WhiteHorse Finance Inc

Previous wording

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file with the U.S. Securities and Exchange

Current wording

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures

Previous wording

Commission, or the SEC, in the future, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Current wording

that we may make directly to you or through reports that we may file with the U.S. Securities and Exchange Commission, or the SEC, in the future, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Previous wording

We were formed on December 28, 2011 and commenced operations on January 1, 2012. We were originally capitalized with approximately $176.3 million of contributed assets from H.I.G. Bayside Debt & LBO Fund II, L.P. and H.I.G. Bayside Loan Opportunity Fund II, L.P., each of which is an affiliate of H.I.G. Capital, L.L.C., or H.I.G. Capital. These assets were contributed as of January 1, 2012 in exchange for 11,752,383 units in WhiteHorse Finance, LLC. On December 4, 2012, we converted from a Delaware LLC into a Delaware corporation and elected to be treated as a business development company under the 1940 Act.

Current wording

We were formed on December 28, 2011 and commenced operations on January 1, 2012. We were originally capitalized with approximately $176.3 million of contributed assets from two private funds that are advised by an affiliate of H.I.G. Capital, L.L.C., or H.I.G. Capital. These assets were contributed as of January 1, 2012 in exchange for 11,752,383 units in WhiteHorse Finance, LLC. On December 4, 2012, we converted from a Delaware LLC into a Delaware corporation and elected to be treated as a business development company under the 1940 Act.

Previous wording

June 30, 2023. In light of feedback received, the FCA proposed that the one-, three- and six-month U.S. dollar LIBOR tenors continue to be published on a synthetic basis through September 2024. Other jurisdictions have also proposed their own alternative to LIBOR, including the Sterling Overnight Index Average for Sterling markets, the Euro Short Term Rate for Euros and Tokyo Overnight Average Rate for Japanese Yen.

Current wording

June 30, 2023. In light of feedback received, the FCA proposed that the one-, three- and six-month U.S. dollar LIBOR tenors continue to be published on a synthetic basis through September 2024. Other jurisdictions have also proposed their own alternatives to LIBOR, including the Sterling Overnight Index Average for Sterling markets, the Euro Short Term Rate for Euros and Tokyo Overnight Average Rate for Japanese Yen.

Previous wording

To identify a successor rate for U.S. dollar LIBOR, the Federal Reserve System, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified SOFR as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. As of March 31, 2024, LIBOR is no longer utilized as the floating benchmark rate on our debt investments to portfolio companies. As of March 31, 2024, SOFR is utilized as the floating benchmark rate on the Credit Facility for USD denominated borrowings.

Current wording

To identify a successor rate for U.S. dollar LIBOR, the Federal Reserve System, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified SOFR as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. LIBOR is no longer utilized as the floating benchmark rate on our debt investments to portfolio companies or Credit Facility.

Previous wording

Comparison of the Three Months Ended March 31, 2024 and March 31, 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and June 30, 2023

Previous wording

Set forth below are the consolidated results of operations for the three months ended March 31, 2024 and 2023:

Current wording

Set forth below are the consolidated results of operations for the three and six months ended June 30, 2024 and 2023:

Previous wording

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

Current wording

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

Previous wording

Net investment income for the three months ended March 31, 2024 totaled $10.8 million. Net investment income for the three months ended March 31, 2023 totaled $10.7 million. Net investment income increased by $0.1 million for the three months ended March 31, 2024 from the three months ended March 31, 2023, as described below under “Investment Income” and “Operating Expenses.”

Current wording

Net investment income for the three and six months ended June 30, 2024 totaled $9.3 million and $20.1 million, respectively. Net investment income for the three and six months ended June 30, 2023 totaled $10.6 million and $21.3 million, respectively. Net investment income decreased by $1.3 million and $1.2 million for the three and six months ended June 30, 2024 from the three and six months ended June 30, 2023, as described below under “Investment Income” and “Operating Expenses.”

Previous wording

The following table summarizes our investment income for the three months ended March 31, 2024 and 2023:

Current wording

The following table summarizes our investment income for the three and six months ended June 30, 2024 and 2023:

Previous wording

Fee and dividend income decreased by $0.5 million for the three months ended March 31, 2024 from the three months ended March 31, 2023 due to lower non-recurring fee income. We expect to generate some level of non-recurring fee income during most quarters from prepayments, amendments and other sources.

Current wording

Fee and dividend income decreased by $0.5 million and $1.0 million for the three and six months ended June 30, 2024 from the three and six months ended June 30, 2023 due to lower non-recurring fee income. We expect to generate some level of non-recurring fee income during most quarters from prepayments, amendments and other sources.

Previous wording

Interest and dividend income from STRS JV increased by $1.0 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily attributable to an increase in base rates.

Current wording

Interest and dividend income from STRS JV increased by $0.2 million and $1.2 million for the three and six months ended June 30, 2024 from the three and six months ended June 30, 2023, primarily attributable to an increase in base rates.

Previous wording

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

Current wording

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

Previous wording

Interest expense decreased $0.2 million for the three months ended March 31, 2024 from the three months ended March 31, 2023, primarily due to lower weighted average interest outstanding borrowings, partially offset by higher weighted average interest rates. For the three months ended March 31, 2024, the weighted average outstanding borrowings were $398.0 million at a weighted average interest rate of 6.53%. For the three months ended March 31, 2023, the weighted average outstanding borrowings were $455.9 million at a weighted average interest rate of 6.19%.

Current wording

Interest expense decreased $0.2 million and $0.4 million for the three and six months ended June 30, 2024 from the three and six months ended June 30, 2023, primarily due to a decrease in total debt outstanding, partially offset by higher weighted average interest rates. For the three and six months ended June 30, 2024, the weighted average outstanding borrowings were $386.0 million and $392.0 million at a weighted average interest rate of 6.48% and 6.51%, respectively. For the three and six months ended June 30, 2023, the weighted average outstanding borrowings were $426.7 million and $441.2 million at a weighted average interest rate of 6.31% and 6.24%, respectively.

Previous wording

Base management fees decreased by $0.6 million for the three months ended March 31, 2024 from the three months ended March 31, 2023 due to the base management fee rate reduction to 1.75%, from 2.00% effective January 1, 2024.

Current wording

Base management fees decreased by $0.6 million and $1.2 million for the three and six months ended June 30, 2024, respectively, from the three and six months ended June 30, 2023 due to the base management fee rate reduction to 1.75%, from 2.00% effective January 1, 2024.

Previous wording

Performance-based incentive fees were $2.7 million for both the three months ended March 31, 2024 and the three months ended March 31, 2023, which were comprised of pre-incentive fee net investment income. There was no capital gains incentive fee incurred for both the three months ended March 31, 2024 and the three months ended March 31, 2023.

Current wording

Performance-based incentive fees were $2.3 million and $5.0 million for the three and six months ended June 30, 2024, respectively, and $2.7 million and $5.3 million the three and six months ended June 30, 2023, respectively, which were comprised of pre-incentive fee net investment income. There was no capital gains incentive fee incurred for both the three and six months ended June 30, 2024 and the three and six months ended June 30, 2023.

Previous wording

Excise tax was $0.3 million for both the three months ended March 31, 2024 and for the three months ended March 31, 2023. As of March 31, 2024 and December 31, 2023, we accrued a net federal excise tax expense of $0.3 million and $1.0 million, respectively.

Current wording

Excise tax was $0.3 million and $0.6 million for the three and six months ended June 30,2024, respectively. Excise tax was $0.3 million and $0.5 million for the three and six months ended June 30, 2023, respectively. As of June 30, 2024 and December 31, 2023, we accrued a net federal excise tax expense of $0.5 million and $1.0 million, respectively.

Previous wording

The following table shows the breakdown of net realized gains and losses on investments for the three months ended March 31, 2024 and 2023:

Current wording

The following table shows the breakdown of net realized gains and losses on investments for the three and six months ended June 30, 2024 and 2023:

Previous wording

The following table shows the breakdown in the changes in unrealized appreciation and depreciation of investments for the three months ended March 31, 2024 and 2023:

Current wording

The following table shows the breakdown in the changes in unrealized appreciation and depreciation of investments for the three and six months ended June 30, 2024 and 2023:

Previous wording

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve elements of liquidity and credit risk in excess of the amount recognized on the consolidated statements of assets and liabilities. As of March 31, 2024 and December 31, 2023, we had commitments to fund approximately $20.7 million and $21.4 million, respectively, of revolving lines of credit or delayed draw facilities to our portfolio companies. We reasonably believe that we have sufficient assets to adequately cover and allow us to satisfy our outstanding unfunded commitments.

Current wording

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve elements of liquidity and credit risk in excess of the amount recognized on the consolidated statements of assets and liabilities. As of June 30, 2024 and December 31, 2023, we had commitments to fund approximately $24.7 million and $21.4 million, respectively, of revolving lines of credit or delayed draw facilities to our portfolio companies. We reasonably believe that we have sufficient assets to adequately cover and allow us to satisfy our outstanding unfunded commitments.

Previous wording

by acquisition of investments and cash used from the net change in working capital. Our financing activities used cash and cash equivalents of $25.8 million during the three months ended March 31, 2023, primarily due to repayments on the Credit Facility and the payment of distributions to stockholders.

Current wording

Our operating activities provided cash and cash equivalents of $43.1 million during the six months ended June 30, 2024, primarily from the net proceeds received from realizations and repayments on our investments, partially offset by acquisition of investments and cash used from the net change in working capital. Our financing activities used cash and cash equivalents of $45.8 million during the six months ended June 30, 2024, primarily for repayments on the Credit Facility and the payment of distributions to stockholders.

Previous wording

Our operating activities provided cash and cash equivalents of $1.6 million during the three months ended March 31, 2024, primarily from the net proceeds received from realizations and repayments on our investments, partially offset by acquisition of investments and cash used from the net change in working capital. Our financing activities used cash and cash equivalents of $5.2 million during the three months ended March 31, 2024, primarily due to repayments on the Credit Facility and the payment of distributions to stockholders.

Current wording

Our operating activities provided cash and cash equivalents of $32.3 million during the six months ended June 30, 2023, primarily from the net proceeds received from realizations and repayments on our investments, partially offset by acquisition of investments and cash used from the net change in working capital. Our financing activities used cash and cash equivalents of $35.5 million during the six months ended June 30, 2023, primarily due to repayments on the Credit Facility and the payment of distributions to stockholders.

Previous wording

As of March 31, 2024, we had cash and cash equivalent resources of $20.9 million, including $10.2 million of restricted cash. As of March 31, 2024, we had approximately $135.0 million undrawn and available to be drawn under the Credit Facility based on the collateral and portfolio quality requirements stipulated in the related credit agreement.

Current wording

As of June 30, 2024, we had cash and cash equivalent resources of $21.8 million, including $8.9 million of restricted cash. As of June 30, 2024, we had approximately $166.9 million undrawn and available to be drawn under the Credit Facility based on the collateral and portfolio quality requirements stipulated in the related credit agreement.

Previous wording

In January 2019, we and STRS Ohio formed a joint venture, STRS JV, that invests primarily in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries that typically carry a floating interest index rate based on SOFR, or an equivalent index rate and have a term of three to six years. STRS JV invests in portfolio companies in the same industries in which we may directly invest. STRS JV was formed as a Delaware LLC and is not consolidated by either us or STRS Ohio for financial reporting purposes. On July 19, 2019, STRS JV formally launched operations. As of March 31, 2024, STRS JV had total assets of $327.9 million. As of December 31, 2023, STRS JV had total assets of $332.2 million.

Current wording

In January 2019, we and STRS Ohio formed a joint venture, STRS JV, that invests primarily in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries that typically carry a floating interest index rate based on SOFR, or an equivalent index rate and have a term of three to six years. STRS JV invests in portfolio companies in the same industries in which we may directly invest. STRS JV was formed as a Delaware LLC and is not consolidated by either us or STRS Ohio for financial reporting purposes. On July 19, 2019, STRS JV formally launched operations. As of June 30, 2024, STRS JV had total assets of $345.0 million. As of December 31, 2023, STRS JV had total assets of $332.2 million.

Previous wording

See Note 4 to our consolidated financial statements for further discussion on STRS JV’s portfolio and selected balance sheet information as of March 31, 2024 and December 31, 2023 and selected statement of operations information for the three months ended March 31, 2024 and 2023.

Current wording

See Note 4 to our consolidated financial statements for further discussion on STRS JV’s portfolio and selected balance sheet information as of June 30, 2024 and December 31, 2023 and selected statement of operations information for the three and six months ended June 30, 2024 and 2023.

Previous wording

On March 15, 2021, we previously entered into an equity distribution agreement, or the 2021 Equity Distribution Agreement, with WhiteHorse Advisers, WhiteHorse Administration and Raymond James & Associates, Inc., as the sales agent, or Raymond James, in connection with the sale of shares of our common stock, with an aggregate offering price of up to $35.0 million. The 2021 Equity Distribution Agreement provided that we may offer and sell shares of our common stock from time to time through the Raymond James in amounts and at times to be determined by us (the “2021 ATM Offering”). Actual sales depended on a variety of factors to be determined by us from time to time, including market conditions and the trading price of our common stock. We used all or substantially all of the net proceeds from the 2021 ATM Offering to invest in portfolio companies in accordance with our investment objective and strategies and for general corporate purposes. The 2021 Equity Distribution Agreement with Raymond James is no longer effective. Gross proceeds of $4.4 million were raised from the 2021 ATM Offering with Raymond James.

Current wording

On March 15, 2021, we previously entered into an equity distribution agreement, or the 2021 Equity Distribution Agreement, with WhiteHorse Advisers, WhiteHorse Administration and Raymond James & Associates, Inc., as the sales agent, or Raymond James, in connection with the sale of shares of our common stock, with an aggregate offering price of up to $35.0 million (the “2021 ATM Offering”). We used all or substantially all of the net proceeds from the 2021 ATM Offering to invest in portfolio companies in accordance with our investment objective and strategies and for general corporate purposes. The 2021 Equity Distribution Agreement with Raymond James is no longer effective. Gross proceeds of $4.4 million were raised from the 2021 ATM Offering with Raymond James.

Previous wording

temporary increase of $25.0 million in availability under the Credit Facility, allowing WhiteHorse Credit to borrow up to $335.0 million through April 4, 2022 (the “$25 Million Temporary Increase”) and (iv) apply an annual interest rate equal to applicable SOFR plus 2.50% to any borrowings under the $25 Million Increase in the Credit Facility and the $25 Million Temporary Increase in availability under the Credit Facility.

Current wording

On February 4, 2022, the terms of the Credit Facility were further amended to, among other things (i) increase WhiteHorse Credit’s availability under the Credit Facility from $285.0 million to $310.0 million (the “$25 Million Increase”), (ii) increase the minimum funding amount from $200.0 million to $217.0 million, (iii) extend an additional temporary increase of $25.0 million in availability under the Credit Facility, allowing WhiteHorse Credit to borrow up to $335.0 million through April 4, 2022 (the “$25 Million Temporary Increase”) and (iv) apply an annual interest rate equal to applicable SOFR plus 2.50% to any borrowings under the $25 Million Increase in the Credit Facility and the $25 Million Temporary Increase in availability under the Credit Facility.

Previous wording

On April 12, 2023, the terms of the Credit Facility were further amended to, among other things, (i) apply an annual interest rate equal to the applicable base rate plus 2.50% to any USD denominated borrowings, and (ii) convert to SOFR for USD denominated borrowings effective June 6, 2023.

Current wording

On April 12, 2023, the terms of the Credit Facility were amended to (i) apply an annual interest rate equal to the applicable base rate plus 2.50% to any USD denominated borrowings, and (ii) convert to SOFR for USD denominated borrowings effective June 6, 2023.

Previous wording

Under the Credit Facility, there are two coverage tests that WhiteHorse Credit must meet on specified compliance dates in order to permit WhiteHorse Credit to make new borrowings and to make distributions in the ordinary course: (i) a borrowing base test and (ii) a market value test. The borrowing base test compares, at any given time, the aggregate outstanding amount of all Lender advances under the Credit Facility less the amount of principal proceeds in respect of the collateral on deposit in the accounts to the net asset value of the collateral, as set forth in the credit agreement, as amended and restated from time to time, in connection therewith (the “Amended Loan Agreement”), and related documentation. To meet the borrowing base test, this ratio must be less than or equal to 60%, as set forth in the Amended Loan Agreement and related documentation. To meet the market value test, the value of WhiteHorse Credit’s portfolio investments must exceed a minimum of 167.5% of the aggregate outstanding amount of all Lender advances as set forth in the Amended Loan Agreement and related documentation.

Current wording

a borrowing base test and (ii) a market value test. The borrowing base test compares, at any given time, the aggregate outstanding amount of all Lender advances under the Credit Facility less the amount of principal proceeds in respect of the collateral on deposit in the accounts to the net asset value of the collateral, as set forth in the credit agreement, as amended and restated from time to time, in connection therewith (the “Amended Loan Agreement”), and related documentation. To meet the borrowing base test, this ratio must be less than or equal to 60%, as set forth in the Amended Loan Agreement and related documentation. To meet the market value test, the value of WhiteHorse Credit’s portfolio investments must exceed a minimum of 167.5% of the aggregate outstanding amount of all Lender advances as set forth in the Amended Loan Agreement and related documentation.

Previous wording

Advances under the Credit Facility are based on SOFR for USD denominated borrowings plus an annual spread of 2.50%. The Credit Facility bears interest at EurIBOR, for EUR denominated borrowings, CDOR for CAD denominated borrowings, SONIA, for GBP denominated, plus a spread of 2.35% on outstanding borrowings. Interest is payable quarterly in arrears. WhiteHorse Credit is required to pay a non-usage fee which accrues at 0.75% per annum on the average daily unused amount of the financing commitments, to the extent the aggregate principal amount available under the Credit Facility has not been borrowed. WhiteHorse Credit paid an upfront fee and incurred certain other customary costs and expenses in connection with obtaining the Credit Facility. Any amounts borrowed under the Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on November 22, 2025.

Current wording

Advances under the Credit Facility are based on SOFR for USD denominated borrowings plus an annual spread of 2.50%. The Credit Facility bears interest at EurIBOR for EUR denominated borrowings, CDOR for CAD denominated borrowings and SONIA for GBP denominated borrowings, plus a spread of 2.35% on outstanding borrowings. Interest is payable quarterly in arrears. WhiteHorse Credit is required to pay a non-usage fee which accrues at 0.75% per annum on the average daily unused amount of the financing commitments, to the extent the aggregate principal amount available under the Credit Facility has not been borrowed. WhiteHorse Credit paid an upfront fee and incurred certain other customary costs and expenses in connection with obtaining the Credit Facility. Any amounts borrowed under the Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on November 22, 2025.

Previous wording

The Credit Facility and the related documents require WhiteHorse Finance and WhiteHorse Credit to, among other things, agree to make certain customary representations and to comply with customary affirmative and negative covenants. The Credit Facility also includes customary events of default for credit facilities of this nature, including breaches of representations, warranties or covenants by WhiteHorse Finance or WhiteHorse Credit, the occurrence of a change in control, or failure to maintain certain required ratios.

Current wording

The Credit Facility and the related documents require WhiteHorse Finance and WhiteHorse Credit to agree to make certain customary representations and to comply with customary affirmative and negative covenants. The Credit Facility also includes customary events of default for credit facilities of this nature, including breaches of representations, warranties or covenants by WhiteHorse Finance or WhiteHorse Credit, the occurrence of a change in control, or failure to maintain certain required ratios.

Previous wording

As of March 31, 2024, there was $200.0 million in outstanding borrowings under the Credit Facility and, based on collateral and portfolio requirements stipulated in the Credit Facility agreement, approximately $135.0 million was available to be drawn on such date. The Credit Facility is secured by all of the assets of WhiteHorse Credit, which included loans with a fair value of $568.3 million as of March 31, 2024.

Current wording

As of June 30, 2024, there were $168.1 million in outstanding borrowings under the Credit Facility and, based on collateral and portfolio requirements stipulated in the Credit Facility agreement, approximately $166.9 million was available to be drawn on such date. The Credit Facility is secured by all of the assets of WhiteHorse Credit, which included loans with a fair value of $529.1 million as of June 30, 2024.

Previous wording

As of December 31, 2023, there was $196.5 million in outstanding borrowings under the Credit Facility and, based on collateral and portfolio requirements stipulated in the Credit Facility agreement, approximately $138.5 million was available to be drawn on such date. The Credit Facility is secured by all of the assets of WhiteHorse Credit, which included loans with a fair value of $572.1 million as of December 31, 2023.

Current wording

As of December 31, 2023, there were $196.5 million in outstanding borrowings under the Credit Facility and, based on collateral and portfolio requirements stipulated in the Credit Facility agreement, approximately $138.5 million was available to be drawn on such date. The Credit Facility is secured by all of the assets of WhiteHorse Credit, which included loans with a fair value of $572.1 million as of December 31, 2023.

Previous wording

On July 13, 2018, we entered into the 2023 Note Purchase Agreement to sell in a private offering $30 million of aggregate principal amount of unsecured notes to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act. Interest on the 6.000% 2023 Notes was payable semiannually on February 7 and August 7, at a fixed, annual rate of 6.000%. This interest rate was subject to increase (up to 6.50%) in the event that, subject to certain exceptions, the 6.000% 2023 Notes cease to have an investment grade rating. The 6.000% 2023 Notes were general unsecured obligations that ranked pari passu with all outstanding and future unsecured unsubordinated indebtedness that we may issue. The closing of the transaction occurred on August 7, 2018. On August 7, 2023, the 6.000% 2023 Notes matured and were fully repaid by the Company.

Current wording

On July 13, 2018, we entered into the 2023 Note Purchase Agreement to sell in a private offering $30 million of aggregate principal amount of unsecured notes to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act. Interest on the 6.000% 2023 Notes was payable semiannually on February 7 and August 7, at a fixed, annual rate of 6.000%. This interest rate was subject to increase (up to 6.50%) in the event that, subject to certain exceptions, the 6.000% 2023 Notes cease to have an investment grade rating. The 6.000% 2023 Notes were issued on August 7, 2018 and were general unsecured obligations that ranked pari passu with all outstanding and future unsecured unsubordinated indebtedness that we may issue. On August 7, 2023, the 6.000% 2023 Notes matured and were fully repaid by the Company.

Previous wording

As of March 31, 2024, our investment portfolio consisted primarily of senior secured loans across 120 positions in 71 companies with an aggregate fair value of $697.9 million. As of March 31, 2024, the majority of our portfolio was comprised of senior secured loans to lower middle market borrowers and nearly all of those loans were variable-rate investments (primarily indexed to SOFR) with six fixed-rate loan investments representing 1.1% based on fair value. As of March 31, 2024, our portfolio had an average investment size of $5.0 million based on fair value and average debt investment size of $8.4 million, with investment sizes ranging from zero to $21.4 million and a weighted average effective yield of 12.1% (and a weighted average effective yield on income-producing debt investments of 13.7%).

Current wording

As of June 30, 2024, our investment portfolio consisted primarily of senior secured loans across 125 positions in 72 companies with an aggregate fair value of $660.0 million. As of June 30, 2024, the majority of our portfolio was comprised of senior secured loans to lower middle market borrowers and nearly all of those loans were variable-rate investments (primarily indexed to SOFR) with six fixed-rate loan investments representing 1.2% based on fair value. As of June 30, 2024, our portfolio had an average investment size of $4.5 million based on fair value and average debt investment size of $5.8 million, with investment sizes ranging from zero to $21.0 million and a weighted average effective yield of 11.7% (and a weighted average effective yield on income-producing debt investments of 13.8%).

Previous wording

For the three months ended March 31, 2024, we invested $58.2 million in new and existing portfolio companies, offset by repayments and sales of $54.9 million. Proceeds from sales totaled $29.1 million while repayments included $1.8 million of scheduled repayments and $24.0 million of unscheduled repayments.

Current wording

For the six months ended June 30, 2024, we invested $116.4 million in new and existing portfolio companies, offset by repayments and sales of $152.0 million. Proceeds from sales totaled $57.2 million while repayments included $3.6 million of scheduled repayments and $91.2 million of unscheduled repayments.

Previous wording

For the three months ended March 31, 2023, we invested $37.3 million in new and existing portfolio companies, offset by repayments and sales of $48.2 million. Proceeds from sales totaled $26.3 million while repayments included $3.8 million of scheduled repayments and $18.1 million of unscheduled repayments.

Current wording

For the six months ended June 30, 2023, we invested $65.3 million in new and existing portfolio companies, offset by repayments and sales of $93.4 million. Proceeds from sales totaled $45.3 million while repayments included $6.4 million of scheduled repayments and $41.7 million of unscheduled repayments.

Previous wording

In order to maintain our status as a RIC and to avoid the imposition of corporate-level tax on income, we must distribute dividends to our stockholders each taxable year of an amount generally at least equal to the sum of 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses out of the assets legally available for distribution. In order to avoid the imposition of certain excise taxes imposed on RICs, we must distribute dividends in respect of each calendar year of an amount at least equal to the sum of (1) 98% of our ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses, or capital gain net income, adjusted for certain ordinary losses, for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and capital gain net income for preceding years that were not distributed during such years on which we incurred no U.S. federal income tax.

Current wording

In order to maintain our status as a RIC and to avoid the imposition of corporate-level tax on income, we must distribute to our stockholders each taxable year an amount generally at least equal to the sum of 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses out of the assets legally available for distribution. In order to avoid the imposition of certain excise taxes imposed on RICs, we must distribute in respect of each calendar year an amount at least equal to the sum of (1) 98% of our ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses, or capital gain net income, adjusted for certain ordinary losses, for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and capital gain net income for preceding years that were not distributed during such years on which we incurred no U.S. federal income tax.

Previous wording

The timing and amount of our quarterly distributions, if any, are determined by our board of directors. While we intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution, we may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including the possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions.

Current wording

The timing and amount of our quarterly distributions, if any, are determined by our board of directors. While we intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution, we may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including the possible loss of our tax status as a RIC. We cannot assure stockholders that they will receive any distributions.

Previous wording

During the three months ended March 31, 2024, we declared to stockholders distributions of $0.385 per share for total distributions of $8.9 million. During the three months ended March 31, 2023, we declared to stockholders distributions of $0.425 for total distributions of $9.9 million.

Current wording

During the three and six months ended June 30, 2024, we declared to stockholders distributions of $0.385 and $0.770, respectively, per share for total distributions of $8.9 million and $17.9 million, respectively. During the three and six months ended June 30, 2023, we declared to stockholders distributions of $0.37 and $0.795, respectively, for total distributions of $8.6 million and $18.5 million, respectively.