MSC INCOME FUND INC
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
MSIF$12.53+2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001535778-24-000039
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001535778-24-000114
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 112 previous paragraphs and 136 current paragraphs.
75 unchanged; 33 reworded; 18 added; 1 removed; 3 previous and 10 current paragraphs rearranged.
Tables are not compared: 10 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
(a)The increase in interest income was primarily due to (i) an increase in interest rates on floating rate Investment Portfolio debt investments primarily resulting from increases in benchmark index rates, (ii) an increase in accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments and (iii) higher average levels of income producing Investment Portfolio debt investments, partially offset by the negative impact of an increase in non-accrual investments.
Current report
Net investment income for each of the three months ended June 30, 2024 and 2023 was $14.4 million, or $0.18 per share. Within net investment income, the increase in total investment income was offset by an increase in total expenses, both as discussed above. Net investment income per share for each of the three months ended June 30, 2024 and 2023 included $0.02 per share of income considered less consistent or non-recurring in nature.
Current report
(a)Other activity includes a realized gain from a transaction involving one portfolio company which is not considered to be significant individually.
Current report
The following table provides a summary of the total net unrealized appreciation of $6.2 million for the three months ended June 30, 2024:
Current report
The income tax provision for the three months ended June 30, 2024 of $2.8 million principally consisted of (i) a deferred tax provision of $2.2 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $0.6 million, primarily related to a $0.6 million provision for current U.S. federal and state income taxes.
Current report
The income tax provision for the three months ended June 30, 2023 of $2.0 million principally consisted of (i) a deferred tax provision of $1.8 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/
Current report
depreciation and other temporary book-tax differences and (ii) a current tax provision of $0.2 million related to a $0.1 million provision for excise tax on our estimated undistributed taxable income and a $0.1 million provision for current U.S. federal and state income taxes.
Current report
Comparison of the six months ended June 30, 2024 and 2023
Current report
NM Net change % not meaningful
Current report
Investment Income
Current report
Total investment income for the six months ended June 30, 2024 was $67.9 million, a 6% increase from the $64.3 million of total investment income for the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.
Current report
Expenses
Current report
Total expenses, net of fee and expense waivers, for the six months ended June 30, 2024 were $39.0 million, a 9% increase from $35.8 million in the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.
Current report
Net Investment Income
Current report
Net Unrealized Appreciation (Depreciation)
Current report
The following table provides a summary of the total net unrealized appreciation of $5.1 million for the six months ended June 30, 2024:
Current report
Income Tax Benefit (Provision)
Current report
The income tax provision for the six months ended June 30, 2023 of $3.2 million consisted of (i) a deferred tax provision of $2.7 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $0.5 million related to a $0.3 million provision for current federal and state income taxes and a $0.2 million provision for excise tax on our estimated undistributed taxable income.
Removed paragraphs (1)
Previous report
The following table provides a summary of the total net unrealized depreciation of $1.1 million for the three months ended March 31, 2024.
Reworded paragraphs (33)
Previous wording
Private Loan investments primarily consist of debt securities that have primarily been originated directly by our Adviser or, to a lesser extent, through our Adviser’s strategic relationships with other investment funds on a collaborative basis through investments that are often referred to in the debt markets as “club deals” because of the small lender group size. Our Private Loan investments are typically made to support a company owned by or in the process of being acquired by a private equity sponsor. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. We may also co-invest with Main Street and the private equity sponsors in the equity securities of our Private Loan portfolio companies.
Current wording
Private Loan investments primarily consist of debt securities that have primarily been originated directly by our Adviser or, to a lesser extent, through our Adviser’s strategic relationships with other investment funds on a collaborative basis through investments that are often referred to in the debt markets as “club deals” because of the small lender group size. Our Private Loan investments are typically made to a company owned by or in the process of being acquired by a private equity sponsor. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. We may also co-invest with Main Street and the private equity sponsors in the equity securities of our Private Loan portfolio companies.
Previous wording
Our other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles for our Private Loan, LMM or Middle Market portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.
Current wording
Our other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles of our Private Loan, LMM or Middle Market portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.
Previous wording
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2024, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on our debt portfolio as of March 31, 2024 including debt investments on non-accrual status was 12.6% for our Private Loan portfolio, 13.0% for our LMM portfolio and 10.1% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.
Current wording
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of June 30, 2024, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on our debt portfolio as of June 30, 2024 including debt investments on non-accrual status was 12.7% for our Private Loan portfolio, 12.2% for our LMM portfolio and 9.8% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.
Previous wording
(c)The average EBITDA is calculated using a weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including one Private Loan portfolio company, two LMM portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.
Current wording
(c)The average EBITDA is calculated using a weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including three Private Loan portfolio companies, two LMM portfolio companies and two Middle Market portfolio companies, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.
Previous wording
For the three months ended March 31, 2024 and 2023, we achieved an annualized total return on investments of 11.8% and 11.4%, respectively. For the year ended December 31, 2023, we achieved a total return on investments of 13.6%. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Our total return on investments is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.
Current wording
For the three months ended June 30, 2024 and 2023, we achieved an annualized total return on investments of 15.1% and 15.2%, respectively. For the six months ended June 30, 2024 and 2023, we achieved an annualized total return on investments of 13.4% and 13.3%, respectively. For the year ended December 31, 2023, we achieved a total return on investments of 13.6%. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Our total return on investments is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.
Previous wording
As of March 31, 2024, we had Other Portfolio investments in four entities, collectively totaling $24.6 million in fair value and $21.4 million in cost basis and which comprised 2.2% and 2.0% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2023, we had Other Portfolio investments in four entities, collectively totaling $24.6 million in fair value and $21.5 million in cost basis and which comprised 2.3% and 2.1% of our Investment Portfolio at fair value and cost, respectively.
Current wording
As of June 30, 2024, we had Other Portfolio investments in four entities, collectively totaling $26.2 million in fair value and $20.0 million in cost basis and which comprised 2.3% and 1.8% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2023, we had Other Portfolio investments in four entities, collectively totaling $24.6 million in fair value and $21.5 million in cost basis and which comprised 2.3% and 2.1% of our Investment Portfolio at fair value and cost, respectively.
Previous wording
The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of both March 31, 2024 and December 31, 2023, our Investment Portfolio valued at fair value represented 96% of our total assets. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for a detailed discussion of our Investment Portfolio valuation process and procedures.
Current wording
The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of June 30, 2024 and December 31, 2023, our Investment Portfolio valued at fair value represented 95% and 96%, respectively, of our total assets. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for a detailed discussion of our Investment Portfolio valuation process and procedures.
Previous wording
We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.7. — Summary of Significant Accounting Policies — Income Taxes included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2024 and 2023, 4.5% and 3.8%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash. For each of the three months ended March 31, 2024 and 2023, 0.1% of our total investment income was attributable to cumulative dividend income not paid currently in cash.
Current wording
We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.7. — Summary of Significant Accounting Policies — Income Taxes included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the three and six months ended June 30, 2024 and 2023, 5.0% and 4.7%, and 3.4% and 3.6%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash. For each of the three and six months ended June 30, 2024 and 2023, 0.1% of our total investment income was attributable to cumulative dividend income not paid currently in cash.
Previous wording
As of March 31, 2024, investments on non-accrual status comprised 0.7% of our total Investment Portfolio at fair value and 3.6% at cost. As of December 31, 2023, investments on non-accrual status comprised 1.1% of our total Investment Portfolio at fair value and 4.0% at cost.
Current wording
As of June 30, 2024, investments on non-accrual status comprised 1.8% of our total Investment Portfolio at fair value and 5.3% at cost. As of December 31, 2023, investments on non-accrual status comprised 1.1% of our total Investment Portfolio at fair value and 4.0% at cost.
Previous wording
Total investment income for the three months ended March 31, 2024 was $34.0 million, a 9% increase from the $31.0 million of total investment income for the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.
Current wording
Total investment income for the three months ended June 30, 2024 was $33.9 million, a 2% increase from the $33.2 million of total investment income for the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.
Previous wording
(a)The increase in dividend income from Investment Portfolio equity investments was primarily a result of (i) an increase of $0.8 million in dividend income from certain of our LMM portfolio companies and (ii) an increase of $0.2 million in dividend income from our Private Loan portfolio companies. The increase includes a $0.1 million increase in dividend income considered less consistent or non-recurring.
Current wording
(b)The increase in dividend income from Investment Portfolio equity investments was primarily a result of an increase of $0.7 million in dividend income from certain of our LMM and Other portfolio companies, partially offset by a decrease in dividend income from certain of our Private Loan portfolio companies. The increase includes a $0.5 million decrease from prior year in dividend income considered to be less consistent or non-recurring.
Previous wording
Total expenses, net of expense waivers, for the three months ended March 31, 2024 were $19.4 million, a 15% increase from $16.9 million in the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.
Current wording
Total expenses, net of expense waivers, for the three months ended June 30, 2024 were $19.6 million, a 4% increase from $18.8 million in the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.
Previous wording
The following table provides a summary of the primary components of the total net realized loss on investments of $1.9 million for the three months ended March 31, 2024.
Current wording
The following table provides a summary of the primary components of the total net realized gain on investments of $0.3 million for the three months ended June 30, 2024:
Previous wording
(a)Includes unrealized appreciation on 20 LMM portfolio investments and unrealized depreciation on 11 LMM portfolio investments.
Current wording
(a)Includes unrealized appreciation on 21 LMM portfolio investments and unrealized depreciation on 14 LMM portfolio investments.
Previous wording
The net increase in net assets resulting from operations for the three months ended March 31, 2024 was $10.6 million, or $0.13 per share, compared with $12.2 million, or $0.15 per share, during the three months ended March 31, 2023. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Current wording
The net increase in net assets resulting from operations for the three months ended June 30, 2024 was $18.1 million, or $0.23 per share, compared with $19.3 million, or $0.24 per share, during the three months ended June 30, 2023. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.
Previous wording
(b)The increase in fee income was primarily related to (i) a $1.7 million increase in fees received from the refinancing and prepayment of debt investments and (ii) a $0.2 million increase related to higher investment activities. The increase includes a $1.7 million increase in fee income considered less consistent or non-recurring.
Current wording
(b)The increase in fee income was primarily related to (i) a $1.8 million increase in fees received from the refinancing and prepayment of debt investments and (ii) a $0.2 million increase related to increased investment activity.
Previous wording
(c)The increase in total investment income includes a net increase of $0.5 million due to the impact of certain income considered less consistent or non-recurring, including (i) a $1.7 million increase in accelerated prepayments, repricing and other activity related to certain Investment Portfolio debt investments and (ii) a $0.1 million increase in such dividend income, partially offset by a $1.2 million decrease in interest income from accelerated OID income.
Current wording
(c)The increase in total investment income includes a net increase of $0.5 million in the impact of certain income considered less consistent or non-recurring, including a $1.9 million increase in fee income, partially offset by (i) a $0.9 million decrease in interest income and (ii) a $0.5 million decrease in dividend income.
Previous wording
(b)The increase in incentive fees was due to the increased Pre-Incentive Fee Net Investment Income resulting from our more favorable operating results for the three months ended March 31, 2024.
Current wording
(b)The increase in incentive fees was due to the increased Pre-Incentive Fee Net Investment Income resulting from our more favorable operating results for the three months ended March 31, 2024 compared to the corresponding period of 2023 and consistent levels of Pre-Incentive Fee Net Investment Income for the three months ended June 30, 2024 and 2023.
Previous wording
Net investment income for the three months ended March 31, 2024 increased to $14.5 million, or $0.18 per share, compared to net investment income of $14.1 million, or $0.18 per share, for the corresponding period of 2023. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by the increase in total expenses, including incentive fees, each as discussed above. The increase in net investment income on a per share basis includes a $0.01 per share increase in investment income considered less consistent or non-recurring, as discussed above.
Current wording
Net investment income for the six months ended June 30, 2024 increased 1% to $28.9 million, or $0.36 per share, compared to net investment income of $28.5 million, or $0.36 per share, for the corresponding period of 2023. The increase in net investment income was attributable to the increase in total investment income, partially offset by the increase in total expenses, both as discussed above. The increase in net investment income and net investment income per share includes a $0.5 million, or $0.01 per share, increase in investment income considered to be less consistent or non-recurring, as discussed above.
Previous wording
The income tax provision for the three months ended March 31, 2024 of $0.9 million principally consisted of (i) a deferred tax provision of $0.6 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $0.3 million, related to a $0.2 million provision for current federal and state income taxes and a $0.1 million provision for excise tax on our estimated undistributed taxable income. The income tax provision for the three months ended March 31, 2023 of $1.2 million principally consisted of (i) a deferred tax provision of $0.9 million which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $0.3 million related to a $0.2 million provision for current federal and state income taxes and a $0.1 million provision for excise tax on our estimated undistributed taxable income.
Current wording
The income tax provision for the six months ended June 30, 2024 of $3.7 million principally consisted of (i) a deferred tax provision of $2.8 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $0.9 million related to a $0.8 million provision for current federal and state income taxes and a $0.1 million provision for excise tax on our estimated undistributed taxable income.
Previous wording
For the three months ended March 31, 2024, we realized a net decrease in cash and cash equivalents of $6.1 million as the result of $11.6 million of cash used in our operating activities, partially offset by $5.4 million of cash provided by our financing activities.
Current wording
For the six months ended June 30, 2024, we realized a net decrease in cash and cash equivalents of $1.3 million as the result of $39.8 million of cash used in our operating activities, partially offset by $38.5 million of cash provided by our financing activities.
Previous wording
The $11.6 million of cash used in our operating activities resulted primarily from the funding of new portfolio investments of $75.7 million, partially offset by (i) cash proceeds totaling $52.1 million from the sales and repayments of debt investments and sales of and return of capital from equity investments, (ii) cash flows that we generated from the operating profits earned totaling $12.2 million, which is our net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization expense for deferred financing costs and (iii) $0.2 million in cash flows related to changes in other assets and liabilities.
Current wording
The $39.8 million of cash used in our operating activities resulted primarily from (i) the funding of new portfolio investments of $183.3 million and (ii) $10.5 million in cash flows related to changes in other assets and liabilities, partially offset by (i) cash proceeds totaling $131.2 million from the sales and repayments of debt investments and sales of and return of capital from equity investments, (ii) cash flows that we generated from the operating profits earned totaling $23.6 million, which is our net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization expense for deferred financing costs.
Previous wording
The $5.4 million of cash provided by our financing activities principally consisted of (i) $19.0 million net cash proceeds related to our Credit Facilities and (ii) $2.5 million cash proceeds related to common stock issuance, partially offset by (i) $9.5 million in cash dividends paid to stockholders and (ii) $6.5 million for the repurchases of our common stock.
Current wording
The $38.5 million of cash provided by our financing activities principally consisted of (i) $66.0 million net cash borrowings related to our Credit Facilities and (ii) $5.0 million cash proceeds related to common stock issuance, partially offset by (i) $19.7 million in cash dividends paid to stockholders and (ii) $12.7 million for the repurchases of our common stock.
Previous wording
As of March 31, 2024, we had $24.6 million in cash and cash equivalents and $110.3 million of unused capacity under the Credit Facilities, which we maintain to support our investment and operating activities. As of March 31, 2024, our NAV totaled $618.5 million, or $7.72 per share.
Current wording
As of June 30, 2024, we had $29.5 million in cash and cash equivalents and $63.3 million of unused capacity under the Credit Facilities, which we maintain to support our investment and operating activities. As of June 30, 2024, our NAV totaled $623.2 million, or $7.78 per share.
Previous wording
As of March 31, 2024, we had $79.0 million outstanding and $86.0 million of undrawn commitments under our Corporate Facility and $275.7 million outstanding and $24.3 million of undrawn commitments under our SPV Facility, both of which we estimated approximated fair value. Availability under our Credit Facilities is subject to certain leverage and borrowing base limitations, various covenants, reporting requirements and other customary requirements for similar credit facilities. For further information on our Credit Facilities, including key terms and financial covenants, refer to Note D — Debt included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Current wording
As of June 30, 2024, we had $151.0 million outstanding and $14.0 million of undrawn commitments under our Corporate Facility and $250.7 million outstanding and $49.3 million of undrawn commitments under our SPV Facility, both of which we estimated approximated fair value. Availability under our Credit Facilities is subject to certain leverage and borrowing base limitations, various covenants, reporting requirements and other customary requirements for similar credit facilities. For further information on our Credit Facilities, including key terms and financial covenants, refer to Note D — Debt included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Previous wording
As a BDC, we generally are required to maintain a coverage ratio, or BDC asset coverage ratio, of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if certain requirements are met in the future). This requirement limits the amount that we may borrow. As of March 31, 2024, our BDC asset coverage ratio was 223%. The combination of these factors limits our access to capital to fund future investment activities or operating requirements, including our ability to grow the Investment Portfolio. We anticipate that we will continue to fund our investment activities and operating requirements through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, including cash proceeds from the repayments and from the sales of investments in our portfolio companies, and utilization of available borrowings under our Credit
Current wording
As a BDC, we generally are required to maintain a coverage ratio, or BDC asset coverage ratio, of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if certain requirements are met in the future). This requirement limits the amount that we may borrow. As of June 30, 2024, our BDC asset coverage ratio was 213%. The combination of these factors limits our access to capital to fund future investment activities or operating requirements, including our ability to grow the Investment Portfolio. We anticipate that we will continue to fund our investment activities and operating requirements through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, including cash proceeds from the repayments and from the sales of investments in our portfolio companies, and utilization of available borrowings under our Credit Facilities. Our primary uses of funds will be investments in portfolio companies, operating expenses, cash distributions to holders of our common stock and share repurchases under our share repurchase programs.
Previous wording
We may be 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 include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the Consolidated Balance Sheets. At March 31, 2024, we had a total of $78.8 million in outstanding commitments comprised of (i) 68 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) three investments with equity capital commitments that had not been fully called.
Current wording
We may be 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 include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the Consolidated Balance Sheets. At June 30, 2024, we had a total of $79.0 million in outstanding commitments comprised of (i) 74 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) two investments with equity capital commitments that had not been fully called.
Previous wording
As of March 31, 2024, we had $504.7 million in total borrowings outstanding under our Credit Facilities and Series A Notes. The Corporate Facility will mature on March 1, 2026. The SPV Facility will mature on February 3, 2028. The Series A Notes will mature on October 30, 2026. See further discussion of the terms of our Credit Facilities, Series A Notes and other debt in Note D — Debt included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Current wording
As of June 30, 2024, we had $551.7 million in total borrowings outstanding under our Credit Facilities and Series A Notes. The Corporate Facility will mature on March 1, 2026. The SPV Facility will mature on February 3, 2028. The Series A Notes will mature on October 30, 2026. See further discussion of the terms of our Credit Facilities, Series A Notes and other debt in Note D — Debt included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Previous wording
(1)As of March 31, 2024, $24.3 million remained available to borrow under the SPV Facility; however, our borrowing ability is limited to leverage and borrowing base restrictions imposed by the SPV Facility and the 1940 Act, as discussed above.
Current wording
(1)As of June 30, 2024, $49.3 million remained available to borrow under the SPV Facility; however, our borrowing ability is limited to leverage and borrowing base restrictions imposed by the SPV Facility and the 1940 Act, as discussed above.
Previous wording
(2)As of March 31, 2024, $86.0 million remained available to borrow under the Corporate Facility; however, our borrowing ability is limited to leverage and borrowing base restrictions imposed by the Corporate Facility and the 1940 Act, as discussed above.
Current wording
(2)As of June 30, 2024, $14.0 million remained available to borrow under the Corporate Facility; however, our borrowing ability is limited to leverage and borrowing base restrictions imposed by the Corporate Facility and the 1940 Act, as discussed above.
Previous wording
to the DRIP, for total proceeds to us of $2.5 million. The issuance and sale were made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and were unanimously approved by the Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of us or our Adviser.
Current wording
On August 1, 2024, we sold 250,627 shares of our common stock to Main Street at $7.98 per share, the price at which we issued new shares in connection with reinvestments of the August 1, 2024 dividend pursuant to the DRIP, for total proceeds to us of $2.0 million. The issuance and sale were made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and were unanimously approved by the Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of us or our Adviser.
Previous wording
On May 1, 2024, we repurchased 536,330 shares of our common stock validly tendered and not withdrawn on the terms set forth in our tender offer statement on Schedule TO and Offer to Purchase filed with the SEC on March 26, 2024. The shares were repurchased at a price of $7.78 per share, which was our NAV per share as of May 1, 2024, for an aggregate purchase price of $4.2 million (an amount equal to 90% of the proceeds we received from the issuance of shares under the our DRIP from the May 1, 2024 dividend payment).
Current wording
On August 1, 2024, we repurchased 514,109 shares of our common stock validly tendered and not withdrawn on the terms set forth in our tender offer statement on Schedule TO and Offer to Purchase filed with the SEC on June 27, 2024. The shares were repurchased at a price of $7.83 per share, which was our NAV per share as of August 1, 2024, for an aggregate purchase price of $4.0 million (an amount equal to 90% of the proceeds we received from the issuance of shares under the our DRIP from the August 1, 2024 dividend payment).
Previous wording
On May 13, 2024, our Board of Directors declared a quarterly dividend of $0.180 per share payable August 1, 2024 to stockholders of record as of June 28, 2024. Additionally, our Board of Directors approved a repurchase offer pursuant to our share repurchase program in an amount equal to 90% of the proceeds resulting from shares issued in lieu of cash distributions from the August 1, 2024 dividend payment.
Current wording
On August 13, 2024, our Board of Directors declared a quarterly dividend of $0.18 per share payable November 1, 2024 to stockholders of record as of September 30, 2024. Additionally, our Board of Directors approved a repurchase offer pursuant to our share repurchase program in an amount equal to 90% of the proceeds resulting from shares issued in lieu of cash distributions from the November 1, 2024 dividend payment.
Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
(c)The increase in fee income was primarily related to (i) a $0.2 million increase in fees related to increased investment activity and (ii) a $0.1 million increase in fees received from the refinancing and prepayment of debt investments.
Current report — wording carried from elsewhere
Set forth below is a comparison of the results of operations for the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
(a)The increase in dividend income from Investment Portfolio equity investments was primarily a result of an increase of $1.2 million in dividend income from certain of our LMM portfolio companies, partially offset by a decrease in dividend income from certain of our Private Loan portfolio companies. The increase includes a $0.5 million decrease from prior year in dividend income considered to be less consistent or non-recurring.
Current report — wording carried from elsewhere
(a)The increase in interest expense was primarily related to (i) increased weighted average interest rates on our Credit Facilities based upon the increases in benchmark index rates for these floating rate obligations and (ii) higher weighted-average outstanding borrowings.
Current report — wording carried from elsewhere
Net Realized Gain (Loss) from Investments
Current report — wording carried from elsewhere
The following table provides a summary of the primary components of the total net realized loss on investments of $1.6 million for the six months ended June 30, 2024:
Current report — wording carried from elsewhere
(a)Includes unrealized appreciation on 24 LMM portfolio investments and unrealized depreciation on 16 LMM portfolio investments.
Current report — wording carried from elsewhere
Net Increase in Net Assets Resulting from Operations
Current report — wording carried from elsewhere
The net increase in net assets resulting from operations for the six months ended June 30, 2024 was $28.7 million, or $0.36 per share, compared with $31.5 million, or $0.39 per share, during the six months ended June 30, 2023. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.
Current report — wording carried from elsewhere
On May 17, 2024, we commenced a $2.0 million modified “Dutch Auction” tender offer (the “May 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated May 17, 2024, which expired on June 20, 2024.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Facilities. Our primary uses of funds will be investments in portfolio companies, operating expenses, cash distributions to holders of our common stock and share repurchases under our share repurchase programs.
Previous report — wording carried elsewhere
On May 1, 2024, we sold 315,259 shares of our common stock to Main Street at $7.93 per share, the
Previous report — wording carried elsewhere
price at which we issued new shares in connection with reinvestments of the May 1, 2024 dividend pursuant