Carlyle Secured Lending Inc
For the period ended Sep 30, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 5, 2024
CGBD$11.17+2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-05.
0001544206-24-000054
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001544206-24-000067
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 199 previous paragraphs and 209 current paragraphs.
154 unchanged; 38 reworded; 15 added; 4 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 25 previous and 26 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 (15)
Current report
We invest primarily in loans to middle market companies whose debt is rated below investment grade, or would likely be rated below investment grade if it was rated. These securities, which are often referred to as “junk,” have predominately speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.
Current report
Third Quarter 2024 Highlights
Current report
•Adjusted for one-time expenses related to the reset of the 2015-1R Notes, the adjusted net investment income per share (a non-GAAP financial measure) was $0.49. Refer to the Adjusted Net Investment Income and Adjusted Net Income discussion within this section for further details.
Current report
•On July 17, 2024, we issued 53,517 shares for a total consideration of $1.0 million under the dividend reinvestment plan.
Current report
•On October 18, 2024, we completed a public offering of $300.0 million aggregate principal of 6.75% senior unsecured notes due February 18, 2030 (the “2030 Notes”). In connection with the issuance of the 2030 Notes, we entered into an interest rate swap agreement with JP Morgan Chase Bank N.A. for a total notional amounts of $300.0 million. Under the interest rate agreement, commencing on the effective date of August 18, 2025, we will receive a fixed interest rate of 6.75% and pays a floating interest rate based on the compounded average daily SOFR plus 3.23%.
Current report
Adjusted Net Investment Income and Adjusted Net Income
Current report
On a supplemental basis, we are disclosing Adjusted Net Investment Income, Adjusted Net Investment Income Per Share, Adjusted Net Income and Adjusted Net Income Per Share each of which is calculated and presented on a basis other than in accordance with GAAP (“non-GAAP”). We use these non-GAAP financial measures internally to analyze and evaluate financial results and performance, and we believe these non-GAAP financial measures are useful to investors as an additional tool to evaluate our ongoing results and trends and to review our performance without giving effect to one-time or non-recurring investment income and expense events, including the effects on incentive fees. The presentation of these non-GAAP measures is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation.
Current report
We use the non-GAAP financial measures described above internally to analyze and evaluate financial results and performance and to compare our financial results with those of other business development companies that have not had similar one-time or non-recurring events. We believe “Adjusted Net Investment Income”, “Adjusted Net Investment Income Per Share”, “Adjusted Net Income” and “Adjusted Net Income Per Share” are useful to investors as an additional tool to evaluate our ongoing results and trends without giving effect to one-time or non-recurring events and are used to evaluate our economic earnings.
Current report
The following table summarizes our Adjusted Net Investment Income, Adjusted Net Investment Income Per Share, Adjusted Net Income, and Adjusted Net Income Per Share:
Current report
(1)On July 2, 2024, Carlyle Direct Lending CLO 2015-1R LLC, a wholly-owned and consolidated subsidiary of us, completed the refinancing of its outstanding notes by redeeming the notes in full and issuing new notes and loans. In connection with the refinancing, the debt issuance costs were accelerated in accordance with GAAP. Refer to Note 8, Borrowings, in the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on the refinancing.
Current report
(1)Excludes $30 million of Class C-R notes, which are rated BBB-, accrue interest at SOFR plus spread of 3.75%, and are retained by the Company.
Current report
The increase in other income for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024 was primarily driven by an increase in prepayment fees.
Current report
For the three and nine months ended September 30, 2024 and September 30, 2023
Current report
(1)Reflects cumulative convertible preferred securities as equity, net of excess cash held at period end, which was $38.5 million as of September 30, 2024.
Current report
(2)Reflects cumulative convertible preferred securities as debt. These securities are considered "senior securities" for the purposes of calculating asset coverage pursuant to the Investment Company Act.
Removed paragraphs (4)
Previous report
Second Quarter 2024 Highlights
Previous report
•On August 2, 2024, we entered into an Agreement and Plan of Merger with Carlyle Secured Lending III, a Delaware statutory trust (“CSL III”), Blue Fox Merger Sub, Inc., a Maryland corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and, solely for the limited purposes set forth therein, CSL III Advisor, LLC, a Delaware limited liability company and investment adviser to CSL III (“CSL III Advisor”), and the Investment Adviser (together with CSL III Advisor, the “Advisors”), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, (i) Merger Sub will merge with and into CSL III, with CSL III continuing as the surviving company and as a wholly-owned subsidiary of the Company (the “Merger”) and (ii) immediately thereafter, CSL III will merge with and into the Company, with the Company continuing as the surviving company (together with the Merger, the “Mergers”). Refer to Note 14, Subsequent Events, to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the Merger Agreement and the Mergers.
Previous report
•On July 2, 2024, we completed a $410.0 million refinancing of the 2015-1R Notes, including $30.0 million retained by the Company. The refinancing extended the reinvestment period by four years and reduced the cost of debt by 22 basis points.
Previous report
For the three and six months ended June 30, 2024 and June 30, 2023
Reworded paragraphs (38)
Previous wording
•Net investment income, inclusive of the preferred dividend, was $26.0 million or $0.51 per common share. Dividends declared on common shares for the second quarter of 2024 totaled $23.9 million, or $0.47 per share.
Current wording
•Dividends declared on common shares for the third quarter of 2024 totaled $23.9 million, or $0.47 per share.
Previous wording
•Net investment income for the three months ended June 30, 2024 declined slightly from the comparable period in the prior year primarily due to a decrease in portfolio size.
Current wording
•Net investment income for the three months ended September 30, 2024, after adjusting for the acceleration of debt issuance costs related to the reset of the 2015-R Notes, declined slightly from the comparable period in the prior year primarily due to a decrease in portfolio size, partially offset by lower non-accruals.
Previous wording
•The NAV per common share decreased to $16.95 as of June 30, 2024, from $17.07 as of March 31, 2024, primarily driven by net unrealized depreciation from our watchlist names partially offset by earnings in excess of our dividend for the quarter.
Current wording
•The NAV per common share decreased to $16.85 as of September 30, 2024, from $16.95 as of June 30, 2024.
Previous wording
•As of June 30, 2024, we held 180 investments across 126 portfolio companies and 25 industries for a total fair value of $1.7 billion.
Current wording
•As of September 30, 2024, we held 175 investments across 128 portfolio companies and 26 industries for a total fair value of $1.7 billion.
Previous wording
•During the three months ended June 30, 2024, we had investment fundings of $84.8 million and investment repayments of $135.9 million.
Current wording
•During the three months ended September 30, 2024, we had investment fundings of $143.4 million and investment repayments of $171.2 million.
Previous wording
•As of June 30, 2024, non-accrual investments represented 2.8% and 1.8% of our portfolio based on cost and fair value, respectively.
Current wording
•As of September 30, 2024, non-accrual investments represented 1.2% and 0.6% of our portfolio based on cost and fair value, respectively.
Previous wording
•In connection with the entry into the Merger Agreement, upon the terms and subject to the conditions contained in the Preferred Stock Exchange Documents (as defined in the Merger Agreement) by and between us and the holder of Preferred Stock, all shares of Preferred Stock issued and outstanding immediately prior to the effective time of the Merger will be exchanged for such number of shares of our common stock in a transaction exempt from registration under the Securities Act, as is equal to the quotient of (i) the aggregate liquidation preference of the Preferred Stock and (ii) the Closing CGBD Net Asset Value.
Current wording
•On August 2, 2024, we entered into a Merger Agreement with Carlyle Secured Lending III. In connection with the Merger Agreement, all shares of Preferred Stock issued and outstanding will be exchanged for shares of our common stock in a private placement transaction at a rate equal to the quotient of (i) the aggregate liquidation preference of the Preferred Stock and (ii) the Closing CGBD Net Asset Value per share. Refer to Note 14, Merger with CSL III, to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the Merger Agreement, the Mergers and the Preferred Stock Exchange.
Previous wording
•Total liquidity as of June 30, 2024 was $399.1 million in cash and undrawn debt capacity.
Current wording
•Total liquidity as of September 30, 2024 was $354.8 million in cash and undrawn debt capacity.
Previous wording
•On August 1, 2024, we declared common stock dividends of $0.47 per share to be paid in October 2024.
Current wording
•On November 4, 2024, we declared common stock dividends of $0.45 per share to be paid on January 17, 2025.
Previous wording
As a BDC, we believe that the key components of our results of operations for our business are earnings per share, dividends declared, net investment income and net asset value per common share. For the three months ended June 30, 2024, we recorded basic earnings per common share of $0.35, declared a dividend of $0.47 per common share and earned $0.51 of net investment income per common share.
Current wording
As a BDC, we believe that the key components of our results of operations for our business are earnings per share, dividends declared, net investment income and net asset value per common share. For the three months ended September 30, 2024, we recorded basic earnings per common share of $0.37, declared a dividend of $0.47 per common share and earned $0.47 of net investment income per common share.
Previous wording
For the three months ended June 30, 2024 and March 31, 2024, we declared dividends per common share of $0.47 and $0.48, respectively. As of June 30, 2024 and December 31, 2023, our NAV per share was $16.95 and $16.99, respectively.
Current wording
For the three months ended September 30, 2024 and June 30, 2024, we declared dividends per common share of $0.47 and $0.47, respectively. As of September 30, 2024 and December 31, 2023, our NAV per share was $16.85 and $16.99, respectively.
Previous wording
(1)Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of June 30, 2024. Weighted average yield at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount (“OID”) and market discount earned, divided by (b) total fair value included in such securities. Weighted average yield at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned, divided by (b) total amortized cost included in such securities. Weighted average yields exclude investments on non-accrual status. Actual yields earned over the life of each investment could differ materially from the yields presented above. Inclusive of all debt and income producing investments and investments on non-accrual status, the weighted average yield on amortized cost was 12.3% as of June 30, 2024.
Current wording
(1)Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of September 30, 2024. Weighted average yield at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount (“OID”) and market discount earned, divided by (b) total fair value included in such securities. Weighted average yield at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned, divided by (b) total amortized cost included in such securities. Weighted average yields exclude investments on non-accrual status. Actual yields earned over the life of each investment could differ materially from the yields presented above. Inclusive of all debt and income producing investments and investments on non-accrual status, the weighted average yield on amortized cost was 11.8% as of September 30, 2024.
Previous wording
(3)For the three months ended June 30, 2024, 95.2% of new debt investment commitments were at floating interest rates.
Current wording
(3)For the three months ended September 30, 2024, 100.0% of new funded debt investments were at floating interest rates.
Previous wording
As of June 30, 2024 and December 31, 2023, the weighted average Internal Risk Rating of our debt investment portfolio was 2.2. As of June 30, 2024 and December 31, 2023, three and four of our debt investments were assigned an Internal Risk Rating of 4-5, respectively.
Current wording
As of September 30, 2024 and December 31, 2023, the weighted average Internal Risk Rating of our debt investment portfolio was 2.2. As of September 30, 2024 and December 31, 2023, two and four of our debt investments were assigned an Internal Risk Rating of 4-5, respectively.
Previous wording
On July 2, 2024, the Company and the 2015-1 Issuer completed the 2015-1R Refinancing, which resulted in the 2015-1N Debt, a $410.0 million collateralized loan obligation. On closing date of the 2015-1R Refinancing, the 2015-1 Issuer refinanced the 2015-1R Notes to the 2015-1N Debt, issued additional 2015-1 Issuer Preferred Interests to the Company in the aggregate notional amount of $13,500, increasing the 2015-1 Issuer Preferred Interests held by the Company to approximately
Current wording
On July 2, 2024, the Company and the 2015-1 Issuer completed the 2015-1R Refinancing, which resulted in the 2015-1N Debt, a $410.0 million collateralized loan obligation. On closing date of the 2015-1R Refinancing, the 2015-1 Issuer refinanced the 2015-1R Notes to the 2015-1N Debt, issued additional 2015-1 Issuer Preferred Interests to the Company in the aggregate notional amount of $13,500, increasing the 2015-1 Issuer Preferred Interests held by the Company to approximately $118,054 and extended the reinvestment period end date and maturity date applicable to the 2015-1 Issuer to July 15, 2028 and July 1, 2036, respectively.
Previous wording
Since inception of Credit Fund and through June 30, 2024, we and Credit Partners each made capital contributions of $1 in members’ equity and $216,000 in subordinated loans to Credit Fund. On May 25, 2021, we and Credit Partners each received an aggregate return of capital on the subordinated loans of $23,000. The cost and fair value of our investment in Credit Fund was $193,001 and $180,301, respectively, as of June 30, 2024 and $193,001 and $181,960, respectively, as of December 31, 2023.
Current wording
Since inception of Credit Fund and through September 30, 2024, we and Credit Partners each made capital contributions of $1 in members’ equity and $216,000 in subordinated loans to Credit Fund. On May 25, 2021, we and Credit Partners each received an aggregate return of capital on the subordinated loans of $23,000. The cost and fair value of our investment in Credit Fund was $193,001 and $176,865, respectively, as of September 30, 2024 and $193,001 and $181,960, respectively, as of December 31, 2023.
Previous wording
Since inception of Credit Fund II and through June 30, 2024, we and CCLF made capital contributions of $78,096 and $12,709 in members’ equity, respectively, to Credit Fund II. The cost and fair value of our investment in Credit Fund II was $78,096 and $67,667, respectively, as of June 30, 2024 and $78,096 and $67,419, respectively, as of December 31, 2023. Our portion of the dividends declared by Credit Fund II was $3,281 and $2,776 for the three months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, our annualized dividend yield from Credit Fund II was 16.8% and 14.2%, respectively.
Current wording
Since inception of Credit Fund II and through September 30, 2024, we and CCLF made capital contributions of $78,096 and $12,709 in members’ equity, respectively, to Credit Fund II. The cost and fair value of our investment in Credit Fund II was $78,096 and $67,107, respectively, as of September 30, 2024 and $78,096 and $67,419, respectively, as of December 31, 2023. Our portion of the dividends declared by Credit Fund II was $2,776 and $2,776 for the three months ended
Previous wording
The decrease in investment income for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024 was primarily driven by a decrease in average outstanding investment balance due to sales and repayments of our investments and a decrease in other income. As of June 30, 2024, the size of our portfolio decreased to $1,783,219 from $1,829,575 as of March 31, 2024, at amortized cost. As of June 30, 2024 and March 31, 2024, the weighted average yield of our total debt and income producing investments was 12.7% and 12.6%, respectively, based on amortized cost.
Current wording
The decrease in investment income for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024 was primarily driven by a decrease in average outstanding investment balance due to sales and repayments of our investments and a lower weighted average yield on the portfolio. As of September 30, 2024, the size of our portfolio decreased to $1,757,621 from $1,783,219 as of June 30, 2024, at amortized cost. As of September 30, 2024 and June 30, 2024, the weighted average yield of our total debt and income producing investments was 11.9% and 12.7%, respectively, based on amortized cost.
Previous wording
Interest income and PIK income on our first and second lien debt investments are dependent on the composition and credit quality of the portfolio. Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement. As of June 30, 2024 and March 31, 2024, three and one of our debt investments were on non-accrual status, respectively. Non-accrual investments had a fair value of $30,209 and $3,792, which represented approximately 1.8% and 0.2% of total investments at fair value as of June 30, 2024 and March 31, 2024, respectively. The remaining first and second lien debt investments were performing and current on their interest payments as of June 30, 2024 and March 31, 2024.
Current wording
Interest income and PIK income on our first and second lien debt investments are dependent on the composition and credit quality of the portfolio. Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement. As of September 30, 2024 and June 30, 2024, two and three of our debt investments were on non-accrual status, respectively. Non-accrual investments had a fair value of $10,472 and $30,209, which represented approximately 0.6% and 1.8% of total investments at fair value as of September 30, 2024 and June 30, 2024, respectively. The remaining first and second lien debt investments were performing and current on their interest payments as of September 30, 2024 and June 30, 2024.
Previous wording
The decrease in interest expense and credit facility fees was primarily driven by repayments on the 2015-1R Notes during the three months ended June 30, 2024.
Current wording
The increase in interest expense and credit facility fees was primarily driven by the acceleration of debt issuance costs as a result of the refinancing of the 2015-1R Notes during the three months ended September 30, 2024.
Previous wording
During the three months ended June 30, 2024, we recognized a realized gain after the sale of our equity investment in Legacy.com, Inc. partially offset by a realized loss from the restructuring of our investment in Material Holdings, LLC.
Current wording
During the three months ended September 30, 2024, we recognized a realized loss after the sale of our investments in Emergency Communications Network, LLC and Stonegate Pub Company Bidco Limited partially offset by a realized gain from the sale of our equity investment in Chartis Holding, LLC.
Previous wording
Net change in unrealized appreciation (depreciation) is driven by changes in other inputs utilized under our valuation methodology, including, but not limited to, enterprise value multiples, borrower leverage multiples and borrower ratings, and the impact of exits.
Current wording
The net change in unrealized appreciation (depreciation) is driven by changes in various inputs used in our valuation methodology, including but not limited to enterprise value multiples, borrower leverage ratios, borrower ratings, and the impact of exits. The net change in unrealized appreciation (depreciation) is also driven by the reversal of prior period unrealized depreciation related to Emergency Communications Network, LLC.
Previous wording
The following table sets forth information regarding our consolidated results of operations for the three and six month periods ending June 30, 2024 and June 30, 2023:
Current wording
The following table sets forth information regarding our consolidated results of operations for the three and nine month periods ending September 30, 2024 and September 30, 2023:
Previous wording
The decrease in investment income for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was primarily driven by a decrease in interest income and other income. The increase in investment income for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily driven by higher benchmark rates and an increase in other income. As of June 30, 2024, the size of our portfolio decreased to $1,783,219 from $1,963,144 as of June 30, 2023, at amortized cost. As of June 30, 2024 and June 30, 2023, the weighted average yield of our total debt and income producing investments was 12.7% and 12.6%, respectively, based on amortized cost.
Current wording
The decrease in investment income for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 was primarily driven by a decrease in interest income. As of September 30, 2024, the size of our portfolio decreased to $1,757,621 from $1,926,884 as of September 30, 2023, at amortized cost. As of September 30, 2024 and September 30, 2023, the weighted average yield of our total debt and income producing investments was 11.9% and 12.3%, respectively, based on amortized cost.
Previous wording
Interest income and PIK income on our first and second lien debt investments are dependent on the composition and credit quality of the portfolio. Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement. As of June 30, 2024 and June 30, 2023, three and four of our debt investments were on non-accrual status, respectively. Non-accrual investments had a fair value of $30,209 and $34,661, which represented approximately 1.8% and 1.8% of total investments at fair value as of June 30, 2024 and June 30, 2023, respectively. The remaining first and second lien debt investments were performing and current on their interest payments as of June 30, 2024 and June 30, 2023.
Current wording
Interest income and PIK income on our first and second lien debt investments are dependent on the composition and credit quality of the portfolio. Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement. As of September 30, 2024 and September 30, 2023, two and four of our debt investments were on non-accrual status, respectively. Non-accrual investments had a fair value of $10,472 and $36,600, which represented approximately 0.6% and 2.0% of total investments at fair value as of September 30, 2024 and September 30, 2023, respectively. The remaining first and second lien debt investments were performing and current on their interest payments as of September 30, 2024 and September 30, 2023.
Previous wording
The increase in other income for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily driven by higher amendment and prepayment fees.
Current wording
The increase in other income for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was primarily driven by higher amendment and prepayment fees.
Previous wording
The decrease in interest expense and credit facility fees for the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023 was primarily driven by lower average principal balance, partially offset by higher weighted average interest rates due to higher benchmark rates during the three and six months ended June 30, 2024.
Current wording
The decrease in interest expense and credit facility fees for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 was primarily driven by a lower average principal balance during the three and nine months ended September 30, 2024.
Previous wording
The change in incentive fees for the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023 is driven by changes in pre-incentive fee net investment income.
Current wording
The change in incentive fees for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 is driven by changes in pre-incentive fee net investment income.
Previous wording
The decrease in base management fees for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 was driven by lower average gross assets as a result of net repayments on our investments.
Current wording
The decrease in base management fees for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was driven by lower average gross assets as a result of net repayments on our investments.
Previous wording
For the three and six months ended June 30, 2024, there were no accrued capital gains incentive fees based upon the cumulative net realized and unrealized appreciation (depreciation) as of June 30, 2024. The accrual for any capital gains incentive fee under U.S. GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. See Note 4, Related Party Transactions, to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on the incentive and base management fees.
Current wording
For the three and nine months ended September 30, 2024, there were no accrued capital gains incentive fees based upon the cumulative net realized and unrealized appreciation (depreciation) as of September 30, 2024. The accrual for any capital gains incentive fee under U.S. GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. See Note 4, Related Party Transactions, to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on the incentive and base management fees.
Previous wording
The amount of and number of investments with realized gain (loss) and change in unrealized appreciation (depreciation) for the three and six months ended June 30, 2024 and June 30, 2023 were as follows:
Current wording
The amount of and number of investments with realized gain (loss) and changes in unrealized appreciation (depreciation) for the three and nine months ended September 30, 2024 and September 30, 2023 were as follows:
Previous wording
During the six month ended June 30, 2024, we recognized a realized loss after the write-off of our investment in American Physician Partners partially offset by a realized gains from the recapitalization of our investment in Dermatology Associates and from our exit of the equity investment in Legacy.com, Inc. The net change in unrealized appreciation (depreciation) for the six months ended June 30, 2024 was mainly driven by the reversal of prior period unrealized appreciation (depreciation) related to American Physician Partners and Dermatology Associates.
Current wording
During the nine months ended September 30, 2024, we recognized a realized loss due to the write-off of our investment in American Physician Partners and Emergency Communications Network, LLC partially offset by realized gains from the recapitalization of our investment in Dermatology Associates and from our exit of the equity investment in Legacy.com, Inc.
Previous wording
Net change in unrealized appreciation (depreciation) is driven by changes in other inputs utilized under our valuation methodology, including, but not limited to, enterprise value multiples, borrower leverage multiples and borrower ratings, and the impact of exits.
Current wording
Net change in unrealized appreciation (depreciation) is driven by changes in other inputs utilized under our valuation methodology, including, but not limited to, enterprise value multiples, borrower leverage multiples and borrower ratings, and the impact of exits. The net change in unrealized appreciation (depreciation) for the three and nine months ended September 30, 2024 was mainly driven by the reversal of prior period unrealized appreciation (depreciation) related to American Physician Partners.
Previous wording
We have capitalized our business to date primarily through the issuance and sale of our common stock, asset-level financing, and the issuance of unsecured senior debt. As of June 30, 2024, we had $911,230 of outstanding consolidated indebtedness under the Credit Facility, the 2015-1R Notes and the Senior Notes as previously discussed within Portfolio and Investment Activity - Portfolio Financing. As of June 30, 2024, we had $399,149 of liquidity that can be used to satisfy our short-term cash requirements and working capital for our business. Refer to Note 8, Borrowings, to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our financing.
Current wording
We have capitalized our business to date primarily through the issuance and sale of our common stock, asset-level financing, and the issuance of unsecured senior debt. As of September 30, 2024, we had $852,593 of outstanding consolidated indebtedness under the Credit Facility, the 2015-1R Notes and the Senior Notes as previously discussed within Portfolio and Investment Activity - Portfolio Financing. As of September 30, 2024, we had $354,808 of liquidity that can be used to satisfy our short-term cash requirements and working capital for our business. Refer to Note 8, Borrowings, to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our financing.
Previous wording
The Preferred Stock is convertible, in whole or in part, at the option of the holder of the Preferred Stock into the number of shares of common stock equal to the Liquidation Preference plus any accumulated but unpaid dividends, divided by an initial conversion price of $9.50, subject to certain adjustments to prevent dilution as set forth in the Company's articles supplementary (the “Articles Supplementary”). The conversion price as of June 30, 2024 was $8.98. Effective as of May 5, 2023, the Company, with the approval of the Board of Directors, including a majority of the Independent Directors, has the option to redeem all of the Preferred Stock for cash consideration equal to the Liquidation Preference plus any accumulated but unpaid dividends. The holders of the Preferred Stock have the right to convert all or a portion of their shares of Preferred Stock prior to the date fixed for such redemption. Effective as of May 5, 2027, the holders of the Preferred Stock have the option to require the Company to redeem any or all of the then-outstanding Preferred Stock upon 90 days’ notice. The form of consideration used in any such redemption is at the option of the Board of Directors, including a majority of the Independent Directors, and may be cash consideration equal to the Liquidation Preference plus any accumulated but unpaid dividends, or shares of common stock. Holders also have the right to redeem the Preferred Stock upon a Change in Control (as defined in the Articles Supplementary).
Current wording
The Preferred Stock is convertible, in whole or in part, at the option of the holder of the Preferred Stock into the number of shares of common stock equal to the Liquidation Preference plus any accumulated but unpaid dividends, divided by an initial conversion price of $9.50, subject to certain adjustments to prevent dilution as set forth in the Company's articles supplementary (the “Articles Supplementary”). The conversion price as of September 30, 2024 was $8.92. Effective as of May 5, 2023, the Company, with the approval of the Board of Directors, including a majority of the Independent Directors, has the option to redeem all of the Preferred Stock for cash consideration equal to the Liquidation Preference plus any accumulated but unpaid dividends. The holders of the Preferred Stock have the right to convert all or a portion of their shares of Preferred Stock prior to the date fixed for such redemption. Effective as of May 5, 2027, the holders of the Preferred Stock have the option to require the Company to redeem any or all of the then-outstanding Preferred Stock upon 90 days’ notice. The form of consideration used in any such redemption is at the option of the Board of Directors, including a majority of the Independent Directors, and may be cash consideration equal to the Liquidation Preference plus any accumulated but unpaid dividends, or shares of common stock. Holders also have the right to redeem the Preferred Stock upon a Change in Control (as defined in the Articles Supplementary). Refer to Note 14, Merger with CSL III, to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the Merger Agreement, the Mergers and the Preferred Stock Exchange.
Previous wording
In the ordinary course of our business, we enter into contracts or agreements that contain indemnifications or warranties. Future events could occur which may give rise to liabilities arising from these provisions against us. We believe that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in these unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q as of June 30, 2024 and December 31, 2023 for any such exposure.
Current wording
In the ordinary course of our business, we enter into contracts or agreements that contain indemnifications or warranties. Future events could occur which may give rise to liabilities arising from these provisions against us. We believe that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q as of September 30, 2024 and the audited consolidated financial statements as of December 31, 2023 for any such exposure.
Previous wording
During the six months ended June 30, 2024, we paid $142,537 related to cost of investments purchased and received $258,427 in repayments on our investments. During the six months ended June 30, 2024, we had net repayments of $22,942 on the Credit Facility and repaid $49,216 of principal on the 2015-1R Notes.
Current wording
During the nine months ended September 30, 2024, we paid $264,425 related to cost of investments purchased and received $422,269 in repayments on our investments. During the nine months ended September 30, 2024, we had net repayments of $63,881 on the Credit Facility and repaid $449,200 of principal on the 2015-1R Notes.
Previous wording
As of June 30, 2024 and December 31, 2023, the Company had total senior securities of $961,230 and $1,034,556, respectively, consisting of secured borrowings under the Credit Facility, the Senior Notes, the 2015-1R Notes and the Preferred
Current wording
As of September 30, 2024 and December 31, 2023, the Company had total senior securities of $902,593 and $1,034,556, respectively, consisting of secured borrowings under the Credit Facility, the Senior Notes, the Securitizations, and the Preferred Stock, and had asset coverage ratios of 194.9% and 183.4%, respectively. For the purposes of the asset coverage ratio, the Preferred Stock is classified as a senior security.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
•Net investment income, inclusive of the preferred dividend, was $24.0 million or $0.47 per common share.
Current report — wording carried from elsewhere
September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, our annualized dividend yield from Credit Fund II was 14.2% and 16.8%, respectively.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
$118,054 and extended the reinvestment period end date and maturity date applicable to the 2015-1 Issuer to July 15, 2028 and July 1, 2036, respectively.
Previous report — wording carried elsewhere
The decrease in other income for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024 was primarily driven by a decrease in amendment and prepayment fees.
Previous report — wording carried elsewhere
Stock, and had asset coverage ratios of 189.6% and 183.4%, respectively. For the purposes of the asset coverage ratio, the Preferred Stock is classified as a senior security.