What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2020-11-19 compared with 2019-11-20 · 510 added, 628 removed, 426 unchanged (73% of the section changed)

5 unchanged sentences

• the ability of Oaktree to reposition our portfolio and to implement Oaktree's future plans with respect to our business;

the ability of Oaktree to attract and retain highly talented professionals;

• the ability of Oaktree and its affiliates to attract and retain highly talented professionals;

• our business prospects and the prospects of our portfolio companies;

8 unchanged sentences

Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “ Item 1A.

Risk Factors ” and elsewhere in this annual report on Form 10-K.

Risk Factors ” in this annual report on Form 10-K.

Other factors that could cause actual results to differ materially include:

• changes or potential disruptions in our operations, the economy, financial markets or political environment;

• risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic;

• future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to Business Development Companies or RICs;

• general considerations associated with the COVID-19 pandemic;

• the ability of the parties to consummate the Mergers on the expected timeline, or at all;

• the ability to realize the anticipated benefits of the Mergers;

• the effects of disruption on our business from the proposed Mergers;

• the combined company’s plans, expectations, objectives and intentions, as a result of the Mergers;

• any potential termination of the Merger Agreement;

• the actions of our stockholders or the stockholders of OCSI with respect to the proposals submitted for their approval in connection with the Mergers ;

• other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.

1 unchanged sentence

Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

All dollar amounts in tables are in thousands, except share and per share amounts, percentages and as otherwise indicated.

All dollar amounts in tables are in thousands, except share and per share amounts and as otherwise indicated.

Business Overview

We are a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets.

We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company under the Investment Company Act.

We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company under the Investment Company Act of 1940, as amended, or the Investment Company Act.

In addition, we have qualified and elected to be treated as a RIC under the Code for tax purposes.

As of October 17, 2017, we are externally managed by Oaktree, pursuant to the Investment Advisory Agreement.

Oaktree Administrator, a subsidiary of Oaktree, provides certain administrative and other services necessary for us to operate pursuant to the Administration Agreement.

We seek to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments.

We are externally managed by Oaktree pursuant to the Investment Advisory Agreement.

The Oaktree Administrator, an affiliate of Oaktree, provides certain administrative and other services necessary for us to operate pursuant to the Administration Agreement.

Our investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments.

We may also seek to generate capital appreciation and income through secondary investments at discounts to par in either private or syndicated transactions.

Our portfolio may also include certain structured finance and other non-traditional structures.

We invest in companies that typically possess business models we expect to be resilient in the future with underlying fundamentals that will provide strength in future downturns.

We intend to deploy capital across credit and economic cycles with a focus on long-term results, which we

believe will enable us to build lasting partnerships with financial sponsors and management teams, and we may seek to opportunistically take advantage of dislocations in the financial markets and other situations that may benefit from Oaktree’s credit and structuring expertise.

We invest in companies that typically possess resilient business models with strong underlying fundamentals.

We intend to deploy capital across credit and economic cycles with a focus on long-term results, which we believe will enable us to build lasting partnerships with financial sponsors and management teams, and we may seek to opportunistically take advantage of dislocations in the financial markets and other situations that may benefit from Oaktree’s credit and structuring expertise, including during the COVID-19 pandemic.

Sponsors may include financial sponsors, such as an institutional investor or a private equity firm, or a strategic entity seeking to invest in a portfolio company.

2 unchanged sentences

Below investment grade securities, which are often referred to as “high yield” and “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.

Oaktree intends to continue to reposition our portfolio into investments that are better aligned with Oaktree's overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles.

Since becoming our investment adviser, Oaktree has performed a comprehensive review of our portfolio and categorized our portfolio into core investments, non-core performing investments and underperforming investments.

Oaktree intends to continue to rotate our portfolio into investments that are better aligned with Oaktree's overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles (which we call "core investments").

Oaktree has performed a comprehensive review of our portfolio and categorized our portfolio into core investments, non-core performing investments and underperforming investments.

Certain additional information on such categorization and our portfolio composition is included in investor presentations that we file with the SEC.

Since becoming our investment adviser, Oaktree has reduced the investments it has identified as non-core by nearly $700 million at fair value.

Over time, Oaktree intends to rotate us out of the remaining non-core investments, which is approximately $200 million at fair value as of September 30, 2019 .

Since an Oaktree affiliate became our investment adviser in October 2017, Oaktree and its affiliates have reduced the investments identified as non-core by over $700 million at fair value.

Over time, Oaktree intends to rotate us out of the remaining non-core investments, which were approximately $128 million at fair value as of September 30, 2020.

Oaktree periodically reviews designations of investments as core and non-core and may change such designations over time.

Business Environment and Developments

We believe that the shift of commercial banks away from lending to middle-market companies following the 2008 financial crisis, including as a result of the passage of the Dodd-Frank Act, and the adoption of the Basel III Accord continues to create opportunities for non-bank lenders such as us.

We believe middle-market companies represent a significant opportunity for direct lending as there are nearly 200,000 middle-market businesses, representing one-third of private sector gross domestic product and accounting for approximately 48 million jobs according to the National Center for the Middle Market.

In addition, according to the S&P Global Market Intelligence LCD Middle Market Review, there was a total of $2.6 billion of syndicated middle market loan issuance in the first half of calendar year 2019.

We believe that quantitative easing and other similar monetary policies implemented by central banks worldwide in reaction to the 2008 financial crisis have created significant inflows of capital, including from private equity sponsors, focused on yield-driven products such as sub-investment grade debt.

While we believe that private equity sponsors continue to have a large pool of available capital and will continue to pursue acquisitions in the middle market, increased competition from other lenders to middle-market companies together with increased capital focused on the sector have led to spread compression and higher leverage multiples across the middle market, resulting in spreads near historically low levels, and average debt levels near historically high levels.

Despite the heightened competition, we believe that the fundamentals of middle-market companies remain strong.

In this environment, we believe attractive risk-adjusted returns can be achieved by investing in companies that cannot efficiently access traditional debt capital markets.

We believe that we have the resources and experience to source, diligence and structure investments in these companies and are well placed to generate attractive returns for investors.

We believe that the COVID-19 pandemic may have lasting effects on the U.S.

and global financial markets and may cause further economic uncertainties or deterioration in the performance of the middle market in the United States and worldwide.

While the initial market disruptions have somewhat eased, the global economy continues to experience economic uncertainty.

This uncertainty can impact the overall supply and demand of the market through changing spreads, deal terms and structures, and equity purchase price multiples.

Despite this economic uncertainty, we believe attractive risk-adjusted returns can be achieved by making loans to companies in the middle market.

Given the breadth of the investment platform of Oaktree and its affiliates, we believe that we have the resources and experience to source, diligence and structure investments in these companies and are well placed to generate attractive returns for investors.

We have proactively taken a number of actions to evaluate and support our portfolio companies in light of the COVID-19 pandemic, including outreach to a variety of management teams and sponsors.

We have been in close contact with many of our portfolio companies to understand their liquidity and solvency positions.

We believe that these efforts to closely monitor and identify vulnerable investments will allow us to address potential problems early and provide constructive solutions to our portfolio companies.

As of September 30, 2020, 88.3% of our debt investment portfolio (at fair value) and 88.8% of our debt investment portfolio (at cost) bore interest at floating rates indexed to the LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly or monthly at the borrower’s option.

As a result of the COVID-19 pandemic and the related decision of the U.S.

Federal Reserve to reduce certain interest rates, LIBOR decreased beginning in March 2020.

A prolonged reduction in interest rates will result in a decrease in our total investment income and could result in a decrease in our net investment income to the extent the decreases are not offset by an increase in the spread on our floating rate investments, a decrease in our interest expense or a reduction of our incentive fee on income.

In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of LIBOR by the end of 2021.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, is considering replacing U.S.-dollar LIBOR with the SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities.

Although there have been a few issuances utilizing SOFR or the Sterling Over Night Index Average, an alternative reference rate that is based on transactions, it remains unknown whether these alternative reference rates will attain market acceptance as replacements for LIBOR.

If LIBOR ceases to exist, we may need to renegotiate any credit agreements extending beyond 2021 with our prospective portfolio companies that utilize LIBOR as a factor in determining the interest rate and may also need to renegotiate the terms of the Credit Facility, which matures in 2024.

Certain of the loan agreements with our portfolio companies have included fallback language in the event that LIBOR becomes unavailable.

In anticipation of the cessation of LIBOR, we may need to renegotiate any credit agreements extending beyond 2021 with our prospective portfolio companies that utilize LIBOR as a factor in determining the interest rate and may also need to renegotiate the terms of the Credit Facility, which matures in 2024.

Certain of the loan agreements with our portfolio companies have included fallback

language in the event that LIBOR becomes unavailable.

This language generally provides that the administrative agent may identify a replacement reference rate, typically with the consent of (or prior consultation with) the borrower.

1 unchanged sentence

Certain of the loan agreements with our portfolio companies do not include any fallback language providing a mechanism for the parties to negotiate a new reference interest rate and will instead revert to the base rate in the event LIBOR ceases to exist.

Investment Advisory Agreement with Oaktree

On October 17, 2017, Oaktree became the investment adviser to each of OCSI and us.

See “ Note 11.

Related Party Transactions– Investment Advisory Agreement ” and “ – Administrative Services ” in the notes to the accompanying Consolidated Financial Statements.

Asset Coverage Requirements

At a special meeting of stockholders held on June 28, 2019, our stockholders approved the application of the reduced asset coverage requirements in Section 61(a)(2) of the Investment Company Act to us, effective as of June 29, 2019.

The reduced asset coverage requirements permit us to double the maximum amount of leverage that we are permitted to incur by reducing the asset coverage requirements applicable to us from 200% to 150%.

As a result of the reduced asset coverage requirement, we can incur $2 of debt for each $1 of equity as compared to $1 of debt for each $1 of equity.

As of September 30, 2019 , we had $476.1 million in senior securities and our asset coverage ratio was 294.9% .

It remains unclear whether the cessation of LIBOR will be delayed due to COVID-19 or what form any delay may take, and there are no assurances that there will be a delay.

It is also unclear what the duration and severity of COVID-19 will be, and whether this will impact LIBOR transition planning.

COVID-19 may also slow regulators’ and others’ efforts to develop and implement alternative reference rates, which could make LIBOR transition planning more difficult, particularly if the cessation of LIBOR is not delayed but an alternative reference rate does not emerge as industry standard.

Critical Accounting Policies

2 unchanged sentences

All intercompany balances and transactions have been eliminated.

We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board, or FASB, ASC Topic 946, Financial Services-Investment Companies , or ASC 946.

We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 946, Financial Services-Investment Companies , or ASC 946.

Investment Valuation

We value our investments in accordance with ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

We value our investments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor.

18 unchanged sentences

If we are unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within our set threshold, we seek to obtain a quote directly from a broker making a market for the asset.

Oaktree evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated.

Oaktree evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or

similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated.

Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions.

16 unchanged sentences

Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels.

These investments are generally not redeemable.

We estimate the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk-free rate.

8 unchanged sentences

• Our Board of Directors discusses valuations and determines the fair value of each investment in our portfolio.

The fair value of our investments as of September 30, 2019 and 2018 was determined in good faith by our Board of Directors.

The fair value of our investments as of September 30, 2020 and September 30, 2019 was determined in good faith by our Board of Directors.

Our Board of Directors has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of a portion of our portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance.

As of September 30, 2020, 93.1% of our portfolio at fair value was valued either based on market quotations, the transactions precedent approach or corroborated by independent valuation firms.

However, our Board of Directors is responsible for the ultimate valuation of the

portfolio investments at fair value as determined in good faith pursuant to our valuation policy and a consistently applied valuation process.

However, our Board of Directors is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to our valuation policy and a consistently applied valuation process.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period.

Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

As of September 30, 2020 and September 30, 2019, approximately 95.9% and 97.1%, respectively, of our total assets represented investments at fair value.

Revenue Recognition

Interest Income

Interest income, adjusted for accretion of OID is recorded on an accrual basis to the extent that such amounts are expected to be collected.

3 unchanged sentences

A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash, and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations.

As of September 30, 2019 , there were three investments on which we had stopped accruing cash and/or PIK interest or OID income.

As of September 30, 2020, there were two investments on which we had stopped accruing cash and/or PIK interest or OID income.

In connection with our investment in a portfolio company, we sometimes receive nominal cost equity that is valued as part of the negotiation process with the portfolio company.

1 unchanged sentence

Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.

For our secured borrowings, the interest earned on the entire loan balance is recorded within interest income and the interest earned by the buyer from the partial loan sales is recorded within interest expense in the Consolidated Statements of Operations.

PIK Interest Income

Our investments in debt securities may contain PIK interest provisions.

10 unchanged sentences

To maintain our status as a RIC, certain income from PIK interest may be required to be distributed to our stockholders, even though we have not yet collected the cash and may never do so.

Oaktree may provide financial advisory services to portfolio companies and, in return, we may receive fees for capital structuring services.

Oaktree or its affiliates may provide financial advisory services to portfolio companies and, in return, we may receive fees for capital structuring services.

These fees are generally nonrecurring and are recognized by us upon the investment closing date.

5 unchanged sentences

Dividend Income

We generally recognize dividend income on the ex-dividend date.

Distributions received from equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.

Generally, we will not record distributions from such equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution.

We generally recognize dividend income on the ex-dividend date for public securities and the record date for private equity investments.

Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.

Generally, we will not record distributions from private equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution.

Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

Portfolio Composition

Our investments principally consist of loans, common and preferred equity and warrants in privately-held companies and Senior Loan Fund JV I, LLC, or SLF JV I.

Our investments principally consist of loans, common and preferred equity and warrants in privately-held companies and SLF JV I , a joint venture through which we and Kemper co-invest in senior secured loans of middle-market companies and other corporate debt securities.

Our loans are typically secured by a first, second or subordinated lien on the assets of the portfolio company and generally have terms of up to ten years (but an expected average life of between three and four years).

We believe the environment for direct lending remains active, and, as a result, a number of our portfolio companies were able to refinance and repay their loans during the fiscal year ended September 30, 2019 .

During the fiscal year ended September 30, 2020, we originated $816.1 million of investment commitments in 59 new and 23 existing portfolio companies and funded $732.7 million of investments.

1 unchanged sentence

A summary of the composition of our investment portfolio at cost and fair value as a percentage of total investments is shown in the following tables:

September 30, 2019

September 30, 2018

September 30, 2020 September 30, 2019

Senior secured debt 80.58 % 77.35 %

Debt investment in SLF JV I 5.77 6.36

Subordinated debt 4.64 6.88

Debt investments in SLF JV I

Common equity & warrants

Common equity and warrants 3.69 3.48

LLC equity interests of SLF JV I 2.95 3.26

Preferred equity 2.37 2.67

September 30, 2019

September 30, 2018

Total 100.00 % 100.00 %

September 30, 2020 September 30, 2019

Senior secured debt 84.06 % 78.64 %

Debt investments in SLF JV I

Debt investment in SLF JV I 6.12 6.69

Subordinated debt 4.17 5.65

2 unchanged sentences

LLC equity interests of SLF JV I 1.35 2.10

Total 100.00 % 100.00 %

The industry composition of our portfolio at cost and fair value as a percentage of total investments was as follows:

September 30, 2019

September 30, 2018

Multi-sector holdings (1)

September 30, 2020 September 30, 2019

Application Software 9.71 % 8.73 %

Healthcare services

Multi-Sector Holdings (1) 8.87 9.67

Data Processing & Outsourced Services 6.57 6.46

Biotechnology

Property & casualty insurance

Pharmaceuticals 5.96 3.92

Biotechnology 5.36 5.43

Health Care Services 4.26 6.62

Specialized Finance 3.11 3.52

Healthcare technology

Auto parts & equipment

Real estate services

Research & consulting services

Integrated telecommunication services

Aerospace & defense

Internet services & infrastructure

Personal Products 3.00 —

Property & Casualty Insurance 2.88 4.83

Specialty Chemicals 2.68 2.10

Systems software

Movies & Entertainment 2.68 1.25

Integrated Telecommunication Services 2.67 2.23

Real Estate Services 2.34 2.60

Fertilizers & Agricultural Chemicals 2.02 —

Auto Parts & Equipment 2.02 2.82

Oil & Gas Refining & Marketing 1.87 2.01

Alternative carriers

Managed healthcare

Construction & engineering

Healthcare distributors

Interactive media & services

Internet Services & Infrastructure 1.72 2.15

Aerospace & Defense 1.68 2.23

Managed Health Care 1.65 1.83

Oil & Gas Storage & Transportation 1.59 0.77

Electronic Components 1.53 —

Research & Consulting Services 1.49 2.30

Education Services 1.37 1.04

Airport Services 1.34 —

Health Care Supplies 1.30 —

Health Care Technology 1.29 3.37

Independent Power Producers & Energy Traders 1.29 —

Electrical Components & Equipment 1.25 1.40

Systems Software 1.24 2.10

General Merchandise Stores 1.15 1.25

Movies & entertainment

Diversified Support Services 1.13 1.24

Apparel, accessories & luxury goods

Insurance Brokers 1.05 —

Hotels, Resorts & Cruise Lines 0.92 —

Diversified Real Estate Activities 0.92 —

Industrial Machinery 0.90 1.13

Education services

IT Consulting & Other Services 0.89 0.99

Oil & gas equipment & services

Oil & gas storage & transportation

Internet & Direct Marketing Retail 0.89 —

Apparel, Accessories & Luxury Goods 0.82 1.20

Advertising 0.82 2.80

Construction & Engineering 0.80 1.55

Health Care Distributors 0.77 1.49

Metal & Glass Containers 0.68 —

Airlines 0.63 0.70

Restaurants 0.61 0.20

Trading Companies & Distributors 0.61 0.68

Specialized REITs

Household appliances

Commercial Printing 0.47 0.40

Environmental & facilities services

Food Retail 0.41 0.96

Oil & Gas Equipment & Services 0.20 0.80

Health Care Facilities 0.19 —

Construction Materials 0.13 —

Leisure Facilities 0.11 0.12

1 unchanged sentence

Thrifts & Mortgage Finance 0.06 0.08

Specialized REITs 0.01 0.55

Other Diversified Financial Services 0.01 0.01

Alternative Carriers — 1.94

Interactive Media & Services — 1.44

Household Appliances — 0.52

Environmental & Facilities Services — 0.39

Human Resource & Employment Services — 0.05

Department Stores — 0.04

Other diversified financial services

Healthcare equipment

Oil & gas exploration & production

Technology distributors

Consumer electronics

Personal products

Investment banking & brokerage

Security & alarm services

Coal & consumable fuels

Commodity chemicals

Hypermarkets & super centers

September 30, 2019

September 30, 2018

Total 100.00 % 100.00 %

September 30, 2020 September 30, 2019

Application Software 10.21 % 9.00 %

Multi-Sector Holdings (1) 7.74 8.94

Pharmaceuticals 6.55 4.18

Data Processing & Outsourced Services 6.33 6.83

Biotechnology 6.14 5.96

Property & casualty insurance

Pharmaceuticals

Healthcare services

Healthcare technology

Health Care Services 3.81 4.06

Personal Products 3.24 —

Specialized Finance 3.08 3.58

Auto parts & equipment

Property & Casualty Insurance 2.97 5.16

Movies & Entertainment 2.77 1.29

Integrated Telecommunication Services 2.61 2.01

Specialty Chemicals 2.48 1.64

Real Estate Services 2.40 2.75

Research & consulting services

Aerospace & defense

Internet services & infrastructure

Fertilizers & Agricultural Chemicals 2.14 —

Auto Parts & Equipment 1.99 2.82

Oil & Gas Refining & Marketing 1.90 2.20

Managed Health Care 1.70 1.93

Internet Services & Infrastructure 1.69 2.26

Electronic Components 1.69 —

Oil & Gas Storage & Transportation 1.64 0.83

Aerospace & Defense 1.56 2.35

Research & Consulting Services 1.54 2.60

Health Care Technology 1.40 3.64

Health Care Supplies 1.37 —

Airport Services 1.35 —

Independent Power Producers & Energy Traders 1.32 —

Systems Software 1.30 2.19

Alternative carriers

Integrated telecommunication services

Managed healthcare

Construction & engineering

Specialty chemicals

Interactive media & services

Healthcare distributors

Electrical Components & Equipment 1.30 1.39

Diversified support services

Movies & entertainment

Insurance Brokers 1.15 —

General Merchandise Stores 1.14 1.18

Industrial machinery

Leisure products

Diversified Support Services 1.12 1.30

Hotels, Resorts & Cruise Lines 1.09 —

Diversified Real Estate Activities 1.07 —

Internet & Direct Marketing Retail 0.97 —

IT Consulting & Other Services 0.88 0.96

Oil & gas equipment & services

Apparel, accessories & luxury goods

Oil & gas storage & transportation

Construction & Engineering 0.86 1.67

Advertising 0.85 2.59

Airlines 0.83 1.12

Health Care Distributors 0.78 1.53

Metal & Glass Containers 0.75 —

Industrial Machinery 0.74 1.17

Trading Companies & Distributors 0.64 0.72

Restaurants 0.50 0.19

Apparel, Accessories & Luxury Goods 0.50 0.92

Commercial Printing 0.47 0.41

Education Services 0.45 —

Food Retail 0.44 1.04

Health Care Facilities 0.23 —

Oil & Gas Equipment & Services 0.16 0.95

Construction Materials 0.13 —

Thrifts & Mortgage Finance 0.02 0.05

Specialized REITs 0.01 0.57

Leisure Products — 1.05

Alternative Carriers — 2.06

Interactive Media & Services — 1.56

Household Appliances — 0.53

Environmental & Facilities Services — 0.41

Commercial printing

Leisure Facilities — 0.33

Human Resource & Employment Services — 0.05

Thrifts & mortgage finance

Department stores — 0.03

Education services

Specialty stores

Oil & gas exploration & production

Technology distributors

Consumer electronics

Personal products

Investment banking & brokerage

Security & alarm services

Healthcare equipment

Coal & consumable fuels

Commodity chemicals

Hypermarkets & super centers

Total 100.00 % 100.00 %

___________________

This industry includes our investment in SLF JV I.

(1) This industry includes our investments in SLF JV I, collateralized loan obligations and certain limited partnership interests.

Loans and Debt Securities on Non-Accrual Status

As of September 30, 2019 and September 30, 2018 , there were three and eight investments on which we had stopped accruing cash and/or PIK interest or OID income.

As of September 30, 2020 and September 30, 2019, there were two and three investments, respectively, on which we had stopped accruing cash and/or PIK interest or OID income.

The percentages of our debt investments at cost and fair value by accrual status as of September 30, 2020 and September 30, 2019 were as follows:

September 30, 2019

September 30, 2018

September 30, 2020 September 30, 2019

Cost % of Debt

Portfolio Fair

Value % of Debt

Portfolio Cost % of Debt

Portfolio Fair

Value % of Debt

Accrual $ 1,500,364 98.79 % $ 1,483,284 99.89 % $ 1,311,849 95.72 % $ 1,305,718 99.79 %

PIK non-accrual (1) 12,661 0.83 — — 12,661 0.92 — —

Cash non-accrual (2) 5,712 0.38 1,571 0.11 46,107 3.36 2,706 0.21

Total $ 1,518,737 100.00 % $ 1,484,855 100.00 % $ 1,370,617 100.00 % $ 1,308,424 100.00 %

___________________

9 unchanged sentences

On December 28, 2018, we and Kemper directed the redemption of our holdings of mezzanine notes issued by SLF Repack Issuer 2016, LLC, a wholly-owned, special purpose issuer subsidiary of SLF JV I.

Upon such redemption, the assets collateralizing the mezzanine notes, which consisted of equity interests of SLF JV I Funding LLC (the "Equity Interests"), were distributed in-kind to each of us and Kemper, based upon our respective holdings of mezzanine notes.

Upon such redemption, the assets collateralizing the mezzanine notes, which consisted of equity interests of SLF JV I Funding LLC, or the Equity Interests, were distributed in-kind to each of us and Kemper, based upon our respective holdings of mezzanine notes.

Upon such distribution, we and Kemper each then directed that a portion of our respective Equity Interests holdings be contributed to SLF JV I in exchange for LLC equity interests of SLF JV I and the remainder be applied as payment for the subordinated notes of SLF JV I.

3 unchanged sentences

The SLF JV I Subordinated Notes are (and the SLF Repack Notes were, prior to their redemption) senior in right of payment to SLF JV I LLC equity interests and subordinated in right of payment to SLF JV I’s secured debt.

As of September 30, 2019 , we and Kemper owned, in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV I and the outstanding SLF JV I Subordinated Notes and as of September 30, 2018 , we and Kemper owned in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interest in SLF JV I and the outstanding SLF Repack Notes.

SLF JV I has the Deutsche Bank I Facility, which permitted up to $250.0 million of borrowings as of September 30, 2019 and up to $200.0 million of borrowings as of September 30, 2018 .

As of September 30, 2020 and September 30, 2019, we and Kemper owned, in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV I and the outstanding SLF JV I Subordinated Notes.

SLF JV I has a senior revolving credit facility with Deutsche Bank AG, New York Branch, or, as amended, the Deutsche Bank I Facility, which permitted up to $250.0 million of borrowings (subject to borrowing base and other limitations) as of September 30, 2020 and September 30, 2019.

Borrowings under the Deutsche Bank I Facility are secured by all of the assets of SLF JV I Funding LLC, a special purpose financing subsidiary of SLF JV I.

2 unchanged sentences

Under the Deutsche Bank I Facility, $167.9 million and $170.2 million of borrowings were outstanding as of September 30, 2020 and September 30, 2019, respectively.

As of September 30, 2020, the Deutsche Bank I Facility includes a waiver period (which extends through January 3, 2021) during which the facility agent is restricted from revaluing certain collateral obligations where the change in valuation is caused by or results from a business disruption due primarily to the COVID-19 pandemic (subject to SLF JV I’s ability to earlier terminate such period in certain circumstances).

As of September 30, 2020 and September 30, 2019, SLF JV I had total assets of $313.5 million and $360.9 million, respectively.

1 unchanged sentence

The portfolio companies in SLF JV I are in industries similar to those in which we may invest directly.

As of September 30, 2019 , our investment in SLF JV I consisted of LLC equity interests of $30.1 million , at fair value, and subordinated notes of $96.3 million , at fair value.

As of September 30, 2018 , our investment in SLF JV I consisted of LLC equity interests of $0.0 million , at fair

value, and Class A mezzanine secured deferrable floating rate notes and Class B mezzanine secured deferrable fixed rate notes of $99.8 million and $29.5 million, at fair value, respectively.

As of September 30, 2020, our investment in SLF JV I consisted of LLC equity interests and SLF JV I Subordinated Notes of $117.4 million in aggregate at fair value.

As of September 30, 2019, our investment in SLF JV I consisted of LLC equity interests and SLF JV I Subordinated Notes of $126.3 million in aggregate at fair value.

As of each of September 30, 2020 and September 30, 2019, we and Kemper had funded approximately $165.5 million to SLF JV I, of which $144.8 million was from us.

2 unchanged sentences

Below is a summary of SLF JV I's portfolio, followed by a listing of the individual loans in SLF JV I's portfolio as of September 30, 2020 and September 30, 2019:

September 30, 2019

September 30, 2018

September 30, 2020 September 30, 2019

Senior secured loans (1) $307,579 $340,960

7 unchanged sentences

SLF JV I Portfolio as of September 30, 2020

Portfolio Company

Investment Type

Cash Interest Rate (1)(2)

Fair Value (3)

Access CIG, LLC

First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025

Diversified support services

Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes

Access CIG, LLC First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025 3.91 % Diversified Support Services $ 9,206 $ 9,170 $ 9,029

AdVenture Interactive, Corp.

927 shares of common stock

927 shares of common stock Advertising 1,390 1,373 (4)

AI Ladder (Luxembourg) Subco S.a.r.l.

First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025

Electrical components & equipment

First Lien Term Loan, LIBOR+4.75% cash due 5/31/2024

IT consulting & other services

AL Midcoast Holdings LLC

First Lien Term Loan, LIBOR+5.50% cash due 8/1/2025

Oil & gas storage & transportation

First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 4.65 % Electrical Components & Equipment 6,038 5,914 5,781 (4)

First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025 8.50 % Hotels, Resorts & Cruise Lines 3,051 2,981 3,311 (4)

Altice France S.A.

First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026

Integrated telecommunication services

First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026 4.15 % Integrated Telecommunication Services 4,643 4,450 4,527

Alvogen Pharma US, Inc.

First Lien Term Loan, LIBOR+4.75% cash due 4/1/2022

Pharmaceuticals

First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025

Application software

First Lien Revolver, LIBOR+7.25% cash due 1/10/2025

Application software

First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023 6.25 % Pharmaceuticals 9,879 9,623 9,566

Amplify Finco Pty Ltd.

First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026 4.75 % Movies & Entertainment 7,960 7,880 6,846 (4)

Anastasia Parent, LLC First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025 Personal Products 2,828 2,282 1,248 (6)

First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025 8.25 % Application Software 4,615 4,550 4,526 (4)

First Lien Revolver, LIBOR+7.25% cash due 1/10/2025 Application Software — (5) (8) (4)(5)

Total Apptio, Inc.

Aurora Lux Finco S.À.R.L.

First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026 7.00 % Airport Services 6,468 6,324 6,015 (4)

Blackhawk Network Holdings, Inc.

First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025

Data processing & outsourced services

First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025 3.15 % Data Processing & Outsourced Services 9,775 9,758 9,251

Boxer Parent Company Inc.

First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025

Systems software

Brazos Delaware II, LLC

First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025

Oil & gas equipment & services

C5 Technology Holdings, LLC

171 Common Units

IT consulting & other services

7,193,539.63 Preferred Units

First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025 4.40 % Systems Software 7,532 7,448 7,331 (4)

Brazos Delaware II, LLC First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025 4.16 % Oil & Gas Equipment & Services 7,331 7,306 5,600

C5 Technology Holdings, LLC 171 Common Units Data Processing & Outsourced Services — — (4)

7,193,539.63 Preferred Units Data Processing & Outsourced Services 7,194 5,683 (4)

Total C5 Technology Holdings, LLC 7,194 5,683

Cast & Crew Payroll, LLC

First Lien Term Loan, LIBOR+4.00% cash due 2/9/2026

Application software

Carrols Restaurant Group, Inc.

First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026 7.25 % Restaurants 3,990 3,792 3,960

CITGO Petroleum Corp.

First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024

Oil & gas refining & marketing

First Lien Term Loan, LIBOR+4.50% cash due 9/23/2026

Alternative Carriers

First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 6.00 % Oil & Gas Refining & Marketing 7,184 7,112 6,842 (4)

Clear Channel Outdoor Holdings, Inc.

First Lien Term Loan, LIBOR+3.50% cash due 8/21/2026 3.76 % Advertising 331 290 302

Finco LLC First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026 5.50 % Alternative Carriers 7,437 7,262 7,228

Curium Bidco S.à.r.l.

First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026

Biotechnology

First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026 3.97 % Biotechnology 5,940 5,895 5,895

Dcert Buyer, Inc.

First Lien Term Loan, LIBOR+4.00% cash due 8/8/2026

Internet services & infrastructure

DigiCert, Inc.

First Lien Term Loan, LIBOR+4.00% cash due 10/31/2024

Internet services & infrastructure

Ellie Mae, Inc.

First Lien Term Loan, LIBOR+4.00% cash due 4/17/2026

Application software

Everi Payments Inc.

First Lien Term Loan, LIBOR+3.00% cash due 5/9/2024

Casinos & gaming

Falmouth Group Holdings Corp.

First Lien Term Loan, LIBOR+6.75% cash due 12/14/2021

Specialty chemicals

Frontier Communications Corporation

First Lien Term Loan, LIBOR+3.75% cash due 6/15/2024

Integrated telecommunication services

Gentiva Health Services, Inc.

First Lien Term Loan, LIBOR+3.75% cash due 7/2/2025

Healthcare services

First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026 4.15 % Internet Services & Infrastructure 7,960 7,940 7,879

Dealer Tire, LLC First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025 4.40 % Distributors 943 902 924

eResearch Technology, Inc.

First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027 5.50 % Application Software 7,481 7,406 7,461

Frontier Communications Corporation First Lien Term Loan, PRIME+2.75% cash due 6/15/2024 6.00 % Integrated Telecommunication Services 3,939 3,901 3,887

Gigamon, Inc.

First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024

Systems software

First Lien Term Loan, LIBOR+2.75% cash due 10/10/2025

Interactive media & services

Guidehouse LLP

Second Lien Term Loan, LIBOR+7.50% cash due 5/1/2026

Research & consulting services

Portfolio Company

Investment Type

Cash Interest Rate (1)(2)

Fair Value (3)

Indivior Finance S.a.r.l.

First Lien Term Loan, LIBOR+4.50% cash due 12/19/2022

Pharmaceuticals

First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024 5.25 % Systems Software 7,781 7,734 7,684

Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes

Global Medical Response, Inc.

First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025 5.75 % Health Care Services $ 2,231 $ 2,187 $ 2,185

Guidehouse LLP Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026 8.15 % Research & Consulting Services 6,000 5,979 5,790 (4)

Helios Software Holdings, Inc.

First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025 4.52 % Systems Software 3,970 3,930 3,923

Intelsat Jackson Holdings S.A.

First Lien Term Loan, LIBOR+3.75% cash due 11/27/2023

Alternative Carriers

First Lien Term Loan, PRIME+4.75% cash due 11/27/2023 8.00 % Alternative Carriers 3,568 3,541 3,598

First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 7/13/2022 6.50 % Alternative Carriers 971 801 1,011 (5)

Total Intelsat Jackson Holdings S.A.

KIK Custom Products Inc.

First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023

Household products

McDermott Technology (Americas), Inc.

First Lien Term Loan, LIBOR+5.00% cash due 5/9/2025

Oil & gas equipment & services

First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023 5.00 % Household Products 5,322 5,308 5,302

LogMeIn, Inc.

First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027 4.91 % Application Software 5,000 4,876 4,842

Mindbody, Inc.

First Lien Term Loan, LIBOR+7.00% cash due 2/14/2025

Internet services & infrastructure

First Lien Revolver, LIBOR+7.00% cash due 2/15/2025

Internet services & infrastructure

First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025 8.00 % Internet Services & Infrastructure 4,546 4,481 4,192 (4)

First Lien Revolver, LIBOR+8.00% cash due 2/14/2025 Internet Services & Infrastructure — (7) (38) (4)(5)

Total Mindbody, Inc.

MRI Software LLC First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026 6.50 % Application Software 3,830 3,795 3,737 (4)

First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026 Application Software — (1) (4) (4)(5)

First Lien Revolver, LIBOR+5.50% cash due 2/10/2026 Application Software — (3) (8) (4)(5)

Total MRI Software LLC 3,791 3,725

Navicure, Inc.

First Lien Term Loan, LIBOR+3.75% cash due 9/18/2026

Healthcare technology

First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026 4.15 % Health Care Technology 5,970 5,940 5,849

New IPT, Inc.

First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021

Oil & gas equipment & services

21.876 Class A Common Units in New IPT Holdings, LLC

Oil & gas equipment & services

First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021 6.00 % Oil & Gas Equipment & Services 1,006 1,006 786 (4)

21.876 Class A Common Units in New IPT Holdings, LLC Oil & Gas Equipment & Services — — (4)

Total New IPT, Inc.

Northern Star Industries Inc.

First Lien Term Loan, LIBOR+4.50% cash due 3/31/2025

Electrical components & equipment

Novetta Solutions, LLC

First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022

Application software

OCI Beaumont LLC

First Lien Term Loan, LIBOR+4.00% cash due 3/13/2025

Commodity chemicals

OEConnection LLC

First Lien Term Loan, LIBOR+4.00% cash due 9/24/2026

Application software

First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/24/2026

Application software

First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025 5.75 % Electrical Components & Equipment 6,825 6,803 6,518

Northwest Fiber, LLC First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027 5.66 % Integrated Telecommunication Services 2,400 2,314 2,403

Novetta Solutions, LLC First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022 6.00 % Application Software 5,931 5,909 5,827

OEConnection LLC First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026 4.15 % Application Software 7,455 7,418 7,371

First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026 Application Software — (2) (5) (5)

Total OEConnection LLC 7,416 7,366

Red Ventures, LLC

First Lien Term Loan, LIBOR+3.00% cash due 11/8/2024

Interactive media & services

Olaplex, Inc.

First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026 7.50 % Personal Products 4,938 4,851 4,938 (4)

First Lien Revolver, LIBOR+6.50% cash due 1/8/2025 7.50 % Personal Products 270 261 270 (4)(5)

Total Olaplex, Inc.

PetVet Care Centers, LLC First Lien Term Loan, LIBOR+4.25% cash due 2/14/2025 5.25 % Specialized Consumer Services 2,743 2,736 2,747

PG&E Corporation First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025 5.50 % Electric Utilities 5,985 5,899 5,875

Recorded Books, Inc.

First Lien Term Loan, LIBOR+4.25% cash due 8/31/2025 4.75 % Publishing 6,000 5,940 5,940

Sabert Corporation First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026 5.50 % Metal & Glass Containers 2,828 2,800 2,791

Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes

Salient CRGT, Inc.

First Lien Term Loan, LIBOR+6.00% cash due 2/28/2022

Aerospace & defense

Scientific Games International, Inc.

First Lien Term Loan, LIBOR+2.75% cash due 8/14/2024

Casinos & gaming

SHO Holding I Corporation

First Lien Term Loan, LIBOR+5.00% cash due 10/27/2022

Signify Health, LLC

First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024

Healthcare services

First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022 7.50 % Aerospace & Defense $ 2,111 $ 2,099 $ 1,963 (4)

SHO Holding I Corporation First Lien Term Loan, LIBOR+3.00% cash PIK 2.25% due 4/27/2024 4.00 % Footwear 8,396 8,380 5,898

Signify Health, LLC First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024 5.50 % Health Care Services 9,750 9,690 9,409

Sirva Worldwide, Inc.

First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025

Diversified support services

Sunshine Luxembourg VII SARL

First Lien Term Loan, LIBOR+4.25% cash due 9/25/2026

Personal products

Thruline Marketing, Inc.

First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022

927 Class A Units in FS AVI Holdco, LLC

Total Thruline Marketing, Inc.

Triple Royalty Sub LLC

Fixed Rate Bond 144A 9.0% Toggle PIK cash due 4/15/2033

Pharmaceuticals

First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025 5.65 % Diversified Support Services 4,781 4,709 3,992

Star US Bidco LLC First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027 5.25 % Industrial Machinery 3,718 3,532 3,551

Sunshine Luxembourg VII SARL First Lien Term Loan, LIBOR+4.25% cash due 10/1/2026 5.25 % Personal Products 7,940 7,900 7,911

Supermoose Borrower, LLC First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025 3.90 % Application Software 4,888 4,575 4,407 (4)

Surgery Center Holdings, Inc.

First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024 4.25 % Health Care Facilities 4,962 4,943 4,691 (4)

Uber Technologies, Inc.

First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025

Application software

UFC Holdings, LLC

First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026

Movies & entertainment

Uniti Group LP

First Lien Term Loan, LIBOR+5.00% cash due 10/24/2022

Specialized REITs

Valeant Pharmaceuticals International Inc.

First Lien Term Loan, LIBOR+2.75% cash due 11/27/2025

Pharmaceuticals

Portfolio Company

Investment Type

Cash Interest Rate (1)(2)

Fair Value (3)

First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025 5.00 % Application Software 2,997 2,959 2,980

UFC Holdings, LLC First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026 4.25 % Movies & Entertainment 2,856 2,816 2,814

Veritas US Inc.

First Lien Term Loan, LIBOR+4.50% cash due 1/27/2023

Application software

Verra Mobility, Corp.

First Lien Term Loan, LIBOR+3.75% cash due 2/28/2025

Data processing & outsourced services

WP CPP Holdings, LLC

Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026

Aerospace & defense

First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025 6.50 % Application Software 6,500 6,371 6,375

Verscend Holding Corp.

First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025 4.65 % Health Care Technology 4,112 4,080 4,084 (4)

VM Consolidated, Inc.

First Lien Term Loan, LIBOR+3.25% cash due 2/28/2025 3.40 % Data Processing & Outsourced Services 10,487 10,495 10,291

Windstream Services II, LLC First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027 7.25 % Integrated Telecommunication Services 7,980 7,662 7,744 (4)

WP CPP Holdings, LLC Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 8.75 % Aerospace & Defense 6,000 5,956 4,680 (4)

$ 307,579 $ 311,428 $ 298,771

(1) Represents the current interest rate as of September 30, 2019 .

__________________

(1) Represents the interest rate as of September 30, 2020.

All interest rates are payable in cash, unless otherwise noted.

11 unchanged sentences

A negative fair value may result from the unfunded commitment being valued below par.

(6) This investment was on cash non-accrual status as of September 30, 2020.

Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

SLF JV I Portfolio as of September 30, 2019

Portfolio Company

Investment Type

Cash Interest Rate (1)(2)

Fair Value (3)

Accudyne Industries, LLC

First Lien Term Loan, LIBOR+3.00% cash due 8/18/2024

Industrial machinery

Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes

Access CIG, LLC First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025 6.07 % Diversified support services $ 9,300 $ 9,256 $ 9,201

AdVenture Interactive, Corp.

927 Common Stock Shares

927 shares of common stock Advertising 1,390 1,295 (4)

AI Ladder (Luxembourg) Subco S.a.r.l.

First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025

Electrical components & equipment

First Lien Term Loan, LIBOR+4.75% cash due 5/31/2024

IT consulting & other services

AL Midcoast Holdings LLC

First Lien Term Loan, LIBOR+5.50% cash due 8/1/2025

Oil & gas storage & transportation

Allied Universal Holdco LLC

First Lien Term Loan, LIBOR+3.75% cash due 7/28/2022

Security & alarm services

First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 6.60 % Electrical components & equipment 6,145 5,992 5,659 (4)

Air Newco LP First Lien Term Loan, LIBOR+4.75% cash due 5/31/2024 6.79 % IT consulting & other services 9,900 9,875 9,916

AL Midcoast Holdings LLC First Lien Term Loan, LIBOR+5.50% cash due 8/1/2025 7.60 % Oil & gas storage & transportation 9,900 9,801 9,764

Altice France S.A.

First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026

Integrated telecommunication services

First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026 6.03 % Integrated telecommunication services 7,444 7,282 7,439

Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes

Alvogen Pharma US, Inc.

First Lien Term Loan, LIBOR+4.75% cash due 4/1/2022

Pharmaceuticals

Asset International, Inc.

First Lien Term Loan, LIBOR+4.50% cash due 12/30/2024

Research & consulting services

First Lien Term Loan, LIBOR+4.75% cash due 4/1/2022 6.79 % Pharmaceuticals $ 7,656 $ 7,656 $ 6,963

First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025 9.56 % Application software 4,615 4,534 4,530 (4)

First Lien Revolver, LIBOR+7.25% cash due 1/10/2025 Application software — (7) (7) (4)(5)

Total Apptio, Inc.

Blackhawk Network Holdings, Inc.

First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025

Data processing & outsourced services

Brazos Delaware II, LLC

First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025

Oil & gas equipment & services

Chloe Ox Parent LLC

First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024

Healthcare services

Clearent Newco, LLC

First Lien Term Loan, LIBOR+4.00% cash due 3/20/2024

Application software

Delayed Draw Term Loan, LIBOR+4.00% cash due 3/20/2024

Application software

First Lien Revolver, PRIME+3.00% cash due 3/20/2023

Application software

Total Clearent Newco, LLC

Portfolio Company

Investment Type

Cash Interest Rate (1)(2)

Fair Value (3)

EOS Fitness Opco Holdings, LLC

First Lien Term Loan, LIBOR+8.25% cash due 12/30/2019

Leisure facilities

Second Lien Term Loan, LIBOR+7.50% cash due 5/1/2026

Research & consulting services

First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025 5.04 % Data processing & outsourced services 9,875 9,855 9,858

Boxer Parent Company Inc.

First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025 6.29 % Systems software 7,609 7,518 7,336 (4)

Brazos Delaware II, LLC First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025 6.05 % Oil & gas equipment & services 7,406 7,376 6,855

C5 Technology Holdings, LLC 171 Common Units Data Processing & Outsourced Services — — (4)

7,193,539.63 Preferred Units 7,194 7,194 (4)

Total C5 Technology Holdings, LLC 7,194 7,194

Cast & Crew Payroll, LLC First Lien Term Loan, LIBOR+4.00% cash due 2/9/2026 6.05 % Application software 4,975 4,925 5,018

CITGO Petroleum Corp.

First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 7.10 % Oil & gas refining & marketing 7,960 7,880 8,010 (4)

Finco LLC First Lien Term Loan, LIBOR+4.50% cash due 9/23/2026 7.10 % Alternative Carriers 8,000 7,840 7,888 (4)

Curium Bidco S.à r.l.

First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026 6.10 % Biotechnology 6,000 5,955 6,030

Dcert Buyer, Inc.

First Lien Term Loan, LIBOR+4.00% cash due 8/8/2026 6.26 % Internet services & infrastructure 8,000 7,980 7,985

DigiCert, Inc.

First Lien Term Loan, LIBOR+4.00% cash due 10/31/2024 6.04 % Internet services & infrastructure 8,250 8,148 8,249 (4)

Ellie Mae, Inc.

First Lien Term Loan, LIBOR+4.00% cash due 4/17/2026 6.04 % Application software 5,000 4,975 5,015

Everi Payments Inc.

First Lien Term Loan, LIBOR+3.00% cash due 5/9/2024

Casinos & gaming

First Lien Term Loan, LIBOR+3.00% cash due 5/9/2024 5.04 % Casinos & gaming 4,764 4,742 4,776

Falmouth Group Holdings Corp.

First Lien Term Loan, LIBOR+6.75% cash due 12/14/2021

Specialty chemicals

Garretson Resolution Group, Inc.

First Lien Term Loan, LIBOR+6.50% cash due 5/22/2021

Diversified support services

First Lien Term Loan, LIBOR+4.50% cash due 12/27/2024

Systems software

IBC Capital Ltd.

First Lien Term Loan, LIBOR+3.75% cash due 9/11/2023

Metal & glass containers

InMotion Entertainment Group, LLC

First Lien Term Loan, LIBOR+7.25% cash due 10/1/2021

Consumer electronics

First Lien Term Loan, LIBOR+7.25% cash due 10/1/2021

Consumer electronics

Total InMotion Entertainment Group, LLC

Keypath Education, Inc.

First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022

927 shares Common Stock

Total Keypath Education, Inc.

First Lien Term Loan, LIBOR+6.75% cash due 12/14/2021 8.95 % Specialty chemicals 4,938 4,909 4,910

Frontier Communications Corporation First Lien Term Loan, LIBOR+3.75% cash due 6/15/2024 5.80 % Integrated telecommunication services 6,473 6,400 6,471

Gentiva Health Services, Inc.

First Lien Term Loan, LIBOR+3.75% cash due 7/2/2025 5.81 % Healthcare services 7,920 7,801 7,974

Gigamon, Inc.

First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024 6.29 % Systems software 7,860 7,801 7,644

First Lien Term Loan, LIBOR+2.75% cash due 10/10/2025 4.81 % Interactive media & services 7,852 7,835 7,862

Guidehouse LLP Second Lien Term Loan, LIBOR+7.50% cash due 5/1/2026 9.54 % Research & consulting services 6,000 5,975 5,925 (4)

Indivior Finance S.a.r.l.

First Lien Term Loan, LIBOR+4.50% cash due 12/19/2022 6.76 % Pharmaceuticals 7,898 7,797 7,272

Intelsat Jackson Holdings S.A.

First Lien Term Loan, LIBOR+3.75% cash due 11/27/2023 5.80 % Alternative Carriers 10,000 9,891 10,042

KIK Custom Products Inc.

First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023

Household products

First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023 6.26 % Household products 8,000 7,972 7,610

McDermott Technology (Americas), Inc.

First Lien Term Loan, LIBOR+5.00% cash due 5/12/2025

Oil & gas equipment & services

First Lien Term Loan, LIBOR+6.00% cash due 2/10/2023

Personal products

First Lien Term Loan, LIBOR+5.00% cash due 5/9/2025 7.10 % Oil & gas equipment & services 4,187 4,119 2,676

Mindbody, Inc.

First Lien Term Loan, LIBOR+7.00% cash due 2/14/2025 9.06 % Internet services & infrastructure 4,524 4,443 4,438 (4)

First Lien Revolver, LIBOR+7.00% cash due 2/15/2025 Internet services & infrastructure — (9) (9) (4)(5)

Total Mindbody, Inc.

Navicure, Inc.

First Lien Term Loan, LIBOR+3.75% cash due 9/18/2026 6.13 % Healthcare technology 6,000 5,970 6,008

Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes

New IPT, Inc.

First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021

Oil & gas equipment & services

Second Lien Term Loan, LIBOR+5.10% cash due 9/17/2021

Oil & gas equipment & services

21.876 Class A Common Units

Oil & gas equipment & services

First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021 7.10 % Oil & gas equipment & services $ 1,422 $ 1,422 $ 1,422 (4)

21.876 Class A Common Units in New IPT Holdings, LLC Oil & gas equipment & services — 1,268 (4)

Total New IPT, Inc.

Northern Star Industries Inc.

First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025

Electrical components & equipment

Novetta Solutions, LLC

First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022

Application software

OCI Beaumont LLC

First Lien Term Loan, LIBOR+4.00% cash due 3/13/2025

Commodity chemicals

Refac Optical Group

First Lien Term Loan, LIBOR+8.00% cash due 1/9/2019

Specialty stores

First Lien Term Loan, LIBOR+4.50% cash due 3/31/2025 6.56 % Electrical components & equipment 6,895 6,868 6,792

Novetta Solutions, LLC First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022 7.05 % Application software 5,993 5,961 5,882

OCI Beaumont LLC First Lien Term Loan, LIBOR+4.00% cash due 3/13/2025 6.10 % Commodity chemicals 7,880 7,872 7,890

OEConnection LLC First Lien Term Loan, LIBOR+4.00% cash due 9/24/2026 6.13 % Application software 7,312 7,275 7,298

First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/24/2026 Application software — (3) (1) (5)

Total OEConnection LLC 7,272 7,297

Red Ventures, LLC First Lien Term Loan, LIBOR+3.00% cash due 11/8/2024 5.04 % Interactive media & services 3,990 3,971 4,011

Salient CRGT, Inc.

First Lien Term Loan, LIBOR+5.75% cash due 2/28/2022

Aerospace & defense

First Lien Term Loan, LIBOR+6.00% cash due 2/28/2022 8.05 % Aerospace & defense 2,205 2,183 2,094 (4)

Scientific Games International, Inc.

First Lien Term Loan, LIBOR+2.75% cash due 8/14/2024

Casinos & gaming

SHO Holding I Corporation

First Lien Term Loan, LIBOR+5.00% cash due 11/18/2022

First Lien Term Loan, LIBOR+2.75% cash due 8/14/2024 4.79 % Casinos & gaming 6,516 6,491 6,470

SHO Holding I Corporation First Lien Term Loan, LIBOR+5.00% cash due 10/27/2022 7.26 % Footwear 8,420 8,403 7,999

Signify Health, LLC First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024 6.60 % Healthcare services 9,850 9,775 9,838

Sirva Worldwide, Inc.

First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025

Diversified support services

TravelCLICK, Inc.

Second Lien Term Loan, LIBOR+7.75% cash due 11/6/2021

Data Processing & outsourced services

TV Borrower US, LLC

First Lien Term Loan, LIBOR+4.75% cash due 2/22/2024

Integrated telecommunication services

First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025 7.54 % Diversified support services 4,906 4,833 4,759

Sunshine Luxembourg VII SARL First Lien Term Loan, LIBOR+4.25% cash due 9/25/2026 6.59 % Personal products 8,000 7,960 8,048

Thruline Marketing, Inc.

First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022 9.10 % Advertising 1,854 1,851 1,854 (4)

927 Class A Units in FS AVI Holdco, LLC Advertising 1,088 658 (4)

Total Thruline Marketing, Inc.

Triple Royalty Sub LLC Fixed Rate Bond 144A 9.0% Toggle PIK cash due 4/15/2033 Pharmaceuticals 5,000 5,000 5,175

Uber Technologies, Inc.

First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025

Application software

Uniti Group LP

First Lien Term Loan, LIBOR+3.00% cash due 10/24/2022

Specialized REITs

Portfolio Company

Investment Type

Cash Interest Rate (1)(2)

Fair Value (3)

First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025 6.03 % Application software 9,875 9,836 9,836 (4)

UFC Holdings, LLC First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026 5.30 % Movies & entertainment 4,489 4,489 4,506

Uniti Group LP First Lien Term Loan, LIBOR+5.00% cash due 10/24/2022 7.04 % Specialized REITs 6,401 6,221 6,256 (4)

Valeant Pharmaceuticals International Inc.

First Lien Term Loan, LIBOR+2.75% cash due 11/27/2025 4.79 % Pharmaceuticals 1,772 1,764 1,778

Veritas US Inc.

First Lien Term Loan, LIBOR+4.50% cash due 1/27/2023

Application software

First Lien Term Loan, LIBOR+4.50% cash due 1/27/2023 6.60 % Application software 6,894 6,856 6,534 (4)

Verra Mobility, Corp.

First Lien Term Loan, LIBOR+3.75% cash due 2/28/2025

Data processing & outsourced services

WP CPP Holdings, LLC

Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026

Aerospace & defense

First Lien Term Loan, LIBOR+3.75% cash due 2/28/2025 5.79 % Data processing & outsourced services 10,835 10,849 10,894

WP CPP Holdings, LLC Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 10.01 % Aerospace & defense 6,000 5,949 5,974 (4)

$ 340,960 $ 347,985 $ 345,032

(1) Represents the current interest rate as of September 30, 2018 .

__________________

(1) Represents the interest rate as of September 30, 2019.

All interest rates are payable in cash, unless otherwise noted.

2 unchanged sentences

For each of these loans, we have provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end.

All LIBOR shown above is in U.S.

All the LIBOR shown above is in U.S.

As of September 30, 2019, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 2.04%, the 60-day LIBOR at 2.09%, the 90-day LIBOR at 2.10%, the 180-day LIBOR at 2.06%, and the PRIME at 5.00%.

2 unchanged sentences

However, the determination of such fair value is not included in our Board of Directors' valuation process described elsewhere herein.

(4) This investment is held by both us and SLF JV I as of September 30, 2018 .

(5) This investment was on cash non-accrual status as of September 30, 2018 .

Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

Both the cost and fair value of our debt investment in the SLF JV I were $96.3 million as of September 30, 2019 and $129.3 million as of September 30, 2018.

We earned interest income of $9.8 million , $11.2 million (including $3.1 million of PIK interest) and $11.1 million on our debt investment in the SLF JV I for the years ended September 30, 2019 , 2018 and 2017.

Our debt investment in the SLF JV I bears interest at a rate of one-month LIBOR plus 7.0% per annum and matures on December 29, 2028.

(4) This investment was held by both us and SLF JV I as of September 30, 2019.

(5) Investment had undrawn commitments.

Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis.

A negative fair value may result from the unfunded commitment being valued below par.

Both the cost and fair value of our debt investment in the SLF JV I were $96.3 million as of each of September 30, 2020 and September 30, 2019.

We earned interest income of $8.1 million, $9.8 million and $11.2 million (including $3.1 million of PIK interest) on our investments in the SLF JV I Subordinated Notes for the years ended September 30, 2020, 2019 and 2018, respectively.

The SLF JV I Subordinated Notes bear interest at a rate of one-month LIBOR plus 7.0% per annum and mature on December 29, 2028.

The cost and fair value of the LLC equity interests in SLF JV I held by us was $49.3 million and $21.2 million, respectively, as of September 30, 2020, and $49.3 million and $30.1 million, respectively, as of September 30, 2019.

We did not earn dividend income for the year ended September 30, 2019 with respect to our investment in the LLC equity interests of SLF JV I.

We earned dividend income of $1.6 million and $1.1 million for the years ended September 30, 2018 and 2017, respectively, with respect to our LLC equity interests of SLF JV I.

We did not earn dividend income for the years ended September 30, 2020 and 2019 with respect to our investment in the LLC equity interests of SLF JV I.

We earned dividend income of $1.6 million for the year ended September 30, 2018 with respect to our investment in LLC equity interests of SLF JV I.

The LLC equity interests of SLF JV I are dividend producing to the extent SLF JV I has residual cash to be distributed on a quarterly basis.

Below is certain summarized financial information for SLF JV I as of September 30, 2020 and September 30, 2019 and for the years ended September 30, 2020, 2019 and 2018:

September 30, 2019

September 30, 2018

September 30, 2020 September 30, 2019

Selected Balance Sheet Information:

1 unchanged sentence

cost September 30, 2019:

Receivables from secured financing arrangements at fair value (cost September 30, 2019:

cost September 30, 2018:

$347,985) $ 298,771 $ 345,032

Cash and cash equivalents 5,389 3,674

Restricted cash 4,211 5,242

Other assets 5,093 6,912

Total assets $ 313,464 $ 360,860

Senior credit facility payable $ 167,910 $ 170,210

1 unchanged sentence

proceeds September 30, 2019:

$110,000) 110,000 110,000

Other liabilities 11,336 46,303

2 unchanged sentences

Total liabilities and members' equity $ 313,464 $ 360,860

Year ended September 30, 2019

Year ended September 30, 2018

Year ended September 30, 2020 Year ended September 30, 2019 Year ended September 30, 2018

Selected Statements of Operations Information:

Interest income $ 19,808 $ 22,727 $ 20,574

Other income 338 153 65

Total investment income 20,146 22,880 20,639

6 unchanged sentences

(1) There are no management fees or incentive fees charged at SLF JV I.

SLF JV I has elected to fair value the debt securities issued to us and Kemper under ASC Topic 825, Financial Instruments, or ASC 825.

The debt securities are valued based on the total assets less the total liabilities senior to the mezzanine notes of SLF JV I in an amount not exceeding par under the enterprise value technique.

SLF JV I has elected to fair value the debt securities issued to us and Kemper under FASB ASC Topic 825, Financial Instruments - Fair Value Option .

The debt securities are valued based on the total assets less the total liabilities senior to the SLF JV I Notes in an amount not exceeding par under the enterprise value technique.

During the year ended September 30, 2020, we did not sell any debt investments to SLF JV I.

During the year ended September 30, 2019, we sold $8.4 million of senior secured debt investments to SLF JV I at fair value in exchange for $8.3 million cash consideration.

4 unchanged sentences

Net increase (decrease) in net assets resulting from operations includes net investment income, net realized gains (losses) and net unrealized appreciation (depreciation).

Net investment income is the difference between our income from interest, dividends and fees and total expenses.

Net investment income is the difference between our income from interest, dividends and fees and net expenses.

Net realized gains (losses) is the difference between the proceeds received from dispositions of investment related assets and liabilities and their stated costs.

6 unchanged sentences

For the year ended September 30, 2019, this amount consisted of $139.2 million of interest income from portfolio investments (which included $5.5 million of PIK interest), $6.7 million of fee income and $1.8 million of dividend income.

The increase of $9.0 million , or 6.5% , in our total investment income for the year ended September 30, 2019 , as compared to the year ended September 30, 2018 , was due primarily to a $14.9 million increase in interest income, which was primarily attributable to $12.1 million of OID accretion related to our first lien term loan and revolver with Dominion Diagnostics, LLC and $3.0 million of call protection earned in connection with the exit of U.S.

Wells Services, LLC, partially offset by a $2.7 million decrease in fee income, which was attributable to lower structuring and prepayment fees earned during the year ended September 30, 2019 , and a $3.2 million decrease in dividend income, which was attributable to lower dividends earned related to our investments in SLF JV I, First Star Bermuda Aviation Limited and First Star Speir Aviation Limited during the year ended September 30, 2019.

The decrease of $4.6 million, or 3.1%, in our total investment income for the year ended September 30, 2020, as compared to the year ended September 30, 2019, was due primarily to (i) a $5.7 million decrease in interest income, which was primarily attributable to decreases in OID of $5.7 million, which was the result of higher non-recurring OID accretion during the year ended September 30, 2019, and the impact of decreases in LIBOR on our floating rate investments, partially offset by a $3.1 million increase in make-whole interest earned in connection with the prepayment of certain investments during the year ended September 30, 2020 as well as a larger average investment portfolio and higher yields on new originations, and (ii) a $0.6 million decrease in dividend income from our investment in First Star Speir Aviation Limited, partially offset by a $1.8 million increase in fee income primarily due to higher prepayment fees.

Net expenses (expenses net of fee waivers) for the years ended September 30, 2020 and September 30, 2019 were $71.1 million and $79.8 million, respectively.

Net expenses increased for the year ended September 30, 2019 , as compared to the year ended September 30, 2018 , by $1.1 million , or 1.4% , due primarily to a $7.9 million increase in incentive fees (net of waivers), which was attributable to higher pre-incentive fee net investment income and higher accrued capital gains incentive fees during the period, partially offset by a $2.8 million decrease in professional fees and a $3.3 million decrease in interest expense, which was primarily attributable to a lower level of borrowing outstanding during the year.

Net expenses decreased for the year ended September 30, 2020, as compared to the year ended September 30, 2019, by $8.7 million, or 10.8%, due primarily to a $6.1 million decrease in interest expense, primarily the result of decreases to LIBOR and interest expense savings from the issuance of the 2025 Notes and the subsequent repayment of the 2024 Notes and 2028 Notes during the year ended September 30, 2020, and a $1.7 million decrease in base management fees and incentive fees (net of fee waivers), primarily driven by a $1.2 million reversal of previously accrued waived fees in the prior year and $1.1 million of accrued Part II incentive fees (net of accrued waivers) in the prior year, partially offset by $0.6 million of higher management fees during the current year due to a larger investment portfolio and $0.3 million of higher Part I incentive fees during the current year mainly due to lower interest expense.

Net Investment Income

As a result of the $9.0 million increase in total investment income and the $1.1 million increase in net expenses, net investment income for the year ended September 30, 2019 increased by $7.9 million , or 13.1% , compared to the year ended September 30, 2018 .

As a result of the $4.6 million decrease in total investment income and the $8.7 million decrease in net expenses, net investment income for the year ended September 30, 2020 increased by $4.1 million, or 6.0%, compared to the year ended September 30, 2019.

Realized Gain (Loss)

7 unchanged sentences

During the years ended September 30, 2020 and 2019, we recorded net unrealized appreciation (depreciation) of $(20.6) million and $38.5 million, respectively.

For the year ended September 30, 2020, this consisted of $35.3 million of net unrealized depreciation on equity investments, $12.0 million of net unrealized depreciation on debt investments and $0.3 million of net unrealized depreciation of foreign currency forward contracts, partially offset by $26.9 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses).

For the year ended September 30, 2019, this consisted of $57.0 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses), $10.6 million of net unrealized appreciation on equity investments and $0.3 million of net unrealized appreciation of foreign currency forward contracts, partially offset by $26.8 million of net unrealized depreciation on debt investments and $2.7 million of net unrealized depreciation of secured borrowings (which results in a reclassification to realized gains).

For the year ended September 30, 2018 , this consisted of $127.4 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses), $2.4 million of net unrealized appreciation on secured borrowings and $2.2 million of net unrealized appreciation on equity investments, offset by $29.4 million of net unrealized depreciation on debt investments.

Comparison of Years ended September 30, 2019 and September 30, 2018

Total Investment Income

Total investment income includes interest on our investments, fee income and dividend and other income.

Total investment income for the years ended September 30, 2018 and September 30, 2017 was $138.7 million and $178.0 million, respectively.

For the year ended September 30, 2018 , this amount consisted of $124.3 million of interest income from portfolio investments (which included $5.8 million of PIK interest), $9.4 million of fee income and $5.0 million of dividend income.

For the year ended September 30, 2017, this amount primarily consisted of $163.4 million of interest income from portfolio investments (which included $11.1 million of PIK interest), $10.5 million of fee income and $4.0 million of dividend income.

The decrease of $39.2 million, or 22.1%, in our total investment income for the year ended September 30, 2018 , as compared to the year ended September 30, 2017, was due primarily to a $39.1 million decrease in interest income, which was attributable to a decrease in both the size and yield of our investment portfolio, partially offset by increases in LIBOR, and a $1.1 million decrease in fee income, which was attributable to lower advisory fees earned, offset by a $1.0 million increase in dividend income, which was attributable to higher dividend income earned on our investment in SLF JV I and one of our portfolio companies during the year ended September 30, 2018 .

Net expenses (expenses net of fee waivers and insurance recoveries) for the years ended September 30, 2018 and September 30, 2017 were $78.7 million and $105.3 million, respectively.

Net expenses decreased for the year ended September 30, 2018 , as compared to the year ended September 30, 2017, by $26.6 million, or 25.3%, due primarily to a $10.0 million decrease in base management fees and Part I incentive fees (net of fee waivers), which was attributable to a reduction in the size of our portfolio and lower pre-incentive fee net investment income, a $14.2 million decrease in interest expense, which was attributable to lower levels of outstanding debt, and a $2.9 million decrease in general and administrative expenses, partially offset by a $1.2 million increase in professional fees (net of insurance recoveries).

Net Investment Income

As a result of the $39.2 million decrease in total investment income and the $26.6 million decrease in net expenses, net investment income for the year ended September 30, 2018 decreased by $12.6 million, or 17.4%, compared to the year ended September 30, 2017.

Realized Gain (Loss)

During the year ended September 30, 2018 , we recorded an aggregate net realized loss of $115.1 million primarily in connection with the exit of our investments in Ameritox Ltd., TransTrade Operators and Traffic Solutions Holdings, Inc.

During the year ended September 30, 2017, we recorded an aggregate net realized loss of $171.8 million primarily in connection with the restructuring or disposition of investments in five portfolio companies previously on non-accrual status as well as the restructuring of SLF JV I.

Net Unrealized Appreciation (Depreciation)

During the year ended September 30, 2018 and September 30, 2017, we recorded net unrealized appreciation (depreciation) of $102.6 million and $(97.8) million, respectively.

For the year ended September 30, 2017, this consisted of $163.4 million of net unrealized depreciation on debt investments, $93.1 million of net unrealized depreciation on equity investments and $0.3 million of net unrealized depreciation on secured borrowings, offset by $159.0 million of net unrealized appreciation related to exited investments (a portion of which results in a reclassification to realized losses).

The comparison of the fiscal years ended September 30, 2019 and 2018 can be found within Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our annual report on Form 10-K for the fiscal year ended September 30, 2019 which is incorporated by reference herein.

Financial Condition, Liquidity and Capital Resources

6 unchanged sentences

Our primary uses of funds are investments in our targeted asset classes and cash distributions to holders of our common stock.

We may from time to time repurchase or redeem some or all of our outstanding notes in open-market transactions, privately negotiated transactions or otherwise.

Effective as of June 29, 2019, we are subject to a 150% asset coverage requirements.

However, we generally expect to target a debt to equity ratio of 0.70x to 0.85x (i.e., one dollar of equity for each $0.70 to $0.85 of debt outstanding).

We may also from time to time repurchase or redeem some or all of our outstanding notes.

At a special meeting of our stockholders held on June 28, 2019, our stockholders approved the application of the reduced asset coverage requirements in Section 61(a)(2) of the Investment Company Act to us effective as of June 29, 2019.

As a result of the reduced asset coverage requirement, we can incur $2 of debt for each $1 of equity as compared to $1 of debt for each $1 of equity.

As of September 30, 2020, we had $714.8 million in senior securities and our asset coverage ratio was 227.2%.

As of September 30, 2020, our debt to equity ratio was 0.78x.

Our target debt to equity ratio is 0.85x to 1.0x (i.e., one dollar of equity for each $0.85 to $1.00 of debt outstanding) as we plan to continue to opportunistically deploy capital into the markets.

For the year ended September 30, 2020, we experienced a net increase in cash and cash equivalents of $23.7 million.

During that period, we used $152.9 million of net cash from operating activities, primarily from funding $727.2 million of investments, a $63.7 million of net decrease in payables from unsettled transactions, partially offset by $579.6 million of principal payments and sale proceeds received and the cash activities related to $72.0 million of net investment income.

During the same period, net cash provided by financing activities was $176.3 million, primarily consisting of $100.0 million of net borrowings under the Credit Facility (as defined below) and $136.2 million net incurrence of unsecured notes, partially offset by $53.1 million of cash distributions paid to our stockholders, $4.8 million of deferred financing costs paid and $1.9 million of repurchases of common stock under our dividend reinvestment plan, or DRIP.

For the year ended September 30, 2019, we experienced a net increase in cash and cash equivalents and restricted cash of $1.9 million.

During that period, we received $215.8 million of net cash from operating activities, primarily from $606.3 million of principal payments and sale proceeds received, $44.5 million of a net increase in payables from unsettled transactions and the cash activities related to $67.9 million of net investment income, partially offset by funding $478.0 million of investments.

During the same period, net cash used in financing activities was $214.1 million , primarily consisting of $228.8 million of repayments of unsecured notes, $2.7 million of repayments of secured borrowings, $52.2 million of cash distributions paid to our stockholders, $2.9 million of deferred financing costs paid and $1.3 million of repurchases of common stock under our dividend reinvestment plan, or DRIP, partially offset by $73.8 million of net borrowings under the Credit Facility.

For the year ended September 30, 2018 , we experienced a net decrease in cash and cash equivalents and restricted cash of $46.4 million .

During that period, we received $53.5 million of net cash from operating activities, primarily from $1,106.8 million of principal payments and sale proceeds received and the cash activities related to $60.0 million of net investment income, partially offset by funding

$1,059.6 million of investments and net revolvers.

During the same period, net cash used in financing activities was $99.9 million, primarily consisting of $15.0 million of net repayments under our credit facilities, $21.2 million of repurchases of unsecured notes, $1.2 million of repayments of secured borrowings, $55.0 million of cash distributions paid to our stockholders, $6.2 million of payments of deferred financing costs and $1.4 million of repurchases of common stock under our dividend reinvestment plan, or DRIP.

During the same period, net cash used in financing activities was $214.1 million, primarily consisting of $228.8 million of repayments of unsecured notes, $2.7 million of repayments of secured borrowings, $52.2 million of cash distributions paid to our stockholders, $2.9 million of deferred financing costs paid and $1.3 million of repurchases of common stock under our DRIP, partially offset by $73.8 million of net borrowings under the Credit Facility.

For the year ended September 30, 2018, we experienced a net decrease in cash and cash equivalents and restricted cash of $46.4 million.

During the same period, net cash used by financing activities was $557.3 million, primarily consisting of $260.3 million of net repayments under our credit facilities, $213.3 million o f repayments of borrowings under SBA debentures payable, $62.5 million of cash distributions paid to our stockholders, $14.8 million of repurchases of common stock under our stock repurchase program and DRIP, and $5.4 million of repayments of secured borrowings.

As of September 30, 2019 , we had $15.4 million in cash and cash equivalents, portfolio investments (at fair value) of $1.4 billion , $11.2 million of interest, dividends and fees receivable, $55.0 million of net payables from unsettled transactions, $314.8 million of borrowings outstanding under our Credit Facility, $158.5 million of unsecured notes payable (net of unamortized financing costs) and unfunded commitments of $88.3 million .

As of September 30, 2018 , we had $13.5 million in cash and cash equivalents (including $0.1 million of restricted cash), portfolio investments (at fair value) of $1.5 billion, $10.3 million of interest, dividends and fees receivable, $10.5 million of net payables from unsettled transactions, $241.0 million of borrowings outstanding under our credit facility, $386.5 million of unsecured notes payable (net of unamortized financing costs), $9.7 million of secured borrowings (at fair value) and unfunded commitments of $52.7 million.

As of September 30, 2020, we had $39.1 million in cash and cash equivalents, portfolio investments (at fair value) of $1.6 billion, $6.9 million of interest, dividends and fees receivable, $285.2 million of undrawn capacity on the Credit Facility (subject to borrowing base and other limitations), $8.6 million of net receivables from unsettled transactions, $414.8 million of borrowings outstanding under our Credit Facility, $294.5 million of unsecured notes payable (net of unamortized financing costs and unaccreted discount) and unfunded commitments to portfolio companies of $157.5 million.

As of September 30, 2020, we have analyzed cash and cash equivalents, availability under the Credit Facility, the ability to rotate out of certain assets and amounts of unfunded commitments that could be drawn and believe our liquidity and capital resources are sufficient to take advantage of market opportunities in the current economic climate.

As of September 30, 2019, we had $15.4 million in cash and cash equivalents, portfolio investments (at fair value) of $1.4 billion, $11.2 million of interest, dividends and fees receivable, $385.2 of undrawn capacity on the Credit Facility (subject to borrowing base and other limitations), $55.0 million of net payables from unsettled transactions, $314.8 million of borrowings outstanding under our Credit Facility, $158.5 million of unsecured notes payable (net of unamortized financing costs) and unfunded commitments of $88.3 million.

Significant Capital Transactions

The following table reflects the distributions per share that we have paid, including shares issued under our DRIP, on our common stock since October 1, 2017:

Date Declared

August 3, 2016

October 14, 2016

October 31, 2016

$ 8.2 million

$ 0.4 million

August 3, 2016

November 15, 2016

November 30, 2016

October 18, 2016

December 15, 2016

December 30, 2016

October 18, 2016

January 13, 2017

January 31, 2017

October 18, 2016

February 15, 2017

February 28, 2017

February 6, 2017

March 15, 2017

March 31, 2017

February 6, 2017

June 15, 2017

June 30, 2017

February 6, 2017

September 15, 2017

September 29, 2017

August 7, 2017

December 15, 2017

December 29, 2017

February 5, 2018

March 15, 2018

March 30, 2018

June 15, 2018

June 29, 2018

August 1, 2018

September 15, 2018

September 28, 2018

November 19, 2018

December 17, 2018

December 28, 2018

February 1, 2019

March 15, 2019

March 29, 2019

June 14, 2019

June 28, 2019

August 2, 2019

September 13, 2019

September 30, 2019

Date Declared Record Date Payment Date Amount

per Share Cash

Distribution DRIP Shares

Issued (1) DRIP Shares

August 7, 2017 December 15, 2017 December 29, 2017 $ 0.125 $ 17.3 million 58,456 $ 0.3 million

February 5, 2018 March 15, 2018 March 30, 2018 0.085 11.5 million 122,884 0.5 million

May 3, 2018 June 15, 2018 June 29, 2018 0.095 13.0 million 87,283 0.4 million

August 1, 2018 September 15, 2018 September 28, 2018 0.095 13.2 million 34,575 0.2 million

November 19, 2018 December 17, 2018 December 28, 2018 0.095 13.0 million 87,429 0.4 million

February 1, 2019 March 15, 2019 March 29, 2019 0.095 13.1 million 59,603 0.3 million

May 3, 2019 June 14, 2019 June 28, 2019 0.095 13.1 million 61,093 0.3 million

August 2, 2019 September 13, 2019 September 30, 2019 0.095 13.1 million 61,205 0.3 million

November 12, 2019 December 13, 2019 December 31, 2019 0.095 12.9 million 87,747 0.5 million

January 31, 2020 March 13, 2020 March 31, 2020 0.095 12.9 million 157,523 0.5 million

April 30, 2020 June 15, 2020 June 30, 2020 0.095 13.0 million 87,351 0.4 million

July 31, 2020 September 15, 2020 September 30, 2020 0.105 14.3 million 102,404 0.5 million

______________

1 unchanged sentence

See “ Note 6.

Borrowings ” and “ Note 14.

Secured Borrowings ” in the Consolidated Financial Statements for more details regarding our indebtedness and secured borrowings.

Borrowings ” in the Consolidated Financial Statements for more details regarding our indebtedness.

Credit Facility

On February 25, 2019, we amended and restated the Credit Facility to increase the size of facility from $600 million to $680 million (with an “accordion” feature that permits us, under certain circumstances, to increase the size of the facility up to $1.02 billion), extend the period during which we may make drawings from expiring on November 30, 2020 to expiring on February 25, 2023, extend the final maturity date from November 30, 2021 to February 25, 2024, and lower the interest rate margins (a) for LIBOR loans (which may be 1-, 2-, 3- or 6-month, at our option), from 2.75% to 2.25% or from 2.25% to 2.00% and (b) for alternate base rate loans, from 1.75% to 1.25% or from 1.25% to 1.00%, each depending on our senior debt coverage ratio.

Additionally, on April 1, 2019, we increased the size of the Credit Facility from $680 million to $700 million under the “accordion” feature.

As of September 30, 2019 , we were able to borrow up to $700 million under the Credit Facility.

As of September 30, 2020, (i) the size of the Credit Facility was $700 million (with an “accordion” feature that permits us, under certain circumstances, to increase the size of the facility to up to the greater of $800 million and our net worth (as defined in the Credit Facility) on the date of such increase, (ii) the period during which we may make drawings will expire on February 25, 2023 and the maturity date was February 25, 2024 and (iii) the interest rate margin for (a) LIBOR loans (which may be 1-, 2-, 3- or 6-month, at our option) was 2.00% (which can be increased up to 2.25%) and (b) alternate base rate loans was 1.00% (which can be increased up to 1.25%);

provided that the interest margin will increase to 2.75% and 1.75% for

LIBOR loans and alternative base rate loans, respectively, if our stockholders’ equity is below $700 million, each depending on our senior debt coverage ratio.

See “ —Recent Developments—Upsize of Credit Facility.

Each loan or letter of credit originated or assumed under the Credit Facility is subject to the satisfaction of certain conditions.

Borrowings under the Credit Facility are subject to the facility’s various covenants and the leverage restrictions contained in the Investment Company Act.

We cannot be assured that we will be able to borrow funds under the Credit Facility at any particular time or at all.

We cannot assure you that we will be able to borrow funds under the Credit Facility at any particular time or at all.

The following table describes significant financial covenants, as of September 30, 2020, with which we must comply under the Credit Facility on a quarterly basis:

Financial Covenant

June 30, 2019 Reported Value (1)

Minimum shareholders' equity

Net assets shall not be less than the greater of (a) 40% of total assets and (b) $700 million plus 50% of the aggregate net proceeds of all sales of equity interests after November 30, 2017

Asset coverage ratio

Asset coverage ratio shall not be less than the greater of 1.65:1 and the statutory test applicable to us

Interest coverage ratio

Interest coverage ratio shall not be less than 2.00:1

Minimum net worth

Net worth shall not be less than $600 million

(1) As contractually required, we report financial covenants based on the last filed quarterly or annual report, in this case our Quarterly Report on Form 10-Q for the three months ended June 30, 2019.

Financial Covenant Description Target Value June 30, 2020 Reported Value (1)

Minimum shareholders' equity Net assets shall not be less than the sum of (x) $550 million, plus (y) 50% of the aggregate net proceeds of all sales of equity interests after May 6, 2020

$550 million $859 million

Asset coverage ratio Asset coverage ratio shall not be less than the greater of 1.50:1 and the statutory test applicable to us 1.50:1 2.11:1

Interest coverage ratio Interest coverage ratio shall not be less than 2.25:1 2.25:1 3.30:1

Minimum net worth Net worth shall not be less than $500 million $500 million $855 million

(1) As contractually required, we report financial covenants based on the last filed quarterly or annual report, in this case our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

We were in compliance with all financial covenants under the Credit Facility based on the financial information contained in this Quarterly Report on Form 10-Q.

From May 27, 2010 through November 30, 2017, we were party to a secured syndicated revolving credit facility with certain lenders party thereto from time to time and ING Capital LLC, as administrative agent, as amended, or the Prior ING Facility.

As of September 30, 2020 and September 30, 2019, we had $414.8 million and $314.8 million of borrowings outstanding under the Credit Facility, respectively, which had a fair value of $414.8 million and $314.8 million, respectively.

Our borrowings under the Credit Facility bore interest at a weighted average interest rate of 3.028% and 4.550% for the years ended September 30, 2020 and 2019, respectively.

Our borrowings under the Credit Facility bore interest at a weighted average interest rate of 4.254% for the period from November 30, 2017 to September 30, 2018.

Our borrowings under the Prior ING Facility (as defined below) bore interest at a weighted average interest rate of 3.705% for the period from October 1, 2017 to November 30, 2017.

For the years ended September 30, 2020, 2019 and 2018, we recorded interest expense (inclusive of fees) of $14.9 million, $17.1 million and $11.6 million, respectively, related to the Credit Facility.

In connection with the entry into the Credit Facility, we repaid all outstanding borrowings under the Prior ING Facility following which the Prior ING Facility was terminated.

Obligations under the Prior ING Facility would have otherwise matured on August 6, 2018.

As of September 30, 2019 and 2018, we had $314.8 million and $241.0 million of borrowings outstanding under the Credit Facility, respectively, which had a fair value of $314.8 million and $241.0 million , respectively.

Our borrowings under the Credit Facility bore interest at a weighted average interest rate of 4.550% and 4.254% for the year ended September 30, 2019 and the period from November 30, 2017 to September 30, 2018, respectively.

Our borrowings under the Prior ING Facility bore interest at a weighted average interest rate of 3.705% and 3.191% for the period from October 1, 2017 to November 30, 2017 and the year ended September 30, 2017, respectively.

For the years ended September 30, 2019 , 2018 and 2017, we recorded interest expense of $17.1 million , $11.6 million and $13.6 million , in the aggregate, related to the Prior ING Facility and the Credit Facility.

Sumitomo Facility

On September 16, 2011, a consolidated wholly-owned bankruptcy remote, special purpose subsidiary entered into a credit facility, as amended, or the Sumitomo Facility, with Sumitomo Mitsui Banking Corporation, as administrative agent, and each of the lenders from time to time party thereto.

Prior to its termination on November 24, 2017, the Sumitomo Facility permitted up to $125 million of borrowings (subject to collateral requirements) and borrowings under the Sumitomo Facility bore interest at a rate of either (i) LIBOR (1-month) plus 2.00% per annum, with no LIBOR floor, if the borrowings under the Sumitomo Facility were greater than 35% of the aggregate available borrowings under the Sumitomo Facility or (ii) LIBOR (1-month) plus 2.25% per annum, if the borrowings under the Sumitomo Facility were less than or equal to 35% of the aggregate available borrowings under the Sumitomo Facility.

On November 24, 2017, all outstanding borrowings under the Sumitomo Facility were repaid, following which the Sumitomo Facility was terminated.

Obligations under the Sumitomo Facility would have otherwise matured on the earlier of August 6, 2018 or the date on which the Prior ING Facility was repaid, refinanced or terminated.

As of September 30, 2019 and September 30, 2018, there were no borrowings outstanding under the Sumitomo Facility.

Our borrowings under the Sumitomo Facility bore interest at a weighted average interest rate of 3.501% and 3.108% for the period from October 1, 2017 through termination on November 24, 2017 and the year ended September 30, 2017, respectively.

For the year ended

September 30, 2018 , we recorded interest expense of $0.7 million, including $0.5 million of debt issuance costs that were expensed, related to the Sumitomo Facility.

For the year ended September 30, 2017, we recorded interest expense of $2.4 million related to the Sumitomo Facility.

For the years ended September 30, 2019 , 2018 and 2017, we recorded interest expense of $5.1 million , $12.6 million and $13.3 million, respectively, related to our 4.875% unsecured notes due 2019, or the 2019 Notes.

During the year ended September 30, 2019 , we fully repaid the 2019 Notes.

During the year ended September 30, 2018 , we repurchased and subsequently canceled $21.2 million of the 2019 Notes.

We recognized a loss of $0.1 million in connection with such transaction.

As of September 30, 2019 , there were no 2019 Notes outstanding.

As of September 30, 2018 , there were $228.8 million of 2019 Notes outstanding, which had a carrying value and fair value of $228.3 million and $230.5 million , respectively.

For each of the years ended September 30, 2019 , 2018 and 2017, we recorded interest expense of $4.6 million , respectively, related to the 2024 Notes.

During the years ended September 30, 2019 , 2018 and 2017, we did not repurchase any of the 2024 Notes in the open market.

As of September 30, 2019 , there were $75.0 million of 2024 Notes outstanding, which had a carrying value and fair value of $73.9 million and $77.4 million , respectively.

During the year ended September 30, 2018, we expensed $0.2 million of unamortized deferred financing costs related to the Prior ING Facility.

On February 25, 2020, we issued $300.0 million in aggregate principal amount of the 2025 Notes for net proceeds of $293.8 million after deducting OID of $2.5 million, underwriting commissions and discounts of $3.0 million and offering costs of $0.7 million.

The OID on the 2025 Notes is amortized based on the effective interest method over the term of the notes.

For the year ended September 30, 2020, we recorded interest expense of $7.0 million related to the 2025 Notes.

As of September 30, 2020, there were $300.0 million of 2025 Notes outstanding, which had a carrying value and fair value of $294.5 million and $301.4 million, respectively.

As of September 30, 2019 , the 2024 Notes were listed on the New York Stock Exchange under the trading symbol “OSLE” with a par value of $25.00 per note.

For each of the years ended September 30, 2019 , 2018 and 2017, we recorded interest expense of $5.5 million , respectively, related to the 2028 Notes.

During the years ended September 30, 2019 , 2018 and 2017, we did not repurchase any of the 2028 Notes in the open market.

For the years ended September 30, 2019 and 2018, we recorded interest expense of $5.1 million and $12.6 million (inclusive of fees), respectively, related to our 4.875% unsecured notes due 2019, or the 2019 Notes.

The 2019 Notes matured on March 1, 2019 and were fully repaid during the three months ended March 31, 2019.

As of September 30, 2020 and September 30, 2019, there were no 2019 Notes outstanding.

For the year ended September 30, 2020, we recorded interest expense of $1.9 million (inclusive of fees) related to our 5.875% unsecured notes due 2024, or the 2024 Notes.

For each of the years ended September 30, 2019 and 2018, we recorded interest expense of $4.6 million (inclusive of fees) related to the 2024 Notes.

On March 2, 2020, we redeemed 100%, or $75.0 million aggregate principal amount, of the issued and outstanding 2024 Notes.

The redemption price per 2024 Note was $25 plus accrued and unpaid interest.

We recognized a loss of $1.0 million in connection with the redemption of the 2024 Notes during the year ended September 30, 2020.

As of September 30, 2020, there were no 2024 Notes outstanding.

As of September 30, 2019, there were $75.0 million of 2024 Notes outstanding, which had a carrying value and fair value of $73.9 million and $77.4 million, respectively.

For the year ended September 30, 2020, we recorded interest expense of $2.5 million (inclusive of fees) related to our 6.125% unsecured notes due 2028, or the 2028 Notes.

For each of the years ended September 30, 2019 and 2018, we recorded interest expense of $5.5 million (inclusive of fees) related to the 2028 Notes.

On March 13, 2020, we redeemed 100%, or $86.3 million aggregate principal amount, of the issued and outstanding 2028 Notes.

The redemption price per 2028 Note was $25 plus accrued and unpaid interest.

We recognized a loss of $1.5 million in connection with the redemption of the 2028 Notes during the year ended September 30, 2020.

As of September 30, 2020, there were no 2028 Notes outstanding.

As of September 30, 2019, there were $86.3 million of 2028 Notes outstanding, which had a carrying value and fair value of $84.6 million and $87.6 million, respectively.

As of September 30, 2019 , the 2028 Notes were listed on the Nasdaq Global Select Market under the trading symbol “OCSLL” with a par value of $25.00 per note.

Secured Borrowings

We follow the guidance in ASC Topic 860, Transfers and Servicing, when accounting for loan participations and other partial loan sales.

Such guidance requires a participation or other partial loan sale to meet the definition of a "participating interest," as defined in the guidance, in order for sale treatment to be allowed.

Participations or other partial loan sales which do not meet the definition of a participating interest remain on our Consolidated Statements of Assets and Liabilities and the proceeds are recorded as a secured borrowing until the definition is met.

Secured borrowings are carried at fair value to correspond with the related investments, which are carried at fair value.

As of September 30, 2019 , there were no secured borrowings outstanding.

As of September 30, 2018 , there were $12.3 million of secured borrowings outstanding.

As of September 30, 2018 , secured borrowings at fair value totaled $9.7 million and the fair value of the loan that is associated with these secured borrowings was $34.3 million.

These secured borrowings were the result of the completion of partial loan sales totaling $22.8 million of a senior secured debt investment during the fiscal year ended September 30, 2014 that did not meet the definition of a participating interest.

As a result, sale treatment was not allowed and these partial loan sales were treated as secured borrowings.

During the years ended September 30, 2019 , 2018 and 2017, there were $2.7 million , $1.2 million and $5.4 million of net repayments on secured borrowings, respectively.

For the years ended September 30, 2019 , 2018 and 2017, we recorded interest expense of $0.1 million , $0.7 million and $1.2 million , respectively, related to the secured borrowings.

As of September 30, 2020 and 2019, there were no secured borrowings outstanding.

During the year ended September 30, 2019, $7.2 million of secured borrowings were extinguished in exchange for $7.2 million of preferred stock in C5 Technology Holdings, LLC, which was restructured during the year.

For the years ended September 30, 2019 and 2018, we recorded interest expense of $0.1 million and $0.7 million, respectively, related to the secured borrowings.

For the years ended September 30, 2019 and 2018, we recorded unrealized appreciation (depreciation) on secured borrowings of $(2.7) million and $2.4 million respectively.

For the year ended September 30, 2019, we recorded a realized gain of $2.6 million as a result of the extinguishment of secured borrowings in connection with the C5 Technology Holdings, LLC restructuring.

Off-Balance Sheet Arrangements

1 unchanged sentence

As of September 30, 2020, our only off-balance sheet arrangements consisted of $157.5 million of unfunded commitments, which was comprised of $152.7 million to provide debt financing to certain of our portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests.

As of September 30, 2018 , our only off-balance sheet arrangements consisted of $52.7 million of unfunded commitments, which was comprised of $46.7 million to

provide debt financing to certain of our portfolio companies, $1.3 million to provide equity financing to SLF JV I and $4.7 million related to unfunded limited partnership interests.

As of September 30, 2019, our only off-balance sheet arrangements consisted of $88.3 million of unfunded commitments, which was comprised of $83.5 million to provide debt financing to certain of its portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests.

Such commitments are subject to our portfolio companies' satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in our Consolidated Statements of Assets and Liabilities.

A list of unfunded commitments by investment (consisting of revolvers, term loans with delayed draw components, SLF JV I subordinated notes and LLC equity interests, and limited partnership interests) as of September 30, 2020 and September 30, 2019 is shown in the table below:

September 30, 2019

September 30, 2018

September 30, 2020 September 30, 2019

Assembled Brands Capital LLC $ 36,079 $ 35,182

WPEngine, Inc.

Athenex, Inc.

NuStar Logistics, L.P.

Holdings II SÀRL 7,541 —

MRI Software LLC 7,239 —

Dominion Diagnostics, LLC 5,887 —

Corrona, LLC 5,189 —

NeuAG, LLC 4,382 —

Pingora MSR Opportunity Fund I-A, LP 3,500 3,500

Mindbody, Inc.

Ardonagh Midco 3 PLC 3,007 —

Accupac, Inc.

New IPT, Inc.

Olaplex, Inc.

Senior Loan Fund JV I, LLC 1,328 1,328

Coyote Buyer, LLC 942 —

Immucor, Inc.

Ministry Brands, LLC 425 800

GKD Index Partners, LLC 231 1,156

PaySimple, Inc.

2 unchanged sentences

TerSera Therapeutics, LLC — 4,200

Pingora MSR Opportunity Fund I-A, LP

Mindbody, Inc.

Thruline Marketing, Inc.

New IPT, Inc.

4 Over International, LLC — 1,977

Senior Loan Fund JV I, LLC

GKD Index Partners, LLC

Ministry Brands, LLC

PLATO Learning Inc.

Dominion Diagnostics, LLC

EOS Fitness Opco Holdings, LLC

InMotion Entertainment Group, LLC

Access CIG LLC

Cenegenics, LLC (1)

(1) This investment was on cash non-accrual status as of September 30, 2019 .

$ 157,530 $ 88,336

(1) This investment was on cash non-accrual status as of September 30, 2020 and September 30, 2019.

Contractual Obligations

The following table reflects information pertaining to our debt outstanding under the Credit Facility, the 2019 Notes, the 2024 Notes, the 2028 Notes and our secured borrowings:

Debt Outstanding

as of September 30, 2018

The following table reflects information pertaining to our principal debt outstanding under the Credit Facility, 2025 Notes, 2024 Notes and 2028 Notes:

Debt Outstanding

as of September 30, 2019

Weighted average debt

as of September 30, 2019 Debt Outstanding

as of September 30, 2020 Weighted average debt

outstanding for the

September 30, 2019

for the year ended

September 30, 2020 Maximum debt

outstanding for the year ended

September 30, 2020

Credit Facility $ 314,825 $ 414,825 $ 397,951 $ 466,825

Secured borrowings

The following table reflects our contractual obligations arising from the Credit Facility, our 2024 Notes and our 2028 Notes:

2025 Notes — 300,000 178,689 300,000

2024 Notes 75,000 — 31,557 75,000

2028 Notes 86,250 — 38,883 86,250

Total debt $ 476,075 $ 714,825 $ 647,080

The following table reflects our contractual obligations arising from the Credit Facility and the 2025 Notes:

Payments due by period as of September 30, 2020

Contractual Obligations

Less than 1 year

More than 5 years

Contractual Obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years

Credit Facility $ 414,825 $ — $ — $ 414,825 $ —

Interest due on Credit Facility 30,877 9,074 18,149 3,654 —

Interest due on 2024 Notes

2025 Notes 300,000 — — 300,000 —

Interest due on 2025 Notes 46,286 10,500 21,000 14,786 —

Total $ 791,988 $ 19,574 $ 39,149 $ 733,265 $ —

Regulated Investment Company Status and Distributions

8 unchanged sentences

We did not incur a U.S.

federal excise tax for calendar years 2017 and 2018 and do not expect to incur a U.S.

federal excise tax for the calendar year 2019.

federal excise tax for calendar years 2018 and 2019.

We may incur a federal excise tax in future years.

11 unchanged sentences

If these and certain other requirements are met, for U.S federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.

We have no current intention of paying dividends in shares of our stock in accordance with these guidelines.

We may generate qualified net interest income or qualified net short-term capital gains that may be exempt from U.S.

4 unchanged sentences

The following table, which may be subject to change as we finalize our annual tax filings, lists the percentage of qualified net interest income and qualified short-term capital gains for the year ended September 30, 2020, our last tax year end.

Qualified Net Interest Income

Qualified Short-Term Capital Gains

Year Ended Qualified Net Interest Income Qualified Short-Term Capital Gains

September 30, 2020 83.4 % —

4 unchanged sentences

Related Party Transactions

We have entered into the Investment Advisory Agreement with Oaktree and the Administration Agreement with Oaktree Administrator, a wholly-owned subsidiary of Oaktree.

We have entered into the Investment Advisory Agreement with Oaktree and the Administration Agreement with Oaktree Administrator, an affiliate of Oaktree.

Frank, an interested member of our Board of Directors, has an indirect pecuniary interest in Oaktree.

2 unchanged sentences

Related Party Transactions – Investment Advisory Agreement ” and “ – Administrative Services ” in the notes to the accompanying Consolidated Financial Statements.

Prior to October 17, 2017, we were externally managed and advised by our Former Adviser, and our administrator was FSC CT LLC, a wholly-owned subsidiary of our Former Adviser.

Berman, Patrick J.

Dalton, Ivelin M.

Dimitrov, Alexander C.

Frank, Todd G.

Owens and Sandeep K.

Khorana, each an interested member of our Board of Directors for all or a portion of our fiscal year ended September 30, 2017 and prior to October 17, 2017, had a direct or indirect pecuniary interest in our Former Adviser.

See “ Note 11.

Related Party Transactions – Former Investment Advisory Agreements ” and “ – Administrative Services ” in the notes to the accompanying Consolidated Financial Statements.

Recent Developments

Distribution Declaration

On November 12, 2019 , our Board of Directors declared a quarterly distribution of $0.095 per share, payable on December 31, 2019 to stockholders of record on December 13, 2019 .

On November 13, 2020, our Board of Directors declared a quarterly distribution of $0.11 per share, payable in cash on December 31, 2020 to stockholders of record on December 15, 2020.

Upsize of Credit Facility

On October 28, 2020, we entered into an incremental commitment and assumption agreement in connection with our exercise of $75 million of the accordion feature under the Credit Facility, increasing the size of the Credit Facility to $775 million.

Merger Agreement

On October 28, 2020, we entered into the Merger Agreement, which provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into OCSI, with OCSI continuing as the surviving company and as our wholly-owned subsidiary and, immediately thereafter, OCSI will merge with and into us, with us continuing as the surviving company.

Both our Board of Directors and the Board of Directors of OCSI, including all of the respective independent directors, in each case, on the recommendation of a special committee comprised solely of certain independent directors of us or OCSI, as applicable, have approved the Merger Agreement and the transactions contemplated thereby.

At the Effective Time, each share of OCSI Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares) will be converted into the right to receive a number of shares of our common stock equal to the Exchange Ratio (as defined below), plus any cash (without interest) in lieu of fractional shares.

As of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the Effective Time, which we refer as the “Determination Date”, each of us and OCSI will deliver to the other a calculation of its net asset value as of such date, in each case using a pre-agreed set of assumptions, methodologies and adjustments.

We refer to such calculation with respect to OCSI as the “Closing OCSI Net Asset Value” and with respect to us as the “Closing OCSL Net Asset Value”.

Based on such calculations, the parties will calculate the “OCSI Per Share NAV”, which will be equal to (i) the Closing OCSI Net Asset Value divided by (ii) the number of shares of OCSI Common Stock issued and outstanding as of the Determination Date

(excluding any Cancelled Shares), and the “OCSL Per Share NAV”, which will be equal to (A) the Closing OCSL Net Asset Value divided by (B) the number of shares of our common stock issued and outstanding as of the Determination Date.

The “Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the OCSI Per Share NAV divided by (ii) the OCSL Per Share NAV.

We and OCSI will update and redeliver the Closing OCSL Net Asset Value or the Closing OCSI Net Asset Value, respectively, in the event of a material change to such calculation between the Determination Date and the closing of the Mergers and if needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the Effective Time.

The Merger Agreement contains customary representations and warranties by each of us, OCSI and Oaktree.

The Merger Agreement also contains customary covenants, including, among others, covenants relating to the operation of each of our and OCSI’s businesses during the period prior to the closing of the Mergers.

Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2021, is subject to certain closing conditions, including requisite approvals of our and OCSI’s stockholders and certain other closing conditions.

The Merger Agreement also contains certain termination rights in favor of us and OCSI, including if the Mergers are not completed on or before July 28, 2021 or if the requisite approvals of our or OCSI’s stockholders are not obtained.

The Merger Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring OCSI may be required to pay us a termination fee of approximately $5.7 million.

The Merger Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring us may be required to pay OCSI a termination fee of approximately $20.0 million.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement.

The representations, warranties, covenants and agreements contained in the Merger Agreement were made only for purposes of the Merger Agreement and as of specific dates;

were solely for the benefit of the parties to the Merger Agreement (except as may be expressly set forth in the Merger Agreement);

may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts;

and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.

Investors and security holders should not rely on such representations, warranties, covenants or agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates.

Moreover, information concerning the subject matter of the representations, warranties, covenants and agreements may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by the parties to the Merger Agreement.

Management Fee Waiver

In connection with entry into the Merger Agreement, Oaktree has agreed to waive $750,000 of base management fees payable to it under the Investment Advisory Agreement in each of the eight quarters immediately following the closing of the Mergers (for an aggregate waiver of $6.0 million of base management fees).

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

What changed 10-K

Item 7. Management’s Discussion and Analysis