What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-05-09 compared with 2022-02-08 · 26 added, 16 removed, 109 unchanged (28% of the section changed)

5 unchanged sentences

Risks Relating to Business

The Russian invasion of Ukraine may have a material adverse impact on us and our portfolio companies.

As a result of Russia's military invasion of Ukraine in February 2022, the United States and other countries imposed broad-reaching political and economic sanctions on Russia, certain Russian allies believed to be providing them military or financial support, on private and public companies domiciled in Russia, including public issuers and banking and financial institutions, and on a variety of individuals.

These sanctions, combined with equivalent measures taken by foreign businesses ceasing operations in Russia, continue to adversely impact global financial markets, disrupt global supply chains, and impair the value and liquidity of issuers that continue to maintain exposure to Russia and its allies, Russian investments and sectors that can be impacted by restrictions on Russian imports and exports, such as the oil and gas industry.

It is not possible to predict the duration or extent of longer-term consequences of this conflict, which could include further sanctions, retaliatory measures taken by Russia, embargoes, regional instability, geopolitical shifts and adverse effects on or involving macroeconomic conditions, supply chains, inflation, security conditions, currency exchange rates and financial markets around the globe.

However, the consequences of the conflict between Russia and Ukraine could result in an economic downturn or recession either globally or locally in the U.S.

or other economies, reduce business activity, spawn additional conflicts (whether in the form of traditional military action, reignited "cold" wars or in the form of virtual warfare such as cyberattacks) with similar and perhaps wider ranging impacts and consequences and have an adverse impact on our returns and net asset value.

Such consequences also may increase our funding cost or limit our access to the capital markets.

We are subject to risks related to corporate social responsibility.

5 unchanged sentences

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.

Recently, there have been market indicators of a rise in inflation and the Federal Reserve has indicated an intention to raise certain benchmark interest rates in an effort to combat inflation.

Recently, there have been market indicators of a rise in inflation and the Federal Reserve has begun to raise certain benchmark interest rates in an effort to combat inflation.

As inflation increases, the real value of our common stock and distributions therefore may decline.

2 unchanged sentences

This could also lead to decreased asset coverage for our outstanding debt and preferred stock.

Inflation rates may change frequently and significantly as a result of various factors, including unexpected shifts in the domestic or global economy and changes in economic policies, and our investments may not keep pace with inflation, which may result in losses to our stockholders.

Inflation rates

may change frequently and significantly as a result of various factors, including unexpected shifts in the domestic or global economy and changes in economic policies, and our investments may not keep pace with inflation, which may result in losses to our stockholders.

This risk is greater for fixed-income instruments with longer maturities.

3 unchanged sentences

Since December 31, 2021, all sterling, euro, Swiss franc and Japanese yen LIBOR settings and the 1-week and 2-month U.S.

dollar LIBOR settings have ceased to be published or are no longer be representative, and after June 30, 2023, the overnight, 1-month, 3-month, 6-month and 12-month U.S.

dollar LIBOR settings have ceased to be published or are no longer representative, and after June 30, 2023, the overnight, 1-month, 3-month, 6-month and 12-month U.S.

dollar LIBOR settings will cease to be published or will no longer be representative.

Various financial industry groups have begun planning for the transition away from LIBOR, but there are challenges to converting certain securities and transactions to a new reference rate (e.g., the Secured Overnight Financing Rate, which is intended to replace the U.S.

dollar LIBOR).

Various financial industry groups have begun planning for the transition away from LIBOR, but there are challenges to converting certain securities and transactions to a new reference rate.

Neither the effect of the LIBOR transition process nor its ultimate success can yet be known.

At this time, no consensus exists as to what rate or rates will become accepted alternatives to LIBOR, although the U.S.

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

institutions, is considering replacing U.S.

dollar LIBOR with the Secured Overnight Financing Rate (“SOFR”).

As an alternative to LIBOR, the FRS, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions recommended replacing U.S.

dollar LIBOR with the Secured Overnight Financing Rate (“SOFR”), a new index calculated by short-term repurchase agreements, backed by Treasury securities.

Abandonment of, or modifications to, LIBOR could have adverse impacts on newly issued financial instruments and our existing financial instruments which reference LIBOR.

While some instruments may contemplate a scenario where LIBOR is no longer available by providing an alternative rate setting methodology, not all instruments may have such provisions and there is significant uncertainty regarding the effectiveness of any such alternative methodologies.

On March 15, 2022, President Biden signed into law the Consolidated Appropriations Act of 2022, which among other things, provides for the use of interest rates based on SOFR in certain contracts currently based on LIBOR and a safe harbor from liability for utilizing SOFR-based interest rates as a replacement for LIBOR.

Given the inherent differences between LIBOR and SOFR, or any other alternative benchmark rate that may be established, there are many uncertainties regarding a transition from LIBOR, including but not limited to the need to amend all contracts with LIBOR as the referenced rate and how this will impact the cost of variable rate debt and certain derivative financial instruments.

19 unchanged sentences

In addition, the effect of a phase out of LIBOR on U.S.

senior secured loans, the underlying assets of the CLOs in which we invest, is currently unclear.

senior secured loans, the underlying assets of the CLOs in which we invest, is currently unclear, even if certain statutory regimes may apply, e.g., N.Y.

Law § 18-401 or the Adjustable Interest Rate (LIBOR) Act.

To the extent that any replacement rate utilized for senior secured loans differs from that utilized for a CLO that holds those loans, the CLO would experience an interest rate mismatch between its assets and liabilities which could have an adverse impact on our net investment income and portfolio returns.

4 unchanged sentences

A rising interest rate environment may increase loan defaults, resulting in losses for the CLOs in which we invest.

In addition, increasing interest

rates may lead to higher prepayment rates, as corporate borrowers look to avoid escalating interest payments or refinance floating rate loans.

In addition, increasing interest rates may lead to higher prepayment rates, as corporate borrowers look to avoid escalating interest payments or refinance floating rate loans.

Further, a general rise in interest rates will increase the financing costs of the CLOs.

11 unchanged sentences

In other words, under the 1940 Act, the Company is now able to borrow $2 for investment purposes for every $1 of investor equity, as opposed to borrowing $1 for investment purposes for every $1 of investor equity.

As a result, the Company will be able to incur additional indebtedness in the future and investors in the Company may face increased investment risk.

As a result, the

Company will be able to incur additional indebtedness in the future and investors in the Company may face increased investment risk.

In addition, the Company’s management fee payable to the Investment Adviser is based on the Company's average adjusted gross assets, which includes leverage and, as a result, if the Company incurs additional leverage, management fees paid to the Investment Adviser would increase.

34 unchanged sentences

(1) Assumes no conversion of 5.50% Preferred Stock to common stock.

(2) Assumes the conversion of $1.25 billion in 5.50% Preferred Stock at a conversion rate based on the 5-day VWAP of our common stock on December 31, 2021, which was $8.46, and a Holder Optional Conversion Fee (as defined in the prospectus supplement relating to the applicable offering) of 9.00% and 9.50% on Series A1 Preferred Stock and Series AA Preferred Stock, respectively, of the maximum public offering price disclosed within the applicable prospectus supplements.

(2) Assumes the conversion of $1.3 billion in 5.50% Preferred Stock at a conversion rate based on the 5-day VWAP of our common stock on March 31, 2022, which was $8.24, and a Holder Optional Conversion Fee (as defined in the prospectus supplement relating to the applicable offering) of 9.00% on Series A1 Preferred Stock and Series AA1 Preferred Stock of the maximum public offering price disclosed within the applicable prospectus supplements.

The actual 5-day VWAP of our common stock on a Holder Conversion Exercise Date may be more or less than $8.24, which may result in more or less shares of common stock issued.

1 unchanged sentence

Actual returns may be greater or less than those appearing in the table.

Pursuant to SEC regulations, this table is calculated as of December 31, 2021.

As a result, it has not been updated to take into account any changes in assets or leverage since December 31, 2021.

Pursuant to SEC regulations, this table is calculated as of March 31, 2022.

As a result, it has not been updated to take into account any changes in assets or leverage since March 31, 2022.

Unregistered Sales of Equity Securities and Use of Proceeds

5 unchanged sentences

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-Q

Item 1A. Risk Factors