What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-11-16 compared with 2020-11-19 · 399 added, 613 removed, 323 unchanged (76% of the section changed)

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• 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.

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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 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.

We are a specialty finance company dedicated to providing 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.

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

federal income tax purposes.

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.

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.

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.

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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.

In the current market environment, Oaktree intends to focus on the following areas, in which Oaktree believes there is less competition and thus potential for greater returns, for our new investment opportunities:

(1) situational lending, which we define to include directly originated loans to non-sponsor companies that are hard to understand and value using traditional underwriting techniques, (2) select sponsor lending, which we define to include financing to support leveraged buyouts of companies with specialized sponsors that have expertise in certain industries, and (3) stressed sector and rescue lending, which we define to include opportunistic private loans in industries experiencing stress or limited access to capital.

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").

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

On March 19, 2021, we acquired OCSI pursuant to the Merger Agreement.

Pursuant to the Merger Agreement, Merger Sub was first merged with and into OCSI, with OCSI as the surviving corporation, and, immediately following the Merger, OCSI was then merged with and into us, with us as the surviving company.

In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of OCSI’s common stock was converted into the right to receive 1.3371 shares of our common stock (with OCSI’s stockholders receiving cash in lieu of fractional shares of our common stock).

As a result of the Mergers, we issued an aggregate of 39,400,011 shares of our common stock to former OCSI stockholders.

Business Environment and Developments

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.

The rapid spread of COVID-19 in early 2020 led to disruptions in the U.S.

and global financial markets.

While several countries, including the U.S., have eased certain travel restrictions, business closures and social distancing measures, the U.S.

and global economies continue to rapidly evolve and experience uncertainty, particularly due to recurring COVID-19 outbreaks, vaccine hesitancy and potential re-imposition of certain restrictions.

The general uncertainty surrounding the dangers and long-term impact of COVID-19 have created significant disruption in supply chains and economic activity and have had a particularly adverse impact on transportation, oil-related, hospitality, tourism, entertainment and other industries.

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

We are unable to predict the full effects of the COVID-19 pandemic or how long any further outbreaks, market disruptions or volatility might last.

We continue to closely monitor the impact that this has had on our business, industry and portfolio companies, which we believe may help us identify vulnerabilities and allow us to address potential problems early and provide constructive solutions if necessary.

Despite the ongoing uncertainty surrounding the COVID-19 pandemic, 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 and decades of credit investing experience 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.

As of September 30, 2021, 91.5% of our debt investment portfolio (at fair value) and 91.8% 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.

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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.

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.

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

However, in March 2021 the FCA announced that most U.S.

dollar LIBOR would continue to be published through June 30, 2023 effectively extending the LIBOR transition period to June 30, 2023.

However, the FCA has indicated it will not compel panel banks to continue to contribute to LIBOR after the end of 2021 and the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have encouraged banks to cease entering into new contracts that use U.S.

dollar LIBOR as a reference rate no later than December 31, 2021.

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

financial institutions, supports replacing U.S.-dollar LIBOR with the Secured Overnight Financing Rate, or 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 is unknown whether these alternative reference rates will attain market acceptance as replacements for LIBOR.

In anticipation of the cessation of LIBOR, we may need to renegotiate any credit agreements extending beyond the applicable phase out date with our prospective portfolio companies that utilize LIBOR as a factor in determining the interest rate.

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.

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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.

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

Basis of Presentation

Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and pursuant to the requirements for reporting on Form 10-K and Regulation S-X.

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, Accounting Standards Codification, or ASC, Topic 946, Financial Services-Investment Companies , or ASC 946.

Critical Accounting Estimates

Investment Valuation

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Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

As such, Oaktree obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of our investments for which quotations are available.

As such, Oaktree obtains and analyzes readily

available market quotations provided by pricing vendors and brokers for all of our investments for which quotations are available.

In determining the fair value of a particular investment, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations.

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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.

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We may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date.

Under the EV technique, the significant unobservable input used in the fair value measurement of our investments in debt or equity securities is the EBITDA, revenue or asset multiple, as applicable.

Increases or decreases in the valuation multiples in isolation may result in a higher or lower fair value measurement, respectively.

The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments.

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As debt investments held by us are substantially illiquid with no active transaction market, we depend on primary market data, including newly funded transactions and industry-specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.

Under the market yield technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt securities is the market yield.

Increases or decreases in the market yield may result in a lower or higher fair value measurement, respectively.

In accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value.

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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.

We estimate the fair value of certain 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.

Changes in the subjective input assumptions can materially affect the fair value estimates.

Our Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of our investments:

• The quarterly valuation process begins with each portfolio company or investment being initially valued by Oaktree’s valuation team in conjunction with Oaktree’s portfolio management team and investment professionals responsible for each portfolio investment;

• Preliminary valuations are then reviewed and discussed with management of Oaktree;

• Separately, independent valuation firms engaged by our Board of Directors prepare valuations of our investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to us and provide such reports to Oaktree and the Audit Committee of our Board of Directors;

• Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee;

• The Audit Committee reviews the preliminary valuations with Oaktree, and Oaktree responds and supplements the preliminary valuations to reflect any discussions between Oaktree and the Audit Committee;

• The Audit Committee makes a recommendation to our full Board of Directors regarding the fair value of the investments in our portfolio;

• 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, 2021 and September 30, 2020 was determined in good faith by our Board of Directors.

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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.

Certain factors that may be considered in determining the fair value of our investments include the nature and realizable value of any collateral, the portfolio company’s earnings and its ability to make payments on its indebtedness, the markets in which the portfolio company does business, comparison to comparable publicly-traded companies, discounted cash flow and other relevant factors.

Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed.

Due to these uncertainties, our fair value determinations may cause our net asset value on a given date to materially understate or overstate the value that we may ultimately realize upon the sale of one or more of our investments.

As of September 30, 2021, we held $2,556.6 million of investments at fair value, up from $1,573.9 million held at September 30, 2020, primarily driven by new originations, investment acquired in the Mergers and unrealized appreciation.

As of September 30, 2021 and September 30, 2020, approximately 97.0% and 95.9%, respectively, of our total assets represented investments at fair value.

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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, 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.

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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 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.

We may also receive additional fees in the ordinary course of business, including servicing, amendment and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered.

We have also structured exit fees across certain of our portfolio investments to be received upon the future exit of those investments.

These fees are typically paid to us upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs.

The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments.

These fees are included in net investment income over the life of the loan.

Dividend Income

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 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 investments principally consist of loans, common and preferred equity and warrants in privately-held companies, and the JVs.

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).

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Senior secured debt 85.85 % 80.58 %

Debt investment in SLF JV I 5.77 6.36

Subordinated debt 4.64 6.88

Common equity and warrants 3.69 3.48

LLC equity interests of SLF JV I 2.95 3.26

Debt investments in the JVs 5.79 5.77

Preferred equity 2.60 2.37

Common equity and warrants 2.15 3.69

LLC equity interests of the JVs 1.94 2.95

Subordinated debt 1.67 4.64

Total 100.00 % 100.00 %

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Senior secured debt 86.72 % 84.06 %

Debt investment in SLF JV I 6.12 6.69

Subordinated debt 4.17 5.65

Common equity and warrants 2.40 4.10

Debt investments in the JVs 5.94 6.12

Preferred equity 2.49 1.90

LLC equity interests of SLF JV I 1.35 2.10

Common equity and warrants 1.71 2.40

Subordinated debt 1.67 4.17

LLC equity interests of the JVs 1.47 1.35

Total 100.00 % 100.00 %

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Multi-Sector Holdings (1) 7.73 8.87

Data Processing & Outsourced Services 6.57 6.46

Pharmaceuticals 5.44 5.96

Data Processing & Outsourced Services 4.74 6.57

Biotechnology 4.41 5.36

Personal Products 4.08 3.00

Industrial Machinery 3.47 0.90

Health Care Services 3.34 4.26

Specialized Finance 2.70 3.11

Personal Products 3.00 —

Property & Casualty Insurance 2.88 4.83

Specialty Chemicals 2.68 2.10

Movies & Entertainment 2.68 1.25

Aerospace & Defense 2.66 1.68

Fertilizers & Agricultural Chemicals 2.63 2.02

Internet & Direct Marketing Retail 2.45 0.89

Construction & Engineering 2.44 0.80

Integrated Telecommunication Services 1.85 2.67

Internet Services & Infrastructure 1.85 1.72

Specialty Chemicals 1.84 2.68

Home Improvement Retail 1.83 —

Automotive Retail 1.65 —

Airport Services 1.64 1.34

Diversified Support Services 1.60 1.13

Real Estate Services 1.59 2.34

Fertilizers & Agricultural Chemicals 2.02 —

Auto Parts & Equipment 2.02 2.82

Oil & Gas Storage & Transportation 1.44 1.59

Oil & Gas Refining & Marketing 1.42 1.87

Internet Services & Infrastructure 1.72 2.15

Aerospace & Defense 1.68 2.23

Soft Drinks 1.32 —

Electrical Components & Equipment 1.27 1.25

Health Care Supplies 1.17 1.30

Advertising 1.13 0.82

Real Estate Operating Companies 1.08 —

Cable & Satellite 1.05 —

Movies & Entertainment 1.02 2.68

Insurance Brokers 1.00 1.05

Leisure Facilities 0.99 0.11

Health Care Equipment 0.93 —

Independent Power Producers & Energy Traders 0.92 1.29

Airlines 0.88 0.63

Health Care Distributors 0.78 0.77

Commercial Printing 0.78 0.47

Home Furnishings 0.77 —

Managed Health Care 0.73 1.65

Oil & Gas Storage & Transportation 1.59 0.77

Metal & Glass Containers 0.69 0.68

Other Diversified Financial Services 0.63 0.01

Thrifts & Mortgage Finance 0.63 0.06

Health Care Technology 0.55 1.29

Auto Parts & Equipment 0.49 2.02

Electronic Components 0.40 1.53

Property & Casualty Insurance 0.39 2.88

Restaurants 0.37 0.61

IT Consulting & Other Services 0.30 0.89

Research & Consulting Services 0.29 1.49

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 0.26 1.24

Leisure Products 0.26 —

Alternative Carriers 0.26 —

Apparel, Accessories & Luxury Goods 0.20 0.82

Air Freight & Logistics 0.19 —

Integrated Oil & Gas 0.19 —

Food Distributors 0.18 —

Food Retail 0.15 0.41

Diversified Banks 0.14 —

Technology Distributors 0.12 —

Construction Materials 0.09 0.13

Housewares & Specialties 0.07 —

Education Services 0.04 1.37

General Merchandise Stores — 1.15

Diversified Support Services 1.13 1.24

Insurance Brokers 1.05 —

Hotels, Resorts & Cruise Lines — 0.92

Diversified Real Estate Activities — 0.92

Industrial Machinery 0.90 1.13

IT Consulting & Other Services 0.89 0.99

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

Commercial Printing 0.47 0.40

Food Retail 0.41 0.96

Oil & Gas Equipment & Services — 0.20

Health Care Facilities — 0.19

Construction Materials 0.13 —

Leisure Facilities 0.11 0.12

Specialty Stores — 0.08

Thrifts & Mortgage Finance 0.06 0.08

Specialized REITs — 0.01

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

Total 100.00 % 100.00 %

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Biotechnology 4.44 6.14

Health Care Services 3.81 4.06

Personal Products 4.13 3.24

Industrial Machinery 3.53 0.74

Health Care Services 3.31 3.81

Aerospace & Defense 2.72 1.56

Specialized Finance 2.69 3.08

Property & Casualty Insurance 2.97 5.16

Movies & Entertainment 2.77 1.29

Internet & Direct Marketing Retail 2.68 0.97

Fertilizers & Agricultural Chemicals 2.64 2.14

Construction & Engineering 2.47 0.86

Integrated Telecommunication Services 1.94 2.61

Internet Services & Infrastructure 1.87 1.69

Specialty Chemicals 1.82 2.48

Home Improvement Retail 1.82 —

Automotive Retail 1.65 —

Real Estate Services 1.61 2.40

Fertilizers & Agricultural Chemicals 2.14 —

Auto Parts & Equipment 1.99 2.82

Diversified Support Services 1.60 1.12

Airport Services 1.59 1.35

Oil & Gas Refining & Marketing 1.43 1.90

Managed Health Care 1.70 1.93

Internet Services & Infrastructure 1.69 2.26

Electronic Components 1.69 —

Oil & Gas Storage & Transportation 1.35 1.64

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

Soft Drinks 1.31 —

Electrical Components & Equipment 1.26 1.30

Insurance Brokers 1.15 —

General Merchandise Stores 1.14 1.18

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

Construction & Engineering 0.86 1.67

Advertising 1.19 0.85

Health Care Supplies 1.18 1.37

Real Estate Operating Companies 1.11 —

Insurance Brokers 1.08 1.15

Cable & Satellite 1.06 —

Movies & Entertainment 1.06 2.77

Airlines 0.96 0.83

Health Care Equipment 0.93 —

Independent Power Producers & Energy Traders 0.92 1.32

Leisure Facilities 0.90 —

Commercial Printing 0.79 0.47

Home Furnishings 0.77 —

Health Care Distributors 0.77 0.78

Managed Health Care 0.74 1.70

Metal & Glass Containers 0.68 0.75

Industrial Machinery 0.74 1.17

Trading Companies & Distributors 0.64 0.72

Thrifts & Mortgage Finance 0.62 0.02

Other Diversified Financial Services 0.62 —

Health Care Technology 0.55 1.40

Auto Parts & Equipment 0.48 1.99

Electronic Components 0.40 1.69

Property & Casualty Insurance 0.39 2.97

Restaurants 0.37 0.50

Apparel, Accessories & Luxury Goods 0.50 0.92

Commercial Printing 0.47 0.41

Education Services 0.45 —

Research & Consulting Services 0.30 1.54

IT Consulting & Other Services 0.29 0.88

Alternative Carriers 0.27 —

Systems Software 0.26 1.30

Leisure Products 0.26 —

Air Freight & Logistics 0.19 —

Integrated Oil & Gas 0.19 —

Food Distributors 0.18 —

Food Retail 0.15 0.44

Diversified Banks 0.14 —

Technology Distributors 0.12 —

Construction Materials 0.09 0.13

Housewares & Specialties 0.08 —

Education Services 0.04 0.45

Apparel, Accessories & Luxury Goods — 0.50

General Merchandise Stores — 1.14

Hotels, Resorts & Cruise Lines — 1.09

Diversified Real Estate Activities — 1.07

Trading Companies & Distributors — 0.64

Health Care Facilities — 0.23

Oil & Gas Equipment & Services — 0.16

Construction Materials 0.13 —

Thrifts & Mortgage Finance 0.02 0.05

Specialized REITs — 0.01

Leisure Products — 1.05

Alternative Carriers — 2.06

Interactive Media & Services — 1.56

Household Appliances — 0.53

Environmental & Facilities Services — 0.41

Leisure Facilities — 0.33

Human Resource & Employment Services — 0.05

Department stores — 0.03

Total 100.00 % 100.00 %

___________________

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

(1) This industry includes our investments in the JVs and certain limited partnership interests.

Loans and Debt Securities on Non-Accrual Status

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, 2020 September 30, 2019

As of September 30, 2021, there were no investments on non-accrual status.

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

During the year ended September 30, 2021, we exited the two investments previously on non-accrual status as of September 30, 2020.

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

September 30, 2020

Cost % of Debt

Portfolio Fair

Value % of Debt

Portfolio Cost % of Debt

Portfolio Fair

Value % of Debt

Portfolio Fair Value % of Debt

Accrual $ 1,500,364 98.79 % $ 1,483,284 99.89 %

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

The Joint Ventures

Senior Loan Fund JV I, LLC

In May 2014, we entered into a limited liability company, or LLC, agreement with Kemper to form SLF JV I.

In May 2014, we entered into an LLC agreement with Kemper to form SLF JV I.

We co-invest in senior secured loans of middle-market companies and other corporate debt securities with Kemper through our investment in SLF JV I.

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Since we do not have a controlling financial interest in SLF JV I, we do not consolidate SLF JV I.

SLF JV I is not an "eligible portfolio company" as defined in section 2(a)(46) of the Investment Company Act.

SLF JV I is capitalized pro rata with LLC equity interests as transactions are completed and may be capitalized with additional subordinated notes issued to us and Kemper by SLF JV I.

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, 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.

SLF Repack Issuer 2016, LLC was dissolved following the foregoing redemption and liquidation.

The subordinated notes issued by SLF JV I, or the SLF JV 1 Subordinated Notes, and the mezzanine notes issued by SLF Repack Issuer 2016, LLC, or the SLF Repack Notes, collectively are referred to as the SLF JV I Notes.

Prior to their redemption on December 28, 2018, the SLF Repack Notes consisted of Class A mezzanine secured deferrable floating rate notes and Class B mezzanine secured deferrable fixed rate notes.

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, 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.

As of September 30, 2020, the reinvestment period of the Deutsche Bank I Facility was scheduled to expire June 28, 2021 and the maturity date for the Deutsche Bank I Facility was June 29, 2026.

As of September 30, 2020, borrowings under the Deutsche Bank I Facility accrued interest at a rate equal to the 3-month LIBOR plus 1.85% per annum during the reinvestment period and 3-month LIBOR plus 2.00% per annum during the amortization period.

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.

SLF JV I's portfolio primarily consisted of senior secured loans to 56 and 51 portfolio companies as of September 30, 2020 and September 30, 2019, respectively.

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

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.

The SLF JV I Notes are 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, 2021 and September 30, 2020, 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 Notes.

As of each of September 30, 2021 and September 30, 2020, we and Kemper had funded approximately $165.5 million to SLF JV I, of which $144.8 million was from us.

As of September 30, 2020 and September 30, 2019, we and Kemper had the option to fund additional SLF JV I Notes, subject to additional equity funding to SLF JV I.

As of each of September 30, 2020 and September 30, 2019, we had commitments to fund LLC equity interests in SLF JV I of $17.5 million, of which $1.3 million was unfunded.

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, 2020 September 30, 2019

As of September 30, 2021, we had aggregate commitments to fund SLF JV I of $35.0 million, of which approximately $26.2 million was to fund additional SLF JV I Notes and approximately $8.8 million was to fund LLC equity interests in SLF JV I.

As of September 30, 2020, we had commitments to fund LLC equity interests in SLF JV I of $17.5 million, of which $1.3 million was unfunded.

Both the cost and fair value of our SLF JV I Notes were $96.3 million as of each of September 30, 2021 and September 30, 2020.

We earned interest income of $7.4 million, $8.1 million and $9.8 million on our investment in the SLF JV I Notes for the years ended September 30, 2021, 2020 and 2019, respectively.

The cost and fair value of the LLC equity interests in SLF JV I held by us was $49.3 million and $37.7 million, respectively, as of September 30, 2021 and $49.3 million and $21.2 million, respectively, as of September 30, 2020.

We earned $0.9 million in dividend income for the year ended September 30, 2021 with respect to our investment in the 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.

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 a summary of SLF JV I's portfolio as of September 30, 2021:

September 30, 2021

Senior secured loans (1) $344,196

6 unchanged sentences

(2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value.

SLF JV I Portfolio as of September 30, 2020

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 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 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 4.15 % Integrated Telecommunication Services 4,643 4,450 4,527

Alvogen Pharma US, Inc.

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 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 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

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 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+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 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 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, 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 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 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+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 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+4.75% 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

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+6.50% 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 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 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+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 interest rate as of September 30, 2020.

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

(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option.

The borrower may also elect to have multiple interest reset periods for each loan.

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 the LIBOR shown above is in U.S.

As of September 30, 2020, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27% and the PRIME at 3.25%.

Most loans include an interest floor, which generally ranges from 0% to 1%.

(3) Represents the current determination of fair value as of September 30, 2020 utilizing a similar technique as us in accordance with ASC 820.

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, 2020.

(5) Investment has 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.

(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) 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 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 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 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 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 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 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 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 6.26 % Household products 8,000 7,972 7,610

McDermott Technology (Americas), Inc.

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 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+4.50% 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+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 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 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 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 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 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 interest rate as of September 30, 2019.

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

The borrower may also elect to have multiple interest reset periods for each loan.

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 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%.

Most loans include an interest floor, which generally ranges from 0% to 1%.

(3) Represents the current determination of fair value as of September 30, 2019 utilizing a similar technique as us in accordance with ASC 820.

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

(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 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, 2020 September 30, 2019

Selected Balance Sheet Information:

Investments at fair value (cost September 30, 2020:

cost September 30, 2019:

$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

Debt securities payable at fair value (proceeds September 30, 2020:

proceeds September 30, 2019:

$110,000) 110,000 110,000

Other liabilities 11,336 46,303

Total liabilities 289,246 326,513

Members' equity 24,218 34,347

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

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

Interest expense 16,637 19,858 20,713

Other expenses 244 358 473

Total expenses (1) 16,881 20,216 21,186

Net unrealized appreciation (depreciation) (9,704) 2,257 12,386

Net realized gains (losses) (3,691) (8,507) (16,311)

Net income (loss) $ (10,130) $ (3,586) $ (4,472)

(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 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.

A loss of $0.1 million was recognized by us on these transactions.

During the year ended September 30, 2018, we sold $8.0 million of senior secured debt investments to SLF JV I at fair value in exchange for $8.0 million cash consideration.

See " Note 3.

Portfolio Investments" in the notes to the accompanying financial statements for more information on SLF JV I and its portfolio.

OCSI Glick JV LLC

On March 19, 2021, as a result of the consummation of the Mergers, we became party to the LLC agreement of the Glick JV.

The Glick JV invests primarily in senior secured loans of middle-market companies.

We co-invest in these securities with GF Equity Funding through the Glick JV.

The Glick JV is managed by a four person Board of Directors, two of whom are selected by us and two of whom are selected by GF Equity Funding.

All portfolio decisions and investment decisions in respect of the Glick JV must be approved by the Glick JV investment committee, consisting of one representative selected by us and one representative selected by GF Equity Funding (with approval from a representative of each required).

Since we do not have a controlling financial interest in the Glick JV, we do not consolidate the Glick JV.

The Glick JV is not an "eligible portfolio company" as defined in section 2(a)(46) of the Investment Company Act.

The Glick JV is capitalized as transactions are completed.

The members provide capital to the Glick JV in exchange for LLC equity interests, and we and GF Debt Funding 2014 LLC, or GF Debt Funding, an entity advised by affiliates of GF Equity Funding, provide capital to the Glick JV in exchange for subordinated notes issued by the Glick JV, or the Glick JV Notes.

The Glick JV Notes are junior in right of payment to the repayment of temporary contributions made by us to fund investments of the Glick JV that are repaid when GF Equity Funding and GF Debt Funding make their capital contributions and fund their Glick JV Notes, respectively.

As of September 30, 2021, we and GF Equity Funding owned 87.5% and 12.5%, respectively, of the outstanding LLC equity interests, and we and GF Debt Funding owned 87.5% and 12.5%, respectively, of the Glick JV Notes.

Approximately $84.0 million in aggregate commitments was funded as of September 30, 2021, of which $73.5 million was from us.

As of September 30, 2021, we had commitments to fund Glick JV Notes of $78.8 million, of which $12.4 million was unfunded.

As of September 30, 2021, we had commitments to fund LLC equity interests in the Glick JV of $8.7 million, of which $1.6 million was unfunded as of each such date.

The cost and fair value of our aggregate investment in the Glick JV was $50.7 million and $55.6 million, respectively, as of September 30, 2021 .

For the period from March 19, 2021 to September 30, 2021, our investment in the Glick JV Notes earned interest income of $2.4 million.

We did not earn any dividend income for the period from March 19, 2021 to September 30, 2021 with respect to our investment in the LLC equity interests of the Glick JV.

The LLC equity interests of the Glick JV are income producing to the extent there is residual cash to be distributed on a quarterly basis.

Below is a summary of the Glick JV's portfolio as of September 30, 2021:

September 30, 2021

Senior secured loans (1) $126,512

Weighted average current interest rate on senior secured loans (2) 5.86%

Number of borrowers in the Glick JV 37

Largest loan exposure to a single borrower (1) $6,907

Total of five largest loan exposures to borrowers (1) $28,324

(1) At principal amount.

(2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value.

See " Note 3.

Portfolio Investments" in the notes to the accompanying financial statements for more information on the Glick JV and its portfolio.

Discussion and Analysis of Results and Operations

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Net unrealized appreciation (depreciation) is the net change in the fair value of our investment related assets and liabilities carried at fair value during the reporting period, including the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized.

On March 19, 2021, we completed our previously announced acquisition of OCSI pursuant to the Merger Agreement.

We were the accounting survivor of the Mergers.

The Mergers were accounted for as an asset acquisition in accordance with the asset acquisition method of accounting as detailed in ASC 805-50, Business Combinations—Related Issues , or ASC 805.

We determined the fair value of the shares of our common stock that were issued to former OCSI stockholders pursuant to the Merger Agreement plus transaction costs to be the consideration paid in connection with the Mergers under ASC 805.

The consideration paid to OCSI stockholders was less than the aggregate fair values of the assets acquired and liabilities assumed, which resulted in a purchase discount (the “purchase discount”).

The consideration paid was allocated to the individual assets acquired and liabilities assumed based on the relative fair values of net identifiable assets acquired other than “non-qualifying” assets (for example, cash) and did not give rise to goodwill.

As a result, the purchase discount was allocated to the cost basis of the OCSI investments acquired by us on a pro-rata basis based on their relative fair values as of the effective time of the Mergers.

Immediately following the Mergers, the investments were marked to their respective fair values in accordance with ASC 820, which resulted in $34.1 million of unrealized appreciation in the Consolidated Statement of Operations as a result of the Mergers.

The purchase discount allocated to the debt investments acquired will accrete over the life of each respective debt investment through interest income, with a corresponding adjustment recorded to unrealized appreciation on such investment acquired through its ultimate disposition.

The purchase discount allocated to equity investments acquired will not amortize over the life of such investments through interest income and, assuming no subsequent change to the fair value of the equity investments acquired and disposition of such equity investments at fair value, we will recognize a realized gain with a corresponding reversal of the unrealized appreciation on disposition of such equity investments acquired.

The Mergers were considered a tax-free reorganization and we have elected to carry forward the historical cost basis of the acquired OCSI investments for tax purposes.

Comparison of Years ended September 30, 2021 and September 30, 2020

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

Total investment income for the years ended September 30, 2020 and September 30, 2019 was $143.1 million and $147.7 million, respectively.

Total investment income for the years ended September 30, 2021 and 2020 was $209.4 million and $143.1 million, respectively.

For the year ended September 30, 2021, this amount consisted of $190.8 million of interest income from portfolio investments (which included $16.4 million of PIK interest), $14.1 million of fee income and $4.5 million of dividend income.

For the year ended September 30, 2020, this amount consisted of $133.4 million of interest income from portfolio investments (which included $7.9 million of PIK interest), $8.5 million of fee income and $1.2 million of dividend income.

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 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.

The increase of $66.3 million, or 46.3%, in our total investment income for the year ended September 30, 2021, as compared to the year ended September 30, 2020, was due primarily to (1) a $57.4 million increase in interest income, which was primarily driven by a larger investment portfolio primarily due to the increase in assets resulting from the Mergers and new originations, OID accretion that resulted from merger-related accounting adjustments and higher OID acceleration resulting from exits of investments, (2) a $5.6 million increase in fee income primarily due to higher prepayment fees and amendment fees and (3) a $3.3 million increase in dividend income mainly driven by dividends received from two investments that did not pay dividends in the prior year.

Net expenses (expenses net of fee waivers) for the years ended September 30, 2021 and 2020 were $109.5 million and $71.1 million, respectively.

Net expenses increased for the year ended September 30, 2021, as compared to the year ended September 30, 2020, by $38.3 million, or 53.9%, primarily due to (1) $18.0 million of higher accrued Part II incentive fees (net of waivers) as a result of higher cumulative capital gains earned and the impact of the waiver reversal in the prior year, (2) $7.8 of higher base management fees (net of management fee waivers) primarily as a result of a larger investment portfolio, including due to the Mergers, (3) a $6.4 million increase in Part I incentive fees mainly due to increased total investment income and (4) a $4.2 million increase in interest expense due to higher borrowings outstanding.

Net Investment Income

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.

Primarily as a result of the $66.3 million increase in total investment income and the $38.3 million increase in net expenses, net investment income for the year ended September 30, 2021 increased by $25.1 million, or 34.9%, compared to the year ended September 30, 2020.

Realized Gain (Loss)

Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of investments, secured borrowings and foreign currency and the cost basis without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period, net of recoveries.

Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of investments and foreign currency and the cost basis without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period, net of recoveries.

Realized losses may also be recorded in connection with our determination that certain investments are considered worthless securities and/or meet the conditions for loss recognition per the applicable tax rules.

During the years ended September 30, 2020 and 2019, we recorded aggregate net realized gains (losses) of $(13.9) million and $20.8 million, respectively, in connection with the exits or restructurings of various investments.

During the years ended September 30, 2021, 2020 and 2019, we recorded aggregate net realized gains (losses) of $26.4 million, $(13.9) million and $20.8 million, respectively, in connection with the exits or restructurings of various investments.

See “ Note 9.

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Net Unrealized Appreciation (Depreciation)

Net unrealized appreciation or depreciation is the net change in the fair value of our investments, secured borrowings and foreign currency during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

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

Net unrealized appreciation or depreciation is the net change in the fair value of our investments and foreign currency during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

During the years ended September 30, 2021, 2020 and 2019, we recorded net unrealized appreciation (depreciation) of $114.5 million, $(20.6) million and $38.5 million, respectively.

For the year ended September 30, 2021, this consisted of $70.0 million of net unrealized appreciation on debt investments, $36.3 million of net unrealized appreciation on equity investments, $6.6 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses) and $1.7 million of net unrealized appreciation of foreign currency forward contracts.

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, 2019, this consisted of $57.0 million of net unrealized appreciation related to exited investments (a portion of which results in a reclassification to realized losses), $10.6 million of net unrealized appreciation on equity investments and $0.3 million 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, 2021, there were $22.8 million of net realized and unrealized gains (losses) that resulted solely from accounting adjustments related to the Mergers.

Comparison of Years ended September 30, 2020 and September 30, 2019

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We intend to continue to generate cash primarily from cash flows from operations, including interest earned, and future borrowings.

We intend to fund our future distribution obligations through operating cash flow or with funds obtained through future equity and debt offerings or credit facilities, as we deem appropriate.

We intend to fund our future distribution

obligations through operating cash flow or with funds obtained through future equity and debt offerings or credit facilities, as we deem appropriate.

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

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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, 2021, we experienced a net decrease in cash and cash equivalents (including restricted cash) of $7.5 million.

During that period, we used $230.5 million of net cash from operating activities, primarily from funding $1,120.2 million of investments, partially offset by $792.2 million of principal payments and sale proceeds received, $20.9 million of cash acquired in the Mergers, the cash activities related to $97.1 million of net investment income and $10.1 million of net increases in payables and net decreases in receivables from unsettled transactions.

During the same period, net cash provided by financing activities was $224.2 million, primarily consisting of $349.0 million of borrowings of unsecured notes (net of OID), partially offset by $24.6 million of net repayments under the credit facilities, $79.9 million of cash distributions paid to our stockholders, $9.3 million of repayments of secured borrowings, $2.2 million of repurchases of common stock under our dividend reinvestment plan, or DRIP, and $8.9 million of deferred financing costs paid.

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

4 unchanged sentences

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 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 DRIP.

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.

As of September 30, 2021, we had $31.6 million in cash and cash equivalents (including $2.3 million of restricted cash), portfolio investments (at fair value) of $2.6 billion, $22.1 million of interest, dividends and fees receivable, $470.0 million of undrawn capacity on our credit facilities (subject to borrowing base and other limitations), $0.1 million of net receivables from unsettled transactions, $630.0 million of borrowings outstanding under our credit facilities and $638.7 million of unsecured notes payable (net of unamortized financing costs, unaccreted discount and interest rate swap fair value adjustment).

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 Syndicated Facility (as defined below) (subject to borrowing base and other limitations), $8.6 million of net receivables from unsettled transactions, $414.8 million of borrowings outstanding under our Syndicated Facility and $294.5 million of unsecured notes payable (net of unamortized financing costs and unaccreted discount).

We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies.

As of September 30, 2021, our only off-balance sheet arrangements consisted of $264.9 million of unfunded commitments, which was comprised of $212.4 million to provide debt and equity financing to certain of our portfolio companies, $49.0 million to provide financing to the JVs and $3.5 million related to unfunded limited partnership interests.

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.

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.

As of September 30, 2021, we have analyzed cash and cash equivalents, availability under our credit facilities, 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.

Contractual Obligations

The following table reflects information pertaining to our principal debt outstanding under the Syndicated Facility, Citibank Facility, Deutsche Bank Facility, 2025 Notes, 2027 Notes and secured borrowings:

Debt Outstanding

as of September 30, 2020 Debt Outstanding

as of September 30, 2021 Weighted average debt

outstanding for the

September 30, 2021 Maximum debt

outstanding for the year ended

September 30, 2021

Syndicated Facility $ 414,825 $ 495,000 $ 455,292 $ 700,025

Citibank Facility

— 135,000 65,478 149,057

Deutsche Bank Facility — — 13,107 115,700

2025 Notes 300,000 300,000 300,000 300,000

2027 Notes — 350,000 130,411 350,000

Secured borrowings — — 102 9,341

Total debt $ 714,825 $ 1,280,000 $ 964,390

The following table reflects our contractual obligations arising from the Syndicated Facility, Citibank Facility, 2025 Notes and 2027 Notes:

Payments due by period as of September 30, 2021

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

Syndicated Facility $ 495,000 $ — $ — $ 495,000 $ —

Interest due on Syndicated Facility 49,305 10,731 21,462 17,112 —

Citibank Facility 135,000 — 135,000 — —

Interest due on Citibank Facility 7,311 2,611 4,700 — —

2025 Notes 300,000 — — 300,000 —

Interest due on 2025 Notes 35,786 10,500 21,000 4,286 —

2027 Notes 350,000 — — — 350,000

Interest due on 2027 Notes (a) 33,607 6,346 12,692 12,692 1,877

Total $ 1,406,009 $ 30,188 $ 194,854 $ 829,090 $ 351,877

(a) The interest due on the 2027 Notes was calculated net of the interest rate swap.

Equity Issuances

On March 19, 2021, in connection with the Mergers, we issued an aggregate of 39,400,011 shares of our common stock to former OCSI stockholders.

There were no other common stock issuances during the year ended September 30, 2021, 2020 and 2019.

Significant Capital Transactions

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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

6 unchanged sentences

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

November 13, 2020 December 15, 2020 December 31, 2020 0.11 15.0 million 93,964 0.5 million

January 29, 2021 March 15, 2021 March 31, 2021 0.12 16.4 million 81,702 0.5 million

April 30, 2021 June 15, 2021 June 30, 2021 0.13 22.9 million 76,979 0.5 million

July 30, 2021 September 15, 2021 September 30, 2021 0.145 25.5 million 85,075 0.6 million

______________

2 unchanged sentences

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

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 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:

Syndicated Facility

As of September 30, 2021, (i) the size of the Syndicated Facility was $950 million (with an “accordion” feature that permits us, under certain circumstances, to increase the size of the facility to up to the greater of $1.25 billion and our net worth (as defined in the Syndicated Facility) on the date of such increase), (ii) the period during which we may make drawings will expire on May 4, 2025 and the maturity date was May 4, 2026 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% and (b) alternate base rate loans was 1.00%.

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

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

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

The following table describes significant financial covenants, as of September 30, 2021, with which we must comply under the Syndicated Facility on a quarterly basis:

Financial Covenant Description Target Value June 30, 2021 Reported Value (1)

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(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, 2021.

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.

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.

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, or, as amended, the Prior ING 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.

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

We were in compliance with all financial covenants under the Syndicated Facility based on the financial information contained in this Annual Report on Form 10-K.

As of September 30, 2021 and September 30, 2020, we had $495.0 million and $414.8 million of borrowings outstanding under the Syndicated Facility, respectively, which had a fair value of $495.0 million and $414.8 million, respectively.

Our borrowings under the Syndicated Facility bore interest at a weighted average interest rate of 2.197%, 3.028% and 4.550% for the years ended September 30, 2021, 2020 and 2019, respectively.

For the years ended September 30, 2021, 2020 and 2019, we

recorded interest expense (inclusive of fees) of $13.8 million, $14.9 million and $17.1 million, respectively, related to the Syndicated Facility.

Citibank Facility

On March 19, 2021, as a result of the consummation of the Mergers, we became party to the Citibank Facility.

As of September 30, 2021, we were able to borrow up to $150 million under the Citibank Facility (subject to borrowing base and other limitations).

As of September 30, 2021, the reinvestment period under the Citibank Facility was scheduled to expire on July 18, 2023 and the maturity date for the Citibank Facility was July 18, 2024.

As of September 30, 2021, borrowings under the Citibank Facility are subject to certain customary advance rates and accrue interest at a rate equal to LIBOR plus between 1.25% and 2.20% per annum on broadly syndicated loans, subject to observable market depth and pricing, and LIBOR plus 2.25% per annum on all other eligible loans during the reinvestment period.

In addition, as of September 30, 2021, for the duration of the reinvestment period there is a non-usage fee payable of 0.50% per annum on the undrawn amount under the Citibank Facility.

The minimum asset coverage ratio applicable to us under the Citibank Facility is 150% as determined in accordance with the requirements of the Investment Company Act.

Borrowings under the Citibank Facility are secured by all of the assets of OCSL Senior Funding II LLC and all of our equity interests in OCSL Senior Funding II LLC.

We may use the Citibank Facility to fund a portion of our loan origination activities and for general corporate purposes.

Each loan origination under the Citibank Facility is subject to the satisfaction of certain conditions.

As of September 30, 2021, we had $135.0 million outstanding under the Citibank Facility, which had a fair value of $135.0 million.

Our borrowings under the Citibank Facility bore interest at a weighted average interest rate of 2.086% for the period from March 19, 2021 to September 30, 2021.

For the period from March 19, 2021 to September 30, 2021, we recorded interest expense (inclusive of fees) of $1.9 million related to the Citibank Facility.

Deutsche Bank Facility

On March 19, 2021, as a result of the consummation of the Mergers, we became party to a loan financing and servicing agreement, or, as amended, the Deutsche Bank Facility, with OCSI Senior Funding Ltd., our wholly-owned, special purpose financing subsidiary, as borrower, us, as equityholder and as servicer, the lenders from time to time party thereto, Deutsche Bank AG, New York Branch, as facility agent, and Wells Fargo Bank, National Association, as collateral agent and as collateral custodian.

On May 4, 2021, we repaid all outstanding borrowings under the Deutsche Bank Facility using borrowings under the Syndicated Facility, following which the Deutsche Bank Facility was terminated.

For the period from March 19, 2021 to May 4, 2021, our borrowings under the Deutsche Bank Facility bore interest at a weighted average interest rate of 2.900%.

For the period from March 19, 2021 to September 30, 2021, we recorded interest expense (inclusive of fees) of $0.3 million related to the Deutsche Bank 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.

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 May 18, 2021, we issued $350.0 million in aggregate principal amount of the 2027 Notes for net proceeds of $344.8 million after deducting OID of $1.0 million, underwriting commissions and discounts of $3.5 million and offering costs of $0.7 million.

The OID on the 2027 Notes is amortized based on the effective interest method over the term of the notes.

In connection with the 2027 Notes, we entered into an interest rate swap to more closely align the interest rates of our liabilities with our investment portfolio, which consists of predominately floating rate loans.

Under the interest rate swap agreement, we receive a fixed interest rate of 2.7% and pay a floating interest rate of the three-month LIBOR plus 1.658% on a notional amount of $350 million.

We designated the interest rate swap as the hedging instrument in an effective hedge accounting relationship.

The below table presents the components of the carrying value of the 2025 Notes and the 2027 Notes as of September 30, 2021:

As of September 30, 2021

($ in millions) 2025 Notes 2027 Notes

Principal $ 300.0 $ 350.0

Unamortized financing costs (2.6) (4.0)

Unaccreted discount (1.7) (0.9)

Interest rate swap fair value adjustment — (2.1)

Net carrying value $ 295.7 $ 343.0

Fair Value $ 314.5 $ 351.1

The below table presents the components of the carrying value of the 2025 Notes as of September 30, 2020:

As of September 30, 2020

($ in millions) 2025 Notes

Principal $ 300.0

Unamortized financing costs (3.3)

Unaccreted discount (2.2)

Net carrying value $ 294.5

Fair Value $ 301.4

The below table presents the components of interest and other debt expenses related to the 2025 Notes and the 2027 Notes for the year ended September 30, 2021:

($ in millions) 2025 Notes 2027 Notes

Coupon interest $ 10.5 $ 3.5

Amortization of financing costs and discount 1.3 0.3

Effect of interest rate swap — (1.1)

Total interest expense $ 11.8 $ 2.7

Coupon interest rate (net of effect of interest rate swap for 2027 Notes) 3.500 % 1.813 %

The below table presents the components of interest and other debt expenses related to the 2025 Notes for the year ended September 30, 2020:

($ in millions) 2025 Notes

Coupon interest $ 6.3

Amortization of financing costs and discount 0.7

Total interest expense $ 7.0

Coupon interest rate 3.500 %

For the years ended September 30, 2020 and 2019, we recorded interest expense of $1.9 million and $4.6 million (inclusive of fees), respectively, related to our 5.875% notes due 2024, or the 2024 Notes.

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

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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.

As of September 30, 2021 and September 30, 2020, there were no 2024 Notes outstanding.

For the year ended September 30, 2020 and 2019, we recorded interest expense of $2.5 million and $5.5 million (inclusive of fees), respectively, related to our 6.125% notes due 2028, or the 2028 Notes.

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

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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, 2021 and September 30, 2020, there were no 2028 Notes outstanding.

Secured Borrowings

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

As of September 30, 2021 and September 30, 2020, we did not have any secured borrowings outstanding.

On March 19, 2021, as a result of the consummation of the Mergers, we became party to a secured borrowing arrangement under which certain securities were sold and simultaneously repurchased at a premium.

The amounts due under the secured borrowing arrangement were settled prior to September 30, 2021.

For the period from March 19, 2021 to September 30, 2021, we recorded less than $0.1 million of interest expense in connection with secured borrowings.

Our secured borrowings bore interest at a weighted average rate of 3.123% for the period from March 19, 2021 to September 30, 2021.

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 interest expense of $0.1 million related to the secured borrowings.

For the year ended September 30, 2019, we recorded unrealized depreciation on secured borrowings of $2.7 million.

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

We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies.

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, 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.

P2 Upstream Acquisition Co.

Sorrento Therapeutics, Inc.

TerSera Therapeutics, LLC — 4,200

Thruline Marketing, Inc.

4 Over International, LLC — 1,977

PLATO Learning Inc.

$ 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 principal debt outstanding under the Credit Facility, 2025 Notes, 2024 Notes and 2028 Notes:

Debt Outstanding

as of September 30, 2019 Debt Outstanding

as of September 30, 2020 Weighted average debt

outstanding for the

September 30, 2020 Maximum debt

outstanding for the year ended

September 30, 2020

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

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 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 —

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

We have qualified and elected to be treated as a RIC under Subchapter M of the Code for tax purposes.

We have qualified and elected to be treated as a RIC under Subchapter M of the Code for U.S.

federal income tax purposes.

As long as we continue to qualify as a RIC, we will not be subject to tax on our investment company taxable income (determined without regard to any deduction for dividends paid) or realized net capital gains, to the extent that such taxable income or gains is distributed, or deemed to be distributed as dividends, to stockholders on a timely basis.

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We intend to distribute at least 90% of our annual taxable income (which includes our taxable interest and fee income) to our stockholders.

The covenants contained in the Credit Facility may prohibit us from making distributions to our stockholders, and, as a result, could hinder our ability to satisfy the distribution requirement associated with our ability to be subject to tax as a RIC.

The covenants contained in our credit facilities may prohibit us from making distributions to our stockholders, and, as a result, could hinder our ability to satisfy the distribution requirement associated with our ability to be subject to tax as a RIC.

In addition, we may retain for investment some or all of our net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) and treat such amounts as deemed distributions to our stockholders.

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shareholders with proper documentation.

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.

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

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

Oaktree is a registered investment adviser under the Advisers Act that is partially and indirectly owned by OCG.

Oaktree is a registered investment adviser under the Investment Advisers Act of 1940, as amended, that is partially and indirectly owned by OCG.

See “ Note 11.

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Distribution Declaration

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).

On October 13, 2021, our Board of Directors declared a quarterly distribution of $0.155 per share, payable in cash on December 31, 2021 to stockholders of record on December 15, 2021.

Election of Chief Financial Officer and Treasurer

On November 12, 2021, our Board of Directors elected Christopher McKown, age 40, as its Chief Financial Officer and Treasurer effective as of November 30, 2021.

McKown is also expected to succeed Mel Carlisle as Chief Financial Officer and Treasurer of OSI II as of December 31, 2021.

McKown joined OCM in 2011 and currently serves as a Managing Director responsible for fund accounting and reporting for Oaktree’s Strategic Credit strategy and as the Assistant Treasurer of the Company and OSI II.

Prior to joining OCM., he worked in the audit practice at KPMG LLP.

McKown received a B.A.

degree in business economics with a minor in accounting cum laude from the University of California, Los Angeles and is a Certified Public Accountant (inactive).

McKown has no family relationships with any current director, executive officer, or person nominated to become a director or executive officer, of us, and there are no transactions or proposed transactions, to which we are a party, or intended to be a party, in which Mr.

McKown has, or will have, a material interest subject to disclosure under Item 404(a) of Regulation S-K.

Election of Chief Compliance Officer

On November 12, 2021, our Board of Directors, including a majority of our independent directors, elected Ashley Pak, age 43, as its Chief Compliance Officer effective as of the close of business on November 12, 2021.

Pak was also elected as Chief Compliance Officer of OSI II as of the close of business on November 12, 2021.

Pak joined OCM in 2007 and currently serves as a Senior Vice President in the Compliance Department.

Prior to joining OCM, she was a Compliance/Legal Specialist at Associated Securities Corp.

Pak received a B.A.

in Business Administration from Seattle University and an MBA from the University of Massachusetts, Amherst – Isenberg School of Management.

Pak has no family relationships with any current director, executive officer, or person nominated to become a director or executive officer, of us, and there are no transactions or proposed transactions, to which we are a party, or intended to be a party, in which Ms.

Pak has, or will have, a material interest subject to disclosure under Item 404(a) of Regulation S-K.

Election of Independent Director

On November 12, 2021, the Board of Directors elected Phyllis R.

Caldwell to the Board of Directors and each of its committees effective as of December 31, 2021.

Caldwell is founder and has served since 2012 as the managing member of Wroxton Civic Ventures, which provides advisory services on various financial, housing and economic development matters.

Previously, Ms.

Caldwell was Chief Homeownership Preservation Officer at the U.S.

Department of the Treasury, responsible for oversight of the U.S.

housing market stabilization, economic recovery and foreclosure prevention initiatives established through the Troubled Asset Relief Program.

In addition, Ms.

Caldwell held various leadership roles during eleven years at Bank of America, including serving as President of Community Development Banking.

Caldwell has served as Chair of the board of directors of Ocwen Financial Corporation since March 2016 and has served as a director of the company since January 2015.

In June 2021, Ms.

Caldwell became a member of the board of directors of OneMain Holdings, Inc., the country’s largest nonprime installment lender.

In March 2021, Ms.

Caldwell was appointed as a member of the board of trustees of JBG SMITH, an owner and developer of mixed-use properties in the Washington, D.C.

From December 2020 to July 2021, Ms.

Caldwell served as a member of the board of directors of Revolution Acceleration Acquisition Corp., a special purpose acquisition company, and from January 2014 through September 2018, she served as an independent director of American Capital Senior Floating, Ltd., a Business Development Company.

Caldwell also serves or has served on the boards of other public and private businesses and numerous non-profit organizations engaged in housing and community development finance.

Caldwell received her Master of Business Administration from the Robert H.

Smith School of Business at the University of Maryland, College Park and holds a Bachelor of Arts in Sociology, also from the University of Maryland.

Caldwell has no family relationships with any current director, executive officer, or person nominated to become a director or executive officer, of us, and there are no transactions or proposed transactions, to which we are a party, or intended to be a party, in which Ms.

Caldwell has, or will have, a material interest subject to disclosure under Item 404(a) of Regulation S-K.

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