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Financial report summary
?Risks
- We are a relatively new company and have no operating history.
- We are subject to risks associated with the current interest rate environment and to the extent we use debt to finance our investments, changes in interest rates will affect our cost of capital and net investment income.
- We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.
- Covenant-lite loans may expose us to different risks, including with respect to liquidity, ability to restructure loans, credit risks and less protective loan documentation, than is the case with loans that contain financial maintenance covenants.
- Rising interest rates could affect the value of our investments and make it more difficult for portfolio companies to make periodic payments on their loans.
- We are subject to risks associated with the transition away from LIBOR.
- We are dependent upon GC Advisors for our success and upon its access to the investment professionals and partners of Golub Capital and its affiliates.
- Our business model depends to a significant extent upon strong referral relationships with sponsors and investing in companies backed by private equity sponsors. Any inability of GC Advisors to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.
- We can provide no assurance that we will be able to replicate the historical results achieved by other entities managed or sponsored by members of GC Advisors’ investment committee, or by GC Advisors or its affiliates.
- Our financial condition, results of operations and cash flows depend on our ability to manage our business effectively.
- There are significant potential conflicts of interest as a result of our arrangements with GC Advisors and its affiliates and GC Advisors’ investment committee that could affect our investment returns.
- There are conflicts related to the obligations of GC Advisors’ investment committee, GC Advisors or its affiliates have to other clients and conflicts related to fees and expenses of such other clients.
- GC Advisors’ investment committee, GC Advisors or its affiliates could, from time to time, possess material non-public information, limiting our investment discretion.
- Our management and incentive fee structure creates incentives for GC Advisors that are not fully aligned with the interests of our shareholders and could induce GC Advisors to make certain investments, including speculative investments.
- Our securities could be purchased by GC Advisors or its affiliates.
- Although we expect to adopt a share repurchase program, we have discretion to not repurchase shares or to suspend the program.
- The valuation process for certain of our portfolio holdings creates a conflict of interest.
- Conflicts related to other arrangements with GC Advisors or its affiliates.
- Our ability to enter into transactions with our affiliates will be restricted, which could limit the scope of investments available to us.
- We have entered into the Adviser Revolver resulting in a conflict of interest between GC Advisors’ obligation to act in its own best interest and in our best interest.
- Reductions, waivers or absorptions of fees and costs can temporarily result in higher returns to investors than they would otherwise receive if full fees and costs were charged.
- GC Advisors could prioritize its relationship with a borrower or private equity sponsor instead of seeking the most advantageous terms for our investments.
- GC Advisors operates in multiple business lines and could pursue additional business lines, which could create a conflict of interest in the allocation of its time and focus.
- Golub Capital could pursue strategic transactions, which could create a conflict of interest in the allocation of GC Advisors’ time and focus.
- We and GC Advisors could be the target of litigation or regulatory investigations.
- We will be subject to corporate-level income tax if we are unable to qualify as a RIC.
- We could have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income.
- Our shareholders could receive our common shares as distributions, which could result in adverse tax consequences to them.
- Regulations governing our operation as a business development company affect our ability to, and the way in which we, raise additional capital. As a business development company, the necessity of raising additional capital exposes us to risks, including the typical risks associated with leverage.
- We finance our investments with borrowed money, which will accelerate and increase the potential for gain or loss on amounts invested and could increase the risk of investing in us.
- We are subject to risks associated with the 2023 Debt Securitization.
- The notes and membership interests that we hold that are issued by the Securitization Issuer are subordinated obligations of the Securitization Issuer and we could be prevented from receiving cash from such Securitization Issuer.
- The interests of holders of the senior classes of securities issued by the Securitization Issuer could not be aligned with our interests.
- The Securitization Issuer could fail to meet certain asset coverage tests.
- We could be required to assume liabilities of the Securitization Issuer and are indirectly liable for certain representations and warranties in connection with the 2023 Debt Securitization.
- The Securitization Issuer could issue additional notes.
- We are a holding company and depend on payments from our subsidiaries in order to make payments on any debt securities that we may issue as well as to pay distributions on our common shares. Any debt securities that we issue will be structurally subordinated to the obligations of our subsidiaries.
- Our ability to invest in public companies is limited in certain circumstances. If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a business development company or be precluded from investing according to our current business strategy and decrease our operating flexibility.
- Our investments may include original issue discount and payment-in-kind instruments.
- The majority of our portfolio investments are recorded at fair value as determined in good faith by our board of trustees and, as a result, there could be uncertainty as to the value of our portfolio investments.
- Government intervention in the credit markets could adversely affect our business.
- We may not be able to obtain all required state licenses.
- Compliance with the SEC’s Regulation Best Interest may negatively impact our ability to raise capital, which would harm our ability to achieve our investment objectives.
- Our board of trustees could change our investment objective, operating policies and strategies without prior notice or shareholder approval.
- GC Advisors can resign on 120 days’ notice, and we can provide no assurance that we could find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.
- The Administrator can resign on 60 days’ notice, and we can provide no assurance that we could find a suitable replacement, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.
- Certain investors will be subject to Exchange Act filing requirements.
- We face risks associated with the deployment of our capital.
- Economic recessions or downturns could impair our portfolio companies and defaults by our portfolio companies will harm our operating results.
- Inflation could adversely affect the business, results of operations and financial condition of our portfolio companies.
- Our debt investments are risky and we could lose all or part of our investments.
- Our investments in leveraged portfolio companies are risky, and we could lose all or part of our investment.
- Our investments in private and middle-market portfolio companies are risky, and we could lose all or part of our investment.
- An investment strategy focused primarily on privately held companies presents certain challenges, including, but not limited to, the lack of available information about these companies.
- We would be subject to risks if we are required to assume operation of portfolio companies upon default.
- The lack of liquidity in our investments could adversely affect our business.
- Price declines and illiquidity in the corporate debt markets could adversely affect the fair value of our portfolio investments, reducing our NAV through increased net unrealized depreciation.
- Our portfolio companies could prepay loans, which could reduce our yields if capital returned cannot be invested in transactions with equal or greater expected yields.
- We are subject to credit and default risk and our portfolio companies could be unable to repay or refinance outstanding principal on their loans at or prior to maturity.
- We could have difficulty sourcing investment opportunities.
- We are a non-diversified investment company within the meaning of the 1940 Act and, therefore we are not limited with respect to the proportion of our assets that could be invested in securities of a single issuer.
- Our portfolio could be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.
- We could hold the debt securities of leveraged companies that could, due to the significant volatility of such companies, enter into bankruptcy proceedings.
- Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
- Our portfolio companies could incur debt that ranks equally with, or senior to, our investments in such companies and such portfolio companies could fail to generate sufficient cash flow to service their debt obligations to us.
- The disposition of our investments could result in contingent liabilities.
- GC Advisors’ liability is limited, and we have agreed to indemnify GC Advisors against certain liabilities, which could lead GC Advisors to act in a riskier manner on our behalf than it would when acting for its own account.
- We could be subject to risks related to investments in non-U.S. companies.
- We could be subject to risks if we engage in hedging transactions and could become subject to risks if we invest in foreign securities.
- We could suffer losses from our equity investments.
- We could be subject to lender liability claims with respect to our portfolio company investments.
- Investing in our securities could involve an above average degree of risk.
- There is a risk that investors in our equity securities will not receive distributions or that our distributions will not grow over time and a portion of our distributions could be a return of capital.
- We have not established any limit on the amount of funds we can use from available sources, such as borrowings, if any, or proceeds from private placements of our common shares, to fund distributions (which could reduce the amount of capital we ultimately invest in assets).
- If we issue preferred shares, debt securities or convertible debt securities, the NAV of our common shares could become more volatile.
- Holders of any preferred shares that we could issue will have the right to elect members of the board of trustees and have class voting rights on certain matters.
- Our common shareholders’ interest in us could be diluted if they do not fully exercise subscription rights in any rights offering. In addition, if the subscription price is less than our NAV per share, then common shareholders will experience an immediate dilution of the aggregate NAV of their shares.
- Our shareholders will experience dilution in their ownership percentage if they do not participate in our distribution reinvestment plan.
- Terms relating to redemption could materially adversely affect the return on any debt securities that we could issue.
- We are currently in a period of capital markets disruption and economic uncertainty.
- We could experience fluctuations in our monthly operating results.
- Political uncertainty could adversely affect our business.
- The continuing impact of Brexit on our investments is uncertain and could adversely affect our business.
- New or modified laws or regulations governing our operations could adversely affect our business.
- We incur significant costs as a result of having securities registered under the Exchange Act
- We are an “emerging growth company,” and we do not know if such status will make our common shares less attractive to investors.
- Our compliance with the Sarbanes-Oxley Act involves significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act would adversely affect us and the value of our common shares.
- We may invest through various joint ventures.
- We are subject to risks associated with investing alongside other third parties.
- Technological innovations and industry disruptions could negatively impact us.
- We are highly dependent on information systems and systems failures could significantly disrupt our business, which could, in turn, negatively affect the value of our common shares and our ability to pay distributions.
- A data breach could negatively impact our business and result in significant penalties.
- Cybersecurity risks and cyber incidents may adversely affect our business or the business of our portfolio companies.
- Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
- Special considerations for certain benefit plan investors.
- The NAV and net offering price of our shares may fluctuate significantly.