PENNANTPARK INVESTMENT CORP
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
PNNT$3.34+2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0000950170-24-055646
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000950170-24-092751
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 166 previous paragraphs and 178 current paragraphs.
129 unchanged; 37 reworded; 12 added; 0 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
At-the-Market Offering
Current report
On June 4, 2024, we entered into equity distribution agreements with Truist Securities, Inc. and Keefe, Bruyette & Woods, Inc. (together, the "Equity Distribution Agreements"), as sales agents (each a "Sales Agent" and together, the "Sales Agents") in connection with the sale of shares of our common stock, with an aggregate offering price of up to $100 million under an at-the-market offering ("ATM Program"). We may offer and sell shares of our common stock from time to time through a sales agent in amounts and at times to be determined by us. Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions and the trading price of our common stock. The Investment Adviser may, from time to time, in its sole discretion, pay some or all of the commissions payable under the equity distribution agreements or make additional supplemental payments to ensure that the sales price per share of our common stock in connection with all of the offerings made hereunder will not be less than our current NAV per share. Any such payments made by the Investment Adviser will not be subject to reimbursement by us.
Current report
During the three and nine months ended June 30, 2024, we issued 71,594 and 71,594 shares of common stock through the ATM Program at an average price of $7.72 and $7.72 per share, raising $0.6 million and $0.6 million of net proceeds after commissions to the sales agents and inclusive of proceeds from the Investment Adviser to ensure that all shares were sold at or above NAV, respectively. In connection with the share issuance, we expensed $0.3 million of deferred offering costs incurred related to establishing the ATM Program to additional paid in capital.
Current report
On June 4, 2024, we entered into equity distribution agreements with Truist Securities, Inc. and Keefe, Bruyette & Woods, Inc. (together, the "Equity Distribution Agreements"), as sales agents (each a "Sales Agent" and together, the "Sales Agents") in connection with the sale of shares of our common stock, with an aggregate offering price of up to $100 million under an at-the-market offering ("ATM Program"). We may offer and sell shares of our common stock from time to time through a sales agent in amounts and at times to be determined by us. Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions and the trading price of our common stock. The Investment Adviser may, from time to time, in its sole discretion, pay some or all of the commissions payable under the equity distribution agreements or make additional supplemental payments to ensure that the sales price per share of our common stock in connection with all of the offerings made hereunder will not be less than our current NAV per share. Any such payments made by the Investment Adviser will not be subject to reimbursement by us.
Current report
During the three and nine months ended June 30, 2024, we issued 71,594 and 71,594 shares of common stock through the ATM Program at an average price of $7.72 and $7.72 per share, raising $0.6 million and $0.6 million of net proceeds after commissions to the sales agents and inclusive of proceeds from the Investment Adviser to ensure that all shares were sold at or above NAV, respectively. In connection with the share issuance, we expensed $0.3 million of deferred offering costs incurred related to establishing the ATM Program to additional paid in capital.
Current report
Represents floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the applicable Secured Overnight Financing Rate (“SOFR”) or Prime rate (“P”). The spread may change based on the type of rate used. The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. SOFR loans are typically indexed to a 30-day, 60-day, 90-day or 180-day SOFR rate (1M S, 2M S, 3M S, or 6M S, respectively), at the borrower’s option. All securities are subject to a SOFR or Prime rate floor where a spread is provided, unless noted. The spread provided includes PIK interest and other fee rates, if any.
Current report
Non-income producing security
Current report
Represents floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the applicable Secured Overnight Financing Rate, or “SOFR” or Prime rate or
Current report
“P”. The spread may change based on the type of rate used. The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. SOFR loans are typically
Current report
indexed to a 30-day, 60-day, 90-day or 180-day SOFR rate (1M S, 2M S, 3M S, or 6M S, respectively), at the borrower’s option. All securities are subject to a SOFR or Prime rate floor where a
Current report
spread is provided, unless noted. The spread provided includes PIK interest and other fee rates, if any.
Current report
In December 2023, the FASB issued ASU 2023 - 09 "Improvements to Income Tax Disclosures" ("ASU 2023 - 09"). ASU 2023 - 09 intends to improve the transparency of income tax disclosures. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. We are currently assessing the impact of this guidance, however, we do not expect a material impact to our financial statements.
Reworded paragraphs (37)
Previous wording
As noted in the Annual Report on Form 10-K for the year ended September 30, 2023, during the preparation of the financial statements as of and for the year ended September 30, 2023, Management identified an error in the classification and presentation of cash pertaining to the Company’s affiliates – PSLF and PTSF II in the September 30, 2022 financial statements. The Company recorded cash activity and due to affiliates pertaining to their investments as a reduction of the cash account instead of presenting the related cash and cash equivalents as an asset and a due to affiliates as a liability. This misclassification also existed at March 31, 2023, and the impact of the error correction is reflected on the consolidated statement of cash flows for the six months ended March 31, 2023 as an increase to cash and cash equivalents, beginning of period totaling $2.1 million, an increase to cash and cash equivalents, end of period totaling $3.3 million, and increase in due to affiliates of $1.2 million.
Current wording
As noted in the Annual Report on Form 10-K for the year ended September 30, 2023, during the preparation of the financial statements as of and for the year ended September 30, 2023, Management identified an error in the classification and presentation of cash pertaining to the Company’s affiliates – PSLF and PTSF II in the September 30, 2022 financial statements. The Company recorded cash activity and due to affiliates pertaining to their investments as a reduction of the cash account instead of presenting the related cash and cash equivalents as an asset and a due to affiliates as a liability. This misclassification also existed at June 30, 2023, and the impact of the error correction is reflected on the consolidated statement of cash flows for the nine months ended June 30, 2023 as an increase to cash and cash equivalents, beginning of period totaling $2.1 million, an increase to cash and cash equivalents, end of period totaling $3.9 million, and increase in due to affiliates of $1.8 million.
Previous wording
There was no impact from the error correction to total net assets and net asset value per share as reported on the consolidated statement of assets and liabilities as of March 31, 2023. In addition, there was no impact from the error correction on net investment income or net increase (decrease) in net assets resulting from operations in total or on a per common share basis as reported on the consolidated statements of operations for the six months ended March 31, 2023. The corrections related to the prior year comparative cash flow statement amounts were reported in the quarter ended March 31, 2024.
Current wording
There was no impact from the error correction to total net assets and net asset value per share as reported on the consolidated statement of assets and liabilities as of June 30, 2023. In addition, there was no impact from the error correction on net investment income or net increase (decrease) in net assets resulting from operations in total or on a per common share basis as reported on the consolidated statements of operations for the nine months ended June 30, 2023. The corrections related to the prior year comparative cash flow statement amounts were reported in the quarter ended June 30, 2024.
Previous wording
As of March 31, 2024, our portfolio totaled $1,238.2 million and consisted of $678.6 million or 55% of first lien secured debt, $59.7 million or 5% of U.S. Government Securities, $63.7 million or 5% of second lien secured debt, $165.1 million or13% of subordinated debt (including $115.9 million or 9% in PSLF) and $271.1 million or 22% of preferred and common equity (including $72.6 million or 6% in PSLF). Our interest bearing debt portfolio consisted of 97% variable-rate investments and 3% fixed-rate investments. As of March 31, 2024, we had two portfolio companies on non-accrual, representing 3.7% and 3.0% percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $12.0 million as of March 31, 2024. Our overall portfolio consisted of 138 companies with an average investment size of $8.5 million, had a weighted average yield on interest bearing debt investments of 12.5%.
Current wording
As of June 30, 2024, our portfolio totaled $1,259.9 million and consisted of $675.9 million or 54% of first lien secured debt, $59.8 million or 5% of U.S. Government Securities, $65.6 million or 5% of second lien secured debt, $163.7 million or13% of subordinated debt (including $115.9 million or 9% in PSLF) and $294.9 million or 23% of preferred and common equity (including $69.7 million or 6% in PSLF). Our interest bearing debt portfolio consisted of 96% variable-rate investments and 4% fixed-rate investments. As of June 30, 2024, we had three portfolio companies on non-accrual, representing 4.2% and 2.5% percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $6.9 million as of June 30, 2024. Our overall portfolio consisted of 144 companies with an average investment size of $8.3 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.7%.
Previous wording
As of September 30, 2023, our portfolio totaled $1,101.7 million and consisted of $527.7 million or 48% of first lien secured debt, $99.8 million or 9% of U.S. Government Securities, $80.4 million or 7% of second lien secured debt, $156.2 million or 14% of subordinated debt (including $102.3 million or 9% in PSLF) and $237.6 million or 22% of preferred and common equity (including $62.1 million or 6% in PSLF). Our interest bearing debt portfolio consisted of 95% variable-rate investments and 5% fixed-rate investments. As of September 30, 2023, we had one portfolio company on non-accrual, representing 1.2% and zero percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $(16.3) million as of September 30, 2023. Our overall portfolio consisted of 129 companies with an average investment size of $7.8 million, had a weighted average yield on interest bearing debt investments of 13.0%.
Current wording
As of September 30, 2023, our portfolio totaled $1,101.7 million and consisted of $527.7 million or 48% of first lien secured debt, $99.8 million or 9% of U.S. Government Securities, $80.4 million or 7% of second lien secured debt, $156.2 million or 14% of subordinated debt (including $102.3 million or 9% in PSLF) and $237.6 million or 22% of preferred and common equity (including $62.1 million or 6% in PSLF). Our interest bearing debt portfolio consisted of 95% variable-rate investments and 5% fixed-rate investments. As of September 30, 2023, we had one portfolio company on non-accrual, representing 1.2% and zero percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $(16.3) million as of September 30, 2023. Our overall portfolio consisted of 129 companies with an average investment size of $7.8 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 13.0%.
Previous wording
For the three months ended March 31, 2024, we invested $188.5 million in six new and 43 existing portfolio companies with a weighted average yield on debt investments of 11.7% (excluding U.S. Government Securities). For the three months ended March 31, 2024, sales and repayments of investments totaled $176.2 million (excluding U.S. Government Securities). For the six months ended March 31, 2024, we invested $419.6 million in 18 new and 60 existing portfolio companies with a weighted average yield on debt investments of 11.8% (excluding U.S. Government Securities). For the six months ended March 31, 2024, sales and repayment of investments totaled $247.2 million (excluding U.S. Government Securities).
Current wording
For the three months ended June 30, 2024, we invested $163.1 million in 11 new and 42 existing portfolio companies with a weighted average yield on debt investments of 12.0% (excluding U.S. Government Securities). For the three months ended June 30, 2024, sales and repayments of investments totaled $132.9 million (excluding U.S. Government Securities). For the nine months ended June 30, 2024, we invested $752.1 million in 29 new and 65 existing portfolio companies with a weighted average yield on debt investments of 11.9% (excluding U.S. Government Securities). For the nine months ended June 30, 2024, sales and repayment of investments totaled $380.1 million (excluding U.S. Government Securities).
Previous wording
For the three months ended March 31, 2023, we invested $58.3 million in six new and 34 existing portfolio companies with a weighted average yield on debt investments of 11.8%. For the three months ended March 31, 2023, sales and repayments of investments totaled $114.2 million. For the six months ended March 31, 2023, we invested $144.8 million in 12 new and 64 existing portfolio companies with a weighted average yield on debt investments of 11.5%. For the six month ended March 31, 2023, sales and repayment of investments totaled $136.8 million.
Current wording
For the three months ended June 30, 2023, we invested $69.9 million in three new and 43 existing portfolio companies with a weighted average yield on debt investments of 12.6%. For the three months ended June 30, 2023, sales and repayments of investments totaled $135.7 million. For the nine months ended June 30, 2023, we invested $214.4 million in 15 new and 60 existing portfolio companies with a weighted average yield on debt investments of 11.9%. For the nine month ended June 30, 2023, sales and repayment of investments totaled $280.5 million.
Previous wording
As of March 31, 2024, PSLF’s portfolio totaled $923.9 million, consisted of 99 companies with an average investment size of $9.3 million and had a weighted average yield interest bearing debt investments of 12.0%.
Current wording
As of June 30, 2024, PSLF’s portfolio totaled $926.1 million, consisted of 101 companies with an average investment size of $9.2 million and had a weighted average yield interest bearing debt investments of 11.8%.
Previous wording
For the three months ended March 31, 2024, PSLF invested $113.2 million (including $103.1 million were purchased from the Company) in 11 new and five existing portfolio companies at weighted average yield interest bearing debt investments of 11.8%. PSLF’s sales and repayments of investments for the same period totaled $49.7 million. For the six months ended March 31, 2024, PSLF invested $194.2 (of which $154.0 million was purchased from the Company) in 16 new and 11 existing portfolio companies with a weighted average yield on debt investments of 12.2%. PSLF Sales and repayments of investments for the same period totaled $78.9 million.
Current wording
For the three months ended June 30, 2024, PSLF invested $56.0 million (including $37.8 million were purchased from the Company) in five new and seven existing portfolio companies at weighted average yield interest bearing debt investments of 11.5%. PSLF’s sales and repayments of investments for the same period totaled $54.9 million. For the nine months ended June 30, 2024, PSLF invested $250.2 million (of which $191.8 million was purchased from the Company) in 21 new and 16 existing portfolio companies with a weighted average yield on debt investments of 12.0%. PSLF Sales and repayments of investments for the same period totaled $133.8 million.
Previous wording
For the three months ended March 31, 2023, PSLF invested $38.5 million (of which $18.4 were purchased from the Company) in one new and one existing portfolio companies at weighted average yield on interest bearing debt investments of 11.6%. PSLF’s sales and repayments of investments for the same period totaled $24.9 million. For the six months ended March 31, 2023, PSLF invested $55.3 million (of which $18.4 million was purchased from the Company) in eight new and five existing portfolio companies with a weighted average yield on debt investments of 11.5%. PSLF's sales and repayments of investments for the the same period totaled $33.9 million.
Current wording
For the three months ended June 30, 2023, PSLF invested $64.0 million (of which $61.8 were purchased from the Company) in eight new and one existing portfolio companies at weighted average yield on interest bearing debt investments of 12.0%. PSLF’s sales and repayments of investments for the same period totaled $20.0 million. For the nine months ended June 30, 2023, PSLF invested $119.3 million (of which $80.2 million was purchased from the Company) in 16 new and six existing portfolio companies with a weighted average yield on debt investments of 11.8%. PSLF's sales and repayments of investments for the same period totaled $54.0 million.
Previous wording
describe our critical accounting policies in the notes to our Consolidated Financial Statements. We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K. There have been no significant changes in our critical accounting estimates during the six months from those disclosed in our 2023 Annual Report on Form 10-K.
Current wording
describe our critical accounting policies in the notes to our Consolidated Financial Statements. We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K. There have been no significant changes in our critical accounting estimates during the nine months from those disclosed in our 2023 Annual Report on Form 10-K.
Previous wording
Generally, the carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles under ASC Subtopic 825-10, Financial Instruments, or ASC 825-10, which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to our Truist Credit Facility. We elected to use the fair value option for the Truist Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we did not incur any expenses relating to amendment costs on the Truist Credit Facility for both the three and six months ended March 31, 2024 and 2023. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a company’s choice to use fair value. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statements of Assets and Liabilities and changes in fair value of the Truist Credit Facility is reported in our Consolidated Statements of Operations. We elect not to apply ASC 825-10 to any other financial assets or liabilities, including the 2026 Notes, and 2026 Notes-2.
Current wording
Generally, the carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles under ASC Subtopic 825-10, Financial Instruments ("ASC 825-10"), which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to our Truist Credit Facility. We elected to use the fair value option for the Truist Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we did not incur any expenses relating to amendment costs on the Truist Credit Facility for both the three and nine months ended June 30, 2024 and 2023. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a company’s choice to use fair value. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statements of Assets and Liabilities and changes in fair value of the Truist Credit Facility is reported in our Consolidated Statements of Operations. We elect not to apply ASC 825-10 to any other financial assets or liabilities, including the 2026 Notes, and 2026 Notes-2.
Previous wording
For the three and six months ended March 31, 2024, the Truist Credit Facility had a net change in unrealized (appreciation) depreciation of $0.5 million and $(1.6) million, respectively. For the three and six months ended March 31, 2023, the Truist Credit Facility had a net change in unrealized appreciation of $1.5 million and $5.9 million, respectively. As of March 31, 2024 and September 30, 2023, the net unrealized depreciation on the Truist Credit Facility totaled $3.9 million and $5.5 million, respectively. We use a nationally recognized independent valuation service to measure the fair value of our Truist Credit Facility in a manner consistent with the valuation process that the board of directors uses to value our investments.
Current wording
For the three and nine months ended June 30, 2024, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of less than $(0.1) million and $(1.6) million, respectively. For the three and nine months ended June 30, 2023, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $(8.4) million and $(2.5) million, respectively. As of June 30, 2024 and September 30, 2023, the net unrealized depreciation on the Truist Credit Facility totaled $3.9 million and $5.5 million, respectively. We use a nationally recognized independent valuation service to measure the fair value of our Truist Credit Facility in a manner consistent with the valuation process that the board of directors uses to value our investments.
Previous wording
For the three and six months ended March 31, 2024, we recorded a provision for taxes on net investment income of $0.8 million and $1.2 million respectively, pertaining to federal excise tax. For the three and six months ended March 31, 2023, we recorded a provision for taxes on net investment income of $0.5 million and $2.5 million respectively, all of which pertains to U.S. federal excise tax.
Current wording
For the three and nine months ended June 30, 2024, we recorded a provision for taxes on net investment income of $0.7 million and $1.9 million respectively, pertaining to federal excise tax. For the three and nine months ended June 30, 2023, we recorded a provision for taxes on net investment income of $1.2 million and $3.6 million respectively, all of which pertains to U.S. federal excise tax.
Previous wording
For the three months and six months ended March 31, 2024, the Company recognized a provision for taxes of $(0.2) million and $(0.2) million, respectively, on net realized gain (loss) on investments by the Taxable Subsidiary. For the three months and six months ended March 31, 2023, the Company recognized a provision for taxes of $(0.7) million and $(0.7) million, respectively, on net realized gain on investments by the Taxable Subsidiary. For the three months and six months ended March 31, 2024, the Company recognized a provision for taxes of $(0.8) million and $(0.7) million, respectively, on net unrealized gain (loss) on investments by the Taxable Subsidiary. For the three and six months ended March 31, 2023, the Company recognized a provision for taxes of zero and $0.9 million, respectively, on net unrealized gain (loss) on investments by the Taxable Subsidiary. The provision for taxes on net realized and unrealized gains on investments is the result of netting (i) the expected tax liability on the gains from the sales of investments which is likely to be realized and unrealized during fiscal year ending September 30, 2024 and (ii) the expected tax benefit resulting from the use of loss carryforwards to offset such gains. As of March 31, 2024 and September 30, 2023, the Company recognized a provision for taxes of $0.9 million and $3.4 million, respectively, on net realized and unrealized gains on investments by the Taxable Subsidiary.
Current wording
For the three and nine months ended June 30, 2024, the Company recognized a provision for taxes of zero and $0.2 million, respectively, on net realized gain (loss) on investments by the Taxable Subsidiary. For the three and nine months ended June 30, 2023, the Company recognized a provision for taxes of $1.7 million and $2.4 million, respectively, on net realized gain on investments by the Taxable Subsidiary. For the three months and nine months ended June 30, 2024, the Company recognized a provision for taxes of zero and $0.7 million, respectively, on net realized gain (loss) on investments by the Taxable Subsidiary. For the three and nine months ended June 30, 2023, the Company recognized a provision for taxes of zero and $(0.9) million, respectively, on net unrealized gain (loss) on investments by the Taxable Subsidiary. The provision for taxes on net realized and unrealized gains on investments is the result of netting (i) the expected tax liability on the gains from the sales of investments which is likely to be realized and unrealized during fiscal year ending September 30, 2024 and (ii) the expected tax benefit resulting from the use of loss carryforwards to offset such gains. As of June 30, 2024 and September 30, 2023, the Company recognized a provision for taxes of $0.9 million and $3.4 million, respectively, on net realized and unrealized gains on investments by the Taxable Subsidiary.
Previous wording
During the three months and six months ended March 31, 2024, the Company paid zero, respectively, in federal taxes on realized gains on the sale of investments held by the Taxable Subsidiary. The state and local tax liability is $0.4 million as of March 31, 2024 is included under accrued other expenses in the consolidated statement of assets and liabilities.
Current wording
During the three months and nine months ended June 30, 2024, the Company paid zero, respectively, in federal taxes on realized gains on the sale of investments held by the Taxable Subsidiary. The state and local tax liability is zero as of June 30, 2024 is included under accrued other expenses in the consolidated statement of assets and liabilities.
Previous wording
Set forth below are the results of operations for the three and six months ended March 31, 2024 and 2023.
Current wording
Set forth below are the results of operations for the three and nine months ended June 30, 2024 and 2023.
Previous wording
For the three and six months ended March 31, 2024, investment income was $36.0 million and $70.3 million, respectively, which was attributable to $27.8 million and $52.9 million from first lien secured debt, $2.8 million and $5.4 million from second lien secured debt, $0.1 million and $1.4 million from subordinated debt and $5.3 million and $10.6 million from preferred and common equity, respectively. For the three and six months ended March 31, 2023, investment income was $36.3 million and $66.3 million, respectively, which was attributable to $26.8 million and $48.6 million from first lien secured debt, $3.7 million and $7.4 million from second lien secured debt, $1.1 million and $2.2 million from subordinated debt and $4.8 million and $8.1 million from preferred and common equity, respectively. The increase in investment income for the six months ended March 31, 2024 was primarily due to the increase in the cost of yield of our debt portfolio.
Current wording
For the three and nine months ended June 30, 2024, investment income was $37.0 million and $107.3 million, respectively, which was attributable to $25.9 million and $78.5 million from first lien secured debt, $2.1 million and $7.6 million from second lien secured debt, $0.6 million and $1.9 million from subordinated debt and $8.4 million and $19.3 million from other investments, respectively. For the three and nine months ended June 30, 2023, investment income was $45.0 million and $111.3 million, respectively, which was attributable to $24.1 million and $72.7 million from first lien secured debt, $3.5 million and $10.9 million from second lien secured debt, $1.2 million and $3.4 million from subordinated debt and $16.2 million and $24.3 million from preferred and common equity, respectively. The decrease in investment income for the nine months ended June 30, 2024 was primarily due to the decrease in dividend income.
Previous wording
For the three and six months ended March 31, 2024, expenses totaled $21.7 million and $40.4 million, respectively and were comprised of; $11.9 million and $21.4 million of debt related interest and expenses, $4.1 million and $8.1 million of base management fees, $3.0 million and $6.3 million of incentive fees, $1.9 million and $3.3 million of general and administrative expenses and $0.8 million and $1.2 million of provision for excise taxes. For the three and six months ended March 31, 2023, expenses totaled $19.7 million and $39.3 million, respectively and were comprised of; $10.6 million and $20.3 million of debt-related interest and expenses, $4.0 million and $8.6 million of base management fees, $3.5 million and $5.7 million of incentive fees, $1.1 million and $2.2 million of general and administrative expenses and $0.5 million and $2.5 million of provision for excise taxes, respectively. The increase in expenses was primarily due an increase in debt related interest and expenses and an increase in general and administrative expenses.
Current wording
For the three and nine months ended June 30, 2024, expenses totaled $21.3 million and $61.7 million, respectively and were comprised of; $11.5 million and $32.9 million of debt related interest and expenses, $4.2 million and $12.4 million of base management fees, $3.3 million and $9.7 million of incentive fees, $1.5 million and $4.8 million of general and administrative expenses and $0.7 million and $1.9 million of provision for excise taxes. For the three and nine months ended June 30, 2023, expenses totaled $22.1 million and $61.4 million, respectively and were comprised of; $10.1 million and $30.5 million of debt-related interest and expenses, $4.0 million and $12.6 million of base management fees, $4.9 million and $10.6 million of incentive fees, $1.9 million and $4.1 million of general and administrative expenses and $1.2 million and $3.6 million of provision for excise taxes, respectively. The increase in expenses for the nine months ended June 30, 2024 was primarily due an increase in debt related interest and expenses.
Previous wording
For the three and six months ended March 31, 2024, net investment income totaled $14.3 million and $29.9 million, or $0.22 per share, and $0.46 per share, respectively. For the three and six months ended March 31, 2023, net investment income totaled $16.6 million and $27.0 million, or $0.26 per share and $0.41 per share, respectively. The increase in net investment income for the six months ended March 31, 2024 was primarily due to an increase in investment income.
Current wording
For the three and nine months ended June 30, 2024, net investment income totaled $15.7 million and $45.7 million, or $0.24 per share, and $0.70 per share, respectively. For the three and nine months ended June 30, 2023, net investment income totaled $23.0 million and $49.9 million, or $0.35 per share and $0.77 per share, respectively. The decrease in net investment income for the nine months ended June 30, 2024 was primarily due to decrease in investment income.
Previous wording
For the three and six months ended March 31, 2024, net realized gains (losses) totaled $(31.0) million and $(29.2) million, respectively. For the three and six months ended March 31, 2023, net realized gains (losses) totaled $(148.7) million and $(144.7) million, respectively. The change in realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.
Current wording
For the three and nine months ended June 30, 2024, net realized gains (losses) totaled $(6.9) million and $(36.1) million, respectively. For the three and nine months ended June 30, 2023, net realized gains (losses) totaled $(6.9) million and $(151.5) million, respectively. The change in realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.
Previous wording
For the three and six months ended March 31, 2024, we reported net change in unrealized appreciation (depreciation) on investments of $33.2 million and $28.3 million, respectively. For the three and six months ended March 31, 2023, the net unrealized appreciation (depreciation) on investments totaled $135.4 million and $43.8 million, respectively. As of March 31, 2024 and September 30, 2023, our net unrealized appreciation (depreciation) on investments totaled $12.0 million and $(16.3) million, respectively. The net change in unrealized depreciation on our investments was primarily due to changes in the capital market conditions of our investments and the values at which they were realized.
Current wording
For the three and nine months ended June 30, 2024, we reported net change in unrealized appreciation (depreciation) on investments of $(5.1) million and $23.2 million, respectively. For the three and nine months ended June 30, 2023, the net unrealized appreciation (depreciation) on investments totaled $13.3 million and $57.1 million, respectively. As of June 30, 2024 and September 30, 2023, our net unrealized appreciation (depreciation) on investments totaled $6.9 million and $(16.3) million, respectively. The net change in unrealized depreciation on our investments was primarily due to changes in the capital market conditions of our investments and the values at which they were realized.
Previous wording
For the three and six months ended March 31, 2024, the Truist Credit Facility had a net change in unrealized (appreciation) depreciation of $0.5 million and $(1.6) million, respectively. For the three and six months ended March 31, 2023, the Truist Credit Facility had a net change in unrealized (appreciation) depreciation of $1.5 million and $5.9 million, respectively. As of March 31, 2024 and September 30, 2023, the net unrealized depreciation on the Truist Credit Facility totaled $3.9 million and $5.5 million, respectively. Net change in unrealized appreciation was primarily due to changes in the capital markets.
Current wording
For the three and nine months ended June 30, 2024, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) less than $(0.1) million and $(1.6) million, respectively. For the three and nine months ended June 30, 2023, the Truist Credit Facility had a net change in unrealized (appreciation) depreciation of $(8.4) million and $(2.5) million, respectively. As of June 30, 2024 and September 30, 2023, the net unrealized depreciation on the Truist Credit Facility totaled $3.9 million and $5.5 million, respectively. Net change in unrealized appreciation was primarily due to changes in the capital markets.
Previous wording
For the three and six months ended March 31, 2024, net increase (decrease) in net assets resulting from operations totaled $16.1 million and $26.7 million, or $0.25 per share, and $0.41 per share, respectively. For the three and six months ended March 31, 2023, net increase (decrease) in net assets resulting from operations totaled $4.9 million and $(67.0) million, or $0.07 per share and $(1.03) per share, respectively. The increase in net assets from operations for the three months ended March 31, 2024 was primarily due to a decrease in the net realized and unrealized depreciation in the portfolio primarily driven by changes in market conditions.
Current wording
For the three and nine months ended June 30, 2024, net increase (decrease) in net assets resulting from operations totaled $3.7 million and $30.5 million, or $0.06 per share, and $0.47 per share, respectively. For the three and nine months ended June 30, 2023, net increase (decrease) in net assets resulting from operations totaled $20.9 million and $(46.1) million, or $0.32 per share and $(0.71) per share, respectively. The increase in net assets from operations for the nine months ended June 30, 2024 was primarily due to a decrease in the net realized and unrealized depreciation in the portfolio primarily driven by changes in market conditions.
Previous wording
As of March 31, 2024 and September 30, 2023, our asset coverage ratio, as computed in accordance with the 1940 Act was 170% and 195%, respectively.
Current wording
As of June 30, 2024 and September 30, 2023, our asset coverage ratio, as computed in accordance with the 1940 Act was 164%% and 195%, respectively.
Previous wording
For the six months ended March 31, 2024 and 2023, the annualized weighted average cost of debt inclusive of the fee on the undrawn commitment and amendment costs on the Truist Credit Facility, and amortized upfront fees on SBA debentures, 2026 Notes and 2026 Notes-2, was 6.5% and 5.8%, respectively.
Current wording
For the nine months ended June 30, 2024 and 2023, the annualized weighted average cost of debt inclusive of the fee on the undrawn commitment and amendment costs on the Truist Credit Facility, and amortized upfront fees on SBA debentures, 2026 Notes and 2026 Notes-2, was 6.5% and 6.0%, respectively.
Previous wording
As of March 31, 2024, we had the multi-currency Truist Credit Facility for up to $475.0 million (decreased from $500.0 million in September 2023), which may be further increased up to $750.0 million in borrowings with certain lenders and Truist Bank, acting as administrative agent, Regions Bank, acting as an additional multicurrency lender, and JPMorgan Chase Bank, N.A., acting as syndication agent for the lenders. As of March 31, 2024 and September 30, 2023, we had $396.5 million and $212.4 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 7.7% and 7.7%, respectively, exclusive of the fee on undrawn commitment, as of March 31, 2024 and September 30, 2023. The Truist Credit Facility is a revolving facility with a stated maturity date of July 29, 2027 and pricing set at 235 basis points over SOFR (or an alternative risk-free floating interest rate index). As of March 31, 2024 and September 30, 2023, we had $78.5 million and $262.6 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions. The Truist Credit Facility is secured by substantially all of our assets. As of March 31, 2024, we were in compliance with the terms of the Truist Credit Facility.
Current wording
As of June 30, 2024, we had the multi-currency Truist Credit Facility for up to $475.0 million (decreased from $500.0 million in September 2023), which may be further increased up to $750.0 million in borrowings with certain lenders and Truist Bank, acting as administrative agent, Regions Bank, acting as an additional multicurrency lender, and JPMorgan Chase Bank, N.A., acting as syndication agent for the lenders. As of June 30, 2024 and September 30, 2023, we had $450.5 million and $212.4 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 7.7% and 7.7%, respectively, exclusive of the fee on undrawn commitment, as of June 30, 2024 and September 30, 2023. The Truist Credit Facility is a revolving facility with a stated maturity date of July 29, 2027 and pricing set at 235 basis points over SOFR (or an alternative risk-free floating interest rate index). As of June 30, 2024 and September 30, 2023, we had $24.5 million and $262.6 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions. The Truist Credit Facility is secured by substantially all of our assets. As of June 30, 2024, we were in compliance with the terms of the Truist Credit Facility.
Previous wording
As of March 31, 2024, we had $150.0 million in aggregate principal amount of 2026 Notes outstanding. Interest on the 2026 Notes is paid semi-annually on May 1 and November 1, at a rate of 4.50% per year, commencing November 1, 2021. The 2026 Notes mature on May 1, 2026, and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are direct unsecured obligations and rank pari passu in right of payment with future unsecured unsubordinated indebtedness. The 2026 Notes are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities.
Current wording
As of June 30, 2024, we had $150 million in aggregate principal amount of 2026 Notes outstanding. Interest on the 2026 Notes is paid semi-annually on May 1 and November 1, at a rate of 4.50% per year, commencing November 1, 2021. The 2026 Notes mature on May 1, 2026, and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are direct unsecured obligations and rank pari passu in right of payment with future unsecured unsubordinated indebtedness. The 2026 Notes are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities.
Previous wording
As of March 31, 2024, we had $165.0 million in aggregate principal amount of 2026 Notes-2 outstanding. Interest on the 2026 Notes-2 is paid semi-annually on May 1 and November 1, at a rate of 4.0% per year, commencing May 1, 2022. The 2026 Notes-2 mature on November 1, 2026, and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes-2 are direct unsecured obligations and rank pari passu in right of payment with future unsecured unsubordinated indebtedness. The 2026 Notes-2 are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities.
Current wording
As of June 30, 2024, we had $165 million in aggregate principal amount of 2026 Notes-2 outstanding. Interest on the 2026 Notes-2 is paid semi-annually on May 1 and November 1, at a rate of 4.0% per year, commencing May 1, 2022. The 2026 Notes-2 mature on November 1, 2026, and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes-2 are direct unsecured obligations and rank pari passu in right of payment with future unsecured unsubordinated indebtedness. The 2026 Notes-2 are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities.
Previous wording
As of March 31, 2024 and September 30, 2023, we had cash and cash equivalents of $35.4 million and $38.8 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to allows us to effectively operate our business.
Current wording
As of June 30, 2024 and September 30, 2023, we had cash and cash equivalents of $59.2 million and $38.8 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to allows us to effectively operate our business.
Previous wording
For the six months ended March 31, 2024, our operating activities used cash of $150.9 million and our financing activities provided cash of $147.5 million. Our operating activities provided cash primarily due to our investment activities and our financing activities provided cash primarily from borrowings under the Truist Credit Facility.
Current wording
For the nine months ended June 30, 2024, our operating activities used cash of $167.7 million and our financing activities provided cash of $188.1 million. Our operating activities provided cash primarily due to our investment activities and our financing activities used cash primarily from borrowings under the Truist Credit Facility.
Previous wording
For the six months ended March 31, 2023, our operating activities provided cash of $60.5 million and our financing activities used cash of $49.0 million. Our operating activities provided cash primarily due to our investment activities and our financing activities used cash primarily due to repayments under the Truist Credit Facility.
Current wording
For the nine months ended June 30, 2023, our operating activities provided cash of $115.7 million and our financing activities used cash of $124.1 million. Our operating activities provided cash primarily due to our investment activities and our financing activities used cash primarily due to repayments under the Truist Credit Facility.
Previous wording
In July 2020, we and Pantheon formed PSLF, an unconsolidated joint venture. PSLF invests primarily in middle-market and other corporate debt securities consistent with its strategy. PSLF was formed as a Delaware limited liability company. As of March 31, 2024 and September 30, 2023, PSLF had total assets of $987.4 million and $872.8 million, respectively and its investment portfolio consisted of debt investments in 99 and 90 portfolio companies, respectively. As of the same dates, we and Pantheon had remaining commitments to fund subordinated debt of zero and $22.4 million, respectively, and equity interest of zero and $14.5 million, respectively, in PSLF. As of March 31, 2024, at fair value, the largest investment in a single portfolio company in PSLF was $21.5 million and the five largest investments totaled $100.1 million. As of September 30, 2023, at fair value, the largest investment in a single portfolio company in PSLF was $19.7 million and the five largest investments totaled $97.5 million. PSLF invests in portfolio companies in the same industries in which we may directly invest.
Current wording
In July 2020, we and Pantheon formed PSLF, an unconsolidated joint venture. PSLF invests primarily in middle-market and other corporate debt securities consistent with its strategy. PSLF was formed as a Delaware limited liability company. As of June 30, 2024 and September 30, 2023, PSLF had total assets of $977.0 million and $872.8 million, respectively and its investment portfolio consisted of debt investments in 101 and 90 portfolio companies, respectively. As of the same dates, we and Pantheon had remaining commitments to fund subordinated debt of zero and $22.4 million, respectively, and equity interest of zero and $14.5 million, respectively, in PSLF. As of June 30, 2024, at fair value, the largest investment in a single portfolio company in PSLF was $21.5 million and the five largest investments totaled $100.1 million. As of September 30, 2023, at fair value, the largest investment in a single portfolio company in PSLF was $19.7 million and the five largest investments totaled $97.5 million. PSLF invests in portfolio companies in the same industries in which we may directly invest.
Previous wording
Additionally, PSLF, through its wholly-owned subsidiary, or PSLF Subsidiary, has entered into a $325.0 million (increased from $225.0 million on September 2, 2022) senior secured revolving credit facility, or the PSLF Credit Facility, with BNP Paribas, which bears interest at SOFR (or an alternative risk-free interest rate index) plus 260 basis points during the investment period and is subject to leverage and borrowing base restrictions.
Current wording
Additionally, PSLF, through its wholly-owned subsidiary, has entered into a $325.0 million (increased from $225.0 million on September 2, 2022) senior secured revolving credit facility, with BNP Paribas, which bears interest at SOFR (or an alternative risk-free interest rate index) plus 260 basis points during the investment period and is subject to leverage and borrowing base restrictions.
Previous wording
During the three and six months ended March 31, 2024, we declared distributions of $0.21 and $0.42 per share, for total distributions of $13.7 million and $27.4 million. During the three and six months ended March 31, 2023, we declared distributions of $0.185 and $0.35 per share, for total distributions of $12.1 million and $22.8 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.
Current wording
During the three and nine months ended June 30, 2024, we declared distributions of $0.22 and $0.64 per share, for total distributions of $14.4 million and $41.8 million. During the three and nine months ended June 30, 2023, we declared distributions of $0.20 and $0.55 per share, for total distributions of $13.0 million and $35.9 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.
Previous wording
In March 2020, the FASB issued Accounting Standards Update, or ASU, No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through June 30, 2023. The FASB approved an (optional) two year extension to December 31, 2024, for transitioning away from LIBOR. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 during the three and six months ended March 31, 2024, the effect of which was not material to the consolidated financial statements and the notes thereto.
Current wording
In March 2020, the FASB issued Accounting Standards Update ("ASU, No. 2020-04"), “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through June 30, 2023. The FASB approved an (optional) two year extension to December 31, 2024, for transitioning away from LIBOR. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 during the three and nine months ended June 30, 2024, the effect of which was not material to the consolidated financial statements and the notes thereto.
Previous wording
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, or ASU 2022-03, which changed the fair value measurement disclosure requirements of ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early application is permitted. The Company is currently evaluating the impact the adoption of this new accounting standard will have on its consolidated financial statements, but the impact of the adoption is not expected to be material.
Current wording
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"), which changed the fair value measurement disclosure requirements of ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"). The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early application is permitted. The Company is currently evaluating the impact the adoption of this new accounting standard will have on its consolidated financial statements, but the impact of the adoption is not expected to be material.
Previous wording
On February 9, 2022, we announced a share repurchase program which allows us to repurchase up to $25 million of our outstanding common shares in the open market at prices below our net asset value as reported in our then most recently published consolidated financial statements. During the six months ended March 31, 2023, we did not make any repurchases of our common shares. The program expired on March 31, 2023.
Current wording
On February 9, 2022, we announced a share repurchase program which allows us to repurchase up to $25 million of our outstanding common shares in the open market at prices below our net asset value as reported in our then most recently published consolidated financial statements. The program expired on March 31, 2023. During the nine months ended June 30, 2023, we did not make any repurchases of our common shares.