Silver Spike Investment Corp
For the period ended Jun 30, 2024. Filed Aug 8, 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.
Jun 30, 2024 · Filed Aug 8, 2024
LIEN$9.07-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001140361-24-025238
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001140361-24-036447
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 105 previous paragraphs and 112 current paragraphs.
83 unchanged; 22 reworded; 7 added; 0 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 59 previous and 59 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 (7)
Current report
Unfunded Commitments
Current report
The Company’s commitments and contingencies include unfunded commitments to extend credit in the form of loans to the Company’s portfolio companies. A portion of these unfunded contractual commitments are generally dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available. Furthermore, the Company’s credit agreements with its portfolio companies generally contain customary lending provisions that allow the Company relief from funding obligations for previously made commitments in instances where the underlying portfolio company experiences materially adverse events that affect the financial condition or business outlook of the company. Since a portion of these commitments may expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements. As such, the Company’s disclosure of unfunded contractual commitments as of June 30, 2024 includes only those commitments that are available at the request of the portfolio company and are unencumbered by milestones or additional lending provisions. As of June 30, 2024, the Company had outstanding commitments to fund investments totaling $1.75 million. The Company has identified no unfunded commitments as of December 31, 2023.
Current report
The Company did not have any other off-balance sheet financings or liabilities as of June 30, 2024 or December 31, 2023. The Company will fund its unfunded commitments, if any, from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents) and maintains adequate liquidity to fund its unfunded commitments through these sources.
Current report
In the normal course of business, the Company enters into contracts that provide a variety of representations and warranties, and general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.
Current report
On May 14, 2024, Roxanne Jenkins resigned from her Secretary and Chief Compliance Officer positions with the Company. Ms. Jenkins’ decision to resign from the Company was not due to a disagreement on any matter related to the Company’s operations, policies or practices.
Current report
On May 14, 2024, our Board of Directors appointed Umesh Mahajan to the position of Secretary of the Company and Alexander Woodcock to the position of Chief Compliance Officer of the Company. Mr. Mahajan and Mr. Woodcock will serve as Secretary of the Company and Chief Compliance Officer of the Company, respectively, until his successor has been duly elected and qualified, or until the earlier of his resignation or removal.
Current report
Mr. Woodcock is the President and Chief Compliance Officer of PINE Distributors LLC and oversees the delivery of PINE’s Distribution Services. He is also a member of the Registered Fund Chief Compliance Officer Services team at PINE and serves as CCO for mutual funds, ETFs, and other 1940 Act registered products. Mr. Woodcock has over 13 years of experience building and leading compliance programs at global financial services firms across diverse product and business lines. Before joining PINE in 2022, Mr. Woodcock served as Vice President of Compliance Services at SS&C ALPS. In this role, which he began in 2019, he led the Compliance Services team, delivering fund CCO support to over 10 client trusts, and post-trade compliance testing services to over 70 fund families. Mr. Woodcock’s qualifications include being a Certified Anti-Money Laundering Specialist, holding FINRA Series 7 and 24 registrations, and studying International Business and Economics at Aston University in England.
Reworded paragraphs (22)
Previous wording
We have typically invested in and expect to continue to invest in loans made primarily to private leveraged middle-market companies with up to $100 million of earnings before interest, taxes, depreciation and amortization, or “EBITDA.” Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. We expect that our investments will generally range between $4 million and $40 million each, although we expect that this investment size will vary proportionately with the size of our capital base. We have an active pipeline of investments and are currently reviewing approximately $425 million of potential investments in varying stages of underwriting.
Current wording
We have typically invested in and expect to continue to invest in loans made primarily to private leveraged middle-market companies with up to $100 million of earnings before interest, taxes, depreciation and amortization, or “EBITDA.” Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. We expect that our investments will generally range between $4 million and $40 million each, although we expect that this investment size will vary proportionately with the size of our capital base. We have an active pipeline of investments and are currently reviewing approximately $560 million of potential investments in varying stages of underwriting.
Previous wording
As of March 31, 2024, our investment portfolio had an aggregate fair value of approximately $54.8 million and was comprised of approximately $46.6 million in first lien, senior secured loans, and approximately $8.2 million in senior secured notes across five portfolio companies. As of December 31, 2023, our investment portfolio had an aggregate fair value of approximately $54.1 million and was comprised of approximately $46.0 million in first lien, senior secured loans, and approximately $8.1 million in senior secured notes across five portfolio companies.
Current wording
As of June 30, 2024, our investment portfolio had an aggregate fair value of approximately $53.4 million and was comprised of approximately $44.3 million in first lien, senior secured loans, approximately $8.3 million in senior secured notes and approximately $0.8 million in equity securities across six portfolio companies. As of December 31, 2023, our investment portfolio had an aggregate fair value of approximately $54.1 million and was comprised of approximately $46.0 million in first lien, senior secured loans, and approximately $8.1 million in senior secured notes across five portfolio companies. During the three month period ended June 30, 2024, we began making investments in equity securities.
Previous wording
As of March 31, 2024 and December 31, 2023, we had two portfolio companies that represented 77.1% and 77.0% respectively, of the fair values of our portfolio. As of March 31, 2024 and December 31, 2023, our largest portfolio company represented 38.7% and 38.7%, respectively, of the total fair values of our investments in portfolio companies.
Current wording
As of June 30, 2024 and December 31, 2023, we had two portfolio companies that represented 73.1% and 77.0% respectively, of the fair values of our portfolio. As of June 30, 2024 and December 31, 2023, our largest portfolio company represented 39.5% and 38.7%, respectively, of the total fair values of our investments in portfolio companies.
Previous wording
The following table provides a summary of the changes in the investment portfolio for the three months ended March 31, 2024 and 2023:
Current wording
The following table provides a summary of the changes in the investment portfolio for the six months ended June 30, 2024 and 2023:
Previous wording
Our portfolio management team uses an ongoing investment risk rating system to characterize and monitor our outstanding loans. Our portfolio management team monitors and, when appropriate, recommends changes to the investment risk ratings. Our Adviser’s Valuation Committee reviews the recommendations and/or changes to the investment risk ratings, which are submitted on a quarterly basis to the Board of Directors and its Audit Committee.
Current wording
Our portfolio management team uses an ongoing investment risk rating system to characterize and monitor our outstanding investments. Our portfolio management team monitors and, when appropriate, recommends changes to the investment risk ratings. Our Adviser’s Valuation Committee reviews the recommendations and/or changes to the investment risk ratings, which are submitted on a quarterly basis to the Board of Directors and its Audit Committee.
Previous wording
The following tables show the distribution of our loan investments on the 1 to 5 investment risk rating scale at fair value as of March 31, 2024 and December 31, 2023:
Current wording
The following tables show the distribution of our investments on the 1 to 5 investment risk rating scale at fair value as of June 30, 2024 and December 31, 2023:
Previous wording
The following discussion and analysis of our results of operations encompasses our results for the three months ended March 31, 2024 and 2023.
Current wording
The following discussion and analysis of our results of operations encompasses our results for the three and six months ended June 30, 2024 and 2023.
Previous wording
The following table sets forth the components of investment income for the three months ended March 31, 2024 and 2023:
Current wording
The following table sets forth the components of investment income for the three and six months ended June 30, 2024 and 2023:
Previous wording
The Company also recognizes certain fees as one-time fee income, including, but not limited to, structuring fees.
Current wording
The Company also recognizes certain fees as one-time fee income, including, but not limited to, advisory and commitment fees.
Previous wording
For the three months ended March 31, 2024, total investment income was approximately $2.8 million, which is attributable to less than $0.1 million of fee income related to administrative fees and approximately $2.7 million of interest income.
Current wording
For the three and six months ended June 30, 2024, total investment income was approximately $3.1 million and $5.8 million, which is attributable to $0.3 million and $0.3 million of fee income related to commitment fees, advisory fees, and administrative fees and $2.8 million and $5.5 million of interest income, respectively. For the three and six months ended June 30, 2023, total investment income was approximately $2.9 million and $5.3 million, which is attributable to $0.1 million and $0.1 million of fee income related to administrative and amendment fees and $2.8 million and $5.2 million of interest income, respectively.
Previous wording
The $0.3 million increase in investment income during the three months ended March 31, 2024 in comparison to the three months ended March 31, 2023 is due to an increase in interest income driven by the increase in interest rates.
Current wording
The $0.2 million and $0.5 million increase in investment income during the three and six months ended June 30, 2024 in comparison to the three and six months ended June 30, 2023, respectively, is due to a prepayment premium and one-time fee income with respect to the three months ended June 30, 2024 and an increase in interest income driven by the increase in interest rates with respect to the six months ended June 30, 2024.
Previous wording
The table below provides a detailed breakdown of the operating expenses for the quarters ending March 31, 2024 and March 31, 2023.
Current wording
The table below provides a detailed breakdown of the operating expenses for the three and six months ended June 30, 2024 and 2023:
Previous wording
Net investment income (loss) was approximately $(0.1) million for the three months ended March 31, 2024, as compared to approximately $1.4 million for the three months ended March 31, 2023. The fluctuation in net investment income is primarily due to transaction fees of $2.1 million incurred in connection with the Loan Portfolio Acquisition during the quarter ended March 31, 2024. While we consider these fees to be largely non-recurring and anticipate less transaction fees going forward, we acknowledge the possibility of unforeseen transaction-related costs in future periods.
Current wording
Net investment income was approximately $1.5 million and $1.4 million for the three and six months ended June 30, 2024, as compared to approximately $1.9 million and $3.3 million for the three and six months ended June 30, 2023, respectively. The fluctuation in net investment income is primarily due to transaction fees of $0.5 million and $2.6 million incurred in connection with the Loan Portfolio Acquisition during the three and six months ended June 30, 2024, although the impact of such fees was partially offset by the increases in investment income during the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, as discussed above. While we consider these fees to be largely non-recurring and anticipate less transaction fees going forward, we acknowledge the possibility of unforeseen transaction-related costs in future periods.
Previous wording
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the amortized cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period. There were no sales or redemptions of investments during the three months ended March 31, 2024 or 2023.
Current wording
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the amortized cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period. There were no sales or redemptions of investments during the three and six months ended June 30, 2024. There was $210,767 and $210,767 in net realized losses from the sale of an investment during the three and six months ended June 30, 2023, respectively.
Previous wording
Net unrealized appreciation and depreciation on investments for the three months ended March 31, 2024 and 2023 is comprised of the following:
Current wording
Net unrealized appreciation and depreciation on investments for thethree and six months ended June 30, 2024 and 2023 is comprised of the following:
Previous wording
The following table details net change in unrealized appreciation (depreciation) for our portfolio for the three months ended March 31, 2024 and 2023:
Current wording
The following table details net change in unrealized appreciation (depreciation) for our portfolio for the three and six months ended June 30, 2024 and 2023:
Previous wording
Our primary use of funds will be investments in portfolio companies, dividend payments to holders of our common stock who opt out of the DRIP, and the payment of operating expenses. As of March 31, 2024 and December 31, 2023, we had cash resources of approximately $33.2 million and $32.6 million, respectively, and no indebtedness.
Current wording
Our primary use of funds will be investments indebt and equity securities, dividend payments to holders of our common stock who opt out of the DRIP, and the payment of operating expenses. As of June 30, 2024 and December 31, 2023, we had cash resources of approximately $34.0 million and $32.6 million, respectively, and no indebtedness.
Previous wording
All of our investments as of March 31, 2024 and December 31, 2023 are categorized at level 3, and therefore, 100% of our portfolio requires significant estimates. Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5 under the 1940 Act), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Significant unobservable inputs create uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s investments may vary and may include the debt investments’ yield and volatility fluctuations. Significant increases (decreases) in discount rate in isolation would result in a significantly lower (higher) fair value assessment. Significant increases (decreases) in volatility in isolation would result in a significantly lower (higher) fair value assessment.
Current wording
All of our investments as of June 30, 2024 and December 31, 2023 are categorized at Level 3, and therefore, 100% of our portfolio requires significant estimates. Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5 under the 1940 Act), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Significant unobservable inputs create uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s debt investments may vary and may include yield and volatility fluctuations. Significant increases (decreases) in discount rate in isolation would result in a significantly lower (higher) fair value assessment. Significant increases (decreases) in volatility in isolation would result in a significantly lower (higher) fair value assessment. The significant unobservable inputs used in the fair value measurement of the Company’s equity and warrant investments may vary and may include EBITDA multiples, revenue multiples and asset multiples. Significant increases (decreases) in EBITDA, revenue and asset multiple inputs in isolation would result in a significantly higher (lower) fair value assessment.
Previous wording
The following table lists the net asset value per share of our common stock, the range of high and low closing sales prices of our common stock reported on the Nasdaq Global Market, the closing sale prices as a premium (or discount) to our net asset value per share and dividends per share for each fiscal quarter since our common stock began trading on the Nasdaq Global Market. On May 7, 2024, the last reported closing sales price of our common stock on the Nasdaq Global Market was $11.40 per share, which represented a discount of approximately 16.2% to our net asset value per share of $13.60 as of March 31, 2024.
Current wording
The following table lists the net asset value per share of our common stock, the range of high and low closing sales prices of our common stock reported on the Nasdaq Global Market, the closing sale prices as a premium (or discount) to our net asset value per share and dividends per share for each fiscal quarter since our common stock began trading on the Nasdaq Global Market. On August 6, 2024, the last reported closing sales price of our common stock on the Nasdaq Global Market was $11.97 per share, which represented a discount of approximately 11.7% to our net asset value per share of $13.56 as of June 30, 2024.
Previous wording
Duringthe three months ended March 31, 2024, the Company issued the following shares of common stock under the DRIP:
Current wording
During the six months ended June 30, 2024, the Company issued the following shares of common stock under the DRIP:
Previous wording
Duringthe three months ended March 31, 2023, the Company issued no new shares of common stock under the DRIP.
Current wording
During the six months ended June 30, 2023, the Company issued no new shares of common stock under the DRIP.
Previous wording
We did not repurchase any of our equity securities during thethree months ended March 31, 2024 or the fiscal year ended December 31, 2023.
Current wording
We did not repurchase any of our equity securities during the six months ended June 30, 2024 or the fiscal year ended December 31, 2023.