) included in such securities.

Actual yields earned over the life of each investment could differ materially from the yields presented herein.

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All new originated or acquired investments are initially included in Category 2.

Category 3 — In the opinion of our Investment Adviser, investments in Category 3 indicate that the risk to our ability to recoup the initial cost basis at the time of origination or acquisition has increased materially since the origination or acquisition of the investment,

such as declining financial performance and non-compliance with debt covenants;

however, principal and interest payments are not more than 120 days past due.

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For Category 4 investments, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis at the time of origination or acquisition upon exit.

The distribution of our portfolio on the Adviser’s Internal Risk Rating System as of December 31, 2021 and December 31, 2020 was as follows:

The distribution of our portfolio on the Investment Adviser’s Internal Risk Rating System was as follows:

December 31, 2022 December 31, 2021

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CONSOLIDATED RESULTS OF OPERATIONS

The comparison of the fiscal years ended December 31, 2020 and 2019 can be found in our Form 10-K for the fiscal year ended December 31, 2020 under Item 7.

Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

The following table represents our operating results:

For the Year Ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

Total investment income $ 230,593 $ 119,816 $ 21,903

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For the Year Ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

Investment income:

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Total investment income $ 230,593 $ 119,816 $ 21,903

The increase in total investment income from $21,903 for the year ended December 31, 2020 to $119,816 for the year ended December 31, 2021 was primarily driven by our deployment of capital and invested balance of investments, partially offset against

weighted average asset yield decrease.

The size of our investment portfolio at fair value increased from $637.0 million as of December 31, 2020 to $2,387.4 million as of December 31, 2021.

As of such dates, all our debt investments were income-producing.

Total investment income increased from $119,816 for the year ended December 31, 2021 to $230,593 for the year ended December 31, 2022.

The increase was primarily driven by our deployment of capital, increased invested balance of investments, and rising LIBOR and SOFR rates of our floating-rate debt investments particularly during the second half of the year ended December 31, 2022.

The size of our investment portfolio at fair value increased from $2,387,374 as of December 31, 2021 to $2,873,588 as of December 31, 2022.

Weighted average asset yield of debt investments at cost increased from 7.2% at December 31, 2021 to 10.9% at December 31, 2022.

As of such dates, all of our senior secured debt investments were income-producing.

The amortized cost of an unsecured debt investment on non-accrual status as of December 31, 2022 was $1,500.

Total investment income increased from $21,903 for the year ended December 31, 2020 to $119,816 for the year ended December 31, 2021.

The increase was primarily driven by our deployment of capital and invested balance of investments.

The size of our investment portfolio at fair value increased from $636,981 as of December 31, 2020 to $2,387,374 as of December 31, 2021.

Weighted average asset yield of debt investments at cost decreased from 7.5% at December 31, 2020 to 7.2% at December 31, 2021 largely due to spread tightening.

As of such dates, all of our senior secured debt investments were income-producing.

No debt investments were on non-accrual status as of December 31, 2021 and December 31, 2020.

Interest income on our debt investments is dependent on the composition and credit quality of the portfolio.

Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement.

As of December 31, 2021 and December 31, 2020, and for the years then ended, all of our first and second lien debt investments were performing and current on their interest payments.

As of December 31, 2022 and December 31, 2021, and for the periods then ended, all of our first and second lien secured debt investments were performing and current on their interest payments.

The Company is responsible for investment expenses, professional fees, and other general and administrative expenses related to the Company’s operations.

Expenses were as follows for the year ended December 31, 2021 and December 31, 2020, respectively:

Expenses were as follows:

For The Year Ended

December 31, 2021 December 31, 2020

Interest and other financing expenses $ 21,015 $ 3,725

December 31, 2022 December 31, 2021 December 31, 2020

Interest expense and other financing expenses $ 67,182 $ 21,015 $ 3,725

Management fees 26,715 13,860 2,238

Income based incentive fee 15,852 2,517

Capital gains incentive fee 1,809 1,341

Income based incentive fees 26,635 15,852 2,517

Capital gains incentive fees (2,441) 1,809 1,341

Professional fees 3,206 2,440 1,654

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Excise tax expense $ 334 $ 80 $ —

For the year ended December 31, 2021, net expenses were primarily comprised of interest expense of $21,015, gross base management fees of $13,860, income based incentive fees of $15,852, capital gains incentive fees of $1,809, administrative service expenses of $212, professional fees of $2,440, fees to independent directors of $336, organization and offering costs of $42 and other expenses of $1,538;

offset by management fee waiver of $10,395, and increased by expense support recoupment of previously waived organization and offering costs by the Investment Adviser of $98.

For the year ended December 31, 2020, net expenses were primarily comprised of interest expense of $3,725, gross base management fees of $2,238, income based incentive fees of $2,517, capital gains incentive fees of $1,341, administrative service expenses of $183, professional fees of $1,654, fees to independent directors of $349, organization and offering costs of $676 and other expenses of $493;

offset by management fee waiver and expense support by the Investment Adviser of $1,678 and $230, respectively.

Interest and other financing expenses increased from $3,725 for the year ended December 31, 2020 to $21,015 for the year ended December 31, 2021.

The increase was primarily driven by approximately $796.3 million of average borrowings at an average effective interest rate of 2.12% during the year ended December 31, 2021, as compared to approximately $114.4 million of average borrowings at an average effective interest rate of 1.93% during the year ended December 31, 2020.

Interest Expense

Interest expense and other financing expenses, including unused commitment fees, amortization of debt issuance costs and deferred financing costs, were $67,182, $21,015 and $3,725 for the year ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively.

The increases were primarily due to higher average borrowings outstanding over time, increased reference rates and higher cost of unsecured debt issued.

For the year ended December 31, 2022, December 31, 2021 and December 31, 2020, average borrowings outstanding were $1,432,492, $796,272 and $114,431, respectively.

The combined weighted average interest rate of the aggregate borrowings outstanding for the year ended December 31, 2022, December 31, 2021 and December 31, 2020 were 4.05%, 2.12% and 1.93%, respectively.

For more information on our borrowings, including the terms thereof, see Note 6.

Debt in the Notes to Consolidated Financial Statements.

Base Management Fee

The base management fees, net of waiver, were $6,679, $3,465 and $560 for the year ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively, the increase was primarily due to an increase in average gross assets.

For more information on base management fee, including terms thereof, see Note 3.

Related Party Transactions in the Notes to Consolidated Financial Statements.

Incentive Fee

The incentive fee consists of two components:

(1) income based incentive fee and (2) capital gains incentive fee.

The income based incentive fee were $26,635, $15,852 and $2,517 for the year ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively, the increase was primarily due to an increase in pre-incentive fee net investment income.

The capital gains incentive fee accrued were $1,809 and $1,341 for the year ended December 31, 2021 and December 31, 2020, respectively, as a result of realized gains on investments sold and net unrealized appreciation of investments held.

For the year ended December 31, 2022, $2,441 of previously accrued capital gains incentive fee were reversed due to net unrealized depreciation of investments.

For more information on incentive fee, including terms thereof, see Note 3.

Related Party Transactions in the Notes to Consolidated Financial Statements.

Professional Fees, Administrative Service Fee and Other Expenses

Professional fees include legal, audit, tax, and other professional fees incurred related to the management of our Company.

Administrative service fees represent fees paid to the Administrator for our allocable portion of the cost of certain of our executive officers that perform duties for us.

Administrative service fee represents fees paid to the Administrator for our allocable portion of the cost of certain of our executive officers that perform duties for us.

Other general and administrative expenses include insurance, filing, research, subscriptions and other costs.

Organization costs and offering costs include expenses incurred in our initial formation and our offering of stock.

For the year ended December 31, 2021, expense support includes recoupment of previously waived excess organization and offering costs of $98.

For the year ended December 31, 2020, expense support includes excess organization and offering costs of $230 that the Adviser committed to pay.

See “ Item 8.

Consolidated Financial Statements—Notes to Consolidated Financial Statements—Note 3.

For the year ended December 31, 2022, we incurred administrative service fee of $72, professional fees of $3,206, fees to Independent Directors of $362, other expenses of $510, and expense support recoupment of previously waived organization and offering costs by the Investment Adviser of $44, respectively.

For the year ended December 31, 2021, we incurred administrative service fee of $212, professional fees of $2,440, fees to Independent Directors of $336, other expenses of $1,538, and expense support recoupment of previously waived organization and offering costs by the Investment Adviser of $98, respectively.

For the year ended December 31, 2020, we incurred administrative service fee of $183, professional fees of $1,654, fees to Independent Directors of $349, and other expenses of $493;

offset by expense support by the Investment Adviser of $230 of waived organization and offering costs, respectively.

Income Taxes, Including Excise Taxes

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federal income taxes.

For the year ended December 31, 2021, we have accrued $80 of U.S.

federal excise tax.

No federal excise tax was accrued for the year ended December 31, 2020.

For the year ended December 31, 2022 and December 31, 2021, we have accrued $334 and $80 of U.S.

federal excise tax, respectively.

For the year ended December 31, 2020, we did not incur any excise tax.

Net Realized Gain (Loss) and Unrealized Gain (Loss) on Investments

For The Year Ended

December 31, 2021 December 31, 2020

Realized and unrealized gains (losses) on investment transactions:

December 31, 2022 December 31, 2021 December 31, 2020

Net realized and unrealized gains (losses) on investment transactions:

Net realized gain (loss):

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Net realized and unrealized gains (losses) $ (79,468) $ 10,326 $ 7,662

For the year ended December 31, 2021 and December 31, 2020, net realized gain on our investments was $1.9 million and $2.2 million, respectively, primarily driven by the sale of debt and equity investments in our investment portfolio.

We determine the fair value of our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses.

For the year ended December 31, 2021 and December 31, 2020, net change in unrealized gain on our investments of $8.4 million and $5.5 million were primarily driven by the increases of valuations of our debt and equity investments as a result of the tightening credit spread environment and generally strong portfolio company performance.

For the year ended December 31, 2022, December 31, 2021 and December 31, 2020, net realized gain on our investments was $537, $1,895 and $2,154, respectively, driven by the sale of debt and equity investments in our portfolio.

We determine the fair value of our portfolio investments quarterly and any changes in fair value are recorded as unrealized appreciation or depreciation.

For the year ended December 31, 2022, net change in unrealized depreciation on our investments of $80,005 was primarily driven by the decreases of valuations of our debt and equity investments as a result of the volatile credit environment and spread widening in the primary and secondary markets.

For the year ended December 31, 2021 and December 31, 2020, net change in unrealized appreciation on our investments of $8,431 and $5,508, respectively, were primarily driven by the net increases of valuations of our debt and equity investments in a largely tightening credit spread environment.

Fair Value Measurement in the Notes to Consolidated Financial Statements.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We generate cash from the net proceeds of offerings of our Common Stock, net borrowings from our credit facilities, and through cash flows from operations, including investment sales and repayments as well as income earned on investments and cash equivalents.

Details of our credit facilities are described in “ —Debt ” below.

We may from time to time enter into new credit facilities, increase the size of existing credit facilities or issue debt securities.

We generate cash from the net proceeds of offerings of our Common Stock, net borrowings from our Credit Facilities, and net proceeds of our unsecured debt issuances and through cash flows from operations, including investment sales and repayments as well as income earned on investments.

Details of our Credit Facilities and unsecured debt issuance are described in “ —Debt ” below.

We may from time to time enter into new credit facilities, increase the size of existing credit facilities or issue additional debt securities.

Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.

As of December 31, 2021, we had approximately $74.2 million of cash, which taken together with our approximately $89.7 million, $136.5 million and $499.0 million of availability under the CIBC Subscription Facility, the BNP Funding Facility and the Truist Credit Facility (subject to borrowing base availability), respectively, and our approximately $425.7 million of uncalled capital commitments to purchase shares of Common Stock, or capital commitments, we expect to be sufficient for our investing activities and to conduct our operations in the near term.

As of December 31, 2022, we had approximately $81.2 million of cash, which taken together with our approximately $200.0 million and $538.5 million of availability under the BNP Funding Facility and the Truist Credit Facility (subject to borrowing base availability), respectively, and our approximately $220.3 million of uncalled capital commitments to purchase shares of Common Stock, or capital commitments, we expect will be sufficient for our investing activities and sufficient to conduct our operations in the near term.

As of December 31, 2022, we believed we had adequate financial resources to satisfy our unfunded portfolio company commitments.

During the year ended December 31, 2022, we received new capital commitments of approximately $45.6 million.

As of December 31, 2022, we had received aggregate capital commitments of approximately $1,629.4 million.

During the year ended December 31, 2021, we issued eight capital calls to our stockholders.

As a result, the total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the year ended December 31, 2021 were as follows (dollar amounts in millions):

In accordance with the terms of the Subscription Agreements entered into by investors and us, our Board of Directors approved a one-year extension of the Investment Period (as defined in the Subscription Agreements) such that the Investment Period will expire on December 23, 2023.

For the year ended December 31, 2022, we made three capital calls and issued shares to our stockholders.

The total shares issued and capital called pursuant to the Subscription Agreements for the year ended December 31, 2022 were as follows (dollar amounts in millions):

Share Issuance Date Shares Issued Amount

January 20, 2021 1,726,689 $ 35.00

March 12, 2021 2,171,816 45.00

April 12, 2021 5,326,877 110.00

May 16, 2022 3,548,132 $ 74.9

July 28, 2022 3,903,231 79.8

October 15, 2021 7,806,514 164.02

November 12, 2021 8,182,294 173.96

December 23, 2022 4,775,721 94.6

Total 12,227,084 $ 249.3

For the year ended December 31, 2021, we received proceeds from eight capital calls and issued shares to our stockholders.

The total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the year ended December 31, 2021 were as follows (dollar amounts in millions):

Share Issuance Date Shares Issued Amount

February 5, 2020 2,874,810 $ 57.50

January 20, 2021 1,726,689 $ 35.0

March 12, 2021 2,171,816 45.0

June 26, 2020 769,194 14.95

August 11, 2020 2,002,070 39.98

September 28, 2020 3,504,634 69.99

April 12, 2021 5,326,877 110.0

May 26, 2021 4,036,582 85.0

July 16, 2021 7,161,130 149.9

October 15, 2021 7,806,514 164.0

November 12, 2021 8,182,294 174.0

December 29, 2021 4,748,891 99.6

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Date Declared Record Date Payment Date Per Share Amount Dividend Yield (1)

March 18, 2021 March 18, 2021 April 22, 2021 $ 0.45 10.1 % $ 8,570

June 23, 2021 June 23, 2021 July 22, 2021 0.49 10.7 % 13,974

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Total Distributions $ 2.07 $ 72,315

(1) Includes a special distribution of $0.11 and $0.18 per share for the year ended December 31, 2021 and December 31, 2020, respectively.

(1) Dividend yield (annualized) is calculated by dividing the declared dividend by the weighted average of the net asset value at the beginning of the quarter, the capital called and dividend reinvested during the quarter and annualizing over 4 quarterly periods.

(2) Includes a special distribution of $0.11 per share for the year ended December 31, 2021.

We adopted an “opt in” DRIP.

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Shares issued under the DRIP will not reduce an investor’s outstanding capital commitment.

The following tables summarize DRIP shares issued and amounts for the year ended December 31, 2021 and December 31, 2020:

The following tables summarize DRIP shares issued and amounts for the year ended December 31, 2022 and December 31, 2021, respectively:

Payment Date DRIP Shares Value DRIP Shares Issued

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Payment Date DRIP Shares Value DRIP Shares Issued

January 27, 2021 $ 2,462 121,484

April 22, 2021 2,276 110,191

July 22, 2021 3,733 178,345

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CIBC Subscription Facility (1)

$ — $ — $ — $ 400,000 $ 310,350 $ 89,650

BNP Funding Facility 600,000 400,000 200,000 600,000 463,500 136,500

Truist Credit Facility (2)(3)

975,000 432,254 538,521 975,000 476,000 499,000

2027 Notes (4)

425,000 425,000 — — — —

2025 Notes (4)

275,000 275,000 — — — —

Total $ 2,275,000 $ 1,532,254 $ 738,521 $ 1,975,000 $ 1,249,850 $ 725,150

CIBC Subscription Facility

On December 31, 2019, we entered into the CIBC Subscription Facility with CIBC Bank USA as administrative agent and arranger, which was subsequently amended on February 3, 2020 and November 17, 2020.

The maximum principal amount of the CIBC Subscription Facility, which was $100.0 million as of December 31, 2019, was increased to $400.0 million on November 17, 2020.

As of December 31, 2021, the CIBC Subscription Facility allows us to borrow up to $400.0 million at any one time outstanding, subject to certain restrictions, including availability under the borrowing base, which is based on unused capital commitments.

The amount of permissible borrowings under the CIBC Subscription Facility may be increased to up to an aggregate amount of $500.0 million with the consent of the lenders.

The CIBC Subscription Facility has a maturity date of December 31, 2022.

The CIBC Subscription Facility bears interest at a rate at our election of either (i) the per annum one-, two-, or three-month LIBOR, divided by a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities, plus 1.65% or (ii) the prime rate plus 0.65%, as calculated under the CIBC Subscription Facility.

The CIBC Subscription Facility is secured by the unfunded commitments of certain of our investors.

In connection with the CIBC Subscription Facility, 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.

During the year ended December 31, 2021 and December 31, 2020, we borrowed $431.5 million and $612.4 million, and repaid $455.0 million and $278.5 million under the CIBC Subscription Facility, respectively.

As of December 31, 2021 and December 31, 2020, we had $310.4 million and $333.9 million outstanding debt balance, and $89.6 million and $66.2 million of available capacity, under the CIBC Subscription Facility, respectively (subject to borrowing base restrictions).

BNP Funding Facility

On October 14, 2020, DLF LLC entered into a Revolving Credit and Security Agreement, which was subsequently amended on December 11, 2020 and March 2, 2021, with DLF LLC, as the borrower, BNP Paribas (“BNP”), as the administrative agent and lender, the Company, as the equityholder and as the servicer, and U.S.

Bank National Association, as collateral agent, pursuant to which BNP has agreed to extend credit to DLF LLC (the “BNP Funding Facility”).

As of December 31, 2021, the borrowing capacity under the BNP Funding Facility is $600.0 million.

The applicable margin on borrowings during the reinvestment period ranges between 1.95% and 2.75% and, after the reinvestment period, between 2.45% and 3.25%.

The BNP Funding Facility has a maturity date of October 13, 2025.

During the year ended December 31, 2021, we borrowed $538.5 million and repaid $75.0 million under the BNP Funding Facility.

As of December 31, 2021, we had $463.5 million outstanding under the BNP Funding Facility.

During the year ended December 31, 2020, we had no amount borrowed under the BNP Funding Facility.

As of December 31, 2021 and December 31, 2020, we had $136.5 and $300.0 of available capacity, respectively, under the BNP Funding Facility (subject to borrowing base restrictions).

Truist Credit Facility

On July 16, 2021, we entered into the Truist Credit Facility with Truist Bank, as amended on December 3, 2021.

Truist Bank serves as Administrative Agent and Truist Securities, Inc.

serves as Joint Lead Arranger and Sole Book Runner.

The maximum principal amount of the Truist Credit Facility is $975.0 million, subject to availability under the borrowing base.

The Truist Credit Facility includes an uncommitted accordion feature that allows us, under certain circumstances, to increase the borrowing capacity up to $1,000.0 million.

The availability period of the Truist Credit Facility will terminate on July 16, 2025.

The Truist Credit Facility has a maturity date of July 16, 2026.

The Truist Credit Facility is secured by a first priority security interest in substantially all of our assets and the assets of certain of our domestic subsidiaries, subject to certain exceptions.

We may borrow amounts in U.S.

(1) The CIBC Subscription Facility matured on December 31, 2022 and was fully paid off.

(2) As of December 31, 2022, $4,225 letter of credit was outstanding, which reduced the unused availability under the Truist Credit Facility of the same amount.

As of December 31, 2021, no letter of credit was outstanding.

(3) Under the Truist Credit Facility, the Company may borrow in U.S.

dollars or certain other permitted currencies.

Borrowings under the Truist Credit Facility bear interest at a per annum rate equal to, (x) for loans for which we elect the base rate option, the “alternate base rate” (which is the highest of (a) the prime rate as publicly announced by Truist Bank, (b) the sum of (i) the weighted average of the rates on overnight federal funds transactions, as published by the Federal Reserve Bank of New York plus (ii) 0.5%, and (c) one month LIBOR plus 1% per annum) plus either (A) 0.75%, or (B) 0.875%, based on certain borrowing base conditions, and (y) for loans for which we elect the Eurocurrency option, the applicable LIBO Rate for the related Interest Period for such Borrowing plus either (A) 1.75% per annum, or (B) 1.875% per annum, based on certain borrowing base conditions.

We pay an unused fee of 0.375% per annum on the daily unused amount of the revolver commitments.

During the year ended December 31, 2021, the Company borrowed $544.0 million and repaid $68.0 million under the Truist Credit Facility.

As of December 31, 2021, we had $476.0 million outstanding and $499.0 million of available capacity, under the Truist Credit Facility (subject to borrowing base restrictions).

As of December 31, 2021, the Company was in compliance with all covenants and other requirements of each of the credit facilities.

As of December 31, 2022, the Company had borrowings denominated in Euros (EUR) of 238.

As of December 31, 2021, the Company did not have any borrowings denominated in Euros (EUR) or other permitted currencies.

(4) The carrying value of our 2027 Notes and 2025 Notes were presented on the Consolidated Statements of Assets and Liabilities net of unamortized debt issuance costs of $4,622 and $3,277, and unamortized original issuance discount of $881 and $—, respectively.

RECENT DEVELOPMENTS

Subsequent to December 31, 2021 through March 18, 2022, the Company has closed or the Investment Committee has committed/approved approximately $178.6 million of new/add-on investments.

This includes transactions for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore the Company believes are likely to close.

Of these new commitments, approximately $167.8 million were first lien senior secured loans, $10.7 million were second lien senior secured loans, and $0.1 million were common equity investments.

100% of the senior secured loans were floating rate loans.

Subsequent to December 31, 2022 through March 9, 2023, we have closed or the Investment Committee has committed/approved approximately $158.3 million of new/add-on investments.

This includes transactions for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore we believe are likely to close.

Of these new commitments, approximately $158.3 million were first lien senior secured loans and $0.1 million were other securities.

We remain highly focused on conducting extensive due diligence and leveraging the Morgan Stanley platform.

We continue to seek to invest in companies that are led by strong management teams, generate substantial free cash flow, have leading market positions, benefit from sustainable business models, and are well positioned to perform well despite the impact of the Coronavirus pandemic.

We believe the current market environment offers opportunities to seek compelling risk adjusted returns.

Our investment pace will depend on several factors including the market environment, deal flow, and the continued impact of Coronavirus.

Effective January 18, 2022, we provided written notice to CIBC of our intent to permanently reduce the amount of the revolving commitment to $315 million from $400 million in accordance with and as permitted under the CIBC Subscription Facility The other terms of the CIBC Subscription Facility were not changed.

On February 3, 2022, we entered into Amendment No.

4 and Limited Waiver, dated as of February 3, 2022, to the CIBC Subscription Facility to, among other things, amend certain covenants in the CIBC Subscription Facility and provide for certain limited waivers.

All other material terms of the CIBC Subscription Facility remain unchanged.

On February 11, 2022, we issued $425 million in aggregate principal amount of the Notes.

The Notes will mature on February 11, 2027 and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the indenture governing the Notes.

The Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

The Notes were offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S.

persons outside the United States pursuant to Regulation S under the Securities Act.

In connection with the offering of the Notes, we entered into a Registration Rights Agreement, dated as of February 11, 2022 (the “Registration Rights Agreement”), with SMBC Nikko Securities America, Inc., J.P.

Morgan Securities LLC, MUFG Securities Americas Inc.

and Truist Securities, Inc., as the representatives of the initial purchasers of the Notes.

Pursuant to the Registration Rights Agreement, we are obligated to file with the SEC a registration statement relating to an offer to exchange the Notes for new notes issued by the Company that are registered under the Securities Act and otherwise have terms substantially identical to those of the Notes, and to use its commercially reasonable efforts to cause such registration statement to be declared effective.

If we are not able to effect the exchange offer, we will be obligated to file a shelf registration statement covering the resale of the Notes and use our commercially reasonable efforts to cause such registration statement to be declared effective.

If we fail satisfy its registration obligations by certain dates specified in the Registration Rights Agreement, we will be required to pay additional interest to the holders of the Notes.

On March 4, 2022, the Company closed new investor commitments of $40.2 million, which brings total Capital Commitments to approximately $1,625.7 million.

Our investment pace will depend on several factors including the market environment, deal flow and the impact of inflation on valuations and the operations of potential portfolio companies.

On January 31, 2023, we entered into an amendment (the “Third Amendment”) to the Truist Credit Facility.

The Third Amendment amended certain terms of the Truist Credit Facility, including, but not limited to (a) increase the maximum borrowing capacity of the Truist Credit Facility to $1,120,000,000, (b) revise the interest rate for borrowings under the Truist Credit Facility such that borrowings bear interest at a per annum rate equal to (x) for loans for which the Company elects the alternate base rate option, the “alternate base rate” (which is the highest of (A) the prime rate as publicly announced by Truist, (B) the sum of (i) the weighted average of the rates on overnight federal funds transactions, as published by the Federal Reserve Bank of New York plus (ii) 0.5%, and (C) one month Term SOFR (as defined in the Truist Credit Facility) plus 1% per annum) plus 0.875%, and (y) for loans for which the Company elects the term benchmark option, Term SOFR, for borrowings denominated in U.S.

dollars, or the applicable term benchmark rate for borrowings denominated in certain foreign currencies, in each case for the related interest period for such borrowing plus 1.875% per annum or such other applicable margin as is applicable to such foreign currency borrowings, and (c) extend the maturity date of the Truist Credit Facility to January 31, 2028 with respect to the loans and commitments held by the lenders who consented to the maturity extension.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ.

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GAAP and the 1940 Act.

Our Board of Directors, with the assistance of our audit committee (our "Audit Committee"), determines the fair value of our assets, for assets with a daily public

market, and for assets with no readily available public market, on at least a quarterly basis, in accordance with the terms of Topic 820 of the Financial Accounting Standards Board’s Accounting Standards Codification, as amended, Fair Value Measurement (“ASC 820”).

Our Board of Directors, with the assistance of our Audit Committee, determines the fair value of our assets, for assets with a daily public market, and for assets with no readily available public market, on at least a quarterly basis, in accordance with the terms of ASC 820.

The Board of Directors has delegated to the Adviser as 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.

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.

Our valuation procedures are set forth in more detail below.

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However, the objective of a fair value measurement in both cases is the same-to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

For significant accounting policies on the fair value hierarchies, our framework for determining fair value, and the composition of our portfolio, see “ Note 5 to the Consolidated Financial Statements in Part II, Item 8.

Consolidated Financial Statements and Supplementary Data ” of this Form 10-K .

Securities that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Adviser or our Board of Directors, does not represent fair value, each is valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data is available.

Securities that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Valuation Designee or our Board of Directors, does not represent fair value, each is valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data is available.

These valuation techniques may vary by investment but include comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses.

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2) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of our Adviser’s senior management;

3) our Board of Directors engages an independent third-party valuation firm to provide positive assurance on a portion of our illiquid investments each quarter (such that each illiquid investment will be reviewed by an independent valuation firm at least once on a rolling twelve-month basis) including review of management’s preliminary valuation and conclusion of fair value;

4) our Audit Committee reviews the assessments of the Adviser and the independent third-party valuation firm and provide our Board of Directors with recommendations with respect to the fair value of each investment in our portfolio;

5) our Board of Directors discusses the valuation recommendations of our Audit Committee and determine the fair value of each investment in our portfolio in good faith based on the input of the Adviser and, where applicable, the third-party valuation firm.

3) our Board of Directors or Valuation Designee engages independent third-party valuation firms to provide positive assurance on a portion of our illiquid investments each quarter (such that each illiquid investment will be reviewed by an independent valuation firm at least once on a rolling twelve-month basis) including review of management’s preliminary valuation and conclusion of fair value;

4) our Audit Committee reviews the assessments of the Valuation Designee and the independent third-party valuation firms and provide our Board of Directors with recommendations with respect to the fair value of each investment in our portfolio;

5) our Board of Directors discusses the valuation recommendations of our Audit Committee and determine the fair value of each investment in our portfolio in good faith based on the input of the Valuation Designee and, where applicable, the third-party valuation firms.

The fair value is generally determined based on the assessment of the following factors, as relevant:

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Accordingly, the notes to our financial statements will express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.

For significant accounting policies on the fair value hierarchies, our framework for determining fair value, and the composition of our portfolio, see Note 5.

Fair Value Measurements in the Notes to Consolidated Financial Statements .

RELATED PARTY TRANSACTIONS

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The initial period of the Investment Advisory Agreement was two years.

In November 2021, following approval by the Board of Directors, including a majority of the Independent Directors, we renewed the Investment Advisory Agreement for an additional one year term.

In August 2022, following approval by the Board of Directors, including a majority of the Independent Directors, we renewed the Investment Advisory Agreement for an additional one year term.

Consolidated Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 3.

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• 17.5% of the pre-incentive fee net investment income, if any, that exceeds 1.8182% in any calendar quarter (7.2728% annualized), which reflects that once the hurdle rate is reached and the catch-up is achieved, 17.5% of all pre-incentive fee net investment income is paid to the Adviser.

The second part of the incentive fee is determined on realized capital gains calculated and payable in arrears in cash as of the end of each calendar year or upon the termination of the Investment Advisory Agreement in an amount equal to 17.5% of the realized capital gains, if any, on a cumulative basis from the date of our election to be regulated as a business development company through the end of a given calendar year or upon the termination of the Investment Advisory Agreement, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees (the “Cumulative Capital Gains”).

of a given calendar year or upon the termination of the Investment Advisory Agreement, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees (the “Cumulative Capital Gains”).

Administration Agreement

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The initial period of the Administration Agreement was two years.

In November 2021, following approval by the Board of Directors, we renewed the Administration Agreement for an additional one-year term.

In August 2022, following approval by the Board of Directors, including a majority of the Independent Directors, we renewed the Administration Agreement for an additional one-year term.

Pursuant to the Administration Agreement, the Administrator provides services and receives reimbursements equal to an amount that reimburses the Administrator for its costs and expenses and the Company’s allocable portion of overhead incurred by the Administrator in performing its obligations under the Administration Agreement, including the Company’s allocable portion of the compensation paid to our Chief Compliance Officer and Chief Financial Officer.

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If actual organization and offering costs incurred exceed the greater of $1,000 or 0.10% of the Company’s total Capital Commitments, the Investment Adviser or its affiliate will bear the excess costs.

The Company shall reimburse the Investment Adviser for payments of any excess costs borne by the Investment Adviser on the Company’s behalf within three years of Initial Closing Date.

As of December 31, 2022, the Company reimbursed the Investment Adviser organization and offering costs incurred and there was no organization and offering costs in payable to affiliates and accrued expenses and other liabilities in the Consolidated Statements of Assets and Liabilities.

License Agreement

The Company entered into a license agreement with Morgan Stanley (the “License Agreement”) under which Morgan Stanley has agreed to grant the Company a non-exclusive, royalty-free license to use the name “Morgan Stanley” for specified purposes in the Company’s business.

The Company entered into the License Agreement under which Morgan Stanley has agreed to grant the Company a non-exclusive, royalty-free license to use the name “Morgan Stanley” for specified purposes in the Company’s business.

Under the License Agreement, the Company will have a right to use the “Morgan Stanley” name, subject to certain conditions, for so long as the Investment Adviser or one of its affiliates remains the Company’s investment adviser.

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The Company is not liable for any payments to the Placement Agent pursuant to the Placement Agent Agreement, which payments will be made by the Investment Adviser and, to the extent the Paying Agent receives any payments, from the Paying Agent.

Indemnification Agreements

We have entered into indemnification agreements with our directors and officers.

The indemnification agreements are intended to provide our directors and officers the maximum indemnification permitted under Delaware law and the 1940 Act.

Each indemnification agreement provides that we will indemnify the director or officer who is a party to the agreement (an “Indemnitee”), including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, to the maximum extent permitted by Delaware law and the 1940 Act.

MS Credit Partners Holdings Investment

MS Credit Partners Holdings, Inc., a wholly owned subsidiary of Morgan Stanley and an affiliate of the Adviser, or MS Credit Partners Holdings, invested seed capital of $35 in the Company as of December 31, 2019.

Pursuant to the terms of MS Credit Partners Holding’s subscription agreement, MS Credit Partners Holdings has made an aggregate capital commitment of $200.0 million to the Company.

As of December 31, 2021 and December 31, 2020, MS Credit Partners Holdings’ total capital commitment represented approximately 13% and 14% of aggregate capital commitments received, respectively.

Morgan Stanley has no further capital, liquidity or other financial obligation to us beyond this equity investment.

MS Credit Partners Holdings, an indirect, wholly owned subsidiary of Morgan Stanley and an affiliate of the Investment Adviser, made an aggregate capital commitment of $200.0 million to us pursuant to a subscription agreement initially entered into in December 2019.

As of December 31, 2022 and December 31, 2021, MS Credit Partners Holdings held approximately 11.9% and 12.5% of our outstanding shares of common stock, respectively.

Morgan Stanley has no other 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.

Morgan Stanley has no history of financially supporting any of the BDCs on the MS Private Credit platform, even during periods of financial distress.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis