The information contained in this section should be read in conjunction with"ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA". Thisdiscussion contains forward-looking statements, which relate to future events orthe future performance or financial condition ofOwl Rock Capital Corporation and involves numerous risks and uncertainties, including, but not limited to,those described in "ITEM 1A. RISK FACTORS." This discussion also should be readin conjunction with the "Cautionary Statement Regarding Forward LookingStatements" set forth on page 1 of this Annual Report on Form 10-K. Actualresults could differ materially from those implied or expressed in anyforward-looking statements.
Overview
Owl Rock Capital Corporation (the "Company", "we", "us" or "our") is aMaryland corporation formed onOctober 15, 2015 . We were formed primarily to originateand make loans to, and make debt and equity investments in,U.S. middle marketcompanies. We invest in senior secured or unsecured loans, subordinated loans ormezzanine loans and, to a lesser extent, equity and equity-related securitiesincluding warrants, preferred stock and similar forms of senior equity, whichmay or may not be convertible into a portfolio company's common equity. Ourinvestment objective is to generate current income, and to a lesser extent,capital appreciation by targeting investment opportunities with favorablerisk-adjusted returns.We are managed byOwl Rock Capital Advisors LLC ("the Adviser" or "ourAdviser"). The Adviser is registered with theSEC as an investment adviser underthe Investment Advisers Act of 1940, as amended (the "Advisers Act"). Subject tothe overall supervision of our board of directors ("the Board" or "our Board"),the Adviser manages our day-to-day operations, and provides investment advisoryand management services to us. The Adviser or its affiliates may engage incertain origination activities and receive attendant arrangement, structuring orsimilar fees. The Adviser is responsible for managing our business andactivities, including sourcing investment opportunities, conducting research,performing diligence on potential investments, structuring our investments, andmonitoring our portfolio companies on an ongoing basis through a team ofinvestment professionals. The Board consists of eight directors, five of whomare independent.OnJuly 22, 2019 , we closed our initial public offering ("IPO"), issuing 10million shares of our common stock at a public offering price of$15.30 pershare, and onAugust 2, 2019 , the underwriters exercised their option topurchase an additional 1.5 million shares of common stock at a purchase price of$15.30 per share. Net of underwriting fees and offering costs, we received totalcash proceeds of$164.0 million . Our common stock began trading on theNew YorkStock Exchange ("NYSE") under the symbol "ORCC" onJuly 18, 2019 . In connectionwith the IPO, onJuly 22, 2019 , we entered into a stock repurchase plan (the"Company 10b5-1 Plan"), to acquire up to$150 million in the aggregate of ourcommon stock at prices below its net asset value per share over a specifiedperiod, in accordance with the guidelines specified in Rule 10b-18 and Rule10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").Under the Company 10b5-1 Plan, we acquired 12,515,624 shares for approximately$150 million . The Company 10b5-1 Plan commenced onAugust 19, 2019 and wasexhausted onAugust 4, 2020 .
The Adviser also serves as investment adviser to
The Adviser is under common control withOwl Rock Technology Advisors LLC ("ORTA"),Owl Rock Capital Private Fund Advisors LLC ("ORPFA") andOwl RockDiversified Advisors LLC ("ORDA"), which also are investment advisers andsubsidiaries ofOwl Rock Capital Partners . ORTA serves as investment adviser toOwl Rock Technology Finance Corp. and ORDA serves as investment adviser to OwlRock Capital Corporation III. The Adviser, ORTA, ORPFA and ORDA are referred toas the "Owl Rock Advisers" and together withOwl Rock Capital Partners arereferred to, collectively, as "Owl Rock."OnDecember 23, 2020 ,Owl Rock Capital Group, LLC ("Owl Rock Capital Group "),the parent of the Adviser (and a subsidiary ofOwl Rock Capital Partners ), andDyal Capital Partners ("Dyal") announced they are merging to formBlue OwlCapital Inc. ("Blue Owl"). Blue Owl will enter the public market via itsacquisition by Altimar Acquisition Corporation (NYSE:ATAC) ("Altimar"), aspecial purpose acquisition company (the "Transaction"). If the Transaction isconsummated, there will be no changes to the Company's investment strategy orthe Adviser's investment team or investment process with respect to the Company;however, the Transaction will result in a change in control of the Adviser,which will be deemed an assignment of the Investment Advisory Agreement inaccordance with the 1940 Act. As a result, the Board, after considering theTransaction and subsequent change in control, has determined that uponconsummation of the Transaction and subject to the approval of the Company'sshareholders at a special meeting expected to be held onMarch 17, 2021 , theCompany should enter into a third amended and restated investment advisoryagreement with the Adviser on terms that are identical to the InvestmentAdvisory Agreement. The Board also determined that upon consummation of theTransaction, the Company should enter into an amended and restatedadministration agreement with the Adviser on terms that are identical to theAdministration Agreement. See "Item 1. Business - The Adviser and Administrator-Owl Rock Capital Advisors LLC ."
We may be prohibited under the 1940 Act from participating in certaintransactions with our affiliates without the prior approval of our directors whoare not interested persons and, in some cases, the prior approval of the
82--------------------------------------------------------------------------------affiliates have been granted exemptive relief by theSEC to permit us toco-invest with other funds managed by our Adviser or certain of its affiliates,including the Owl Rock Clients, in a manner consistent with our investmentobjective, positions, policies, strategies and restrictions as well asregulatory requirements and other pertinent factors. Pursuant to such exemptiverelief, we generally are permitted to co-invest with certain of our affiliatesif a "required majority" (as defined in Section 57(o) of the Investment CompanyAct of 1940, as amended (the "1940 Act")) of our independent directors makecertain conclusions in connection with a co-investment transaction, includingthat (1) the terms of the transactions, including the consideration to be paid,are reasonable and fair to us and our shareholders and do not involveoverreaching by us or our shareholders on the part of any person concerned, (2)the transaction is consistent with the interests of our shareholders and isconsistent with our investment objective and strategies, and (3) the investmentby our affiliates would not disadvantage us, and our participation would not beon a basis different from or less advantageous than that on which our affiliatesare investing. In addition, pursuant to an exemptive order issued by theSEC onApril 8, 2020 and applicable to all BDCs, throughDecember 31, 2020 , we werepermitted, subject to the satisfaction of certain conditions, to completefollow-on investments in our existing portfolio companies with certain privatefunds managed by the Adviser or its affiliates and covered by our exemptiverelief, even if such private funds had not previously invested in such existingportfolio company. Without this order, private funds would generally not be ableto participate in such follow-on investments with us unless the private fundshad previously acquired securities of the portfolio company in a co-investmenttransaction with us. Although the conditional exemptive order has expired, theSEC's Division of Investment Management has indicated that untilMarch 31, 2021 ,it will not recommend enforcement action, to the extent that any BDC with anexisting coinvestment order continues to engage in certain transactionsdescribed in the conditional exemptive order, pursuant to the same terms andconditions described therein. The Owl Rock Advisers' allocation policy seeks toensure equitable allocation of investment opportunities over time between us andother funds managed by our Adviser or its affiliates. As a result of theexemptive relief, there could be significant overlap in our investment portfolioand the investment portfolio of other funds established by the Adviser or itsaffiliates that could avail themselves of the exemptive relief.OnApril 27, 2016 , we formed a wholly-owned subsidiary,OR Lending LLC , aDelaware limited liability company, which holds aCalifornia finance lenderslicense. ORLending LLC makes loans to borrowers headquartered inCalifornia .For time to time we may form wholly-owned subsidiaries to facilitate our normalcourse of business.
Certain consolidated subsidiaries of ours are subject to
We have elected to be regulated as a BDC under the 1940 Act and as a regulatedinvestment company ("RIC") for tax purposes under the Internal Revenue Code of1986, as amended (the "Code"). As a result, we are required to comply withvarious statutory and regulatory requirements, such as:• the requirement to invest at least 70% of our assets in "qualifying
assets", as such term is defined in the 1940 Act; • source of income limitations; • asset diversification requirements; and • the requirement to distribute (or be treated as distributing) in each taxable year at least 90% of our investment company taxable income and tax-exempt interest for that taxable year.
COVID-19 Developments
InMarch 2020 , the outbreak of COVID -19 was recognized as a pandemic by theWorld Health Organization . Shortly thereafter, the President ofthe UnitedStates declared a National Emergency throughoutthe United States attributableto such outbreak. The outbreak has become increasingly widespread inthe UnitedStates , including in the markets in which we operate, and in response to theoutbreak, our Adviser instituted a work from home policy until it is deemed safeto return to the office.We have and continue to assess the impact of COVID-19 on our portfoliocompanies. We cannot predict the full impact of the COVID-19 pandemic, includingits duration inthe United States and worldwide, the effectiveness ofgovernmental responses designed to mitigate strain to businesses and the economyand the magnitude of the economic impact of the outbreak. The COVID-19 pandemicand preventative measures taken to contain or mitigate its spread have caused,and are continuing to cause, business shutdowns, cancellations of events andtravel, significant reductions in demand for certain goods and services,reductions in business activity and financial transactions, supply chaininterruptions and overall economic and financial market instability bothglobally and inthe United States . Such effects will likely continue for theduration of the pandemic, which is uncertain, and for some period thereafter.While several countries, as well as certain states, counties and cities intheUnited States , have relaxed the initial public health restrictions with a viewto partially or fully reopening their economies, many cities world-wide havesince experienced a surge in the reported number of cases, hospitalizations anddeaths related to the COVID-19 pandemic. These increases have led to there-introduction of restrictions and business shutdowns in certain states,counties and cities inthe United States and globally and could continue to leadto the re-introduction of such restrictions and business shutdowns elsewhere.Additionally, as of lateDecember 2020 , travelers fromthe United States are notallowed to visitCanada ,Australia or the majority of countries inEurope ,Asia ,Africa and 83
--------------------------------------------------------------------------------South America . These continued travel restrictions may prolong the globaleconomic downturn. In addition, although theFederal Food and DrugAdministration authorized vaccines for emergency use starting inDecember 2020 ,it remains unclear how quickly the vaccines will be distributed nationwide andglobally or when "herd immunity" will be achieved and the restrictions that wereimposed to slow the spread of the virus will be lifted entirely. The delay indistributing the vaccines could lead people to continue to self-isolate and notparticipate in the economy at pre-pandemic levels for a prolonged period oftime. Even after the COVID-19 pandemic subsides, theU.S. economy and most othermajor global economies may continue to experience a recession, and we anticipateour business and operations could be materially adversely affected by aprolonged recession inthe United States and other major markets.
Some economists and major investment banks have expressed concerns that thecontinued spread of the virus globally could lead to a world-wide economicdownturn.
We are unable to predict the duration of any business and supply-chaindisruptions, the extent to which COVID-19 will negatively affect our portfoliocompanies' operating results or the impact that such disruptions may have on ourresults of operations and financial condition. Though the magnitude of theimpact remains to be seen, we expect our portfolio companies and, by extension,our operating results to be adversely impacted by COVID-19 and depending on theduration and extent of the disruption to the operations of our portfoliocompanies, we expect that certain portfolio companies will experience financialdistress and possibly default on their financial obligations to us and theirother capital providers. Some of our portfolio companies have significantlycurtailed business operations, furloughed or laid off employees and terminatedservice providers and deferred capital expenditures, which could impair theirbusiness on a permanent basis and we except that additional portfolio companiesmay take similar actions.We have built out our portfolio management team to include workout experts andcontinue to closely monitor our portfolio companies, which includes assessingeach portfolio company's operational and liquidity exposure and outlook. We haveexecuted amendments to our loan documents which provide covenant modificationsor additional liquidity, sometimes by allowing a portion of our loan to be paidin PIK rather than cash and in connection with these amendments we may receiveincreased economics. Any of these developments would likely result in a decreasein the value of our investment in any such portfolio company. In addition, tothe extent that the impact to our portfolio companies results in reducedinterest payments or permanent impairments on our investments, we could see adecrease in our net investment income which could result in an increase in thepercentage of our cash flows dedicated to our debt obligations and could requireus to reduce the future amount of distributions to our shareholders.During the year endedDecember 31, 2020 , we experienced a decrease inoriginations, which reflects the lower levels of private equity deal activity inthat time period; however, for the three months endedDecember 31, 2020 , weexperienced an increase in originations compared to prior quarter. For the threemonths endingMarch 31, 2021 , we expect the performance of our portfoliocompanies to continue to be impacted by COVID-19 and the related economicslowdown, and therefore, while we have highlighted our liquidity and availablecapital, we are focused on preserving that capital for our existing portfoliocompanies in order to protect the value of our investments.
Our Investment Framework
We are aMaryland corporation organized primarily to originate and make loansto, and make debt and equity investments in,U.S. middle market companies. Ourinvestment objective is to generate current income, and to a lesser extent,capital appreciation by targeting investment opportunities with favorablerisk-adjusted returns. Since our Adviser and its affiliates began investmentactivities inApril 2016 throughDecember 31, 2020 , our Adviser and itsaffiliates have originated$27.7 billion aggregate principal amount ofinvestments, of which$25.8 billion of aggregate principal amount of investmentsprior to any subsequent exits or repayments, was retained by either us or acorporation or fund advised by our Adviser or its affiliates. We seek togenerate current income primarily inU.S. middle market companies through directoriginations of senior secured loans or originations of unsecured loans,subordinated loans or mezzanine loans and, to a lesser extent, investments inequity and equity-related securities including warrants, preferred stock andsimilar forms of senior equity.We define "middle market companies" generally to mean companies with earningsbefore interest expense, income tax expense, depreciation and amortization, or"EBITDA," between$10 million and$250 million annually and/or annual revenue of$50 million to$2.5 billion at the time of investment, although we may onoccasion invest in smaller or larger companies if an opportunity presentsitself. We generally seek to invest in companies with a loan-to-value ratio of50% or below.We expect that generally our portfolio composition will be majority debt orincome producing securities, which may include "covenant-lite" loans (as definedbelow), with a lesser allocation to equity or equity-linked opportunities. Inaddition, we may invest a portion of our portfolio in opportunistic investments,which will not be our primary focus, but will be intended to enhance returns toour shareholders. These investments may include high-yield bonds andbroadly-syndicated loans. In addition, we generally do not intend to invest morethan 20% of our total assets in companies whose principal place of business isoutsidethe United States , although we do not generally intend to invest incompanies whose principal place of business is in an emerging market. Ourportfolio composition may fluctuate from time to time based on market conditionsand interest rates. 84
--------------------------------------------------------------------------------Covenants are contractual restrictions that lenders place on companies to limitthe corporate actions a company may pursue. Generally, the loans in which weexpect to invest will have financial maintenance covenants, which are used toproactively address materially adverse changes in a portfolio company'sfinancial performance. However, to a lesser extent, we may invest in"covenant-lite" loans. We use the term "covenant-lite" to refer generally toloans that do not have a complete set of financial maintenance covenants.Generally, "covenant-lite" loans provide borrower companies more freedom tonegatively impact lenders because their covenants are incurrence-based, whichmeans they are only tested and can only be breached following an affirmativeaction of the borrower, rather than by a deterioration in the borrower'sfinancial condition. Accordingly, to the extent we invest in "covenant-lite"loans, we may have fewer rights against a borrower and may have a greater riskof loss on such investments as compared to investments in or exposure to loanswith financial maintenance covenants.As ofDecember 31, 2020 , our average debt investment size in each of ourportfolio companies was approximately$90.2 million based on fair value. As ofDecember 31, 2020 , our portfolio companies, excluding the investment inSebagoLake and certain investments that fall outside of our typical borrower profileand represent 93.8% of our total debt portfolio based on fair value, hadweighted average annual revenue of$460 million and weighted average annualEBITDA of$100 million .The companies in which we invest use our capital to support their growth,acquisitions, market or product expansion, refinancings and/orrecapitalizations. The debt in which we invest typically is not rated by anyrating agency, but if these instruments were rated, they would likely receive arating of below investment grade (that is, below BBB- or Baa3), which is oftenreferred to as "high yield" or "junk".
Key Components of Our Results of Operations
Investments
We focus primarily on the direct origination of loans to middle market companiesdomiciled in
Our level of investment activity (both the number of investments and the size ofeach investment) can and will vary substantially from period to period dependingon many factors, including the amount of debt and equity capital available tomiddle market companies, the level of merger and acquisition activity for suchcompanies, the general economic environment and the competitive environment forthe types of investments we make.
In addition, as part of our risk strategy on investments, we may reduce thelevels of certain investments through partial sales or syndication to additionallenders.
RevenuesWe generate revenues primarily in the form of interest income from theinvestments we hold. In addition, we may generate income from dividends oneither direct equity investments or equity interests obtained in connection withoriginating loans, such as options, warrants or conversion rights. Our debtinvestments typically have a term of three to ten years. As ofDecember 31,2020 , 99.9% of our debt investments based on fair value bear interest at afloating rate, subject to interest rate floors, in certain cases. Interest onour debt investments is generally payable either monthly or quarterly.Our investment portfolio consists primarily of floating rate loans, and ourcredit facilities bear interest at floating rates. Macro trends in base interestrates like London Interbank Offered Rate ("LIBOR") may affect our net investmentincome over the long term. However, because we generally originate loans to asmall number of portfolio companies each quarter, and those investments vary insize, our results in any given period, including the interest rate oninvestments that were sold or repaid in a period compared to the interest rateof new investments made during that period, often are idiosyncratic, and reflectthe characteristics of the particular portfolio companies that we invested in orexited during the period and not necessarily any trends in our business or macrotrends.Loan origination fees, original issue discount and market discount or premiumare capitalized, and we accrete or amortize such amounts underU.S. generallyaccepted accounting principles ("U.S. GAAP") as interest income using theeffective yield method for term instruments and the straight-line method forrevolving or delayed draw instruments. Repayments of our debt investments canreduce interest income from period to period. The frequency or volume of theserepayments may fluctuate significantly. We record prepayment premiums on loansas interest income. We may also generate revenue in the form of commitment, loanorigination, structuring, or due diligence fees, fees for providing managerialassistance to our portfolio companies and possibly consulting fees.
Dividend income on equity investments is recorded on the record date for privateportfolio companies or on the ex-dividend date for publicly traded companies.
Our portfolio activity also reflects the proceeds from sales of investments. Werecognize realized gains or losses on investments based on the differencebetween the net proceeds from the disposition and the amortized cost basis ofthe investment without regard to unrealized gains or losses previouslyrecognized. We record current period changes in fair value of investments thatare measured at fair value as a component of the net change in unrealized gains(losses) on investments in the consolidated statement of operations. 85--------------------------------------------------------------------------------
Expenses
Our primary operating expenses include the payment of the management fee and,when the incentive fee waiver expires, the incentive fee, and expensesreimbursable under the Administration Agreement and Investment AdvisoryAgreement. The management fee and incentive fee compensate our Adviser for workin identifying, evaluating, negotiating, closing, monitoring and realizing ourinvestments. The incentive fee waiver expired onOctober 18, 2020 .Except as specifically provided below, all investment professionals and staff ofthe Adviser, when and to the extent engaged in providing investment advisory andmanagement services to us, the base compensation, bonus and benefits, and theroutine overhead expenses of such personnel allocable to such services, areprovided and paid for by the Adviser. We bear our allocable portion of thecompensation paid by the Adviser (or its affiliates) to our Chief ComplianceOfficer and Chief Financial Officer and their respective staffs (based on apercentage of time such individuals devote, on an estimated basis, to ourbusiness affairs). We bear all other costs and expenses of our operations,administration and transactions, including, but not limited to (i) investmentadvisory fees, including management fees and incentive fees, to the Adviser,pursuant to the Investment Advisory Agreement; (ii) our allocable portion ofoverhead and other expenses incurred by the Adviser in performing itsadministrative obligations under the Administration Agreement; and (iii) allother costs and expenses of its operations and transactions including, withoutlimitation, those relating to:
• the cost of our organization and offerings;
• the cost of calculating our net asset value, including the cost of any
third-party valuation services;
• the cost of effecting any sales and repurchases of our common stock and
other securities;
• fees and expenses payable under any dealer manager agreements, if any;
• debt service and other costs of borrowings or other financing arrangements;
• costs of hedging;
• expenses, including travel expense, incurred by the Adviser, or members
of the investment team, or payable to third parties, performing due
diligence on prospective portfolio companies and, if necessary, enforcing
our rights; • transfer agent and custodial fees; • fees and expenses associated with marketing efforts;
• federal and state registration fees, any stock exchange listing fees and
fees payable to rating agencies; • federal, state and local taxes;
• independent directors' fees and expenses including certain travel expenses;
• costs of preparing financial statements and maintaining books and records
and filing reports or other documents with the
bodies) and other reporting and compliance costs, including registration
and listing fees, and the compensation of professionals responsible for
the preparation of the foregoing; • the costs of any reports, proxy statements or other notices to our shareholders (including printing and mailing costs), the costs of any shareholder or director meetings and the compensation of investor
relations personnel responsible for the preparation of the foregoing and
related matters; • commissions and other compensation payable to brokers or dealers; • research and market data;
• fidelity bond, directors' and officers' errors and omissions liability
insurance and other insurance premiums;
• direct costs and expenses of administration, including printing, mailing,
long distance telephone and staff;
• fees and expenses associated with independent audits, outside legal and
consulting costs; • costs of winding up; • costs incurred in connection with the formation or maintenance of entities or vehicles to hold our assets for tax or other purposes; • extraordinary expenses (such as litigation or indemnification); and
• costs associated with reporting and compliance obligations under the 1940
Act and applicable federal and state securities laws. 86
--------------------------------------------------------------------------------We expect, but cannot assure, that our general and administrative expenses willincrease in dollar terms during periods of asset growth, but will decline as apercentage of total assets during such periods.
Leverage
The amount of leverage we use in any period depends on a variety of factors,including cash available for investing, the cost of financing and generaleconomic and market conditions. Generally, our total borrowings are limited sothat we cannot incur additional borrowings, including through the issuance ofadditional debt securities, if such additional indebtedness would cause ourasset coverage ratio to fall below 200% or 150%, if certain requirements aremet. This means that generally, we can borrow up to$1 for every$1 of investorequity (or, if certain conditions are met, we can borrow up to$2 for every$1 of investor equity). In any period, our interest expense will depend largely onthe extent of our borrowing, and we expect interest expense will increase as weincrease our debt outstanding. In addition, we may dedicate assets to financingfacilities.OnMarch 31, 2020 , our Board, including a "required majority" (as such term isdefined in Section 57(o) of the 1940 Act) of our Board, approved the applicationof the modified asset coverage requirements set forth in Section 61(a)(2) of theInvestment Company Act, as amended by the Small Business Credit AvailabilityAct. OnJune 8, 2020 , the date of our shareholder meeting, we receivedshareholder approval for the application of the modified asset coveragerequirements set forth in Section 61(a)(2) of the 1940 Act, as amended by theSmall Business Credit Availability Act. As a result, effective onJune 9, 2020 ,our asset coverage requirement applicable to senior securities was reduced from200% to 150% and our current target leverage ratio is 0.90x-1.25x.
Market Trends
We believe the middle-market lending environment provides opportunities for usto meet our goal of making investments that generate attractive risk-adjustedreturns based on a combination of the following factors, which continue toremain true in the current environment, with the economic shutdown resultingfrom the COVID-19 national health emergency.Limited Availability of Capital for Middle-Market Companies. We believe thatregulatory and structural changes in the market have reduced the amount ofcapital available toU.S. middle-market companies. In particular, we believethere are currently fewer providers of capital to middle market companies. Webelieve that many commercial and investment banks have, in recent years,de-emphasized their service and product offerings to middle-market businesses infavor of lending to large corporate clients and managing capital marketstransactions. In addition, these lenders may be constrained in their ability tounderwrite and hold bank loans and high yield securities for middle-marketissuers as they seek to meet existing and future regulatory capitalrequirements. We also believe that there is a lack of market participants thatare willing to hold meaningful amounts of certain middle-market loans. As aresult, we believe our ability to minimize syndication risk for a companyseeking financing by being able to hold its loans without having to syndicatethem, coupled with reduced capacity of traditional lenders to serve themiddle-market, present an attractive opportunity to invest in middle-marketcompanies.Capital Markets Have Been Unable to Fill the Void inU.S. Middle Market FinanceLeft by Banks. While underwritten bond and syndicated loan markets have beenrobust in recent years, middle market companies are less able to access thesemarkets for reasons including the following:High Yield Market - Middle market companies generally are not issuing debt in anamount large enough to be an attractively sized bond. High yield bonds aregenerally purchased by institutional investors who, among other things, arefocused on the liquidity characteristics of the bond being issued. For example,mutual funds and exchange traded funds ("ETFs") are significant buyers ofunderwritten bonds. However, mutual funds and ETFs generally require the abilityto liquidate their investments quickly in order to fund investor redemptionsand/or comply with regulatory requirements. Accordingly, the existence of anactive secondary market for bonds is an important consideration in theseentities' initial investment decision. Because there is typically little or noactive secondary market for the debt ofU.S. middle market companies, mutualfunds and ETFs generally do not provide debt capital toU.S. middle marketcompanies. We believe this is likely to be a persistent problem and creates anadvantage for those like us who have a more stable capital base and have theability to invest in illiquid assets.Syndicated Loan Market - While the syndicated loan market is modestly moreaccommodating to middle market issuers, as with bonds, loan issue size andliquidity are key drivers of institutional appetite and, correspondingly,underwriters' willingness to underwrite the loans. Loans arranged through a bankare done either on a "best efforts" basis or are underwritten with terms plusprovisions that permit the underwriters to change certain terms, includingpricing, structure, yield and tenor, otherwise known as "flex", to successfullysyndicate the loan, in the event the terms initially marketed are insufficientlyattractive to investors. Furthermore, banks are generally reluctant tounderwrite middle market loans because the arrangement fees they may earn on theplacement of the debt generally are not sufficient to meet the banks' returnhurdles. Loans provided by companies such as ours provide certainty to issuersin that we can commit to a given amount of debt on specific terms, at statedcoupons and with agreed upon fees. As we are the ultimate holder of the loans,we do not require market "flex" or other arrangements that banks may requirewhen acting on an agency basis. 87--------------------------------------------------------------------------------Robust Demand forDebt Capital . We believeU.S. middle market companies willcontinue to require access to debt capital to refinance existing debt, supportgrowth and finance acquisitions. In addition, we believe the large amount ofuninvested capital held by funds of private equity firms, estimated byPreqinLtd. , an alternative assets industry data and research company, to be$1.5trillion as ofOctober 2020 , will continue to drive deal activity. We expectthat private equity sponsors will continue to pursue acquisitions and leveragetheir equity investments with secured loans provided by companies such as us.The Middle Market is a Large Addressable Market. According toGE Capital'sNational Center for the Middle Market 4th quarter 2020 Middle Market Indicator,there are approximately 200,000U.S. middle market companies, which haveapproximately 48 million aggregate employees. Moreover, theU.S. middle marketaccounts for one-third of private sector gross domestic product ("GDP").GE definesU.S. middle market companies as those between$10 million and$1 billion in annual revenue, which we believe has significant overlap with our definitionofU.S. middle market companies.Attractive Investment Dynamics. An imbalance between the supply of, and demandfor, middle market debt capital creates attractive pricing dynamics. We believethe directly negotiated nature of middle market financings also generallyprovides more favorable terms to the lender, including stronger covenant andreporting packages, better call protection, and lender-protective change ofcontrol provisions. Additionally, we believe BDC managers' expertise in creditselection and ability to manage through credit cycles has generally resulted inBDCs experiencing lower loss rates thanU.S. commercial banks through creditcycles. Further, we believe that historical middle market default rates havebeen lower, and recovery rates have been higher, as compared to the largermarket capitalization, broadly distributed market, leading to lower cumulativelosses. Lastly, we believe that in the current environment, as the economyreopens following the economic shutdown resulting from the COVID-19 nationalhealth emergency, lenders with available capital may be able to take advantageof attractive investment opportunities as the economy reopens and may be able toachieve improved economic spreads and documentation terms.Conservative Capital Structures. Following the credit crisis, which we definebroadly as occurring between mid-2007 and mid-2009, lenders have generallyrequired borrowers to maintain more equity as a percentage of their totalcapitalization, specifically to protect lenders during economic downturns. Withmore conservative capital structures,U.S. middle market companies haveexhibited higher levels of cash flows available to service their debt. Inaddition,U.S. middle market companies often are characterized by simplercapital structures than larger borrowers, which facilitates a streamlinedunderwriting process and, when necessary, restructuring process.Attractive Opportunities in Investments in Loans. We invest in senior secured orunsecured loans, subordinated loans or mezzanine loans and, to a lesser extent,equity and equity-related securities. We believe that opportunities in seniorsecured loans are significant because of the floating rate structure of mostsenior secured debt issuances and because of the strong defensivecharacteristics of these types of investments. Given the current low interestrate environment, we believe that debt issues with floating interest rates offera superior return profile as compared with fixed-rate investments, sincefloating rate structures are generally less susceptible to declines in valueexperienced by fixed-rate securities in a rising interest rate environment.Senior secured debt also provides strong defensive characteristics. Seniorsecured debt has priority in payment among an issuer's security holders wherebyholders are due to receive payment before junior creditors and equity holders.Further, these investments are secured by the issuer's assets, which may provideprotection in the event of a default.
Portfolio and Investment Activity
As ofDecember 31, 2020 , based on fair value, our portfolio consisted of 77.5%first lien senior secured debt investments (of which 37% we consider to beunitranche debt investments (including "last out" portions of such loans)),18.5% second lien senior secured debt investments, 0.5% unsecured investments,2.5% equity investments, and 1.0% investment funds and vehicles.As ofDecember 31, 2020 , our weighted average total yield of the portfolio atfair value and amortized cost was 8.1% and 8.0%, respectively, and our weightedaverage yield of accruing debt and income producing securities at fair value andamortized cost was 8.3% and 8.2%, respectively.
As of
Based on current market conditions, the pace of our investment activities mayvary.
88--------------------------------------------------------------------------------Our investment activity for the years endedDecember 31, 2020 , 2019 and 2018 ispresented below (information presented herein is at par value unless otherwiseindicated). For the Years Ended December 31, ($ in thousands) 2020 2019 2018 New investment commitments Gross originations$ 3,667,048 4,625,939 5,814,181 Less: Sell downs (222,276 ) (191,277 ) (618,040 )
Total new investment commitments
Principal amount of investments
funded:
First-lien senior secured debt
investments
3,388,527
Second-lien senior secured debt 518,480 596,421 799,701 investments Unsecured debt investments 55,873 - 23,000 Equity investments 119,780 1,991 11,215 Investment funds and vehicles 18,950 -
26,110
Total principal amount of$ 2,845,500 $ 3,682,189
investments funded
Principal amount of investments
sold or repaid:
First-lien senior secured debt
investments
Second-lien senior secured debt (90,686 ) (116,700 ) (341,600 ) investments Unsecured debt investments - (23,000 ) - Equity investments (867 ) (1,991 ) (2,760 ) Investment funds and vehicles - (2,250 ) - Total principal amount of$ (1,151,905 ) $ (964,543 ) $ (881,075 ) investments sold or repaid Number of new investment 30 38 44
commitments in new portfolio
companies(1)
Average new investment commitment
amount
Weighted average term for new 5.9 6.3
6.2
investment commitments (in years)
Percentage of new debt investment 96.3 % 100.0 %
99.6 %
commitments at
floating rates
Percentage of new debt investment 3.7 % 0.0 %
0.4 %
commitments at
fixed rates
Weighted average interest rate of 7.8 % 8.0 %
8.8 %
new investment
commitments(2)
Weighted average spread over LIBOR 6.9 % 6.1 %
6.0 %
of new floating rate investment
commitments________________
(1) Number of new investment commitments represents commitments to a particular portfolio company.
(2) Assumes each floating rate commitment is subject to the greater of the
interest rate floor (if applicable) or 3-month LIBOR, which was 0.24%,
1.91% and 2.81% as of
89
--------------------------------------------------------------------------------As ofDecember 31, 2020 andDecember 31, 2019 , our investments consisted of thefollowing: December 31, 2020 December 31, 2019($ in thousands) Amortized Cost Fair Value Amortized Cost Fair ValueFirst-lien senior secured$ 8,483,799 (3)$ 8,404,754 $ 7,136,866 (3)$ 7,113,356 debt investmentsSecond-lien senior secured 2,035,151 2,000,471 1,590,439 1,584,917debt investmentsUnsecured debt investments 56,473 59,562 - -Equity investments(1) 245,458 271,739 12,663 12,875Investment funds and 107,837 105,546 88,888 88,077vehicles(2)Total Investments$ 10,928,718 $ 10,842,072 $ 8,828,856 $ 8,799,225 ________________ (1) Includes investment in Wingspire. (2) Includes investment inSebago Lake .
(3) 37% and 43% of which we consider unitranche loans as of
andDecember 31, 2019 , respectively.
The table below describes investments by industry composition based on fairvalue as of
December 31, 2020 December 31, 2019Advertising and media 1.0 % 2.6 %Aerospace and defense 2.7 3.3Automotive 1.6 1.7Buildings and real estate 5.6 6.6Business services 5.7 5.4Chemicals 2.2 2.6Consumer products 2.3 2.7Containers and packaging 2.0 2.1Distribution 6.3 8.6Education 2.6 3.5Energy equipment and services 0.1 0.2Financial services (1) 2.9 1.6Food and beverage 8.7 7.2Healthcare equipment and services 3.7
8.3
Healthcare providers and services 5.2 -Healthcare technology 3.6 3.4Household products 1.4 1.5Human resource support services (3) 0.0 -Infrastructure and environmental services 1.8
2.7
Insurance 8.9
5.7
Internet software and services 11.1
8.1
Investment funds and vehicles (2) 1.0 1.0Leisure and entertainment 2.0 2.0Manufacturing 5.3 2.9Oil and gas 1.7 2.3Professional services 5.6 8.1Specialty retail 2.1 2.7Telecommunications 0.5 0.5Transportation 2.4 2.7Total 100.0 % 100.0 %________________
(1) Includes investment in Wingspire. (2) Includes investment inSebago Lake . (3) Rounds to less than 0.1%. 90
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The table below describes investments by geographic composition based on fairvalue as of
December 31, 2020 December 31, 2019 United States: Midwest 18.2 % 19.5 % Northeast 16.7 18.7 South 42.3 42.8 West 17.2 15.3 Belgium 0.8 1.0 Canada 1.0 0.9 Israel 0.4 - United Kingdom 3.4 1.8 Total 100.0 % 100.0 %
The weighted average yields and interest rates of our investments at fair valueas of
December 31, 2020 December 31, 2019Weighted average total yield of portfolio 8.1 % 8.7 %Weighted average total yield of accruing 8.3 % 8.7 %
debt and income
producing securitiesWeighted average interest rate of accruing 7.4 % 8.1 %debt securitiesWeighted average spread over LIBOR of all 6.6 % 6.3 %accruing floating rate investmentsThe weighted average yield of our accruing debt and income producing securitiesis not the same as a return on investment for our shareholders but, rather,relates to our investment portfolio and is calculated before the payment of allof our and our subsidiaries' fees and expenses. The weighted average yield wascomputed using the effective interest rates as of each respective date,including accretion of original issue discount and loan origination fees, butexcluding investments on non-accrual status, if any. There can be no assurancethat the weighted average yield will remain at its current level.Our Adviser monitors our portfolio companies on an ongoing basis. It monitorsthe financial trends of each portfolio company to determine if they are meetingtheir respective business plans and to assess the appropriate course of actionwith respect to each portfolio company. Our Adviser has several methods ofevaluating and monitoring the performance and fair value of our investments,which may include the following:
• assessment of success of the portfolio company in adhering to its
business plan and compliance with covenants;
• periodic and regular contact with portfolio company management and, if
appropriate, the financial or strategic sponsor, to discuss financial
position, requirements and accomplishments;
• comparisons to other companies in the portfolio company's industry; and • review of monthly or quarterly financial statements and financial
projections for portfolio companies. 91
--------------------------------------------------------------------------------As part of the monitoring process, our Adviser employs an investment ratingsystem to categorize our investments. In addition to various risk management andmonitoring tools, our Adviser rates the credit risk of all investments on ascale of 1 to 5. This system is intended primarily to reflect the underlyingrisk of a portfolio investment relative to our initial cost basis in respect ofsuch portfolio investment (i.e., at the time of origination or acquisition),although it may also take into account the performance of the portfoliocompany's business, the collateral coverage of the investment and other relevantfactors. The rating system is as follows:
Investment Rating Description
1 Investments rated 1 involve the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since origination or acquisition are generally favorable; 2 Investments rated 2 involve an acceptable level of risk that is similar to the risk at the time of origination or acquisition. The borrower is generally performing as expected and the risk factors are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a rating of 2; 3 Investments rated 3 involve a borrower performing below expectations and indicates that the loan's risk has increased somewhat since origination or acquisition; 4 Investments rated 4 involve a borrower performing materially below expectations and indicates that the loan's risk has increased materially since origination or acquisition. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due); and 5 Investments rated 5 involve a borrower performing substantially below expectations and indicates that the loan's risk has increased substantially since origination or
acquisition. Most
or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.Our Adviser rates the investments in our portfolio at least quarterly and it ispossible that the rating of a portfolio investment may be reduced or increasedover time. For investments rated 3, 4 or 5, our Adviser enhances its level ofscrutiny over the monitoring of such portfolio company.
The following table shows the composition of our portfolio on the 1 to 5 ratingscale as of
December 31, 2020 December 31, 2019 Investments Percentage of
Investments Percentage of
Investment Rating at Fair Value Total Portfolio at Fair Value Total Portfolio
($ in thousands) 1$ 1,093,318 10.1 %$ 753,619 8.6 % 2 8,628,248 79.6 7,576,022 86.1 3 904,018 8.3 469,584 5.3 4 216,488 2.0 - - 5 - - - - Total$ 10,842,072 100.0 %$ 8,799,225 100.0 %
The increase in investments rated by our Adviser as a 3, 4 and 5 as of
92--------------------------------------------------------------------------------
The following table shows the amortized cost of our performing and non-accrualdebt investments as of
December 31, 2020 December
31, 2019
($ in thousands) Amortized Cost Percentage Amortized Cost
Percentage Performing$ 10,518,059 99.5 %$ 8,727,305 100.0 % Non-accrual 57,364 0.5 % - - % Total$ 10,575,423 100.0 %$ 8,727,305 100.0 %Loans are generally placed on non-accrual status when there is reasonable doubtthat principal or interest will be collected in full. Accrued interest isgenerally reversed when a loan is placed on non-accrual status. Interestpayments received on non-accrual loans may be recognized as income or applied toprincipal depending upon management's judgment regarding collectability.Non-accrual loans are restored to accrual status when past due principal andinterest is paid current and, in management's judgment, are likely to remaincurrent. Management may make exceptions to this treatment and determine to notplace a loan on non-accrual status if the loan has sufficient collateral valueand is in the process of collection.
Portfolio Companies
The following table sets forth certain information regarding each of theportfolio companies in which we had a debt or equity investment as ofDecember 31, 2020 . We offer to make available significant managerial assistanceto our portfolio companies. We may receive rights to observe the meetings of ourportfolio companies' board of directors. Other than these investments, our onlyrelationships with our portfolio companies are the managerial assistance we mayseparately provide to our portfolio companies, which services would be ancillaryto our investments. As ofDecember 31, 2020 , other thanSebago Lake LLC ,Wingspire Capital Holdings LLC andSwipe Acquisition Corp. (dba PLI), we did not"control" and are not an "affiliate" of any of our portfolio companies, each asdefined in the 1940 Act. In general, under the 1940 Act, we would "control" aportfolio company if we owned 25.0% or more of its voting securities and wouldbe an "affiliate" of a portfolio company if we owned five percent or more of itsvoting securities. 93
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest Dissolution Diluted Number of AmortizedCompany Industry Investment Rate Date Basis Units Cost Fair Value3ES Innovation Inc. (dba Internet First lien L + 5.75% 5/13/2025 0.0 % 39,728 39,346 38,536Aucerna)(1)(4) software and seniorSuite 800, 250 - 2nd services secured loanStreet S.W.Calgary, Alberta, Canada 3ES Innovation Inc. (dba Internet First lien L + 5.75% 5/13/2025 0.0 % - (35 ) (117 )Aucerna)(1)(12) software and seniorSuite 800, 250 - 2nd services securedStreet S.W. revolvingCalgary, Alberta, Canada loanABB/Con-cise Optical Group Distribution First lien L + 5.00% 6/15/2023 0.0 % 75,620 75,053 68,815LLC(1)(5) senior12301 NW 39th Street secured loanCoral Springs, FL 33065ABB/Con-cise Optical Group Distribution Second lien L + 9.00% 6/17/2024 0.0 % 25,000 24,604 21,875LLC(1)(5) senior12301 NW 39th Street secured loanCoral Springs, FL 33065Accela, Inc.(1)(2) Internet First lien L + 9/28/2023 0.0 % 22,090 21,871 22,0902633 Camino Ramon, Suite software and senior 4.92% (incl.500 services secured loan 1.67% PIK)San Ramon, CA 94583Accela, Inc.(1)(12) Internet First lien L + 7.00% 9/28/2023 0.0 % - - -2633 Camino Ramon, Suite software and senior500 services securedSan Ramon, CA 94583 revolving loanAccess CIG, LLC(1)(2) Business Second lien L + 7.75% 2/27/2026 0.0 % 58,760 58,260 57,7326818 A Patterson Pass Road services seniorLivermore, CA 94550 secured loanAmspec Services Inc.(1)(4) Professional First lien L + 5.75% 7/2/2024 0.0 % 111,404 110,080 108,8961249 S River Rd services seniorCranbury, NJ 08512 secured loanAmspec Services Professional First lien L + 4.75% 7/2/2024 0.0 % - (148 ) (325 )Inc.(1)(12) services senior1249 S River Rd securedCranbury, NJ 08512 revolving loanApptio, Inc.(1)(5) Internet First lien L + 7.25% 1/10/2025 0.0 % 50,916 49,975 50,66211100 NE 8th Street, Suite software and senior600 services secured loanBellevue, WA 98004Apptio, Inc.(1)(12) Internet First lien L + 7.25% 1/10/2025 0.0 % - (37 ) (14 )11100 NE 8th Street, Suite software and senior600 services securedBellevue, WA 98004 revolving loanAramsco, Inc.(1)(2) Distribution First lien L + 5.25% 8/28/2024 0.0 % 56,477 55,561 55,912PO Box 29 seniorThorofare, NJ 08086 secured loanAramsco, Inc.(1)(12) Distribution First lien L + 5.25% 8/28/2024 0.0 % - (128 ) (84 )PO Box 29 seniorThorofare, NJ 08086 secured revolving loanArdonagh Midco 2 PLC Insurance Unsecured 12.75% PIK 1/15/2027 0.0 % 9,300 9,213 9,9511 Minster Court, Mincing notesLaneLondon EC3R 7AAUnited Kingdom 94
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest Dissolution Diluted Number of AmortizedCompany Industry Investment Rate Date Basis Units Cost Fair ValueArdonagh Midco 3 Insurance First lien G + 7/14/2026 0.0 % 95,791 83,893 95,791PLC(1)(11) senior 8.25%1 Minster Court, Mincing secured loan (incl.Lane 2.81%London EC3R 7AA PIK)United Kingdom Ardonagh Midco 3 Insurance First lien E + 7/14/2026 0.0 % 10,924 9,720 10,924PLC(1)(10) senior 8.25%1 Minster Court, Mincing secured loan (incl.Lane 2.81%London EC3R 7AA PIK)United KingdomArdonagh Midco 3 Insurance First lien G + 7/14/2022 0.0 % 3,390 2,730 3,390PLC(1)(11)(12) senior 8.25%1 Minster Court, Mincing secured (incl.Lane delayed draw 2.81%London EC3R 7AA term loan PIK)United KingdomAruba Investments Chemicals Second lien L + 11/24/2028 0.0 % 10,000 9,854 9,850Holdings LLC (dba Angus senior 7.75%Chemical Company)(1)(5) secured loan1500 E Lake Cook Road Buffalo Grove, IL 60089Associations, Inc.(1)(4) Buildings First lien L + 7/30/2024 0.0 % 307,333 304,807 305,7955401 North Central and real senior 7.00%Expressway, Suite 300 estate secured loan (incl.Dallas, TX 75205 3.00% PIK)Associations, Buildings First lien L + 7/30/2021 0.0 % 59,153 58,724 58,849Inc.(1)(4)(12) and real senior 7.00%5401 North Central estate secured (incl.Expressway, Suite 300 delayed draw 3.00%Dallas, TX 75205 term loan PIK)
0.0 % 11,543 11,457 11,4275401 North Central and real senior 6.00%Expressway, Suite 300 estate securedDallas, TX 75205 revolving loan
0.0 % 50,450 50,235
50,768
648 Grassmere Park senior 6.50%Nashville, TN 37211 secured loan
Aviation Solutions Aerospace First lien L +
0.0 % 210,719 207,743 183,326Midco, LLC (dba STS and defense senior 9.25%Aviation)(1)(4) secured loan (incl.2000 NE Jensen Beach 9.25%Blvd PIK)Jensen Beach, FL 34957AxiomSL Group, Financial First lien L + 12/3/2027 0.0 % 78,659 77,490 77,479Inc.(1)(4) services senior 6.50%45 Broadway, 27th Floor secured loanNew York, NY, 10006AxiomSL Group, Financial First lien L + 12/3/2025 0.0 % - (138 ) (140 )Inc.(1)(12) services senior 6.50%45 Broadway, 27th Floor securedNew York, NY, 10006 revolving loanBarracuda Dental LLC Healthcare First lien L + 10/27/2025 0.0 % 62,048 60,974 60,937(dba National providers senior 7.00%Dentex)(1)(4) and services secured loan
11601 Kew Gardens Ave ,Suite 200Palm Beach Gardens, FL 33410 95
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of
Dissolution Diluted Number of
Industry Investment Interest Rate Date Basis Units Cost Fair
Value
6/30/2022 0.0 % - (105 ) (164 )National Dentex)(1)(12) providers and senior11601 Kew Gardens Ave, services securedSuite 200 delayed drawPalm Beach Gardens, FL term loan33410Barracuda Dental LLC (dba Healthcare First lien L + 7.00% 10/27/2025 0.0 % 3,512 3,351
3,344
National Dentex)(1)(4)(12) providers and senior11601 Kew Gardens Ave, services securedSuite 200 revolvingPalm Beach Gardens, FL loan33410BCPE Nucleon (DE) SPV, Internet First lien L + 7.00% 9/24/2026 0.0 % 213,500 210,318 210,297LP(1)(4) software and senior4001 Kennett Pike, Suite services secured loan302Wilmington, DE 19807BCTO BSI Buyer, Inc. (dba Internet First lien L + 7.00% 12/23/2026 0.0 % 44,643 44,198 44,196Buildertrend)(1)(4) software and senior11811 I St. services secured loanOmaha, NE 68137BCTO BSI Buyer, Inc. (dba Internet First lien L + 7.00%
12/23/2026 0.0 % - (53 ) (54 )Buildertrend)(1)(12) software and senior11811 I St. services securedOmaha, NE 68137 revolving loanBIG Buyer, LLC(1)(5) Specialty First lien L + 6.50% 11/20/2023 0.0 % 49,952 49,240 48,954631 North 400 West Retail seniorSalt Lake City, UT 84103 secured loan
2/28/2021 0.0 % - (72 ) (14 )631 North 400 West Retail seniorSalt Lake City, UT 84103 secured delayed draw term loanBIG Buyer, LLC(1)(2)(12) Specialty First lien L + 6.50% 11/20/2023 0.0 % 1,750 1,681 1,675631 North 400 West Retail seniorSalt Lake City, UT 84103 secured revolving loanBlack Mountain Sand Eagle Oil and gas First lien L + 8.25%
8/17/2022 0.0 % 46,883 46,683 42,429Ford LLC (1)(4) senior420 Commerce Street, Suite secured loan500Fort Worth, TX 76102Blackhawk Network Financial Second lien L + 7.00% 6/15/2026 0.0 % 106,400 105,644 99,750Holdings, Inc.(1)(2) services senior6220 Stoneridge Mall Road secured loanPleasanton, CA 94588Bracket Intermediate Healthcare First lien L + 4.25% 9/5/2025 0.0 % 521 485 512Holding Corp.(1)(4) technology senior575 East Swedesford Road, secured loanSuite 200Wayne, PA 19087Bracket Intermediate Healthcare Second lien L + 8.13% 9/7/2026 0.0 % 26,250 25,838 25,594Holding Corp.(1)(4) technology senior575 East Swedesford Road, secured loanSuite 200Wayne, PA 19087 96
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest
Dissolution Diluted Number of
Industry Investment Rate Date Basis Units Cost Fair
Value
11/3/2025 0.0 % 175,347 173,881 176,224City Brewing)(1)(2) senior 5.75%925 S. 3rd St. secured loanLa Crosse, WI 54601Caiman Merger Sub LLC (dba Food and beverage First lien L + 11/1/2024 0.0 % - (99 ) -City Brewing)(1)(12) senior 5.75%925 S. 3rd St. securedLa Crosse, WI 54601 revolving loanCardinal US Holdings, Professional First lien L + 7/31/2023 0.0 % 89,273 86,998 88,827Inc.(1)(4) services senior 5.00%De Kleetlaan 6A secured loan1831 MachelenBrussels, BelgiumCIBT Global, Inc.(1)(4) Business services First lien L + 6/3/2024 0.0 % 843 660 5991600 International Drive, senior 3.75%Suite 600 secured loanMcLean, VA 22102CIBT Global, Inc.(1)(4) Business services Second lien L + 6/2/2025 0.0 % 62,621 57,364 32,5631600 International Drive, senior 7.75%Suite 600 secured loan (incl.McLean, VA 22102 6.75% PIK)CM7 Restaurant Holdings, Food and beverage First lien L + 5/22/2023 0.0 % 38,507 37,937 37,352LLC(1)(2) senior 8.00%18900 Dallas Parkway secured loanDallas, TX 75287CM7 Restaurant Holdings, Food and beverage LLC Interest N/A N/A 0.1 % 340 340 340LLC18900 Dallas Parkway , TX75287Confluent Health, Healthcare First lien L + 6/24/2026 0.0 % 17,730 17,589 17,331LLC.(1)(2) providers and senior 5.00%175 S English Station Rd services secured loanSte. 218Louisville, KYConnectWise, LLC(1)(4) Business services First lien L + 2/28/2025 0.0 % 178,653 176,981
178,653
4110 George Rd., Suite 200 senior 5.25%Tampa, FL, 33634 secured loan
2/28/2025 0.0 % 5,001 4,824 5,0014110 George Rd., Suite 200 senior 5.25%Tampa, FL, 33634 secured revolving loan
4/3/2025 0.0 % 47,409 46,920 47,172Inc.(1)(2) senior 8.00%400 South Akard Street, secured loanSuite 100Dallas, TX 75202Definitive Healthcare Healthcare First lien L + 7/16/2026 0.0 % 197,734 196,131 195,756Holdings, LLC(1)(4) technology senior 5.50%550 Cochituate Rd. secured loanFramingham, MA 01701 97
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest Dissolution Diluted Number of AmortizedCompany Industry Investment Rate Date Basis Units Cost Fair Value
0.0 % 7,807 7,531 7,728Holdings, LLC(1)(4)(12) technology senior 5.50%550 Cochituate Rd. securedFramingham, MA 01701 delayed draw term loan
0.0 % - (77 ) (109 )Holdings, LLC(1)(12) technology senior 5.50%550 Cochituate Rd. securedFramingham, MA 01701 revolving loan
0.0 % 15,000 14,927 14,925Infoblox, Inc.)(1)(5) software and senior 7.25%3111 Coronado Dr. services secured loanSanta Clara, CA 95054DMT Solutions Global Professional First lien L + 7/2/2024 0.0 % 57,150 55,677 54,864Corporation(1)(4) services senior 7.50%37 Executive Dr secured loanDanbury, CT 06810Douglas Products and Chemicals First lien L + 10/19/2022 0.0 % 97,939 97,530 95,980Packaging Company senior 5.75%LLC(1)(4) secured loan1550 E. Old 210 HighwayLiberty, MO 64068Douglas Products and Chemicals First lien P + 10/19/2022 0.0 % 3,028 3,000 2,846Packaging Company senior 4.75%LLC(1)(8)(12) secured1550 E. Old 210 Highway revolvingLiberty, MO 64068 loanEndries Acquisition, Distribution First lien L + 12/10/2025 0.0 % 202,219 199,557 198,680Inc.(1)(6) senior 6.25%714 West Ryan Street, secured loanP.O. Box 69Brillion, Wisconsin USA54110-0069Endries Acquisition, Distribution First lien L + 12/10/2024 0.0 % - (310 ) (473 )Inc.(1)(12) senior 6.25%714 West Ryan Street, securedP.O. Box 69 revolvingBrillion, Wisconsin USA loan54110-0069
Entertainment Benefits Business First lien L +
0.0 % 81,250 80,262
71,500
Group, LLC(1)(4) services senior 8.25%19495 Biscayne Boulevard, secured loan (incl.Suite 300, Aventura, 2.50%FL 33180 PIK)
Entertainment Benefits Business First lien L +
0.0 % 10,096 9,971
8,752
secured (incl.Suite 300, Aventura, revolving 2.50%FL 33180 loan PIK)EW Holdco, LLC (dba Specialty First lien L + 9/25/2024 0.0 % 71,297 70,818 67,732European Wax)(1)(2) Retail senior 5.50%P.O. Box 802208 secured loanAventura, FL 33280Feradyne Outdoors, Consumer First lien L + 5/25/2023 0.0 % 88,400 87,920 86,632LLC(1)(4) products senior 6.25%1230 Poplar Avenue secured loanSuperior, WI 54880 98
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest Dissolution Diluted Number of AmortizedCompany Industry Investment Rate Date Basis Units Cost Fair ValueForescout Technologies, Internet First lien L + 8/17/2026 0.0 % 49,834 49,032 49,211Inc.(1)(4) software and senior 9.50% (190 W. Tasman Drive services secured loan incl.San Jose, CA 95134 9.50% PIK)Forescout Technologies, Internet First lien L + 8/18/2025 0.0 % - (87 ) (67 )Inc.(1)(12) software and senior 8.50%190 W. Tasman Drive services securedSan Jose, CA 95134 revolving loan
FR Arsenal Holdings II Infrastructure First lien L +
0.0 % 121,900 120,927
115,805
Corp. (dba and senior 7.50%Applied-Cleveland environmental secured loanHoldings, Inc.)(1)(4) services370690 East Old Highway 64Cleveland, OK 74020Galls, LLC(1)(4) Specialty First lien L + 1/31/2025 0.0 % 105,272 104,288 101,0611340 Russell Cave Road Retail senior 6.75%P.O. Box 54308 secured loan (incl.Lexington, KY 40505 0.50% PIK)Galls, LLC(1)(4)(12) Specialty First lien L + 1/31/2024 0.0 % 9,916 9,741 9,0721340 Russell Cave Road Retail senior 6.75%P.O. Box 54308 secured (incl.Lexington, KY 40505 revolving 0.50% loan PIK)GC Agile Holdings Limited Professional First lien L + 6/15/2025 0.0 % 158,862 156,717 156,081(dba Apex Fund services senior 7.00%Services)(1)(4) secured loanVeritas House, 125Finsbury PavementLondon, England , EC2A 1NQGC Agile Holdings Limited Professional First lien L + 6/15/2023 0.0 % 3,462 3,299 3,280(dba Apex Fund services senior 7.00%Services)(1)(4)(12) securedVeritas House, 125 revolvingFinsbury Pavement loan
0.0 % 18,315 18,085
17,629
(dba Procare software and senior 4.00%Software)(1)(4) services secured loan1 West Main St. , Ste 201Medford, OR 97501Genesis Acquisition Co. Internet First lien L + 7/31/2024 0.0 % 2,637 2,606
2,538
(dba Procare software and senior 4.00%Software)(1)(4) services secured1 West Main St., Ste 201 revolvingMedford, OR 97501 loanGerson Lehrman Group, Professional First lien L + 12/12/2024 0.0 % 195,899 194,541 195,899Inc.(1)(4) services senior 4.75%60 East 42nd Street, 3rd secured loanFloorNew York, NY 10165Gerson Lehrman Group, Professional First lien L + 12/12/2024 0.0 % - (142 ) -Inc.(1)(12) services senior 4.75%60 East 42nd Street, 3rd securedFloor revolvingNew York, NY 10165 loan 99
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest Dissolution Diluted Number of AmortizedCompany Industry Investment Rate Date Basis Units Cost Fair Value
0.0 % 135,400 134,357
133,708
(fka GI Chill Acquisition providers and senior 7.50%LLC)(1)(4) services secured loan611 Gateway Blvd , Suite820South San Francisco, CA 94080Gloves Buyer, Inc. (dba Manufacturing Second lien L +
12/29/2028 0.0 % 29,250 28,519 28,519Protective Industrial senior 8.25%Products)(1)(2) secured loan968 Albany Shaker Road Latham, NY 12110Gloves Holdings, LP (dba Manufacturing LP Interest N/A N/A 0.6 % 3,250 3,250 3,250Protective Industrial Products)968 Albany Shaker Road Latham, NY 12110Granicus, Inc.(1)(5) Internet First lien L + 8/21/2026 0.0 % 41,756 40,760
42,173
services secured loan
0.0 % - (62 ) -
services secured revolving loan
H&F Opportunities LUX III Internet First lien L +
0.0 % 42,250 41,100 42,144S.À R.L (dba software and senior 7.75%Checkmarx)(1)(5) services secured loanAmot Atrium Tower , 2Jabotinsky StreetRamat Gan 520501IsraelH&F Opportunities LUX III Internet First lien L + 4/16/2026 0.0 % - (429 ) (41 )S.À R.L (dba software and senior 7.75%Checkmarx)(1)(12) services securedAmot Atrium Tower, 2 revolvingJabotinsky Street loanRamat Gan 520501IsraelHayward Industries, Household First lien L + 8/5/2024 0.0 % 918 899 906Inc.(1)(2) products senior 3.50%620 Division Street secured loan
0.0 % 52,149 51,458 51,628Inc.(1)(2) products senior 8.25%620 Division Street secured loanElizabeth, NJ 07201Hercules Borrower, Business First lien L + 12/15/2026 0.0 % 180,043 177,358 177,343LLC(1)(5) services senior 6.50%412 Georgia Avenue #300 secured loanChattanooga, TN 37403Hercules Borrower, Business First lien L + 12/15/2026 0.0 % - (311 ) (314 )LLC(1)(12) services senior 6.50%412 Georgia Avenue #300 securedChattanooga, TN 37403 revolving loan
0.0 % 5,112 5,112 5,112412 Georgia Avenue #300 services notes (inc.Chattanooga, TN 37403 0.48% PIK) 100
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Percentage of Class Held on a Principal Maturity / Fully Number of($ in thousands) Type of Interest Dissolution Diluted Shares / Number AmortizedCompany Industry Investment Rate Date Basis of Units Cost Fair ValueHercules Buyer, LLC Business Common Units N/A N/A 1.0 % 2,190,000 2,190 2,190412 Georgia Avenue #300 servicesChattanooga, TN 37403H-Food Holdings, LLC(1)(2) Food and First lien L + 5/23/2025 0.0 % 12,861 12,768 12,6563500 Lacey Road, Suite 300 beverage senior 4.00%Downers Grove IL 60515 secured loanH-Food Holdings, LLC(1)(2) Food and Second lien L + 3/2/2026 0.0 % 121,800 119,542 119,0603500 Lacey Road, Suite 300 beverage senior 7.00%Downers Grove IL 60515 secured loanH-Food Holdings, LLC Food and LLC Interest N/A N/A 0.9 % 10,875 10,875 11,1593500 Lacey Road, Suite beverage300,Downers Grove IL 60515Hg Genesis 8 Sumoco Financial Unsecured G + 8/28/2025 0.0 % 43,841 42,148 44,499Limited(1)(11) services facility 7.50%2 More London Riverside (incl.London SE1 2AP 7.50%United Kingdom PIK)HGH Purchaser, Inc. (dba Household First lien L + 11/3/2025 0.0 % 76,982 76,015 74,673Horizon Services)(1)(4) products senior 6.75%320 Century Blvd secured loanWilmington, DE 19808HGH Purchaser, Inc. (dba Household First lien L + 11/1/2021 0.0 % 26,993 26,394 26,090Horizon products senior 6.75%Services)(1)(4)(12) secured320 Century Blvd delayed drawWilmington, DE 19808 term loanHGH Purchaser, Inc. (dba Household First lien L + 11/3/2025 0.0 % 972 855 680Horizon products senior 6.75%Services)(1)(4)(12) secured320 Century Blvd revolvingWilmington, DE 19808 loanHometown Food Food and First lien L + 8/31/2023 0.0 % 21,388 21,145 21,388Company(1)(2) beverage senior 5.00%1 Strawberry Lane secured loanOrrville, Ohio 44667-0280Hometown Food Food and First lien L + 8/31/2023 0.0 % 565 520 565Company(1)(2)(12) beverage senior 5.00%1 Strawberry Lane securedOrrville, Ohio 44667-0280 revolving loanHyland Software, Internet Second lien L + 7/7/2025 0.0 % 24,705 24,372 24,848Inc.(1)(2) software and senior 7.00%28500 Clemens Road services secured loanWestlake, OH 44145Ideal Tridon Holdings, Manufacturing First lien L + 7/31/2024 0.0 % 53,310 52,757 52,111Inc.(1)(4) senior 5.75%8100 Tridon Drive secured loanSmyrna, TN USA 37167-6603Ideal Tridon Holdings, Manufacturing First lien L + 7/31/2023 0.0 % 900 858 771Inc.(1)(2)(12) senior 5.75%8100 Tridon Drive securedSmyrna, TN USA 37167-6603 revolving loan 101
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Dissolution Diluted Number of AmortizedCompany Industry Investment Interest Rate Date Basis Units Cost Fair ValueIndividual Foodservice Distribution First lien L + 6.25% 11/22/2025 0.0 % 156,900 154,129 154,547Holdings, LLC(1)(5) senior5496 Lindbergh Lane secured loanBell, CA 90201Individual Foodservice Distribution First lien L + 6.25% 6/30/2022 0.0 % 12,587 11,912 12,012Holdings, LLC(1)(5)(12) senior5496 Lindbergh Lane securedBell, CA 90201 delayed draw term loanIndividual Foodservice Distribution First lien L + 6.25% 11/22/2024 0.0 % 5,276 4,877 4,919Holdings, LLC(1)(2)(12) senior5496 Lindbergh Lane securedBell, CA 90201 revolving loanInnovative Water Care Chemicals First lien L + 5.00% 2/27/2026 0.0 % 147,375 139,223 129,690Global Corporation(1)(4) senior1400 Bluegrass Lakes Pkwy secured loanAlpharetta, GA 30004Instructure, Inc.(1)(4) Education First lien L + 7.00% 3/24/2026 0.0 % 84,660 83,400 84,6606330 South 3000 East, seniorSuite 700 secured loanSalt Lake City, UT 84121Instructure, Inc.(1)(12) Education First lien L + 7.00% 3/24/2026 0.0 % - (60 ) -6330 South 3000 East, seniorSuite 700 securedSalt Lake City, UT 84121 revolving loanIntegrity Marketing Insurance First lien L + 5.75% 8/27/2025 0.0 % 221,109 218,033 217,792Acquisition, LLC(1)(5) senior9111 Cypress Waters Blvd secured loanSuite 450Coppell, TX 75019Integrity Marketing Insurance First lien L + 5.75% 8/27/2025 0.0 % - (172 ) (222 )Acquisition, LLC(1)(12) senior9111 Cypress Waters Blvd securedSuite 450 revolvingCoppell, TX 75019 loanIntelerad Medical Systems Healthcare First lien L + 6.25% 2/20/2026 0.0 % 67,852 67,092 66,834Incorporated (fka technology senior11849573 Canada secured loanInc.)(1)(4)800 Boulevard deMaisonneuve East 12thfloorMontreal, Quebec H2L 4L8,CanadaIntelerad Medical Systems Healthcare First lien L + 6.25% 2/20/2026 0.0 % 1,126 1,066 1,041Incorporated (fka technology senior11849573 Canada securedInc.)(1)(4)(12) revolving800 Boulevard de loanMaisonneuve East 12thfloorMontreal, Quebec H2L 4L8,Canada 102
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Dissolution Diluted Number of AmortizedCompany Industry Investment Interest Rate Date Basis Units Cost Fair Value
Interoperability Bidco, Healthcare First lien L + 5.75%
0.0 % 76,042 75,260 73,571Inc.(1)(4) technology senior100 High Street, Suite secured loan1560
0.0 % - (8 ) (170 )Inc.(1)(12) technology senior100 High Street, Suite secured1560 delayed drawBoston, MA 02110 term loan
Interoperability Bidco, Healthcare First lien L + 5.75%
0.0 % 4,000 3,965 3,870Inc.(1)(4) technology senior100 High Street, Suite secured1560 revolvingBoston, MA 02110 loan
0.0 % 189,956 188,084 188,531Beeline)(1)(4) software and senior12724 Gran Bay Parkway services secured loanWest, Suite 200Jacksonville, FL32258-4467IQN Holding Corp. (dba Internet First lien L + 5.50% 8/21/2023 0.0 % - (179 ) (170 )Beeline)(1)(12) software and senior12724 Gran Bay Parkway services securedWest, Suite 200 revolvingJacksonville, FL loan32258-4467
0.0 % 7,130 7,076
7,058
150 North Clinton Street and media seniorChicago, IL 60661-1416 secured loanStorm Chaser Intermediate Distribution First lien L + 7.50% 7/25/2022 0.0 % 114,964 114,167 114,676II Holding Corporation senior(dba JM Swank, secured loanLLC) (1)(4)21333 Haggerty Rd. Suite100Novi, MI 48375KS Management Services, Healthcare First lien L + 4.25% 1/9/2026 0.0 % 123,750 122,422 123,751L.L.C.(1)(2) providers senior2727 West Holcombe and services secured loanBoulevardHouston, TX 77025KWOR Acquisition, Inc. Insurance First lien L + 4.00% 6/3/2026 0.0 % 20,312 19,780 19,804(dba Worley Claims seniorServices)(1)(2) secured loanPost Office Box 249Hammond, LA 70404KWOR Acquisition, Inc. Insurance First lien L + 4.00%
6/3/2021 0.0 % - (52 ) (52 )(dba Worley Claims seniorServices)(1)(12) securedPost Office Box 249 delayed drawHammond, LA 70404 term loanKWOR Acquisition, Inc. Insurance First lien L + 4.00% 6/3/2024 0.0 % - (80 ) (130 )(dba Worley Claims seniorServices)(1)(12) securedPost Office Box 249 revolvingHammond, LA 70404 loanKWOR Acquisition, Inc. Insurance Second lien L + 7.75% 12/3/2026 0.0 % 49,600 48,976 48,732(dba Worley Claims seniorServices)(1)(2) secured loanPost Office Box 249Hammond, LA 70404 103
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Dissolution Diluted Number of AmortizedCompany Industry Investment Interest Rate Date Basis Units Cost Fair ValueLazer Spot G B Holdings, Transportation First lien L + 5.75% 12/9/2025 0.0 % 145,530 143,377 144,439Inc.(1)(4) senior 6525 Shiloh Rd #900 secured loanAlpharetta, GA 30005Lazer Spot G B Holdings, Transportation First lien L + 5.75% 12/9/2025 0.0 % - (381 ) (201 )Inc.(1)(12) senior6525 Shiloh Rd #900 securedAlpharetta, GA 30005 revolving loanLearning Care Group (US) Education Second lien L + 7.50% 3/13/2026 0.0 % 26,967 26,606 23,731No. 2 Inc.(1)(5) senior21333 Haggerty Rd., Suite secured loan100Novi, MI 48375Liberty Oilfield Services Energy First lien L + 7.63% 9/19/2022 0.0 % 13,759 13,661 13,587LLC(1)(2) equipment and senior950 17th Street, Suite services secured loan2000, 20th FloorDenver, CO 80202Lightning Midco, LLC (dba Internet First lien L + 5.50% 11/21/2025 0.0 % 138,905 137,883 138,209Vector Solutions)(1)(5) software and senior4890 W. Kennedy Blvd, Suite services secured loan300Tampa, FL 33609Lightning Midco, LLC (dba Internet First lien L + 5.50% 11/21/2023 0.0 % 4,409 4,332 4,343Vector Solutions)(1)(5)(12) software and senior4890 W. Kennedy Blvd, Suite services secured300 revolvingTampa, FL 33609 loanLineStar Integrity Services Infrastructure First lien L + 7.25%
2/12/2024 0.0 % 88,851 87,950 78,189LLC(1)(5) and senior5391 Bay Oaks Dr. environmental secured loanPasadena, TX 77505 servicesLitera Bidco LLC(1)(2) Internet First lien L + 5.43% 5/29/2026 0.0 % 84,186 83,185 83,766
services secured loan
5/30/2025 0.0 % - (56 ) (29 )300 S Riverside Plaza #800 software and seniorChicago, IL 60606 services secured revolving loanLytx, Inc.(1)(2) Transportation First lien L + 6.00% 2/28/2026 0.0 % 53,614 52,804 52,6759785 Towne Centre Drive seniorSan Diego, CA 92121 secured loanLytx, Inc.(1)(2)(12) Transportation First lien L + 6.00% 2/28/2022 0.0 % 4,662 4,524 4,3349785 Towne Centre Drive seniorSan Diego, CA 92121 secured delayed draw term loanManna Development Group, Food and First lien L + 6.75% 10/24/2022 0.0 % 52,764 52,426 49,598LLC(1)(2) beverage senior2339 11th Street secured loanEncinitas, CA 92024Manna Development Group, Food and First lien L + 6.75% 10/24/2022 0.0 % 3,183 3,132 2,992LLC(1)(2) beverage senior2339 11th Street securedEncinitas, CA 92024 revolving loan 104
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest Dissolution Diluted Number of AmortizedCompany Industry Investment Rate Date Basis Units Cost Fair ValueMavis Tire Express Automotive First lien L + 3/20/2025 0.0 % 864 813 847Services Corp.(1)(4) senior 3.25%358 Saw Mill River Road, secured loanSuite 17Millwood, NY 10546Mavis Tire Express Automotive Second lien L + 3/20/2026 0.0 % 179,905 177,149 176,776Services Corp.(1)(4) senior 7.57%358 Saw Mill River Road, secured loanSuite 17Millwood, NY 10546Mavis Tire Express Automotive Second lien L + 3/20/2021 0.0 % - - (48 )Services Corp.(1)(12) senior 8.00%358 Saw Mill River Road, securedSuite 17 delayed drawMillwood, NY 10546 term loanMHE Intermediate Holdings, Manufacturing First lien L + 3/8/2024 0.0 % 23,726 23,571 23,014LLC (dba Material Handling senior 5.00%Services)(1)(4) secured loan3201 Levis Commons Blvd Perrysburg, OH 43551MINDBODY, Inc.(1)(5) Internet First lien L + 2/14/2025 0.0 % 58,187 57,761 53,532651 Tank Farm Road software and senior 8.50%San Luis Obispo, CA services secured loan (incl. 1.50% PIK)MINDBODY, Inc.(1)(5)(12) Internet First lien L + 2/14/2025 0.0 % - (42 ) (486 )651 Tank Farm Road software and senior 7.00%San Luis Obispo, CA services secured revolving loanWindows Entities Manufacturing LLC Units N/A N/A 22.5 % 31,822 58,495 72,5386201 E 43rd StTulsa, OK 74135Motus, LLC and Runzheimer Transportation First lien L + 1/17/2024 0.0 % 59,282 58,430 59,282International LLC(1)(4) senior 6.36%Two Financial Center secured loan60 South Street,Boston, MA 02111Nelipak Holding Healthcare First lien L + 7/2/2026 0.0 % 47,521 46,742 46,333Company(1)(5) equipment and senior 4.25%21 Amflex Drive services secured loanCranston, RI , 02921,USA Nelipak Holding Healthcare First lien L + 7/2/2024 0.0 % 4,422 4,319 4,238Company(1)(4)(12) equipment and senior 4.25%21 Amflex Drive services securedCranston, RI, 02921, USA revolving loanNelipak Holding Healthcare First lien E + 7/2/2024 0.0 % 492 147 290Company(1)(8)(12) equipment and senior 4.50%21 Amflex Drive services securedCranston, RI, 02921, USA revolving loanNelipak Holding Healthcare Second lien L + 7/2/2027 0.0 % 67,006 66,135 65,331Company(1)(5) equipment and senior 8.25%21 Amflex Drive services secured loanCranston, RI , 02921,USA 105
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Percentage of Class Held on a Principal Maturity / Fully Number of($ in thousands) Type of
Dissolution Diluted Shares / Number
Industry Investment Interest Rate Date Basis of Units Cost Fair ValueNelipak Holding Healthcare Second lien E + 8.50% 7/2/2027 0.0 % 73,536 66,385 70,595Company(1)(8) equipment and senior21 Amflex Drive services secured loanCranston, RI , 02921,USA Nellson Nutraceutical, Food and beverage First lien L + 5.25% 12/23/2023 0.0 % 27,498 26,480 26,536LLC(1)(4) senior5115 E. La Palma Ave. secured loanAnaheim, CA 92807NMI Acquisitionco, Inc. Financial services First lien L + 5.00% 9/6/2022 0.0 % 27,904 27,640 27,625(dba Network seniorMerchants)(1)(2) secured loan201 Main St.Roselle, IL 60172NMI Acquisitionco, Inc. Financial services First lien L + 5.00% 9/6/2022 0.0 % - (6 ) (6 )(dba Network seniorMerchants)(1)(12) secured201 Main St. revolvingRoselle, IL 60172 loanNorvax, LLC (dba Insurance First lien L + 6.50% 9/15/2025 0.0 % 199,357 195,089 199,856GoHealth)(1)(4) senior214 West Huron St. secured loanChicago, IL 60654Norvax, LLC (dba Insurance First lien L + 6.50% 9/13/2024 0.0 % - (136 ) -GoHealth)(1)(12) senior214 West Huron St. securedChicago, IL 60654 revolving loanNorvax, LLC (dba GoHealth) Insurance Common Stock N/A N/A 0.45 % 1,439,481 7,315
19,275
214 West Huron St. Chicago, IL 60654Nutraceutical International Food and beverage First lien L + 7.00% 9/30/2026 0.0 % 217,255 214,110 215,083Corporation(1)(2) senior1777 Sun Peak Drive secured loanPark City, UT 84098Nutraceutical International Food and beverage First lien L + 7.00% 9/30/2025 0.0 % - (193 ) (136 )Corporation(1)(12) senior1777 Sun Peak Drive securedPark City, UT 84098 revolving loanOffen, Inc.(1)(2) Distribution First lien L + 5.00% 6/22/2026 0.0 % 19,780 19,620 19,2855100 East 78th Avenue seniorCommerce City, CO 80022 secured loanPackaging Coordinators Healthcare Second lien L + 8.25% 11/30/2028 0.0 % 195,044 191,173 191,143Midco, Inc.(1)(5) equipment and senior3001 Red Lion Road services secured loanPhiladelphia, PA 19114KPCI Holdings, LP Healthcare LP Interest N/A N/A 2.7 % 25,285 25,285 25,2853001 Red Lion Road equipment andPhiladelphia, PA 19114 servicesPark Place Technologies, Telecommunications First lien L + 5.00% 11/10/2027 0.0 % 9,000 8,646 8,640LLC(1)(2) senior5910 Landerbrook Drive secured loanCleveland, OH 44124 106
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of
Dissolution Diluted Number of
Industry Investment Interest Rate Date Basis Units Cost Fair
Value
3/31/2026 0.0 % 123,891 122,224 123,891Insurance Services, seniorLLC(1)(5) secured loan6200 Canoga Avenue , Suite325Woodland Hills, CA 91367Peter C. Foy & Associated Insurance First lien L + 6.25% 9/30/2021 0.0 % 12,044 11,636 12,044Insurance Services, seniorLLC(1)(4)(12) secured6200 Canoga Avenue, Suite delayed draw325 term loanWoodland Hills, CA 91367Peter C. Foy & Associated Insurance First lien L + 6.25%
3/31/2026 0.0 % 2,531 2,414 2,531Insurance Services, seniorLLC(1)(5)(12) secured6200 Canoga Avenue, Suite revolving325 loanWoodland Hills, CA 91367PHM Netherlands Midco B.V. Manufacturing First lien L + 4.50% 7/31/2026 0.0 % 794 737 780(dba Loparex)(1)(4) senior1255 Crescent Green Suite secured loan400Cary, NC 27518PHM Netherlands Midco B.V. Manufacturing Second lien L + 8.75% 8/2/2027 0.0 % 112,000 105,126 106,960(dba Loparex)(1)(4) senior1255 Crescent Green Suite secured loan400Cary, NC 27518Pregis Topco LLC(1)(2) Containers First lien L + 3.75% 7/31/2026 0.0 % 863 819
859
secured loanDeerfield, IL 60015 USAPregis Topco LLC(1)(2) Containers Second lien L + 7.75% 7/30/2027 0.0 % 215,033 211,223
213,959
secured loanDeerfield, IL 60015 USAPremier Imaging, LLC (dba Healthcare First lien L + 5.50% 1/2/2025 0.0 % 33,320 32,851 32,737LucidHealth)(1)(2) providers and senior100 E. Campus View Blvd., services secured loanSuite 100Columbus, Ohio 43235Professional Plumbing Manufacturing First lien L + 6.75% 4/16/2024 0.0 % 51,681 51,210 49,873Group, Inc.(1)(4) senior2951 E HWY 501 secured loanConway, SC 29526Professional Plumbing Manufacturing First lien L + 6.75% 4/16/2023 0.0 % 6,643 6,582 6,209Group, Inc.(1)(4)(12) senior2951 E HWY 501 securedConway, SC 29526 revolving loan
5/14/2026 0.0 % 45,553 45,039 45,097(dba PEC-Veriforce)(1)(4) senior233 General Patton Ave. secured loanMandeville, LA 70471 107
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest
Dissolution Diluted Number of
Industry Investment Rate Date Basis Units Cost Fair ValueProject Power Buyer, LLC Oil and gas First lien L + 5/14/2025 0.0 % - (29 ) (32 )(dba PEC-Veriforce)(1)(12) senior 6.25%233 General Patton Ave. securedMandeville, LA 70471 revolving loan
Project Ruby Ultimate Healthcare First lien L +
0.0 % 2,906 2,863 2,863Parent Corp.(1)(2) technology senior 4.25%11300 Switzer Road secured loan
0.0 % 9,457 9,268 9,268Parent Corp.(1)(2) technology senior 8.25%11300 Switzer Road secured loanOverland Park, KS 66210QC Supply, LLC(1)(2) Distribution First lien L + 12/29/2022 0.0 % 34,568 34,248 29,037574 Road 11 senior 7.00%Schuyler, NE 68661 secured loan (incl. 1.00% PIK)QC Supply, LLC(1)(2)(12) Distribution First lien L + 12/29/2021 0.0 % 4,336 4,311 3,541574 Road 11 senior 7.00%Schuyler, NE 68661 secured revolving loanRecipe Acquisition Corp. Food and Second lien L + 12/1/2022 0.0 % 32,000 31,771 26,560(dba Roland beverage senior 9.00%Corporation)(1)(4) secured loan71 West 23rd StreetNew York, NY 10010Reef (fka Cheese Buildings and First lien L + 11/28/2024 0.0 % 134,253 132,953 128,212Acquisition, LLC)(1)(5) real estate senior 5.75%233 Peachtree Street NE secured loan (incl.Harris Tower, Suite 2600 1.00%Atlanta, GA 30303 PIK)Imperial Parking Buildings and First lien C + 11/28/2024 0.0 % 27,749 26,561 26,501Canada(1)(7) real estate senior 6.25%233 Peachtree Street NE secured loan (incl.Harris Tower, Suite 2600 1.25%Atlanta, GA 30303 PIK)Reef (fka Cheese Buildings and First lien L + 11/28/2023 0.0 % 10,987 10,893 10,251Acquisition, real estate senior 4.75%LLC)(1)(2)(12) secured233 Peachtree Street NE revolvingHarris Tower, Suite 2600 loan
0.0 % 89,872 88,536 88,524Inc.(1)(4) providers and senior 6.50%320 1st Street North, services secured loanSuite 712Jacksonville Beach, FL 32250Refresh Parent Holdings, Healthcare First lien L + 6/9/2022 0.0 % - (73 ) (74 )Inc.(1)(12) providers and senior 6.50%320 1st Street North, services securedSuite 712 delayed drawJacksonville Beach, FL term loan32250
0.0 % 3,060 2,900 2,899Inc.(1)(4)(12) providers and senior 6.50%320 1st Street North, services securedSuite 712 revolvingJacksonville Beach, FL loan32250 108
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Dissolution Diluted Number of AmortizedCompany Industry Investment Interest Rate Date Basis Units Cost Fair ValueRestore OMH Intermediate Healthcare Senior N/A N/A 4.6 % 2,284 22,163 22,157Holdings, Inc. providers and Preferred320 1st Street North, services StockSuite 712Jacksonville Beach, FL 32250RSC Acquisition, Inc (dba Insurance First lien L + 5.50% 10/30/2026 0.0 % 53,649 52,845 52,441Risk Strategies)(1)(4) senior160 Federal Street, 4th secured loanFloorBoston, Massachusetts 02110RSC Acquisition, Inc (dba Insurance First lien L + 5.50% 10/30/2026 0.0 % - (28 ) (38 )Risk Strategies)(1)(12) senior160 Federal Street, 4th securedFloor revolvingBoston, Massachusetts loan02110Safety Products/JHC Manufacturing First lien L + 4.50% 6/28/2026 0.0 % 13,345 13,237 12,110Acquisition Corp. (dba seniorJustrite Safety secured loanGroup)(1)(2)3921 DeWitt AveMattoon, IL 61938 U.S.A.Safety Products/JHC Manufacturing First lien L + 4.50% 6/28/2021 0.0 % 721 708 569Acquisition Corp. (dba seniorJustrite Safety securedGroup)(1)(2)(12) delayed draw3921 DeWitt Ave term loanMattoon, IL 61938 U.S.A.Sara Lee Frozen Bakery, Food and First lien L + 4.50% 7/30/2025 0.0 % 44,313 43,705 42,430LLC (fka KSLB Holdings, beverage seniorLLC)(1)(2) secured loan3500 Lacey RdDowners Grove, IL 60515Sara Lee Frozen Bakery, Food and First lien L + 4.50% 7/30/2023 0.0 % 4,560 4,456 4,178LLC (fka KSLB Holdings, beverage seniorLLC)(1)(2)(12) secured3500 Lacey Rd revolvingDowners Grove, IL 60515 loanSebago Lake LLC(13) Investment LLC Interest N/A N/A 50.0 % 107,837 107,837 105,546399 Park Avenue, 38th funds andFloor vehiclesNew York, NY 10022Severin Acquisition, LLC Education Second lien L + 6.75% 8/3/2026 0.0 % 112,000 111,259 109,480(dba PowerSchool)(1)(2) senior150 Parkshore Dr. secured loanFolsom, CA 95630Shearer's Foods, LLC(1)(4) Food and Second lien L + 7.75% 9/22/2028 0.0 % 120,000 118,829 119,400100 Lincoln Way East beverage seniorMassillon, Ohio 44646 secured loanSonny's Enterprises, Manufacturing First lien L + 7.00% 8/5/2026 0.0 % 226,625 222,327 223,225LLC(1)(2) senior5605 Hiatus Road secured loanTamarac, FL 33321Sonny's Enterprises, Manufacturing First lien L + 7.00% 8/5/2025 0.0 % - (330 ) (270 )LLC(1)(12) senior5605 Hiatus Road securedTamarac, FL 33321 revolving loan 109
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Percentage of Class Held on a Maturity / Fully Principal Number($ in thousands) Type of Dissolution Diluted of Shares /Company Industry Investment Interest Rate
Date Basis Number of Units Amortized Cost
0.0 % 40,385 39,458
39,981
Abingdon Science Park software and seniorAbingdon OX14 3YP United services secured loanKingdomSwipe Acquisition Advertising First lien L + 8.00% 6/29/2024 0.0 % 50,045 49,050 49,044Corporation (dba and media seniorPLI)(1)(4)(13) secured loan1220 Trade DriveNorth Las Vegas, NV 89030Swipe Acquisition Advertising First lien L + 8.00% 12/31/2021 0.0 % 2,669 2,669 2,246Corporation (dba and media seniorPLI)(1)(3)(12)(13) secured1220 Trade Drive delayed drawNorth Las Vegas, NV 89030 term loanSwipe Acquisition Advertising Letter of L + 8.00% 6/29/2024 0.0 % - 4 -Corporation (dba and media CreditPLI)(1)(12)(13)1220 Trade DriveNorth Las Vegas, NV 89030New PLI Holdings, LLC(13) Advertising Class A N/A N/A 0.0 % 86,745 48,007
48,007
1220 Trade Drive and media Common UnitsNorth Las Vegas, NV 89030Tall Tree Foods, Food and First lien L + 7.25% 8/12/2022 0.0 % 48,284 48,103 47,438Inc.(1)(2) beverage senior1190 West Loop South secured loan
0.0 % 83,324 82,427 83,324TrialCard)(1)(4) providers senior2250 Perimeter Park Dr and services secured loan#300,Morrisville, NC 27560TC Holdings, LLC (dba Healthcare First lien L + 4.50% 11/14/2022 0.0 % - (58 ) -TrialCard)(1)(12) providers senior2250 Perimeter Park Dr and services secured#300, revolvingMorrisville, NC 27560 loanThe Ultimate Software Human Second lien L + 6.75% 5/3/2027 0.0 % 1,592 1,578 1,624Group, Inc.(1)(4) resource senior2000 Ultimate Way support secured loanWeston, FL 33326 servicesTHG Acquisition, LLC (dba Insurance First lien L + 5.89% 12/2/2026 0.0 % 81,921 80,061 80,246Hilb)(1)(6) senior6802 Paragon Place, Suite secured loan200Richmond, Virginia 23230THG Acquisition, LLC (dba Insurance First lien L + 5.78% 12/2/2021 0.0 % 17,938 17,082 17,452Hilb)(1)(4)(12) senior6802 Paragon Place, Suite secured200 delayed drawRichmond, Virginia 23230 term loanTHG Acquisition, LLC (dba Insurance First lien L + 5.75% 12/2/2025 0.0 % - (189 ) (193 )Hilb)(1)(12) senior6802 Paragon Place, Suite secured200 revolvingRichmond, Virginia 23230 loan 110
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Interest Dissolution Diluted Number of AmortizedCompany Industry Investment Rate Date Basis Units Cost Fair Value
0.0 % 132,566 131,507 131,240(fka Dominion Web software and senior 6.25%Solutions, LLC)(1)(4) services secured loan150 Granby Street Norfolk, VA 23510-1604Trader Interactive, LLC Internet First lien L + 6/15/2023 0.0 % 1,916 1,876
1,852
(fka Dominion Web software and senior 6.25%
revolvingNorfolk, VA 23510-1604 loan
0.0 % 219,112 216,856
218,564
15044 N. Scottsdale Road, entertainment senior 5.50%Suite 300 secured term (TLA: LScottsdale, AZ 85254 loan A and B + 3.5%; TLB: L + 5.98%)Troon Golf, Leisure and First lien L + 3/29/2025 0.0 % - (99 ) (36 )L.L.C.(1)(8)(12) entertainment senior 5.50%15044 N. Scottsdale Road, securedSuite 300 revolvingScottsdale, AZ 85254 loanTSB Purchaser, Inc. (dba Education First lien L + 5/14/2024 0.0 % 61,581 60,634 61,120Teaching Strategies, senior 6.00%Inc.)(1)(4) secured loan4500 East-West Highway Suite 300Bethesda, MD 20814TSB Purchaser, Inc. (dba Education First lien L + 5/14/2024 0.0 % - (59 ) (32 )Teaching Strategies, senior 6.00%Inc.)(1)(12) secured4500 East-West Highway revolvingSuite 300 loan
0.0 % 26,460 26,043 26,064Midco, LLC(1)(2) beverage senior 4.00%828 Kasota Ave SE secured loan
0.0 % 445 385 368Midco, LLC(1)(2)(12) beverage senior 4.00%828 Kasota Ave SE securedMinneapolis, MN 55414 revolving loanValence Surface Aerospace and First lien L + 6/28/2025 0.0 % 98,500 97,340
90,129
secured loanSte. 300The Woodlands, TX 77380Valence Surface Aerospace and First lien L + 6/28/2021 0.0 % 23,820 23,515 21,285Technologies defense senior 5.75%LLC(1)(4)(12) secured1790 Hughes Landing Blvd delayed drawSte. 300 term loanThe Woodlands, TX 77380 111
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Percentage of Class Principal Held on a Number of Maturity / Fully Shares /($ in thousands) Type of Dissolution Diluted Number of AmortizedCompany Industry Investment Interest Rate Date Basis Units Cost Fair ValueValence Surface Aerospace First lien L + 5.75% 6/28/2025 0.0 % - (112 ) (850 )Technologies LLC(1)(12) and defense senior1790 Hughes Landing Blvd securedSte. 300 revolvingThe Woodlands, TX 77380 loan
Velocity Commercial Buildings First lien L + 7.50%
0.0 % 63,980 63,369 63,181Capital, LLC(1)(4) and real seniorRussell Ranch Rd. Suite estate secured295 loanWestlake Village ,CA 91362Vestcom Parent Holdings, Business Second lien L + 8.00% 12/19/2024 0.0 % 78,987 78,321
78,987
Inc.(1)(2) services senior2800 Cantrell Rd #500 securedLittle Rock, AR 72202 loanWingspire Capital Financial LLC N/A N/A 75.0 % 67,538 67,538 67,538Holdings LLC(12)(13) services Interest8000 Avalon Blvd. , Suite100Alpharetta, GA 30009WU Holdco, Inc. (dba Consumer First lien L + 5.25% 3/26/2026 0.0 % 158,495 155,981 157,702Weiman Products, products seniorLLC)(1)(4) secured705 Tri State Pkwy loan
0.0 % 3,182 2,986 3,112Weiman Products, products seniorLLC)(1)(4)(12) secured705 Tri State Pkwy revolvingGurnee, IL 60031 loanZenith Energy U.S. Oil and gas First lien L + 6.50% 12/20/2024 0.0 % 95,365 93,991 94,410Logistics Holdings, LLC senior(1)(4) secured3900 Essex Lane Suite loan950Houston, TX 77027________________
(1) Loan contains a variable rate structure and may be subject to an interest
rate floor. Variable rate loans bear interest at a rate that may be
determined by reference to either the London Interbank Offered Rate
("LIBOR" or "L") (which can include one-, two-, three- or six-month LIBOR)
or an alternate base rate (which can include the Federal Funds Effective
Rate or the Prime Rate), at the borrower's option, and which reset periodically based on the terms of the loan agreement.
(2) The interest rate on these loans is subject to 1 month LIBOR, which as of
(3) The interest rate on these loans is subject to 2 month LIBOR, which as of
(4) The interest rate on these loans is subject to 3 month LIBOR, which as of
(5) The interest rate on these loans is subject to 6 month LIBOR, which as of
(6) The interest rate on these loans is subject to 12 month LIBOR, which as of
December 31, 2020 was 0.34%. (7) The interest rate on this loan is subject to 6 month Canadian Dollar
Offered Rate ("CDOR" or "C"), which as of
(8) The interest rate on these loans is subject to Prime, which as ofDecember 31, 2020 was 3.25%.
(9) The interest rate on these loans is subject to 3 month EURIBOR, which as of
(10) The interest rate on these loans is subject to 6 month EURIBOR, which as
of
(11) The interest rate on this loan is subject to 6 month GBPLIBOR, which as
of was 0.03%.
(12) Position or portion thereof is an unfunded loan commitment. See "ITEM 15.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Note 7. Commitments and Contingencies." (13) As defined in the 1940 Act, the Company is deemed to be both an
"Affiliated Person" and has "Control" of this portfolio company as the
Company owns more than 25% of the portfolio company's outstanding voting
securities or has the power to exercise control over management or
policies of such portfolio company (including through a management
agreement). Other than for purposes of the 1940 Act, the Company does not
believe that it has control over this portfolio company. 112
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Sebago Lake, aDelaware limited liability company, was formed as a joint venturebetween us and The Regents of theUniversity of California ("Regents") andcommenced operations onJune 20, 2017 . Sebago Lake's principal purpose is tomake investments, primarily in senior secured loans that are made tomiddle-market companies or in broadly syndicated loans. Both we and Regents (the"Members") have a 50% economic ownership inSebago Lake . Except under certaincirc*mstances, contributions to Sebago Lake cannot be redeemed. Each of theMembers initially agreed to contribute up to$100 million to Sebago Lake. OnJuly 26, 2018 , each of the Members increased their contribution to Sebago Lakeup to an aggregate of$125 million . As ofDecember 31, 2020 , each Member hasfunded$107.8 million of their respective$125 million commitments. Sebago Lakeis managed by the Members, each of which have equal voting rights. Investmentdecisions must be approved by each of the Members.We have determined that Sebago Lake is an investment company under AccountingStandards Codification ("ASC") 946, however, in accordance with such guidance,we will generally not consolidate our investment in a company other than awholly owned investment company subsidiary or a controlled operating companywhose business consists of providing services to us. Accordingly, we do notconsolidate our non-controlling interest inSebago Lake .As ofDecember 31, 2020 andDecember 31, 2019 , Sebago Lake had total investmentsin senior secured debt at fair value of$554.7 million and$478.5 million ,respectively. The determination of fair value is in accordance withFinancialAccounting Standards Board ("FASB") Accounting Standards Codification 820, FairValue Measurements ("ASC 820"), as amended; however, such fair value is notincluded in our Board's valuation process. The following table is a summary ofSebago Lake's portfolio as well as a listing of the portfolio investments inSebago Lake's portfolio as ofDecember 31, 2020 andDecember 31, 2019 :($ in thousands) December 31, 2020 December 31, 2019Total senior secured debt investments(1) $ 563,555 $
484,439
Weighted average spread over LIBOR(1) 4.45 % 4.56 %Number of portfolio companies 17 16Largest funded investment to a singleborrower(1) $ 49,625 $ 50,000________________ (1) At par. 113
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Sebago Lake's Portfolio as of December 31, 2020 ($ in thousands) Amortized Percentage ofCompany(1)(2)(4)(5) Investment Interest Maturity Date Par / Units Cost(3) Fair Value Members' EquityDebt InvestmentsAerospace and defenseApplied Composites First lien senior L + 5.25% 12/21/2023$ 34,829 $ 34,455 $ 34,671 16.4 %Holdings, LLC (fka AC&A secured loanEnterprises Holdings ,LLC)(7)Applied Composites First lien senior L + 5.25% 12/21/2022 3,000 2,977 2,986 1.4 %Holdings, LLC (fka AC&A secured revolvingEnterprises Holdings, loanLLC)(7)(14)Bleriot US Bidco First lien senior L + 4.75% 10/30/2026 14,888 14,762 14,827 6.9 %Inc.(7)(10) secured loanDynasty Acquisition First lien senior L + 3.50% 4/4/2026 39,500 39,345 35,826 17.0 %Co., Inc. (dba secured loanStandardAeroLimited)(7) 92,217 91,539 88,310 41.7 %Business ServicesVistage Worldwide, First lien senior L + 4.00% 2/10/2025 16,584 16,513 16,418 7.8 %Inc.(7) secured loanDistributionDealer Tire, LLC First lien senior L + 4.25% 12/12/2025 36,630 36,449 36,293 17.2 %(6)(10) secured loanEducation
34,212 34,140 32,456 15.4 %Inc. (fka SSH Group secured loanHoldings, Inc. )(7)Food and beverageDecoPac, Inc.(7) First lien senior L + 4.25% 9/30/2024 20,561 20,503 20,561 9.7 % secured loanDecoPac, First lien senior L + 4.25% 9/29/2023 - (8 ) (55 ) - %Inc.(11)(12)(14) secured revolving loanFQSR, LLC (dba KBP First lien senior L + 5.00% 5/15/2023 24,259 24,086 24,213 11.5 %Investments)(7) secured loanFQSR, LLC (dba KBP First lien senior L + 5.00% 9/10/2021 17,987 17,778 17,943 8.5 %
Investments)(8)(11)(13) secured delayed draw
term loanSovos Brands First lien senior L + 4.75% 11/20/2025 44,100 43,780 44,100 20.9 %Intermediate, Inc.(7) secured loan 106,907 106,139 106,762 50.6 %Healthcare equipmentand servicesCadence, Inc.(6) First lien senior L + 4.50% 5/21/2025 26,990 26,543 26,446 12.5 % secured loanCadence, First lien senior P + 3.50% 5/21/2025 2,936 2,848 2,788 1.3 %Inc.(9)(11)(14) secured revolving loan 29,926 29,391 29,234 13.8 %Healthcare technologyVVC Holdings Corp. (dba First lien senior L + 4.50% 2/11/2026 17,309 17,041 17,262 8.2 %
Athenahealth, secured loanInc.)(6)(10)Infrastructure andenvironmental servicesCHA Holding, Inc.(7) First lien senior L + 4.50% 4/10/2025
41,145 40,861 40,857 19.4 % secured loan
Insurance
30,055 29,987 30,014 14.2 % secured loanIntegro Parent First lien senior L + 4.50% 4/30/2022 - (7 ) (28 ) - %Inc.(11)(12)(14) secured revolving loanUSRP Holdings, Inc. First lien senior L + 4.25% 3/29/2025 40,149 39,502 39,446 18.7 %(dba U.S. Retirement secured loanand BenefitsPartners)(8) 114
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Sebago Lake's Portfolio as of December 31, 2020 ($ in thousands) Amortized Percentage ofCompany(1)(2)(4)(5) Investment Interest Maturity Date Par / Units Cost(3) Fair Value Members' EquityUSRP Holdings, Inc. First lien senior L + 4.25% 3/29/2024 - (84 ) (131 ) (0.1 ) %(dba U.S. Retirement secured revolvingand Benefits loanPartners)(11)(12)(14) 70,204 69,398 69,301 32.8 %Internet software andservicesDCert Buyer, Inc. (dba First lien senior L + 4.00% 10/16/2026 49,625 49,466 49,511 23.5 %DigiCert)(6)(10) secured loanManufacturingEngineered Machinery First lien senior L + 4.25% 7/19/2024 44,397 44,071 43,841 20.8 %Holdings (dba secured loanDuravant)(7)TransportationUber Technologies, First lien senior L + 4.00% 4/4/2025 24,399 24,290 24,465 11.6 %Inc.(6)(10) secured loan
Total Debt Investments 563,555 559,298 554,710 262.8 %Total Investments$ 563,555 $ 559,298 $ 554,710 262.8 %________________
(1) Certain portfolio company investments are subject to contractual restrictions on sales. (2) Unless otherwise indicated, Sebago Lake's investments are pledged as
collateral supporting the amounts outstanding under Sebago Lake's credit
facility. (3) The amortized cost represents the original cost adjusted for the
amortization of discounts and premiums, as applicable, on debt investments
using the effective interest method. (4) Unless otherwise indicated, all investments are considered Level 3 investments.
(5) Unless otherwise indicated, loan contains a variable rate structure, and
may be subject to an interest rate floor. Variable rate loans bear interest
at a rate that may be determined by reference to either the
Interbank Offered Rate ("LIBOR" or "L") (which can include one-, two-,
three- or six-month LIBOR) or an alternate base rate (which can include the
Federal Funds Effective Rate or the Prime Rate), at the borrower's option,
and which reset periodically based on the terms of the loan agreement.
(6) The interest rate on these loans is subject to 1 month LIBOR, which as of
(7) The interest rate on these loans is subject to 3 month LIBOR, which as of
(8) The interest rate on these loans is subject to 6 month LIBOR, which as of
December 31, 2020 was 0.26%. (9) The interest rate on these loans is subject to Prime, which as ofDecember 31, 2020 was 3.25%. (10) Level 2 investment. (11) Position or portion thereof is an unfunded loan commitment.
(12) The negative cost is the result of the capitalized discount being greater
than the principal amount outstanding on the loan. The negative fair value
is the result of the capitalized discount on the loan.
(13) The date disclosed represents the commitment period of the unfunded term
loan. Upon expiration of the commitment period, the funded portion of the
term loan may be subject to a longer maturity date. (14) Investment is not pledged as collateral under Sebago Lake's credit facility. 115
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Sebago Lake's Portfolio as of December 31, 2019 ($ in thousands) Amortized Percentage ofCompany(1)(2)(4)(5) Investment Interest Maturity Date Par / Units Cost(3) Fair Value Members' EquityDebt InvestmentsAerospace and defenseApplied Composites First lien senior L + 5.25% 12/21/2023$ 35,188 $ 34,690 $ 34,805 19.8 %Holdings, LLC (fka secured loanAC&A Enterprises Holdings, LLC)(7)Applied Composites First lien senior L + 5.25% 12/21/2022 - (36 ) (31 ) - %Holdings, LLC (fka secured revolvingAC&A Enterprises loanHoldings,LLC)(9)(10)(12)Bleriot US Bidco First lien senior L + 4.75% 10/31/2026 12,973 12,844 12,843 7.3 %Inc.(7) secured term loanBleriot US Bidco First lien senior L + 4.75% 10/31/2020 - (20 ) (20 ) - %Inc.(9)(10)(11)(12) secured delayed draw term loanDynasty Acquisition First lien senior L + 4.00% 4/4/2026
39,900 39,717 39,707 22.6 %Co., Inc. (dba secured loanStandardAeroLimited)(7) 88,061 87,195 87,304 49.7 %EducationSpring Education First lien senior L + 4.25% 7/30/2025 34,562 34,475 34,488 19.5 %Group, Inc. (fka SSH secured loanGroup Holdings,Inc.)(7)Food and beverageDecoPac, Inc.(7) First lien senior L + 4.25% 9/30/2024 20,561 20,489 20,561 11.7 % secured loanDecoPac, First lien senior L + 4.25% 9/29/2023 - (11 ) - - %Inc.(9)(10)(12) secured revolving loanFQSR, LLC (dba KBP First lien senior L + 5.50% 5/14/2023 24,507 24,246 24,236 13.7 %Investments)(7) secured loanFQSR, LLC (dba KBP First lien senior L + 5.50% 9/10/2021 8,373 8,075 8,115 4.6 %
Investments)(7)(9)(11) secured delayed draw
term loanGive & Go Prepared First lien senior L + 4.25% 7/29/2023 24,438 24,398 23,093 13.0 %Foods Corp.(7) secured loanSovos Brands First lien senior L + 5.00% 11/20/2025 44,550 44,171 44,143 25.1 %
122,429 121,368 120,148 68.1 %Healthcare equipmentand servicesCadence, Inc.(6) First lien senior L + 4.50% 5/21/2025 27,266 26,727 26,749 15.2 % secured loanCadence, First lien senior L + 4.50% 5/21/2025 - (124 ) (139 ) (0.1 ) %Inc.(9)(10)(12) secured revolving loan 27,266 26,603 26,610 15.1 %Healthcare technologyVVC Holdings Corp. First lien senior L + 4.50% 2/11/2026 19,850 19,491 19,925 11.3 %(dba Athenahealth, secured loanInc.)(7)(8)Infrastructure andenvironmental servicesCHA Holding, Inc.(7) First lien senior L + 4.50% 4/10/2025 29,816 29,709 29,694 16.8 % secured loan
Insurance
30,520 30,416 30,224 17.2 % secured loanIntegro Parent First lien senior L + 4.50% 10/30/2021 - (16 ) (54 ) - %Inc.(9)(10)(12) secured revolving loanUSRP Holdings, Inc. First lien senior L + 4.25% 3/29/2025 34,475 33,800 33,406 19.0 %(dba U.S. Retirement secured loanand BenefitsPartners)(7) 116
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Sebago Lake's Portfolio as of December 31, 2019 ($ in thousands) Amortized Percentage ofCompany(1)(2)(4)(5) Investment Interest Maturity Date
Par / Units Cost(3) Fair Value
1,875 1,754 1,690 1.0 %(dba U.S. Retirement secured revolvingand Benefits loan
Partners)(7)(9)(12)
6,085 5,923 5,817 3.3 %(dba U.S. Retirement secured delayed drawand Benefits term loan
Partners)(7)(9)(11)
72,955 71,877 71,083 40.5 %Internet software andservicesDCert Buyer, Inc.(6) First lien senior L + 4.00% 10/16/2026 50,000 49,816 49,878 28.3 % secured loan
Manufacturing
14,850 14,596 14,801 8.3 %Holdings(7)(8) secured loanTransportationUber Technologies, First lien senior L + 4.00% 4/4/2025 24,650 24,517 24,578 14.0 %Inc.(6)(8) secured loan
Total Debt Investments 484,439 479,647 478,509 271.6 %Total Investments$ 484,439 $ 479,647 $ 478,509 271.6 %________________
(1) Certain portfolio company investments are subject to contractual restrictions on sales. (2) Unless otherwise indicated, Sebago Lake's investments are pledged as
collateral supporting the amounts outstanding under Sebago Lake's credit
facility. (3) The amortized cost represents the original cost adjusted for the
amortization of discounts and premiums, as applicable, on debt investments
using the effective interest method. (4) Unless otherwise indicated, all investments are considered Level 3 investments.
(5) Unless otherwise indicated, loan contains a variable rate structure, and
may be subject to an interest rate floor. Variable rate loans bear interest
at a rate that may be determined by reference to either the
Interbank Offered Rate ("LIBOR" or "L") (which can include one-, two-,
three- or six-month LIBOR) or an alternate base rate (which can include the
Federal Funds Effective Rate or the Prime Rate), at the borrower's option,
and which reset periodically based on the terms of the loan agreement.
(6) The interest rate on these loans is subject to 1 month LIBOR, which as of
(7) The interest rate on these loans is subject to 3 month LIBOR, which as of
December 31, 2019 was 1.9%. (8) Level 2 investment. (9) Position or portion thereof is an unfunded loan commitment.
(10) The negative cost is the result of the capitalized discount being greater
than the principal amount outstanding on the loan. The negative fair value
is the result of the capitalized discount on the loan.
(11) The date disclosed represents the commitment period of the unfunded term
loan. Upon expiration of the commitment period, the funded portion of the
term loan may be subject to a longer maturity date. (12) Investment is not pledged as collateral under Sebago Lake's credit facility. 117
--------------------------------------------------------------------------------Below is selected balance sheet information for Sebago Lake as ofDecember 31,2020 andDecember 31, 2019 :($ in thousands) December 31, 2020 December 31, 2019AssetsInvestments at fair value (amortized cost of$559,298 and$479,647 , respectively) $ 554,710 $ 478,509Cash 9,385 34,104Interest receivable 992 1,281Prepaid expenses and other assets 237 162Total Assets $ 565,324 $ 514,056
Liabilities
Debt (net of unamortized debt issuance costs of$2,415 and$3,895 , respectively) $ 347,564 $ 330,289Distributions payable 4,694 4,950Accrued expenses and other liabilities 1,975 2,663Total Liabilities $ 354,233 $ 337,902Members' EquityMembers' Equity 211,091 176,154Members' Equity 211,091 176,154Total Liabilities and Members' Equity $ 565,324 $ 514,056
Below is selected statement of operations information for Sebago Lake for theyears ended
Years Ended December 31, ($ in thousands) 2020 2019 2018 Investment Income Interest income$ 32,163 $ 38,841 $ 37,760 Other income 281 348 671 Total Investment Income 32,444 39,189 38,431 Expenses Loan origination and structuring fee - - 4,871 Interest expense 12,611 17,426 16,228 Professional fees 691 718 821 Total Expenses 13,302 18,144 21,920 Net Investment Income Before Taxes 19,142 21,045 16,511 Taxes 533 967 285 Net Investment Income After Taxes$ 18,609 $ 20,078 $ 16,226 Net Realized and Change in Unrealized Gain (Loss) on Investments Net change in unrealized gain (loss) on (3,450 ) 7,423 (9,703 ) investments Net realized gain (loss) on investments 4 - 61 Total Net Realized and Change in (3,446 ) 7,423 (9,642 ) Unrealized Gain (Loss) on Investments Net Increase (Decrease) in Members' Equity$ 15,163 $ 27,501 $ 6,584 Resulting from Operations 118
--------------------------------------------------------------------------------OnAugust 9, 2017 ,Sebago Lake Financing LLC andSL Lending LLC , wholly-ownedsubsidiaries of Sebago Lake, entered into a credit facility withGoldman SachsBank USA .Goldman Sachs Bank USA serves as the sole lead arranger, syndicationagent and administrative agent, andState Street Bank and Trust Company servesas the collateral administrator and agent. The credit facility includes amaximum borrowing capacity of$400 million . As ofDecember 31, 2020 , there was$350.0 million outstanding under the credit facility. For the years endedDecember 31, 2020 , 2019 and 2018, the components of interest expense were asfollows: Years Ended December 31, ($ in thousands) 2020 2019 2018 Interest expense$ 10,962 $ 15,782 $ 14,663
Amortization of debt issuance costs 1,649 1,644
1,565 Total Interest Expense$ 12,611 $ 17,426 $ 16,228 Average interest rate 3.1 % 4.7 % 4.4 %
Average daily borrowings$ 352,505 $ 337,491 $
326,902
Loan Origination and Structuring Fees
If the loan origination and structuring fees earned by Sebago Lake during afiscal period exceed Sebago Lake's expenses and other obligations (excludingfinancing costs), such excess is allocated to the Member(s) responsible for theorigination of the loans pro rata in accordance with the total loan originationand structuring fees earned by Sebago Lake with respect to the loans originatedby such Member; provided, that in no event will the amount allocated to a Memberexceed 1% of the par value of the loans originated by such Member in any fiscalyear. The loan origination and structuring fee is accrued quarterly and includedin other income from controlled, affiliated investments on our ConsolidatedStatements of Operations and paid annually. OnFebruary 27, 2019 , the Membersagreed to amend the terms of Sebago Lake's operating agreement to eliminate theallocation of excess loan origination and structuring fees to the Members. Assuch, for the years endedDecember 31, 2020 and 2019, we accrued no income basedon loan origination and structuring fees. For the year endedDecember 31, 2018 ,the Company accrued income based on loan origination and structuring fees of$4.9 million .Results of Operations
The following table represents the operating results for the years ended
For the Years Ended December 31,($ in millions) 2020 2019 2018Total Investment Income$ 803.3 $ 718.0$ 388.7 Less: Net operating expenses 283.8 217.1 142.2
Net Investment Income (Loss) Before
$ 246.5 TaxesLess: Income taxes (benefit), 2.0 2.0 1.1including excise taxesNet Investment Income (Loss) After$ 517.5 $ 498.9$ 245.4 TaxesNet change in unrealized gain (76.0 ) (3.7 ) (43.6 )
(loss)
Net realized gain (loss) (53.8 ) 2.8 0.4
Net Increase (Decrease) in Net
$ 202.2 Assets Resulting from OperationsNet increase (decrease) in net assets resulting from operations can vary fromperiod to period as a result of various factors, including the level of newinvestment commitments, expenses, the recognition of realized gains and lossesand changes in unrealized appreciation and depreciation on the investmentportfolio. 119
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Investment Income
Investment income for the years endedDecember 31, 2020 , 2019 and 2018 were asfollows: For the Years Ended December 31, ($ in millions) 2020 2019 2018 Interest income from investments$ 769.0 $ 691.9 $ 366.8 Dividend income 19.5 10.0 8.4 Other income 14.8 16.1 13.5 Total investment income$ 803.3 $ 718.0
For the years ended
Investment income increased to$803.3 million for the year endedDecember 31,2020 from$718.0 million for the same period in prior year primarily due to anincrease in our investment portfolio, which, at par, increased from$8.9 billion as ofDecember 31, 2019 , to$10.7 billion as ofDecember 31, 2020 , partiallyoffset by a decrease in our portfolio's weighted average yield from 8.6% as ofDecember 31, 2019 to 8.0% as ofDecember 31, 2020 . Included in interest incomeare other fees such as prepayment fees and accelerated amortization of upfrontfees from unscheduled paydowns. Period over period, income generated from thesefees represented$23.6 million and$21.1 million , for the years endedDecember31, 2020 and 2019, respectively. In addition to the growth in the portfolio, theincremental increase in investment income was primarily due to an increase individend income earned from our investment inMoore Holdings, LLC of$10.2million , that was not earned in 2019, partially offset by a decrease in dividendincome from Sebago Lake of$0.9 million period over period. Other incomedecreased period-over-period due to a decrease in incremental fee income, whichare fees that are generally available to us as a result of closing investmentsand normally paid at the time of closing. For the year endedDecember 31, 2020 ,the increase in investment income was partially driven by increased originationactivity as a result of significant merger activity which has since leveled off.We expect that investment income will vary based on a variety of factorsincluding the pace of our originations and repayments.
For the years ended
Investment income increased to$718.0 million for the year endedDecember 31,2019 from$388.7 million for the same period in prior year primarily due to anincrease in our investment portfolio, which, at par, increased from$5.9 billion as ofDecember 31, 2018 , to$8.9 billion as ofDecember 31, 2019 , partiallyoffset by a decrease in our portfolio's weighted average yield from 9.4% as ofDecember 31, 2018 to 8.7% as ofDecember 31, 2019 . Included in interest incomeare other fees such as prepayment fees and accelerated amortization of upfrontfees from unscheduled paydowns. Period over period, income generated from thesefees represented$21.1 million and$16.3 million , for the years endedDecember31, 2019 and 2018, respectively. In addition to the growth in the portfolio, theincremental increase in investment income was due to an increase in dividendincome earned from our investment inSebago Lake of$1.6 million period-over-period. Other income increased period-over-period due to an increasein incremental fee income, which are fees that are generally available to us asa result of closing investments and normally paid at the time of closing, of$7.5 million , offset by$4.9 million of Sebago Lake fee income received for theyear endedDecember 31, 2018 that is no longer received subsequent toDecember31, 2018 (Refer to "Note 4. Investments - Loan Origination and Structuring Fees"for additional information). We expect that investment income will continue toincrease provided that our investment portfolio continues to increase.
Expenses
Expenses for the years endedDecember 31, 2020 , 2019 and 2018 were as follows: For the Years Ended December 31, ($ in millions) 2020 2019 2018 Interest expense$ 152.9 $ 136.5 $ 76.8 Management fee 144.5 89.9 52.1 Performance based incentive fees 93.9 45.1 - Professional fees 14.7 10.0 7.8 Directors' fees 0.8 0.6 0.5 Other general and administrative 7.9 8.4 5.0 Total operating expenses$ 414.7 $ 290.5 $ 142.2 Management and incentive fees waived (130.9 ) (73.4 ) - Net operating expenses$ 283.8 $ 217.1 $ 142.2 120
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Under the terms of the Administration Agreement, we reimburse the Adviser forservices performed for us. In addition, pursuant to the terms of theAdministration Agreement, the Adviser may delegate its obligations under theAdministration Agreement to an affiliate or to a third party and we reimbursethe Adviser for any services performed for us by such affiliate or third party.
For the years ended
Total expenses increased to$283.8 million for the year endedDecember 31, 2020 from$217.1 million for the same period in the prior year primarily due to anincrease in interest expense and increase in gross management fees and incentivefees, coupled with the expiration of the management fee and incentive feewaivers. The increase in interest expense of$16.4 million was driven by anincrease in average daily borrowings to$3.8 billion from$2.6 billion periodover period, partially offset by a decrease in the average interest rate to 3.5%from 4.8% period over period. Interest expense increased period over period, andwe would expect it to continue to increase as we re-deploy leverage and ourasset coverage ratio decreases. As ofDecember 31, 2019 , our asset coverageratio was 293% compared to 206% as ofDecember 31, 2020 . Gross management feesand incentive fees increased primarily due to an increase in our investmentportfolio, which at par, increased from$8.9 billion as ofDecember 31, 2019 , to$10.7 billion as ofDecember 31, 2020 , and were partially offset by themanagement and incentive fee waivers, which expiredOctober 18, 2020 .
For the years ended
Total expenses increased to$217.1 million for the year endedDecember 31, 2019 from$142.2 million for the same period in the prior year primarily due to anincrease in interest expense. The increase in interest expense of$59.7 million was driven by both an increase in average daily borrowings to$2.6 billion from$1.6 billion period over period, and an increase in the average interest rate to4.8% from 4.3% period over period. The average stated interest rate increased asa result of the subscription facility terminating in June of 2019. Interestexpense increased period over period, and we would expect it to continue toincrease as we re-deploy leverage and our asset coverage ratio decreases. As ofDecember 31, 2018 , our asset coverage ratio was 225% compared to 293% as ofDecember 31, 2019 .
Income Taxes, Including Excise Taxes
We have elected to be treated as a RIC under Subchapter M of the Code, and weintend to operate in a manner so as to continue to qualify for the tax treatmentapplicable to RICs. To qualify for tax treatment as a RIC, we must, among otherthings, distribute to our shareholders in each taxable year generally at least90% of our investment company taxable income, as defined by the Code, and nettax-exempt income for that taxable year. To maintain our tax treatment as a RIC,we, among other things, intend to make the requisite distributions to ourshareholders, which generally relieves us from corporate-levelU.S. federalincome taxes.Depending on the level of taxable income earned in a tax year, we can beexpected to carry forward taxable income (including net capital gains, if any)in excess of current year dividend distributions from the current tax year intothe next tax year and pay a nondeductible 4%U.S. federal excise tax on suchtaxable income, as required. To the extent that we determine that our estimatedcurrent year annual taxable income will be in excess of estimated current yeardividend distributions from such income, we will accrue excise tax on estimatedexcess taxable income.For the years endedDecember 31, 2020 , 2019 and 2018 we recordedU.S. federalincome tax expense/(benefit) of$2.0 million ,$2.0 million and$1.1 million ,respectively, includingU.S. federal excise tax expense/(benefit) of$(0.1)million ,$2.0 million and$1.1 million , respectively.Certain of our consolidated subsidiaries are subject toU.S. federal and stateincome taxes. For the year endedDecember 31, 2020 , we recorded a net taxexpense of$2.1 million . For the years endedDecember 31, 2019 and 2018, we didnot record a net tax expense, for these subsidiaries. The income tax expense forour taxable consolidated subsidiaries will vary depending on the level ofinvestment income earnings and realized gains from the exits of investments heldby such taxable subsidiaries during the respective periods. 121--------------------------------------------------------------------------------
Net Unrealized Gains (Losses)
We fair value our portfolio investments quarterly and any changes in fair valueare recorded as unrealized gains or losses. During the years endedDecember 31,2020 , 2019 and 2018, net unrealized gains (losses) were comprised of thefollowing: For the Years Ended December 31,($ in millions) 2020 2019 2018Net change in unrealized gain $ (76.9 ) $ (3.5 )$ (43.5 ) (loss) on investmentsIncome tax (provision) benefit (3.7 ) - -Net change in translation of 4.6 (0.2 ) (0.1 )
assets and liabilities in
foreign currenciesNet change in unrealized gain $ (76.0 ) $ (3.7 )$ (43.6 ) (loss)
For the years ended
For the year endedDecember 31, 2020 , the net unrealized loss was primarilydriven by a decrease in the fair value of our debt investments as compared toDecember 31, 2019 . As ofDecember 31, 2020 , the fair value of our debtinvestments as a percentage of principal was 97.3% as compared to 98.0% as ofDecember 31, 2019 . The primary driver of our portfolio's net unrealized loss wasdue to current market conditions and credit spreads widening, the impact ofwhich was primarily seen in the first quarter of 2020, but which hassubsequently improved in the second, third and fourth quarters as the averagefair value of the portfolio has improved. See "COVID-19 Developments" foradditional information.The ten largest contributors to the change in net unrealized gain (loss) oninvestments during the year endedDecember 31, 2020 consisted of the following:Portfolio Company Net Change in Unrealized($ in millions) Gain (Loss)Norvax, LLC (dba GoHealth) $ 16.9Windows Entities 14.0Feradyne Outdoors, LLC 11.4Remaining portfolio companies (25.6 )Aviation Solutions Midco, LLC (dba STS Aviation) (25.3 )CIBT Global, Inc. (25.3 )LineStar Integrity Services LLC (10.0 )Entertainment Benefits Group, LLC (9.9 )Valence Surface Technologies LLC
(9.7 )
(6.9 )Blackhawk Network Holdings, Inc. (6.5 )Total $ (76.9 )
For the years ended
For the year endedDecember 31, 2019 , the net unrealized loss was primarilydriven by a decrease in the fair value of our debt investments as compared toDecember 31, 2018 . For the year endedDecember 31, 2019 , the fair value of ourdebt investments as a percentage of principal was 98.0%, as compared to 97.9%for the period endedDecember 31, 2018 .
Net Realized Gains (Losses)
The realized gains and losses on fully exited and partially exited portfoliocompanies during the years endedDecember 31, 2020 , 2019 and 2018 were comprisedof the following: For the Years Ended December 31,($ in millions) 2020 2019 2018Net realized gain (loss) on $ 2.6investments$ (51.4 ) $ 0.3Net realized gain (loss) on foreign (2.4 ) 0.2 0.1currency transactionsNet realized gain (loss)$ (53.8 ) $ 2.8 $ 0.4 122
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For the years ended
For the year endedDecember 31, 2020 , we had net realized losses on investmentsof$51.4 million , primarily driven bySwipe Acquisition Corporation , and for theyears endedDecember 31, 2019 and 2018, we had net realized gains on investmentsof$2.6 million and$0.3 million , respectively. For the year endedDecember 31,2020 , we had net realized losses of$2.3 million and for the years endedDecember 31 2019 , and 2018, we had net realized gains of$0.2 million and$0.1million , respectively, on foreign currency transactions, primarily as a resultof translating foreign currency related to our non-USD denominated investments.
Realized Gross Internal Rate of Return
Since we began investing in 2016 throughDecember 31, 2020 , our exitedinvestments have resulted in an aggregate cash flow realized gross internal rateof return to us of over 11.9% (based on total capital invested of$2.9 billion and total proceeds from these exited investments of$3.3 billion ). Over seventypercent of these exited investments resulted in an aggregate cash flow realizedgross internal rate of return ("IRR") to us of 10% or greater.IRR, is a measure of our discounted cash flows (inflows and outflows).Specifically, IRR is the discount rate at which the net present value of allcash flows is equal to zero. That is, IRR is the discount rate at which thepresent value of total capital invested in each of our investments is equal tothe present value of all realized returns from that investment. Our IRRcalculations are unaudited.Capital invested, with respect to an investment, represents the aggregate costbasis allocable to the realized or unrealized portion of the investment, net ofany upfront fees paid at closing for the term loan portion of the investment.Realized returns, with respect to an investment, represents the total cashreceived with respect to each investment, including all amortization payments,interest, dividends, prepayment fees, upfront fees (except upfront fees paid atclosing for the term loan portion of an investment), administrative fees, agentfees, amendment fees, accrued interest, and other fees and proceeds.Gross IRR, with respect to an investment, is calculated based on the dates thatwe invested capital and dates we received distributions, regardless of when wemade distributions to our shareholders. Initial investments are assumed to occurat time zero.Gross IRR reflects historical results relating to our past performance and isnot necessarily indicative of our future results. In addition, gross IRR doesnot reflect the effect of management fees, expenses, incentive fees or taxesborne, or to be borne, by us or our shareholders, and would be lower if it did.Aggregate cash flow realized gross IRR on our exited investments reflects onlyinvested and realized cash amounts as described above, and does not reflect anyunrealized gains or losses in our portfolio.
Financial Condition, Liquidity and Capital Resources
Our liquidity and capital resources are generated primarily from cash flows frominterest, dividends and fees earned from our investments and principalrepayments, our credit facilities, debt securitization transactions, and othersecured and unsecured debt. We may also generate cash flow from operations,future borrowings and future offerings of securities including public and/orprivate issuances of debt and/or equity securities through both registeredofferings off of our shelf registration statement and private offerings. Theprimary uses of our cash are (i) investments in portfolio companies and otherinvestments and to comply with certain portfolio diversification requirements,(ii) the cost of operations (including paying or reimbursing our Adviser), (iii)debt service, repayment and other financing costs of any borrowings and (iv)cash distributions to the holders of our shares.We may from time to time enter into additional debt facilities, increase thesize of our existing credit facilities, enter into additional debtsecuritization transactions, or issue additional debt securities. Any suchincurrence or issuance would be subject to prevailing market conditions, ourliquidity requirements, contractual and regulatory restrictions and otherfactors. In accordance with the 1940 Act, with certain limited exceptions, weare only allowed to incur borrowings, issue debt securities or issue preferredstock, if immediately after the borrowing or issuance, the ratio of total assets(less total liabilities other than indebtedness) to total indebtedness pluspreferred stock, is at least 200% (or 150% if certain conditions are met). Ourasset coverage requirement applicable to senior securities was reduced from 200%to 150% and our current target ratio is 0.90x-1.25x.As ofDecember 31, 2020 andDecember 31, 2019 , our asset coverage ratio was 206%and 293%, respectively. We seek to carefully consider our unfunded commitmentsfor the purpose of planning our ongoing financial leverage. Further, we maintainsufficient borrowing capacity within the 150% asset coverage limitation to coverany outstanding unfunded commitments we are required to fund.Cash and restricted cash as ofDecember 31, 2020 , taken together with ouravailable debt, is expected to be sufficient for our investing activities and toconduct our operations in the near term. As ofDecember 31, 2020 , we had$1.6billion available under our credit facilities. 123--------------------------------------------------------------------------------As ofDecember 31, 2020 , we had$357.9 million in cash and restricted cash.During the year endedDecember 31, 2020 , we used$1.6 billion in cash foroperating activities, primarily as a result of funding portfolio investments of$3.9 billion , partially offset by sell downs and repayments of$1.8 billion andother operating activity of$0.5 billion . Lastly, cash provided by financingactivities was$1.6 billion during the period, which was the result of netborrowings on our credit facilities of$2.3 billion , partially offset byrepurchase of common stock under the Company 10b5-1 Plan of$0.2 billion anddistributions paid of$0.5 billion .
Equity
IPO, Subscriptions and Drawdowns
We have the authority to issue 500,000,000 common shares at
OnJuly 22, 2019 , we closed our initial public offering ("IPO"), issuing 10million shares of our common stock at a public offering price of$15.30 pershare, and onAugust 2, 2019 , the underwriters exercised their option topurchase an additional 1.5 million shares of common stock at a purchase price of$15.30 per share. Net of underwriting fees and offering costs, we received totalcash proceeds of$164.0 million . Our common stock began trading on theNew YorkStock Exchange ("NYSE") under the symbol "ORCC" onJuly 18, 2019 .OnJuly 7, 2019 , our Board of Directors determined to eliminate any outstandingfractional shares of our common stock (the "Fractional Shares"), as permitted bythe Maryland General Corporation Law and onJuly 8, 2019 , we eliminated suchFractional Shares by rounding down the number of Fractional Shares held by eachshareholder to the nearest whole share and paying each shareholder cash for suchFractional Shares based on a price of$15.27 per whole share.Prior toMarch 2, 2018 , we entered into subscription agreements (the"Subscription Agreements") with investors providing for the private placement ofour common shares. Under the terms of the Subscription Agreements, investorswere required to fund drawdowns to purchase our common shares up to the amountof their respective Capital Commitment on an as-needed basis each time wedelivered a drawdown notice to our investors. As ofJune 4, 2019 , all CapitalCommitments had been drawn.
On
During the year ended
Common Share Aggregate Issuance Number of Common Offering PriceCapital Drawdown Notice Date Date Shares Issued ($ in millions) June 17, 103,504,284June 4, 2019 2019$ 1,580.5 March 21, 19,267,823March 8, 2019 2019 300.0 February 12, 29,220,780January 30, 2019 2019 450.0Total 151,992,887 2,330.5Distributions
The following table reflects the distributions declared on shares of our commonstock during the year ended
December 31, 2020 Distribution perDate Declared Record Date Payment Date Share December 31, $ 0.31November 3, 2020 2020 January 19, 2020 December 31, $ 0.08May 28, 2019 (special dividend) 2020 January 19, 2020 September $ 0.31August 4, 2020 30, 2020 November 13, 2020 September $ 0.08
June 30, $ 0.31May 5, 2020 2020 August 14, 2020 June 30, $ 0.08May 28, 2019 (special dividend) 2020 August 14, 2020 March 31, $ 0.31February 19, 2020 2020 May 15, 2020 March 31, $ 0.08May 28, 2019 (special dividend) 2020 May 15, 2020
On
124--------------------------------------------------------------------------------During certain periods, our distributions may exceed our earnings. As a result,it is possible that a portion of the distributions we make may represent areturn of capital. A return of capital generally is a return of a shareholder'sinvestment rather than a return of earnings or gains derived from our investmentactivities. Each year a statement on Form 1099-DIV identifying the sources ofthe distributions will be mailed to our shareholders. No portion of thedistributions paid during the years endedDecember 31, 2020 , 2019 or 2018represented a return of capital.
The following table reflects the distributions declared on shares of our commonstock during the year ended
December 31, 2019 Distribution perDate Declared Record Date Payment Date Share December 31, $ 0.31October 30, 2019 2019 January 31, 2020 December 31, $ 0.04May 28, 2019 (special dividend) 2019 January 31, 2020 September $ 0.31May 28, 2019 30, 2019 November 15, 2019 September $ 0.02
June 14, $ 0.44June 4, 2019 2019 August 15, 2019 March 31, $ 0.33February 27, 2019 2019 May 14, 2019 125
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The following table reflects the distributions declared on shares of our commonstock during the year ended
December 31, 2018 Date Declared Record Date Payment Date Distribution per Share November 6, 2018 December 31, 2018 January 31, 2019 $ 0.36 August 7, 2018 September 30, 2018 November 15, 2018 $ 0.39 June 22, 2018 June 30, 2018 August 15, 2018 $ 0.34 March 2, 2018 March 31, 2018 April 30, 2018 $ 0.33Dividend ReinvestmentWe have adopted a dividend reinvestment plan, pursuant to which we will reinvestall cash distributions declared by the Board on behalf of our shareholders whodo not elect to receive their distribution in cash as provided below. As aresult, if the Board authorizes, and we declare, a cash dividend or otherdistribution, then our shareholders who have not opted out of our dividendreinvestment plan will have their cash distributions automatically reinvested inadditional shares of our common stock as described below, rather than receivingthe cash dividend or other distribution. Any fractional share otherwise issuableto a participant in the dividend reinvestment plan will instead be paid in cash.In connection with our IPO, we entered into our second amended and restateddividend reinvestment plan, pursuant to which, if newly issued shares are usedto implement the dividend reinvestment plan, the number of shares to be issuedto a shareholder will be determined by dividing the total dollar amount of thecash dividend or distribution payable to a shareholder by the market price pershare of our common stock at the close of regular trading on theNew York StockExchange on the payment date of a distribution, or if no sale is reported forsuch day, the average of the reported bid and ask prices. However, if the marketprice per share on the payment date of a cash dividend or distribution exceedsthe most recently computed net asset value per share, we will issue shares atthe greater of (i) the most recently computed net asset value per share and (ii)95% of the current market price per share (or such lesser discount to thecurrent market price per share that still exceeded the most recently computednet asset value per share). For example, if the most recently computed net assetvalue per share is$15.00 and the market price on the payment date of a cashdividend is$14.00 per share, we will issue shares at$14.00 per share. If themost recently computed net asset value per share is$15.00 and the market priceon the payment date of a cash dividend is$16.00 per share, we will issue sharesat$15.20 per share (95% of the current market price). If the most recentlycomputed net asset value per share is$15.00 and the market price on the paymentdate of a cash dividend is$15.50 per share, we will issue shares at$15.00 pershare, as net asset value is greater than 95% ($14.73 per share) of the currentmarket price. Pursuant to our second amended and restated dividend reinvestmentplan, if shares are purchased in the open market to implement the dividendreinvestment plan, the number of shares to be issued to a shareholder shall bedetermined by dividing the dollar amount of the cash dividend payable to suchshareholder by the weighted average price per share for all shares purchased bythe plan administrator in the open market in connection with the dividend.Shareholders who receive distributions in the form of shares of common stockwill be subject to the sameU.S. federal, state and local tax consequences as ifthey received cash distributions.
The following table reflects the common stock issued pursuant to the dividendreinvestment plan during the year ended
Date Declared Record Date Payment Date Shares August 4, 2020 September 30, 2020 November 13, 2020 1,738,817 May 5, 2020 June 30, 2020 August 14, 2020 3,541,285 Feburary 19, 2020 March 31, 2020 May 15, 2020 2,249,543 October 30, 2019 December 31, 2019 January 31, 2020 2,823,048In conjunction with the distribution paid onJanuary 19, 2021 for shareholdersof record as ofDecember 31, 2020 , the Company issued 1,435,099 shares of commonstock pursuant to the dividend reinvestment plan.
The following table reflects the common stock issued pursuant to the dividendreinvestment plan during the year ended
126
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Date Declared Record Date Payment Date Shares May 28, 2019 September 30, 2019 November 15, 2019 2,974,103 June 4, 2019 June 14, 2019 August 15, 2019 3,965,754 February 27, 2019 March 31, 2019 May 14, 2019 2,882,297 November 6, 2018 December 31, 2018 January 31, 2019 2,613,223
The following table reflects the common stock issued pursuant to the dividendreinvestment plan during the year ended
Date Declared Record Date Payment Date Shares August 7, 2018 September 30, 2018 November 15, 2018 2,323,165 June 22, 2018 June 30, 2018 August 15, 2018 1,539,516 March 2, 2018 March 31, 2018 April 30, 2018 1,310,272
Stock Repurchase Plan (the "Company 10b5-1 Plan")
OnJuly 7, 2019 , our Board approved the Company 10b5-1 Plan, to acquire up to$150 million in the aggregate of our common stock at prices below our net assetvalue per share over a specified period, in accordance with the guidelinesspecified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Company 10b5-1Plan commenced onAugust 19, 2019 and was exhausted onAugust 4, 2020 .The Company 10b5-1 Plan was intended to allow us to repurchase our common stockat times when we otherwise might be prevented from doing so under insidertrading laws. The Company 10b5-1 Plan requiredGoldman Sachs & Co. LLC , as ouragent, to repurchase shares of common stock on our behalf when the market priceper share was below the most recently reported net asset value per share(including any updates, corrections or adjustments publicly announced by us toany previously announced net asset value per share). Under the Company 10b5-1Plan, the agent would increase the volume of purchases made as the price of ourcommon stock declined, subject to volume restrictions.The purchase of shares pursuant to the Company 10b5-1 Plan was intended tosatisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act,and will otherwise be subject to applicable law, including Regulation M, whichmay prohibit purchases under certain circ*mstances.The following table provides information regarding purchases of our common stockbyGoldman, Sachs & Co. , as agent, pursuant to the 10b5-1 plan for each month inthe year endedDecember 31, 2020 : Approximate Approximate Dollar Value of Dollar Value Shares that of Shares thatPeriod Total Number have been May Yet Be
($ in millions, except share of Shares Average Price Purchased Under Purchased Underand per share amounts)
Repurchased Paid per Share the Plans the PlanJanuary 1, 2020 - January 31, - $ - $ - $ 150.0
2020
February 1, 2020 - February 87,328 $ 15.17 $ 1.4 $ 148.629, 2020March 1, 2020 - March 31, 4,009,218 $ 12.46 $ 46.6 $ 102.0
2020
April 1, 2020 - April 30, 6,235,497 $ 11.95 $ 74.3 $ 27.72020May 1, 2020 - May 31, 2020 2,183,581 $ 12.76 $ 27.7 $ -June 1, 2020 - June 30, 2020 - $ - $ - $ -July 1, 2020 - July 31, 2020 - $ -August 1, 2020 - August 31, - $ -2020Total 12,515,624 $ 150.0OnNovember 3, 2020 , the Board approved a repurchase program under which we mayrepurchase up to$100 million of our outstanding common stock. Under theprogram, purchases may be made at management's discretion from time to time inopen-market transactions, in accordance with all applicable securities laws andregulations. Unless extended by the Board, the repurchase program 127--------------------------------------------------------------------------------
will terminate 12-months from the date it was approved. As of
128--------------------------------------------------------------------------------
DebtAggregate BorrowingsDebt obligations consisted of the following as ofDecember 31, 2020 andDecember31, 2019 : December 31, 2020 Aggregate Principal Outstanding Amount Net Carrying($ in thousands) Committed Principal Available(1) Value(2)Revolving Credit Facility(3)(5)$ 1,355,000 $ 252,525 $ 1,075,636 $ 243,143 SPV Asset Facility II 350,000 100,000 250,000 95,654SPV Asset Facility III 500,000 375,000 125,000 373,238SPV Asset Facility IV 450,000 295,000 155,000 291,644CLO I 390,000 390,000 - 386,708CLO II 260,000 260,000 - 257,686CLO III 260,000 260,000 - 257,744CLO IV 252,000 252,000 - 247,745CLO V 196,000 196,000 - 194,1282023 Notes(4) 150,000 150,000 - 151,8892024 Notes(4) 400,000 400,000 - 418,3722025 Notes 425,000 425,000 - 418,154July 2025 Notes 500,000 500,000 - 492,0952026 Notes 500,000 500,000 - 489,176July 2026 Notes 1,000,000 1,000,000 - 975,346Total Debt$ 6,988,000 $ 5,355,525 $ 1,605,636 $ 5,292,722 ________________
(1) The amount available reflects any limitations related to each credit facility's borrowing base.
(2) The carrying value of the Company's Revolving Credit Facility, SPV Asset
Facility II, SPV Asset Facility III, SPV Asset Facility IV, CLO I,
Notes, 2026 Notes and
financing costs of
million,
million, respectively.
(3) Includes the unrealized translation gain (loss) on borrowings denominated
in foreign currencies. (4) Inclusive of change in fair market value of effective hedge.
(5) The amount available is reduced by
credit. 129
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December 31, 2019 Aggregate Principal Outstanding Amount Net Carrying($ in thousands) Committed Principal Available(1) Value(2)Revolving Credit Facility(3)(5)$ 1,170,000 $ 480,861 $ 664,410 $ 473,655 SPV Asset Facility I 400,000 300,000 100,000 297,246SPV Asset Facility II 350,000 350,000 - 346,395SPV Asset Facility III 500,000 255,000 245,000 251,548SPV Asset Facility IV 300,000 60,250 239,750 57,201CLO I 390,000 390,000 - 386,405CLO II 260,000 260,000 - 258,0282023 Notes(4) 150,000 150,000 - 150,1132024 Notes(4) 400,000 400,000 - 400,9552025 Notes 425,000 425,000 - 416,686Total Debt$ 4,345,000 $ 3,071,111 $ 1,249,160 $ 3,038,232 ________________
(1) The amount available reflects any limitations related to each credit facility's borrowing base.
(2) The carrying value of the Company's Revolving Credit Facility, SPV Asset
Facility I, SPV Asset Facility II, SPV Asset Facility III, SPV Asset
Facility IV, CLO I,
presented net of deferred financing costs of
million,
unrealized translation gain (loss) on borrowings denominated in foreign
currencies. (3) Inclusive of change in fair market value of effective hedge.
(4) The amount available is reduced by
credit.For the years endedDecember 31, 2020 , 2019 and 2018, the components of interestexpense were as follows: For the Years Ended December 31, ($ in thousands) 2020 2019 2018 Interest expense$ 136,387 $ 125,311 $ 71,441 Amortization of debt issuance 17,178 12,152
5,333
costs
Net change in unrealized gain (626 ) (1,018 ) -
(loss) on effective
interest rate swaps and hedged
items(1) Total Interest Expense$ 152,939 $ 136,445 $ 76,774 Average interest rate 3.5 % 4.8 % 4.3 % Average daily borrowings$ 3,815,270 $ 2,576,121 $ 1,649,191 ________________
(1) Refer to "ITEM 1. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - Notes to
Consolidated Financial Statements - Note 6. Debt - 2023 Notes and 2024
Notes" for details on each facility's interest rate swap.Credit FacilitiesOur credit facilities contain customary covenants, including certain limitationson the incurrence by us of additional indebtedness and on our ability to makedistributions to our shareholders, or redeem, repurchase or retire shares ofstock, upon the occurrence of certain events, and customary events of default(with customary cure and notice provisions).
Revolving Credit Facility
OnFebruary 1, 2017 , we entered into a senior secured revolving credit agreement(and as amended by that certain First Amendment to Senior Secured RevolvingCredit Agreement, dated as ofJuly 17, 2017 , the First Omnibus Amendment toSenior Secured Revolving Credit Agreement and Guarantee and Security Agreement,dated as ofMarch 29, 2018 , the Third Amendment to Senior Secured RevolvingCredit Agreement, dated as ofJune 21, 2018 , the Fourth Amendment to SeniorSecured Revolving Credit Agreement, dated as ofApril 2, 2019 , the FifthAmendment to Senior Secured Revolving Credit Agreement, dated as ofMay 7, 2020 ,and the Sixth Amendment to Senior Secured Revolving Credit Agreement, dated asofSeptember 3, 2020 , the "Revolving Credit Facility"). The parties to theRevolving Credit Facility include us, as Borrower, the lenders from time to timeparties thereto (each a "Lender" and collectively, the "Lenders") andTruistSecurities, Inc. andING Capital LLC as Joint Lead Arrangers and Joint Book 130--------------------------------------------------------------------------------
Runners,
The Revolving Credit Facility is guaranteed byOR Lending LLC , our subsidiary,and will be guaranteed by certain domestic subsidiaries of ours that are formedor acquired by us in the future (collectively, the "Guarantors"). Proceeds ofthe Revolving Credit Facility may be used for general corporate purposes,including the funding of portfolio investments. The maximum principal amount of the Revolving Credit Facility is$1.46 billion (increased from$1.40 billion onFebruary 8, 2021 ; increased from$1.36 billion onJanuary 8, 2021 ; increased from$1.335 billion onSeptember 3, 2020 ;increased from$1.295 billion onJune 12, 2020 ; increased from$1.24 billion onMay 27, 2020 ; increased from$1.195 onMay 7, 2020 ; increased from$1.17 billion onFebruary 11, 2020 ; increased from$1.1 billion onAugust 27, 2019 ; increasedfrom$1.0 billion onJuly 26, 2019 ), subject to availability under the borrowingbase, which is based on our portfolio investments and other outstandingindebtedness. As amended onSeptember 3, 2020 , maximum capacity under theRevolving Credit Facility may be increased to$2.0 billion through our exerciseof an uncommitted accordion feature through which existing and new lenders may,at their option, agree to provide additional financing. The Revolving CreditFacility includes a$50 million limit for swingline loans and is secured by aperfected first-priority interest in substantially all of the portfolioinvestments held by us and each Guarantor, subject to certain exceptions.The availability period under the Revolving Credit Facility will terminate onSeptember 3, 2024 , with respect to$1.295 billion of commitments, and onMarch31, 2023 , which respect to the remaining commitments (together, the "RevolvingCredit Facility Commitment Termination Date"). The Revolving Credit Facilitywill mature onSeptember 3, 2025 , with respect to 1.295 billion of commitments,and onApril 2, 2024 , with respect to the remaining commitments (together, the"Revolving Credit Facility Maturity Date"). During the period from the earliestRevolving Credit Facility Commitment Termination Date to the final RevolvingCredit Facility Maturity Date, we will be obligated to make mandatoryprepayments under the Revolving Credit Facility out of the proceeds of certainasset sales and other recovery events and equity and debt issuances.We may borrow amounts inU.S. dollars or certain other permitted currencies.Amounts drawn under the Revolving Credit Facility will bear interest at eitherLIBOR plus 2.00%, or the prime rate plus 1.00%. We may elect either the LIBOR orprime rate at the time of drawdown, and loans may be converted from one rate toanother at any time at our option, subject to certain conditions. Wepredominantly borrow utilizing LIBOR rate loans, generally electing one-monthLIBOR upon borrowing. We also pay a fee of 0.375% on undrawn amounts under theRevolving Credit Facility.The Revolving Credit Facility includes customary covenants, including certainlimitations on the incurrence by us of additional indebtedness and on ourability to make distributions to our shareholders, or redeem, repurchase orretire shares of stock, upon the occurrence of certain events and certainfinancial covenants related to asset coverage and liquidity and othermaintenance covenants, as well as customary events of default. The agreementrequires a minimum asset coverage ratio of 150% with respect to our consolidatedassets and our subsidiaries, measured at the last day of any fiscal quarter anda minimum asset coverage ratio of no less than 200% with respect to ourconsolidated assets and our subsidiary guarantors (including certain limitationson the contribution of equity in financing subsidiaries as specified therein) toour secured debt and our subsidiary guarantors (the "Obligor Asset CoverageRatio"), measured at the last day of each fiscal quarter. The agreementconcentration limits in connection with the calculation of the borrowing base,based upon the Obligor Asset Coverage Ratio.
Subscription Credit Facility
OnAugust 1, 2016 , we entered into a subscription credit facility (as amended,the "Subscription Credit Facility") withWells Fargo Bank, National Association ("Wells Fargo"), as administrative agent (the "Subscription Credit FacilityAdministrative Agent") and letter of credit issuer, and Wells Fargo,StateStreet Bank and Trust Company and the banks and financial institutions from timeto time party thereto, as lenders.The Subscription Credit Facility permitted us to borrow up to$900 million ,subject to availability under the borrowing base which is calculated based onthe unused Capital Commitments of the investors meeting various eligibilityrequirements. EffectiveJune 19, 2019 , the outstanding balance of theSubscription Credit Facility was paid in full and the facility was terminatedpursuant to its terms.Borrowings under the Subscription Credit Facility bore interest, at our electionat the time of drawdown, at a rate per annum equal to (i) in the case of LIBORrate loans, an adjusted LIBOR rate for the applicable interest period plus 1.60%or (ii) in the case of reference rate loans, the greatest of (A) a prime rateplus 0.60%, (B) the federal funds rate plus 1.10%, and (C) one-month LIBOR plus1.60%. Loans may have been converted from one rate to another at any time at ourelection, subject to certain conditions. We predominantly borrowed utilizingLIBOR rate loans, generally electing one-month LIBOR upon borrowing. We paid anunused commitment fee of 0.25% per annum on the unused commitments. 131--------------------------------------------------------------------------------
SPV Asset Facilities
Certain of our wholly owned subsidiaries are parties to credit facilities (the"SPV Asset Facilities"). Pursuant to the SPV Asset Facilities, we sell andcontribute certain investments to these wholly owned subsidiaries pursuant tosale and contribution agreements by and between us and the wholly ownedsubsidiaries. No gain or loss is recognized as a result of these contributions.Proceeds from the SPV Asset Facilities are used to finance the origination andacquisition of eligible assets by the wholly owned subsidiary, including thepurchase of such assets from us. We retain a residual interest in assetscontributed to or acquired to the wholly owned subsidiary through our ownershipof the wholly owned subsidiary.The SPV Asset Facilities are secured by a perfected first priority securityinterest in the assets of these wholly owned subsidiaries and on any paymentsreceived by such wholly owned subsidiaries in respect of those assets. Assetspledged to lenders under the SPV Asset Facilities will not be available to payour debts.
The SPV Asset Facilities contain customary covenants, including certainlimitations on the incurrence by us of additional indebtedness and on ourability to make distributions to our shareholders, or redeem, repurchase orretire shares of stock, upon the occurrence of certain events, and customaryevents of default (with customary cure and notice provisions).
SPV Asset Facility I
OnDecember 21, 2017 (the "SPV Asset Facility I Closing Date"),ORCC FinancingLLC ("ORCC Financing"), aDelaware limited liability company and our subsidiary,entered into a Loan and Servicing Agreement (as amended, the "SPV Asset FacilityI"), with ORCC Financing as Borrower, us as Transferor and Servicer, the lendersfrom time to time parties thereto (the "SPV Lenders"),Morgan Stanley AssetFunding Inc. as Administrative Agent,State Street Bank and Trust Company asCollateral Agent andCortland Capital Market Services LLC as CollateralCustodian.From time to time, we sold and contributed certain investments to ORCC Financingpursuant to a Sale and Contribution Agreement by and between us and ORCCFinancing. No gain or loss was recognized as a result of the contribution.Proceeds from the SPV Asset Facility I were used to finance the origination andacquisition of eligible assets by ORCC Financing, including the purchase of suchassets from us. We retained a residual interest in assets contributed to oracquired by ORCC Financing through its ownership of ORCC Financing. The maximumprincipal amount of the SPV Asset Facility I was$400 million ; the availabilityof this amount was subject to a borrowing base test, which was based on thevalue of ORCC Financing's assets from time to time, and satisfaction of certainconditions, including certain concentration limits.The SPV Asset Facility I provided for the ability to draw and redraw amountsunder the SPV Asset Facility I for a period of up to three years after the SPVAsset Facility I Closing Date (the "SPV Asset Facility I Commitment TerminationDate"). The SPV Asset Facility I was terminated onJune 2, 2020 (the "SPV AssetFacility I Termination Date"). Prior to the SPV Asset Facility I TerminationDate, proceeds received by ORCC Financing from principal and interest,dividends, or fees on assets must be used to pay fees, expenses and interest onoutstanding borrowings, and the excess may be returned to us, subject to certainconditions. On the SPV Asset Facility I Termination Date, ORCC Financing repaidin full all outstanding fees and expenses and all principal and interest onoutstanding borrowings.Amounts drawn bore interest at LIBOR plus a spread of 2.25% until the six-monthanniversary of the SPV Asset Facility I Closing Date, increasing to 2.50%thereafter, until the SPV Asset Facility I Commitment Termination Date. Wepredominantly borrowed utilizing LIBOR rate loans, generally electing one-monthLIBOR upon borrowing. After a ramp-up period, there was an unused fee of 0.75%per annum on the amount, if any, by which the undrawn amount under the SPV AssetFacility I exceeded 25% of the maximum principal amount of the SPV AssetFacility I. The SPV Asset Facility I contained customary covenants, includingcertain financial maintenance covenants, limitations on the activities of ORCCFinancing, including limitations on incurrence of incremental indebtedness, andcustomary events of default. The SPV Asset Facility I was secured by a perfectedfirst priority security interest in the assets of ORCC Financing and on anypayments received by ORCC Financing in respect of those assets. Assets pledgedto the SPV Lenders were not available to pay our debts.
SPV Asset Facility II
OnMay 22, 2018 , our subsidiary,ORCC Financing II LLC ("ORCC Financing II"), aDelaware limited liability company and our subsidiary, entered into a CreditAgreement (as amended, the "SPV Asset Facility II"), with ORCC Financing II, asBorrower, the lenders from time to time parties thereto, Natixis,New York Branch, as Administrative Agent,State Street Bank and Trust Company , asCollateral Agent, andCortland Capital Market Services LLC as DocumentCustodian. The parties to the SPV Asset Facility II have entered into variousamendments, including to admit new lenders, increase or decrease the maximumprincipal amount available under the facility, extend the availability periodand maturity date, change the interest rate and make various other changes. Thefollowing describes the terms of SPV Asset Facility II amended throughMarch 17,2020 (the "SPV Asset Facility II Fifth Amendment Date"). 132--------------------------------------------------------------------------------The maximum principal amount of the SPV Asset Facility II following the SPVAsset Facility II Fifth Amendment Date is$350 million (which includes termsloans of$100 million and revolving commitments of$250 million ); theavailability of this amount is subject to an overcollateralization ratio test,which is based on the value of ORCC Financing II's assets from time to time, andsatisfaction of certain conditions, including an interest coverage ratio test,certain concentration limits and collateral quality tests.The SPV Asset Facility II provides for the ability to (1) draw term loans and(2) draw and redraw revolving loans under the SPV Asset Facility II for a periodof up to 18 months after SPV Asset Facility II Fifth Amendment Date unless therevolving commitments are terminated or converted to term loans sooner asprovided in the SPV Asset Facility II (the "SPV Asset Facility II CommitmentTermination Date"). Unless otherwise terminated, the SPV Asset Facility II willmature onMay 22, 2028 (the "SPV Assert Facility II Stated Maturity"). Prior tothe SPV Asset Facility II Stated Maturity, proceeds received by ORCC FinancingII from principal and interest, dividends, or fees on assets must be used to payfees, expenses and interest on outstanding borrowings, and the excess may bereturned to us, subject to certain conditions. OnOctober 10, 2026 , ORCCFinancing II must pay in full all outstanding fees and expenses and allprincipal and interest on outstanding borrowings, and the excess may be returnedto us.With respect to revolving loans, amounts drawn bear interest at LIBOR (or, inthe case of certain lenders that are commercial paper conduits, the lower oftheir cost of funds and LIBOR plus 0.25%) plus a spread that steps up from 2.20%to 2.50% during the period from the SPV Asset Facility II Fifth Amendment Dateto the six month anniversary of the Reinvestment Period End Date. With respectto term loans, amounts drawn bear interest at LIBOR (or, in the case of certainlenders that are commercial paper conduits, the lower of their cost of funds andLIBOR plus 0.25%) plus a spread that steps up from 2.25% to 2.55% during thesame period. We predominantly borrow utilizing LIBOR rate loans, generallyelecting one-month LIBOR upon borrowing. From the SPV Asset Facility II FifthAmendment Date to the SPV Asset Facility II Commitment Termination Date, thereis a commitment fee ranging from 0.50% to 0.75% per annum on the undrawn amount,if any, of the revolving commitments in the SPV Asset Facility II. For furtherdetails, see "ITEM 8. - Notes to Consolidated Financial Statements - Note 6.Debt."SPV Asset Facility IIIOnDecember 14, 2018 ,ORCC Financing III LLC ("ORCC Financing III"), aDelaware limited liability company and our subsidiary, entered into a Loan Financing andServicing Agreement (the "SPV Asset Facility III"), with ORCC Financing III, asborrower, ourselves, as equity holder and services provider, the lenders fromtime to time parties thereto, Deutsche Bank AG,New York Branch, as FacilityAgent,State Street Bank and Trust Company , asCollateral Agent andCortlandCapital Market Services LLC , as Collateral Custodian. OnDecember 10, 2019 , theparties to SPV Asset Facility III amended certain terms of the facility,including those relating to the undrawn fee and make-whole fee. The followingdescribes the terms of SPV Asset Facility III as amended throughDecember 10,2019 .The maximum principal amount of the SPV Asset Facility III is$500 million ; theavailability of this amount is subject to a borrowing base test, which is basedon the value of ORCC Financing III's assets from time to time, and satisfactionof certain conditions, including interest spread and weighted average coupontests, certain concentration limits and collateral quality tests.The SPV Asset Facility III provides for the ability to borrow, reborrow, repayand prepay advances under the SPV Asset Facility III for a period of up to threeyears afterDecember 14, 2018 unless such period is extended or acceleratedunder the terms of the SPV Asset Facility III (the "SPV Asset Facility IIIRevolving Period"). Unless otherwise extended, accelerated or terminated underthe terms of the SPV Asset Facility III, the SPV Asset Facility III will matureon the date that is two years after the last day of the SPV Asset Facility IIIRevolving Period (the "SPV Asset Facility III Stated Maturity"). Prior to theSPV Asset Facility III Stated Maturity, proceeds received by ORCC Financing IIIfrom principal and interest, dividends, or fees on assets must be used to payfees, expenses and interest on outstanding advances, and the excess may bereturned to us, subject to certain conditions. On the SPV Asset Facility IIIStated Maturity, ORCC Financing III must pay in full all outstanding fees andexpenses and all principal and interest on outstanding advances, and the excessmay be returned to us.Amounts drawn bear interest at LIBOR (or, in the case of certain SPV Lenders IIIthat are commercial paper conduits, the lower of (a) their cost of funds and (b)LIBOR, such LIBOR not to be lower than zero) plus a spread equal to 2.20% perannum, which spread will increase (a) on and after the end of the SPV AssetFacility III Revolving Period by 0.15% per annum if no event of default hasoccurred and (b) by 2.00% per annum upon the occurrence of an event of default(such spread, the "Applicable Margin"). LIBOR may be replaced as a base rateunder certain circ*mstances. We predominantly borrow utilizing LIBOR rate loans,generally electing one-month LIBOR upon borrowing. During the Revolving Period,ORCC Financing III will pay an undrawn fee ranging from 0.25% to 0.50% per annumon the undrawn amount, if any, of the revolving commitments in the SPV AssetFacility III. During the Revolving Period, if the undrawn commitments are inexcess of a certain portion (initially 20% and increasing in stages to 75%) ofthe total commitments under the SPV Asset Facility III, ORCC Financing III willalso pay a make-whole fee equal to the Applicable Margin multiplied by suchexcess undrawn commitment amount, reduced by the undrawn fee payable on suchexcess. For further details, see "ITEM 8. - Notes to Consolidated FinancialStatements - Note 6. Debt. "Unsecured Notes." 133--------------------------------------------------------------------------------
SPV Asset Facility IV
OnAugust 2, 2019 (the "SPV Asset Facility IV Closing Date"),ORCC Financing IVLLC ("ORCC Financing IV"), aDelaware limited liability company and newly formedsubsidiary, entered into a Credit Agreement (the "SPV Asset Facility IV"), withORCC Financing IV, as borrower, Société Générale, as initial Lender and asAdministrative Agent,State Street Bank and Trust Company , as Collateral Agent,Collateral Administrator and Custodian, andCortland Capital Market Services LLC as Document Custodian and the lenders from time to time party thereto pursuantto Assignment and Assumption Agreements. OnNovember 22, 2019 (the "SPV AssetFacility IV Amendment Date"), the parties to the SPV Asset Facility IV amendedthe SPV Asset Facility IV to increase the maximum principal amount of the SPVAsset Facility IV to$450 million in periodic increments throughMarch 22, 2020 .From time to time, we expect to sell and contribute certain investments to ORCCFinancing IV pursuant to a Sale and Contribution Agreement by and between us andORCC Financing IV. No gain or loss will be recognized as a result of thecontribution. Proceeds from the SPV Asset Facility IV will be used to financethe origination and acquisition of eligible assets by ORCC Financing IV,including the purchase of such assets from us. We retain a residual interest inassets contributed to or acquired by ORCC Financing IV through our ownership ofORCC Financing IV. The maximum principal amount of the Credit Facility iscurrently$450 million , subject to a ramp period; the availability of thisamount is subject to an overcollateralization ratio test, which is based on thevalue of ORCC Financing IV's assets from time to time, and satisfaction ofcertain conditions, including an interest coverage ratio test, certainconcentration limits and collateral quality tests.The SPV Asset Facility IV provides for the ability to (1) draw term loans and(2) draw and redraw revolving loans under the SPV Asset Facility IV for a periodof up to two years after the Closing Date unless the revolving commitments areterminated or converted to term loans sooner as provided in the SPV AssetFacility IV (the "Commitment Termination Date"). Unless otherwise terminated,the SPV Asset Facility IV will mature onAugust 2, 2029 (the "SPV Asset FacilityIV Stated Maturity"). Prior to the SPV Asset Facility IV Stated Maturity,proceeds received by ORCC Financing IV from principal and interest, dividends,or fees on assets must be used to pay fees, expenses and interest on outstandingborrowings, and the excess may be returned to us, subject to certainconditions. On the SPV Asset Facility IV Stated Maturity, ORCC Financing IV mustpay in full all outstanding fees and expenses and all principal and interest onoutstanding borrowings, and the excess may be returned to us.Amounts drawn bear interest at LIBOR (or, in the case of certain lenders thatare commercial paper conduits, the lower of their cost of funds and LIBOR plus0.25%) plus a spread ranging from 2.15% to 2.50%. We predominantly borrowutilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing.From the Closing Date to the Commitment Termination Date, there is a commitmentfee ranging from 0.50% to 1.00% per annum on the undrawn amount, if any, of therevolving commitments in the SPV Asset Facility IV. The SPV Asset Facility IVcontains customary covenants, including certain financial maintenance covenants,limitations on the activities of ORCC Financing IV, including limitations onincurrence of incremental indebtedness, and customary events of default. The SPVAsset Facility IV is secured by a perfected first priority security interest inthe assets of ORCC Financing IV and on any payments received by ORCC FinancingIV in respect of those assets. Assets pledged to the Lenders will not beavailable to pay our debts.CLOsCLO IOn May 28, 2019 (the "CLO I Closing Date"), we completed a $596 million termdebt securitization transaction (the "CLO I Transaction"), also known as acollateralized loan obligation transaction. The secured notes and preferredshares issued in the CLO I Transaction and the secured loan borrowed in the CLOI Transaction were issued and incurred, as applicable, by our consolidatedsubsidiaries Owl Rock CLO I, Ltd., an exempted company incorporated in theCayman Islands with limited liability (the "CLO I Issuer"), and Owl Rock CLO I,LLC, aDelaware limited liability company (the "CLO I Co-Issuer" and togetherwith the CLO I Issuer, the "CLO I Issuers") ") and are backed by a portfolio ofcollateral obligations consisting of middle market loans and participationinterests in middle market loans as well as by other assets of the CLO I Issuer.In the CLO I Transaction the CLO I Issuers (A) issued the following notespursuant to an indenture and security agreement dated as of the Closing Date(the "CLO I Indenture"), by and among the CLO I Issuers andState Street Bankand Trust Company : (i) $242 million ofAAA (sf) Class A Notes, which bearinterest at three-month LIBOR plus 1.80%, (ii) $30 million ofAAA (sf) Class A-FNotes, which bear interest at a fixed rate of 4.165%, and (iii) $68 million ofAA(sf) ClassB Notes , which bear interest at three-month LIBOR plus 2.70%(together, the "CLO I Notes") and (B) borrowed $50 million under floating rateloans (the "Class A Loans" and together with the CLO I Notes, the "CLO I Debt"),which bear interest at three-month LIBOR plus 1.80%, under a credit agreement(the "CLO I Credit Agreement"), dated as of the CLO I Closing Date, by and amongthe CLO I Issuers, as borrowers, various financial institutions, as lenders, andState Street Bank and Trust Company , as collateral trustee and loan agent. TheClass A Loans may be exchanged by the lenders for Class A Notes at any time,subject to certain conditions under the CLO I Credit Agreement and theIndenture. The CLO I Debt is scheduled to mature on May 20, 2031. The CLO INotes were privately placed byNatixis Securities Americas, LLC andSG AmericasSecurities, LLC . 134
--------------------------------------------------------------------------------Concurrently with the issuance of the CLO I Notes and the borrowing under theClass A Loans, the CLO I Issuer issued approximately $206.1 million ofsubordinated securities in the form of 206,106 preferred shares at an issueprice of U.S.$1,000 per share (the "CLO I Preferred Shares"). The CLO IPreferred Shares were issued by the CLO I Issuer as part of its issued sharecapital and are not secured by the collateral securing the CLO I Debt. We ownall of the CLO I Preferred Shares, and as such, are eliminated in consolidation.We act as retention holder in connection with the CLO I Transaction for thepurposes of satisfying certainU.S. andEuropean Union regulations requiringsponsors of securitization transactions to retain exposure to the performance ofthe securitized assets and as such is required to retain a portion of the CLO IPreferred Shares.The Adviser serves as collateral manager for the CLO I Issuer under a collateralmanagement agreement dated as of the CLO I Closing Date. The Adviser is entitledto receive fees for providing these services. The Adviser has waived its rightto receive such fees but may rescind such waiver at any time; provided, however,that if the Adviser rescinds such waiver, the management fee payable to theAdviser pursuant to the Investment Advisory Agreement will be offset by theamount of the collateral management fee attributable to the CLO I Issuers'equity or notes that we own.The CLO I Debt is secured by all of the assets of the CLO I Issuer, which willconsist primarily of middle market loans, participation interests in middlemarket loans, and related rights and the cash proceeds thereof. As part of theCLO I Transaction, we and ORCC Financing II LLC sold and contributedapproximately $575 million par amount of middle market loans to the CLO I Issueron the CLO I Closing Date. Such loans constituted the initial portfolio assetssecuring the CLO I Debt. We and ORCC Financing II LLC each made customaryrepresentations, warranties, and covenants to the CLO I Issuer regarding suchsales and contributions under a loan sale agreement.Through May 20, 2023, a portion of the proceeds received by the CLO I Issuerfrom the loans securing the CLO I Debt may be used by the CLO I Issuer topurchase additional middle market loans under the direction of the Adviser asthe collateral manager in the CLO I Transaction.The CLO I Debt is the secured obligation of the CLO I Issuers, and the CLO IIndenture and the CLO I Credit Agreement include customary covenants and eventsof default. Assets pledged to holders of the Secured Debt and the other securedparties under the Indenture will not be available to pay our debts.The CLO I Notes were offered in reliance on Section 4(a)(2) of the SecuritiesAct. The CLO I Notes have not been registered under the Securities Act or anystate securities laws and, unless so registered, may not be offered or sold inthe United States absent registration with the Securities and ExchangeCommission or pursuant to an exemption from, or in a transaction not subject to,the registration requirements of the Securities Act of 1933, as amended (the"Securities Act") as applicable. For further details, see "ITEM 8. - Notes toConsolidated Financial Statements - Note 6. Debt."
On December 12, 2019 (the "CLO II Closing Date"), we completed a $396.6 millionterm debt securitization transaction (the "CLO II Transaction"), also known as acollateralized loan obligation transaction, which is a form of secured financingincurred by us. The secured notes and preferred shares issued in the CLO IITransaction were issued by our consolidated subsidiaries Owl Rock CLO II, Ltd.,an exempted company incorporated in theCayman Islands with limited liability(the "CLO II Issuer"), and Owl Rock CLO II, LLC, aDelaware limited liabilitycompany (the "CLO II Co-Issuer" and together with the Issuer, the "CLO II Issuers") and are backed by a portfolio of collateral obligations consisting ofmiddle market loans and participation interests in middle market loans as wellas by other assets of the Issuer.The CLO II Transaction was executed by the issuance of the following classes ofnotes and preferred shares pursuant to an indenture and security agreement datedas of the Closing Date (the "CLO II Indenture"), by and among the Issuers andState Street Bank and Trust Company : (i) $157 million ofAAA (sf) Class A-1LNotes, which bear interest at three-month LIBOR plus 1.75%, (ii) $40 million ofAAA (sf) Class A-1F Notes, which bear interest at a fixed rate of 3.44%, (iii)$20 million ofAAA (sf) Class A-2 Notes, which bear interest at three-month LIBORplus 2.20%, (iv) $40 million of AA(sf) Class B-L Notes, which bear interest atthree-month LIBOR plus 2.75% and (v) $3 million of AA(sf) Class B-F Notes, whichbear interest at a fixed rate of 4.46% (together, the "CLO II Debt"). The CLO IIDebt is scheduled to mature on January 20, 2031. The CLO II Debt was privatelyplaced byDeutsche Bank Securities Inc. Upon the occurrence of certaintriggering events relating to the end of LIBOR, a different benchmark rate willreplace LIBOR as the reference rate for interest accruing on the CLO II Debt. Concurrently with the issuance of the CLO II Debt, the CLO II Issuer issuedapproximately $136.6 million of subordinated securities in the form of 136,600preferred shares at an issue price of U.S.$1,000 per share (the "CLO II Preferred Shares"). The CLO II Preferred Shares were issued by the CLO II Issueras part of its issued share capital and are not secured by the collateralsecuring the CLO II Debt. We purchased all of the CLO II Preferred Shares. Weact as retention holder in connection with the CLO II Transaction for thepurposes of satisfying certainU.S. andEuropean Union regulations requiringsponsors of securitization 135
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transactions to retain exposure to the performance of the securitized assets andas such is required to retain a portion of the CLO II Preferred Shares.
The Adviser serves as collateral manager for the CLO II Issuer under acollateral management agreement dated as of the CLO II Closing Date. The Adviseris entitled to receive fees for providing these services. The Adviser has waivedits right to receive such fees but may rescind such waiver at any time;provided, however, that if the Adviser rescinds such waiver, the management feepayable to the Adviser pursuant to the Investment Advisory Agreement will beoffset by the amount of the collateral management fee attributable to the CLO IIIssuers' equity or notes that we own.The CLO II Debt is secured by all of the assets of the CLO II Issuer, which willconsist primarily of middle market loans, participation interests in middlemarket loans, and related rights and the cash proceeds thereof. As part of theCLO II Transaction, we and ORCC Financing III LLC sold and contributedapproximately $400 million par amount of middle market loans to the CLO IIIssuer on the CLO II Closing Date. Such loans constituted the initial portfolioassets securing the CLO II Debt. We and ORCC Financing III LLC each madecustomary representations, warranties, and covenants to the CLO II Issuerregarding such sales and contributions under a loan sale agreement.Through January 20, 2022, a portion of the proceeds received by the CLO IIIssuer from the loans securing the CLO II Debt may be used by the CLO II Issuerto purchase additional middle market loans under the direction of the Adviser ascollateral manager for the CLO II Issuer and in accordance with the ourinvesting strategy and ability to originate eligible middle market loans.The CLO II Debt is the secured obligation of the CLO II Issuers, and the CLO IIIndenture includes customary covenants and events of default. Assets pledged toholders of the Secured Debt and the other secured parties under the Indenturewill not be available to pay our debts.The CLO II Debt was offered in reliance on Section 4(a)(2) of the SecuritiesAct. The CLO II Notes have not been registered under the Securities Act or anystate securities laws and, unless so registered, may not be offered or sold inthe United States absent registration with the Securities and ExchangeCommission or pursuant to an exemption from, or in a transaction not subject to,the registration requirements of the Securities Act as applicable. For furtherdetails, see "ITEM 8. - Notes to Consolidated Financial Statements - Note 6.Debt."CLO III On March 26, 2020 (the "CLO III Closing Date"), we completed a $395.31 millionterm debt securitization transaction (the "CLO III Transaction"), also known asa collateralized loan obligation transaction, which is a form of securedfinancing incurred by us. The secured notes and preferred shares issued in theCLO III Transaction were issued by our consolidated subsidiaries Owl Rock CLOIII, Ltd., an exempted company incorporated in theCayman Islands with limitedliability (the "CLO III Issuer"), and Owl Rock CLO III, LLC, aDelaware limitedliability company (the "CLO III Co-Issuer" and together with the CLO III Issuer,the "CLO III Issuers") and are backed by a portfolio of collateral obligationsconsisting of middle market loans and participation interests in middle marketloans as well as by other assets of the CLO III Issuer.The CLO III Transaction was executed by the issuance of the following classes ofnotes and preferred shares pursuant to an indenture and security agreement datedas of the CLO III Closing Date (the "CLO III Indenture"), by and among the CLOIII Issuers andState Street Bank and Trust Company : (i) $166 million ofAAA (sf)Class A-1L Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $40million ofAAA (sf) Class A-1F Notes, which bear interest at a fixed rate of2.75%, (iii) $20 million ofAAA (sf) Class A-2 Notes, which bear interest atthree-month LIBOR plus 2.00%, and (iv) $34 million of AA(sf) ClassB Notes ,which bear interest at three-month LIBOR plus 2.45% (together, the "CLO III Debt"). The CLO III Debt is scheduled to mature on April 20, 2032. The CLO IIIDebt was privately placed bySG Americas Securities, LLC . Upon the occurrence ofcertain triggering events relating to the end of LIBOR, a different benchmarkrate will replace LIBOR as the reference rate for interest accruing on the CLOIII Debt.Concurrently with the issuance of the CLO III Debt, the CLO III Issuer issuedapproximately $135.31 million of subordinated securities in the form of 135,310preferred shares at an issue price of U.S.$1,000 per share (the "CLO III Preferred Shares"). The CLO III Preferred Shares were issued by the CLO IIIIssuer as part of its issued share capital and are not secured by the collateralsecuring the CLO III Debt. We own all of the CLO III Preferred Shares, and assuch, these securities are eliminated in consolidation. We act as retentionholder in connection with the CLO III Transaction for the purposes of satisfyingcertainU.S. andEuropean Union regulations requiring sponsors of securitizationtransactions to retain exposure to the performance of the securitized assets andas such is required to retain a portion of the CLO III Preferred Shares.The Adviser serves as collateral manager for the CLO III Issuer under acollateral management agreement dated as of the CLO III Closing Date. TheAdviser is entitled to receive fees for providing these services. The Adviserhas waived its right to receive such fees but may rescind such waiver at anytime; provided, however, that if the Adviser rescinds such waiver, themanagement fee 136
--------------------------------------------------------------------------------payable to the Adviser pursuant to the Investment Advisory Agreement will beoffset by the amount of the collateral management fee attributable to the CLOIII Issuers' equity or notes that we own.The CLO III Debt is secured by all of the assets of the CLO III Issuer, whichwill consist primarily of middle market loans, participation interests in middlemarket loans, and related rights and the cash proceeds thereof. As part of theCLO III Transaction, we and ORCC Financing IV LLC sold and contributedapproximately $400 million par amount of middle market loans to the CLO IIIIssuer on the CLO III Closing Date. Such loans constituted the initial portfolioassets securing the CLO III Debt. Us and ORCC Financing IV LLC each madecustomary representations, warranties, and covenants to the CLO III Issuerregarding such sales and contributions under a loan sale agreement.Through April 20, 2024, a portion of the proceeds received by the CLO III Issuerfrom the loans securing the CLO III Debt may be used by the CLO III Issuer topurchase additional middle market loans under the direction of the Adviser asthe collateral manager for the CLO III Issuer and in accordance with ourinvesting strategy and ability to originate eligible middle market loans.The CLO III Debt is the secured obligation of the CLO III Issuers, and the CLOIII Indenture includes customary covenants and events of default. Assets pledgedto holders of the CLO III Debt and the other secured parties under the CLO IIIIndenture will not be available to pay our debts.The CLO III Debt was offered in reliance on Section 4(a)(2) of the SecuritiesAct. The CLO III Debt has not been registered under the Securities Act or anystate securities laws and, unless so registered, may not be offered or sold inthe United States absent registration with the Securities and ExchangeCommission or pursuant to an exemption from, or in a transaction not subject to,the registration requirements of the Securities Act as applicable.
On May 28, 2020 (the "CLO IV Closing Date"), we completed a $438.9 million termdebt securitization transaction (the "CLO IV Transaction"), also known as acollateralized loan obligation transaction, which is a form of securedfinancing. The secured notes and preferred shares issued in the CLO IVTransaction were issued by our consolidated subsidiaries Owl Rock CLO IV, Ltd.,an exempted company incorporated in theCayman Islands with limited liability(the "CLO IV Issuer"), and Owl Rock CLO IV, LLC, aDelaware limited liabilitycompany (the "CLO IV Co-Issuer" and together with the CLO IV Issuer, the "CLO IV Issuers") and are backed by a portfolio of collateral obligations consisting ofmiddle market loans and participation interests in middle market loans as wellas by other assets of the CLO IV Issuer.The CLO IV Transaction was executed by the issuance of the following classes ofnotes and preferred shares pursuant to an indenture and security agreement datedas of the Closing Date (the "CLO IV Indenture"), by and among the CLO IV IssuersandState Street Bank and Trust Company : (i) $236.5 million ofAAA (sf) Class A-1Notes, which bear interest at three-month LIBOR plus 2.62% and (ii) $15.5million ofAAA (sf) Class A-2 Notes, which bear interest at three-month LIBORplus 3.40% (together, the "CLO IV Secured Notes"). The CLO IV Secured Notes aresecured by the middle market loans, participation interests in middle marketloans and other assets of the CLO IV Issuer. The CLO IV Secured Notes arescheduled to mature on May 20, 2029. The CLO IV Secured Notes were privatelyplaced byNatixis Securities Americas LLC . Upon the occurrence of certaintriggering events relating to the end of LIBOR, a different benchmark rate willreplace LIBOR as the reference rate for interest accruing on the CLO IV SecuredNotes.Concurrently with the issuance of the CLO IV Secured Notes, the CLO IV Issuerissued approximately $186.9 million of subordinated securities in the form of186,900 preferred shares at an issue price of U.S.$1,000 per share (the "CLO IV Preferred Shares"). The CLO IV Preferred Shares were issued by the CLO IV Issueras part of its issued share capital and are not secured by the collateralsecuring the CLO IV Secured Notes. We purchased all of the CLO IV PreferredShares. We act as retention holder in connection with the CLO IV Transaction forthe purposes of satisfying certainU.S. andEuropean Union regulations requiringsponsors of securitization transactions to retain exposure to the performance ofthe securitized assets and as such is required to retain a portion of the CLO IVPreferred Shares.As part of the CLO IV Transaction, we entered into a loan sale agreement withthe CLO IV Issuer dated as of the CLO IV Closing Date, which provided for thesale and contribution of approximately $275.07 million par amount of middlemarket loans to the CLO IV Issuer on the CLO IV Closing Date and for futuresales to the CLO IV Issuer on an ongoing basis. Such loans constituted part ofthe initial portfolio of assets securing the CLO IV Secured Notes. The remainderof the initial portfolio assets securing the CLO IV Secured Notes consisted ofapproximately $174.92 million par amount of middle market loans purchased by theCLO IV Issuer from ORCC Financing II LLC, our wholly-owned subsidiary, under anadditional loan sale agreement executed on the CLO IV Closing Date between theIssuer and ORCC Financing II LLC. We and ORCC Financing II LLC each madecustomary representations, warranties, and covenants to the Issuer under theapplicable loan sale agreement.Through November 20, 2021, a portion of the proceeds received by the CLO IVIssuer from the loans securing the CLO IV Secured Notes may be used by the CLOIV Issuer to purchase additional middle market loans under the direction of theAdviser, in its 137
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capacity as collateral manager for the CLO IV Issuer and in accordance with ourinvesting strategy and ability to originate eligible middle market loans.
The Secured Notes are the secured obligation of the CLO IV Issuers, and the CLOIV Indenture includes customary covenants and events of default. The CLO IVSecured Notes have not been registered under the Securities Act, or any statesecurities (e.g., "blue sky") laws, and may not be offered or sold inthe UnitedStates absent registration with the Securities and Exchange Commission orpursuant to an applicable exemption from such registration.The Adviser will serve as collateral manager for the CLO IV Issuer under acollateral management agreement dated as of the CLO IV Closing Date. The Adviseris entitled to receive fees for providing these services. The Adviser has waivedits right to receive such fees but may rescind such waiver at any time;provided, however, that if the Adviser rescinds such waiver, the management feepayable to the Adviser pursuant to the Investment Advisory Agreement will beoffset by the amount of the collateral management fee attributable to the CLO IVIssuers' equity or notes that we own.
CLO V
On November 20, 2020 (the "CLO V Closing Date"), we completed a $345.45 millionterm debt securitization transaction (the "CLO V Transaction"), also known as acollateralized loan obligation transaction, which is a form of securedfinancing. The secured notes and preferred shares issued in the CLO VTransaction were issued by our consolidated subsidiaries Owl Rock CLO V, Ltd.,an exempted company incorporated in theCayman Islands with limited liability(the "CLO V Issuer"), and Owl Rock CLO V, LLC, aDelaware limited liabilitycompany (the "CLO V Co-Issuer" and together with the CLO V Issuer, the "CLO VIssuers") and are backed by a portfolio of collateral obligations consisting ofmiddle market loans and participation interests in middle market loans as wellas by other assets of the CLO V Issuer.The CLO V Transaction was executed by the issuance of the following classes ofnotes and preferred shares pursuant to an indenture and security agreement datedas of the Closing Date (the "CLO V Indenture"), by and among the CLO V IssuersandState Street Bank and Trust Company : (i) $182 million ofAAA (sf)/AAAsf ClassA-1 Notes, which bear interest at three-month LIBOR plus 1.85% and (ii) $14million ofAAA (sf) Class A-2 Notes, which bear interest at three-month LIBORplus 2.20% (together, the "CLO V Secured Notes"). The CLO V Secured Notes aresecured by the middle market loans, participation interests in middle marketloans and other assets of the CLO V Issuer. The CLO V Secured Notes arescheduled to mature on November 20, 2029. The CLO V Secured Notes were privatelyplaced byNatixis Securities Americas LLC . Upon the occurrence of certaintriggering events relating to the end of LIBOR, a different benchmark rate willreplace LIBOR as the reference rate for interest accruing on the CLO V SecuredNotes.Concurrently with the issuance of the CLO V Secured Notes, the CLO V Issuerissued approximately $149.45 million of subordinated securities in the form of149,450 preferred shares at an issue price of U.S.$1,000 per share (the "CLO VPreferred Shares"). The CLO V Preferred Shares were issued by the CLO V Issueras part of its issued share capital and are not secured by the collateralsecuring the CLO V Secured Notes. We purchased all of the CLO V PreferredShares. We act as retention holder in connection with the CLO V Transaction forthe purposes of satisfying certainU.S. andEuropean Union regulations requiringsponsors of securitization transactions to retain exposure to the performance ofthe securitized assets and as such is required to retain a portion of the CLO VPreferred Shares.As part of the CLO V Transaction, we entered into a loan sale agreement with theCLO V Issuer dated as of the CLO V Closing Date, which provided for the sale andcontribution of approximately $201.75 million par amount of middle market loansto the CLO V Issuer on the CLO V Closing Date and for future sales to the CLO VIssuer on an ongoing basis. Such loans constituted part of the initial portfolioof assets securing the CLO V Secured Notes. The remainder of the initialportfolio assets securing the CLO V Secured Notes consisted of approximately$84.74 million par amount of middle market loans purchased by the CLO V Issuerfrom ORCC Financing II LLC, our wholly-owned subsidiary, under an additionalloan sale agreement executed on the CLO V Closing Date between the Issuer andORCC Financing II LLC. We and ORCC Financing II LLC each made customaryrepresentations, warranties, and covenants to the Issuer under the applicableloan sale agreement.Through July 20, 2022, a portion of the proceeds received by the CLO V Issuerfrom the loans securing the CLO V Secured Notes may be used by the CLO V Issuerto purchase additional middle market loans under the direction of the Adviser,in its capacity as collateral manager for the CLO V Issuer and in accordancewith our investing strategy and ability to originate eligible middle marketloans.The Secured Notes are the secured obligation of the CLO V Issuers, and the CLO VIndenture includes customary covenants and events of default. The CLO V SecuredNotes have not been registered under the Securities Act of 1933, as amended (the"Securities Act"), or any state securities (e.g., "blue sky") laws, and may notbe offered or sold inthe United States absent registration with the Securitiesand Exchange Commission or pursuant to an applicable exemption from suchregistration. 138
--------------------------------------------------------------------------------The Adviser will serve as collateral manager for the CLO V Issuer under acollateral management agreement dated as of the CLO V Closing Date. The Adviseris entitled to receive fees for providing these services. The Adviser has waivedits right to receive such fees but may rescind such waiver at any time;provided, however, that if the Adviser rescinds such waiver, the management feepayable to the Adviser pursuant to the Investment Advisory Agreement will beoffset by the amount of the collateral management fee attributable to the CLO VIssuers' equity or notes that we own. 139--------------------------------------------------------------------------------
Unsecured Notes2023 NotesOn December 21, 2017, we entered into a Note Purchase Agreement governing theissuance of $150 million in aggregate principal amount of unsecured notes (the"2023 Notes") to institutional investors in a private placement. The 2023 Noteshave a fixed interest rate of 4.75% and are due on June 21, 2023. Interest onthe 2023 Notes will be due semiannually. This interest rate is subject toincrease (up to a maximum interest rate of 5.50%) in the event that, subject tocertain exceptions, the 2023 Notes cease to have an investment grade rating. Weare obligated to offer to repay the 2023 Notes at par if certain change incontrol events occur. The 2023 Notes are general unsecured obligations of usthat rank pari passu with all outstanding and future unsecured unsubordinatedindebtedness issued by us.The Note Purchase Agreement for the 2023 Notes contains customary terms andconditions for unsecured notes issued in a private placement, including, withoutlimitation, affirmative and negative covenants such as information reporting,maintenance of our status as a BDC within the meaning of the 1940 Act and a RICunder the Code, minimum shareholders equity, minimum asset coverage ratio andprohibitions on certain fundamental changes at us or any subsidiary guarantor,as well as customary events of default with customary cure and notice,including, without limitation, nonpayment, misrepresentation in a materialrespect, breach of covenant, cross-default under other indebtedness of us orcertain significant subsidiaries, certain judgments and orders, and certainevents of bankruptcy.The 2023 Notes were offered in reliance on Section 4(a)(2) of the SecuritiesAct. The 2023 Notes have not been registered under the Securities Act or anystate securities laws and, unless so registered, may not be offered or sold inthe United States except pursuant to an exemption from, or in a transaction notsubject to, the registration requirements of the Securities Act as applicable.In connection with the offering of the 2023 Notes, on December 21, 2017 weentered into a centrally cleared interest rate swap to continue to align theinterest rates of our liabilities with our investment portfolio, which consistspredominately of floating rate loans. The notional amount of the interest rateswap is $150 million. We will receive fixed rate interest semi-annually at 4.75%and pay variable rate interest monthly based on 1-month LIBOR plus 2.545%. Theinterest rate swap matures on December 21, 2021. For the years endedDecember 31, 2020, 2019 and 2018, we made periodic payments of $4.8 million,$7.4 million and $6.8 million, respectively. The interest expense related to the2023 Notes is equally offset by proceeds received from the interest rate swap.The swap adjusted interest expense is included as a component of interestexpense in our Consolidated Statements of Operations. As of December 31, 2020and December 31, 2019, the interest rate swap had a fair value of $3.0 millionand $1.7 million, respectively. Depending on the nature of the balance at periodend, the fair value of the interest rate swap is either included as a componentof accrued expenses and other liabilities or prepaid expenses and other assetson our Consolidated Statements of Assets and Liabilities. The change in fairvalue of the interest rate swap is offset by the change in fair value of the2023 Notes, with the remaining difference included as a component of interestexpense on the Consolidated Statements of Operations. For further details, see"ITEM 8. - Notes to Consolidated Financial Statements - Note 6. Debt."
2024 Notes
On April 10, 2019, we issued $400 million aggregate principal amount of notesthat mature on April 15, 2024 (the "2024 Notes"). The 2024 Notes bear interestat a rate of 5.250% per year, payable semi-annually on April 15 and October 15of each year, commencing on October 15, 2019. We may redeem some or all of the2024 Notes at any time, or from time to time, at a redemption price equal to thegreater of (1) 100% of the principal amount of the 2024 Notes to be redeemed or(2) the sum of the present values of the remaining scheduled payments ofprincipal and interest (exclusive of accrued and unpaid interest to the date ofredemption) on the 2024 Notes to be redeemed, discounted to the redemption dateon a semi-annual basis (assuming a 360-day year consisting of twelve 30-daymonths) using the applicable Treasury Rate plus 50 basis points, plus, in eachcase, accrued and unpaid interest to the redemption date; provided, however,that if we redeem any 2024 Notes on or after March 15, 2024 (the date fallingone month prior to the maturity date of the 2024 Notes), the redemption pricefor the 2024 Notes will be equal to 100% of the principal amount of the 2024Notes to be redeemed, plus accrued and unpaid interest, if any, to, butexcluding, the date of redemption.In connection with the issuance of the 2024 Notes, on April 10, 2019 we enteredinto centrally cleared interest rate swaps to continue to align interest ratesof its liabilities with the investment portfolio, which consists ofpredominantly floating rate loans. The notional amount of the interest rateswaps is $400 million. We will receive fixed rate interest at 5.25% and payvariable rate interest based on one-month LIBOR plus 2.937%. The interest rateswaps mature on April 10, 2024. For the years ended December 31, 2020 and 2019,we made periodic payments of $19.3 million and $10.8 million, respectively. Theinterest expense related to the 2024 Notes is equally offset by the proceedsreceived from the interest rate swaps. The swap adjusted interest expense isincluded as a component of interest expense on our Consolidated Statements ofOperations. As of December 31, 2020 and December 31, 2019, the interest rateswap had a fair value of $26.9 million and $10.8 million, respectively.Depending on the nature of the balance at period end, the fair value of theinterest rate swap is either included as a component of accrued expenses andother liabilities or prepaid expenses and other assets on our ConsolidatedStatements of Assets and Liabilities. The change in fair value of the interestrate swap is offset by 140
--------------------------------------------------------------------------------the change in fair value of the 2024 Notes, with the remaining differenceincluded as a component of interest expense on the Consolidated Statements ofOperations. For further details, see "ITEM 8. - Notes to Consolidated FinancialStatements - Note 6. Debt."2025 NotesOn October 8, 2019, we issued $425 million aggregate principal amount of notesthat mature on March 30, 2025 (the "2025 Notes"). The 2025 Notes bear interestat a rate of 4.00% per year, payable semi-annually on March 30 and September 30of each year, commencing on March 30, 2020. We may redeem some or all of the2025 Notes at any time, or from time to time, at a redemption price equal to thegreater of (1) 100% of the principal amount of the 2025 Notes to be redeemed or(2) the sum of the present values of the remaining scheduled payments ofprincipal and interest (exclusive of accrued and unpaid interest to the date ofredemption) on the 2025 Notes to be redeemed, discounted to the redemption dateon a semi-annual basis (assuming a 360-day year consisting of twelve 30-daymonths) using the applicable Treasury Rate plus 40 basis points, plus, in eachcase, accrued and unpaid interest to the redemption date; provided, however,that if we redeem any 2025 Notes on or after February 28, 2025 (the date fallingone month prior to the maturity date of the 2025 Notes), the redemption pricefor the 2025 Notes will be equal to 100% of the principal amount of the 2025Notes to be redeemed, plus accrued and unpaid interest, if any, to, butexcluding, the date of redemption. "ITEM 8. - Notes to Consolidated FinancialStatements - Note 6. Debt."July 2025 NotesOn January 22, 2020, we issued $500 million aggregate principal amount of notesthat mature on July 22, 2025 (the "July 2025 Notes"). The July 2025 Notes bearinterest at a rate of 3.75% per year, payable semi-annually on January 22 andJuly 22, of each year, commencing on July 22, 2020. We may redeem some or all ofthe July 2025 Notes at any time, or from time to time, at a redemption priceequal to the greater of (1) 100% of the principal amount of the July 2025 Notesto be redeemed or (2) the sum of the present values of the remaining scheduledpayments of principal and interest (exclusive of accrued and unpaid interest tothe date of redemption) on the July 2025 Notes to be redeemed, discounted to theredemption date on a semi-annual basis (assuming a 360-day year consisting oftwelve 30-day months) using the applicable Treasury Rate plus 35 basis points,plus, in each case, accrued and unpaid interest to the redemption date;provided, however, that if we redeem any July 2025 Notes on or after June 22,2025 (the date falling one month prior to the maturity date of the 2025 Notes),the redemption price for the July 2025 Notes will be equal to 100% of theprincipal amount of the July 2025 Notes to be redeemed, plus accrued and unpaidinterest, if any, to, but excluding, the date of redemption.
2026 Notes
On July 23, 2020, we issued $500 million aggregate principal amount of notesthat mature on January 15, 2026 (the "2026 Notes"). The 2026 Notes bear interestat a rate of 4.25% per year, payable semi-annually on January 15 and July 15 ofeach year, commencing on January 15, 2021. We may redeem some or all of the 2026Notes at any time, or from time to time, at a redemption price equal to thegreater of (1) 100% of the principal amount of the 2026 Notes to be redeemed or(2) the sum of the present values of the remaining scheduled payments ofprincipal and interest (exclusive of accrued and unpaid interest to the date ofredemption) on the 2026 Notes to be redeemed, discounted to the redemption dateon a semi-annual basis (assuming a 360-day year consisting of twelve 30-daymonths) using the applicable Treasury Rate plus 50 basis points, plus, in eachcase, accrued and unpaid interest to the redemption date; provided, however,that if we redeem any 2026 Notes on or after December, 15 2025 (the date fallingone month prior to the maturity date of the 2026 Notes), the redemption pricefor the 2026 Notes will be equal to 100% of the principal amount of the 2026Notes to be redeemed, plus accrued and unpaid interest, if any, to, butexcluding, the date of redemption.
July 2026 Notes
On December 8, 2020, we issued $1.0 billion aggregate principal amount of notesthat mature on July 15, 2026 (the "July 2026 Notes"). The July 2026 Notes bearinterest at a rate of 3.40% per year, payable semi-annually on January 15 andJuly 15 of each year, commencing on July 15, 2021. We may redeem some or all ofthe July 2026 Notes at any time, or from time to time, at a redemption priceequal to the greater of (1) 100% of the principal amount of the July 2026 Notesto be redeemed or (2) the sum of the present values of the remaining scheduledpayments of principal and interest (exclusive of accrued and unpaid interest tothe date of redemption) on the July 2026 Notes to be redeemed, discounted to theredemption date on a semi-annual basis (assuming a 360-day year consisting oftwelve 30-day months) using the applicable Treasury Rate plus 50 basis points,plus, in each case, accrued and unpaid interest to the redemption date;provided, however, that if we redeem any July 2026 Notes on or after June 15,2026 (the date falling one month prior to the maturity date of the July 2026Notes), the redemption price for the July 2026 Notes will be equal to 100% ofthe principal amount of the July 2026 Notes to be redeemed, plus accrued andunpaid interest, if any, to, but excluding, the date of redemption. 141
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Off-Balance Sheet Arrangements
Portfolio Company Commitments
From time to time, we may enter into commitments to fund investments. As ofDecember 31, 2020 and December 31, 2019, we had the following outstandingcommitments to fund investments in current portfolio companies:
Portfolio Company Investment December 31, 2020 December 31, 2019($ in thousands)Intelerad Medical Systems First lien senior secured 4,530 -Incorporated (fka 11849573 revolving loanCanada Inc.)3ES Innovation Inc. (dba First lien senior secured
3,893 3,893Aucerna) revolving loanAccela, Inc. First lien senior secured 3,000 - revolving loanAmspec Services Inc. First lien senior secured 14,462 9,038 revolving loanApptio, Inc. First lien senior secured 2,779 2,779 revolving loanAramsco, Inc. First lien senior secured 8,378 6,842 revolving loanArdonagh Midco 3 PLC First lien senior secured 16,950 - delayed draw term loanAssociations, Inc. First lien senior secured 866 17,949 delayed draw term loanAssociations, Inc. First lien senior secured - 11,543 revolving loanAxiomSL Group, Inc. First lien senior secured 9,341 - revolving loanBarracuda Dental LLC (dba First lien senior secured 30,437 -National Dentex) delayed draw term loanBarracuda Dental LLC (dba First lien senior secured 5,854 -National Dentex) revolving loanBCTO BSI Buyer, Inc. (dba First lien senior secured 5,357 -Buildertrend) revolving loanBIG Buyer, LLC First lien senior secured 5,625 11,250 delayed draw term loanBIG Buyer, LLC First lien senior secured 2,000 3,750 revolving loanCaiman Merger Sub LLC (dba First lien senior secured 12,881 12,881City Brewing) revolving loanConnectWise, LLC First lien senior secured 15,004 20,005 revolving loanCovenant Surgical Partners, First lien senior secured - 2,800Inc. delayed draw term loanDefinitive Healthcare First lien senior secured 35,651 43,478Holdings, LLC delayed draw term loanDefinitive Healthcare First lien senior secured 10,870 10,870Holdings, LLC revolving loanDouglas Products and First lien senior secured 6,055 7,872Packaging Company LLC revolving loanEndries Acquisition, Inc. First lien senior secured - 51,638 delayed draw term loanEndries Acquisition, Inc. First lien senior secured 27,000 27,000 revolving loanEntertainment Benefits First lien senior secured 1,104 9,600Group, LLC revolving loanForescout Technologies, Inc. First lien senior secured 5,345 - revolving loanGalls, LLC First lien senior secured 11,204 3,719 revolving loanGalls, LLC First lien senior secured - 29,181 delayed draw term loanGC Agile Holdings Limited First lien senior secured 6,924 10,386(dba Apex Fund Services) revolving loanGenesis Acquisition Co. (dba First lien senior secured - 4,745Procare Software) delayed draw term loanGenesis Acquisition Co. (dba First lien senior secured - 1,714Procare Software) revolving loanGerson Lehrman Group, Inc. First lien senior secured 21,563 21,563 revolving loanGranicus, Inc. First lien senior secured 2,636 - revolving loanH&F Opportunities LUX III First lien senior secured 16,250 -S.À R.L (dba Checkmarx) revolving loan 142
--------------------------------------------------------------------------------Portfolio Company Investment December 31, 2020 December 31, 2019Hercules Buyer LLC (dba The First lien senior secured 20,916 -Vincit Group) revolving loanHGH Purchaser, Inc. (dba First lien senior secured 5,346 32,400Horizon Services) delayed draw term loanHGH Purchaser, Inc. (dba First lien senior secured 8,748 7,938Horizon Services) revolving loanHometown Food Company First lien senior secured 3,671 4,235 revolving loanIdeal Tridon Holdings, Inc. First lien senior secured - 381 delayed draw term loanIdeal Tridon Holdings, Inc. First lien senior secured 4,828 5,400 revolving loanIndividual Foodservice First lien senior secured 25,781 42,500Holdings, LLC delayed draw term loanIndividual Foodservice First lien senior secured 18,465 24,225Holdings, LLC revolving loanInstructure, Inc. First lien senior secured 5,554 - revolving loanIntegrity Marketing First lien senior secured - 16,587Acquisition, LLC delayed draw term loanIntegrity Marketing First lien senior secured - 32,573Acquisition, LLC delayed draw term loanIntegrity Marketing First lien senior secured 14,832 14,832Acquisition, LLC revolving loanInteroperability Bidco, Inc. First lien senior secured 8,000 8,000 delayed draw term loanInteroperability Bidco, Inc. First lien senior secured - 4,000 revolving loanIQN Holding Corp. (dba First lien senior secured 22,672 15,532Beeline) revolving loanKWOR Acquisition, Inc. (dba First lien senior secured 2,063 2,428
Worley Claims Services) delayed draw term loanKWOR Acquisition, Inc. (dba First lien senior secured
5,200 5,200Worley Claims Services) revolving loanLazer Spot G B Holdings, First lien senior secured - 13,417Inc. delayed draw term loanLazer Spot G B Holdings, First lien senior secured 26,833 24,687Inc. revolving loanLightning Midco, LLC (dba First lien senior secured - 1,764Vector Solutions) delayed draw term loanLightning Midco, LLC (dba First lien senior secured 8,953 5,318Vector Solutions) revolving loanLitera Bidco LLC First lien senior secured 5,738 5,738 revolving loanLytx, Inc. First lien senior secured - 2,033 revolving loanLytx, Inc. First lien senior secured 14,092 - delayed draw term loanManna Development Group, LLC First lien senior secured - 3,469 revolving loanMavis Tire Express Services Second lien senior secured 11,376 34,831Corp. delayed draw term loanMINDBODY, Inc. First lien senior secured 6,071 6,071 revolving loanNelipak Holding Company First lien senior secured 2,948 4,690 revolving loanNelipak Holding Company First lien senior secured 7,597 6,970 revolving loanNMI Acquisitionco, Inc. (dba First lien senior secured 646 646Network Merchants) revolving loanNorvax, LLC (dba GoHealth) First lien senior secured 12,273 12,273 revolving loanNutraceutical International First lien senior secured 13,578 -Corporation revolving loanOffen, Inc. First lien senior secured - 5,310 delayed draw term loanPeter C. Foy & Associated First lien senior secured 37,955 -Insurance Services, LLC delayed draw term loanPeter C. Foy & Associated First lien senior secured 8,194 -Insurance Services, LLC revolving loanProject Power Buyer, LLC First lien senior secured 3,188 3,188(dba PEC-Veriforce) revolving loanProfessional Plumbing Group, First lien senior secured 5,757 5,757Inc. revolving loan 143
--------------------------------------------------------------------------------Portfolio Company Investment December 31, 2020 December 31, 2019QC Supply, LLC First lien senior secured 633 - revolving loanReef Global, Inc. (fka First lien senior secured 5,377 16,364Cheese Acquisition, LLC) revolving loanRefresh Parent Holdings, First lien senior secured 29,482 -Inc. delayed draw term loanRefresh Parent Holdings, First lien senior secured 7,716 -Inc. revolving loanRSC Acquisition, Inc (dba First lien senior secured - 10,894Risk Strategies) delayed draw term loanRSC Acquisition, Inc (dba First lien senior secured 1,702 1,702Risk Strategies) revolving loanRxSense Holdings, LLC First lien senior secured - 4,047 revolving loanSafety Products/JHC First lien senior secured 924 924
Acquisition Corp. (dba delayed draw term loanJustrite Safety Group)Sara Lee Frozen Bakery, LLC First lien senior secured
4,440 3,480(fka KSLB Holdings, LLC) revolving loanSonny's Enterprises LLC First lien senior secured 17,969 - revolving loanSwipe Acquisition First lien senior secured 18,461 -Corporation (dba PLI) delayed draw term loanSwipe Acquisition Letter of Credit 7,118 -Corporation (dba PLI)TC Holdings, LLC (dba First lien senior secured 7,685 7,685TrialCard) revolving loanTHG Acquisition, LLC (dba First lien senior secured 36,302 16,841Hilb) delayed draw term loanTHG Acquisition, LLC (dba First lien senior secured 8,608 5,614Hilb) revolving loanTrader Interactive, LLC (fka First lien senior secured 4,471 6,387Dominion Web Solutions, LLC) revolving loanTroon Golf, L.L.C. First lien senior secured 14,426 14,426 revolving loanTSB Purchaser, Inc. (dba First lien senior secured 4,239 3,010Teaching Strategies, Inc.) revolving loanUltimate Baked Goods Midco, First lien senior secured 4,638 4,066LLC revolving loanValence Surface Technologies First lien senior secured 6,000 30,000LLC delayed draw term loanValence Surface Technologies First lien senior secured 10,000 10,000LLC revolving loanWingspire Capital Holdings LLC Interest 82,462 48,552
LLC
WU Holdco, Inc. (dba Weiman First lien senior secured 10,739 13,920Products, LLC) revolving loanWU Holdco, Inc. (dba Weiman First lien senior secured - 16,943Products, LLC) delayed draw term loanTotal Unfunded Portfolio $ 880,626 $ 891,744Company Commitments
We maintain sufficient borrowing capacity to cover outstanding unfundedportfolio company commitments that we may be required to fund. We seek tocarefully consider our unfunded portfolio company commitments for the purpose ofplanning our ongoing financial leverage. Further, we maintain sufficientborrowing capacity within the 150% asset coverage limitation to cover anyoutstanding portfolio company unfunded commitments we are required to fund.
Other Commitments and Contingencies
We had raised $5.5 billion in total Capital Commitments from investors, of which$112.4 million was from executives of Owl Rock. As of June 17, 2019, alloutstanding Capital Commitments had been drawn.
In connection with the IPO, on July 22, 2019, we entered into the Company 10b5-1Plan, to acquire up to $150 million in the aggregate of our common stock atprices below its net asset value per share over a specified period, inaccordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of theExchange Act. The Company 10b5-1 Plan commenced on August 19, 2019.Goldman,Sachs & Co. , as agent has repurchased an aggregate of 12,515,624 shares of ourcommon stock pursuant to the Company 10b5-1 Plan for an aggregate ofapproximately $150 million. The 10b5-1 Plan was exhausted on August 4, 2020. 144
--------------------------------------------------------------------------------On November 3, 2020, our Board approved a repurchase program under which we mayrepurchase up to $100 million of our outstanding common stock. Under theprogram, purchases may be made at management's discretion from time to time inopen-market transactions, in accordance with all applicable securities laws andregulations. Unless extended by our Board, the repurchase program will terminate12-months from the date it was approved. As of December 31, 2020, no repurchaseswere made under the Repurchase Plan.From time to time, we may become a party to certain legal proceedings incidentalto the normal course of its business. At December 31, 2020, we were not aware ofany material pending or threatened litigation that would require accountingrecognition or financial statement disclosure.
Contractual Obligations
A summary of our contractual payment obligations under our credit facilities asof December 31, 2020, is as follows:
Payments Due by Period Less than 1($ in millions) Total year 1-3 years 3-5 years After 5 yearsRevolving Credit Facility $ 252.5 $ - $ - 252.5 -SPV Asset Facility II 100.0 - - - 100.0SPV Asset Facility III 375.0 - 375.0 - -SPV Asset Facility IV 295.0 - - - 295.0CLO I 390.0 - - - 390.0CLO II 260.0 - - - 260.0CLO III 260.0 - - - 260.0CLO IV 252.0 - - - 252.0CLO V 196.0 - - - 196.02023 Notes 150.0 - 150.0 - -2024 Notes 400.0 - - 400.0 -2025 Notes 425.0 - - 425.0 -July 2025 Notes 500.0 - - 500.0 -2026 Notes 500.0 - - - 500.0July 2026 Notes 1,000.0 - - - 1,000.0
Total Contractual Obligations $ 5,355.5 $ - $ 525.0
$ 1,577.5 $ 3,253.0Related-Party Transactions
We have entered into a number of business relationships with affiliated orrelated parties, including the following:
• the Investment Advisory Agreement; • the Administration Agreement; and • the License Agreement.In addition to the aforementioned agreements, we, our Adviser and certain of ourAdviser's affiliates have been granted exemptive relief by theSEC to co-investwith other funds managed by he Owl Rock Advisers, including the Owl RockClients, in a manner consistent with our investment objective, positions,policies, strategies and restrictions as well as regulatory requirements andother pertinent factors. See "ITEM 1. - Notes to Consolidated FinancialStatements - Note 3. Agreements and Related Party Transactions" for furtherdetails.We invest through Wingspire and, together with Regents, through Sebago Lake,controlled affiliated investments as defined in the 1940 Act. See "ITEM 1. -Notes to Consolidated Financial Statements - Note 3. Agreements and RelatedParty Transactions" for further details.
Critical Accounting Policies
The preparation of the consolidated financial statements requires us to makeestimates and assumptions that affect the reported amounts of assets,liabilities, revenues and expenses. Changes in the economic environment,financial markets, and any other
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parameters used in determining such estimates could cause actual results todiffer. Our critical accounting policies should be read in connection with ourrisk factors as described in "ITEM 1A. RISK FACTORS."
Investments at Fair Value
Investment transactions are recorded on the trade date. Realized gains or lossesare measured by the difference between the net proceeds received (excludingprepayment fees, if any) and the amortized cost basis of the investment usingthe specific identification method without regard to unrealized gains or lossespreviously recognized, and include investments charged off during the period,net of recoveries. The net change in unrealized gains or losses primarilyreflects the change in investment values, including the reversal of previouslyrecorded unrealized gains or losses with respect to investments realized duringthe period.Investments for which market quotations are readily available are typicallyvalued at the bid price of those market quotations. To validate marketquotations, we utilize a number of factors to determine if the quotations arerepresentative of fair value, including the source and number of the quotations.Debt and equity securities that are not publicly traded or whose market pricesare not readily available, as is the case for substantially all of ourinvestments, are valued at fair value as determined in good faith by our Board,based on, among other things, the input of the Adviser, our audit committee andindependent third-party valuation firm(s) engaged at the direction of the Board.As part of the valuation process, the Board takes into account relevant factorsin determining the fair value of our investments, including: the estimatedenterprise value of a portfolio company (i.e., the total fair value of theportfolio company's debt and equity), the nature and realizable value of anycollateral, the portfolio company's ability to make payments based on itsearnings and cash flow, the markets in which the portfolio company doesbusiness, a comparison of the portfolio company's securities to any similarpublicly traded securities, and overall changes in the interest rate environmentand the credit markets that may affect the price at which similar investmentsmay be made in the future. When an external event such as a purchasetransaction, public offering or subsequent equity sale occurs, the Boardconsiders whether the pricing indicated by the external event corroborates itsvaluation.
The Board undertakes a multi-step valuation process, which includes, among otherprocedures, the following:
• With respect to investments for which market quotations are readily
available, those investments will typically be valued at the bid price of
those market quotations;
• With respect to investments for which market quotations are not readily
available, the valuation process begins with the independent valuation
firm(s) providing a preliminary valuation of each investment to the Adviser's valuation committee;
• Preliminary valuation conclusions are documented and discussed with the
Adviser's valuation committee. Agreed upon valuation recommendations are
presented to the Audit Committee;
• The Audit Committee reviews the valuation recommendations and recommends
values for each investment to the Board; and • The Board reviews the recommended valuations and determines the fair value of each investment.
We conduct this valuation process on a quarterly basis.
We apply ASC 820, which establishes a framework for measuring fair value inaccordance withU.S. GAAP and required disclosures of fair value measurements.ASC 820 determines fair value to be the price that would be received for aninvestment in a current sale, which assumes an orderly transaction betweenmarket participants on the measurement date. Market participants are defined asbuyers and sellers in the principal or most advantageous market (which may be ahypothetical market) that are independent, knowledgeable, and willing and ableto transact. In accordance with ASC 820, we consider its principal market to bethe market that has the greatest volume and level of activity. ASC 820 specifiesa fair value hierarchy that prioritizes and ranks the level of observability ofinputs used in determination of fair value. In accordance with ASC 820, theselevels are summarized below: • Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. • Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. • Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.Transfers between levels, if any, are recognized at the beginning of the quarterin which the transfer occurred. In addition to using the above inputs ininvestment valuations, we apply the valuation policy approved by our Board thatis consistent with ASC 820. Consistent with the valuation policy, we evaluatethe source of the inputs, including any markets in which our investments aretrading 146
--------------------------------------------------------------------------------(or any markets in which securities with similar attributes are trading), indetermining fair value. When an investment is valued based on prices provided byreputable dealers or pricing services (that is, broker quotes), we subject thoseprices to various criteria in making the determination as to whether aparticular investment would qualify for treatment as a Level 2 or Level 3investment. For example, we, or the independent valuation firm(s), reviewpricing support provided by dealers or pricing services in order to determine ifobservable market information is being used, versus unobservable inputs.Due to the inherent uncertainty of determining the fair value of investmentsthat do not have a readily available market value, the fair value of ourinvestments may fluctuate from period to period. Additionally, the fair value ofsuch investments may differ significantly from the values that would have beenused had a ready market existed for such investments and may differ materiallyfrom the values that may ultimately be realized. Further, such investments aregenerally less liquid than publicly traded securities and may be subject tocontractual and other restrictions on resale. If we were required to liquidate aportfolio investment in a forced or liquidation sale, it could realize amountsthat are different from the amounts presented and such differences could bematerial.
In addition, changes in the market environment and other events that may occurover the life of the investments may cause the gains or losses ultimatelyrealized on these investments to be different than the unrealized gains orlosses reflected herein.
Rule 2a-5 under the 1940 Act was recently adopted by theSEC and establishesrequirements for determining fair value in good faith for purposes of the 1940Act. We are evaluating the impact of adopting Rule 2a-5 on the consolidatedfinancial statements and intend to comply with the new rule's requirements on orbefore the compliance date in September 2022.
Interest and Dividend Income Recognition
Interest income is recorded on the accrual basis and includes amortization ofdiscounts or premiums. Certain investments may have contractual payment-in-kind("PIK") interest or dividends. PIK interest represents accrued interest that isadded to the principal amount of the investment on the respective interestpayment dates rather than being paid in cash and generally becomes due atmaturity. Discounts to par value on securities purchased are amortized intointerest income over the contractual life of the respective security using theeffective yield method. Premiums to par value on securities purchased areamortized to first call date. The amortized cost of investments represents theoriginal cost adjusted for the amortization of discounts or premiums, if any.Upon prepayment of a loan or debt security, any prepayment premiums, unamortizedupfront loan origination fees and unamortized discounts are recorded as interestincome in the current period.Loans are generally placed on non-accrual status when there is reasonable doubtthat principal or interest will be collected in full. Accrued interest isgenerally reversed when a loan is placed on non-accrual status. Interestpayments received on non-accrual loans may be recognized as income or applied toprincipal depending upon management's judgment regarding collectability. If atany point we believe PIK interest is not expected to be realized, the investmentgenerating PIK interest will be placed on non-accrual status. When a PIKinvestment is placed on non-accrual status, the accrued, uncapitalized interestor dividends are generally reversed through interest income. Non-accrual loansare restored to accrual status when past due principal and interest is paidcurrent and, in management's judgment, are likely to remain current. Managementmay make exceptions to this treatment and determine to not place a loan onnon-accrual status if the loan has sufficient collateral value and is in theprocess of collection.Dividend income on preferred equity securities is recorded on the accrual basisto the extent that such amounts are payable by the portfolio company and areexpected to be collected. Dividend income on common equity securities isrecorded on the record date for private portfolio companies or on theex-dividend date for publicly-traded portfolio companies.Distributions
We have elected to be treated for
• investment company taxable income (which is generally our ordinary income
plus the excess of realized short-term capital gains over realized net
long-term capital losses), determined without regard to the deduction for
dividends paid, for such taxable year; and • net tax-exempt interest income (which is the excess of our gross
tax-exempt interest income over certain disallowed deductions) for such taxable year.As a RIC, we (but not our shareholders) generally will not be subject toU.S. federal tax on investment company taxable income and net capital gains that wedistribute to our shareholders.We intend to distribute annually all or substantially all of such income. To theextent that we retain our net capital gains or any investment company taxableincome, we generally will be subject to corporate-levelU.S. federal income tax.We can be expected to 147
--------------------------------------------------------------------------------carry forward our net capital gains or any investment company taxable income inexcess of current year dividend distributions, and pay theU.S. federal excisetax as described below.Amounts not distributed on a timely basis in accordance with a calendar yeardistribution requirement are subject to a nondeductible 4%U.S. federal excisetax payable by us. We may be subject to a nondeductible 4%U.S. federal excisetax if we do not distribute (or are treated as distributing) during eachcalendar year an amount at least equal to the sum of:
• 98% of our net ordinary income excluding certain ordinary gains or losses
for that calendar year;
• 98.2% of our capital gain net income, adjusted for certain ordinary gains
and losses, recognized for the twelve-month period ending on October 31
of that calendar year; and
• 100% of any income or gains recognized, but not distributed, in preceding
years.
While we intend to distribute any income and capital gains in the mannernecessary to minimize imposition of the 4%U.S. federal excise tax, sufficientamounts of our taxable income and capital gains may not be distributed and as aresult, in such cases, the excise tax will be imposed. In such an event, we willbe liable for this tax only on the amount by which we do not meet the foregoingdistribution requirement.We intend to pay quarterly distributions to our shareholders out of assetslegally available for distribution. All distributions will be paid at thediscretion of our Board and will depend on our earnings, financial condition,maintenance of our tax treatment as a RIC, compliance with applicable BDCregulations and such other factors as our Board may deem relevant from time totime.To the extent our current taxable earnings for a year fall below the totalamount of our distributions for that year, a portion of those distributions maybe deemed a return of capital to our shareholders forU.S. federal income taxpurposes. Thus, the source of a distribution to our shareholders may be theoriginal capital invested by the shareholder rather than our income or gains.Shareholders should read written disclosure carefully and should not assume thatthe source of any distribution is our ordinary income or gains.We have adopted an "opt out" dividend reinvestment plan for our commonshareholders. As a result, if we declare a cash dividend or other distribution,each shareholder that has not "opted out" of our dividend reinvestment plan willhave their dividends or distributions automatically reinvested in additionalshares of our common stock rather than receiving cash distributions.Shareholders who receive distributions in the form of shares of common stockwill be subject to the sameU.S. federal, state and local tax consequences as ifthey received cash distributions.
Income Taxes
We have elected to be treated as a BDC under the 1940 Act. We have also electedto be treated as a RIC under the Code beginning with the taxable year endingDecember 31, 2016 and intend to continue to qualify as a RIC. So long as wemaintain our tax treatment as a RIC, we generally will not pay corporate-levelU.S. federal income taxes on any ordinary income or capital gains that wedistribute at least annually to our shareholders as distributions. Rather, anytax liability related to income earned and distributed by us representsobligations of our investors and will not be reflected in our consolidatedfinancial statements.To qualify as a RIC, we must, among other things, meet certain source-of-incomeand asset diversification requirements. In addition, to qualify for RIC taxtreatment, we must distribute to our shareholders, for each taxable year, atleast 90% of our "investment company taxable income" for that year, which isgenerally our ordinary income plus the excess of our realized net short-termcapital gains over our realized net long-term capital losses. In order for us tonot be subject toU.S. federal excise taxes, we must distribute annually anamount at least equal to the sum of (i) 98% of our net ordinary income (takinginto account certain deferrals and elections) for the calendar year, (ii) 98.2%of our capital gains in excess of capital losses for the one-year period endingon October 31 of the calendar year and (iii) any net ordinary income and capitalgains in excess of capital losses for preceding years that were not distributedduring such years. We, at our discretion, may carry forward taxable income inexcess of calendar year dividends and pay a 4% nondeductibleU.S. excise tax onthis income.
Certain consolidated subsidiaries of ours are subject to
We evaluate tax positions taken or expected to be taken in the course ofpreparing our consolidated financial statements to determine whether the taxpositions are "more-likely-than-not" to be sustained by the applicable taxauthority. Tax positions not deemed to meet the "more-likely-than-not" thresholdare reserved and recorded as a tax benefit or expense in the current year. Allpenalties and interest associated with income taxes are included in income taxexpense. Conclusions regarding tax positions are subject to review and may beadjusted at a later date based on factors including, but not limited to,on-going analyses of tax laws, regulations and interpretations thereof. Therewere no material uncertain tax positions through December 31, 2020. The 2017through 2019 tax years remain subject to examination byU.S. federal, state andlocal tax authorities. 148
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