UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM10-Q

 

 

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017MARCH 31, 2019

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER:814-01196

 

 

AB Private Credit Investors Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Maryland 47-5049745
(State of incorporation) 

(I.R.S. Employer

Identification No.)

1345 Avenues of the Americas

New York, NY 10105

(Address of principal executive offices)

(212)969-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

———

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

(Title of Class)

 

 

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.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☐☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-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 Rule12b-2 of the Exchange Act.

 

Large accelerated filer ☐  Accelerated filer ☐
Non-accelerated filer ☒  (do not check if a smaller reporting company)  Smaller reporting company ☐

Emerging Growth Company

 ☒   

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 Rule12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The issuer had 2,5008,751,728 shares of common stock, $0.01 par value per share, outstanding as of November 13, 2017.May 15, 2019.

 

 

 

AB PRIVATE CREDIT INVESTORS CORPORATION

FORM10-Q FOR THE QUARTER ENDED September 30, 2017March 31, 2019

Table of Contents

 

   

INDEX

  PAGE
NO.		 

PART I.

  FINANCIAL INFORMATION  

Item 1.

  Consolidated Financial Statements   3
Statement of Assets and Liabilities as of September 30, 2017 (unaudited) and December 31, 20163
Statement of Operations for the three and nine months ended September 30, 2017 (unaudited)4 

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations   1130 

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk   2047 

Item 4.

  Controls and Procedures   2048 

PART II.

  OTHER INFORMATION   2149 

Item 1.

  Legal Proceedings   2149 

Item 1A.

  Risk Factors   2149 

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds   2150 

Item 3.

  Defaults Upon Senior Securities   2150 

Item 4.

  Mine Safety Disclosures   2150 

Item 5.

  Other Information   2150 

Item 6.

  Exhibits   2150 

SIGNATURES

    

Item 1.

Financial Statements

AB Private Credit Investors Corporation

Unaudited StatementConsolidated Statements of Assets and Liabilities

 

   

September 30,
2017

(unaudited)

   

December 31,

2016

 

ASSETS:

    

Cash

  $25,000   $1,000 

Expense Payment from Adviser

  $565,647   

Deferred Offering Cost

  $235,353   
  

 

 

   

 

 

 

Total Assets

  $826,000   $1,000 
  

 

 

   

 

 

 

LIABILITIES:

    

Organizational and Offering Expenses

  $703,000   

Professional Fees

  $98,000   
  

 

 

   

 

 

 

Total Liabilities

  $801,000   $0 
  

 

 

   

 

 

 

Net Assets

  $25,000   $1,000 

Composition of Net Assets:

    

Common Stock, $0.01 par value

  $25   $1 

Additional paid in capital

   24,975    999 
  

 

 

   

 

 

 
  $25,000   $1,000 
  

 

 

   

 

 

 

Shares

    

Net asset value per share
(2,500 and 100 shares of Common Stock issued and outstanding at September 30, 2017 and December 31, 2016, respectively)

  $10.00   $10.00 
   As of
March 31, 2019
(Unaudited)		  As of
December 31,
2018		 

Assets

 

Investments, at fair value (amortized cost of $196,908,013 and $138,512,243, respectively)

  $196,556,910  $137,803,133 

Cash and cash equivalents

   19,062,177   2,510,208 

Receivable for fund shares sold

   15,425,206   12,566,810 

Interest receivable

   1,160,956   808,707 

Deferred financing costs

   929,629   172,580 

Receivable for investments sold

   66,507   —   

Prepaid expenses

   41,363   102,390 
  

 

 

  

 

 

 

Total assets

  $233,242,748  $153,963,828 
  

 

 

  

 

 

 

Liabilities

 

Credit facility payable

  $142,000,000  $88,200,000 

Management fees payable

   1,382,818   830,130 

Interest and credit facility expense payable

   949,481   247,376 

Professional fees payable

   625,974   491,910 

Distribution payable

   475,946   403,999 

Incentive fee payable

   229,877   199,862 

Administrator and custodian fees payable

   146,239   215,678 

Payable for investments purchased

   136,194   —   

Directors’ fees payable

   34,500   —   

Transfer agent fees payable

   15,380   10,717 

Accrued expenses and other liabilities

   10,710   —   

Payable to Adviser

   2,865   90,446 
  

 

 

  

 

 

 

Total liabilities

  $146,009,984  $90,690,118 
  

 

 

  

 

 

 

Commitments and Contingencies (Note 6)

 

Net Assets

 

Common stock, par value $0.01 per share (200,000,000 shares authorized, 8,751,728 and 6,383,672 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively)

   87,517   63,837 

Paid-in capital in excess of par value

   87,448,404   63,838,147 

Distributable earnings (accumulated loss)

   (303,157)   (628,274) 
  

 

 

  

 

 

 

Total net assets

  $87,232,764  $63,273,710 
  

 

 

  

 

 

 

Total liabilities and net assets

  $233,242,748  $153,963,828 
  

 

 

  

 

 

 

Net asset value per share

  $9.97  $9.91 
  

 

 

  

 

 

 

See accompanying notesNotes to financial statements.Unaudited Consolidated Financial Statements

AB Private Credit Investors Corporation

Consolidated Unaudited Statement of Operations

 

   Three Months
Ended
September 30, 2017		  Nine Months
Ended
September 30, 2017		 

Investment income

   

Total Investment Income

  $0  $0 

Operating expenses

   

Organizational and Offering Expenses

   467,647   467,647 

Directors’ Fees

   149,000   149,000 

Professional Fees

   385,500   385,500 

Total Operating Expenses

   1,002,147   1,002,147 
  

 

 

  

 

 

 

Expense Payment

   (1,002,147)   (1,002,147) 
  

 

 

  

 

 

 

Net Income

  $0  $0 
  

 

 

  

 

 

 
   For the Three Months Ended
March 31,		 
   2019  2018 

Investment Income:

 

Interest income, net of amortization/accretion

  $3,400,195  $608,490 

Payment-in-kind interest

   28,637   —   

Other fee income

   —     —   
  

 

 

  

 

 

 

Total investment income

   3,428,832   608,490 
  

 

 

  

 

 

 

Expenses:

 

Interest and credit facility expenses

   1,409,152   149,801 

Management fees

   615,859   105,472 

Professional fees

   342,361   319,188 

Income-based incentive fee

   106,087   —   

Administration and custodian fees

   65,825   56,277 

Insurance expenses

   61,027   61,027 

Directors’ fees

   37,500   36,963 

Transfer agent fees

   4,662   —   

Offering costs

   —     51,647 

Other expenses

   55,914   84,021 
  

 

 

  

 

 

 

Total expenses

   2,698,387   864,396 

Expense reimbursement from Adviser

   (156,418)   (503,592) 

Waived management fees

   (63,171)   (12,453) 

Waived incentive fees

   (76,072)   —   
  

 

 

  

 

 

 

Net expenses

   2,402,726   348,351 
  

 

 

  

 

 

 

Net investment income before taxes

   1,026,106   260,139 
  

 

 

  

 

 

 

Excise tax expense

   —     3 
  

 

 

  

 

 

 

Net investment income

   1,026,106   260,136 
  

 

 

  

 

 

 

Net realized and change in unrealized gains (losses) on investment transactions:

 

Net realized gain (loss) from investments

   (1,754)   —   

Net change in unrealized appreciation (depreciation) from investments

   358,007   (26,039) 
  

 

 

  

 

 

 

Net realized and change in unrealized gains (losses)

   356,253   (26,039) 
  

 

 

  

 

 

 

Net increase in net assets resulting from operations

  $1,382,359  $234,097 
  

 

 

  

 

 

 

Net investment income per share (basic and diluted):

 

Net investment income per share (basic and diluted):

  $0.15  $0.11 

Earnings per share (basic and diluted):

  $0.20  $0.10 

Weighted average shares outstanding:

   6,914,873   2,424,032 

See Notes to Unaudited Consolidated Financial Statements

AB Private Credit Investors Corporation

Consolidated Unaudited Statements of Changes in Net Assets

Unaudited Consolidated Statements of Changes in Net Assets

   Three Months
Ended
March 31, 2019		  Three Months
Ended
March 31, 2018		 

Increase (decrease) in net assets resulting from operations:

 

Net investment income

  $1,026,106  $260,136 

Net realized gain (loss) on investments

   (1,754)   —   

Net change in unrealized appreciation (depreciation) on investments

   358,007   (26,039) 
  

 

 

  

 

 

 

Net increase in net assets resulting from operations

   1,382,359   234,097 
  

 

 

  

 

 

 

Distributions to shareholders

   (1,057,242)   —   
  

 

 

  

 

 

 

Capital transactions:

 

Issuance of common stock (2,317,068 and 599,421 shares, respectively)

   23,125,308   6,066,799 

Issuance of common shares pursuant to distribution reinvestment plan (58,319 and 0 shares, respectively)

   581,297   —   

Repurchase of common stock (7,331 and 0 shares, respectively)

   (72,668)   —   
  

 

 

  

 

 

 

Net increase in net assets resulting from capital transactions

   23,633,937   6,066,799 
  

 

 

  

 

 

 

Total increase in net assets

   23,959,054   6,300,896 

Net assets at beginning of period

   63,273,710   24,232,383 
  

 

 

  

 

 

 

Net assets at end of period

  $87,232,764  $30,533,279 
  

 

 

  

 

 

 

Distributions declared per share:

  $0.15  $—   

See Notes to Unaudited Consolidated Financial Statements

AB Private Credit Investors Corporation

Consolidated Unaudited Statements of Cash Flows

   Three Months
Ended
March 31, 2019		  Three Months
Ended
March 31, 2018		 

Cash flows from operating activities

 

Net increase (decrease) in net assets resulting from operations

  $1,382,359  $234,097 

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:

 

Purchases of investments

   (60,724,441)   (11,332,082) 

Payment-in-kind investments

   (28,637)   —   

Proceeds from sales of investments and principal repayments

   2,479,560   721,656 

Net realized (gain) loss on investments

   1,754   —   

Net change in unrealized (appreciation) depreciation on investments

   (358,007)   26,039 

Amortization of premium and accretion of discount, net

   (124,006)   (27,727) 

Amortization of deferred financing costs

   142,897   67,636 

Amortization of deferred offering costs

   —     51,647 

Increase (decrease) in operating assets and liabilities:

 

(Increase) decrease in receivable for investments sold

   (66,507)   —   

(Increase) decrease in interest receivable

   (352,249)   (103,329) 

(Increase) decrease in receivable from Adviser

   —     (186,668) 

(Increase) decrease in deferred organization and offering costs

   —     —   

(Increase) decrease in prepaid expenses

   61,027   61,027 

Increase (decrease) in investments purchased payable

   136,194   —   

Increase (decrease) in management fees payable

   552,688   93,019 

Increase (decrease) in due to Adviser

   (87,581)   —   

Increase (decrease) in administrator and custodian fees payable

   (69,439)   56,276 

Increase (decrease) in professional fees payable

   134,064   203,055 

Increase (decrease) in excise tax payable

   —     (2,336) 

Increase (decrease) in incentive fees payable

   30,015   —   

Increase (decrease) in directors’ fees payable

   34,500   (187) 

Increase (decrease) in transfer agent fees payable

   4,663   2,412 

Increase (decrease) in interest and credit facility expense payable

   702,105   18,506 

Increase (decrease) in accrued organization and offering costs

   —     (90,308) 

Increase (decrease) in accrued expenses and other liabilities

   10,710   10,615 
  

 

 

  

 

 

 

Net cash provided by (used for) operating activities

   (56,138,331)   (10,196,652) 
  

 

 

  

 

 

 

Cash flows from financing activities

 

Issuance of common stock

   20,266,912   6,457,252 

Repurchase of common stock

   (72,668)   —   

Distributions paid

   (403,998)   —   

Financing costs paid

   (899,946)   —   

Borrowings on debt

   144,000,000   24,000,000 

Repayments of debt

   (90,200,000)   (20,000,000) 
  

 

 

  

 

 

 

Net cash provided by (used for) financing activities

   72,690,300   10,457,252 
  

 

 

  

 

 

 

Net increase (decrease) in cash

   16,551,969   260,600 

Cash and cash equivalents, beginning of period

   2,510,208   17,139,858 
  

 

 

  

 

 

 

Cash and cash equivalents, end of period

  $19,062,177  $17,400,458 
  

 

 

  

 

 

 

Supplemental andnon-cash financing activities

 

Cash paid during the period for interest

  $528,010  $63,659 

Issuance of common shares pursuant to distribution reinvestment plan

  $581,297  $—   

See Notes to Unaudited Consolidated Financial Statements

AB Private Credit Investors Corporation

Consolidated Schedule of Investments as of March 31, 2019

(Unaudited)

Portfolio Company

 Industry 

Facility Type

 

Interest

 Maturity Funded
Par Amount		  Cost  Fair Value 
Investments at Fair Value- 225.32% + * # ^ 
U.S. Corporate Debt- 221.17% 
1st Lien/Senior Secured Debt- 219.79% 

Edgewood Partners Holdings LLC

 Business Services Term Loan 6.75% (L + 4.25%; 1.00% Floor) 09/06/2024 $3,138,543  $3,107,820  $3,107,158 

Edgewood Partners Holdings LLC(1) (2)

 Business Services Delayed Draw Term Loan 6.75% (L + 4.25%; 1.00% Floor) 09/08/2024  —     (16,530)   (16,943) 

Nuvei Technologies Corp.(3)

 Business Services Initial U.S. Term Loan Commitment 9.00% (P + 3.50%; 1.00% Floor) 09/28/2025  669,193   662,871   662,501 

Nuvei Technologies Corp.(3)

 Business Services Initial Canadian Term Loan Commitment 9.00% (P + 3.50%; 1.00% Floor) 09/28/2025  1,003,789   994,306   993,751 

Nuvei Technologies Corp.(1) (3)

 Business Services Delayed Draw Term Loan 6.97% (L + 4.50%; 1.00% Floor) 09/28/2025  328,884   324,294   324,034 

Quirch Foods, Co.

 Business Services Term Loan 8.49% (L + 6.00%) 12/20/2025  2,133,590   2,112,531   2,112,254 

Single Digits, Inc.

 Business Services Term Loan 8.62% (L + 6.00%; 1.00% Floor) 12/21/2023  3,320,857   3,288,249   3,287,649 

Single Digits, Inc.(1) (2)

 Business Services Revolver 8.62% (L + 6.00%; 1.00% Floor) 12/21/2023  —     (3,939)   (4,162) 

Single Digits, Inc.(1) (2)

 Business Services Delayed Draw Term Loan 8.62% (L + 6.00%; 1.00% Floor) 12/21/2023  —     (10,008)   (10,404) 

Smile Brands, Inc.

 Business Services Term Loan 7.38% (L + 4.50%) 10/12/2024  1,652,110   1,636,676   1,635,588 

Smile Brands, Inc.(1)

 Business Services Revolver 9.00% (P + 3.50%) 10/12/2023  93,430   91,081   90,881 

Smile Brands, Inc.(1)

 Business Services Delayed Draw Term Loan 7.38% (L + 4.50%) 10/12/2024  159,280   153,404   152,914 

Trade Supplies Acquisition, LLC

 Business Services Term Loan 7.00% (L + 4.50%; 1.00% Floor) 11/21/2023  6,285,749   6,195,348   6,191,463 

Trade Supplies Acquisition, LLC(1)

 Business Services Revolver 9.00% (P + 3.50%; 1.00% Floor) 11/21/2023  119,748   111,540   110,914 

InSite Wireless Group, LLC(1)

 Communications & IT
Infrastructure		 Term Loan 8.04% (L + 5.55%; 0.50% Floor) 03/15/2023  2,238,572   2,204,852   2,185,319 

InSite Wireless Group, LLC(1)

 Communications & IT
Infrastructure		 Revolver 8.04% (L + 5.55%; 0.50% Floor) 03/15/2023  138,062   135,714   135,103 

Maintech, Incorporated

 Communications & IT
Infrastructure		 Term Loan 9.60% (L + 7.00%; 1.00% Floor) 12/28/2022  2,835,938   2,796,633   2,793,398 

Maintech, Incorporated(1) (4)

 Communications & IT
Infrastructure		 Revolver 11.50% (P + 6.00%; 1.00% Floor) 12/28/2022  154,000   150,748   149,875 

Captain D’s, Inc.

 ConsumerNon-Cyclical Term Loan 6.99% (L + 4.50%; 1.00% Floor) 12/15/2023  2,018,782   2,001,929   1,998,594 

Captain D’s, Inc.(1) (5)

 ConsumerNon-Cyclical Revolver 9.00% (P + 3.50%; 1.00% Floor) 12/15/2023  81,272   79,666   79,322 

GPS Hospitality Holding Company LLC

 Consumer Non-Cyclical Term Loan B 6.85% (L + 4.25%) 12/06/2025  2,447,722   2,412,315   2,411,006 

Lucky Bucks, LLC

 ConsumerNon-Cyclical Term Loan 9.78% (L + 7.00%; 1.00% Floor) 04/09/2023  1,049,698   1,032,645   1,031,328 

Lucky Bucks, LLC(1)

 ConsumerNon-Cyclical Delayed Draw Term Loan 9.86% (L + 7.00%; 1.00% Floor) 04/09/2023  662,826   645,059   643,435 

Tropical Smoothie Café, LLC

 ConsumerNon-Cyclical Term Loan 8.00% (L + 5.50%; 1.00% Floor) 09/24/2023  1,350,089   1,337,783   1,336,588 

Tropical Smoothie Café,
LLC(1)

 ConsumerNon-Cyclical Revolver 8.00% (L + 5.50%; 1.00% Floor) 09/24/2023  38,574   37,340   37,224 

AEG Holding Company, Inc.

 Education Term Loan 8.48% (L + 6.00%; 1.00% Floor) 11/20/2023  6,152,982   6,053,737   6,029,922 

AEG Holding Company,
Inc.(1)

 Education Revolver 8.48% (L + 6.00%; 1.00% Floor) 11/20/2023  595,996   582,807   579,742 

AEG Holding Company,
Inc.(1) (2)

 Education Delayed Draw Term Loan 8.48% (L + 6.00%; 1.00% Floor) 11/20/2023  —     (16,914)   (21,673) 

BCP Raptor II, LLC(6)

 Energy Term Loan 7.37% (L + 4.75%) 11/03/2025  5,740,914   5,721,241   5,413,682 

Brazos Delaware II, LLC(6)

 Energy Term Loan B 6.49% (L + 4.00%) 05/21/2025  4,075,961   3,957,076   3,859,935 

American Physician Partners LLC

 Healthcare & HCIT Term Loan A 9.10% (L + 6.50%; 1.00% Floor) 12/21/2021  5,825,318   5,742,438   5,737,939 

American Physician Partners LLC(1)

 Healthcare & HCIT Revolver 9.05% (L + 6.50%; 1.00% Floor) 12/21/2021  111,001   105,059   104,341 

American Physician Partners LLC(1)

 Healthcare & HCIT Delayed Draw Term Loan 9.10% (L + 6.50%; 1.00% Floor) 12/21/2021  346,322   331,756   329,939 

Analogic Corporation

 Healthcare & HCIT Term Loan 8.50% (L + 6.00%; 1.00% Floor) 06/22/2024  2,997,978   2,944,264   2,938,019 

Analogic Corporation(1) (2)

 Healthcare & HCIT Revolver 8.50% (L + 6.00%; 1.00% Floor) 06/22/2023  —     (5,019)   (5,739) 

Delaware Valley Management Holdings, Inc.

 Healthcare & HCIT Term Loan 8.24% (L + 5.75%; 1.00% Floor) 03/21/2024  4,436,327   4,347,956   4,347,601 

Delaware Valley Management Holdings, Inc.(1) (2)

 Healthcare & HCIT Revolver 8.24% (L + 5.75%; 1.00% Floor) 03/21/2024  —     (10,487)   (10,538) 

Delaware Valley Management Holdings, Inc.(1) (2)

 Healthcare & HCIT Delayed Draw Term Loan 8.24% (L + 5.75%; 1.00% Floor) 03/21/2024  —     (59,022)   (105,376) 

GHA Buyer, Inc.

 Healthcare & HCIT Term Loan 8.00% (L + 5.50%; 1.00% Floor) 10/22/2023  2,020,070   1,982,665   1,979,669 

GHA Buyer, Inc.(1) (2)

 Healthcare & HCIT Revolver 8.00% (L + 5.50%; 1.00% Floor) 10/22/2023  —     (3,704)   (4,050) 

GHA Buyer, Inc.(1) (2)

 Healthcare & HCIT Delayed Draw Term Loan 8.00% (L + 5.50%; 1.00% Floor) 10/22/2023  —     (4,989)   (13,501) 

INH Buyer, Inc.

 Healthcare & HCIT Term Loan 9.24% (L + 6.50%; 1.00% Floor) 01/31/2025  6,861,938   6,760,716   6,759,009 

INH Buyer, Inc.(1)

 Healthcare & HCIT Revolver 9.24% (L + 6.50%; 1.00% Floor) 01/31/2024  27,448   24,441   24,360 

Pinnacle Dermatology Management, LLC

 Healthcare & HCIT Term Loan 6.85% (L + 4.25%; 1.00% Floor) 05/18/2023  1,859,642   1,828,215   1,822,449 

Pinnacle Dermatology Management, LLC(1) (2)

 Healthcare & HCIT Revolver 6.85% (L + 4.25%; 1.00% Floor) 05/18/2023  —     (7,778)   (9,369) 

Portfolio Company

 Industry 

Facility Type

 

Interest

 Maturity Funded
Par Amount		  Cost  Fair Value 

Pinnacle Dermatology Management, LLC(1)

 Healthcare & HCIT Delayed Draw Term Loan 6.85% (L + 4.25%; 1.00% Floor) 05/18/2023 $2,763,699  $2,686,039  $2,670,014 

Platinum Dermatology Partners, LLC

 Healthcare & HCIT Term Loan 8.83% (L + 6.25%; 1.00% Floor) 01/03/2023  3,163,563   3,105,215   3,100,292 

Platinum Dermatology Partners, LLC

 Healthcare & HCIT Specified Delayed Draw Term Loan Commitment 9.11% (L + 6.25%; 1.00% Floor) 01/03/2023  1,974,422   1,943,501   1,934,934 

Platinum Dermatology Partners, LLC(1) (7)

 Healthcare & HCIT Revolver 10.75% (P + 5.25%; 1.00% Floor) 01/03/2023  388,901   381,356   378,930 

Platinum Dermatology Partners, LLC(1)

 Healthcare & HCIT General Delayed Draw Term Loan Commitment 9.13% (L + 6.25%; 1.00% Floor) 01/03/2023  1,425,972   1,394,809   1,386,084 

Qualifacts Corporation

 Healthcare & HCIT Term Loan 8.60% (L + 6.00%; 1.00% Floor) 12/12/2022  2,820,000   2,774,783   2,805,900 

Qualifacts Corporation(1) (2)

 Healthcare & HCIT Revolver 8.60% (L + 6.00%; 1.00% Floor) 12/12/2022  —     (4,470)   (1,500) 

Theranest, LLC

 Healthcare & HCIT Term Loan 7.59% (L + 5.00%; 1.00% Floor) 07/23/2023  3,000,000   2,947,077   2,940,000 

Theranest, LLC(1) (2)

 Healthcare & HCIT Revolver 7.59% (L + 5.00%; 1.00% Floor) 07/23/2023  —     (7,424)   (8,571) 

Theranest, LLC(1)

 Healthcare & HCIT Delayed Draw Term Loan 7.60% (L + 5.00%; 1.00% Floor) 07/23/2023  214,286   175,353   169,286 

RxBenefits, Inc.

 Pharmaceutical Term Loan A 8.10% (L + 5.50%; 1.00% Floor) 03/28/2025  5,821,647   5,763,430   5,763,430 

RxBenefits, Inc.(1) (2)

 Pharmaceutical Revolver 8.10% (L + 5.50%; 1.00% Floor) 03/28/2024  —     (5,758)   (5,758) 

Avetta, LLC

 Software & Services Term Loan 7.99% (L + 5.50%; 1.00% Floor) 04/10/2024  7,671,657   7,528,049   7,518,224 

Avetta, LLC(1) (2)

 Software & Services Revolver 7.99% (L + 5.50%; 1.00% Floor) 04/10/2024  —     (8,005)   (9,888) 

Avetta, LLC(1) (2)

 Software & Services Delayed Draw Term Loan 7.99% (L + 5.50%; 1.00% Floor) 04/10/2024  —     (13,028)   (12,360) 

Businesssolver.com, Inc.

 Software & Services Term Loan 10.18% (L + 7.50%; 1.00% Floor) 05/15/2023  2,588,235   2,544,101   2,536,471 

Businesssolver.com, Inc.(1) (8)

 Software & Services Revolver 9.99% (L + 7.50%; 1.00% Floor) 05/15/2023  64,706   59,363   58,235 

Businesssolver.com, Inc.(1)

 Software & Services Delayed Draw Term Loan 10.18% (L + 7.50%; 1.00% Floor) 05/15/2023  148,824   145,148   141,059 

Drilling Info Holdings, Inc.(6)

 Software & Services Term Loan 6.75% (L + 4.25%) 07/30/2025  3,404,810   3,390,150   3,387,786 

Drilling Info Holdings, Inc.(1) (6)

 Software & Services Delayed Draw Term Loan 6.75% (L + 4.25%) 07/30/2025  6,357   6,276   6,271 

E2open LLC

 Software & Services Term Loan 7.63% (L + 5.00%; 1.00% Floor) 11/26/2024  4,139,917   4,080,750   4,077,819 

E2open LLC(1) (2)

 Software & Services Revolver 7.63% (L + 5.00%; 1.00% Floor) 11/26/2024  —     (4,409)   (4,671) 

E2open LLC

 Software & Services Delayed Draw Term Loan 7.66% (L + 5.00%; 1.00% Floor) 11/26/2024  829,825   817,794   817,378 

Engage2Excel, Inc.

 Software & Services Term Loan 9.36% (L + 6.50%; 1.00% Floor) 03/07/2023  2,992,864   2,940,953   2,933,006 

Engage2Excel, Inc.(1)

 Software & Services Revolver 11.00% (P + 5.50%; 1.00% Floor) 03/07/2023  31,409   24,698   23,871 

Exterro, Inc.(1) (2)

 Software & Services Revolver 7.12% (L + 4.50%; 1.00% Floor) 05/31/2024  —     (5,257)   (6,600) 

Exterro, Inc.

 Software & Services Initial Term Loan 7.12% (L + 4.50%; 1.00% Floor) 05/31/2024  2,947,725   2,898,791   2,888,770 

Finalsite Holdings, Inc.

 Software & Services Term Loan 8.25% (L + 5.50%; 1.00% Floor) 09/25/2024  3,358,346   3,303,678   3,307,971 

Finalsite Holdings, Inc.(1) (2)

 Software & Services Revolver 8.25% (L + 5.50%; 1.00% Floor) 09/25/2024  —     (4,059)   (3,797) 

Genesis Acquisition Co.

 Software & Services Term Loan 6.60% (L + 4.00%; 1.00% Floor) 07/31/2024  1,373,024   1,348,141   1,345,564 

Genesis Acquisition Co.(1) (2)

 Software & Services Revolver 6.60% (L + 4.00%; 1.00% Floor) 07/31/2024  —     (3,612)   (4,048) 

Genesis Acquisition Co.(1) (2)

 Software & Services Delayed Draw Term Loan 6.60% (L + 4.00%; 1.00% Floor) 07/31/2024  —     (3,256)   (3,645) 

Ministry Brands, LLC(1)

 Software & Services Delayed Draw Term Loan 6.50% (L + 4.00%; 1.00% Floor) 12/02/2022  662,540   656,892   655,567 

Ministry Brands, LLC

 Software & Services 1st Lien Term Loan 6.50% (L + 4.00%; 1.00% Floor) 12/02/2022  3,168,308   3,155,413   3,152,467 

Perforce Intermediate Holdings, LLC

 Software & Services Term Loan 7.00% (L + 4.50%; 1.00% Floor) 12/27/2024  6,352,123   6,185,088   6,320,362 

Perforce Intermediate Holdings, LLC(1) (2)

 Software & Services Revolver 7.00% (L + 4.50%; 1.00% Floor) 12/28/2022  —     (13,112)   (3,352) 

Selligent, Inc.

 Software & Services Term Loan 8.11% (L + 5.50%; 1.00% Floor) 11/05/2024  1,921,516   1,894,578   1,892,694 

Selligent, Inc.(1) (2)

 Software & Services Revolver 8.11% (L + 5.50%; 1.00% Floor) 11/03/2023  —     (2,773)   (3,010) 

Sirsi Corporation

 Software & Services Term Loan 7.22% (L + 4.75%; 1.00% Floor) 03/15/2024  13,705,097   13,500,453   13,499,521 

Sirsi Corporation(1) (2)

 Software & Services Revolver 7.22% (L + 4.75%; 1.00% Floor) 03/15/2024  —     (12,359)   (12,459) 

Sugarcrm, Inc.

 Software & Services Term Loan 9.25% (L + 6.75%; 1.00% Floor) 07/31/2024  3,235,401   3,183,713   3,178,782 

Sugarcrm, Inc.(1) (2)

 Software & Services Revolver 9.25% (L + 6.75%; 1.00% Floor) 07/31/2024  —     (4,844)   (5,429) 

Summit Infrastructure Group, Inc.

 Software & Services Term Loan 7.62% (L + 5.00%; 1.00% Floor) 03/15/2024  7,035,977   6,895,884   6,895,257 

Summit Infrastructure Group,
Inc.(1) (2)

 Software & Services Revolver 7.62% (L + 5.00%; 1.00% Floor) 03/15/2024  —     (11,168)   (11,258) 

Summit Infrastructure Group,
Inc.(1) (2)

 Software & Services Delayed Draw Term Loan 7.62% (L + 5.00%; 1.00% Floor) 03/15/2024  —     (22,515)   (22,515) 

Swiftpage, Inc.

 Software & Services Term Loan A 7.97% (L + 5.50%; 1.00% Floor) 06/13/2023  231,537   227,067   226,907 

Swiftpage, Inc.

 

Software & Services

 Term Loan 7.99% (L + 5.50%; 1.00% Floor) 06/13/2023  2,515,800   2,472,416   2,465,484 

Swiftpage, Inc.(1) (2)

 Software & Services Revolver 7.99% (L + 5.50%; 1.00% Floor) 06/13/2023  —     (3,804)   (4,506) 

Symplr Software, Inc.(9)

 Software & Services Term Loan 8.50% (L + 6.00%) 11/28/2025  3,881,298   3,824,475   3,823,079 

Symplr Software, Inc.(1) (9)

 Software & Services Revolver 8.48% (L + 6.00%) 11/30/2023  29,646   25,493   25,199 

TRGRP Acquisition Corp.

 Software & Services Term Loan 9.60% (L + 4.50%; 2.50% PIK; 1.00% Floor) 11/01/2023  4,714,748   4,624,219   4,620,453 

TRGRP Acquisition Corp.(1) (2)

 Software & Services Revolver 9.60% (L + 4.50%; 2.50% PIK; 1.00% Floor) 11/01/2023  —     (6,129)   (6,667) 

Velocity Purchaser Corporation

 Software & Services Term Loan 8.48% (L + 6.00%; 1.00% Floor) 12/01/2022  724,166   710,944   716,924 

Velocity Purchaser Corporation

 Software & Services Term Loan 8.50% (L + 6.00%; 1.00% Floor) 12/01/2022  2,912,802   2,868,400   2,883,674 

Velocity Purchaser
Corporation(1) (2)

 Software & Services Revolver 8.48% (L + 6.00%; 1.00% Floor) 12/01/2022  —     (3,010)   (1,932) 

Portfolio Company

 Industry 

Facility Type

 

Interest

 Maturity Funded
Par Amount		  Cost  Fair Value 

Veriforce Holdings, LLC

 Software & Services Term Loan 8.98% (L + 6.50%; 1.00% Floor) 07/13/2023 $3,074,867  $3,027,471  $3,167,113 

Veriforce Holdings, LLC(1)

 Software & Services Revolver 8.98% (L + 6.50%; 1.00% Floor) 07/13/2023  146,456   142,100   154,905 

Watermark Insights, LLC

  Software & Services  Term Loan  7.22% (L + 4.75%; 1.00% Floor)   06/07/2024    2,632,599    2,609,301    2,606,273 

Watermark Insights, LLC

  Software & Services  Delayed Draw Term Loan  7.22% (L + 4.75%; 1.00% Floor)   06/07/2024    330,368    328,208    327,064 

Purchasing Power, LLC

  Specialty Finance  Term Loan  9.75% (L + 7.25%; 1.00% Floor)   02/06/2024    3,079,825    3,026,746    3,025,928 

Dillon Logistics, Inc.

  Transport & Logistics  Term Loan C  9.58% (L + 7.00%; 1.00% Floor)   12/31/2020    304,975    299,732    298,875 

Dillon Logistics, Inc.

  Transport & Logistics  Term Loan B  9.58% (L + 7.00%; 1.00% Floor)   12/11/2023    1,270,729    1,246,550    1,245,315 

Dillon Logistics, Inc.

  Transport & Logistics  Term Loan A  9.58% (L + 7.00%; 1.00% Floor)   12/11/2023    2,592,288    2,542,961    2,540,442 

Dillon Logistics, Inc.(1) (10)

  Transport & Logistics  Revolver  9.56% (L + 7.00%; 1.00% Floor)   12/11/2023    387,446    379,412    376,264 

OSG Bulk Ships, Inc.

  Transport & Logistics  Term Loan  7.50% (L + 5.00%)   12/21/2023    6,460,736    6,383,719    6,379,977 
            

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

       192,088,483    191,733,006 

2nd Lien/Junior Secured Debt- 1.38%

 

Brave Parent Holdings, Inc.

  Energy  Term Loan  10.00% (L + 7.50%)   04/17/2026    1,230,107    1,202,102    1,200,773 
            

 

 

   

 

 

 

Total 2nd Lien/Junior Secured Debt

       1,202,102    1,200,773 
            

 

 

   

 

 

 

Total U.S. Corporate Debt

       193,290,585    192,933,779 

Portfolio Company

  

Industry

  

Coupon

      Shares   Cost   Fair Value 

U.S. Preferred Stock- 3.16%

        

Protoscale Rubrik, LLC(11)

  Software & Services       25,397   $598,212   $598,201 

Symplr Software Intermediate Holdings, Inc.(11)

  Software & Services       1,196   $1,160,531   $1,160,531 

Workfront, Inc.(11)

    Software & Services       104,058   $999,998   $999,998 
            

 

 

   

 

 

 

Total U.S. Preferred Stock

       2,758,741    2,758,730 

U.S. Common Stock- 0.99%

        

SSC TS Investments, LLC(11) (12)

  Business Services       62,735   $62,735   $62,735 

Leeds FEG Investors, LLC(11)

  Education       311   $311,400   $317,114 

INH Group Holdings, LLC(11)

  Healthcare & HCIT       484,552   $484,552   $484,552 
            

 

 

   

 

 

 

Total U.S. Common Stock

       858,687    864,401 

TOTAL INVESTMENTS - 225.32%(13)

 

  $196,908,013   $196,556,910 
            

 

 

   

 

 

 

Cash Equivalents- 17.36%

        

U.S. Investment Companies- 17.36%

        

Fidelity Government Portfolio I(14)

  Money Market Portfolio  2.31% (15)    $13,989,010   $13,989,010   $13,989,010 

Fidelity Government Portfolio I(14)

  Money Market Portfolio  2.31% (15)     1,146,632   $1,146,632   $1,146,632 
            

 

 

   

 

 

 

Total U.S. Investment Companies

       15,135,642    15,135,642 
            

 

 

   

 

 

 

Total Cash Equivalents

       15,135,642    15,135,642 

LIABILITIES IN EXCESS OF OTHER ASSETS - (142.68%)

 

  $(124,459,788) 
              

 

 

 

NET ASSETS - 100.00%

 

  $87,232,764 
              

 

 

 

+

As of March 31, 2019, qualifying assets represented 97.40% of total assets. Under the 1940 Act we may not acquire anynon-qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets.

*

Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy.

#

Percentages are based on net assets.

^

Generally, the interest rate on floating interest rate investments is at benchmark rate plus spread. The borrower has an option to choose the benchmark rate, such as the London Interbank Offered Rate (“LIBOR”) or the U.S. Prime rate. The spread may change based on the type of rate used. The terms in the Consolidated Schedule of Investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to30-day,60-day,90-day or180-day LIBOR rates (1M L, 3M L or 6M L, respectively) at the borrower’s option. LIBOR loans may be subject to interest floors. As of March 31, 2019, rates for 1M L, 2M L, 3M L and 6M L are 2.49%, 2.56%, 2.60% and 2.66%, respectively. As of March 31, 2019, the U.S. Prime rate was 5.50%.

(1)

Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated. See Note 6 “Commitments and Contingencies”.

(2)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

(3)

Pivotal Payments, Inc. has been renamed to Nuvei Technologies Corp. in 2019.

(4)

$55,000 of the funded par amount accrues interest at 9.60% (L+7.00%; 1.00% Floor).

(5)

$33,159 of the funded par amount accrues interest at 6.99% (L+4.50%; 1.00% Floor).

(6)

Categorized as Level 2 assets under the definition of ASC 820 fair value hierarchy.

(7)

$124,648 of the funded par amount accrues interest at 9.05% (L+6.25%).

(8)

$12,941 of the funded par amount accrues interest at 12.00% (P+6.50%).

(9)

Caliper Software, Inc. has been renamed to Symplr Software, Inc. in 2019.

(10)

$133,300 of the funded par amount accrues interest at 11.50% (P+6.00%).

(11)

Non-income producing security.

(12)

SSC TS Investments, LLC is held through ABPCIC SSC TS Holdings LLC.

(13)

Aggregate gross unrealized appreciation for federal income tax purposes is $364,837; aggregate gross unrealized depreciation for federal income tax purposes is $715,940. Net unrealized depreciation is $351,103 based upon a tax cost basis of $196,908,013.

(14)

Included within ‘Cash and cash equivalents’ on the Consolidated Statements of Assets and Liabilities.

(15)

The rate shown is the annualizedseven-day yield as of March 31, 2019.

L-LIBOR
P-Prime
PIK-Payment-In-Kind

See Notes to Unaudited Consolidated Financial Statements

AB Private Credit Investors Corporation

Consolidated Schedule of Investments as of December 31, 2018

Portfolio Company

 Industry 

Facility Type

 

Interest

 Maturity Funded
Par Amount		  Cost  Fair Value 
Investments at Fair Value—217.79% + * # ^ 
U.S. Corporate Debt—215.36% 
1st Lien/Senior Secured Debt—213.46% 

Pivotal Payments Direct Corp.

 Business Services Initial Canadian Term
Loan Commitment		 9.00% (P + 3.50%; 1.00% Floor) 09/28/2025 $1,004,630  $994,863  $994,584 

Pivotal Payments, Inc.

 Business Services Initial U.S. Term
Loan Commitment		 9.00% (P + 3.50%; 1.00% Floor) 09/28/2025  672,556   666,017   665,830 

Pivotal Payments, Inc.(1)

 Business Services Delayed Draw Term
Loan		 7.01% (L + 4.50%; 1.00% Floor) 09/28/2025  302,582   297,860   297,725 

Single Digits, Inc.

 Business Services Term Loan 8.79% (L + 6.00%; 1.00% Floor) 12/21/2023  3,329,180   3,295,889   3,295,889 

Single Digits, Inc.(1) (2)

 Business Services Revolver 8.79% (L + 6.00%; 1.00% Floor) 12/21/2023  —     (4,161)   (4,161) 

Single Digits, Inc.(1) (2)

 Business Services Delayed Draw Term
Loan		 8.79% (L + 6.00%; 1.00% Floor) 12/21/2023  —     (10,404)   (10,404) 

Smile Brands, Inc.

 Business Services Term Loan 7.13% (L + 4.50%) 10/12/2024  1,656,250   1,640,203   1,639,688 

Smile Brands, Inc.(1)

 Business Services Revolver 9.00% (P + 3.50%) 10/12/2023  42,468   40,015   39,920 

Smile Brands, Inc.(1)

 Business Services Delayed Draw Term
Loan		 7.13% (L + 4.50%) 10/12/2024  159,680   153,543   153,309 

Trade Supplies Acquisition, LLC

 Business Services Term Loan 7.01% (L + 4.50%; 1.00% Floor) 11/21/2023  6,301,503   6,208,200   6,206,980 

Trade Supplies Acquisition,
LLC(1)

 Business Services Revolver 9.00% (P + 3.50%; 1.00% Floor) 11/21/2023  119,748   111,113   110,914 

InSite Wireless Group, LLC(1)

 Communications & IT
Infrastructure		 Term Loan 8.03% (L + 5.61%; 0.50% Floor) 03/15/2023  2,238,572   2,206,783   2,185,319 

InSite Wireless Group, LLC(1) (2)

 Communications & IT
Infrastructure		 Revolver 8.03% (L + 5.61%; 0.50% Floor) 03/15/2023  —     (2,490)   (2,958) 

Maintech, Incorporated(3)

 Communications & IT
Infrastructure		 Term Loan 9.80% (L + 7.00%; 1.00% Floor) 12/28/2022  2,887,500   2,845,887   2,844,187 

Maintech, Incorporated (1) (3) (4)

 Communications & IT
Infrastructure		 Revolver 11.50% (P + 6.00%; 1.00% Floor) 12/28/2022  214,500   211,071   210,375 

Captain D’s, Inc.

 ConsumerNon-Cyclical Term Loan 7.30% (L + 4.50%; 1.00% Floor) 12/15/2023  2,057,194   2,039,173   2,036,622 

Captain D’s, Inc.(1) (5)

 ConsumerNon-Cyclical Revolver 9.00% (P + 3.50%; 1.00% Floor) 12/15/2023  82,573   80,898   80,622 

GPS Hospitality Holding Company LLC

 ConsumerNon-Cyclical Term Loan B 6.99% (L + 4.25%) 12/06/2025  2,453,856   2,417,343   2,417,048 

Lucky Bucks, LLC

 ConsumerNon-Cyclical Term Loan 9.78% (L + 7.00%; 1.00% Floor) 04/09/2023  1,078,856   1,060,428   1,059,976 

Lucky Bucks, LLC(1)

 ConsumerNon-Cyclical Delayed Draw Term
Loan		 9.86% (L + 7.00%; 1.00% Floor) 04/09/2023  551,452   532,621   532,061 

Tropical Smoothie Café, LLC

 ConsumerNon-Cyclical Term Loan 8.00% (L + 5.50%; 1.00% Floor) 09/24/2023  1,350,089   1,337,204   1,336,588 

Tropical Smoothie Café, LLC(1)

 Consumer Non-Cyclical Revolver 8.00% (L + 5.50%; 1.00% Floor) 09/24/2023  38,574   37,285   37,224 

AEG Holding Company, Inc.

 Education Term Loan 8.53% (L + 6.00%; 1.00% Floor) 11/20/2023  6,168,559   6,064,136   6,045,188 

AEG Holding Company, Inc.(1)

 Education Revolver 8.52% (L + 6.00%; 1.00% Floor) 11/20/2023  595,996   582,236   579,742 

AEG Holding Company,
Inc.(1) (2)

 Education Delayed Draw Term
Loan		 8.53% (L + 6.00%; 1.00% Floor) 11/20/2023  —     (17,771)   (21,673) 

BCP Raptor II, LLC(6)

 Energy Term Loan 7.37% (L + 4.75%) 11/03/2025  5,740,914   5,712,752   5,303,169 

Brazos Delaware II, LLC(6)

 Energy Term Loan B 6.50% (L + 4.00%) 05/21/2025  4,086,228   3,957,985   3,738,898 

American Physician Partners LLC

 Healthcare & HCIT Term Loan A 9.30% (L + 6.25%; 1.00% Floor) 12/21/2021  3,113,453   3,068,540   3,066,751 

American Physician Partners LLC(1)

 Healthcare & HCIT Revolver 9.29% (L + 6.25%; 1.00% Floor) 12/21/2021  241,459   232,964   232,626 

American Physician Partners LLC(1)

 Healthcare & HCIT Delayed Draw Term
Loan		 9.30% (L + 6.25%; 1.00% Floor) 12/21/2021  446,243   393,462   391,355 

Analogic Corporation

 Healthcare & HCIT Term Loan 8.52% (L + 6.00%; 1.00% Floor) 06/22/2024  3,005,511   2,949,568   2,945,401 

Analogic Corporation(1) (2)

 Healthcare & HCIT Revolver 8.52% (L + 6.00%; 1.00% Floor) 06/22/2023  —     (5,246)   (5,739) 

GHA Buyer, Inc.

 Healthcare & HCIT Term Loan 8.02% (L + 5.50%; 1.00% Floor) 10/22/2023  2,025,133   1,985,938   1,984,631 

GHA Buyer, Inc.(1) (2)

 Healthcare & HCIT Revolver 8.02% (L + 5.50%; 1.00% Floor) 10/22/2023  —     (3,895)   (4,050) 

GHA Buyer, Inc.(1) (2)

 Healthcare & HCIT Delayed Draw Term
Loan		 8.02% (L + 5.50%; 1.00% Floor) 10/22/2023  —     (5,966)   (13,501) 

Pinnacle Dermatology Management, LLC

 Healthcare & HCIT Term Loan 6.77% (L + 4.25%; 1.00% Floor) 05/18/2023  1,864,326   1,831,047   1,827,039 

Pinnacle Dermatology Management, LLC(1) (2)

 Healthcare & HCIT Revolver 6.77% (L + 4.25%; 1.00% Floor) 05/18/2023  —     (8,226)   (9,368) 

Pinnacle Dermatology Management, LLC(1)

 Healthcare & HCIT Delayed Draw Term Loan 6.77% (L + 4.25%; 1.00% Floor) 05/18/2023  2,763,699   2,681,310   2,670,014 

Platinum Dermatology Partners, LLC

 Healthcare & HCIT Term Loan 9.05% (L + 6.25%; 1.00% Floor) 01/03/2023  3,169,048   3,108,282   3,105,667 

Platinum Dermatology Partners, LLC(1) (2)

 Healthcare & HCIT Revolver 9.05% (L + 6.25%; 1.00% Floor) 01/03/2023  —     (8,024)   (9,972) 

Platinum Dermatology Partners, LLC

 Healthcare & HCIT Specified Delayed
Draw Term Loan
Commitment		 9.11% (L + 6.25%; 1.00% Floor) 01/03/2023  1,979,408   1,946,432   1,939,820 

Platinum Dermatology Partners, LLC(1)

 Healthcare & HCIT General Delayed
Draw Term Loan
Commitment		 9.13% (L + 6.25%; 1.00% Floor) 01/03/2023  1,425,972   1,392,746   1,386,084 

Qualifacts Corporation

 Healthcare & HCIT Term Loan 9.78% (L + 7.00%; 1.00% Floor) 12/12/2022  2,820,000   2,773,525   2,805,900 

Qualifacts Corporation(1) (2)

 Healthcare & HCIT Revolver 9.78% (L + 7.00%; 1.00% Floor) 12/12/2022  —     (4,756)   (1,500) 

Theranest, LLC

 Healthcare & HCIT Term Loan 7.76% (L + 5.00%; 1.00% Floor) 07/23/2023  3,000,000   2,944,416   2,940,000 

See Notes to Unaudited Consolidated Financial Statements

Portfolio Company

 Industry  

Facility Type

 

Interest

 Maturity Funded
Par Amount		  Cost  Fair Value 

Theranest, LLC(1) (2)

  Healthcare & HCIT  Revolver 7.76% (L + 5.00%; 1.00% Floor) 07/23/2023 $—    $(7,832)  $(8,571) 

Theranest, LLC(1)

  Healthcare & HCIT  

Delayed Draw Term

Loan

 7.79% (L + 5.00%; 1.00% Floor) 07/23/2023  214,286   173,176   169,286 

Avetta, LLC

  Software & Services  Term Loan 7.76% (L + 5.25%; 1.00% Floor) 04/10/2024  3,320,490   3,260,667   3,287,285 

Avetta, LLC(1) (2)

  Software & Services  Revolver 7.76% (L + 5.25%; 1.00% Floor) 04/10/2024  —     (8,475)   (4,944) 

Avetta, LLC(1) (2)

  Software & Services  Delayed Draw Term
Loan		 7.76% (L + 5.25%; 1.00% Floor) 04/10/2024  —     (13,634)   (12,360) 

Businesssolver.com, Inc.

  Software & Services  Term Loan 10.12% (L + 7.50%; 1.00% Floor) 05/15/2023  2,588,235   2,541,806   2,536,471 

Businesssolver.com, Inc.(1)

  Software & Services  Revolver 12.00% (P + 6.50%; 1.00% Floor) 05/15/2023  129,412   123,756   122,941 

Businesssolver.com, Inc.(1)

  Software & Services  Delayed Draw Term
Loan		 10.12% (L + 7.50%; 1.00% Floor) 05/15/2023  97,059   93,663   89,294 

Caliper Software, Inc.

  Software & Services  Term Loan 8.02% (L + 5.50%) 11/30/2025  3,891,026   3,832,660   3,832,660 

Caliper Software, Inc.(1)

  Software & Services  Revolver 8.02% (L + 5.50%) 11/30/2023  14,823   10,376   10,376 

Drilling Info Holdings, Inc.(6)

  Software & Services  Term Loan 6.77% (L + 4.25%) 07/30/2025  3,059,098   3,044,509   3,039,979 

Drilling Info Holdings,
Inc. (1) (2) (6)

  Software & Services  Delayed Draw Term
Loan		 6.77% (L + 4.25%) 07/30/2025  —     (1,103)   (1,461) 

E2open LLC

  Software & Services  Term Loan 7.68% (L + 5.00%; 1.00% Floor) 11/26/2024  4,150,293   4,088,890   4,088,039 

E2open LLC(1) (2)

  Software & Services  Revolver 7.68% (L + 5.00%; 1.00% Floor) 11/26/2024  —     (4,595)   (4,670) 

E2open LLC(1)

  Software & Services  Delayed Draw Term
Loan		 7.68% (L + 5.00%; 1.00% Floor) 11/26/2024  93,382   86,567   80,931 

Engage2Excel, Inc.

  Software & Services  Term Loan 9.36% (L + 6.50%; 1.00% Floor) 03/07/2023  3,000,421   2,945,737   2,940,413 

Engage2Excel, Inc.(1)

  Software & Services  Revolver 9.36% (L + 6.50%; 1.00% Floor) 03/07/2023  106,790   99,884   99,252 

Exterro, Inc.

  Software & Services  Initial Term Loan 8.24% (L + 5.50%; 1.00% Floor) 05/31/2024  2,955,150   2,903,587   2,896,047 

Exterro, Inc.(1) (2)

  Software & Services  Revolver 8.24% (L + 5.50%; 1.00% Floor) 05/31/2024  —     (5,651)   (6,600) 

Finalsite Holdings, Inc.

  Software & Services  Term Loan 8.03% (L + 5.50%; 1.00% Floor) 09/25/2024  3,366,784   3,309,983   3,307,865 

Finalsite Holdings, Inc.(1) (2)

  Software & Services  Revolver 8.03% (L + 5.50%; 1.00% Floor) 09/25/2024  —     (4,234)   (4,430) 

Genesis Acquisition Co.

  Software & Services  Term Loan 6.52% (L + 4.00%; 1.00% Floor) 07/31/2024  1,376,466   1,350,527   1,348,936 

Genesis Acquisition Co.(1) (2)

  Software & Services  Revolver 6.52% (L + 4.00%; 1.00% Floor) 07/31/2024  —     (3,772)   (4,048) 

Genesis Acquisition Co.(1) (2)

  Software & Services  Delayed Draw Term
Loan		 6.52% (L + 4.00%; 1.00% Floor) 07/31/2024  —     (3,399)   (3,645) 

Ministry Brands, LLC

  Software & Services  1st Lien Term Loan 6.52% (L + 4.00%; 1.00% Floor) 12/02/2022  3,176,249   3,162,463   3,160,367 

Ministry Brands, LLC(1)

  Software & Services  Delayed Draw Term
Loan		 6.52% (L + 4.00%; 1.00% Floor) 12/02/2022  448,683   442,681   441,704 

Perforce Intermediate Holdings, LLC

  Software & Services  Term Loan 6.77% (L + 4.25%; 1.00% Floor) 12/27/2024  3,835,253   3,758,340   3,796,900 

Perforce Intermediate Holdings, LLC(1) (2)

  Software & Services  Revolver 6.77% (L + 4.25%; 1.00% Floor) 12/28/2022  —     (10,987)   (5,915) 

Selligent, Inc.

  Software & Services  Term Loan 8.09% (L + 5.50%; 1.00% Floor) 11/05/2024  1,926,332   1,898,180   1,897,437 

Selligent, Inc.(1) (2)

  Software & Services  Revolver 8.09% (L + 5.50%; 1.00% Floor) 11/03/2023  —     (2,917)   (3,010) 

Sugarcrm, Inc.

  Software & Services  Term Loan 9.27% (L + 6.75%; 1.00% Floor) 07/31/2024  3,235,401   3,181,827   3,178,782 

Sugarcrm, Inc.(1)

  Software & Services  Revolver 9.43% (L + 6.75%; 1.00% Floor) 07/31/2024  77,561   72,502   72,132 

Swiftpage, Inc.

  Software & Services  Term Loan 8.01% (L + 5.50%; 1.00% Floor) 06/13/2023  2,522,137   2,476,347   2,471,694 

Swiftpage, Inc.

  Software & Services  Term Loan A 8.01% (L + 5.50%; 1.00% Floor) 06/13/2023  232,118   227,512   227,475 

Swiftpage, Inc.(1) (2)

  Software & Services  Revolver 8.01% (L + 5.50%; 1.00% Floor) 06/13/2023  —     (4,019)   (4,506) 

TRGRP Acquisition Corp.

  Software & Services  Term Loan 9.80% (L + 4.50%; 2.50% PIK; 1.00% Floor) 11/01/2023  4,686,111   4,595,436   4,592,389 

TRGRP Acquisition Corp.(1) (2)

  Software & Services  Revolver 9.80% (L + 4.50%; 2.50% PIK; 1.00% Floor) 11/01/2023  —     (6,447)   (6,667) 

Velocity Purchaser
Corporation

  Software & Services  Term Loan 8.53% (L + 6.00%; 1.00% Floor) 12/01/2022  2,931,594   2,883,855   2,872,962 

Velocity Purchaser
Corporation

  Software & Services  Term Loan 8.52% (L + 6.00%; 1.00% Floor) 12/01/2022  728,749   714,791   714,174 

Velocity Purchaser
Corporation(1) (2)

  Software & Services  Revolver 8.53% (L + 6.00%; 1.00% Floor) 12/01/2022  —     (3,174)   (3,865) 

Veriforce Holdings, LLC

  Software & Services  Term Loan 9.14% (L + 6.50%; 1.00% Floor) 07/13/2023  3,082,612   3,032,743   3,028,666 

Veriforce Holdings, LLC(1) (2)

  Software & Services  Revolver 9.14% (L + 6.50%; 1.00% Floor) 07/13/2023  —     (4,556)   (4,929) 

Watermark Insights, LLC

  Software & Services  Term Loan 7.26% (L + 4.75%; 1.00% Floor) 06/07/2024  2,639,230   2,614,903   2,612,837 

Watermark Insights, LLC

  Software & Services  Delayed Draw Term
Loan		 7.26% (L + 4.75%; 1.00% Floor) 06/07/2024  331,198   328,821   327,886 

Dillon Logistics, Inc.

  
Transport &
Logistics		 
 		 Term Loan A 9.80% (L + 7.00%; 1.00% Floor) 12/11/2023  2,592,288   2,540,918   2,540,442 

Dillon Logistics, Inc.

  
Transport &
Logistics		 
 		 Term Loan B 9.80% (L + 7.00%; 1.00% Floor) 12/11/2023  1,270,729   1,245,548   1,245,315 

Dillon Logistics, Inc.

  
Transport &
Logistics		 
 		 Term Loan C 9.80% (L + 7.00%; 1.00% Floor) 12/31/2020  304,975   299,032   298,876 

Dillon Logistics, Inc.(1)

  
Transport &
Logistics		 
 		 Revolver 9.65% (L + 7.00%; 1.00% Floor) 12/11/2023  333,571   325,211   325,133 

OSG Bulk Ships, Inc.

  
Transport &
Logistics		 
 		 Term Loan 7.78% (L + 5.00%) 12/21/2023  6,544,642   6,463,245   6,462,835 
      

 

 

  

 

 

 

Total 1st Lien/Senior Secured Debt

      135,776,144   135,061,980 

2nd Lien/Junior Secured Debt —1.90%

       

Brave Parent Holdings, Inc.

  Energy  Term Loan 10.02% (L + 7.50%) 04/17/2026  1,230,107   1,201,433   1,200,773 
      

 

 

  

 

 

 

Total 2nd Lien/Junior Secured Debt

      1,201,433   1,200,773 
     

 

 

  

 

 

 

Total U.S. Corporate Debt

      136,977,577   136,262,753 

See Notes to Unaudited Consolidated Financial Statements

Portfolio Company

  

Industry

  

Coupon

  

Shares

  Cost   Fair Value 

U.S. Preferred Stock—1.83%

          

Symplr Software Intermediate Holdings, Inc.(7)

  Software & Services    $1,196  $1,160,531   $1,160,531 
        

 

 

   

 

 

 

Total U.S. Preferred Stock

         1,160,531    1,160,531 

U.S. Common Stock—0.60%

          

SSC TS Investments, LLC(7) (8)

  Business Services    62,734  $62,735   $62,735 

Leeds FEG Investors, LLC(7)

  Education    311  $311,400   $317,114 
        

 

 

   

 

 

 

Total U.S. Common Stock

         374,135    379,849 

TOTAL INVESTMENTS—217.79%(9)

        $138,512,243   $137,803,133 
        

 

 

   

 

 

 

LIABILITIES IN EXCESS OF OTHER ASSETS—(117.79%)

        $(74,529,423) 
        

 

 

 

NET ASSETS—100.00%

          $63,273,710 
          

 

 

 

+

As of December 31, 2018, qualifying assets represented 96.79% of total assets. Under the 1940 Act we may not acquire anynon-qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets.

*

Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy.

#

Percentages are based on net assets.

^

Generally, the interest rate on floating interest rate investments is at benchmark rate plus spread. The borrower has an option to choose the benchmark rate, such as the London Interbank Offered Rate (“LIBOR”) or the U.S. Prime rate. The spread may change based on the type of rate used. The terms in the Consolidated Schedule of Investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to30-day,60-day,90-day or180-day LIBOR rates (1M L, 3M L or 6M L, respectively) at the borrower’s option. LIBOR loans may be subject to interest floors. As of December 31, 2018, rates for 1M L, 2M L, 3M L and 6M L are 2.50%, 2.61%, 2.81% and 2.88%, respectively. As of December 31, 2018, the U.S. Prime rate was 5.50%.

(1)

Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated. See Note 6 “Commitments and Contingencies”.

(2)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

(3)

D1MT Holdings LLC has been renamed to Maintech, Incorporated in 2018.

(4)

$55,000 of the funded par amount accrues interest at 9.39% (L+7.00%; 1.00% Floor).

(5)

$33,159 of the funded par amount accrues interest at 6.89% (L+4.50%; 1.00% Floor).

(6)

Categorized as Level 2 assets under the definition of ASC 820 fair value hierarchy.

(7)

Non-income producing security.

(8)

SSC TS Investments, LLC is held through ABPCIC SSC TS Holdings LLC.

(9)

Aggregate gross unrealized appreciation for federal income tax purposes is $116,400; aggregate gross unrealized depreciation for federal income tax purposes is $825,510. Net unrealized depreciation is $709,110 based upon a tax cost basis of $138,512,243.

L-LIBOR
P-Prime
PIK-Payment-In-Kind

See Notes to Unaudited Consolidated Financial Statements

AB Private Credit Investors Corporation

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2019

1. Organization

AB Private Credit Investors Corporation (the “Fund”“Fund,” “we,” “our,” and “us”), an externally managed,non-diversified,closed-end,non-diversified management investment company that iselected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), was incorporated under the laws of the state of Maryland on February 6, 2015. The Fund was formed to invest in primary-issue middle-market credit opportunities that are directly sourced and privately negotiated. AB Private Credit Investors LLC serves as the Fund’s external investment adviser (the “Adviser”).

Prior to 2017, there were no significant operations other than the sale and issuance of 100 shares of common stock, par value $0.01, on June 27, 2016, at an aggregate purchase price of $1,000 ($10.00 per share) to the Adviser. The sale of common shares was approved by the unanimous consent of the Fund’s Board of Directors (the “Board”). In addition, prior to commencing operations in 2017, on May 26, 2017, the Fund issued and sold an additional 2,400 shares of common stock, par value $0.01 at an aggregate purchase price of $24,000 ($10.00 per share) to the Adviser. That sale was also approved by the unanimous consent of the Fund’s Board.

The Fund is conducting private offerings (each a “Private Offering”) of its common stock to investors in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At the closing of any Private Offering, each investor will make a capital commitment (a “Capital Commitment”) to purchase shares of the Fund’s common stock pursuant to a subscription agreement entered into with the Fund. Investors will be required to fund drawdowns to purchase shares of the Fund’s common stock up to the amount of their respective Capital Commitment on anas-needed basis each time the Fund delivers a capital draw-down notice to its investors. The Fund anticipates commencing its loan origination and investment activities contemporaneously with the initial drawdown from investors in the initial Private Offering.

As of September 30, 2017, no significant operations other than the sale and issuance of (i) 100 shares of common stock, par value $0.01, on June 27, 2016, at an aggregate purchase price of $1,000 ($10.00 per share) and (ii) 2,400 shares of common stock, par value $0.01, on May 26, 2017 to AB Private Credit Investors LLC, the Fund’s external investment adviser (the “Adviser”) have occurred. The sale of common shares was approved by the unanimous consent of the Fund’s board of directors on both occasions.

On September 29, 2017, the Fund completed the initial closing (“Initial Closing”) of its Private Offering after entering into subscription agreements (collectively, the “Subscription Agreements”) with several investors, providing for the private placement of the Fund’s common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Fund’s common shares up to the amount of their respective Capital Commitments on anas-needed basis upon the issuance of a capital drawn-down notice. At September 30, 2017March 31, 2019, the Fund had total Capital Commitments of $70,928,060,$360,272,341, of which 100%76% is unfunded. Capital Commitments may be drawn down by the Fund on a pro rata basis, as needed (includingfollow-on investments), for paying the Fund’s expenses, including fees under the Advisory Agreement, and/or maintaining a reserve account for the payment of future expenses or liabilities.

As of September 30, 2017,On October 31, 2018, the Adviser established ABPCIC SSC TS Holdings LLC (the “Blocker”), through which the Fund had notmade an investment. The Blocker is 100% owned by the Fund and is consolidated in the Fund’s consolidated financial statements commencing from the date of its formation. On December 19, 2018 the Adviser established ABPCIC Funding I LLC (“ABPCIC Funding”), a Delaware limited liability company (the “Financing Subsidiary”). The Financing Subsidiary is 100% owned by the Fund and is consolidated in the Fund’s consolidated financial statements commencing from the date of its formation.

There were no operating activities from February 6, 2015 to November 15, 2017. As described above, the Fund completed its Initial Closing on September 29, 2017, and commenced significant operational or investment activities.

operations on November 15, 2017. The Fund’s fiscal year ends on December 31.

2. Significant Accounting Policies

The Fund is an investment company under accounting principles generally accepted in the United States of America (“U.S. GAAP”) and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board (“FASB”) ASCAccounting Standards Codification (“ASC”) 946,Financial Services – Investment Companies. ActualThe Fund has prepared the consolidated financial statements and related financial information pursuant to the requirements for reporting on Form10-Q and Articles 6 and 10 of RegulationS-X. Accordingly, we have not included in this quarterly report all of the information and notes required by GAAP for annual financial statements. In the opinion of management, the unaudited financial information for the interim period presented in this report reflects all normal and recurring adjustments necessary for a fair statement of financial position and results could differ from those estimates.

operations. Operating results for interim periods are not necessarily indicative of operating results for an entire year. The functional currency of the Fund is U.S. dollars and these consolidated financial statements have been prepared in conformitythat currency.

The consolidated financial statements include the accounts of the Fund and its wholly-owned Blocker and Financing Subsidiary. All intercompany balances and transactions have been eliminated.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current presentation, with U.S. GAAP, which requires the useno significant effect on our financial condition, results of estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual amounts and results could differ from these estimates, and such differences could be material.operations or cash flows.

The following is a summary of significant accounting policies followed by the Fund.

Cash and Cash Equivalents

Cash consists of demand deposits. Cash is carried at cost, which approximates fair value. The Fund maintains deposits of its cash with financial institutions, and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation insured limit. The Fund considers all highly liquid investments, with original maturities of less than ninety days, as cash equivalents.

Revenue Recognition

Investment transactions are recorded on a trade-date basis. Interest income is recognized on an accrual basis. Interest income on debt instruments is accrued and recognized for those issuers who are currently paying in full or expected to pay in full. For those issuers who are in default or expected to default, interest is not accrued and is only recognized when received. Generally, when interest and/or principal payments on a loan become past due, or if the Fund otherwise does not expect the borrower to be able to service its debt and other obligations, the Fund will place the loan onnon-accrual status and will cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to restructuring such that the interest income is deemed to be collectible. The Fund generally restoresnon-accrual loans to accrual status when past due principal and interest is paid and, in the management’s judgment, is likely to remain current. Interest income and expense include discounts accreted and premiums amortized on certain debt instruments as determined in good faith by the Adviser and calculated using the effective interest method. Loan origination fees, original issue discounts and market discounts or premiums are capitalized as part of the underlying cost of the investments and accreted or amortized over the life of the investment as interest income.

Realized gains and losses on investment transactions are determined on the specific identification method.

Certain investments in debt securities may contain a contractualpayment-in-kind (“PIK”) interest provision. The PIK provisions generally feature the obligation, or the option, at each interest payment date of making interest payments in (i) cash, (ii) additional debt or (iii) a combination of cash and additional debt. PIK interest, computed at the contractual rate specified in the investment’s credit agreement, is accrued as interest income and recorded as interest receivable up to the interest payment date. On the interest payment date, the accrued interest receivable attributable to PIK is added to the principal balance of the investment. When additional debt is received on the interest payment date, it typically has the same terms, including maturity dates and interest rates, as the original loan. PIK interest generally becomes due on the investment’s maturity date or call date.

The Fund intendsmay earn various fees during the life of the loans. Such fees include, but are not limited to, electsyndication, commitment, administration, prepayment and amendment fees, some of which are paid to the Fund on an ongoing basis. These fees and any other income are recognized as earned.

Credit Facility Related Costs, Expenses and Deferred Financing Costs

Interest expense and unused commitment fees on the Credit Facility (as defined below) are recorded on an accrual basis. Unused commitment fees are included in interest and credit facility expenses in the consolidated statements of operations. Deferred financing costs include capitalized expenses related to the closing of the Credit Facility. Amortization of deferred financing costs is computed on the straight-line basis over the contractual term. The amortization of such costs is included in interest and credit facility expenses in the consolidated statements of operations.

Income Taxes

ASC 740, “Accounting for Uncertainty in Income Taxes” (“ASC 740”) provides guidance on the accounting for and disclosure of uncertainty in tax position. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are“more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet themore-likely-than-not threshold are recorded as a tax benefit or expense in the current year.

Based on its analysis of its tax position for all open tax years (the current and prior year), the Fund has concluded that it does not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740. Such open tax years remain subject to examination and adjustment by tax authorities.

The Fund has elected to be treated and intends to continue to be treated for federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended.amended (the “Code”). So long as the Fund is able to maintain its status as a RIC, it intends not to be subject to U.S. federal income tax on the portion of its taxable income and gains distributed to stockholders, if any. To qualify for RIC tax treatment, the Fund is required to distribute at least 90% of its investment company taxable income annually, meet diversification and income requirements quarterly, meet gross income requirements annually and file Form1120-RIC, as definedprovided by the Internal Revenue Code.

In the normal course of business,order for the Fund entersnot to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into general business contractsaccount certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for theone-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that containwere not distributed during such years. The Fund, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a variety4% nondeductible U.S. federal excise tax on this income. The Fund will accrue excise tax on estimated undistributed taxable income as required. For the three months ended March 31, 2019 and March 31, 2018, the Fund accrued excise taxes of representations$0 and warranties$3, respectively. As of March 31, 2019, and December 31, 2018, $0 and $0, respectively, of accrued excise taxes remained payable.

The Fund may be subject to taxes imposed by countries in which the Fund invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized gain (loss) as such income and/or gains are earned.

The Fund remains subject to examination by U.S. federal and state jurisdictions, as well as international jurisdictions, and upon completion of these examinations (if undertaken by the taxing jurisdiction) tax adjustments may be necessary and retroactive to all open tax years.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities, if any, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses recorded during the reporting period. Actual results could differ from those estimates and such differences could be material.

Distributions

Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may providediffer from those amounts determined in accordance with GAAP. The Fund may pay distributions in excess of its taxable net investment income. This excess would be atax-free return of capital in the period and reduce the stockholder’s tax basis in its shares. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent they are charged or credited topaid-in capital in excess of par, accumulated undistributed net investment income or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income andnon-deductible expenses. These differences are generally determined in conjunction with the preparation of the Fund’s annual RIC tax return. Distributions to common stockholders are recorded on theex-dividend date. The amount to be paid out as a distribution is determined by the Board each quarter and is generally based upon the earnings estimated by the Adviser. The Fund may pay distributions to its stockholders in a year in excess of its net ordinary income and capital gains for indemnification.that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. The Fund’s maximum exposure under these arrangements is unknown. However,Fund intends to timely distribute to its stockholders substantially all of its annual taxable income for each year, except that the Fund expectsmay retain certain net capital gains for reinvestment and, depending upon the risklevel of material lossthe Fund’s taxable income earned in a year, the Fund may choose to carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax. The specific tax characteristics of the Fund’s distributions will be remotereported to stockholders after the end of the calendar year. All distributions will be subject to available funds, and no amounts have been recorded in the financial statement for such arrangements.

In November 2016, the FASB issued ASU2016-18,Statement of Cash Flows (Topic 230): Restricted Cash (a Consensus of the Emerging Issues Task Force)(“ASU2016-18”), which requiresassurance can be given that the statement ofFund will be able to declare such distributions in future periods.

The Fund has adopted a dividend reinvestment plan that provides for stockholders to receive dividends or other distributions declared by the Board in cash flows explainunless a stockholder elects to “opt in” to the change duringdividend reinvestment plan. As a result, if the period inBoard

declares a cash distribution, then the total of cash, cash equivalents, and amounts generally describes as restricted cash or restricted cash equivalents. ASU2016-18 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted.

Management does not believe this accounting standard, which is not yet effective, if currently adopted, wouldstockholders who have a material effect on“opted in” to the accompanying financial statements. The Adviser is assessing the impact this accounting standarddividend reinvestment plan will have oncetheir cash distributions automatically reinvested in additional shares of common stock, rather than receiving the Fund commences investment activities.cash distribution.

Recent Accounting Pronouncements

As of and for the three months ended March 31, 2019, there are no recent accounting pronouncements that affect the Fund.

3. Agreements and Related Party Transactions

Advisory Agreement

On July 5, 2017, the Fund’s board of directorsBoard approved the investment advisory agreement with the Adviser (the “Advisory Agreement”), pursuant to which the Fund will pay the Adviser, quarterly in arrears, a base management fee calculated at an annual rate of 1.50%. The base management fee is calculated based on a percentage of the average outstanding assets of the Fund (which equals the gross value of equity and debt instruments, including investments made utilizing leverage), excluding cash and cash equivalents, during such fiscal quarter. The average outstanding assets will be calculated by taking the average of the amount of assets of the Fund at the beginning and end of each month that occurs during the calculation period. The base management fee will be calculated and paid quarterly in arrears but will be accrued monthly by the Fund over the fiscal quarter for which such base management fee is paid. The base management fee for any partial month or quarter will be appropriately prorated. For the three months ended March 31, 2019, the Fund incurred a management fee of $615,859, of which $63,171 was voluntarily waived by the Adviser. For the three months ended March 31, 2018, the Fund incurred a management fee of $105,472, of which $12,453 was voluntarily waived by the Adviser. As of March 31, 2019, and December 31, 2018, $1,382,818 and $830,130, respectively, remained payable.

The Fund will also pay the Adviser an incentive fee that provides the Adviser with a share of the income that the Adviser generates for the Fund. The incentive fee will consist of an income-based incentive fee component and a capital-gains component, which are largely independent of each other, with the result that one component may be payable even if the other is not.

Income-Based Incentive Fee: The income-based incentive fee is calculated and payable quarterly in arrears based on the Fund’s net investment income prior to any deductions with respect to such income-based incentive fees and capital gains incentive fees(“Pre-incentive Fee Net Investment Income”) for the quarter, as further described below.Pre-incentive fee net investment incomeFee Net Investment Income means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial and consulting fees or

other fees the Fund receives from portfolio companies) that the Fund accrues during the fiscal quarter, minus the Fund’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement (the “Administration Agreement”) we have entered into with State Street Bank and Trust Company (the “Administrator”), and any interest expense and dividends paid on any issued and outstanding indebtedness or preferred stock, respectively, but excluding, for avoidance of doubt, the income-based incentive fee accrued under U.S. GAAP).Pre-incentive fee net investment incomeFee Net Investment Income also includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay in kind interest and zero couponzero-coupon securities), accrued income that the Fund has not yet received in cash. The Adviser is not under any obligation to reimburse the Fund for any part of the income-based incentive fees it received that was based on accrued interest that the Fund never actually received.

Pre-incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the income-based incentive fee, it is possible that the Fund may accrue such income-based incentive fee in a quarter where the Fund incurs a net loss. For example, if the Fund receivesPre-incentive Fee Net Investment Income in excess of a hurdle rate (as defined below) for a quarter, the Fund will accrue the applicable income-based incentive fee even if the Fund has incurred a realized and/or unrealized capital loss in that quarter. However, cash payment of the income-based incentive fee may be deferred in this situation, subject to the restrictions detailed at the end of this section.

Pre-incentive Fee Net Investment Income, expressed as a rate of return on the value of net assets (defined as total assets, less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding fiscal quarter, will be compared to various “hurdle rates,” with the income-based incentive fee rate of return increasing at each hurdle rate.

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Description of Quarterly Incentive Fee Calculations

We pay the Adviser an income-based incentive fee with respect toPre-incentive Fee Net Investment Income in each calendar quarter as follows:

 

No income-based incentive fee in any calendar quarter in whichPre-incentive Fee Net Investment Income does not exceed 1.5% per quarter (approximately 6%(6% per annum), the “6% Hurdle Rate”;

100% ofPre-incentive Fee Net Investment Income with respect to that portion of suchPre-incentive Fee Net Investment Income, if any, that exceeds the 6% Hurdle Rate but is less than 1.67% in any calendar quarter (the “6%Catch-up Cap”), approximately 6.67% per annum. This portion ofPre-incentive Fee Net Investment Income (which exceeds the 6% Hurdle Rate but is less than the 6%Catch-up Cap) is referred to as the “6%Catch-up.” The 6%Catch-up is meant to provide the Adviser with 10.0% of thePre-incentive Fee Net Investment Income as if hurdle rate did not apply if this net investment income exceeded 1.67% but was less than 1.94% in any calendar quarter; and

 

10.0% of the amount ofPre-incentive Fee Net Investment Income, if any, that exceeds the 6%Catch-up Cap, but is less than 1.94% (the “7% Hurdle Rate”), approximately 7.78% per annum. The 7% Hurdle Rate is meant to limit the Adviser to 10% of thePre-incentive Fee Net Investment Income until the amount ofPre-incentive Fee Net Investment Income exceeds 1.94%, approximately 7.78% per annum; and

100% ofPre-incentive Fee Net Investment Income with respect to that portion of suchPre-incentive Fee Net Investment Income, if any, that exceeds the 7% Hurdle Rate but is less than 2.06% in any calendar quarter (the “7%Catch-up Cap”), approximately 8.24% per annum. This portion ofPre-incentive Fee Net Investment Income (which exceeds the 7% Hurdle Rate but is less than the 7%Catch-up Cap) is referred to as the “7%Catch-up.” The 7%Catch-up is meant to provide the Adviser with 15.0% of thePre-incentive Fee Net Investment Income as if a hurdle rate did not apply if this net investment income exceeded 2.06% but was less than 2.35% in any calendar quarter; and

 

15.0% of the amount ofPre-incentive Fee Net Investment Income, if any, that exceeds the 7%Catch-up Cap, but is less than 2.35% (the “8% Hurdle Rate”, approximately 9.41% per annum). The 8% Hurdle Rate is meant to limit the Adviser to 15% of thePre-incentive Fee Net Investment Income until the amount ofPre-incentive Fee Net Investment Income exceeds 2.06%, approximately 9.41% per annum; and

 

100% ofPre-incentive Fee Net Investment Income with respect to that portion of suchPre-incentive Fee Net Investment Income, if any, that exceeds the 8% Hurdle Rate but is less than 2.50% in any calendar quarter (the “8%Catch-up Cap”), approximately 10% per annum. This portion ofPre-incentive Fee Net Investment Income (which exceeds the 8% Hurdle Rate but is less than the 8%Catch-up cap) is referred to as the “8%Catch-up”. The 8%Catch-up is meant to provide the Adviser with 20.0% of thePre-incentive Fee Net Investment Income as if a hurdle rate did not apply if this net investment income exceeded 2.50% in any calendar quarter; and

 

20.0% of the amount ofPre-incentive Fee Net Investment Income, if any, that exceeds 2.50% in any calendar quarter.

For the three months ended March 31, 2019, the Fund incurred income – based incentive fees of $106,087, of which $76,072, was voluntarily waived by the Adviser. For the three months ended March 31, 2018, the Fund incurred income – based incentive fees of $0, of which $0, was voluntarily waived by the Adviser. As of March 31, 2019 and December 31, 2018, $229,877, and $199,862 remained payable.

Capital Gains Incentive Fee: The capital gains incentive fee is determined and payable at the end of each fiscal year as 17.5%20% of aggregate cumulative realized capital gains from the date of the Fund’s election to be regulated as a BDC through the end of that year, computed net of all aggregate cumulative realized capital losses and aggregate cumulative unrealized depreciation through the end of such year, less the aggregate amount of any previously paid capital gain incentive fees. For the foregoing purpose, “aggregate cumulative realized capital gains” will not include any unrealized appreciation. It should be noted, however, that the Fund will accrue an incentive fee for accounting purposes taking into account any unrealized appreciation in accordance with U.S. GAAP. For accounting purposes only, in orderwe are required under GAAP to reflect the theoretical capital gains incentive fee that would be payable foraccrue a given period as if all unrealized gains were realized, the Fund will accrue ahypothetical capital gains incentive fee based upon net realized gains and unrealized depreciation for that calendar year (in accordance with the terms of the Advisory Agreement), plus unrealized appreciation on investments held at the end of the period. The accrual of this hypothetical capital gains incentive fee assumes all unrealized capital gain and loss is realized in order to reflect a hypothetical capital gains incentive fee that would be payable to the Adviser at each measurement date. The capital gains incentive fee is not subject to any minimum return to stockholders. If such amount is negative, then no capital gains incentive fee will be payable for such year. Additionally, if the Advisory Agreement is terminated as of a date that is not a calendar year end, the termination date will be treated as though it were a calendar year end for purposes of calculating and paying the capital gains incentive fee.

Since inception, no capital gains incentive fees have been incurred or are payable as of March 31, 2019 and December 31, 2018, and for the three months ended March 31, 2019 and March 31, 2018.

The amount of capital gains incentive fee expense related to a hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to the Adviser in the event of a complete liquidation of the Fund’s portfolio as of period end and the termination of the Advisory Agreement on such date. Also, it should be noted that the capital gains incentive fee expense fluctuates with the Fund’s overall investment results.

The Fund will defer cash payment of any income-based incentive fee and/or any capital gains incentive fee otherwise earned by the Adviser if during the most recent four full fiscal quarter periodperiods ending on or prior to the date such payment is to be made, the sum of (a) thepre-incentivePre-incentive fee net investment income,Fee Net Investment Income, and (b) the realized capital gain / loss and (c) unrealized capital appreciation/ depreciation expressed as a rate of return on the value of our net assets, is less than 6.0%. Any such deferred fees are carried over for payment in subsequent calculation periods to the extent such payment is payable under the Advisory Agreement.

Administration Agreement and Expense Reimbursement Agreement

We have entered into the Administration Agreement with the Administrator and a separate expense reimbursement agreement with the Adviser (the “Expense Reimbursement Agreement”) under which any allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs will be reimbursed by the Fund. Under the Administration Agreement, the Administrator will be responsible for providing us with clerical, bookkeeping, recordkeeping and other administrative services. We will reimburse the Adviser an amount equal to our allocable portion (subject to the review of our Board) of its overhead resulting from its obligations under the Expense Reimbursement Agreement, including the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs.

Expense Support and Conditional Reimbursement Agreement

On September 29, 2017, the Fund and the Adviser entered into an agreement (the “Expense Support and Conditional Reimbursement Agreement”) to limit certain of the Fund’s Operating Expenses, as defined in the Expense Support and Conditional Reimbursement Agreement, to no more than 1.5% of the Fund’s average quarterly gross assets. To achieve this percentage limitation, the Adviser has agreed to reimburse the Fund for certain Operating Expenses on a quarterly basis (any such payment by the Adviser, an “Expense Payment”) and the Fund has agreed to later repay such amounts (any such payment by the Fund, a “Reimbursement Payment”), pursuant to the terms of the Expense Support and Conditional Reimbursement Agreement. The actual percentage of Operating Expenses paid by the Fund in any quarter after deducting any Expense Payment, as a percentage of the Fund’s average quarterly gross assets, is referred to as the “Percentage Limit.”

Any Expense Payment by the Adviser pursuant to the Expense Support and Conditional Reimbursement Agreement will be subject to repayment by the Fund on a quarterly basis within the three years following the fiscal quarter of the Fund in which the Operating Expenses were paid or absorbed, if the total Operating Expenses for the current quarter, including Reimbursement Payments, expressed as a percentage of the Fund’s average gross assets during such quarter is less than the then-current Percentage Limit, if any, and the Percentage Limit that was in effect at the time when the AdvisorAdviser reimbursed the Operating Expenses that are the subject of the repayment, subject to certain provisions of the Expense Support and Conditional Reimbursement Agreement, as described below. For purposes of the Expense Support and Conditional Reimbursement Agreement, “Operating Expenses” means the Fund’s Total Operating Expenses (as defined below), excluding base management fees, incentive fees, distribution and shareholder servicing fees, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses and “Total Operating Expenses” means all of the Fund’s operating costs and expenses incurred, as determined in accordance with generally accepted accounting principles for investment companies. The calculation of average net assets will be consistent with such periodic calculations of average net assets in the Fund’s financial statements.

However, no Reimbursement Payment for any quarter will be made if: (1) the Effective Rate of Distributions Per Share (as defined below) declared by the Fund at the time of such Reimbursement Payment is less than or equal to the Effective Rate of Distributions Per Share at the time the Expense Payment was made to which such Reimbursement Payment relates, or (2) the Fund’s Operating Expense Ratio at the time of such Reimbursement Payment is greater than or equal to the Operating Expense Ratio (as defined below) at the time the Expense Payment was made to which such Reimbursement Payment relates. For purposes of the Expense Support and Conditional Reimbursement Agreement, “Effective Rate of Distributions Per Share” means the annualized rate (based on a365- day year) of regular cash distributions per share exclusive of returns of capital, distribution rate reductions due to distribution and shareholder fees, and declared special dividends or special distributions, if any. The “Operating Expense Ratio” is calculated by dividing Operating Expenses in any quarter by the Fund’s average net assets in such quarter.

The specific amount of expenses paid by the Adviser, if any, will be determined at the end of each quarter. The Fund or the Adviser may terminate the Expense Support and Conditional Reimbursement Agreement at any time,

with or without notice. The Expense Support and Conditional Reimbursement Agreement will automatically terminate in the event of (a) the termination of the Advisory Agreement, or (b) the board of directorsBoard of the Fund makes a determination to dissolve or liquidate the Fund. Upon termination of the

Expense Support and Conditional Reimbursement Agreement, the Fund will be required to fund any Expense Payments, subject to the aforementioned requirements per the Expense Support and Conditional Reimbursement Agreement that have not been reimbursed by the Fund to the Adviser.

As of September 30, 2017,March 31, 2019, the amount of Expense Payments provided by the Adviser since inception is $1,002,147.$4,493,244. Management believes that a Reimbursement PaymentPayments by the Fund to the Adviser were not probable under the terms of the Expense Support Agreement as of September 30, 2017.March 31, 2019, and therefore have not been accrued. The following table reflects the Expense Payments that may be subject to reimbursement pursuant to the Expense Agreement:

 

For the Quarter Ended

  Amount of
Expense
Support		   Effective Rate
of Distribution
per Share(1)		   Reimbursement
Eligibility
Expiration		   Percentage
limit(2)		 

For the Quarters Ended

  Amount of
Expense Support		   

Effective Rate of

Distribution per Share (1)

  

Reimbursement Eligibility

Expiration

  Percentage
Limit (2)		 

September 30, 2017

  $1,002,147    n/a    September 30, 2020    0.00%   $1,002,147   n/a  

September 30, 2020

   1.5% 

December 31, 2017

   1,027,398   n/a  

December 31, 2020

   1.5% 

March 31, 2018

   503,592   n/a  

March 31, 2021

   1.5% 

June 30, 2018

   1,086,482   4.787%  

June 30, 2021

   1.0% 

September 30, 2018

   462,465   4.715%  

September 30, 2021

   1.0% 

December 31, 2018

   254,742   6.762%  

December 31, 2021

   1.0% 

March 31, 2019

   156,418   5.599%  

March 31, 2022

   1.0% 
  

 

         

 

       

Total

  $1,002,147         $4,493,244       
  

 

         

 

       

 

(1)

The effective rate of distribution per share is expressed as a percentage equal to the projected annualized distribution amount as of the end of the applicable period (which is calculated by annualizing the regular weeklyquarterly cash distributions per share as of such date without compounding), divided by the Fund’s gross offering price per share as of such date.

(2)

Represents the actual percentage of Operating Expenses paid by the Fund in any quarter after deducting any Expense Payment, as a percentage of the Fund’s average quarterly gross assets.

Transfer Agency Agreement

On September 26, 2017, the Fund and AllianceBernstein Investor Services, Inc. (“ABIS”), an affiliate of the Fund, entered into an agreement pursuant to which ABIS will provide transfer agent services to the Fund. The Fund bears the expenses related to the agreement with ABIS.

For the three months ended March 31, 2019 and March 31, 2018, the Fund accrued $4,662 and $0 in transfer agent fees, respectively, and as of March 31, 2019 and December 31, 2018, $15,380 and $10,717, respectively, remained payable.

4. OrganizationalCredit Facility

On November 15, 2017, the Fund entered into a credit agreement (the “Credit Agreement”) to establish a revolving credit facility (the “Revolving Credit Facility”) with HSBC Bank USA, National Association (“HSBC”). The initial maximum commitment amount (the “Maximum Commitment”) under the Revolving Credit Facility was $30 million and Offering Expensesmay be increased in a minimum amount of $10 million and in $5 million increments thereof with the consent of HSBC or reduced upon request of the Fund. As of January 31, 2019, the Fund had decreased the Maximum Commitment to $50 million. So long as no request for borrowing is outstanding, the Fund may terminate the Commitments or reduce the Maximum Commitments by giving prior irrevocable written notice to the administrative agent. Any reduction of the Maximum Commitments shall be in an amount equal to $10 million or multiples thereof; and in no event, shall a reduction by the Fund reduce the Commitments to $35 million or less (in each case, except for a termination of all the Commitments). Proceeds under the Credit Agreement may be used for any purpose permitted under our organizational documents, including general corporate purposes such as the making of investments. The Credit Agreement contains certain customary covenants and events of default, with customary cure and notice provisions. As of March 31, 2019, the Fund is in compliance with these covenants. The Fund’s obligations under the Credit Agreement are secured by the Capital Commitments and capital contributions to the Fund.

Organization costs include, among other things,Borrowings under the costCredit Agreement bear interest, at the Fund’s election at the time of organizingdrawdown, at a rate per annum equal to (i) with respect to LIBOR Rate Loans, Adjusted LIBOR (as defined in the Credit Agreement) for the applicable Interest Period; and (ii) with respect to Reference Rate Loans (as defined in the Credit Agreement), the greatest of: (i) the rate of interest per annum publicly announced from time to time by HSBC as its prime rate, (ii) the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, plus two hundred basis points (2.00%), provided that if such rate is not so published for any day that is a Maryland corporation, includingBusiness Day (as defined in the costcredit agreement), the average of legal services the quotation for such day on such transactions received by the administrative agent (as defined in the credit agreement), from three (3) Federal funds brokers of recognized standing selected by the administrative agent

and, other fees pertainingupon request of Borrowers (as defined in the Credit Agreement), with notice of such quotations to the Borrowers and (iii) except during any period of time during which LIBOR isunavailable, one-month Adjusted LIBOR plus two hundred basis points (2.00%). The Fund will also pay an unused commitment fee of 35 basis points (0.35%) on any unused commitments.

The Revolving Credit Facility will mature on November 13, 2019, subject to the Fund’s organization,option to extend the maturity date for up to one additional term not longer than 364 days, subject to the following conditions: (i) each of the Lenders and the administrative agent consents to the extension in their sole discretion; (ii) the Fund has paid an extension fee to the administrative agent for the benefit of the extending Lenders consenting to such extension in an amount agreed to by the administrative agent and the Borrowers at the time of the extension and as set forth in the applicable extension request; (iii) no potential default or event of default has occurred and is continuing on the date on which notice is given in accordance with the following clause (iv) or on November 13, 2019; and (v) the Fund has delivered an extension request to the administrative agent not more than one hundred twenty (120) days or less than forty-five (45) days prior to November 13, 2019.

On January 30, 2019, ABPCIC Funding entered into a Credit Agreement (the “Barclays Credit Facility”) with Barclays Bank PLC, New York Branch (“Barclays”) as facility agent (in such capacity, the “Facility Agent”) and U.S. Bank National Association (“U.S. Bank”) as collateral agent (in such capacity, the “Collateral Agent”) and collateral administrator (in such capacity, the “Collateral Administrator”).

All of the collateral pledged to lenders by ABPCIC Funding under the Barclays Credit Facility is held in the custody of the custodian under an account control agreement by and among ABPCIC Funding, the Collateral Agent and the custodian. The Collateral Administrator will maintain and perform certain collateral administration services with respect to the collateral pursuant to a collateral administration agreement among ABPCIC Funding, the Adviser and the Collateral Administrator. Borrowings under the Barclays Credit Facility are secured by all of the assets held by ABPCIC Funding. Pursuant to a collateral management agreement (the “Collateral Management Agreement”) by and between ABPCIC Funding and the Adviser as collateral manager, the Adviser will perform certain duties with respect to the purchase and management of the assets securing the Barclays Credit Facility. The Adviser has elected to waive any fees that would otherwise be payable under the Barclays Credit Facility and the Collateral Management Agreement. ABPCIC Funding will reimburse the expenses incurred by the Adviser in the performance of its obligations under the Collateral Management Agreement other than any ordinary overhead expenses, which shall not be reimbursed.

The Barclays Credit Facility provides for borrowings in an aggregate amount up to $150 million. Borrowings under the Barclays Credit Facility will bear interest paid on an annual adjusted LIBOR for the relevant interest period, plus an applicable spread of 2.25%. ABPCIC Funding will also pay an unused commitment fee of .50% and the commitment will expire on July 30, 2020. Interest and fees are paid quarterly in arrears. Any amounts borrowed under the Barclays Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on the earlier of (i) January 20, 2029, (ii) the date on which ABPCIC Funding issues collateralized loan obligation securities in a transaction for which the sole arranger is Barclays (or an affiliate thereof) or (iii) upon certain other events which result in accelerated maturity under the credit facility. Borrowing under the Barclays Credit Facility is subject to certain restrictions contained in the 1940 Act.

The Fund’s outstanding debt as of March 31, 2019 was as follows:

   Aggregate Borrowing
Amount Committed		   Outstanding
Borrowing		   Amount
Available		   Carrying
Value		 

HSBC

  $50,000,000   $12,250,000   $37,750,000   $12,250,000 

Barclays

   150,000,000    129,750,000    20,250,000    129,750,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $200,000,000   $142,000,000   $58,000,000   $142,000,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

The Fund’s outstanding debt as of December 31, 2018 was as follows:

   Aggregate Borrowing
Amount Committed		   Outstanding
Borrowing		   Amount
Available		   Carrying
Value		 

HSBC

  $125,000,000   $88,200,000   $36,800,000   $88,200,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $125,000,000   $88,200,000   $36,800,000   $88,200,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

As of March 31, 2019 and December 31, 2018, deferred financing costs were $929,629 and $172,580, respectively, which remain to be amortized, and are reflected on the consolidated statements of assets and liabilities.

For the three months ended March 31, 2019 and March 31, 2018, the components of interest and other debt expenses related to the credit facilities were as follows:

   For the three months ended
March 31,		 
   2019  2018 

Borrowing interest expense

  $1,187,000  $61,683 

Commitment fees

   79,255   20,482 

Amortization of financing costs

   142,897   67,636 
  

 

 

  

 

 

 

Total

  $1,409,152  $149,801 
  

 

 

  

 

 

 

Weighted average interest rate

   4.87%   3.79% 

Average outstanding balance

  $98,848,889  $6,592,222 

In July 2017, the head of the United Kingdom Financial Conduct Authority announced the intention to phase out the use of LIBOR by the end of 2021. Because the statements made by the head of the United Kingdom Financial Conduct Authority are recent in nature, there is no definitive information regarding the future of LIBOR or of any particular replacement index rate. As such, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined.

5. Fair Value Measurement

In accordance with ASC 820, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability as of the reporting date.

Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are expensed as incurred. Offering costs include, among other things, legal fees and other costs pertainingsignificant to the preparationoverall valuation.

The three-tier hierarchy of inputs is summarized below:

Level 1 – Quoted prices in active markets for identical investments.

Level 2 – Other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).

Level 3 – Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments at the reporting date).

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. If a fair value measurement uses price data vendors or observable market price quotations, that measurement is a Level 2 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

The determination of what constitutes “observable” requires significant judgment by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Valuation of Investments

Investments are valued at fair value as determined in good faith by our Board, based on input of management, the audit committee and independent valuation firms that have been engaged to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter.

The fair values of loan investments based upon price data vendors or observable market price quotations are generally categorized as Level 2; however, those priced using models with significant unobservable inputs are categorized as Level 3.

In determining the fair value of the Fund’s private placement memorandumLevel 3 debt and other offering documents, including travel-related expenses.equity positions the Adviser uses the following factors, where relevant: loan to value (“LTV”) based on an enterprise value determined using the original purchase price, public equity comparable, recent M&A transaction, and a discounted cash flow (“DCF”) analysis, and yields from comparable loans, comparable high yield bonds, high yield indexes and loan indexes (“comparable yields”).

Due to the inherent uncertainty of valuations, however, estimated fair values may differ from the values that would have been used had a readily available market for the securities existed and the differences could be material.

The following table summarizes the valuation of the Fund’s investments as of March 31, 2019:

Assets*

  Level 1   Level 2   Level 3   Total 

1st Lien/Senior Secured Debt

  $—     $12,667,674   $179,065,332   $191,733,006 

2nd Lien/Junior Secured Debt

   —      —      1,200,773    1,200,773 

Preferred Stock

   —      —      2,758,730    2,758,730 

Common Stock

   —      —      864,401    864,401 

Investment Companies

   15,135,642    —      —      15,135,642 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $15,135,642   $12,667,674   $183,889,236   $211,692,552 
  

 

 

   

 

 

   

 

 

   

 

 

 

*

See consolidated schedule of investments for industry classifications.

The following table summarizes the valuation of the Fund’s investments as of December 31, 2018:

Assets*

  Level 1   Level 2   Level 3   Total 

1st Lien/Senior Secured Debt

  $—     $12,080,585   $122,981,395   $135,061,980 

2nd Lien/Junior Secured Debt

   —      —      1,200,773    1,200,773 

Preferred Stock

   —      —      1,160,531    1,160,531 

Common Stock

   —      —      379,849    379,849 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $—     $12,080,585   $125,722,548   $137,803,133 
  

 

 

   

 

 

   

 

 

   

 

 

 

*

See consolidated schedule of investments for industry classifications.

The following is a reconciliation of Level 3 assets for the three months ended March 31, 2019:

   1st Lien/Senior
Secured Debt		  2nd Lien/Junior
Secured Debt		  Common
Stock		   Preferred
Stock		  Total 

Balance as of January 1, 2019

  $122,981,395  $1,200,773  $379,849   $1,160,531  $125,722,548 

Purchases (including PIK)

   58,311,236   —     484,552    1,598,210   60,393,998 

Sales and principal payments

   (2,461,597)   —     —      —     (2,461,597) 

Realized Gain (Loss)

   (1,754)   —     —      —     (1,754) 

Net Amortization of Premium/Discount

   103,854   669   —      —     104,523 

Transfers In

   —     —     —      —     —   

Transfers Out

   —     —     —      —     —   

Net Change in Unrealized Appreciation (Depreciation)

   132,198   (669)   —      (11)   131,518 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Balance as of March 31, 2019

  $179,065,332  $1,200,773  $864,401   $2,758,730  $183,889,236 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Change in Unrealized Appreciation (Depreciation) for Investments Still Held

  $132,198  $(669)  $—     $(11)  $131,518 

For the three months ended March 31, 2019, there were no transfers to or from Level 3.

The following is a reconciliation of Level 3 assets for the three months ended March 31, 2018:

   1st Lien/Senior
Secured Debt		   Common
Stock		   Total 

Balance as of January 1, 2018

  $23,561,630   $311,400   $23,873,030 

Purchases

   11,332,082    —      11,332,082 

Sales and principal payments

   (721,656)    —      (721,656) 

Realized Gain (Loss)

   —      —      —   

Net Amortization of Premium/Discount

   27,727    —      27,727 

Transfers In

   —      —      —   

Transfers Out

   —      —      —   

Net Change in Unrealized Appreciation (Depreciation)

   (26,039)    —      (26,039) 
  

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2018

  $34,173,744   $311,400   $34,485,144 
  

 

 

   

 

 

   

 

 

 

Change in Unrealized Appreciation (Depreciation) for Investments Still Held

  $(26,039)   $—     $(26,039) 

For the three months ended March 31, 2018, there were no transfers to or from Level 3.

The following tables present the ranges of significant unobservable inputs used to value the Fund’s Level 3 investments as of March 31, 2019 and December 31, 2018, respectively. These ranges represent the significant unobservable inputs that were used in the valuation of each type of investment. These inputs are not representative of the inputs that could have been used in the valuation of any one investment. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Fund’s Level 3 investments.

   Fair Value
as of
March 31,
2019		   

Valuation
Techniques

  

Unobservable
Input

  Range
(Weighted
Average) (1)		  Impact to
Valuation from
an Increase in
Input		 

Assets:

         

1st Lien/Senior Secured Debt

  $91,874,019   Market Yield Analysis  Market Yield   
6.8% - 10.9%
(8.6%)		 
 		  Decrease 
   87,191,313   Recent Purchase  Purchase Price   N/A   N/A 

2nd Lien/Junior Secured Debt

   1,200,773   Recent Purchase  Purchase Price   N/A   N/A 

Common Stock

   317,114   Market Approach  EBITDA Multiple   (12.5)x   Increase 
   547,287   Recent Purchase  Purchase Price   N/A   N/A 

Preferred Stock

   2,758,730   Recent Purchase  Purchase Price   N/A   N/A 
  

 

 

        

Total Assets

  $183,889,236        

(1)

Weighted averages are calculated based on fair value of investments.

   Fair Value
as of
December 31.
2018		   

Valuation
Techniques

  

Unobservable
Input

  Range
(Weighted
Average) (1)		  Impact to
Valuation from
an Increase in
Input		 

Assets:

         

1st Lien/Senior Secured Debt

  $59,170,282   Market Yield Analysis  Market Yield   
6.0% - 15.5%
(9.2%)		 
 		  Decrease 
   63,811,113   Recent Purchase  Purchase Price   N/A   N/A 

2nd Lien/Junior Secured Debt

   1,200,773   Recent Purchase  Purchase Price   N/A   N/A 

Common Stock

   317,114   Market Approach  EBITDA Multiple   12.5x   Increase 
   62,735   Recent Purchase  Purchase Price   N/A   N/A 

Preferred Stock

   1,160,531   Recent Purchase  Purchase Price   N/A   N/A 
  

 

 

        

Total Assets

  $125,722,548        

(1)

Weighted averages are calculated based on fair value of investments.

6. Commitments & Contingencies

Commitments

The Fund may enter into commitments to fund investments. As of September 30, 2017, total organization expenses incurred amounted to $467,000. Offering expenses, which are being deferred, totaled $236,000, which is being amortized on a straight line basis over a one year period starting from September 29, 2017.

For the quarter ended September 30, 2017, the Adviser had reimbursed the above expenses as part of its Expense Payment, amounting to $467,647.

5. Fund Expenses

As of September 30, 2017, the Adviser and its affiliates have incurred expenses of approximately $534,500 on behalf ofMarch 31, 2019, the Fund believed that it had adequate financial resources to satisfy its unfunded commitments. The amounts associated with unfunded commitments to provide funds to portfolio companies are not recorded in relation to professional fees for insurance, legal, auditthe Fund’s consolidated statements of assets and tax servicesliabilities. Since these commitments and board of directors’ compensation costs.

For the quarter ended September 30, 2017, the Adviser had reimbursed the above expenses as part of its Expense Payment, amounting to $534,500.

6.associated amounts may expire without being drawn upon, the total commitment amount does not necessarily represent a future cash requirement. The Fund had the following unfunded commitments by investment types as of March 31, 2019:

Investment

Type

  

Facility

Type

  Commitment
Expiration Date (1)		   Unfunded
Commitment (2)		   Fair
Value (3)		 

1st Lien/Senior Secured Debt

        

AEG Holding Company, Inc.

  Delayed Draw Term Loan   11/20/2019   $1,083,629   $(21,673) 

AEG Holding Company, Inc.

  Revolver   11/20/2023   $216,726   $(4,335) 

American Physician Partners LLC

  Delayed Draw Term Loan   01/29/2020   $745,925   $(11,189) 

American Physician Partners LLC

  Revolver   12/21/2021   $333,002   $(4,995) 

Analogic Corporation

  Revolver   06/22/2023   $286,957   $(5,739) 

Avetta, LLC

  Delayed Draw Term Loan   04/11/2020   $1,235,991   $(12,360) 

Avetta, LLC

  Revolver   04/10/2024   $494,396   $(9,888) 

Businesssolver.com, Inc.

  Delayed Draw Term Loan   05/15/2020   $239,412   $(4,788) 

Businesssolver.com, Inc.

  Revolver   05/15/2023   $258,824   $(5,176) 

Captain D’s, Inc.

  Revolver   12/15/2023   $113,781   $(1,138) 

Delaware Valley Management Holdings, Inc.

  Delayed Draw Term Loan   03/21/2021   $5,268,797   $(105,376) 

Delaware Valley Management Holdings, Inc.

  Revolver   03/21/2024   $526,880   $(10,538) 

Dillon Logistics, Inc.

  Revolver   12/11/2023   $171,675   $(3,433) 

Drilling Info Holdings, Inc.

  Delayed Draw Term Loan   07/30/2020   $10,831   $(54) 

E2open LLC

  Revolver   11/26/2024   $311,365   $(4,671) 

Edgewood Partners Holdings LLC

  Delayed Draw Term Loan   07/31/2019   $1,694,263   $(16,943) 

Engage2Excel, Inc.

  Revolver   03/07/2023   $345,497   $(6,910) 

Exterro, Inc.

  Revolver   05/31/2024   $330,000   $(6,600) 

Finalsite Holdings, Inc.

  Revolver   09/25/2024   $253,142   $(3,797) 

Genesis Acquisition Co.

  Delayed Draw Term Loan   07/31/2020   $364,466   $(3,645) 

Genesis Acquisition Co.

  Revolver   07/31/2024   $202,400   $(4,048) 

GHA Buyer, Inc.

  Delayed Draw Term Loan   06/20/2020   $675,044   $(13,501) 

GHA Buyer, Inc.

  Revolver   10/22/2023   $202,513   $(4,050) 

INH Buyer, Inc.

  Revolver   01/31/2024   $178,410   $(2,676) 

InSite Wireless Group, LLC

  Revolver   03/15/2023   $59,169   $(888) 

InSite Wireless Group, LLC

  Term Loan   03/15/2021   $1,311,586   $(19,674) 

Lucky Bucks, LLC

  Delayed Draw Term Loan   04/09/2020   $445,189   $(7,791) 

Maintech, Incorporated

  Revolver   12/28/2022   $121,000   $(1,815) 

Ministry Brands, LLC

  Delayed Draw Term Loan   12/02/2022   $732,131   $(3,661) 

Nuvei Technologies Corp.

  Delayed Draw Term Loan   03/28/2020   $156,095   $(1,561) 

Perforce Intermediate Holdings, LLC

  Revolver   12/28/2022   $670,352   $(3,352) 

Pinnacle Dermatology Management, LLC

  Delayed Draw Term Loan   05/18/2020   $1,920,537   $(38,411) 

Pinnacle Dermatology Management, LLC

  Revolver   05/18/2023   $468,424   $(9,369) 

Platinum Dermatology Partners, LLC

  General Delayed Draw Term Loan Commitment   07/03/2019   $568,394   $(11,368) 

Platinum Dermatology Partners, LLC

  Revolver   01/03/2023   $109,690   $(2,194) 

Qualifacts Corporation

  Revolver   12/12/2022   $300,000   $(1,500) 

RxBenefits, Inc.

  Revolver   03/29/2024   $575,767   $(5,758) 

Selligent, Inc.

  Revolver   11/03/2023   $200,660   $(3,010) 

Single Digits, Inc.

  Delayed Draw Term Loan   12/21/2020   $1,040,369   $(10,404) 

Single Digits, Inc.

  Revolver   12/21/2023   $416,148   $(4,162) 

Sirsi Corporation

  Revolver   03/15/2024   $830,612   $(12,459) 

Smile Brands, Inc.

  Delayed Draw Term Loan   10/12/2020   $477,339   $(4,773) 

Smile Brands, Inc.

  Revolver   10/12/2023   $161,378   $(1,614) 

Sugarcrm, Inc.

  Revolver   07/31/2024   $310,244   $(5,429) 

Summit Infrastructure Group, Inc.

  Delayed Draw Term Loan   03/15/2021   $1,125,756   $(22,515) 

Summit Infrastructure Group, Inc.

  Revolver   03/15/2024   $562,878   $(11,258) 

Swiftpage, Inc.

  Revolver   06/13/2023   $225,317   $(4,506) 

Symplr Software, Inc.

  Revolver   11/30/2023   $266,813   $(4,002) 

Theranest, LLC

  Delayed Draw Term Loan   07/23/2020   $2,785,714   $(41,786) 

Theranest, LLC

  Revolver   07/23/2023   $428,571   $(8,571) 

Trade Supplies Acquisition, LLC

  Revolver   11/21/2023   $469,177   $(7,038) 

TRGRP Acquisition Corp.

  Revolver   11/01/2023   $333,333   $(6,667) 

Tropical Smoothie Café, LLC

  Revolver   09/24/2023   $96,435   $(964) 

Velocity Purchaser Corporation

  Revolver   12/01/2022   $193,237   $(1,932) 

Veriforce Holdings, LLC

  Revolver   07/13/2023   $135,190   $4,056 
      

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

      $33,041,431   $(521,899) 
      

 

 

   

 

 

 

Total

      $33,041,431   $(521,899) 
      

 

 

   

 

 

 

The Fund had the following unfunded commitments by investment types as of December 31, 2018:

Investment

Type

  

Facility

Type

  Commitment
Expiration Date (1)		   Unfunded
Commitment (2)		   Fair
Value(3)		 

1st Lien/Senior Secured Debt

        

AEG Holding Company, Inc.

  Delayed Draw Term Loan   11/20/2019   $1,083,629   $(21,673) 

AEG Holding Company, Inc.

  Revolver   11/20/2023   $216,726   $(4,335) 

American Physician Partners LLC

  Delayed Draw Term Loan   01/29/2020   $3,212,948   $(48,194) 

American Physician Partners LLC

  Revolver   12/21/2021   $347,466   $(5,212) 

Analogic Corporation

  Revolver   06/22/2023   $286,957   $(5,739) 

Avetta, LLC

  Delayed Draw Term Loan   04/11/2020   $1,235,991   $(12,360) 

Avetta, LLC

  Revolver   04/10/2024   $494,396   $(4,944) 

Businesssolver.com, Inc.

  Delayed Draw Term Loan   05/15/2020   $291,176   $(5,824) 

Businesssolver.com, Inc.

  Revolver   05/15/2023   $194,118   $(3,882) 

Caliper Software, Inc.

  Revolver   11/30/2023   $281,636   $(4,225) 

Captain D’s, Inc.

  Revolver   12/15/2023   $112,481   $(1,125) 

Dillon Logistics, Inc.

  Revolver   12/11/2023   $225,550   $(3,404) 

Drilling Info Holdings, Inc.

  Delayed Draw Term Loan   07/30/2020   $233,718   $(1,461) 

E2open LLC

  Delayed Draw Term Loan   05/26/2020   $736,677   $(11,050) 

E2open LLC

  Revolver   11/26/2024   $311,365   $(4,670) 

Engage2Excel, Inc.

  Revolver   03/07/2023   $270,115   $(5,402) 

Exterro, Inc.

  Revolver   05/31/2024   $330,000   $(6,600) 

Finalsite Holdings, Inc.

  Revolver   09/25/2024   $253,142   $(4,430) 

Genesis Acquisition Co.

  Delayed Draw Term Loan   07/31/2020   $364,466   $(3,645) 

Genesis Acquisition Co.

  Revolver   07/31/2024   $202,400   $(4,048) 

GHA Buyer, Inc.

  Delayed Draw Term Loan   06/20/2020   $675,044   $(13,501) 

GHA Buyer, Inc.

  Revolver   10/22/2023   $202,513   $(4,050) 

InSite Wireless Group, LLC

  Revolver   03/15/2023   $197,231   $(2,958) 

InSite Wireless Group, LLC

  Term Loan   03/15/2021   $1,311,586   $(19,674) 

Lucky Bucks, LLC

  Delayed Draw Term Loan   04/09/2020   $556,562   $(9,740) 

Maintech, Incorporated

  Revolver   12/28/2022   $60,500   $(908) 

Ministry Brands, LLC

  Delayed Draw Term Loan   12/02/2022   $947,111   $(4,736) 

Perforce Intermediate Holdings, LLC

  Revolver   12/28/2022   $591,549   $(5,915) 

Pinnacle Dermatology Management, LLC

  Delayed Draw Term Loan   05/18/2020   $1,920,536   $(38,411) 

Pinnacle Dermatology Management, LLC

  Revolver   05/18/2023   $468,424   $(9,368) 

Pivotal Payments, Inc.

  Delayed Draw Term Loan   03/28/2020   $183,152   $(1,832) 

Platinum Dermatology Partners, LLC

  General Delayed Draw Term Loan Commitment   07/03/2019   $568,394   $(11,368) 

Platinum Dermatology Partners, LLC

  Revolver   01/03/2023   $498,592   $(9,972) 

Qualifacts Corporation

  Revolver   12/12/2022   $300,000   $(1,500) 

Selligent, Inc.

  Revolver   11/03/2023   $200,660   $(3,010) 

Single Digits, Inc.

  Delayed Draw Term Loan   12/21/2020   $1,040,369   $(10,404) 

Single Digits, Inc.

  Revolver   12/21/2023   $416,148   $(4,161) 

Smile Brands, Inc.

  Delayed Draw Term Loan   10/12/2020   $477,340   $(4,773) 

Smile Brands, Inc.

  Revolver   10/12/2023   $212,340   $(2,123) 

Sugarcrm, Inc.

  Revolver   07/31/2024   $232,683   $(4,072) 

Swiftpage, Inc.

  Revolver   06/13/2023   $225,317   $(4,506) 

Theranest, LLC

  Delayed Draw Term Loan   07/23/2020   $2,785,713   $(41,786) 

Theranest, LLC

  Revolver   07/23/2023   $428,571   $(8,571) 

Trade Supplies Acquisition, LLC

  Revolver   11/21/2023   $469,177   $(7,038) 

TRGRP Acquisition Corp.

  Revolver   11/01/2023   $333,333   $(6,667) 

Tropical Smoothie Café, LLC

  Revolver   09/24/2023   $96,435   $(964) 

Velocity Purchaser Corporation

  Revolver   12/01/2022   $193,237   $(3,865) 

Veriforce Holdings, LLC

  Revolver   07/13/2023   $281,646   $(4,929) 
      

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

      $26,559,120   $(403,025) 
      

 

 

   

 

 

 

Total

      $26,559,120   $(403,025) 
      

 

 

   

 

 

 

(1)

Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

(2)

Net of capitalized fees, expenses and original issue discount (“OID”).

(3)

A negative fair value was reflected as investments, at fair value in the consolidated statements of assets and liabilities. The negative fair value is the result of the capitalized discount on the loan.

Contingencies

In the normal course of business, the Fund enters into contracts that provide a variety of general indemnifications. Any exposure to the Fund under these arrangements could involve future claims that may be made against the Fund. Currently, no such claims exist or are expected to arise and, accordingly, the Fund has not accrued any liability in connection with such indemnifications.

7. Net Assets

Equity Issuance

In connection with its formation, the Fund has the authority to issue 200,000,000 shares of the Fund’s common stock, par value $0.01 per share.

On September 29, 2017, the Fund completed its Initial Closing after entering into Subscription Agreements with several investors, including the Adviser, providing for the private placement of the Fund’s common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Fund’s common shares up to the amount of their respective Capital Commitments on anas-needed basis upon the issuance of a capital drawn-downdraw-down notice. At September 30, 2017March 31, 2019 the Fund had total Capital Commitments of $70,928,060,$360,272,341, of which 100%76% is unfunded. The minimum Capital Commitment of an investor is $50,000. The Fund,Adviser, however, may waive the minimum Capital Commitment at its discretion.

Capital Commitments may be drawn down by the Fund on a pro rata basis, as needed (includingfollow-on investments), for paying the Fund’s expenses, including fees under the Advisory Agreement, and/or maintaining a reserve account for the payment of future expenses or liabilities.

The following table summarizes the total shares issued and amount received related to capital drawdowns delivered pursuant to the Subscription Agreements during the three months ended March 31, 2019 and March 31, 2018:

   For the three months ended
March 31, 2019		   For the three months ended
March 31, 2018		 

Quarter Ended

  Shares   Amount   Shares   Amount 

March 31

   2,317,068   $23,125,308    599,421   $6,066,799 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total capital drawdowns

   2,317,068   $23,125,308    599,421   $6,066,799 
  

 

 

   

 

 

   

 

 

   

 

 

 

Distributions

The following table reflects the distributions declared on shares of the Fund’s common stock during the three months ended March 31, 2019:

Date Declared

 

Record Date

 

Payment Date

 

Amount Per Share

 

Dollar Amount

3/27/2019

 3/27/2019 4/25/2019 $0.15 $1,057,242
    

 

    $1,057,242
    

 

There were no distributions declared on shares of the Fund’s common stock during the three months ended March 31, 2018.

Distribution Reinvestment Plan

On September 26, 2017, the Fund adopted a dividend reinvestment plan, which was amended and restated on August 6, 2018 (the “DRIP”). Pursuant to the DRIP (both before and after it was amended), stockholders receive dividends or other distributions in cash unless a stockholder elects to reinvest his or her dividends and other distributions. As a result of adopting the DRIP, if the Board authorizes, and the Fund declares, a cash dividend or distribution, stockholders who have opted into the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of common stock, rather than receiving cash.

The following table summarizes shares distributed pursuant to the DRIP during the three months ended March 31, 2019 to stockholders who opted into the DRIP:

Date Declared

 

Record Date

 

Reinvestment Date

 

Shares

 

Dollar Amount

3/27/2019

 3/27/2019 3/29/2019 58,319 $581,297
    

 

    $581,297
    

 

There were no shares distributed pursuant to the DRIP during the three months ended March 31, 2018 to stockholders who had opted into the DRIP.

Share Repurchase Plan

On March 23, 2018, the Small Business Credit Availability Act (the “SBCAA”) was signed into law. The SBCAA, among other things, modifies the applicable provisions of the 1940 Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a majority of the directors who are not interested persons of the BDC and who have no financial interest in the proposal). On September 26, 2018, the Fund’s stockholders approved the reduction of the asset coverage ratio applicable to the Fund from 200% to 150%. Pursuant to the SBCAA, on November 27, 2018, the Fund extended to its stockholders as of such date the opportunity to sell the shares held by that stockholder as of such date, with 25% of those shares to be repurchased in each of the four calendar quarters following the calendar quarter in which the approval was obtained. The first tender offer period began on November 27, 2018 and expired on December 27, 2018.

The following table summarizes shares repurchased during the three months ended March 31, 2019:

Payment Date

 

Shares

 

Dollar Amount

3/28/2019

 7,331 $72,668

There were no shares repurchased during the three months ended March 31, 2018.

8. Earnings Per Share

The following information sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2019 and March 31, 2018:

   For the three months ended
March 31,		 
   2019   2018 

Net increase (decrease) in net assets from operations

  $1,382,359   $234,097 

Weighted average common shares outstanding

   6,914,873    2,424,032 

Earnings per common share-basic and diluted

  $0.20   $0.10 

9. Financial Highlights

Below is the schedule of financial highlights of the Fund for the three months ended March 31, 2019 and March 31, 2018:

   For the three months
ended
March 31, 2019		  For the three months
ended
March 31, 2018		 

Per Share Data:(1)

 

Net asset value, beginning of period

  $9.91  $10.02 

Net investment income (loss)

   0.15   0.11 

Net realized and unrealized gains (losses) on investments

   0.06   (0.01) 
  

 

 

  

 

 

 

Net increase (decrease) in net assets resulting from operations

   0.21   0.10 
  

 

 

  

 

 

 

Distributions to shareholders(2)

   (0.15)   0.00 
  

 

 

  

 

 

 

Net asset value, end of period

  $9.97  $10.12 

Shares outstanding, end of period

   8,751,728   3,016,792 

Total return at net asset value before incentive fees(3)(4)

   2.09%   0.97% 

Total return at net asset value after incentive fees(3)(4)

   2.05%   0.97% 

Ratio/Supplemental Data:

 

Net assets, end of period

  $87,232,764  $30,533,279 

Ratio of total expenses to weighted average net assets(5)

   12.57%   8.25% 

Ratio of net expenses to weighted average net assets(5)

   11.71%   3.33% 

Ratio of net investment income (loss) before waiver to weighted average net assets(5)

   5.91%   0.76% 

Ratio of net investment income (loss) after waiver to weighted average net assets(5)

   6.77%   5.69% 

Ratio of interest and credit facility expenses to weighted average net assets(5)

   7.59%   2.22% 

Ratio of incentive fees to weighted average net assets

   0.14%   —  % 

Portfolio turnover rate(4)

   1.51%   2.91% 

Asset coverage ratio(6)

   161%   211% 

(1)

The per share data was derived by using the weighted average shares outstanding during the applicable period.

(2)

The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the entire period.

(3)

Total return based on NAV is calculated as the change in NAV per share during the respective periods, assuming dividends and distributions, if any, are reinvested in accordance with the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized, except for professional fees, directors’ fees, incentive fees and organizational and offering costs.

(6)

Asset coverage ratio is equal to (i) the sum of (A) net assets at end of period and (B) debt outstanding at end of period, divided by (ii) total debt outstanding at the end of the period.

10. Subsequent Events

Subsequent events after the statements of assets and liabilities date have been evaluated through the date the financial statements were issued. The Fund has concluded that there is no impact requiring adjustment or disclosure in the financial statements.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form10-Q (this “Quarterly Report”) contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. 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:

 

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

 

such an economic downturn could disproportionately impact the companies that we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies;

 

a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;

 

interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

 

our future operating results;

 

our business prospects and the prospects of our portfolio companies;

 

our contractual arrangements and relationships with third parties;

 

the ability of our portfolio companies to achieve their objectives;

 

competition with other entities and our affiliates for investment opportunities;

 

the speculative and illiquid nature of our investments;

 

the use of borrowed money to finance a portion of our investments;

 

the adequacy of our financing sources and working capital;

 

the loss of key personnel;

 

the timing of cash flows, if any, from the operations of our portfolio companies;

 

the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;

 

the ability of the Adviser to attract and retain highly talented professionals;

 

our ability to qualify and maintain our qualification as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development company (“BDC”);

 

the effect of legal, tax and regulatory changes;changes, including the Small Business Credit Availability Act (the “SBCAA”); and

 

the other risks, uncertainties and other factors we identify under “Item 1A. Risk“Risk Factors” of our Annual Report on Form10-K for the fiscal year ended December 31, 2016.2018.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled “Item 1A. Risk Factors” of Annual Report on Form10-K for the fiscal year ended December 31, 20162018 and elsewhere in this report. These forward-looking statements apply only as of the date of this report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. The forward-looking statements and projections contained in this Annual Report are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) because we are an investment company.

The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form10-Q.Report.

Overview

AB Private Credit Investors Corporation (the “Fund”) wasWe were formed on February 6, 2015 as a corporation under the laws of the State of Maryland. We are currentlystructured as an externally managed,non-diversified,closed-end management investment company. We were formed to invest primarily in the development stageprimary-issue middle-market credit opportunities that are directly sourced and have notprivately negotiated. We commenced investment operations. Since inception, there has been no investment or operational activity. In conjunction with our formation, we issued and sold (i) 100 shares of common stock, par value $0.01,operations on June 27, 2016, at an aggregate purchase price of $1,000 ($10.00 per share) and (ii) 2,400 shares of common stock, par value $0.01, on May 26,November 15, 2017 to(“Commencement”). We are advised by AB Private Credit Investors LLC.LLC (the “Adviser”), which is registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Adviser is responsible for sourcing potential investments, conducting due diligence on prospective investments, analyzing investment opportunities, structuring investments and monitoring our portfolio on an ongoing basis. State Street Bank and Trust Company (the “Administrator”) provides the administrative services necessary for the Fund to operate.

On October 6, 2016, we filed with the Securities and Exchange Commission (the “SEC”)SEC an election to be treated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). We also intend to electIn addition, the Fund has elected to be treated and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code for U.S. federal income tax purposes. While we intend to elect to be treated as a RIC as soon as practicable, we may have difficulty satisfying the asset diversification requirements as we deploy initial capital and build our portfolio. To the extent that we have net taxable income prior to our qualification as a RIC, we will be subject to U.S. federal income tax on such income. As a BDC and a RIC, respectively, we are and will be required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income andtax-exempt tax exempt interest.

Our investment activities are managed by our external investment adviser, AB Private Credit Investors LLC (the “Adviser”), an investment adviser that is registered under the Investment Advisers Act of 1940, as amended. We intend to enter into an administration agreement (the “Administration Agreement”) with a third party administrator (the “Administrator”), pursuant to which the Administrator will provide the administrative services necessary for us to operate.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012.2012 (the “JOBS Act”). We will remain an emerging growth company for up to five years following anour initial public offering, if any, although if the market value of our common stock that is held bynon-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31. For so long as we remain an emerging growth company under the JOBS Act, we will be subject to reduced public company reporting requirements.

The Fund is conductingPrivate Offering

We enter into separate subscription agreements with investors providing for the private offerings (each a “Private Offering”)placement of itsour common stock to investors(the “Shares”) in reliance on an exemptionexemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”Act,” and such offering, the “Private Offering”). At the closing of any Private Offering, eachEach investor will makemakes a capital commitment (a “Capital Commitment”) to purchase shares of the Fund’s common stockShares pursuant to a subscription agreement entered into with the Fund.agreement. Investors will be required to fund drawdowns to purchase shares of the Fund’s common stock up to the amount of their respective Capital Commitment on anas-needed basis each time the Fund delivers a notice to its investors. The Fund anticipates commencing its loan origination and investment activities contemporaneously with the initial drawdown from investors in the initial Private Offering.

On September 29, 2017, the Fund completed the initial closing (“Initial Closing”) of its Private Offering after entering into subscription agreements (collectively, the “Subscription Agreements”) with several investors, including the Adviser, providing for the private placement of the Fund’s common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdownsmake capital contributions to purchase Shares each time we deliver a capital call notice, which is issued based on our anticipated investment activities and capital needs, delivered at least 10 business days prior to the required funding date, provided that investors may fund such requirements sooner than the deadline as agreed between the Fund and the investor. Generally, purchases of our Shares are made pro rata in accordance with each investor’s Capital Commitment, in an amount not to exceed each investor’s remaining capital commitment (“Remaining Commitment”), at aper-Share price equal to the net asset value per share of our common stock subject to any adjustments.

We may accept additional Capital Commitments quarterly (“Subsequent Closings”) from new investors as well as existing investors that wish to increase their commitment and shareholding in the Fund. These Subsequent Closings are expected to occur on a calendar-quarter end based on investor interest as well as the state of the market and our capacity to invest the additional capital in a reasonable period. Each Capital Commitment is for the life of the Fund or for a shorter period based on the investor’s liquidation election, subject to the Fund’s common shares upreceipt of exemptive relief that would permit stockholders to the amount ofliquidate their respective Capital Commitments on anas-needed basis upon the issuance of a capital drawn-down notice. At September 30, 2017 the Fund had total Capital Commitments of $70,928,060, of which 100% is unfunded. Capital Commitments may be drawn downinvestments pursuant to transactions that are currently prohibited by the Fund on a pro rata basis, as needed (includingfollow-on investments), for paying the Fund’s expenses, including fees under the Advisory Agreement, and/or maintaining a reserve account for the payment of future expenses or liabilities.1940 Act and would require an SEC order in order to be established.

Portfolio and Investment Activity

As of September 30, 2017 and December 31, 2016, we have not commenced investment activities.

Results of Operations

As of September 30, 2017, we completed the Initial Closing of our Private Offering but had not commenced any significant operational or investment activities. As of December 31, 2016, we had not completed the Initial Closing of our private offering or commenced any operational or investment activities. Therefore, no results of operations are reported.

Revenues

Our investment objective is to generate current income and prioritize capital preservation through a portfolio that primarily invests in directly-sourced, privately-negotiated, secured, middle market loans. We intend to primarily invest in middle market businesses based in the United States. We expect that the primary use of proceeds by the companies in which we invest will be for leveraged buyouts, recapitalizations, mergers and acquisitions and growth capital.

We will seek to build the Fund’s portfolio in a defensive manner that minimizes cyclical and correlated risks across individual names and sector verticals by targeting companies with strong underlying business models and durable intrinsic value.

We will primarily hold secured loans, which encompass traditional first lien, uni-trancheunitranche and second lien loans, but may also invest in mezzanine, structured preferred stock andnon-control equityco-investment opportunities. We will seek to deliver attractive risk adjusted returns with lower volatility and low correlation relative to the public credit markets. The Adviser believes our flexibility to invest across the capital structure and liquidity spectrum will allow us to optimize investor risk-adjusted returns.

Expenses

Expenses for the three and nine months ended September 30, 2017 were as follows:

Expenses for the three and nine months ended September 30, 2017, were $1,002,147, which consisted of $467,647 in organizational and offering expenses, $149,000 in directors’ fees, and $385,500 in professional fees.

Pursuant to the Expense Support and Conditional Reimbursement Agreement, our Adviser provided expense support of $1,002,147, reducing our expenses to $0.00. See “Item 1. – Notes to Financial Statements – Note 3. Agreements and Related Party Transactions – Expense Support and Conditional Reimbursement Agreement.”

Organization and Offering Costs

As of September 30, 2017, the Adviser and its affiliates have incurred or expect to incur organizational costs of approximately $467,000 and offering costs of approximately $236,000 on behalf of the Fund.

Organization costs include, among other things, the cost of organizing as a Maryland corporation, including the cost of legal services, directors’ fees and other fees, including travel-related expenses, pertaining to our organization, all of which are expensed as incurred. Offering costs include, among other things, legal fees and other costs pertaining to the preparation of our private placement memorandum and other offering documents. Offering costs are being deferred and will be amortized on a straight line basis over aone-year period starting from September 29, 2017.

Pursuant to the Expense Support and Conditional Reimbursement Agreement, our Adviser provided expense support of $467,000 and $236,000 for our organizational costs and offering costs, respectively, reducing our organizational costs and offering costs to $0.00. See “Item 1. – Notes to Financial Statements – Note 3. Agreements and Related Party Transactions – Expense Support and Conditional Reimbursement Agreement.”

Operating Expenses

Under the Advisory Agreement, our primary operating expenses will include the payment of fees to the Adviser our allocable portion of overhead expenses under the Expense Reimbursement Agreement (as defined below) and other operating costs described below. We bear all otherout-of-pocket costs and expenses of our operations and transactions, including those relating to:

 

reasonable and documented organization and offering expenses to the extent reimbursement of such expenses is included in any future agreement with the Adviser;

 

calculating our net asset value (including the cost and expenses of any independent valuation firm);

 

fees and expenses payable to third parties, including agents, consultants or other advisers, in connection with monitoring financial (including advising with respect to our financing strategy) and legal affairs for us and in providing administrative services, monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments;

 

interest payable on debt, if any, incurred to finance our investments;

 

sales and purchases of our common stock and other securities;

 

base management fees and incentive fees payable to the Adviser;

 

transfer agent and custodial fees;

��

federal and state registration fees;

all costs of registration and listing our securities on any securities exchange;

 

U.S. federal, state and local taxes;

 

independent directors’ fees and expenses;

 

costs of preparing and filing reports or other documents required by the SEC, the Financial Industry Regulatory Authority or other regulators;

 

costs of any reports, proxy statements or other notices to stockholders, including printing costs;

 

our allocable portion of any fidelity bond, directors’ and officers’ errors and omissions liability insurance, and any other insurance premiums;

 

direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and

 

all other expenses incurred by us, the Administrator or the Adviser in connection with administering our business, including payments under the Administration Agreement and payments under the Expense Reimbursement Agreement based on our allocable portion of the Adviser’s overhead in performing its obligations under the Expense Reimbursement Agreement, including the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs.

Portfolio and Investment Activity

We commenced investment operations on November 15, 2017. During the three months ended March 31, 2019, we invested $57,136,514 in 11 portfolio companies, $3,587,927 was drawn down against the revolvers and delayed draw term loans, and we had $2,348,789 in aggregate amount of principal repayments, which includes $1,876,665 in revolver and delayed draw term paydowns, and $130,771 in sales, resulting in net investments of $58,244,881 for the period.

During the year ended March 31, 2018, we invested $7,857,111 in 3 portfolio companies, $3,474,971 was drawn down against the revolvers and delayed draw term loans, and we had $721,656 in aggregate amount of principal repayments, which includes $626,813 in revolver and delayed draw term loan paydowns, resulting in net investments of $10,610,426 for the period.

The following table shows the composition of the investment portfolio and associated yield data as of March 31, 2019:

   As of March 31, 2019 
   Cost   Percentage of
Total Portfolio		  Fair Value   Percentage of
Total Portfolio		  Weighted
Average
Yield(1)		 

First Lien Senior Secured Debt

  $192,088,483    97.55%  $191,733,006    97.55%   9.14% 

Second Lien Junior Secured Debt

  $1,202,102    0.61%  $1,200,773    0.61%   10.88% 

Preferred Stock

  $2,758,741    1.40%  $2,758,730    1.40%   0% 

Common Stock

  $858,687    0.44%  $864,401    0.44%   0% 
  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

 

Total

  $196,908,013    100%  $196,556,910    100%  
  

 

 

   

 

 

  

 

 

   

 

 

  

(1)

Based upon the par value of our debt investments

The following table shows the composition of the investment portfolio and associated yield data as of December 31, 2018:

   As of December 31, 2018 
   Cost   Percentage of
Total Portfolio		  Fair Value   Percentage of
Total Portfolio		  Weighted
Average
Yield(1)		 

First Lien Senior Secured Debt

  $135,776,144    98.02%  $135,061,980    98.01%   9.34% 

Second Lien Junior Secured Debt

  $1,201,433    0.87%  $1,200,773    0.87%   10.91% 

Preferred Stock

  $1,160,531    0.84%  $1,160,531    0.84%   0 

Common Stock

  $374,135    0.27%  $379,849    0.28%   0 
  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

 

Total

  $138,512,243    100%  $137,803,133    100%  
  

 

 

   

 

 

  

 

 

   

 

 

  

(1)

Based upon the par value of our debt investments

The following table presents certain selected financial information regarding our investment portfolio:

   As of
March 31, 2019		  As of
December 31, 2018		 

Number of portfolio companies

   55   44 

Percentage of debt bearing a floating rate(1)

   100%   100% 

Percentage of debt bearing a fixed rate(1)

   —  %   —  % 

(1)

Measured on a fair value basis, and excludes equity securities.

The following table shows the amortized cost and fair value of our performing andnon-accrual debt investments as of March 31, 2019:

   As of March 31, 2019 
   Amortized Cost   Percentage at
Amortized Cost		  Fair Value   Percentage at
Fair Value		 

Performing

  $193,290,585    100%  $192,933,779    100% 

Non-accrual

   —      —     —      —   
  

 

 

   

 

 

  

 

 

   

 

 

 

Total

  $193,290,585    100%  $192,933,779    100% 
  

 

 

   

 

 

  

 

 

   

 

 

 

The following table shows the amortized cost and fair value of our performing andnon-accrual debt investments as of December 31, 2018:

   As of December 31, 2018 
   Amortized Cost   Percentage at
Amortized Cost		  Fair Value   Percentage at
Fair Value		 

Performing

  $136,977,577    100%  $136,262,753    100% 

Non-accrual

   0    0   0    0 
  

 

 

   

 

 

  

 

 

   

 

 

 

Total

  $136,977,577    100%  $136,262,753    100% 
  

 

 

   

 

 

  

 

 

   

 

 

 

Generally, when interest and/or principal payments on a loan become past due, or if the Fund otherwise does not expect the borrower to be able to service its debt and other obligations, the Fund will place the loan onnon-accrual status and will cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to restructuring such that the interest income is deemed to be collectible. The Fund generally restoresnon-accrual loans to accrual status when past due principal and interest is paid and, in the management’s judgment, is likely to remain current. As of March 31, 2019 and as of December 31, 2018, the Fund had no investments that were onnon-accrual status.

The following table shows the amortized cost and fair value of the investment portfolio and cash and cash equivalents as of March 31, 2019:

   As of March 31, 2019 
   Amortized Cost   Percentage of
Total		  Fair Value   Percentage of
Total		 

First Lien Senior Secured Debt

  $192,088,483    88.93%  $191,733,006    88.92% 

Second Lien Junior Secured Debt

   1,202,102    0.56   1,200,773    0.56 

Preferred Stock

   2,758,741    1.28   2,758,730    1.28 

Common Stock

   858,687    0.40   864,401    0.40 

Cash and cash equivalents

   19,062,177    8.83   19,062,177    8.84 
  

 

 

   

 

 

  

 

 

   

 

 

 

Total

  $215,970,190    100.00%  $215,619,087    100.00% 
  

 

 

   

 

 

  

 

 

   

 

 

 

The following table shows the amortized cost and fair value of the investment portfolio and cash as of December 31, 2018:

   As of December 31, 2018 
   Amortized Cost   Percentage of
Total		  Fair Value   Percentage of
Total		 

First Lien Senior Secured Debt

  $135,776,144    96.2%  $135,061,980    96.2% 

Second Lien Junior Secured Debt

  $1,201,433    0.9%  $1,200,773    0.9% 

Preferred Stock

  $1,160,531    0.8%  $1,160,531    0.8% 

   As of December 31, 2018 
   Amortized Cost   Percentage of
Total		  Fair Value   Percentage of
Total		 

Common Stock

  $374,135    0.3%  $379,849    0.3% 

Cash

  $2,510,208    1.8%  $2,510,208    1.8% 
  

 

 

   

 

 

  

 

 

   

 

 

 

Total

  $141,022,451    100%  $140,313,341    100% 
  

 

 

   

 

 

  

 

 

   

 

 

 

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of March 31, 2019 (with corresponding percentage of total portfolio investments):

   As of March 31, 2019 
  Amortized Cost   Percentage of
Total Portfolio		  Fair Value   Percentage of
Total Portfolio		 

Business Services

  $18,710,378    9.50%  $18,700,333    9.51% 

Communications & IT Infrastructure

  $5,287,947    2.69  $5,263,695    2.68 

ConsumerNon-Cyclical

  $7,546,737    3.83  $7,537,497    3.83 

Education

  $6,931,030    3.52  $6,905,105    3.51 

Energy

  $10,880,419    5.53  $10,474,390    5.33 

Healthcare & HCIT

  $39,857,302    20.24  $39,754,674    20.23 

Pharmaceutical

  $5,757,672    2.92  $5,757,672    2.93 

Software & Services

  $88,057,408    44.72  $88,296,743    44.92 

Specialty Finance

  $3,026,746    1.54  $3,025,928    1.54 

Transport & Logistics

  $10,852,374    5.51  $10,840,873    5.52 
  

 

 

   

 

 

  

 

 

   

 

 

 
  $196,908,013    100%  $196,556,910    100% 
  

 

 

   

 

 

  

 

 

   

 

 

 

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 2018 (with corresponding percentage of total portfolio investments):

   As of December 31, 2018 
  Amortized Cost   Percentage of
Total Portfolio		  Fair Value   Percentage of
Total Portfolio		 

Business Services

  $13,455,873    9.72%  $13,453,009    9.77% 

Communications & IT Infrastructure

  $5,261,251    3.80  $5,236,923    3.80 

ConsumerNon-Cyclical

  $7,504,952    5.42  $7,500,141    5.44 

Education

  $6,940,001    5.01  $6,920,371    5.02 

Energy

  $10,872,170    7.85  $10,242,840    7.43 

Healthcare & HCIT

  $25,437,461    18.36  $25,411,873    18.44 

Software & Services

  $58,166,581    41.99  $58,165,375    42.21 

Transport & Logistics

  $10,873,954    7.85  $10,872,601    7.89 
  

 

 

   

 

 

  

 

 

   

 

 

 
  $138,512,243    100%  $137,803,133    100% 
  

 

 

   

 

 

  

 

 

   

 

 

 

The Adviser monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action for each company. The Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

assessment of success in adhering to the portfolio company’s business plan and compliance with covenants;

periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments;

comparisons to our other portfolio companies in the industry, if any;

attendance at and participation in board meetings or presentations by portfolio companies; and

review of monthly and quarterly financial statements and financial projections of portfolio companies.

Results of Operations

The following is a summary of our operating results for the quarter ended March 31, 2019 and 2018:

   For the Three Months Ended
March 31,
2019		   For the Three Months Ended
March 31,
2018		 

Total investment income

  $3,428,832   $608,490 

Total expenses

   2,698,387    864,396 
  

 

 

   

 

 

 

Expense Reimbursement from Adviser

   (156,418)    (503,592) 

Waived Management Fees

   (63,171)    (12,453) 

Waived Incentive Fees

   (76,072)    —   

Excise Tax Expense

   —      3 
  

 

 

   

 

 

 

Net investment income

   1,026,106    260,136 

Net realized and change in unrealized depreciation on investments

   356,253    (26,039) 
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

  $1,382,359   $234,097 
  

 

 

   

 

 

 

Investment Income

During the three months ended March 31, 2019, the Fund’s investment income was comprised of $3,400,195 of interest income, which includes $124,006 from net amortization of premium and accretion of discount, and $28,637 inpayment-in-kind interest.

During the three months ended March 31, 2018, the Fund’s investment income was comprised of $608,490 of interest income, which includes $27,727 from net amortization of premium and accretion of discount.

Operating Expenses

The following is a summary of our operating expenses for the quarter ended March 31, 2019 and 2018:

   For the Three
Months
Ended		   For the Three Months
Ended		 
  March 31,   March 31, 
  2019   2018 

Interest and credit facility expenses

  $1,409,152   $149,801 

Management fees

   615,859    105,472 

Professional fees

   342,361    319,188 

Income-based incentive fee

   106,087    —   

Administration and custodian fees

   65,825    56,277 

Insurance expenses

   61,027    61,027 

Directors’ fees

   37,500    36,963 

Transfer agent fees

   4,662    —   

Offering costs

   —      51,647 

Other expenses

   55,914    84,021 
  

 

 

   

 

 

 

Total expenses

   2,698,387    864,396 

Expense reimbursement from Adviser

   (156,418)    (503,592) 

Waived management fees

   (63,171)    (12,453) 

Waived incentive fees

   (76,072)    —   
  

 

 

   

 

 

 

Total net expenses

  $2,402,726   $348,351 

Interest and debt financing expenses

Interest and debt financing expenses includes interest, amortization of deferred financing costs, upfront commitment fees and unused fees on the unused portion of the HSBC Credit Facility and the Barclays Credit Facility (each defined herein, and together, the “Credit Facilities”). The Fund first drew on the HSBC Credit Facility on November 15, 2017. As of March 31, 2019, there was an outstanding balance of $12,250,000 on the HSBC Credit Facility. As of December 31, 2018, the HSBC Credit Facility had an outstanding balance of $88,200,000. The Fund first drew on the Barclays Credit Facility on January 30, 2019. As of March 31, 2019, there was an outstanding balance of $129,750,000 on the Barclays Credit Facility. Interest and credit facility expenses for the three months ended March 31, 2019, were $1,409,152, and for the three months ended March 31, 2018, were $149,801. The weighted average interest rate (excluding deferred upfront financing costs and unused fees) on our debt outstanding was 4.87% and 3.79% as of March 31, 2019 and March 31, 2018, respectively.

Net Realized Gain (Loss) on Investments

During the three months ended March 31, 2019, we had principal repayments of $2,348,789, which includes $1,876,665 of revolver and delayed draw term loan paydowns, and $130,771 in sales, resulting in $1,754 of net realized loss.

During the three months ended March 31, 2018, we had principal repayments of $721,656, which includes $626,813 of revolver paydowns, resulting in $0 of net realized gain/loss.

Net Change in Unrealized Appreciation (Depreciation) on Investments

During the three months ended March 31, 2019, we had $358,007 in net change in unrealized appreciation on $196,908,013 of investments in 55 portfolio companies.

During the three months ended March 31, 2018, we had $26,039 in net change in unrealized depreciation on $34,515,429 of investments in 11 portfolio companies.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended March 31, 2019, the net increase in net assets resulting from operations was $1,382,359. Based on the weighted average shares of common stock outstanding for the three months ended March 31, 2019, our per share net increase in net assets resulting from operations was $0.21.

For the three months ended March 31, 2018, the net increase in net assets resulting from operations was $234,097. Based on the weighted average shares of common stock outstanding for the three months ended March 31, 2018, our per share net increase in net assets resulting from operations was $0.10.

Cash Flows

For the three months ended March 31, 2019, cash increased by $16,551,969. During the same period, we used $56,138,331 in operating activities, primarily as a result of purchases of investments. During the three months ended March 31, 2019, we generated $72,690,300 from financing activities, primarily from issuance of common stock, repurchase of common stock, distributions paid, financing costs paid and borrowings and repayments on the HSBC Credit Facility and Barclays Credit Facility.

For the three months ended March 31, 2018, cash increased by $260,600. During the same period, we used $10,196,652 in operating activities, primarily as a result of purchases of investments. During the three months ended March 31, 2018, we generated $10,457,252 from financing activities, primarily from issuance of common stock and borrowings on our Revolving Credit Facility.

Hedging

The Fund may enter into currency hedging contracts, interest rate hedging agreements such as futures, options, swaps and forward contracts, and credit hedging contracts, such as credit default swaps. However, no assurance can be given that such hedging transactions will be entered into or, if they are, that they will be effective. For the three months ended March 31, 2019, the Fund did not enter into any hedging contracts.

Financial Condition, Liquidity and Capital Resources

At March 31, 2019, and December 31, 2018, we had $19,062,177 and $2,510,208 in cash and cash equivalents, respectively. We expect to generate cash primarily from (i) the net proceeds of the Private Offering, (ii) cash flows from our operations, (iii) any financing arrangements now existing or that we may enter into in the future and (iv) any future offerings of our equity or debt securities. We may fund a portion of our investments through borrowings from banks, or other large global institutions such as insurance companies, and issuances of senior securities.

Our primary use of funds from a credit facility will be investments in portfolio companies, cash distributions to holders of our common stock and the payment of operating expenses.

In the future, we may also securitize or finance a portion of our investments with a special purpose vehicle. If we undertake a securitization transaction, we will consolidate our allocable portion of the debt of any securitization subsidiary on our financial statements, and include such debt in our calculation of the asset coverage test, if and to the extent required pursuant to the guidance of the staff of the SEC.

Cash and cash equivalents as of September 30, 2017,the three months ended March 31, 2019, taken together with our uncalled Capital Commitments of $70,928,060,$274,410,365 and $58,000,000 undrawn on our Credit Facilities, is expected to be sufficient for our investing activities and to conduct our operations in the near term. As of September 30, 2017, we had $25,000 in cash and cash equivalents. During the ninethree months ended September 30, 2017,March 31, 2019, we used no cash$56,138,331 for operating activities, as the Fund had not yet begun investment activities.

Equity Activity

In connection with our formation, weWe have the authority to issue 200,000,000 shares of common stock at a $0.01 per share par value.

On June 27, 2016,We have entered into Subscription Agreements with investors providing for the private placement of our common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Fund’s common shares up to the amount of their respective Capital Commitments on anas-needed basis upon the issuance of a capital draw down notice. As of March 31, 2019, we received capital commitments of $360,272,341. Inception to date, we received capital contributions to the Fund of $85,861,976. For the quarter ended March 31, 2019, the Fund had $581,297 of dividend reinvestments, and $72,668 was withdrawn from the Fund as part of the quarter end share repurchase program. As of December 31, 2018, we received inception to date capital contributions to the Fund of $62,736,668. For the quarter ended March 31, 2018, the Fund had $0 of dividend reinvestments, and $0 was withdrawn from the Fund as part of the quarter end share repurchase program.

During the three months ended March 31, 2019, the Fund received additional capital commitments to the Fund of $51,768,231. In addition, one commitment of $85,000, originally committed during the quarter ended March 31, 2019, was subsequently cancelled before any capital was called. Pursuant to the Subscription Agreements, for the three months ended March 31, 2019, we have delivered capital drawdown notices to our investors relating to the issuance of 2,317,068 of our common shares for an aggregate offering of $23,125,308. Proceeds from the issuance were used for investing activities and for other general corporate purposes.

During the three months ended March 31, 2019, we issued 10058,319 shares of our common stock to investors who have opted into our dividend reinvestment plan.

Distributions

Distributions to stockholders are recorded on the Adviser,record date. To the extent that we have income available, we intend to distribute quarterly distributions to our stockholders. Our quarterly distributions, if any, will be determined by the Board. Any distributions to our stockholders will be declared out of assets legally available for distribution.

The following table summarizes distributions declared during the three months ended March 31, 2019:

Date Declared

  Record Date   Payment Date   Amount
Per Share		   Total
Distributions		 

March 29, 2019

   March 27, 2019    April 25, 2019   $0.15   $1,057,242 
      

 

 

   

 

 

 

Total distributions declared

      $0.15   $1,057,242 
      

 

 

   

 

 

 

There were no distributions declared on the Fund’s common stock during the three months ended March 31, 2018.

The federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscalyear-end based upon our investment company taxable income for the full fiscal year and distributions paid during the full year. For the three months ended March 31, 2019, the Company estimates that the aggregate $1,057,242 distributed to stockholders was attributable to ordinary income and no amounts distributed were attributable to short-term capital gains, based on current earnings for the fiscal year ending December 31, 2019. The character of distributions for federal income tax purposes are determined in accordance with income tax regulations which may differ from GAAP. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is only ordinary income or gains.

To the extent the Fund’s taxable earnings fall below the total amount of its distributions paid for that fiscal year, a portion of those distributions may be deemed a return of capital to the Fund’s stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to stockholders may be the original capital invested by the stockholder rather than the Fund’s income or gains.

For the three months ended December 31, 2018, the Company estimates that an aggregate purchase price of $1,000. $847,537 distributed to stockholders was attributable to ordinary income and $63,795 distributed to stockholders was attributable to short-term capital gains, based on earnings for the fiscal year ending December 31, 2018. The character of distributions for federal income tax purposes are determined in accordance with income tax regulations which may differ from GAAP. Stockholders should not assume that the source of any distribution is only ordinary income or gains.

Share Repurchase Plan

On MayMarch 23, 2018, the SBCAA was signed into law. The SBCAA, among other things, modifies the applicable provisions of the 1940 Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a majority of the directors who are not interested persons of the BDC and who have no financial interest in the proposal). On September 26, 2017, we issued 2,400 shares2018, the Fund’s stockholders approved the reduction of our common stockthe asset coverage ratio applicable to the Adviser, for an aggregate purchase price of $24,000. We have not had any other equity transactionsFund from 200% to 150%. Pursuant to the SBCAA, on November 27, 2018, the Fund extended to its stockholders as of September 30, 2017such date the opportunity to sell the shares held by that stockholder as of such date, with 25% of those shares to be repurchased in each of the four calendar quarters following the calendar quarter in which the approval was obtained. The first tender offer period began on November 27, 2018 and expired on December 27, 2018.

The following table summarizes shares repurchased during the three months ended March 31, 2016.2019:

            Payment Date            

 

             Shares            

 

            Dollar Amount            

3/28/2019

 7,331 $72,668

There were no shares repurchased during the three months ended March 31, 2018.

Contractual Obligations

As of September 30, 2017 and December 31, 2016, we have not commenced operations.

We have entered into certain contracts under which we have future commitments. Payments under the Advisory Agreement with the Adviser in accordance with the 1940 Act. Under the Advisory Agreement, the Adviser is responsible for sourcing, reviewing and structuring investment opportunities for us, underwriting and conducting diligence on our investments and monitoring our investment portfolio on an ongoing basis. For these services, we will payconsist of (i) a base management fee equal to a percentage of the average

outstanding assets of the Fund (which equals the gross value of equity and debt instruments, including investments made utilizing leverage), excluding cash and cash equivalents, during such fiscal quarter and (ii) an incentive fee based on our performance. The cost of both the base management fee and the incentive fee will ultimately be borne by our stockholders. We have entered into the Administration Agreement with the Administrator and a separate expense reimbursement agreement with the Adviser (the “Expense Reimbursement Agreement”) under which any allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs will be reimbursed by the Fund. Under the Administration Agreement, the Administrator will be responsible for providing us with clerical, bookkeeping, recordkeeping and other administrative services. Wewe will reimburse the Adviser an amount equal to our allocable portion (subject to the review of our Board) of its overhead resulting from its obligations under the Expense Reimbursement Agreement, including the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs. Stockholder approval is not required to amend the Administration Agreement or the Expense Reimbursement Agreement.

If any of the contractual obligations discussed above are terminated, our costs under any new agreements that we enter into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we receive under the Advisory Agreement, the Administration Agreement and the Expense Reimbursement Agreement. Any new investment advisory agreement would also be subject to approval by our stockholders.

Expense Support and Conditional Reimbursement Agreement

On September 29, 2017, the Fund and the Adviser entered into an agreement (the “Expense Support and Conditional Reimbursement Agreement”) to limit certain of the Fund’s Operating Expenses, as defined in the Expense Support and Conditional Reimbursement Agreement, to no more than 1.5% of the Fund’s average quarterly gross assets. To achieve this percentage limitation, the Adviser has agreed to reimburse the Fund for certain Operating Expenses on a quarterly basis (any such payment by the Adviser, an (“Expense Payment”) and the Fund has agreed to later repay such amounts (any such payment by the Fund, a “Reimbursement Payment”), pursuant to the terms of the Expense Support and Conditional Reimbursement Agreement. The actual percentage of Operating Expenses paid by the Fund in any quarter after deducting any Expense Payment, as a percentage of the Fund’s average quarterly gross assets, is referred to as the “Percentage Limit”).

Any Expense Payment by the Adviser pursuant to the Expense Support and Conditional Reimbursement Agreement will be subject to repayment by the Fund on a quarterly basis within the three years following the fiscal quarter of the Fund in which the Operating Expenses were paid or absorbed, if the total Operating Expenses for the current quarter, including Reimbursement Payments, expressed as a percentage of the Fund’s average gross assets during such quarter is less than the then-current Percentage Limit, if any, and the Percentage Limit that was in effect at the time when the Advisor reimbursed the Operating Expenses that are the subject of the repayment, subject to Sections 2(b) and 2(c) as applicable. For purposes of the Expense Support and Conditional Reimbursement Agreement, “Operating Expenses” means the Fund’s Total Operating Expenses (as defined below), excluding base management fees, incentive fees, distribution and shareholder servicing fees, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses, and “Total Operating Expenses” means all of the Fund’s operating costs and expenses incurred, as determined in accordance with generally accepted accounting principles for investment companies. The calculation of average net assets will be consistent with such periodic calculations of average net assets in the Fund’s financial statements.

However, no Reimbursement Payment for any quarter will be made if: (1) the Effective Rate of Distributions Per Share (as defined below) declared by the Fund at the time of such Reimbursement Payment is less than or equal to the Effective Rate of Distributions Per Share at the time the Expense Payment was made to which such Reimbursement Payment relates, or (2) the Fund’s Operating Expense Ratio at the time of such Reimbursement Payment is greater than or equal to the Operating Expense Ratio (as defined below) at the time the Expense Payment was made to which such Reimbursement Payment relates. For purposes of the Expense Support and Conditional Reimbursement Agreement, “Effective Rate of Distributions Per Share” means the annualized rate (based on a365-day year) of regular cash distributions per share exclusive of returns of capital, distribution rate reductions due to distribution and shareholder fees, and declared special dividends or special distributions, if any. The “Operating Expense Ratio” is calculated by dividing Operating Expenses in any quarter by the Fund’s average net assets in such quarter.

The specific amountfollowing table shows our contractual obligations as of expenses paid by the Adviser, if any, will be determined at the end of each quarter. The Fund or the Adviser may terminate the Expense Support and Conditional Reimbursement Agreement at any time, with or without notice. The Expense Support and Conditional Reimbursement Agreement will automatically terminate in the event of (a) the termination of the Investment Advisory Agreement, or (b) the Board of the Fund makes a determination to dissolve or liquidate the Fund. Upon termination of the Expense Support and Conditional Reimbursement Agreement, the Fund will be required to fund any Expense Payments, subject to the aforementioned requirements per the Expense Support and Conditional Reimbursement Agreement that have not been reimbursed by the Fund to the Adviser.March 31, 2019:

For the quarter ended September 30, 2017, the Adviser’s Expense Payment amounted to $1,002,147. See “Item 1. –

   Payments Due by Period (Millions) 
   Total   Less Than
1 Year		   1 – 3 Years   3 – 5 Years   More Than
5 Years		 

HSBC Credit Facility

  $12,250,000   $12,250,000   $—    $—    $—  

Barclays Credit Facility

  $129,750,000   $—    $—    $—    $129,750,000 

See“Notes to Financial Statements – Note 3. Agreements and Related Party Transactions – Expense Support and Conditional Reimbursement Agreement.4. Credit Facility,” for a discussion of the terms of the Credit Facilities.

Off-Balance Sheet Arrangements

As of March 31, 2019 and December 31, 2018, the Fund had unfunded Capital Commitments related to Subscription Agreements of $274,410,365 and $245,767,442, respectively.

We had nomay become a party to financial instruments withoff-balance sheet risk in the normal course of our business to fund investments and to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the statements of assets and liabilities. As of March 31, 2019 ouroff-balance sheet arrangements asconsisted of the following:

Investment

Type

  

Facility

Type

  Commitment
Expiration Date (1)		   Unfunded
Commitment (2)		   Fair
Value (3)		 

1st Lien/Senior Secured Debt

        

AEG Holding Company, Inc.

  Delayed Draw Term Loan   11/20/2019   $1,083,629   $(21,673) 

AEG Holding Company, Inc.

  Revolver   11/20/2023   $216,726   $(4,335) 

American Physician Partners LLC

  Delayed Draw Term Loan   01/29/2020   $745,925   $(11,189) 

American Physician Partners LLC

  Revolver   12/21/2021   $333,002   $(4,995) 

Analogic Corporation

  Revolver   06/22/2023   $286,957   $(5,739) 

Avetta, LLC

  Delayed Draw Term Loan   04/11/2020   $1,235,991   $(12,360) 

Avetta, LLC

  Revolver   04/10/2024   $494,396   $(9,888) 

Businesssolver.com, Inc.

  Delayed Draw Term Loan   05/15/2020   $239,412   $(4,788) 

Businesssolver.com, Inc.

  Revolver   05/15/2023   $258,824   $(5,176) 

Captain D’s, Inc.

  Revolver   12/15/2023   $113,781   $(1,138) 

Delaware Valley Management Holdings, Inc.

  Delayed Draw Term Loan   03/21/2021   $5,268,797   $(105,376) 

Delaware Valley Management Holdings, Inc.

  Revolver   03/21/2024   $526,880   $(10,538) 

Dillon Logistics, Inc.

  Revolver   12/11/2023   $171,675   $(3,433) 

Drilling Info Holdings, Inc.

  Delayed Draw Term Loan   07/30/2020   $10,831   $(54) 

E2open LLC

  Revolver   11/26/2024   $311,365   $(4,671) 

Edgewood Partners Holdings LLC

  Delayed Draw Term Loan   07/31/2019   $1,694,263   $(16,943) 

Engage2Excel, Inc.

  Revolver   03/07/2023   $345,497   $(6,910) 

Exterro, Inc.

  Revolver   05/31/2024   $330,000   $(6,600) 

Finalsite Holdings, Inc.

  Revolver   09/25/2024   $253,142   $(3,797) 

Genesis Acquisition Co.

  Delayed Draw Term Loan   07/31/2020   $364,466   $(3,645) 

Genesis Acquisition Co.

  Revolver   07/31/2024   $202,400   $(4,048) 

GHA Buyer, Inc.

  Delayed Draw Term Loan   06/20/2020   $675,044   $(13,501) 

GHA Buyer, Inc.

  Revolver   10/22/2023   $202,513   $(4,050) 

INH Buyer, Inc.

  Revolver   01/31/2024   $178,410   $(2,676) 

InSite Wireless Group, LLC

  Revolver   03/15/2023   $59,169   $(888) 

InSite Wireless Group, LLC

  Term Loan   03/15/2021   $1,311,586   $(19,674) 

Lucky Bucks, LLC

  Delayed Draw Term Loan   04/09/2020   $445,189   $(7,791) 

Maintech, Incorporated

  Revolver   12/28/2022   $121,000   $(1,815) 

Ministry Brands, LLC

  Delayed Draw Term Loan   12/02/2022   $732,131   $(3,661) 

Nuvei Technologies Corp.

  Delayed Draw Term Loan   03/28/2020   $156,095   $(1,561) 

Perforce Intermediate Holdings, LLC

  Revolver   12/28/2022   $670,352   $(3,352) 

Pinnacle Dermatology Management, LLC

  Delayed Draw Term Loan   05/18/2020   $1,920,537   $(38,411) 

Pinnacle Dermatology Management, LLC

  Revolver   05/18/2023   $468,424   $(9,369) 

Platinum Dermatology Partners, LLC

  General Delayed Draw Term Loan Commitment   07/03/2019   $568,394   $(11,368) 

Platinum Dermatology Partners, LLC

  Revolver   01/03/2023   $109,690   $(2,194) 

Qualifacts Corporation

  Revolver   12/12/2022   $300,000   $(1,500) 

RxBenefits, Inc.

  Revolver   03/29/2024   $575,767   $(5,758) 

Selligent, Inc.

  Revolver   11/03/2023   $200,660   $(3,010) 

Single Digits, Inc.

  Delayed Draw Term Loan   12/21/2020   $1,040,369   $(10,404) 

Single Digits, Inc.

  Revolver   12/21/2023   $416,148   $(4,162) 

Sirsi Corporation

  Revolver   03/15/2024   $830,612   $(12,459) 

Smile Brands, Inc.

  Delayed Draw Term Loan   10/12/2020   $477,339   $(4,773) 

Smile Brands, Inc.

  Revolver   10/12/2023   $161,378   $(1,614) 

Sugarcrm, Inc.

  Revolver   07/31/2024   $310,244   $(5,429) 

Summit Infrastructure Group, Inc.

  Delayed Draw Term Loan   03/15/2021   $1,125,756   $(22,515) 

Summit Infrastructure Group, Inc.

  Revolver   03/15/2024   $562,878   $(11,258) 

Swiftpage, Inc.

  Revolver   06/13/2023   $225,317   $(4,506) 

Symplr Software, Inc.

  Revolver   11/30/2023   $266,813   $(4,002) 

Theranest, LLC

  Delayed Draw Term Loan   07/23/2020   $2,785,714   $(41,786) 

Theranest, LLC

  Revolver   07/23/2023   $428,571   $(8,571) 

Trade Supplies Acquisition, LLC

  Revolver   11/21/2023   $469,177   $(7,038) 

TRGRP Acquisition Corp.

  Revolver   11/01/2023   $333,333   $(6,667) 

Tropical Smoothie Café, LLC

  Revolver   09/24/2023   $96,435   $(964) 

Velocity Purchaser Corporation

  Revolver   12/01/2022   $193,237   $(1,932) 

Veriforce Holdings, LLC

  Revolver   07/13/2023   $135,190   $4,056 
      

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

      $33,041,431   $(521,899) 
      

 

 

   

 

 

 

Total

      $33,041,431   $(521,899) 
      

 

 

   

 

 

 

As of December 31, 2016.2018, ouroff-balance sheet arrangements consisted of the following:

As of September 30, 2017, we had $70,928,060 in total Capital Commitments from investors, all of which were unfunded.

Investment

Type

  

Facility

Type

  Commitment
Expiration Date (1)		   Unfunded
Commitment (2)		   Fair
Value (3)		 

1st Lien/Senior Secured Debt

        

AEG Holding Company, Inc.

  Delayed Draw Term Loan   11/20/2019   $1,083,629   $(21,673) 

AEG Holding Company, Inc.

  Revolver   11/20/2023   $216,726   $(4,335) 

American Physician Partners LLC

  Delayed Draw Term Loan   01/29/2020   $3,212,948   $(48,194) 

American Physician Partners LLC

  Revolver   12/21/2021   $347,466   $(5,212) 

Analogic Corporation

  Revolver   06/22/2023   $286,957   $(5,739) 

Avetta, LLC

  Delayed Draw Term Loan   04/11/2020   $1,235,991   $(12,360) 

Avetta, LLC

  Revolver   04/10/2024   $494,396   $(4,944) 

Businesssolver.com, Inc.

  Delayed Draw Term Loan   05/15/2020   $291,176   $(5,824) 

Businesssolver.com, Inc.

  Revolver   05/15/2023   $194,118   $(3,882) 

Caliper Software, Inc.

  Revolver   11/30/2023   $281,636   $(4,225) 

Captain D’s, Inc.

  Revolver   12/15/2023   $112,481   $(1,125) 

Dillon Logistics, Inc.

  Revolver   12/11/2023   $225,550   $(3,404) 

Drilling Info Holdings, Inc.

  Delayed Draw Term Loan   07/30/2020   $233,718   $(1,461) 

E2open LLC

  Delayed Draw Term Loan   05/26/2020   $736,677   $(11,050) 

E2open LLC

  Revolver   11/26/2024   $311,365   $(4,670) 

Engage2Excel, Inc.

  Revolver   03/07/2023   $270,115   $(5,402) 

Exterro, Inc.

  Revolver   05/31/2024   $330,000   $(6,600) 

Finalsite Holdings, Inc.

  Revolver   09/25/2024   $253,142   $(4,430) 

Genesis Acquisition Co.

  Delayed Draw Term Loan   07/31/2020   $364,466   $(3,645) 

Genesis Acquisition Co.

  Revolver   07/31/2024   $202,400   $(4,048) 

GHA Buyer, Inc.

  Delayed Draw Term Loan   06/20/2020   $675,044   $(13,501) 

GHA Buyer, Inc.

  Revolver   10/22/2023   $202,513   $(4,050) 

InSite Wireless Group, LLC

  Revolver   03/15/2023   $197,231   $(2,958) 

InSite Wireless Group, LLC

  Term Loan   03/15/2021   $1,311,586   $(19,674) 

Lucky Bucks, LLC

  Delayed Draw Term Loan   04/09/2020   $556,562   $(9,740) 

Maintech, Incorporated

  Revolver   12/28/2022   $60,500   $(908) 

Ministry Brands, LLC

  Delayed Draw Term Loan   12/02/2022   $947,111   $(4,736) 

Perforce Intermediate Holdings, LLC

  Revolver   12/28/2022   $591,549   $(5,915) 

Pinnacle Dermatology Management, LLC

  Delayed Draw Term Loan   05/18/2020   $1,920,536   $(38,411) 

Pinnacle Dermatology Management, LLC

  Revolver   05/18/2023   $468,424   $(9,368) 

Pivotal Payments, Inc.

  Delayed Draw Term Loan   03/28/2020   $183,152   $(1,832) 

Platinum Dermatology Partners, LLC

  General Delayed Draw Term Loan Commitment   07/03/2019   $568,394   $(11,368) 

Platinum Dermatology Partners, LLC

  Revolver   01/03/2023   $498,592   $(9,972) 

Qualifacts Corporation

  Revolver   12/12/2022   $300,000   $(1,500) 

Selligent, Inc.

  Revolver   11/03/2023   $200,660   $(3,010) 

Single Digits, Inc.

  Delayed Draw Term Loan   12/21/2020   $1,040,369   $(10,404) 

Single Digits, Inc.

  Revolver   12/21/2023   $416,148   $(4,161) 

Smile Brands, Inc.

  Delayed Draw Term Loan   10/12/2020   $477,340   $(4,773) 

Smile Brands, Inc.

  Revolver   10/12/2023   $212,340   $(2,123) 

Sugarcrm, Inc.

  Revolver   07/31/2024   $232,683   $(4,072) 

Swiftpage, Inc.

  Revolver   06/13/2023   $225,317   $(4,506) 

Theranest, LLC

  Delayed Draw Term Loan   07/23/2020   $2,785,713   $(41,786) 

Theranest, LLC

  Revolver   07/23/2023   $428,571   $(8,571) 

Trade Supplies Acquisition, LLC

  Revolver   11/21/2023   $469,177   $(7,038) 

TRGRP Acquisition Corp.

  Revolver   11/01/2023   $333,333   $(6,667) 

Tropical Smoothie Café, LLC

  Revolver   09/24/2023   $96,435   $(964) 

Velocity Purchaser Corporation

  Revolver   12/01/2022   $193,237   $(3,865) 

Veriforce Holdings, LLC

  Revolver   07/13/2023   $281,646   $(4,929) 
      

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

      $26,559,120   $(403,025) 
      

 

 

   

 

 

 

Total

      $26,559,120   $(403,025) 
      

 

 

   

 

 

 

(1)

Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

(2)

Net of capitalized fees, expenses and original issue discount (“OID”).

(3)

A negative fair value was reflected as investments, at fair value in the consolidated statements of assets and liabilities. The negative fair value is the result of the capitalized discount on the loan.

Co-investment Exemptive Order

On October 11, 2016,August 6, 2018, the SEC granted us relief sought in ana new exemptive application that expands our abilitytheco-investment exemptive relief previously granted to us in October 2016 to allow us toco-invest in portfolio companies with certain of our affiliates managed by the Adviser (“Affiliated Funds”)Funds in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”).the Order. Pursuant to the Order, we are permitted toco-invest with Affiliated Funds, which the new exemptive relief defines to include affiliated managed accounts, if, among other things, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with aco-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies. We intend toco-invest with Affiliated Funds, subject to the conditions included in the Order.

Credit Facilities

HSBC Credit Facility Agreement

On November 15, 2017, the Fund entered into a credit agreement (the “HSBC Credit Agreement”) to establish a revolving credit facility (the “HSBC Credit Facility”) with HSBC Bank USA, National Association (“HSBC”) as administrative agent (the “Administrative Agent”) and any other lender that becomes a party to the HSBC Credit Facility in accordance with the terms of the HSBC Credit Facility, as lenders.

The initial maximum principal amount (the “Maximum Commitment”) of the HSBC Credit Facility is $30 million. The Maximum Commitment amount may be increased upon request of the Fund to an amount agreed upon by the Fund and the Administrative Agent. Such increase may be done in one or more requested increases, each in a minimum amount of $10 million and in $5 million increments thereof, or such lesser amount to be determined by the Administrative Agent, subject to certain terms and conditions. So long as no request for borrowing is outstanding, the Fund may terminate the Lenders’ commitments (the “Commitments”) or reduce the Maximum Commitments by giving prior irrevocable written notice to the Administrative Agent. Any reduction of the Maximum Commitments shall be in an amount equal to $10 million or multiples thereof; and in no event shall a reduction by the Fund reduce the Commitments to $35 million or less (in each case, except for a termination of all the Commitments). Proceeds under the HSBC Credit Facility may be used for any purpose permitted under our organizational documents, including general corporate purposes such as the making of investments.

Borrowings under the HSBC Credit Facility bear interest, at the Fund’s election at the time of drawdown, at a rate per annum equal to (i) with respect to LIBOR Rate Loans, Adjusted LIBOR (as defined in the HSBC Credit Agreement) for the applicable Interest Period; and (ii) with respect to Reference Rate Loans (as defined in the HSBC Credit Agreement), the greatest of: (i) the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate, (ii) the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, plus two hundred basis points (2.00%), provided that if such rate is not so published for any day that is a Business Day, the average of the quotation for such day on such transactions received by the Administrative Agent from three (3) Federal funds brokers of recognized standing selected by the Administrative Agent and, upon request of Borrowers, with notice of such quotations to the Borrowers and (iii) except during any period of time during which LIBOR isunavailable, one-month Adjusted LIBOR plus two hundred basis points (2.00%). The Fund will also pay an unused commitment fee of 35 basis points (0.35%) on any unused commitments.

The HSBC Credit Facility will mature on November 13, 2019, subject to the Fund’s option to extend the maturity date for up to one additional term not longer than 364 days, subject to the following conditions: (i) each of the Lenders and the Administrative Agent consents to the extension in their sole discretion; (ii) the Fund has paid an extension fee to the Administrative Agent for the benefit of the extending Lenders consenting to such extension in an amount agreed to by the Administrative Agent and the Borrowers at the time of the extension and as set forth in the applicable extension request; (iii) no potential default or event of default has occurred and is continuing on the date on which notice is given in accordance with the following clause (iv) or on November 13, 2019; and (iv) the Fund has delivered an extension request to the Administrative Agent not more than one hundred twenty (120) days or less than forty-five (45) days prior to November 13, 2019. On December 19, 2018, the Fund increased the maximum commitment amount on a temporary basis through February 7, 2019 from $100 million to $125 million. On January 31, 2019, the Fund reduced its maximum available borrowings under the HSBC Credit Facility from $125 million to $50 million by giving notice to the Administrative Agent.

Subject to certain terms and conditions, the HSBC Credit Facility is secured by a first priority, exclusive, perfected security interest and lien in and on all of the Fund’s right, title and interest, in, to and under, whether now existing or hereafter acquired or arising and wherever located (a) all of the Fund’s rights, titles, interests and privileges in and to the Capital Commitments, and the Capital Contributions made by its Investors, and all other rights, titles, interests, powers and privileges related to, appurtenant to or arising out of the Capital Commitments; (b) all of the Fund’s rights, titles, interests, remedies, and privileges under the Constituent Documents (i) to issue and enforce Capital Calls and Pending Capital Calls, (ii) to receive and enforce Capital Contributions and (iii) relating to Capital Calls, Pending Capital Calls, Capital Commitments or Capital Contributions; (c) all proceeds of any and all of the foregoing.

The HSBC Credit Facility contains customary covenants and events of default (with customary cure and notice provisions).

As of March 31, 2019, we had $12,250,000 outstanding on the HSBC Credit Facility and we were in compliance with the terms of the HSBC Credit Facility. As of December 31, 2018, we had $88,200,000 outstanding on the HSBC Credit Facility and we were in compliance with the terms of the HSBC Credit Facility. We intend to continue to utilize the HSBC Credit Facility on a revolving basis to fund investments and for other general corporate purposes.

For the three months ended March 31, 2019 and 2018, the components of interest expense related to the HSBC Credit Facility were as follows:

   For the Three Months Ended March 31, 
   2019   2018 

Borrowing interest expense

  $303,967   $61,683 

Commitment fees

  $42,041  $20,482

Amortization of financing costs

  $36,593  $67,636
  

 

 

   

 

 

 

Total interest and debt financing expenses

  $382,601   $149,801 
  

 

 

   

 

 

 

In July 2017, the head of the United Kingdom Financial Conduct Authority announced the intention to phase out the use of LIBOR by the end of 2021. Because the statements made by the head of the United Kingdom Financial Conduct Authority are recent in nature, there is no definitive information regarding the future of LIBOR or of any particular replacement index rate. As such, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined.

Barclays Credit Facility Agreement

On December 19, 2018, the Fund formed AB PCIC Funding I LLC, an indirectly wholly-owned Delaware limited liability company (“ABPCIC Funding”), the primary purpose of which is to function as the Fund’s special purpose, bankruptcy remote, financing subsidiary in connection with a credit agreement (the “Barclays Credit Agreement,” together with all ancillary documents thereto, the “Barclays Credit Facility”) with Barclays Bank PLC, New York Branch (“Barclays”) as facility agent (in such capacity, the “Facility Agent”) and U.S. Bank National Association (“U.S. Bank”) as collateral agent (in such capacity, the “Collateral Agent”), collateral administrator (in such capacity, the “Collateral Administrator”) and custodian (in such capacity, the “Custodian”) providing for borrowings in an aggregate amount up to $150,000,000 collateralized with certain assets sold to ABPCIC Funding by the Fund (the “Collateral”). The Fund has been appointed as the Designated Manager of ABPCIC Funding and as such has full and exclusive control of ABPCIC Funding’s business and makes all decisions affecting its affairs (except with respect to certain material actions). On January 30, 2019, ABPCIC Funding entered into the Barclays Credit Agreement. Concurrently with the closing of the Barclays Credit Agreement, the Fund contributed and/or sold certain assets to ABPCIC Funding pursuant to a transfer agreement (the “Transfer Agreement”), by and between the Fund as seller and ABPCIC Funding as buyer. The Fund expects to continue to contribute and/or sell assets to ABPCIC Funding pursuant to the Transfer Agreement in the future.

All of the collateral pledged to lenders by ABPCIC Funding under the Barclays Credit Facility is held in the custody of the Custodian under an Account Control Agreement by and among ABPCIC Funding, the Collateral Agent and the Custodian. The Collateral Administrator will maintain and perform certain collateral administration services with respect to the collateral pursuant to a collateral administration agreement among ABPCIC Funding, the Adviser and the Collateral Administrator. Borrowings under the Barclays Credit Facility are secured by all of the assets held by ABPCIC Funding. Pursuant to a collateral management agreement (the “Collateral Management Agreement”) by and between ABPCIC Funding and the Adviser as collateral manager, the Adviser will perform certain duties with respect to the purchase and management of the assets securing the Barclays Credit Facility. The Adviser has elected to waive any fees that would otherwise be payable under the Barclays Credit Facility and the Collateral Management Agreement. ABPCIC Funding will reimburse the expenses incurred by the Adviser in the performance of its obligations under the Collateral Management Agreement other than any ordinary overhead expenses, which shall not be reimbursed.

The Barclays Credit Facility provides for borrowings in an aggregate amount up to $150 million. Borrowings under the Barclays Credit Facility will bear interest paid on an annual adjusted London interbank offered rate for the relevant interest period, plus an applicable spread of 2.25%. ABPCIC Funding will also pay an unused commitment fee of .50% and the commitment will expire on July 30, 2020. Interest is paid quarterly in arrears. Any amounts borrowed under the Barclay’s Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on the earlier of (i) January 20, 2029, (ii) the date on which ABPCIC Funding issues collateralized loan obligation securities in a transaction for which the sole arranger is Barclays (or an affiliate thereof) or (iii) upon certain other events which result in accelerated maturity under the Barclays Credit Facility. Borrowing under the Barclays Credit Facility is subject to certain restrictions contained in the 1940 Act.

As of March 31, 2019, we had $129,750,000 outstanding on the Barclays Credit Facility and we were in compliance with the terms of the Barclays Credit Facility. We intend to continue to utilize the Barclays Credit Facility to fund investments and for other general corporate purposes.

For the three months ended March 31, 2019 and 2018, the components of interest expense related to the Barclays Credit Facility were as follows:

   For the Three Months Ended March 31, 
   2019   2018 

Borrowing interest expense

  $883,033   $—  

Commitment fees

  $37,214   $—  

Amortization of financing costs

  $106,304   $—  
  

 

 

   

Total interest and debt financing expenses

  $1,026,551   $—  

Borrowings of ABPCIC Funding will be considered borrowings by the Fund for purposes of complying with the asset coverage requirements under the 1940 Act applicable to business development companies. The obligations of ABPCIC Funding under the Barclays Credit Facility arenon-recourse to the Fund.

In accordance with applicable SEC staff guidance and interpretations, as a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, is at least 1.5 to 1 after such borrowing. As of March 31, 2019, our asset coverage ratio was 1.61 to 1. As of December 31, 2018, our asset coverage ratio was 1.72 to 1. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions.

In the future, we may also securitize or finance a portion of our investments with a special purpose vehicle. If we undertake a securitization transaction, we will consolidate our allocable portion of the debt of any securitization subsidiary on our consolidated financial statements, and include such debt in our calculation of the asset coverage test, if and to the extent required pursuant to the guidance of the staff of the SEC.

Asset Coverage

In accordance with the 1940 Act, the Fund has historically only been allowed to borrow amounts such that its “asset coverage,” as defined in the 1940 Act, is at least 200% after such borrowing, permitting the Fund to borrow up to one dollar for investment purposes for every one dollar of investor equity. “Asset coverage” generally refers to a company’s total assets, less all liabilities and indebtedness not represented by “senior securities,” as defined in the 1940 Act, divided by total senior securities representing indebtedness and, if applicable, preferred stock. “Senior securities” for this purpose includes borrowings from banks or other lenders, debt securities and preferred stock.

On March 23, 2018, the SBCAA was signed into law. The SBCAA, among other things, modifies the applicable provisions of the 1940 Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a majority of the directors who are not interested persons of the BDC and who have no financial interest in the proposal). On July 5, 2018, the Board voted to approve the adoption of the reduced asset coverage ratio and separately recommended that Investors approve the reduced asset coverage requirements at the 2018 annual meeting of stockholders. On September 26, 2018, at the Fund’s 2018 annual meeting of stockholders, the Fund’s stockholders approved the reduction of the required minimum asset coverage ratio applicable to the Fund from 200% to 150%, which took effect on September 27, 2018. This reduction in the required minimum asset coverage ratio increases the amount of debt that the Fund is permitted to incur, permitting the Fund to borrow up to two dollars for investment purposes for every one dollar of investor equity.

As of March 31, 2019, and December 31, 2018, the Fund had total senior securities of $142,000,000 and $88,200,000, respectively, consisting of borrowings under the HSBC Credit Facility and the Barclays Credit Facility, and had asset coverage ratios of 161% and 172%, respectively.

Critical Accounting Policies

Valuation of Investments

We measure the value of our investments at fair value accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure, or “ASC Topic 820,” issued by the Financial Accounting Standards Board, (“FASB”).or “FASB.” Fair value is 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.

The audit committee of our Board (the “Audit Committee’Committee”) is also responsible for assisting our Board in valuing investments that are not publicly traded or for which current market values are not readily available. Investments for which market quotations are

readily available are valued using market quotations, which are generally obtained from independent pricing services, broker-dealers or market makers. With respect to portfolio investments for which market quotations are not readily available, our Board, with the assistance of the Adviser and its senior investment team and independent valuation firms, is responsible for determining in good faith the fair value in accordance with the valuation policy approved by our Board. If more than one valuation method is used to measure

fair value, the results are evaluated and weighted, as appropriate, considering the reasonableness of the range indicated by those results. We consider a range of fair values based upon the valuation techniques utilized and select the value within that range that was most representative of fair value based on current market conditions as well as other factors the Adviser’s senior investment team considers relevant.

Our Board will make this fair value determination on a quarterly basis and any other time when a decision regarding the fair value of the portfolio investments is required. A determination of fair value involves subjective

judgments and estimates and depends on the facts and circumstances. Due to the inherent uncertainty of determining the fair value of portfolio investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

ASC Topic 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. ASC Topic 820 also provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level within the hierarchy of information used in the valuation. In accordance with ASC Topic 820, these inputs are summarized in the three levels listed below:

 

Level 1—Valuations are based on quoted1 – Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.investments.

 

Level 2—Valuations are based on2 – Other significant observable inputs (including quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly and model-based valuation techniques for which all significant inputs are observable.similar investments, interest rates, prepayment speeds, credit risk, etc.).

 

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Level 3 assets and liabilities include financial instruments whose value is determined using pricing models incorporating significant– Significant unobservable inputs such as discounted cash flow models and other similar valuations techniques. The valuation of Level 3 assets and liabilities generally requires significant management judgment due to(including the inability to observe inputs to valuation.

In certain cases, the inputs used to measure fair value may fall into different levels ofFund’s own assumptions in determining the fair value hierarchy. In such cases, an investment’sof investments at the reporting date).

The level withinin the fair value hierarchy within which the fair value measurement is basedcategorized in its entirety is determined on the basis of the lowest level of observable input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. The assessment ofIf a fair value measurement uses price data vendors or observable market price quotations, that measurement is a Level 2 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, and considersconsidering factors specific to the investment.asset or liability.

Under ASC Topic 820,The determination of what constitutes “observable” requires significant judgment by the fair value measurement also assumesFund. The Fund considers observable data to be that the transaction to sell an asset occursmarket data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset, which may be a hypothetical market, and excludes transaction costs. The principal market for any asset is the market with the greatest volume and level of activity for such asset in which the reporting entity would or could sell or transfer the asset. In determining the principal market for an asset or liability under ASC Topic 820, it is assumed that the reporting entity has access to such market as of the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable and willing and able to transact.relevant market.

With respect to investments for which market quotations are not readily available, our Board will undertake a multi-step valuation process each quarter, as described below:

Our quarterly valuation process will begin with each portfolio company or investment being initially valued by the Adviser’s professionals that are responsible for the portfolio investment;

Preliminary valuation conclusions will then be documented and discussed with the Adviser’s senior investment team;

Our Audit Committee will then review these preliminary valuations;

At least once annually, the valuation for each portfolio investment will be reviewed by an independent valuation firm; and

Our Board will then discuss valuations and determine the fair value of each investment in our portfolio in good faith, based on the input of the Adviser, the respective independent valuation firms and the Audit Committee.

Because of the inherent uncertainty of valuation for all fair value investments and interests, the Board’s determination of fair value may differ from the values that would have been used had a ready market existed, or that could have been (or will be) realized in an actual sale, and such differences could be material.

The value of any investment on any valuation date is intended to represent the fair value of such investment on such date based upon the amount at which the investment could be exchanged between willing parties, other than in a forced liquidation sale, and reflects the Board’s determination of fair value using the methodology described herein. Any valuation of an investment may not reflect the actual amount received by the Fund upon the liquidation of such investment.

Our investments will be primarily loans made to middle-market companies. These investments are mostly considered Level 3 assets under ASC Topic 820 because there is not usually a known or accessible market or market indices for these types of debt instruments and, thus, the Adviser’s senior investment team must estimate the fair value of these investment securities based on models utilizing unobservable inputs.

SecurityInvestment Transactions, Realized/Unrealized Gains or Losses, and Income Recognition

SecurityInvestment transactions are recorded on a trade-date basis. We measure realized gains or losses from the repayment or sale of investments using the specific identificationidentified cost method. The amortized cost basis of investments represents the original cost adjusted for the accretion/amortization of discounts and premiums and upfront loan origination fees. We report changes in fair value of investments that are measured at fair value as a component of net change in unrealized appreciation (depreciation) on investments in the consolidated statement of operations.

Interest income, adjusted for amortization of market premium and accretion of market discount, is recorded on an accrual basis to the extent that we expect to collect such amounts. Original issue discount, principally representingInterest income on debt instruments is accrued and recognized for those issuers who are currently paying in full or expected to pay in full. For those issuers who are in default or expected to default, interest is not accrued and is only recognized when received. Interest income and expense include discounts accreted and premiums amortized on certain debt instruments as determined in good faith by the estimated fair value of detachable equity or warrants obtained in conjunction with our debt investments,Adviser and market discount or premium are capitalized and accreted or amortized into interest income over the life of the respective securitycalculated using the effective interest method. Loan origination fees, received in connection withoriginal issue discounts and market discounts or premiums are capitalized as part of the closing of investments are reported as unearned income which is included as amortizedunderlying cost of the investment; the unearned income from such fees isinvestments and accreted or amortized over the contractual life of the loan based on the effective interest method. Upon prepayment of a loan or debt security, any prepayment penalties, unamortized loan origination fees, and unamortized market discounts are recordedinvestment as interest income.

Management and Incentive Fees

We will accrue for the base management fee and incentive fee. The accrual for incentive fee includes the recognition of incentive fee on unrealized capital gains, even though such incentive fee is neither earned nor payable to the Adviser until the gains are both realized and in excess of unrealized depreciation on investments. The amount of capital gains incentive fee expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to the Adviser in the event of a complete liquidation of the Fund’s portfolio as of period end and the termination of the Advisory Agreement on such date. Also, it should be noted that the capital gains incentive fee expense fluctuates with the Fund’s overall investment results.

Fund Expenses

For the three months ended March 31, 2019, the Fund incurred $2,698,387 of expenses in relation to professional fees, directors’ fees, management fees, incentive fees, insurance expenses, interest and credit facility expenses, offering costs, transfer agent fees, other fees, and administration and custodian fees, of which $156,418 was reimbursed by the Adviser and its affiliates on behalf of the Fund, and $63,171 of management fees and $76,072 of incentive fees were waived by the Adviser.

Federal Income Taxes

We intend to electhave elected to be treated, and intend to qualify annually, thereafter, as a RIC under Subchapter M of the Code as soon as practicable.Code. Generally, a RIC is not subject to federal income taxes on distributed income and gains if it distributes at least 90% of its net ordinary income and net short-term capital gains in excess of its net long-term capital losses, if any, to its stockholders. We intend to distribute sufficient dividends to maintain our RIC status each year and we do not anticipate paying any material federal income taxes in the future.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

As of September 30, 2017 and December 31, 2016, we had not commenced investment activities.

When investing commences, we will beWe are subject to financial market risks, including changes in interest rates. To the extent that we borrow money to make investments, our net investment income will beis dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of funds would increase, which may reduce our net investment income. Because we expect that most of our investments will bear interest at floating rates, we anticipate that an increase in interest rates would have a corresponding increase in our interest income that would likely offset any increase in our cost of funds and, thus, net investment income would not be reduced. However, there can be no assurance that a significant change in market interest rates will not have an adverse effect on our net investment income.

We will generally invest in illiquid loans and securities including debt and equity securities of middle-market companies. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by the Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

Assuming that the consolidated statement of assets and liabilities as of March 31, 2019, were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates.

Change in Interest Rates

  Increase (Decrease) in
Interest Income		   Increase (Decrease) in
Interest Expense		   Net Increase (Decrease) in
Net Investment Income		 

Down 25 basis points

  $(491,744)   $(355,000)   $(136,744) 

Up 100 basis points

   1,966,978    1,420,000    546,978 

Up 200 basis points

   3,933,956    2,840,000    1,093,956 

Up 300 basis points

   5,900,934    4,260,000    1,640,934 

In addition, although we do not currently intend to make investments that are denominated in a foreign currency, to the extent we do, we will be subject to risks associated with changes in currency exchange rates. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved.

We may hedge against interest rate and currency exchange rate fluctuations by using standard hedging instruments such as futures, options 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 our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates.

Item 4.

Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule13a-15 under the Exchange Act). Based on that evaluation, our President and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Exchange Act.

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we 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. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. 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

As of September 30, 2017,In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report onForm 10-K for the fiscal year ended December 31, 2018, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report onForm 10-K are not the only risks we face. Additional risks and uncertainties are not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. During the three months ended March 31, 2019, there have been no material changes from the risk factors set forth in our Annual Report onForm10-K for the year ended December 31, 2016.2018.

The Small Business Credit Availability Act allows us to incur additional leverage, which may increase the risk of investing with us.

On March 23, 2018, the SBCAA was signed into law. The SBCAA, among other things, modifies the applicable provisions of the 1940 Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a majority of the directors who are not interested persons of the BDC and who have no financial interest in the proposal). On July 5, 2018, the Board voted to approve the adoption of the reduced asset coverage ratio and separately recommended that Investors approve the reduced asset coverage requirements at the 2018 annual meeting of stockholders. On September 26, 2018, the Fund’s stockholders voted to approve the adoption of the reduced asset coverage ratio, effective September 27, 2018.

Increased leverage could increase the risks associated with investing in the Fund. For example, if the value of the Fund’s assets decreases, although the asset base and expected revenues would be larger because increased leverage would permit the Fund to acquire additional assets, leverage will cause the Fund’s net asset value to decline more sharply than it otherwise would have without leverage or with lower leverage. Similarly, any decrease in the Fund’s revenue would cause its net income to decline more sharply, on a relative basis, than it would have if the Fund had not borrowed or had borrowed less (although, as noted above, the Fund’s asset base and expected revenues would likely be larger). However, since the Fund already uses leverage in optimizing its investment portfolio, there are no material new risks associated with increased leverage other than the amount of the leverage.

If the Fund’s asset coverage ratio falls below the required limit, the Fund will not be able to incur additional debt until it is able to comply with the asset coverage ratio. This could have a material adverse effect on the Fund’s operations, and the Fund may not be able to make distributions to stockholders. The actual amount of leverage that the Fund employs will depend on the Board’s and the Adviser’s assessment of market and other factors at the time of any proposed borrowing. The Fund currently anticipates being able to obtain sufficient credit on acceptable terms, although the Fund can make no assurance that this will be the case or that it will remain such in the future.

The following table illustrates the effect of leverage on returns from an investment in the shares of common stock assuming that we employ leverage such that our asset coverage equals (1) our actual asset coverage as of December 31, 2018 and (2) 150%, each at various annual returns, net of expenses and as of December 31, 2018.

The calculations in the tables below are hypothetical, and are provided for illustrative purposes only. Actual returns may be higher or lower than those appearing below.

 

Assumed Return on Our Portfolio (net of expenses)

   (10.00)%   (5.00)%   0.00%   5.00%   10.00% 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Corresponding net return to holders of common stock assuming actual asset coverage as of March 31, 2019(1)

   (36.3)%   (22.9)%   (9.5)%   3.8%   17.2% 

Corresponding net return to holders of common stock assuming 150% asset coverage(2)

   (41.4)%   (26.4)%   (11.4)%   3.6%   18.6% 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(1)

Assumes $233.2 million in total portfolio assets, $146.0 million in senior securities outstanding, $87.2 million in net assets, and an average cost of funds of 5.7%. Actual interest payments may be different.

(2)

Assumes $233.2 million in total portfolio assets, $155.5 million in senior securities outstanding, $77.7 million in net assets, and an average cost of funds of 5.7%. Actual interest payments may be different.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.Except as previously reported by the Fund on its current reports on Form8-K, we did not sell any securities during the period covered by this Quarterly Report that were not registered under the Securities Act.

 

Item 3.

Defaults Upon Senior Securities

None.

 

Item 4.

Mine Safety Disclosure

Not applicable.

 

Item 5.

Other Information

Not applicable.

 

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:

 

  3.1Articles of Incorporation(1)
  3.2Articles of Amendment(1)
  3.3Articles of Amendment and Restatement(3)
  3.4Bylaws(2)
10.1Investment Advisory Agreement between the Fund and the Adviser, dated July 27, 2017(3)
10.2License Agreement between the Fund and the Adviser, dated August 14, 2017(3)
10.3Form of Subscription Agreement*
10.4Expense Reimbursement Agreement, dated August 14, 2017(3)
10.5Administration Agreement, dated September 29, 2017(4)
10.6Custodian Agreement, dated September 29, 2017(4)
10.7Expense Support and Conditional Reimbursement Agreement, dated September 29, 2017(4)
10.8Dividend Reinvestment Plan, dated September 29, 2017(4)
31.1  Certification of Chief Executive Officer pursuant to Rule13a-14 of the Securities Exchange Act of 1934, as amended*
31.2  Certification of Chief Financial Officer pursuant to Rule13a-14 of the Securities Exchange Act of 1934, as amended*
32.1  Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*2002, as amended.

*
32.2Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

Filed herewith

(1)Previously filed as an exhibit to the Registration Statement on Form 10 (FileNo. 000-55640) filed with the SEC on April 8, 2016.
(2)Previously filed as an exhibit to the Registration Statement on Form 10 (FileNo. 000-55640) filed with the SEC on July 1, 2016.
(3)Previously filed as an exhibit to the Fund’s quarterly report on Form10-Q (FileNo. 814-01196) filed with the SEC on August 14, 2017.
(4)Previously filed as an exhibit to the Fund’s current report on Form8-K (File No.814-01196 filed with the SEC on September 29, 2017.
*Filed herewith

SIGNATURES

Pursuant to the requirements 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.

 

   AB PRIVATE CREDIT INVESTORS CORPORATION
Date: November 13, 2017May 15, 2019  By: 

/s/ J. Brent Humphries

   J. Brent Humphries
   President and Chief Executive Officer
   (Principal Executive Officer)
Date: November 13, 2017May 15, 2019  By: 

/s/ Wesley Raper

   Wesley Raper
   Chief Financial Officer and Treasurer
   (Principal Financial and Accounting Officer)