Bain Capital Specialty Finance Inc

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 December 31, 2023, we have invested approximately $7,018.3 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 December 31, 2024, we have invested approximately $8,784.3 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 primary focus is capitalizing on opportunities within our Senior Direct Lending strategy, which seeks to provide risk-adjusted returns and current income to our stockholders by investing primarily in middle-market companies with between $10.0 million and $150.0 million in annual earnings before interest, taxes, depreciation and amortization (“EBITDA”). However, we may, from time to time, invest in larger or smaller companies. We generally seek to retain effective voting control in respect of the loans or particular classes of securities in which we invest through maintaining affirmative voting positions or negotiating consent rights that allow us to retain a blocking position. We focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. We may also invest in mezzanine debt and other junior securities, including common and preferred equity, on an opportunistic basis, and in secondary purchases of assets or portfolios but such investments are not the principal focus of our investment strategy. In addition, we may invest, from time to time, in distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities.

Current wording

Our primary focus is capitalizing on opportunities within Bain Capital Credit's Senior Direct Lending Strategy, as defined below, which seeks to provide risk-adjusted returns and current income to investors by investing primarily in middle-market direct lending opportunities across North America, Europe and Australia and also in other geographic markets. We use the term "middle market" to refer to companies with between $10.0 million and $150.0 million in annual earnings before interest, taxes, depreciation and amortization (“EBITDA”). However, we may, from time to time, invest in larger or smaller companies. We focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender (including "unitranche" loans, which are loans that combine both senior and mezzanine debt). We generally seek to retain effective voting control in respect of the loans or particular class of securities in which we invest through maintaining affirmative voting positions or negotiating consent rights that allow us to retain a blocking position. We may also invest in mezzanine debt and other junior securities, including common and preferred equity and in secondary purchases of assets or portfolios, on an opportunistic basis, but such investments are not the principal focus of our investment strategy. We may also invest, from time to time, in distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities. Our debt investments may be fixed or floating interest rates, and our floating rate investments may utilize one or more reference rates, such as SOFR. Our investments are subject to a number of risks.

Previous wording

Our debt investment portfolio consists of primarily floating rate loans. As of December 31, 2023 and December 31, 2022, 93.8% and 94.5%, 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 LIBOR, 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 December 31, 2024 and December 31, 2023, 92.0% 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 of Directors (our “Board”). We incurred expenses related to the Administrator of $1.2 million, $0.1 million and $0.0 million for the years ended December 31, 2023, 2022 and 2021 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 $0.6 million, $0.6 million and $0.5 million for the years ended December 31, 2023, 2022 and 2021 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 $2.5 million, $1.2 million and $0.1 million for December 31, 2024, 2023 and 2022 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 $0.6 million, $0.6 million and $0.6 million for December 31, 2024, 2023 and 2022 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 December 31, 2023, the Company’s asset coverage was 189.9%.

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 December 31, 2024, the Company’s asset coverage was 181.7%.

Previous wording

The Advisor’s investment process can be broken into four processes: (1) Sourcing and Idea Generation, (2) Investment Diligence & Recommendation, (3) Credit Committee Approval and Portfolio Construction and (4) Portfolio & Risk Management.

Current wording

The Advisor’s investment process can be broken into five processes: (1) Sourcing and Idea Generation, (2) Investment Diligence & Recommendation, (3) Credit Committee Approval, (4) Portfolio Construction and (5) Portfolio & Risk Management.

Previous wording

During the year ended December 31, 2022, we invested $1,517.3 million, including PIK, in 104 portfolio companies, and had $1,411.9 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $105.4 million for the year. Of the $1,517.3 million invested during the year ended December 31, 2022, $182.1 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.

Current wording

During the year ended December 31, 2024, we invested $1,670.7 million, including PIK, in 159 portfolio companies, and had $1,522.8 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $147.9 million for the year. Of the $1,670.7 million invested during the year ended December 31, 2024, $291.2 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.

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 December 31, 2023, there were five loans from three issuers placed on non-accrual in the Company’s portfolio. As of December 31, 2022, 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 December 31, 2024, there were eight 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

The composition of our investment income for years ended December 31, 2023, 2022 and 2021 was as follows (dollars in thousands):

Current wording

The composition of our investment income for the years ended December 31, 2024, 2023 and 2022 was as follows (dollars in thousands):

Previous wording

Interest income from investments, which includes interest and accretion of discounts and fees, decreased to $166.3 million for the year ended December 31, 2022 from $167.3 million for the year ended December 31, 2021, primarily due to the continued ramping of the joint ventures, ISLP and SLP, and the increase in PIK, between the periods. Our investment portfolio at amortized cost increased to $2,419.9 million from $2,311.4 million for the years ended December 31, 2022 and 2021, respectively. Dividend income increased to $23.1 million for the year ended December 31, 2022 from $13.1 million for the year ended December 31, 2021, primarily due to an increase in dividend income from our equity interests in ISLP, SLP, and 2018-1 Issuer. Other income increased to approximately $15.1 million for the year ended December 31, 2022 from $6.2 million for the year ended December 31, 2021, primarily due to an increase in one-time fees earned on certain investments. As of December 31, 2022, the weighted average yield of our investment portfolio increased to 11.4% from 7.6% as of December 31, 2021, at amortized cost.

Current wording

Interest income from investments, which includes interest and accretion of discounts and fees, decreased to $222.2 million for the year ended December 31, 2024 from $228.6 million for the year ended December 31, 2023, primarily due to a decrease in yield of the investment portfolio. Dividend income decreased to $28.7 million for the year ended December 31, 2024 from $35.8 million for the year ended December 31, 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 the Gale Aviation investment in the third and fourth quarters of 2024. Other income increased to approximately $18.6 million for the year ended December 31, 2024 from $10.6 million for the year ended December 31, 2023, primarily due to an increase in amendment, closing and commitment fees earned on certain investments. As of December 31, 2024, the weighted average yield of our investment portfolio decreased to 11.7% from 13.0% as of December 31, 2023, at amortized cost.

Previous wording

Interest and debt financing expenses on our borrowings totaled approximately $52.3 million and $51.3 million for the years ended December 31, 2022 and 2021, respectively. Interest and debt financing expense for the year ended December 31, 2022 as compared to December 31, 2021, increased primarily due to rise in base rates of the variable rate debt and the usage of our Sumitomo Credit Facility, offset by the termination of the JPM Credit Facility, retirement of the 2023 Notes, refinance of the 2019-1 Debt to more favorable rates and the sale of the 2018-1 Notes to the SLP between periods. The weighted average principal debt balance outstanding for the year ended December 31, 2022 was $1.3 billion compared to $1.6 billion for the year ended December 31, 2021. The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) on our debt outstanding was 3.5% and 3.1% as of December 31, 2022 and 2021, respectively.

Current wording

Interest and debt financing expenses on our borrowings totaled approximately $74.7 million and $80.0 million for years ended December 31, 2024 and 2023, respectively. Interest and debt financing expense for the year ended December 31, 2024 as compared to December 31, 2023 decreased primarily due to decreased usage of our Sumitomo Credit Facility. The weighted average principal debt balance outstanding for the year ended December 31, 2024 was $1.3 billion compared to $1.4 billion for the year ended December 31, 2023.

Previous wording

The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for years ended December 31, 2023 and 2022 were 5.2% and 3.5%, respectively.

Current wording

The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for years ended December 31, 2024 and 2023 were 5.1% and 5.2%, respectively.

Previous wording

Management fee (net of waivers) increased to $34.7 million for the year ended December 31, 2022 from $30.1 million for the year ended December 31, 2021. Management fee decreased to $34.7 million for the year ended December 31, 2022 from $34.9 million for the year ended December 31, 2021, primarily due to a decrease in total assets throughout the year ended December 31, 2022 compared to the year ended December 31, 2021. Management fee waived for the years ended December 31, 2022 and 2021 were $0.0 million and $4.8 million, respectively. The decrease in management fee waived during the year ended December 31, 2022 compared to December 31, 2021, was due to a reduction of the Company's fee waiver.

Current wording

Management fee (net of waivers) decreased to $35.6 million for the year ended December 31, 2024 from $36.1 million for the year ended December 31, 2023. Management fee (gross of waivers) decreased to $35.6 million for the year ended December 31, 2024 from $36.1 million for the year ended December 31, 2023, primarily due to a decrease in total assets throughout the year ended December 31, 2024 compared to the year ended December 31, 2023. Management fee waived for the years ended December 31, 2024 and 2023 were $0.0 million and $0.0 million, respectively.

Previous wording

Incentive fee (net of waivers) increased slightly to $19.6 million for the year ended December 31, 2022 from $19.5 million for the year ended December 31, 2021. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the year ended December 31, 2022 and $4.5 million for the year ended December 31, 2021. For the year ended December 31, 2022 there were no incentive fees related to the GAAP Incentive Fee.

Current wording

Incentive fee (net of waivers) increased to $28.9 million for the year ended December 31, 2024 from $25.5 million for the year ended December 31, 2023 primarily due to an increase in pre-incentive net investment income. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the year ended December 31, 2024 and $0.0 million for the year ended December 31, 2023. For the year ended December 31, 2024, there were no incentive fees related to the GAAP Incentive Fee.

Previous wording

Professional fees and other general and administrative expenses increased to $8.7 million for the year ended December 31, 2022 from $7.9 million for the year ended December 31, 2021, 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 $13.6 million for the year ended December 31, 2024 from $10.5 million for the year ended December 31, 2023, primarily due to an increase in costs associated with servicing our investment portfolio.

Previous wording

For the years ended December 31, 2023, 2022 and 2021, we had net realized gains (losses) on investments of ($43.9) million, ($3.1) million and $21.2 million, respectively. For the years ended December 31, 2023, 2022 and 2021, we had net realized gains (losses) on foreign currency transactions of ($5.1) million, $5.3 million and ($3.5) million, respectively. For the years ended December 31, 2023, 2022 and 2021, we had net realized gains (losses) on forward currency contracts of ($0.4) million, $20.9 million and ($23.8) million, respectively, primarily as a result of settling EUR, GBP, AUD, NOK and CAD forward contracts.

Current wording

For the years ended December 31, 2024, 2023 and 2022, we had net realized losses on investments of ($10.4) million, ($43.9) million and ($3.1) million, respectively, which were primarily driven by full or partial sales or paydowns of our investments. For the years ended December 31, 2024, 2023 and 2022, we had net realized gains (losses) on foreign currency transactions of ($0.3) million, ($5.1) million and $5.3 million, respectively, primarily as a result of fluctuations in the EUR, GBP, NZD and CAD exchange rates. For the years ended December 31, 2024, 2023 and 2022, we had net realized gains (losses) on forward currency contracts of $2.3 million, ($0.4) million and $20.9 million, respectively, primarily as a result of settling AUD, EUR, GBP and NOK forward contracts.

Previous wording

For the year ended December 31, 2022, we had $69.1 million in unrealized appreciation on 53 portfolio company investments, which was offset by $79.8 million in unrealized depreciation on 89 portfolio company investments. Unrealized depreciation for the year ended December 31, 2022 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments. Unrealized depreciation was primarily due to positive valuation adjustments.

Current wording

For the year ended December 31, 2024, we had $74.2 million in unrealized appreciation on 80 portfolio company investments, which was offset by $86.5 million in unrealized depreciation on 102 portfolio company investments. Unrealized appreciation for the year ended December 31, 2024 resulted from an increase in fair value, primarily due to positive valuation adjustments. Unrealized depreciation for the year ended December 31, 2024 resulted from a decrease in fair value, primarily due to a widening of credit spreads and negative valuation adjustments.

Previous wording

For the years ended December 31, 2023, 2022 and 2021, we had unrealized appreciation on forward currency exchange contracts of ($2.3) million, ($5.3) million and $27.9 million, respectively. For the year ended December 31, 2023, unrealized appreciation on forward currency exchange contracts was primarily due to GBP forward contracts. For the year ended December 31, 2022, unrealized appreciation on forward currency exchange contracts was primarily due to EUR and GBP forward contracts. For the year ended December 31, 2021, unrealized appreciation on forward currency exchange contracts was primarily due to EUR and GBP forward contracts.

Current wording

For the years ended December 31, 2024, 2023 and 2022, we had unrealized appreciation on forward currency exchange contracts of $5.8 million, ($2.3) million and ($5.3) million, respectively. For the year ended December 31, 2024, unrealized appreciation on forward currency exchange contracts was primarily due to AUD, EUR, GBP, and NOK forward contracts. For the year ended December 31, 2023, unrealized appreciation on forward currency exchange contracts was primarily due to GBP forward contracts. For the year ended December 31, 2022, unrealized appreciation on forward currency exchange contracts was primarily due to EUR and GBP forward contracts.

Previous wording

Included in total net gains (losses) on the consolidated statements of operations is gains (losses) of $4.1 million, ($13.0) million and ($7.3) 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 years ended December 31, 2023, 2022 and 2021, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($2.7) million, $15.6 million and $4.2 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 $1.4 million, $2.7 million and ($3.1) million for the years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

Included in total net gains (losses) on the consolidated statements of operations were gains (losses) of ($5.6) million, $4.1 million and ($13.0) 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 years ended December 31, 2024, 2023 and 2022, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of $8.1 million, ($2.7) million and $15.6 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 $2.5 million, $1.4 million and $2.7 million the years ended December 31, 2024, 2023 and 2022, respectively.

Previous wording

For the years ended December 31, 2023, 2022 and 2021, the net increase in net assets resulting from operations was $123.4 million $105.5 million and $119.8 million, respectively. Based on the weighted average shares of common stock outstanding for the years ended December 31, 2023, 2022 and 2021, our per share net increase in net assets resulting from operations was $1.91, $1.63 and $1.86 respectively.

Current wording

For the years ended December 31, 2024, 2023 and 2022, the increase in net assets resulting from operations was $119.4 million, $123.4 million and $105.5 million, respectively. Based on the weighted average shares of common stock outstanding for the years ended December 31, 2024, 2023 and 2022, our per share net increase in net assets resulting from operations was $1.85, $1.91 and $1.63, respectively.

Previous wording

Our liquidity and capital resources are derived primarily from proceeds from equity issuances, advances from our credit facilities, 2019‑1 Debt, March 2026 Notes, October 2026 Notes, the Sumitomo Credit Facility and cash flows from operations. The primary uses of our cash are for (1) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements; (2) the cost of operations (including payments to the Advisor under the Investment Advisory and Administration Agreements); (3) debt service, repayment, and other financing costs; and, (4) cash distributions to the holders of our common shares.

Current wording

Our liquidity and capital resources are derived primarily from proceeds from equity issuances, advances from our credit facilities, 2019‑1 Debt, March 2026 Notes, October 2026 Notes, the Sumitomo Credit Facility and cash flows from operations. The primary uses of our cash are for (1) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements; (2) debt service, repayment, and other financing costs; (3) cash distributions to the holders of our common stock; and (4) the cost of operations (including payments to the Advisor under the Investment Advisory and Administration Agreements).

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 December 31, 2023 and December 31, 2022, our asset coverage ratio was 189.9% and 180.0%, 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 December 31, 2024 and December 31, 2023, our asset coverage ratio was 181.7% and 189.9%, respectively.

Previous wording

At December 31, 2023 and December 31, 2022, we had $112.5 million and $125.7 million in cash, foreign cash, restricted cash and cash equivalents, respectively.

Current wording

At December 31, 2024 and December 31, 2023, we had $99.1 million and $112.5 million in cash, foreign cash, restricted cash and cash equivalents, respectively.

Previous wording

At December 31, 2023, we had approximately $343.3 million of availability on our Sumitomo Credit Facility, subject to existing terms and regulatory requirements. At December 31, 2022, we had approximately $207.3 million of availability on our Sumitomo Credit Facility and $50.0 million of availability on our Revolving Advisor Loan, subject to existing terms and regulatory requirements.

Current wording

At December 31, 2024, we had approximately $412.3 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 year ended December 31, 2022, cash, foreign cash, restricted cash, and cash equivalents decreased by $77.9 million. During the year ended December 31, 2022, we used $316.8 million in cash for operating activities. The decrease in cash used for operating activities was primarily related to the purchases of investments of $1,404.1 million, which was offset by proceeds from principal payments and sales of investments of $988.1 million and a net increase in assets resulting from operations of $105.5 million. During the year ended December 31, 2022, we provided $238.3 million for financing activities, primarily due to borrowings and repayments on our Sumitomo Credit Facility and the retirement of the 2023 Notes.

Current wording

For the year ended December 31, 2024, cash, foreign cash, restricted cash, and cash equivalents decreased by $13.4 million. During the year ended December 31, 2024, we used $27.1 million in cash for operating activities. The decrease in cash used for operating activities was primarily related to purchases of investments of $1,626.0 million, which was offset by proceeds from principal payments and sales of investments of $1,486.3 million and a net increase in assets resulting from operations of $119.4 million. During the year ended December 31, 2024, we provided $14.3 million for financing activities, primarily on borrowings under our Sumitomo Credit Facility of $867.0 million., partially offset by repayments of $735.3 million and distributions paid during the period of $114.3 million.

Previous wording

For the year ended December 31, 2023, cash, foreign cash, restricted cash, and cash equivalents decreased by $13.2 million. During the year ended December 31, 2023, we provided $219.3 million in cash for operating activities. The increase in cash provided for operating activities was primarily related to the purchases of investments of $844.3 million, which was offset by proceeds from principal payments and sales of investments of $937.6 million and a net increase in assets resulting from operations of $123.4 million. During the year ended

Current wording

For the year ended December 31, 2023, cash, foreign cash, restricted cash, and cash equivalents decreased by $13.2 million. During the year ended December 31, 2023, we provided $219.3 million in cash for operating activities. The increase in cash provided for operating activities was primarily related to the purchases of investments of $844.3 million, which was offset by proceeds from principal payments and sales of investments of $937.6 million and a net increase in assets resulting from operations of $123.4 million. During the year ended December 31, 2023, we used $231.4 million for financing activities, primarily on repayments of our Sumitomo Credit Facility of $480.0 million, distributions paid during the period of $99.4 million, partially offset by borrowings of $348.0 million.

Previous wording

On November 19, 2018, we closed our initial public offering (the “IPO”) issuing 7,500,000 shares of its common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018. The offering generated net proceeds, after expenses, of $145.4 million. All outstanding capital commitments from the Company’s Private Offering were cancelled as of the completion of the IPO.

Current wording

On November 19, 2018, we closed our IPO issuing 7,500,000 shares of common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018. The offering generated net proceeds, after expenses, of $145.4 million. All outstanding capital commitments from the Company’s Private Offering were cancelled as of the completion of the IPO.

Previous wording

On May 7, 2019, the Company’s Board of Directors authorized the Company to repurchase up to $50 million of its outstanding common stock in accordance with safe harbor rules under the Exchange Act of 1934. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As of December 31, 2023, there have been no repurchases of common stock.

Current wording

On May 7, 2019, the Company’s Board authorized the Company to repurchase up to $50 million of its outstanding common stock in accordance with safe harbor rules under the Exchange Act. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As of December 31, 2024, there have been no repurchases of common stock.

Previous wording

During the year ended December 31, 2023, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan. During the year ended December 31, 2022, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan. During the year ended December 31, 2021, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan.

Current wording

During years ended December 31, 2024, 2023 and 2022 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 December 31, 2023, $10.7 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.

Previous wording

On September 28, 2018 (the “2018‑1 Closing Date”), we, through BCC Middle Market CLO 2018‑1 LLC (the “2018‑1 Issuer”), a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its $451.2 million term debt securitization (the “CLO Transaction”). The notes issued in connection with the CLO Transaction (the “2018‑1 Notes”) are secured by a diversified portfolio of the 2018‑1 Issuer consisting primarily of middle market loans, the majority of which are senior secured loans (the “2018‑1 Portfolio”). At the 2018‑1 Closing Date, the 2018‑1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the CLO Transaction.

Current wording

On September 28, 2018, (the “2018‑1 Closing Date”), the Company, through BCC Middle Market CLO 2018‑1 LLC (the “2018‑1 Issuer”), a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its $451.2 million term debt securitization (the “CLO Transaction”). The notes issued in connection with the CLO Transaction (the “2018‑1 Notes”) are secured by a diversified portfolio of the 2018‑1 Issuer consisting primarily of middle market loans, the majority of which are senior secured loans (the “2018‑1 Portfolio”). At the 2018‑1 Closing Date, the 2018‑1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the CLO Transaction.

Previous wording

The CLO Transaction was executed through a private placement of the following 2018‑1 Notes. The Class A‑1 A, A‑1 B, A‑2, B and C 2018‑1 Notes were issued at par and are scheduled to mature on October 20, 2030. The Company received 100% of the membership interests (the “Membership Interests”) in the 2018‑1 Issuer in exchange for its sale to the 2018‑1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest. At the time of the transaction, the Class A‑1 A, A‑1 B, A‑2, B and C 2018‑1 Notes were included in the consolidated financial statements. The Membership Interests were eliminated in consolidation.

Current wording

The CLO Transaction was executed through a private placement of the following 2018-1 Notes. The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes were issued at par and are scheduled to mature on October 20, 2030. The Company received 100% of the membership interests (the “Membership Interests”) in the 2018-1 Issuer in exchange for its sale to the 2018-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest. As of December 31, 2021, the Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes were included in the consolidated financial statements. The Membership Interests were eliminated in consolidation. On March 7, 2022, the Company sold 70% of the membership equity interests of the Company’s 2018-1 Notes to SLP, which resulted in the deconsolidation of the 2018-1 Notes from the Company’s consolidated financial statements as further discussed in Note 3.

Previous wording

Notes, which bear interest at the applicable reference rate plus 2.00% per annum; (iii) $47.5 million of Class B-R Senior Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 2.60% per annum; and (iv) $25.0 million of Class C-R Senior Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 3.75% per annum (collectively, the “2019‑1 CLO Reset Notes”). As part of the transactions, the 2019-1 Issuer was redomiciled from Cayman to Jersey. The 2019‑1 CLO Reset Notes are scheduled to mature on October 15, 2033 and the reinvestment period ends October 15, 2025. The Company retained $32.5 million of the Class B-R Notes and $25.0 million of the Class C-R Notes. The retained notes by the Company are eliminated in consolidation. The transaction resulted in a realized loss on the extinguishment of debt of $2.3 million from the acceleration of unamortized debt issuance costs of. The obligations of the 2019-1 Issuer under the 2019-1 CLO Transaction are non-recourse to the Company.

Current wording

On November 30, 2021, the Co-Issuers refinanced the 2019‑1 CLO Transaction through a private placement of $410 million of senior secured and senior deferrable notes consisting of: (i) $282.5 million of Class A‑1‑R Senior Secured Floating Rate Notes, which currently bear interest at the applicable reference rate plus 1.50% per annum; (ii) $55 million of Class A‑2‑R Senior Secured Floating Rate Notes, which bear interest at the applicable reference rate plus 2.00% per annum; (iii) $47.5 million of Class B-R Senior Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 2.60% per annum; and (iv) $25.0 million of Class C-R Senior Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 3.75% per annum (collectively, the “2019‑1 CLO Reset Notes”). As part of the transactions, the 2019-1 Issuer was redomiciled from Cayman to Jersey. The 2019‑1 CLO Reset Notes are scheduled to mature on October 15, 2033 and the reinvestment period ends October 15, 2025. The Company retained $32.5 million of the Class B-R Notes and $25.0 million of the Class C-R Notes. The retained notes by the Company are eliminated in consolidation. The transaction resulted in a realized loss to the Company on the extinguishment of debt of $2.3 million from the acceleration of unamortized debt issuance costs. The obligations of the 2019-1 Issuer under the 2019-1 CLO Transaction are non-recourse to the Company.

Previous wording

As of December 31, 2023, there were 49 first lien and second lien senior secured loans with a total fair value of approximately $453.7 million and cash of $52.8 million securing the 2019-1 Debt. As of December 31, 2022, there were 49 first lien and second lien senior secured loans with a total fair value of approximately $447.4 million and cash of $56.0 million securing the 2019-1 Debt. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As of December 31, 2023, the Company was in compliance with its covenants related to the 2019-1 Debt.

Current wording

As of December 31, 2024, there were 56 first lien senior secured loans with a total fair value of approximately $465.3 million and cash of $39.8 million securing the 2019-1 Debt. As of December 31, 2023, there were 49 first lien and second lien senior secured loans with a total fair value of approximately $453.7 million and cash of $52.8 million securing the 2019-1 Debt. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As of December 31, 2024, the Company was in compliance with its covenants related to the 2019-1 Debt.

Previous wording

Costs of the offering of $1.5 million were incurred in connection with the 2019‑1 CLO Reset Notes which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019‑1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life using the effective interest method. The balance of the unamortized debt issuance costs was $1.3 million and $1.4 million as of December 31, 2023 and December 31, 2022, respectively.

Current wording

Costs of the offering of $1.5 million were incurred in connection with the 2019-1 CLO Reset Notes which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019-1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life using the effective interest method. The balance of the unamortized debt issuance costs was $1.1 million and $1.3 million as of December 31, 2024 and December 31, 2023, respectively.

Previous wording

The 2023 Notes were scheduled to mature on June 10, 2023 and could be redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the Note Purchase Agreement. The 2023 Notes bore interest at a rate of 8.50% per year payable semi-annually on June 10 and December 10 of each year, commencing on December 10, 2020.

Current wording

The 2023 Notes were scheduled to mature on June 10, 2023 and could have been redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the Note Purchase Agreement. The 2023 Notes bore interest at a rate of 8.50% per year payable semi-annually on June 10 and December 10 of each year, commencing on December 10, 2020.

Previous wording

On July 16, 2021 the Company repurchased $37.5 million of the 2023 Notes at a total cost of $39.5 million. This resulted in a realized loss on the extinguishment of debt of $2.5 million, which included a premium paid of $2.0 million and acceleration of unamortized debt issuance costs and original issue discount of $0.5 million.

Current wording

On July 16, 2021 the Company repurchased $37.5 million of the 2023 Notes at a total cost of $39.5 million. This resulted in a realized loss to the Company on the extinguishment of debt of $2.5 million, which included a premium paid of $2.0 million and acceleration of unamortized debt issuance costs and original issue discount of $0.5 million.

Previous wording

On August 24, 2022, the Company issued a notice to the noteholders of the 2023 Notes, indicating its intention to prepay the total aggregate principal amount committed of $150,000,000, including the principal amount outstanding of $112,500,000, under the 2023 Notes pursuant to the terms of the Note Purchase Agreement governing the 2023 Notes. The Notes were prepaid at 100% of their principal amount, plus accrued and unpaid interest thereon, on September 6, 2022.

Current wording

On August 24, 2022, the Company issued a notice to the noteholders of the 2023 Notes, indicating its intention to prepay the total aggregate principal amount committed of $150.0 million, including the principal amount outstanding of $112.5 million, under the 2023 Notes pursuant to the terms of the Note Purchase Agreement governing the 2023 Notes. The Notes were prepaid at 100% of their principal amount, plus accrued and unpaid interest thereon, on September 6, 2022. This resulted in a realized loss to the Company on the extinguishment of debt of $0.7 million, which included acceleration of unamortized debt issuance costs and original issue discount of $0.7 million.

Previous wording

The net proceeds to the Company were approximately $294.3 million, after deducting the underwriting discounts and commissions of $4.4 million and offering expenses of $1.3 million.

Current wording

The net proceeds to the Company from the March 2026 Notes were $294.3 million, after deducting the underwriting discounts and commissions of $4.4 million payable by the Company and offering expenses of $1.3 million payable by the Company.