UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarter Ended
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State of Incorporation) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
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Trading Symbol(s) |
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Name of Each Exchange on Which Registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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☐ |
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Smaller Reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No
The number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of August 5, 2024 was
SLR INVESTMENT CORP.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2024
TABLE OF CONTENTS
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Item 1. |
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3 |
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4 |
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3 |
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6 |
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Consolidated Schedule of Investments as of June 30, 2024 (unaudited) |
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7 |
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Consolidated Schedule of Investments as of December 31, 2023 |
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18 |
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29 |
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51 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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52 |
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Item 3. |
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73 |
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Item 4. |
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74 |
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Item 1. |
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75 |
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Item 1A. |
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75 |
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Item 2. |
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75 |
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Item 3. |
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75 |
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Item 4. |
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75 |
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Item 5. |
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75 |
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Item 6. |
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76 |
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77 |
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PART I. FINANCIAL INFORMATION
In this Quarterly Report, “Company”, “we”, “us”, and “our” refer to SLR Investment Corp. unless the context states otherwise.
Item 1. Financial Statements
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share amounts)
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June 30, 2024 |
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December 31, |
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Assets |
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Investments at fair value: |
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Companies less than 5% owned (cost: $ |
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$ |
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$ |
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Companies 5% to 25% owned (cost: $ |
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Companies more than 25% owned (cost: $ |
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Cash |
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Cash equivalents (cost: $ |
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Dividends receivable |
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Interest receivable |
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Receivable for investments sold |
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Prepaid expenses and other assets |
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Total assets |
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$ |
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$ |
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Liabilities |
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Debt ($ |
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$ |
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$ |
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Payable for investments and cash equivalents purchased |
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Management fee payable (see note 3) |
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Performance-based incentive fee payable (see note 3) |
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Interest payable (see note 7) |
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Administrative services payable (see note 3) |
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Other liabilities and accrued expenses |
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Total liabilities |
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$ |
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$ |
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(see note 9) |
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Net Assets |
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Common stock, par value $ |
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$ |
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$ |
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Paid-in capital in excess of par |
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Accumulated distributable net loss |
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( |
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Total net assets |
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$ |
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$ |
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Net Asset Value Per Share |
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$ |
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$ |
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See notes to consolidated financial statements.
3
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except share amounts)
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Three months ended |
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Six months ended |
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June 30, 2024 |
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June 30, 2023 |
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June 30, 2024 |
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June 30, 2023 |
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INVESTMENT INCOME: |
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Interest: |
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Companies less than 5% owned |
$ |
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$ |
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$ |
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$ |
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Companies 5% to 25% owned |
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Companies more than 25% owned |
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Dividends: |
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Companies more than 25% owned |
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Other income: |
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Companies less than 5% owned |
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Companies more than 25% owned |
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Total investment income |
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EXPENSES: |
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Management fees (see note 3) |
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Performance-based incentive fees (see note 3) |
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Interest and other credit facility expenses (see note 7) |
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Administrative services expense (see note 3) |
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Other general and administrative expenses |
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Total expenses |
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Performance-based incentive fees waived (see note 3) |
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Net expenses |
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Net investment income |
$ |
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$ |
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$ |
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$ |
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND |
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Net realized gain on investments and cash equivalents (companies less than 5% owned) |
$ |
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$ |
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$ |
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$ |
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Net change in unrealized gain (loss) on investments and cash equivalents: |
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Companies less than 5% owned |
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Companies 5% to 25% owned |
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Companies more than 25% owned |
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( |
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( |
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( |
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Net change in unrealized gain (loss) on investments and cash equivalents |
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( |
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( |
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( |
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Net realized and unrealized gain (loss) on investments and cash equivalents |
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( |
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( |
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ |
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$ |
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$ |
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$ |
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EARNINGS PER SHARE (see note 5) |
$ |
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$ |
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$ |
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$ |
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See notes to consolidated financial statements.
4
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
(in thousands, except share amounts)
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Three months ended |
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Six months ended |
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June 30, 2024 |
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June 30, 2023 |
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June 30, 2024 |
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June 30, 2023 |
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Increase (decrease) in net assets resulting from operations: |
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Net investment income |
$ |
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$ |
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$ |
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$ |
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Net realized gain |
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Net change in unrealized gain (loss) |
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( |
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( |
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( |
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Net increase in net assets resulting from operations |
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Distributions to stockholders: |
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From net investment income |
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( |
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From return of capital |
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Net distributions to stockholders |
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( |
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( |
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( |
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Capital transactions (see note 10): |
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Repurchases of common stock |
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( |
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Total increase (decrease) in net assets |
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( |
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Net assets at beginning of period |
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Net assets at end of period |
$ |
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$ |
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$ |
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$ |
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Capital stock activity (see note 10): |
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Repurchases of common stock |
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See notes to consolidated financial statements.
5
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
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Six months ended |
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June 30, 2024 |
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June 30, 2023 |
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Cash Flows from Operating Activities: |
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Net increase in net assets resulting from operations |
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$ |
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$ |
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Adjustments to reconcile net increase in net assets resulting from operations to |
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Net realized gain on investments and cash equivalents |
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( |
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( |
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Net change in unrealized (gain) loss on investments |
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( |
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Deferred financing costs/market discount amortization |
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Net accretion of discount on investments |
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( |
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( |
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(Increase) decrease in operating assets: |
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Purchase of investments |
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( |
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( |
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Proceeds from disposition of investments |
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Capitalization of payment-in-kind income |
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( |
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( |
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Collections of payment-in-kind income |
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Receivable for investments sold |
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( |
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( |
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Interest receivable |
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( |
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( |
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Dividends receivable |
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( |
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Prepaid expenses and other assets |
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( |
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( |
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Increase (decrease) in operating liabilities: |
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Payable for investments and cash equivalents purchased |
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( |
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( |
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Management fee payable |
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( |
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( |
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Performance-based incentive fee payable |
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Administrative services expense payable |
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Interest payable |
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( |
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( |
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Other liabilities and accrued expenses |
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( |
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( |
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Net Cash Provided by (Used in) Operating Activities |
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( |
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Cash Flows from Financing Activities: |
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Cash distributions paid |
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( |
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Repayment of unsecured borrowings |
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Proceeds from secured borrowings |
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Repayment of secured borrowings |
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( |
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( |
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Repurchase of common stock |
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( |
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Net Cash Provided by (Used in) Financing Activities |
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( |
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NET DECREASE IN CASH AND CASH EQUIVALENTS |
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( |
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( |
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
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CASH AND CASH EQUIVALENTS AT END OF PERIOD |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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See notes to consolidated financial statements.
6
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)
June 30, 2024
(in thousands, except share/unit amounts)
Description |
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Industry |
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Spread |
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Floor |
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Interest |
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Acquisition |
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Maturity |
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Par |
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Cost |
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Fair |
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Senior Secured Loans — |
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First Lien Bank Debt/Senior |
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33Across Inc. |
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P+ |
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% |
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% |
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$ |
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$ |
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$ |
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Aegis Toxicology Sciences |
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S+ |
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% |
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% |
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Alkeme Intermediary Holdings, |
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S+ |
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% |
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% |
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All States Ag Parts, LLC(16) |
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S+ |
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% |
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% |
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Atria Wealth Solutions, Inc.(16) |
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S+ |
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% |
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% |
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Basic Fun, Inc.(16) |
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S+ |
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% |
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% |
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BayMark Health Services, |
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S+ |
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% |
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% |
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Bayside Opco, LLC(25) |
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S+ |
(11) |
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% |
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% |
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Bayside Parent, LLC(25) |
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S+ |
(11) |
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% |
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% |
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BDG Media, Inc. |
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P+ |
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% |
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% |
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Brainjolt LLC |
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P+ |
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% |
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% |
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CC SAG Holdings Corp. |
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S+ |
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% |
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% |
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Copper River Seafoods, Inc. |
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P+ |
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% |
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CVAUSA Management, LLC(16) |
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S+ |
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% |
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% |
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DeepIntent, Inc. |
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P+ |
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% |
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Enhanced Permanent Capital, |
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S+ |
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% |
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% |
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ENS Holdings III Corp. & ES |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
EyeSouth Eye Care Holdco LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fertility (ITC) Investment |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foundation Consumer |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
GSM Acquisition Corp. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
See notes to consolidated financial statements.
7
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Spread |
|
|
Floor |
|
|
Interest |
|
|
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Higginbotham Insurance Agency, |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Human Interest Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
iCIMS, Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
(24) |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Kaseya, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
(14) |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Kid Distro Holdings, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Kingsbridge Holdings, LLC(2) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Logix Holding Company, |
|
|
P+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Luxury Asset Capital, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Maxor Acquisition, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
NSPC Intermediate Corp. |
|
|
S+ |
(11) (29) |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
One Touch Direct, LLC |
|
|
P+ |
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
ONS MSO, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Orthopedic Care Partners |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Peter C. Foy & Associates |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Plastics Management, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Quantcast Corporation |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Retina Midco, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
RQM+ Corp.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
RxSense Holdings LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Shoes for Crews Global, LLC |
|
|
S+ |
(27) |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sightly Enterprises, Inc. |
|
|
P+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
See notes to consolidated financial statements.
8
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Spread |
|
|
Floor |
|
|
Interest |
|
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Southern Orthodontic Partners |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
SPAR Marketing Force, Inc. |
|
|
P+ |
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stryten Resources LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
SunMed Group Holdings, |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
TAUC Management, LLC(16) |
|
|
S+ |
(28) |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
The Townsend Company, |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Tilley Distribution, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Ultimate Baked Goods Midco |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
United Digestive MSO Parent, |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Urology Management Holdings, |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
UVP Management, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Western Veterinary Partners |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
West-NR Parent, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total First Lien Bank Debt/ Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Second Lien Asset-Based |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
AMF Levered II, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
FGI Worldwide LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Second Lien Asset-Backed Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Second Lien Bank Debt/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
RD Holdco, Inc.** (2) |
|
|
S+ |
(11) |
|
|
% |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
See notes to consolidated financial statements.
9
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Spread |
|
Floor |
|
|
Interest |
|
|
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First Lien Life Science Senior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Alimera Sciences, Inc. (3)(16) |
|
Pharmaceuticals |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Arcutis Biotherapeutics, Inc.(3) |
|
Pharmaceuticals |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Ardelyx, Inc.(3) |
|
Pharmaceuticals |
|
S+ |
|
|
% |
|
|
% |
(26) |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cerapedics, Inc. |
|
Biotechnology |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Meditrina, Inc. |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Neuronetics, Inc.(16) |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
OmniGuide Holdings, Inc. (13) |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Outset Medical, Inc.(16) |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SPR Therapeutics, Inc. |
|
Health Care Technology |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Vapotherm, Inc. |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Vapotherm, Inc. |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
% |
|
|
% |
(22) |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Vertos Medical, Inc. |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total First Lien Life Science Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Total Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Description |
|
Industry |
|
Interest |
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||
Equipment Financing — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
A&A Crane and Rigging, LLC (10) |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Aero Operating LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
AFG Dallas III, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Air Methods Corporation (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
AmeraMex International, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Boart Longyear Company (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Bowman Energy Solutions, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
See notes to consolidated financial statements.
10
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Interest |
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||
Equipment Financing (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Carolina’s Contracting, LLC (10) |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
CKD Holdings, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Clubcorp Holdings, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Complete Equipment Rentals, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Dongwon Autopart Technology Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Double S Industrial Contractors, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Drillers Choice, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Environmental Protection & Improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Equipment Operating Leases, LLC (2)(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Extreme Steel Crane & Rigging, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
First American Commercial Bancorp, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
First National Capital, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
GMT Corporation (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Hawkeye Contracting Company, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
HTI Logistics Corporation (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
International Automotive Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loc Performance Products, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loyer Capital LLC (2)(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Lux Vending, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
See notes to consolidated financial statements.
11
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Interest |
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||
Equipment Financing (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Miranda Logistics Enterprise, Inc. (10) |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Mountain Air Helicopters, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Nimble Crane LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
No Limit Construction Services, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PCX Aerostructures LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rango, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rayzor’s Edge LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RH Land Construction, LLC & Harbor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rotten Rock Hardscaping & Tree |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Signet Marine Corporation (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Smiley Lifting Solutions, LLC(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
ST Coaches, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Star Coaches Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Superior Transportation, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
The Smedley Company & Smedley |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Trinity Equipment, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Trinity Equipment Rentals, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. Crane & Rigging, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Up Trucking Services, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
See notes to consolidated financial statements.
12
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Interest |
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||
Equipment Financing (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Waste Pro of Florida, Inc. & Waste Pro |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Wind River Environmental, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Womble Company, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Worldwide Flight Services, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Zamborelli Enterprises Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
Shares/Units |
|
|
|
|
|
|
|
|||
SLR Equipment Finance Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Equipment Financing |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
Par Amount |
|
|
|
|
|
|
|
|||
Preferred Equity – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
SOINT, LLC (2)(3)(4) |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||||
Description |
|
Industry |
|
Acquisition |
|
Shares/ |
|
|
Cost |
|
|
Fair |
|
|||
Common Equity/Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Assertio Holdings, Inc. (8)* |
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
aTyr Pharma, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Bayside Parent, LLC (25)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
CardioFocus, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Centrexion Therapeutics, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Conventus Orthopaedics, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Delphinus Medical Technologies, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Essence Group Holdings Corporation |
|
|
|
|
|
|
|
|
|
|
|
|||||
KBH Topco LLC (Kingsbridge) (2)(5)(18) |
|
|
|
|
|
|
|
|
|
|
|
|||||
Meditrina, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
NSPC Holdings, LLC (National Spine) * |
|
|
|
|
|
|
|
|
|
|
|
|||||
RD Holdco, Inc. (Rug Doctor) (2)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
RD Holdco, Inc. (Rug Doctor) Class B (2)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
Senseonics Holdings, Inc. (3)(8)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
Shoes for Crews Holdings, LLC |
|
|
|
|
|
|
|
|
|
|
|
|||||
SLR-AMI Topco Blocker, LLC (15)(25)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
SLR Business Credit (2)(3)(19) |
|
|
|
|
|
|
|
|
|
|
|
|||||
SLR Credit Solutions (2)(3)(20) |
|
|
|
|
|
|
|
|
|
|
|
|||||
See notes to consolidated financial statements.
13
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Acquisition |
|
Shares/ |
|
|
Cost |
|
|
Fair |
|
|||
Common Equity/Equity Interests/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
SLR Healthcare ABL (2)(3)(21) |
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
SLR Senior Lending Program LLC (2)(3)(23) |
|
|
|
|
|
|
|
|
|
|
|
|||||
Vapotherm, Inc. Warrants* |
|
|
|
|
|
|
|
|
|
|
|
|||||
Venus Concept Ltd. Warrants* (f/k/a |
|
|
|
|
|
|
|
|
|
|
|
|||||
Vertos Medical, Inc. Warrants* |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Common Equity/Equity Interests/Warrants |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
Total Investments (6) — |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
Description |
|
Industry |
|
Acquisition |
|
Maturity |
|
Par Amount |
|
|
Cost |
|
|
Fair Value |
|
|||
Cash Equivalents — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
U.S. Treasury Bill ( |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total Investments & Cash Equivalents — |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
Liabilities in Excess of Other Assets — ( |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||
Net Assets — |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||
Name of Issuer |
|
Fair Value at |
|
|
Gross |
|
|
Gross |
|
|
Realized |
|
|
Change in |
|
|
Fair Value at |
|
|
Interest/ |
|
|||||||
Equipment Operating Leases, LLC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Kingsbridge Holdings, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
KBH Topco, LLC (Kingsbridge) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loyer Capital LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RD Holdco, Inc. (Rug Doctor, common equity) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RD Holdco, Inc. (Rug Doctor, class B) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RD Holdco, Inc. (debt) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR Business Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
See notes to consolidated financial statements.
14
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Name of Issuer |
|
Fair Value at |
|
|
Gross |
|
|
Gross |
|
|
Realized |
|
|
Change in |
|
|
Fair Value at |
|
|
Interest/ |
|
|||||||
SLR Credit Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR Equipment Finance (equity) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
SLR Equipment Finance (debt) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR Healthcare ABL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR Senior Lending Program LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SOINT, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
See notes to consolidated financial statements.
15
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Name of Issuer |
|
Fair Value at |
|
|
Gross |
|
|
Gross |
|
|
Realized |
|
|
Change in |
|
|
Fair Value at |
|
|
Interest |
|
|||||||
Bayside Opco, LLC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Bayside Parent, LLC (loan) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Bayside Parent, LLC (equity) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR-AMI Topco Blocker, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
*
**
See notes to consolidated financial statements.
16
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share/unit amounts)
Industry Classification |
|
Percentage of Total |
|
|
Diversified Financial Services (includes SLR Credit Solutions, SLR Business Credit and SLR Healthcare ABL) |
|
|
% |
|
Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance, Equipment Operating Leases, |
|
|
% |
|
Health Care Providers & Services |
|
|
% |
|
Health Care Equipment & Supplies |
|
|
% |
|
Pharmaceuticals |
|
|
% |
|
Software |
|
|
% |
|
Insurance |
|
|
% |
|
Diversified Consumer Services |
|
|
% |
|
Asset Management |
|
|
% |
|
Media |
|
|
% |
|
Commercial Services & Supplies |
|
|
% |
|
Capital Markets |
|
|
% |
|
Biotechnology |
|
|
% |
|
Thrifts & Mortgage Finance |
|
|
% |
|
Packaged Foods & Meats |
|
|
% |
|
Personal Products |
|
|
% |
|
Auto Parts & Equipment |
|
|
% |
|
Life Sciences Tools & Services |
|
|
% |
|
Internet Software & Services |
|
|
% |
|
Internet & Catalog Retail |
|
|
% |
|
Transportation Infrastructure |
|
|
% |
|
Communications Equipment |
|
|
% |
|
Road & Rail |
|
|
% |
|
Trading Companies & Distributors |
|
|
% |
|
Hotels, Restaurants & Leisure |
|
|
% |
|
Health Care Technology |
|
|
% |
|
Aerospace & Defense |
|
|
% |
|
Food Products |
|
|
% |
|
Machinery |
|
|
% |
|
Auto Components |
|
|
% |
|
Airlines |
|
|
% |
|
Leisure Equipment & Products |
|
|
% |
|
Specialty Retail |
|
|
% |
|
Metals & Mining |
|
|
% |
|
Construction & Engineering |
|
|
% |
|
Energy Equipment & Services |
|
|
% |
|
Consumer Finance |
|
|
% |
|
Total Investments |
|
|
% |
|
See notes to consolidated financial statements.
17
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Spread |
|
|
Floor |
|
|
Interest |
|
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Senior Secured Loans — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First Lien Bank Debt/Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accession Risk Management Group, Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Aegis Toxicology Sciences Corporation(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Alkeme Intermediary Holdings, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
All States Ag Parts, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Atria Wealth Solutions, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Fun, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
BayMark Health Services, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Bayside Opco, LLC(27) |
|
|
S+ |
(11) |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Bayside Parent, LLC(27) |
|
|
S+ |
(11) |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
BDG Media, Inc. |
|
|
P+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
CC SAG Holdings Corp. (Spectrum |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Copper River Seafoods, Inc. |
|
|
P+ |
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Crewline Buyer, Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
CVAUSA Management, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
DeepIntent, Inc. |
|
|
P+ |
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Enhanced Permanent Capital, LLC(3) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
ENS Holdings III Corp. & ES Opco |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Exactcare Parent, Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fertility (ITC) Investment Holdco, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foundation Consumer Brands, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
GSM Acquisition Corp. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
See notes to consolidated financial statements.
18
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Spread |
|
Floor |
|
|
Interest |
|
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Senior Secured Loans (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Higginbotham Insurance Agency, Inc.(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Human Interest Inc |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
iCIMS, Inc. |
|
|
S+ |
|
|
% |
|
|
% |
(26) |
|
|
|
|
|
|
|
|
|
|
||||||||
Kaseya, Inc.(16) |
|
|
S+ |
|
|
% |
|
|
% |
(14) |
|
|
|
|
|
|
|
|
|
|
||||||||
Kid Distro Holdings, LLC (Distro Kid)(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Kingsbridge Holdings, LLC(2) . |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Logix Holding Company, LLC(16) |
|
|
P+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Luxury Asset Capital, LLC(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Maxor Acquisition, Inc.(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Medrina, LLC |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
NSPC Intermediate Corp. (National Spine) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
One Touch Direct, LLC |
|
|
P+ |
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
ONS MSO, LLC |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Orthopedic Care Partners Management, LLC |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Peter C. Foy & Associates Insurance |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pinnacle Treatment Centers, Inc.(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Plastics Management, LLC(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Retina Midco, Inc.(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
RQM+ Corp.(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
RxSense Holdings LLC(16) |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
SCP Eye Care, LLC |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
SHO Holding I Corporation (Shoes |
|
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
See notes to consolidated financial statements.
19
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Spread |
|
|
Floor |
|
|
Interest |
|
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Senior Secured Loans (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Southern Orthodontic Partners Management, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
SPAR Marketing Force, Inc. |
|
|
P+ |
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stryten Resources LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
SunMed Group Holdings, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
TAUC Management, LLC(16) |
|
|
P+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
The Townsend Company, LLC(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Tilley Distribution, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Ultimate Baked Goods Midco LLC (Rise Baking)(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
United Digestive MSO Parent, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Urology Management Holdings, Inc |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
UVP Management, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Vessco Midco Holdings, LLC |
|
|
P+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
WCI-BXC Purchaser, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
West-NR Parent, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total First Lien Bank Debt/Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Second Lien Asset-Based Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
AMF Levered II, LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
FGI Worldwide LLC |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Second Lien Bank Asset-Backed Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Second Lien Bank Debt/Senior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
RD Holdco, Inc.** (2) |
|
|
S+ |
(11) |
|
|
% |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
See notes to consolidated financial statements.
20
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Spread |
|
|
Floor |
|
|
Interest |
|
|
Acquisition |
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
||||||
Senior Secured Loans (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
First Lien Life Science Senior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Alimera Sciences, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
Arcutis Biotherapeutics, Inc.(3) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Ardelyx, Inc.(3) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
BridgeBio Pharma, Inc.(3) |
|
|
|
|
|
|
|
|
|
% |
(22) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Cerapedics, Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Glooko, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Meditrina, Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Neuronetics, Inc.(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
OmniGuide Holdings, Inc. (13) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Outset Medical, Inc.(3)(16) |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Vapotherm, Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
(24) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Vertos Medical, Inc. |
|
|
S+ |
|
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total First Lien Life Science Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||
Total Senior Secured Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||
Description |
|
Industry |
|
Interest |
|
Acquisition |
|
Maturity |
|
Par Amount |
|
|
Cost |
|
|
Fair |
|
|||
Equipment Financing — 26.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
A&A Crane and Rigging, LLC (10) |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Aero Operating LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
AFG Dallas III, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Air Methods Corporation (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
AmeraMex International, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Bazzini, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Boart Longyear Company (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Bowman Energy Solutions, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
C-Port/Stone LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
See notes to consolidated financial statements.
21
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Interest |
|
Acquisition |
|
Maturity |
|
Par Amount |
|
|
Cost |
|
|
Fair |
|
|||
Equipment Financing (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Capital City Jet Center, Inc. (10) |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Carolina’s Contracting, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
CKD Holdings, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Clubcorp Holdings, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Complete Equipment Rentals, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Dongwon Autopart Technology Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Double S Industrial Contractors, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Drillers Choice, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Energy Drilling Services, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Environmental Protection & Improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Equipment Operating Leases, LLC (2)(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Extreme Steel Crane & Rigging, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
First American Commercial Bancorp, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
First National Capital, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Georgia Jet, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
GMT Corporation (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Hawkeye Contracting Company, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
HTI Logistics Corporation (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
International Automotive Components Group, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Kool Pak, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loc Performance Products, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loyer Capital LLC (2)(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Lux Credit Consultants, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Lux Vending, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
See notes to consolidated financial statements.
22
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Interest |
|
Acquisition |
|
Maturity |
|
Par Amount |
|
|
Cost |
|
|
Fair |
|
|||
Equipment Financing (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Miranda Logistics Enterprise, Inc. (10) |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Mountain Air Helicopters, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Nimble Crane LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
No Limit Construction Services, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Ozzies, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PCX Aerostructures LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rane Light Metal Castings Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rango, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rayzor’s Edge LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RH Land Construction, LLC & Harbor Dredging |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Royal Express Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rotten Rock Hardscaping & Tree Service (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rutt Services, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Signet Marine Corporation (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR Equipment Finance(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Smiley Lifting Solutions, LLC(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
ST Coaches, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Star Coaches Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Superior Transportation , Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
The Smedley Company & Smedley |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Trinity Equipment, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Trinity Equipment Rentals, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. Crane & Rigging, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Up Trucking Services, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
See notes to consolidated financial statements.
23
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Interest |
|
Acquisition |
|
Maturity |
|
Par Amount |
|
|
Cost |
|
|
Fair |
|
|||
Equipment Financing (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Waste Pro of Florida, Inc. & Waste |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Wind River Environmental, LLC (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Womble Company, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Worldwide Flight Services, Inc. (10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Zamborelli Enterprises Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Shares/Units |
|
|
|
|
|
|
|
|||
SLR Equipment Finance Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Equipment Financing |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Par Amount |
|
|
|
|
|
|
|
|||
Preferred Equity – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
SOINT, LLC (2)(3)(4) |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||||
Description |
|
Industry |
|
Acquisition |
|
Shares/ |
|
|
Cost |
|
|
Fair |
|
|||
Common Equity/Equity Interests/Warrants— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Assertio Holdings, Inc. (8)* |
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
aTyr Pharma, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Bayside Parent, LLC (27)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
CardioFocus, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Centrexion Therapeutics, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Conventus Orthopaedics, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Delphinus Medical Technologies, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
Essence Group Holdings Corporation |
|
|
|
|
|
|
|
|
|
|
|
|||||
KBH Topco LLC (Kingsbridge) (2)(5)(18). |
|
|
|
|
|
|
|
|
|
|
|
|||||
Meditrina, Inc. Warrants * |
|
|
|
|
|
|
|
|
|
|
|
|||||
NSPC Holdings, LLC (National Spine) * |
|
|
|
|
|
|
|
|
|
|
|
|||||
RD Holdco, Inc. (Rug Doctor) (2)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
RD Holdco, Inc. (Rug Doctor) Class B (2)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
Senseonics Holdings, Inc. (3)(8)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
SLR-AMI Topco Blocker, LLC (15)(27)* |
|
|
|
|
|
|
|
|
|
|
|
|||||
SLR Business Credit (2)(3)(19) |
|
|
|
|
|
|
|
|
|
|
|
|||||
SLR Credit Solutions (2)(3)(20) |
|
|
|
|
|
|
|
|
|
|
|
|||||
See notes to consolidated financial statements.
24
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description |
|
Industry |
|
Acquisition |
|
Shares/ |
|
|
Cost |
|
|
Fair |
|
|||
Common Equity/Equity Interests/Warrants (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
SLR Healthcare ABL (2)(3)(21) |
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
SLR Senior Lending Program LLC (2)(3)(25) |
|
|
|
|
|
|
|
|
|
|
|
|||||
Vapotherm, Inc. Warrants* |
|
|
|
|
|
|
|
|
|
|
|
|||||
Venus Concept Ltd. Warrants* (f/k/a |
|
|
|
|
|
|
|
|
|
|
|
|||||
Vertos Medical, Inc. Warrants* |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Common Equity/Equity Interests/Warrants |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
Total Investments (6) — |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
Description |
|
Industry |
|
Acquisition |
|
Maturity |
|
Par Amount |
|
|
Cost |
|
|
Fair Value |
|
|||
Cash Equivalents — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
U.S. Treasury Bill ( |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total Investments & Cash Equivalents — |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
Liabilities in Excess of Other Assets — ( |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||
Net Assets — |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||
Name of Issuer |
|
Fair Value at |
|
|
Gross |
|
|
Gross |
|
|
Realized |
|
|
Change in |
|
|
Fair Value at |
|
|
Interest/ |
|
|||||||
Equipment Operating Leases, LLC |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Kingsbridge Holdings, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
KBH Topco, LLC (Kingsbridge) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Loyer Capital LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RD Holdco, Inc. (Rug Doctor, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RD Holdco, Inc. (Rug Doctor, class B) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RD Holdco, Inc. (Rug Doctor, warrants) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||||
RD Holdco, Inc. (debt) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR Business Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
See notes to consolidated financial statements.
25
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Name of Issuer |
|
Fair Value at |
|
|
Gross |
|
|
Gross |
|
|
Realized |
|
|
Change in |
|
|
Fair Value at |
|
|
Interest/ |
|
|||||||
SLR Credit Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
SLR Equipment Finance (equity) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR Equipment Finance (debt) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
SLR Healthcare ABL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SLR Senior Lending Program LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
SOINT, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
See notes to consolidated financial statements.
26
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Name of Issuer |
|
Fair Value at |
|
|
Gross |
|
|
|
Gross |
|
|
Realized |
|
|
Change in |
|
|
Fair Value at |
|
|
Interest |
|
|||||||
Oldco AI, LLC (f/k/a AmeriMark) |
|
$ |
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Oldco AI, LLC (f/k/a AmeriMark) |
|
|
|
|
|
|
|
|
( |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Bayside Opco, LLC |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Bayside Opco, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Bayside Parent, LLC (loan) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Bayside Parent, LLC (equity) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
SLR-AMI Topco Blocker, LLC |
|
|
|
|
|
|
a |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
|
|
$ |
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
a
*
** Investment is on non-accrual status.
See notes to consolidated financial statements.
27
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands)
Industry Classification |
|
Percentage of Total |
|
|
Diversified Financial Services (includes SLR Credit Solutions, SLR Business Credit and SLR |
|
|
% |
|
Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance, |
|
|
% |
|
Health Care Providers & Services |
|
|
% |
|
Health Care Equipment & Supplies |
|
|
% |
|
Pharmaceuticals |
|
|
% |
|
Biotechnology |
|
|
% |
|
Software |
|
|
% |
|
Insurance |
|
|
% |
|
Diversified Consumer Services |
|
|
% |
|
Commercial Services & Supplies |
|
|
% |
|
Asset Management |
|
|
% |
|
Capital Markets |
|
|
% |
|
Media |
|
|
% |
|
Thrifts & Mortgage Finance |
|
|
% |
|
Personal Products |
|
|
% |
|
Packaged Foods & Meats |
|
|
% |
|
Auto Parts & Equipment |
|
|
% |
|
Road & Rail |
|
|
% |
|
Life Sciences Tools & Services |
|
|
% |
|
Internet Software & Services |
|
|
% |
|
Internet & Catalog Retail |
|
|
% |
|
Transportation Infrastructure |
|
|
% |
|
Communications Equipment |
|
|
% |
|
Health Care Technology |
|
|
% |
|
Trading Companies & Distributors |
|
|
% |
|
Hotels, Restaurants & Leisure |
|
|
% |
|
Aerospace & Defense |
|
|
% |
|
Oil, Gas & Consumable Fuels. |
|
|
% |
|
Footwear |
|
|
% |
|
Auto Components |
|
|
% |
|
IT Services |
|
|
% |
|
Food Products |
|
|
% |
|
Machinery |
|
|
% |
|
Airlines |
|
|
% |
|
Distributors |
|
|
% |
|
Metals & Mining |
|
|
% |
|
Leisure Equipment & Products |
|
|
% |
|
Specialty Retail |
|
|
% |
|
Food & Staples Retailing |
|
|
% |
|
Construction & Engineering |
|
|
% |
|
Consumer Finance |
|
|
% |
|
Energy Equipment & Services |
|
|
% |
|
Water Utilities |
|
|
% |
|
Total Investments |
|
|
% |
|
See notes to consolidated financial statements.
28
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
June 30, 2024
(in thousands, except share amounts)
Note 1. Organization
SLR Investment Corp. (the “Company”, “SLRC”, “we”, “us” or “our”), a Maryland corporation formed in November 2007, is an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues to apply the guidance in the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S. federal income tax purposes, the Company has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
On February 9, 2010, the Company priced its initial public offering, selling
The Company’s investment objective is to maximize both current income and capital appreciation through debt and equity investments. The Company directly and indirectly invests primarily in leveraged middle market companies in the form of senior secured loans, financing leases and, to a lesser extent, unsecured loans and equity securities. From time to time, we may also invest in public companies that are thinly traded.
On April 1, 2022, we acquired SLR Senior Investment Corp., a Maryland corporation (“SUNS”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 1, 2021, by and among us, SUNS, Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, SLR Capital Partners, LLC (the “Investment Adviser”). Pursuant to the Merger Agreement, Merger Sub merged with and into SUNS, with SUNS continuing as the surviving company and as SUNS’s wholly-owned subsidiary (the “Merger”) and, immediately thereafter, SUNS merged with and into us, with us continuing as the surviving company (together with the Merger, the “Mergers”). In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of SUNS’s common stock was converted into the right to receive
29
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Note 2. Significant Accounting Policies
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”), and include the accounts of the Company and certain wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts may have been reclassified to conform to the current period presentation.
Interim consolidated financial statements are prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, they may not include all of the information and notes required by GAAP for annual consolidated financial statements. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2024.
In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of consolidated financial statements, have been included.
The significant accounting policies consistently followed by the Company are:
With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value under GAAP, the Board has approved a multi-step valuation process each quarter, as described below:
30
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
The valuation principles set forth above may be modified from time to time, in whole or in part, as determined by the Board in its sole discretion. The Board will also (1) periodically assess and manage valuation risks; (2) establish and apply fair value methodologies; (3) test fair value methodologies; (4) oversee and evaluate third-party pricing services, as applicable; (5) oversee the reporting required by Rule 2a-5 under the 1940 Act; and (6) maintain recordkeeping requirements under Rule 2a-5.
Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. However, in accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation approaches to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. For the six months ended June 30, 2024, there has been no change to the Company’s valuation approaches or techniques and the nature of the related inputs considered in the valuation process.
ASC Topic 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for the asset or liability.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The exercise of judgment is based in part on our knowledge of the asset class and our prior experience.
31
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying consolidated financial statements.
32
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Note 3. Agreements
The Company has an investment advisory and management agreement (the “Advisory Agreement”) with the Investment Adviser, under which the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. For providing these services, the Investment Adviser receives a fee from the Company, consisting of two components—a base management fee and a performance-based incentive fee. On April 1, 2022, in connection with the consummation of the Mergers, we entered into a letter agreement (the “Letter Agreement”) pursuant to which the Investment Adviser voluntarily agreed to a permanent 25 basis point reduction of the annual base management fee rate payable by us to the Investment Adviser pursuant to the Advisory Agreement. Following the Letter Agreement, the base management fee is now determined by taking the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of
The performance-based incentive fee has two parts, as follows: one part is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement (as defined below), and any interest expense and distributions paid on any issued and outstanding preferred stock, but excluding the performance-based incentive fee). Pre-incentive fee net investment income does not include any realized capital gains or losses, or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of
The second part of the performance-based incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), and equals
For the three and six months ended June 30, 2024, the Company recognized $
The Company has also entered into an administration agreement (the “Administration Agreement”) with SLR Capital Management, LLC (the “Administrator”) under which the Administrator provides administrative services to the Company. For providing these services, facilities and personnel, the Company reimburses the Administrator for the Company’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement,
33
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
including rent. The Administrator will also provide, on the Company’s behalf, managerial assistance to those portfolio companies to which the Company is required to provide such assistance. The Company typically reimburses the Administrator on a quarterly basis.
For the three and six months ended June 30, 2024, the Company recognized expenses under the Administration Agreement of $
Note 4. Net Asset Value Per Share
At June 30, 2024, the Company’s total net assets and net asset value per share were $
Note 5. Earnings Per Share
The following table sets forth the computation of basic and diluted net increase in net assets per share resulting from operations, pursuant to ASC 260-10, for the three and six months ended June 30, 2024 and 2023:
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Earnings per share (basic & diluted) |
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator - net increase in net assets resulting from |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Denominator - weighted average shares: |
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share: |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 6. Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuations used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:
Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.
Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s and, if applicable, an independent third-party valuation firm’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.
34
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3).
Gains and losses for assets and liabilities categorized within the Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Such reclassifications involving Level 3 assets and liabilities are reported as transfers in/out of Level 3 as of the end of the quarter in which the reclassifications occur. Within the fair value hierarchy tables below, cash and cash equivalents are excluded but could be classified as Level 1.
The following tables present the balances of assets measured at fair value on a recurring basis, as of June 30, 2024 and December 31, 2023:
Fair Value Measurements
As of June 30, 2024
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Measured at |
|
|
Total |
|
|||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Senior Secured Loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Equipment Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Preferred Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Equity/Equity Interests/Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Fair Value Measurements
As of December 31, 2023
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Measured at |
|
|
Total |
|
|||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Senior Secured Loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Equipment Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Preferred Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Equity/Equity Interests/Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
* In accordance with ASC 820-10, certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities. The portfolio investment in this category is SSLP (as defined below). See Note 17 for more information on this investment, including its investment strategy and the Company’s unfunded equity commitment to SSLP. This investment is not redeemable by the Company absent an election by the members of the entity to liquidate all investments and distribute the proceeds to the members.
35
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
The following tables provide a summary of the changes in fair value of Level 3 assets for the three and six months ended June 30, 2024, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at June 30, 2024:
Fair Value Measurements Using Level 3 Inputs
|
|
Senior |
|
|
Equipment |
|
|
Preferred Equity |
|
|
Common |
|
|
Total |
|
|||||
Fair value, March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total gains or losses included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net realized gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Net change in unrealized gain (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Purchase of investment securities* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from dispositions of investment securities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Transfers in/out of Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fair value, June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Unrealized gains (losses) for the period relating to those |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net change in unrealized gain (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Senior |
|
|
Equipment |
|
|
Preferred Equity |
|
|
Common |
|
|
Total |
|
|||||
Fair value, December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total gains or losses included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net realized gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Net change in unrealized gain (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||
Purchase of investment securities* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from dispositions of investment securities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Transfers in/out of Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fair value, June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Unrealized gains (losses) for the period relating to those |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net change in unrealized gain (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
*
While the Company has not made an election to apply the fair value option of accounting to any of its current debt obligations, if the Company’s debt obligations were carried at fair value at June 30, 2024, the fair value of the Credit Facility, SPV Credit Facility, 2024 Unsecured Notes, 2025 Unsecured Notes, 2026 Unsecured Notes, 2027 Unsecured Notes and 2027 Series F Unsecured Notes (each as defined below) would be $
36
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
The following table provides a summary of the changes in fair value of Level 3 assets for the year ended December 31, 2023, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at December 31, 2023:
Fair Value Measurements Using Level 3 Inputs
|
|
Senior |
|
|
Equipment |
|
|
Preferred |
|
|
Common |
|
|
Total |
|
|||||
Fair value, December 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total gains or losses included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net realized loss |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
change in unrealized gain (loss) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||
Purchase of investment securities* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from dispositions of investment securities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Transfers in/out of Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fair value, December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Unrealized gains (losses) for the period relating to those |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
change in unrealized gain (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
While the Company has not made an election to apply the fair value option of accounting to any of its current debt obligations, if the Company’s debt obligations were carried at fair value at December 31, 2023, the fair value of the Credit Facility, SPV Credit Facility, 2024 Unsecured Notes, 2025 Unsecured Notes, 2026 Unsecured Notes, 2027 Unsecured Notes and 2027 Series F Unsecured Notes would be $
Quantitative Information about Level 3 Fair Value Measurements
The Company typically determines the fair value of its performing debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to current contractual interest rates, relative maturities and other key terms and risks associated with an investment. Among other factors, a significant determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio company.
Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 assets and liabilities primarily reflect current market yields, including indices, and readily available quotes from brokers, dealers, and pricing services as indicated by comparable assets and liabilities, as well as enterprise values, returns on equity and earnings before income taxes, depreciation and amortization (“EBITDA”) multiples of similar companies, and comparable market transactions for equity securities.
37
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of June 30, 2024 is summarized in the table below:
|
|
Asset or |
|
Fair Value at |
|
|
Principal Valuation |
|
Unobservable |
|
Range (Weighted |
|
Senior Secured Loans |
|
Asset |
|
$ |
|
|
|
|
||||
|
|
|
|
$ |
|
|
|
|
N/A |
|||
Equipment Financing |
|
Asset |
|
$ |
|
|
|
|
||||
|
|
|
|
$ |
|
|
|
|
||||
Preferred Equity |
|
Asset |
|
$ |
|
|
|
|
N/A |
|||
Common Equity/Equity |
|
Asset |
|
$ |
|
|
|
|
||||
|
|
|
|
$ |
|
|
|
|
||||
Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of December 31, 2023 is summarized in the table below:
|
|
Asset or |
|
Fair Value at |
|
|
Principal Valuation |
|
Unobservable |
|
Range (Weighted |
|
Senior Secured Loans |
|
Asset |
|
$ |
|
|
|
|
||||
|
|
|
|
$ |
|
|
|
|
N/A |
|||
Equipment Financing |
|
Asset |
|
$ |
|
|
|
|
||||
|
|
|
|
$ |
|
|
|
|
||||
Preferred Equity |
|
Asset |
|
$ |
|
|
|
|
||||
Common Equity/Equity |
|
Asset |
|
$ |
|
|
|
|
||||
|
|
|
|
$ |
|
|
|
|
||||
Significant increases or decreases in any of the above unobservable inputs in isolation, including unobservable inputs used in deriving bid-ask spreads, if applicable, could result in significantly lower or higher fair value measurements for such assets and liabilities. Generally, an increase in market yields or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments. Weighted averages in the above tables are calculated based on fair value of the underlying assets.
38
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Note 7. Debt
Our debt obligations consisted of the following as of June 30, 2024 and December 31, 2023:
|
|
June 30, 2024 |
|
|
|
December 31, 2023 |
|
|
||||||||||
Facility |
|
Face Amount |
|
|
Carrying Value |
|
|
|
Face Amount |
|
|
Carrying Value |
|
|
||||
Credit Facility |
|
$ |
|
|
$ |
|
(1) |
|
$ |
|
|
$ |
|
(1) |
||||
SPV Credit Facility |
|
|
|
|
|
|
(2) |
|
|
|
|
|
|
(2) |
||||
2024 Unsecured Notes |
|
|
|
|
|
|
(3) |
|
|
|
|
|
|
(3) |
||||
2025 Unsecured Notes |
|
|
|
|
|
|
(4) |
|
|
|
|
|
|
(4) |
||||
2026 Unsecured Notes |
|
|
|
|
|
|
(5) |
|
|
|
|
|
|
(5) |
||||
2027 Unsecured Notes |
|
|
|
|
|
|
(6) |
|
|
|
|
|
|
(6) |
||||
2027 Series F Unsecured Notes |
|
|
|
|
|
|
(7) |
|
|
|
|
|
|
(7) |
||||
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
||||
Unsecured Notes
On April 1, 2022, the Company entered into an assumption agreement (the “Note Assumption Agreement”), effective as of the closing of the Mergers. The Note Assumption Agreement relates to the Company’s assumption of $
On January 6, 2022, the Company closed a private offering of $
On September 14, 2021, the Company closed a private offering of $
On December 18, 2019, the Company closed a private offering of $
39
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
On December 18, 2019, the Company closed a private offering of $
Revolving and Term Loan Facilities
On April 1, 2022, the Company entered into an assumption agreement (the “CF Assumption Agreement”), effective as of the closing of the Mergers. The CF Assumption Agreement relates to the Company’s assumption of the revolving credit facility, originally entered into on August 26, 2011 (as amended from time to time, the “SPV Credit Facility”), by and among SUNS SPV LLC (the “SUNS SPV”), a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, subsequent to an August 29, 2023 amendment, the commitment under the SPV Credit Facility is $
On December 28, 2021, the Company closed on Amendment No. 1 to its August 28, 2019 senior secured credit agreement (the “Credit Facility”). Following the amendment, a $
Certain covenants on our issued debt may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the Code.
The average annualized interest cost for all borrowings for the six months ended June 30, 2024 and the year ended December 31, 2023 was
40
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Note 8. Financial Highlights
The following is a schedule of financial highlights for the six months ended June 30, 2024 and 2023:
|
|
Six months ended |
|
|
Six months ended |
|
||
Per Share Data: (a) |
|
|
|
|
|
|
||
Net asset value, beginning of year |
|
$ |
|
|
$ |
|
||
Net investment income |
|
|
|
|
|
|
||
Net realized and unrealized gain (loss) |
|
|
|
|
|
( |
) |
|
Net increase in net assets resulting from operations |
|
|
|
|
|
|
||
Distributions to stockholders: |
|
|
|
|
|
|
||
From distributable earnings |
|
|
( |
) |
|
|
( |
) |
From return of capital |
|
|
|
|
|
|
||
Net asset value, end of period |
|
$ |
|
|
$ |
|
||
Per share market value, end of period |
|
$ |
|
|
$ |
|
||
Total Return (b)(c) |
|
|
% |
|
|
% |
||
Net assets, end of period |
|
$ |
|
|
$ |
|
||
Shares outstanding, end of period |
|
|
|
|
|
|
||
Ratios to average net assets (c): |
|
|
|
|
|
|
||
Net investment income |
|
|
% |
|
|
% |
||
Operating expenses |
|
|
|
|
||||
Interest and other credit facility expenses |
|
|
% |
|
|
% |
||
Total expenses |
|
|
|
|
||||
Average debt outstanding |
|
$ |
|
|
$ |
|
||
Portfolio turnover ratio |
|
|
% |
|
|
% |
||
* The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is shown net of the performance-based incentive fee waiver (see note 3). For the six months ended June 30, 2024 and 2023, the ratios of operating expenses to average net assets would be
41
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Note 9. Commitments and Contingencies
Off-Balance Sheet Arrangements
The Company had unfunded debt and equity commitments to various revolving and delayed-draw term loans as well as to SLR Credit and SLR Healthcare (each as defined below).
|
|
June 30, |
|
|
December 31, |
|
||
SLR Credit Solutions* |
|
$ |
|
|
$ |
|
||
BDG Media, Inc. |
|
|
|
|
|
|
||
CVAUSA Management, LLC |
|
|
|
|
|
|
||
iCIMS, Inc. |
|
|
|
|
|
|
||
Copper River Seafoods, Inc. |
|
|
|
|
|
|
||
One Touch Direct, LLC |
|
|
|
|
|
|
||
SPR Therapeutics, Inc. |
|
|
|
|
|
|
||
Quantcast Corporation |
|
|
|
|
|
|
||
SPAR Marketing Force, Inc. |
|
|
|
|
|
|
||
West-NR Parent, Inc. |
|
|
|
|
|
|
||
DeepIntent, Inc. |
|
|
|
|
|
|
||
33 Across Inc. |
|
|
|
|
|
|
||
Luxury Asset Capital, LLC |
|
|
|
|
|
|
||
Western Veterinary Partners LLC |
|
|
|
|
|
|
||
Southern Orthodontic Partners Management, LLC |
|
|
|
|
|
|
||
The Townsend Company, LLC |
|
|
|
|
|
|
||
United Digestive MSO Parent, LLC |
|
|
|
|
|
|
||
Vertos Medical, Inc. |
|
|
|
|
|
|
||
Foundation Consumer Brands, LLC |
|
|
|
|
|
|
||
Kid Distro Holdings, LLC |
|
|
|
|
|
|
||
Erie Construction Mid-west, LLC |
|
|
|
|
|
|
||
SLR Senior Lending Program LLC* |
|
|
|
|
|
|
||
Basic Fun, Inc. |
|
|
|
|
|
|
||
Bayside Opco, LLC |
|
|
|
|
|
|
||
Kaseya, Inc. |
|
|
|
|
|
|
||
EyeSouth Eye Care Holdco LLC |
|
|
|
|
|
|
||
Ultimate Baked Goods Midco LLC |
|
|
|
|
|
|
||
SunMed Group Holdings, LLC |
|
|
|
|
|
|
||
AMF Levered II, LLC |
|
|
|
|
|
|
||
Sightly Enterprises, Inc. |
|
|
|
|
|
|
||
SLR Healthcare ABL* |
|
|
|
|
|
|
||
Brainjolt LLC |
|
|
|
|
|
|
||
RxSense Holdings LLC |
|
|
|
|
|
|
||
Tilley Distribution, Inc. |
|
|
|
|
|
|
||
Vapotherm, Inc. |
|
|
|
|
|
|
||
GSM Acquisition Corp |
|
|
|
|
|
|
||
UVP Management, LLC |
|
|
|
|
|
|
||
ENS Holdings III Corp, LLC |
|
|
|
|
|
|
||
High Street Buyer, Inc. |
|
|
|
|
|
|
||
CC SAG Holdings Corp. (Spectrum Automotive) |
|
|
|
|
|
|
||
Vessco Midco Holdings, LLC |
|
|
|
|
|
|
||
TAUC Management, LLC |
|
|
|
|
|
|
||
Shoes for Crews Global, LLC |
|
|
|
|
|
|
||
All States Ag Parts, LLC |
|
|
|
|
|
|
||
Orthopedic Care Partners Management, LLC |
|
|
|
|
|
|
||
Ardelyx, Inc. |
|
|
|
|
|
|
||
Retina Midco, Inc. |
|
|
|
|
|
|
||
Alkeme Intermediary Holdings, LLC |
|
|
|
|
|
|
||
Legacy Service Partners, LLC |
|
|
|
|
|
|
||
Peter C. Foy & Associates Insurance Services, LLC |
|
|
|
|
|
|
||
SLR Equipment Finance* |
|
|
|
|
|
|
||
Urology Management Holdings, Inc. |
|
|
|
|
|
|
||
Medrina, LLC |
|
|
|
|
|
|
||
Pinnacle Treatment Centers, Inc. |
|
|
|
|
|
|
||
Crewline Buyer, Inc. |
|
|
|
|
|
|
||
Exactcare Parent, Inc. |
|
|
|
|
|
|
||
WCI-BXC Purchaser, LLC |
|
|
|
|
|
|
||
Total Commitments |
|
$ |
|
|
$ |
|
||
42
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
The credit agreements of the above loan commitments contain customary lending provisions and/or are subject to the portfolio company’s achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. As of June 30, 2024 and December 31, 2023, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment.
Note 10. Capital Share Transactions
As of June 30, 2024 and June 30, 2023,
Transactions in capital stock were as follows:
|
|
Shares |
|
|
Amount |
|
||||||||||
|
|
Three months |
|
|
Three months ended June 30, 2023 |
|
|
Three months |
|
|
Three months ended June 30, 2023 |
|
||||
Shares repurchased |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Shares |
|
|
Amount |
|
||||||||||
|
|
Six months |
|
|
Six months ended June 30, 2023 |
|
|
Six months |
|
|
Six months ended June 30, 2023 |
|
||||
Shares repurchased |
|
|
|
|
|
( |
) |
|
$ |
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Note 11. SLR Credit Solutions
On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (“Crystal Financial”) for $
As of June 30, 2024, SLR Credit had
43
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
$
Note 12. SLR Equipment Finance
On July 31, 2017, we acquired a
As of June 30, 2024, SLR Equipment had
Note 13. Kingsbridge Holdings, LLC
On November 3, 2020, the Company acquired
As of June 30, 2024 and December 31, 2023, KBHT had total assets of $
Note 14. SLR Healthcare ABL
SUNS acquired an equity interest in SLR Healthcare ABL, f/k/a Gemino Healthcare Finance, LLC (“SLR Healthcare”), on September 30, 2013. SLR Healthcare is a commercial finance company that originates, underwrites, and manages primarily secured, asset-based loans for small and mid-sized companies operating in the healthcare industry. SUNS’s initial investment in SLR Healthcare ABL was $
44
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
upon an amendment dated August 24, 2023, SLR Healthcare has a $
SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of June 30, 2024, the portfolio totaled approximately $
Note 15. SLR Business Credit
SUNS acquired
Note 16. Stock Repurchase Program
On May 7, 2024, our Board authorized an extension of a program for the purpose of repurchasing up to $
45
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
of our outstanding shares of common stock have been repurchased. The timing and number of additional shares to be repurchased will depend on a number of factors, including market conditions. There are
46
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Note 17. SLR Senior Lending Program LLC
On October 12, 2022, the Company entered into an amended and restated limited liability company agreement with Sunstone Senior Credit L.P. (the “Investor”) to create a joint venture vehicle, SLR Senior Lending Program LLC (“SSLP”). SSLP is expected to invest primarily in senior secured cash flow loans. The Company and the Investor each have made initial equity commitments of $
On December 1, 2022, SSLP commenced operations. On December 12, 2022, SSLP, as servicer, and SLR Senior Lending Program SPV LLC (“SSLP SPV”), a newly formed wholly owned subsidiary of SSLP, as borrower, entered into a $
As of June 30, 2024 and December 31, 2023, the Company and the Investor had contributed combined equity capital in the amount of $
As of June 30, 2024 and December 31, 2023, SSLP had total assets of $
47
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
SSLP Portfolio as of June 30, 2024
Description |
|
Industry |
|
Spread |
|
Floor |
|
|
Interest |
|
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Accession Risk Management Group, Inc. |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Aegis Toxicology Sciences Corporation (4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Alkeme Intermediary Holdings, LLC (4) |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
All States Ag Parts, LLC (4) |
|
Trading Companies & Distributors |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Apex Service Partners, LLC |
|
Diversified Consumer Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Atria Wealth Solutions, Inc. (4) |
|
Diversified Financial Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
BayMark Health Services, Inc. (4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
CC SAG Holdings Corp. (4) |
|
Diversified Consumer Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Crewline Buyer, Inc. |
|
IT Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
CVAUSA Management, LLC (4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
ENS Holdings III Corp. & ES Opco USA LLC (4) |
|
Trading Companies & Distributors |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Erie Construction Mid-west, LLC |
|
Building Products |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Exactcare Parent, Inc. |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Fertility (ITC) Investment Holdco, LLC (4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Foundation Consumer Brands, LLC (4) |
|
Personal Products |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
GSM Acquisition Corp. (4) |
|
Leisure Equipment & Products |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Higginbotham Insurance Agency, Inc. (4) |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
High Street Buyer, Inc. |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
iCIMS, Inc.(4) |
|
Software |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Kaseya, Inc.(4) |
|
Software |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Kid Distro Holdings, LLC(4) |
|
Software |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Legacy Service Partners, LLC |
|
Diversified Consumer Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Maxor Acquisition, Inc.(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Medrina, LLC |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
ONS MSO, LLC(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Plastics Management, LLC(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Retina Midco, Inc.(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
RQM+ Corp.(4) |
|
Life Sciences Tools & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
RxSense Holdings LLC(4) |
|
Diversified Consumer Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
SunMed Group Holdings, LLC(4) |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
The Townsend Company, LLC(4) |
|
Commercial Services & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Tilley Distribution, Inc.(4) |
|
Trading Companies & Distributors |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Ultimate Baked Goods Midco LLC(4) |
|
Packaged Foods & Meats |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
United Digestive MSO Parent, LLC(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Urology Management Holdings, Inc.(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
UVP Management, LLC(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Vessco Midco Holdings, LLC(4) |
|
Water Utilities |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
WCI-BXC Purchaser, LLC |
|
Distributors |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
West-NR Parent, Inc.(4) |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
48
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
SSLP Portfolio as of December 31, 2023
Description |
|
Industry |
|
Spread |
|
Floor |
|
|
Interest |
|
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Aegis Toxicology Sciences Corporation (4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Alkeme Intermediary Holdings, LLC (4) |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
All States Ag Parts, LLC (4) |
|
Trading Companies & Distributors |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Apex Service Partners, LLC |
|
Diversified Consumer Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Atria Wealth Solutions, Inc. (4) |
|
Diversified Financial Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
BayMark Health Services, Inc. (4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
CC SAG Holdings Corp. (4) |
|
Diversified Consumer Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
CVAUSA Management, LLC (4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
ENS Holdings III Corp. & ES Opco USA LLC (4) |
|
Trading Companies & Distributors |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Erie Construction Mid-west, LLC |
|
Building Products |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Fertility (ITC) Investment Holdco, LLC (4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Foundation Consumer Brands, LLC (4) |
|
Personal Products |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
GSM Acquisition Corp. (4) |
|
Leisure Equipment & Products |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Higginbotham Insurance Agency, Inc. (4) |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
High Street Buyer, Inc. |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
iCIMS, Inc.(4) |
|
Software |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Kaseya, Inc.(4) |
|
Software |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Kid Distro Holdings, LLC(4) |
|
Software |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Maxor Acquisition, Inc.(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
ONS MSO, LLC(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Pinnacle Treatment Centers, Inc.(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Plastics Management, LLC(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
RQM+ Corp.(4) |
|
Life Sciences Tools & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
RxSense Holdings LLC(4) |
|
Diversified Consumer Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
SunMed Group Holdings, LLC(4) |
|
Health Care Equipment & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
The Townsend Company, LLC(4) |
|
Commercial Services & Supplies |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Tilley Distribution, Inc.(4) |
|
Trading Companies & Distributors |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Ultimate Baked Goods Midco LLC(4) |
|
Packaged Foods & Meats |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
United Digestive MSO Parent, LLC(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Urology Management Holdings, Inc.(4) |
|
Health Care Providers & Services |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
Vessco Midco Holdings, LLC(4) |
|
Water Utilities |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
West-NR Parent, Inc.(4) |
|
Insurance |
|
S+ |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
49
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
June 30, 2024
(in thousands, except share amounts)
Below is certain summarized financial information for SSLP as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and June 30, 2023:
|
|
June 30, 2024 |
|
|
December 31, |
|
||
Selected Balance Sheet Information for SSLP: |
|
|
|
|
|
|
||
Investments at fair value (cost $ |
|
$ |
|
|
$ |
|
||
Cash and other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
Debt outstanding ($ |
|
$ |
|
|
$ |
|
||
Distributions payable |
|
|
|
|
|
|
||
Interest payable and other credit facility related expenses |
|
|
|
|
|
|
||
Accrued expenses and other payables |
|
|
|
|
|
|
||
Total liabilities |
|
$ |
|
|
$ |
|
||
Members’ equity |
|
$ |
|
|
$ |
|
||
Total liabilities and members’ equity |
|
$ |
|
|
$ |
|
||
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
||||
Selected Income Statement Information for SSLP: |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Service fees* |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other credit facility expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Other general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Net investment income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Realized gain on investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Net change in unrealized gain (loss) on investments |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Net realized and unrealized gain (loss) on investments |
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
* Service fees are included within the Company’s Consolidated Statements of Operations as other income.
Note 18. Subsequent Events
The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued.
50
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
SLR Investment Corp.:
Results of Review of Interim Financial Information
We have reviewed the consolidated statement of assets and liabilities of SLR Investment Corp. (and subsidiaries) (the Company), including the consolidated schedule of investments, as of June 30, 2024, the related consolidated statements of operations and changes in net assets, for the three-month and six-month periods ended June 30, 2024 and 2023, the related consolidated statements of cash flows for the six-month periods ended June 30, 2024 and 2023, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities, including the consolidated schedule of investments, of the Company as of December 31, 2023, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated February 27, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities, including the consolidated schedule of investments, from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ KPMG LLP
New York, New York
August 7, 2024
51
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.
Some of the statements in this report constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained herein involve risks and uncertainties, including statements as to:
These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
52
We generally use words such as “anticipates”, “believes”, “expects”, “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including any factors set forth in “Risk Factors” and elsewhere in this report.
We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including any annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview
SLR Investment Corp. (the “Company”, “SLRC”, “we” or “our”), a Maryland corporation formed in November 2007, is an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues to apply the guidance in the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S federal income tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
On February 9, 2010, we priced our initial public offering, selling 5.68 million shares of our common stock. Concurrent with our initial public offering, Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, and Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, collectively purchased an additional 0.6 million shares of our common stock through a private placement transaction exempt from registration under the Securities Act of 1933, as amended.
We invest primarily in privately held U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged middle-market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities. From time to time, we may also invest in public companies that are thinly traded. Our business is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Our investments generally range between $5 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base and/or with strategic initiatives. Our investment activities are managed by the Investment Adviser and supervised by our board of directors (the “Board”), a majority of whom are non-interested, as such term is defined in the 1940 Act. SLR Capital Management, LLC (the “Administrator”) provides the administrative services necessary for us to operate.
In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns. These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.
Recent Developments
On August 7, 2024, the Board declared a quarterly distribution of $0.41 per share payable on September 27, 2024 to holders of record as of September 13, 2024.
Investments
Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least
53
70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” The definition of “eligible portfolio company” includes certain public companies that do not have any securities listed on a national securities exchange and companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.
Revenue
We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment securities that we may sell. Our debt investments generally have a stated term of three to seven years and typically bear interest at a floating rate usually determined on the basis of a benchmark Secured Overnight Financing Rate (“SOFR”), commercial paper rate, or the prime rate. Interest on our debt investments is generally payable monthly or quarterly but may be bi-monthly or semi-annually. In addition, our investments may provide payment-in-kind (“PIK”) income. Such amounts of accrued PIK income are added to the cost of the investment on the respective capitalization dates and generally become due at maturity of the investment or upon the investment being called by the issuer. We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable, consulting fees, etc.
Expenses
All investment professionals of the Investment Adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Investment Adviser. We bear all other costs and expenses of our operations and transactions, including (without limitation):
54
We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in dollar terms. During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks and offerings of our securities relative to comparative periods, among other factors.
Portfolio and Investment Activity
During the three months ended June 30, 2024, we invested approximately $92.1 million across 24 portfolio companies. This compares to investing approximately $212.9 million in 44 portfolio companies during the three months ended June 30, 2023. Investments sold, prepaid or repaid during the three months ended June 30, 2024 totaled approximately $93.0 million versus approximately $122.4 million for the three months ended June 30, 2023.
At June 30, 2024, our portfolio consisted of 138 portfolio companies and was invested 33.7% in cash flow senior secured loans, 28.9% in asset-based senior secured loans / SLR Credit Solutions (“SLR Credit”) / SLR Healthcare ABL / SLR Business Credit, 21.2% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 16.2% in life science senior secured loans, in each case, measured at fair value, versus 156 portfolio companies invested 33.7% in cash flow senior secured loans, 27.8% in asset-based senior secured loans / SLR Credit / SLR Healthcare ABL / SLR Business Credit, 22.9% in equipment senior secured financings / SLR Equipment / KBH, and 15.6% in life science senior secured loans, in each case, measured at fair value, at June 30, 2023.
At June 30, 2024, 82.7%, or $1.74 billion, of our income producing investment portfolio* was floating rate and 17.3%, or $365.0 million, was fixed rate, measured at fair value. At June 30, 2023, 78.0%, or $1.68 billion, of our income producing investment portfolio* was floating rate and 22.0%, or $473.9 million, was fixed rate, measured at fair value. As of June 30, 2024 and 2023, we had one and three issuers, respectively, on non-accrual status.
SLR Credit Solutions
On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (“Crystal Financial”) for $275 million in cash. Crystal Financial owned approximately 98% of the outstanding ownership interest in SLR Credit Solutions, f/k/a Crystal Financial LLC. The remaining financial interest was held by various employees of SLR Credit, through their investment in Crystal Management LP. SLR Credit had a diversified portfolio of 23 loans having a total par value of approximately $400 million at November 30, 2012 and a $275 million committed revolving credit facility. On July 28, 2016, the Company purchased Crystal Management LP’s approximately 2% equity interest in SLR Credit for approximately $5.7 million. Upon the closing of this transaction, the Company holds 100% of the equity interest in SLR Credit. On September 30, 2016, Crystal Capital Financial Holdings LLC was dissolved. As of June 30, 2024, total commitments to the revolving credit facility were $300 million.
As of June 30, 2024, SLR Credit had 31 funded commitments to 25 different issuers with total funded loans of approximately $396.5 million on total assets of $423.4 million. As of December 31, 2023, SLR Credit had 31 funded commitments to 26 different issuers with total funded loans of approximately $406.6 million on total assets of $438.4 million. As of June 30, 2024 and December 31, 2023, the largest loan outstanding totaled $30.0 million and $30.0 million, respectively. For the same periods, the average exposure per issuer was $15.9 million and $15.6 million, respectively. SLR Credit’s credit facility, which is non-recourse to the Company, had approximately $206.3 million and $218.9 million of borrowings outstanding at June 30, 2024 and December 31, 2023, respectively. For the three months ended June 30, 2024 and 2023, SLR Credit had net income of $6.9 million and $6.8 million, respectively, on gross income of $15.5 million and $13.9 million, respectively. For the six months ended June 30, 2024 and 2023, SLR Credit had net income (loss) of $12.6 million and ($2.9) million, respectively, on gross income of $28.6 million and $28.5 million, respectively. Due to timing and non-cash items, there may be material differences between U.S. generally accepted accounting principles (“GAAP”) net income and cash available for distributions. As such, and subject to fluctuations in SLR Credit’s funded
55
commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Credit will be able to maintain consistent dividend payments to us.
SLR Equipment Finance
On July 31, 2017, we acquired a 100% equity interest in NEF Holdings, LLC, which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC. Effective February 25, 2021, Nations Equipment Finance, LLC and its related companies are doing business as SLR Equipment Finance. SLR Equipment is an independent equipment finance company that provides senior secured loans and leases primarily to U.S. based companies. We invested $209.9 million in cash to effect the transaction, of which $145.0 million was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC and $64.9 million was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC. On January 31, 2024, SLR Equipment entered into a $225 million senior secured credit facility with a maturity date of January 31, 2027. On March 1, 2024, the credit facility was expanded to $350 million of commitments.
As of June 30, 2024, SLR Equipment had 201 funded equipment-backed leases and loans to 101 different customers with a total net investment in leases and loans of approximately $232.7 million on total assets of $281.4 million. As of December 31, 2023, SLR Equipment had 150 funded equipment-backed leases and loans to 62 different customers with a total net investment in leases and loans of approximately $203.7 million on total assets of $254.7 million. As of June 30, 2024 and December 31, 2023, the largest position outstanding totaled $17.9 million and $17.9 million, respectively. For the same periods, the average exposure per customer was $2.3 million and $3.3 million, respectively. SLR Equipment’s credit facility, which is non-recourse to the Company, had approximately $175.0 million and $137.2 million of borrowings outstanding at June 30, 2024 and December 31, 2023, respectively. For the three months ended June 30, 2024 and 2023, SLR Equipment had net loss of $1.8 million and $2.1 million, respectively, on gross income of $5.2 million and $4.1 million, respectively. For the six months ended June 30, 2024 and 2023, SLR Equipment had net loss of $3.7 million and $1.0 million, respectively, on gross income of $10.1 million and $10.4 million, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Equipment’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Equipment will be able to maintain consistent dividend payments to us.
Kingsbridge Holdings, LLC
On November 3, 2020, the Company acquired 87.5% of the equity securities of Kingsbridge Holdings, LLC through KBH Topco LLC (“KBHT”), a Delaware corporation. KBH is a residual focused independent mid-ticket lessor of equipment primarily to U.S. investment grade companies. The Company invested $216.6 million to effect the transaction, of which $136.6 million was invested to acquire 87.5% of KBHT’s equity and $80.0 million of KBH’s debt. The existing management team of KBH committed to continuing to lead KBH after the transaction. Following the transaction, the Company owns 87.5% of KBHT’s equity and the KBH management team owns the remaining 12.5% of KBHT’s equity. On March 13, 2024, as per the terms of the original purchase agreement, the Company acquired 3.125% of KBHT’s equity from the KBH management team. Effective with this purchase, the Company owns 90.625% of KBHT’s equity and the KBH management team owns the remaining 9.375%.
As of June 30, 2024 and December 31, 2023, KBHT had total assets of $884.6 million and $857.3 million, respectively. For the same periods, debt recourse to KBHT totaled $241.9 million and $249.8 million, respectively, and non-recourse debt totaled $412.8 million and $367.1 million, respectively. None of the debt is recourse to the Company. For the three months ended June 30, 2024 and 2023, KBHT had net income of $2.7 million and $3.3 million, respectively, on gross income of $78.5 million and $75.5 million, respectively. For the six months ended June 30, 2024 and 2023, KBHT had net income of $4.6 million and $5.9 million, respectively, on gross income of $158.5 million and $143.5 million, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in KBHT’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that KBHT will be able to maintain consistent dividend payments to us.
SLR Healthcare ABL
SLR Senior Investment Corp. (“SUNS”) acquired an equity interest in SLR Healthcare ABL, f/k/a Gemino Healthcare Finance, LLC (“SLR Healthcare”) on September 30, 2013. SLR Healthcare is a commercial finance company that originates, underwrites, and manages primarily secured, asset-based loans for small and mid-sized companies operating in the healthcare industry. SUNS’s initial investment in SLR Healthcare ABL was approximately $32.8 million. The management team of SLR Healthcare co-invested in the transaction and continues to lead SLR Healthcare. As of June 30, 2024, SLR Healthcare’s management team and the Company owned approximately 7% and 93% of the equity in SLR Healthcare, respectively. SLRC acquired SLR Healthcare in connection with the Mergers (as defined in Note 1 to the Company’s Consolidated Financial Statements) on April 1, 2022. Effective with an amendment
56
dated August 24, 2023, SLR Healthcare has a $150 million non-recourse credit facility, which is expandable to $200 million under its accordion facility. The maturity date of this facility is March 31, 2026.
SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of June 30, 2024, the portfolio totaled approximately $279.0 million of commitments with a total net investment in loans of $119.1 million on total assets of $126.7 million. As of December 31, 2023, the portfolio totaled approximately $255.0 million of commitments with a total net investment in loans of $111.3 million on total assets of $118.6 million. At June 30, 2024, the portfolio consisted of 44 issuers with an average balance of approximately $2.7 million versus 42 issuers with an average balance of approximately $2.6 million at December 31, 2023. All of the commitments in SLR Healthcare’s portfolio are floating-rate, senior-secured, cash-pay loans. SLR Healthcare’s credit facility, which is non-recourse to us, had approximately $93.3 million and $84.7 million of borrowings outstanding at June 30, 2024 and December 31, 2023, respectively. For the three months ended June 30, 2024 and 2023, SLR Healthcare had net income of $1.3 million and $1.3 million, respectively, on gross income of $5.1 million and $4.4 million, respectively. For the six months ended June 30, 2024 and 2023, SLR Healthcare had net income of $2.6 million and $2.4 million, respectively, on gross income of $9.9 million and $8.3 million, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Healthcare’s funded commitments, the timing of originations, and the repayment of financings, the Company cannot guarantee that SLR Healthcare will be able to maintain consistent dividend payments to us.
SLR Business Credit
SUNS acquired 100% of the equity interests of North Mill Capital LLC (“NMC”) on October 20, 2017. NMC is a leading asset-backed lending commercial finance company that provides senior secured asset-backed financings to U.S. based small-to-medium-sized businesses primarily in the manufacturing, services and distribution industries. SUNS invested approximately $51.0 million to effect the transaction. Subsequently, SUNS contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, SUNS and ESP SSC Corporation contributed their equity interests to NorthMill LLC (“North Mill”). On May 1, 2018, North Mill merged with and into NMC, with NMC being the surviving company. SUNS and ESP SSC Corporation then owned 99% and 1% of the equity interests of NMC, respectively. The management team of NMC continues to lead NMC. On June 28, 2019, North Mill Holdco LLC (“NM Holdco”), a newly formed entity and ESP SSC Corporation acquired 100% of Summit Financial Resources, a Salt Lake City-based provider of asset-backed financing to small and medium-sized businesses. As part of this transaction, SUNS’s 99% interest in the equity of NMC was contributed to NM Holdco. This approximately $15.5 million transaction was financed with borrowings on NMC’s credit facility. Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit. On June 3, 2021, NMC acquired 100% of Fast Pay Partners LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of $66.7 million was financed with equity from SUNS of $19.0 million and borrowings on NMC’s credit facility of $47.7 million. SLRC acquired SLR Business Credit in connection with the Mergers on April 1, 2022.
SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of June 30, 2024, the portfolio totaled approximately $557.1 million of commitments, of which $240.7 million were funded, on total assets of $271.1 million. As of December 31, 2023, the portfolio totaled approximately $610.9 million of commitments, of which $273.5 million were funded, on total assets of $315.3 million. At June 30, 2024, the portfolio consisted of 94 issuers with an average balance of approximately $2.6 million versus 102 issuers with an average balance of approximately $2.7 million at December 31, 2023. NMC has a senior credit facility with a bank lending group for $285.3 million, which expires on November 13, 2025. Borrowings are secured by substantially all of NMC’s assets. NMC’s credit facility, which is non-recourse to us, had approximately $188.5 million and $222.9 million of borrowings outstanding at June 30, 2024 and December 31, 2023, respectively. For the three months ended June 30, 2024 and 2023, SLR Business Credit had net income of $2.3 million and $1.4 million, respectively, on gross income of $10.4 million and $8.8 million, respectively. For the six months ended June 30, 2024 and 2023, SLR Business Credit had net income of $5.5 million and $3.4 million, respectively, on gross income of $21.6 million and $18.2 million, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Business Credit’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Business Credit will be able to maintain consistent dividend payments to us.
57
Stock Repurchase Program
On May 7, 2024, our Board authorized an extension of a program for the purpose of repurchasing up to $50 million of our outstanding shares of common stock. Under the repurchase program, we may, but are not obligated to, repurchase shares of our outstanding common stock in the open market from time to time provided that we comply with our code of ethics and the guidelines specified in Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “1934 Act”), including certain price, market volume and timing constraints. In addition, any repurchases will be conducted in accordance with the 1940 Act. Unless further amended or extended by our Board, we expect the repurchase program to be in place until the earlier of May 7, 2025 or until $50 million of our outstanding shares of common stock have been repurchased. The timing and number of additional shares to be repurchased will depend on a number of factors, including market conditions. There are no assurances that we will engage in any repurchases beyond what is reported herein. There were no share repurchases during the three and six months ended June 30, 2024. For the fiscal year ended December 31, 2023, the Company repurchased 746 shares at an average price of approximately $14.02 per share, inclusive of commissions. The total dollar amount of shares repurchased for the fiscal year ended December 31, 2023 was $0.01 million.
SLR Senior Lending Program LLC
On October 12, 2022, the Company entered into an amended and restated limited liability company agreement with Sunstone Senior Credit L.P. (the “Investor”) to create a joint venture vehicle, SLR Senior Lending Program LLC (“SSLP”). SSLP is expected to invest primarily in senior secured cash flow loans. The Company and the Investor each have made initial equity commitments of $50 million, resulting in a total equity commitment of $100 million. Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor.
On December 1, 2022, SSLP commenced operations. On December 12, 2022, SSLP, as servicer, and SLR Senior Lending Program SPV LLC (“SSLP SPV”), a newly formed wholly owned subsidiary of SSLP, as borrower, entered into a $100 million senior secured revolving credit facility (the “SSLP Facility”) with Goldman Sachs Bank USA acting as administrative agent. On October 20, 2023, the SSLP Facility was expanded to $150 million. Effective with an amendment on March 25, 2024, the SSLP Facility is scheduled to mature on December 12, 2028 and generally bears interest at a rate of SOFR plus 2.90%. SSLP and SSLP SPV, as applicable, have made certain customary representations and warranties and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The SSLP Facility also includes usual and customary events of default for credit facilities of this nature. At June 30, 2024, there were $135.8 million of borrowings outstanding on the SSLP Facility.
As of June 30, 2024 and December 31, 2023, the Company and the Investor had contributed combined equity capital in the amount of $95.75 million and $85.75 million, respectively. As of June 30, 2024 and December 31, 2023, the Company and the Investor’s combined remaining commitments to SSLP totaled $4.25 million and $14.25 million, respectively. The Company, along with the Investor, controls the funding of SSLP, and SSLP may not call the unfunded commitments of the Company or the Investor without the approval of both the Company and the Investor.
As of June 30, 2024 and December 31, 2023, SSLP had total assets of $237.0 million and $195.9 million, respectively. For the same periods, SSLP’s portfolio consisted of floating rate senior secured loans to 39 and 32 different borrowers, respectively. For the three months ended June 30, 2024, SSLP invested $11.4 million in 7 portfolio companies. Investments prepaid totaled $7.7 million for the three months ended June 30, 2024. For the three months ended June 30, 2023, SSLP invested $32.6 million in 9 portfolio companies. Investments prepaid totaled $0.2 million for the three months ended June 30, 2023.
58
SSLP Portfolio as of June 30, 2024 (dollar amounts in thousands)
Description |
|
Industry |
|
Spread |
|
Floor |
|
|
Interest |
|
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Accession Risk Management Group, Inc. |
|
Insurance |
|
S+550 |
|
|
0.75 |
% |
|
|
10.98 |
% |
|
11/1/29 |
|
$ |
6,923 |
|
|
$ |
6,898 |
|
|
$ |
6,923 |
|
Aegis Toxicology Sciences Corporation (4) |
|
Health Care Providers & Services |
|
S+550 |
|
|
1.00 |
% |
|
|
11.09 |
% |
|
5/9/25 |
|
|
2,921 |
|
|
|
2,921 |
|
|
|
2,921 |
|
Alkeme Intermediary Holdings, LLC (4) |
|
Insurance |
|
S+600 |
|
|
1.00 |
% |
|
|
11.44 |
% |
|
10/28/26 |
|
|
6,026 |
|
|
|
5,872 |
|
|
|
6,026 |
|
All States Ag Parts, LLC (4) |
|
Trading Companies & Distributors |
|
S+600 |
|
|
1.00 |
% |
|
|
11.60 |
% |
|
9/1/26 |
|
|
2,122 |
|
|
|
2,122 |
|
|
|
2,122 |
|
Apex Service Partners, LLC |
|
Diversified Consumer Services |
|
S+700 |
|
|
1.00 |
% |
|
|
11.83 |
% |
|
10/24/30 |
|
|
5,834 |
|
|
|
5,698 |
|
|
|
5,834 |
|
Atria Wealth Solutions, Inc. (4) |
|
Diversified Financial Services |
|
S+650 |
|
|
1.00 |
% |
|
|
12.09 |
% |
|
11/29/24 |
|
|
2,456 |
|
|
|
2,456 |
|
|
|
2,456 |
|
BayMark Health Services, Inc. (4) |
|
Health Care Providers & Services |
|
S+500 |
|
|
1.00 |
% |
|
|
10.60 |
% |
|
6/11/27 |
|
|
4,013 |
|
|
|
4,013 |
|
|
|
3,932 |
|
CC SAG Holdings Corp. (4) |
|
Diversified Consumer Services |
|
S+525 |
|
|
0.75 |
% |
|
|
10.59 |
% |
|
6/29/28 |
|
|
8,923 |
|
|
|
8,923 |
|
|
|
8,923 |
|
Crewline Buyer, Inc. |
|
IT Services |
|
S+675 |
|
|
1.00 |
% |
|
|
12.08 |
% |
|
11/8/30 |
|
|
5,084 |
|
|
|
4,960 |
|
|
|
5,084 |
|
CVAUSA Management, LLC (4) |
|
Health Care Providers & Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.75 |
% |
|
5/22/29 |
|
|
5,384 |
|
|
|
5,235 |
|
|
|
5,384 |
|
ENS Holdings III Corp. & ES Opco USA LLC (4) |
|
Trading Companies & Distributors |
|
S+475 |
|
|
1.00 |
% |
|
|
10.19 |
% |
|
12/31/25 |
|
|
1,080 |
|
|
|
1,080 |
|
|
|
1,080 |
|
Erie Construction Mid-west, LLC |
|
Building Products |
|
S+475 |
|
|
1.00 |
% |
|
|
10.15 |
% |
|
7/30/27 |
|
|
8,229 |
|
|
|
8,229 |
|
|
|
8,229 |
|
Exactcare Parent, Inc. |
|
Health Care Providers & Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.84 |
% |
|
11/5/29 |
|
|
3,220 |
|
|
|
3,135 |
|
|
|
3,220 |
|
Fertility (ITC) Investment Holdco, LLC (4) |
|
Health Care Providers & Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.78 |
% |
|
1/3/29 |
|
|
5,925 |
|
|
|
5,774 |
|
|
|
5,925 |
|
Foundation Consumer Brands, LLC (4) |
|
Personal Products |
|
S+625 |
|
|
1.00 |
% |
|
|
11.73 |
% |
|
2/12/27 |
|
|
8,551 |
|
|
|
8,551 |
|
|
|
8,551 |
|
GSM Acquisition Corp. (4) |
|
Leisure Equipment & Products |
|
S+500 |
|
|
1.00 |
% |
|
|
10.46 |
% |
|
11/16/26 |
|
|
8,497 |
|
|
|
8,497 |
|
|
|
8,497 |
|
Higginbotham Insurance Agency, Inc. (4) |
|
Insurance |
|
S+550 |
|
|
1.00 |
% |
|
|
10.94 |
% |
|
11/25/28 |
|
|
7,535 |
|
|
|
7,535 |
|
|
|
7,535 |
|
High Street Buyer, Inc. |
|
Insurance |
|
S+525 |
|
|
0.75 |
% |
|
|
10.59 |
% |
|
4/16/28 |
|
|
7,565 |
|
|
|
7,565 |
|
|
|
7,565 |
|
iCIMS, Inc.(4) |
|
Software |
|
S+725 |
|
|
0.75 |
% |
|
|
12.58 |
% |
|
8/18/28 |
|
|
3,150 |
|
|
|
3,109 |
|
|
|
3,150 |
|
Kaseya, Inc.(4) |
|
Software |
|
S+550 |
|
|
0.75 |
% |
|
|
10.83 |
% |
|
6/23/29 |
|
|
9,172 |
|
|
|
9,172 |
|
|
|
9,172 |
|
Kid Distro Holdings, LLC(4) |
|
Software |
|
S+550 |
|
|
1.00 |
% |
|
|
10.94 |
% |
|
10/1/27 |
|
|
8,893 |
|
|
|
8,893 |
|
|
|
8,893 |
|
Legacy Service Partners, LLC |
|
Diversified Consumer Services |
|
S+575 |
|
|
1.00 |
% |
|
|
11.23 |
% |
|
1/9/29 |
|
|
1,947 |
|
|
|
1,900 |
|
|
|
1,947 |
|
Maxor Acquisition, Inc.(4) |
|
Health Care Providers & Services |
|
S+675 |
|
|
1.00 |
% |
|
|
12.29 |
% |
|
3/1/29 |
|
|
6,089 |
|
|
|
5,923 |
|
|
|
6,089 |
|
Medrina, LLC |
|
Health Care Providers & Services |
|
S+625 |
|
|
1.00 |
% |
|
|
11.55 |
% |
|
10/20/29 |
|
|
2,398 |
|
|
|
2,341 |
|
|
|
2,398 |
|
ONS MSO, LLC(4) |
|
Health Care Providers & Services |
|
S+625 |
|
|
1.00 |
% |
|
|
11.57 |
% |
|
7/8/26 |
|
|
5,878 |
|
|
|
5,753 |
|
|
|
5,878 |
|
Plastics Management, LLC(4) |
|
Health Care Providers & Services |
|
S+500 |
|
|
1.00 |
% |
|
|
10.44 |
% |
|
8/18/27 |
|
|
5,608 |
|
|
|
5,461 |
|
|
|
5,608 |
|
Retina Midco, Inc.(4) |
|
Health Care Providers & Services |
|
S+575 |
|
|
1.00 |
% |
|
|
11.34 |
% |
|
1/31/26 |
|
|
9,962 |
|
|
|
9,784 |
|
|
|
9,962 |
|
RQM+ Corp.(4) |
|
Life Sciences Tools & Services |
|
S+575 |
|
|
1.00 |
% |
|
|
11.35 |
% |
|
8/12/26 |
|
|
5,924 |
|
|
|
5,924 |
|
|
|
5,776 |
|
RxSense Holdings LLC(4) |
|
Diversified Consumer Services |
|
S+500 |
|
|
1.00 |
% |
|
|
10.43 |
% |
|
3/13/26 |
|
|
8,922 |
|
|
|
8,922 |
|
|
|
8,922 |
|
SunMed Group Holdings, LLC(4) |
|
Health Care Equipment & Supplies |
|
S+550 |
|
|
0.75 |
% |
|
|
10.93 |
% |
|
6/16/28 |
|
|
8,902 |
|
|
|
8,902 |
|
|
|
8,902 |
|
The Townsend Company, LLC(4) |
|
Commercial Services & Supplies |
|
S+625 |
|
|
1.00 |
% |
|
|
11.59 |
% |
|
8/15/29 |
|
|
3,557 |
|
|
|
3,477 |
|
|
|
3,557 |
|
Tilley Distribution, Inc.(4) |
|
Trading Companies & Distributors |
|
S+600 |
|
|
1.00 |
% |
|
|
11.49 |
% |
|
12/31/26 |
|
|
5,637 |
|
|
|
5,637 |
|
|
|
5,524 |
|
Ultimate Baked Goods Midco LLC(4) |
|
Packaged Foods & Meats |
|
S+625 |
|
|
1.00 |
% |
|
|
11.69 |
% |
|
8/13/27 |
|
|
8,909 |
|
|
|
8,909 |
|
|
|
8,864 |
|
United Digestive MSO Parent, LLC(4) |
|
Health Care Providers & Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.80 |
% |
|
3/30/29 |
|
|
3,574 |
|
|
|
3,476 |
|
|
|
3,574 |
|
Urology Management Holdings, Inc.(4) |
|
Health Care Providers & Services |
|
S+625 |
|
|
1.00 |
% |
|
|
11.73 |
% |
|
6/15/26 |
|
|
3,684 |
|
|
|
3,607 |
|
|
|
3,684 |
|
UVP Management, LLC(4) |
|
Health Care Providers & Services |
|
S+625 |
|
|
1.00 |
% |
|
|
11.73 |
% |
|
9/15/25 |
|
|
4,883 |
|
|
|
4,791 |
|
|
|
4,736 |
|
Vessco Midco Holdings, LLC(4) |
|
Water Utilities |
|
S+450 |
|
|
1.00 |
% |
|
|
9.75 |
% |
|
11/2/26 |
|
|
4,282 |
|
|
|
4,282 |
|
|
|
4,282 |
|
WCI-BXC Purchaser, LLC |
|
Distributors |
|
S+625 |
|
|
1.00 |
% |
|
|
11.59 |
% |
|
11/6/30 |
|
|
2,890 |
|
|
|
2,820 |
|
|
|
2,890 |
|
West-NR Parent, Inc.(4) |
|
Insurance |
|
S+625 |
|
|
1.00 |
% |
|
|
11.68 |
% |
|
12/27/27 |
|
|
6,788 |
|
|
|
6,670 |
|
|
|
6,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
219,217 |
|
|
$ |
220,803 |
|
|||
59
SSLP Portfolio as of December 31, 2023 (dollar amounts in thousands)
Description |
|
Industry |
|
Spread |
|
Floor |
|
|
Interest |
|
|
Maturity |
|
Par |
|
|
Cost |
|
|
Fair |
|
|||||
Aegis Toxicology Sciences Corporation (4) |
|
Health Care Providers & Services |
|
S+550 |
|
|
1.00 |
% |
|
|
11.13 |
% |
|
5/9/25 |
|
$ |
2,947 |
|
|
$ |
2,947 |
|
|
$ |
2,947 |
|
Alkeme Intermediary Holdings, LLC (4) |
|
Insurance |
|
S+650 |
|
|
1.00 |
% |
|
|
11.96 |
% |
|
10/28/26 |
|
|
3,017 |
|
|
|
2,934 |
|
|
|
3,017 |
|
All States Ag Parts, LLC (4) |
|
Trading Companies & Distributors |
|
S+600 |
|
|
1.00 |
% |
|
|
11.61 |
% |
|
9/1/26 |
|
|
2,133 |
|
|
|
2,133 |
|
|
|
2,133 |
|
Apex Service Partners, LLC |
|
Diversified Consumer Services |
|
S+700 |
|
|
1.00 |
% |
|
|
11.87 |
% |
|
10/24/30 |
|
|
4,905 |
|
|
|
4,784 |
|
|
|
4,783 |
|
Atria Wealth Solutions, Inc. (4) |
|
Diversified Financial Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.97 |
% |
|
5/31/24 |
|
|
2,468 |
|
|
|
2,468 |
|
|
|
2,468 |
|
BayMark Health Services, Inc. (4) |
|
Health Care Providers & Services |
|
S+500 |
|
|
1.00 |
% |
|
|
10.61 |
% |
|
6/11/27 |
|
|
4,033 |
|
|
|
4,033 |
|
|
|
4,033 |
|
CC SAG Holdings Corp. (4) |
|
Diversified Consumer Services |
|
S+575 |
|
|
0.75 |
% |
|
|
11.22 |
% |
|
6/29/28 |
|
|
8,969 |
|
|
|
8,969 |
|
|
|
8,969 |
|
CVAUSA Management, LLC (4) |
|
Health Care Providers & Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.74 |
% |
|
5/22/29 |
|
|
5,412 |
|
|
|
5,251 |
|
|
|
5,412 |
|
ENS Holdings III Corp. & ES Opco USA LLC (4) |
|
Trading Companies & Distributors |
|
S+475 |
|
|
1.00 |
% |
|
|
10.20 |
% |
|
12/31/25 |
|
|
1,086 |
|
|
|
1,086 |
|
|
|
1,086 |
|
Erie Construction Mid-west, LLC |
|
Building Products |
|
S+475 |
|
|
1.00 |
% |
|
|
10.20 |
% |
|
7/30/27 |
|
|
8,457 |
|
|
|
8,457 |
|
|
|
8,457 |
|
Fertility (ITC) Investment Holdco, LLC (4) |
|
Health Care Providers & Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.97 |
% |
|
1/3/29 |
|
|
5,955 |
|
|
|
5,791 |
|
|
|
5,955 |
|
Foundation Consumer Brands, LLC (4) |
|
Personal Products |
|
S+625 |
|
|
1.00 |
% |
|
|
11.79 |
% |
|
2/12/27 |
|
|
8,641 |
|
|
|
8,641 |
|
|
|
8,641 |
|
GSM Acquisition Corp. (4) |
|
Leisure Equipment & Products |
|
S+500 |
|
|
1.00 |
% |
|
|
10.47 |
% |
|
11/16/26 |
|
|
8,541 |
|
|
|
8,541 |
|
|
|
8,541 |
|
Higginbotham Insurance Agency, Inc. (4) |
|
Insurance |
|
S+550 |
|
|
1.00 |
% |
|
|
10.96 |
% |
|
11/25/28 |
|
|
7,573 |
|
|
|
7,573 |
|
|
|
7,573 |
|
High Street Buyer, Inc. |
|
Insurance |
|
S+575 |
|
|
0.75 |
% |
|
|
11.25 |
% |
|
4/16/28 |
|
|
7,604 |
|
|
|
7,604 |
|
|
|
7,604 |
|
iCIMS, Inc.(4) |
|
Software |
|
S+725 |
|
|
0.75 |
% |
|
|
12.62 |
% |
|
8/18/28 |
|
|
3,089 |
|
|
|
3,066 |
|
|
|
3,089 |
|
Kaseya, Inc.(4) |
|
Software |
|
S+600 |
|
|
0.75 |
% |
|
|
11.38 |
% |
|
6/23/29 |
|
|
9,058 |
|
|
|
9,058 |
|
|
|
9,058 |
|
Kid Distro Holdings, LLC(4) |
|
Software |
|
S+550 |
|
|
1.00 |
% |
|
|
11.00 |
% |
|
10/1/27 |
|
|
8,939 |
|
|
|
8,939 |
|
|
|
8,939 |
|
Maxor Acquisition, Inc.(4) |
|
Health Care Providers & Services |
|
S+675 |
|
|
1.00 |
% |
|
|
12.48 |
% |
|
3/1/29 |
|
|
6,120 |
|
|
|
5,940 |
|
|
|
6,120 |
|
ONS MSO, LLC(4) |
|
Health Care Providers & Services |
|
S+625 |
|
|
1.00 |
% |
|
|
11.62 |
% |
|
7/8/26 |
|
|
5,922 |
|
|
|
5,784 |
|
|
|
5,922 |
|
Pinnacle Treatment Centers, Inc.(4) |
|
Health Care Providers & Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.95 |
% |
|
1/2/26 |
|
|
6,951 |
|
|
|
6,951 |
|
|
|
6,951 |
|
Plastics Management, LLC(4) |
|
Health Care Providers & Services |
|
S+500 |
|
|
1.00 |
% |
|
|
10.45 |
% |
|
8/18/27 |
|
|
5,637 |
|
|
|
5,471 |
|
|
|
5,637 |
|
RQM+ Corp.(4) |
|
Life Sciences Tools & Services |
|
S+575 |
|
|
1.00 |
% |
|
|
11.36 |
% |
|
8/12/26 |
|
|
5,955 |
|
|
|
5,955 |
|
|
|
5,955 |
|
RxSense Holdings LLC(4) |
|
Diversified Consumer Services |
|
S+500 |
|
|
1.00 |
% |
|
|
10.48 |
% |
|
3/13/26 |
|
|
8,968 |
|
|
|
8,968 |
|
|
|
8,968 |
|
SunMed Group Holdings, LLC(4) |
|
Health Care Equipment & Supplies |
|
S+550 |
|
|
0.75 |
% |
|
|
10.96 |
% |
|
6/16/28 |
|
|
8,948 |
|
|
|
8,948 |
|
|
|
8,948 |
|
The Townsend Company, LLC(4) |
|
Commercial Services & Supplies |
|
S+625 |
|
|
1.00 |
% |
|
|
11.61 |
% |
|
8/15/29 |
|
|
3,642 |
|
|
|
3,555 |
|
|
|
3,642 |
|
Tilley Distribution, Inc.(4) |
|
Trading Companies & Distributors |
|
S+600 |
|
|
1.00 |
% |
|
|
11.50 |
% |
|
12/31/26 |
|
|
5,850 |
|
|
|
5,850 |
|
|
|
5,850 |
|
Ultimate Baked Goods Midco LLC(4) |
|
Packaged Foods & Meats |
|
S+625 |
|
|
1.00 |
% |
|
|
11.71 |
% |
|
8/13/27 |
|
|
8,954 |
|
|
|
8,954 |
|
|
|
8,865 |
|
United Digestive MSO Parent, LLC(4) |
|
Health Care Providers & Services |
|
S+675 |
|
|
1.00 |
% |
|
|
12.25 |
% |
|
3/30/29 |
|
|
3,411 |
|
|
|
3,311 |
|
|
|
3,411 |
|
Urology Management Holdings, Inc.(4) |
|
Health Care Providers & Services |
|
S+650 |
|
|
1.00 |
% |
|
|
11.93 |
% |
|
6/15/26 |
|
|
3,179 |
|
|
|
3,102 |
|
|
|
3,155 |
|
Vessco Midco Holdings, LLC(4) |
|
Water Utilities |
|
S+450 |
|
|
1.00 |
% |
|
|
9.96 |
% |
|
11/2/26 |
|
|
4,304 |
|
|
|
4,304 |
|
|
|
4,304 |
|
West-NR Parent, Inc.(4) |
|
Insurance |
|
S+625 |
|
|
1.00 |
% |
|
|
11.70 |
% |
|
12/27/27 |
|
|
6,822 |
|
|
|
6,691 |
|
|
|
6,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
186,059 |
|
|
$ |
187,255 |
|
|||
Below is certain summarized financial information for SSLP as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and the three and six months ended June 30, 2023:
|
|
June 30, 2024 |
|
|
December 31, |
|
||
Selected Balance Sheet Information for SSLP (in thousands): |
|
|
|
|
|
|
||
Investments at fair value (cost $219,217 and $186,059, |
|
$ |
220,803 |
|
|
$ |
187,255 |
|
Cash and other assets |
|
|
16,163 |
|
|
|
8,613 |
|
Total assets |
|
$ |
236,966 |
|
|
$ |
195,868 |
|
Debt outstanding ($135,800 and $106,900 face amounts, |
|
$ |
133,949 |
|
|
$ |
105,203 |
|
Distributions payable |
|
|
3,365 |
|
|
|
1,900 |
|
Interest payable and other credit facility related expenses |
|
|
597 |
|
|
|
551 |
|
Accrued expenses and other payables |
|
|
510 |
|
|
|
416 |
|
Total liabilities |
|
$ |
138,421 |
|
|
$ |
108,070 |
|
Members’ equity |
|
$ |
98,545 |
|
|
$ |
87,798 |
|
Total liabilities and members’ equity |
|
$ |
236,966 |
|
|
$ |
195,868 |
|
60
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
||||
Selected Income Statement Information for SSLP (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
$ |
6,616 |
|
|
$ |
1,605 |
|
|
$ |
12,585 |
|
|
$ |
2,614 |
|
Service fees* |
|
135 |
|
|
|
38 |
|
|
|
260 |
|
|
|
57 |
|
Interest and other credit facility expenses |
|
2,920 |
|
|
|
1,447 |
|
|
|
5,638 |
|
|
|
2,252 |
|
Other general and administrative expenses |
|
46 |
|
|
|
19 |
|
|
|
90 |
|
|
|
57 |
|
Total expenses |
|
3,101 |
|
|
|
1,504 |
|
|
|
5,988 |
|
|
|
2,366 |
|
Net investment income |
$ |
3,515 |
|
|
$ |
101 |
|
|
$ |
6,597 |
|
|
$ |
248 |
|
Realized gain on investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30 |
|
Net change in unrealized gain (loss) on investments |
|
(118 |
) |
|
|
321 |
|
|
|
391 |
|
|
|
361 |
|
Net realized and unrealized gain (loss) on investments |
$ |
(118 |
) |
|
$ |
321 |
|
|
$ |
391 |
|
|
$ |
391 |
|
Net income |
$ |
3,397 |
|
|
$ |
422 |
|
|
$ |
6,988 |
|
|
$ |
639 |
|
* Service fees are included within the Company’s Consolidated Statements of Operations as other income.
Critical Accounting Policies
The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies. Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other reasonably likely events or circumstances that would result in materially different amounts being reported.
Valuation of Portfolio Investments
In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act addressing fair valuation of fund investments. The rule sets forth requirements for good faith determinations of fair value, as well as for the performance of fair value determinations, including related oversight and reporting obligations. The rule also defines “readily available market quotations” for purposes of the definition of “value” under the 1940 Act, and the SEC noted that this definition will apply in all contexts under the 1940 Act. The Company complies with the Rule 2a-5 valuation requirements.
We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP and the 1940 Act. The Board will (1) periodically assess and manage valuation risks; (2) establish and apply fair value methodologies; (3) test fair value methodologies; (4) oversee and evaluate third-party pricing services, as applicable; (5) oversee the reporting required by Rule 2a-5 under the 1940 Act; and (6) maintain recordkeeping requirements under Rule 2a-5.
It is anticipated that in respect of many of the Company’s assets, readily available market quotations will not be obtainable and that such assets will be valued at fair value. A market quotation is readily available for a security only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be readily available if it is not reliable. If the Company anticipates using a market quotation for a security, it will also monitor for circumstances that may necessitate the use of fair value, such as significant events that may cause concern over the reliability of a market quotation.
Our valuation procedures are set forth in more detail in Note 2(b) to the Company’s consolidated financial statements. Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.
61
Revenue Recognition
The Company records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis. Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in management’s judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on investments may be recognized as income or applied to principal depending upon management’s judgment. Some of our investments may have contractual PIK income. PIK income computed at the contractual rate, as applicable, is accrued and reflected as a receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates, as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at the maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends is reversed from the related receivable through interest or dividend income, respectively. The Company does not reverse previously capitalized PIK income. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if the Company again believes that PIK is expected to be realized. Loan origination fees, original issue discount, and market discounts are capitalized and amortized into income using the effective interest method. Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income. We record prepayment premiums on loans and other investments as interest income when we receive such amounts. Capital structuring fees are recorded as other income when earned.
The typically higher yields and interest rates on PIK securities, to the extent we invested, reflect the payment deferral and increased credit risks associated with such instruments and that such investments may represent a significantly higher credit risk than coupon loans. PIK securities may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral. PIK income has the effect of generating investment income and increasing the incentive fees payable at a compounding rate. In addition, the deferral of PIK income also increases the loan-to-value ratio at a compounding rate. PIK securities create the risk that incentive fees will be paid to the Investment Adviser based on non-cash accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees. For the three and six months ended June 30, 2024, capitalized PIK income totaled $2.1 million and $4.9 million, respectively. For the three and six months ended June 30, 2023, capitalized PIK income totaled $3.0 million and $6.2 million, respectively.
Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss
We generally measure realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized origination or commitment fees and prepayment penalties. The net change in unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized. Gains or losses on investments are calculated by using the specific identification method.
Income Taxes
SLRC, a U.S. corporation, has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code. In order to qualify for U.S. federal income taxation as a RIC, the Company is required, among other things, to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year. Depending on the level of taxable income earned in a given tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues an estimated excise tax, if any, on estimated excess taxable income.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standard updates (“ASU”) issued by the Financial Accounting Standards Board. ASUs not listed were assessed and either determined to be not applicable or expected to have minimal impact on its consolidated financial statements.
62
RESULTS OF OPERATIONS
Results comparisons are for the three and six months ended June 30, 2024 and June 30, 2023:
Investment Income
For the three and six months ended June 30, 2024, gross investment income totaled $59.0 million and $117.1 million, respectively. For the three and six months ended June 30, 2023, gross investment income totaled $56.3 million and $109.9 million, respectively. The increase in gross investment income for the year over year three and six month periods was primarily due to the growth of the SSLP portfolio as well as an increase in index rates.
Expenses
Net expenses totaled $34.7 million and $68.9 million, respectively, for the three and six months ended June 30, 2024, of which $13.9 million and $27.8 million, respectively, were base management fees and performance-based incentive fees and $18.2 million and $36.4 million, respectively, were interest and other credit facility expenses. Other general and administrative expenses totaled $2.6 million and $4.9 million, respectively, for the three and six months ended June 30, 2024. Over the same periods, $0.04 million and $0.09 million of performance-based incentive fees were waived. Net expenses totaled $33.7 million and $65.1 million, respectively, for the three and six months ended June 30, 2023, of which $13.5 million and $26.7 million, respectively, were base management fees and performance-based incentive fees and $17.8 million and $33.1 million, respectively, were interest and other credit facility expenses. Administrative services and other general and administrative expenses totaled $2.4 million and $5.4 million, respectively, for the three and six months ended June 30, 2023. Over the same periods, $0.1 million and $0.2 million of performance-based incentive fees were waived. Expenses generally consist of management and performance-based incentive fees, interest and other credit facility expenses, administrative services fees, insurance expenses, legal fees, directors’ fees, transfer agency fees, printing and proxy expenses, audit and tax services expenses and other general and administrative expenses. Interest and other credit facility expenses generally consist of interest, unused fees, agency fees and loan origination fees, if any, among others. The increase in expenses for the year over year three and six month periods was primarily due to larger incentive fees on greater pre-incentive fee net investment income year over year as well as higher interest expense on a larger average credit facility balance and an increase in index rates on borrowings.
Net Investment Income
The Company’s net investment income totaled $24.3 million and $48.2 million, or $0.45 and $0.88, per average share, respectively, for the three and six months ended June 30, 2024. The Company’s net investment income totaled $22.7 million and $44.8 million, or $0.42 and $0.82, per average share, respectively, for the three and six months ended June 30, 2023.
Net Realized Gain
The Company had investment sales and prepayments totaling approximately $93 million and $224 million, respectively, for the three and six months ended June 30, 2024. Net realized gains over the same periods were $0.1 million and $0.2 million, respectively. The Company had investment sales and prepayments totaling approximately $122 million and $267 million, respectively, for the three and six months ended June 30, 2023. Net realized gains over the same periods were $0.5 million and $1.2 million, respectively. Net realized gain for the three and six months ended June 30, 2024 and 2023 was primarily due to dispositions of selected assets.
Net Change in Unrealized Gain (Loss)
For the three and six months ended June 30, 2024, net change in unrealized gain (loss) on the Company’s assets totaled ($1.2) million and $2.7 million, respectively. Net unrealized loss for the three months ended June 30, 2024 was primarily due to depreciation in the value of our investments in SLR Equipment Finance, NSPC Intermediate Corp. and RQM+ Corp., among others, partially offset by appreciation in the value of our investments in Neuronetics, Inc., SLR Credit Solutions and SLR Business Credit, among others. Net unrealized gain for the six months ended June 30, 2024 was primarily due to appreciation in the value of our investments in Neuronetics, Inc., SLR Credit Solutions, Arcutis Biotherapeutics, Inc. and Cerapedics, Inc., among others, partially offset by depreciation in the value of our investments in SLR Equipment Finance, SOINT, LLC, RQM+ Corp. and NSPC Intermediate Corp., among others. For the three and six months ended June 30, 2023, net change in unrealized loss on the Company’s assets totaled $4.2 million and $20.2 million, respectively. Net unrealized loss for the three months ended June 30, 2023 was primarily due to depreciation in the value of our investments in SLR Credit Solutions, among others, partially offset by appreciation in the value of our investments in World Insurance Associates, LLC, among others. Net unrealized loss for the six months ended June 30, 2023 was primarily due to depreciation in the value of our investments in SLR Credit Solutions and AmeriMark Intermediate Holdings, LLC
63
and, among others, partially offset by appreciation in the value of our investments in World Insurance Associates, LLC and SLR Business Credit, among others.
Net Increase in Net Assets From Operations
For the three and six months ended June 30, 2024, the Company had a net increase in net assets resulting from operations of $23.2 million and $51.1 million, respectively. For the same periods, earnings per average share were $0.43 and $0.94, respectively. For the three and six months ended June 30, 2023, the Company had a net increase in net assets resulting from operations of $19.0 million and $25.8 million, respectively. For the same periods, earnings per average share were $0.35 and $0.47, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s liquidity and capital resources are generated and generally available through its Credit Facility and SPV Credit Facility, the 2024 Unsecured Notes, the 2025 Unsecured Notes, the 2026 Unsecured Notes, the 2027 Unsecured Notes and the 2027 Series F Unsecured Notes (each as defined below and, collectively, the “Debt Instruments”), through cash flows from operations, investment sales, prepayments of senior and subordinated loans, income earned on investments and cash equivalents, and periodic follow-on equity and/or debt offerings. As of June 30, 2024, we had a total of $271.2 million of collective unused borrowing capacity under the Credit Facility and SPV Credit Facility, subject to borrowing base limits.
We may from time to time issue equity and/or debt securities in either public or private offerings. The issuance of such securities will depend on future market conditions, funding needs and other factors and there can be no assurance that any such issuance will occur or be successful. The primary uses of existing funds and any funds raised in the future are expected to be for investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders, or for other general corporate purposes.
Debt
On April 1, 2022, we entered into an assumption agreement (the “CF Assumption Agreement”), effective as of the closing of the Mergers. The CF Assumption Agreement relates to our assumption of the revolving credit facility, originally entered into on August 26, 2011 (as amended from time to time, the “SPV Credit Facility”), by and among SUNS SPV LLC (the “SUNS SPV”), a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, subsequent to an August 29, 2023 amendment, the commitment under the SPV Credit Facility is $275 million; however, the commitment can also be expanded up to $600 million. The stated interest rate on the SPV Credit Facility is SOFR plus 2.00%-2.50% with no SOFR floor requirement, and the current final maturity date, effective with a May 23, 2024 amendment, is September 1, 2026. The SPV Credit Facility is secured by all of the assets held by SUNS SPV. Under the terms of the SPV Credit Facility and related transaction documents, we, as successor to SUNS, and SUNS SPV, as applicable, have made certain customary representations and warranties and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature. At June 30, 2024, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $187.9 million.
On April 1, 2022, we entered into an assumption agreement (the “Note Assumption Agreement”), effective as of the closing of the Mergers. The Note Assumption Agreement relates to our assumption of $85 million in aggregate principal amount of five-year, 3.90% senior unsecured notes, due March 31, 2025 (the “2025 Unsecured Notes”) and other obligations of SUNS under the Note Purchase Agreement, dated as of March 31, 2020 (the “Note Purchase Agreement”), among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. Pursuant to the Note Assumption Agreement, we expressly assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding and the due and punctual performance and observance of every covenant and every condition of the Note Purchase Agreement to be performed or observed by SUNS.
On January 6, 2022, the Company closed a private offering of $135 million of unsecured notes with a fixed interest rate of 3.33% and a maturity date of January 6, 2027 (the “2027 Series F Unsecured Notes”) . Interest on the 2027 Series F Unsecured Notes is due semi-annually on January 6 and July 6. The 2027 Series F Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On December 28, 2021, the Company closed on Amendment No. 1 to its August 28, 2019 senior secured credit agreement (the “Credit Facility”). Following the amendment, a $25 million November 2022 upsizing and a $40 million August 2023 commitment expiration, the Credit Facility is composed of $585 million of revolving credit and $100 million of term loans. Borrowings generally
64
bear interest at a rate per annum equal to the base rate plus a range of 1.75%-2.00% or the alternate base rate plus 0.75%-1.00%. The Credit Facility has a 0% floor, matures in December 2026 and includes ratable amortization in the final year. The Credit Facility may be increased up to $800 million with additional new lenders or an increase in commitments from current lenders. The Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Credit Facility contains certain financial covenants that, among other things, require the Company to maintain a minimum stockholder’s equity and a minimum asset coverage ratio. At June 30, 2024, outstanding USD equivalent borrowings under the Credit Facility totaled $501.0 million, composed of $401.0 million of revolving credit and $100.0 million of term loans.
On September 14, 2021, the Company closed a private offering of $50 million of unsecured notes with a fixed interest rate of 2.95% and a maturity date of March 14, 2027 (the “2027 Unsecured Notes”). Interest on the 2027 Unsecured Notes is due semi-annually on March 14 and September 14. The 2027 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On December 18, 2019, the Company closed a private offering of $125 million of unsecured notes with a fixed interest rate of 4.20% and a maturity date of December 15, 2024 (the “2024 Unsecured Notes”). Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15. The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On December 18, 2019, the Company closed a private offering of $75 million of unsecured notes with a fixed interest rate of 4.375% and a maturity date of December 15, 2026 (the “2026 Unsecured Notes”). Interest on the 2026 Unsecured Notes is due semi-annually on June 15 and December 15. The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
Certain covenants on our issued debt may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the Code. At June 30, 2024, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.
Cash Equivalents
We deem certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities as cash equivalents. The Company makes purchases that are consistent with its purpose of making investments in securities described in paragraphs 1 through 3 of Section 55(a) of the 1940 Act. From time to time, including at or near the end of each fiscal quarter, we consider using various temporary investment strategies for our business. One strategy includes taking proactive steps by utilizing cash equivalents as temporary assets with the objective of enhancing our investment flexibility pursuant to Section 55 of the 1940 Act. More specifically, from time to time we may purchase U.S. Treasury bills or other high-quality, short-term debt securities at or near the end of the quarter and typically close out the position on a net cash basis subsequent to quarter end. We may also utilize repurchase agreements or other balance sheet transactions, including drawing down on the Credit Facility, as deemed appropriate. The amount of these transactions or such drawn cash for this purpose are excluded from total assets for purposes of computing the asset base upon which the management fee is determined. We held a face amount of $275 million in cash equivalents as of June 30, 2024.
Contractual Obligations
A summary of our significant contractual payment obligations is as follows as of June 30, 2024:
Payments Due by Period (in millions)
|
|
Total |
|
|
Less than |
|
|
1-3 Years |
|
|
3-5 Years |
|
|
More Than |
|
|||||
Revolving credit facilities (1) |
|
$ |
588.9 |
|
|
$ |
— |
|
|
$ |
588.9 |
|
|
$ |
— |
|
|
$ |
— |
|
Unsecured senior notes |
|
|
470.0 |
|
|
|
210.0 |
|
|
|
260.0 |
|
|
|
— |
|
|
|
— |
|
Term loans |
|
|
100.0 |
|
|
|
— |
|
|
|
100.0 |
|
|
|
— |
|
|
|
— |
|
Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of gross assets less all liabilities and indebtedness not represented by
65
senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss.
We have also entered into two contracts under which we have future commitments: an investment advisory and management agreement (the “Advisory Agreement”), pursuant to which the Investment Adviser has agreed to serve as our investment adviser, and an administration agreement (the “Administration Agreement”), pursuant to which the Administrator has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and provide on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance. Payments under the Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a two-part incentive fee. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent, technology systems, insurance and our allocable portion of the costs of our chief financial officer and chief compliance officer and their respective staffs. Either party may terminate each of the Advisory Agreement and Administration Agreement without penalty upon 60 days written notice to the other. See Note 3 to our Consolidated Financial Statements.
On July 31, 2017, the Company, NEFPASS LLC and NEFCORP LLC entered into a servicing agreement. NEFCORP LLC was engaged to provide NEFPASS LLC with administrative services related to the loans and capital leases held by NEFPASS LLC. NEFPASS LLC may terminate this agreement upon 30 days written notice to NEFCORP LLC.
On October 7, 2022, the Company committed $50 million to SSLP and entered into a servicing agreement. SSLP engaged and retained the Company to provide certain administrative services relating to the facilities, supplies and necessary ongoing overhead support services for the operation of SSLP’s ongoing business affairs in exchange for a fee.
Senior Securities
Information about our senior securities is shown in the following table (in thousands) as of the quarter ended June 30, 2024 and each year ended December 31 for the past ten years, unless otherwise noted. The “—” indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.
66
Class and Year |
|
Total Amount |
|
|
Asset |
|
|
Involuntary |
|
|
Average |
|||
Credit Facility |
|
|
|
|
|
|
|
|
|
|
|
|||
Fiscal 2024 (through June 30, 2024) |
|
$ |
|
|
$ |
|
|
|
|
|
N/A |
|||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2015 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2014 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
SPV Credit Facility |
|
|
|
|
|
|
|
|
|
|
|
|||
Fiscal 2024 (through June 30, 2024) |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
2022 Unsecured Notes |
|
|
|
|
|
|
|
|
|
|
|
|||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
2022 Tranche C Notes |
|
|
|
|
|
|
|
|
|
|
|
|||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
2023 Unsecured Notes |
|
|
|
|
|
|
|
|
|
|
|
|||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
2024 Unsecured Notes |
|
|
|
|
|
|
|
|
|
|
|
|||
Fiscal 2024 (through June 30, 2024) |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|||
67
Class and Year |
|
Total Amount |
|
|
Asset |
|
|
Involuntary |
|
|
Average |
|
||||
2025 Unsecured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2024 (through June 30, 2024) |
|
$ |
|
|
$ |
|
|
|
|
|
N/A |
|
||||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
2026 Unsecured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2024 (through June 30, 2024) |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
2027 Unsecured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2024 (through June 30, 2024) |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
2027 Series F Unsecured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2024 (through June 30, 2024) |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
2042 Unsecured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Fiscal 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Senior Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2015 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2014 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Term Loans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2024 (through June 30, 2024) |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2015 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2014 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
NEFPASS Facility |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
SSLP Facility |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Total Senior Securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fiscal 2024 (through June 30, 2024) |
|
$ |
|
|
$ |
|
|
|
|
|
N/A |
|
||||
Fiscal 2023 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2022 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2021 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2020 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2019 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2015 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
Fiscal 2014 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
||||
68
69
Off-Balance Sheet Arrangements
From time to time and in the normal course of business, the Company may make unfunded capital commitments to current or prospective portfolio companies. Typically, the Company may agree to provide delayed-draw term loans or, to a lesser extent, revolving loans or equity commitments. These unfunded capital commitments always take into account the Company’s liquidity and cash available for investment, portfolio and issuer diversification, and other considerations. Accordingly, the Company had the following unfunded capital commitments at June 30, 2024 and December 31, 2023, respectively:
(in millions) |
|
June 30, |
|
|
December 31, |
|
||
SLR Credit Solutions* |
|
$ |
44.3 |
|
|
$ |
44.3 |
|
BDG Media, Inc. |
|
|
15.3 |
|
|
|
10.1 |
|
CVAUSA Management, LLC |
|
|
10.2 |
|
|
|
10.2 |
|
iCIMS, Inc. |
|
|
9.6 |
|
|
|
9.8 |
|
Copper River Seafoods, Inc. |
|
|
7.7 |
|
|
|
7.1 |
|
One Touch Direct, LLC |
|
|
7.1 |
|
|
|
4.1 |
|
SPR Therapeutics, Inc. |
|
|
6.1 |
|
|
|
— |
|
Quantcast Corporation |
|
|
5.9 |
|
|
|
— |
|
SPAR Marketing Force, Inc. |
|
|
5.8 |
|
|
|
8.3 |
|
West-NR Parent, Inc. |
|
|
5.0 |
|
|
|
5.0 |
|
DeepIntent, Inc. |
|
|
4.8 |
|
|
|
3.9 |
|
33 Across Inc. |
|
|
4.7 |
|
|
|
— |
|
Luxury Asset Capital, LLC |
|
|
4.5 |
|
|
|
4.5 |
|
Western Veterinary Partners LLC |
|
|
3.6 |
|
|
|
— |
|
Southern Orthodontic Partners Management, LLC |
|
|
3.5 |
|
|
|
17.9 |
|
The Townsend Company, LLC |
|
|
3.4 |
|
|
|
3.3 |
|
United Digestive MSO Parent, LLC |
|
|
3.4 |
|
|
|
3.9 |
|
Vertos Medical, Inc. |
|
|
3.3 |
|
|
|
3.3 |
|
Foundation Consumer Brands, LLC |
|
|
3.0 |
|
|
|
3.0 |
|
Kid Distro Holdings, LLC |
|
|
2.7 |
|
|
|
2.7 |
|
Erie Construction Mid-west, LLC |
|
|
2.4 |
|
|
|
2.4 |
|
SLR Senior Lending Program LLC* |
|
|
2.1 |
|
|
|
7.1 |
|
Basic Fun, Inc. |
|
|
2.1 |
|
|
|
2.1 |
|
Bayside Opco, LLC |
|
|
2.1 |
|
|
|
2.1 |
|
Kaseya, Inc. |
|
|
1.9 |
|
|
|
3.8 |
|
EyeSouth Eye Care Holdco LLC |
|
|
1.9 |
|
|
|
1.0 |
|
Ultimate Baked Goods Midco LLC |
|
|
1.8 |
|
|
|
2.4 |
|
SunMed Group Holdings, LLC |
|
|
1.6 |
|
|
|
1.6 |
|
AMF Levered II, LLC |
|
|
1.6 |
|
|
|
3.2 |
|
Sightly Enterprises, Inc. |
|
|
1.5 |
|
|
|
— |
|
SLR Healthcare ABL* |
|
|
1.4 |
|
|
|
1.4 |
|
Brainjolt LLC |
|
|
1.4 |
|
|
|
— |
|
RxSense Holdings LLC |
|
|
1.3 |
|
|
|
1.3 |
|
Tilley Distribution, Inc. |
|
|
1.2 |
|
|
|
1.2 |
|
Vapotherm, Inc. |
|
|
1.0 |
|
|
|
— |
|
GSM Acquisition Corp |
|
|
0.9 |
|
|
|
0.9 |
|
UVP Management, LLC |
|
|
0.8 |
|
|
|
2.9 |
|
ENS Holdings III Corp, LLC |
|
|
0.7 |
|
|
|
0.6 |
|
High Street Buyer, Inc. |
|
|
0.6 |
|
|
|
0.6 |
|
CC SAG Holdings Corp. (Spectrum Automotive) |
|
|
0.5 |
|
|
|
0.5 |
|
Vessco Midco Holdings, LLC |
|
|
0.3 |
|
|
|
0.3 |
|
TAUC Management, LLC |
|
|
0.3 |
|
|
|
0.3 |
|
Shoes for Crews Global, LLC |
|
|
0.3 |
|
|
|
— |
|
All States Ag Parts, LLC |
|
|
0.2 |
|
|
|
0.3 |
|
Orthopedic Care Partners Management, LLC |
|
|
— |
|
|
|
20.8 |
|
Ardelyx, Inc. |
|
|
— |
|
|
|
15.9 |
|
Retina Midco, Inc. |
|
|
— |
|
|
|
9.4 |
|
Alkeme Intermediary Holdings, LLC |
|
|
— |
|
|
|
8.5 |
|
Legacy Service Partners, LLC |
|
|
— |
|
|
|
5.4 |
|
Peter C. Foy & Associates Insurance Services, LLC |
|
|
— |
|
|
|
5.1 |
|
SLR Equipment Finance* |
|
|
— |
|
|
|
2.1 |
|
Urology Management Holdings, Inc. |
|
|
— |
|
|
|
1.5 |
|
Medrina, LLC |
|
|
— |
|
|
|
0.8 |
|
Pinnacle Treatment Centers, Inc. |
|
|
— |
|
|
|
0.6 |
|
Crewline Buyer, Inc. |
|
|
— |
|
|
|
0.5 |
|
Exactcare Parent, Inc. |
|
|
— |
|
|
|
0.4 |
|
WCI-BXC Purchaser, LLC |
|
|
— |
|
|
|
0.3 |
|
Total Commitments |
|
$ |
183.8 |
|
|
$ |
248.7 |
|
* The Company controls the funding of these commitments and may cancel them at its discretion.
70
The credit agreements of the above loan commitments contain customary lending provisions and/or are subject to the respective portfolio company’s achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. As of June 30, 2024 and December 31, 2023, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment.
In the normal course of business, we invest or trade in various financial instruments and may enter into various investment activities with off-balance sheet risk, which may include forward foreign currency contracts. Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at specific terms at future dates. These financial instruments contain varying degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount recognized in our Consolidated Statements of Assets and Liabilities.
Distributions
The following table reflects the cash distributions per share on our common stock for the two most recent fiscal years and the current fiscal year to date:
Date Declared |
|
Record Date |
|
Payment Date |
|
Amount |
|
|
Fiscal 2024 |
|
|
|
|
|
|
|
|
August 7, 2024 |
|
September 13, 2024 |
|
September 27, 2024 |
|
$ |
0.41 |
|
May 8, 2024 |
|
June 13, 2024 |
|
June 27, 2024 |
|
|
0.41 |
|
February 27, 2024 |
|
March 14, 2024 |
|
March 28, 2024 |
|
|
0.41 |
|
Total 2024 |
|
|
|
|
|
$ |
1.23 |
|
Fiscal 2023 |
|
|
|
|
|
|
|
|
November 7, 2023 |
|
December 14, 2023 |
|
December 28, 2023 |
|
$ |
0.41 |
|
September 5, 2023 |
|
September 20, 2023 |
|
September 28, 2023 |
|
|
0.136667 |
|
August 8, 2023 |
|
August 18, 2023 |
|
August 30, 2023 |
|
|
0.136667 |
|
July 5, 2023 |
|
July 20, 2023 |
|
August 1, 2023 |
|
|
0.136667 |
|
June 1, 2023 |
|
June 20, 2023 |
|
June 29, 2023 |
|
|
0.136667 |
|
May 10, 2023 |
|
May 24, 2023 |
|
June 1, 2023 |
|
|
0.136667 |
|
April 4, 2023 |
|
April 20, 2023 |
|
May 2, 2023 |
|
|
0.136667 |
|
February 28, 2023 |
|
March 23, 2023 |
|
April 4, 2023 |
|
|
0.136667 |
|
February 2, 2023 |
|
February 16, 2023 |
|
March 1, 2023 |
|
|
0.136667 |
|
January 10, 2023. |
|
January 26, 2023 |
|
February 2, 2023 |
|
|
0.136667 |
|
Total 2023 |
|
|
|
|
|
$ |
1.64 |
|
Fiscal 2022 |
|
|
|
|
|
|
|
|
December 6, 2022 |
|
December 22, 2022 |
|
January 5, 2023 |
|
$ |
0.136667 |
|
November 2, 2022 |
|
November 17, 2022 |
|
December 1, 2022 |
|
|
0.136667 |
|
October 5, 2022 |
|
October 20, 2022 |
|
November 2, 2022 |
|
|
0.136667 |
|
September 2, 2022 |
|
September 20, 2022 |
|
October 4, 2022 |
|
|
0.136667 |
|
August 2, 2022 |
|
August 18, 2022 |
|
September 1, 2022 |
|
|
0.136667 |
|
July 6, 2022 |
|
July 21, 2022 |
|
August 2, 2022 |
|
|
0.136667 |
|
June 3, 2022 |
|
June 23, 2022 |
|
July 5, 2022 |
|
|
0.136667 |
|
May 3, 2022 |
|
May 19, 2022 |
|
June 2, 2022 |
|
|
0.136667 |
|
April 4, 2022 |
|
April 21, 2022 |
|
May 3, 2022 |
|
|
0.136667 |
|
March 1, 2022 |
|
March 18, 2022 |
|
April 1, 2022 |
|
|
0.41 |
|
Total 2022 |
|
|
|
|
|
$ |
1.64 |
|
Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the calendar year. Future quarterly distributions, if any, will be determined by the Board. We expect that our distributions to stockholders will generally be from accumulated net investment income, net realized capital gains or non-taxable return of capital, if any, as applicable.
We have elected to be taxed as a RIC under Subchapter M of the Code. To maintain our RIC tax treatment, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, although we currently intend to distribute realized net capital gains (i.e., net
71
long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.
We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions.
We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, due to the asset coverage test applicable to us as a business development company, we may in the future be limited in our ability to make distributions. Also, the Credit Facility may limit our ability to declare distributions if we default under certain provisions. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of the tax benefits available to us as a RIC. In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we have not yet received in cash, such as contractual payment-in-kind income, which represents contractual income added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC.
With respect to the distributions to stockholders, income from origination, structuring, closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and, accordingly, distributed to stockholders.
Related Parties
We have entered into a number of business relationships with affiliated or related parties, including the following:
72
The Investment Adviser may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, with ours. For example, the Investment Adviser presently serves as investment adviser to SCP Private Credit Income BDC LLC, an unlisted BDC that focuses on investing primarily in senior secured loans, including non-traditional asset-based loans and first lien loans, SLR HC BDC LLC, an unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market companies within the healthcare industry, and SLR Private Credit BDC II LLC, an unlisted BDC focused on first lien senior secured floating rate loans. In addition, Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, Shiraz Kajee, our Chief Financial Officer and Treasurer, and Guy F. Talarico, our Chief Compliance Officer and Secretary, serve in similar capacities for SCP Private Credit Income BDC LLC, SLR HC BDC LLC and SLR Private Credit BDC II LLC. The Investment Adviser and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser’s allocation procedures. On June 13, 2017, the Investment Adviser received an exemptive order that permits the Company to participate in negotiated co-investment transactions with certain affiliates, in a manner consistent with the Company’s investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to various conditions (the “Exemptive Order”). If the Company is unable to rely on the Exemptive Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entity’s investment strategy, on an alternating basis. Although the Investment Adviser’s investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, the Company and its stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of the Investment Adviser.
Related party transactions may occur among us, SLR Senior Lending Program LLC, SLR Senior Lending Program SPV LLC, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR Business Credit, SLR Healthcare ABL and SLR Equipment. These transactions may occur in the normal course of business. No administrative or other fees are paid to the Investment Adviser by SLR Senior Lending Program LLC, SLR Senior Lending Program SPV LLC, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR Business Credit, SLR Healthcare ABL or SLR Equipment.
In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates. Uncertainty with respect to interest rates, inflationary pressures, risks in respect of a failure to increase the U.S. debt ceiling or a downgrade in the U.S. credit rating, the war between Ukraine and Russia, certain regional bank failures, an inflationary environment, the ongoing war in the Middle East and health epidemics and pandemics introduced significant volatility in the financial markets, and the effects of this volatility have materially impacted and could continue to materially impact our market risks. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In a low interest rate environment, including a reduction of SOFR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results. Conversely, in a rising interest rate environment, such as the recent economic environment, such difference could potentially increase thereby increasing our net investment income. During the six months ended June 30, 2024, certain investments in our comprehensive investment portfolio had floating interest rates. These floating rate investments were primarily based on floating SOFR and typically have durations of one to three months after which they reset to current market interest rates. Additionally, some of these investments have floors. The Company also has revolving credit facilities that are generally based on floating SOFR. Assuming no changes to our balance sheet as of June 30, 2024 and no new defaults by portfolio companies, a hypothetical one percent decrease in SOFR on our comprehensive floating rate assets and liabilities would decrease our net investment income by seven cents per average share over the next twelve months. Assuming no changes to our balance sheet as of June 30, 2024 and no new defaults by portfolio companies, a hypothetical one percent increase in SOFR on our comprehensive floating rate assets and liabilities would increase our net investment income by approximately seven cents per average share over the next twelve months. However, we may hedge against interest rate fluctuations from time to time by using standard hedging instruments such as futures, options, swaps and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit
73
our ability to participate in any benefits of certain changes in interest rates with respect to our portfolio of investments. At June 30, 2024, we have no interest rate hedging instruments outstanding on our balance sheet.
Increase (Decrease) in SOFR |
|
|
(1.00 |
%) |
|
|
1.00 |
% |
Increase (Decrease) in Net Investment Income Per Share |
|
$ |
(0.07 |
) |
|
$ |
0.07 |
|
We may also have exposure to foreign currencies through various investments. These investments are converted into U.S. dollars at the balance sheet date, exposing us to movements in foreign exchange rates. In order to reduce our exposure to fluctuations in foreign exchange rates, we may borrow from time to time in such currencies under our multi-currency revolving credit facility or enter into forward currency or similar contracts.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As of June 30, 2024 (the end of the period covered by this report), we, including our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management, including the Co-Chief Executive Officers and Chief Financial Officer, concluded that, as of June 30, 2024, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
(b) Changes in Internal Controls Over Financial Reporting
Management has not identified any change in the Company’s internal control over financial reporting that occurred during the second quarter of 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
74
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We and our consolidated subsidiaries are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or our consolidated subsidiaries. From time to time, we and our consolidated subsidiaries may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in the February 27, 2024 filing of our Annual Report on Form 10-K (the “Annual Report”) , which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. There have been no material changes during the period ended June 30, 2024 to the risk factors discussed in “Risk Factors” in the February 27, 2024 filing of our Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended June 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the 1934 Act)
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Item 6. Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
Exhibit Number |
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Description |
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3.1 |
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3.2 |
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4.1 |
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4.2 |
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23.1 |
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Awareness Letter of Independent Registered Public Accounting Firm* |
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31.1 |
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31.2 |
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31.3 |
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32.1 |
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32.2 |
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32.3 |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document* |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document* |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document* |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document* |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document* |
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104 |
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Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on August 7, 2024.
SLR INVESTMENT CORP. |
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By: |
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/s/ MICHAEL S. GROSS |
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Michael S. Gross Co-Chief Executive Officer (Principal Executive Officer) |
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By: |
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/s/ BRUCE J. SPOHLER |
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Bruce J. Spohler Co-Chief Executive Officer (Principal Executive Officer) |
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By: |
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/s/ SHIRAZ Y. KAJEE |
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Shiraz Y. Kajee Chief Financial Officer (Principal Financial and Accounting Officer) |
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