FIDUS INVESTMENT Corp

Previous wording

our ability to operate as a BDC and a RIC and Fund III to operate as an SBIC;

Current wording

our ability to operate as a BDC and a RIC and each of the SBIC Funds to operate as an SBIC;

Previous wording

FIC was formed as a Maryland corporation on February 14, 2011. We completed our initial public offering, or IPO, in June 2011. On June 20, 2011, FIC acquired all of the limited partnership interests of Fidus Mezzanine Capital, L.P. ("Fund I") and membership interests of Fidus Mezzanine Capital GP, LLC, its general partner, resulting in Fund I becoming our wholly-owned SBIC subsidiary. Immediately following the acquisition, we and Fund I elected to be treated as business development companies, or BDCs, under the 1940 Act and our investment activities have been managed by Fidus Investment Advisors, LLC, our investment advisor, and supervised by our board of directors, a majority of whom are independent of us. On March 29, 2013, we commenced operations of a second wholly-owned subsidiary, Fund II. On April 18, 2018, we commenced operations of a third wholly-owned subsidiary, Fund III.

Current wording

FIC was formed as a Maryland corporation on February 14, 2011. We completed our initial public offering, or IPO, in June 2011. On June 20, 2011, FIC acquired all of the limited partnership interests of Fidus Mezzanine Capital, L.P. ("Fund I") and membership interests of Fidus Mezzanine Capital GP, LLC, its general partner, resulting in Fund I becoming our wholly-owned SBIC subsidiary. Immediately following the acquisition, we and Fund I elected to be treated as business development companies, or BDCs, under the 1940 Act and our investment activities have been managed by Fidus Investment Advisors, LLC, our investment advisor, and supervised by our board of directors, a majority of whom are independent of us. On March 29, 2013, we commenced operations of a second wholly-owned subsidiary, Fidus Mezzanine Capital II, L.P. ("Fund II"). On April 18, 2018, we commenced operations of a third wholly-owned subsidiary, Fund III. On November 28, 2023, we commenced operations of a fourth wholly-owned subsidiary, Fund IV.

Previous wording

Fund II and Fund III received their SBIC licenses on May 28, 2013 and March 21, 2019, respectively. We plan to continue to operate Fund III as a SBIC, subject to SBA approval, and to utilize the proceeds of the sale of SBA-guaranteed debentures to enhance returns to our stockholders. Fund II completed its wind-down plan, can no longer issue additional SBA debentures, and relinquished its SBIC license on March 7, 2024, which remains subject to the SBA's approval. We have also made, and continue to make, investments directly through FIC. We believe that utilizing FIC and Fund III as investment vehicles provides us with access to a broader array of investment opportunities.

Current wording

Fund III and Fund IV received their SBIC licenses on March 21, 2019 and September 30, 2024, respectively. We plan to continue to operate Fund III and Fund IV as SBICs, subject to SBA approval, and to utilize the proceeds of the sale of SBA-guaranteed debentures to enhance returns to our stockholders. Fund I and Fund II completed their wind-down plans, can no longer issue additional SBA debentures, and relinquished their SBIC licenses on March 20, 2020 and March 7, 2024, respectively. We have also made, and continue to make, investments directly through FIC. We believe that utilizing FIC and the SBIC Funds as investment vehicles provides us with access to a broader array of investment opportunities.

Previous wording

During the six months ended June 30, 2024 and 2023, we invested $208.3 million and $147.3 million, respectively, in debt and equity investments including eight and eight new portfolio companies, respectively. During the six months ended June 30, 2024 and 2023, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of $103.3 million and $76.5 million, respectively, including an exit of two and five portfolio companies, respectively. The following table summarizes purchases of investments and sales and repayments of investments by type for the six months ended June 30, 2024 and 2023 (dollars in millions).

Current wording

During the nine months ended September 30, 2024 and 2023, we invested $274.2 million and $204.0 million, respectively, in debt and equity investments including eleven and ten new portfolio companies, respectively. During the nine months ended September 30, 2024 and 2023, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of $154.1 million and $146.4 million, respectively, including an exit of six and six portfolio companies, respectively. The following table summarizes purchases of investments and sales and repayments of investments by type for the nine months ended September 30, 2024 and 2023 (dollars in millions).

Previous wording

(1) For the six months ended June 30, 2024 and 2023, first lien debt includes unitranche securities, which account for 29.9% and 32.5% of purchases, respectively. For the six months ended June 30, 2024 and 2023, first lien debt includes unitranche securities, which account for 5.0% and 3.9% of repayments, respectively.

Current wording

(1) For the nine months ended September 30, 2024 and 2023, first lien debt includes unitranche securities, which account for 32.3% and 35.7% of purchases, respectively. For the nine months ended September 30, 2024 and 2023, first lien debt includes unitranche securities, which account for 6.3% and 3.9% of repayments, respectively.

Previous wording

As of June 30, 2024, the fair value of our investment portfolio totaled $1,078.4 million and consisted of 86 active portfolio companies and five portfolio companies that have sold their underlying operations. As of June 30, 2024, 48 portfolio companies’ debt investments bore interest at a variable rate, which represented $688.4 million, or 72.8%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed-rate investments. Overall, the portfolio had net unrealized appreciation of $20.4 million as of June 30, 2024. As of June 30, 2024, our average active portfolio company investment at amortized cost was $12.3 million, which excludes investments in five portfolio companies that have sold their underlying operations.

Current wording

As of September 30, 2024, the fair value of our investment portfolio totaled $1,090.7 million and consisted of 85 active portfolio companies and five portfolio companies that have sold their underlying operations. As of September 30, 2024, 49 portfolio companies’ debt investments bore interest at a variable rate, which represented $702.0 million, or 73.2%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed-rate investments. Overall, the portfolio had net unrealized appreciation of $15.9 million as of September 30, 2024. As of September 30, 2024, our average active portfolio company investment at amortized cost was $12.6 million, which excludes investments in five portfolio companies that have sold their underlying operations.

Previous wording

The weighted average yield on debt investments as of June 30, 2024 and December 31, 2023 was 14.0% and 14.2%, respectively. The weighted average yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yields were computed using the effective interest rates for debt investments at cost including the accretion of OID and debt investment origination fees, but excluding investments on non-accrual status.

Current wording

The weighted average yield on debt investments as of September 30, 2024 and December 31, 2023 was 13.8% and 14.2%, respectively. The weighted average yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yields were computed using the effective interest rates for debt investments at cost including the accretion of OID and debt investment origination fees, but excluding investments on non-accrual status.

Previous wording

Based on our investment rating system, the weighted average rating of our portfolio as of June 30, 2024 and December 31, 2023 was 2.0 and 2.0, respectively, on a fair value basis and 2.1 and 2.2, respectively, on a cost basis.

Current wording

Based on our investment rating system, the weighted average rating of our portfolio as of September 30, 2024 and December 31, 2023 was 2.0 and 2.0, respectively, on a fair value basis and 2.2 and 2.2, respectively, on a cost basis.

Previous wording

Comparison of three and six months ended June 30, 2024 and 2023

Current wording

Comparison of three and nine months ended September 30, 2024 and 2023

Previous wording

For the three months ended June 30, 2024, total investment income was $35.7 million, an increase of $5.1 million or 16.7%, from the $30.6 million of total investment income for the three months ended June 30, 2023. As reflected in the table above, the increase is primarily attributable to the following:

Current wording

For the three months ended September 30, 2024, total investment income was $38.4 million, an increase of $4.2 million or 12.3%, from the $34.2 million of total investment income for the three months ended September 30, 2023. As reflected in the table above, the increase is primarily attributable to the following:

Previous wording

$5.9 million increase in total interest income (which includes payment-in-kind ("PIK") interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding during 2024 as compared to 2023.

Current wording

$2.6 million increase in total interest income (which includes payment-in-kind ("PIK") interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding during 2024 as compared to the same period in 2023.

Previous wording

$0.1 million increase in dividend income due to an increase in distributions received from equity investments, during 2024 as compared to 2023.

Current wording

$1.1 million increase in dividend income due to an increase in distributions received from equity investments, during 2024 as compared to the same period in 2023.

Previous wording

$0.2 million increase in fee income resulting from an increase in amendment and origination fees, partially offset by a decrease in prepayment fees during 2024 as compared to 2023.

Current wording

$0.5 million increase in fee income resulting from an increase in amendment during 2024 as compared to the same period in 2023.

Previous wording

For the six months ended June 30, 2024, total investment income was $70.3 million, an increase of $10.7 million or 18.0%, from the $59.6 million of total investment income for the six months ended June 30, 2023. As reflected in the table above, the increase is primarily attributable to the following:

Current wording

For the nine months ended September 30, 2024, total investment income was $108.7 million, an increase of $14.9 million or 15.9%, from the $93.8 million of total investment income for the nine months ended September 30, 2023. As reflected in the table above, the increase is primarily attributable to the following:

Previous wording

$9.5 million increase in total interest income (which includes a $2.0 million increase in PIK interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding during 2024 as compared to 2023.

Current wording

$12.1 million increase in total interest income (which includes a $1.0 million increase in PIK interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding during 2024 as compared to the same period in 2023.

Previous wording

$0.1 million increase in dividend income due to an increase in distributions received from equity investments, during 2024 as compared to 2023.

Current wording

$1.1 million increase in dividend income due to an increase in distributions received from equity investments, during 2024 as compared to the same period in 2023.

Previous wording

$0.7 million decrease in fee income resulting from a decrease in prepayment and origination fees, partially offset by an increase in amendment fees during 2024 as compared to 2023.

Current wording

$0.7 million increase in fee income resulting from an increase in amendment and origination fees, partially offset by a decrease in prepayment fees during 2024 as compared to the same period in 2023.

Previous wording

$0.9 million increase in interest on idle funds due to an increase in average cash balances outstanding during 2024 as compared to 2023.

Current wording

$1.0 million increase in interest on idle funds due to an increase in average cash balances outstanding during 2024 as compared to the same period in 2023.

Previous wording

For the three months ended June 30, 2024, total expenses, including income tax provision, were $18.7 million, an increase of $4.9 million or 35.9%, from the $13.8 million of total expenses for the three months ended June 30, 2023. As reflected in the table above, changes across the periods were primarily attributable to the following:

Current wording

For the three months ended September 30, 2024, total expenses, including income tax provision, were $17.0 million, a decrease of $0.5 million or (3.2%), from the $17.5 million of total expenses for the three months ended September 30, 2023. As reflected in the table above, changes across the periods were primarily attributable to the following:

Previous wording

$1.2 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2024 as compared to 2023.

Current wording

$0.7 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2024 as compared to the same period in 2023.

Previous wording

$0.7 million increase in the income incentive fee due to an increase in pre-incentive fee net investment income during 2024 as compared to 2023.

Current wording

$0.6 million increase in the income incentive fee due to an increase in pre-incentive fee net investment income during 2024 as compared to the same period in 2023.

Previous wording

$2.9 million increase in the accrued capital gains incentive fee due to a net $14.7 million increase in net gain on investments and realized losses on extinguishment of debt during 2024 as compared to the same period in 2023.

Current wording

$2.5 million decrease in the accrued capital gains incentive fee due to a net $12.6 million decrease in net gain on investments and realized losses on extinguishment of debt during 2024 as compared to the same period in 2023.

Previous wording

Below is a summary of the changes in total expenses, including income tax provision, for the six months ended June 30, 2024 as compared to the same period in 2023 (dollars in millions):

Current wording

Below is a summary of the changes in total expenses, including income tax provision, for the nine months ended September 30, 2024 as compared to the same period in 2023 (dollars in millions):

Previous wording

For the six months ended June 30, 2024, total expenses, including income tax provision, were $35.7 million, an increase of $7.6 million or 27.1%, from the $28.1 million of total expenses for the six months ended June 30, 2023. As reflected in the table above, changes across periods were primarily attributable to the following:

Current wording

For the nine months ended September 30, 2024, total expenses, including income tax provision, were $52.7 million, an increase of $7.1 million or 15.5%, from the $45.6 million of total expenses for the nine months ended September 30, 2023. As reflected in the table above, changes across periods were primarily attributable to the following:

Previous wording

$0.6 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2024 as compared to 2023.

Current wording

$1.9 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2024 as compared to 2023.

Previous wording

$1.5 million net increase in the income incentive fee due to an increase in pre-incentive fee net investment income during 2024 as compared to the same period in 2023.

Current wording

$2.1 million net increase in the income incentive fee due to an increase in pre-incentive fee net investment income during 2024 as compared to the same period in 2023.

Previous wording

$2.6 million increase in the accrued capital gains incentive fee due to a net $13.0 million increase in net gain on investments and realized losses on extinguishment of debt during 2024 as compared to the same period in 2023.

Current wording

$0.4 million increase in the accrued capital gains incentive fee due to a net $2.2 million increase in net gain on investments and realized losses on extinguishment of debt during 2024 as compared to the same period in 2023.

Previous wording

Net investment income increased by $3.1 million, or 9.7%, to $34.6 million during the six months ended June 30, 2024 as compared to the same period in 2023, as a result of the $10.7 million increase in total investment income, partially offset by the $7.6 million increase in total expenses, including base management fee waiver and income tax provision.

Current wording

Net investment income increased by $4.7 million, or 28.5%, to $21.4 million during the three months ended September 30, 2024 as compared to the same period in 2023, as a result of the $4.2 million increase in total investment income and the $0.5 million decrease in total expenses, including base management fee waiver and income tax provision.

Previous wording

Net investment income increased by $0.2 million, or 1.0%, to $17.0 million during the three months ended June 30, 2024 as compared to the same period in 2023, as a result of the $5.1 million increase in total investment income, partially offset by the $4.9 million increase in total expenses, including base management fee waiver and income tax provision.

Current wording

Net investment income increased by $7.8 million, or 16.2%, to $56.0 million during the nine months ended September 30, 2024 as compared to the same period in 2023, as a result of the $14.9 million increase in total investment income, partially offset by the $7.1 million increase in total expenses, including base management fee waiver and income tax provision.

Previous wording

For the three and six months ended June 30, 2024, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $10.8 million and $12.5 million, respectively. Income tax (provision) benefit from realized gains on investments was $(1.6) million and $(1.5) million for the three and six months ended June 30, 2024, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and six months ended June 30, 2024 are summarized below (dollars in millions):

Current wording

For the three and nine months ended September 30, 2024, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $(0.4) million and $12.2 million, respectively. Income tax (provision) benefit from realized gains on investments was zero and $(1.6) million for the three and nine months ended September 30, 2024, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and nine months ended September 30, 2024 are summarized below (dollars in millions):

Previous wording

For the three and six months ended June 30, 2023, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $(5.6) and $(5.5) million, respectively. Income tax (provision) benefit from realized gains on investments was $(1.5) million and $(1.5) million for the three and six months ended June 30, 2023, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and six months ended June 30, 2023 are summarized below (dollars in millions):

Current wording

For the three and nine months ended September 30, 2023, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $9.8 and $4.3 million, respectively. Income tax (provision) benefit from realized gains on investments was zero and $(1.6) million for the three and nine months ended September 30, 2023, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and nine months ended September 30, 2023 are summarized below (dollars in millions):

Previous wording

During the three and six months ended June 30, 2024 and 2023, we recorded a net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):

Current wording

During the three and nine months ended September 30, 2024 and 2023, we recorded a net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):

Previous wording

Net increase (decrease) in net assets resulting from operations during the three months ended June 30, 2024 and 2023 was $24.1 million and $10.9 million, respectively, as a result of the events described above.

Current wording

Net increase (decrease) in net assets resulting from operations during the three months ended September 30, 2024 and 2023 was $16.5 million and $24.3 million, respectively, as a result of the events described above.

Previous wording

Net increase (decrease) in net assets resulting from operations during the six months ended June 30, 2024 and 2023 was $44.2 million and $26.4 million, respectively, as a result of the events described above.

Current wording

Net increase (decrease) in net assets resulting from operations during the nine months ended September 30, 2024 and 2023 was $60.7 million and $50.7 million, respectively, as a result of the events described above.

Previous wording

As of June 30, 2024, we had $48.3 million in cash and cash equivalents and our net assets totaled $646.8 million. We believe that our current cash and cash equivalents on hand, our Credit Facility, our anticipated access to SBA-guaranteed debentures, and our anticipated cash flows from investments will provide adequate capital resources with which to operate and finance our investment business and make distributions to our stockholders for at least the next 12 months. We intend to generate additional cash primarily from the future offerings of securities (including the ATM Program) and future borrowings, as well as cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions to our stockholders. During the six months ended June 30, 2024, we repaid $35.0 million of SBA debentures relating to Fund II that would have matured during the period March 1, 2026 through September 1, 2027. Our remaining outstanding SBA debentures begin to mature in 2029 and subsequent years through 2034, which will require repayment on or before the respective maturity dates. In light of current market conditions, we will continually evaluate our overall liquidity position and take proactive steps to maintain that position based on the current circumstances. This “Financial Liquidity and Capital Resources” section should be read in conjunction with the notes of our consolidated financial statements.

Current wording

As of September 30, 2024, we had $54.4 million in cash and cash equivalents and our net assets totaled $658.8 million. We believe that our current cash and cash equivalents on hand, our Credit Facility, our anticipated access to SBA-guaranteed debentures, and our anticipated cash flows from investments will provide adequate capital resources with which to operate and finance our investment business and make distributions to our stockholders for at least the next 12 months. We intend to generate additional cash primarily from the future offerings of securities (including the ATM Program) and future borrowings, as well as cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions to our stockholders. During the nine months ended September 30, 2024, we repaid $35.0 million of SBA debentures relating to Fund II that would have matured during the period March 1, 2026 through September 1, 2027. Our remaining outstanding SBA debentures begin to mature in 2029 and subsequent years through 2034, which will require repayment on or before the respective maturity dates. In light of current market conditions, we will continually evaluate our overall liquidity position and take proactive steps to maintain that position based on the current circumstances. This “Financial Liquidity and Capital Resources” section should be read in conjunction with the notes of our consolidated financial statements.

Previous wording

For the six months ended June 30, 2024, we experienced a net decrease in cash and cash equivalents in the amount of $70.8 million. During that period, we made payments of $80.5 million of cash for operating activities, which included the funding of $208.3 million of investments that was partially offset by proceeds received from sales and repayments of investments of $103.3 million. During the same period, we repaid SBA debentures of $35.0 million relating to Fund II, borrowed $32.5 million under our Credit Facility, received net proceeds from the ATM Program of approximately $52.2 million, received repayments of $0.6 million on our secured borrowings, paid cash dividends to stockholders of $39.1 million, and made payment of deferred financing costs related to our debt financings of $0.3 million.

Current wording

For the nine months ended September 30, 2024, we experienced a net decrease in cash and cash equivalents in the amount of $64.7 million. During that period, we made payments of $75.8 million of cash for operating activities, which included the funding of $274.2 million of investments that was partially offset by proceeds received from sales and repayments of investments of $154.1 million. During the same period, we repaid SBA debentures of $35.0 million relating to Fund II, received net borrowings of $40.0 million under our Credit Facility, received net proceeds from the ATM Program of approximately $66.3 million, received repayments of $1.9 million on our secured borrowings, paid cash dividends to stockholders of $57.7 million, and made payment of deferred financing costs related to our debt financings of $0.6 million.

Previous wording

Fund III is licensed to operate as a SBIC, and has the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the SBA regulations, an SBIC can have outstanding at any time debentures guaranteed by the SBA in an amount up to twice its regulatory capital. The SBA regulations currently limit the amount that is available to be borrowed by any SBIC and guaranteed by the SBA to 300.0% of an SBIC’s regulatory capital or $175.0 million, whichever is less. For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. The SBA may limit the amount that may be drawn each year under the SBA debenture commitments, and each issuance of leverage is conditioned on SBIC's full compliance, as determined by the SBA, with the terms and conditions under SBA regulations. SBA debentures have fixed interest rates that approximate prevailing 10-year Treasury Note rates plus a spread and have a maturity of ten years with interest payable semi-annually. The principal amount of the SBA debentures is not required to be paid before maturity but may be pre-paid at any time. As of June 30, 2024, Fund III had $175.0 million of outstanding SBA debentures. Fund II has completed a wind-down plan, relinquished its SBIC license and can no longer issue additional SBA debentures, effective as of March 7, 2024. Subject to SBA regulatory requirements and approval of an additional SBIC licensed fund and SBA debenture commitments, we may access up to $175.0 million of additional SBA debentures under the SBIC debenture program. For more information on the SBA debentures, please refer to Note 6 to our consolidated financial statements.

Current wording

Fund III and Fund IV are licensed to operate as an SBIC, and have the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the SBA regulations, an SBIC can have outstanding at any time debentures guaranteed by the SBA in an amount up to twice its regulatory capital. The SBA regulations currently limit the amount that is available to be borrowed by any SBIC and guaranteed by the SBA to 300.0% of an SBIC’s regulatory capital or $175.0 million, whichever is less. For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. The SBA may limit the amount that may be drawn each year under the SBA debenture commitments, and each issuance of leverage is conditioned on SBIC's full compliance, as determined by the SBA, with the terms and conditions under SBA regulations. SBA debentures have fixed interest rates that approximate prevailing 10-year Treasury Note rates plus a spread and have a maturity of ten years with interest payable semi-annually. The principal amount of the SBA debentures is not required to be paid before maturity but may be pre-paid at any time. Fund II has completed a wind-down plan, relinquished its SBIC license and can no longer issue additional SBA debentures, effective as of March 7, 2024. Effective September 30, 2024, the SBA approved a new SBIC license for Fund IV. As of September 30, 2024, Fund III and Fund IV had $175.0 million and zero outstanding SBA debentures, respectively. Subject to SBA regulatory requirements and approval of SBA debenture commitments, we may access up to $175.0 million of additional SBA debentures under the SBIC debenture program. For more information on the SBA debentures, please refer to Note 6 to our consolidated financial statements.

Previous wording

On June 16, 2014, we entered into a senior secured revolving credit agreement (the "Credit Agreement" and the senior secured revolving credit facility, the “Credit Facility”) with ING Capital LLC (“ING”), as the administrative agent, collateral agent, and lender. The Credit Facility is secured by certain portfolio investments held by us, but portfolio investments held by Fund II and Fund III are not collateral for the Credit Facility. On April 24, 2019, we entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the “Amended Credit Agreement”) among us, as borrower, the lenders party thereto, and ING, as administrative agent. On June 26, 2020, we entered into an amendment to the Amended Credit Agreement that, among other changes, modified certain financial covenants. On August 17, 2022, the Company entered into a second amendment to the Amended Credit Agreement (“Second Amendment”). The Second Amendment, among other things: (i) changed the underlying benchmark used to compute interest under the Amended Credit Agreement to the Secured Overnight Financing Rate (SOFR) from the London Interbank Offered Rate (LIBOR); (ii) reduced the applicable margin from 3.00% to 2.675% on SOFR loans prior to satisfying certain step-down conditions, and from 2.675% to 2.50% after satisfying certain step-down conditions, with commensurate reductions in the applicable margins for base rate loans; (iii) provided for a loan commitment availability period ending on August 17, 2026; (iv) extended the maturity date to August 17, 2027 from April 24, 2023; and (v) amended certain financial covenants, including (a) amending the asset coverage ratio to no less than 1.50 to 1.00 from no less than 2.00 to 1.00 (on a regulatory basis); and (b) requiring the Company to maintain a senior asset coverage ratio of no less than 2.00 to 1.00.

Current wording

On June 16, 2014, we entered into a senior secured revolving credit agreement (the "Credit Agreement" and the senior secured revolving credit facility, the “Credit Facility”) with ING Capital LLC (“ING”), as the administrative agent, collateral agent, and lender. The Credit Facility is secured by certain portfolio investments held by us, but portfolio investments held by the SBIC Funds are not collateral for the Credit Facility. On April 24, 2019, we entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the “Amended Credit Agreement”) among us, as borrower, the lenders party thereto, and ING, as administrative agent. On June 26, 2020, we entered into an amendment to the Amended Credit Agreement that, among other changes, modified certain financial covenants. On August 17, 2022, the Company entered into a second amendment to the Amended Credit Agreement (“Second Amendment”). The Second Amendment, among other things: (i) changed the underlying benchmark used to compute interest under the Amended Credit Agreement to the Secured Overnight Financing Rate (SOFR) from the London Interbank Offered Rate (LIBOR); (ii) reduced the applicable margin from 3.00% to 2.675% on SOFR loans prior to satisfying certain step-down conditions, and from 2.675% to 2.50% after satisfying certain step-down conditions, with commensurate reductions in the applicable margins for base rate loans; (iii) provided for a loan commitment availability period ending on August 17, 2026; (iv) extended the maturity date to August 17, 2027 from April 24, 2023; and (v) amended certain financial covenants, including (a) amending the asset coverage ratio to no less than 1.50 to 1.00 from no less than 2.00 to 1.00 (on a regulatory basis); and (b) requiring the Company to maintain a senior asset coverage ratio of no less than 2.00 to 1.00. On July 25, 2024, the Company entered into an incremental commitment agreement that increased the Credit Facility total commitment from $100.0 million to $140.0 million.

Previous wording

Amounts available to borrow under the Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to certain investments held by us, excluding investments held by Fund II and Fund III. We are subject to limitations with respect to the investments securing the Credit Facility, including, but not limited to, restrictions on sector concentrations, loan size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may also affect the borrowing base and therefore amounts available to borrow.

Current wording

Amounts available to borrow under the Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to certain investments held by us, excluding investments held by the SBIC Funds. We are subject to limitations with respect to the investments securing the Credit Facility, including, but not limited to, restrictions on sector concentrations, loan size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may also affect the borrowing base and therefore amounts available to borrow.

Previous wording

We have made customary representations and warranties and we are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. As of June 30, 2024, we were in compliance in all material respects with the terms of the Credit Agreement and we had $32.5 million in borrowings outstanding under the Credit Facility.

Current wording

We have made customary representations and warranties and we are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. As of September 30, 2024, we were in compliance in all material respects with the terms of the Credit Agreement and we had $40.0 million in borrowings outstanding under the Credit Facility.