What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-02 · 312 added, 256 removed, 471 unchanged (55% of the section changed)

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The forward-looking statements contained herein involve risks and uncertainties, including statements as to:

our future operating results, including our ability to achieve objectives as a result of the current COVID-19

our future operating results, including our ability to achieve objectives;

our business prospects and the prospects of our portfolio companies;

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our contractual arrangements and relationships with third parties;

the dependence of our future success on the general economy and its impact on the industries in which we invest and the impact of the COVID-19

pandemic thereon;

the impact of any protracted decline in the liquidity of credit markets on our business and the impact of the COVID-19

pandemic thereon;

the ability of our portfolio companies to achieve their objectives, including as a result of the current COVID-19

the valuation of our investments in portfolio companies, particularly those having no liquid trading market, and the impact of the COVID-19

pandemic thereon;

market conditions and our ability to access alternative debt markets and additional debt and equity capital, and the impact of the COVID-19

pandemic thereon;

the dependence of our future success on the general economy and its impact on the industries in which we invest;

the impact of any protracted decline in the liquidity of credit markets on our business;

the ability of our portfolio companies to achieve their objectives;

the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

market conditions and our ability to access alternative debt markets and additional debt and equity capital;

our expected financings and investments;

the adequacy of our cash resources and working capital;

the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the COVID-19

pandemic thereon;

the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments and the impacts of the COVID-19

pandemic thereon.

changes in the political conditions and relations between the United States, Russia, Ukraine and other nations.

the timing of cash flows, if any, from the operations of our portfolio companies;

the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;

the ability of the Investment Adviser to attract and retain highly talented professionals;

the ability of the Investment Adviser to adequately allocate investment opportunities among the Company and its other advisory clients;

any conflicts of interest posed by the structure of the management fee and incentive fee to be paid to the Investment Adviser;

changes in political, economic or industry conditions, relations between the United States, Russia, Ukraine and other nations, the interest rate environment or conditions affecting the financial and capital markets;

changes in the general economy, slowing economy, rising inflation, risk of recession and risks in respect of a failure to increase the U.S.

debt ceiling;

our ability to anticipate and identify evolving market expectations with respect to environmental, social and governance matters, including the environmental impacts of our portfolio companies’ supply chain and operations.

These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

an economic downturn, including as a result of the current COVID-19

pandemic, could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

a contraction of available credit and/or an inability to access the equity markets, including as a result of the current COVID-19

pandemic, could impair our lending and investment activities;

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;

interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy;

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S.

the ability to realize the anticipated benefits of the Mergers;

the effects of disruption on our business from the Mergers;

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

the risks, uncertainties and other factors we identify in Item 1A.

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These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.

Merger Agreement

On December 1, 2021, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with SLR Senior Investment Corp., a Maryland corporation (“SUNS”), Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, the Investment Adviser.

The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into SUNS, with SUNS continuing as the surviving company and as SUNS’s wholly-owned subsidiary (the “Merger,”) and, immediately thereafter, SUNS will merge with and into us, with us continuing as the surviving company (together with the Merger, the “Mergers”).

Both the Board and SUNS’s board of directors, including all of the respective independent directors, in each case, on the recommendation of a special committee comprised solely of the independent directors of us and SUNS, as applicable, have approved the Merger Agreement and the transactions contemplated thereby.

The Merger Agreement contains customary representations and warranties by each of us, SUNS and the Investment Adviser.

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

Consummation of the Mergers, which occurred on April 1, 2022, was subject to certain closing conditions as disclosed in the Merger Agreement.

On April 1, 2022, we completed our previously announced acquisition of SUNS.

Pursuant to the Merger Agreement, Merger Sub was first merged with and into SUNS, with SUNS as the surviving corporation, and, immediately following the Merger, SUNS 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 SUNS’s common stock was converted into the right to receive 0.7796 shares of our common stock (with SUNS’s stockholders receiving cash in lieu of fractional shares of our common stock).

As a result of the Mergers, we issued an aggregate of 12,511,825 shares of our common stock to former SUNS stockholders.

The Merger is accounted for as an asset acquisition of SLR Senior Investment Corp.

by the Company in accordance with the asset acquisition method of accounting as detailed in ASC 805-50,

Business Combinations – Related Issues, with the fair value of total consideration paid in conjunction with the Merger allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of the Merger.

Generally, under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group.

The cost of the group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair values of net identifiable assets acquired other than certain “non-qualifying”

assets (for example cash) and does not give rise to goodwill.

The Company is the accounting survivor of the Merger.

The Merger was considered a tax-free

reorganization and the historical cost basis of the acquired SUNS investments are carried forward for tax purposes.

Letter Agreement

On April 1, 2022, in connection with the consummation of the Mergers, we entered into a letter agreement (the “Letter Agreement”) pursuant to which the Investment Adviser voluntarily agreed to a permanent 25 basis point reduction of the annual base management fee rate payable by us to the Investment Adviser pursuant to the Advisory Agreement, resulting in an annual base management fee rate payable by us to the Investment Adviser of 1.50% on gross assets up to 200% of our total net assets.

We retained the annual base management fee rate payable by us to the Investment Adviser of 1.00% on gross assets that exceed 200% of our total net assets.

Recent Developments

On October 5, 2022, our Board declared a monthly distribution of $0.136667 per share payable on November 2, 2022 to holders of record as of October 20, 2022.

On October 12, 2022, the Company entered into a joint venture agreement with SunStone Senior Credit L.P.

(the “Investor”) to create SLR Senior Lending Program LLC (“SSLP”).

The joint venture is expected to invest primarily in senior secured cash flow loans.

The Company and the Investor each have made initial equity commitments of $50 million, resulting in a total equity commitment of $100 million.

SSLP intends to seek third party financing to allow the joint venture to utilize leverage.

The Company and the Investor expect to begin funding SSLP with investments prior to the end of 2022.

Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor.

On November 2, 2022, our Board declared a monthly distribution of $0.136667 per share payable on December 1, 2022 to holders of record as of November 17, 2022.

The global outbreak of the COVID-19

pandemic, and the related effect on the U.S.

and global economies, has continued to have adverse consequences for the business operations of some of the Company’s portfolio companies and, as a result, has had adverse effects on the Company’s operations.

The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, including the Company, remain uncertain.

The operational and financial performance of the issuers of securities in which the Company invests depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Company’s investments and negatively impact the Company’s performance.

Effective on April 3, 2023, Richard L.

Peteka resigned from his position as the Chief Financial Officer, Treasurer and Secretary of the Company.

The resignation was not the result of any disagreement between Mr.

Peteka and the Company.

On April 3, 2023, the Company’s board of directors appointed Shiraz Y.

Kajee as the Company’s Chief Financial Officer, Treasurer and Secretary effective immediately.

For more information on Mr.

Kajee’s background and experience, refer to the Company’s Form 8-K

as filed with the SEC on April 3, 2023.

On April 4, 2023, the Board declared a monthly distribution of $0.136667 per share payable on May 2, 2023 to holders of record as of April 20, 2023.

On May 9, 2023, our Board authorized an extension of a program for the purpose of repurchasing up to $50 million of our outstanding shares of common stock.

Under the repurchase program, we may, but are not obligated to, repurchase shares of our outstanding common stock in the open market from time to time provided that we comply with our code of ethics and the guidelines specified in Rule 10b-18

of the Exchange Act, including certain price, market volume and timing constraints.

In addition, any repurchases will be conducted in accordance with the 1940 Act.

Unless further amended or extended by our Board, we expect the repurchase program to be in place until the earlier of May 10, 2024 or until $50 million of our outstanding shares of common stock have been repurchased.

To date, approximately $3 million of repurchases have been made by us under the repurchase program.

The timing and number of additional shares to be repurchased will depend on a number of factors, including market conditions.

There are no assurances that we will engage in any repurchases.

On May 10, 2023, the Board declared a monthly distribution of $0.136667 per share payable on June 1, 2023 to holders of record as of May 24, 2023.

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.

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All investment professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Investment Adviser.

We bear all other costs and expenses of our operations and

transactions, including (without limitation):

We bear all other costs and expenses of our operations and transactions, including (without limitation):

the cost of our organization and public offerings;

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Portfolio and Investment Activity

During the three months ended September 30, 2022, we invested approximately $245.4 million across 44 portfolio companies.

This compares to investing approximately $230.7 million in 23 portfolio companies for the three months ended September 30, 2021.

Investments sold, prepaid or repaid during the three months ended September 30, 2022 totaled approximately $81.1 million versus approximately $105.9 million for the three months ended September 30, 2021.

At September 30, 2022, our portfolio consisted of 135 portfolio companies and was invested 30.2% in cash flow senior secured loans, 31.9% in asset-based senior secured loans / SLR Credit Solutions (“SLR Credit”) / SLR Healthcare ABL / SLR Business Credit, 21.6% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 16.3% in life science senior secured loans, in each case, measured at fair value, versus 106 portfolio companies and was invested 28.4% in cash flow senior secured loans, 26.5% in asset-based senior secured loans / SLR Credit, 30.4% in equipment senior secured financings / SLR Equipment / KBH, and 14.7% in life science senior secured loans, in each case, measured at fair value, at September 30, 2021.

At September 30, 2022, 79.7% or $1.71 billion of our income producing investment portfolio *

During the three months ended March 31, 2023, we invested approximately $156.0 million across 40 portfolio companies.

This compares to investing approximately $67.5 million in 14 portfolio companies for the three months ended March 31, 2022.

Investments sold, prepaid or repaid during the three months ended March 31, 2023 totaled approximately $144.2 million versus approximately $101.0 million for the three months ended March 31, 2022.

At March 31, 2023, our portfolio consisted of 145 portfolio companies and was invested 31.9% in cash flow senior secured loans, 29.3% in asset-based senior secured loans / SLR Credit Solutions (“SLR Credit”) / SLR Healthcare ABL / SLR Business Credit, 23.3% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 15.5% in life science senior secured loans, in each case, measured at fair value, versus 101 portfolio companies invested 23.2% in cash flow senior secured loans, 28.4% in asset-based senior secured loans / SLR Credit, 14.1% in KBH, 16.0% in equipment senior secured financings / SLR Equipment, and 18.3% in life science senior secured loans, in each case, measured at fair value, at March 31, 2022.

At March 31, 2023, 77.7% or $1.61 billion of our income producing investment portfolio *

is floating rate and 22.3% or $460.4 million is fixed rate, measured at fair value.

At September 30, 2021, 74.1% or $1.20 billion of our income producing investment portfolio *

At March 31, 2022, 79.4% or $1.15 billion of our income producing investment portfolio *

is floating rate and 20.6% or $296.9 million is fixed rate, measured at fair value.

As of September 30, 2022 and 2021, we had three and one issuers, respectively, on non-accrual

As of March 31, 2023 and 2022, we had two and two issuers, respectively, on non-accrual

We have included SLR Credit Solutions, SLR Equipment Finance, SLR Healthcare ABL, SLR Business Credit and Kingsbridge Holdings, LLC within our income producing investment portfolio.

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On September 30, 2016, Crystal Capital Financial Holdings LLC was dissolved.

As of September 30, 2022, total commitments to the revolving credit facility are $250 million.

As of September 30, 2022, SLR Credit had 27 funded commitments to 21 different issuers with total funded loans of approximately $354.9 million on total assets of $375.6 million.

As of March 31, 2023, total commitments to the revolving credit facility are $300 million.

As of March 31, 2023, SLR Credit had 28 funded commitments to 24 different issuers with total funded loans of approximately $423.2 million on total assets of $435.3 million.

As of December 31, 2022, SLR Credit had 29 funded commitments to 25 different issuers with total funded loans of approximately $439.5 million on total assets of $460.7 million.

As of September 30, 2022 and December 31, 2021, the largest loan outstanding totaled $34.2 million and $35.0 million, respectively.

As of March 31, 2023 and December 31, 2022, the largest loan outstanding totaled $37.2 million and $33.4 million, respectively.

For the same periods, the average exposure per issuer was $17.6 million and $17.6 million, respectively.

SLR Credit’s credit facility, which is non-recourse

to the Company, had approximately $139.5 million and $100.7 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, SLR Credit had net income of $3.9 million and $5.4 million, respectively, on gross income of $8.6 million and $9.5 million, respectively.

For the nine months ended September 30, 2022 and 2021, SLR Credit had net income of $8.6 million and $12.5 million, respectively, on gross income of $22.2 million and $27.2 million, respectively.

to the Company, had approximately $207.8 million and $224.3 million of borrowings outstanding at March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023 and 2022, SLR Credit had net income (loss) of ($9.7) million and $2.8 million, respectively, on gross income of $14.6 million and $6.7 million, respectively.

Due to timing and non-cash

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On July 31, 2017, we acquired a 100% equity interest in NEF Holdings, LLC, which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC.

Effective February 25, 2021, Nations Equipment Finance, LLC and its related companies is doing business as SLR Equipment Finance (“SLR Equipment”).

Effective February 25, 2021, Nations Equipment Finance, LLC and its related companies are doing business as SLR Equipment Finance (“SLR Equipment”).

SLR Equipment is an independent equipment finance company that provides senior secured loans and leases primarily to U.S.

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In September 2019, SLR Equipment amended the facility, increasing commitments to $214.0 million with an accordion feature to expand up to $314.0, million and extended the maturity date of the facility to July 31, 2023.

As of September 30, 2022, SLR Equipment had 129 funded equipment-backed leases and loans to 59 different customers with a total net investment in leases and loans of approximately $189.3 million on total assets of $241.2 million.

As of March 31, 2023, SLR Equipment had 129 funded equipment-backed leases and loans to 53 different customers with a total net investment in leases and loans of approximately $188.6 million on total assets of $236.6 million.

As of December 31, 2022, SLR Equipment had 131 funded equipment-backed leases and loans to 59 different customers with a total net investment in leases and loans of approximately $190.8 million on total assets of $241.8 million.

As of September 30, 2022 and December 31, 2021, the largest position outstanding totaled $19.3 million and $19.2 million, respectively.

As of March 31, 2023 and December 31, 2022, the largest position outstanding totaled $19.3 million and $19.3 million, respectively.

For the same periods, the average exposure per customer was $3.6 million and $3.2 million, respectively.

SLR Equipment’s credit facility, which is non-recourse

to the Company, had approximately $111.0 million and $118.0 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, SLR Equipment had net income (loss) of $1.0 million and ($0.3) million, respectively, on gross income of $6.5 million and $5.8 million, respectively.

For the nine months ended September 30, 2022 and 2021, SLR Equipment had net loss of $0.1 million and $2.3 million, respectively, on gross income of $15.7 million and $16.4 million, respectively.

to the Company, had approximately $113.1 million and $115.0 million of borrowings outstanding at March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023 and 2022, SLR Equipment had net income of $1.0 million and $0.6 million, respectively, on gross income of $6.3 million and $5.2 million, respectively.

Due to timing and non-cash

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Kingsbridge Holdings, LLC

On November 3, 2020, the Company acquired 87.5% of Kingsbridge Holdings, LLC (“KBH”) through KBH Topco LLC (“KBHT”), a newly formed Delaware corporation.

On November 3, 2020, the Company acquired 87.5% of the equity securities of Kingsbridge Holdings, LLC (“KBH”) through KBH Topco LLC (“KBHT”), a Delaware corporation.

KBH is a residual focused independent mid-ticket

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The Company invested $216.6 million to effect the transaction, of which $136.6 million was invested to acquire 87.5% of KBHT’s equity and $80.0 million in KBH’s debt.

The existing management team of KBH committed to continue to lead KBH after the transaction.

The existing management team of KBH committed to continuing to lead KBH after the transaction.

Following the transaction, the Company owns 87.5% of KBHT equity and the KBH management team owns the remaining 12.5% of KBHT’s equity.

As of September 30, 2022 and December 31, 2021, KBHT had total assets of $774.6 million and $738.4 million, respectively.

As of March 31, 2023 and December 31, 2022, KBHT had total assets of $778.5 million and $777.2 million, respectively.

For the same periods, debt recourse to KBHT totaled $225.1 million and $222.1 million, respectively, and non-recourse

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None of the debt is recourse to the Company.

For the three months ended September 30, 2022 and 2021, KBHT had net income of $3.3 million and $3.2 million, respectively, on gross income of $71.3 million and $60.5 million, respectively.

For the nine months ended September 30, 2022 and 2021, KBHT had net income of $10.4 million and $10.3 million, respectively, on gross income of $215.1 million and $180.1 million, respectively.

For the three months ended March 31, 2023 and 2022, KBHT had net income of $2.6 million and $3.4 million, respectively, on gross income of $68.0 million and $66.4 million, respectively.

Due to timing and non-cash

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As of September 30, 2022, SLR Healthcare’s management team and the Company own approximately 7% and 93% of the equity in SLR Healthcare, respectively.

SLRC acquired SLR Healthcare in connection with the Merger on April 1, 2022.

SLRC acquired SLR Healthcare in connection with the Mergers on April 1, 2022.

Concurrent with the closing of the transaction, SLR Healthcare entered into a new, four-year, non-recourse,

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On June 28, 2019, this $125 million facility was amended, extending the maturity date to June 28, 2023.

On March 31, 2023, the facility was again amended, adjusting capacity to $100 million and extending the maturity date to March 31, 2026.

SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments.

As of September 30, 2022, the portfolio totaled approximately $179.6 million of commitments with a total net investment in loans of $81.4 million on total assets of $93.0 million.

As of March 31, 2023, the portfolio totaled approximately $258.6 million of commitments with a total net investment in loans of $105.7 million on total assets of $113.8 million.

As of December 31, 2022, the portfolio totaled approximately $242.1 million of commitments with a total net investment in loans of $92.4 million on total assets of $108.7 million.

At September 30, 2022, the portfolio consisted of 37 issuers with an average balance of approximately $2.2 million versus 36 issuers with an average balance of approximately $2.3 million at December 31, 2021.

At March 31, 2023, the

portfolio consisted of 41 issuers with an average balance of approximately $2.6 million versus 41 issuers with an average balance of approximately $2.3 million at December 31, 2022.

All of the commitments in SLR Healthcare’s portfolio are floating-rate, senior-secured, cash-pay

SLR Healthcare’s credit facility, which is non-recourse

to us, had approximately $62 million and $60 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, SLR Healthcare had net income (loss) of $0.8 million and ($0.04) million, respectively, on gross income of $3.0 million and $2.6 million, respectively.

For the nine months ended September 30, 2022 and 2021, SLR Healthcare had net income of $2.5 million and $0.5 million, respectively, on gross income of $7.9 million and $7.0 million, respectively.

to us, had approximately $83.5 million and $77.0 million of borrowings outstanding at March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023 and 2022, SLR Healthcare had net income of $1.1 million and $0.9 million, respectively, on gross income of $3.8 million and $2.4 million, respectively.

Due to timing and non-cash

items, there may be material differences between GAAP net income and cash available for distributions.

As such, and subject to fluctuations in SLR Healthcare’s funded commitments, the timing of originations, and the repayment of financings, the Company cannot guarantee that SLR Healthcare will be able to maintain consistent dividend payments to us.

SLR Business Credit

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As part of this transaction, SUNS 99% interest in the equity of NMC was contributed to NM Holdco.

This approximately $15.5 million transaction

was financed with borrowings on NMC’s credit facility.

This approximately $15.5 million transaction was financed with borrowings on NMC’s credit facility.

Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit.

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The transaction purchase price of $66.7 million was financed with equity from SUNS of $19.0 million and borrowings on NMC’s credit facility of $47.7 million.

SLRC acquired SLR Business Credit in connection with the Merger on April 1, 2022.

SLRC acquired SLR Business Credit in connection with the Mergers on April 1, 2022.

SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments.

As of September 30, 2022, the portfolio totaled approximately $554.2 million of commitments, of which $296.0 million were funded, on total assets of $346.3 million.

As of March 31, 2023, the portfolio totaled approximately $597.0 million of commitments, of which $242.4 million were funded, on total assets of $287.3 million.

As of December 31, 2022, the portfolio totaled approximately $603.4 million of commitments, of which $286.0 million were funded, on total assets of $332.2 million.

At September 30, 2022, the portfolio consisted of 109 issuers with an average balance of approximately $2.7 million versus 125 issuers with an average balance of approximately $2.0 million at December 31, 2021.

At March 31, 2023, the portfolio consisted of 100 issuers with an average balance of approximately $2.4 million versus 108 issuers with an average balance of approximately $2.6 million at December 31, 2022.

NMC has a senior credit facility with a bank lending group for $285.3 million, which expires on November 13, 2025.

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NMC’s credit facility, which is non-recourse

to us, had approximately $237.5 million and $183.3 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, SLR Business Credit had net income of $2.0 million and $2.6 million, respectively, on gross income of $7.6 million and $6.9 million, respectively.

For the nine months ended September 30, 2022 and 2021, SLR Business Credit had net income of $5.7 million and $4.7 million, respectively, on gross income of $20.4 million and $16.7 million, respectively.

to us, had approximately $183.5 million and $214.4 million of borrowings outstanding at March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023 and 2022, SLR Business Credit had net income of $2.0 million and $1.9 million, respectively, on gross income of $9.3 million and $6.1 million, respectively.

Due to timing and non-cash

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of the Exchange Act, including certain price, market volume and timing constraints.

of the 1934 Act, including certain price, market volume and timing constraints.

In addition, any repurchases will be conducted in accordance with the 1940 Act.

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The timing and number of shares to be repurchased will depend on a number of factors, including market conditions.

There are no assurances that we will engage in any repurchases.

As of September 30, 2022, no repurchases have taken place.

There are no assurances that we will engage in any repurchases beyond what is reported herein.

For the three months ended March 31, 2023, the Company repurchased 746 shares at an average price of approximately $14.02 per share, inclusive of commissions.

The total dollar amount of shares repurchased for the three months ended March 31, 2023 was $0.01 million.

During the fiscal year ended December 31, 2022, the Company repurchased 217,271 shares at an average price of approximately $13.98 per share, inclusive of commissions.

The total dollar amount of shares repurchased for the fiscal year ended December 31, 2022 was $3.0 million.

SLR Senior Lending Program LLC

On October 12, 2022, the Company entered into an amended and restated limited liability company agreement with Sunstone Senior Credit L.P.

(the “Investor”) to create a joint venture vehicle, SLR Senior Lending Program LLC (“SSLP”).

SSLP is expected to invest primarily in senior secured cash flow loans.

The Company and the Investor each have made initial equity commitments of $50 million, resulting in a total equity commitment of $100 million.

Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor.

On December 1, 2022, SSLP commenced operations.

On December 12, 2022, SSLP as servicer and SLR Senior Lending Program SPV LLC (“SSLP SPV”), a newly formed wholly owned subsidiary of SSLP, as borrower entered into a $100 million senior secured revolving credit facility (the “SSLP Facility”) with Goldman Sachs Bank USA acting as administrative agent.

The SSLP Facility is scheduled to mature on December 12, 2027.

The SSLP Facility generally bears interest at a rate of SOFR plus 3.25%.

SSLP and SSLP SPV, as applicable, have made certain customary representations and warranties, and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities.

The SSLP Facility also includes usual and customary events of default for credit facilities of this nature.

At March 31, 2023, there were $27.9 million of borrowings outstanding on the SSLP Facility.

As of March 31, 2023 the Company and the Investor had contributed combined equity capital in the amount of $19.0 million.

As of March 31, 2023, the Company and the Investor’s remaining commitments to SSLP totaled $40.5 million and $40.5 million, respectively.

The Company, along with the Investor, controls the funding of SSLP, and SSLP may not call the unfunded commitments of the Company or the Investor without approval of both the Company and the Investor.

As of March 31, 2023 and December 31, 2022, SSLP had total assets of $46.0 million and $19.1 million, respectively.

For the same periods, SSLP’s portfolio consisted of floating rate senior secured loans to 18 and 7 different borrowers, respectively.

For the three months ended March 31, 2023, SSLP invested $29.8 million in 12 portfolio companies.

Investments prepaid totaled $3.2 million for the three months ended March 31, 2023.

For the period December 1, 2022 (commencement of operations) through December 31, 2022, SSLP invested $18.1 million in 7 portfolio companies.

Investments prepaid totaled $0.1 million for the period December 1, 2022 (commencement of operations) through December 31, 2022.

SSLP Portfolio as of March 31, 2023 (dollar amounts in thousands)

Aegis Toxicology Sciences Corporation (4)

Health Care Providers &

Atria Wealth Solutions, Inc.

Diversified Financial

BayMark Health Services, Inc.

Health Care Providers &

ENS Holdings III Corp.

& ES Opco USA LLC (4)

Trading Companies &

Foundation Consumer Brands, LLC (4)

Personal Products

Higginbotham Insurance Agency, Inc.

High Street Buyer, Inc.

Kid Distro Holdings, LLC (4)

PhyNet Dermatology LLC (4)

Health Care Providers &

Pinnacle Treatment Centers, Inc.

Health Care Providers &

Plastics Management, LLC (4)

Health Care Providers &

Life Sciences Tools &

RSC Acquisition, Inc.

RxSense Holdings LLC (4)

Diversified Consumer

SunMed Group Holdings, LLC (4)

Equipment & Supplies

Tilley Distribution, Inc.

Trading Companies &

Urology Management Holdings, Inc.

Health Care Providers &

Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR or SOFR.

These instruments are typically subject to a LIBOR or SOFR floor.

Floating rate debt investments typically bear interest at a rate determined by reference to either the LIBOR (“L”) or SOFR (“S”), and which typically reset monthly, quarterly or semi-annually.

For each debt investment we have provided the current interest rate in effect as of March 31, 2023.

Represents the fair value in accordance with ASC Topic 820.

The determination of such fair value is not included in the Board’s valuation process described elsewhere herein.

The Company also holds this security on its Consolidated Statements of Assets and Liabilities.

SSLP Portfolio as of December 31, 2022 (audited) (dollar amounts in thousands)

Atria Wealth Solutions, Inc.

BayMark Health Services, Inc.

ENS Holdings III Corp.

& ES Opco USA LLC (4)

Foundation Consumer Brands, LLC (4)

High Street Buyer, Inc.

Ivy Fertility Services, LLC (4)

Kid Distro Holdings, LLC (4)

Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR or SOFR.

These instruments are typically subject to a LIBOR or SOFR floor.

For each debt investment we have provided the current interest rate in effect as of December 31, 2022.

Represents the fair value in accordance with ASC Topic 820.

The determination of such fair value is not included in the Board’s valuation process described elsewhere herein.

The Company also holds this security on its Consolidated Statements of Assets and Liabilities.

Below is certain summarized financial information for SSLP as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and for the period December 1, 2022 (commencement of operations) through December 31, 2022:

2022 (audited)

Selected Balance Sheet Information for SSLP (in thousands):

Investments at fair value (cost $44,686 and $18,032, respectively)

Cash and other assets

Debt outstanding

Interest payable and other credit facility related expenses

Accrued expenses and other payables

Total liabilities

Members’ equity

Total liabilities and members’ equity

For the three

For the period

December 1, 2022

(commencement

of operations) to

2022 (audited)

Selected Income Statement Information for SSLP (in thousands):

Interest income

Service fees*

Interest and other credit facility expenses

Organizational costs

Other general and administrative expenses

Total expenses

Net investment income (loss)

Realized gain on investments

Net change in unrealized gain on investments

Net realized and unrealized gain on investments

Net income (loss)

Service fees are included within the Company’s Consolidated Statements of Operations as other income.

Critical Accounting Policies

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Valuation of Portfolio Investments

In December 2020, the SEC adopted new Rule 2a-5

under the 1940 Act addressing fair valuation of fund investments.

The new rule sets forth requirements for good faith determinations of fair value, as well as for the performance of fair value determinations, including related oversight and reporting obligations.

The new rule also defines “readily available market quotations” for purposes of the definition of “value” under the 1940 Act, and the SEC noted that this definition will apply in all contexts under the 1940 Act.

The Company will comply with Rule 2a-5’s

valuation requirements.

We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP, and the 1940 Act.

Our valuation procedures are set forth in more detail in Note 2(b) to the Company’s Consolidated Financial Statements.

Determination of fair value involves subjective judgments and estimates.

The Board will (1) periodically assess and manage valuation risks;

(2) establish and apply fair value methodologies;

(3) test fair value methodologies;

(4) oversee and evaluate third-party pricing services, as applicable;

(5) oversee the reporting required by Rule 2a-5

under the 1940 Act;

and (6) maintain recordkeeping requirements under Rule 2a-5.

It is anticipated that in respect of many of the Company’s assets, readily available market quotations will not be obtainable and that such assets will be valued at fair value.

A market quotation is readily available for a security only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be readily available if it is not reliable.

If the Company anticipates using a market quotation for a security, it will also monitor for circumstances that may necessitate the use of fair value, such as significant events that may cause concern over the reliability of a market quotation.

Our valuation procedures are set forth in more detail in Note 2(b) to the Company’s Consolidated Financial Statements Determination of fair value involves subjective judgments and estimates.

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

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Some of our investments may have contractual PIK income.

PIK income computed at the contractual rate, as applicable, is accrued and reflected as

a receivable up to the capitalization date.

PIK income computed at the contractual rate, as applicable, is accrued and reflected as a receivable up to the capitalization date.

PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities.

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accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees.

For the three and nine months ended September 30, 2022, capitalized PIK income totaled $0.7 million and $1.7 million, respectively.

For the three and nine months ended September 30, 2021, capitalized PIK income totaled $1.7 million and $5.0 million, respectively.

For the three months ended March 31, 2023 and 2022, capitalized PIK income totaled $3.2 million and $0.7 million, respectively.

Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss

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Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update No.

“Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform.

is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company has determined that the adoption of this guidance has not had a material impact on the Company’s consolidated financial statements and disclosures.

RESULTS OF OPERATIONS

Results comparisons are for the three and nine months ended September 30, 2022 and September 30, 2021:

Results comparisons are for the three months ended March 31, 2023 and March 31, 2022:

Investment Income

For the three and nine months ended September 30, 2022, gross investment income totaled $47.6 million and $123.4 million, respectively.

For the three and nine months ended September 30, 2021, gross investment income totaled $32.2 million and $103.6 million, respectively.

The increase in gross investment income for the year over year three and nine month periods was primarily due to a larger portfolio size as a result of the Merger coupled with organic growth, as well as due to an increase in LIBOR and SOFR.

Net expenses totaled $27.5 million and $69.5 million, respectively, for the three and nine months ended September 30, 2022, of which $12.9 million and $31.7 million, respectively, were base management fees and gross performance-based incentive fees and $12.8 million and $31.5 million, respectively, were interest and other credit facility expenses.

Over the same periods, $0.2 million and $1.6 million, respectively, of performance-based incentive fees were waived.

Administrative services and other general and administrative expenses totaled $2.1 million and $7.9 million, respectively, for the three and nine months ended September 30, 2022.

Expenses totaled $17.2 million and $57.6 million, respectively, for the three and nine months ended September 30, 2021, of which $7.8 million and $29.3 million, respectively, were base management fees and performance-based incentive fees and $7.1 million and $21.5 million, respectively, were interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $2.2 million and $6.8 million, respectively, for the three and nine months ended September 30, 2021.

For the three months ended March 31, 2023 and 2022, gross investment income totaled $53.5 million and $33.0 million, respectively.

The increase in gross investment income for the year over year three month periods was primarily due to the Mergers as well as an increase in index rates.

Net expenses totaled $31.4 million and $19.5 million, respectively, for the three months ended March 31, 2023 and 2022, of which $13.2 million and $7.2 million, respectively, were base management fees and performance-based incentive fees and $15.3 million and $8.3 million, respectively, were interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $3.0 million and $4.0 million, respectively, for the three months ended March 31, 2023 and 2022.

Over the same periods, $0.1 million and $0.0 million of performance-based incentive fees were waived.

Expenses generally consist of management and performance-based incentive fees, interest and other credit facility expenses, administrative services fees, insurance expenses, legal fees, directors’ fees, transfer agency fees, printing and proxy expenses, audit and tax services expenses, and other general and administrative expenses.

Interest and other credit facility expenses generally consist of interest, unused fees, agency fees and loan origination fees, if any, among others.

The increase in expenses for the year over year three and nine month periods was primarily due to higher interest expense associated with an increase in borrowings to fund new investments as well as the increase in LIBOR and SOFR.

The increase in expenses for the three months ended March 31, 2023 versus the three months ended March 31, 2022 was primarily due to higher management fees, incentive fees and interest expense on a larger portfolio resulting from the Mergers.

Additionally, there was an increase in index rates on borrowings.

Net Investment Income

The Company’s net investment income totaled $20.1 million and $53.8 million, or $0.37 and $1.06, per average share, respectively, for the three and nine months ended September 30, 2022.

The Company’s net investment income totaled $15.0 million and $46.0 million, or $0.36 and $1.09, per average share, respectively, for the three and nine months ended September 30, 2021.

Net Realized Gain (Loss)

The Company had investment sales and prepayments totaling approximately $81 million and $261 million, respectively, for the three and nine months ended September 30, 2022.

Net realized losses over the same periods were $37.3 million and $37.4 million, respectively.

Net realized losses for the three and nine months ended September 30, 2022 were primarily related to the exit of our investment in PhyMed Management, LLC.

The Company had investment sales and prepayments totaling approximately $106 million and $320 million, respectively, for the three and nine months ended September 30, 2021.

Net realized gains (losses) over the same periods were ($0.1) million and $0.1 million, respectively.

Net realized losses for the three months ended September 30, 2021 were generally related to the exit of our warrant position in Scynexis, Inc.

Net realized gains for the nine months ended September 30, 2021 were generally related to the exit of our warrant position in PQ Bypass, Inc., partially offset by losses from the sale of our legacy investment in B.

Riley Financial, Inc and exit of our warrant position in Scynexis, Inc.

Net Change in Unrealized Gain (Loss)

For the three and nine months ended September 30, 2022, net change in unrealized gain (loss) on the Company’s assets and liabilities totaled $30.8 million and ($17.1) million, respectively.

For the three and nine months ended September 30, 2021, net change in unrealized gain (loss) on the Company’s assets and liabilities totaled ($1.5) million and $7.4 million, respectively.

Net unrealized gain for the three months ended September 30, 2022 is primarily due to the reversal of previously recognized unrealized depreciation on our investment in PhyMed Management LLC, as well as appreciation in the value of our investments in SLR Business Credit, Alimera Sciences, Inc.

and Kingsbridge Holdings, LLC, among others, partially offset by depreciation in the value of our investments in SLR Equipment Finance, PPT Management Holdings, LLC, KBH Topco, LLC, SLR Healthcare ABL and SLR Credit Solutions, among others.

Net unrealized loss for the nine months ended September 30, 2022 is primarily due to depreciation in the value of our investments in RD Holdco, Inc., American Teleconferencing Services, Ltd., SLR Credit Solutions and SLR Equipment Finance, among others, partially offset by the reversal of previously recognized unrealized depreciation on our investment in PhyMed Management LLC as well as appreciation on the value of our investments in SLR Business Credit and Alimera Sciences, Inc.

in addition to unrealized appreciation on assets acquired in the Merger due to the accounting treatment of the purchase discount.

Net unrealized loss for the three months ended September 30, 2021 is primarily due to depreciation in the value of our investments in American Teleconferencing Services, Ltd., PhyMed Management LLC and Rug Doctor, among others, partially offset by appreciation in the value of our investments in KBH Topco, LLC and SLR Credit Solutions, among others.

Net unrealized gain for the nine months ended September 30, 2021 was primarily due to appreciation in the value our investments in KBH Topco, LLC, SLR Credit Solutions, and Senseonics Holdings, Inc., among others, partially offset by depreciation in the value of our investments in American Teleconferencing Services, Ltd., Rug Doctor and SOAGG, LLC, among others.

Net Increase (Decrease) in Net Assets From Operations

For the three and nine months ended September 30, 2022, the Company had a net increase (decrease) in net assets resulting from operations of $13.5 million and ($0.7) million, respectively.

For the same periods, earnings (losses) per average share were $0.25 and ($0.01), respectively.

For the three and nine months ended September 30, 2021, the Company had a net increase in net assets resulting from operations of $13.4 million and $53.4 million, respectively.

The Company’s net investment income totaled $22.1 million and $13.5 million, or $0.41 and $0.32, per average share, respectively, for the three months ended March 31, 2023 and 2022.

Net Realized Gain

The Company had investment sales and prepayments totaling approximately $144 million and $101 million, respectively, for the three months ended March 31, 2023 and 2022.

Net realized gains over the same periods were $0.7 million and $0.03 million, respectively.

Net realized gain for the three months ended March 31, 2023 was primarily due to sales of selected assets.

Net realized gain for the three months ended March 31, 2022 was de minimis.

Net Change in Unrealized Loss

For the three months ended March 31, 2023 and 2022, net change in unrealized loss on the Company’s assets totaled $16.0 million and $12.0 million, respectively.

Net unrealized loss for the three months ended March 31, 2023 is primarily due to depreciation in the value of our investments in AmeriMark Intermediate Holdings, LLC and SLR Credit Solutions, among others, partially offset by appreciation in the value of our investments in Spectrum Pharmaceuticals, Inc., SLR Business Credit and Pinnacle Treatment Centers, Inc., among others.

Net unrealized loss for the three months ended March 31, 2022 is primarily due to depreciation in the value of our investments in PhyMed Management LLC and Rug Doctor LLC, among others, partially offset by appreciation in the value of our investments in KBH Topco, LLC, SOC Telemed, Inc.

and Cerapedics, Inc., among others.

Net Increase in Net Assets From Operations

For the three months ended March 31, 2023 and 2022, the Company had a net increase in net assets resulting from operations of $6.8 million and $1.5 million, respectively.

For the same periods, earnings per average share were $0.13 and $0.04, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity and capital resources are generated and generally available through its Credit Facility and SPV Credit Facility (as defined below), the 2022 Tranche C Notes, the 2023 Unsecured Notes, the 2024 Unsecured Notes, the 2025 Unsecured Notes, the 2026 Unsecured Notes, the 2027 Unsecured Notes and the 2027 Series F Unsecured Notes, through cash flows from operations, investment sales, prepayments of senior and subordinated loans, income earned on investments and cash equivalents, and periodic follow-on

The Company’s liquidity and capital resources are generated and generally available through its Credit Facility and SPV Credit Facility (as defined below), the 2024 Unsecured Notes, the 2025 Unsecured Notes, the 2026 Unsecured Notes, the 2027 Unsecured Notes and the 2027 Series F Unsecured Notes, through cash flows from operations, investment sales, prepayments of senior and subordinated loans, income earned on investments and cash equivalents, and periodic follow-on

equity and/or debt offerings.

As of September 30, 2022, we had a total of $334.8 million of unused borrowing capacity under the Credit Facility and SPV Credit Facility, subject to borrowing base limits.

As of March 31, 2023, we had a total of $297.8 million of unused borrowing capacity under the Credit Facility and SPV Credit Facility, subject to borrowing base limits.

We may from time to time issue equity and/or debt securities in either public or private offerings.

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1 to its August 28, 2019 senior secured credit agreement (the “Credit Facility”).

Following the amendment, the Credit Facility is composed of $600 million of revolving credit and $100 million of term loans.

Following the amendment and a November 2022 upsizing, the Credit Facility is composed of $625 million of revolving credit and $100 million of term loans.

Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 1.75%-2.00%

or the alternate base rate plus 0.75%-1.00%.

The Credit Facility has a 0% floor and matures in December 2026 and includes ratable amortization in the final year.

Credit Facility has a 0% floor and matures in December 2026 and includes ratable amortization in the final year.

On September 14, 2021, the Company closed a private offering of $50 million of the 2027 Unsecured Notes with a fixed interest rate of 2.95% and a maturity date of March 14, 2027.

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The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed interest rate of 4.50% and a maturity date of December 28, 2022.

Interest on the 2022 Tranche C Notes is due semi-annually on June 28 and December 28.

The 2022 Tranche C Notes were issued in a private placement only to qualified institutional buyers.

On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023 Unsecured Notes for net proceeds of $73.8 million.

Interest on the 2023 Unsecured Notes is paid semi-annually on January 20 and July 20, at a fixed rate of 4.50% per year, commencing on January 20, 2018.

The 2023 Unsecured Notes mature on January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022 Unsecured Notes with a fixed interest rate of 4.60% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022 Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

The 2022 Unsecured Notes were repaid in full at maturity.

On January 11, 2013, the Company closed its most recent follow-on

public equity offering of 6.3 million shares of common stock raising approximately $146.9 million in net proceeds.

The primary uses of the funds raised were for investments in portfolio companies, reductions in revolving debt outstanding and for other general corporate purposes.

The 2023 Unsecured Notes were repaid in full at maturity on January 20, 2023.

Cash Equivalents

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One strategy includes taking proactive steps by utilizing cash equivalents as temporary assets with the objective of enhancing our investment flexibility pursuant to Section 55 of the 1940 Act.

More specifically, from time-to-time

we may purchase U.S.

More specifically, from time to time we may purchase U.S.

Treasury bills or other high-quality, short-term debt securities at or near the end of the quarter and typically close out the position on a net cash basis subsequent to quarter end.

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The amount of these transactions or such drawn cash for this purpose is excluded from total assets for purposes of computing the asset base upon which the management fee is determined.

We held approximately $269 million in cash equivalents as of September 30, 2022.

We held approximately $430 million in cash equivalents as of March 31, 2023.

Unsecured Notes

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The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed interest rate of 4.50% and a maturity date of December 28, 2022.

Interest on the 2022 Tranche C Notes is due semi-annually on June 28 and December 28.

The 2022 Tranche C Notes were issued in a private placement only to qualified institutional buyers.

On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023 Unsecured Notes for net proceeds of $73.8 million.

Interest on the 2023 Unsecured Notes is paid semi-annually on January 20 and July 20, at a fixed rate of 4.50% per year, commencing on January 20, 2018.

The 2023 Unsecured Notes mature on January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022 Unsecured Notes with a fixed interest rate of 4.60% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022 Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

The 2022 Unsecured Notes were repaid in full at maturity.

The 2023 Unsecured Notes were repaid in full at maturity on January 20, 2023.

Revolving & Term Loan Facilities

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The SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature.

At September 30, 2022, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $130.2 million.

At March 31, 2023, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $164.2 million.

On December 28, 2021, the Company closed on Amendment No.

1 to the Credit Facility.

Following the amendment, the Credit Facility is composed of $600 million of revolving credit and $100 million of term loans.

Following the amendment and a November 2022 upsizing, the Credit Facility is composed of $625 million of revolving credit and $100 million of term loans.

Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 1.75%-2.00%

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The Credit Facility contains certain customary affirmative and negative covenants and events of default.

In addition, the Credit Facility contains certain financial covenants that among other things, requires the Company to maintain a minimum shareholder’s equity and a minimum asset coverage ratio.

At September 30, 2022, outstanding USD equivalent borrowings under the Credit Facility totaled $460.0 million, composed of $360.0 million of revolving credit and $100.0 million of term loans.

In addition, the Credit Facility contains certain financial covenants that among other things, require the Company to maintain a minimum shareholder’s equity and a minimum asset coverage ratio.

At March 31, 2023, outstanding USD equivalent borrowings under the Credit Facility totaled $488.0 million, composed of $388.0 million of revolving credit and $100.0 million of term loans.

Certain covenants on our issued debt may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the Code.

At September 30, 2022, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.

At March 31, 2023, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.

Contractual Obligations

A summary of our significant contractual payment obligations is as follows as of September 30, 2022:

A summary of our significant contractual payment obligations is as follows as of March 31, 2023:

Payments Due by Period (in millions)

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Unsecured senior notes

As of September 30, 2022, we had a total of $334.8 million of unused borrowing capacity under our revolving credit facilities, subject to borrowing base limits.

As of March 31, 2023, we had a total of $297.8 million of unused borrowing capacity under our revolving credit facilities, subject to borrowing base limits.

Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities.

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NEFPASS LLC may terminate this agreement upon 30 days written notice to NEFCORP LLC.

On October 7, 2022, the Company committed $50 million to SSLP and entered into a servicing agreement.

SSLP engaged and retained the Company to provide certain administrative services relating to the facilities, supplies and necessary ongoing overhead support services for the operation of SSLP’s ongoing business affairs in exchange for a fee.

Senior Securities

Information about our senior securities is shown in the following table (in thousands) as of the quarter ended September 30, 2022 and each year ended December 31 for the past ten years, unless otherwise noted.

Information about our senior securities is shown in the following table (in thousands) as of the quarter ended March 31, 2023 and each year ended December 31 for the past ten years, unless otherwise noted.

The “—” indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.

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Credit Facility