Bain Capital Specialty Finance Inc
For the period ended Sep 30, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
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.
Sep 30, 2024 · Filed Nov 5, 2024
BCSF$11.14-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0000950170-24-091840
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0000950170-24-121464
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 192 previous paragraphs and 192 current paragraphs.
140 unchanged; 47 reworded; 5 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 24 previous and 24 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 (5)
Current report
During the three months ended September 30, 2024, we invested $413.1 million, including PIK, in 83 portfolio companies, and had $248.0 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $165.1 million for the period. Of the $413.1 million invested during the three months ended September 30, 2024, $86.2 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
Current report
During the three months ended September 30, 2023, we invested $114.2 million, including PIK, in 59 portfolio companies, and had $102.8 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $11.4 million for the period. Of the $114.2 million invested during the three months ended September 30, 2023, $47.2 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
Current report
During the nine months ended September 30, 2024, we invested $1,122.9 million, including PIK, in 134 portfolio companies, and had $1,017.6 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $105.2 million for the period. Of the $1,122.9 million invested during the nine months ended September 30, 2024, $186.9 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
Current report
During the nine months ended September 30, 2023, we invested $630.8 million, including PIK, in 91 portfolio companies, and had $616.2 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $14.6 million for the period. Of the $630.8 million invested during the nine months ended September 30, 2023, $160.1 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
Current report
For the three months ended September 30, 2023, we had $68.7 million in unrealized appreciation on 62 portfolio company investments, which was offset by $25.6 million in unrealized depreciation on 81 portfolio company investments. Unrealized depreciation for the three months ended September 30, 2023 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments. Unrealized appreciation for the three months ended September 30, 2023 resulted from an increase in fair value, primarily due to positive valuation adjustments.
Removed paragraphs (5)
Previous report
During the three months ended June 30, 2024, we invested $306.7 million, including PIK, in 77 portfolio companies, and had $473.7 million in aggregate amount of principal repayments and sales, resulting in a net decrease in investments of $167.0 million for the period. Of the $306.7 million invested during the three months ended June 30, 2024, $51.2 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
Previous report
During the three months ended June 30, 2023, we invested $204.4 million, including PIK, in 60 portfolio companies, and had $227.9 million in aggregate amount of principal repayments and sales, resulting in a net decrease in investments of $23.5 million for the period. Of the $204.4 million invested during the three months ended June 30, 2023, $35.4 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
Previous report
During the six months ended June 30, 2024, we invested $709.8 million, including PIK, in 111 portfolio companies, and had $769.7 million in aggregate amount of principal repayments and sales, resulting in a net decrease in investments of $59.9 million for the period. Of the $709.8 million invested during the six months ended June 30, 2024, $100.8 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
Previous report
During the six months ended June 30, 2023, we invested $516.6 million, including PIK, in 85 portfolio companies, and had $513.4 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $3.2 million for the period. Of the $516.6 million invested during the six months ended June 30, 2023, $112.9 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
Previous report
For the six months ended June 30, 2024, we had $43.3 million in unrealized appreciation on 74 portfolio company investments, which was offset by $45.9 million in unrealized depreciation on 85 portfolio company investments. Unrealized appreciation for the six months ended June 30, 2024 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the six months ended June 30, 2024 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments.
Reworded paragraphs (47)
Previous wording
Bain Capital Specialty Finance, Inc. (the “Company”, “we”, “our” and “us”) is an externally managed specialty finance company focused on lending to middle market companies. We have elected to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “1940 Act”). We are managed by BCSF Advisors, LP (our “Advisor” or “BCSF Advisors”), a subsidiary of Bain Capital Credit, LP (“Bain Capital Credit”). Our Advisor is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Our Advisor also provides the administrative services necessary for us to operate (in such capacity, our “Administrator” or “BCSF Advisors”). Since we commenced operations on October 13, 2016 through June 30, 2024, we have invested approximately $7,752.5 million in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. We seek to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last-out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds.
Current wording
Bain Capital Specialty Finance, Inc. (the “Company”, “we”, “our” and “us”) is an externally managed specialty finance company focused on lending to middle market companies. We have elected to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “1940 Act”). We are managed by the Advisor, a subsidiary of Bain Capital Credit, LP (“Bain Capital Credit”). Our Advisor is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Our Advisor also provides the administrative services necessary for us to operate (in such capacity, our “Administrator”). Since we commenced operations on October 13, 2016 through September 30, 2024, we have invested approximately $8,132.9 million in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. We seek to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last-out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds.
Previous wording
Our debt investment portfolio consists of primarily floating rate loans. As of June 30, 2024 and December 31, 2023, 92.9% and 93.8%, respectively, of our debt investments, based on fair value, bore interest at floating rates, which may be subject to interest rate floors. Variable-rate investments subject to a floor generally reset periodically to the applicable floor, only if the floor exceeds the index. Trends in base interest rates, such as SOFR, may affect our net investment income over the long term. In addition, our results may vary from period to period depending on the interest rates of new investments made during the period compared to investments that were sold or repaid during the period; these results reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macroeconomic trends.
Current wording
Our debt investment portfolio consists of primarily floating rate loans. As of September 30, 2024 and December 31, 2023, 90.8% and 93.8%, respectively, of our debt investments, based on fair value, bore interest at floating rates, which may be subject to interest rate floors. Variable-rate investments subject to a floor generally reset periodically to the applicable floor, only if the floor exceeds the index. Trends in base interest rates, such as SOFR, may affect our net investment income over the long term. In addition, our results may vary from period to period depending on the interest rates of new investments made during the period compared to investments that were sold or repaid during the period; these results reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macroeconomic trends.
Previous wording
other expenses incurred by BCSF Advisors or us in connection with administering our business, including payments made to third-party providers of goods or services;
Current wording
other expenses incurred by the Administrator or us in connection with administering our business, including payments made to third-party providers of goods or services;
Previous wording
To the extent that expenses to be borne by us are paid by BCSF Advisors, we will generally reimburse BCSF Advisors for such expenses. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to the Administrator. We will also reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain rent and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment and fees paid to third-party providers for goods or services. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to our business and affairs, and will be subject to oversight by our Board. We incurred expenses related to the Administrator of $0.7 million and $0.2 million for the three months ended June 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. We incurred expenses related to the Administrator of $1.1 million and $0.4 million for the six months ended June 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. We incurred expenses related to the sub-administrator of $0.1 million and $0.2 million for the three months ended June 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. We incurred expenses related to the sub-administrator of $0.2 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. BCSF Advisors will not be reimbursed to the extent that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of the foregoing expenses are ultimately borne by our stockholders.
Current wording
To the extent that expenses to be borne by us are paid by the Administrator, we will generally reimburse the Administrator for such expenses. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to the Administrator. We will also reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain rent and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment and fees paid to third-party providers for goods or services. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to our business and affairs, and will be subject to oversight by our Board. We incurred expenses related to the Administrator of $0.7 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. We incurred expenses related to the Administrator of $1.8 million and $0.8 million for the nine months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. We incurred expenses related to the sub-administrator of $0.1 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. We incurred expenses related to the sub-administrator of $0.4 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Administrator will not be reimbursed to the extent that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of the foregoing expenses are ultimately borne by our stockholders.
Previous wording
We may borrow money from time to time. However, our ability to incur indebtedness (including by issuing preferred stock), is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150%. In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook. As of June 30, 2024, the Company’s asset coverage was 196.8%.
Current wording
We may borrow money from time to time. However, our ability to incur indebtedness (including by issuing preferred stock), is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150%. In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook. As of September 30, 2024, the Company’s asset coverage was 187.8%.
Previous wording
Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection. As of June 30, 2024, there were five loans from three issuers placed on non-accrual in the Company’s portfolio. As of December 31, 2023, there were five loans from three issuers placed on non-accrual in the Company’s portfolio.
Current wording
Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection. As of September 30, 2024, there were nine loans from five issuers placed on non-accrual in the Company’s portfolio. As of December 31, 2023, there were five loans from three issuers placed on non-accrual in the Company’s portfolio.
Previous wording
Our operating results for the six months ended June 30, 2024 and 2023 were as follows (dollars in thousands):
Current wording
Our operating results for the nine months ended September 30, 2024 and 2023 were as follows (dollars in thousands):
Previous wording
Interest income from investments, which includes interest and accretion of discounts and fees, decreased to $55.1 million for the three months ended June 30, 2024 from $58.2 million for the three months ended June 30, 2023, primarily due to a decrease in the investment portfolio. Dividend income decreased to $8.2 million for the three months ended June 30, 2024 from $8.7 million for the three months ended June 30, 2023, primarily due to a decrease in dividend income from the 2018-1 Issuer interests which were sold to SLP in the first quarter. Other income increased to approximately $3.1 million for the three months ended June 30, 2024 from $1.9 million for the three months ended June 30, 2023, primarily due to an increase in structuring, arrangement and amendment fees earned on certain investments.
Current wording
Interest income from investments, which includes interest and accretion of discounts and fees, decreased to $55.4 million for the three months ended September 30, 2024 from $57.2 million for the three months ended September 30, 2023, primarily due to a decrease in the investment portfolio. Dividend income decreased to $6.2 million for the three months ended September 30, 2024 from $8.6 million for the three months ended September 30, 2023, primarily due to no dividend income from the 2018-1 Issuer interests, which were sold to SLP in the first quarter, and a decrease in dividend income on Gale Aviation in the third quarter. Other income increased to approximately $5.7 million for the three months ended September 30, 2024 from $1.0 million for the three months ended September 30, 2023, primarily due to an increase in commitment, closing and consent fees earned on certain investments.
Previous wording
The composition of our investment income for the six months ended June 30, 2024 and 2023 was as follows (dollars in thousands):
Current wording
The composition of our investment income for the nine months ended September 30, 2024 and 2023 was as follows (dollars in thousands):
Previous wording
Interest income from investments, which includes interest and accretion of discounts and fees, decreased to $110.7 million for the six months ended June 30, 2024 from $115.1 million for the six months ended June 30, 2023, primarily due to a decrease in the investment portfolio. Dividend income decreased to $16.5 million for the six months ended June 30, 2024 from $17.1 million for the six months ended June 30, 2023, primarily due to a decrease in dividend income from the 2018-1 Issuer interests which were sold to SLP during the first quarter of 2024. Other income increased to approximately $8.4 million for the six months ended June 30, 2024 from $7.2 million for the six months ended June 30, 2023, primarily due to an increase in amendment, closing and prepayment fees earned on certain investments. As of June 30, 2024, the weighted average yield of our investment portfolio increased to 13.1% from 12.8% as of June 30, 2023, at amortized cost.
Current wording
Interest income from investments, which includes interest and accretion of discounts and fees, decreased to $166.1 million for the nine months ended September 30, 2024 from $172.3 million for the nine months ended September 30, 2023, primarily due to a decrease in the investment portfolio. Dividend income decreased to $22.7 million for the nine months ended September 30, 2024 from $25.7 million for the nine months ended September 30, 2023, primarily due to a decrease in dividend income from the 2018-1 Issuer interests which were sold to SLP during the first quarter of 2024, and a decrease in dividend income on Gale Aviation in the third quarter. Other income increased to approximately $14.1 million for the nine months ended September 30, 2024 from $8.2 million for the nine months ended September 30, 2023, primarily due to an increase in amendment, closing and consent fees earned on certain investments. As of September 30, 2024, the weighted average yield of our investment portfolio decreased to 12.1% from 12.9% as of September 30, 2023, at amortized cost.
Previous wording
The composition of our operating expenses for the six months ended June 30, 2024 and 2023 were as follows (dollars in thousands):
Current wording
The composition of our operating expenses for the nine months ended September 30, 2024 and 2023 were as follows (dollars in thousands):
Previous wording
Interest and debt financing expenses on our borrowings totaled approximately $17.6 million and $20.5 million for the three months ended June 30, 2024 and 2023, respectively. Interest and debt financing expense for the three months ended June 30, 2024 as compared to June 30, 2023 decreased primarily due to decreased usage of our Sumitomo Credit Facility. Interest and debt financing expenses on our borrowings totaled approximately $35.7 million and $40.0 million for the six months ended June 30, 2024 and 2023, respectively. Interest and debt financing expense for the six months ended June 30, 2024 as compared to June 30, 2023 decreased primarily due to decreased usage of our Sumitomo Credit Facility. The weighted average principal debt balance outstanding for the three months ended June 30, 2024 was $1.2 billion compared to $1.5 billion for the three months ended June 30, 2023. The weighted average principal debt balance outstanding for the six months ended June 30, 2024 was $1.3 billion compared to $1.5 billion for the six months ended June 30, 2023.
Current wording
Interest and debt financing expenses on our borrowings totaled approximately $18.1 million and $20.8 million for the three months ended September 30, 2024 and 2023, respectively. Interest and debt financing expense for the three months ended September 30, 2024 as compared to September 30, 2023 decreased primarily due to decreased usage of our Sumitomo Credit Facility. Interest and debt financing expenses on our borrowings totaled approximately $53.8 million and $60.8 million for the nine months ended September 30, 2024 and 2023, respectively. Interest and debt financing expense for the nine months ended September 30, 2024 as compared to September 30, 2023 decreased primarily due to decreased usage of our Sumitomo Credit Facility. The weighted average principal debt balance outstanding for the three months ended September 30, 2024 was $1.3 billion compared to $1.4 billion for the three months ended September 30, 2023. The weighted average principal debt balance outstanding for the nine months ended September 30, 2024 was $1.3 billion compared to $1.5 billion for the nine months ended September 30, 2023.
Previous wording
The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for the six months ended June 30, 2024 and year ended December 31, 2023 were 5.1% and 5.2%, respectively.
Current wording
The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for the nine months ended September 30, 2024 and year ended December 31, 2023 were 5.1% and 5.2%, respectively.
Previous wording
Management fee (net of waivers) decreased to $8.8 million for the three months ended June 30, 2024 from $9.1 million for the three months ended June 30, 2023. Management fee (gross of waivers) decreased to $8.8 million for the three months ended June 30, 2024 from $9.1 million for the three months ended June 30, 2023, primarily due to a decrease in total assets throughout the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Management fee waived for the three months ended June 30, 2024 and 2023 were $0.0 million and $0.0 million, respectively.
Current wording
Management fee (net of waivers) decreased to $8.9 million for the three months ended September 30, 2024 from $9.1 million for the three months ended September 30, 2023. Management fee (gross of waivers) decreased to $8.9 million for the three months ended September 30, 2024 from $9.1 million for the three months ended September 30, 2023, primarily due to a decrease in total assets throughout the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Management fee waived for the three months ended September 30, 2024 and 2023 were $0.0 million and $0.0 million, respectively.
Previous wording
Management fee (net of waivers) decreased to $17.6 million for the six months ended June 30, 2024 from $18.0 million for the six months ended June 30, 2023. Management fee (gross of waivers) decreased to $17.6 million for the six months ended June 30, 2024 from $18.0 million for the six months ended June 30, 2023, primarily due to a decrease in total assets throughout the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Management fee waived for the six months ended June 30, 2024 and 2023 were $0.0 million and $0.0 million, respectively.
Current wording
Management fee (net of waivers) decreased to $26.5 million for the nine months ended September 30, 2024 from $27.2 million for the nine months ended September 30, 2023. Management fee (gross of waivers) decreased to $26.5 million for the nine months ended September 30, 2024 from $27.2 million for the nine months ended September 30, 2023, primarily due to a decrease in total assets throughout the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Management fee waived for the nine months ended September 30, 2024 and 2023 were $0.0 million and $0.0 million, respectively.
Previous wording
Incentive fee (net of waivers) increased to $7.9 million for the three months ended June 30, 2024 from $4.0 million for the three months ended June 30, 2023 primarily due to an increase in pre-incentive fee net investment income. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the three months ended June 30, 2024 and $0.0 million for the three months ended June 30, 2023. For the three months ended June 30, 2024 there were no incentive fees related to the GAAP Incentive Fee. Incentive fee (net of waivers) increased to $17.2 million for the six months ended June 30, 2024 from $15.1 million for the six months ended June 30, 2023 primarily due to an increase in pre-incentive fee net investment income. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the six months ended June 30, 2024 and $0.0 million for the six months ended June 30, 2023. For the six months ended June 30, 2024 there were no incentive fees related to the GAAP Incentive Fee.
Current wording
Incentive fee (net of waivers) increased to $7.0 million for the three months ended September 30, 2024 from $3.0 million for the three months ended September 30, 2023 primarily due to the mechanics of the Trailing Twelve Quarters aspect of the incentive fee calculation. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the three months ended September 30, 2024 and $0.0 million for the three months ended September 30, 2023. For the three months ended September 30, 2024, there were no incentive fees related to the GAAP Incentive Fee. Incentive fee (net of waivers) increased to $24.2 million for the nine months ended September 30, 2024 from $18.1 million for the nine months ended September 30, 2023 primarily due to the mechanics of the Trailing Twelve Quarters aspect of the incentive fee calculation. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the nine months ended September 30, 2024 and $0.0 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, there were no incentive fees related to the GAAP Incentive Fee.
Previous wording
Professional fees and other general and administrative expenses increased to $3.5 million for the three months ended June 30, 2024 from $1.9 million for the three months ended June 30, 2023, primarily due to an increase in costs associated with servicing our investment portfolio.
Current wording
Professional fees and other general and administrative expenses increased to $3.3 million for the three months ended September 30, 2024 from $3.0 million for the three months ended September 30, 2023, primarily due to an increase in costs associated with servicing our investment portfolio.
Previous wording
Professional fees and other general and administrative expenses increased to $6.8 million for the six months ended June 30, 2024 from $4.2 million for the six months ended June 30, 2023, primarily due to an increase in costs associated with servicing our investment portfolio.
Current wording
Professional fees and other general and administrative expenses increased to $10.1 million for the nine months ended September 30, 2024 from $7.2 million for the nine months ended September 30, 2023, primarily due to an increase in costs associated with servicing our investment portfolio.
Previous wording
For the three months ended June 30, 2024 and 2023, we had net realized (losses) on investments of ($5.3) million and ($0.2) million, respectively, which was primarily driven by full or partial sales or paydowns of our investments. For the three months ended June 30, 2024 and 2023, we had net realized (losses) on foreign currency transactions of ($0.4) million and ($0.3) million, respectively. For the three months ended June 30, 2024 and 2023, we had realized gains on forward currency contracts of $0.2 million and $0.0 million, respectively, primarily as a result of settling GBP and EUR forward contracts.
Current wording
For the three months ended September 30, 2024 and 2023, we had net realized gains (losses) on investments of $3.3 million and ($50.9) million, respectively, which was primarily driven by full or partial sales or paydowns of our investments. For the three months ended September 30, 2024 and 2023, we had net realized (losses) on foreign currency transactions of ($0.5) million and ($0.7) million, respectively. For the three months ended September 30, 2024 and 2023, we had realized gains (losses) on forward currency contracts of $0.0 million and ($0.2) million, respectively, primarily as a result of settling GBP forward contracts.
Previous wording
For the three months ended June 30, 2023 we had $23.5 million in unrealized appreciation on 58 portfolio company investments, which was offset by $31.4 million in unrealized depreciation on 83 portfolio company investments. Unrealized appreciation for the three months ended June 30, 2023 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the three months ended June 30, 2023 resulted from a decrease in fair value, primarily due to negative adjustments and widening of credit spread.
Current wording
For the three months ended September 30, 2024, we had $30.8 million in unrealized appreciation on 83 portfolio company investments, which was offset by $29.8 million in unrealized depreciation on 78 portfolio company investments. Unrealized appreciation for the three months ended September 30, 2024 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the three months ended September 30, 2024 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments.
Previous wording
For the three months ended June 30, 2024 and 2023, we had unrealized appreciation on forward currency exchange contracts of $0.2 million and ($1.5) million, respectively. For the three months ended June 30, 2024, unrealized appreciation on forward currency exchange contracts was primarily due to EUR forward contracts.
Current wording
For the three months ended September 30, 2024 and 2023, we had unrealized appreciation on forward currency exchange contracts of ($5.7) million and $7.1 million, respectively. For the three months ended September 30, 2024, unrealized depreciation on forward currency exchange contracts was primarily due to GBP, EUR and AUD forward contracts.
Previous wording
The following table summarizes our net realized and unrealized gains (losses) for the six months ended June 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table summarizes our net realized and unrealized gains (losses) for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
Previous wording
For the six months ended June 30, 2024 and 2023, we had net realized (losses) on investments of ($3.2) million and ($10.9) million, respectively, which was primarily driven by full or partial sales or paydowns of our investments. For the six months ended June 30, 2024 and 2023, we had net realized (losses) on foreign currency transactions of ($0.4) million and ($4.5) million, respectively. For the six months ended June 30, 2024 and 2023, we had net realized gains (losses) on forward currency contracts of $1.9 million and ($2.4) million, respectively, primarily as a result of settling EUR, AUD, NOK and CAD forward contracts.
Current wording
For the nine months ended September 30, 2024 and 2023, we had net realized gains (losses) on investments of $0.1 million and ($61.8) million, respectively, which was primarily driven by full or partial sales or paydowns of our investments. For the nine months ended September 30, 2024 and 2023, we had net realized losses on foreign currency transactions of ($0.9) million and ($5.2) million, respectively. For the nine months ended September 30, 2024 and 2023, we had net realized gains (losses) on forward currency contracts of $1.9 million and ($2.6) million, respectively, primarily as a result of settling AUD, CAD, EUR, GBP and NOK forward contracts.
Previous wording
For the three months ended June 30, 2024, we had $27.9 million in unrealized appreciation on 67 portfolio company investments, which was offset by $26.7 million in unrealized depreciation on 92 portfolio company investments. Unrealized appreciation for the three months ended June 30, 2024 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the three months ended June 30, 2024 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments.
Current wording
For the nine months ended September 30, 2024, we had $63.5 million in unrealized appreciation on 92 portfolio company investments, which was offset by $65.0 million in unrealized depreciation on 76 portfolio company investments. Unrealized appreciation for the nine months ended September 30, 2024 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the nine months ended September 30, 2024 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments.
Previous wording
For the six months ended June 30, 2023, we had $47.3 million in unrealized appreciation on 77 portfolio company investments, which was offset by $44.7 million in unrealized depreciation on 68 portfolio company investments. Unrealized appreciation for the six months ended June 30, 2023 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the six months ended June 30, 2023 resulted from a decrease in fair value, primarily due to negative valuation adjustments and widening of credit spread.
Current wording
For the nine months ended September 30, 2023, we had $77.6 million in unrealized appreciation on 80 portfolio company investments, which was offset by ($31.9) million in unrealized depreciation on 68 portfolio company investments. Unrealized depreciation for the nine months ended September 30, 2023 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments. Unrealized appreciation for the nine months ended September 30, 2023 resulted from an increase in fair value, primarily due to positive valuation adjustments.
Previous wording
For the six months ended June 30, 2024 and 2023, we had unrealized appreciation on forward currency exchange contracts of $1.4 million and ($1.3) million, respectively. For the six months ended June 30, 2024, unrealized appreciation on forward currency exchange contracts was primarily due to EUR, GBP, and CAD forward contracts.
Current wording
For the nine months ended September 30, 2024 and 2023, we had unrealized appreciation on forward currency exchange contracts of ($4.3) million and $5.8 million, respectively. For the nine months ended September 30, 2024, unrealized depreciation on forward currency exchange contracts was primarily due to AUD, GBP, and NOK forward contracts.
Previous wording
Included in total net losses on the consolidated statements of operations were gains (losses) of ($0.1) million and $2.6 million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the three months ended June 30, 2024 and 2023, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of $0.3 million and ($1.5) million, respectively, included in the above table, the net impact of foreign currency on total net losses on the consolidated statements of operations is $0.3 million and $1.1 million for the three months ended June 30, 2024 and 2023, respectively.
Current wording
Included in total net losses on the consolidated statements of operations were gains (losses) of $5.6 million and ($6.3) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the three months ended September 30, 2024 and 2023, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($5.7) million and $6.9 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is ($0.1) million and $0.5 million for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
The following table summarizes the impact of foreign currency for the six months ended June 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table summarizes the impact of foreign currency for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
Previous wording
Included in total net losses on the consolidated statements of operations were gains (losses) of ($2.3) million and $4.7 million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the six months ended June 30, 2024 and 2023, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of $3.3 million and ($3.7) million, respectively, included in the above table, the net impact of foreign currency on total net gains on the consolidated statements of operations is $1.0 million and $1.0 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
Included in total net losses on the consolidated statements of operations were gains (losses) of $3.3 million and ($1.7) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the nine months ended September 30, 2024 and 2023, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($2.4) million and $3.2 million, respectively, included in the above table, the net impact of foreign currency on total net gains on the consolidated statements of operations is $0.9 million and $1.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
For the three months ended June 30, 2024 and 2023, the net increase in net assets resulting from operations was $29.1 million and $29.2 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended June 30, 2024 and 2023, our per share net increase in net assets resulting from operations was $0.45 and $0.45, respectively.
Current wording
For the three months ended September 30, 2024 and 2023, the net increase in net assets resulting from operations was $33.1 million and $33.9 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended September 30, 2024 and 2023, our per share net increase in net assets resulting from operations was $0.51 and $0.52, respectively.
Previous wording
For the six months ended June 30, 2024 and 2023, the net increase in net assets resulting from operations was $64.2 million and $58.5 million, respectively. Based on the weighted average shares of common stock outstanding for the six months ended June 30, 2024 and 2023, our per share net increase in net assets resulting from operations was $1.00 and $0.91, respectively.
Current wording
For the nine months ended September 30, 2024 and 2023, the increase in net assets resulting from operations was $97.3 million and $92.3 million, respectively. Based on the weighted average shares of common stock outstanding for the nine months ended September 30, 2024 and 2023, our per share net increase in net assets resulting from operations was $1.51 and $1.43, respectively.
Previous wording
We intend to continue to generate cash primarily from cash flows from operations, future borrowings and future offerings of securities. We may from time to time raise additional equity or debt capital through registered offerings, enter into additional debt facilities, or increase the size of existing facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. We are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities. As of June 30, 2024 and December 31, 2023, our asset coverage ratio was 196.8% and 189.9%, respectively.
Current wording
We intend to continue to generate cash primarily from cash flows from operations, future borrowings and future offerings of securities. We may from time to time raise additional equity or debt capital through registered offerings, enter into additional debt facilities, or increase the size of existing facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. We are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities. As of September 30, 2024 and December 31, 2023, our asset coverage ratio was 187.8% and 189.9%, respectively.
Previous wording
At June 30, 2024 and December 31, 2023, we had $98.1 million and $112.5 million in cash, foreign cash, restricted cash and cash equivalents, respectively.
Current wording
At September 30, 2024 and December 31, 2023, we had $59.8 million and $112.5 million in cash, foreign cash, restricted cash and cash equivalents, respectively.
Previous wording
At June 30, 2024, we had approximately $616.6 million of availability on our Sumitomo Credit Facility, subject to existing terms and regulatory requirements. At December 31, 2023 we had approximately $343.3 million of availability on our Sumitomo Credit Facility subject to existing terms and regulatory requirements.
Current wording
At September 30, 2024, we had approximately $501.3 million of availability on our Sumitomo Credit Facility, subject to existing terms and regulatory requirements. At December 31, 2023 we had approximately $343.3 million of availability on our Sumitomo Credit Facility subject to existing terms and regulatory requirements.
Previous wording
For the six months ended June 30, 2023, cash, foreign cash, restricted cash, and cash equivalents increased by $2.9 million. During the six months ended June 30, 2023, we used $51.7 million in cash for operating activities. The increase in cash used for operating activities was primarily related to the purchases of investments of $539.6 million, which was offset by proceeds from principal payments and sales of investments of $435.5 million and a net increase in assets resulting from operations of $58.5 million.
Current wording
For the nine months ended September 30, 2024, cash, foreign cash, restricted cash, and cash equivalents decreased by $52.7 million. During the nine months ended September 30, 2024, we used ($7.1) million in cash for operating activities. The increase in cash used in operating activities was primarily related to purchases of investments of $1,097.8 million, which was offset by proceeds from principal payments and sales of investments of $1,001.5 million and a net increase in assets resulting from operations of $97.3 million.
Previous wording
During the six months ended June 30, 2024, we used $142.6 million for financing activities, primarily on repayments of our Sumitomo Credit Facility of $380.3 million, distributions paid during the period of $56.2 million, partially offset by borrowings of $297.0 million.
Current wording
During the nine months ended September 30, 2024, we used $45.7 million for financing activities, primarily on repayments of our Sumitomo Credit Facility of $522.3 million and distributions paid during the period of $85.2 million, partially offset by borrowings of $565.0 million.
Previous wording
For the six months ended June 30, 2024, cash, foreign cash, restricted cash, and cash equivalents decreased by $14.4 million. During the six months ended June 30, 2024, we provided $128.7 million in cash for operating activities. The increase in cash provided by operating activities was primarily related to proceeds from principal payments and sales of investments of $747.4 million and a net increase in assets resulting from operations of $64.2 million, which was offset by the purchases of investments of $682.2 million.
Current wording
For the nine months ended September 30, 2023, cash, foreign cash, restricted cash, and cash equivalents decreased by $20.3 million. During the nine months ended September 30, 2023, we provided $70.6 million in cash for operating activities. The increase in cash provided by operating activities was primarily related to cash generated from earnings of $92.3 million outpacing net increase in investments of $14.6 million.
Previous wording
During the six months ended June 30, 2023, we provided $55.2 million for financing activities, primarily due to borrowings and repayments on our Sumitomo Credit Facility and paying our quarterly dividend to shareholders.
Current wording
During the nine months ended September 30, 2023, we used $89.3 million for financing activities, primarily due to borrowings and repayments on our Sumitomo Credit Facility and paying our quarterly dividend to shareholders.
Previous wording
During the six months ended June 30, 2024, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan. During the six months ended June 30, 2023, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan.
Current wording
During the nine months ended September 30, 2024, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan. During the nine months ended September 30, 2023, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan.
Previous wording
On January 26, 2022, Gale Aviation (Offshore) Co investment, a controlled affiliate investment of the Company, entered into a letter of credit agreement with Sumitomo Mitsui Banking Corporation for $14.7 million. On October 2, 2023, $4.0 million of the letter of credit agreement was terminated. As of June 30, 2024, $10.6 million is outstanding on the letter of credit and the amount has been drawn against the total aggregate principal amount committed of the Sumitomo Credit Facility.
Current wording
On January 26, 2022, Gale Aviation (Offshore) Co investment, a controlled affiliate investment of the Company, entered into a letter of credit agreement with Sumitomo Mitsui Banking Corporation for $14.7 million. On October 2, 2023, $4.0 million of the letter of credit agreement was terminated. On July 4, 2024, the remaining $10.7 million of the letter of credit agreement was terminated.
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