New Mountain Finance Corp

Previous wording

We are a Delaware corporation that was originally incorporated on June 29, 2010 and completed our initial public offering ("IPO") on May 19, 2011. We are a closed-end, non-diversified management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). We have elected to be treated, and intend to comply with the requirements to continue to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Since our IPO, and through March 31, 2024, we have raised approximately $1,014.8 million in net proceeds from additional offerings of our common stock.

Current wording

We are a Delaware corporation that was originally incorporated on June 29, 2010 and completed our initial public offering ("IPO") on May 19, 2011. We are a closed-end, non-diversified management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). We have elected to be treated, and intend to comply with the requirements to continue to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Since our IPO, and through June 30, 2024, we have raised approximately $1,034.6 million in net proceeds from additional offerings of our common stock.

Previous wording

The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital. New Mountain Capital is a global investment firm with approximately $50 billion of assets under management and a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, credit and net lease investment strategies. The Investment Adviser manages our day-to-day operations and provides us with investment advisory and management services. The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to ours. New Mountain Finance Administration, L.L.C. (the "Administrator”), a wholly-owned subsidiary of New Mountain Capital, provides the administrative services necessary to conduct our day-to-day operations.

Current wording

The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital. New Mountain Capital is a global investment firm with approximately $55 billion of assets under management and a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, credit and net lease investment strategies. The Investment Adviser manages our day-to-day operations and provides us with investment advisory and management services. The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to ours. New Mountain Finance Administration, L.L.C. (the "Administrator”), a wholly-owned subsidiary of New Mountain Capital, provides the administrative services necessary to conduct our day-to-day operations.

Previous wording

Similar to us, the investment objective of SBIC I and SBIC II is to generate current income and capital appreciation under the investment criteria we use. However, SBIC I and SBIC II investments must be in SBA eligible small businesses. Our portfolio may be concentrated in a limited number of industries. As of March 31, 2024, our top five industry concentrations were software, business services, healthcare, investment funds (which includes our investments in our joint ventures) and education.

Current wording

Similar to us, the investment objective of SBIC I and SBIC II is to generate current income and capital appreciation under the investment criteria we use. However, SBIC I and SBIC II investments must be in SBA eligible small businesses. Our portfolio may be concentrated in a limited number of industries. As of June 30, 2024, our top five industry concentrations were software, business services, healthcare, investment funds (which includes our investments in our joint ventures) and consumer services.

Previous wording

As of March 31, 2024, our net asset value was approximately $1,356.9 million and our portfolio had a fair value, as determined in good faith by the board of directors, of approximately $3,070.0 million in 114 portfolio companies, with a weighted average yield to maturity at cost for income producing investments ("YTM at Cost") of approximately 11.1% and a weighted average yield to maturity at cost for all investments ("YTM at Cost for Investments") of approximately 9.5%. The YTM at Cost calculation assumes that all investments, including secured collateralized agreements, not on non-accrual are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. The YTM at Cost for Investments calculation assumes that all investments, including secured collateralized agreements, are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. YTM at Cost and YTM at Cost for Investments calculations exclude the impact of existing leverage. YTM at Cost and YTM at Cost for Investments use Sterling Overnight Interbank Average Rate ("SONIA"), Secured Overnight Financing Rate ("SOFR") and Euro Interbank Offered Rate ("EURIBOR") curves at each quarter's end date. The actual yield to maturity may be higher or lower due to the future selection of the SONIA, SOFR and EURIBOR contracts by the individual companies in our portfolio or other factors.

Current wording

As of June 30, 2024, our net asset value was approximately $1,374.1 million and our portfolio had a fair value, as determined in good faith by the board of directors, of approximately $3,213.8 million in 122 portfolio companies, with a weighted average yield to maturity at cost for income producing investments ("YTM at Cost") of approximately 11.1% and a weighted average yield to maturity at cost for all investments ("YTM at Cost for Investments") of approximately 10.1%. The YTM at Cost calculation assumes that all investments, including secured collateralized agreements, not on non-accrual are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. The YTM at Cost for Investments calculation assumes that all investments, including secured collateralized agreements, are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. YTM at Cost and YTM at Cost for Investments calculations exclude the impact of existing leverage. YTM at Cost and YTM at Cost for Investments use Sterling Overnight Interbank Average Rate ("SONIA"), Secured Overnight Financing Rate ("SOFR") and Euro Interbank Offered Rate ("EURIBOR") curves at each quarter's end date. The actual yield to maturity may be higher or lower due to the future selection of the SONIA, SOFR and EURIBOR contracts by the individual companies in our portfolio or other factors.

Previous wording

On April 18, 2024, our board of directors declared a second quarter 2024 distribution of $0.32 per share and a supplemental distribution related to first quarter earnings of $0.02 per share, each payable on June 28, 2024 to holders of record as of June 14, 2024.

Current wording

On July 23, 2024, our board of directors declared a third quarter 2024 distribution of $0.32 per share and a supplemental distribution related to second quarter earnings of $0.02 per share, each payable on September 30, 2024 to holders of record as of September 16, 2024.

Previous wording

NMFC Senior Loan Program III LLC ("SLP III") was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between us and SkyKnight Income II, LLC (“SkyKnight II”) and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from us and SkyKnight II. SLP III has a five year investment period and will continue in existence until July 8, 2026. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement.

Current wording

NMFC Senior Loan Program III LLC ("SLP III") was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between us and SkyKnight Income II, LLC (“SkyKnight II”) and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from us and SkyKnight II. SLP III has a five year investment period and will continue in existence until July 8, 2029. On July 3, 2024, the investment period was extended until July 8, 2027. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement.

Previous wording

SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of March 31, 2024, we and SkyKnight II have committed and contributed $140.0 million and $35.0 million, respectively, of equity to SLP III. Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of March 31, 2024 and December 31, 2023.

Current wording

SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of June 30, 2024, we and SkyKnight II have committed and contributed $140.0 million and $35.0 million, respectively, of equity to SLP III. As of July 5, 2024, we and SkyKnight II have committed an additional $20.0 million and $5.0 million, respectively, of equity to SLP III. Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of June 30, 2024 and December 31, 2023.

Previous wording

On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on January 8, 2026. Effective July 8, 2021, the reinvestment period was extended to July 8, 2024. As of the amendment on June 23, 2023, during the reinvestment period, the credit facility bears interest at a rate of SOFR plus 1.80%, and after the reinvestment period it will bear interest at a rate of SOFR plus 2.10%. Prior to the amendment on June 23, 2023, the facility bore interest at a rate of LIBOR plus 1.60% per annum during the reinvestment period and LIBOR plus 1.90% per annum after the reinvestment period. Effective November 23, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $525.0 million. As of March 31, 2024 and December 31, 2023, SLP III had total investments with an aggregate fair value of approximately $653.9 million and $636.6 million, respectively, and debt outstanding under its credit facility of $474.9 million and $453.2 million, respectively. As of March 31, 2024 and December 31, 2023, none of SLP III's investments were on non-accrual. Additionally, as of March 31, 2024 and December 31, 2023, SLP III had unfunded commitments in the form of delayed draws of $1.3 million and $1.1 million, respectively.

Current wording

On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A. As of the amendment on July 3, 2024, the maturity date of SLP III's revolving credit facility was extended from January 8, 2026 to January 8, 2029, and the reinvestment period was extended from July 8, 2026 to July 8, 2027. As of the amendment on July 3, 2024, during the reinvestment period, the credit facility bears interest at a rate of the Secured Overnight Financing Rate ("SOFR") plus 1.65%, and after the reinvestment period it will bear interest at a rate of SOFR plus 1.95%. From June 23, 2023 to July 3, 2024, during the reinvestment period, the credit facility bore interest at a rate of SOFR plus 1.80%, and after the reinvestment period it bore interest at a rate of SOFR plus 2.10%. Prior to the amendment on June 23, 2023, the facility bore interest at a rate of LIBOR plus 1.60% per annum during the reinvestment period and LIBOR plus 1.90% per annum after the reinvestment period. As of June 30, 2024, SLP III's revolving credit facility has a maximum borrowing capacity of $525.0 million. As of the amendment on July 3, 2024, SLP III's revolving credit facility has a maximum borrowing capacity of $600.0 million. As of June 30, 2024 and December 31, 2023, SLP III had total investments with an aggregate fair value of approximately $681.4 million and $636.6 million, respectively, and debt outstanding under its credit facility of $492.4 million and $453.2 million, respectively. As of June 30, 2024 and December 31, 2023, none of SLP III's investments were on non-accrual. Additionally, as of June 30, 2024 and December 31, 2023, SLP III had unfunded commitments in the form of delayed draws of $1.0 million and $1.1 million, respectively.

Previous wording

See Item 1.—Financial Statements and Supplementary Data—Note 3. Investmentsin this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP III's portfolio as of March 31, 2024 and December 31, 2023 and additional information on certain summarized financial information for SLP III as of March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and March 31, 2023.

Current wording

See Item 1.—Financial Statements and Supplementary Data—Note 3. Investmentsin this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP III's portfolio as of June 30, 2024 and December 31, 2023 and additional information on certain summarized financial information for SLP III as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and June 30, 2023.

Previous wording

On May 5, 2021, SLP IV entered into a $370.0 million revolving credit facility with Wells Fargo Bank, National Association which matures on March 27, 2029. As of the amendment on March 27, 2024, the facility bears interest at a rate of SOFR plus 1.90%. From April 28, 2023 to March 27, 2024, the facility bore interest at a rate of SOFR plus 1.70%. Prior to the amendment on April 28, 2023, the facility bore interest at a rate of LIBOR plus 1.60% per annum. As of March 31, 2024 and

Current wording

On May 5, 2021, SLP IV entered into a $370.0 million revolving credit facility with Wells Fargo Bank, National Association which matures on March 27, 2029. As of the amendment on March 27, 2024, the facility bears interest at a rate of SOFR plus 1.90%. From April 28, 2023 to March 27, 2024, the facility bore interest at a rate of SOFR plus 1.70%. Prior to the amendment on April 28, 2023, the facility bore interest at a rate of LIBOR plus 1.60% per annum. As of June 30, 2024 and December 31, 2023, SLP IV had total investments with an aggregate fair value of approximately $491.8 million and $467.9 million, respectively, and debt outstanding under its credit facility of $344.9 million and $306.5 million, respectively. As of June 30, 2024 and December 31, 2023, none of SLP IV’s investments were on non-accrual. Additionally, as of June 30, 2024 and December 31, 2023, SLP IV had unfunded commitments in the form of delayed draws of $0.8 million and $0.8 million, respectively.

Previous wording

See Item 1.—Financial Statements and Supplementary Data—Note 3. Investmentsin this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP IV's consolidated portfolio as of March 31, 2024 and December 31, 2023 and additional information on certain summarized financial information for SLP IV as of March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and March 31, 2023.

Current wording

See Item 1.—Financial Statements and Supplementary Data—Note 3. Investmentsin this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP IV's consolidated portfolio as of June 30, 2024 and December 31, 2023 and additional information on certain summarized financial information for SLP IV as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and June 30, 2023.

Previous wording

We follow the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral ("ASC 860") when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of March 31, 2024 and December 31, 2023, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a fair value of $16.5 million and $16.5 million, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from us at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to us, therefore, we do not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized our contractual rights under the collateralized agreement. We continue to exercise our rights under the collateralized agreement and continue to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position.

Current wording

We follow the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral ("ASC 860") when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of June 30, 2024 and December 31, 2023, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a fair value of $13.5 million and $16.5 million, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from us at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to us, therefore, we do not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized our contractual rights under the collateralized agreement. We continue to exercise our rights under the collateralized agreement and continue to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position.

Previous wording

On December 22, 2017, we settled the Trustee’s $20.5 million Claim for $16.0 million and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16.0 million that is owed to us under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. We continue to exercise our rights under the SPP Agreement and continue to monitor the liquidation process of the private hedge fund. During the year ended December 31, 2018, we received a $1.5 million payment from our insurance carrier in respect to the settlement. As of March 31, 2024 and December 31, 2023, the SPP Agreement had a cost basis of $14.5 million and $14.5 million, respectively, and a fair value of $8.0 million and $8.0 million, respectively, which is reflective of the higher inherent risk in this transaction.

Current wording

On December 22, 2017, we settled the Trustee’s $20.5 million Claim for $16.0 million and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16.0 million that is owed to us under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. We continue to exercise our rights under the SPP Agreement and continue to monitor the liquidation process of the private hedge fund. During the year ended December 31, 2018, we received a $1.5 million payment from our insurance carrier in respect to the settlement. As of June 30, 2024 and December 31, 2023, the SPP Agreement had a cost basis of $14.5 million and $14.5 million, respectively, and a fair value of $6.5 million and $8.0 million, respectively, which is reflective of the higher inherent risk in this transaction.

Previous wording

Interest and dividend income: Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three months ended March 31, 2024 and March 31, 2023, we recognized PIK and non-cash interest from investments of approximately $9.7 million and $9.0 million, respectively, and PIK and non-cash dividends from investments of approximately $7.4 million and $6.5 million, respectively.

Current wording

Interest and dividend income: Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three and six months ended June 30, 2024 we recognized PIK and non-cash interest from investments of approximately $9.0 million and $18.7 million, respectively, and PIK and non-cash dividends from investments of approximately $7.7 million and $15.2 million, respectively. For the three and six months ended June 30, 2023, we recognized PIK and non-cash interest from investments of approximately $7.9 million and $16.9 million, respectively, and PIK and non-cash dividends from investments of approximately $6.7 million and $13.2 million, respectively.

Previous wording

As of March 31, 2024, all investments in our portfolio had a Green Risk Rating with the exception of four portfolio companies that had a Yellow Risk Rating, four portfolio companies that had an Orange Risk Rating and three portfolio companies that had a Red Risk Rating.

Current wording

As of June 30, 2024, all investments in our portfolio had a Green Risk Rating with the exception of four portfolio companies that had a Yellow Risk Rating, five portfolio companies that had an Orange Risk Rating and one portfolio company that had a Red Risk Rating.

Previous wording

During the second quarter of 2022, we placed our second lien positions in National HME, Inc. ("National HME") on non-accrual status. As of March 31, 2024, our second lien position in National HME had an aggregate cost basis of $7.9 million, an aggregate fair value of $3.0 million and total unearned interest income of $0.5 million, for the three months then ended. As of March 31, 2024, our investment in National HME had a Red Risk Rating.

Current wording

During the second quarter of 2022, we placed our second lien positions in National HME, Inc. ("National HME") on non-accrual status. As of June 30, 2024, our second lien position in National HME had an aggregate cost basis of $7.9 million, an aggregate fair value of $3.0 million and total unearned interest income of $0.5 million and $1.0 million, respectively, for the three and six months then ended. As of June 30, 2024, our investment in National HME had a Red Risk Rating.

Previous wording

As of March 31, 2024, our aggregate principal amount of our subordinated position and first lien term loans in American Achievement Corporation ("AAC") was $5.2 million and $31.4 million, respectively. During the first quarter of 2021, we placed an aggregate principal amount of $5.2 million of our subordinated position on non-accrual status. During the third quarter of 2021, we placed an aggregate principal amount of $13.5 million of our first lien term loans on non-accrual status. During the third quarter of 2023, we placed the remaining aggregate principal amount of $17.9 million of our first lien term loans on non-accrual status. As of March 31, 2024, our positions in AAC on non-accrual status had an aggregate cost basis of $31.4 million, an aggregate fair value of $20.4 million and total unearned interest income of $1.2 million, for the three months then ended. As of March 31, 2024, our investment in AAC had an Orange Risk Rating.

Current wording

As of June 30, 2024, our aggregate principal amount of our subordinated position and first lien term loans in American Achievement Corporation ("AAC") was $5.2 million and $31.4 million, respectively. During the first quarter of 2021, we placed an aggregate principal amount of $5.2 million of our subordinated position on non-accrual status. During the third quarter of 2021, we placed an aggregate principal amount of $13.5 million of our first lien term loans on non-accrual status. During the third quarter of 2023, we placed the remaining aggregate principal amount of $17.9 million of our first lien term loans on non-accrual status. As of June 30, 2024, our positions in AAC on non-accrual status had an aggregate cost basis of $31.4 million, an aggregate fair value of $20.0 million and total unearned interest income of $1.2 million and $2.4 million, for the three and six months then ended. As of June 30, 2024, our investment in AAC had an Orange Risk Rating.

Previous wording

During the first quarter of 2020, we placed our investment in our junior preferred shares of UniTek Global Services, Inc. ("UniTek") on non-accrual status. As of March 31, 2024, our junior preferred shares of UniTek had an aggregate cost basis of $34.4 million, an aggregate fair value of $0 and total unearned dividend income of $2.1 million, for the three months then ended. During the third quarter of 2021, we placed an aggregate principal amount of $19.8 million of our investment in our senior preferred shares of UniTek on non-accrual status. As of March 31, 2024, our senior preferred shares of UniTek had an aggregate cost basis of $19.8 million, an aggregate fair value of approximately $3.3 million and total unearned dividend income of approximately $1.6 million, for the three months then ended. As of March 31, 2024, our investment in UniTek had a Green Risk Rating.

Current wording

During the first quarter of 2020, we placed our investment in our junior preferred shares of UniTek Global Services, Inc. ("UniTek") on non-accrual status. As of June 30, 2024, our junior preferred shares of UniTek had an aggregate cost basis of $34.4 million, an aggregate fair value of $0 and total unearned dividend income of $2.1 million and $4.2 million, respectively, for the three and six months then ended. During the third quarter of 2021, we placed an aggregate principal amount of $19.8 million of our investment in our senior preferred shares of UniTek on non-accrual status. As of June 30, 2024, our senior preferred shares of UniTek had an aggregate cost basis of $19.8 million, an aggregate fair value of approximately $4.6 million and total unearned dividend income of approximately $1.6 million and $3.2 million, respectively, for the three and six months then ended. As of June 30, 2024, our investment in UniTek had a Green Risk Rating.

Previous wording

During the fourth quarter of 2023, we placed our investment in our second lien term loan in Transcendia Holdings Inc. ("Transcendia") on non-accrual status. As of March 31, 2024, our investment had an aggregate cost of $14.4 million, an aggregate fair value of $5.6 million and total unearned interest income of $0.5 million, for the three months then ended. As of March 31, 2024, our investment in Transcendia had an Orange Risk Rating.

Current wording

During the second quarter of 2024, we placed our investment in our junior preferred shares in Eclipse Topco Holdings, Inc. (fka Transcendia Holdings, Inc.) ("Transcendia") on non-accrual status. As of June 30, 2024, our junior preferred shares in Transcendia had an aggregate cost basis of $2.6 million, an aggregate fair value of $2.6 million and total unearned income of $0.0 million and $0.0 million, respectively, for the three and six months then ended. As of June 30, 2024, our investment in Transcendia had a Green Risk Rating.

Previous wording

During the year ended December 31, 2019, our security purchased under collateralized agreements to resell was placed on non-accrual. As of March 31, 2024, our investment in this security had a Yellow Risk Rating and had an aggregate cost basis of $30.0 million and an aggregate fair value of approximately $16.5 million.

Current wording

During the year ended December 31, 2019, our security purchased under collateralized agreements to resell was placed on non-accrual. As of June 30, 2024, our investment in this security had a Yellow Risk Rating and had an aggregate cost basis of $30.0 million and an aggregate fair value of approximately $13.5 million.

Previous wording

The fair value of our investments, as determined in good faith by our board of directors, was approximately $3,070.0 million in 114 portfolio companies at March 31, 2024 and approximately $3,011.3 million in 110 portfolio companies at December 31, 2023.

Current wording

The fair value of our investments, as determined in good faith by our board of directors, was approximately $3,213.8 million in 122 portfolio companies at June 30, 2024 and approximately $3,011.3 million in 110 portfolio companies at December 31, 2023.

Previous wording

The following table shows our portfolio and investment activity for the three months ended March 31, 2024 and March 31, 2023:

Current wording

The following table shows our portfolio and investment activity for the six months ended June 30, 2024 and June 30, 2023:

Previous wording

Our total net operating expenses decreased by approximately $0.5 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Our management fee, net of a management fee waiver, and our incentive fee remained relatively flat for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Interest and other financing expenses remained relatively flat during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 as a result of an increase in our cost of borrowings due to higher SOFR rates on our floating rate facilities, our 8.250% Unsecured Notes, issued on November 13, 2023 and our 6.875% Unsecured Notes, issued on February 1, 2024, partially offset by the repayment of our 2018A Unsecured Notes on January 30, 2023 and a lower drawn balance on our NMFC Credit Facility and Holdings Credit Facility. Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 remained relatively flat.

Current wording

Our total net operating expenses increased by approximately $0.6 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Our incentive fee decreased by approximately $0.4 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Our management fee, net of a management fee waiver, remained relatively flat for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Interest and other financing expenses increased by approximately $1.4 million during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 as a result of an increase in our cost of borrowings due to higher SOFR rates on our floating rate facilities, our 8.250% Unsecured Notes, issued on November 13, 2023, our 6.875% Unsecured Notes, issued on February 1, 2024 and a higher drawn balance on our NMFC Credit Facility, partially offset by the repayment of our 2019A Unsecured Notes on February 5, 2024, the repayment of our 2018 Convertible Notes on August 15, 2023 and a lower drawn balance on our Holdings Credit Facility. Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 remained relatively flat.

Previous wording

Our total investment income decreased by approximately $1.4 million, or 2%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. For the three months ended March 31, 2024, total investment income of approximately $90.6 million consisted of approximately $56.0 million in cash interest from investments, approximately $9.7 million in PIK and non-cash interest from investments, approximately $0.2 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $1.8 million, approximately $13.0 million in cash dividends from investments, approximately $7.4 million in PIK and non-cash dividends from investments and approximately $2.5 million in other income. The decrease in interest income of approximately $3.6 million during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was primarily due to a lower leverage ratio resulting in a lower invested portfolio balance, partially offset by a higher effective interest rate of our portfolio due to the higher SOFR rates on our floating rate assets. The increase in dividend income for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was primarily driven by an increase in PIK dividends and an increase in cash dividends from our investment in SLP III and SLP IV, partially offset by a decrease in cash from our investment in NMNLC. Other income during the three months ended March 31, 2024, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront and amendment fees received from 21 different portfolio companies.

Current wording

Our total investment income decreased by approximately $2.3 million, or 1%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. For the six months ended June 30, 2024, total investment income of approximately $185.1 million consisted of approximately $112.9 million in cash interest from investments, approximately $18.7 million in PIK and non-cash interest from investments, approximately $0.5 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $4.0 million, approximately $27.4 million in cash dividends from investments, approximately $15.2 million in PIK and non-cash dividends from investments and approximately $6.4 million in other income. The decrease in interest income of approximately $9.7 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily due to lower leverage, resulting in a smaller invested asset base, along with slightly lower yields on the portfolio. The increase in dividend income of approximately $6.3 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily driven by an increase in PIK dividends, an increase in cash dividends from our investments in SLP III and SLP IV and a cash distribution from our common shares investment in OA Topco, L.P. Other income during the six months ended June 30, 2024, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront and amendment fees received from 46 different portfolio companies.

Previous wording

Our net realized losses and unrealized gains and losses resulted in a net loss of approximately $9.5 million for the three months ended March 31, 2024 compared to net realized and unrealized gains resulting in a net gain of approximately $6.4 million for the same period in 2023. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the three months ended March 31, 2024 was primarily driven by a realized loss in TMK Hawk Parent, Corp. and unrealized depreciation in TVG-Edmentum Holdings, LLC and New Benevis Topco, LLC, partially offset by unrealized appreciation in NM GP Holdco, LLC, UniTek and CentralSquare Technologies, LLC. The provision for income taxes was attributable to equity investments that are held as of March 31, 2024 in eight of our corporate subsidiaries. The net gain for the three months ended March 31, 2023 was primarily driven by realized gains in Haven Midstream Holdings LLC and unrealized gains in UniTek, partially offset by realized losses in National HME and unrealized losses in Ansira Holding, Inc. and ADG, LLC. See Monitoring of Portfolio Investments above for more details regarding the health of our portfolio companies.

Current wording

Our net realized losses and unrealized gains and losses resulted in a net loss of approximately $13.1 million for the six months ended June 30, 2024 compared to net realized gains and unrealized losses resulting in a net gain of approximately $1.6 million for the same period in 2023. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the six months ended June 30, 2024 was primarily driven by realized losses in New Trojan Parent, Inc., TMK Hawk Parent, Corp., and Transcendia and unrealized depreciation in TVG-Edmentum Holdings, LLC, New Benevis Topco, LLC, PPVA Fund, L.P. and Black Elk, partially offset by realized gains in Haven Midstream Holdings LLC and unrealized appreciation in NM GP Holdco, LLC, UniTek, CentralSquare Technologies, LLC and New Permian Holdco, Inc. The provision for income taxes was attributable to equity investments that are held as of June 30, 2024 in eight of our corporate subsidiaries. The net gain for the six months ended

Previous wording

Since our IPO, and through March 31, 2024, we have raised approximately $1,014.8 million in net proceeds from additional offerings of common stock.

Current wording

Since our IPO, and through June 30, 2024, we have raised approximately $1,034.6 million in net proceeds from additional offerings of common stock.

Previous wording

Our liquidity is generated and generally available through advances from the revolving credit facilities, from cash flows from operations, and, we expect, through periodic follow-on equity offerings. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including unsecured debt and/or debt securities convertible into common stock. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. On June 8, 2018 our shareholders approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, which resulted in the reduction of the minimum asset coverage ratio applicable to us from 200.0% to 150.0% as of June 9, 2018. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150.0% after such borrowing (which means we can borrow $2 for every $1 of our equity). As a result of our exemptive relief received on November 5, 2014, we are permitted to exclude our SBA-guaranteed debentures from the 150.0% asset coverage ratio that we are required to maintain under the 1940 Act. The agreements governing the NMFC Credit Facility, the Convertible Notes and certain of the Unsecured Notes (as defined below) contain certain covenants and terms, including a requirement that we not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that we not exceed a secured debt ratio of 0.70 to 1.00 at any time. As of March 31, 2024, our asset coverage ratio was 192.3%.

Current wording

Our liquidity is generated and generally available through advances from the revolving credit facilities, from cash flows from operations, and, we expect, through periodic follow-on equity offerings. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including unsecured debt and/or debt securities convertible into common stock. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. On June 8, 2018 our shareholders approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, which resulted in the reduction of the minimum asset coverage ratio applicable to us from 200.0% to 150.0% as of June 9, 2018. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150.0% after such borrowing (which means we can borrow $2 for every $1 of our equity). As a result of our exemptive relief received on November 5, 2014, we are permitted to exclude the SBA-guaranteed debentures held by SBIC I and SBIC II from the 150.0% asset coverage ratio that we are required to maintain under the 1940 Act. The agreements governing the NMFC Credit Facility, the Convertible Notes and certain of the Unsecured Notes (as defined in Item 1— Financial Statements—Note 7. Borrowings) contain certain covenants and terms, including a requirement that we not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that we not exceed a secured debt ratio of 0.70 to 1.00 at any time. As of June 30, 2024, our asset coverage ratio was 182.8%.

Previous wording

As of March 31, 2024 and December 31, 2023, our borrowings consisted of the 2019A Unsecured Notes, 2021A Unsecured Notes, 2022A Unsecured Notes, 8.250% Unsecured Notes, 6.875% Unsecured Notes, SBA-guaranteed debentures, Holding Credit Facility, 2022 Convertible Notes, DB Credit Facility, NMFC Credit Facility, NMNLC Credit Facility II and Unsecured Management Company Revolver. See Item 1—Financial Statements and Supplementary Data—Note 7. Borrowings in this Quarterly Report on Form 10-Q for additional information.

Current wording

As of June 30, 2024 and December 31, 2023, our borrowings consisted of the 2019A Unsecured Notes (repaid on February 5, 2024), 2021A Unsecured Notes, 2022A Unsecured Notes, 8.250% Unsecured Notes, 6.875% Unsecured Notes (issued on February 1, 2024), SBA-guaranteed debentures, Holding Credit Facility, 2022 Convertible Notes, DB Credit Facility, NMFC Credit Facility, NMNLC Credit Facility II and Unsecured Management Company Revolver. See Item 1—Financial Statements —Note 7. Borrowings in this Quarterly Report on Form 10-Q for additional information.

Previous wording

At March 31, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $107.5 million and $70.1 million, respectively. Our cash provided by provided by (used in) operating activities during the three months ended

Current wording

At June 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $119.6 million and $70.1 million, respectively. Our cash (used in) provided by operating activities during the six months ended June 30, 2024 and June 30, 2023 was approximately $(91.6) million and $119.9 million, respectively. We expect that all current liquidity needs will be met with cash flows from operations and other activities.

Previous wording

On November 3, 2021, we entered into an equity distribution agreement, as amended on May 18, 2023 and August 23, 2023 (the “Distribution Agreement”) with B. Riley Securities, Inc. and Raymond James & Associates, Inc. (collectively, the “Agents”). The Distribution Agreement provides that we may issue and sell our shares from time to time through the Agents, up to $250.0 million worth of our common stock by means of at-the-market ("ATM") offerings.

Current wording

On November 3, 2021, we entered into an equity distribution agreement, as amended on May 18, 2023, August 23, 2023 and June 27, 2024 (the “Distribution Agreement”) with B. Riley Securities, Inc. and Raymond James & Associates, Inc. (collectively, the “Agents”). The Distribution Agreement originally provided that we may issue and sell our shares from time to time through the Agents, up to $250.0 million worth of our common stock by means of at-the-market ("ATM") offerings. As of the amendment on June 27, 2024, we increased the maximum amount of shares to be sold through the ATM program from $250.0 million to $400.0 million.

Previous wording

For the three months ended March 31, 2024, we sold 3,730,434 shares of common stock under the Distribution Agreement and received total accumulated net proceeds of approximately $47.9 million including $0.0 million of offering expenses, from these sales. For the three months ended March 31, 2023, we did not sell any shares of common stock under the Distribution Agreement.

Current wording

For the three and six months ended June 30, 2024, we sold 1,562,122 and 5,292,556 shares, respectively, of common stock, under the Distribution Agreement and received total accumulated net proceeds of approximately $19.8 million and $67.7 million, respectively, including $0.0 million and $0.0 million of offering expenses, from these sales. For the three and six months ended June 30, 2023, we did not sell any shares of common stock under the Distribution Agreement.

Previous wording

We generally use net proceeds from these ATM offerings to make investments, to pay down liabilities and for general corporate purposes. As of March 31, 2024, shares representing approximately $127.8 million of our common stock remain available for issuance and sale under the Distribution Agreement.

Current wording

We generally use net proceeds from these ATM offerings to make investments, to pay down liabilities and for general corporate purposes. As of June 30, 2024, shares representing approximately $258.0 million of our common stock remain available for issuance and sale under the Distribution Agreement.

Previous wording

We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of March 31, 2024 and December 31, 2023, we had outstanding commitments to third parties to fund investments totaling $212.2 million and $156.8 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.

Current wording

We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of June 30, 2024 and December 31, 2023, we had outstanding commitments to third parties to fund investments totaling $278.3 million and $156.8 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.

Previous wording

We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of March 31, 2024 and December 31, 2023, we had commitment letters to purchase investments in an aggregate par amount of $6.3 million and $11.1 million, respectively. As of March 31, 2024 and December 31, 2023, we had not entered into any bridge financing commitments which could require funding in the future.

Current wording

We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of June 30, 2024 and December 31, 2023, we had commitment letters to purchase investments in an aggregate par amount of $14.0 million and $11.1 million, respectively. As of June 30, 2024 and December 31, 2023, we had not entered into any bridge financing commitments which could require funding in the future.

Previous wording

(3)Under the terms of the $730.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($291.6 million as of March 31, 2024) must be repaid on or before October 26, 2028. As of March 31, 2024, there was approximately $438.4 million of available capacity remaining, subject to borrowing base limitations, under the Holdings Credit Facility.

Current wording

(2)Under the terms of the $730.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($386.6 million as of June 30, 2024) must be repaid on or before October 26, 2028. As of June 30, 2024, there was approximately $343.4 million of available capacity remaining, subject to borrowing base limitations, under the Holdings Credit Facility.

Previous wording

(2)Our SBA-guaranteed debentures will begin to mature on March 1, 2025.

Current wording

(3)The SBA-guaranteed debentures held by SBIC I and SBIC II will begin to mature on March 1, 2025.

Previous wording

(6)Under the terms of the $198.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($47.6 million, which included £22.9 million denominated in GBP and €17.4 million denominated in EUR that have been converted to U.S. dollars as of March 31, 2024) must be repaid on or before June 4, 2026. As of March 31, 2024, there was approximately $150.9 million of available capacity remaining, subject to borrowing base limitations, under the NMFC Credit Facility.

Current wording

(6)Under the terms of the $198.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($141.8 million, which included £26.7 million denominated in GBP and €17.4 million denominated in EUR that have been converted to U.S. dollars as of June 30, 2024) must be repaid on or before June 4, 2026. As of June 30, 2024, there was approximately $56.7 million of available capacity remaining, subject to borrowing base limitations, under the NMFC Credit Facility.

Previous wording

Distributions declared and paid to stockholders for the three months ended March 31, 2024 totaled approximately $38.3 million.

Current wording

Distributions declared and paid to stockholders for the six months ended June 30, 2024 totaled approximately $74.9 million.

Previous wording

(2)Includes a regular quarterly distribution of $0.32 per share and a supplemental distribution related to fourth quarter 2023 earnings of $0.04 per share.

Current wording

(3)Includes a regular quarterly distribution of $0.32 per share and a supplemental distribution related to fourth quarter 2023 earnings of $0.04 per share.

Previous wording

(3)Special distribution of excess undistributed taxable income, driven primarily from the gain realized on our investment in Haven Midstream Holdings LLC.

Current wording

(4)Special distribution of excess undistributed taxable income, driven primarily from the gain realized on our investment in Haven Midstream Holdings LLC.