New Mountain Finance Corp

Previous wording

•the ability of New Mountain Finance Advisers BDC, L.L.C. (the "Investment Adviser") or its affiliates to attract and retain highly talented professionals;

Current wording

•the ability of New Mountain Finance Advisers, L.L.C. (the "Investment Adviser"), formerly known as New Mountain Finance Advisers BDC, L.L.C., or its affiliates to attract and retain highly talented professionals;

Previous wording

We have based the forward-looking statements included in this report on information available to us on the date of this report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the U.S. Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.

Current wording

We have based the forward-looking statements included in this report on information available to us on the date of this report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the U.S. Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Previous 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.

Current wording

The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital. New Mountain Capital is a global investment firm with over $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

•New Mountain Finance Holdings, L.L.C. ("NMF Holdings") and New Mountain Finance DB, L.L.C. ("NMFDB"), whose assets are used to secure NMF Holdings’ credit facility and NMFDB’s credit facility, respectively;

Current wording

•New Mountain Finance Holdings, L.L.C. ("NMF Holdings") and New Mountain Finance DB, L.L.C. ("NMFDB"), whose assets are used to secure NMF Holdings’ credit facility and were used to secured NMFDB’s credit facility, until its termination on September 30, 2024, respectively;

Previous 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.

Current wording

As of September 30, 2024, our net asset value was approximately $1,361.3 million and our portfolio had a fair value, as determined in good faith by the board of directors, of approximately $3,265.3 million in 127 portfolio companies, with a weighted average yield to maturity at cost for income producing investments ("YTM at Cost") of approximately 10.5% 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.

Previous 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.

Current wording

On October 23, 2024, our board of directors declared a fourth quarter 2024 distribution of $0.32 per share and a supplemental distribution related to third quarter earnings of $0.01 per share, each payable on December 31, 2024 to holders of record as of December 17, 2024.

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 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.

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 September 30, 2024, we and SkyKnight II have committed and contributed $160.0 million and $40.0 million, respectively, of equity to SLP III. Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of September 30, 2024 and December 31, 2023.

Previous 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.

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 September 30, 2024, SLP III's revolving credit facility has a maximum borrowing capacity of $600.0 million. As of September 30, 2024 and December 31, 2023, SLP III had total investments with an aggregate fair value of approximately $680.7 million and $636.6 million, respectively, and debt outstanding under its credit facility of $473.2 million and $453.2 million, respectively. As of September 30, 2024 and December 31, 2023, none of SLP III's investments were on non-accrual. Additionally, as of September 30, 2024 and December 31, 2023, SLP III had unfunded commitments in the form of delayed draws of $1.8 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 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.

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 September 30, 2024 and December 31, 2023 and additional information on certain summarized financial information for SLP III as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and September 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 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.

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 September 30, 2024 and December 31, 2023, SLP IV had total investments with an aggregate fair value of approximately $466.3 million and $467.9 million, respectively, and debt outstanding under its credit facility of $341.9 million and $306.5 million, respectively. As of September 30, 2024 and December 31, 2023, none of SLP IV’s investments were on non-accrual. Additionally, as of September 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 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.

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 September 30, 2024 and December 31, 2023 and additional information on certain summarized financial information for SLP IV as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and September 30, 2023.

Previous wording

On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.

Current wording

On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020. Effective July 1, 2024, NMNLC purchased 63,575 shares of NMNLC's common stock from an affiliate of the Investment Adviser at remaining original cost, a price of $73.39 per share, for an aggregate purchase price of approximately $4.7 million. Immediately thereafter, NMNLC sold the 63,575 shares of its common stock to NMFC at remaining original cost, a price of $73.39 per share, for an aggregate purchase price of approximately $4.7 million.

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 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.

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 nine months ended September 30, 2024 we recognized PIK and non-cash interest from investments of approximately $9.1 million and $27.7 million, respectively, and PIK and non-cash dividends from investments of approximately $8.3 million and $23.5 million, respectively. For the three and nine months ended September 30, 2023, we recognized PIK and non-cash interest from investments of approximately $7.9 million and $24.8 million, respectively, and PIK and non-cash dividends from investments of approximately $7.0 million and $20.2 million, respectively.

Previous 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.

Current wording

As of September 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, and six portfolio companies that had an Orange Risk Rating. As of September 30, 2024, no portfolio companies 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 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.

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 September 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 $1.5 million, respectively, for the three and nine months then ended. As of September 30, 2024, our investment in National HME had an Orange Risk Rating.

Previous 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.

Current wording

As of September 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 September 30, 2024, our positions in AAC on non-accrual status had an aggregate cost basis of $31.4 million, an aggregate fair value of $18.0 million and total unearned interest income of $1.3 million and $3.7 million, for the three and nine months then ended. As of September 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 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.

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 September 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 $2.2 million and $6.4 million, respectively, for the three and nine 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 September 30, 2024, our senior preferred shares of UniTek had an aggregate cost basis of $19.8 million, an aggregate fair value of approximately $2.4 million and total unearned dividend income of approximately $1.7 million and $4.9 million, respectively, for the three and nine months then ended. As of September 30, 2024, our investment in UniTek had a Green Risk Rating.

Previous 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.

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 September 30, 2024, our junior preferred shares in Transcendia had an aggregate cost basis of $2.6 million, an aggregate fair value of $2.7 million and total unearned income of $0.1 million and $0.1 million, respectively, for the three and nine months then ended. As of September 30, 2024, our investment in Transcendia had a Green Risk Rating.

Previous 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.

Current wording

The fair value of our investments, as determined in good faith by our board of directors, was approximately $3,265.3 million in 127 portfolio companies at September 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 six months ended June 30, 2024 and June 30, 2023:

Current wording

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

Previous wording

Our total investment income decreased by approximately $0.9 million, or 1%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. For the three months ended June 30, 2024, total investment income of approximately $94.6 million consisted of approximately $56.9 million in cash interest from investments, approximately $9.0 million in PIK and non-cash interest from investments, approximately $0.3 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $2.3 million, approximately $14.4 million in cash dividends from investments, approximately $7.8 million in PIK and non-cash dividends from investments and approximately $3.9 million in other income. The decrease in interest income of approximately $6.1 million during the three months ended June 30, 2024 as compared to the three 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 $3.4 million during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was primarily driven by an increase in PIK dividends and a cash distribution related to our ordinary shares in OA Topco, L.P. Other income during the three 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 29 different portfolio companies.

Current wording

Our total investment income increased by approximately $1.0 million, or 1%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. For the three months ended September 30, 2024, total investment income of approximately $95.3 million consisted of approximately $61.9 million in cash interest from investments, approximately $9.0 million in PIK and non-cash interest from investments, approximately $0.1 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $1.7 million, approximately $12.0 million in cash dividends from investments, approximately $8.4 million in PIK and non-cash dividends from investments and approximately $2.2 million in other income. The decrease in interest income of approximately $1.2 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily due to the decrease in total coupon rates on our floating rate investments, partially offset by a larger invested balance. The increase in dividend income of approximately $2.2 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily due to an increase in cash dividends from SLP III and an increase in PIK dividends on our preferred equity investments. Other income during the three months ended September 30, 2024, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront and amendment fees received from 19 different portfolio companies.

Previous 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.

Current wording

Our total net operating expenses increased by approximately $6.3 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Our management fee, net of a management fee waiver, remained relatively flat for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Our incentive fee decreased by approximately $1.3 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The decrease in incentives fees was attributable to a decrease in net investment income. Interest and other financing expenses increased by approximately $6.2 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 as a result of the acceleration of financing costs upon termination of the DB Credit Facility, 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 2019A Unsecured Notes on February 5, 2024. Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 remained relatively flat.

Previous wording

Our net realized losses and unrealized gains and losses resulted in a net loss of approximately $3.7 million for the three months ended June 30, 2024 compared to net realized gains and unrealized losses resulting in a net loss of approximately $4.9 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 June 30, 2024 was primarily driven by realized losses in New Trojan Parent, Inc. and Transcendia and unrealized depreciation in TVG-Edmentum Holdings, LLC, PPVA Fund, L.P. and Black Elk, partially offset by realized gains in Haven Midstream Holdings LLC and unrealized appreciation in New Permian Holdco, Inc., OA Topco, L.P. and UniTek. 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 loss for the three months ended June 30, 2023 was primarily driven by realized losses in ADG, LLC and unrealized losses in Ansira Holdings, Inc., New Trojan Parent, Inc. and American Achievement Corporation, partially offset by realized gains in Haven Midstream Holdings LLC and unrealized gains in MED Parentco, LP, CentralSquare Technologies, LLC, Integro Parent Inc.

Current wording

Our net realized losses and unrealized gains and losses resulted in a net loss of approximately $11.5 million for the three months ended September 30, 2024 compared to net realized gains and unrealized losses resulting in a net loss of approximately $12.0 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 September 30, 2024 was primarily driven by unrealized depreciation in New Permian Holdco, Inc., TVG-Edmentum Holdings, LLC ("Edmentum") and AAC, partially offset by unrealized appreciation in HB Wealth Management, LLC ("Homrich"), NM NL Holdings, L.P. and NM YI, LLC. The provision for income taxes was attributable to equity investments that are held as of September 30, 2024 in eight of our corporate subsidiaries. The net loss for the three months ended September 30, 2023 was primarily driven by unrealized depreciation in Edmentum and UniTek, partially offset by realized gains in Haven Midstream Holdings LLC and unrealized appreciation in Vectra Co. and TMK Hawk Parent, Corp. See Monitoring of Portfolio Investments above for more details regarding the health of our portfolio companies.

Previous wording

Results of Operations for the Six Months Ended June 30, 2024 and June 30, 2023

Current wording

Results of Operations for the Nine Months Ended September 30, 2024 and September 30, 2023

Previous 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.

Current wording

Our total investment income remained relatively flat for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. For the nine months ended September 30, 2024, total investment income of approximately $280.5 million consisted of approximately $174.8 million in cash interest from investments, approximately $27.7 million in PIK and non-cash interest from investments, approximately $0.6 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $5.8 million, approximately $39.4 million in cash dividends from investments, approximately $23.6 million in PIK and non-cash dividends from investments and approximately $8.6 million in other income. The decrease in interest income of approximately $10.9 million during the nine months ended September 30, 2024 as compared to the nine months ended September 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 $8.5 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily driven by an increase in cash dividends from our investments in SLP III and SLP IV, an increase in PIK dividends on our preferred equity investments and a cash distribution from our common shares investment in OA Topco, L.P. Other income during the nine months ended September 30, 2024, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront and amendment fees received from 61 different portfolio companies.

Previous wording

Our total net operating expenses remained relatively flat for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our management fee, net of a management fee waiver, decreased by approximately $0.5 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 due to a decrease in average gross assets. Our incentive fee decreased by approximately $0.6 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The decrease in incentive fees was attributable to a decrease in net investment income. Interest and other financing expenses increased by approximately $1.6 million for the six months ended June 30, 2024 as compared to the six 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 six months ended June 30, 2024 as compared to the six months ended June 30, 2023 remained relatively flat.

Current wording

Our total net operating expenses increased by approximately $6.3 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Our management fee, net of a management fee waiver, remained relatively flat for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Our incentive fee decreased by approximately $2.0 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The decrease in incentive fees was attributable to a decrease in net investment income. Interest and other financing expenses increased by approximately $7.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 as a result of the acceleration of financing costs upon termination of the DB Credit Facility, 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 2019A Unsecured Notes on February 5, 2024. Our total professional fees, administrative expenses and total other general and administrative expenses for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 remained relatively flat.

Previous 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

Current wording

Our net realized losses and unrealized gains and losses resulted in a net loss of approximately $24.6 million for the nine months ended September 30, 2024 compared to net realized gains and unrealized losses resulting in a net loss of approximately $10.4 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 nine months ended September 30, 2024 was primarily driven by realized losses in New Trojan Parent, Inc., TMK Hawk Parent, Corp., and Transcendia and unrealized depreciation in Edmentum, Permian and New Benevis Holdco, Inc., partially offset by realized gains in Haven Midstream Holdings LLC and unrealized appreciation in NM GP Holdco, LLC, UniTek, Homrich and CentralSquare Technologies, LLC. The benefit for income taxes was attributable to equity investments that are held as of September 30, 2024 in eight of our corporate subsidiaries. The net loss for the nine months ended September 30, 2023 was primarily driven by realized losses in National HME and ADG, LLC, and unrealized depreciation in Ansira, Edmentum and

Previous wording

June 30, 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 ADG, LLC and unrealized losses in Ansira Holding, Inc. See Monitoring of Portfolio Investments above for more details regarding the health of our portfolio companies.

Current wording

New Trojan Parent, Inc., partially offset by realized gains in Haven Midstream Holdings LLC and unrealized appreciation in UniTek. See Monitoring of Portfolio Investments above for more details regarding the health of our portfolio companies.

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 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%.

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 September 30, 2024, our asset coverage ratio was 179.2%.

Previous 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.

Current wording

As of September 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, Holdings Credit Facility, 2022 Convertible Notes, DB Credit Facility (repaid and terminated on September 30, 2024), 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 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.

Current wording

At September 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $61.9 million and $70.1 million, respectively. Our cash (used in) provided by operating activities during the nine months ended September 30, 2024 and September 30, 2023 was approximately $(153.2) million and $207.0 million, respectively. We expect that all current liquidity needs will be met with cash flows from operations and other activities.

Previous 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.

Current wording

For the three months ended September 30, 2024, we did not sell any shares of common stock under the Distribution Agreement. For the nine months ended September 30, 2024, we sold 5,292,556 shares of common stock under the Distribution Agreement and received total accumulated net proceeds of approximately $67.7 million, including $0.0 million of offering expenses, from these sales. For the three and nine months ended September 30, 2023, we sold 502,623 and 502,623 shares, respectively, of common stock, under the Distribution Agreement and received total accumulated net proceeds of approximately $6.6 million and $6.6 million, respectively, including $0.0 million and $0.0 million, respectively, of offering expenses, from these sales.

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 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.

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 September 30, 2024 and December 31, 2023, we had outstanding commitments to third parties to fund investments totaling $277.4 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 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.

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 September 30, 2024 and December 31, 2023, we had commitment letters to purchase investments in an aggregate par amount of $87.6 million and $11.1 million, respectively. As of September 30, 2024 and December 31, 2023, we had not entered into any bridge financing commitments which could require funding in the future.

Previous wording

(1)$200.0 million of the 2021A Unsecured Notes will mature on January 29, 2026 unless earlier repurchased, $75.0 million of the 2022A Unsecured Notes will mature on June 15, 2027 unless earlier repurchased, $115.0 million of the 8.250% Unsecured Notes will mature on November 15, 2028 unless earlier redeemed and $300.0 million of the 6.875% Unsecured Notes will mature on February 1, 2029 unless earlier redeemed.

Current wording

(1)$200.0 million of the 2021A Unsecured Notes will mature on January 29, 2026 unless earlier repurchased, $75.0 million of the 2022A Unsecured Notes will mature on June 15, 2027 unless earlier repurchased, $115.0 million of the 8.250% Unsecured Notes will mature on November 15, 2028 unless earlier redeemed, $300.0 million of the 6.875% Unsecured Notes will mature on February 1, 2029 unless earlier redeemed and $300.0 million of the 6.200% Unsecured Notes will mature on October 15, 2027 unless earlier redeemed.

Previous 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.

Current wording

(2)Under the terms of the $730.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($407.6 million as of September 30, 2024) must be repaid on or before October 26, 2028. As of September 30, 2024, there was approximately $322.4 million of available capacity remaining, subject to borrowing base limitations, under the Holdings Credit Facility.

Previous 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.

Current wording

(5)Under the terms of the $638.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($55.0 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 September 30, 2024) must be repaid on or before June 4, 2026 for Non-Extending Lenders and on or before September 28, 2029 for Extending Lenders. As of September 30, 2024, there was approximately $583.5 million of available capacity remaining, subject to borrowing base limitations, under the NMFC Credit Facility.

Previous wording

(7)Under the terms of the NMNLC Credit Facility II, all outstanding borrowings under that facility must be repaid on or before November 1, 2024. As of June 30, 2024, the outstanding borrowings under the NMNLC Credit Facility II for all borrowers was $25.5 million, of which $2.9 million was outstanding for NMNLC.

Current wording

(6)Under the terms of the NMNLC Credit Facility II, all outstanding borrowings under that facility must be repaid on or before November 1, 2024. As of September 30, 2024, the outstanding borrowings under the NMNLC Credit Facility II for all borrowers was $25.5 million, of which $2.9 million was outstanding for NMNLC.

Previous wording

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

Current wording

Distributions declared and paid to stockholders for the nine months ended September 30, 2024 totaled approximately $111.6 million.

Previous wording

(2)Includes a regular quarterly distribution of $0.32 per share and a supplemental distribution related to first quarter 2024 earnings of $0.02 per share.

Current wording

(2)Includes a regular quarterly distribution of $0.32 per share and a supplemental distribution related to second quarter 2024 earnings of $0.02 per share.