Item 1. Financial Statements
Item 1.
Financial Statements
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share amounts)
September 30,
2023 (unaudited)
December 31,
2022
Assets
Investments at fair value:
Companies less than 5% owned (cost: $ 1,305,572 and $ 1,312,701 , respectively)
$
1,320,729
$
1,289,082
Companies 5% to 25% owned (cost: $ 59,983 and $ 0 , respectively)
43,405
—
Companies more than 25% owned (cost: $ 839,062 and $ 821,886 , respectively)
806,922
797,594
Cash
10,266
10,743
Cash equivalents (cost: $ 332,557 and $ 417,590 , respectively)
332,557
417,590
Dividends receivable
10,993
11,192
Interest receivable
11,828
9,706
Receivable for investments sold
1,598
1,124
Prepaid expenses and other assets
788
664
Total assets
$
2,539,086
$
2,537,695
Liabilities
Debt ($ 1,197,750 and $ 1,093,200 face amounts, respectively, reported net of unamortized debt issuance costs of $ 5,996 and $ 7,202 , respectively. See notes 6 and 7)
$
1,191,754
$
1,085,998
Payable for investments and cash equivalents purchased
332,557
417,611
Distributions payable
—
7,481
Management fee payable (see note 3)
8,051
7,964
Performance-based incentive fee payable (see note 3)
5,621
5,422
Interest payable (see note 7)
7,416
7,943
Administrative services payable (see note 3)
3,678
1,488
Other liabilities and accrued expenses
4,624
4,057
Total liabilities
$
1,553,701
$
1,537,964
Commitments and contingencies (see note 14)
Net Assets
Common stock, par value $ 0.01 per share, 200,000,000 and 200,000,000 common shares authorized, respectively, and 54,554,634 and 54,555,380 shares issued and outstanding, respectively
$
546
$
546
Paid-in
capital in excess of par
1,162,559
1,162,569
Accumulated distributable net loss
( 177,720
)
( 163,384
)
Total net assets
$
985,385
$
999,731
Net Asset Value Per Share
$
18.06
$
18.33
See notes to consolidated financial statements.
3
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except share amounts)
Three months ended
Nine months ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
INVESTMENT INCOME:
Interest:
Companies less than 5% owned
$
43,696
$
32,933
$
122,301
$
82,450
Companies 5% to 25% owned
816
—
1,081
—
Companies more than 25% owned
2,879
2,431
8,404
6,914
Dividends:
Companies more than 25% owned
11,429
11,969
33,782
32,767
Other income:
Companies less than 5% owned
735
234
3,814
1,222
Companies more than 25% owned
86
—
143
—
Total investment income
59,641
47,567
169,525
123,353
EXPENSES:
Management fees (see note 3)
$
8,051
$
7,890
$
23,635
$
22,019
Performance-based incentive fees (see note 3)
5,796
4,965
16,943
9,699
Interest and other credit facility expenses (see note 7)
19,874
12,784
53,002
31,464
Administrative services expense (see note 3)
1,575
1,132
4,563
3,684
Other general and administrative expenses
1,161
935
3,610
4,212
Total expenses
36,457
27,706
101,753
71,078
Performance-based incentive fees waived (see note 3)
( 175
)
( 194
)
( 410
)
( 1,552
)
Net expenses
36,282
27,512
101,343
69,526
Net investment income
$
23,359
$
20,055
$
68,182
$
53,827
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS:
Net realized loss on investments and cash equivalents (companies less than 5% owned)
$
( 30,951
)
$
( 37,326
)
$
( 29,766
)
$
( 37,401
)
Net change in unrealized gain (loss) on investments and cash equivalents:
Companies less than 5% owned
33,439
28,783
24,349
3,521
Companies 5% to 25% owned
1,065
—
( 2,151
)
—
Companies more than 25% owned
35
2,016
( 7,848
)
( 20,602
)
Net change in unrealized gain (loss) on investments and cash equivalents
34,539
30,799
14,350
( 17,081
)
Net realized and unrealized gain (loss) on investments and cash equivalents
3,588
( 6,527
)
( 15,416
)
( 54,482
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
$
26,947
$
13,528
$
52,766
$
( 655
)
EARNINGS (LOSS) PER SHARE (see note 5)
$
0.49
$
0.25
$
0.97
$
( 0.01
)
See notes to consolidated financial statements.
4
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
(in thousands, except share amounts)
Three months ended
Nine months ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Increase (decrease) in net assets resulting from operations:
Net investment income
$
23,359
$
20,055
$
68,182
$
53,827
Net realized loss
( 30,951
)
( 37,326
)
( 29,766
)
( 37,401
)
Net change in unrealized gain (loss)
34,539
30,799
14,350
( 17,081
)
Net increase (decrease) in net assets resulting from operations
26,947
13,528
52,766
( 655
)
Distributions to stockholders:
From net investment income
( 22,367
)
( 20,055
)
( 67,102
)
( 53,827
)
From return of capital
—
( 2,401
)
—
( 8,413
)
Net distributions to stockholders
( 22,367
)
( 22,456
)
( 67,102
)
( 62,240
)
Capital transactions
(see note 12) :
Issuance of common stock
—
—
—
226,839
Repurchases of common stock
—
—
( 10
)
—
Net capital transactions
—
—
( 10
)
226,839
Total increase (decrease) in net assets
4,580
( 8,928
)
( 14,346
)
163,944
Net assets at beginning of period
980,805
1,015,153
999,731
842,281
Net assets at end of period
$
985,385
$
1,006,225
$
985,385
$
1,006,225
Capital stock activity
(see note 12) :
Issuance of common stock
—
—
—
12,511,825
Repurchases of common stock
—
—
( 746
)
—
Net capital stock activity
—
—
( 746
)
12,511,825
See notes to consolidated financial statements.
5
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
Nine months ended
September 30, 2023
September 30, 2022
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from
operations
$
52,766
$
( 655
)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
Net realized loss on investments and cash equivalents
29,766
37,401
Net change in unrealized (gain) loss on investments
( 14,350
)
17,081
Deferred financing costs/market discount
1,561
1,631
(Increase) decrease in operating assets:
Purchase of investments
( 556,348
)
( 406,302
)
Proceeds from disposition of investments
474,599
259,784
Net accretion of discount on investments
( 9,315
)
( 7,760
)
Capitalization of payment-in-kind
income
( 8,936
)
( 1,753
)
Collections of payment-in-kind
income
204
1,112
Receivable for investments sold
( 474
)
102
Interest receivable
( 2,122
)
( 2,935
)
Dividends receivable
199
( 2,514
)
Prepaid expenses and other assets
( 124
)
( 319
)
Cash acquired in the Mergers
—
2,313
Increase (decrease) in operating liabilities:
Payable for investments and cash equivalents purchased
( 85,054
)
( 51,089
)
Management fee payable
87
455
Performance-based incentive fee payable
199
2,907
Administrative services expense payable
2,190
( 1,396
)
Interest payable
( 527
)
2,591
Other liabilities and accrued expenses
567
600
Net Cash Used in Operating Activities
( 115,112
)
( 148,746
)
Cash Flows from Financing Activities:
Cash distributions paid
( 74,583
)
( 72,081
)
Proceeds from unsecured borrowings
—
134,914
Repayment of unsecured borrowings
( 75,000
)
( 150,000
)
Proceeds from secured borrowings
667,695
743,892
Repayment of secured borrowings
( 488,500
)
( 554,000
)
Repurchase of common stock
( 10
)
—
Net Cash Provided by Financing Activities
29,602
102,725
NET DECREASE IN CASH AND CASH EQUIVALENTS
( 85,510
)
( 46,021
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
428,333
322,935
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
342,823
$
276,914
Supplemental disclosure of cash flow information:
Cash paid for interest
$
53,529
$
28,873
Issuance of shares in connection with the Mergers (1)
—
226,839
(1)
On April 1, 2022, in connection with the Mergers (as defined in Note 1 “Organization”), the Company acquired net assets of $ 244,691 for the total stock consideration of $ 226,839 .
See notes to consolidated financial statements.
6
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)
September 30, 2023
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index (7)
Floor
Interest
Rate (1)
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Senior Secured Loans —
132.0 %
First Lien Bank Debt/Senior Secured Loans
Accession Risk Management Group, Inc. (f/k/a RSC Acquisition, Inc.) (16)
Insurance
S+ 550
0.75
%
11.02
%
4/1/2022
11/1/2026
$
20,221
$
20,071
$
20,221
Aegis Toxicology Sciences Corporation(16)
Health Care Providers & Services
S+ 550
1.00
%
11.13
%
5/7/2018
5/9/2025
13,420
13,218
13,420
Alkeme Intermediary Holdings, LLC
Insurance
S+ 650
1.00
%
11.92
%
9/20/2023
10/28/2026
8,524
8,270
8,268
All States Ag Parts, LLC(16)
Trading Companies & Distributors
S+ 600
1.00
%
11.60
%
4/1/2022
9/1/2026
2,177
2,148
2,177
Apex Services Partners, LLC(16)
Diversified Consumer Services
S+ 525
1.00
%
10.67
%
8/31/2022
7/31/2025
13,916
13,641
13,916
Atria Wealth Solutions, Inc.(16)
Diversified Financial Services
S+ 650
1.00
%
12.15
%
9/14/2018
2/29/2024
16,288
16,170
16,288
Basic Fun, Inc.(16)
Specialty Retail
S+ 650
1.00
%
12.17
%
10/30/2020
7/2/2024
2,150
2,149
2,150
BayMark Health Services, Inc.(16)
Health Care Providers & Services
S+ 500
1.00
%
10.65
%
4/1/2022
6/11/2027
8,286
8,021
8,286
Bayside Opco, LLC(27)
Healthcare Providers & Services
S+ 700
(15)
1.00
%
12.54
%
5/31/2023
5/31/2026
402
402
402
Bayside Opco, LLC(27)
Healthcare Providers & Services
S+ 725
(11)
1.00
%
12.79
%
5/31/2023
5/31/2026
18,807
18,807
18,807
Bayside Parent, LLC(27)
Healthcare Providers & Services
S+ 1000
(11)
1.00
%
15.54
%
5/31/2023
5/31/2026
4,959
4,959
4,959
BDG Media, Inc.
Media
P+ 525
5.50
%
13.75
%
7/18/2022
7/31/2025
5,354
5,354
5,354
CC SAG Holdings Corp. (Spectrum Automotive)(16)
Diversified Consumer Services
S+ 575
0.75
%
11.18
%
6/29/2021
6/29/2028
36,588
36,020
36,588
Composite Technology Acquisition Corp.(16)
Building Products
S+ 450
1.00
%
10.04
%
4/1/2022
2/1/2025
11,028
10,765
11,028
CVAUSA Management, LLC
Health Care Providers & Services
S+ 650
1.00
%
11.59
%
5/22/2023
5/22/2029
18,855
18,308
18,289
Enhanced Permanent Capital, LLC(3)
Capital Markets
S+ 700
1.00
%
12.26
%
12/29/2020
12/29/2025
42,521
41,790
42,521
ENS Holdings III Corp. & ES Opco USA LLC (Bluefin)(16)
Trading Companies & Distributors
S+ 475
1.00
%
10.24
%
4/1/2022
12/31/2025
4,630
4,507
4,630
Enverus Holdings, Inc. (fka Drilling Info Holdings)(16)
IT Services
S+ 450
—
9.92
%
4/1/2022
7/30/2025
11,277
10,950
11,277
Erie Construction Mid-west,
LLC(16)
Building Products
S+ 475
1.00
%
10.34
%
4/1/2022
7/30/2027
8,572
8,296
8,572
Fertility (ITC) Investment Holdco, LLC
Health Care Providers & Services
S+ 650
1.00
%
11.63
%
1/4/2023
1/3/2029
22,653
22,034
22,653
Foundation Consumer Brands, LLC(16)
Personal Products
S+ 625
1.00
%
11.77
%
2/12/2021
2/12/2027
27,560
26,963
27,560
GSM Acquisition Corp.(16)
Leisure Equipment & Products
S+ 500
1.00
%
10.65
%
4/1/2022
11/16/2026
10,939
10,578
10,939
Higginbotham Insurance Agency, Inc.(16)
Insurance
S+ 550
1.00
%
10.92
%
4/1/2022
11/15/2028
28,856
28,856
28,856
High Street Buyer, Inc.(16)
Insurance
S+ 600
0.75
%
11.54
%
4/1/2022
4/16/2028
3,191
3,034
3,191
Human Interest Inc.
Internet Software & Services
S+ 785
1.00
%
13.18
%
6/30/2022
7/1/2027
20,104
19,903
20,104
iCIMS, Inc.
Software
S+ 725
0.75
%
12.14
% (26)
8/18/2022
8/18/2028
30,762
30,327
30,762
Kaseya, Inc.(16)
Software
S+ 625
0.75
%
11.58
% (29)
6/22/2022
6/23/2029
24,365
24,050
24,365
Kid Distro Holdings, LLC (Distro Kid)(16)
Software
S+ 550
1.00
%
11.04
%
9/24/2021
10/1/2027
20,259
19,969
20,259
Kingsbridge Holdings, LLC(2)
Multi-Sector Holdings
S+ 700
1.00
%
12.40
%
12/21/2018
12/21/2024
80,000
79,872
80,000
KORE Wireless Group, Inc.(16)
Wireless Telecommunication Services
S+ 550
—
10.99
%
12/21/2018
12/21/2024
23,404
23,108
23,404
Logix Holding Company, LLC(16)
Communications Equipment
L+ 575
1.00
%
11.48
%
9/14/2018
12/22/2024
14,009
13,516
13,729
Luxury Asset Capital, LLC(16)
Thrifts & Mortgage Finance
S+ 675
1.00
%
12.19
%
7/15/2022
7/15/2027
30,500
30,005
30,500
Maurices, Incorporated(16)
Specialty Retail
S+ 675
1.00
%
9.94
%
8/27/2021
6/1/2024
7,395
7,346
7,395
Maxor Acquisition, Inc.
Health Care Providers & Services
S+ 675
1.00
%
12.48
%
3/1/2023
3/1/2029
23,783
23,118
23,783
NSPC Intermediate Corp. (National Spine)
Health Care Providers & Services
S+ 850
1.00
%
13.20
%
4/1/2022
2/13/2026
2,216
2,136
2,216
Oldco AI, LLC(f/k/a Amerimark)(14)(27)
Internet & Catalog Retail
P+ 475
1.00
%
13.25
%
6/16/2023
10/31/2023
321
321
321
Oldco AI, LLC (f/k/a Amerimark)(14)(27)**
Internet & Catalog Retail
S+ 800
1.00
%
—
7/28/2021
10/15/2026
4,855
4,204
—
ONS MSO, LLC
Health Care Providers & Services
S+ 625
1.00
%
11.62
%
2/10/2023
7/8/2025
17,192
16,798
17,192
Orthopedic Care Partners Management, LLC
Health Care Providers & Services
S+ 650
1.00
%
11.96
%
8/17/2022
5/16/2024
5,502
5,473
5,420
Pediatric Home Respiratory Services, LLC
Health Care Providers & Services
S+ 625
1.00
%
11.67
%
8/19/2022
12/4/2024
3,118
3,082
3,118
Peter C. Foy & Associates Insurance Services, LLC
Insurance
S+ 600
0.75
%
11.43
%
4/1/2022
11/1/2028
16,920
16,668
16,581
PhyNet Dermatology LLC
Health Care Providers & Services
S+ 625
1.00
%
11.45
%
9/5/2018
8/16/2024
8,374
8,361
8,374
Pinnacle Treatment Centers, Inc.(16)
Health Care Providers & Services
S+ 675
1.00
%
12.10
%
1/22/2020
1/2/2026
25,243
24,903
25,243
Plastics Management, LLC(16)
Health Care Providers & Services
S+ 500
1.00
%
10.44
%
4/1/2022
8/18/2027
17,184
16,493
17,184
RQM+ Corp.(16)
Life Sciences Tools & Services
S+ 575
1.00
%
11.40
%
8/20/2021
8/12/2026
23,696
23,361
23,696
RxSense Holdings LLC(16)
Diversified Consumer Services
S+ 500
1.00
%
10.47
%
4/1/2022
3/13/2026
8,677
8,369
8,677
SCP Eye Care, LLC
Health Care Providers & Services
S+ 575
1.00
%
11.17
%
10/6/2022
10/5/2029
9,562
9,281
9,562
SHO Holding I Corporation (Shoes for Crews)(16)
Footwear
S+ 523
1.00
%
10.86
%
4/1/2022
4/27/2024
5,659
5,505
5,376
Southern Orthodontic Partners Management, LLC(16)
Health Care Providers & Services
S+ 625
1.00
%
11.89
%
6/3/2022
1/27/2026
11,505
11,319
11,274
Stryten Resources LLC
Auto Parts & Equipment
S+ 800
1.00
%
13.43
%
8/11/2021
10/12/2026
10,725
10,581
10,586
SunMed Group Holdings, LLC(16)
Health Care Equipment & Supplies
S+ 550
0.75
%
10.99
%
6/16/2021
6/16/2028
15,020
14,700
15,020
TAUC Management, LLC(16)
Health Care Providers & Services
L+ 525
1.00
%
10.59
%
4/1/2022
2/12/2027
6,893
6,630
6,411
The Townsend Company, LLC
Commercial Services & Supplies
S+ 625
1.00
%
11.57
%
8/17/2023
8/15/2029
10,073
9,825
9,821
Tilley Distribution, Inc.(16)
Trading Companies & Distributors
S+ 600
1.00
%
11.54
%
4/1/2022
12/31/2026
3,848
3,692
3,848
Ultimate Baked Goods Midco LLC (Rise Baking)(16)
Packaged Foods & Meats
S+ 625
1.00
%
11.67
%
8/12/2021
8/13/2027
14,858
14,397
14,858
United Digestive MSO Parent, LLC
Health Care Providers & Services
S+ 675
1.00
%
12.29
%
3/30/2023
3/30/2029
13,257
12,882
13,257
Urology Management Holdings, Inc.
Health Care Providers & Services
S+ 625
1.00
%
11.79
%
2/7/2023
6/15/2026
7,138
6,959
7,066
UVP Management, LLC
Health Care Providers & Services
S+ 625
1.00
%
11.79
%
9/18/2023
9/15/2025
15,444
15,063
15,058
Vessco Midco Holdings, LLC(16)
Water Utilities
S+ 450
1.00
%
9.92
%
4/1/2022
11/2/2026
2,466
2,408
2,466
West-NR
Parent, Inc.
Insurance
S+ 625
1.00
%
11.72
%
8/1/2023
12/27/2027
13,201
12,945
12,937
World Insurance Associates, LLC(16)
Insurance
S+ 575
1.00
%
11.14
%
4/1/2022
4/1/2026
48,250
48,141
48,250
Total First Lien Bank Debt/Senior Secured Loans
$
921,022
$
928,465
Second Lien Asset-Based Senior Secured Loans
ACRES Commercial Mortgage, LLC
Diversified Financial Services
S+ 705
1.00
%
12.49
%
12/24/2021
8/21/2028
29,925
$
29,455
$
29,925
FGI Worldwide LLC
Diversified Financial Services
S+ 650
1.00
%
11.82
%
4/17/2023
4/17/2028
8,206
8,015
8,206
$
37,470
$
38,131
Second Lien Bank Debt/Senior Secured Loans
RD Holdco, Inc.** (2)
Diversified Consumer Services
S+ 975
(11)
1.00
%
—
12/23/2013
10/12/2026
15,065
$
12,297
$
7,532
See notes to consolidated financial statements.
7
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2023
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index (7)
Floor
Interest
Rate (1)
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Senior Secured Loans (continued) —
First Lien Life Science Senior Secured Loans
Alimera Sciences, Inc.(16)
Pharmaceuticals
S+ 515
4.60
%
10.48
%
12/31/2019
5/1/2028
$
34,738
$
34,857
$
37,186
Apeel Technology, Inc
Biotechnology
S+ 625
1.00
%
8.75
%
6/29/2022
6/1/2027
3,643
3,641
4,062
Arcutis Biotherapeutics, Inc.(3)
Pharamceuticals
S+ 745
0.10
%
12.88
%
12/22/2021
1/1/2027
66,849
67,893
68,019
Ardelyx, Inc.(3)
Pharmaceuticals
S+ 795
1.00
%
13.30
%
2/23/2022
3/1/2027
9,475
9,526
10,503
BridgeBio Pharma, Inc.(3)
Biotechnology
—
—
9.00
% (22)
11/17/2021
11/17/2026
40,753
40,487
40,854
Cerapedics, Inc.
Biotechnology
S+ 620
2.75
%
11.53
%
12/27/2022
1/1/2028
26,939
27,000
27,007
Glooko, Inc.(16)
Health Care Technology
S+ 790
0.10
%
13.33
%
9/30/2021
10/1/2026
11,912
11,984
12,150
Meditrina, Inc.
Health Care Equipment & Supplies
S+ 550
3.45
%
10.83
%
12/20/2022
12/1/2027
3,367
3,365
3,384
Neuronetics, Inc.(16)
Health Care Equipment & Supplies
S+ 565
3.95
%
10.98
%
3/2/2020
3/29/2028
19,299
19,256
19,396
OmniGuide Holdings, Inc. (13)
Health Care Equipment & Supplies
S+ 580
5.31
%
11.23
%
7/30/2018
11/1/2025
24,500
24,590
24,561
Outset Medical, Inc.(3)(16)
Health Care Equipment & Supplies
S+ 515
2.75
%
10.48
%
11/3/2022
11/1/2027
35,084
35,162
35,171
Vapotherm, Inc.
Health Care Equipment & Supplies
S+ 930
1.00
%
14.73
% (24)
2/18/2022
2/1/2027
36,826
37,086
37,378
Vertos Medical, Inc.
Health Care Equipment & Supplies
S+ 515
4.75
%
10.48
%
6/14/2023
7/1/2028
6,651
6,587
6,567
Total First Lien Life Science Senior
Secured Loans
$
321,434
$
326,238
Total Senior Secured Loans
$
1,292,223
$
1,300,366
Description
Industry
Interest Rate (1)
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Equipment Financing — 26.9 %
A&A Crane and Rigging, LLC (10)
Commercial Services & Supplies
7.78 %
3/27/2023
3/27/2028
$
72
$
72
$
72
Aero Operating LLC (10)
Commercial Services & Supplies
8.47 - 9.64 %
2/12/2021
3/1/2025 - 12/1/2026
1,493
1,492
1,491
AFG Dallas III, LLC (10)
Diversified Consumer Services
10.00 - 11.29 %
8/11/2022
8/11/2026 - 3/1/2027
1,182
1,182
1,182
Air Methods Corporation (10)
Airlines
7.08 - 7.13 %
11/3/2021
11/3/2026 - 11/23/2026
3,231
3,275
3,231
AmeraMex International, Inc. (10)
Commercial Services & Supplies
10.00 %
3/29/2019
4/15/2025
563
563
569
Bazzini, LLC (10)
Food & Staples Retailing
10.46 %
12/23/2022
1/1/2028
2,084
2,146
2,084
Boart Longyear Company (10)
Metals & Mining
8.31 - 10.44 %
5/28/2020
7/1/2024 - 10/7/2026
2,870
2,870
2,870
Bowman Energy Solutions, LLC (10)
Commercial Services & Supplies
7.42 %
7/1/2022
8/1/2026
124
124
124
C-Port/Stone
LLC (10)
Oil, Gas & Consumable Fuels
8.54 %
10/7/2022
11/1/2027
6,366
6,206
6,175
Capital City Jet Center, Inc. (10)
Airlines
10.00 %
4/4/2018
10/4/2023 - 6/22/2026
1,536
1,536
1,528
Carolina’s Contracting, LLC (10)
Diversified Consumer Services
8.40
- 8.72
%
3/7/2023
3/7/2028 - 5/18/2028
3,688
3,723
3,688
CKD Holdings, Inc. (10)
Road & Rail
8.10
- 8.60
%
9/22/2022
6/22/2026 - 9/22/2027
3,076
3,076
3,076
Clubcorp Holdings, Inc. (10)
Hotels, Restaurants & Leisure
9.36 - 13.01 %
5/27/2021
4/1/2025 - 5/1/2028
6,880
6,880
6,880
Complete Equipment Rentals, LLC (10)
Commercial Services & Supplies
6.75 - 7.15 %
3/23/2023
4/1/2028 - 6/1/2028
1,926
1,895
1,893
Dongwon Autopart Technology Inc. (10)
Auto Components
7.96 %
2/2/2021
1/1/2026
1,411
1,424
1,411
Double S Industrial Contractors, Inc. (10)
Commercial Services & Supplies
8.60 %
7/28/2023
8/1/2027
119
119
119
Drillers Choice, Inc. (10)
Commercial Services & Supplies
8.00 - 10.08 %
10/31/2022
11/1/2027 - 6/1/2029
1,962
1,965
1,962
Energy Drilling Services, LLC (10)
Diversified Consumer Services
6.58 - 9.16 %
8/26/2022
11/9/2025 - 9/1/2027
1,139
1,139
1,139
Environmental Protection & Improvement Company, LLC (10)
Road & Rail
8.25 %
9/30/2020
10/1/2027
4,746
4,769
4,746
Equipment Operating Leases, LLC (2)(12)
Multi-Sector Holdings
8.37 %
4/27/2018
4/27/2025
3,498
3,498
3,411
Extreme Steel Crane & Rigging, LLC (10)
Commercial Services & Supplies
9.52 %
3/3/2023
3/3/2027
902
910
902
First American Commercial Bancorp,
Inc. (10)
Diversified Financial Services
7.50 - 9.02 %
10/28/2021
10/1/2026 - 3/1/2027
2,449
2,451
2,449
First National Capital, LLC (10)
Diversified Financial Services
9.00 %
11/5/2021
8/1/2026
5,739
5,739
5,739
Freightsol LLC (10)
Road & Rail
12.51 - 12.89 %
4/9/2019
11/1/2023
289
289
289
Georgia Jet, Inc. (10)
Airlines
8.00 %
12/4/2017
1/4/2024
128
128
128
GMT Corporation (10)
Machinery
10.71 %
10/23/2018
1/1/2026
4,070
4,073
4,070
Hawkeye Contracting Company, LLC (10)
Construction & Engineering
10.50 %
10/8/2021
11/1/2025
769
769
769
HTI Logistics Corporation (10)
Commercial Services & Supplies
9.69 - 9.94 %
11/15/2018
5/1/2024 - 9/1/2025
189
189
184
International Automotive Components Group, North America, Inc. (10)
Auto Components
7.95 %
6/23/2021
6/23/2025
4,375
4,394
4,288
Kool Pak, LLC (10)
Road & Rail
8.58 %
2/5/2018
3/1/2024
71
71
71
Loc Performance Products, LLC (10)
Machinery
10.50 %
12/29/2022
6/1/2027
673
673
673
Loyer Capital LLC (2)(12)
Multi-Sector Holdings
8.73 - 11.52 %
5/16/2019
5/16/2024 - 9/25/2024
7,500
7,500
7,361
Lux Credit Consultants, LLC (10)
Road & Rail
8.28 - 12.09 %
6/17/2021
12/1/2024 - 12/1/2026
12,142
12,142
12,142
Lux Vending, LLC (10)
Consumer Finance
12.46 - 13.26 %
8/20/2021
7/20/2024 - 10/1/2024
895
903
895
Miranda Logistics Enterprise, Inc. (10)
Construction & Engineering
7.69 %
4/14/2023
4/14/2028
824
824
824
Mountain Air Helicopters, Inc. (10)
Commercial Services & Supplies
10.00 %
7/31/2017
2/28/2025
279
278
279
Nimble Crane LLC (10)
Commercial Services & Supplies
9.18 %
7/13/2023
7/13/2028
975
975
975
No Limit Construction Services, LLC (10)
Commercial Services & Supplies
7.73 %
5/5/2023
6/1/2028
124
124
124
Ozzies, Inc. (10)
Commercial Services & Supplies
10.72 %
12/23/2022
1/1/2027
1,731
1,783
1,731
PCX Aerostructures LLC (10)
Aerospace & Defense
9.32 %
11/23/2022
12/1/2028
2,401
2,401
2,401
Rane Light Metal Castings Inc. (10)
Machinery
10.00 %
6/1/2020
6/1/2024
83
83
83
Rango, Inc. (10)
Commercial Services & Supplies
9.33 - 9.77 %
9/24/2019
10/1/2023 - 11/1/2024
731
742
717
Rayzor’s Edge LLC (10)
Diversified Consumer Services
7.69 - 8.27 %
5/19/2023
5/18/2030 - 6/30/2030
732
732
732
RH Land Construction, LLC & Harbor Dredging LA, Inc. (10)
Construction & Engineering
8.08 %
5/10/2023
5/10/2026
124
124
124
Royal Express Inc. (10)
Road & Rail
9.53 %
1/17/2019
2/1/2024
220
221
220
Rotten Rock Hardscaping & Tree Service (10)
Diversified Consumer Services
8.21 %
12/6/2022
12/6/2027
214
214
214
Rutt Services, LLC (10)
Commercial Services & Supplies
8.95 %
8/11/2023
8/11/2030
1,201
1,201
1,201
Signet Marine Corporation (10)
Transportation Infrastructure
8.50 %
10/31/2022
11/1/2029
12,712
12,753
12,712
SLR Equipment Finance(2)
Multi-Sector Holdings
8.50 %
1/24/2022
1/27/2024
2,500
2,500
2,500
Smiley Lifting Solutions, LLC(10)
Commercial Services & Supplies
7.82 - 8.61 %
6/30/2022
9/15/2026 - 6/27/2030
6,123
6,123
6,123
ST Coaches, LLC (10)
Road & Rail
8.50 - 8.58 %
7/31/2017
10/1/2023 - 1/25/2025
1,111
1,111
1,075
Star Coaches Inc. (10)
Road & Rail
8.42 %
3/9/2018
4/1/2025
2,472
2,472
2,218
Superior Transportation, Inc. (10)
Road & Rail
10.22 - 10.63 %
7/31/2017
1/1/2026
2,589
2,589
2,589
The Smedley Company & Smedley Services, Inc. (10)
Commercial Services & Supplies
4.07 %
7/31/2017
1/15/2028
1,476
1,476
1,476
Trinity Equipment, Inc. (10)
Commercial Services & Supplies
8.78 - 8.93 %
5/4/2023
5/4/2028 - 5/19/2028
1,407
1,407
1,407
Trinity Equipment Rentals, Inc. (10)
Commercial Services & Supplies
7.94 - 8.75 %
10/8/2021
11/1/2024 - 12/1/2026
416
416
416
U.S. Crane & Rigging, LLC (10)
Commercial Services & Supplies
8.73 %- 10.92 %
12/23/2022
3/1/2027 - 9/1/2028
2,717
2,717
2,717
Up Trucking Services, LLC (10)
Road & Rail
11.21 %
3/23/2018
8/1/2024
256
258
256
Waste Pro of Florida, Inc. & Waste Pro USA, Inc. (10)
Commercial Services & Supplies
9.17 %
4/18/2023
4/18/2028
9,330
9,485
9,330
Wind River Environmental, LLC (10)
Diversified Consumer Services
8.43 - 10.00 %
7/31/2019
8/1/2024 - 10/5/2025
387
387
387
Womble Company, Inc. (10)
Energy Equipment & Services
9.11 %
12/27/2019
1/1/2025
256
256
246
Worldwide Flight Services, Inc. (10)
Transportation Infrastructure
8.32 - 9.93 %
9/23/2022
9/23/2027 - 8/16/2028
3,192
3,240
3,192
Zamborelli Enterprises Pacific Souther Foundation (10)
Diversified Consumer Services
8.91 %
12/7/2022
1/1/2027
606
611
606
See notes to consolidated financial statements.
8
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2023
(in thousands, except share/unit amounts)
Description
Industry
Acquisition
Date
Shares/Units
Cost
Fair
Value
Equipment Financing (continued) —
SLR Equipment Finance Equity Interests (2)(9)(17)*
Multi-Sector Holdings
7/31/2017
200
145,000
120,820
Total Equipment Financing
$
290,688
$
265,306
Description
Industry
Interest Rate (1)
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Preferred Equity – 0.4 %
SOINT, LLC (2)(3)(4)
Aerospace &
Defense
5.00
% (11)
6/8/2012
6/30/2025
—
$
5,114
$
3,801
Description
Industry
Acquisition
Date
Shares/
Units
Cost
Fair
Value
Common Equity/Equity Interests/Warrants— 61.1 %
Assertio Holdings, Inc. (8)*
Pharmaceuticals
7/31/2023
12,510
$
51
$
32
aTyr Pharma, Inc. Warrants *
Pharmaceuticals
11/18/2016
6,347
106
—
Bayside Parent, LLC (27)*
Health Care Providers & Services
5/31/2023
6,526
11,411
3,816
CardioFocus, Inc. Warrants *
Health Care Equipment & Supplies
3/31/2017
90
51
—
Centrexion Therapeutics, Inc. Warrants *
Pharmaceuticals
6/28/2019
289,102
136
50
Conventus Orthopaedics, Inc. Warrants *
Health Care Equipment & Supplies
6/15/2016
157,500
65
—
Delphinus Medical Technologies, Inc. Warrants *
Health Care Equipment & Supplies
8/18/2017
444,388
74
87
Essence Group Holdings Corporation (Lumeris) Warrants *
Health Care Technology
3/22/2017
260,000
129
342
KBH Topco LLC (Kingsbridge) (2)(5)(18)
Multi-Sector Holdings
11/3/2020
73,500,000
136,596
146,000
Meditrina, Inc. Warrants *
Health Care Equipment & Supplies
12/20/2022
29,366
23
20
NSPC Holdings, LLC (National Spine) *
Health Care Providers & Services
2/13/2023
207,043
657
273
RD Holdco, Inc. (Rug Doctor) (2)*
Diversified Consumer Services
12/23/2013
231,177
15,683
—
RD Holdco, Inc. (Rug Doctor) Class B (2)*
Diversified Consumer Services
12/23/2013
522
5,216
—
RD Holdco, Inc. (Rug Doctor) Warrants (2)*
Diversified Consumer Services
12/23/2013
30,370
381
—
Senseonics Holdings, Inc. (3)(8)*
Health Care Equipment & Supplies
7/25/2019
469,353
235
283
SLR-AMI
Topco Blocker, LLC (27)(28)*
Internet & Catalog Retail
6/16/2023
—
19,880
15,100
SLR Business Credit (2)(3)(19)
Diversified Financial Services
4/1/2022
100
81,583
90,370
SLR Credit Solutions (2)(3)(20)
Diversified Financial Services
12/28/2012
280,303
280,737
281,000
SLR Healthcare ABL (2)(3)(21)
Diversified Financial Services
4/1/2022
32,839
34,335
34,850
SLR Senior Lending Program LLC (2)(3)(25)
Asset Management
12/1/2022
—
28,750
29,277
Vapotherm, Inc. Warrants*
Health Care Equipment & Supplies
2/18/2022
48,969
290
28
Venus Concept Ltd. Warrants* (f/k/a Restoration Robotics)
Health Care Equipment & Supplies
5/10/2018
2,230
152
—
Vertos Medical, Inc. Warrants*
Health Care Equipment & Supplies
6/14/2023
161,761
51
55
Total Common Equity/Equity Interests/Warrants
$
616,592
$
601,583
Total Investments (6) — 220.4 %
$
2,204,617
$
2,171,056
Description
Industry
Acquisition
Date
Maturity
Date
Par Amount
Cash Equivalents — 33.7 %
U.S. Treasury Bill
Government
9/29/2023
11/21/2023
$
335,000
$
332,557
$
332,557
Total Investments & Cash Equivalents — 254.1 %
$
2,537,174
$
2,503,613
Liabilities in Excess of Other Assets — ( 154.1 %)
( 1,518,228
)
Net Assets — 100.0 %
$
985,385
(1)
Floating rate debt investments typically bear interest at a rate determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), the Secured Overnight Financing Rate (“SOFR” or “S”) or the prime index rate (“PRIME” or “P”), and which typically reset monthly, quarterly or semi-annually. For each debt investment we have provided the current rate of interest, or in the case of leases the current implied yield, in effect as of September 30, 2023.
(2)
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”), due to beneficially owning, either directly or through one or more controlled companies, more than 25 % of the outstanding voting securities of the investment. Transactions during the nine months ended September 30, 2023 in these controlled investments are as follows:
Name of Issuer
Fair Value at
December 31,
2022
Gross
Additions
Gross
Reductions
Realized
Gain
(Loss)
Change in
Unrealized
Gain
(Loss)
Fair Value at
September 30,
2023
Interest/
Dividend/Misc
Income
Equipment Operating Leases, LLC
$
3,741
$
—
$
( 338
)
$
—
$
8
$
3,411
$
231
Kingsbridge Holdings, LLC
80,000
—
—
—
( 70
)
80,000
7,434
KBH Topco, LLC (Kingsbridge)
148,444
—
—
—
( 2,444
)
146,000
10,500
Loyer Capital LLC
7,361
—
—
—
—
7,361
565
RD Holdco, Inc. (Rug Doctor, common equity)
—
—
—
—
—
—
—
RD Holdco, Inc. (Rug Doctor, class B)
—
—
—
—
—
—
—
RD Holdco, Inc. (Rug Doctor, warrants)
—
—
—
—
—
—
—
RD Holdco, Inc. (debt)
6,521
507
—
—
504
7,532
—
SLR Business Credit
89,370
—
—
—
1,000
90,370
5,250
SLR Credit Solutions
288,760
—
—
—
( 7,760
)
281,000
15,000
SLR Equipment Finance (equity)
120,820
—
—
—
—
120,820
—
SLR Equipment Finance (debt)
5,000
2,500
( 5,000
)
—
—
2,500
174
SLR Healthcare ABL
34,350
—
—
—
500
34,850
2,595
SLR Senior Lending Program LLC
9,426
19,250
—
—
601
29,277
393
SOINT, LLC
3,801
187
—
—
( 187
)
3,801
187
$
797,594
$
22,444
$
( 5,338
)
$
—
$
( 7,848
)
$
806,922
$
42,329
See notes to consolidated financial statements.
9
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2023
(in thousands)
(3)
Indicates assets that the Company believes may not represent “qualifying assets” under Section 55(a) of the 1940 Act. If we fail to invest a sufficient portion of our assets in qualifying assets, we could be prevented from making follow-on
investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act. As of September 30, 2023, on a fair value basis, non-qualifying
assets in the portfolio represented 25.1 % of the total assets of the Company.
(4)
The Company’s investment in SOINT, LLC includes a one dollar investment in common shares.
(5)
Kingsbridge Holdings, LLC is held through KBH Topco LLC, a Delaware corporation.
(6)
Aggregate net unrealized appreciation for U.S. federal income tax purposes is $ 31,537 ; aggregate gross unrealized appreciation and depreciation for U.S. federal tax purposes is $ 152,992 and $ 121,455 , respectively, based on a tax cost of $ 2,139,519 . Unless otherwise noted, all of the Company’s investments are pledged as collateral against the borrowings outstanding on the senior secured credit facility. The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act. All investments are Level 3 unless otherwise indicated.
(7)
Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR, SOFR or PRIME rate. These instruments are often subject to a LIBOR, SOFR or PRIME rate floor.
(8)
Denotes a Level 1 investment.
(9)
SLR Equipment Finance is held through NEFCORP LLC, a wholly-owned consolidated taxable subsidiary and NEFPASS LLC, a wholly-owned consolidated subsidiary.
(10)
Indicates an investment that is wholly held by the Company through NEFPASS LLC.
(11)
Interest is paid in kind (“PIK”).
(12)
Denotes a subsidiary of SLR Equipment Finance.
(13)
OmniGuide Holdings, Inc., Domain Surgical, Inc. and OmniGuide, Inc. are co-borrowers.
(14)
AmeriMark Interactive, LLC, AmeriMark Direct LLC, AmeriMark Intermediate Sub, Inc., L.T.D. Commodities LLC, Dr. Leonard’s Healthcare Corp. and Amerimark Intermediate Holdings, LLC are each co-Borrowers.
(15)
Spread is 1.00 % Cash / 6.00 % PIK.
(16)
Indicates an investment that is wholly or partially held by the Company through its wholly-owned financing subsidiary SUNS SPV LLC (the “SUNS SPV”). Such investments are pledged as collateral under the Senior Secured Revolving SPV Credit Facility (the “SPV Credit Facility”) (see Note 7 to the consolidated financial statements) and are not generally available to creditors, if any, of the Company.
(17)
See note 10 to the consolidated financial statements.
(18)
See note 11 to the consolidated financial statements.
(19)
See note 13 to the consolidated financial statements.
(20)
See note 9 to the consolidated financial statements.
(21)
See note 12 to the consolidated financial statements.
(22)
BridgeBio Pharma, Inc. may elect to defer up to 3.00 % of the coupon as PIK.
(23)
The Company became an Affiliated Person to Bayside Opco, LLC and Bayside Parent, LLC on May 31, 2023 and to Amerimark Intermediate Holdings, LLC and SLR- AMI Topco Blocker, LLC on June 16, 2023.
(24)
Vapotherm, Inc. may elect to defer up to 9.00 % of the coupon as PIK.
(25)
See note 17 to the consolidated financial statements.
(26)
iCIMS, Inc. may elect to defer up to 3.875 % of the coupon as PIK.
(27)
Denotes investments in which we are an “Affiliated Person” but do not exercise a controlling influence, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 5% but less than 25% of the outstanding voting securities of the investment. Transactions during the nine months ended September 30, 2023 (beginning with the date at which the Company became an Affiliated Person) in these affiliated investments are as follows:
Name of Issuer
Fair Value at
Date of
Affiliation(23)
Gross
Additions
Gross
Reductions
Realized
Gain (Loss)
Change in
Unrealized
Gain
(Loss)
Fair Value at
September 30,
2023
Interest Income
Oldco AI, LLC (f/k/a AmeriMark)
$
—
$
1,262
$
( 941
)
$
—
$
—
$
321
$
15
Oldco AI, LLC (f/k/a AmeriMark)
9,371
—
( 12,866
)
—
3,495
—
—
Bayside Opco, LLC
846
21
( 465
)
—
—
402
32
Bayside Opco, LLC
18,224
583
—
—
—
18,807
784
Bayside Parent, LLC (loan)
4,773
186
—
—
—
4,959
250
Bayside Parent, LLC (equity)
4,681
—
—
—
( 865
)
3,816
—
SLR-AMI
Topco Blocker, LLC
7,014
12,867
—
—
( 4,781
)
15,100
—
$
44,909
$
14,919
$
( 14,272
)
$
—
$
( 2,151
)
$
43,405
$
1,081
(28)
Through this entity and other intermediate entities, the Company owns approximately 7.3 % of the underlying common units of ASC Holdco, LLC, a joint venture which owns certain assets of the former Amerimark Interactive, LLC.
(29)
Kaseya, Inc. may elect to defer up to 2.50 % of the coupon as PIK.
*
Non-income
producing security.
**
Investment is on non-accrual
status.
See notes to consolidated financial statements.
10
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2023
(in thousands)
Industry Classification
Percentage of Total
Investments (at fair value) as
of September 30, 2023
Diversified Financial Services (includes SLR Credit Solutions, SLR Business Credit and SLR Healthcare ABL)
21.6
%
Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance, Equipment Operating Leases, LLC and Loyer Capital LLC)
16.6
%
Health Care Providers & Services
11.8
%
Health Care Equipment & Supplies
6.5
%
Insurance
6.4
%
Pharmaceuticals
5.3
%
Software
3.5
%
Diversified Consumer Services
3.4
%
Biotechnology
3.3
%
Capital Markets
2.0
%
Commercial Services & Supplies
2.0
%
Thrifts & Mortgage Finance
1.4
%
Asset Management
1.4
%
Road & Rail
1.3
%
Personal Products
1.3
%
Life Sciences Tools & Services
1.1
%
Wireless Telecommunication Services
1.1
%
Internet Software & Services
0.9
%
Building Products
0.9
%
Transportation Infrastructure
0.7
%
Internet & Catalog Retail
0.7
%
Packaged Foods & Meats
0.7
%
Communications Equipment
0.6
%
Health Care Technology
0.6
%
IT Services
0.5
%
Leisure Equipment & Products
0.5
%
Trading Companies & Distributors
0.5
%
Auto Parts & Equipment
0.5
%
Specialty Retail
0.4
%
Hotels, Restaurants & Leisure
0.3
%
Aerospace & Defense
0.3
%
Oil, Gas & Consumable Fuels
0.3
%
Auto Components
0.3
%
Footwear
0.3
%
Media
0.2
%
Airlines
0.2
%
Machinery
0.2
%
Metals & Mining
0.1
%
Water Utilities
0.1
%
Food & Staples Retailing
0.1
%
Construction & Engineering
0.1
%
Consumer Finance
0.0
%
Energy Equipment & Services
0.0
%
Total Investments
100.0
%
See notes to
consolidated financial statements.
11
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2022
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index (7)
Floor
Interest
Rate (1)
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Senior Secured Loans — 124.6 %
First Lien Bank Debt/Senior Secured Loans
Aegis Toxicology Sciences Corporation(16)
Health Care Providers & Services
L+ 550
1.00
%
10.09
%
5/7/2018
5/9/2025
$
17,103
$
16,793
$
17,103
All States Ag Parts, LLC(16)
Trading Companies & Distributors
S+ 575
1.00
%
10.19
%
4/1/2022
9/1/2026
4,197
4,081
4,197
American Teleconferencing Services, Ltd**
Communications Equipment
L+ 650
1.00
%
—
5/5/2016
9/9/2021
36,135
25,926
—
American Teleconferencing Services, Ltd**
Communications Equipment
L+ 650
1.00
%
—
9/17/2021
1/31/2023
6,405
6,254
224
AmeriMark Intermediate Holdings, LLC(14)
Internet & Catalog Retail
L+ 800
1.00
%
14.77
%
7/28/2021
10/15/2026
24,087
23,711
22,882
Apex Services Partners, LLC(16)
Diversified Consumer Services
S+ 525
1.00
%
9.80
%
8/31/2022
7/31/2025
14,021
13,644
14,021
Atria Wealth Solutions, Inc.(16)
Diversified Financial Services
S+ 600
1.00
%
10.84
%
9/14/2018
2/29/2024
8,149
8,107
8,149
Basic Fun, Inc.(16)
Specialty Retail
L+ 550
1.00
%
10.27
%
10/30/2020
10/30/2023
2,162
2,152
2,162
BayMark Health Services, Inc.(16)
Health Care Providers & Services
L+ 500
1.00
%
9.73
%
4/1/2022
6/11/2027
9,432
9,078
9,432
BDG Media, Inc.
Media
L+ 900
0.25
%
13.17
%
7/18/2022
4/27/2023
14,454
14,454
14,454
CC SAG Holdings Corp. (Spectrum
Automotive)(16)
Diversified Consumer Services
L+ 575
0.75
%
10.48
%
6/29/2021
6/29/2028
20,427
20,057
20,427
Composite Technology Acquisition Corp.(16)
Building Products
L+ 475
1.00
%
9.73
%
4/1/2022
2/1/2025
10,386
9,983
10,386
Copper River Seafoods, Inc.
Food Products
P+ 275
—
10.25
%
8/31/2022
4/23/2025
8,405
8,405
8,405
DeepIntent, Inc.
Media
P+ 175
—
9.25
%
10/12/2022
3/25/2025
16,951
16,951
16,951
Enhanced Permanent Capital, LLC(3)
Capital Markets
L+ 700
1.00
%
10.13
%
12/29/2020
12/29/2025
35,205
34,496
35,205
ENS Holdings III Corp. & ES Opco USA
LLC (Bluefin)(16)
Trading Companies & Distributors
S+ 475
1.00
%
9.43
%
4/1/2022
12/31/2025
4,978
4,804
4,978
Enverus Holdings, Inc. (fka Drilling Info Holdings)(16)
IT Services
L+ 450
—
8.88
%
4/1/2022
7/30/2025
11,598
11,129
11,598
Erie Construction Mid-west,
LLC(16)
Building Products
S+ 475
1.00
%
9.79
%
4/1/2022
7/30/2027
8,915
8,580
8,915
Foundation Consumer Brands, LLC(16)
Personal Products
L+ 550
1.00
%
10.15
%
2/12/2021
2/12/2027
35,273
34,421
35,273
GSM Acquisition Corp.(16)
Leisure Equipment & Products
S+ 500
1.00
%
9.03
%
4/1/2022
11/16/2026
11,022
10,562
10,912
Higginbotham Insurance Agency, Inc.(16)
Insurance
L+ 525
0.75
%
9.63
%
4/1/2022
11/25/2026
6,223
5,994
6,223
High Street Buyer, Inc.(16)
Insurance
L+ 600
0.75
%
10.73
%
4/1/2022
4/16/2028
5,188
4,900
5,188
Human Interest Inc.
Internet Software & Services
S+ 785
1.00
%
11.97
%
6/30/2022
7/1/2027
20,104
19,783
20,104
iCIMS, Inc.
Software
S+ 725
0.75
%
11.52
% (26)
8/18/2022
8/18/2028
32,084
31,548
31,522
Ivy Fertility Services, LLC
Health Care Providers & Services
L+ 625
1.00
%
10.39
%
12/22/2021
2/25/2026
30,092
29,415
30,393
Kaseya, Inc.(16)
Software
S+ 575
0.75
%
10.33
%
6/22/2022
6/23/2029
32,426
31,966
32,426
Kid Distro Holdings, LLC (Distro Kid)(16)
Software
L+ 575
1.00
%
10.48
%
9/24/2021
10/1/2027
26,452
26,015
26,452
Kingsbridge Holdings, LLC(2)
Multi-Sector Holdings
L+ 700
1.00
%
10.75
%
12/21/2018
12/21/2024
80,000
79,800
80,000
KORE Wireless Group, Inc.(16)
Wireless Telecommunication Services
S+ 550
—
10.08
%
12/21/2018
12/21/2024
23,588
23,123
23,588
Logix Holding Company, LLC(16)
Communications Equipment
L+ 575
1.00
%
10.13
%
9/14/2018
12/22/2024
14,009
13,246
13,449
Luxury Asset Capital, LLC(16)
Thrifts & Mortgage Finance
S+ 675
1.00
%
10.99
%
7/15/2022
7/15/2027
27,500
26,991
27,500
Maurices, Incorporated(16)
Specialty Retail
S+ 675
1.00
%
8.74
%
8/27/2021
6/1/2024
7,808
7,678
7,808
Montefiore Nyack Hospital
Health Care Providers & Services
L+ 495
—
9.72
%
8/9/2022
11/15/2024
3,966
3,966
3,966
NAC Holdings Corporation (Jaguar)(16)
Insurance
S+ 525
1.00
%
9.45
%
7/30/2021
9/28/2024
28,603
28,214
28,603
National Spine and Pain Centers, LLC
Health Care Providers & Services
L+ 500
1.00
%
7.31
%
4/1/2022
6/2/2024
2,681
2,564
2,547
One Touch Direct, LLC
Commercial Services & Supplies
P+ 75
—
8.25
%
4/3/2020
3/30/2024
4,431
4,431
4,431
Orthopedic Care Partners Management, LLC
Health Care Providers & Services
S+ 650
1.00
%
10.91
%
8/17/2022
5/16/2024
3,111
3,092
3,111
Pediatric Home Respiratory Services, LLC
Health Care Providers & Services
S+ 625
1.00
%
10.67
%
8/19/2022
12/4/2024
1,327
1,309
1,313
Peter C. Foy & Associates Insurance Services,
LLC
Insurance
S+ 600
0.75
%
10.44
%
4/1/2022
11/1/2028
10,854
10,699
10,854
PhyNet Dermatology LLC
Health Care Providers & Services
S+ 625
(15)
1.00
%
9.81
%
9/5/2018
8/16/2024
14,458
14,420
14,458
Pinnacle Treatment Centers, Inc.(16)
Health Care Providers & Services
S+ 650
1.00
%
10.57
%
1/22/2020
1/2/2026
27,997
27,528
27,367
Plastics Management, LLC(16)
Health Care Providers & Services
S+ 500
1.00
%
9.89
%
4/1/2022
8/18/2027
9,491
9,161
9,491
PPT Management Holdings, LLC(16)
Health Care Providers & Services
L+ 850
(11)
1.00
%
12.83
%
9/14/2018
1/30/2023
32,163
31,987
25,827
RQM+ Corp.(16)
Life Sciences Tools & Services
S+ 575
1.00
%
10.97
%
8/20/2021
8/12/2026
26,823
26,455
26,823
RSC Acquisition, Inc.(16)
Insurance
S+ 550
0.75
%
9.26
%
4/1/2022
11/1/2026
6,985
6,813
6,985
RxSense Holdings LLC(16)
Diversified Consumer Services
L+ 500
1.00
%
9.41
%
4/1/2022
3/13/2026
11,775
11,357
11,775
SCP Eye Care, LLC
Health Care Providers & Services
S+ 575
1.00
%
9.46
%
10/6/2022
10/5/2029
8,314
8,050
8,044
SHO Holding I Corporation (Shoes for
Crews)(16)
Footwear
L+ 523
1.00
%
9.66
%
4/1/2022
4/27/2024
5,704
5,361
5,419
Southern Orthodontic Partners Management, LLC(16)
Health Care Providers & Services
S+ 600
1.00
%
10.77
%
6/3/2022
1/27/2026
1,399
1,387
1,399
SPAR Marketing Force, Inc.
Media
P+ 95
—
8.45
%
7/18/2022
10/10/2024
9,162
9,162
9,162
Stryten Resources LLC
Auto Parts & Equipment
S+ 800
1.00
%
12.44
%
8/11/2021
10/12/2026
25,922
25,506
25,922
SunMed Group Holdings, LLC(16)
Health Care Equipment & Supplies
L+ 575
0.75
%
10.48
%
6/16/2021
6/16/2028
24,953
24,446
24,953
TAUC Management, LLC(16)
Health Care Providers & Services
L+ 525
1.00
%
9.98
%
4/1/2022
2/12/2027
6,899
6,585
6,864
Tilley Distribution, Inc.(16)
Trading Companies & Distributors
S+ 550
1.00
%
10.14
%
4/1/2022
12/31/2026
9,996
9,527
9,996
Ultimate Baked Goods Midco LLC (Rise
Baking)(16)
Packaged Foods & Meats
L+ 650
1.00
%
10.88
%
8/12/2021
8/13/2027
24,789
24,038
24,789
Vessco Midco Holdings, LLC(16)
Water Utilities
L+ 450
1.00
%
7.87
%
4/1/2022
11/2/2026
1,728
1,668
1,728
World Insurance Associates, LLC(16)
Insurance
S+ 575
1.00
%
9.31
%
4/1/2022
4/1/2026
31,624
30,785
30,359
Total First Lien Bank Debt/Senior
Secured Loans
$
912,558
$
886,513
Second Lien Asset-Based Senior Secured
Loans
ACRES Commercial Mortgage, LLC
Diversified Financial Services
S+ 705
1.00
%
11.38
%
12/24/2021
8/21/2028
29,925
$
29,398
$
29,925
Second Lien Bank Debt/Senior Secured Loans
RD Holdco, Inc.** (2)
Diversified Consumer Services
S+ 975
(11)
1.00
%
—
12/23/2013
10/12/2026
13,043
$
11,791
$
6,521
See notes to consolidated financial statements.
12
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2022
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index (7)
Floor
Interest
Rate (1)
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Senior Secured Loans (continued) —
First Lien Life Science Senior Secured Loans
Alimera Sciences, Inc.(16)
Pharmaceuticals
L+ 765
1.78
%
11.82
%
12/31/2019
7/1/2024
$
23,159
$
23,894
$
24,433
Apeel Technology, Inc
Biotechnology
S+ 625
1.00
%
8.75
%
6/29/2022
6/1/2027
3,643
3,620
3,643
Arcutis Biotherapeutics, Inc.(3)
Pharamceuticals
L+ 745
0.10
%
11.62
%
12/22/2021
1/1/2027
66,849
67,077
67,685
Ardelyx, Inc.(3)
Pharmaceuticals
L+ 795
0.10
%
12.12
%
2/23/2022
3/1/2027
9,475
9,437
9,499
BridgeBio Pharma, Inc.(3)
Biotechnology
—
—
9.00
% (22)
11/17/2021
11/17/2026
39,839
39,340
39,839
Centrexion Therapeutics, Inc.
Pharmaceuticals
L+ 725
2.45
%
11.42
%
6/28/2019
1/1/2024
11,844
12,372
12,555
Cerapedics, Inc.
Biotechnology
S+ 620
2.75
%
10.52
%
12/27/2022
1/1/2028
26,939
26,874
26,872
Glooko, Inc.(16)
Health Care Technology
L+ 790
0.10
%
12.07
%
9/30/2021
10/1/2026
15,883
15,867
15,922
Meditrina, Inc.
Health Care Equipment & Supplies
S+ 550
3.45
%
9.82
%
12/20/2022
12/1/2027
3,367
3,338
3,359
Neuronetics, Inc.(16)
Health Care Equipment & Supplies
L+ 765
1.66
%
11.82
%
3/2/2020
2/28/2025
18,012
18,450
19,003
OmniGuide Holdings, Inc. (13)
Health Care Equipment & Supplies
L+ 1405
0.10
%
18.22
% (23)
7/30/2018
7/1/2023
19,201
19,380
19,777
Outset Medical, Inc.(3)
Health Care Equipment & Supplies
S+ 515
2.75
%
9.33
%
11/3/2022
11/1/2027
35,084
34,880
34,820
Spectrum Pharmaceuticals, Inc.(16)
Biotechnology
S+ 570
2.30
%
9.88
%
9/21/2022
9/1/2027
10,525
10,406
10,420
Vapotherm, Inc.
Health Care Equipment & Supplies
S+ 830
1.00
%
12.58
% (24)
2/18/2022
2/1/2027
34,455
34,270
34,628
Total First Lien Life Science Senior Secured Loans
$
319,205
$
322,455
Total Senior Secured Loans
$
1,272,952
$
1,245,414
Description
Industry
Interest Rate (1)
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Equipment Financing — 26.6 %
Aero Operating LLC (10)
Commercial Services & Supplies
8.47 - 9.64 %
2/12/2021
3/1/2025 - 12/1/2026
$
2,264
$
2,262
$
2,262
AFG Dallas III, LLC (10)
Diversified Consumer Services
10.00 %
8/11/2022
8/11/2026 - 8/29/2026
1,036
1,036
1,036
Air Methods Corporation (10)
Airlines
7.08 - 7.13 %
11/3/2021
11/3/2026 - 11/23/2026
3,600
3,660
3,600
AmeraMex International, Inc. (10)
Commercial Services & Supplies
10.00 %
3/29/2019
9/15/2024
1,059
1,059
1,069
Bazzini, LLC (10)
Food & Staples Retailing
10.46 %
12/23/2022
1/1/2028
2,365
2,440
2,365
Boart Longyear Company (10)
Metals & Mining
8.31 - 10.44 %
5/28/2020
7/1/2024 - 10/7/2026
4,568
4,568
4,568
Bowman Energy Solutions, LLC (10)
Commercial Services & Supplies
7.42 %
7/1/2022
8/1/2026
153
153
153
C-Port/Stone
LLC (10)
Oil, Gas & Consumable Fuels
8.54 %
10/7/2022
11/1/2027
6,708
6,514
6,507
Capital City Jet Center, Inc. (10)
Airlines
10.00 %
4/4/2018
10/4/2023 - 6/22/2026
2,241
2,241
2,214
Champion Air, LLC (10)
Airlines
10.00 %
3/19/2018
1/1/2023
1,055
1,055
1,055
CKD Holdings, Inc. (10)
Road & Rail
8.10 - 8.60 %
9/22/2022
3/22/2026 - 9/22/2027
3,690
3,690
3,690
Clubcorp Holdings, Inc. (10)
Hotels, Restaurants & Leisure
9.36 - 13.01 %
5/27/2021
4/1/2025 - 1/1/2028
6,539
6,539
6,539
Dongwon Autopart Technology Inc. (10)
Auto Components
7.96 %
2/2/2021
1/1/2026
1,828
1,849
1,828
Drillers Choice, Inc. (10)
Commercial Services & Supplies
8.00 %
10/31/2022
11/1/2027
1,589
1,589
1,589
EasyPak, LLC (10)
Containers & Packaging
9.01 %
1/6/2021
1/1/2024
276
276
276
Energy Drilling Services, LLC (10)
Diversified Consumer Services
6.58 - 9.16 %
8/26/2022
12/9/2025 - 9/1/2027
1,321
1,321
1,295
Environmental Protection & Improvement Company, LLC (10)
Road & Rail
8.25 %
9/30/2020
10/1/2027
5,270
5,300
5,270
Equipment Operating Leases, LLC (2)(12)
Multi-Sector Holdings
8.37 %
4/27/2018
4/27/2025
3,837
3,837
3,741
First American Commercial Bancorp, Inc. (10)
Diversified Financial Services
7.50 - 9.02 %
10/28/2021
10/1/2026 - 3/1/2027
2,938
2,941
2,938
First National Capital, LLC (10)
Diversified Financial Services
9.00 %
11/5/2021
8/1/2026
7,116
7,116
7,116
Freightsol LLC (10)
Road & Rail
12.51 - 12.89 %
4/9/2019
11/1/2023
779
784
779
Garda CL Technical Services, Inc. (10)
Commercial Services & Supplies
8.30 - 8.77 %
3/22/2018
6/5/2023 - 10/5/2023
469
469
468
Georgia Jet, Inc. (10)
Airlines
8.00 %
12/4/2017
1/4/2024
425
425
425
GMT Corporation (10)
Machinery
10.71 %
10/23/2018
1/1/2026
4,801
4,806
4,801
Hawkeye Contracting Company, LLC (10)
Construction & Engineering
10.50 %
10/8/2021
11/1/2025
997
997
997
HTI Logistics Corporation (10)
Commercial Services & Supplies
9.69 - 9.94 %
11/15/2018
5/1/2024 - 9/1/2025
290
290
283
International Automotive Components Group, North America, Inc. (10)
Auto Components
7.95 %
6/23/2021
6/23/2025
6,072
6,109
5,951
Kool Pak, LLC (10)
Road & Rail
8.58 %
2/5/2018
3/1/2024
194
194
194
Loc Performance Products, LLC (10)
Machinery
10.50 %
12/29/2022
6/1/2027
767
767
767
Loyer Capital LLC (2)(12)
Multi-Sector Holdings
8.73 - 11.52 %
5/16/2019
5/16/2024 - 9/25/2024
7,500
7,500
7,361
Lux Credit Consultants, LLC (10)
Road & Rail
8.28 - 12.09 %
6/17/2021
12/1/2024 - 12/1/2026
16,411
16,411
16,411
Lux Vending, LLC (10)
Consumer Finance
12.46 - 13.26 %
8/20/2021
8/20/2024 - 10/1/2024
1,638
1,663
1,638
Mountain Air Helicopters, Inc. (10)
Commercial Services & Supplies
10.00 %
7/31/2017
2/28/2025
369
368
369
Ozzies, Inc. (10)
Commercial Services & Supplies
10.72 %
12/23/2022
1/1/2027
2,005
2,072
2,005
PCX Aerostructures LLC (10)
Aerospace & Defense
9.32 %
11/23/2022
12/1/2028
2,658
2,658
2,658
Rane Light Metal Castings Inc. (10)
Machinery
10.00 %
6/1/2020
6/1/2024
159
159
159
Rango, Inc. (10)
Commercial Services & Supplies
9.33 - 9.79 %
9/24/2019
4/1/2023 - 11/1/2024
1,940
1,960
1,904
Royal Coach Lines, Inc.(10)
Road & Rail
9.56 %
11/21/2019
8/1/2025
849
849
775
Royal Express Inc. (10)
Road & Rail
9.53 %
1/17/2019
2/1/2024
428
431
428
Rotten Rock Hardscaping & Tree Service (10)
Diversified Consumer Services
8.21 %
12/6/2022
12/6/2027
245
245
245
Signet Marine Corporation (10)
Transportation Infrastructure
8.50 %
10/31/2022
7/1/2029
14,102
14,152
14,102
SLR Equipment Finance(2)
Multi-Sector Holdings
8.50 %
1/24/2022
1/24/2023
5,000
5,000
5,000
Smiley Lifting Solutions, LLC(10)
Commercial Services & Supplies
7.82 - 8.28 %
6/30/2022
9/15/2026 - 12/29/2029
4,139
4,139
4,139
ST Coaches, LLC (10)
Road & Rail
8.47 - 8.58 %
7/31/2017
7/1/2023 - 1/25/2025
1,521
1,521
1,459
Star Coaches Inc. (10)
Road & Rail
8.42 %
3/9/2018
4/1/2025
2,887
2,887
2,591
Superior Transportation, Inc. (10)
Road & Rail
10.22 - 10.63 %
7/31/2017
1/1/2026
3,369
3,369
3,369
The Smedley Company & Smedley Services, Inc. (10)
Commercial Services & Supplies
4.07 %
7/31/2017
1/15/2028
1,706
1,706
1,706
Trinity Equipment Rentals, Inc. (10)
Commercial Services & Supplies
7.94 - 8.75 %
10/8/2021
11/1/2024 - 12/1/2026
577
577
577
U.S. Crane & Rigging, LLC (10)
Commercial Services & Supplies
10.92 %
12/23/2022
3/1/2027
2,005
2,005
2,005
Up Trucking Services, LLC (10)
Road & Rail
11.21 %
3/23/2018
8/1/2024
469
473
469
Wind River Environmental, LLC (10)
Diversified Consumer Services
8.43 - 10.00 %
7/31/2019
8/1/2024 - 10/5/2025
604
605
604
Womble Company, Inc. (10)
Energy Equipment & Services
9.11 %
12/27/2019
1/1/2025
386
386
371
Worldwide Flight Services, Inc. (10)
Transportation Infrastructure
8.32 - 9.36 %
9/23/2022
9/23/2027 - 10/28/2027
304
308
304
Zamborelli Enterprises Pacific Souther Foundation (10)
Diversified Consumer Services
8.91 %
12/7/2022
1/1/2027
707
714
707
Shares/Units
SLR Equipment Finance Equity Interests (2)(9)(17)*
Multi-Sector Holdings
7/31/2017
200
145,000
120,820
Total Equipment Financing
$
291,445
$
265,952
See notes to consolidated financial statements.
13
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2022
(in thousands, except share/unit amounts)
Description
Industry
Interest Rate (1)
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Preferred Equity – 0.4 %
SOINT, LLC (2)(3)(4)
Aerospace & Defense
5.00
% (11)
6/8/2012
6/30/2023
49,273
$
4,927
$
3,801
Description
Industry
Acquisition
Date
Shares/Units
Cost
Fair
Value
Common Equity/Equity Interests/Warrants— 57.1 %
aTyr Pharma, Inc. Warrants *
Pharmaceuticals
11/18/2016
6,347
$
106
$
—
CardioFocus, Inc. Warrants *
Health Care Equipment & Supplies
3/31/2017
90
51
—
Centrexion Therapeutics, Inc. Warrants *
Pharmaceuticals
6/28/2019
289,102
136
82
Conventus Orthopaedics, Inc. Warrants *
Health Care Equipment & Supplies
6/15/2016
157,500
65
—
Delphinus Medical Technologies, Inc. Warrants *
Health Care Equipment & Supplies
8/18/2017
444,388
74
103
Essence Group Holdings Corporation (Lumeris) Warrants *
Health Care Technology
3/22/2017
260,000
129
366
KBH Topco LLC (Kingsbridge) (2)(5)(18)
Multi-Sector Holdings
11/3/2020
73,500,000
136,596
148,444
Meditrina, Inc. Warrants *
Health Care Equipment & Supplies
12/20/2022
29,366
23
23
RD Holdco, Inc. (Rug Doctor) (2)*
Diversified Consumer Services
12/23/2013
231,177
15,683
—
RD Holdco, Inc. (Rug Doctor) Class B (2)*
Diversified Consumer Services
12/23/2013
522
5,216
—
RD Holdco, Inc. (Rug Doctor) Warrants (2)*
Diversified Consumer Services
12/23/2013
30,370
381
—
Senseonics Holdings, Inc. (3)(8)*
Health Care Equipment & Supplies
7/25/2019
469,353
235
483
SLR Business Credit (2)(3)(19)
Diversified Financial Services
4/1/2022
100
81,583
89,370
SLR Credit Solutions (2)(3)(20)
Diversified Financial Services
12/28/2012
280,303
280,737
288,760
SLR Healthcare ABL (2)(3)(21)
Diversified Financial Services
4/1/2022
32,839
34,335
34,350
SLR Senior Lending Program LLC (2)(3)(25)
Asset Management
12/1/2022
—
9,500
9,426
Spectrum Pharmaceuticals, Inc. Warrants *
Biotechnology
9/21/2022
159,470
51
15
Vapotherm, Inc. Warrants*
Health Care Equipment & Supplies
2/18/2022
36,996
210
87
Venus Concept Ltd. Warrants* (f/k/a Restoration Robotics)
Health Care Equipment & Supplies
5/10/2018
33,430
152
—
Total Common Equity/Equity Interests/Warrants
$
565,263
$
571,509
Total Investments (6) — 208.7 %
$
2,134,587
$
2,086,676
Description
Industry
Acquisition
Date
Maturity
Date
Par Amount
Cash Equivalents — 41.8 %
U.S. Treasury Bill
Government
12/30/2022
2/23/2023
$
420,000
$
417,590
$
417,590
Total Investments & Cash Equivalents — 250.5 %
$
2,552,177
$
2,504,266
Liabilities in Excess of Other Assets — ( 150.5 %)
( 1,504,535
)
Net Assets — 100.0 %
$
999,731
(1)
Floating rate debt investments typically bear interest at a rate determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), the Secured Overnight Financing Rate (“SOFR” or “S”) or the prime index rate (“PRIME” or “P”), and which typically reset monthly, quarterly or semi-annually. For each debt investment we have provided the current rate of interest, or in the case of leases the current implied yield, in effect as of December 31, 2022.
(2)
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the Investment Company Act of 1940, as amended (“1940 Act”), due to beneficially owning, either directly or through one or more controlled companies, more than 25 % of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2022 in these controlled investments are as follows:
Name of Issuer
Fair Value at
December 31,
2021
Gross
Additions
Gross
Reductions
Realized
Gain
(Loss)
Change in
Unrealized
Gain
(Loss)
Fair Value at
December 31,
2022
Interest/
Dividend
Income
Equipment Operating Leases, LLC
$
18,939
$
—
$
( 15,833
)
$
—
$
635
$
3,741
$
749
Kingsbridge Holdings, LLC
80,000
—
—
—
( 87
)
80,000
7,402
KBH Topco, LLC (Kingsbridge)
145,996
—
—
—
2,448
148,444
15,225
Loyer Capital LLC
10,725
—
( 3,500
)
—
136
7,361
1,003
RD Holdco, Inc. (Rug Doctor, common equity)
—
—
—
—
—
—
—
RD Holdco, Inc. (Rug Doctor, class B)
5,216
—
—
—
( 5,216
)
—
—
RD Holdco, Inc. (Rug Doctor, warrants)
—
—
—
—
—
—
—
RD Holdco, Inc. (debt)
11,829
685
—
—
( 5,280
)
6,521
( 18
)
SLR Business Credit
—
81,583
—
—
7,787
89,370
5,150
SLR Credit Solutions
298,766
—
—
—
( 10,006
)
288,760
20,500
SLR Equipment Finance (equity)
129,102
—
—
—
( 8,282
)
120,820
—
SLR Equipment Finance (debt)
—
5,000
—
—
—
5,000
379
SLR Healthcare ABL
—
34,335
—
—
15
34,350
2,595
SLR Senior Lending Program LLC
—
9,500
—
—
( 74
)
9,426
—
SOAGG LLC
1,121
—
( 447
)
—
( 674
)
—
647
SOINT, LLC
4,509
266
( 942
)
—
( 32
)
3,801
266
$
706,203
$
131,369
$
( 20,722
)
$
—
$
( 18,630
)
$
797,594
$
53,898
See notes to consolidated financial statements.
14
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2022
(in thousands)
(3)
Indicates assets that the Company believes may not represent “qualifying assets” under Section 55(a) of the 1940 Act. If we fail to invest a sufficient portion of our assets in qualifying assets, we could be prevented from making follow-on
investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act. As of December 31, 2022, on a fair value basis, non-qualifying
assets in the portfolio represented 24.2 % of the total assets of the Company.
(4)
The Company’s investment in SOINT, LLC includes a one dollar investment in common shares.
(5)
Kingsbridge Holdings, LLC is held through KBH Topco LLC, a Delaware corporation.
(6)
Aggregate net unrealized appreciation for U.S. federal income tax purposes is $ 17,187 ; aggregate gross unrealized appreciation and depreciation for U.S. federal tax purposes is $ 161,053 and $ 143,866 , respectively, based on a tax cost of $ 2,069,489 . Unless otherwise noted, all of the Company’s investments are pledged as collateral against the borrowings outstanding on the senior secured credit facility. The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act. All investments are Level 3 unless otherwise indicated.
(7)
Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR, SOFR or PRIME rate. These instruments are often subject to a LIBOR, SOFR or PRIME rate floor.
(8)
Denotes a Level 1 investment.
(9)
SLR Equipment Finance is held through NEFCORP LLC, a wholly-owned consolidated taxable subsidiary and NEFPASS LLC, a wholly-owned consolidated subsidiary.
(10)
Indicates an investment that is wholly held by the Company through NEFPASS LLC.
(11)
Interest is paid in kind (“PIK”).
(12)
Denotes a subsidiary of SLR Equipment Finance.
(13)
OmniGuide Holdings, Inc., Domain Surgical, Inc. and OmniGuide, Inc. are co-borrowers.
(14)
AmeriMark Interactive, LLC, AmeriMark Direct LLC, AmeriMark Intermediate Sub, Inc., L.T.D. Commodities LLC, Dr. Leonard’s Healthcare Corp. and Amerimark Intermediate Holdings, LLC are each co-Borrowers.
Amerimark may elect to defer up to 8.00 % of the coupon as PIK.
(15)
Spread is 5.75 % Cash / 0.50 % PIK.
(16)
Indicates an investment that is wholly or partially held by the Company through its wholly-owned financing subsidiary SUNS SPV LLC (the “SUNS SPV”). Such investments are pledged as collateral under the Senior Secured Revolving SPV Credit Facility (the “SPV Credit Facility”) (see Note 7 to the consolidated financial statements) and are not generally available to creditors, if any, of the Company.
(17)
See note 10 to the consolidated financial statements.
(18)
See note 11 to the consolidated financial statements.
(19)
See note 13 to the consolidated financial statements.
(20)
See note 9 to the consolidated financial statements.
(21)
See note 12 to the consolidated financial statements.
(22)
BridgeBio Pharma, Inc. may elect to defer up to 3.00 % of the coupon as PIK.
(23)
OmniGuide Holdings, Inc. may elect to defer up to 10.00 % of the coupon as PIK.
(24)
Vapotherm, Inc. may elect to defer up to 8.00 % of the coupon as PIK.
(25)
See note 17 to the consolidated financial statements.
(26)
iCIMS, Inc. may elect to defer up to 3.875 % of the coupon as PIK.
*
Non-income
producing security.
**
Investment is on non-accrual
status.
See notes to consolidated financial statements.
15
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2022
(in thousands)
Industry Classification
Percentage of Total
Investments (at fair value) as
of December 31, 2022
Diversified Financial Services (includes SLR Credit Solutions, SLR Business Credit and SLR Healthcare ABL)
22.1
%
Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance, Equipment Operating Leases, LLC and Loyer Capital LLC)
17.5
%
Health Care Providers & Services
7.7
%
Health Care Equipment & Supplies
6.6
%
Pharmaceuticals
5.5
%
Software
4.3
%
Insurance
4.2
%
Biotechnology
3.9
%
Diversified Consumer Services
2.7
%
Media
1.9
%
Road & Rail
1.7
%
Personal Products
1.7
%
Capital Markets
1.7
%
Thrifts & Mortgage Finance
1.3
%
Life Sciences Tools & Services
1.3
%
Auto Parts & Equipment
1.2
%
Packaged Foods & Meats
1.2
%
Wireless Telecommunication Services
1.1
%
Commercial Services & Supplies
1.1
%
Internet & Catalog Retail
1.1
%
Internet Software & Services
1.0
%
Building Products
0.9
%
Trading Companies & Distributors
0.9
%
Health Care Technology
0.8
%
Transportation Infrastructure
0.7
%
Communications Equipment
0.7
%
IT Services
0.6
%
Leisure Equipment & Products
0.5
%
Specialty Retail
0.5
%
Asset Management
0.5
%
Food Products
0.4
%
Auto Components
0.4
%
Airlines
0.3
%
Hotels, Restaurants & Leisure
0.3
%
Oil, Gas & Consumable Fuels
0.3
%
Aerospace & Defense
0.3
%
Machinery
0.3
%
Footwear
0.3
%
Metals & Mining
0.2
%
Food & Staples Retailing
0.1
%
Water Utilities
0.1
%
Consumer Finance
0.1
%
Construction & Engineering
0.0
%
Energy Equipment & Services
0.0
%
Containers & Packaging
0.0
%
Total Investments
100.0
%
See notes to consolidated financial statements.
16
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
September 30, 2023
(in thousands, except share amounts)
Note 1. Organization
SLR Investment Corp. (the “Company”, “SLRC”, “we”, “us” or “our”), a Maryland corporation formed in November 2007, is a closed-end,
externally managed, non-diversified
management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues to apply the guidance in FASB Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S. federal income tax purposes, the Company has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
On February 9, 2010, the Company priced its initial public offering, selling 5.68 million shares of common stock, including the underwriters’ over-allotment, at a price of $ 18.50 per share. Concurrent with this offering, the Company’s senior management purchased an additional 600,000 shares through a private placement, also at $ 18.50 per share.
The Company’s investment objective is to maximize both current income and capital appreciation through debt and equity investments. The Company directly and indirectly invests primarily in leveraged middle market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities. From time to time, we may also invest in public companies that are thinly traded.
On April 1, 2022, we acquired SLR Senior Investment Corp., a Maryland corporation (“SUNS”) pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 1, 2021, by and among us, SUNS, Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, SLR Capital Partners, LLC (the “Investment Adviser”). Pursuant to the Merger Agreement, Merger Sub merged with and into SUNS, with SUNS continuing as the surviving company and as SUNS’s wholly-owned subsidiary (the “Merger”) and, immediately thereafter, SUNS merged with and into us, with us continuing as the surviving company (together with the Merger, the “Mergers”). 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.
Note 2. Significant Accounting Policies
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company and certain wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts may have been reclassified to conform to the current period presentation.
Interim consolidated financial statements are prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q
and Regulation S-X,
as appropriate. Accordingly, they may not include all of the information and notes required by GAAP for annual consolidated financial statements. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2023.
17
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements, have been included.
The significant accounting policies consistently followed by the Company are:
(a)
Investment transactions are accounted for on the trade date;
(b)
Under procedures established by the board of directors (the “Board”), we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available and deemed to represent fair value under GAAP, at such market quotations (unless they are deemed not to represent 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. We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service). We utilize mid-market
pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are deemed not to represent fair value, we may utilize independent third-party valuation firms to assist us in determining the fair value of material assets. Accordingly, such investments go through our multi-step valuation process as described below. In each such case, independent valuation firms, that may from time to time be engaged by the Board, consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations. Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith by or under the direction of the Board. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board. Such determination of fair values involves subjective judgments and estimates.
With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value under GAAP, the Board has approved a multi-step valuation process each quarter, as described below:
(1)
our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;
(2)
preliminary valuation conclusions are then documented and discussed with senior management of the Investment Adviser;
(3)
independent valuation firms engaged by the Board conduct independent appraisals and review the Investment Adviser’s preliminary valuations and make their own independent assessment for all material assets;
(4)
the audit committee of the Board reviews the preliminary valuation of the Investment Adviser and that of the independent valuation firm and responds to the valuation recommendation of the independent valuation firm, if any, to reflect any comments; and
(5)
the Board discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser, the respective independent valuation firm, if any, and the audit committee.
The valuation principles set forth above may be modified from time to time, in whole or in part, as determined by the Board in its sole discretion. The Board will also (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.
18
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. However, 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. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation approaches to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. For the nine months ended September 30, 2023, there has been no change to the Company’s valuation approaches or techniques and the nature of the related inputs considered in the valuation process.
ASC Topic 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level
1
: Unadjusted quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.
Level
2
: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level
3
: Unobservable inputs for the asset or liability.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The exercise of judgment is based in part on our knowledge of the asset class and our prior experience.
(c)
Gains or losses on investments are calculated by using the specific identification method.
(d)
The Company records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis. Loan origination fees, original issue discount, and market discounts are capitalized and we amortize such amounts into income using the effective interest method. Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income. We record call premiums received on loans repaid as interest income when we receive such amounts. Capital structuring fees, amendment fees, consent fees, and any other non-recurring
fee income as well as a management fee and other fee income for services rendered, if any, are recorded as other income when earned.
(e)
The Company intends to comply with the applicable provisions of the Code pertaining to RICs to make distributions of taxable income sufficient to relieve it of substantially all U.S. federal income taxes. The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4 % excise tax on this income. The Company will accrue excise tax on such estimated excess taxable income as appropriate.
(f)
Book and tax basis differences relating to stockholder distributions and other permanent book and tax differences are typically reclassified among the Company’s capital accounts annually. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP.
(g)
Distributions to common stockholders are recorded as of the record date. The amount to be paid out as a distribution is determined by the Board. Net realized capital gains, if any, are generally distributed or deemed distributed at least annually.
(h)
In accordance with Regulation S-X
and ASC Topic 810— Consolidation
, the Company consolidates its interest in controlled investment company subsidiaries, financing subsidiaries and certain wholly-owned holding companies that serve to facilitate investment in portfolio companies. In addition, the Company may also consolidate any controlled operating companies substantially all of whose business consists of providing services to the Company.
19
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SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
(i)
The accounting records of the Company are maintained in U.S. dollars. Any assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. The Company will not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations would be included with the net unrealized gain or loss from investments. The Company’s investments in foreign securities, if any, may involve certain risks, including without limitation: foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments in terms of U.S. dollars and therefore the earnings of the Company.
(j)
In accordance with ASC 835-30,
the Company reports origination and other expenses related to certain debt issuances as a direct deduction from the carrying amount of the debt liability. Applicable expenses are deferred and amortized using either the effective interest method or the straight-line method over the stated life. The straight-line method may be used on revolving facilities and/or when it approximates the effective yield method.
(k)
The Company may enter into forward exchange contracts in order to hedge against foreign currency risk. These contracts are marked-to-market
by recognizing the difference between the contract exchange rate and the current market rate as unrealized appreciation or depreciation. Realized gains or losses are recognized when contracts are settled.
(l)
The Company records expenses related to shelf registration statements and applicable equity offering costs as prepaid assets. These expenses are typically charged as a reduction of capital upon the sale of shares or expensed, in accordance with ASC 946-20-25.
(m)
Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual
status when principal or interest cash payments are past due 30 days or more ( 90 days or more for equipment financing) and/or when it is no longer probable that principal or interest cash payments will be collected. Such non-accrual
investments are restored to accrual status if past due principal and interest are paid in cash, and in management’s judgment, are likely to continue timely payment of their remaining principal and interest obligations. Cash interest payments received on such investments may be recognized as income or applied to principal depending on management’s judgment.
(n)
The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less would qualify, with limited exceptions. The Company believes that certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities would qualify as cash equivalents.
20
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SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Note 3. Agreements
The Company has an investment advisory and management agreement (the “Advisory Agreement”) with the Investment Adviser, under which the Investment Adviser manages the day-to-day
operations of, and provides investment advisory services to the Company. For providing these services, the Investment Adviser receives a fee from the Company, consisting of two components—a base management fee and a performance-based incentive fee. The base management fee is determined by taking the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of 1.50 % on gross assets up to 200 % of the Company’s total net assets as of the immediately preceding quarter end and 1.00 % on gross assets that exceed 200 % of the Company’s total net assets as of the immediately preceding quarter end. For purposes of computing the base management fee, gross assets exclude temporary assets acquired at the end of each fiscal quarter for purposes of preserving investment flexibility in the next fiscal quarter. Temporary assets include, but are not limited to, U.S. treasury bills, other short-term U.S. government or government agency securities, repurchase agreements or cash borrowings.
The performance-based incentive fee has two parts, as follows: one part is calculated and payable quarterly in arrears based on the Company’s pre-incentive
fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive
fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement, and any interest expense and distributions paid on any issued and outstanding preferred stock, but excluding the performance-based incentive fee). Pre-incentive
fee net investment income does not include any realized capital gains or losses, or unrealized capital appreciation or depreciation. Pre-incentive
fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75 % per quarter ( 7 % annualized). The Company pays the Investment Adviser a performance-based incentive fee with respect to the Company’s pre-incentive
fee net investment income in each calendar quarter as follows: (1) no performance-based incentive fee in any calendar quarter in which the Company’s pre-incentive
fee net investment income does not exceed the hurdle rate; (2) 100 % of the Company’s pre-incentive
fee net investment income with respect to that portion of such pre-incentive
fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter; and (3) 20 % of the amount of the Company’s pre-incentive
fee net investment income, if any, that exceeds 2.1875% in any calendar quarter. These calculations are appropriately pro-rated
for any period of less than three months.
The second part of the performance-based incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), and will equal 20 % of the Company’s cumulative realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment
basis at the end of each calendar year) and all net capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser. For financial statement purposes, the second part of the performance-based incentive fee is accrued based upon 20 % of cumulative net realized gains and net unrealized capital appreciation. No accrual was required for the three and nine months ended September 30, 2023 and 2022.
For the three and nine months ended September 30, 2023, the Company recognized $ 8,051 and $ 23,635 , respectively, in base management fees and $ 5,796 and $ 16,943 , respectively, in performance-based incentive fees. For the three and nine months ended September 30, 2023, $ 175 and $ 410 , respectively, of such performance-based incentive fees were waived. For the three and nine months ended September 30, 2022, the Company recognized $ 7,890 and $ 22,019 , respectively, in base management fees and $ 4,965 and $ 9,699 , respectively, in gross performance-based incentive fees. For the three and nine months ended September 30, 2022, $ 194 and $ 1,552 of such performance-based incentive fees were waived. The Investment Adviser has agreed to waive incentive fees resulting from income earned due to the accretion of purchase discount allocated to investments acquired as a result of the Mergers. Fees waived pursuant to the above are not subject to recoupment by the Investment Adviser.
The Company has also entered into an Administration Agreement with SLR Capital Management, LLC (the “Administrator”) under which the Administrator provides administrative services to the Company. For providing these services, facilities and personnel, the Company reimburses the Administrator for the Company’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent. The Administrator will also provide, on the Company’s behalf, managerial assistance to those portfolio companies to which the Company is required to provide such assistance. The Company typically reimburses the Administrator on a quarterly basis.
For the three and nine months ended September 30, 2023, the Company recognized expenses under the Administration Agreement of $ 1,575 and $ 4,563 respectively. For the three and nine months ended September 30, 2022, the Company recognized expenses under the Administration Agreement of $ 1,132 and $ 3,684 respectively. No managerial assistance fees were accrued or collected for the three and nine months ended September 30, 2023 and 2022.
21
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SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Note 4. Net Asset Value Per Share
At September 30, 2023, the Company’s total net assets and net asset value per share were $ 985,385 and $ 18.06 , respectively. This compares to total net assets and net asset value per share at December 31, 2022 of $ 999,731 and $ 18.33 , respectively.
Note 5. Earnings Per Share
The following table sets forth the computation of basic and diluted net increase in net assets per share resulting from operations, pursuant to ASC 260-10,
for the three and nine months ended September 30, 2023 and 2022:
Three months ended September 30,
Nine months ended September 30,
2023
2022
2023
2022
Earnings (loss) per share (basic & diluted)
Numerator—net increase (decrease) in net assets resulting from operations:
$
26,947
$
13,528
$
52,766
$
( 655
)
Denominator – weighted average shares:
54,554,634
54,772,651
54,554,639
50,647,874
Earnings (loss) per share:
$
0.49
$
0.25
$
0.97
($
0.01
)
Note 6. Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuations used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:
Level
1.
Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.
Level
2.
Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
a)
Quoted prices for similar assets or liabilities in active markets;
b)
Quoted prices for identical or similar assets or liabilities in non-active
markets;
c)
Pricing models whose inputs are observable for substantially the full term of the asset or liability; and
d)
Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
Level
3.
Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s and, if applicable, an independent third-party valuation firm’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.
When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3).
Gains and losses for assets and liabilities categorized within the Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Such reclassifications involving Level 3 assets and liabilities are reported as transfers in/out of Level 3 as of the end of the quarter in which the reclassifications occur. Within the fair value hierarchy tables below, cash and cash equivalents are excluded but could be classified as Level 1.
22
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
The following tables present the balances of assets measured at fair value on a recurring basis, as of September 30, 2023 and December 31, 2022:
Fair Value Measurements
As of September 30, 2023
Level 1
Level 2
Level 3
Measured at
Net Asset Value*
Total
Assets:
Senior Secured Loans
$
—
$
—
$
1,300,366
$
—
$
1,300,366
Equipment Financing
—
—
265,306
—
265,306
Preferred Equity
—
—
3,801
—
3,801
Common Equity/Equity Interests/Warrants
315
—
571,991
29,277
601,583
Total Investments
$
315
$
—
$
2,141,464
$
29,277
$
2,171,056
Fair Value Measurements
As of December 31, 2022
Level 1
Level 2
Level 3
Measured at
Net Asset Value*
Total
Assets:
Senior Secured Loans
$
—
$
—
$
1,245,414
$
—
$
1,245,414
Equipment Financing
—
—
265,952
—
265,952
Preferred Equity
—
—
3,801
—
3,801
Common Equity/Equity Interests/Warrants
483
—
561,600
9,426
571,509
Total Investments
$
483
$
—
$
2,076,767
$
9,426
$
2,086,676
*
In accordance with ASC 820-10,
certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities. The portfolio investment in this category is SSLP. See Note 17 for more information on this investment, including its investment strategy and the Company’s unfunded equity commitment to SSLP. This investment is not redeemable by the Company absent an election by the members of the entity to liquidate all investments and distribute the proceeds to the members.
23
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
The following tables provide a summary of the changes in fair value of Level 3 assets for the three and nine months ended September 30, 2023, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at September 30, 2023:
Fair Value Measurements Using Level 3 Inputs
Senior Secured
Loans
Equipment
Financing
Preferred Equity
Common Equity/
Equity
Interests/
Warrants
Total
Fair value, June
30, 2023
$
1,318,512
$
271,333
$
3,801
$
566,427
$
2,160,073
Total gains or losses included in earnings:
Net realized loss
( 29,555
)
—
—
—
( 29,555
)
Net change in unrealized gain (loss)
41,505
190
( 64
)
( 7,280
)
34,351
Purchase of investment securities *
168,421
4,190
64
12,895
185,570
Proceeds from dispositions of investment securities
( 198,517
)
( 10,407
)
—
( 51
)
( 208,975
)
Transfers in/out of Level 3
—
—
—
—
—
Fair value, September
30, 2023
$
1,300,366
$
265,306
$
3,801
$
571,991
$
2,141,464
Unrealized losses for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gain (loss)
$
9,782
$
190
$
( 64 )
$
( 7,251
)
$
2,657
Senior Secured
Loans
Equipment
Financing
Preferred Equity
Common Equity/
Equity
Interests/
Warrants
Total
Fair value, December
31, 2022
$
1,245,414
$
265,952
$
3,801
$
561,600
$
2,076,767
Total gains or losses included in earnings:
Net realized loss
( 28,398
)
—
—
—
( 28,398
)
Net change in unrealized gain (loss)
35,682
111
( 187
)
( 21,639
)
13,967
Purchase of investment securities *
488,757
34,274
187
32,081
555,299
Proceeds from dispositions of investment securities
( 441,089
)
( 35,031
)
—
( 51
)
( 476,171
)
Transfers in/out of Level 3
—
—
—
—
—
Fair value, September
30, 2023
$
1,300,366
$
265,306
$
3,801
$
571,991
$
2,141,464
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gain (loss)
$
29,925
$
111
$
( 187
)
$
( 21,639
)
$
8,210
*
Includes PIK capitalization and accretion of discount
While the Company has not made an election to apply the fair value option of accounting to any of its current debt obligations, if the Company’s debt obligations were carried at fair value at September 30, 2023, the fair value of the Credit Facility, SPV Credit Facility, 2024 Unsecured Notes, 2025 Unsecured Notes, 2026 Unsecured Notes, 2027 Unsecured Notes and 2027 Series F Unsecured Notes would be $ 521,500 , $ 206,250 , $ 120,313 , $ 80,750 , $ 68,438 , $ 43,375 and $ 119,138 , respectively.
24
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
The following table provides a summary of the changes in fair value of Level 3 assets for the year ended December 31, 2022, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at December 31, 2022:
Fair Value Measurements Using Level 3 Inputs
Senior Secured
Loans
Equipment
Financing
Preferred Equity
Common Equity/
Equity
Interests/
Warrants
Total
Fair value, December
31, 2021
$
939,690
$
273,795
$
5,630
$
450,381
$
1,669,496
Total gains or losses included in earnings:
Net realized gain (loss)
( 36,244
)
—
—
6
( 36,238
)
Net change in unrealized loss
( 8,065
)
( 6,924
)
( 706
)
( 5,048
)
( 20,743
)
Purchase of investment securities(1)
796,389
84,168
266
116,272
997,095
Proceeds from dispositions of investment securities
( 446,356
)
( 85,087
)
( 1,389
)
( 11
)
( 532,843
)
Transfers in/out of Level 3
—
—
—
—
—
Fair value, December
31, 2022
$
1,245,414
$
265,952
$
3,801
$
561,600
$
2,076,767
Unrealized losses for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized loss
$
( 8,920
)
$
( 6,924
)
$
( 706
)
$
( 5,048
)
$
( 21,598
)
(1)
Includes positions acquired from SUNS as a result of the Mergers.
The following table shows a reconciliation of the beginning and ending balances for fair valued liabilities measured using significant unobservable inputs (Level 3) for the year ended December 31, 2022:
2022 Unsecured Notes
For the year ended
December 31, 2022
Beginning fair value
$
150,000
Net realized (gain) loss
—
Net change in unrealized (gain) loss
—
Borrowings
—
Repayments
( 150,000
)
Transfers in/out of Level 3
—
Ending fair value
$
—
The Company made an election to apply the fair value option of accounting to the 2022 Unsecured Notes, in accordance with ASC 825-10.
On May 8, 2022, the borrowings were repaid in full. While the Company has not made an election to apply the fair value option of accounting to any of its other debt obligations, if the Company’s debt obligations were carried at fair value at December 31, 2022, the fair value of the Credit Facility, SPV Credit Facility, 2023 Unsecured Notes, 2024 Unsecured Notes, 2025 Unsecured Notes, 2026 Unsecured Notes, 2027 Unsecured Notes and 2027 Series F Unsecured Notes would be $ 393,000 , $ 155,200 , $ 75,000 , $ 118,750 , $ 79,688 , $ 68,250 , $ 42,875 and $ 118,125 , respectively.
25
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Quantitative Information about Level 3 Fair Value Measurements
The Company typically determines the fair value of its performing debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to current contractual interest rates, relative maturities and other key terms and risks associated with an investment. Among other factors, a significant determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio company.
Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 assets and liabilities primarily reflect current market yields, including indices, and readily available quotes from brokers, dealers, and pricing services as indicated by comparable assets and liabilities, as well as enterprise values, returns on equity and earnings before income taxes, depreciation and amortization (“EBITDA”) multiples of similar companies, and comparable market transactions for equity securities.
Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of September 30, 2023 is summarized in the table below:
Asset or
Liability
Fair Value at
September 30, 2023
Principal Valuation
Technique/Methodology
Unobservable Input
Range (Weighted
Average)
Senior Secured Loans
Asset
$ $
1,292,834 7,532
Income Approach Recovery Analysis
Market Yield Recoverable Amount
10.1 % - 20.5 % ( 12.8 %)
N/A
Equipment Financing
Asset
$ $
144,486 120,820
Income Approach Market Multiple (1)
Market Yield Comparable Multiple
8.5 % - 9.5 % ( 9.5 %)
1.1 x- 1.4 x ( 1.2 x)
Preferred Equity
Asset
$
3,801
Income Approach
Market Yield
5.0 % - 5.0 % ( 5.0 %)
Common Equity/Equity Interests/Warrants
Asset
$ $
165,771 406,220
Market Multiple (2)
Market Approach
Comparable Multiple Return on Equity
6.3 x - 11.5 x ( 8.8 x)
5.5 % - 30.7 % ( 10.7 %)
(1)
Includes $ 120,820 of investments valued using an implied multiple.
(2)
Includes $ 855 of investments valued using a Black-Scholes model and $ 164,916 of investments valued using an EBITDA multiple.
Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of December 31, 2022 is summarized in the table below:
Asset or
Liability
Fair Value at
December 31, 2022
Principal Valuation
Technique/Methodology
Unobservable Input
Range (Weighted
Average)
Senior Secured Loans
Asset
$ $
1,212,842 32,572
Income Approach Market Multiple (1)
Market Yield Comparable Multiple
9.4 % - 18.2 % ( 12.0 %)
0.1 x- 21.4 x ( 12.4 x)
Equipment Financing
Asset
$ $
145,132 120,820
I ncome Approach
Market Multiple (2)
Market Yield Comparable Multiple
8.5 % - 9.7 % ( 9.7 %)
1.1 x- 1.4 x ( 1.2 x)
Preferred Equity
Asset
$
3,801
I ncome Approach
Market Yield
5.0 % - 5.0 % ( 5.0 %)
Common Equity/Equity Interests/Warrants
Asset
$ $
149,120 412,480
Market Multiple (3)
Market Approach
Comparable Multiple Return on Equity
7.8 x – 9.8 x ( 8.8 x) 6.6 % - 35.2 % ( 9.2 %)
(1)
Investments are valued using a sum-of-the
parts analysis, using expected revenue multiples for certain segments of the businesses and expected EBITDA multiples for certain segments of the businesses.
(2)
Includes $ 120,820 of investments valued using an implied multiple.
(3)
Includes $ 676 of investments valued using a Black-Scholes model and $ 148,444 of investments valued using an EBITDA multiple.
Significan
t increases or decreases in any of the above unobservable inputs in isolation, including unobservable inputs used in deriving bid-ask
spreads, if applicable, could result in significantly lower or higher fair value measurements for such assets and liabilities. Generally, an increase in market yields or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments.
26
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Note 7. Debt
Our debt obligations consisted of the following as of September 30, 2023 and December 31, 2022:
September 30, 2023
December 31, 2022
Facility
Face Amount
Carrying Value
Face Amount
Carrying Value
Credit Facility
$
521,500
$
517,582
(1)
$
393,000
$
388,254
(1)
SPV Credit Facility
206,250
205,263
(2)
155,200
154,302
(2)
2023 Unsecured Notes
—
—
75,000
74,979
(3)
2024 Unsecured Notes
125,000
124,637
(4)
125,000
124,421
(4)
2025 Unsecured Notes
85,000
84,738
(5)
85,000
84,613
(5)
2026 Unsecured Notes
75,000
74,586
(6)
75,000
74,498
(6)
2027 Unsecured Notes
50,000
49,963
(7)
50,000
49,953
(7)
2027 Series F Unsecured Notes
135,000
134,985
(8)
135,000
134,978
(8)
$
1,197,750
$
1,191,754
$
1,093,200
$
1,085,998
(1)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $ 3,918 and $ 4,746 as of September 30, 2023 and December 31, 2022, respectively.
(2)
Carrying Value equals the Face Amount net of unamortized market discount of $ 987 and $ 898 as of September 30, 2023 and December 31, 2022, respectively.
(3)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $ 21 as of December 31, 2022.
(4)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $ 363 and $ 579 as of September 30, 2023 and December 31, 2022, respectively.
(5)
Carrying Value equals the Face Amount net of unamortized market discount of $ 262 and $ 387 as of September 30, 2023 and December 31, 2022, respectively.
(6)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $ 414 and $ 502 as of September 30, 2023 and December 31, 2022, respectively.
(7)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $ 37 and $ 47 as of September 30, 2023 and December 31, 2022, respectively.
(8)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $ 15 and $ 22 as of September 30, 2023 and December 31, 2022, respectively.
Unsecured Notes
On April 1, 2022, the Company entered into an assumption agreement (the “Note Assumption Agreement”), effective as of the closing of the Mergers. The Note Assumption Agreement relates to the Company’s assumption of $ 85,000 in aggregate principal amount of five-year , 3.90 % senior unsecured notes, due March 31, 2025 (the “2025 Unsecured Notes”) and other obligations of SUNS under the Note Purchase Agreement, dated as of March 31, 2020 (the “Note Purchase Agreement”), among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30 . Pursuant to the Note Assumption Agreement, the Company expressly assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding, and the due and punctual performance and observance of every covenant and every condition of the Note Purchase Agreement, to be performed or observed by SUNS.
On January 6, 2022, the Company closed a private offering of $ 135,000 of the 2027 Series F Unsecured Notes with a fixed interest rate of 3.33 % and a maturity date of January 6, 2027 . Interest on the 2027 Series F Unsecured Notes is due semi-annually on January 6 and July 6 . The 2027 Series F Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On September 14, 2021, the Company closed a private offering of $ 50,000 of the 2027 Unsecured Notes with a fixed interest rate of 2.95 % and a maturity date of March 14, 2027. Interest on the 2027 Unsecured Notes is due semi-annually on March 14 and September 14. The 2027 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On December 18, 2019, the Company closed a private offering of $ 125,000 of the 2024 Unsecured Notes with a fixed interest rate of 4.20 % and a maturity date of December 15, 2024 . Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15 . The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
27
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SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
On December 18, 2019, the Company closed a private offering of $ 75,000 of the 2026 Unsecured Notes with a fixed interest rate of 4.375 % and a maturity date of December 15, 2026 . Interest on the 2026 Unsecured Notes is due semi-annually on June 15 and December 15. The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On November 22, 2017, we issued $ 75,000 in aggregate principal amount of publicly registered 2023 Unsecured Notes for net proceeds of $ 73,846 . 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 were repaid in full on the maturity date, January 20, 2023 .
Revolving and Term Loan Facilities
On April 1, 2022, the Company entered into an assumption agreement (the “CF Assumption Agreement”), effective as of the closing of the Mergers. The CF Assumption Agreement relates to the Company’s assumption of the Revolving Credit Facility, originally entered into on August 26, 2011 (as amended from time to time, the “SPV Credit Facility”), by and among SUNS SPV LLC (the “SUNS SPV”), a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, subsequent to an August 29, 2023 amendment, the commitment under the SPV Credit Facility is $ 275,000 ; however, the commitment can also be expanded up to $ 600,000 . The stated interest rate on the SPV Credit Facility is SOFR plus 2.00 %- 2.50 %
with no SOFR floor requirement and the current final maturity date is June 1, 2026 . The SPV Credit Facility is secured by all of the assets held by SUNS SPV. Under the terms of the SPV Credit Facility and related transaction documents, the Company as successor to SUNS, and SUNS 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 SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature. At September 30, 2023, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $ 206,250 .
On December 28, 2021, the Company closed on Amendment No. 1 to its August 28, 2019 senior secured credit agreement (the “Credit Facility”). Following the amendment, a $ 25,000
November 2022 upsizing and a $ 40,000
August 2023 commitment expiration, the Credit Facility is composed of $ 585,000 of revolving credit and $ 100,000 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. The Credit Facility may be increased up to $ 800,000 with additional new lenders or an increase in commitments from current lenders. 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, 2023, outstanding USD equivalent borrowings under the Credit Facility totaled $ 521,500 , composed of $ 421,500 of revolving credit and $ 100,000 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.
The average annualized interest cost for all borrowings for the nine months ended September 30, 2023 and the year ended December 31, 2022 was 5.79 % and 4.09 %, respectively. These costs are exclusive of other credit facility expenses such as unused fees, agency fees and other prepaid expenses related to establishing and/or amending the Credit Facility, the SPV Credit Facility, 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 (collectively the “Debt Instruments”), if any. The maximum amounts borrowed on the Debt Instruments during the nine months ended September 30, 2023 and the year ended December 31, 2022 were $ 1,273,200 and $ 1,164,200 , respectively.
28
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SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Note 8. Financial Highlights
The following is a schedule of financial highlights for the nine months ended September 30, 2023 and 2022:
Nine months ended
September 30, 2023
Nine months ended
September 30, 2022
Per Share Data: (a)
Net asset value, beginning of year
$
18.33
$
19.93
Net investment income
1.25
1.06
Net realized and unrealized loss
( 0.29
)
( 1.08
)*
Net increase (decrease) in net assets resulting from operations
0.96
( 0.02
)
Issuance of common stock in connection with the Mergers
—
( 0.31
)
Distributions to stockholders:
From distributable earnings
( 1.23
)
( 1.06
)
From return of capital
—
( 0.17
)
Net asset value, end of period
$
18.06
$
18.37
Per share market value, end of period
$
15.39
$
12.32
Total Return (b)(c)
20.07
%
( 27.75
%)
Net assets, end of period
$
985,385
$
1,006,225
Shares outstanding, end of period
54,554,634
54,772,651
Ratios to average net assets (c):
Net investment income
6.90
%
5.51
%
Operating expenses
4.89
%**
3.90
%**
Interest and other credit facility expenses
5.37
%
3.22
%
Total expenses
10.26
%**
7.12
%**
Average debt outstanding
$
1,161,095
$
951,995
Portfolio turnover ratio
22.1
%
13.8
%
(a)
Calculated using the average shares outstanding method, except for the issuance of common stock in connection with the Mergers, which reflects the actual amount per share for the applicable period.
(b)
Total return is based on the change in market price per share during the period and takes into account distributions, if any, reinvested in accordance with the dividend reinvestment plan. The market price per share as of December 31, 2022 and December 31, 2021 was $ 13.91 and $ 18.43 , respectively. Total return does not include a sales load.
(c)
Not annualized for periods less than one year.
*
The amount shown may not correspond with the aggregate amount for the period as it includes the effect of the timing of the Mergers.
**
The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is shown net of the performance-based incentive fee waiver (see note 3). For the nine months ended September 30, 2023, the ratios of operating expenses to average net assets and total expenses to average net assets would be 4.93 % and 10.30 %, respectively, without the performance-based incentive fee waiver. For the nine months ended September 30, 2022, the ratios of operating expenses to average net assets and total expenses to average net assets would be 4.06 % and 7.28 %, respectively, without the performance-based incentive fee waiver.
Note 9. SLR Credit Solutions
On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (“Crystal Financial”) for $ 275,000 in cash. Crystal Financial owned approximately 98 % of the outstanding ownership interest in SLR Credit Solutions (“SLR Credit”), f/k/a Crystal Financial LLC. The remaining financial interest was held by various employees of SLR Credit, through their investment in Crystal Management LP. SLR Credit had a diversified portfolio of 23 loans having a total par value of approximately $ 400,000 at November 30, 2012 and a $ 275,000 committed revolving credit facility. On July 28, 2016, the Company purchased Crystal Management LP’s approximately 2 % equity interest in SLR Credit for approximately $ 5,737 . Upon the closing of this transaction, the Company holds 100 % of the equity interest in SLR Credit. On September 30, 2016, Crystal Capital Financial Holdings LLC was dissolved. As of September 30, 2023, total commitments to the revolving credit facility are $ 300,000 .
As of September 30, 2023 SLR Credit had 32 funded commitments to 28 different issuers with total funded loans of approximately $ 469,495 on total assets of $ 506,081 . As of December 31, 2022 SLR Credit had 29 funded commitments to 25 different issuers with total funded loans of approximately $ 439,484 on total assets of $ 460,683 . As of September 30, 2023 and December 31, 2022, the largest loan outstanding totaled $ 40,725 and $ 33,420 , respectively. For the same periods, the average exposure per issuer was $ 16,768 and $ 17,579 , respectively. SLR Credit’s credit facility, which is non-recourse
to the Company, had approximately $ 284,472 and $ 224,325 of borrowings outstanding at September 30, 2023 and December 31, 2022, respectively. For the three months ended September 30, 2023 and 2022, SLR Credit had net income of $ 4,315 and $ 3,897 , respectively, on gross income of $ 13,897 and $ 8,596 , respectively. For the nine months ended September 30, 2023 and 2022, SLR Credit had net income of $ 1,411 and $ 8,557 , respectively, on gross income of $ 42,350 and $ 22,171 , respectively. Due to timing and non-cash
items, there may be material differences between GAAP net income and cash available for distributions.
29
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Note 10. SLR Equipment Finance
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 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. based companies. We invested $ 209,866 in cash to effect the transaction, of which $ 145,000 was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC and $ 64,866 was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC. Concurrent with the transaction, SLR Equipment refinanced its existing senior secured credit facility into a $ 150,000 non-recourse
facility with an accordion feature to expand up to $ 250,000 . In September 2019, SLR Equipment amended the facility, increasing commitments to $ 213,957 with an accordion feature to expand up to $ 313,957 and extended the maturity date of the facility to July 31, 2023. In June 2023, the facility was amended to extend the maturity date to January 31, 2024 , with updated commitments totaling $ 152,147 , effective August 1, 2023 .
As of September 30, 2023, SLR Equipment had 141 funded equipment-backed leases and loans to 56 different customers with a total net investment in leases and loans of approximately $ 199,831 on total assets of $ 251,031 . 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 $ 190,830 on total assets of $ 241,813 . As of September 30, 2023 and December 31, 2022, the largest position outstanding totaled $ 18,319 and $ 19,259 , respectively. For the same periods, the average exposure per customer was $ 3,568 and $ 3,234 , respectively. SLR Equipment’s credit facility, which is non-recourse
to the Company, had approximately $ 130,557 and $ 114,977 of borrowings outstanding at September 30, 2023 and December 31, 2022, respectively. For the three months ended September 30, 2023 and September 30, 2022, SLR Equipment had net income (loss) of ($ 1,176 ) and $ 1,034 , respectively, on gross income of $ 4,783 and $ 6,486 , respectively. For the nine months ended September 30, 2023 and September 30, 2022, SLR Equipment had net loss of $ 2,193 and $ 125 , respectively, on gross income of $ 15,174 and $ 15,704 , respectively. Due to timing and non-cash
items, there may be material differences between GAAP net income and cash available for distributions.
Note 11. Kingsbridge Holdings, LLC
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
lessor of equipment primarily to U.S. investment grade companies. The Company invested $ 216,596 to effect the transaction, of which $ 136,596 was invested to acquire 87.5 % of KBHT’s equity and $ 80,000 in KBH’s debt. 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, 2023 and December 31, 2022, KBHT had total assets of $ 783,089 and $ 777,151 , respectively. For the same periods, debt recourse to KBHT totaled $ 239,505 and $ 222,094 , respectively, and non-recourse
debt totaled $ 353,415 and $ 353,128 , respectively. None of the debt is recourse to the Company. For the three months ended September 30, 2023 and 2022, KBHT had net income of $ 2,129 and $ 3,327 , respectively, on gross income of $ 85,544 and $ 71,332 , respectively. For the nine months ended September 30, 2023 and 2022, KBHT had net income of $ 7,151 and $ 10,393 , respectively, on gross income of $ 229,051 and $ 215,074 , 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 KBHT’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that KBHT will be able to maintain consistent dividend payments to us.
Note 12. SLR Healthcare ABL
SUNS acquired an equity interest in SLR Healthcare ABL, f/k/a Gemino Healthcare Finance, LLC (“SLR Healthcare”) on September 30, 2013. SLR Healthcare is a commercial finance company that originates, underwrites, and manages primarily secured, asset-based loans for small and mid-sized
companies operating in the healthcare industry. SUNS initial investment in SLR Healthcare ABL was $ 32,839 . The management team of SLR Healthcare co-invested
in the transaction and continues to lead SLR Healthcare. As of September 30, 2023, 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 Mergers on April 1, 2022. Effective with an amendment dated August 24, 2023, SLR Healthcare has a $ 150,000 non-recourse
credit facility, which is expandable to $ 200,000 under its accordion facility. The maturity date of this facility is March 31, 2026 .
30
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SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of September 30, 2023, the portfolio totaled approximately $ 237,000 of commitments with a total net investment in loans of $ 106,484 on total assets of $ 113,832 . As of December 31, 2022, the portfolio totaled approximately $ 242,106 of commitments with a total net investment in loans of $ 92,383 on total assets of $ 108,705 . At September 30, 2023, the portfolio consisted of 38 issuers with an average balance of approximately $ 2,802 versus 41 issuers with an average balance of approximately $ 2,253 at December 31, 2022. All of the commitments in SLR Healthcare’s portfolio are floating-rate, senior-secured, cash-pay
loans. SLR Healthcare’s credit facility, which is non-recourse
to us, had approximately $ 81,000 and $ 77,000 of borrowings outstanding at September 30, 2023 and December 31, 2022, respectively. For the three months ended September 30, 2023 and 2022, SLR Healthcare had net income of $ 1,532 and $ 822 , respectively, on gross income of $ 4,833 and $ 3,020 , respectively. For the nine months ended September 30, 2023 and 2022, SLR Healthcare had net income of $ 3,925 and $ 2,543 , respectively, on gross income of $ 13,109 and $ 7,898 , respectively. Due to timing and non-cash
items, there may be material differences between GAAP net income and cash available for distributions.
Note 13. SLR Business Credit
SUNS acquired 100 % of the equity interests of North Mill Capital LLC (“NMC”) on October 20, 2017. NMC is a leading asset-backed lending commercial finance company that provides senior secured asset-backed financings to U.S. based small-to-medium-sized
businesses primarily in the manufacturing, services and distribution industries. SUNS invested approximately $ 51,000 to effect the transaction. Subsequently, SUNS contributed 1 % of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, SUNS and ESP SSC Corporation contributed their equity interests to NorthMill LLC (“North Mill”). On May 1, 2018, North Mill merged with and into NMC, with NMC being the surviving company. SUNS and ESP SSC Corporation then owned 99 % and 1 % of the equity interests of NMC, respectively. The management team of NMC continues to lead NMC. On June 28, 2019, North Mill Holdco LLC (“NM Holdco”), a newly formed entity and ESP SSC Corporation acquired 100 % of Summit Financial Resources, a Salt Lake City-based provider of asset-backed financing to small and medium-sized
businesses. As part of this transaction, SUNS 99 % interest in the equity of NMC was contributed to NM Holdco. This approximately $ 15,500 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. On June 3, 2021, NMC acquired 100 % of Fast Pay Partners LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of $ 66,671 was financed with equity from SUNS of $ 19,000 and borrowings on NMC’s credit facility of $ 47,671 .
SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of September 30, 2023, the portfolio totaled approximately $ 612,399 of commitments, of which $ 257,818 were funded, on total assets of $ 302,912 . As of December 31, 2022, the portfolio totaled approximately $ 603,432 of commitments, of which $ 286,006 were funded, on total assets of $ 332,247 . At September 30, 2023, the portfolio consisted of 98 issuers with an average balance of approximately $ 2,631 versus 108 issuers with an average balance of approximately $ 2,648 at December 31, 2022. NMC has a senior credit facility with a bank lending group for $ 285,307 which expires on November 13, 2025 . Borrowings are secured by substantially all of NMC’s assets. NMC’s credit facility, which is non-recourse
to us, had approximately $ 199,449 and $ 214,425 of borrowings outstanding at September 30, 2023 and December 31, 2022, respectively. For the three months ended September 30, 2023 and 2022, SLR Business Credit had net income of $ 1,779 and $ 1,977 respectively, on gross income of $ 9,709 and $ 7,607 , respectively. For the nine months ended September 30, 2023 and 2022, SLR Business Credit had net income of $ 5,211 and $ 5,703 respectively, on gross income of $ 27,868 and $ 20,378 , 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 Business Credit’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Business Credit will be able to maintain consistent dividend payments to us.
31
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Note 14. Commitments and Contingencies
Off-Balance
Sheet Arrangements
The Company had unfunded debt and equity commitments to various revolving and delayed-draw term loans as well as to SLR Credit and SLR Healthcare. The total amount of these unfunded commitments as of September 30, 2023 and December 31, 2022 is $ 367,295 and $ 364,163 , respectively, comprised of the following:
September 30,
2023
December 31,
2022
SLR Credit Solutions*
$
44,263
$
44,263
Outset Medical, Inc.
35,084
35,084
Apeel Technology, Inc.
32,786
32,786
Southern Orthodontic Partners Management, LLC
21,931
1,918
SLR Senior Lending Program LLC*
21,250
40,500
Orthopedic Care Partners Management, LLC
20,770
1,620
Human Interest, Inc.
20,104
20,104
CVAUSA Management, LLC
18,239
—
BDG Media, Inc.
12,646
3,546
Neuronetics, Inc.
11,579
—
ONS MSO, LLC
10,961
—
iCIMS, Inc.
10,506
11,435
Cerapedics, Inc.
9,217
6,735
Alkeme Intermediate Holdings, LLC
8,531
—
Arcutis Biotherapeutics, Inc.
8,356
8,356
Ardelyx, Inc.
7,752
7,752
West-NR
Parent, Inc.
6,830
—
United Digestive MSO Parent, LLC
5,259
—
Peter C. Foy & Associates Insurance Services, LLC
5,062
1,094
Luxury Asset Capital, LLC
4,500
7,500
UVP Management, LLC
4,386
—
Kaseya, Inc.
3,769
3,936
Urology Management Holdings, Inc.
3,596
—
The Townsend Company, LLC
3,556
—
SLR Equipment Finance
3,500
1,000
Vertos Medical, Inc.
3,325
—
Foundation Consumer Brands, LLC
3,009
3,009
Kid Distro Holdings, LLC
2,650
2,650
Maurices, Incorporated
2,589
4,314
Erie Construction Mid-west,
LLC
2,403
1,248
Ultimate Baked Goods Midco LLC
2,371
1,636
Basic Fun, Inc.
2,150
2,675
Bayside Opco, LLC
1,721
—
SunMed Group Holdings, LLC
1,621
843
SCP Eye Care, LLC
1,459
2,771
SLR Healthcare ABL*
1,400
1,400
RxSense Holdings LLC
1,250
1,250
Enverus Holdings, Inc.
1,239
1,004
Tilley Distribution, Inc.
1,158
525
GSM Acquisition Corp.
862
784
Composite Technology Acquisition Corp
796
1,537
High Street Buyer, Inc.
631
327
CC SAG Holdings Corp. (Spectrum Automotive)
548
20,670
ENS Holdings III Corp, LLC
461
144
Pinnacle Treatment Centers, Inc.
386
1,745
Vessco Midco Holdings, LLC
327
3,892
TAUC Management, LLC
294
294
All States Ag Parts, LLC
212
135
Glooko, Inc.
—
17,868
World Insurance Associates, LLC
—
17,117
Spectrum Pharmaceuticals, Inc.
—
8,771
Atria Wealth Solutions, Inc.
—
8,215
Accession Risk Management Group, Inc.
—
7,498
Copper River Seafoods, Inc.
—
3,595
Meditrina, Inc.
—
3,367
One Touch Direct, LLC
—
3,069
DeepIntent, Inc.
—
3,049
Plastics Management, LLC
—
2,424
Pediatric Home Respiratory Services, LLC
—
1,805
Ivy Fertility Services, LLC
—
1,571
NAC Holdings Corporation
—
1,479
SPAR Marketing Force, Inc.
—
1,338
Montefiore Nyack Hospital
—
1,034
American Teleconferencing Services, Ltd
—
1,090
BayMark Health Services, Inc.
—
391
Total Commitments
$
367,295
$
364,163
*
The Company controls the funding of these commitments and may cancel them at its discretion.
32
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
The credit agreements of the above loan commitments contain customary lending provisions and/or are subject to the respective portfolio company’s achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. As of September 30, 2023 and December 31, 2022, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment.
Note 15. Capital Share Transactions
As of September 30, 2023 and September 30, 2022, 200,000,000 shares of $ 0.01 par value capital stock were authorized.
Transactions in capital stock were as follows:
Shares
Amount
Three months ended
September 30, 2023
Three months ended
September 30, 2022
Three months ended
September 30, 2023
Three months ended
September 30, 2022
Shares issued in connection with the Mergers
—
—
$
—
$
—
Net increase
—
—
$
—
$
—
Shares
Amount
Nine months ended
September 30, 2023
Nine months ended
September 30, 2022
Nine months ended
September 30, 2023
Nine months ended
September 30, 2022
Shares issued in connection with the Mergers
—
12,511,825
$
—
$
226,839
Shares repurchased
( 746
)
—
$
( 10
)
$
—
Net increase
( 746
)
12,511,825
$
( 10
)
$
226,839
Note 16. Stock Repurchase Program
On May 9, 2023, our Board authorized an extension of a program for the purpose of repurchasing up to $ 50,000 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 $50,000 of our outstanding shares of common stock have been repurchased. 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 beyond what is reported herein. For the nine months ended September 30, 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 nine months ended September 30, 2023 was $ 10 . 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 $ 3,038 .
33
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
Note 17. 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 $ 50,000 , resulting in a total equity commitment of $ 100,000 . 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 $ 100,000 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 September 30, 2023, there were $ 79,200 of borrowings outstanding on the SSLP Facility.
As of September 30, 2023, the Company and the Investor had contributed combined equity capital in the amount of $ 57,500 . As of September 30, 2023, the Company and the Investors’ remaining commitments to SSLP totaled $ 21,250 and $ 21,250 , 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 the approval of both the Company and the Investor.
As of September 30, 2023 and December 31, 2022, SSLP had total assets of $ 137,447 and $ 19,105 , respectively. For the same periods, SSLP’s portfolio consisted of floating rate senior secured loans to 27 and 7 different borrowers, respectively. For the three months ended September 30, 2023, SSLP invested $ 57,456 in 16 portfolio companies. Investments prepaid totaled $ 1,658 for the three months ended September 30, 2023. For the period December 1, 2022 (commencement of operations) through December 31, 2022, SSLP invested $ 18,100 in 7 portfolio companies. Investments prepaid totaled $ 68 for the period December 1, 2022 (commencement of operations) through December 31, 2022.
34
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
SSLP Portfolio as of September 30, 2023
Description
Industry
Spread
Above
Index (1)
Floor
Interest
Rate (2)
Maturity
Date
Par
Amount
Cost
Fair
Value (3)
Accession Risk Management Group, Inc. (4)
Insurance
S+550
0.75
%
11.02
%
11/1/26
$
9,078
$
9,078
$
9,078
Aegis Toxicology Sciences Corporation (4)
Health Care Providers & Services
S+550
1.00
%
11.13
%
5/9/25
2,960
2,960
2,960
Alkeme Intermediary Holdings, LLC (4)
Insurance
S+650
1.00
%
11.92
%
10/28/26
3,021
2,931
2,930
All States Ag Parts, LLC (4)
Trading Companies & Distributors
S+600
1.00
%
11.60
%
9/1/26
2,138
2,138
2,138
Atria Wealth Solutions, Inc. (4)
Diversified Financial Services
S+650
1.00
%
12.15
%
2/29/24
2,475
2,475
2,475
BayMark Health Services, Inc. (4)
Health Care Providers & Services
S+500
1.00
%
10.65
%
6/11/27
4,043
4,043
4,043
CC SAG Holdings Corp. (4)
Diversified Consumer Services
S+575
0.75
%
11.18
%
6/29/28
2,992
2,992
2,992
ENS Holdings III Corp. & ES Opco USA LLC (4)
Trading Companies & Distributors
S+475
1.00
%
10.24
%
12/31/25
1,089
1,089
1,089
Fertility (ITC) Investment Holdco, LLC (4)
Health Care Providers & Services
S+650
1.00
%
11.63
%
1/3/29
5,970
5,799
5,970
Foundation Consumer Brands, LLC (4)
Personal Products
S+625
1.00
%
11.77
%
2/12/27
8,911
8,911
8,911
High Street Buyer, Inc. (4)
Insurance
S+600
0.75
%
11.54
%
4/16/28
4,433
4,433
4,433
iCIMS, Inc. (4)
Software
S+725
0.75
%
12.14
%
8/18/28
3,059
3,028
3,059
Kaseya, Inc. (4)
Software
S+625
0.75
%
11.58
%
6/23/29
9,000
9,000
9,000
Kid Distro Holdings, LLC (4)
Software
S+550
1.00
%
11.04
%
10/1/27
8,962
8,962
8,962
ONS MSO, LLC (4)
Health Care Providers & Services
S+625
1.00
%
11.62
%
7/8/25
5,936
5,779
5,936
PhyNet Dermatology LLC (4)
Health Care Providers & Services
S+625
1.00
%
11.45
%
8/16/24
5,964
5,964
5,964
Pinnacle Treatment Centers, Inc. (4)
Health Care Providers & Services
S+675
1.00
%
12.10
%
1/2/26
4,725
4,725
4,725
Plastics Management, LLC (4)
Health Care Providers & Services
S+500
1.00
%
10.44
%
8/18/27
5,651
5,476
5,651
RQM+ Corp. (4)
Life Sciences Tools & Services
S+575
1.00
%
11.40
%
8/12/26
5,970
5,970
5,970
RxSense Holdings LLC (4)
Diversified Consumer Services
S+500
1.00
%
10.47
%
3/13/26
2,977
2,977
2,977
SunMed Group Holdings, LLC (4)
Health Care Equipment & Supplies
S+550
0.75
%
10.99
%
6/16/28
8,971
8,971
8,971
The Townsend Company, LLC (4)
Commercial Services & Supplies
S+625
1.00
%
11.57
%
8/15/29
3,570
3,482
3,481
Tilley Distribution, Inc. (4)
Trading Companies & Distributors
S+600
1.00
%
11.54
%
12/31/26
5,963
5,963
5,963
Ultimate Baked Goods Midco LLC (4)
Packaged Foods & Meats
S+625
1.00
%
11.67
%
8/13/27
8,977
8,977
8,977
Urology Management Holdings, Inc. (4)
Health Care Providers & Services
S+625
1.00
%
11.79
%
6/15/26
2,465
2,403
2,440
Vessco Midco Holdings, LLC (4)
Water Utilities
S+450
1.00
%
9.92
%
11/2/26
1,845
1,845
1,845
West-NR
Parent, Inc. (4)
Insurance
S+625
1.00
%
11.72
%
12/27/27
2,674
2,622
2,621
$
132,993
$
133,561
(1)
Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the SOFR. These instruments are typically subject to a SOFR floor.
(2)
Floating rate debt investments typically bear interest at a rate determined by reference to the 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 September 30, 2023.
(3)
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.
(4)
The Company also holds this security on its Consolidated Statements of Assets and Liabilities.
35
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
SSLP Portfolio as of December 31, 2022
Description
Industry
Spread
Above
Index (1)
Floor
Interest
Rate (2)
Maturity
Date
Par
Amount
Cost
Fair
Value (3)
Atria Wealth Solutions, Inc. (4)
Diversified Financial Services
S+600
1.00
%
10.84
%
2/29/24
$
2,494
$
2,494
$
2,494
BayMark Health Services, Inc. (4)
Health Care Providers & Services
L+500
1.00
%
9.73
%
6/11/27
2,992
2,992
2,992
ENS Holdings III Corp. & ES Opco USA LLC (4)
Trading Companies & Distributors
L+475
1.00
%
9.43
%
12/31/25
1,097
1,097
1,097
Foundation Consumer Brands, LLC (4)
Personal Products
L+550
1.00
%
10.15
%
2/12/27
2,963
2,963
2,963
High Street Buyer, Inc. (4)
Insurance
L+600
0.75
%
10.73
%
4/16/28
2,494
2,494
2,494
Ivy Fertility Services, LLC (4)
Health Care Providers & Services
L+625
1.00
%
10.39
%
2/25/26
3,000
3,000
3,030
Kid Distro Holdings, LLC (4)
Software
L+575
1.00
%
10.48
%
10/1/27
2,992
2,992
2,992
$
18,032
$
18,062
(1)
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.
(2)
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 December 31, 2022.
(3)
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.
(4)
The Company also holds this security on its Consolidated Statements of Assets and Liabilities.
Below is certain summarized financial information for SSLP as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and for the period December 1, 2022 (commencement of operations) through December 31, 2022:
September 30,
2023
December 31,
2022
Selected Balance Sheet Information for SSLP:
Investments at fair value (cost $ 132,993 and $ 18,032 , respectively)
$
133,561
$
18,062
Cash and other assets
3,886
1,043
Total assets
$
137,447
$
19,105
Debt outstanding
$
77,826
$
—
Distributions payable
500
—
Interest payable and other credit facility related expenses
358
165
Accrued expenses and other payables
209
89
Total liabilities
$
78,893
$
254
Members’ equity
$
58,554
$
18,851
Total liabilities and members’ equity
$
137,447
$
19,105
36
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
September 30, 2023
(in thousands, except share amounts)
For the three
months ended
September 30,
2023
For the nine
months ended
September 30,
2023
For the period
December 1, 2022
(commencement
of operations) to
December 31,
2022
Selected Income Statement Information for SSLP:
Interest income
$
2,757
$
5,371
$
152
Service fees*
66
123
$
4
Interest and other credit facility expenses
1,773
4,025
166
Organizational costs
—
—
73
Other general and administrative expenses
32
89
88
Total expenses
1,871
4,237
331
Net investment income (loss)
$
886
$
1,134
$
( 179
)
Realized gain on investments
—
30
—
Net change in unrealized gain on investments
177
538
30
Net realized and unrealized gain on investments
$
177
$
568
30
Net income (loss)
$
1,063
$
1,702
$
( 149
)
*
Service fees are included within the Company’s Consolidated Statements of Operations as other income.
Note 18. Subsequent Events
The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued.
On November 7, 2023, the Board declared a quarterly distribution of $ 0.41 per share payable on December 28, 2023 to holders of record as of December 14, 2023.
37
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
SLR Investment Corp.:
Results of Review of Interim Financial Information
We have reviewed the consolidated statement of assets and liabilities of SLR Investment Corp. (and subsidiaries) (the Company), including the consolidated schedule of investments, as of September 30, 2023, the related consolidated statements of operations and changes in net assets, for the three-month and nine-month periods ended September 30, 2023 and 2022, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2023 and 2022, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities, including the consolidated schedule of investments, of the Company as of December 31, 2022, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated February 28, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, as of December 31, 2022, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities, including the consolidated schedule of investments, from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ KPMG LLP
New York, New York
November 7, 2023
38
Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.