GOLUB CAPITAL BDC Inc

Previous wording

•turmoil in Ukraine and Russia, including sanctions related to such turmoil, and the potential for volatility in energy prices and other supply chain issues and any impact on the industries in which we invest;

Current wording

•turmoil in Ukraine and Russia and the Middle East, including sanctions related to such turmoil, and the potential for volatility in energy prices and other supply chain issues and any impact on the industries in which we invest;

Previous wording

Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words. The forward looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in our annual report on Form 10-K for the year ended September 30, 2023, our quarterly report on Form 10-Q for the quarter ended December 31, 2023 and in Item 1A. “Risk Factors” in this quarterly report on Form 10-Q.

Current wording

Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words. The forward looking statements contained in this

Previous wording

Our investment objective is to generate current income and capital appreciation by investing primarily in one stop (a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans and that are often referred to by other middle-market lenders as unitranche loans) and other senior secured loans of U.S. middle-market companies. We also selectively invest in second lien and subordinated loans of, and warrants and minority equity securities in U.S. middle-market companies. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub Capital, a leading lender to U.S. middle-market companies with over $70.0 billion in capital under management as of April 1, 2024, (2) selecting investments within our core middle-market company focus, (3) partnering with experienced private equity firms, or sponsors, in many cases with whom Golub Capital has invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub Capital and (5) drawing upon the aggregate experience and resources of Golub Capital.

Current wording

Our investment objective is to generate current income and capital appreciation by investing primarily in one stop (a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans and that are often referred to by other middle-market lenders as unitranche loans) and other senior secured loans of U.S. middle-market companies. We also selectively invest in second lien and subordinated loans of, and warrants and minority equity securities in U.S. middle-market companies. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub Capital, a leading lender to U.S. middle-market companies with over $75.0 billion in capital under management as of January 1, 2025, (2) selecting investments within our core middle-market company focus, (3) partnering with experienced private equity firms, or sponsors, in many cases with whom Golub Capital has invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub Capital and (5) drawing upon the aggregate experience and resources of Golub Capital.

Previous wording

We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. These securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay down principal prior to maturity, which may increase our risk of losing part or all of our investment.

Current wording

We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. These securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay down principal prior to maturity, which could increase our risk of losing part or all of our investment.

Previous wording

One stop loans include loans to technology companies undergoing strong growth due to new services, increased adoption and/or entry into new markets. We refer to loans to these companies as recurring revenue loans. Other targeted characteristics of recurring revenue businesses include strong customer revenue retention rates, a diversified customer base and backing from growth equity or venture capital firms. In some cases, the borrower’s high revenue growth is supported by a high level of discretionary spending. As part of the underwriting of such loans and consistent with industry practice, we adjust our characterization of the earnings of such borrowers for a reduction or elimination of such discretionary expenses, if appropriate. As of June 30, 2024 and September 30, 2023, one stop loans included $1,124.2 million and $782.6 million, respectively, of recurring revenue loans at fair value.

Current wording

One stop loans include loans to technology companies undergoing strong growth due to new services, increased adoption and/or entry into new markets. We refer to loans to these companies as recurring revenue loans. Other targeted characteristics of recurring revenue businesses include strong customer revenue retention rates, a diversified customer base and backing from growth equity or venture capital firms. In some cases, the borrower’s high revenue growth is supported by a high level of discretionary spending. As part of the underwriting of such loans and consistent with industry practice, we adjust our characterization of the earnings of such borrowers for a reduction or elimination of such discretionary expenses, if appropriate. As of December 31, 2024 and September 30, 2024, one stop loans included $1,104.2 million and $1,021.3 million, respectively, of recurring revenue loans at fair value.

Previous wording

As of June 30, 2024 and September 30, 2023, we had debt and equity investments in 380 and 342 portfolio companies, respectively.

Current wording

As of December 31, 2024 and September 30, 2024, we had debt and equity investments in 386 and 381 portfolio companies, respectively.

Previous wording

The following table shows the weighted average income yield and weighted average investment income yield of our earning portfolio company investments, which represented nearly 100% of our debt investments, as well as the annualized total return based on our average net asset value, and the total return based on the change in the quoted market price of our stock and assuming distributions were reinvested in accordance with our dividend reinvestment plan, or DRIP, in each case for the three months ended June 30, 2024 and March 31, 2024 and the nine months ended June 30, 2024 and June 30, 2023:

Current wording

The following table shows the weighted average income yield and weighted average investment income yield of our earning portfolio company investments, which represented nearly 100% of our debt investments, as well as the total return based on our average net asset value, and the total return based on the change in the quoted market price of our stock and assuming distributions were reinvested in accordance with our dividend reinvestment plan, or DRIP, in each case for three months ended December 31, 2024, September 30, 2024 and December 31, 2023:

Previous wording

(1)Represents income from interest, fees, interest earned on cash, accrued PIK and non-cash dividend income, excluding amortization of capitalized fees, discounts and purchase premium (as described in Note 2 of the consolidated financial statements), divided by the daily average fair value of earning portfolio company investments, and does not represent a return to any investor in us.

Current wording

(1)Represents income from interest, fees, interest earned on cash, accrued PIK and non-cash dividend income, excluding amortization of capitalized fees, discounts and purchase premium (as described in “Note 2. Significant Accounting Policies and Recent Accounting Updates” of the consolidated financial statements), divided by the daily average fair value of earning portfolio company investments, and does not represent a return to any investor in us.

Previous wording

(2)Represents income from interest, fees, interest earned on cash, accrued PIK and non-cash dividend income and amortization of capitalized fees and discounts, excluding amortization of purchase premium (as described in Note 2 of the consolidated financial statements), divided by the daily average fair value of earning portfolio investments, and does not represent a return to any investor in us.

Current wording

(2)Represents income from interest, fees, interest earned on cash, accrued PIK and non-cash dividend income and amortization of capitalized fees and discounts, excluding amortization of purchase premium (as described in “Note 2. Significant Accounting Policies and Recent Accounting Updates” of the consolidated financial statements), divided by the daily average fair value of earning portfolio investments, and does not represent a return to any investor in us.

Previous wording

GC Advisors, as collateral manager for Golub Capital Investment Corporation CLO II LLC, or the GCIC 2018 Issuer, under a collateral management agreement, or the GCIC 2018 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the GCIC 2018 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the 2018 GCIC Collateral Management Agreement, the term “collection period” generally refers to a quarterly period commencing on the day after the end of the prior collection period to the tenth business day prior to the payment date.

Current wording

Prior to the redemption of the GCIC 2018 Notes and the termination of the documents governing the GCIC 2018 Debt Securitization, GC Advisors served as collateral manager for Golub Capital Investment Corporation CLO II LLC, or the GCIC 2018 Issuer, under a collateral management agreement, or the GCIC 2018 Collateral Management Agreement, and was entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the GCIC 2018 Issuer at the beginning of the collection period relating to each payment date, which was payable in arrears on each payment date. Under the 2018 GCIC Collateral Management Agreement, the term “collection period” generally referred to a quarterly period commencing on the day after the end of the prior collection period to the tenth business day prior to the payment date.

Previous wording

GC Advisors, as collateral manager for our indirect, wholly owned, consolidated subsidiary, Golub Capital BDC 3 CLO 1 LLC, or the GBDC 3 2021 Issuer, under a collateral management agreement, or the 2021 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the GBDC 3 2021 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the 2021 Collateral Management Agreement, the term “collection period” refers to the period commencing on the tenth business day prior to the preceding payment date and ending on (but excluding) the tenth business day prior to such payment date.

Current wording

Prior to the redemption of the GBDC 3 2021 Notes and the termination of the documents governing the GBDC 3 2021 Debt Securitization, GC Advisors served as collateral manager for our indirect, wholly owned, consolidated subsidiary, Golub Capital BDC 3 CLO 1 LLC, or the GBDC 3 2021 Issuer, under a collateral management agreement, or the GBDC 3 2021 Collateral Management Agreement, and was entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the GBDC 3 2021 Issuer at the beginning of the collection period relating to each payment date, which was payable in arrears on each payment date. Under the GBDC 3 2021 Collateral Management Agreement, the term “collection period” referred to the period commencing on the tenth business day prior to the preceding payment date and ending on (but excluding) the tenth business day prior to such payment date.

Previous wording

GC Advisors, as collateral manager for our indirect, wholly owned, consolidated subsidiary, Golub Capital BDC 3 ABS 2022-1 LLC, or the GBDC 3 2022 Issuer, under a collateral management agreement, or the 2022-2 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the GBDC 3 2022 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the 2022 Collateral Management Agreement, the term “collection period” relating to any payment date, refers to the period commencing on the tenth business day prior to the preceding payment date and ending on (but excluding) the tenth business day prior to such payment date. GC Advisors, as collateral manager for our indirect, wholly owned, consolidated subsidiary, Golub Capital BDC 3 CLO 2 LLC, or the GBDC 3 2022-2 Issuer, under a collateral management agreement, or the 2022-2 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the GBDC 3 2022-2 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the 2022-2 Collateral Management Agreement, the term “collection period” refers to the period commencing on the tenth business day prior to the preceding payment date and ending on (but excluding) the tenth business day prior to such payment date.

Current wording

GC Advisors, as collateral manager for our indirect, wholly owned, consolidated subsidiary, Golub Capital BDC 3 ABS 2022-1 LLC, or the GBDC 3 2022 Issuer, under a collateral management agreement, or the GBDC 3 2022-2 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the GBDC 3 2022 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the GBDC 3 2022 Collateral Management Agreement, the term “collection period” relating to any payment date, refers to the period commencing on the tenth business day prior to the preceding payment date and ending on (but excluding) the tenth business day prior to such payment date.

Previous wording

GC Advisors, as collateral manager for Golub Capital BDC CLO III LLC, or the 2018 Issuer, under a collateral management agreement, or the 2018 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.25% of the principal balance of the portfolio loans held by the 2018 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the 2018 Collateral Management Agreement, the term "collection period" refers to the period commencing on the third business day prior to the preceding payment date and ending on (but excluding) the third business day prior to such payment date.

Current wording

GC Advisors, as collateral manager for our indirect, wholly owned, consolidated subsidiary, Golub Capital BDC CLO 8 LLC, or the 2024 Issuer, under a collateral management agreement, or the 2024 Issuer Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the 2024 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the 2024 Issuer Collateral Management Agreement, the term “collection period” refers to the period commencing on the third business day prior to the preceding payment date and ending on (but excluding) the third business day prior to such payment date.

Previous wording

Collateral management fees are paid directly by the 2018 Issuer, GCIC 2018 Issuer, GBDC 3 2021 Issuer, GBDC 3 2022 Issuer and GBDC 3 2022-2 Issuer to GC Advisors and are offset against the management fees payable under the Investment Advisory Agreement. The 2018 Issuer paid Morgan Stanley & Co. LLC structuring and placement fees for its services in connection with the structuring of the 2018 Debt Securitization (as defined in Note 7 of our consolidated financial statements). Before we acquired the GCIC 2018 Issuer as part of our acquisition of Golub Capital Investment Corporation, a Maryland corporation, or GCIC, on September 6, 2019, the GCIC 2018 Issuer paid Wells Fargo Securities, LLC structuring and placement fees for its services in connection with the initial structuring of the GCIC 2018 Debt Securitization (as defined in Note 7 of our consolidated financial statements). Before we acquired the GBDC 3 2021 Issuer and GBDC 3 2022 Issuer as a part of our acquisition of Golub Capital BDC 3, Inc., or GBDC 3, on June 3, 2024, the GBDC 3 2021 Issuer and GBDC 3 2022 Issuer paid Deutsche Bank AG, New York Branch, structuring and placement fees for its services in connection with the structuring of the GBDC 3 2021 Debt Securitization and the GBDC 3 2022 Debt Securitization (as defined in Note 7 of our consolidated financial statements). Before we acquired the GBDC 3 2022-2 Issuer as a part of our acquisition of GBDC 3 on June 3, 2024, the GBDC 3 2022-2 Issuer paid GreensLedge Capital Markets LLC and KeyBanc Capital Markets Inc. structuring and placement fees for its services in connection with the structuring of the GBDC 3 2022-2 Debt Securitization (as defined in Note 7 of our consolidated financial statements). Term debt securitizations are also known as CLOs, and are a form of secured financing incurred by us, which are consolidated by us and subject to our overall asset coverage requirement. The 2018 Issuer, GCIC 2018 Issuer, GBDC 3 2021 Issuer, GBDC 3 2022 Issuer and GBDC 3 2022-2 Issuer also agreed to pay ongoing administrative expenses to the trustee, collateral manager, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2018 Debt Securitization, GCIC 2018 Debt Securitization, the GBDC 3 2021 Debt Securitization, the GBDC 3 2022 Debt Securitization and the GBDC 3 2022-2 Debt Securitization and collectively the Debt Securitizations, as applicable.

Current wording

Collateral management fees are paid directly by the 2018 Issuer, GCIC 2018 Issuer, GBDC 3 2021 Issuer, GBDC 3 2022 Issuer, GBDC 2 2022-2 Issuer and the 2024 Issuer and are offset against the management fees payable under the Investment Advisory Agreement. The 2018 Issuer paid Morgan Stanley & Co. LLC structuring and placement fees for its services in connection with the structuring of the 2018 Debt Securitization. Before we acquired the GCIC 2018 Issuer as part of our acquisition of Golub Capital Investment Corporation, a Maryland corporation, or GCIC, on September 6, 2019, the GCIC 2018 Issuer paid Wells Fargo Securities, LLC structuring and placement fees for its services in connection with the initial structuring of the GCIC 2018 Debt Securitization. Before we acquired the GBDC 3 2022 Issuer as a part of our acquisition of Golub Capital BDC 3, Inc., or GBDC 3, on June 3, 2024, the GBDC 3 2022 Issuer paid Deutsche Bank AG, New York Branch, structuring and placement fees for its services in connection with the structuring of the GBDC 3 2022 Debt Securitization (as defined in “Note 7. Borrowings” of our consolidated financial statements). Before we acquired the GBDC 3 2022-2 Issuer as a part of our acquisition of GBDC 3 on June 3, 2024, the GBDC 3 2022-2 Issuer paid GreensLedge Capital Markets LLC and KeyBanc Capital Markets Inc. structuring and placement fees for its services in connection with the structuring of the GBDC 3 2022-2 Debt Securitization (as defined in “Note 7. Borrowings” of our consolidated financial statements).Term debt securitizations are also known as CLOs, and are a form of secured financing incurred by us, which are consolidated by us and subject to our overall asset coverage requirement. The 2018 Issuer, GCIC 2018 Issuer, GBDC 3 2021 Issuer, GBDC 3 2022 Issuer, GBDC 3 2022-2 Issuer and the 2024 Issuer also agreed to pay ongoing administrative expenses to the trustee, collateral manager, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2018 Debt Securitization, GCIC 2018 Debt Securitization, the GBDC 3 2021 Debt Securitization, the GBDC 3 2022 Debt Securitization, the GBDC 3 2022-2 Debt Securitization and the 2024 Debt Securitization and collectively the Debt Securitizations, as applicable.

Previous wording

In accordance with the terms of the GBDC 3 Merger Agreement, at the effective time of the GBDC 3 Merger, each outstanding share of GBDC 3’s common stock was converted into the right to receive 0.9138 shares of our common stock (with GBDC 3’s stockholders receiving cash in lieu of fractional shares of our common stock). As a result of the GBDC 3 Merger, we issued issue an aggregate of 92,115,308 shares of our common stock to former stockholders of GBDC 3.

Current wording

In accordance with the terms of the GBDC 3 Merger Agreement, at the effective time of the GBDC 3 Merger, each outstanding share of GBDC 3’s common stock was converted into the right to receive 0.9138 shares of our common stock (with GBDC 3’s stockholders receiving cash in lieu of fractional shares of our common stock). As a result of the GBDC 3 Merger, we issued an aggregate of 92,115,308 shares of our common stock to former stockholders of GBDC 3.

Previous wording

On August 2, 2024, the Company’s Board declared a quarterly distribution of $0.39 per share payable on September 27, 2024 to holders of record as of August 30, 2024 and a supplemental distribution of $0.05 per share payable on September 13, 2024 to holders of record as of August 16, 2024.

Current wording

On February 3, 2025, our Board declared a quarterly distribution of $0.39 per share, which is payable on March 28, 2025 to holders of record as of March 3, 2025.

Previous wording

Consolidated operating results for the three months ended June 30, 2024 and March 31, 2024 and the nine months ended June 30, 2024 and June 30, 2023 are as follows:

Current wording

Consolidated operating results for three months ended December 31, 2024, September 30, 2024 and December 31, 2023 are as follows:

Previous wording

Investment income increased from the three months ended March 31, 2024 to the three months ended June 30, 2024 by $7.0 million, primarily due an increase in interest income as a result of an increase in the average earning debt investments balance of $484.8 million from our acquisition of GBDC 3. The increase in interest income resulting from the increase in the average earning debt investments was partially offset by the reversal of $2.5 million of previously recognized interest income and payment-in-kind (“PIK”) interest income resulting from loans that were restructured or placed on non-accrual status during the three months ended June 30, 2024 and, to a lesser extent, a decrease of interest earned on cash to $3.1 million during the three months ended June 30, 2024 from $4.8 million during the three months ended March 31, 2024.

Current wording

Investment income decreased from the three months ended September 30, 2024 to the three months ended December 31, 2024 by $3.7 million primarily due to (1) a $4.9 million decrease in PIK interest income driven by refinancing and repayments of loans with a PIK feature and (2) declining interest base rates, and to a lesser extent, spread compression on amendments and new originations on the portfolio during the three months ended December 31, 2024 that were partially offset by (1) an increase in interest income as a result of an increase in the average earning debt investments balance of $347.2 million, (2) an increase in discount amortization driven by increased repayments and (3) an increase in cash dividend income. Investment income increased from the three months ended December 31, 2023 to the three months ended December 31, 2024 by $55.9 million, primarily due to (1) an increase in interest income as a result of an increase in the average earning debt investments balance of $2,592.1 million primarily driven by our acquisition of GBDC 3 and (2) an increase in non-cash dividend income driven by an increase in the average earning preferred equity investments balance of $104.6 million.

Previous wording

The annualized income yield by debt security type for the three months ended June 30, 2024 and March 31, 2024 and the nine months ended June 30, 2024 and June 30, 2023 are as follows:

Current wording

The annualized income yield by debt security type for three months ended December 31, 2024, September 30, 2024 and December 31, 2023 are as follows:

Previous wording

Income yields on senior secured loans and one stop loans decreased for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024, primarily due to interest rate spread compression on new investments and amendments to existing loans. Income yields on senior secured and one stop loans increased for the nine months ended June 30, 2024 as compared to the nine months ended June 30, 2023, primarily due to rising interest base rates. Our loan portfolio is partially insulated from a drop in floating interest rates, as 97.2% of the loan portfolio at fair value is subject to an interest rate floor. As of June 30, 2024 and September 30, 2023, the weighted average base rate floor of our loans was 0.81% and 0.80%, respectively.

Current wording

Income yields on senior secured and one stop loans decreased for the three months ended December 31, 2024 as compared to the three months ended September 30, 2024 and for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023, primarily due to declining interest base rates and, to a lesser extent, spread compression on amendments and new originations during the second half of calendar year 2024. Our loan portfolio is partially insulated from a drop in floating interest rates, as 97.8% of the loan portfolio at fair value is subject to an interest rate floor. As of December 31, 2024 and September 30, 2024, the weighted average base rate floor of our loans was 0.79% and 0.81%, respectively.

Previous wording

As of June 30, 2024, we have second lien investments in four portfolio companies and subordinated debt investments in six portfolio companies as shown in the Consolidated Schedule of Investments. Due to the limited number of second lien and subordinated debt investments, income yields on second lien and subordinated debt investments can be significantly impacted by the addition, subtraction or refinancing of one investment. The income yield for subordinated debt loans decreased for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024 due to the one-time recognition of $0.2 million of previously deferred interest income resulting from the change in accrual status of a former non-accrual loan during the three months ended March 31, 2024. The income yield for subordinated debt loans was 15.2% for the three months ended March 31, 2024 when excluding the $0.2 million of previously deferred interest income.

Current wording

As of December 31, 2024, we have second lien investments in six portfolio companies and subordinated debt investments in seven portfolio companies as shown in the Consolidated Schedule of Investments. Due to the limited number of second lien and subordinated debt investments, income yields on second lien and subordinated debt investments can be significantly impacted by the addition, subtraction or refinancing of one investment.

Previous wording

The following table summarizes our expenses for the three months ended June 30, 2024 and March 31, 2024 and the nine months ended June 30, 2024 and June 30, 2023:

Current wording

The following table summarizes our expenses for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023:

Previous wording

primarily due to the assumption of GBDC 3’s debt facilities. Interest and other debt financing expenses, including amortization of debt issuance costs, increased from the nine months ended June 30, 2023 to the nine months ended June 30, 2024 by $35.8 million, primarily due to (i) the issuance of the 2028 Notes and 2029 Notes, (ii) rising interest base rates on borrowings from our floating rate debt facilities, (iii) an increase in average debt outstanding of $140.3 million primarily due to the assumption of GBDC 3’s debt facilities and (iv) $3.5 million of net unrealized losses related to the fair value hedge of the interest rate swaps on the 2028 and 2029 Notes. For more information about our outstanding borrowings for the three and nine months ended June 30, 2024 and 2023, including the terms thereof, see “Note 7. Borrowings” in the notes to our consolidated financial statements and the “Liquidity and Capital Resources” section below.

Current wording

Interest and other debt financing expenses, including amortization of debt issuance costs, increased from the three months ended September 30, 2024 to the three months ended December 31, 2024 by $13.0 million, primarily due to (1) $4.6 million of net unrealized losses related to the fair value hedge of the interest rate swaps on the 2028 and 2029 Notes recognized during the three months ended December 31, 2024 compared to $7.6 million of unrealized gains related to the fair value hedge of the interest rate swaps on the 2028 and 2029 Notes recognized during the three months ended September 30, 2024 and, to a lesser extent, (2) increased interest expense due to an increase in average debt outstanding of $434.2 million driven by the series of debt funding structure initiatives undertaken in November and December 2024 including the 2024 Debt Securitization issuance of $1.3 billion in notes which bear interest at a weighted-average rate of three-month SOFR + 1.58% and the additional 2029 Note issuance, for which GBDC did not recognize the full benefit of the reduced borrowing costs during the three months ended December 31, 2024 due to the timing of the refinancing. Interest and other debt financing expenses, including amortization of debt issuance costs, increased from the three months ended December 31, 2023 to the three months ended December 31, 2024 by $38.1 million, primarily due to (1) an increase in average debt outstanding of $1,692 million driven by (i) the assumption of GBDC 3’s debt facilities and (ii) the issuance of the 2029 Notes and (2) rising interest base rates on borrowings from our floating rate debt facilities. For more information about our outstanding borrowings for the three months ended December 31, 2024 and 2023, including the terms thereof, see “Note 7. Borrowings” in the notes to our consolidated financial statements and the “Liquidity and Capital Resources” section below.

Previous wording

For the three months ended June 30, 2024 and March 31, 2024 and the nine months ended June 30, 2024 and June 30, 2023, the effective annualized average interest rate, which includes amortization of debt financing costs, amortization of discounts on notes issued non-usage facility fees and the net contractual interest rate swap expense on the 2028 and 2029 Notes but excluding the net gain/(loss) related to the fair value hedges associated with the 2028 and 2029 Notes interest rate swaps, on our total debt was 6.5%, 5.5%, 5.9% and 4.8%, respectively.

Current wording

For the three months ended December 31, 2024 and September 30, 2024, the effective annualized average interest rate, which includes amortization of debt financing costs, amortization of discounts on notes issued, non-usage facility fees and the net contractual interest rate swap expense on the 2028 and 2029 Notes but excluding the net gain/(loss) related to the fair value hedges associated with the 2028 and 2029 Notes interest rate swaps, on our total debt was 6.2% and 6.8%, respectively. For the three months ended December 31, 2023, the effective annualized average interest rate, which includes amortization of debt financing costs, amortization of discounts on notes issued and non-usage facility fees and the net contractual interest rate swap expense on the 2028 Notes but excluding the net gain/(loss) related to the fair value hedges associated with the 2028 Notes interest rate swaps, on our total debt was 5.4%. The effective average interest rate decreased for the three months ended December 31, 2024 compared to the three months ended September 30, 2024 primarily due to declining interest base rates and, to a lesser extent, reduced borrowing costs resulting from the debt capital refinancing during the three months ended December 31, 2024. The effective annualized average interest rate increased for the three months ended December 31, 2024 compared to the three months ended December 31, 2023 primarily due to the 2029 Notes issuance, a full period of the 2028 Notes issuance, the redemption of the 2024 Notes in April 2024 that bore interest at a rate of 3.375% and rising interest rates on our borrowings from floating rate debt facilities.

Previous wording

The base management fee increased from the three months ended March 31, 2024 to the three months ended June 30, 2024 primarily due to an increase in average adjusted gross assets as a result of our acquisition of GBDC 3.

Current wording

The base management fee increased from the three months ended December 31, 2023 to the three months ended December 31, 2024 primarily due to an increase in average adjusted gross assets primarily as a result of our acquisition of GBDC 3 in June 2024.

Previous wording

The Income Incentive Fee decreased by $16.1 million from the nine months ended June 30, 2023 to the nine months ended June 30, 2024 primarily as a result of $19.6 million in aggregate waivers of Income Incentive Fees during the nine months ended June 30, 2024 that offset an increase in Pre-Incentive Fee Net Investment Income and a greater rate of return on the value of our net assets driven by net funds growth, the impact of rising interest base rates and an increase in non-cash dividend income during fiscal year 2024. For each of the three months ended June 30, 2024 and March 31, 2024 and the nine months ended June 30, 2024 and June 30, 2023, we were fully through the Income Incentive Fee “catch-up” provision and the Income Incentive Fee was equal to 15% of Pre-Incentive Fee Net Investment Income, net of the GBDC 3 Merger Waiver for the three months ended March 31, 2024 and 20% of Pre-Incentive Fee Net Investment Income for the three months ended December 31, 2023.

Current wording

The Income Incentive Fee increased by $5.0 million from the three months ended September 30, 2024 to the three months ended December 31, 2024 primarily due to a $7.8 million income incentive fee waiver unilaterally provided by GC Advisors during the three months ended September 30, 2024. The Income Incentive Fee decreased by $3.2 million from the three months ended December 31, 2023 to the three months ended December 31, 2024 primarily due to the permanent reduction of the income incentive fee and capital gain incentive fee rate from 20% to 15% upon the close of the acquisition of GBDC 3 in June 2024. For each of three months ended December 31, 2024, September 30, 2024 and December 31, 2023, we were fully through the Income Incentive Fee “catch-up” provision and the Income Incentive Fee was equal to 15% of Pre-Incentive Fee Net Investment Income for the three months ended December 31, 2024 and September 30, 2024, and was equal to 20% of Pre-Incentive Fee Net Investment Income for the three months ended December 31, 2023.

Previous wording

In total, professional fees, the administrative service fee and general and administrative expenses increased by $0.9 million from the nine months ended June 30, 2023 to the nine months ended June 30, 2024, primarily due to an increase in the administrative service fee and professional fees.

Current wording

In total, professional fees, the administrative service fee and general and administrative expenses increased by $0.7 million from the three months ended September 30, 2024 to the three months ended December 31, 2024 primarily due to an increase in the administrative service fee and professional fees.

Previous wording

In total, professional fees, the administrative service fee and general and administrative expenses increased by $0.1 million from the three months ended March 31, 2024 to the three months ended June 30, 2024 primarily due to an increase in professional fees.

Current wording

In total, professional fees, the administrative service fee and general and administrative expenses increased by $1.4 million from the three months ended December 31, 2023 to the three months ended December 31, 2024, primarily due to an increase in the administrative service fee and professional fees.

Previous wording

The Administrator pays for certain expenses incurred by us. These expenses are subsequently reimbursed in cash. Total expenses reimbursed to the Administrator during the three months ended June 30, 2024 and March 31, 2024 and the nine months ended June 30, 2024 and June 30, 2023 were $5.7 million, $2.0 million, $9.8 million and $7.2 million, respectively.

Current wording

The Administrator pays for certain expenses incurred by us. These expenses are subsequently reimbursed in cash. Total expenses reimbursed to the Administrator during the three months ended December 31, 2024, September 30, 2024 and December 31, 2023 were $2.7 million, $3.2 million, and $2.0 million, respectively.

Previous wording

As of June 30, 2024 and September 30, 2023, included in accounts payable and other liabilities were $3.2 million and $2.0 million, respectively, of expenses paid on behalf of us by the Administrator.

Current wording

As of December 31, 2024 and September 30, 2024, included in accounts payable and other liabilities were $1.7 million and $2.7 million, respectively, of expenses paid on behalf of us by the Administrator.

Previous wording

The following table summarizes our net realized and unrealized gains (losses) for the three months ended June 30, 2024 and March 31, 2024 and the nine months ended June 30, 2024 and June 30, 2023:

Current wording

The following table summarizes our net realized and unrealized gains (losses) for three months ended December 31, 2024, September 30, 2024 and December 31, 2023:

Previous wording

During the nine months ended June 30, 2024, we had a net realized loss of $50.4 million, primarily attributable to realized losses recognized on (i) the restructure of equity and debt investments of a portfolio company during the three months ended June 30, 2024 and (ii) the disposition of equity and debt investments of a portfolio company during the three months ended March 31, 2024 that were partially offset by realized gains recognized on the sale of equity investments in multiple portfolio companies throughout the nine months ended June 30, 2024. During the nine months ended June 30, 2023, we had a net realized loss of $43.4 million primarily attributable to the realized loss recognized on the restructuring of debt investments of multiple portfolio companies and the disposition of equity and debt investments of multiple portfolio company investments that were partially offset by realized gains on the sale of equity investments in multiple portfolio companies and gains on the settlement of a forward currency contract.

Current wording

During the three months ended December 31, 2024, we had a net realized loss of $27.9 million, primarily attributable to realized losses recognized on (i) the restructuring of equity and debt investments of two portfolio company investments and the sale of a portfolio company debt investment, and (ii) net realized losses recognized on the translation of foreign currency amounts and transactions into U.S. dollars, that were partially offset by (i) net realized gains recognized on the settlement of forward currency contracts and (ii) $0.4 million of realized gain recognized on the sale of one equity investment. During the three months ended September 30, 2024, we had a net realized loss of $29.5 million primarily attributable to the realized losses recognized on (i) the restructure of equity and debt investments in multiple portfolio companies and (ii) the disposition of an equity investment of a portfolio company, that were partially offset by realized gains recognized on the settlement of forward currency contracts. During the three months ended December 31, 2023, we had a net realized gain of $1.1 million primarily attributable to the realized gain recognized on the sale of an equity investment and the translation of foreign currency amounts and transactions into U.S. dollars that were partially offset by realized losses on the disposition of an equity investment of a portfolio company.

Previous wording

For the three months ended June 30, 2024, we had $28.3 million in unrealized appreciation on 111 portfolio company investments, which was offset by $29.3 million in unrealized depreciation on 293 portfolio company investments. For the three months ended March 31, 2024, we had $46.5 million in unrealized appreciation on 209 portfolio company investments, which was offset by $20.1 million in unrealized depreciation on 174 portfolio company investments.

Current wording

For the three months ended December 31, 2024, we had $81.2 million in unrealized appreciation on 225 portfolio company investments, which was offset by $37.6 million in unrealized depreciation on 174 portfolio company investments. For the three months ended September 30, 2024, we had $58.7 million in unrealized appreciation on 196 portfolio company investments, which was offset by $55.1 million in unrealized depreciation on 224 portfolio company investments. For the three months ended December 31, 2023, we had $32.8 million in unrealized appreciation on 153 portfolio company investments, which was offset by $42.1 million in unrealized depreciation on 213 portfolio company investments.

Previous wording

Unrealized appreciation for the nine months ended June 30, 2024 primarily resulted from the reversal of unrealized depreciation on the disposition or restructuring of portfolio company investments, improved performance of certain portfolio companies and the reversal of unrealized depreciation due to spread tightening in the market during the 2024 fiscal year. Unrealized appreciation for the nine months ended June 30, 2023 primarily resulted from the reversal of unrealized depreciation on the sale, restructuring or disposition of portfolio company investments, loan repayments and improved performance of certain portfolio companies. Unrealized depreciation for the nine months ended June 30, 2024 primarily resulted from isolated deterioration in the credit performance of certain portfolio companies that were moved to or on non-accrual status as well as certain portfolio companies with pre-existing credit challenges. Unrealized depreciation for the nine months ended June 30, 2023 primarily resulted from decreases in the fair value across our portfolio company investments due to incremental spread widening in the market during the first quarter of the 2023 fiscal year and isolated deterioration in the credit performance of a small number of portfolio companies.

Current wording

Unrealized appreciation for the three months ended December 31, 2024 and September 30, 2024 was primarily due to unrealized appreciation resulting from solid borrower credit trends across our portfolio and the reversal of previously recognized unrealized depreciation (i) on the disposition or restructuring of portfolio company investments and (ii) spread tightening in the market during the second half of calendar year 2024. Unrealized appreciation for the three months ended December 31, 2023 primarily resulted from the improved performance of certain portfolio companies and the reversal of unrealized depreciation due to spread tightening in the market during the second half of calendar year 2023.

Previous wording

Unrealized appreciation for the three months ended June 30, 2024 primarily resulted from the reversal of unrealized depreciation on the restructuring of portfolio company investments and unrealized appreciation on equity investments due to improved performance of certain portfolio companies. Unrealized appreciation for the three months ended March 31, 2024 primarily resulted from strong credit performance in our portfolio and the reversal of unrealized depreciation on the disposition of equity and debt investments of a portfolio company. Unrealized depreciation for the three months ended June 30, 2024 primarily resulted from isolated deterioration in the credit performance of certain portfolio companies that were moved to or previously on non-accrual status as well as certain portfolio companies with pre-existing credit challenges. Unrealized depreciation for the three months ended March 31, 2024 primarily resulted from isolated deterioration in the credit performance of a small number of portfolio companies.

Current wording

Unrealized depreciation for the three months ended December 31, 2024 primarily resulted from isolated deterioration in credit performance in certain portfolio companies that were on non-accrual status as well as isolated deterioration in the credit performance of a small number of portfolio companies. Unrealized depreciation for the three months ended September 30, 2024 primarily resulted from isolated deterioration in credit performance in certain portfolio companies that were moved to or on non-accrual status. Unrealized depreciation for the three months ended December 31, 2023 primarily resulted from isolated deterioration in the credit performance of a small number of portfolio companies.

Previous wording

For the nine months ended June 30, 2024, we experienced a net increase in cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies of $326.0 million. During the period, cash provided by operating activities was $543.9 million, primarily driven by proceeds from principal payments and sales of portfolio investments of $867.2 million and net investment income after tax of $262.8 million, offset by fundings of portfolio investments of $554.5 million. Lastly, cash used in financing activities was $217.9 million, primarily driven by borrowings on debt of $1,966.6 million, offset by repayments of debt of $1,971.9 million and distributions paid of $199.2 million.

Current wording

For the three months ended December 31, 2024, we experienced a net decrease in cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies of $136.6 million. During the period, cash used in operating activities was $374.7 million, primarily driven by proceeds from principal payments and sales of portfolio investments of $450.2 million and net investment income after tax of $96.6 million, offset by fundings of portfolio investments of $909.5 million. Lastly, cash provided by financing activities was $238.1 million, primarily driven by borrowings on debt of $3,390.2 million, offset by repayments of debt of $3,037.7 million and distributions paid of $108.3 million.

Previous wording

For the nine months ended June 30, 2023, we experienced a net decrease in cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies of $9.6 million. During the period, cash provided by operating activities was $131.2 million, primarily driven by proceeds from principal payments and sales of portfolio investments of $550.8 million and net investment income after excise tax of $205.6 million, offset by fundings of portfolio investments of $583.8 million. Lastly, cash used by financing activities was $140.9 million, primarily driven by repayments of debt of $463.8 million, distributions paid of $135.3 million and purchases of common stock under the DRIP of $33.5 million, offset by borrowings on debt of $513.9 million.

Current wording

For the three months ended December 31, 2023, we experienced a net increase in cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies of $32.8 million. During the period, cash provided by operating activities was $163.6 million, primarily driven by proceeds from principal payments and sales of portfolio investments of $179.4 million and net investment income after excise tax of $83.5 million, offset by fundings of portfolio investments of $73.2 million. Lastly, cash used by financing activities was $130.8 million, primarily driven by repayments of debt of $629.5 million, distributions paid of $59.7 million, offset by borrowings on debt of $563.7 million.

Previous wording

As of June 30, 2024 and September 30, 2023, we had cash and cash equivalents of $141.2 million and $65.6 million, respectively. In addition, we had foreign currencies of $6.3 million and $4.2 million as of June 30, 2024 and September 30, 2023, respectively, restricted cash and cash equivalents of $316.5 million and $70.4 million as of June 30, 2024 and September 30, 2023, respectively, and restricted foreign currencies of $0.7 million as of June 30, 2024. As of September 30, 2023, we had no restricted foreign currencies. Cash and cash equivalents and foreign currencies are available to fund new investments, pay operating expenses and pay distributions. Restricted cash and cash equivalents and restricted foreign currencies can be used to pay principal and interest on borrowings and to fund new investments that meet the guidelines under our debt securitizations or credit facilities, as applicable.

Current wording

As of December 31, 2024 and September 30, 2024, we had cash and cash equivalents of $103.5 million and $123.1 million, respectively. In addition, we had foreign currencies of $6.8 million and $8.0 million as of December 31, 2024 and September 30, 2024, respectively, restricted cash and cash equivalents of $110.6 million and $227.2 million as of December 31, 2024 and September 30, 2024, respectively. We had restricted foreign currencies of $0.0 million and $1.2 million as of December 31, 2024 and September 30, 2024. Cash and cash equivalents and foreign currencies are available to fund new investments, pay operating expenses and pay distributions. Restricted cash and cash equivalents and restricted foreign currencies can be used to pay principal and interest on borrowings and to fund new investments that meet the guidelines under our debt securitizations or credit facilities, as applicable. As of December 31, 2024 and September 30, 2024, $23.4 million and $136.3 million, respectively, of restricted cash was retained for partial repayments on the notes of certain of our debt securitizations that are past their reinvestment period term.

Previous wording

JPM Credit Facility - On February 11, 2021, we entered into the JPM Credit Facility (as defined in Note 7 of our consolidated financial statements), which, as of June 30, 2024, allowed us to borrow up to $1.49 billion at any one time outstanding, subject to leverage and borrowing base restrictions. As of June 30, 2024 and September 30, 2023, we had outstanding debt under the JPM Credit Facility of $333.7 million and $784.4 million, respectively. As of June 30, 2024 and September 30, 2023, subject to leverage and borrowing base restrictions, we had $1.15 billion and $703.1 million, respectively, of remaining commitments and availability on the JPM Credit Facility.

Current wording

JPM Credit Facility - On February 11, 2021, we entered into the JPM Credit Facility (as defined in Note 7 of our consolidated financial statements), which, as of December 31, 2024, allowed us to borrow up to $2.0 billion at any one time outstanding, subject to leverage and borrowing base restrictions. As of December 31, 2024 and September 30, 2024, we had outstanding debt under the JPM Credit Facility of $1,191.3 million and $956.6 million, respectively. As of December 31, 2024 and September 30, 2024, subject to leverage and borrowing base restrictions, we had $806.2 million and $865.9 million, respectively, of remaining commitments and availability on the JPM Credit Facility.

Previous wording

DB Credit Facility - Effective June 3, 2024, we assumed, as a result of the GBDC 3 Merger, the DB Credit Facility (as defined in Note 7 of our consolidated financial statements), which, as of June 30, 2024, allowed us to borrow up to $625.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. As of June 30, 2024, we had outstanding debt under the DB Credit Facility of $565.8 million. As of June 30, 2024, subject to leverage and borrowing base restrictions, we had $59.2 million of remaining commitments and $23.9 million of availability on the DB Credit Facility.

Current wording

GBDC 3 DB Credit Facility - Effective June 3, 2024, we assumed, as a result of the GBDC 3 Merger, the GBDC 3 DB Credit Facility (as defined in “Note 7. Borrowings” of our consolidated financial statements). On November 19, 2024, all amounts outstanding under the GBDC 3 DB Credit Facility were repaid, following which the agreements governing the GBDC 3 DB Credit Facility were terminated. As of September 30, 2024, we had outstanding debt under the GBDC 3 DB Credit Facility of $411.5 million and subject to leverage and borrowing base restrictions, we had $213.5 million of remaining commitments and $113.9 million of availability on the GBDC 3 DB Credit Facility. As of September 30, 2024, we could borrow up to $625.0 million on the GBDC 3 DB Credit Facility.