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• We depend upon the senior management of Churchill for our success, and upon its access to the investment professionals of Nuveen and its affiliates.
+Added: • There may be conflicts related to obligations that senior investment professionals of Churchill and members of its investment committee have to other clients.
There may be conflicts related to the investment and related activities of TIAA, Nuveen and Churchill.
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The Company has a limited operating history.
−Removed: The Company began investment operations in March of 2020, and, as a result, has limited operating history and limited financial information on which prospective investors can evaluate an investment in the Shares or prior performance.
+Added: The Company began investment operations in March 2020, and, as a result, has limited operating history and limited financial information on which prospective investors can evaluate an investment in the Company's shares or prior performance.
As a result, we are subject to the business risks and uncertainties associated with recently formed businesses, including the risk that we will not achieve our investment objective and the value of a shareholder’s investment could decline substantially or become worthless.
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Kencel, Strife and Schwimmer.
−Removed: The loss of any member of the Joint Investment Committee or of other Nuveen senior investment professionals could negatively impact the Company’s ability to achieve its investment objectives and operate as anticipated.
+Added: The loss of any member of the Joint Investment Committee or of other Churchill or Nuveen senior investment professionals could negatively impact the Company’s ability to achieve its investment objective and operate as anticipated.
This could have a material adverse effect on our financial condition and results of operations.
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There may be conflicts related to obligations that senior investment professionals of Churchill and members of its investment committee have to other clients.
+Added: There may be conflicts related to the investment and related activities of TIAA, Nuveen and Churchill.
The senior investment professionals and members of the investment committee of each Investment Team serve or may serve as officers, directors, members or principals of entities that operate in the same or a related line of business as we do, or of investment funds, accounts or other investment vehicles sponsored or managed by Churchill or its affiliates.
2 unchanged sentences
For example, Messrs.
−Removed: Kencel, Strife and Schwimmer have and will continue to have management responsibilities for other investment funds, including NC SLF Inc., a BDC, and other accounts or other investment vehicles sponsored or managed by affiliates of Churchill.
+Added: Kencel, Strife and Schwimmer have and will continue to have management responsibilities for other investment funds, including NC SLF Inc., a closed-end fund registered under the 1940 Act, Nuveen Churchill Private Capital Income Fund, a BDC, and other accounts or other investment vehicles sponsored or managed by affiliates of Churchill.
Churchill seeks to allocate investment opportunities among eligible accounts in a manner that is fair and equitable over time and consistent with their respective allocation policies.
2 unchanged sentences
Additionally, affiliates of Churchill may act as the administrative agent on credit facilities under which such securities are issued, which may contemplate additional compensation to such affiliates for the service of acting as administrative agent thereunder.
−Removed: Churchill may also simultaneously be managing certain securities for the Company and the same investments on a whole-loan, whole-security basis for TIAA pursuant to separate engagements, which may lead to conflicts of interest.
+Added: Churchill has separate account, fund-of-one or other managed account arrangements in place with TIAA or subsidiaries thereof.
+Added: Consistent with Churchill's investment allocation policies and the Order, Churchill also may be managing certain securities for the Company and allocating the same investments to TIAA (or subsidiaries thereof) pursuant to such arrangements, which may lead to conflicts of interest.
As described herein, in certain instances, it is possible that other entities managed by Churchill or a proprietary account of TIAA may be invested in the same or similar loans or securities as held by the Company, and which may be acquired at different times at lower or higher prices.
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In such circumstances, measures will be taken to address such actual or potential conflicts, which may include, as appropriate, establishing an information barrier between or among the applicable personnel of the relevant affiliated entities (including as between officers of Churchill), requiring recusal of certain personnel from participating in decisions that give rise to such conflicts, or other protective measures as shall be established from time to time to address such conflicts.
−Removed: There may be conflicts related to the investment and related activities of TIAA, Nuveen and Churchill.
Further, an affiliate of TIAA may serve as the administrative or other named agent on behalf of the lenders with respect to investments by the Company and/or one or more of its affiliates.
−Removed: In some cases, investments that are originated or otherwise sourced by Churchill may be funded by a loan syndicate organized by Churchill or its affiliate (“Loan Syndicate”).
−Removed: The participants in a Loan Syndicate (the “Loan Syndicate Participants”), in addition to the Company and its affiliates may include other lenders and various institutional and sophisticated investors (through private investment vehicles in which they invest).
+Added: In some cases, investments that are originated or otherwise sourced by Churchill may be funded by a loan syndicate organized by Churchill or its affiliates.
+Added: The participants in such loan syndicate (the “Loan Syndicate Participants”), in addition to the Company and its affiliates may include other lenders and various institutional and sophisticated investors (through private investment vehicles in which they invest).
The entity acting as agent may serve as an agent with respect to loans made at varying levels of a borrower’s capital structure.
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As a result of an affiliate of TIAA acting as agent for an agented loan where a Loan Syndicate Participant may own more of the related indebtedness of the obligor or hold indebtedness in a position in the capital structure of an obligor different from that of the Company and its affiliates, such Loan Syndicate Participants will be in a position to exercise more control with respect to the related loan facility than that which Churchill could exercise on behalf of the Company, and may exercise such control in a manner adverse to the interests of the Company.
−Removed: In addition, TIAA, as advised by an affiliate of the Advisers, may be a limited partner investor in many of the private equity funds that own the portfolio companies in which the Company will invest or TIAA may otherwise have a relationship with the private equity funds or portfolio companies, which may give rise to certain conflicts or limit the Company’s ability to invest in such portfolio companies.
−Removed: TIAA (and other private clients managed by affiliates of the Advisers) may also hold passive equity co-investments in such private equity funds or portfolio companies owned by such fund, or in holding companies elsewhere in the capital structure of the private equity fund or portfolio company, which may give rise to certain conflicts for the investment professionals of affiliates of the Advisers when making investment decisions.
+Added: In addition, TIAA and other client accounts of Churchill.
+Added: in connection with an advisory relationship with Churchill, may be a limited partner investor in many of the private equity funds that own the portfolio companies in which the Company will invest or TIAA may otherwise have a relationship with the private equity funds or portfolio companies, which may give rise to certain conflicts or limit the Company’s ability to invest in such portfolio companies.
+Added: TIAA (and other private clients managed by Churchill and its affiliates) may also hold passive equity co-investments in such private equity funds or portfolio companies owned by such fund, or in holding companies elsewhere in the capital structure of the private equity fund or portfolio company, which may give rise to certain conflicts for the investment professionals of affiliates of the Advisers when making investment decisions.
The recommendations that Churchill gives to the Company may differ from those rendered to its other clients.
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Our management and incentive fee structure may create incentives for Churchill and certain of its investment professionals that are not fully aligned with the interests of our shareholders.
−Removed: In the course of our investing activities, we pay a management fee to the Advisers and will pay an incentive fee to the Adviser following an Exchange Listing or any listing of our securities on any other public trading market.
+Added: In the course of our investing activities, we pay a management fee to the Adviser and will pay an incentive fee to the Adviser following an Exchange Listing or any listing of our securities on any other public trading market.
Prior to an Exchange Listing or any listing of our securities on any other public trading market, the Company will pay no incentive fee to the Adviser.
−Removed: Management fees are based on our Average Total Assets (which include assets purchased with borrowed amounts but exclude cash and cash equivalents).
+Added: Management fees are based on our Average Total Assets (which include assets purchased with borrowed amounts but exclude cash and cash equivalents and undrawn capital commitments).
As a result, investors in our shares invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than one might achieve through direct investments.
−Removed: Because these fees are based on our total assets, including assets purchased with borrowed amounts but excluding cash and cash equivalents, the Advisers benefit when we incur debt or otherwise use leverage.
+Added: Because these fees are based on our total assets, including assets purchased with borrowed amounts but excluding cash and cash equivalents and undrawn capital commitments, the Advisers benefit when we incur debt or otherwise use leverage.
This fee structure may encourage Churchill to cause us to borrow money to finance additional investments or to maintain leverage when it would otherwise be appropriate to pay off our indebtedness.
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Such professionals would face similar conflicts when considering investments for and making decisions on behalf of the Company.
−Removed: The part of the incentive fee payable to the Advisers that relates to our net investment income is computed and paid on income that may include interest income that has been accrued but not yet received in cash.
+Added: The part of the incentive fee payable to the Adviser that relates to our net investment income is computed and paid on income that may include interest income that has been accrued but not yet received in cash.
This fee structure may be considered to involve a conflict of interest for Churchill to the extent that it may encourage Churchill to favor debt financings that provide for deferred interest, rather than current cash payments of interest.
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This risk could be increased because the Advisers are not obligated to reimburse us for any incentive fees received even if we subsequently incur losses or never receive in cash the deferred income that was previously accrued.
−Removed: In addition, the part of the incentive fee payable to Churchill that relates to our net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
+Added: In addition, the incentive fee based on our net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
Any net investment income incentive fee would not be subject to repayment.
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Prior to an Exchange Listing, or any listing of its securities on any other public trading market, the Company will pay no incentive fee to the Adviser.
−Removed: Following an Exchange Listing or any listing of its securities on any other public trading market, the Advisers will receive an incentive fee based, in part, upon net capital gains realized on our investments.
+Added: Following an Exchange Listing or any listing of its securities on any other public trading market, the Adviser will receive an incentive fee based, in part, upon net capital gains realized on our investments.
Unlike that portion of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive fee based on net capital gains.
1 unchanged sentence
Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.
−Removed: TIAA (directly or through one or more of its affiliates) has made a significant investment in the Company, which may present certain conflicts of interest.
−Removed: TIAA, the ultimate parent of the Advisers, has made a significant investment in the Company (directly or through one or more of its affiliates).
−Removed: This may result in TIAA’s ownership of a significant percentage of the Shares.
+Added: TIAA has made a significant investment in the Company, which may present certain conflicts of interest.
+Added: TIAA, the ultimate parent of the Advisers, has made a significant investment in the Company.
+Added: This may result in TIAA’s ownership of a significant percentage of our shares.
This may be detrimental to other shareholders as TIAA may control a significant percentage of the shareholder vote and may vote in a manner that is beneficial to the Advisers.
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Our ability to enter into transactions with our affiliates is restricted, which may limit the scope of investments available to us.
−Removed: We are prohibited under the 1940 Act from participating in certain transactions with our affiliates, including NC SLF Inc., and other funds and accounts that the Advisers manage, without the prior approval of our independent directors and, in some cases, of the SEC.
+Added: We are prohibited under the 1940 Act from participating in certain transactions with our affiliates, including NC SLF Inc., Nuveen Churchill Private Capital Income Fund, and other funds and accounts that the Advisers manage, without the prior approval of our independent directors and, in some cases, of the SEC.
Any person that owns, directly or indirectly, five percent or more of our outstanding voting securities is our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying any security from such affiliate, absent the prior approval of our independent directors.
−Removed: The 1940 Act also prohibits us from participating in certain “joint” transactions with certain of our affiliates, including NC SLF Inc., and other funds and accounts that the Advisers manage, which could include investments in the same portfolio company without prior approval of our independent directors and, in some cases, of the SEC.
+Added: The 1940 Act also prohibits us from participating in certain “joint” transactions with certain of our affiliates, including NC SLF Inc., Nuveen Churchill Private Capital Income Fund, and other funds and accounts that the Advisers manage, which could include investments in the same portfolio company without prior approval of our independent directors and, in some cases, of the SEC.
For example, we are prohibited from buying or selling any security from or to any person (or certain affiliates of a person) who owns more than 25% of our voting securities, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC.
As a result of these restrictions, we may be prohibited from buying or selling any security (other than any security of which we are the issuer) from or to any portfolio company at the same time as another fund managed by any of the Advisers or their affiliates without the prior approval of the SEC, which may limit the scope of investment opportunities that would otherwise be available to us.
−Removed: In addition, TIAA (directly or through one or more of its affiliates) intends to invest $100 million in the Company, which includes consideration for its acquisition of 3,310,540 Shares in exchange for all of the outstanding preference shares of the Predecessor Entity, which may result in its ownership of more than 25% of the voting securities of the Company.
We may, however, co-invest with each Adviser and its affiliates’ other clients in certain circumstances where doing so is consistent with applicable law and SEC staff interpretations.
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Each Adviser makes these determinations based on its policies and procedures, which generally require that such opportunities be offered to eligible accounts on a basis that will be fair and equitable over time (and which takes into consideration the ability of the relevant account(s) to acquire securities in an amount and on terms suitable for the relevant transaction).
−Removed: Moreover, there will be a conflict of interest if we invest in any issuer in which a fund managed by the Advisers or their affiliates, including NC SLF Inc., and other funds and accounts that the Advisers manage, has previously invested, and in some cases, we will be restricted from making such investment.
+Added: Moreover, there will be a conflict of interest if we invest in any issuer in which a fund managed by the Advisers or their affiliates, including NC SLF Inc., Nuveen Churchill Private Capital Income Fund, and other funds and accounts that the Advisers manage, has previously invested, and in some cases, we will be restricted from making such investment.
Similar restrictions limit our ability to transact business with our officers or directors or their affiliates.
We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.
−Removed: We compete with a number of specialty and commercial finance companies to make the types of investments that we make in middle-market companies, including business development companies, traditional commercial banks, private investment funds, regional banking institutions, small business investment companies, investment banks and insurance companies.
+Added: We compete with a number of specialty and commercial finance companies to make the types of investments that we make in middle-market companies, including BDCs, traditional commercial banks, private investment funds, regional banking institutions, small business investment companies, investment banks and insurance companies.
Additionally, with increased competition for investment opportunities, alternative investment vehicles such as hedge funds may seek to invest in areas they have not traditionally invested in or from which they had withdrawn during the economic downturn, including investing in middle-market companies.
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federal taxes on income and gains timely distributed to our shareholders, we must meet certain requirements, including source-of-income, asset diversification and distribution requirements.
−Removed: The annual distribution requirement applicable to RICs is satisfied if we timely distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our shareholders on an annual basis.
+Added: The annual distribution requirement applicable to RICs generally is satisfied if we timely distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our shareholders on an annual basis.
In addition, we will be subject to a 4% nondeductible U.S.
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To the extent we use debt financing, we will be subject to certain asset coverage ratio requirements under the 1940 Act and may be subject to financial covenants under loan and credit agreements, each of which could, under certain circumstances, restrict us from making annual distributions necessary to receive RIC tax treatment.
−Removed: If we are unable to obtain cash from other sources, we may fail to be taxed as a RIC and, thus, may be subject to = U.S.
+Added: If we are unable to obtain cash needed to pay such annual distributions from other sources, we may fail to be taxed as a RIC and, thus, may be subject to U.S.
federal income tax at corporate rates on our entire taxable income without regard to any distributions made by us.
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We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income.
−Removed: federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as original issue discount, or through contracted PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term.
−Removed: Original issue discount, which could be significant relative to our overall investment activities, or increases in loan balances as a result of contracted PIK arrangements, will be included in income before we receive any corresponding cash payments.
+Added: federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as OID, or through contracted PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term.
+Added: OID, which could be significant relative to our overall investment activities, or increases in loan balances as a result of contracted PIK arrangements, will be included in income before we receive any corresponding cash payments.
We also may be required to include in income certain other amounts that we will not receive in cash.
Prior to an Exchange Listing, or any listing of its securities on any other public trading market, the Company will pay no incentive fee to the Adviser.
−Removed: Following an Exchange Listing or any listing of its securities on any other public trading market, the part of the incentive fee that will be payable by us that relates to our net investment income is computed and will be paid on income that may include interest that has been accrued but not yet received in cash, such as original issue discount and PIK interest.
+Added: Following an Exchange Listing or any listing of its securities on any other public trading market, the part of the incentive fee that will be payable by us that relates to our net investment income is computed and will be paid on income that may include interest that has been accrued but not yet received in cash, such as OID and PIK interest.
If we pay a net investment income incentive fee on interest that has been accrued, but not yet received in cash, it will increase the basis of our investment in that loan, which will reduce the capital gains incentive fee that we would otherwise pay in the future.
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Investors in shares of our common stock could fail to fund their capital commitments when due.
−Removed: We call only a limited amount of capital commitments from investors in the capital commitments private placement of our common stock upon each drawdown notice.
+Added: We call only a limited amount of capital commitments from investors in the private placement of our common stock upon each drawdown notice.
The timing of drawdowns is difficult to predict, requiring each investor to maintain sufficient liquidity until its capital commitments to purchase shares are fully funded.
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Under the provisions of the 1940 Act, we are permitted as a BDC to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of total assets less all liabilities and indebtedness not represented by senior securities, immediately after each issuance of senior securities.
−Removed: If the value of our assets declines, we may be unable to satisfy this test.
+Added: If the value of our assets declines, we may be unable to satisfy this requirement.
If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous.
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There are significant financial and other resources necessary to comply with the requirements of being an SEC reporting entity.
−Removed: Even though we are an "emerging growth company" under the JOBS Act, we are still subject to the reporting requirements of the 1934 Act and requirements of the Sarbanes-Oxley Act.
+Added: Even though we are an "emerging growth company" under the JOBS Act, we are still subject to the reporting requirements of the Exchange Act and requirements of the Sarbanes-Oxley Act.
These requirements may place a strain on our systems and resources.
−Removed: The 1934 Act requires that we file annual, quarterly and current reports with respect to our business and financial condition.
+Added: The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition.
The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting, which are discussed below.
In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls, significant resources and management oversight will be required.
−Removed: We intend to implement procedures, processes, policies and practices for the purpose of addressing the standards and requirements applicable to public companies.
+Added: We have implemented procedures, processes, policies and practices for the purpose of addressing such standards and requirements applicable to public companies.
These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
3 unchanged sentences
As long as we remain an emerging growth company, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
−Removed: We will remain an emerging growth company for up to five years following an IPO or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues equal or exceeds $1.07 billion, (ii) December 31 of the fiscal year that we become a “large accelerated filer” as defined in Rule 12b-2 under the 1934 Act which would occur if the market value of our Shares that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months and have filed an annual report on Form 10-K, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the preceding three-year period or (iv) December 31 of the fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement under the 1933 Act.
+Added: We will remain an emerging growth company for up to five years following an IPO or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues equal or exceeds $1.07 billion, (ii) December 31 of the fiscal year that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act which would occur if the market value of our shares that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months and have filed an annual report on Form 10-K, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the preceding three-year period or (iv) December 31 of the fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement under the Securities Act.
Efforts to comply with Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and noncompliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us .
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Provisions in our credit facilities may limit discretion.
−Removed: At our discretion, we may utilize the leverage available under the Subscription Facility, the SPV I Financing Facility, and the SPV II Financing Facility for investment and operating purposes.
+Added: At our discretion, we may utilize the leverage available under the Subscription Facility, the Wells Fargo Financing Facility, and the SMBC Financing Facility for investment and operating purposes.
Additionally, in the future, we may enter into additional credit facilities.
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In addition, following any such default, the agent for the lenders under such borrowing facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: We are subject to risks associated with the 2022 Debt Securitization.
+Added: As a result of the 2022 Debt Securitization, we are subject to a variety of risks, including those set forth below.
+Added: We use the term “debt securitization” to describe a form of secured borrowing under which an operating company (sometimes referred to as an “originator” or “sponsor”) acquires or originates loans or other assets that earn income, whether on a one-time or recurring basis (collectively, “income producing assets”), and borrows money on a non-recourse basis against a legally separate pool of loans or other income producing assets.
+Added: In a typical debt securitization, the originator transfers the loans or income producing assets to a single-purpose, bankruptcy-remote subsidiary (also referred to as a “special purpose entity”), which is established solely for the purpose of holding loans and income producing assets and issuing debt secured by these income producing assets.
+Added: The special purpose entity completes the borrowing through the issuance of notes secured by the loans or other assets.
+Added: The special purpose entity may issue the notes in the capital markets to a variety of investors, including banks, non-bank financial institutions and other investors.
+Added: CLO-I is an indirect, wholly-owned, consolidated subsidiary of the Company.
+Added: In the 2022 Debt Securitization, institutional investors purchased certain notes issued by CLO-I in private placements.
+Added: The 2022 Notes and membership interests that we hold that were issued by CLO-I are subordinated obligations of CLO-I and we could be prevented from receiving cash from CLO-I.
+Added: The notes offered in the 2022 Debt Securitization (the “2022 Notes”) were issued by CLO-I, an indirect, wholly-owned, consolidated subsidiary of the Company.
+Added: The 2022 Notes that were issued by CLO-I and retained by us are the most junior class of notes issued by CLO-I, are subordinated in priority of payment to the other notes issued by CLO-I and will be subject to certain payment restrictions set forth in the indenture governing the 2022 Notes issued by CLO-I.
+Added: Therefore, we only receive cash distributions on the 2022 Notes if CLO-I has made all cash interest payments to all other notes it has issued.
+Added: Consequently, to the extent that the value of the portfolio of loan investments held by CLO-I has been reduced as a result of conditions in the credit markets, or as a result of defaulted loans or individual fund assets, the value of the 2022 Notes that we have retained at their redemption could be reduced.
+Added: If CLO-I does not meet the asset coverage tests or the interest coverage test set forth in the documents governing the 2022 Debt Securitization, cash would be diverted from the 2022 Notes that we hold to first pay the more senior notes issued by CLO-I in amounts sufficient to cause such tests to be satisfied.
+Added: Separately, 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 CLO-I or any other investment we may make.
+Added: If any of these occur, it could materially and adversely affect our operating results and cash flows.
+Added: CLO-I is the residual claimant on funds, if any, remaining after holders of all classes of notes issued by CLO-I have been paid in full on each payment date or upon maturity of such notes under the 2022 Debt Securitization documents.
+Added: As the holder of the membership interests in CLO-I, we could receive distributions, if any, only to the extent that CLO-I makes distributions out of funds remaining after holders of all classes of notes issued by CLO-I have been paid in full on the payment date any amounts due and owing on such payment date or upon maturity of such notes.
+Added: In the event that we fail to receive cash directly from CLO-I, we could be unable to make distributions in amounts sufficient to maintain our ability to be subject to tax as a RIC, or at all.
Inflation may adversely affect the business, results of operations and financial condition of our portfolio companies, which may, in turn, impact the valuation of such portfolio companies.
1 unchanged sentence
If such portfolio companies are unable to pass any increases in their costs along to their customers, it could adversely affect their results and their ability to pay interest and principal on our loans, particularly if interest rates rise in response to inflation.
−Removed: More recently, the Federal Reserve has indicated that it would likely raise interest rates as early as March 2022 in response to an increase in inflation.
−Removed: (See “We are exposed to risks associated with changes in interest rates” for a discussion of the risks associated with a rising interest rate environment).
In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments.
3 unchanged sentences
As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.
−Removed: A reduction in the interest rates on new investments relative to interest rates on current investments could have an adverse impact on our net investment income.
−Removed: However, an increase in interest rates could decrease the value of any investments we hold which earn fixed interest rates and also could increase our interest expense, thereby decreasing our net income.
−Removed: Also, an increase in interest rates available to investors could make an investment in our common stock less attractive if we are not able to increase our distribution rate, which could reduce the value of our common stock.
+Added: In response to market indicators showing a rise in inflation, since March 2022, the Federal Reserve has been rapidly increasing interest rates and has indicated that it would consider additional rate hikes in response to ongoing inflation concerns.
+Added: An increase in interest rates could decrease the value of any investments we hold which earn fixed interest rates and also could increase our interest expense, thereby decreasing our net income.
+Added: Also, an increase in interest rates available to investors could make an investment in shares of our common stock less attractive if we are not able to increase our distribution rate, which could reduce the value of our common stock.
Further, rising interest rates could also adversely affect our performance if such increases cause our borrowing costs to rise at a rate in excess of the rate that our investments yield.
−Removed: In periods of rising interest rates, to the extent we borrow money subject to a floating interest rate, our cost of funds would increase, which could reduce our net investment income.
+Added: It is possible that the Federal Reserve's tightening cycle could also result in a recession in the United States (see "Economic recessions or downturns could impair our portfolio companies and harm our operating results" for a discussion of the risks associated with an economic recession or downturn).
+Added: In periods of rising interest rates, to the extent we borrow money subject to a floating interest rate (such as under the Wells Fargo Financing Facility, the Subscription Facility, and the SMBC Financing Facility), our cost of funds would increase, which could reduce our net investment income if there is not a corresponding increase in interest income generated by our investment portfolio.
Further, rising interest rates could also adversely affect our performance if we hold investments with floating interest rates, subject to specified minimum (or “floor”) interest rates, while at the same time engaging in borrowings subject to floating interest rates not subject to such minimums.
In such a scenario, rising interest rates may temporarily increase our interest expense, even though our interest income from investments is not increasing in a corresponding manner if market rates remain lower than the existing floor rate.
−Removed: If general interest rates rise, there is a risk that the portfolio companies in which we hold floating rate securities will be unable to pay escalating interest amounts, which could result in a default under their loan documents with us.
+Added: If general interest rates rise, there is also a risk that the portfolio companies in which we hold floating rate securities will be unable to pay escalating interest amounts, which could result in a default under their loan documents with us.
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.
3 unchanged sentences
Uncertainty relating to the LIBOR calculation process, the valuation of LIBOR alternatives, and other economic consequences from the phasing out of LIBOR may adversely affect our results of operations, financial condition and liquidity.
−Removed: On March 5, 2021, the United Kingdom's Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced that it will not compel panel banks to contribute to the overnight 1, 3, 6 and 12 months USD LIBOR tenors after June 30, 2023 and all other tenors after December 31, 2021.
+Added: On March 5, 2021, the United Kingdom's Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced that the ICE Benchmark Administration ("IBA") (the entity regulated by the FCA that is responsible for calculating LIBOR) had notified the FCA of its intent, among other things, to cease providin g overnight, 1, 3, 6 and 12 months USD LIBOR tenors after June 30, 2023 and all other tenors after December 31, 2021.
On November 16, 2021, the FCA issued a statement confirming that starting January 1, 2022, entities supervised by the FCA will be prohibited from using LIBORs, including USD LIBOR, that will be discontinued as of December 31, 2021 as well as, except in very limited circumstances, those tenors of USD LIBOR that will be discontinued or declared non-representative after June 30, 2023.
13 unchanged sentences
There can be no guarantee that SOFR will become the dominant alternative to USD LIBOR or that SOFR will be widely used and other alternatives may or may not be developed and adopted with additional consequences.
−Removed: On April 6, 2021, legislation was signed into law in the state of New York that provides that contracts, securities and instruments governed by New York law that reference USD LIBOR and that either lack benchmark fallback provisions or include ineffective benchmark fallback provisions in connection with USD LIBOR no longer being published or becoming non-representative, will, by operation of law, refer to a replacement benchmark rate based on SOFR.
−Removed: Despite the adoption of the New York legislation, successful legal challenges against the legislation may render it partially or wholly unconstitutional or unenforceable, e.g., based on other federal or state law grounds.
+Added: New York and several other states have passed laws intended to apply to U.S.
+Added: dollar LIBOR-based contracts, securities, and instruments governed by those states’ laws.
+Added: These laws established fallbacks for LIBOR when there is no or insufficient fallback rates in these contracts.
+Added: The federal Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was signed into law on March 15, 2022.
+Added: The federal legislation provides a statutory fallback mechanism on a nation-wide basis to replace U.S.
+Added: dollar LIBOR with a benchmark rate, selected by the Federal Reserve Board and based on SOFR, for certain contracts that reference U.S.
+Added: dollar LIBOR and contain no or insufficient fallback provisions.
+Added: The New York and other state laws were superseded by the LIBOR Act.
+Added: On December 16, 2022, the Federal Reserve Board adopted a final rule implementing certain provisions of the LIBOR Act (“Regulation ZZ”).
+Added: Regulation ZZ specifies that on the LIBOR replacement date, which is the first London banking day after June 30, 2023, the Federal Reserve Board-selected benchmark replacement, based on SOFR and including any tenor spread adjustment as provided by Regulation ZZ, will replace references to overnight, 1, 3, 6, and 12-month LIBOR in certain contracts that do not mature before the LIBOR replacement date and that do not contain adequate fallback language.
+Added: The LIBOR Act Regulation ZZ could apply to certain our investments that reference LIBOR to the extent that they do not have fallback provisions or adequate fallback provisions.
The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market value of and/or transferability of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us, valuation measurements used by us that include LIBOR as an input, our operational processes or our overall financial condition or results of operations.
3 unchanged sentences
Such adverse impacts and the uncertainty of the transition could result in disputes and litigation with counterparties and borrowers regarding the implementation of alternative reference rates.
−Removed: Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited.
−Removed: In November 2020, the SEC adopted new rules 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 new rules, BDCs that use derivatives are subject to a value-at-risk (“VaR”) leverage limit, certain other derivatives risk management program and testing requirements and requirements related to board reporting.
−Removed: These new requirements apply unless the BDC qualifies as a “limited derivatives user,” as defined in the SEC’s adopted rules.
−Removed: A BDC that enters into reverse repurchase agreements or similar financing transactions could either (i) comply with the asset coverage requirements of Section 18, as modified by Section 61 of the 1940 Act, when engaging in reverse repurchase agreements or (ii) choose to treat such agreements as derivatives transactions under the adopted rule.
−Removed: Under the adopted 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 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.
−Removed: If the BDC cannot meet this test, it is required to treat unfunded commitments as a derivatives transaction subject to the requirements of the rule.
+Added: Our ability to enter into transactions involving derivatives and unfunded commitment transactions may be limited.
+Added: In 2020, the SEC adopted Rule 18f-4 under the 1940 Act, which relates to the use of derivatives and other transactions that create future payment or delivery obligations, by BDCs (and other funds that are registered investment companies).
+Added: Under Rule 18f-4, for which compliance was required beginning in August 2022, BDCs that use derivatives are subject to a value-at-risk (“VaR”) leverage limit, certain derivatives risk management program and testing requirements, and requirements related to board reporting.
+Added: These requirements apply unless the BDC qualifies as a “limited derivatives user,” as defined in Rule 18f-4.
+Added: A BDC that enters into reverse repurchase agreements or similar financing transactions could either (i) comply with the asset coverage requirements of Section 18, as modified by Section 61 of the 1940 Act, when engaging in reverse repurchase agreements or (ii) choose to treat such agreements as derivatives transactions under Rule 18f-4.
+Added: In addition, under Rule 18f-4, 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 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: If the BDC cannot meet this requirement, it is required to treat the unfunded commitment as a derivatives transaction subject to the aforementioned requirements of Rule 18f-4.
Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts.
1 unchanged sentence
As a BDC, we may not acquire any assets other than “qualifying assets” unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets.
−Removed: See “ Item 1.
“ Regulation as a Business Development Company — Qualifying Assets .” We believe that most of the investments that we may acquire in the future will constitute qualifying assets.
33 unchanged sentences
The effect of global climate change may impact the operations of our portfolio companies, which may, in turn, impact the valuation of such Portfolio Companies.
−Removed: There may be evidence of global climate change.
Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change.
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Biden signed an executive order to rejoin the Paris Agreement.
+Added: Additionally, the Inflation Reduction Act of 2022 included several measures designed to combat climate change, including restrictions on methane emissions.
As a result, some of our portfolio companies may become subject to new or strengthened regulations or legislation, which could increase their operating costs and/or decrease their revenues, which may, in turn, impact the valuation of such portfolio companies.
25 unchanged sentences
Risks resulting from such debt crisis, including any austerity measures taken in exchange for bailout of certain nations, and any future debt crisis in Europe or any similar crisis elsewhere could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in certain countries and the financial condition of financial institutions generally.
−Removed: On January 31, 2020, the United Kingdom ended its membership in the European Union (“Brexit”).
−Removed: Under the terms of the withdrawal agreement negotiated and agreed between the United Kingdom (the “UK”) and the European Union, the UK’s departure from the European Union was followed by a transition period, which ran until December 31, 2020 and during which the UK continued to apply European Union law and was treated for all material purposes as if it were still a member of the European Union.
−Removed: On December 24, 2020, the European Union and United Kingdom governments signed a trade deal that became provisionally effective on January 1, 2021 and that now governs the relationship between the United Kingdom and the European Union (the “Trade Agreement”).
+Added: On January 31, 2020, the United Kingdom ended its membership in the European Union, referred to as Brexit.
+Added: Following the termination of a transition period, the United Kingdom and the European Union entered into a trade and cooperation agreement to govern the future relationship between the parties, which was provisionally applied as of January 1, 2021 and entered into force on May 1, 2021 following ratification by the European Union.
+Added: With respect to financial services, the agreement leaves decisions on equivalence and adequacy to be determined by each of the United Kingdom and the European Union unilaterally in due course.
+Added: Such agreement is untested and could lead to ongoing political and economic uncertainty and periods of exacerbated volatility in both the United Kingdom and in wider European and global markets for some time.
+Added: In addition, on December 24, 2020, the European Union and United Kingdom governments signed a trade deal that became provisionally effective on January 1, 2021 and that now governs the relationship between the United Kingdom and the European Union (the “Trade Agreement”).
The Trade Agreement implements significant regulation around trade, transport of goods and travel restrictions between the United Kingdom and the European Union.
Notwithstanding the foregoing, the longer term economic, legal, political and social implications of Brexit are unclear at this stage and are likely to continue to lead to ongoing political and economic uncertainty and periods of increased volatility in both the United Kingdom and in wider European markets for some time.
−Removed: In particular, Brexit could lead to calls for similar referendums in other European jurisdictions, which could cause increased economic volatility in the European and global markets.
+Added: In particular, Brexit could lead to calls for similar referendums in other European Union jurisdictions, which could cause increased economic volatility in the European and global markets.
This mid- to long-term uncertainty could have adverse effects on the economy generally and on our ability to earn attractive returns.
In particular, currency volatility could mean that our returns are adversely affected by market movements and could make it more difficult, or more expensive, for us to execute prudent currency hedging policies.
−Removed: Potential decline in the value of the British Pound and/or the Euro against other currencies, along with the potential further downgrading of the United Kingdom’s sovereign credit rating, could also have an impact on the performance of certain investments made in the United Kingdom or Europe.
+Added: Potential decline in the value of the British Pound and/or the Euro against other currencies, along with the potential further downgrading of the United Kingdom’s sovereign credit rating, could also have an impact on the performance of certain investments made in the United Kingdom or European Union.
We are currently operating in a period of significant market disruption and economic uncertainty, which may have a negative impact on our business, financial condition and operations.
From time to time, capital markets may experience periods of disruption and instability.
−Removed: capital markets have experienced extreme volatility and disruption following the global outbreak of COVID-19 that began in December 2019 and the conflict between Russia and Ukraine that began in late February 2022 (see “Terrorist attacks, acts of war, global health emergencies or natural disasters may affect any market for our Shares, impact the businesses in which we invest and harm our business, operating results and financial condition.” for more information).
−Removed: Some economists and major investment banks have expressed concern that the continued spread of the COVID-19 globally could lead to a world-wide economic downturn.
−Removed: Even after the COVID-19 pandemic subsides, the U.S.
+Added: capital markets have experienced extreme volatility and disruption following the global outbreak of COVID-19 that began in December 2019 and the conflict between Russia and Ukraine that began in late February 2022 (see “Terrorist attacks, acts of war, global health emergencies or natural disasters may affect any market for our shares, impact the businesses in which we invest and harm our business, operating results and financial condition.” for more information).Even after the COVID-19 pandemic subsides, the U.S.
economy, as well as most other major economies, may continue to experience a recession, and we anticipate our businesses would be materially and adversely affected by a prolonged recession in the United States and other major markets.
Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets.
−Removed: The COVID-19 outbreak, including new variants of COVID-19, such as the Delta and Omicron variants, continues to have, and any future outbreaks could have, an adverse impact on the ability of lenders to originate loans, the volume and type of loans originated, the ability of borrowers to make payments and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by the Company and returns to the Company, among other things.
−Removed: The global impact of the COVID-19 pandemic continues to evolve, and health advisors warn that recurring COVID-19 outbreaks will continue if reopening is pursued too soon or in the wrong manner, which may lead to the re-introduction or continuation of certain public health restrictions (such as prohibitions and restrictions on travel, the closure of offices, businesses, schools, retail stores and other public venues, and other public health measures).
−Removed: Some form of economic, social and/or travel restrictions may be in place for extended periods of time or may be reinstated in the future.
−Removed: General uncertainty surrounding the dangers and impact of COVID-19, including the preventative measures taken in response thereto and additional uncertainty regarding new variants of COVID-19, continues to create significant disruption in supply chains and economic activity.
+Added: The economic conditions caused by the COVID-19 pandemic could have an adverse impact on the ability of lenders to originate loans, the volume and type of loans originated, the ability of borrowers to make payments and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by the Company and returns to the Company, among other things.
With respect to the U.S.
credit markets (in particular for middle-market loans), the COVID-19 outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things:
−Removed: (i) government imposition of various forms of capacity and operating restrictions, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chain disruptions and labor shortages and, while these effects are hoped to be temporary, some effects could be persistent or even permanent;
−Removed: (ii) increased draws by borrowers on revolving lines of credit and other financing instruments;
−Removed: (iii) 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: (iv) greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues;
−Removed: and (v) rapidly evolving proposals and/or actions by 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 businesses.
+Added: (i) increased draws by borrowers on revolving lines of credit and other financing instruments;
+Added: (ii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans;
+Added: and (iii) greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues.
These conditions and future market disruptions and/or illiquidity could have an adverse effect on our (and our portfolio companies’) business, financial condition, results of operations and cash flows.
3 unchanged sentences
government spending and deficit levels or other global economic conditions could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Additionally, the recent disruption in economic activity caused by the COVID-19 pandemic has had, and may continue to have, a negative effect on the potential for liquidity events involving our investments.
+Added: Additionally, the disruption in economic activity caused by the COVID-19 pandemic has had, and may continue to have, a negative effect on the potential for liquidity events involving our investments.
The illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes.
1 unchanged sentence
While we intend to continue to source and invest in new loan transactions to U.S.
−Removed: middle market companies, we cannot be certain that we will be able to do so successfully or consistently during the continuation of the COVID-19 pandemic.
+Added: middle market companies, we cannot be certain that we will be able to do so successfully or consistently.
A lack of suitable investment opportunities may impair our ability to make new investments, and may reduce our earnings and dividends as a result.
4 unchanged sentences
Additionally, continued travel restrictions may prolong the global economic downturn.
−Removed: We cannot be certain as to the duration or magnitude of the economic impact of the COVID-19 pandemic in the markets in which we and our portfolio companies operate, including with respect to travel restrictions, business closures, mitigation efforts (whether voluntary, suggested, or mandated by law) and corresponding declines in economic activity that may negatively impact the U.S.
−Removed: economy and the markets for the various types of goods and services provided by U.S.
−Removed: middle market companies.
−Removed: Depending on the duration, magnitude and severity of these conditions and their related economic and market impacts, certain of our portfolio companies may suffer declines in earnings and could experience financial distress, which could cause them to default on their financial obligations to us and their other lenders.
−Removed: In consideration of these and related factors, we have downgraded our internal ratings with respect to certain companies and may make additional downgrades with respect to other portfolio companies in the future as conditions warrant and new information comes to light.
−Removed: In addition, due to COVID-19 health and safety concerns, the staff of our Advisers is currently working remotely, which may introduce additional operational risk to us.
−Removed: Staff members of certain of our other service providers may also work remotely during the COVID-19 pandemic and beyond.
−Removed: An extended period of remote working could lead to service limitations or failures that could impact us or our performance.
−Removed: As of the date of this annual report on Form 10-K, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us and our portfolio companies.
−Removed: Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity of COVID-19, including any COVID-19 variants, and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of which are beyond our control.
−Removed: We are subject to risks related to corporate social responsibility.
−Removed: Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities.
−Removed: We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as environmental stewardship, corporate governance and transparency, either in our operations or when considering ESG factors in our investment processes.
−Removed: Adverse incidents with respect to ESG activities could impact the value of our brand, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations.
−Removed: Additionally, new regulatory, initiatives related to ESG could adversely affect our business.
−Removed: We are currently operating in a period of significant market disruption and economic uncertainty.
−Removed: The COVID-19 pandemic has delivered a shock to the global economy.
−Removed: Containment efforts around the world have halted business and manufacturing operations and restricted people’s movement and travel.
−Removed: This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies effected thereby, including a recession and a steep increase in unemployment in the United States.
−Removed: With respect to the U.S.
−Removed: credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things:
−Removed: (i) government imposition of various forms of shelter-in-place orders and the closing of “non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent;
−Removed: (ii) increased draws by borrowers on revolving lines of credit;
−Removed: (iii) 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: (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues;
−Removed: and (v) rapidly evolving proposals and/or actions by 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 businesses.
−Removed: While several countries, as well as certain states, counties and cities in the United States, have relaxed initial public health restrictions with the view to partially or fully reopening their economies, many cities have since experienced a surge in the reported number of cases, hospitalizations and deaths related to the COVID-19 pandemic.
−Removed: These surges have led to the re-introduction of such restrictions and business shutdowns in certain states in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere.
−Removed: Health advisors warn that recurring COVID-19 outbreaks will continue if reopening is pursued too soon or in the wrong manner, which may lead to the re-introduction or continuation of certain public health restrictions (such as instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores and other public venues).
−Removed: Additionally, as of late December 2020, travelers from the United States are not allowed to visit Canada, Australia or the majority of countries in Europe, Asia, Africa and South America.
−Removed: These continued travel restrictions may prolong the global economic downturn.
−Removed: In addition, although the Federal Food and Drug Administration authorized vaccines for emergency use starting in December 2020, it remains unclear how quickly the vaccines will be distributed nationwide and globally or when “herd immunity” will be achieved and the restrictions that were imposed to slow the spread of the virus will be lifted entirely.
−Removed: The delay in distributing the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time.
−Removed: Even after the COVID-19 pandemic subsides, the U.S.
−Removed: economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States and other major markets.
−Removed: This outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things.
−Removed: General uncertainty surrounding the dangers and impact of COVID-19 (including the preventative measures taken in response thereto and additional uncertainty regarding new variants of COVID-19 that have emerged in the U.S., South Arica and Brazil) has to date created significant disruption in supply chains and economic activity.
−Removed: As of the date of this Annual Report, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us and our portfolio companies.
−Removed: Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of which are beyond our control.
−Removed: Additionally, oil prices collapsed to an 18-year low on supply glut concerns, as shutdowns across the global economy sharply reduced oil demand while Saudi Arabia and Russia engaged in a price war.
−Removed: Central banks and governments have responded with liquidity injections to ease the strain on financial systems and stimulus measures to buffer the shock to businesses and consumers.
−Removed: These measures have helped stabilize certain portions of the financial markets over the short term, but volatility will likely remain elevated until the health crisis itself is under control (via fewer new cases, lower infection rates and/or verified treatments).
−Removed: There are still many unknowns and new information is incoming daily, compounding the difficulty of modeling outcomes for epidemiologists and economists alike.
−Removed: Disruptions in the capital markets resulting from the pandemic have increased the spread between the yields realized on risk-free and higher risk securities.
−Removed: Certain parts of the fixed income markets have experienced significant drops in values as a result, particularly below-investment grade corporate credits.
−Removed: The disruptions to global supply chains, consumer demand, business investment and the global financial system are just beginning to be seen, but are resulting (and are expected to continue to result) in significant disruption to the businesses of U.S.
−Removed: operating companies.
−Removed: This disruption is expected to result in an increase in the liquidity needs of U.S operating companies, as well as an increase in requests for amendments and waivers of corporate credit agreements to avoid defaults.
−Removed: These effects are expected to impact middle market companies to which we lend and in which we invest.
−Removed: In addition, due to the outbreak in the United States, the staff of our Advisers is currently working remotely, which may introduce additional operational risk to us.
−Removed: Staff members of certain of our other service providers may also work remotely during the COVID-19 outbreak.
−Removed: An extended period of remote working could lead to service limitations or failures that could impact us or our performance.
−Removed: These conditions and future market disruptions and/or illiquidity could have an adverse effect on our (and our portfolio companies’) business, financial condition, results of operations and cash flows.
−Removed: Unfavorable economic conditions also would be expected to increase funding costs, limit access to the capital markets and/or result in a decision by lenders not to extend credit to portfolio companies and/or us.
−Removed: These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our investments.
−Removed: Additionally, the recent disruption in economic activity caused by the COVID-19 pandemic has had, and may continue to have, a negative effect on the potential for liquidity events involving our investments.
−Removed: The illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes.
−Removed: An inability to raise or access capital, and any required sale of all or a portion of our investments as a result, could have a material adverse effect on our business, financial condition or results of operations.
−Removed: While we intend to continue to source and invest in new loan transactions to U.S.
−Removed: middle market companies, we cannot be certain that we will be able to do successfully or consistently during the continuation of the COVID-19 pandemic.
−Removed: A lack of suitable investment opportunities may impair our ability to make new investments, and may reduce our earnings and dividends as a result.
−Removed: If the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase.
−Removed: In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of loan guarantors could decline, impairing their ability to honor commitments to us.
−Removed: An increase in loan delinquencies and non-accruals or a decrease in loan collateral and guarantor net worth could result in increased costs and reduced income which would have a material adverse effect on our business, financial condition or results of operations.
−Removed: Nor can we be certain as to the duration or magnitude of the economic impact of the pandemic in the markets in which we and our portfolio companies operate, including with respect to travel restrictions, business closures, mitigation efforts (whether voluntary, suggested, or mandated by law) and corresponding declines in economic activity that may negatively impact the U.S.
+Added: We cannot be certain as to the duration or magnitude of the economic impact of the COVID-19 pandemic in the markets in which we and our portfolio companies operate and corresponding declines in economic activity that may negatively impact the U.S.
economy and the markets for the various types of goods and services provided by U.S.
3 unchanged sentences
The COVID-19 pandemic or any outbreak of other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on the fair value of our investments or the conduct of our business.
−Removed: The COVID-19 pandemic has caused, and may continue to cause, the valuation of our investments to differ materially from the values that we may ultimately realize.
+Added: The COVID-19 pandemic and the economic conditions caused by the pandemic has caused, and may continue to cause, the valuation of our investments to differ materially from the values that we may ultimately realize.
Our valuations, and particularly valuations of private investments and private companies, will be inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that may not show the complete impact of the COVID-19 pandemic and the resulting measures taken in response thereto.
42 unchanged sentences
Investors are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our shares.
−Removed: There is uncertainty surrounding potential legal, regulatory and policy changes by new presidential administrations in the United States that may directly affect financial institutions and the global economy.
−Removed: As a result of the U.S presidential election in November 2020 and the subsequent senate runoff elections, there has been a change in control of the executive and legislative branches of the U.S.
−Removed: Therefore, changes in federal policy, including tax policies, and at regulatory agencies are expected to occur over time through policy and personnel changes, which may lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities.
+Added: There is uncertainty surrounding potential legal, regulatory and policy changes by the current presidential administration and Congress in the United States that may directly affect financial institutions and the global economy.
+Added: Following the November 2022 elections in the United States, the Democratic Party controls the Presidency and the Senate, with the Republican Party controlling the House of Representatives.
+Added: Despite political tensions and uncertainty in a divided legislature, changes in federal policy, including tax policies, and at regulatory agencies are expected to occur over time through policy and personnel changes, which may lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities.
The nature, timing and economic and political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain.
10 unchanged sentences
We anticipate that we will not qualify as a publicly offered RIC immediately after the Private Offering.
−Removed: We anticipate that we will not qualify as a publicly offered RIC immediately after the Private Offering.
+Added: A “publicly offered RIC” is a RIC whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market or (iii) held by at least 500 persons at all times during the taxable year.
If we are not a publicly offered RIC for any period, a non-corporate shareholder’s allocable portion of our affected expenses, including its management fees, will be treated as an additional distribution to the shareholder and will be deductible by such shareholder only to the extent permitted under the limitations described below.
In particular, these expenses, which are “miscellaneous itemized deductions”, are not currently deductible by an individual or other non-corporate investor (and, beginning in 2026, will be deductible only to the extent they exceed 2% of such a shareholder’s adjusted gross income, and are not deductible for alternative minimum tax purposes).
+Added: We do not expect to qualify as a publicly offered RIC for the current taxable year.
We may qualify as a publicly offered RIC in future taxable years, but we can provide no assurances that we will qualify as a publicly offered RIC for any taxable year.
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The invasion significantly amplified already existing geopolitical tensions among Russia, Ukraine, Europe, NATO and the West, including the United States.
−Removed: In response to the military action by Russia, various countries, including the United States, the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia.
+Added: In response to the ongoing military action by Russia, various countries, including the United States, the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia.
Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, large financial institutions, officials and oligarchs;
31 unchanged sentences
We currently do not maintain insurance coverage relating to cybersecurity risks, and we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are not fully insured.
−Removed: We and our service providers are currently impacted by operating restrictions and similar measures being enacted by governments and private businesses in response to COVID-19, which includes requiring employees to work from remote locations.
+Added: We and our service providers may be impacted by operating restrictions in response to COVID-19, which may include requiring employees to work from remote locations.
Policies of extended periods of remote working, whether by us or our service providers, could strain technology resources, introduce operational risks and otherwise heighten the risks described above.
27 unchanged sentences
These research products or services may and will also benefit and be used to assist other clients of Churchill and its affiliates.
−Removed: Research generated for Churchill’s credit strategy on our behalf will be used to benefit other investment strategies of Churchill and its affiliates, including NC SLF Inc.
−Removed: and other funds and accounts that Churchill manages.
+Added: Research generated for Churchill’s credit strategy on our behalf will be used to benefit other investment strategies of Churchill and its affiliates, including NC SLF Inc., Nuveen Churchill Private Capital Income Fund, and other funds and accounts that Churchill manages.
Furthermore, Churchill’s implementation of a credit strategy on our behalf will rely on its affiliates’ research efforts to manage the client/fund portfolios of such affiliates.
10 unchanged sentences
Economic recessions or downturns could impair our portfolio companies and harm our operating results.
−Removed: Many of our portfolio companies will be susceptible to economic slowdowns or recessions, including as a result of the COVID-19 pandemic, and may be unable to repay our loans during these periods.
+Added: Many of our portfolio companies will be susceptible to economic slowdowns or recessions, including as a result of, among other things, the COVID-19 pandemic, elevated levels of inflation, and a rising interest rate environment, and may be unable to repay our loans during these periods.
Therefore, any non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods.
28 unchanged sentences
• are more likely to depend on the management talents and efforts of a small group of persons;
−Removed: therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us;
+Added: therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on the company and, in turn, on us;
• typically have more limited access to the capital markets, which may hinder their ability to refinance borrowings;
• will be unable to refinance or repay at maturity the unamortized loan balance as we structure our loans such that a significant balance remains due at maturity;
−Removed: • generally have less predictable operating results, may be particularly vulnerable to changes in customer preferences or market conditions, depend on one or a limited number of major customers;
−Removed: • may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position;
−Removed: • generally have less publicly available information about their businesses, operations and financial condition.
−Removed: If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and may lose all or part of our investment.
+Added: • generally have less predictable operating results, may be particularly vulnerable to changes in customer preferences or market conditions, and may depend on one or a limited number of major customers;
+Added: • may be parties to litigation from time to time, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position;
+Added: • generally have less publicly available information about their businesses, operations and financial condition, and, if we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and may lose all or part of our investment.
Any of these factors or changes thereto could impair a portfolio company’s financial condition, results of operation, cash flow or result in other adverse events, such as bankruptcy, any of which could limit a portfolio company’s ability to make scheduled payments on loans from us.
3 unchanged sentences
Senior Loans are usually rated below investment grade or may also be unrated.
−Removed: As a result, the risks associated with senior secured loans may be considered by credit rating agencies to be similar to the risks of below investment grade fixed-income instruments, although Senior Loans are senior and secured in contrast to other below investment grade fixed-income instruments, which are often subordinated or unsecured.
+Added: As a result, the risks associated with Senior Loans may be considered by credit rating agencies to be similar to the risks of below investment grade fixed-income instruments, although Senior Loans are senior and secured in contrast to other below investment grade fixed-income instruments, which are often subordinated or unsecured.
Investment in Senior Loans rated below investment grade is considered speculative because of the credit risk of their issuers.
2 unchanged sentences
Moreover, any specific collateral used to secure a Senior Loans may decline in value or become illiquid, which would adversely affect the Senior Loan’s value.
−Removed: There may be less readily available and reliable information about most senior secured loans than is the case for many other types of securities, including securities issued in transactions registered under the 1933 Act or registered under the 1934 Act.
+Added: There may be less readily available and reliable information about most Senior Loans than is the case for many other types of securities, including securities issued in transactions registered under the Securities Act or registered under the Exchange Act.
As a result, Churchill will rely primarily on its own evaluation of a borrower’s credit quality rather than on any available independent sources.
1 unchanged sentence
In general, the secondary trading market for senior secured loans is not well developed.
−Removed: No active trading market may exist for certain senior secured loans, which may make it difficult to value them.
−Removed: Illiquidity and adverse market conditions may mean that we may not be able to sell senior secured loans quickly or at a fair price.
−Removed: To the extent that a secondary market does exist for certain senior secured loans, the market for them may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.
+Added: No active trading market may exist for certain Senior Loans, which may make it difficult to value them.
+Added: Illiquidity and adverse market conditions may mean that we may not be able to sell Senior Loans quickly or at a fair price.
+Added: To the extent that a secondary market does exist for certain Senior Loans, the market for them may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.
We may be subject to risks associated with our investment in junior debt securities.
5 unchanged sentences
Holders of equity are not entitled to payments until all creditors are paid in full.
−Removed: In addition, the remedies available to holders of junior debt are normally limited by restrictions benefitting senior creditors.
+Added: In addition, the remedies available to holders of junior debt are normally limited by restrictions benefiting senior creditors.
In the event any portfolio company cannot generate adequate cash flow to meet senior debt service, we may suffer a partial or total loss of capital invested.
15 unchanged sentences
The equity interests we receive may not appreciate in value and, in fact, may decline in value.
−Removed: Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.
+Added: Accordingly, we may not be able to realize gains from our equity interests, and any gains that we realize in the disposition of any equity interests may not be sufficient to offset any other losses we experience.
We will generally have little, if any, control over the timing of any gains we may realize from our equity investments.
17 unchanged sentences
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 the Board.
+Added: As a BDC, we are required to carry our investments at market value or, if no market quotation readily available, at fair value as determined in good faith by the Board.
When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation.
15 unchanged sentences
To the extent original issue discount and payment-in-kind interest constitute a portion of our income, we will be exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash representing such income.
−Removed: Our investments may include original issue discount, or OID, components and may include PIK interest or PIK dividend components.
−Removed: To the extent original issue discount constitutes a portion of our income, we are exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including the following:
+Added: Our investments may include OID components and may include PIK interest or PIK dividend components.
+Added: To the extent OID constitutes a portion of our income, we are exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including the following:
• We must include in income each year a portion of the OID that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year.
72 unchanged sentences
In addition, a bankruptcy court may choose not to enforce an intercreditor agreement or other agreement with creditors.
−Removed: We may be subject to risks associated with unsecured loans we make to portfolio companies.
−Removed: We may also make unsecured loans to portfolio companies, meaning that such loans will not benefit from any interest in collateral of such companies.
−Removed: Liens on such portfolio companies’ collateral, if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements.
−Removed: The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us.
−Removed: 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: There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured loan obligations after payment in full of all secured loan obligations.
−Removed: If such proceeds were not sufficient to repay the outstanding secured loan 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.
We may be subject to risks associated with subordinated investments.
26 unchanged sentences
These arrangements may result in contingent liabilities that ultimately result in funding obligations that we must satisfy through our return of distributions previously made to us.
−Removed: We may not realize gains from our equity investments.
−Removed: We may in the future make investments that include warrants or other equity or equity-related securities.
−Removed: In addition, we may from time to time make non-control, equity co-investments in companies in conjunction with private equity sponsors.
−Removed: Our goal is ultimately to realize gains upon our disposition of such equity interests.
−Removed: However, the equity interests we receive may not appreciate in value and, in fact, may decline in value.
−Removed: Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.
−Removed: We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests.
−Removed: We often seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company issuer.
−Removed: We may be unable to exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress.
Risks Relating to Our Shares
1 unchanged sentence
There is currently no public market for our shares, and a market for our shares may never develop.
−Removed: Our Shares are not registered under the 1933 Act, or any state securities law and are restricted as to transfer by law and the terms of our Charter.
+Added: Our shares are not registered under the Securities Act, or any state securities law and are restricted as to transfer by law and the terms of our Charter.
Our shareholders generally may not sell, assign or transfer shares without prior written consent of the Adviser, which the Adviser may grant or withhold in its sole discretion.
3 unchanged sentences
Our shareholders may experience dilution.
−Removed: Our shareholders will not have preemptive rights to subscribe for or purchase any Shares issued in the future.
−Removed: To the extent we issue additional equity interests, including in a public offering, a rights offering, or following a subsequent closing, a shareholder’s percentage ownership interest in the Company will be diluted.
+Added: Our shareholders will not have preemptive rights to subscribe for or purchase any of our shares issued in the future.
+Added: To the extent we issue additional equity interests, including in a public offering, a rights offering, a follow-on private offering, or a subsequent closing, a shareholder’s percentage ownership interest in the Company will be diluted.
In addition, depending upon the terms and pricing of any additional offerings or rights offerings and the value of our investments, a shareholder may also experience dilution in the net asset value and fair value of our shares.
3 unchanged sentences
Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein.
−Removed: In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions.
+Added: In addition, the inability to satisfy the asset coverage r applicable to us as a BDC could limit our ability to pay distributions.
All distributions will be paid at the discretion of the Board and will depend on our earnings, our financial condition, maintenance of our RIC tax treatment, compliance with applicable BDC regulations and such other factors as the Board may deem relevant from time to time.
5 unchanged sentences
We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions.
−Removed: Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this annual report on Form 10-K, including the COVID-19 pandemic described above.
−Removed: For example, if the operating restrictions of many corporate offices, retail stores, and manufacturing facilities and factories in the jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time it could result in reduced cash flows to us from our existing portfolio companies, which could reduce cash available for distribution to our shareholders.
+Added: Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this Annual Report on Form 10-K, including current market conditions described herein.
If we violate certain covenants under our existing or future credit facilities or other leverage, we may be limited in our ability to make distributions.
3 unchanged sentences
A return of capital distribution may cause a shareholder to recognize a capital gain from the sale of our shares even if the shareholder sells its shares for less than the original purchase price.
−Removed: Due to the COVID-19 pandemic or other disruptions in the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur U.S.
+Added: Due to the current market conditions, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur U.S.
federal excise tax in order preserve cash and maintain flexibility.
−Removed: As a BDC, we are not required to make any distributions to shareholders other than in connection with our election to be taxed as a RIC under subchapter M of the Code.
−Removed: In order to maintain our tax treatment as a RIC, we must distribute to shareholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses).
+Added: As a BDC, we are not required to make any distributions to shareholders other than in connection with our election to be treated for U.S.
+Added: federal income tax purposes as a RIC under subchapter M of the Code.
+Added: In order to maintain our tax treatment as a RIC, we generally must distribute to shareholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses).
If we qualify for taxation as a RIC, we generally will not be subject to U.S.
3 unchanged sentences
Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year.
−Removed: In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all US federal tax purposes as if it were paid on December 31 of the current year.
+Added: In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all U.S.
+Added: federal tax purposes as if it were paid on December 31 of the current year.
In addition, under the Code, we may pay dividends, referred to as “spillover dividends,” that are paid during the following taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for corporate-level U.S.
4 unchanged sentences
federal excise tax on some or all of the distribution.
−Removed: Due to the COVID-19 pandemic or other disruptions in the economy, we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility.
−Removed: For example, we may not be able to increase our dividends.
−Removed: In addition, we may reduce our dividends and/or defer our dividends to the following taxable year.
+Added: Due to current market conditions (as described herein), we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility.
+Added: For example, we may reduce our dividends and/or defer our dividends to the following taxable year.
If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S.
federal excise tax on such amounts.
−Removed: To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our stock as discussed below under:
−Removed: " We may choose to pay a portion of our dividends in our own Shares, in which case you may be required to pay U.S.
−Removed: federal income taxes in excess of the cash you receive."
+Added: To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our stock (see "We may choose to pay a portion of our dividends in our own shares, in which case you may be required to pay U.S.
+Added: federal income taxes in excess of the cash you receive" for more information).
We may choose to pay a portion of our dividends in our own shares, in which case you may be required to pay U.S.
1 unchanged sentence
We have adopted a dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our shareholders that elect to opt in to such plan.
−Removed: We may distribute taxable dividends that are payable in part in our Shares.
−Removed: Taxable shareholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain or qualified dividend income to the extent such distribution is properly reported as such) to the extent of our current and accumulated earnings and profits for U.S.
+Added: Shareholders that opt in to our dividend reinvestment plan will receive dividends that are payable in part in our shares.
+Added: Shareholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain or qualified dividend income to the extent such distribution is properly reported as such) to the extent of our current and accumulated earnings and profits for U.S.
federal income tax purposes.
−Removed: The tax rate for ordinary income will vary depending on a shareholder’s particular characteristics.
−Removed: For individuals, the top marginal federal ordinary income tax rate effective beginning in 2018 is 37%.
+Added: For individuals, the top marginal U.S.
+Added: federal income tax rate applicable to ordinary income is 37%.
To the extent distributions paid by us to non-corporate shareholders (including individuals) are attributable to dividends from U.S.
−Removed: corporations and certain qualified foreign corporations, such distributions generally will be eligible for a maximum qualified dividend federal tax rate of 20%.
−Removed: However, in this regard, it is anticipated that distributions paid by us will generally not be attributable to such dividends and, therefore, generally will not qualify for the preferential federal tax rate.
+Added: corporations and certain qualified foreign corporations, such "qualified dividends" may be subject to U.S.
+Added: federal income tax at a rate of of 20%.
+Added: However, it is anticipated that distributions paid by us will generally not be attributable to qualified dividends and, therefore, generally will not qualify for such preferential U.S.
+Added: federal income tax rate.
Distributions of our net capital gains (which is generally our realized net long-term capital gains in excess of realized net short-term capital losses) properly reported by us as “capital gain dividends” will be taxable to a U.S.
−Removed: shareholder as long-term capital gains currently at a maximum federal tax rate of 20%.
+Added: shareholder as long-term capital gains currently at a maximum U.S.
+Added: federal income tax rate of 20%.
As a result of receiving dividends in the form of our shares, a U.S.
1 unchanged sentence
Under certain applicable provisions of the Code and the published guidance, distributions payable of a publicly offered RIC that are in cash or in shares of stock at the election of shareholders may be treated as taxable distributions.
−Removed: The Internal Revenue Service has issued a revenue procedure indicating that this rule will apply if the total amount of cash to be distributed is not less than 20% of the total distribution , which amount has temporarily been reduced to 10% for distributions on or after November 1, 2021, and on or before June 30, 2022.
+Added: The Internal Revenue Service has issued a revenue procedure indicating that this rule will apply if the total amount of cash to be distributed is not less than 20% of the total distribution.
Under this revenue procedure, if too many shareholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the shareholders electing to receive cash (with the balance of distributions paid in stock).
−Removed: If we decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable shareholders receiving such distributions will be required to include the full amount of the distribution (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain distribution) to the extent of our current and accumulated earnings and profits for U.S.
+Added: We currently do not expect to qualify as a publicly offered RIC and are thus not able to make distributions consistent with such revenue procedure at this time.
+Added: If we qualify as a publicly offered RIC and decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable shareholders receiving such distributions will be required to include the full amount of the distribution (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain distribution) to the extent of our current and accumulated earnings and profits for U.S.
federal income tax purposes.
23 unchanged sentences
There are restrictions on the ability of holders of our shares to transfer such shares in excess of the restrictions typically associated with a private offering of securities under Regulation D and other exemptions from registration under the Securities Act, and these restrictions could limit the liquidity of an investment in our shares and the price at which holders may be able to sell their shares.
−Removed: We are relying on an exemption from registration under the 1933 Act and state securities laws in offering our Shares pursuant to a subscription agreement.
−Removed: As such, absent an effective registration statement covering our Shares, such Shares may be resold only in transactions that are exempt from the registration requirements of the 1933 Act and with the prior written consent of the Adviser.
+Added: We are relying on an exemption from registration under the Securities Act and state securities laws in offering our shares pursuant to a subscription agreement.
+Added: As such, absent an effective registration statement covering our shares, such shares may be resold only in transactions that are exempt from the registration requirements of the Securities Act and with the prior written consent of the Adviser.
Our shares 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 shareholders.
−Removed: Shareholders may be subject to filing requirements under the 1934 Act as a result of an investment in us.
−Removed: Because our Shares will be registered under the 1934 Act, ownership information for any person who beneficially owns 5% or more of our Shares must be disclosed in a Schedule 13D or Schedule 13G or other filings with the SEC.
+Added: Shareholders may be subject to filing requirements under the Exchange Act as a result of an investment in us.
+Added: Because our shares will be registered under the Exchange Act, ownership information for any person who beneficially owns 5% or more of our shares must be disclosed in a Schedule 13D or Schedule 13G or other filings with the SEC.
Beneficial ownership for these purposes is determined in accordance with the rules of the SEC, and includes having voting or investment power over the securities.
In some circumstances, investors who choose to reinvest their dividends may see their percentage stake in us increased to more than 5%, thus triggering this filing requirement.
−Removed: Although we provide in our quarterly financial statements the amount of outstanding Shares and the amount of the investor’s Shares, the responsibility for determining the filing obligation and preparing the filing remains with the investor.
−Removed: In addition, owners of 10% or more of our Shares are subject to reporting obligations under Section 16(a) of the 1934 Act.
−Removed: Shareholders may be subject to the short-swing profits rules under the 1934 Act as a result of an investment in us.
−Removed: Persons who hold more than 10% of a class of our Shares may be subject to Section 16(b) of the 1934 Act, which recaptures for the benefit of the issuer profits from the purchase and sale of registered Shares within a six-month period.
+Added: Although we provide in our quarterly financial statements the amount of our outstanding shares and the amount of the investor’s shares, the responsibility for determining the filing obligation and preparing the filing remains with the investor.
+Added: In addition, owners of 10% or more of our shares are subject to reporting obligations under Section 16(a) of the Exchange Act.
+Added: Shareholders may be subject to the short-swing profits rules under the Exchange Act as a result of an investment in us.
+Added: Persons who hold more than 10% of a class of our shares may be subject to Section 16(b) of the Exchange Act, which recaptures for the benefit of the issuer profits from the purchase and sale of registered shares within a six-month period.
UNRESOLVED STAFF COMMENTS
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.