UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM10-Q

 

 

 

☒

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

For the quarterly period ended March 31, 20182019

or

☐

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

Commission file numbernumber:000-55660

 

 

Goldman Sachs Private Middle Market Credit LLC

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware 81-3233378

(State or Other Jurisdiction of

of Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

200 West Street, New York, New York 10282
(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (212)902-0300

Not Applicable

Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report.

 

 

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  X    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 the 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: X  Smaller reporting company: ☐
(Do not check if a smaller reporting company)

Emerging growth company:

 X        

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. X

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act).    YES   ☐    NO   X

Securities registered pursuant to Section 12(b) of the Act: None

The number of the registrant’s limited liability company common units outstanding as of May 3, 20189, 2019 was 5,921,027.9,894,349.

 

 

 

GOLDMAN SACHS PRIVATE MIDDLE MARKET CREDIT LLC

 

   

INDEX

  PAGE
PART I  FINANCIAL INFORMATION    4
ITEM 1.  Financial Statements    4
  Consolidated Statements of Financial Condition as of March 31, 20182019 (Unaudited) and December 31, 20172018    4
  Consolidated Statements of Operations for the three months ended March 31, 20182019 (Unaudited) and 20172018 (Unaudited)    5
  Consolidated Statements of Changes in Members’ Capital for the three months ended March 31, 20182019 (Unaudited) and 20172018 (Unaudited)    6
  Consolidated Statements of Cash Flows for the three months ended March 31, 20182019 (Unaudited) and 20172018 (Unaudited)    7
  Consolidated Schedules of Investments as of March 31, 20182019 (Unaudited) and December 31, 20172018    8
  Notes to the Consolidated Financial Statements (Unaudited)    1418
ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations    
33
38
ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk    5053
ITEM 4.  Controls and Procedures    5054
PART II  OTHER INFORMATION   55
ITEM 1.  Legal Proceedings    5155
ITEM 1A.  Risk Factors    5155
ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds    5255
ITEM 3.  Defaults Upon Senior Securities    5255
ITEM 4.  Mine Safety Disclosures    5255
ITEM 5.  Other Information    5255
ITEM 6.  Exhibits    5255
SIGNATURES   57

 

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “target,” “estimate,” “intend,” “continue” or “believe” or the negatives of, or other variations on, these terms or comparable terminology. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. Our forward-looking statements include information in this report regarding general domestic and global economic conditions, our future financing plans, our ability to operate as a business development company (“BDC”) and the expected performance of, and the yield on, our portfolio companies. There may be events in the future, however, that we are not able to predict accurately or control. The factors listed under “Risk Factors” in our Annual Report on Form10-K for the year ended December 31, 2017,2018, as well as any cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, results of operations and financial position. Any forward-looking statement made by us in this report speaks only as of the date of this report. Factors or events that could cause our actual results to differ, from our forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the U.S. Securities and Exchange Commission (the “SEC”), including annual reports on Form10-K, quarterly reports on Form10-Q and current reports on Form8-K. Under Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in periodic reports we file under the Exchange Act, such as this quarterly report on Form10-Q.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

 

our future operating results;

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets;

uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the European Union and China;

our business prospects and the prospects of our portfolio companies;

the impact of investments that we expect to make;

the impact of increased competition;

our contractual arrangements and relationships with third parties;

the dependence of our future success on the general economy and its impact on the industries in which we invest;

the ability of our current and prospective portfolio companies to achieve their objectives;

the relative and absolute performance of our investment adviser;

our expected financings and investments;

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

our ability to make distributions;

the adequacy of our cash resources and working capital;

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

the impact of future acquisitions and divestitures;

the effect of changes in tax laws and regulations and interpretations thereof;

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

actual and potential conflicts of interest with Goldman Sachs Asset Management, L.P. and its affiliates;

the ability of our investment adviser to attract and retain highly talented professionals;

the impact on our business from new or amended legislation or regulations; and

the availability of credit and/or our ability to access the equity and capital markets.markets; and

currency fluctuations, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars.

 

3

PART I. FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

Goldman Sachs Private Middle Market Credit LLC

Consolidated Statements of Financial Condition

(in thousands, except unit and per unit amounts)

 

  March 31, 2018
(unaudited)		 December 31, 2017  March 31, 2019
(unaudited)		 December 31, 2018
Assets      
Investments, at fair value      

Non-controlled/non-affiliated investments, at fair value (cost of $949,969 and $873,989, respectively)

  $951,684  $875,610 

Non-controlled affiliated investments, at fair value (cost of $15,099 and $0, respectively)

   14,965   – 
Investments in affiliated money market fund (cost of $18,415 and $1,313, respectively)   18,415  1,313 

Non-controlled/non-affiliated investments (cost of $1,452,265 and $1,369,835, respectively)

  $1,431,149  $1,359,919 

Non-controlled affiliated investments (cost of $38,222 and $38,199, respectively)

   39,907  39,442 
Investments in affiliated money market fund (cost of $11,501 and $0, respectively)   11,501   – 
Cash   12,924  8,220    29,944  25,548 
Receivable for investments sold   88  70 
Receivable for common units sold   1,127   –    3,701   – 
Interest and dividends receivable from non-controlled/affiliated investments and non-controlled/non-affiliated investments   5,018  5,189    8,216  7,127 
Deferred financing costs   4,612  5,015    4,404  3,991 
Unrealized appreciation on foreign currency forward contracts   199  105 
Other assets   153  2    186  307 
  

 

 

 

  

 

 

 

Total assets  $1,008,898  $895,349   $1,529,295  $1,436,509 
  

 

 

 

  

 

 

 

Liabilities      
Debt  $435,000  $383,500   $566,290  $574,462 
Interest and other debt expenses payable   3,795  2,014    7,623  6,577 
Management fees payable   1,937  1,675    3,221  2,910 
Incentive fees payable   8,607  5,864    19,577  17,180 
Payable for investments purchased   134   – 
Distribution payable   16,355  14,194    24,442  25,500 
Directors’ fees payable   84  5    90   – 
Accrued expenses and other liabilities   1,716  591    2,727  2,419 
  

 

 

 

  

 

 

 

Total liabilities  $467,628  $407,843   $623,970  $629,048 
  

 

 

 

  

 

 

 

Commitments and Contingencies (Note 7)   
Commitments and Contingencies (Note 8)   
Members’ Capital      
Preferred units (0 units issued and outstanding)  $–  $–   $–  $– 
Common units (5,581,529 and 5,023,428 units issued and outstanding as of March 31, 2018 and December 31, 2017, respectively)   546,888  492,016 
Accumulated net realized gain (loss)   1,714  69 
Accumulated undistributed (distributions in excess of ) net investment income   (8,913)  (6,200) 
Net unrealized appreciation (depreciation) on investments   1,581  1,621 
Common units (9,660,149 and 8,515,171 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively)   943,699  833,956 
Distributable earnings   (38,374)  (26,495) 
  

 

 

 

  

 

 

 

TOTAL MEMBERS’ CAPITAL  $541,270  $487,506   $905,325  $807,461 
  

 

 

 

  

 

 

 

TOTAL LIABILITIES AND MEMBERS’ CAPITAL  $1,008,898  $895,349   $1,529,295  $1,436,509 
  

 

 

 

  

 

 

 

Net asset value per unit  $96.98  $97.05   $93.72  $94.83 

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

4

Goldman Sachs Private Middle Market Credit LLC

Consolidated Statements of Operations

(in thousands, except unit and per unit amounts)

(Unaudited)

 

  For the Three Months Ended
  For the three
months ended
March 31, 2018		 For the three
months ended
March 31, 2017		  March 31, 2019 March 31, 2018
Investment Income:      
Fromnon-controlled/non-affiliated investments:      

Interest income

  $24,770  $6,772   $36,443  $24,770 

Other income

   326  158    483  326 
  

 

 

 

  

 

 

 

Total investment income fromnon-controlled/non-affiliated investments

   25,096  6,930    36,926  25,096 
Fromnon-controlled affiliated investments:      

Interest income

   3   –    705  3 

Dividend income

   39  7    88  39 

Other income

   7   – 
  

 

 

 

  

 

 

 

Total investment income fromnon-controlled affiliated investments

   42  7    800  42 
  

 

 

 

  

 

 

 

Total investment income  $25,138  $6,937   $37,726  $25,138 
  

 

 

 

  

 

 

 

Expenses:      

Interest and other debt expenses

  $5,869  $970   $9,180  $5,869 

Management fees

   1,937  787    3,221  1,937 

Incentive fees

   2,743   –    2,397  2,743 

Offering costs

   –  422 

Professional fees

   512  205    317  512 

Administration, custodian and transfer agent fees

   211  98    299  211 

Directors’ fees

   80  29    90  80 

Other expenses

   144  91    110  144 
  

 

 

 

  

 

 

 

Total expenses  $11,496  $2,602   $15,614  $11,496 
  

 

 

 

  

 

 

 

NET INVESTMENT INCOME (LOSS)  $13,642  $4,335 
NET INVESTMENT INCOME  $22,112  $13,642 
  

 

 

 

  

 

 

 

Net realized and unrealized gains (losses) on investment transactions:   
Net realized and unrealized gains (losses):   
Net realized gain (loss) from:      

Non-controlled/non-affiliated investments

  $2,317  $–   $(2)  $2,317 

Foreign currency forward contracts

   10   – 

Foreign currency transactions

   1   – 
Net change in unrealized appreciation (depreciation) from:      

Noncontrolled/non-affiliated investments

   94  695 

Non controlled affiliated investments

   (134)   – 

Non-controlled/non-affiliated investments

   (11,200)  94 

Non-controlled affiliated investments

   442  (134) 

Foreign currency forward contracts

   94   – 

Foreign currency translations

   1,217   – 
  

 

 

 

  

 

 

 

Net realized and unrealized gains (losses)  $2,277  $695   $(9,438)  $2,277 
  

 

 

 

  

 

 

 

Provision for taxes on realized gain on investments

  $(672)  $– 

(Provision) benefit for taxes on realized gain/loss on investments

  $–  $(672) 

(Provision) benefit for taxes on unrealized appreciation/depreciation on investments

   (111)   – 
  

 

 

 

  

 

 

 

NET INCREASE (DECREASE) IN MEMBERS’ CAPITAL RESULTING FROM OPERATIONS  $15,247  $5,030   $12,563  $15,247 
  

 

 

 

  

 

 

 

Net investment income (loss) per unit (basic and diluted)

  $2.63  $2.02 

Net investment income per unit (basic and diluted)

  $2.51  $2.63 

Earnings (loss) per unit (basic and diluted)

  $2.94  $2.35   $1.42  $2.94 

Weighted average units outstanding

   5,178,886  2,142,978    8,826,360  5,178,886 

Distribution declared per unit

  $2.93  $2.02 

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

5

Goldman Sachs Private Middle Market Credit LLC

Consolidated Statements of Changes in Members’ Capital

(in thousands, except unit and per unit amounts)

(Unaudited)

 

  For the Three Months Ended
  For the three
months ended
March 31, 2018		 For the three
months ended
March 31, 2017		  March 31, 2019 March 31, 2018
Increase (decrease) in Members’ Capital resulting from operations:      

Net investment income (loss)

  $13,642  $4,335 

Net investment income

  $22,112  $13,642 

Net realized gain (loss) on investments

   2,317   –    9  2,317 

Net change in unrealized appreciation (depreciation) on investments

   (40)  695    (9,447)  (40) 

Provision for taxes on realized gain on investments

   (672)   – 

(Provision) benefit for taxes on realized gain/loss on investments

   –  (672) 

(Provision) benefit for unrealized appreciation/depreciation on investments

   (111)   – 
  

 

 

 

  

 

 

 

Net increase (decrease) in Members’ Capital resulting from operations  $15,247  $5,030   $12,563  $15,247 
  

 

 

 

  

 

 

 

Distributions to unitholders from:   

Net investment income

  $(16,355)  $(4,327) 
Distributions to Unitholders from:   

Distributable earnings

  $(24,442)  $(16,355) 
  

 

 

 

  

 

 

 

Total distributions to unitholders  $(16,355)  $(4,327) 
Total distributions to Unitholders  $(24,442)  $(16,355) 
  

 

 

 

  

 

 

 

Capital transactions:      

Issuance of units (558,101 and 0 units, respectively)

  $54,872  $– 
   

Issuance of units (1,144,978 and 558,101 units, respectively)

  $109,743  $54,872 
  

 

 

 

  

 

 

 

Net increase in Members’ Capital resulting from capital transactions  $54,872  $–   $109,743  $54,872 
  

 

 

 

  

 

 

 

TOTAL INCREASE (DECREASE) IN MEMBERS’ CAPITAL  $53,764  $703   $97,864  $53,764 
  

 

 

 

  

 

 

 

Members’ Capital at beginning of period  $487,506  $209,441   $807,461  $487,506 
  

 

 

 

  

 

 

 

Members’ Capital at end of period  $541,270  $210,144   $905,325  $541,270 
  

 

 

 

  

 

 

 

Accumulated undistributed (distributions in excess of) net investment income

  $(8,913)  $(326) 
  

 

 

 

Distribution declared per unit

  $2.53  $2.93 

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

6

Goldman Sachs Private Middle Market Credit LLC

Consolidated Statements of Cash Flows

(in thousands, except unit and per unit amounts)

(Unaudited)

 

  For the Three Months Ended
  For the three
months ended
March 31, 2018		 For the three
months ended
March 31, 2017		  March 31, 2019 March 31, 2018
Cash flows from operating activities:      
Net increase (decrease) in Members’ Capital resulting from operations:  $15,247  $5,030   $12,563  $15,247 

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

      

Purchases of investments

   (139,782)  (152,715)    (135,632)  (139,782) 

Payment-in-kind

   –   – 

Payment-in-kind capitalized

   (306)   – 

Investments in affiliated money market fund, net

   (17,102)  73,956    (11,501)  (17,102) 

Proceeds from sales of investments and principal repayments

   52,499  3,935    55,213  52,499 

Net realized (gain) loss on investments

   (2,317)   –    2  (2,317) 

Net change in unrealized (appreciation) depreciation on investments

   40  (695)    10,758  40 

Net change in unrealized (appreciation) depreciation on foreign currency forward contracts and transactions

   (82)   – 

Amortization of premium and accretion of discount, net

   (1,479)  (172)    (1,732)  (1,479) 

Amortization of deferred financing costs

   517  248    469  517 

Amortization of deferred offering costs

   –  422 
Increase (decrease) in operating assets and liabilities:      

(Increase) decrease in receivable for fund units sold

   (1,127)   – 

(Increase) decrease in receivable for investments sold

   (18)   – 

(Increase) decrease in receivable for common units sold

   (3,701)  (1,127) 

(Increase) decrease in interest and dividends receivable

   171  (366)    (1,089)  171 

(Increase) decrease in other assets

   (151)  (50)    121  (151) 

Increase (decrease) in interest and other debt expenses payable

   1,667  206    1,006  1,667 

Increase (decrease) in management fees payable

   262  89    311  262 

Increase (decrease) in incentive fees payable

   2,743   –    2,397  2,743 

Increase (decrease) in payable for investments purchased

   134   – 

Increase (decrease) in accrued organization costs

   –  (10) 

Increase (decrease) in investments purchased payable

   –  134 

Increase (decrease) in directors’ fees payable

   79  29    90  79 

Increase (decrease) in accrued expenses and other liabilities

   1,125  19    308  1,125 
  

 

 

 

  

 

 

 

Net cash provided by (used for) operating activities  $(87,474)  $(70,074)   $(70,823)  $(87,474) 
  

 

 

 

  

 

 

 

Cash flows from financing activities:      

Proceeds from issuance of common units

  $54,872  $–   $109,743  $54,872 

Offering costs paid

   –  (242) 

Distributions paid

   (14,194)  (2,998)    (25,500)  (14,194) 

Financing costs paid

   –  (241)    (840)   – 

Borrowings on debt

   85,500  174,000    104,828  85,500 

Repayments of debt

   (34,000)  (98,500)    (113,000)  (34,000) 
  

 

 

 

  

 

 

 

Net cash provided by (used for) financing activities  $92,178  $72,019   $75,231  $92,178 
  

 

 

 

  

 

 

 

Net increase (decrease) in cash   4,704  1,945    4,408  4,704 
Effect of foreign exchange rate changes on cash and cash equivalents   (12)   – 
Cash, beginning of period   8,220  3,863    25,548  8,220 
  

 

 

 

  

 

 

 

Cash, end of period  $12,924  $5,808   $29,944  $12,924 
  

 

 

 

  

 

 

 

Supplemental andnon-cash financing activities      
Interest expense paid  $3,460  $361   $7,533  $3,460 
Accrued but unpaid deferred financing and debt issuance costs  $774  $–   $109  $774 
Accrued but unpaid offering costs  $–  $22 
Accrued but unpaid distributions  $16,355  $4,327   $24,442  $16,355 

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

7

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of March 31, 20182019

(in thousands, except unit and per unit amounts)

(Unaudited)

 

Portfolio Company Industry Interest Rate (+) Reference Rate and
Spread (++)		 Maturity Par Amount  Cost  Fair Value 
Investments at Fair Value– 178.59% # 
Corporate Debt– 177.08% 
1st Lien/Senior Secured Debt– 57.69% 
Bullhorn, Inc.(1) (2) Internet Software & Services 8.64% L + 6.75%; 1.00% Floor 11/21/2022 $18,375  $18,197  $18,192 
Bullhorn, Inc.(1) (2) (3) Internet Software & Services 8.62% L + 6.75%; 1.00% Floor 11/21/2022  6,352   3,794   3,779 
Bullhorn, Inc.(1) (2) (3) Internet Software & Services 8.64% L + 6.75%; 1.00% Floor 11/21/2022  952   71   79 
Clinical Supplies Management Holdings, Inc.(2) (4) Containers & Packaging 9.76% L + 7.75%; 1.00% Floor 10/12/2021  18,625   18,337   18,346 
Clinical Supplies Management Holdings, Inc.(2) (4) Containers & Packaging 9.46% L + 7.75%; 1.00% Floor 10/12/2021  5,234   5,154   5,155 
Clinical Supplies Management Holdings, Inc.(2) (3) (4) (5) Containers & Packaging  L + 7.75%; 1.00% Floor 10/12/2021  2,000   (29)   (30) 
Collaborative Imaging,
LLC^^^ (1) (4)		 Health Care Providers & Services 8.39% L + 6.50%; 1.00% Floor 03/28/2025  13,400   13,199   13,065 
Continuum Managed Services LLC(1) (2) (4) IT Services 10.64% L + 8.75%; 1.00% Floor 06/08/2023  31,611   30,829   30,900 
Continuum Managed Services LLC(1) (2) (3) (4) (5) IT Services  L + 8.75%; 1.00% Floor 06/08/2023  2,658   (62)   (60) 
Continuum Managed Services LLC(1) (2) (3) (4) (5) IT Services  L + 8.75%; 1.00% Floor 06/08/2022  3,280   (76)   (74) 
Dade Paper & Bag, LLC(1) (2) (4) Distributors 9.29% L + 7.50%; 1.00% Floor 06/10/2024  16,277   15,979   16,033 
Dade Paper & Bag, LLC(1) (2) (4) Distributors 8.89% L + 7.00%; 1.00% Floor 06/10/2024  2,076   2,056   1,998 
Datacor Holdings, Inc.(2) (4) Chemicals 9.50%  08/12/2022  14,000   13,780   13,790 
Datto, Inc.(1) (2) (4) IT Services 9.72% L + 8.00%; 1.00% Floor 12/07/2022  53,640   52,623   52,567 
Datto, Inc.(1) (2) (3) (4) (5) IT Services  L + 8.00%; 1.00% Floor 12/07/2022  3,610   (68)   (72) 
FWR Holding Corporation(2) (4) Hotels, Restaurants & Leisure 7.66% L + 6.00%; 1.00% Floor 08/21/2023  13,637   13,323   13,330 
FWR Holding Corporation(2) (3) (4) Hotels, Restaurants & Leisure 7.62% L + 6.00%; 1.00% Floor 08/21/2023  4,410   1,620   1,621 
FWR Holding Corporation(2) (3) (4) Hotels, Restaurants & Leisure 9.24% P + 5.00% 08/21/2023  1,764   754   754 
Lithium Technologies,
Inc.(1) (2) (4)		 Internet Software & Services 9.79% L + 8.00%; 1.00% Floor 10/03/2022  31,800   31,139   31,164 
Lithium Technologies,
Inc.(1) (2) (3) (4) (5)		 Internet Software & Services  L + 8.00%; 1.00% Floor 10/03/2022  2,327   (47)   (47) 
Netvoyage Corporation(1) (2) (4) Software 11.38% L + 9.50%; 1.00% Floor 03/24/2022  13,832   13,596   13,590 
Netvoyage Corporation(1) (2) (3) (4) (5) Software  L + 9.50%; 1.00% Floor 03/24/2022  1,044   (17)   (18) 
Real Industry, Inc.(1) Capital Markets 11.00%  11/17/2018  1,054   1,024   1,016 
SF Home Décor, LLC(1) (2) (4) Household Products 11.81% L + 9.50%; 1.00% Floor 07/13/2022  30,415   29,599   29,807 
VRC Companies, LLC(1) (3) (4) (5) Commercial Services & Supplies  L + 6.50%; 1.00% Floor 03/31/2023  2,835   (28)   (28) 
Xactly Corporation(1) (2) (4) Internet Software & Services 9.14% L + 7.25%; 1.00% Floor 07/29/2022  34,390   33,761   33,702 
Xactly Corporation(1) (2) (3) (4) (5) Internet Software & Services  L + 7.25%; 1.00% Floor 07/29/2022  2,554   (45)   (51) 
Yasso, Inc.(1) (2) (4) Food Products 9.64% L + 7.75%; 1.00% Floor 03/23/2022  14,355   14,116   13,781 
      

 

 

  

 

 

 

Total 1st Lien/Senior Secured Debt

   312,579   312,289 
1stLien/Last-Out Unitranche (6) – 26.49% 
Intelligent Document Solutions, Inc.(1) (2) (4) Diversified Financial Services 8.30% L + 6.00%; 1.00% Floor 02/28/2024  30,800   29,806   29,799 
Intelligent Document Solutions, Inc.(1) (2) (3) (4) (5) Diversified Financial Services  L + 6.00%; 1.00% Floor 02/28/2024  21,100   (679)   (686) 
Smarsh, Inc.(1) (2) (4) Software 9.76% L + 7.88%; 1.00% Floor 03/31/2021  57,069   56,087   56,213 
Vantage Mobility International, LLC(2) (4) Health Care Equipment & Supplies 9.42% L + 7.75%; 1.00% Floor 09/09/2021  25,111   24,736   24,232 
You Fit, LLC(2) (4) Diversified Consumer Services 9.06% L + 6.75%; 1.00% Floor 01/04/2022  34,500   33,602   33,810 
      

 

 

  

 

 

 

Total 1stLien/Last-Out Unitranche

     143,552   143,368 
2nd Lien/Senior Secured Debt– 92.20% 
American Dental Partners,
Inc.(1) (2) (4)		 Health Care Providers & Services 10.80% L + 8.50%; 1.00% Floor 09/25/2023  13,600   13,302   13,294 
Association Member Benefits Advisors, LLC(2) (4) Insurance 10.62% L + 8.75%; 1.00% Floor 06/08/2023  28,000   27,524   27,510 
Country Fresh Holdings,
LLC(1) (2) (4)		 Food Products 10.49% L + 8.75%; 1.00% Floor 10/02/2023  13,800   13,547   13,248 
DuBois Chemicals, Inc.(1) (2) (4) Chemicals 9.82% L + 8.00%; 1.00% Floor 03/15/2025  20,000   19,590   19,800 
Portfolio Company Industry Interest Rate (+) 

Reference Rate and

Spread(+)

 Maturity Par Amount (++)  Cost  Fair Value 
Investments at Fair Value – 162.49% #

 

Corporate Debt – 159.68%

 

1st Lien/Senior Secured Debt – 91.74%

 

Accuity Delivery Systems, LLC^ (1) (2) (3) Health Care Providers & Services 9.61% L + 7.00%; 1.00% Floor 06/13/2023 $15,350  $14,948  $15,043 
Associations, Inc.(1) (2) (3) Real Estate Management & Development 9.80% L + 7.00% (incl. 3.00%

PIK); 1.00% Floor

 07/30/2024  17,943   17,741   17,764 
Associations, Inc.(1) (2) (3) (4) Real Estate Management & Development 9.75% L + 7.00% (incl. 3.00%
PIK); 1.00% Floor		 07/30/2024  4,450   2,114   2,119 
Associations, Inc.(1) (2) (3) (4) (5) Real Estate Management & Development  L + 4.00%; 1.00% Floor 07/30/2024  886   (10)   (9) 
Brillio, LLC(1) (2) IT Services 7.23% L + 4.75%; 1.00% Floor 02/06/2025  6,990   6,921   6,920 
Brillio, LLC(1) (2) (4) (5) IT Services  L + 4.75%; 1.00% Floor 02/06/2025  2,330   (23)   (23) 
Bullhorn, Inc.(1) (2) (3) Internet Software & Services 9.40% L + 6.75%; 1.00% Floor 11/21/2022  18,191   18,046   18,054 
Bullhorn, Inc.(1) (2) (3) Internet Software & Services 9.40% L + 6.75%; 1.00% Floor 11/21/2022  4,813   4,775   4,777 
Bullhorn, Inc.(1) (2) (3) Internet Software & Services 9.39% L + 6.75%; 1.00% Floor 11/21/2022  952   938   945 
Businessolver.com, Inc.(1) (2) (3) Health Care Technology 10.18% L + 7.50%; 1.00% Floor 05/15/2023  31,875   31,328   31,237 
Businessolver.com, Inc.(1) (2) (3) (4) Health Care Technology 10.18% L + 7.50%; 1.00% Floor 05/15/2023  4,781   1,776   1,737 
Businessolver.com, Inc.(1) (2) (3) (4) Health Care Technology 10.41% L + 7.50%; 1.00% Floor 05/15/2023  3,984   731   717 
Collaborative Imaging, LLC^^^ (1) (2) (3) Health Care Providers & Services 9.25% L + 6.50%; 1.00% Floor 03/28/2025  13,400   13,221   13,132 

Continuum Managed Services

LLC(1) (2) (3)

 IT Services 8.50% L + 6.00%; 1.00% Floor 06/08/2023  31,293   30,642   30,823 

Continuum Managed Services

LLC(1) (2) (3)

 IT Services 8.50% L + 6.00%; 1.00% Floor 06/08/2023  9,037   8,867   8,902 

Continuum Managed Services

LLC(1) (2) (3)

 IT Services 8.50% L + 6.00%; 1.00% Floor 06/08/2023  2,651   2,600   2,612 

Continuum Managed Services

LLC(1) (2) (3) (4) (5)

 IT Services  L + 6.00%; 1.00% Floor 06/08/2022  3,280   (58)   (49) 
Dade Paper & Bag, LLC(1) (2) (3) Distributors 10.00% L + 7.50%; 1.00% Floor 06/10/2024  16,113   15,855   15,912 
Dade Paper & Bag, LLC(1) (2) (3) Distributors 9.50% L + 7.00%; 1.00% Floor 06/10/2024  2,055   2,038   1,983 
Datacor Holdings, Inc.(2) (3) Chemicals 9.50%  08/12/2022  13,830   13,654   13,657 
Datto, Inc.(1) (2) (3) IT Services 10.49% L + 8.00%; 1.00% Floor 12/07/2022  55,556   54,705   55,556 
Datto, Inc.(1) (2) (3) (4) (5) IT Services  L + 8.00%; 1.00% Floor 12/07/2022  3,739   (55)   — 
DDS USA Holding, Inc.(1) (2) (3) Health Care Equipment & Supplies 8.35% L + 5.75%; 1.00% Floor 06/30/2022  5,966   5,939   5,922 
DDS USA Holding, Inc.(1) (2) (3) Health Care Equipment & Supplies 8.35% L + 5.75%; 1.00% Floor 06/30/2022  5,774   5,748   5,731 
DDS USA Holding, Inc.(1) (2) (3) (4) (5) Health Care Equipment & Supplies  L + 5.75%; 1.00% Floor 06/30/2022  1,625   (7)   (12) 
Diligent Corporation(1) (2) (3) Professional Services 8.31% L + 5.50%; 1.00% Floor 04/14/2022 €24,386   27,903   27,013 
Diligent Corporation(1) (2) (3) Professional Services 8.35% L + 5.50%; 1.00% Floor 04/14/2022  2,246   2,220   2,218 
Diligent Corporation(1) (2) (3) (4) Professional Services 8.23% L + 5.50%; 1.00% Floor 04/14/2022  1,900   1,633   1,648 
Diligent Corporation(1) (2) (3) Professional Services 8.19% L + 5.50%; 1.00% Floor 04/14/2022  772   763   763 
Diligent Corporation(1) (2) (3) Professional Services 8.35% L + 5.50%; 1.00% Floor 04/14/2022  374   369   369 
Diligent Corporation(1) (2) (3) (4) (5) Professional Services  L + 5.50%; 1.00% Floor 04/14/2022  12,244   (141)   (153) 
DiscoverOrg, LLC(1) (2) Software 7.24% L + 4.50% 02/02/2026  25,100   24,852   24,723 
DocuTAP, Inc.(1) (4) Health Care Technology  L + 5.50%; 1.00% Floor 05/09/2025  48,500   —   — 
DocuTAP, Inc.(1) (4) Health Care Technology  L + 5.50%; 1.00% Floor 05/09/2025  7,500   —   — 
Empirix, Inc.(1) (2) (3) Diversified Telecommunication Services 8.86% L + 6.25%; 1.00% Floor 09/25/2024  33,618   33,070   33,030 
Empirix, Inc.(1) (2) (3) (4) (5) Diversified Telecommunication Services  L + 6.25%; 1.00% Floor 09/25/2023  1,900   (30)   (33) 
Fenergo Finance 3 Limited(1) (2) (3) (6) Diversified Financial Services 9.13% L + 6.25%; 1.00% Floor 09/05/2024 €26,900   30,761   29,572 

Fenergo Finance 3

Limited(1) (2) (3) (4) (5) (6)

 Diversified Financial Services  L + 6.25%; 1.00% Floor 09/05/2024  1,785   (28)   (36) 

Fenergo Finance 3

Limited(1) (2) (3) (4) (5) (6)

 Diversified Financial Services  L + 6.25%; 1.00% Floor 09/05/2024 €2,300   (43)   (145) 
FWR Holding Corporation(2) Hotels, Restaurants & Leisure 8.00% L + 5.50%; 1.00% Floor 08/21/2023  13,466   13,204   13,331 
FWR Holding Corporation(2) Hotels, Restaurants & Leisure 8.00% L + 5.50%; 1.00% Floor 08/21/2023  2,690   2,639   2,663 
FWR Holding Corporation(2) Hotels, Restaurants & Leisure 8.00% L + 5.50%; 1.00% Floor 08/21/2023  1,701   1,669   1,684 

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

8

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of March 31, 20182019 (continued)

(in thousands, except unit and per unit amounts)

(Unaudited)

 

Portfolio Company Industry Interest Rate (+) Reference Rate and
Spread (++)		  Maturity  Par Amount  Cost  Fair Value 
ERC Finance, LLC(1) (2) (4) Health Care Providers & Services 9.96%  L + 8.22%; 1.00% Floor   09/21/2025  $29,800  $29,159  $29,204 
Granicus, Inc.(2) (4) Software 11.05%  L + 9.00%; 1.00% Floor   09/07/2023   31,875   31,352   31,397 
ICP Industrial, Inc.(1) (2) (4) Chemicals 9.94%  L + 8.25%; 1.00% Floor   05/03/2024   24,900   24,307   24,277 
ICP Industrial, Inc.(1) (2) (4) Chemicals 10.10%  L + 8.25%; 1.00% Floor   05/03/2024   5,800   5,663   5,655 
Institutional Shareholder Services
Inc.(1) (4)		 Diversified Financial Services 9.47%  L + 7.75%; 1.00% Floor   10/16/2025   7,700   7,663   7,739 
Intelligent Medical Objects,
Inc.(1) (2) (4)		 Health Care Technology 10.31%  L + 8.50%; 1.00% Floor   12/22/2024   18,500   18,051   18,038 
Market Track, LLC(1) (2) (4) Internet Catalog & Retail 9.49%  L + 7.75%; 1.00% Floor   06/05/2025   32,800   31,886   31,816 
National Spine and Pain Centers,
LLC(1) (2) (4)		 Health Care Providers & Services 10.56%  L + 8.25%; 1.00% Floor   12/02/2024   28,500   27,711   27,716 
Oasis Outsourcing Holdings,
Inc.(1) (2) (4)		 Diversified Financial Services 9.14%  L + 7.25%; 1.00% Floor   07/01/2024   33,580   33,115   33,160 
Odyssey Logistics & Technology Corporation(1) (4) Road & Rail 9.88%  L + 8.00%; 1.00% Floor   10/12/2025   20,300   19,812   20,351 
Procare Software, LLC(2) (4) Diversified Financial Services 11.06%  L + 8.75%; 1.00% Floor   09/30/2022   35,000   34,382   34,825 
Recipe Acquisition Corp.(2) (4) Food Products 11.30%  L + 9.00%; 1.00% Floor   12/01/2022   20,000   19,696   19,700 
Regulatory DataCorp, Inc.(2) (4) Diversified Financial Services 10.89%  L + 9.00%; 1.00% Floor   09/21/2023   15,000   14,748   14,775 
RSC Acquisition, Inc.(1) (4) Insurance 10.30%  L + 8.00%; 1.00% Floor   11/30/2023   12,900   12,772   12,771 
RSC Acquisition, Inc.(1) (3) (4) (5) Insurance   L + 8.00%; 1.00% Floor   11/30/2023   6,400   (63)   (64) 
SMB Shipping Logistics,
LLC(1) (2) (4)		 Air Freight & Logistics 10.72%  L + 8.75%; 1.00% Floor   02/03/2025   20,000   19,730   19,750 
Spectrum Plastics Group, Inc.(1) (4) Containers & Packaging 8.88%  L + 7.00%; 1.00% Floor   01/31/2026   9,975   9,926   10,025 
USRP Holdings, Inc.(1) (4) Insurance 10.38%  L + 8.50%; 1.00% Floor   09/29/2025   10,300   10,171   10,171 
USRP Holdings, Inc.(1) (3) (4) (5) Insurance   L + 8.50%; 1.00% Floor   09/29/2025   2,600   (33)   (33) 
Xcellence, Inc.(1) (2) (4) IT Services 11.00%  L + 8.75%; 1.00% Floor   06/22/2024   16,500   16,100   16,088 
Young Innovations, Inc.(1) (2) (4) Health Care Equipment & Supplies 10.05%  L + 7.75%; 1.00% Floor   11/07/2025   23,000   22,334   22,310 
Zep Inc.(1) (4) Chemicals 10.02%  L + 8.25%; 1.00% Floor   08/11/2025   35,700   34,850   35,521 
      

 

 

  

 

 

 

Total 2nd Lien/Senior Secured Debt

     497,295   499,044 
Unsecured Debt– 0.70%      
Recipe Acquisition Corp.(2) Food Products 13.25% PIK   12/21/2022   3,851   3,792   3,783 
      

 

 

  

 

 

 

Total Unsecured Debt

     3,792   3,783 
      

 

 

  

 

 

 

Total Corporate Debt

     957,218   958,484 
Portfolio Company Industry    Coupon      Shares  Cost  Fair Value 
Preferred Stock– 0.58% 
Datacor Holdings, Inc.(2) (7) (8) Chemicals   7.00% PIK    1,000,000  $1,000  $1,410 
Recipe Acquisition Corp.(2) (7) Food Products   11.00% PIK    1,600   1,496   1,739 
      

 

 

  

 

 

 

Total Preferred Stock

      2,496   3,149 
Common Stock– 0.91%      
Collaborative Imaging Holdco, LLC - Class B^^^ (1) (7) Health Care Providers & Services     12,370   1,668   1,668 
Collaborative Imaging Holdco, LLC - Class C^^^ (1) (7) (8) Health Care Providers & Services     11,675   232   232 
Continuum Managed Services LLC - Class A(1) (2) (7) IT Services     1,079   1,079   1,160 
Continuum Managed Services LLC - Class B(1) (2) (7) IT Services     731,623   11   351 
National Spine and Pain Centers,
LLC(1) (2) (7)		 Health Care Providers & Services     900   900   765 
Yasso, Inc.(1) (2) (7) Food Products     1,360   1,360   754 
      

 

 

  

 

 

 

Total Common Stock

      5,250   4,930 
Portfolio Company Industry            Units  Cost  Fair Value 
Warrants– 0.02%      
Recipe Acquisition Corp.(2) Food Products     44  $104  $86 
      

 

 

  

 

 

 

Total Warrants

     104   86 
         Yield      Shares  Cost  Fair Value 
Investments in Affiliated Money Market Fund – 3.40% # 

Goldman Sachs Financial Square Government Fund - Institutional Shares^^^ (4)

  1.61%(9)    18,415,044  $18,415  $18,415 
      

 

 

  

 

 

 

Total Investments in Affiliated Money Market Fund

      18,415   18,415 
      

 

 

  

 

 

 
TOTAL INVESTMENTS – 181.99%   $983,483  $985,064 
      

 

 

  

 

 

 
LIABILITIES IN EXCESS OF OTHER ASSETS – (81.99%)    $(443,794) 
       

 

 

 
MEMBERS’ CAPITAL – 100.00%    $541,270 
       

 

 

 
Portfolio Company Industry Interest Rate (+) 

Reference Rate and

Spread(+)

 Maturity Par Amount (++)  Cost  Fair Value 
FWR Holding Corporation(2) (4) Hotels, Restaurants & Leisure 8.00% L + 5.50%; 1.00% Floor 08/21/2023 $1,764  $408  $423 
Gastro Health Holdco, LLC(1) (2) (3) Health Care Providers & Services 7.99% L + 5.50%; 1.00% Floor 09/04/2024  15,300   15,017   14,994 

Gastro Health Holdco,

LLC(1) (2) (3) (4) (5)

 Health Care Providers & Services  L + 5.50%; 1.00% Floor 09/04/2023  3,100   (55)   (62) 

Gastro Health Holdco,

LLC(1) (2) (3) (4) (5)

 Health Care Providers & Services  L + 5.50%; 1.00% Floor 09/04/2024  7,700   (87)   (154) 
Granicus, Inc.(1) (2) Software 7.35% L + 4.75%; 1.00% Floor 09/07/2022  13,066   12,939   12,936 
Hygiena Borrower LLC(2) Life Sciences Tools & Services 6.60% L + 4.00%; 1.00% Floor 08/26/2022  5,673   5,602   5,560 
Hygiena Borrower LLC(2) (4) (5) Life Sciences Tools & Services  L + 4.00%; 1.00% Floor 08/26/2022  580   (7)   (12) 
Hygiena Borrower LLC(2) (4) (5) Life Sciences Tools & Services  L + 4.00%; 1.00% Floor 08/26/2022  863   (5)   (17) 
iCIMS, Inc.(1) (2) (3) Software 8.99% L + 6.50%; 1.00% Floor 09/12/2024  45,158   44,319   44,255 
iCIMS, Inc.(1) (2) (3) (4) (5) Software  L + 6.50%; 1.00% Floor 09/12/2024  2,822   (51)   (56) 
Integral Ad Science, Inc.(1) (2) (3) Media 9.75% L + 7.25% (incl. 1.25%

PIK); 1.00% Floor

 07/19/2024  35,949   35,302   35,230 
Integral Ad Science, Inc.(1) (2) (3) (4) (5) Media  L + 6.00%; 1.00% Floor 07/19/2023  2,741   (47)   (55) 

Internet Truckstop Group,

LLC(1) (2) (4)

 Transportation Infrastructure  L + 5.50%; 1.00% Floor 04/02/2025  34,500   —   — 

Internet Truckstop Group,

LLC(1) (2) (4)

 Transportation Infrastructure  L + 5.50%; 1.00% Floor 04/02/2025  2,800   —   — 
Lithium Technologies, Inc.(1) (2) (3) Internet Software & Services 10.49% L + 8.00%; 1.00% Floor 10/03/2022  58,727   57,626   57,552 

Lithium Technologies,

Inc.(1) (2) (3) (4) (5)

 Internet Software & Services  L + 8.00%; 1.00% Floor 10/03/2022  4,046   (71)   (81) 
Mailgun Technologies, Inc.(1) (2) Internet Software & Services 8.61% L + 6.00%; 1.00% Floor 03/26/2025  20,380   19,973   19,972 

Mailgun Technologies,

Inc.(1) (2) (4) (5)

 Internet Software & Services  L + 6.00%; 1.00% Floor 03/26/2025  2,370   (47)   (47) 
Midwest Transport, Inc.(1) (2) (3) Road & Rail 9.65% L + 7.00%; 1.00% Floor 10/02/2023  18,720   18,548   18,533 
MMIT Holdings, LLC(1) (2) (3) Health Care Technology 8.00% L + 5.50%; 1.00% Floor 11/15/2024  24,838   24,359   24,341 
MMIT Holdings, LLC(1) (2) (3) (4) (5) Health Care Technology  L + 5.50%; 1.00% Floor 11/15/2024  4,788   (91)   (96) 
Netvoyage Corporation(1) (2) (3) Software 11.50% L + 9.00%; 1.00% Floor 03/24/2024  13,694   13,510   13,454 
Netvoyage Corporation(1) (2) (3) (4) (5) Software  L + 9.00%; 1.00% Floor 03/24/2022  1,044   (13)   (18) 
Pathway Vet Alliance LLC(1) (2) Health Care Providers & Services 7.00% L + 4.50% 12/20/2024  7,431   7,358   7,357 
Pathway Vet Alliance LLC(1) (2) (4) Health Care Providers & Services 7.00% L + 4.50% 12/21/2024  2,621   220   222 
Picture Head Midco LLC(1) (2) (3) Media 9.25% L + 6.75%; 1.00% Floor 08/31/2023  34,930   34,298   34,319 
Picture Head Midco LLC(1) (2) (3) (4) Media 9.25% L + 6.75%; 1.00% Floor 08/31/2023  3,840   1,081   1,085 
Power Stop, LLC(1) (2) Auto Components 7.35% L + 4.75% 10/19/2025  11,471   11,444   11,356 
SF Home Décor, LLC(1) (2) (3) Household Products 12.11% L + 9.50%; 1.00% Floor 07/13/2022  29,230   28,596   28,426 
Shopatron, LLC(1) Internet Catalog & Retail 11.61% L + 9.00%; 1.00% Floor 12/18/2020  6,683   6,556   6,550 
SPay, Inc.(1) (2) (3) Internet Software & Services 8.24% L + 5.75%; 1.00% Floor 06/17/2024  15,548   15,271   15,003 
SPay, Inc.(1) (2) (3) (4) Internet Software & Services 8.38% L + 5.75%; 1.00% Floor 06/17/2024  1,730   661   631 
SPay, Inc.(1) (2) (3) (4) Internet Software & Services 8.55% L + 5.75%; 1.00% Floor 06/17/2024  8,630   500   273 
VRC Companies, LLC(2) (3) Commercial Services & Supplies 9.00% L + 6.50%; 1.00% Floor 03/31/2023  8,353   8,279   8,270 
VRC Companies, LLC(2) (3) (4) Commercial Services & Supplies 9.00% L + 6.50%; 1.00% Floor 03/31/2023  2,323   658   658 
VRC Companies, LLC(2) (3) (4) Commercial Services & Supplies 9.31% L + 6.50%; 1.00% Floor 03/31/2022  264   165   165 
Wine.com, LLC(1) (2) (3) Beverages 9.86% L + 7.00%; 1.00% Floor 11/14/2024  9,600   9,417   9,408 
Wrike, Inc.(1) (2) (3) Professional Services 9.25% L + 6.75%; 1.00% Floor 12/31/2024  24,433   23,960   23,944 
Wrike, Inc.(1) (2) (3) (4) (5) Professional Services  L + 6.75%; 1.00% Floor 12/31/2024  2,400   (46)   (48) 
Xactly Corporation(1) (2) (3) Internet Software & Services 9.75% L + 7.25%; 1.00% Floor 07/29/2022  34,390   33,885   33,874 
Xactly Corporation(1) (2) (3) (4) (5) Internet Software & Services  L + 7.25%; 1.00% Floor 07/29/2022  2,554   (35)   (38) 

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

9

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of March 31, 20182019 (continued)

(in thousands, except unit and per unit amounts)

(Unaudited)

Portfolio Company Industry Interest Rate (+) 

Reference Rate and

Spread(+)

  Maturity  Par Amount (++)  Cost  Fair Value 
Yasso, Inc.(1) (2) (3) Food Products 10.25%  L + 7.75%; 1.00% Floor   03/23/2022  $12,901  $12,733  $12,353 
      

 

 

  

 

 

 

Total 1st Lien/Senior Secured Debt

 

   833,405   830,557 
1stLien/Last-Out Unitranche (7) – 18.46%

 

Intelligent Document Solutions,

Inc.(1) (2) (3)

 Diversified Financial Services 8.60%  L + 6.00%; 1.00% Floor   02/28/2024   30,800   29,940   29,876 

Intelligent Document Solutions,

Inc.(1) (2) (3) (4)

 Diversified Financial Services 8.61%  L + 6.00%; 1.00% Floor   02/28/2024   21,100   16,346   16,289 
RugsUSA, LLC(1) (2) (3) Household Products 8.61%  L + 6.00%; 1.00% Floor   04/30/2023   8,830   8,755   8,742 
Smarsh, Inc.(1) (2) (3) Software 10.38%  L + 7.88%; 1.00% Floor   03/31/2021   56,498   55,820   55,933 

Vantage Mobility International,

LLC(2) (3)

 Health Care Equipment & Supplies 10.26%  L + 7.75%; 1.00% Floor   09/09/2021   25,111   24,833   21,972 
You Fit, LLC(2) (3) Diversified Consumer Services 9.35%  L + 6.75%; 1.00% Floor   01/04/2022   34,500   33,811   34,328 
      

 

 

  

 

 

 

Total 1stLien/Last-Out Unitranche

 

   169,505   167,140 
2nd Lien/Senior Secured Debt– 49.00%

 

American Dental Partners, Inc.(1) (2) (3) Health Care Providers & Services 11.10%  L + 8.50%; 1.00% Floor   09/25/2023   9,180   9,007   8,996 
Chase Industries, Inc.(1) (2) (3) Building Products 10.69%  L + 8.00%; 1.00% Floor   05/11/2026   25,700   24,987   24,865 
Chase Industries, Inc.(1) (2) (3) (4) (5) Building Products   L + 8.00%; 1.00% Floor   05/11/2026   6,400   (172)   (208) 

Country Fresh Holdings,

LLC(1) (2) (3) (8)

 Food Products   L + 8.75%; 1.00% Floor   10/02/2023   13,800   13,573   1,380 
DiscoverOrg, LLC(1) (2) Software 11.24%  L + 8.50%   02/01/2027   15,400   15,171   15,362 
DuBois Chemicals, Inc.(1) (2) Chemicals 10.50%  L + 8.00%; 1.00% Floor   03/15/2025   25,330   24,913   24,570 
ERC Finance, LLC(1) (2) (3) Health Care Providers & Services 10.72%  L + 8.22%; 1.00% Floor   09/22/2025   29,800   29,220   29,204 
Genesis Acquisition Co.(1) (2) (3) Diversified Financial Services 10.24%  L + 7.50%   07/31/2025   10,500   10,255   10,211 
Genesis Acquisition Co.(1) (2) (3) (4) (5) Diversified Financial Services   L + 7.50%   07/31/2025   2,700   (31)   (74) 
Hygiena Borrower LLC(2) (3) Life Sciences Tools & Services 10.35%  L + 7.75%; 1.00% Floor   08/26/2023   2,810   2,760   2,761 
Hygiena Borrower LLC(2) (3) (4) Life Sciences Tools & Services 10.35%  L + 7.75%; 1.00% Floor   08/26/2023   1,030   137   129 
ICP Industrial, Inc.(1) (2) (3) Chemicals 10.74%  L + 8.25%; 1.00% Floor   05/03/2024   30,700   30,061   30,086 

Intelligent Medical Objects,

Inc.(1) (2) (3)

 Health Care Technology 11.30%  L + 8.50%; 1.00% Floor   12/22/2024   23,100   22,585   22,522 
Market Track, LLC(1) (2) (3) Internet Catalog & Retail 10.49%  L + 7.75%; 1.00% Floor   06/05/2025   32,800   31,977   31,160 

National Spine and Pain Centers,

LLC(1) (2) (3)

 Health Care Providers & Services 10.75%  L + 8.25%; 1.00% Floor   12/02/2024   28,500   27,797   27,787 
Odyssey Logistics & Technology Corporation(1) (2) Road & Rail 10.50%  L + 8.00%; 1.00% Floor   10/12/2025   28,152   27,591   27,495 
Recipe Acquisition Corp.(2) (3) Food Products 10.60%  L + 8.00%; 1.00% Floor   12/01/2022   20,000   19,749   19,750 
RSC Acquisition, Inc.(1) (2) (3) Insurance 10.50%  L + 8.00%; 1.00% Floor   11/30/2023   12,900   12,790   12,771 
RSC Acquisition, Inc.(1) (2) (3) Insurance 10.50%  L + 8.00%; 1.00% Floor   11/30/2023   8,310   8,236   8,227 
RSC Acquisition, Inc.(1) (2) (3) Insurance 10.68%  L + 8.00%; 1.00% Floor   11/30/2023   7,200   7,059   7,128 
RSC Acquisition, Inc.(1) (2) (3) (4) (5) Insurance   L + 8.00%; 1.00% Floor   11/30/2023   6,400   (52)   (64) 
SMB Shipping Logistics, LLC(1) (2) (3) Air Freight & Logistics 10.86%  L + 8.00%; 1.00% Floor   02/03/2025   33,333   32,836   32,667 
Spectrum Plastics Group, Inc.(1) (2) Containers & Packaging 9.50%  L + 7.00%; 1.00% Floor   01/31/2026   9,975   9,931   9,539 
USRP Holdings, Inc.(1) (2) (3) Insurance 11.35%  L + 8.75%; 1.00% Floor   09/29/2025   10,300   10,183   10,171 
USRP Holdings, Inc.(1) (2) (3) (4) Insurance 11.36%  L + 8.75%; 1.00% Floor   09/29/2025   2,600   1,688   1,684 
Viant Medical Holdings, Inc.(1) (2) Health Care Equipment & Supplies 10.35%  L + 7.75%   07/02/2026   12,470   12,353   12,470 
Xcellence, Inc.(1) (2) (3) IT Services 11.24%  L + 8.75%; 1.00% Floor   06/22/2024   19,600   19,173   19,257 
YI, LLC(1) (2) (3) Health Care Equipment & Supplies 10.35%  L + 7.75%; 1.00% Floor   11/07/2025   23,000   22,395   22,367 
Zep Inc.(1) (2) Chemicals 10.85%  L + 8.25%; 1.00% Floor   08/11/2025   35,700   34,930   31,416 
      

 

 

  

 

 

 

Total 2nd Lien/Senior Secured Debt

     461,102   443,629 
Unsecured Debt– 0.48%      
Recipe Acquisition Corp.(3) Food Products 13.25% PIK   12/21/2022   4,361   4,312   4,295 
      

 

 

  

 

 

 

Total Unsecured Debt

     4,312   4,295 
      

 

 

  

 

 

 

Total Corporate Debt

     1,468,324   1,445,621 

The accompanying notes are part of these unaudited consolidated financial statements.

10

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of March 31, 2019 (continued)

(in thousands, except unit and per unit amounts)

(Unaudited)

Portfolio Company Industry Coupon Shares  Cost  Fair Value 
Preferred Stock– 1.41%

 

Accuity Delivery Systems, LLC^ (1) (3) (9) (10) Health Care Providers & Services  145,695  $4,800  $6,240 
Datacor Holdings, Inc.(3) (6) (9) (10) Chemicals 7.00% PIK  1,000,000   1,000   1,460 
Recipe Acquisition Corp.(3) (9) (10) Food Products 11.00% PIK  1,600   1,496   2,113 
Wine.com, LLC(1) (3) (9) (10) Beverages  337,425   2,900   2,986 
    

 

 

  

 

 

 

Total Preferred Stock

   10,196   12,799 
Common Stock– 1.38%

 

Collaborative Imaging Holdco, LLC – Class B^^^ (1) (3) (9) Health Care Providers & Services  12,370   1,667   1,879 
Collaborative Imaging Holdco, LLC – Class C^^^ (1) (3) (6) (9) (10) Health Care Providers & Services  11,675   232   259 
Continuum Managed Services LLC – Class A(1) (3) (9) (10) IT Services  1,079   1,079   1,268 
Continuum Managed Services LLC – Class B(1) (3) (9) (10) IT Services  731,623   11   1,244 
Elah Holdings, Inc.^ (1) (3) (9) (10) Capital Markets  69,386   3,354   3,354 
National Spine and Pain Centers, LLC(1) (3) (9) (10) Health Care Providers & Services  900   900   418 
Wrike, Inc.(1) (3) (9) (10) Professional Services  524,730   3,260   3,773 
Yasso, Inc.(1) (3) (9) (10) Food Products  1,360   1,360   303 
    

 

 

  

 

 

 

Total Common Stock

   11,863   12,498 
Portfolio Company Industry    Units  Cost  Fair Value 
Warrants – 0.02%

 

Recipe Acquisition Corp.(3) (9) Food Products   44  $104  $138 
    

 

 

  

 

 

 

Total Warrants

   104   138 
      Yield Shares  Cost  Fair Value 
Investments in Affiliated Money Market Fund– 1.27% #

 

Goldman Sachs Financial Square Government Fund – Institutional Shares^^^ 2.35%(11)  11,500,702  $11,501  $11,501 
    

 

 

  

 

 

 

Total Investments in Affiliated Money Market Fund

   11,501   11,501 
    

 

 

  

 

 

 
TOTAL INVESTMENTS – 163.76%

 

 $1,501,988  $1,482,557 
    

 

 

  

 

 

 
LIABILITIES IN EXCESS OF OTHER ASSETS – (63.76%)

 

 $(577,232) 
     

 

 

 
NET ASSETS – 100.00%

 

 $905,325 
     

 

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

11

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of March 31, 2019 (continued)

(in thousands, except unit and per unit amounts)

(Unaudited)

 

(+) 

The terms in the Consolidated Schedule of Investments disclosediscloses the actual interest rate for partially or fully funded debt in effect as of the reporting date. For investments with multiple interest rate contracts, the interest rate shown is the weighted average interest rate in effect at March 31, 2018.

(++)

Variable rate loans bear interest at a rate that may be determined by reference to either LIBOR (“L”) or alternate base rate (commonly based on the Prime Rate (“P”)), at the borrower’s option.option, which reset periodically based on the terms of the credit agreement. L loans are typically indexed to 12 month, 6 month, 3 month, 2 month, 1 month or 1 week L rates. As of March 31, 2018,2019, rates for the 12 month, 6 month, 3 month, 2 month, 1 month and 1 week L are 2.71%, 2.66%, 2.45%2.60%, 2.31%2.56%, 2.00%, 1.88%2.49% and 1.75%2.42%, respectively. As of March 31, 2018,2019, P was 4.75%5.50%. For investments with multiple reference rates or alternate base rates, the interest rate shown is the weighted average interest rate in effect at March 31, 2019.

(++)

Par amount is denominated in U.S. Dollars (“$”) unless otherwise noted, Euro (“€”).

#  

Percentages are based on Members’ Capital.net assets.

^^^  

As defined in the Investment Company Act of 1940, the Companyinvestment is deemed to be an “Affiliated Person”“affiliated person” of the portfolio companyCompany because itthe Company owns, either directly or indirectly, 5% or more of suchthe portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of suchsecurities. See Note 3 “Significant Agreements and Related Party Transactions”.

^^^

The portfolio company (including through a management agreement)is otherwise deemed to be an “affiliated person” of the Company under the Investment Company Act of 1940. See Note 3 “Significant Agreements and Related Party Transactions”.

(1)  

Representco-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company received from the SEC.U.S. Securities and Exchange Commission. See Note 3 “Significant Agreements and Related Party Transactions”.

(2)

All, or a portion of, the assets are pledged as collateral for the revolving credit facility with JPMorgan Chase Bank, National Association (the “JPMRevolving Credit Facility”). See Note 6 “Debt”.

(3)  

The fair value of the investment was determined using significant unobservable inputs. See Note 5 “Fair Value Measurement”.

(3)(4)  

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 78 “Commitments and Contingencies”.

(4)

All, or a portion of, the assets are pledged as collateral for the revolving credit facility with JPMorgan Chase Bank, National Association (the “JPM Revolving Credit Facility”). See Note 6 “Debt”.

(5)  

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.

(6)  

The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire anynon-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of March 31, 2019 the aggregate fair value of these securities is $31,110 or 2.03% of the Company’s total assets.

(7)

In exchange for the greater risk of loss, the“last-out” portion of the Company’s unitranche loan investment generally earns a higher interest rate than the“first-out” portions. The“first-out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the“last-out” portion that the Company would continue to hold.

(7)(8)

The investment is onnon-accrual status as of March 31, 2019.

(9)

Securities exempt from registration under the Securities Act and may be deemed to be “restricted securities” under the Securities Act. As of March 31, 2019, the aggregate fair value of these securities is $25,435 or 2.81% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

InvestmentAcquisition Date
Accuity Delivery Systems, LLC – Preferred Stock06/13/2018
Collaborative Imaging Holdco, LLC – Class B – Common Stock03/30/2018
Collaborative Imaging Holdco, LLC – Class C – Common Stock03/30/2018
Continuum Managed Services LLC – Class A – Common Stock06/08/2017
Continuum Managed Services LLC – Class B – Common Stock06/08/2017
Datacor Holdings, Inc. – Preferred Stock08/12/2016
Elah Holdings, Inc. – Common Stock05/09/2018
National Spine and Pain Centers, LLC – Common Stock06/02/2017
Recipe Acquisition Corp. – Preferred Stock12/22/2016
Recipe Acquisition Corp. – Warrants12/22/2016
Wine.com, LLC – Preferred Stock11/14/2018
Wrike, Inc. – Common Stock12/31/2018
Yasso, Inc. – Common Stock03/23/2017

(10)  

Non-income producing security.

(8)(11) 

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

PIK –Payment-In-Kind

ADDITIONAL INFORMATION

Foreign currency forward contracts

Counterparty  Currency
Purchased		   Currency
Sold		   Settlement   Unrealized Appreciation
(Depreciation)		 
Bank of America, N.A.   USD 420    EUR 356    04/03/2019   $21 
Bank of America, N.A.   USD 357    EUR 301    05/06/2019    18 
Bank of America, N.A.   USD 447    EUR 375    07/03/2019    22 
Bank of America, N.A.   USD 360    EUR 301    08/05/2019    18 
Bank of America, N.A.   USD 472    EUR 394    10/04/2019    24 
Bank of America, N.A.   USD 378    EUR 314    11/05/2019    20 
Bank of America, N.A.   USD 472    EUR 390    01/06/2020    24 
Bank of America, N.A.   USD 479    EUR 393    04/06/2020    26 
Bank of America, N.A.   USD 480    EUR 390    07/06/2020    26 
        

 

 

 
        $199 
        

 

 

 

Currency Abbreviations:

EUR – Euro

USD – U.S. Dollar

The accompanying notes are part of these unaudited consolidated financial statements.

12

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2018

(in thousands, except unit and per unit amounts)

Portfolio Company Industry Interest Rate (+) Reference Rate and
Spread(+)		 Maturity Par Amount (++)  Cost  Fair Value 
Investments at Fair Value – 173.30% #

 

Corporate Debt – 170.38%

 

1st Lien/Senior Secured Debt – 91.82%

 

 

Accuity Delivery Systems,

LLC^ (1) (2) (3)

 Health Care Providers & Services 9.78% L + 7.00%; 1.00% Floor 06/13/2023 $15,350  $14,930  $14,928 
Associations, Inc.(1) (2) (3) Real Estate Management & Development 9.40% L + 7.00% (incl. 3.00% PIK); 1.00% Floor 07/30/2024  17,807   17,597   17,629 
Associations, Inc.(1) (2) (3) (4) Real Estate Management & Development 9.40% L + 7.00% (incl. 3.00% PIK); 1.00% Floor 07/30/2024  4,438   1,528   1,536 
Associations, Inc.(1) (2) (3) (4) (5) Real Estate Management & Development  L + 4.00%; 1.00% Floor 07/30/2024  886   (10)   (9) 
Bullhorn, Inc.(1) (2) (3) Internet Software & Services 9.40% L + 6.75%; 1.00% Floor 11/21/2022  18,237   18,084   18,100 
Bullhorn, Inc.(1) (2) (3) Internet Software & Services 9.40% L + 6.75%; 1.00% Floor 11/21/2022  4,825   4,785   4,789 
Bullhorn, Inc.(1) (2) (3) Internet Software & Services 9.33% L + 6.75%; 1.00% Floor 11/21/2022  952   937   945 
Businessolver.com, Inc.(1) (2) (3) Health Care Technology 10.12% L + 7.50%; 1.00% Floor 05/15/2023  31,875   31,302   31,238 
Businessolver.com, Inc.(1) (2) (3) (4) Health Care Technology 12.00% P + 6.50%; 2.00% Floor 05/15/2023  3,984   1,524   1,514 
Businessolver.com, Inc.(1) (2) (3) (4) Health Care Technology 10.12% L + 7.50%; 1.00% Floor 05/15/2023  4,781   1,142   1,100 

Collaborative Imaging,

LLC^^^ (1) (2) (3)

 Health Care Providers & Services 9.03% L + 6.50%; 1.00% Floor 03/28/2025  13,400   13,215   13,132 

Continuum Managed Services

LLC(1) (2) (3)

 IT Services 8.53% L + 6.00%; 1.00% Floor 06/08/2023  31,372   30,689   30,745 

Continuum Managed Services

LLC(1) (2) (3)

 IT Services 8.53% L + 6.00%; 1.00% Floor 06/08/2023  9,060   8,879   8,879 

Continuum Managed Services

LLC(1) (2) (3)

 IT Services 8.53% L + 6.00%; 1.00% Floor 06/08/2023  2,658   2,604   2,605 

Continuum Managed Services

LLC(1) (2) (3) (4) (5)

 IT Services  L + 6.00%; 1.00% Floor 06/08/2022  3,280   (63)   (66) 
Dade Paper & Bag, LLC(1) (2) (3) Distributors 10.02% L + 7.50%; 1.00% Floor 06/10/2024  16,154   15,886   15,912 
Dade Paper & Bag, LLC(1) (2) (3) Distributors 9.52% L + 7.00%; 1.00% Floor 06/10/2024  2,060   2,042   1,983 
Datacor Holdings, Inc.(2) (3) Chemicals 9.50%  08/12/2022  13,830   13,644   13,657 
Datto, Inc.(1) (2) IT Services 10.46% L + 8.00%; 1.00% Floor 12/07/2022  55,556   54,659   55,139 
Datto, Inc.(1) (2) (4) (5) IT Services  L + 8.00%; 1.00% Floor 12/07/2022  3,739   (58)   (28) 
DDS USA Holding, Inc.(1) (2) Health Care Equipment & Supplies 8.57% L + 5.75%; 1.00% Floor 06/30/2022  5,981   5,952   5,937 
DDS USA Holding, Inc.(1) (2) Health Care Equipment & Supplies 8.57% L + 5.75%; 1.00% Floor 06/30/2022  5,789   5,762   5,745 
DDS USA Holding, Inc.(1) (2) (4) (5) Health Care Equipment & Supplies  L + 5.75%; 1.00% Floor 06/30/2022  1,625   (8)   (12) 
Diligent Corporation(1) (2) (3) Professional Services 8.03% L + 5.50%; 1.00% Floor 04/14/2022 €24,447   27,949   27,660 
Diligent Corporation(1) (2) (3) Professional Services 8.03% L + 5.50%; 1.00% Floor 04/14/2022  774   764   765 
Diligent Corporation(1) (2) (3) (4) Professional Services 8.28% L + 5.50%; 1.00% Floor 04/14/2022  1,900   718   736 
Diligent Corporation(1) (2) (3) (4) (5) Professional Services  L + 5.50%; 1.00% Floor 04/14/2022  374   (5)   (5) 
Diligent Corporation(1) (2) (3) (4) (5) Professional Services  L + 5.50%; 1.00% Floor 04/14/2022  14,490   (179)   (181) 
Empirix, Inc.(1) (2) (3) Diversified Telecommunication Services 8.93% L + 6.25%; 1.00% Floor 09/25/2024  33,700   33,131   33,110 
Empirix, Inc.(1) (2) (3) (4) (5) Diversified Telecommunication Services  L + 6.25%; 1.00% Floor 09/25/2023  1,900   (31)   (33) 

Fenergo Finance 3

Limited(1) (2) (3) (6)

 Diversified Financial Services 9.13% L + 6.25%; 1.00% Floor 09/05/2024 €26,900   30,744   30,204 

Fenergo Finance 3

Limited(1) (2) (3) (4) (5) (6)

 Diversified Financial Services  L + 6.25%; 1.00% Floor 09/05/2024  1,785   (30)   (36) 

Fenergo Finance 3

Limited(1) (2) (3) (4) (5) (6)

 Diversified Financial Services  L + 6.25%; 1.00% Floor 09/05/2024 €2,300   (44)   (91) 
FWR Holding Corporation(2) (3) Hotels, Restaurants & Leisure 8.26% L + 5.75%; 1.00% Floor 08/21/2023  13,500   13,226   13,230 
FWR Holding Corporation(2) (3) Hotels, Restaurants & Leisure 8.26% L + 5.75%; 1.00% Floor 08/21/2023  2,690   2,637   2,636 
FWR Holding Corporation(2) (3) Hotels, Restaurants & Leisure 8.26% L + 5.75%; 1.00% Floor 08/21/2023  1,705   1,672   1,671 
FWR Holding Corporation(2) (3) (4) Hotels, Restaurants & Leisure 10.25% P + 4.75%; 2.00% Floor 08/21/2023  1,764   626   626 

Gastro Health Holdco,

LLC(1) (2) (3)

 Health Care Providers & Services 8.74% L + 6.00%; 1.00% Floor 09/04/2024  15,300   15,007   14,994 

Gastro Health Holdco,

LLC(1) (2) (3) (4) (5)

 Health Care Providers & Services  L + 6.00%; 1.00% Floor 09/04/2023  3,100   (58)   (62) 

The accompanying notes are part of these unaudited consolidated financial statements.

13

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2018 (continued)

(in thousands, except unit and per unit amounts)

Portfolio Company Industry Interest Rate (+) Reference Rate and
Spread(+)		 Maturity  Par Amount (++)  Cost  Fair Value 

Gastro Health Holdco,

LLC(1) (2) (3) (4) (5)

 Health Care Providers & Services  L + 6.00%; 1.00% Floor  09/04/2024  $7,700  $(91)  $(154) 
Hygiena Borrower LLC(2) Life Sciences Tools & Services 6.80% L + 4.00%; 1.00% Floor  08/26/2022   5,688   5,611   5,574 

Hygiena Borrower

LLC(2) (4) (5)

 Life Sciences Tools & Services  L + 4.00%; 1.00% Floor  08/26/2022   580   (8)   (12) 

Hygiena Borrower

LLC(2) (4) (5)

 Life Sciences Tools & Services  L + 4.00%; 1.00% Floor  08/26/2022   863   (6)   (17) 
iCIMS, Inc.(1) (2) (3) Software 8.94% L + 6.50%; 1.00% Floor  09/12/2024   45,158   44,291   44,255 
iCIMS, Inc.(1) (2) (3) (4) (5) Software  L + 6.50%; 1.00% Floor  09/12/2024   2,822   (54)   (56) 

Integral Ad Science,

Inc.(1) (2) (3)

 Media 9.78% L + 7.25% (incl. 1.25% PIK); 1.00% Floor  07/19/2024   35,840   35,169   35,123 

Integral Ad Science,

Inc.(1) (2) (3) (4) (5)

 Media  L + 6.00%; 1.00% Floor  07/19/2023   2,741   (50)��  (55) 

Lithium Technologies,

Inc.(1) (2) (3)

 Internet Software & Services 10.39% L + 8.00%; 1.00% Floor  10/03/2022   58,727   57,564   57,553 

Lithium Technologies,

Inc.(1) (2) (3) (4) (5)

 Internet Software & Services  L + 8.00%; 1.00% Floor  10/03/2022   4,046   (76)   (81) 
Midwest Transport, Inc.(1) (2) Road & Rail 9.80% L + 7.00%; 1.00% Floor  10/02/2023   18,960   18,778   18,770 
MMIT Holdings, LLC(1) (2) Health Care Technology 8.02% L + 5.50%; 1.00% Floor  11/15/2024   13,400   13,137   13,132 

MMIT Holdings,

LLC(1) (2) (4) (5)

 Health Care Technology  L + 5.50%; 1.00% Floor  11/15/2024   3,830   (75)   (77) 

Netvoyage

Corporation(1) (2) (3)

 Software 11.53% L + 9.00%; 1.00% Floor  03/24/2022   13,729   13,531   13,557 

Netvoyage

Corporation(1) (2) (3) (4) (5)

 Software  L + 9.00%; 1.00% Floor  03/24/2022   1,044   (14)   (13) 

Picture Head Midco

LLC(1) (2) (3)

 Media 9.27% L + 6.75%; 1.00% Floor  08/31/2023   34,930   34,270   34,231 

Picture Head Midco

LLC(1) (2) (3) (4)

 Media 9.27% L + 6.75%; 1.00% Floor  08/31/2023   3,840   1,116   1,075 

Picture Head Midco

LLC(1) (2) (3) (4) (5)

 Media  L + 6.75%; 1.00% Floor  08/31/2023   3,840   (72)   (77) 
Power Stop, LLC(1) (2) Auto Components 7.55% L + 4.75%  10/19/2025   11,500   11,472   11,443 
SF Home Décor, LLC(1) (2) (3) Household Products 12.31% L + 9.50%; 1.00% Floor  07/13/2022   29,625   28,944   28,810 
SPay, Inc.(1) (2) (3) Internet Software & Services 8.22% L + 5.75%; 1.00% Floor  06/17/2024   15,500   15,213   15,113 
SPay, Inc.(1) (2) (3) (4) Internet Software & Services 8.34% L + 5.75%; 1.00% Floor  06/17/2024   1,730   1,237   1,225 
SPay, Inc.(1) (2) (3) (4) (5) Internet Software & Services  L + 5.75%; 1.00% Floor  06/17/2024   8,630   (79)   (216) 
VRC Companies, LLC(2) (3) (4) Commercial Services & Supplies 9.03% L + 6.50%; 1.00% Floor  03/31/2023   5,546   4,181   4,178 
VRC Companies, LLC(2)(3) Commercial Services & Supplies 9.02% L + 6.50%; 1.00% Floor  03/31/2023   2,826   2,802   2,798 
VRC Companies, LLC(2) (3) (4) Commercial Services & Supplies 9.45% L + 6.50%; 1.00% Floor  03/31/2022   264   132   132 
Wine.com, LLC(1) (2) Beverages 9.86% L + 7.00%; 1.00% Floor  11/14/2024   9,600   9,411   9,408 
Wrike, Inc.(1) (2) Professional Services 9.28% L + 6.75%; 1.00% Floor  12/31/2024   29,687   29,094   29,094 
Wrike, Inc.(1) (2) (4) (5) Professional Services  L + 6.75%; 1.00% Floor  12/31/2024   2,400   (48)   (48) 

Xactly

Corporation(1) (2) (3)

 Internet Software & Services 9.78% L + 7.25%; 1.00% Floor  07/29/2022   34,390   33,854   33,874 

Xactly

Corporation(1) (2) (3) (4) (5)

 Internet Software & Services  L + 7.25%; 1.00% Floor  07/29/2022   2,554   (37)   (38) 
Yasso, Inc.(1) (2) (3) Food Products 10.27% L + 7.75%; 1.00% Floor  03/23/2022   12,937   12,757   12,323 
      

 

 

  

 

 

 

Total 1st Lien/Senior Secured Debt

     743,103   741,446 
1stLien/Last-Out Unitranche (7) – 20.22%     
Intelligent Document Solutions, Inc.(1) (2) (3) Diversified Financial Services 8.80% L + 6.00%; 1.00% Floor  02/28/2024   30,800   29,907   29,876 
Intelligent Document Solutions,
Inc.(1) (2) (3) (4)		 Diversified Financial Services 8.79% L + 6.00%; 1.00% Floor  02/28/2024   21,100   12,144   12,111 
RugsUSA, LLC(1) (2) (3) Household Products 9.31% L + 6.50%; 1.00% Floor  04/30/2023   8,830   8,752   8,742 
Smarsh, Inc.(1) (2) (3) Software 10.41% L + 7.88%; 1.00% Floor  03/31/2021   56,641   55,887   56,075 
Vantage Mobility International, LLC(2) (3) Health Care Equipment & Supplies 10.28% L + 7.75%; 1.00% Floor  09/09/2021   25,111   24,808   22,725 
You Fit, LLC(2) (3) Diversified Consumer Services 9.55% L + 6.75%; 1.00% Floor  01/04/2022   34,500   33,758   33,724 
      

 

 

  

 

 

 

Total 1stLien/Last-Out Unitranche

     165,256   163,253 
2nd Lien/Senior Secured Debt– 57.81%     
American Dental Partners, Inc.(1) (2) (3) Health Care Providers & Services 11.30% L + 8.50%; 1.00% Floor  09/25/2023   9,180   9,000   8,996 
Chase Industries, Inc.(1) (2) (3) Building Products 10.61% L + 8.00%; 1.00% Floor  05/11/2026   25,700   24,970   24,865 

The accompanying notes are part of these unaudited consolidated financial statements.

14

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2018 (continued)

(in thousands, except unit and per unit amounts)

Portfolio Company Industry Interest Rate (+) Reference Rate and
Spread(+)		 Maturity  Par Amount (++)  Cost  Fair Value 

Chase Industries,

Inc.(1) (2) (3) (4) (5)

 Building Products  L + 8.00%; 1.00% Floor  05/11/2026  $6,400  $(177)  $(208) 

Country Fresh Holdings,

LLC(1) (2) (3)

 Food Products 11.20% L + 8.75%; 1.00% Floor  10/02/2023   13,800   13,573   11,454 
DuBois Chemicals, Inc.(1) (2) Chemicals 10.52% L + 8.00%; 1.00% Floor  03/15/2025   25,330   24,900   24,823 
ERC Finance, LLC(1) (2) (3) Health Care Providers & Services 10.74% L + 8.22%; 1.00% Floor  09/22/2025   29,800   29,204   29,204 
Genesis Acquisition Co.(1) (2) (3) Diversified Financial Services 10.02% L + 7.50%  07/31/2025   10,500   10,248   10,211 

Genesis Acquisition

Co.(1) (2) (3) (4) (5)

 Diversified Financial Services  L + 7.50%  07/31/2025   2,700   (32)   (74) 
Granicus, Inc.(2) (3) Software 11.77% L + 9.00%; 1.00% Floor  09/07/2023   31,875   31,407   31,397 
Hygiena Borrower LLC(2) (3) Life Sciences Tools & Services 10.55% L + 7.75%; 1.00% Floor  08/26/2023   2,810   2,758   2,761 
Hygiena Borrower LLC(2) (3) (4) Life Sciences Tools & Services 10.55% L + 7.75%; 1.00% Floor  08/26/2023   1,030   136   129 
ICP Industrial, Inc.(1) (2) (3) Chemicals 10.68% L + 8.25%; 1.00% Floor  05/03/2024   30,700   30,038   30,009 
Institutional Shareholder Services Inc.(1) (2) Diversified Financial Services 10.55% L + 7.75%; 1.00% Floor  10/16/2025   7,700   7,666   7,546 

Intelligent Medical

Objects, Inc.(1) (2) (3)

 Health Care Technology 11.27% L + 8.50%; 1.00% Floor  12/22/2024   18,500   18,086   18,315 
Market Track, LLC(1) (2) (3) Internet Catalog & Retail 10.18% L + 7.75%; 1.00% Floor  06/05/2025   32,800   31,955   31,160 
National Spine and Pain Centers, LLC(1) (2) (3) Health Care Providers & Services 10.77% L + 8.25%; 1.00% Floor  12/02/2024   28,500   27,776   27,787 
Odyssey Logistics & Technology Corporation(1) (2) Road & Rail 10.52% L + 8.00%; 1.00% Floor  10/12/2025   28,152   27,577   27,378 
Recipe Acquisition Corp.(2) (3) Food Products 10.81% L + 8.00%; 1.00% Floor  12/01/2022   20,000   19,736   19,750 
RSC Acquisition, Inc.(1) (2) (3) Insurance 10.53% L + 8.00%; 1.00% Floor  11/30/2023   12,900   12,786   12,771 
RSC Acquisition, Inc.(1) (2) (3) Insurance 10.80% L + 8.00%; 1.00% Floor  11/30/2023   8,310   8,233   8,227 

RSC Acquisition,

Inc.(1) (2) (3) (4) (5)

 Insurance  L + 8.00%; 1.00% Floor  11/30/2023   6,400   (55)   (64) 

SMB Shipping Logistics,

LLC(1) (2)

 Air Freight & Logistics 10.86% L + 8.00%; 1.00% Floor  02/03/2025   33,333   32,821   32,667 

Spectrum Plastics Group,

Inc.(1) (2)

 Containers & Packaging 9.52% L + 7.00%; 1.00% Floor  01/31/2026   9,975   9,930   9,676 

USRP Holdings,

Inc.(1) (2) (3)

 Insurance 11.55% L + 8.75%; 1.00% Floor  09/29/2025   10,300   10,180   10,171 
USRP Holdings, Inc.(1) (2) (3) (4) Insurance 11.43% L + 8.75%; 1.00% Floor  09/29/2025   2,600   1,687   1,684 

Viant Medical Holdings,

Inc.(1) (2)

 Health Care Equipment & Supplies 10.55% L + 7.75%  07/02/2026   12,470   12,350   12,096 
Xcellence, Inc.(1) (2) (3) IT Services 11.57% L + 8.75%; 1.00% Floor  06/22/2024   19,600   19,159   19,208 
YI, LLC(1) (2) (3) Health Care Equipment & Supplies 10.55% L + 7.75%; 1.00% Floor  11/07/2025   23,000   22,380   22,367 
Zep Inc.(1) (2) Chemicals 11.05% L + 8.25%; 1.00% Floor  08/11/2025   35,700   34,910   32,487 
      

 

 

  

 

 

 

Total 2nd Lien/Senior Secured Debt

    473,202   466,793 
Unsecured Debt– 0.53%     
Recipe Acquisition Corp.(3) Food Products 13.25% PIK   12/21/2022   4,361   4,309   4,295 

Total Unsecured Debt

   4,309   4,295 
      

 

 

  

 

 

 

Total Corporate Debt

   1,385,870   1,375,787 
      

 

 

  

 

 

 
Portfolio Company Industry    Coupon     Shares  Cost  Fair Value 
Preferred Stock– 1.50%     
Accuity Delivery Systems,
LLC^ (1) (3) (8) (9)		 Health Care Providers & Services     145,695  $4,800  $5,760 

Datacor Holdings,

Inc.(3) (6) (8) (9)

 Chemicals  7.00% PIK   1,000,000   1,000   1,470 

Recipe Acquisition

Corp.(3) (8) (9)

 Food Products  11.00% PIK   1,600   1,496   2,029 
Wine.com, LLC(1) (8) (9) Beverages     337,425   2,900   2,900 
      

 

 

  

 

 

 

Total Preferred Stock

     10,196   12,159 

The accompanying notes are part of these unaudited consolidated financial statements.

15

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2018 (continued)

(in thousands, except unit and per unit amounts)

Portfolio Company Industry Coupon Shares  Cost  Fair Value 
Common Stock – 1.40%

 

Collaborative Imaging Holdco, LLC – Class B^^^ (1) (3) (8) Health Care Providers & Services   12,370   1,668   1,944 
Collaborative Imaging Holdco, LLC – Class C^^^ (1) (3) (6) (8) (9) Health Care Providers & Services   11,675   232   324 
Continuum Managed Services LLC – Class A(1) (3) (8) (9) IT Services   1,079   1,079   1,240 
Continuum Managed Services LLC – Class B(1) (3) (8) (9) IT Services   731,623   11   395 
Elah Holdings, Inc.^ (1) (3) (8) (9) Capital Markets   69,386   3,354   3,354 
National Spine and Pain Centers, LLC(1) (3) (8) (9) Health Care Providers & Services   900   900   477 
Wrike, Inc.(1) (8) (9) Professional Services   524,730   3,260   3,260 
Yasso, Inc.(1) (3) (8) (9) Food Products   1,360   1,360   291 
    

 

 

  

 

 

 

Total Common Stock

    11,864   11,285 
Portfolio Company Industry    Units  Cost  Fair Value 
Warrants– 0.02%   
Recipe Acquisition Corp.(3) (8) Food Products   44  $104  $130 
    

 

 

  

 

 

 

Total Warrants

     104   130 
    

 

 

  

 

 

 
TOTAL INVESTMENTS – 173.30%

 

 $1,408,034  $1,399,361 
 

 

 

  

 

 

 
LIABILITIES IN EXCESS OF OTHER ASSETS – (73.30%)

 

 $(591,900) 
     

 

 

 
NET ASSETS – 100.00%

 

 $807,461 
 

 

 

 

(+)

The Consolidated Schedule of Investments discloses the actual interest rate for partially or fully funded debt in effect as of the reporting date. Variable rate loans bear interest at a rate that may be determined by reference to either LIBOR (“L”) or alternate base rate (commonly based on the Prime Rate (“P”)), at the borrower’s option, which reset periodically based on the terms of the credit agreement. L loans are typically indexed to 12 month, 6 month, 3 month, 2 month, 1 month or 1 week L rates. As of December 31, 2018, rates for the 12 month, 6 month, 3 month, 2 month, 1 month and 1 week L are 3.01%, 2.88%, 2.81%, 2.61%, 2.50% and 2.41%, respectively. As of December 31, 2018, P was 5.50%. For investments with multiple reference rates or alternate base rates, the interest rate shown is the weighted average interest rate in effect at December 31, 2018.

(++)

Par amount is denominated in U.S. Dollars (“$”) unless otherwise noted, Euro (“€”).

#

Percentages are based on net assets.

^

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, 5% or more of the portfolio company’s outstanding voting securities. See Note 3 “Significant Agreements and Related Party Transactions”.

^^^

The portfolio company is otherwise deemed to be an “affiliated person” of the Company under the Investment Company Act of 1940. See Note 3 “Significant Agreements and Related Party Transactions”.

(1)

Representco-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company received from the U.S. Securities and Exchange Commission. See Note 3 “Significant Agreements and Related Party Transactions”.

(2)

All, or a portion of, the assets are pledged as collateral for the revolving credit facility with JPMorgan Chase Bank, National Association (the “JPM Revolving Credit Facility”). See Note 6 “Debt”.

(3)

The fair value of the investment was determined using significant unobservable inputs. See Note 5 “Fair Value Measurement”.

(4)

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 8 “Commitments and Contingencies”.

(5)

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.

(6) 

The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire anynon-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of MarchDecember 31, 2018 the aggregate fair value of these securities was $1,642is $31,871 or 0.16%2.22% of the Company’s total assets.

(9)(7)

The rate shown is the annualizedseven-day yield as of March 31, 2018.

PIK - Payment-In-Kind

The accompanying notes are part of these unaudited consolidated financial statements.

10

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2017

(in thousands, except unit and per unit amounts)

Portfolio Company Industry Interest(+) Maturity  Par Amount  Cost  Fair Value 
Investments at Fair Value – 179.61% # 
Corporate Debt – 178.25% 
1st Lien/Senior Secured Debt – 58.51% 
Bullhorn, Inc.(1) Internet Software & Services 8.20% (L + 6.75%; 1.00% Floor)  11/21/2022  $18,421  $18,235  $18,230 
Bullhorn, Inc.(1) (2) Internet Software & Services 8.20% (L + 6.75%; 1.00% Floor)  11/21/2022   952   70   70 
Bullhorn, Inc.( 1) (2) (3) Internet Software & Services (L + 6.75%; 1.00% Floor)  11/21/2022   6,352   (31)   (32) 
Clinical Supplies Management Holdings, Inc.(4) (5) Containers & Packaging 9.23% (L + 7.75%; 1.00% Floor)  10/12/2021   18,672   18,365   18,392 
Clinical Supplies Management Holdings, Inc.(4) (5) Containers & Packaging 9.11% (L + 7.75%; 1.00% Floor)  10/12/2021   5,247   5,162   5,168 
Clinical Supplies Management Holdings, Inc.(2) (3) (4) (5) Containers & Packaging (L + 7.75%; 1.00% Floor)  10/12/2021   2,000   (31)   (30) 

Continuum Managed Services

LLC(1) (4) (5)

 IT Services 10.32% (L + 8.75%; 1.00% Floor)  06/08/2023   31,691   30,878   30,898 

Continuum Managed Services

LLC(1) (2) (3) (4) (5)

 IT Services (L + 8.75%; 1.00% Floor)  06/08/2023   2,658   (65)   (66) 

Continuum Managed Services

LLC(1) (2) (3) (4) (5)

 IT Services (L + 8.75%; 1.00% Floor)  06/08/2022   3,280   (81)   (82) 
Dade Paper & Bag, LLC(1) (4) (5) Distributors 8.93% (L + 7.50%; 1.00% Floor)  06/10/2024   16,318   16,010   16,032 
Datacor Holdings, Inc.(4) (5) Chemicals 9.50%  08/12/2022   14,000   13,770   13,790 
Datto, Inc.(1) (4) IT Services 9.41% (L + 8.00%; 1.00% Floor)  12/07/2022   53,640   52,580   52,567 
Datto, Inc.(1) (2) (3) (4) IT Services (L + 8.00%; 1.00% Floor)  12/07/2022   3,610   (71)   (72) 
FWR Holding Corporation(4) (5) Hotels, Restaurants & Leisure 7.66% (L + 6.00%; 1.00% Floor)  08/21/2023   13,637   13,312   13,296 
FWR Holding Corporation(2) (4) (5) Hotels, Restaurants & Leisure 7.60% (L + 6.00%; 1.00% Floor)  08/21/2023   4,410   601   595 
FWR Holding Corporation(2) (4) (5) Hotels, Restaurants & Leisure 7.57% (L + 6.00%; 1.00% Floor)  08/21/2023   1,764   178   176 
Lithium Technologies, Inc.(1) (4) Internet Software & Services 9.39% (L + 8.00%; 1.00% Floor)  10/03/2022   31,800   31,109   31,085 
Lithium Technologies, Inc.(1) (2) (3) (4) Internet Software & Services (L + 8.00%; 1.00% Floor)  10/03/2022   2,327   (50)   (52) 
Netvoyage Corporation(1) (4) (5) Software 11.07% (L + 9.50%; 1.00% Floor)  03/24/2022   12,527   12,306   12,308 
Netvoyage Corporation(1) (2) (3) (4) (5) Software (L + 9.50%; 1.00% Floor)  03/24/2022   1,044   (18)   (18) 
SF Home Décor, LLC(1) (4) (5) Household Products 11.20% (L + 9.50%; 1.00% Floor)  07/13/2022   30,810   29,946   29,886 
Xactly Corporation(1) (4) (5) Internet Software & Services 8.82% (L + 7.25%; 1.00% Floor)  07/29/2022   29,800   29,242   29,204 
Xactly Corporation(1) (2) (3) (4) (5) Internet Software & Services (L + 7.25%; 1.00% Floor)  07/29/2022   2,554   (47)   (51) 
Yasso, Inc.(1) (4) (5) Food Products 9.44% (L + 7.75%; 1.00% Floor)  03/23/2022   14,391   14,139   13,960 
     

 

 

  

 

 

 

Total 1st Lien/Senior Secured Debt

 

  285,509   285,254 
1stLien/Last-Out Unitranche(6) – 23.17% 
Intelligent Document Solutions, Inc.(1) (4) (5) Diversified Financial Services 9.95% (L + 8.25%; 1.00% Floor)  08/31/2022   17,900   17,475   17,632 
myON, LLC(1) (4) (5) Internet Software & Services 10.07% (L + 8.50%; 1.00% Floor)  02/17/2022   11,300   11,104   11,102 
Smarsh, Inc.(1) (4) (5) Software 9.45% (L + 7.88%; 1.00% Floor)  03/31/2021   26,069   25,664   25,678 
Vantage Mobility International, LLC(4) (5) Health Care Equipment & Supplies 9.32% (L + 7.75%; 1.00% Floor)  09/09/2021   25,111   24,712   24,734 
You Fit, LLC(4) (5) Diversified Consumer Services 8.44% (L + 6.75%; 1.00% Floor)  01/04/2022   34,500   33,551   33,810 
     

 

 

  

 

 

 

Total 1stLien/Last-Out Unitranche

 

  112,506   112,956 
2nd Lien/Senior Secured Debt – 95.79%      
American Dental Partners, Inc.(1) (4) (5) Health Care Providers & Services 10.19% (L + 8.50%; 1.00% Floor)  09/25/2023   13,600   13,292   13,294 

Association Member Benefits Advisors,

LLC(4) (5)

 Insurance 10.31% (L + 8.75%; 1.00% Floor)  06/08/2023   28,000   27,507   27,510 
Country Fresh Holdings, LLC(1) (4) (5) Food Products 10.11% (L + 8.75%; 1.00% Floor)  10/02/2023   13,800   13,538   13,386 
DuBois Chemicals, Inc.(1) (4) (5) Chemicals 9.49% (L + 8.00%; 1.00% Floor)  03/15/2025   20,000   19,579   19,800 
ERC Finance, LLC(1) (4) (5) Health Care Providers & Services 9.58% (L + 8.22%; 1.00% Floor)  09/21/2025   29,800   29,144   29,129 
Granicus, Inc.(4) (5) Software 10.52% (L + 9.00%; 1.00% Floor)  09/07/2023   25,500   25,057   25,054 
ICP Industrial, Inc.(1) Chemicals 9.62% (L + 8.25%; 1.00% Floor)  05/03/2024   24,900   24,289   24,277 
ICP Industrial, Inc.(1) (2) (3) Chemicals (L + 8.25%; 1.00% Floor)  05/03/2024   5,800   (142)   (145) 
Institutional Shareholder Services Inc.(1) (4) Diversified Financial Services 9.11% (L + 7.75%; 1.00% Floor)  10/16/2025   7,700   7,662   7,719 
Intelligent Medical Objects, Inc.(1) (4) Health Care Technology 10.16% (L + 8.50%; 1.00% Floor)  12/22/2024   18,500   18,039   18,038 
Market Track, LLC(1) (4) (5) Internet Catalog & Retail 9.10% (L + 7.75%; 1.00% Floor)  06/05/2025   32,800   31,863   31,816 

The accompanying notes are part of these unaudited consolidated financial statements.

11

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2017 (continued)

(in thousands, except unit and per unit amounts)

Portfolio Company Industry Interest(+) Maturity  Par Amount  Cost  Fair Value 
National Spine and Pain Centers, LLC(1) (4) (5) Health Care Providers & Services 9.94% (L + 8.25%; 1.00% Floor)  12/02/2024  $28,500  $27,690  $27,716 

Oasis Outsourcing Holdings,

Inc.(1) (4) (5)

 Diversified Financial Services 8.82% (L + 7.25%; 1.00% Floor)  07/01/2024   33,580   33,101   33,076 

Odyssey Logistics & Technology

Corporation(1)(4)

 Road & Rail 9.57% (L + 8.00%; 1.00% Floor)  10/12/2025   20,300   19,801   20,199 
PPC Industries Inc.(1)(4) Containers & Packaging 9.33% (L + 8.00%; 1.00% Floor)  05/08/2025   13,300   13,175   13,267 
Procare Software, LLC(4) (5) Diversified Financial Services 10.44% (L + 8.75%; 1.00% Floor)  09/30/2022   35,000   34,355   34,825 
Recipe Acquisition Corp.(4) (5) Food Products 10.69% (L + 9.00%; 1.00% Floor)  12/01/2022   20,000   19,683   19,700 
Regulatory DataCorp, Inc.(4) (5) Diversified Financial Services 10.57% (L + 9.00%; 1.00% Floor)  09/21/2023   15,000   14,739   14,775 
SMB Shipping Logistics, LLC(1) (4) (5) Air Freight & Logistics 10.20% (L + 8.75%; 1.00% Floor)  02/03/2025   20,000   19,723   19,700 
Xcellence, Inc.(1)(4) IT Services 10.41% (L + 8.75%; 1.00% Floor)  06/22/2024   16,500   16,089   16,088 
Young Innovations, Inc.(1) 

Health Care Equipment &

Supplies

 9.44% (L + 7.75%; 1.00% Floor)  11/07/2025   23,000   22,320   22,310 
Zep Inc.(1)(4) Chemicals 9.63% (L + 8.25%; 1.00% Floor)  08/11/2025   35,700   34,830   35,432 
     

 

 

  

 

 

 

Total 2nd Lien/Senior Secured Debt

 

  465,334   466,966 
Unsecured Debt – 0.78%      
Recipe Acquisition Corp.(5) Food Products 13.25% PIK  12/21/2022   3,851   3,790   3,783 
     

 

 

  

 

 

 

Total Unsecured Debt

 

  3,790   3,783 
 

 

 

  

 

 

 

Total Corporate Debt

 

  867,139   868,959 
 

 

 

  

 

 

 
Portfolio Company Industry    Coupon  Shares  Cost  Fair Value 
Preferred Stock – 0.61% 
Datacor Holdings, Inc.(5) (7) (8) Chemicals   7.00% PIK   1,000,000  $1,000  $1,290 
Recipe Acquisition Corp.(5) (7) Food Products   11.00% PIK   1,600   1,496   1,689 
     

 

 

  

 

 

 

Total Preferred Stock

      2,496   2,979 
     

 

 

  

 

 

 
Common Stock – 0.73% 

Continuum Managed Services LLC –

Class A(1) (5) (7)

 IT Services    1,079   1,079   1,079 

Continuum Managed Services LLC –

Class B(1) (5) (7)

 IT Services    731,623   11   11 
myON, LLC(1) (5) (7) Internet Software & Services    24,131   900   900 
National Spine and Pain Centers, LLC(1) (5) (7) Health Care Providers & Services    900   900   765 
Yasso, Inc.(1) (5) (7) Food Products    1,360   1,360   818 
     

 

 

  

 

 

 
Total Common Stock      4,250   3,573 
     

 

 

  

 

 

 
Portfolio Company Industry        Units  Cost  Fair Value 
Warrants – 0.02% 
Recipe Acquisition Corp.(5) Food Products    44  $104  $99 
     

 

 

  

 

 

 

Total Warrants

 

  104   99 
     

 

 

  

 

 

 
         Yield  Shares  Cost  Fair Value 
Investments in Affiliated Money Market Fund – 0.27% # 
Goldman Sachs Financial Square Government Fund – Institutional Shares(10)   1.21%(9)   1,312,925  $1,313  $1,313 
     

 

 

  

 

 

 

Total Investments in Affiliated Money Market Fund

     1,313   1,313 
     

 

 

  

 

 

 
TOTAL INVESTMENTS – 179.88%     $875,302  $876,923 
     

 

 

  

 

 

 
LIABILITIES IN EXCESS OF OTHER ASSETS – (79.88%)     $(389,417) 
      

 

 

 
MEMBERS’ CAPITAL – 100.00%      $487,506 
      

 

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

12

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2017 (continued)

(in thousands, except unit and per unit amounts)

(+)

Variable rate loans bear interest at a rate that may be determined by reference to either L or alternate base rate (commonly based on P), at the borrower’s option. L loans are typically indexed to 12 month, 6 month, 3 month, 2 month, 1 month and 1 week L rates. The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting date. For investments with multiple interest rate contracts, the interest rate shown is the weighted average interest rate in effect at December 31, 2017. As of December 31, 2017, rates for the 12 month, 6 month, 3 month, 2 month, 1 month or 1 week L were 2.11%, 1.84%, 1.69%, 1.62%, 1.56% and 1.48%, respectively. As of December 31, 2017, P was 4.50%.

#

Percentages are based on Members’ Capital.

(1)

Representco-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company received from the SEC. See Note 3 “Significant Agreements and Related Party Transactions”.

(2)

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 7 “Commitments and Contingencies”.

(3)

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.

(4)

Assets are pledged as collateral for the JPM Revolving Credit Facility. See Note 6 “Debt”.

(5)

The fair value of the investment was determined using significant unobservable inputs. See Note 5 “Fair Value Measurement”.

(6) 

In exchange for the greater risk of loss, the“last-out” portion of the Company’s unitranche loan investment generally earns a higher interest rate than the“first-out” portions. The“first-out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the“last-out” portion that the Company would continue to hold.

(7)(8)

Securities exempt from registration under the Securities Act, and may be deemed to be “restricted securities” under the Securities Act. As of December 31, 2018, the aggregate fair value of these securities is $23,574 or 2.92% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

InvestmentAcquisition Date
Accuity Delivery Systems, LLC – Preferred Stock06/13/2018
Collaborative Imaging Holdco, LLC – Class B – Common Stock03/30/2018
Collaborative Imaging Holdco, LLC – Class C – Common Stock03/30/2018
Continuum Managed Services LLC – Class A – Common Stock06/08/2017
Continuum Managed Services LLC – Class B – Common Stock06/08/2017
Datacor Holdings, Inc. – Preferred Stock08/12/2016
Elah Holdings, Inc. – Common Stock05/09/2018
National Spine and Pain Centers, LLC – Common Stock06/02/2017
Recipe Acquisition Corp. – Preferred Stock12/22/2016
Recipe Acquisition Corp. – Warrants12/22/2016
Wine.com, LLC – Preferred Stock11/14/2018
Wrike, Inc. – Common Stock12/31/2018
Yasso, Inc. – Common Stock03/23/2017

(9)  

Non-income producing security.

(8)

The investment is not a qualifying asset under Section 55(a) of the Investment Company Act. The Company may not acquire anynon-qualifying

PIK –Payment-In-Kind asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2017 the aggregate fair value ofnon-qualifying assets was $1,290 or 0.14% of the Company’s total assets.

(9)

The rate shown is the annualizedseven-day yield as of December 31, 2017.

(10)

A portion of the assets are pledged as collateral for the JPM Revolving Credit Facility. See Note 6 “Debt”.

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

1316

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2018 (continued)

(in thousands, except unit and per unit amounts)

ADDITIONAL INFORMATION

Foreign currency forward contracts

Counterparty  Currency
Purchased		   Currency
Sold		   Settlement   Unrealized Appreciation
(Depreciation)		 
Bank of America, N.A.   USD 411    EUR 351    01/04/2019   $9 
Bank of America, N.A.   USD 327    EUR 278    02/05/2019    7 
Bank of America, N.A.   USD 420    EUR 356    04/03/2019    9 
Bank of America, N.A.   USD 357    EUR 301    05/06/2019    8 
Bank of America, N.A.   USD 447    EUR 375    07/03/2019    10 
Bank of America, N.A.   USD 360    EUR 301    08/05/2019    9 
Bank of America, N.A.   USD 472    EUR 394    10/04/2019    10 
Bank of America, N.A.   USD 378    EUR 314    11/05/2019    9 
Bank of America, N.A.   USD 472    EUR 390    01/06/2020    11 
Bank of America, N.A.   USD 479    EUR 393    04/06/2020    11 
Bank of America, N.A.   USD 480    EUR 390    07/06/2020    12 
        

 

 

 
        $105 
        

 

 

 

Currency Abbreviations:

EUR – Euro

USD – U.S. Dollar

The accompanying notes are part of these unaudited consolidated financial statements.

17

Goldman Sachs Private Middle Market Credit LLC

Notes to the Consolidated Financial Statements

(in thousands, except unit and per unit amounts)

(Unaudited)

 

1.

ORGANIZATION

Goldman Sachs Private Middle Market Credit LLC (the “Company”, which term refers to either Goldman Sachs Private Middle Market Credit LLC or Goldman Sachs Private Middle Market Credit LLC together with its consolidated subsidiaries, as the context may require), initially established on December 23, 2015 as Private Middle Market Credit LP, a Delaware limited partnership, converted to a Delaware limited liability company on April 4, 2016 and commenced investment operations on July 1, 2016. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2016.

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

Goldman Sachs Asset Management, L.P. (“GSAM”), a Delaware limited partnership and an affiliate of Goldman Sachs & Co. LLC (including its predecessors, “GS & Co.”), is the investment adviser (the “Investment Adviser”) of the Company. The term “Goldman Sachs” refers to The Goldman Sachs Group, Inc. (“Group Inc.”), together with GS & Co., GSAM and its other subsidiaries.

On May 6, 2016 (the “Initial Closing Date”), the Company began accepting subscription agreements (“Subscription Agreements”) from investors acquiring common units of the Company’s limited liability company interests (“Units”) in the Company’s private offering. Under the terms of the Subscription Agreements, investors are required to make capital contributions up to the undrawn amount of their capital commitment to purchase Units each time the Company delivers a drawdown notice. On November 1, 2016, the Company’s board of directors (the “Board of Directors” or the “Board”) approved an amended and restated limited liability company agreement and approved an extension of the final date on which the Company would accept Subscription Agreements to May 5, 2017.

The investment period commenced on the Initial Closing Date and will continue until May 5, 2019, provided that it may be extended by the Board of Directors, in its discretion, for one additionalsix-month period, and, with the approval of amajority-in-interest of the unitholders,Unitholders, for up to one additional year thereafter. In addition, the Board of Directors may terminate the investment period at any time in its discretion.

Following the end of the investment period, the Company will have the right to issue drawdowns only (i) to pay, and/or establish reserves for, actual or anticipated Company expenses, liabilities, including the payment or repayment of indebtedness for borrowed money (including through the issuance of notes and other evidence of indebtedness), other indebtedness, financings or extensions of credit, or other obligations, contingent or otherwise, including the Management Fee (as defined below), whether incurred before or after the end of the investment period, (ii) to fulfill investment commitments made or approved by the Investment Committee (as defined below) prior to the expiration of the Investment Period, (iii) to engage in hedging transactions or (iv) to make additional investments in existing portfolio companies (including transactions to hedge interest rate or currency risks related to such additional investment).

The term of the Company is until May 5, 2024, subject to the Board of Directors’ right to liquidate the Company at any time and to extend the term of the Company for up to two successiveone-year periods. Upon the request of the Board of Directors and the approval of amajority-in-interest of the unitholders,Unitholders, the term of the Company may be further extended.

Credit Alternatives GP LLC (the “Initial Member”), an affiliate of the Investment Adviser, made a capital contribution to the Company of one hundred dollars on June 9, 2016 (inception) and served as the sole initial member of the Company. The Company cancelled the Initial Member’s interest in the Company on July 14, 2016, the first date on which investors (other than the Initial Member) made their initial capital contribution to purchase Units (the “Initial Drawdown Date”).

The Company has formed certain wholly owned subsidiaries, which are structured as Delaware limited liability companies, to hold certain investments, including equity or equity-like investments in portfolio companies and corporate debt of portfolio companies.

 

2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s functional currency is U.S. dollars (“USD”) and these consolidated financial statements have been prepared in that currency. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to RegulationS-X. This requires the Company to make certain estimates and assumptions that may affect the amounts reported in the consolidated financial statements and accompanying notes. These consolidated financial statements reflect normal and recurring adjustments that in the opinion of the Company are necessary for the fair statement of the results for the periods presented. Actual results may differ from the estimates and assumptions included in the consolidated financial statements.

Certain financial information that is included in annual consolidated financial statements, including certain financial statement disclosures, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes related thereto for the year ended December 31, 2017,2018, included in the Company’s Annual Report on Form10-K, which was filed with the SECU.S. Securities and Exchange Commission (the “SEC”) on February 23, 2018.28, 2019. The results for the three months ended March 31, 20182019 are not necessarily indicative of the results to be expected for the full fiscal year, any other interim period or any future year or period.

14

Certain prior period information has been reclassified to conform to the current period presentation. The reclassification has no effect on the Company’s consolidated financial position or the consolidated results of operations as previously reported.

18

As an investment company, the Company applies the accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies (“ASC 946”) issued by the Financial Accounting Standards Board (“FASB”).

Basis of Consolidation

As provided under ASC 946, the Company will not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the financial position and results of operations of its wholly owned subsidiaries, PMMC Blocker I, LLC formerly(formerly known asMy-On PMMC Blocker, LLC), PMMC Blocker II, LLC, PMMC Wine I, LLC and Goldman Sachs Private Middle Market Credit SPV LLC (“SPV”). All significant intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition

The Company records its investment transactions on a trade date basis.basis, which is the date when the Company assumes the risks for gains and losses related to that instrument. Realized gains and losses are based on the specific identification method.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discounts and premiums to par value on investments purchased are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Loan origination fees, original issue discount (“OID”) and market discounts or premiums are capitalized and amortized into interest income using the effective interest method or straight-line method, as applicable. Exit fees that are receivable upon repayment of a loan or debt security are amortized into interest income over the life of the respective investment. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income. For the three months ended March 31, 20182019 and 2017,2018, the Company earned $737$77 and $0$737 in prepayment premiums, respectively, and $740$582 and $1$740 in accelerated accretion of upfront loan origination fees and unamortized discounts, respectively.

Fees received from portfolio companies (directors’ fees, consulting fees, administrative fees, tax advisory fees and other similar compensation) are paid to the Company, unless, to the extent required by applicable law or exemptive relief, if any, therefrom, the Company only receives its allocable portion of such fees when invested in the same portfolio company as another account managed by the Investment Adviser.

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on theex-dividend date for publicly traded portfolio companies. Interest and dividend income are presented net of withholding tax, if any.

Certain investments may have contractualpayment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the principal amount or shares (if equity) of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon the investment being called by the issuer. PIK is recorded as interest or dividend income, as applicable. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed onnon-accrual status. When a PIK investment is placed onnon-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest or dividend income, respectively.

Certain structuring fees, amendment fees and syndication fees are recorded as other income when earned. Administrative agent fees received by the Company are recorded as other income when the services are rendered over time.

Non-Accrual Investments

Loans or debt securitiesInvestments are placed onnon-accrual status when it is probable that principal, interest or interestdividends will not be collected according to contractual terms. Accrued interest or dividends generally isare reversed when a loan or debt securityan investment is placed onnon-accrual status. Interest or dividend payments received onnon-accrual loans or debt securitiesinvestments may be recognized as income or applied to principal depending upon management’s judgment.Non-accrual loans and debt securitiesinvestments are restored to accrual status when past due principal and interest or dividends are paid and, in management’s judgment, principal and interest or dividend payments are likely to remain current. The Company may make exceptions to this treatment if a loan or debt securityan investment has sufficient collateral value and is in the process of collection. As of each of March 31, 20182019, the Company had one investmenton non-accrual status, which represented 0.9% and 0.1% of the total investments (excluding an investment in a money market fund managed by an affiliate of Group Inc. of $11,501) at amortized cost and at fair value, respectively. On December 31, 2017, the Company did not have any2018, we had no investments onnon-accrual status.

15

Investments

The Company carries its investments in accordance with ASC Topic 820,Fair Value Measurements and Disclosures (“ASC 820”), issued by the FASB, which defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations or alternative price sources. In the absence of quoted market prices, broker or dealer quotations or alternative price sources, investments are measured at fair value as determined by the Board of Directors within the meaning of the Investment Company Act.

Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. See Note 5 “Fair Value Measurement.”

19

The Company generally invests in illiquid securities, including debt and equity investments, of middle-market companies. The Board of Directors has delegated to the Investment Adviserday-to-day responsibility for implementing and maintaining internal controls and procedures related to the valuation of the Company’s portfolio investments. Under valuation procedures adopted by the Board of Directors, market quotations are generally used to assess the value of the investments for which market quotations are readily available. The Investment Adviser obtains these market quotations from independent pricing services or at the bid prices obtained from at least two brokers or dealers, if available; otherwise from a principal market maker or a primary market dealer. To assess the continuing appropriateness of pricing sources and methodologies, the Investment Adviser regularly performs price verification procedures and issues challenges as necessary to independent pricing services or brokers, and any differences are reviewed in accordance with the valuation procedures. If the Board of Directors or Investment Adviser has a bona fide reason to believe any such market quotation does not reflect the fair value of an investment, it may independently value such investment in accordance with valuation procedures for investments for which market quotations are not readily available.

With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, the valuation procedures adopted by the Board of Directors contemplate a multi-step valuation process each quarter, as described below:

 

 (1)

The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;

 

 (2)

The Board of Directors also engages independent valuation firms (the “Independent Valuation Advisors”) to provide independent valuations of the investments for which market quotations are not readily available, or are readily available but deemed not reflective of the fair value of an investment. The Independent Valuation Advisors independently value such investments using quantitative and qualitative information provided by the investment professionals of the Investment Adviser and the portfolio companies as well as any market quotations obtained from independent pricing services, brokers, dealers or market dealers. The Independent Valuation Advisors also provide analyses to support their valuation methodology and calculations. The Independent Valuation Advisors provide an opinion on a final range of values on such investments to the Board of Directors or the Audit Committee. The Independent Valuation Advisors define fair value in accordance with ASC 820 and utilize valuation approaches including the market approach, the income approach or both. A portion of the portfolio is reviewed on a quarterly basis, and all investments in the portfolio for which market quotations are not readily available, or are readily available, but deemed not reflective of the fair value of an investment, are reviewed at least annually by an Independent Valuation Advisor;

 

 (3)

The Independent Valuation Advisors’ preliminary valuations are reviewed by the Investment Adviser and the Valuation Oversight Group (“VOG”), a team that is part of the Controllers Department within the Finance Division of Goldman Sachs. The Independent Valuation Advisors’ valuation ranges are compared to the Investment Adviser’s valuations to ensure the Investment Adviser’s valuations are reasonable. VOG presents the valuations to the Private Investment Valuation and Side PocketSub-Committee Working Group of the Investment Management Division Valuation Committee, which is comprised of representatives from GSAM who are independent of the investment decision making process;

 

 (4)

The Investment Management Division Valuation Committee ratifies fair valuations and makes recommendations to the Audit Committee of the Board of Directors;

 

 (5)

The Audit Committee of the Board of Directors reviews valuation information provided by the Investment Management Division Valuation Committee, the Investment Adviser and the Independent Valuation Advisors. The Audit Committee then assesses such valuation recommendations; and

 

 (6)

The Board of Directors discusses the valuations and, within the meaning of the Investment Company Act, determines the fair value of the investments in good faith, based on the inputs of the Investment Adviser, the Independent Valuation Advisors and the Audit Committee.

Money Market Funds

Investments in money market funds are valued at net asset value (“NAV”) per share. See Note 3 “Significant Agreements and Related Party Transactions.”

16

Cash

Cash consists of deposits held at a custodian bank. As of March 31, 20182019 and December 31, 2017,2018, the Company held $12,924an aggregate cash balance of $29,944 and $8,220$25,548, respectively. Foreign currency of $637 (acquisition cost of $646) and $553 (acquisition cost of $550) is included in cash as of March 31, 2019 and December 31, 2018, respectively.

Foreign Currency Translation

Amounts denominated in foreign currencies are translated into U.S. dollarsUSD on the following basis: (i) investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollarsUSD based upon currency exchange rates effective on the datelast business day of valuation;the period; and (ii) purchases and sales of investments, borrowings and repayments of such borrowings, income, and expense itemsexpenses denominated in foreign currencies are translated into U.S. dollarsUSD based upon currency exchange rates prevailing on the transaction dates.

20

The Company does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included within the net realized and unrealized gains or losses on investment transactions.investments. Fluctuations arising from the translation ofnon-investment assets and liabilities are included with the net change in unrealized gains (losses) on foreign currency translations on the Consolidated Statements of Operations.

Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.

Derivatives

Foreign currency forward contracts

The Company may enter into foreign currency forward contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations in the value of foreign currencies. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another, at apre-determined price at a future date. Forward foreign currency contracts aremarked-to-market at the applicable forward rate. Unrealized appreciation (depreciation) on foreign currency forward contracts are recorded on the Consolidated Statements of Financial Condition by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Notional amounts of foreign currency forward contract assets and liabilities are presented separately on the Consolidated Schedules of Investments. Purchases and settlements of foreign currency forward contracts having the same settlement date and counterparty are generally settled net and any realized gains or losses are recognized on the settlement date.

The Company does not utilize hedge accounting and as such, the Company recognizes its derivatives at fair value with changes in the net unrealized appreciation (depreciation) on foreign currency forward contracts recorded on the Consolidated Statements of Operations.

Income Taxes

The Company recognizes tax positions in its consolidated financial statements only when it is more likely than not that the position will be sustained upon examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized upon settlement. The Company reports any interest expense related to income tax matters in income tax expense, and any income tax penalties under expenses in the Consolidated Statements of Operations.

The Company’s tax positions have been reviewed based on applicable statutes of limitation for tax assessments, which may vary by jurisdiction, and based on such review, the Company has concluded that no additional provision for income tax is required in the consolidated financial statements. The Company is subject to potential examination by certain taxing authorities in various jurisdictions. The Company’s tax positions are subject to ongoing interpretation of laws and regulations by taxing authorities.

The Company has elected to be treated as a RIC commencing with its taxable year ended December 31, 2016. So long as the Company maintains its status as a RIC, it will generally not be subjectrequired to pay corporate-level U.S. federal income tax on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. As a result, any U.S. federal income tax liability related to income earned and distributed by the Company represents obligations of the Company’s stockholders and will not be reflected in the consolidated financial statements of the Company.

To maintain its statustax treatment as a RIC, the Company must meet specifiedsource-of-income and asset diversification requirements and timely distribute to its unitholdersUnitholders for each taxable year at least 90% of its investment company taxable income (generally, its net ordinary income plus the excess of its realized net short-term capital gains over realized net long-term capital losses, determined without regard to the dividends paid deduction). In order for the Company not 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 account 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 were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income. If the Company chooses to do so, this generally would increase expenses and reduce the amount available to be distributed to unitholders.Unitholders. The Company will accrue excise tax on estimated undistributed taxable income as required. For the three months ended March 31, 2018 and 2017, the Company accrued excise taxes of $0 and $0, respectively.

Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state corporate level income taxes. Income tax expense, if any, is included under the income category for which it applies in the Consolidated Statements of Operations. For the three months ended March 31, 20182019 and 2017,2018, the Company accrued incomeprovision for taxes on realized gains on investments of $0 and $672, respectively. For the three months ended March 31, 2019 and 2018, the Company accrued provision for taxes on unrealized gains on investments of $111 and $0, respectively. As of March 31, 2018, $6722019, $1,192 of income taxes remained payable.

21

Distributions

Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with GAAP. The Company 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 unitholder’sUnitholder’s tax basis in its Units. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent they are charged or credited to common Units, 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 Company’s annual RIC tax return. Distributions to common unitholdersUnitholders are recorded on theex-dividend date. The amount to be paid out as a distribution is determined by the Board of Directors each quarter and is generally based upon the earnings estimated by the Investment Adviser. The Company may pay distributions to its unitholdersUnitholders in a year in excess of its net ordinary income and capital gains for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. The Company intends to timely distribute to its unitholdersUnitholders substantially all of its annual taxable income for each year, except that the Company may retain certain net capital gains for reinvestment and depending upon the level of the Company’s taxable income earned in a year, the Company 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 Company’s distributions will be reported to unitholdersUnitholders after the end of the calendar year. All distributions will be subject to available funds, and no assurance can be given that the Company will be able to declare such distributions in future periods.

17

Deferred Financing Costs

Deferred financing costs consist of fees and expenses paid in connection with the closing of, and amendments to, the JPM Revolving Credit Facility and the revolving credit facility between the Company and Bank of America, N.A. (the “BoA Revolving Credit Facility” and together with the JPM Revolving Credit Facility, the “Revolving Credit Facilities”). These costs are amortized using the straight-line method over the respective term of the Revolving Credit Facilities.Facility. Deferred financing costs related to the Revolving Credit Facilities are presented separately as an asset on the Company’s Consolidated Statements of Financial Condition.

Offering CostsNew Accounting Pronouncements

Offering costs consist primarilyIn October 2018, the SEC adopted the final rule under SEC releaseNo. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The Company is no longer required to present components of feesdistributable earnings on the Consolidated Statements of Financial Condition or the sources of distributable earnings and expenses incurredthe amount of undistributed net investment income on the Consolidated Statements of Changes in connection withMembers’ Capital. Prior period information has been reclassified to conform to the continuous offering of Units, including legal, printingcurrent period presentation and other costs, as well as costs associated with the preparation and filing ofthis had no effect on the Company’s registration statement on Form 10. Offering costs were recognizedconsolidated financial position or the consolidated results of operations as previously reported. The following provides the prior period reclassifications.

Consolidated Statements of Changes in Members’ Capital – The table below provides a deferred chargereconciliation for previously disclosed distributions from net investment income and were amortized on a straight line basis over 12realized gain for the three months beginning onended March 31, 2018 to distributions from distributable earnings as disclosed in the date of commencement of investment operations.current filing.

Distributions to Unitholders from:

  For the three
months ended
  March 31, 2018  		 

Net investment income

  $(16,355) 
  

 

 

 

Total distributions to Unitholders

  $(16,355) 
  

 

 

 

 

3.

SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

The Company entered into an investment advisory agreement effective as of April 11, 2016 (the “Investment Advisory Agreement”) with the Investment Adviser, pursuant to which the Investment Adviser manages the Company’s investment program and related activities.

Management Fee

The Company pays the Investment Adviser a management fee (the “Management Fee”), payable quarterly in arrears, equal to 0.375% (i.e., an annual rate of 1.50%) of the average NAV of the Company (includingun-invested cash and cash equivalents) at the end of the then-current quarter and the prior calendar quarter (and, in the case of the Company’s first quarter, the NAV as of suchquarter-end). The Management Fee for any partial quarter will be appropriately prorated.

For the three months ended March 31, 20182019 and 2017,2018, Management Fees amounted to $1,937$3,221 and $787,$1,937, respectively. As of March 31, 2018, $1,9372019, $3,221 remained payable.

22

Incentive Fee

Pursuant to the Investment Advisory Agreement, the Company pays to the Investment Adviser an Incentive Fee (the “Incentive Fee”) as follows:

 

 a)

First, no Incentive Fee is payable to the Investment Adviser until the Company has made cumulative distributions pursuant to this clause (a) equal to aggregate Contributed Capital (as defined below);

 

 b)

Second, no Incentive Fee is payable to the Investment Adviser until the Company has made cumulative distributions pursuant to this clause (b) equal to a 7% return per annum, compounded annually, on aggregate unreturned Contributed Capital, from the date each capital contribution is made through the date such capital has been returned;

 

 c)

Third, subject to clauses (a) and (b), the Investment Adviser is entitled to an Incentive Fee equal to 100% of all amounts designated by the Company as proceeds intended for distribution and Incentive Fee payments, until such time as the cumulative Incentive Fee paid to the Investment Adviser pursuant to this clause (c) is equal to 15% of the amount by which the sum of (i) cumulative distributions to unitholdersUnitholders pursuant to clauses (a) and (b) above and (ii) the cumulative Incentive Fee previously paid to the Investment Adviser pursuant to this clause exceeds Contributed Capital; and

 

 d)

Fourth, at any time that clause (c) has been satisfied, the Investment Adviser is entitled to an Incentive Fee equal to 15% of all amounts designated by the Company as proceeds intended for distribution and Incentive Fee payments.

The Incentive Fee is calculated on a cumulative basis and the amount of the Incentive Fee payable prior to a proposed distribution will be determined and, if applicable, paid in accordance with the foregoing formula each time amounts are to be distributed to the unitholders.Unitholders. The Incentive Fee is a fee owed by the Company to the Investment Adviser and is not paid out of distributions made to unitholders.Unitholders.

In no event will an amount be paid with respect to the Incentive Fee to the extent it would cause the aggregate amount of the Company’s capital gains paid in respect of the Incentive Fee to exceed 20% of the Company’s realized capital gains computed net of all realized capital losses and unrealized capital depreciation, in each case determined on a cumulative basis from inception of the Company through the date of the proposed payment (the “Incentive Fee Cap”).

18

“Contributed Capital” is the aggregate amount of capital contributions that have been made by all unitholdersUnitholders in respect of their Units to the Company. All distributions (or deemed distributions), including investment income (i.e. proceeds received in respect of interest payments, dividends and fees) and proceeds attributable to the repayment or disposition of any Investment, to unitholdersUnitholders will be considered a return of Contributed Capital. Unreturned Contributed Capital equals aggregate Contributed Capital minus cumulative distributions, but is never less than zero.

The term “proceeds intended for distribution and Incentive Fee payments” includes proceeds from the full or partial realization of the Company’s Investments and income from investing activities and may include return of capital, ordinary income and capital gains.

If, at the termination of the Company, the Investment Adviser has received aggregate payments of Incentive Fees in excess of the amount the Investment Adviser would have received had the Incentive Fees been determined upon such termination, then the Investment Adviser will reimburse the Company for the difference between the amount of Incentive Fees actually received and the amount determined at termination (the “Investment Adviser Reimbursement Obligation”). However, the Investment Adviser will not be required to reimburse the Company an amount greater than the aggregate Incentive Fees paid to the Investment Adviser, reduced by the excess (if any) of (a) the aggregate federal, state and local income tax liability the Investment Adviser incurred in connection with the payment of such Incentive Fees (assuming the highest marginal applicable federal and New York city and state income tax rates applied to such payments), over (b) an amount equal to the U.S. federal and state tax benefits available to the Investment Adviser by virtue of the payment made by the Investment Adviser pursuant to its Investment Adviser Reimbursement Obligation (assuming that, to the extent such payments are deductible by the Investment Adviser, the benefit of such deductions will be computed using the then highest marginal applicable federal and New York city and state income tax rates).

If the Investment Advisory Agreement is terminated prior to the termination of the Company (other than the Investment Adviser voluntarily terminating the agreement), the Company will pay to the Investment Adviser a final Incentive Fee payment (the “Final Incentive Fee Payment”). The Final Incentive Fee Payment will be calculated as of the date the Investment Advisory Agreement is terminated and will equal the amount of Incentive Fee that would be payable to the Investment Adviser if (a) all Investments were liquidated for their current value (but without taking into account any unrealized appreciation of any Investment), and any unamortized deferred Investment-related fees would be deemed accelerated, (b) the proceeds from such liquidation were used to pay all of the Company’s outstanding liabilities, and (c) the remainder was distributed to unitholdersUnitholders and paid as Incentive Fee in accordance with the Incentive Fee waterfall described above for determining the amount of the Incentive Fee, subject to the Incentive Fee Cap. The Company will make the Final Incentive Fee Payment in cash on or immediately following the date the Investment Advisory Agreement is so terminated. The Investment Adviser Reimbursement Obligation will be determined as of the date of the termination of the Investment Advisory Agreement for purposes of the Final Incentive Fee Payment.

For the three months ended March 31, 20182019 and 2017,2018, the Company accrued unvested Incentive Fees of $2,743$2,397 and $0,$2,743, respectively. As of March 31, 2018, $8,607 was2019, $19,577 remained payable in accordance with the terms of the Investment Advisory Agreement.

23

Expense Limitation

Pursuant to the Investment Advisory Agreement, Company expenses borne by the Company in the ordinary course on an annual basis (excluding Management Fee, Incentive Fee, organizational andstart-up expenses and leverage-related expenses) will not exceed an amount equal to 0.5% of the aggregate amount of commitments to the Company by holders of its common Units; provided, however, that expenses incurred outside of the ordinary course, including litigation and similar expenses, are not subject to such cap. For the three months ended March 31, 2019 and 2018, and 2017, there werehave been no reimbursements from the Investment Adviser pursuant to this provision.

Administration and Custodian Fees

The Company has entered into an administration agreement with State Street Bank and Trust Company (the “Administrator”) under which the Administrator provides various accounting and administrative services to the Company. The Company pays the Administrator fees for its services as it determines are commercially reasonable in its sole discretion. The Company also reimburses the Administrator for all reasonable expenses. To the extent that the Administrator outsources any of its functions, the Administrator pays any compensation associated with such functions. The Administrator also serves as the Company’s custodian (the “Custodian”).

For the three months ended March 31, 20182019 and 2017,2018, the Company incurred expenses for services provided by the Administrator and the Custodian of $185$270 and $83,$185, respectively. As of March 31, 2018, $1142019, $134 remained payable.

Transfer Agent Fees

State Street Bank and Trust Company serves as the Company’s transfer agent (“Transfer Agent”), registrar and disbursing agent. For the three months ended March 31, 20182019 and 2017,2018, the Company incurred expenses for services provided by the Transfer Agent of $26$29 and $15,$26, respectively. As of March 31, 2018, $472019, $42 remained payable.

19

Affiliates

The Company’s investments in affiliates for the three months ended March 31, 20182019 were as follows:

 

 

Fair Value as of

December 31,

2017

 

Gross

Additions(2)

 

Gross

Reductions(3)

 

Net Realized

Gains/(Losses)

 

Change in

Unrealized Gains/

(Losses)

 

Fair Value as of

March 31,

2018

 

Dividend,

Interest,

and PIK

Income

 Other
Income		   

Fair Value as of

December 31,

2018

   

Gross

Additions(2)

   

Gross

Reductions(3)

 

Net Realized

Gains/(Losses)

   

Change in

Unrealized Gains/

(Losses)

 

Fair Value as of

March 31,

2019

   

Dividend,

Interest

and Other

Income

 
Non-Controlled Affiliates                    
Goldman Sachs Financial Square Government Fund(1) $1,313  $131,040  $(113,938)  $–  $–  $18,415  $39  $–   $–   $173,195   $(161,694)  $–   $–  $11,501   $69 
Collaborative Imaging, LLC  –  15,099   –   –  (134)  14,965  3   – 
Accuity Delivery Systems, LLC   20,688    18    –   –    577  21,283    396 
Collaborative Imaging Holdco, LLC   15,400    5    –   –    (135)  15,270    335 
Elah Holdings, Inc.   3,354    –    –   –    –  3,354    – 
TotalNon-Controlled Affiliates $1,313  $146,139  $(113,938)  $–  $(134)  $33,380  $42  $–   $39,442   $173,218   $(161,694)  $–   $442  $51,408   $800 

 

(1)  

Fund advised by an affiliate of Goldman Sachs.

(2)  

Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

(3)  

Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

The Company’s investments in affiliates for the year ended December 31, 20172018 were as follows:

 

 

Fair Value as of

December 31,
2016

 

Gross

Additions(2) 

 

Gross

Reductions(3) 

 

Net Realized

Gains/(Losses)

 

Change in

Unrealized Gains/

(Losses)

 

Fair Value as of

December 31,

2017

 

Dividend,

Interest,

and PIK

Income

 Other
Income		   

Fair Value as of

December 31,

2017

   

Gross

Additions(2)

   

Gross

Reductions(3)

 

Net Realized

Gains/(Losses)

   

Change in

Unrealized Gains/

(Losses)

   

Fair Value as of

December 31,

2018

   

Dividend,

Interest

and Other

Income

 
Non-Controlled Affiliates                     
Goldman Sachs Financial Square Government Fund(1) $138,311  $226,504  $(363,502)  $–  $–  $1,313  $18  $–   $1,313   $563,297   $(564,610)  $–   $–   $–   $202 
Accuity Delivery Systems, LLC   –    19,730    –   –    958    20,688    860 
Collaborative Imaging Holdco, LLC   –    15,115    –   –    285    15,400    1,053 
Elah Holdings, Inc.   –    3,354    –   –    –    3,354    – 
TotalNon-Controlled Affiliates $138,311  $226,504  $(363,502)  $–  $–  $1,313  $18  $–   $1,313   $601,496   $(564,610)  $–   $1,243   $39,442   $2,115 

 

(1)  

Fund advised by an affiliate of Goldman Sachs.

(2)  

Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

(3)  

Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

 

2024

Co-investment Activity

In certain circumstances, negotiatedco-investments by the Company and other funds managed by the Investment Adviser may be made only pursuant to an order from the SEC permitting the Company to do so. On January 4, 2017, the SEC granted GSAM, Goldman Sachs BDC, Inc. (“GS BDC”), Goldman Sachs Middle Market Lending Corp. (“GS MMLC”) and the Company exemptive relief (“Exemptive Relief”) that permits the Company toco-invest with GS BDC, GS MMLC and certain other funds that may be managed by GSAM, including the GSAM Credit Alternatives Team, in the future, subject to certain terms and conditions in the Exemptive Relief. The GSAM Credit Alternatives Team is comprised of investment professionals dedicated to the Company’s investment strategy and other funds that share a similar investment strategy with the Company, who are responsible for identifying investment opportunities, conducting research and due diligence on prospective investments, negotiating and structuring the Company’s investments and monitoring and servicing the Company’s investments, together with investment professionals who are primarily focused on investment strategies in syndicated, liquid credit. Under the terms of the Exemptive Relief, a “required majority” (as defined in Section 57(o) of the Investment Company Act) of the Company’s independent directors must make certain conclusions in connection with aco-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to the Company and the Company’s stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the then-current investment objectives and strategies of the Company. As a result of the Exemptive Relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolios of GS BDC, GS MMLC and/or other funds established by the GSAM Credit Alternatives Team that could avail themselves of the Exemptive Relief.

Due To Affiliates

The Investment Adviser paidpays certain general and administrative expenses on behalf of the Company in the ordinary course of business. As of March 31, 20182019 and December 31, 2017,2018, there were $365$592 and $12,$486, respectively, included within Accrued expenses and other liabilities and $109 and $68, respectively, included within Interest and other debt expense payable paid by the Investment Adviser and its affiliates on behalf of the Company.

Co-investment Activity

In certain circumstances, negotiatedco-investments by the Company and other funds managed by the Investment Adviser may be made only pursuant to an order from the SEC permitting the Company to do so. On January 4, 2017, the Company and GSAM, Goldman Sachs BDC, Inc. (“GS BDC”) and Goldman Sachs Middle Market Lending Corp. (“GS MMLC”) received exemptive relief (“Exemptive Relief”) that permits the Company toco-invest with GS BDC, GS MMLC and certain other funds that may be managed by GSAM, including the GSAM Credit Alternatives Team, after the date of the exemptive order, subject to certain conditions including that co-investments are made in a manner consistent with the Company’s investment objectives, positions, policies, strategies and restrictions, as well as regulatory requirements and pursuant to the conditions required by the Exemptive Relief, and are allocated fairly amount participants. The GSAM Credit Alternatives Team is comprised of investment professionals dedicated to the Company’s investment strategy and other funds that share a similar investment strategy with the Company, who are responsible for identifying investment opportunities, conducting research and due diligence on prospective investments, negotiating and structuring the Company’s investments and monitoring and servicing the Company’s investments, together with investment professionals who are primarily focused on investment strategies in syndicated, liquid credit. Under the terms of the Exemptive Relief, a “required majority” (as defined in Section 57(o) of the Investment Company Act) of the Company’s independent directors must make certain conclusions in connection with aco-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to the Company and the Company’s stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the then-current investment objectives and strategies of the Company. As a result of the Exemptive Relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolios of GS BDC, GS MMLC and/or other funds established by the GSAM Credit Alternatives Team that could avail themselves of the Exemptive Relief.

 

4.

INVESTMENTS

As of the dates indicated, the Company’s investments (excluding an investment in a money market fund managed by an affiliate of Group Inc. of $18,415$11,501 and $1,313,$0, respectively) consisted of the following:

 

  March 31, 2018   December 31, 2017   March 31, 2019   December 31, 2018 
Investment Type  Cost   Fair Value   Cost   Fair Value   Cost   Fair Value   Cost   Fair Value 
1st Lien/Senior Secured Debt  $312,579   $312,289   $285,509   $285,254   $833,405   $830,557   $743,103   $741,446 
1stLien/Last-Out Unitranche   143,552    143,368    112,506    112,956    169,505    167,140    165,256    163,253 
2nd Lien/Senior Secured Debt   497,295    499,044    465,334    466,966    461,102    443,629    473,202    466,793 
Unsecured Debt   3,792    3,783    3,790    3,783    4,312    4,295    4,309    4,295 
Preferred Stock   2,496    3,149    2,496    2,979    10,196    12,799    10,196    12,159 
Common Stock   5,250    4,930    4,250    3,573    11,863    12,498    11,864    11,285 
Warrants   104    86    104    99    104    138    104    130 

Total Investments

  $965,068   $966,649   $873,989   $875,610   $1,490,487   $1,471,056   $1,408,034   $1,399,361 

 

2125

As of the dates indicated, the industry composition of the Company’s portfolio at fair value and net assets was as follows:

 

  March 31, 2018 December 31, 2017   March 31, 2019 December 31, 2018 
Industry  Fair Value Net Assets Fair Value Net Assets   Fair Value Net Assets Fair Value Net Assets 
Software   11.3%  18.4%  10.4%  18.0% 
Internet Software & Services   10.3  16.7  9.4  16.3 
IT Services   8.6  14.0  8.4  14.6 
Health Care Providers & Services   8.5  13.8  8.4  14.5 
Chemicals   6.9  11.2  7.3  12.7 
Diversified Financial Services   12.4%  22.1%  12.3%  22.2%    5.8  9.5  6.4  11.1 
Software   10.5  18.7  7.2  12.9 
IT Services   10.4  18.6  11.5  20.6 
Chemicals   10.4  18.6  10.8  19.4 
Internet Software & Services   9.0  16.0  10.3  18.6 
Health Care Providers & Services   8.9  15.9  8.1  14.5 
Health Care Technology   5.5  8.9  4.7  8.1 
Media   4.8  7.8  5.0  8.7 
Health Care Equipment & Supplies   4.7  7.6  4.9  8.5 
Professional Services   4.1  6.6  4.4  7.6 
Road & Rail   3.1  5.1  3.3  5.7 
Food Products   5.5  9.8  6.1  11.0    2.7  4.4  3.6  6.2 
Insurance   5.2  9.3  3.1  5.6    2.7  4.4  2.3  4.1 
Health Care Equipment & Supplies   4.8  8.6  5.4  9.7 
Diversified Consumer Services   3.5  6.2  3.9  6.9 
Containers & Packaging   3.4  6.2  4.2  7.6 
Internet Catalog & Retail   3.3  5.9  3.6  6.5    2.6  4.2  2.2  3.9 
Household Products   3.1  5.5  3.4  6.1    2.5  4.1  2.7  4.7 
Road & Rail   2.1  3.8  2.3  4.1 
Diversified Consumer Services   2.3  3.8  2.4  4.2 
Diversified Telecommunication Services   2.2  3.6  2.4  4.1 
Air Freight & Logistics   2.0  3.7  2.3  4.0    2.2  3.6  2.3  4.0 
Health Care Technology   1.9  3.3  2.1  3.7 
Building Products   1.7  2.7  1.8  3.1 
Real Estate Management & Development   1.4  2.2  1.4  2.4 
Hotels, Restaurants & Leisure   1.2  2.0  1.3  2.2 
Distributors   1.9  3.3  1.8  3.3    1.2  2.0  1.3  2.2 
Hotels, Restaurants & Leisure   1.6  2.9  1.6  2.9 
Beverages   0.8  1.4  0.9  1.5 
Auto Components   0.8  1.2  0.8  1.4 
Containers & Packaging   0.7  1.0  0.7  1.2 
Commercial Services & Supplies   0.6  1.0  0.5  0.9 
Life Sciences Tools & Services   0.6  0.9  0.6  1.0 
Capital Markets   0.1  0.2   –   –    0.2  0.4  0.2  0.4 
Commercial Services & Supplies(1)   (0.0)  (0.0)   –   – 
Transportation Infrastructure(1)   0.0  0.0   –   – 

Total

   100.0%   178.6%   100.0%   179.6%    100.0%   162.5%   100.0%   173.3% 

 

(1) 

Position is an unfunded loan commitment. The negative fair value is the result of the capitalized discount on the loan.commitment

As of the dates indicated, the geographic composition of the Company’s portfolio at fair value was as follows:

 

Geographic  March 31, 2018 December 31, 2017   March 31, 2019 December 31, 2018 
United States   100.0%  100.0%    98.0%  97.9% 
Ireland   2.0  2.1 

Total

   100.0%   100.0%    100.0%   100.0% 

 

5.

FAIR VALUE MEASUREMENT

The fair value of a financial instrument is the amount that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price).

The fair value hierarchy under ASC 820 prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities. The three levels of the fair value hierarchy are as follows:

Basis of Fair Value Measurement

Level 1 – Inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date. The types of financial instruments included in Level 1 include unrestricted securities, including equities and derivatives, listed in active markets.

Level 2 – Inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The types of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities and certainover-the-counter derivatives where the fair value is based on observable inputs.

26

Level 3 – Inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category include investments in privately held entities and certainover-the-counter derivatives where the fair value is based on unobservable inputs.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Note 2 “Significant Accounting Policies” should be read in conjunction with the information outlined below.

The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 2 Instruments.

 

22

Level 2 Instruments  Valuation Techniques and Significant Inputs
Equity and Fixed Income  

The types of instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency include commercial paper, most government agency obligations, most corporate debt securities, certain mortgage-backed securities, certain bank loans, less liquid publicly listed equities, certain state and municipal obligations, certain money market instruments and certain loan commitments.

 

Valuations of Level 2 Equity and Fixed Income instruments can be verified to quoted prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g. indicative or firm) and the relationship of recent market activity to the prices provided from alternative pricing sources.

Derivative Contracts

OTC derivatives (both centrally cleared and bilateral) are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, calibration to market-clearing transactions, broker or dealer quotations, or other alternative pricing sources with reasonable levels of price transparency. Where models are used, the selection of a particular model to value an OTC derivative depends upon the contractual terms of, and specific risks inherent in, the instrument, as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, voluntary and involuntary prepayment rates, loss severity rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, model inputs can generally be verified and model selection does not involve significant management judgment. OTC derivatives are classified within Level 2 of the fair value hierarchy when significant inputs are corroborated by market evidence.

The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 3 Instruments.

 

Level 3 Instruments  Valuation Techniques and Significant Inputs
Bank Loans, Corporate Debt, and Other Debt Obligations  

Valuations are generally based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market yields and recovery assumptions. The significant inputs are generally determined based on relative value analyses, which incorporate comparisons both to credit default swaps that reference the same underlying credit risk and to other debt instruments for the same issuer for which observable prices or broker quotes are available. Other valuation methodologies are used as appropriate including market comparables, transactions in similar instruments and recovery/liquidation analysis.

Equity

  

Recent third-party investments or pending transactions are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate and available:

•  Transactions in similar instruments;

•  Discounted cash flow techniques;

•  Third party appraisals; and

•  Industry multiples and public comparables.

Evidence includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including:

•  Current financial performance as compared to projected performance;

•  Capitalization rates and multiples; and

•  Market yields implied by transactions of similar or related assets.

 

2327

The tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets and liabilities as of March 31, 20182019 and December 31, 2017.2018. These ranges represent the significant unobservable inputs that were used in the valuation of each type of instrument, but they do not represent a range of values for any one instrument. For example, the lowest yield in 1st Lien/Senior Secured Debt is appropriate for valuing that specific debt investment, but may not be appropriate for valuing any other debt investments in this asset class. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 assets and liabilities.

 

Level 3 Instruments 

Level 3 Assets as of

March 31, 20182019(1)

 

Significant Unobservable

Inputs by Valuation

Techniques(2)

 

Range(3) of Significant

Unobservable

Inputs (Weighted Average(4))

as of

March 31, 20182019

Bank Loans, Corporate Debt, and Other Debt Obligations 1st Lien/Senior Secured Debt Discounted cash flows:  
 $298,236716,959 

•  Discount Rate

 9.4% -7.9% – 13.0% (11.1%(9.7%)
 1st Lien/Last – OutLast-Out Unitranche Discounted cash flows:  
  $143,368167,140 

•  Discount Rate

 10.8% - 12.4% (11.3%8.7% – 16.9% (11.2%)
  2nd Lien/Senior Secured Debt Discounted cash flows:  
  $402,563322,777 

•  Discount Rate

 10.4% - 12.6% (11.7%10.6% – 11.7% (11.2%)
Collateral analysis:

•  Recovery Rate

10.0%
  Unsecured Debt Discounted cash flows:  
  $3,7834,295 

•  Discount Rate

 4.9% - 10.9% (13.6%4.8% – 16.7% (13.7%)
Equity Preferred Stock Discounted cash flows:Comparable multiples:  
  $3,14912,799 

•  Discount Rate

EV/Revenue

 4.9% - 10.9% (11.9%)1.4x – 3.3x (1.1x)
  Comparable multiples:  
   

•  EV/EBITDA(5)

 9.4x - 14.4x (10.0x)11.0x – 15.8x (14.6x)
  Common Stock 

Comparable multiples:

Discounted cash flows:		  
  $3,03012,498

•  Discount Rate

15.0% – 30.8% (25.0%)
Comparable multiples:

•  EV/Revenue

5.0x – 19.2x (8.5x)
Comparable multiples:
 

•  EV/EBITDA(5)

 

9.5x - 15.6x (11.8x)

8.4x – 12.7x (12.1x)
  Warrants Comparable multiples:  
  $86138 

•  EV/EBITDA(5)

 5.2x - 15.5x10.4x – 18.8x (13.3x)

 

(1)  

Included within Level 3 Assets of $903,038$1,377,883 is an amount of $48,823$141,277 for which the Investment Adviser did not develop the unobservable inputs (examples include single source broker quotations, third party pricing, and prior transactions).

(2)  

The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparable and discounted cash flows may be used together to determine fair value. Therefore, the Level 3 balance encompasses both of these techniques.

(3)  

The range for an asset category consisting of a single investment represents the relevant market data considered in determining the fair value of the investment.

(4)  

Weighted average for an asset category consisting of multiple investments is calculated by weighting the significant unobservable input by the relative fair value of the investment. Weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

(5)  

Enterprise value of portfolio company as a multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”).

 

2428

Level 3 Instruments 

Level 3 Assets as of

December 31, 20172018(1)

 

Significant Unobservable

Inputs by Valuation

Techniques(2)

 

Range(3) of Significant

Unobservable

Inputs (Weighted

Average(4))

as of

December 31, 20172018

Bank Loans, Corporate Debt, and Other Debt Obligations 1st Lien/Senior Secured Debt Discounted cash flows:  
 $183,458587,398 

•  Discount Rate

 8.9%8.4% – 12.3% (10.6%13.0% (9.9%)
 1stLien/Last – OutLast-Out Unitranche Discounted cash flows:  
  $112,956163,253 

•  Discount Rate

 10.6%9.3% – 11.3% (10.8%15.0% (11.3%)
  2nd Lien/Senior Secured Debt Discounted cash flows:  
  $309,781320,120 

•  Discount Rate

 9.9%10.8% – 12.7% (11.3%16.5% (11.5%)
  Unsecured Debt Discounted cash flows:  
  $3,7834,295 

•  Discount Rate

 3.9% –12.2% (13.6%6.4% – 22.6% (13.7%)
Equity Preferred StockComparable multiples:
$9,259

•  EV/EBITDA(5)

10.0x – 18.9x (16.2x)
Common Stock Discounted cash flows:  
  $2,9798,025 

•  Discount Rate

 3.9%14.6% – 12.2% (11.9%31.0% (24.5%)
Comparable multiples:

•  EV/EBITDA(5)

9.8x – 15.3x (10.0x)
Common StockComparable multiples:
$3,573

•  EV/Revenue

1.4x – 11.2x (2.7x)
   Comparable multiples:  
    

•  EV/EBITDA(5)

 8.4x – 15.3x (12.1x)13.0x (11.7x)
  Warrants Comparable multiples:  
  $99130 

•  EV/EBITDA(5)

 5.7x10.0x – 16.7x22.3x (13.3x)

 

(1)  

Included within Level 3 Assets of $812,260$1,339,496 is an amount of $195,631$247,016 for which the Investment Adviser did not develop the unobservable inputs (examples include single source broker quotations, third party pricing, and prior transactions).

(2)  

The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparable and discounted cash flows may be used together to determine fair value. Therefore, the Level 3 balance encompasses both of these techniques.

(3)  

The range for an asset category consisting of a single investment represents the relevant market data considered in determining the fair value of the investment.

(4)  

Weighted average for an asset category consisting of multiple investments is calculated by weighting the significant unobservable input by the relative fair value of the investment. Weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

(5)  

Enterprise value of portfolio company as a multiple of EBITDA.

As noted above, the income and market approaches were used in the determination of fair value of certain Level 3 assets as of March 31, 20182019 and December 31, 2017.2018. The significant unobservable inputs used in the income approach are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates is risk of default, rating of the investment, call provisions and comparable company investments. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market comparable transactions or market multiples would result in an increase or decrease, respectively, in the fair value.

25

The following is a summary of the Company’s assets categorized within the fair value hierarchy as of March 31, 2019:

Assets  Level 1   Level 2   Level 3   Total 
1st Lien/Senior Secured Debt  $–   $24,723   $805,834   $830,557 
1stLien/Last-Out Unitranche   –    –    167,140    167,140 
2nd Lien/Senior Secured Debt   –    68,450    375,179    443,629 
Unsecured Debt   –    –    4,295    4,295 
Preferred Stock   –    –    12,799    12,799 
Common Stock   –    –    12,498    12,498 
Warrants   –    –    138    138 
Affiliated Money Market Fund   11,501    –    –    11,501 
Total assets  $11,501   $93,173   $1,377,883   $1,482,557 
Derivatives  Level 1   Level 2   Level 3   Total 
Foreign currency forward contracts (asset)(1)  $–   $199   $–   $199 
Total  $–   $199   $–   $199 

(1)

Amounts disclosed represent the unrealized appreciation on the foreign currency forward contracts.

29

The following is a summary of the Company’s assets categorized within the fair value hierarchy as of December 31, 2018:

 

Assets  Level 1   Level 2   Level 3   Total   Level 1   Level 2   Level 3   Total 
1st Lien/Senior Secured Debt  $–   $–   $312,289   $312,289   $–   $–   $741,446   $741,446 
1stLien/Last-Out Unitranche   –    –    143,368    143,368    –    –    163,253    163,253 
2nd Lien/Senior Secured Debt   –    63,611    435,433    499,044    –    59,865    406,928    466,793 
Unsecured Debt   –    –    3,783    3,783    –    –    4,295    4,295 
Preferred Stock   –    –    3,149    3,149    –    –    12,159    12,159 
Common Stock   –    –    4,930    4,930    –    –    11,285    11,285 
Warrants   –    –    86    86    –    –    130    130 
Affiliated Money Market Fund   18,415    –    –    18,415 
Total assets  $18,415   $63,611   $903,038   $985,064   $–   $59,865   $1,339,496   $1,399,361 

The following is a summary of the Company’s assets categorized within the fair value hierarchy as of December 31, 2017:

 

Assets  Level 1   Level 2   Level 3   Total 
1st Lien/Senior Secured Debt  $–   $–   $285,254   $285,254 
1stLien/Last-Out Unitranche   –    –    112,956    112,956 
2nd Lien/Senior Secured Debt   –    63,350    403,616    466,966 
Unsecured Debt   –    –    3,783    3,783 
Preferred Stock   –    –    2,979    2,979 
Common Stock   –    –    3,573    3,573 
Warrants   –    –    99    99 
Affiliated Money Market Fund   1,313    –    –    1,313 
Total assets  $1,313   $63,350   $812,260   $876,923 
Derivatives  Level 1   Level 2   Level 3   Total 
Foreign currency forward contracts (asset)(1)  $–   $105   $–   $105 
Total  $–   $105   $–   $105 

(1)

Amounts disclosed represent the unrealized appreciation on the foreign currency forward contracts.

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

Level 3 

Beginning

Balance

as of

January 1,

2019

  Purchases(1)  

Net

Realized

Gain (Loss)

  

Net Change in

Unrealized

Appreciation

(Depreciation)(2)

  

Sales and

Settlements(1)

  

Net

Amortization

of Premium/

Discount

  

Transfers

In

  

Transfers

Out

  

Ending

Balance

as of

March 31,

2019

 
1st Lien/Senior Secured Debt $741,446  $80,201  $(4)  $(1,063)  $(15,495)  $749  $–  $–  $805,834 
1stLien/Last-Out Unitranche  163,253   4,178   –   (362)   (143)   214   –   –   167,140 
2nd Lien/Senior Secured Debt  406,928   26,709   –   (9,937)   (39,575)   730   –   (9,676)   375,179 
Unsecured Debt  4,295   –   –   (2)   –   2   –   –   4,295 
Preferred Stock  12,159   –   –   640   –   –   –   –   12,799 
Common Stock  11,285   –   –   1,213   –   –   –   –   12,498 
Warrants  130   –   –   8   –   –   –   –   138 
Total assets $1,339,496  $111,088  $(4)  $(9,503)  $(55,213)  $1,695  $–  $(9,676)  $1,377,883 

(1)

Purchases may include PIK and securities received in corporate actions and restructurings. Sales and Settlements may include securities delivered in corporate actions and restructuring of investments.

(2)

Change in unrealized appreciation (depreciation) relating to assets still held as of March 31, 2019 totaled $(9,638), consisting of the following: 1st Lien/Senior Secured Debt $(1,068), 1stLien/Last-Out Unitranche $(362), 2nd Lien/Senior Secured Debt $(10,067), Unsecured Debt $(2), Preferred Stock $640, Common Stock $1,213 and Warrants $8.

30

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

 

Level 3 

Beginning

Balance

as of

January 1,

2018

 Purchases(1) 

Net

Realized

Gain (Loss)

 

Net Change in

Unrealized

Appreciation

(Depreciation)(2)

 

Sales and

Settlements(1)

 

Net

Amortization

of Premium/

Discount

 

Transfers

In

 

Transfers

Out

 

Ending

Balance

as of

March 31,
2018

  

Beginning

Balance

as of

January 1,

2018

 Purchases(1) 

Net

Realized

Gain (Loss)

 

Net Change in

Unrealized

Appreciation

(Depreciation)(2)

 

Sales and

Settlements(1)

 

Net

Amortization

of Premium/

Discount

 

Transfers

In

 

Transfers

Out

 

Ending

Balance

as of

March 31,

2018

 
1st Lien/Senior Secured Debt $285,254  $31,453  $(7)  $(36)  $(4,681)  $306  $–  $–  $312,289  $285,254  $31,453  $(7)  $(36)  $(4,681)  $306  $–  $–  $312,289 
1stLien/Last-Out Unitranche 112,956  59,486   –  (633)  (29,200)  759   –   –  143,368  112,956  59,486   –  (633)  (29,200)  759   –   –  143,368 
2nd Lien/Senior Secured Debt 403,616  46,943   –  (113)  (15,393)  380   –   –  435,433  403,616  46,943   –  (113)  (15,393)  380   –   –  435,433 
Unsecured Debt 3,783   –   –  (2)   –  2   –   –  3,783  3,783   –   –  (2)   –  2   –   –  3,783 
Preferred Stock 2,979   –   –  170   –   –   –   –  3,149  2,979   –   –  170   –   –   –   –  3,149 
Common Stock 3,573  1,900  2,324  358  (3,225)   –   –   –  4,930  3,573  1,900  2,324  358  (3,225)   –   –   –  4,930 
Warrants 99   –   –  (13)   –   –   –   –  86  99   –   –  (13)   –   –   –   –  86 
Total assets $812,260  $139,782  $2,317  $(269)  $(52,499)  $1,447  $–  $–  $903,038  $812,260  $139,782  $2,317  $(269)  $(52,499)  $1,447  $–  $–  $903,038 

 

(1)  

Purchases may include PIK and securities received in corporate actions and restructurings. Sales and Settlements may include securities delivered in corporate actions and restructuring of investments.

(2)  

Change in unrealized appreciation (depreciation) relating to assets still held as of March 31, 2018 totaled $(179), consisting of the following: 1st Lien/Senior Secured Debt $(36), 1stLien/Last-Out Unitranche $(636), 2nd Lien/Senior Secured Debt $(20), Unsecured Debt $(2), Preferred Stock $170, Common Stock $358 and Warrants $(13).

26

The following is a reconciliation of Level 3 assets for the three months ended March 31, 2017:

Level 3 

Beginning

Balance

as of

January 1,

2017

  Purchases(1)  

Net

Realized

Gain (Loss)

  

Net Change in

Unrealized

Appreciation

(Depreciation)(2)

  

Sales and

Settlements(1)

  

Net

Amortization

of Premium/

Discount

  

Transfers

In

  

Transfers

Out

  

Ending

Balance

as of

March 31,

2017

 

1st Lien/Senior Secured

Debt

 $43,554  $39,868  $–  $12  $(60)  $24  $–  $–  $83,398 
1stLien/Last-Out Unitranche  23,520   48,327   –   362   (3,875)   70   –   –   68,404 

2nd Lien/Senior Secured

Debt

  126,430   62,260   –   294   –   70   –   (15,150)   173,904 
Unsecured Debt  3,332   –   –   (3)   –   3   –   –   3,332 
Preferred Stock  2,500   –   –   40   –   –   –   –   2,540 
Common Stock  –   2,260   –   –   –   –   –   –   2,260 
Warrants  100   –   –   (5)   –   –   –   –   95 
Total assets $199,436  $152,715  $–  $700  $(3,935)  $167  $–  $(15,150)  $333,933 

(1)

Purchases may include PIK and securities received in corporate actions and restructurings. Sales and Settlements may include securities delivered in corporate actions and restructuring of investments.

(2)

Change in unrealized appreciation (depreciation) relating to assets still held at March 31, 2017 totaled $700, consisting of the following: 1st Lien/Senior Secured Debt $12, 1stLien/Last-Out Unitranche $362, 2nd Lien/Senior Secured Debt $294, Unsecured Debt $(3), Preferred Stock $40, Common Stock $0 and Warrants $(5).

Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. For the three months ended March 31, 2018, there were no transfers between levels of the fair value hierarchy. For the three months ended March 31, 2017,2019, transfers from Level 3 to Level 2 were primarily due to increased price transparency. For the three months ended March 31, 2018, there were no transfers between levels of the fair value hierarchy.

Debt Not Carried at Fair Value

The fair value of the Company’s debt, which would have been categorized as Level 3 within the fair value hierarchy as of March 31, 20182019 and December 31, 2017,2018, approximates its carrying value.

 

6.

DEBT

In accordance with the Investment Company Act, with certain exceptions, the Company is currently allowed to borrow amounts such that its asset coverage ratio, as defined in the Investment Company Act, is at least 200% after such borrowing (or 150% if certain requirements are met). As of March 31, 20182019 and December 31, 2017, the Company’s outstanding borrowings were $435,000 and $383,500, respectively, and2018, the Company’s asset coverage ratio based on the aggregate amount outstanding of senior securities (which includes the Revolving Credit Facilities) was 224%259% and 227%239%, respectively.

The Company’s outstanding debt as of March 31, 20182019 and December 31, 20172018 was as follows:

 

  As of   As of 
  March 31, 2018   December 31, 2017   March 31, 2019   December 31, 2018 
  

Aggregate

Borrowing

Amount

Committed

   

Outstanding

Borrowing

   

Amount

Available

   

Carrying

Value

   

Aggregate

Borrowing

Amount

Committed

   

Outstanding

Borrowing

   

Amount

Available

   

Carrying

Value

   

Aggregate

Borrowing

Amount

Committed

   

Amount

Available

   

Carrying

Value(3)

   

Aggregate

Borrowing

Amount

Committed

   

Amount

Available

   

Carrying

Value(3)

 
BoA Revolving Credit Facility(1)  $250,000   $235,000   $15,000   $235,000   $250,000   $223,500   $26,500   $223,500   $50,000   $14,750   $35,250   $130,000   $19,500   $110,500 
JPM Revolving Credit Facility(2)   400,000    200,000    200,000    200,000    400,000    160,000    240,000    160,000    630,000    96,700    531,040    465,000    –    463,962 
Total Debt  $650,000   $435,000   $215,000   $435,000   $650,000   $383,500   $266,500   $383,500   $680,000   $111,450   $566,290   $595,000   $19,500   $574,462 

(1)

As of March 31, 2019 and December 31, 2018, all outstanding borrowings were in USD.

(2)

The Company may borrow amounts in USD or certain other permitted currencies. As of March 31, 2019, the Company had outstanding borrowings denominated in USD of $473,943 and in Euros (EUR) of EUR 50,900. As of December 31, 2018, the Company had outstanding borrowings denominated in USD of $405,643 and in Euros (EUR) of EUR 50,900.

(3)

Debt outstanding denominated in currencies other than USD have been converted to USD using the applicable foreign currency exchange rate as of March 31, 2019 and December 31, 2018.

The combined weighted average interest raterates of the aggregate borrowings outstanding for the three months ended March 31, 20182019 and for the year ended December 31, 2017 was 4.93%2018 were 5.91% and 4.25%5.30%, respectively.

 

2731

BoA Revolving Credit Facility

The Company entered into the BoA Revolving Credit Facility on July 18, 2016 with Bank of America, N.A. as administrative agent (the “Administrative Agent”), lead arranger, letter of credit issuer and lender.

On March 3, 2017, the The Company amended the BoA Revolving Credit Facility to, among other things:

temporarily increase the maximum committed principal amount of the BoA Revolving Credit Facility by $100,000 to $350,000,which expired on December 29, 2017;March 3, 2017, July 16, 2018 and August 1, 2018.

increase the interest rate on obligations under the BoA Revolving Credit Facility to either (1) the prevailing London InterBank Offered Rate (“LIBOR”) for one, two, three or six months plus 3.00% per annum (increased from 2.25% per annum) or (2) an alternate base rate (the greater of the prime rate of such commercial bank, the federal funds rate plus 0.50%, and LIBOR plus 1.00%) plus 2.00% per annum (increased from 1.25% per annum).

Subject to availability under the “Borrowing Base,” the maximum principal amount of the BoA Revolving Credit Facility was $250,000$50,000 as of March 31, 2018,2019. The maximum principal amount of which $235,000 was drawn as of March 31, 2018.the BoA Revolving Credit Facility will decrease on a monthly basis until the stated maturity date (unless reduced further at the Company’s discretion). The Borrowing Base is calculated based on the unfunded capital commitments of the investors meeting various eligibility requirements (subject to investor concentration limits) multiplied by specified advance rates. The Company has the ability to increase the maximum principal amount of the BoA Revolving Credit Facility up to $750,000, subject to increasing commitments of existing lenders and/or obtaining commitments of new lenders and certain other conditions. The stated maturity date of the BoA Revolving Credit Facility will mature on July 17, 2018, subject to extension withis May 31, 2019.

Under the consent ofBoA Revolving Credit Facility, the Administrative Agent and the extending lenders, and certain other conditions.

The Company has the ability to elect either LIBOR or the alternative base rate at the time of draw-down, and loans may be converted from one rate to another at any time, subject to certain conditions. Interest rate on obligations under the BoA Revolving Credit Facility is the prevailing LIBOR for one, two, three or six months (the “Applicable LIBOR”) plus 2.50% per annum or (B) an alternate base rate (the greater of the prime rate of such commercial bank, the federal funds rate plus 0.50%, and LIBOR plus 1.00%) (“ABR”) plus 1.50% per annum. The Company pays a 0.25% annualized fee on a quarterly basis on committed but undrawn amounts under the BoA Revolving Credit Facility.

Amounts drawn under the BoA Revolving Credit Facility may be prepaid at any time without premium or penalty, subject to applicable breakage costs. Loans are subject to mandatory prepayment for amounts exceeding the Borrowing Base or the lenders’ aggregate commitment and to the extent required to comply with the Investment Company Act, as applied to BDCs. Transfers of interests in the Company by investors are subject to certain restrictions under the BoA Revolving Credit Facility and may trigger mandatory prepayment obligations.

The BoA Revolving Credit Facility is secured by a perfected first priority security interest in the unfunded capital commitments of the Company’s investors (with certain exceptions) and the proceeds thereof, including assignment of the right to make capital calls, receive and apply capital contributions, and enforce remedies and claims related thereto, and a pledge of the collateral account into which capital call proceeds are deposited. Additionally, under the BoA Revolving Credit Facility, the lenders can directly require investors to fund their capital commitments, but lenders cannot seek recourse against a unitholderUnitholder in excess of such unitholder’sUnitholder’s obligation to contribute capital to the Company.

The BoA Revolving Credit Facility contains customary representations, warranties, and affirmative and negative covenants, including without limitation, treatment as a RIC under the Code and as a BDC under the Investment Company Act and restrictions on certain operations, including without limitation certain distributions. The BoA Revolving Credit Facility includes customary conditions precedent to draw-down of loans and customary events of default. The Company is in compliance with these covenants.

CostsAs of $2,031March 31, 2019, costs of $2,383 were incurred in connection with obtaining and amending the BoA Revolving Credit Facility, which have been recorded as deferred financing costs on the Consolidated Statements of Financial Condition and are being amortized over the life of the BoA Revolving Credit Facility using the straight-line method. As of March 31, 20182019 and December 31, 2017,2018, outstanding deferred financing costs were $266$66 and $486,$163, respectively.

The summary information of the BoA Revolving Credit Facility for the three months ended March 31, 20182019 and 20172018 is as follows:

 

  For the Three Months Ended 
  Three Months Ended
March 31, 2018		   Three Months Ended
March 31, 2017		   March 31, 2019   March 31, 2018 
Borrowing Interest Expense  $2,716   $589   $1,036   $2,716 
Facility fees   9    133    12    9 
Amortization of financing costs   220    248    99    220 
Total  $2,945   $970   $1,147   $2,945 
Weighted average interest rate   4.67%    3.47%    5.07%    4.67% 
Average outstanding balance  $235,961   $68,711   $82,797   $235,961 

 

2832

JPM Revolving Credit Facility

On November 21, 2017, SPV entered into the JPM Revolving Credit Facility. JPMorgan Chase Bank, National Association (“JPM”) serves as administrative agent, State Street Bank and Trust Company serves as collateral agent, collateral administrator, bank and securities intermediary and the Company serves as portfolio manager under the JPM Revolving Credit Facility. State Street Bank and Trust Company also acts as the Company’s transfer agent, disbursing agent, custodian and administrator as well as SPV’s custodian. The Company amended the JPM Revolving Credit Facility on August 17, 2018, December 10, 2018 and February 22, 2019.

Borrowings under the JPM Revolving Credit Facility bear interest (at SPV’s election) at a per annum rate equal to either (x) the three-month LIBOR (or other listed offered rate, depending upon the currency of borrowing) in effect or (y) a rate per annum equal to the greater of (i) the prime rate of JPM in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 0.50%,; and, with respect to advances denominated in each case,a currency other than USD, the annual rate of interest is the reference rate then in effect for determining interest rates on commercial loans made in the applicable jurisdiction of such currency, in all cases, plus the applicable margin. The applicable margin is 3.50% per annum. SPV will also payinitially paid a commitment fee of 1.00% per annum (or 0.50% per annum during the first nine months from the date the JPM Revolving Credit Facility was entered into) on the average daily unused amount of the financing commitments until the third anniversary of the JPM Revolving Credit Facility.

The JPM Revolving Credit Facility is a multicurrency facility. As of March 31, 2018,2019, the total commitments under the JPM Revolving Credit Facility were $400,000, of which $200,000 was drawn.$630,000. The JPM Revolving Credit Facility also has an accordion feature, subject to the satisfaction of various conditions, which could bring total commitments under the JPM Revolving Credit Facility to $750,000. All amounts outstanding under the JPM Revolving Credit Facility must be repaid by the fourth anniversary of the JPM Revolving Credit Facility, subject to a six month extension of the maturity date with the consent of the administrative agent at such time.

SPV’s obligations to the lenders under the JPM Revolving Credit Facility are secured by a first priority security interest in all of SPV’s portfolio of investments and cash. The obligations of SPV under the JPM Revolving Credit Facility arenon-recourse to the Company, and the Company’s exposure under the JPM Revolving Credit Facility is limited to the value of the Company’s investment in SPV.

In connection with the JPM Revolving Credit Facility, SPV has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolving Credit Facility contains customary events of default for similar financing transactions, including if a change of control of SPV occurs or if the Company is no longer the portfolio manager of SPV. Upon the occurrence and during the continuation of an event of default, JPM may declare the outstanding advances and all other obligations under the JPM Revolving Credit Facility immediately due and payable.

Costs of $4,774$6,063 were incurred in connection with obtaining and amending the JPM Revolving Credit Facility, which have been recorded as deferred financing costs on the Consolidated Statements of Financial Condition and are being amortized over the life of the JPM Revolving Credit Facility using the straight-line method. As of March 31, 20182019 and December 31, 2017,2018, outstanding deferred financing costs were $4,346$4,338 and $4,529,$3,828, respectively.

The summary information of the JPM Revolving Credit Facility for the three months ended March 31, 20182019 and 20172018 is as follows:

 

  For the Three Months Ended 
  Three Months Ended
March 31, 2018		   Three Months Ended
March 31, 2017		   March 31, 2019   March 31, 2018 
Borrowing Interest Expense  $2,305   $–     $7,524   $2,305 
Facility fees   322    –      139    322 
Amortization of financing costs   297    –      370    297 
Total  $2,924   $–     $8,033   $2,924 
Weighted average interest rate   5.28%    –      6.05%    5.28% 
Average outstanding balance  $176,889   $–     $504,258   $176,889 

7.

7.

DERIVATIVES

The Company enters into foreign currency forward contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies.

In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or a similar agreement with its derivative counterparties. An ISDA Master Agreement is a bilateral agreement between the Company and a counterparty that governs OTC derivatives, including foreign currency forward contracts, and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of a default(close-out netting) or similar event, including the bankruptcy or insolvency of the counterparty.

33

For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Company and cash collateral received from the counterparty, if any, is included in the Consolidated Statements of Financial Condition as due to/due from a broker. The Company minimizes counterparty credit risk by only entering into agreements with counterparties that they believe to be in good standing and by monitoring the financial stability of those counterparties.

For the three months ended March 31, 2019, the Company’s average USD notional exposure to foreign currency forward contracts was $4,133. The Company did not hold any derivative instruments prior to August 8, 2018.

The following table sets forth the Company’s net exposure to foreign currency forward contracts that are subject to ISDA Master Agreements or similar agreements as of March 31, 2019.

Counterparty  

Gross Amount of

Assets on the

Consolidated

Statements of

Financial Condition

   

Gross Amount of

(Liabilities) on the

Consolidated

Statements of

Financial Condition

   

Net Amount of Assets or

(Liabilities) Presented on

the Consolidated

Statements of

Financial Condition

   

Collateral (Received)

Pledged (1)

   Net Amounts (2) 
Bank of America, N.A.  $199   $–   $199   $–   $199 

Total

  $199   $–   $199   $–   $199 

(1)

Amount excludes excess cash collateral paid.

(2)

Net amount represents the net amount due (to) from counterparty in the event of a default based on the contractual setoff rights under the agreement. Net amount excludes any over-collateralized amounts.

The following table sets forth the Company’s net exposure to foreign currency forward contracts that are subject to ISDA Master Agreements or similar agreements as of December 31, 2018.

Counterparty  

Gross Amount of

Assets on the

Consolidated

Statements of

Financial Condition

   

Gross Amount of

(Liabilities) on the

Consolidated

Statements of

Financial Condition

   

Net Amount of Assets or

(Liabilities) Presented on

the Consolidated

Statements of

Financial Condition

   

Collateral (Received)

Pledged (1)

   Net Amounts (2) 
Bank of America, N.A.  $105   $–   $105   $–   $105 

Total

  $105   $–   $105   $–   $105 

(1)

Amount excludes excess cash collateral paid.

(2)

Net amount represents the net amount due (to) from counterparty in the event of a default based on the contractual setoff rights under the agreement. Net amount excludes any over-collateralized amounts.

The effect of transactions in derivative instruments to the Consolidated Statements of Operations during the three months ended March 31, 2019 and 2018 was as follows:

   For the Three Months Ended 
    March 31, 2019   March 31, 2018 
Net realized gain (loss) on foreign currency forward contracts  $10   $– 
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts  $94   $– 
Total net realized and unrealized gains (losses) on foreign currency forward contracts  $104   $– 

8.

COMMITMENTS AND CONTINGENCIES

Capital Commitments

As of the dates indicated, the Company had aggregate capital commitments and undrawn capital commitments from investors as follows:

 

   

March 31, 2018

   December 31, 2017 
    

Capital

Commitments

  

Unfunded

Capital

Commitments

   

% of Capital

Commitments

Funded

   

Capital

Commitments

   

Unfunded

Capital

Commitments

   

% of Capital

Commitments

Funded

 
Common Units  $1,097,430   $548,715    50%    $1,097,430    $603,587    45% 
   March 31, 2019   December 31, 2018 
    

Capital

Commitments

   

Unfunded

Capital

Commitments

   

% of Capital

Commitments

Funded

   

Capital

Commitments

   

Unfunded

Capital

Commitments

   

% of Capital

Commitments

Funded

 
Common Units  $1,097,430   $153,640    86%   $1,097,430   $263,383    76% 

 

2934

Portfolio Company Commitments

The Company may enter into investment commitments either verbally or through signed commitment letters which in certain circumstances may be disclosed by the Company. In many circumstances, borrower acceptance and final terms are subject to fund investments.transaction-related contingencies. These are disclosed as commitments upon execution of a final agreement. As of March 31, 2018,2019, the Company believed that it had adequate financial resources to satisfy its unfunded commitments. As of the dates indicated, the Company had the following unfunded commitments by investment types:

 

  March 31, 2018 December 31, 2017   March 31, 2019 December 31, 2018 
  

Commitment

Expiration

Date(1)

   

Unfunded

Commitment

   

Fair

Value(2)

 

Commitment

Expiration

Date(1)

   

Unfunded

Commitment

   

Fair

Value(2)

   

Commitment

Expiration

Date(1)

   

Unfunded

Commitment

   

Fair

Value(2)

 

Commitment

Expiration

Date(1)

   

Unfunded

Commitment

   

Fair

Value(2)

 
1st Lien/Senior Secured Debt                      
Bullhorn, Inc.   11/21/2018   $2,509   $(25)  11/21/2018   $6,352   $(32) 
Picture Head Midco LLC   –   $–   $–  03/31/2019   $3,840   $(77) 
VRC Companies, LLC   03/13/2019    2,835    (28)   –    –    –    –    –    –  09/27/2019    1,313    (13) 
Diligent Corporation   –    –    –  08/03/2020    374    (5) 
DocuTAP, Inc.   09/05/2019    47,288    –   –    –    – 
DocuTAP, Inc.   09/05/2019    7,312    –   –    –    – 
VRC Companies, LLC   01/28/2020    1,642    (16)   –    –    – 
Businessolver.com, Inc.   05/15/2020    2,919    (59)  05/15/2020    3,550    (72) 
SPay, Inc.   06/15/2020    7,974    (282)  06/15/2020    8,544    (216) 
Hygiena Borrower LLC   06/29/2020    857    (17)  06/29/2020    857    (17) 
Gastro Health Holdco, LLC   09/04/2020    7,642    (154)  09/04/2020    7,642    (154) 
Diligent Corporation   12/19/2020    12,244    (153)  12/19/2020    14,490    (181) 
Pathway Vet Alliance LLC   12/21/2020    2,386    (12)   –    –    – 
Brillio, LLC   02/06/2021    2,330    (23)   –    –    – 
Associations, Inc.   07/30/2021    2,286    (23)  07/30/2021    2,858    (29) 
Netvoyage Corporation   03/24/2022    1,044    (18)  03/24/2022    1,044    (13) 
VRC Companies, LLC   03/31/2022    97    (1)  03/31/2022    129    (1) 
Diligent Corporation   04/14/2022    228    (3)  04/14/2022    1,140    (14) 
Continuum Managed Services, LLC   06/08/2019    2,658    (60)  06/08/2019    2,658    (66)    06/08/2022    3,280    (49)  06/08/2022    3,280    (66) 
DDS USA Holding, Inc.   06/30/2022    1,625    (12)  06/30/2022    1,625    (12) 
Xactly Corporation   07/29/2022    2,554    (38)  07/29/2022    2,554    (38) 
Hygiena Borrower LLC   08/26/2022    580    (12)  08/26/2022    580    (12) 
Lithium Technologies, Inc.   10/03/2022    4,046    (81)  10/03/2022    4,046    (81) 
Datto, Inc.   12/07/2022    3,739    –  12/07/2022    3,739    (28) 
Businessolver.com, Inc.   05/15/2023    3,187    (64)  05/15/2023    2,391    (48) 
Integral Ad Science, Inc.   07/19/2023    2,741    (55)  07/19/2023    2,741    (55) 
FWR Holding Corporation   08/21/2019    2,690    (61)  08/21/2019    3,704    (93)    08/21/2023    1,323    (13)  08/21/2023    1,103    (22) 
Clinical Supplies Management Holdings, Inc.   10/12/2021    2,000    (30)  10/12/2021    2,000    (30) 
Netvoyage Corporation   03/24/2022    1,044    (18)  03/24/2022    1,044    (18) 
Continuum Managed Services, LLC   06/08/2022    3,280    (74)  06/08/2022    3,280    (82) 
Xactly Corporation   07/29/2022    2,554    (51)  07/29/2022    2,554    (51) 
Lithium Technologies, Inc.   10/03/2022    2,327    (47)  10/03/2022    2,327    (52) 
Bullhorn, Inc.   11/21/2022    863    (9)  11/21/2022    863    (17) 
Datto, Inc.   12/07/2022    3,610    (72)  12/07/2022    3,610    (72) 
FWR Holding Corporation   08/21/2023    970    (22)  08/21/2023    1,544    (39) 
Picture Head Midco LLC   08/31/2023    2,661    (47)  08/31/2023    2,661    (54) 
Gastro Health Holdco, LLC   09/04/2023    3,100    (62)  09/04/2023    3,100    (62) 
Empirix, Inc.   09/25/2023    1,900    (33)  09/25/2023    1,900    (33) 
SPay, Inc.   06/17/2024    1,038    (36)  06/17/2024    461    (12) 
Associations, Inc.   07/30/2024    886    (9)  07/30/2024    886    (9) 
Fenergo Finance 3 Limited(3)   09/05/2024    2,580    (145)  09/05/2024    2,635    (91) 
Fenergo Finance 3 Limited   09/05/2024    1,785    (36)  09/05/2024    1,785    (36) 
iCIMS, Inc.   09/12/2024    2,822    (56)  09/12/2024    2,822    (56) 
MMIT Holdings, LLC   11/15/2024    4,788    (96)  11/15/2024    3,830    (77) 
Wrike, Inc.   12/31/2024    2,400    (48)  12/31/2024    2,400    (48) 
Mailgun Technologies, Inc.   03/26/2025    2,370    (47)   –    –    – 
Internet Truckstop Group, LLC   04/02/2025    33,638    –   –    –    – 
Internet Truckstop Group, LLC   04/02/2025    2,730    –   –    –    – 
Total 1st Lien/Senior Secured Debt      27,340    (497)      29,936    (552)       182,022    (1,700)      90,320    (1,632) 
1stLien/Last-Out Unitranche                      
Intelligent Document Solutions, Inc.   02/28/2020    21,100    (686)   –    –    –    02/28/2020    4,178    (125)  02/28/2020    8,356    (251) 
Total 1stLien/Last-Out Unitranhce      21,100    (686)      –    –       4,178    (125)      8,356    (251) 
2nd Lien/Senior Secured Debt                            
RSC Acquisition, Inc.   03/05/2020    6,400    (64)   –    –    –    03/05/2020    6,400    (64)  03/05/2020    6,400    (64) 
ICP Industrial, Inc.   –    –    –  11/04/2019    5,800    (145) 
USRP Holdings, Inc.   03/29/2020    2,600    (33)   –    –    –    03/29/2020    884    (11)  03/29/2020    884    (11) 
Chase Industries, Inc.   05/11/2020    6,400    (208)  05/11/2020    6,400    (208) 
Hygiena Borrower LLC   06/29/2020    874    (15)  06/29/2020    874    (15) 
Genesis Acquisition Co.   07/31/2020    2,666    (74)  07/31/2020    2,666    (74) 
Total 2nd Lien/Senior Secured Debt      9,000    (97)      5,800    (145)       17,224    (372)      17,224    (372) 
Total     $57,440   $(1,280)     $35,736   $(697)      $203,424   $(2,197)     $115,900   $(2,255) 

 

(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)  

A negative fair value was reflected as investments, at fair value in the Consolidated Statements of Financial Condition. The negative fair value is the result of the capitalized discount on the loan.

(3)

Unfunded commitments denominated in currencies other than USD have been converted to USD using the applicable foreign currency exchange rate as of March 31, 2019 and December 31, 2018.

35

Contingencies

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

 

8.9.

MEMBERS’ CAPITAL

Capital Drawdowns

The following table summarizes the total Units issued and proceeds receivedrelated to capital drawdowns for the three months ended March 31, 2019:

Unit Issue Date  Units Issued   Proceeds 
February 22, 2019   689,032   $65,846 
March 28, 2019   455,946    43,897 

Total capital drawdowns

   1,144,978   $109,743 

The following table summarizes the total Units issued and proceeds related to capital drawdowns for the three months ended March 31, 2018:

 

Unit Issue Date  Units Issued   Proceeds Received   Units Issued   Proceeds 
February 21, 2018   335,966   $32,923    335,966   $32,923 
March 28, 2018   222,135   $21,949    222,135    21,949 

Total capital drawdowns

   558,101   $54,872   558,101   $54,872 

There were no capital drawdowns delivered pursuant toDistributions

The following table reflects the Subscription Agreementsdistributions declared on the Company’s common Units for the three months ended March 31, 2017.

2019:

 

30

Distributions

Date DeclaredRecord DatePayment DateAmount Per Unit
February 20, 2019March 29, 2019April 26, 2019$2.53

The following table reflects the distributions declared on the Company’s common Units for the three months ended March 31, 2018:

 

Date Declared Record Date Payment Date Amount Per Unit
February 21, 2018 March 30, 2018 April 25, 2018 $2.93

The following table reflects the distributions declared on the Company’s common Units for the three months ended March 31, 2017:

 

10.
Date DeclaredRecord DatePayment DateAmount Per Unit
February 22, 2017March 31, 2017April 17, 2017$2.02

9.EARNINGS PER UNIT

The following information sets forth the computation of basic and diluted earnings per unit for the three months ended March 31, 20182019 and 2017:2018:

 

   For the Three Months Ended 
    March 31, 2018   March 31, 2017 
Numerator for basic and diluted earnings per unit—increase in Members’ Capital resulting from operations  $15,247   $5,030 
Denominator for basic and diluted earnings per unit—the weighted average Units outstanding   5,178,886    2,142,978 
Basic and diluted earnings (loss) per unit  $2.94   $2.35 
   For the Three Months Ended 
    March 31, 2019   March 31, 2018 
Numerator for basic and diluted earnings per unit - increase in Members’ Capital resulting from operations  $12,563   $15,247 
Denominator for basic and diluted earnings per unit - the weighted average Units outstanding   8,826,360    5,178,886 
Basic and diluted earnings (loss) per unit  $1.42   $2.94 

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Diluted earnings per unit equal basic earnings per unit because there were no common unit equivalents outstanding during the period presented.

 

10.11.

FINANCIAL HIGHLIGHTS

Below is the schedule of financial highlights of the Company for the three months ended March 31, 20182019 and 2017:2018:

 

  For the Three Months Ended  For the Three Months Ended
  March 31, 2018  March 31, 2017  March 31, 2019 March 31, 2018
Per Unit Data:(1)Per Unit Data:(1)   Per Unit Data:(1)

 

 
NAV, beginning of period  $97.05   $97.73   $94.83  $97.05 
Net investment income (loss)   2.63    2.02 
Net investment income   2.51  2.63 
Net realized and unrealized gains (losses)   0.36 (2)    0.33    (1.08)(2)  0.36(2) 
Income tax provision, realized gain   (0.13)    – 
Income tax provision, realized and unrealized gains   (0.01)  (0.13) 
  

 

  

 

  

 

 

 

Net increase (decrease) in net assets resulting from operations   2.86(2)    2.35    1.42  2.86(2) 
  

 

  

 

  

 

 

 

Distributions declared from net investment income(3)   (2.93)    (2.02)    (2.53)  (2.93) 
  

 

  

 

  

 

 

 

Total increase (decrease) in net assets   (0.07)    0.33    (1.11)  (0.07) 
  

 

  

 

  

 

 

 

NAV, end of period  $96.98   $98.06   $93.72  $96.98 
  

 

  

 

  

 

 

 

Units outstanding, end of period   5,581,529    2,142,978    9,660,149  5,581,529 
Weighted average units outstanding   5,178,886    2,142,978    8,826,360  5,178,886 
Total return based on NAV(4)   2.95%    2.40%    1.50%  2.95% 
Ratio/Supplemental Data (all amounts in thousands except ratios):       
Members’ Capital, end of period  $541,270   $210,144   $905,325  $541,270 
Ratio of net expenses to average Members’ Capital(5)   7.42%    4.32%    6.73%  7.42% 

Ratio of expenses (without incentive fees and interest and other debt expenses) to Members’

Capital(5)

   2.13%    2.45% 
Ratio of expenses (without incentive fees and interest and other debt expenses) to average Members’ Capital(5)   1.96%  2.13% 
Ratio of interest and other debt expenses to average Members’ Capital(5)   4.74%    1.87%    4.48%  4.74% 
Ratio of incentive fees to average Members’ Capital(5)   0.55%    –%    0.29%  0.55% 
Ratio of total expenses to average Members’ Capital(5)   7.42%    4.32%    6.73%  7.42% 
Ratio of net investment income (loss) to average Members’ Capital(5)   12.89%    9.09% 
Ratio of net investment income to average Members’ Capital(5)   11.68%  12.89% 
Average debt outstanding  $412,850   $68,711   $587,055  $412,850 
Average debt per unit(6)  $79.72   $32.06   $66.51  $79.72 
Portfolio turnover   6%    1%    4%  6% 

 

(1)  

The per unit data was derived by using the weighted average units outstanding during the applicable period.

(2)  

For the three months ended March 31, 2019 and 2018, the amount shown may not correspond with the aggregate amount for the period as it includes the effect of the timing of the distribution.

(3)  

The per unit data for distributions declared reflects the actual amount of distributions declared per unit for the applicable period.

(4)  

Total return based on NAV is calculated as the change in NAV per unit during the period plus dividends declared per unit, divided by the beginning NAV per unit.

(5) 

Annualized, except for, as applicable, unvested Incentive Fees and certain operating expenses.

(6) 

Average debt per unit is calculated as average debt outstanding divided by the weighted average units outstanding during the applicable period.

 

31

11.12.

SUBSEQUENT EVENTS

Subsequent events after the Consolidated Statements of Financial Condition date have been evaluated through the date the unaudited consolidated financial statements were available to be issued. Other than the items discussed below, the Company has concluded that there is no impact requiring adjustment or disclosure in the consolidated financial statements.

On April 20, 2018,22, 2019, the Company delivered a capital drawdown notice to its investors relating to the sale of 339,498234,200 common Units for an aggregate offering price of approximately $32,923.$21,949. The common Units were issued on April 27, 2018.29, 2019.

On May 1, 2018,7, 2019, the Board of Directors declared a distribution equal to an amount up to the Company’s taxable earnings per unit, including net investment income (if positive) for the period April 1, 20182019 through June 30, 2018,2019, payable on or about July 25, 201826, 2019 to unitholdersUnitholders of record as of June 29, 2018.28, 2019.

 

3237

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. References to “we,” “us,” “our,” and the “Company,” mean Goldman Sachs Private Middle Market Credit LLC, unless otherwise specified. The terms “GSAM,” our “Adviser” or our “Investment Adviser” refer to Goldman Sachs Asset Management, L.P., a Delaware limited partnership. The term “Group Inc.” refers to The Goldman Sachs Group, Inc. The term “Goldman Sachs” refers to Group Inc., together with Goldman Sachs & Co. LLC (including its predecessors, “GS & Co.”), GSAM and its other subsidiaries and affiliates. The discussion and analysis contained in this section refers to our financial condition, results of operations and cash flows. The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. Please see “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with this discussion and analysis. Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this report.

OVERVIEW

We are a specialty finance company focused on lending to middle-market companies. We are aclosed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, we have elected to be treated, and expect to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2016. From our commencement of investment operations on July 1, 2016 through March 31, 2018,2019, we have originated $1,133.85 million$2.02 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits and repayments. We seek to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

“Unitranche” loans are first lien loans that may extend deeper in a company’s capital structure than traditional first lien debt and may provide for a waterfall of cash flow priority between different lenders in the unitranche loan. In a number of instances, we may find another lender to provide the “first out” portion of such loan and retain the “last out” portion of such loan, in which case, the “first out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the “last out” portion that we would continue to hold. In exchange for the greater risk of loss, the “last out” portion generally earns a higher interest rate than our “first out” portion. We use the term “mezzanine” to refer to debt that ranks senior only to a borrower’s equity securities and ranks junior in right of payment to all of such borrower’s other indebtedness. We may make multiple investments in the same portfolio company.

We expect to invest, under normal circumstances, at least 80% of our net assets (plus any borrowings for investment purposes), directly or indirectly in private middle-market credit obligations and related instruments. We define “credit obligations and related instruments” for this purpose as any fixed-income instrument, including loans to, and bonds and preferred stock of, portfolio companies and other instruments that provide exposure to such fixed-income instruments. “Middle market” is used to refer to companies with between $5 million and $125 million of annual earnings before interest expense, income tax expense, depreciation and amortization (“EBITDA”) excludingcertain one-time and non-recurring items that are outside the operations of between $5 million and $75 million annually.these companies. While, as a result of fluctuations in the net asset value (“NAV”) of one asset relative to another asset, private middle-market credit obligations and related instruments may represent less than 80% of our net assets (plus any borrowings for investment purposes) at any time, we may not invest, under normal circumstances, more than 20% of our net assets (plus any borrowings for investment purposes) in securities and other instruments that are not private middle-market credit obligations and related instruments. To the extent we determine to invest indirectly in private middle-market credit obligations and related instruments, we may invest through certain synthetic instruments, including derivatives that have similar economic characteristics to private middle-market credit obligations. For purposes of determining compliance with our 80% policy, each applicable derivative instrument will be valued based upon its market value. We will notify our unitholdersUnitholders at least 60 days prior to any change to the 80% investment policy described above.

We expect to directly or indirectly invest at least 70% of our total assets in middle-market companies domiciled in the United States. However, we may from time to time invest opportunistically in large U.S. companies,non-U.S. companies, stressed or distressed debt, structured products, private equity or other opportunities, subject to limits imposed by the Investment Company Act.

While our investment program is expected to focus primarily on debt investments, our investments may include equity features, such as a direct investment in the equity or convertible securities of a portfolio company or warrants or options to buy a minority interest in a portfolio company. Any warrants we may receive with debt securities will generally require only a nominal cost to exercise, so as a portfolio company appreciates in value, we may achieve additional investment return from these equity investments. We may structure the warrants to provide provisions protecting our rights as a minority-interest holder, as well as puts, or rights to sell such securities back to the portfolio company, upon the occurrence of specified events. In many cases, we may also obtain registration rights in connection with these equity investments, which may include demand and “piggyback” registration rights.

33

For a discussion of the competitive landscape we face, please see “Item 1A. Risk Factors—Risks Relating to Our Business and Structure–We operate in a highly competitive market for investment opportunities” and “Item 1. Business—Competitive Advantages” in our annual report on Form10-K for the year ended December 31, 2017.2018.

38

KEY COMPONENTS OF OPERATIONS

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, the amount of capital we have available to us and the competitive environment for the type of investments we make.

As a BDC, we may not acquire any assets other than “qualifying assets” specified in the Investment Company Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), “eligible portfolio companies” include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

Revenues

We generate revenue in the form of interest income on debt investments and, to a lesser extent, capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments orpayment-in-kind (“PIK”) interest. The principal amount of the debt investments and any accrued but unpaid interest generally becomes due at the maturity date.

We generate revenues primarily through receipt of interest income from the investments we hold. In addition, we may generate revenue in the form of commitment, origination, structuring, syndication, exit fees or diligence fees, fees for providing managerial assistance and consulting fees. Portfolio company fees (directors’ fees, consulting fees, administrative fees, tax advisory fees and other similar compensation) will be paid to us, unless, to the extent required by applicable law or exemptive relief, if any, therefrom, we receive our allocable portion of such fees when invested in the same portfolio company as other client accounts managed by our Investment Adviser (including Goldman Sachs BDC, Inc. (“GS BDC”) and, Goldman Sachs Middle Market Lending Corp. (“GS MMLC”) and Goldman Sachs Private Middle Market Credit II (“GS PMMC II”), collectively with other client accounts managed by our Investment Adviser, the “Accounts”), which other Accounts could receive their allocable portion of such fee. We do not expect to receive material fee income as it is not our principal investment strategy. We record contractual prepayment premiums on loans and debt securities as interest income.

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on theex-dividend date for publicly traded portfolio companies. Interest and dividend income are presented net of withholding tax, if any.

Expenses

Our primary operating expenses include the payment of the management fee (the “Management Fee”) and the incentive fee (the “Incentive Fee”) to the Investment Adviser, legal and professional fees, interest and other debt expenses and other operating and overhead related expenses. The Management Fee and Incentive Fee compensate our Investment Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. Pursuant to an investment advisory agreement with the Investment Adviser (the “Investment Advisory Agreement”), Company expenses borne by us in the ordinary course on an annual basis (excluding Management Fees, Incentive Fees, organizational andstart-up expenses and leverage-related expenses) will not exceed an amount equal to 0.5% of the aggregate amount of commitments to us by holders of common units of our limited liability company interests (“Units”); provided, however, that expenses incurred outside of the ordinary course, including litigation and similar expenses, are not subject to such cap. We bear all other costs and expenses of our operations and transactions in accordance with our investment advisory agreement (the “InvestmentInvestment Advisory Agreement”)Agreement and administration agreement (the “Administration Agreement”), including those relating to:

 

our operational and organizational expenses;

 

fees and expenses, including travel expenses, incurred by our Investment Adviser or payable to third parties related to our investments, including, among others, professional fees (including the fees and expenses of consultants and experts) and fees and expenses from evaluating, monitoring, researching and performing due diligence on investments and prospective investments;

 

interest, fees and other expenses payable on indebtedness for borrowed money (including through the issuance of notes and other evidence of indebtedness), other indebtedness, financings or extensions of credit, if any, incurred by us;

 

fees and expenses incurred by us in connection with membership in investment company organizations;

 

brokers’ commissions;

 

34

fees and expenses associated with calculating our NAVnet asset value (“NAV”) (including the costs and expenses of any independent valuation firm);

 

legal, auditing or accounting expenses;

 

39

taxes or governmental fees;

 

the fees and expenses of our administrator, transfer agent, orsub-transfer agent;

 

the cost of preparing unit certificates or any other expenses, including clerical expenses of issue or repurchase of our Units;

 

the expenses of and fees for registering or qualifying our Units for sale and of maintaining our registration or qualifying and registering us as a broker or a dealer;

 

the fees and expenses of our directors who are not affiliated with our Investment Adviser;

 

the cost of preparing and distributing reports, proxy statements and notices to our unitholders,Unitholders, the SEC and other regulatory authorities;

 

costs of holding unitholderUnitholder meetings;

 

the fees or disbursements of custodians of our assets, including expenses incurred in the performance of any obligations enumerated by limited liability company agreement or other organizational documents insofar as they govern agreements with any such custodian;

 

insurance premiums; and

 

costs incurred in connection with any claim, litigation, arbitration, mediation, government investigation or dispute in connection with our business and the amount of any judgment or settlement paid in connection therewith, or the enforcement of our rights against any person and indemnification or contribution expenses payable by us to any person and other extraordinary expenses not incurred in the ordinary course of our business.

Our Investment Adviser will not be required to pay expenses of activities which are primarily intended to result in sales of Units.

We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines. Costs relating to future offerings of securities would be incremental.

Leverage

The revolving credit facility with JPMorgan Chase Bank, National Association (the “JPM Revolving Credit Facility”) and the revolving credit facility with Bank of America, N.A. (the “BoA Revolving Credit Facility” and together with the JPM Revolving Credit Facility, the “Revolving Credit Facilities”) allow us to borrow money and lever our investment portfolio, subject to the limitations of the Investment Company Act, with the objective of increasing our yield. This is known as “leverage” and could increase or decrease returns to our unitholders.Unitholders. The use of leverage involves significant risks. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, equals at least 200% after such borrowing (or 150% if certain requirements are met). As of March 31, 20182019 and December 31, 2017,2018, our asset coverage ratio based on the aggregate amount outstanding of our senior securities (which includes the Revolving Credit Facilities) was 224%259% and 227%239%, respectively. The recently passed Small Business Credit Availability Act modified the applicable provisions of the Investment Company Act to reduce the required asset coverage ratio applicable to BDCs to 150%, subject to certain approval and disclosure requirements. Underrequirements and, in the legislation,case of BDCs without common equity listed on a national securities exchange, such as the Company, an offer to repurchase shares held by the BDC’s stockholders as of the date the requisite approval is obtained. As a result, BDCs are able to increase their leverage capacity if shareholders approve a proposal to do so. If a BDC receives shareholder approval, it would be allowed to increase its leverage capacity on the first day after such approval. Alternatively, the legislation allows the majority of the directors who are not “interested persons,” as defined in the Investment Company Act, of the BDC to approve an increase in its leverage capacity, and such approval would become effective after one year. Certain trading practices and investments, such as reverse repurchase agreements, may be considered borrowings or involve leverage and thus may be subject to Investment Company Act restrictions. In accordance with applicable SEC staff guidance and interpretations, when we engage in such transactions, instead of maintaining an asset coverage ratio of at least 200% (or 150% if the above referenced requirements are met), we may segregate or earmark liquid assets, or enter into an offsetting position, in an amount at least equal to our exposure, on amark-to-market basis, to such transactions (as calculated pursuant to requirements of the SEC). Short-term credits necessary for the settlement of securities transactions and arrangements with respect to securities lending will not be considered borrowings for these purposes. Practices and investments that may involve leverage but are not considered borrowings are not subject to the Investment Company Act’s asset coverage requirement, and we will not otherwise segregate or earmark liquid assets or enter into offsetting positions for such transactions. The amount of leverage that we employ will depend on our Investment Adviser’s and our board of directors’ (the “Board of Directors” or the “Board”) assessment of market conditions and other factors at the time of any proposed borrowing.

 

3540

PORTFOLIO AND INVESTMENT ACTIVITY

As of March 31, 20182019 and December 31, 2017,2018, our portfolio (excluding our investment in a money market fund managed by an affiliate of Group Inc. of $18.42$11.50 million and $1.31$0.00 million, respectively) consisted of the following:

 

  As of   As of 
  March 31, 2018 December 31, 2017   March 31, 2019 December 31, 2018 
  Amortized
Cost		   Fair
Value		   Percentage
of Total
Portfolio at
Fair Value		 Amortized
Cost		   Fair
Value		   Percentage
of Total
Portfolio at
Fair Value		   Amortized
Cost		   Fair
Value		   Percentage
of Total
Portfolio at
Fair Value		 Amortized
Cost		   Fair
Value		   Percentage
of Total
Portfolio at
Fair Value		 
  ($ in millions)     ($ in millions)       ($ in millions)     ($ in millions)     
First Lien/Senior Secured Debt  $312.58   $312.29    32.3%  $285.51   $285.25    32.6%   $833.41   $830.56    56.4%  $743.10   $741.44    53.0% 
FirstLien/Last-Out Unitranche   143.55    143.37    14.8  112.51    112.96    13.0    169.51    167.14    11.4  165.26    163.25    11.7 
Second Lien/Senior Secured Debt   497.30    499.04    51.7  465.33    466.97    53.3    461.10    443.63    30.2  473.20    466.79    33.3 
Unsecured Debt   3.79    3.78    0.4  3.79    3.78    0.4    4.31    4.30    0.3  4.31    4.30    0.3 
Preferred Stock   2.50    3.15    0.3  2.50    2.98    0.3    10.20    12.80    0.9  10.20    12.16    0.9 
Common Stock   5.25    4.93    0.5  4.25    3.57    0.4    11.86    12.50    0.8  11.86    11.29    0.8 
Warrants   0.10    0.09    0.0  0.10    0.10    0.0    0.10    0.14    0.0  0.10    0.13    0.0 
  

 

   

 

   

 

  

 

   

 

   

 

   

 

   

 

   

 

  

 

   

 

   

 

 

Total Investments

  $965.07   $966.65    100.0%  $873.99   $875.61    100.0%   $1,490.49   $1,471.07    100.0%  $1,408.03   $1,399.36    100.0% 
  

 

   

 

   

 

  

 

   

 

   

 

   

 

   

 

   

 

  

 

   

 

   

 

 

As of March 31, 20182019 and December 31, 2017,2018, the weighted average yield of our portfolio by asset type of our portfolio (excluding our investment in a money market fund managed by an affiliate of Group Inc.), at amortized cost and fair value, was as follows:

 

  As of   As of 
  March 31, 2018 December 31, 2017   March 31, 2019 December 31, 2018 
  Amortized
Cost		 Fair
Value		 Amortized
Cost		 Fair
Value		   Amortized
Cost		 Fair
Value		 Amortized
Cost		 Fair
Value		 
Weighted Average Yield(1)          
First Lien/Senior Secured Debt(2)   10.3%  10.3%  10.0%  10.1%    9.7%  9.8%  10.0%  10.0% 
FirstLien/Last-Out Unitranche(2)(3)   10.8%  10.8%  10.5%  10.4%    11.1%  11.7%  11.3%  11.8% 
Second Lien/Senior Secured Debt(2)   10.7%  10.6%  10.3%  10.2%    10.8%  11.4%  11.2%  11.6% 
Unsecured Debt(2)   13.7%  13.7%  13.7%  13.8%    13.6%  13.7%  13.6%  13.8% 
Preferred Stock(4)   0.0%  0.0%  0.0%  0.0%    0.0%  0.0%  0.0%  0.0% 
Common Stock(4)   0.0%  0.0%  0.0%  0.0%    0.0%  0.0%  0.0%  0.0% 
Warrants(4)   0.0%  0.0%  0.0%  0.0%    0.0%  0.0%  0.0%  0.0% 
Total Portfolio   10.5%   10.5%   10.2%   10.1%    10.1%   10.3%   10.4%   10.6% 

 

(1)  

The weighted average yield of our portfolio does not represent the total return to our unitholders.Unitholders.

(2)  

Computed based on (a) the annual actual interest rate or yield earned plus amortization of fees and discounts on the performing debt and other income producing investments as of the reporting date, divided by (b) the total investments (including investments onnon-accrual andnon-income producing investments) at amortized cost or fair value, respectively.

(3)  

The calculation includes incremental yield earned on the“last-out” portion of the unitranche loan investments.

(4)  

Computed based on (a) the stated coupon rate, if any, for each income-producing investment, divided by (b) the total investments (including investments onnon-accrual andnon-income producing investments) at amortized cost or fair value, respectively.

The following table presents certain selected information regarding our investment portfolio (excluding our investment in a money market fund managed by an affiliate of Group Inc.) as of March 31, 20182019 and December 31, 2017:2018:

 

  As of   As of 
  March 31, 2018   December 31, 2017   March 31, 2019   December 31, 2018 
Number of portfolio companies   42    38    65    59 
Percentage of performing debt bearing a floating rate(1)   98.1%    98.0%    98.8%    98.7% 
Percentage of performing debt bearing a fixed rate(1)(2)   1.9%    2.0%    1.2%    1.3% 
Weighted average leverage (net debt/EBITDA)(3)   5.5x    5.4x    5.8x    5.7x 
Weighted average interest coverage(3)   2.3x    2.5x    2.1x    2.0x 
Median EBITDA(3)(4)  $40.28 million   $41.8 million   $36.0 million   $40.3 million 

 

(1)  

Measured on a fair value basis. Excludes investments, if any, placed onnon-accrual.

41

(2)  

Includes income producing preferred stock investments, if applicable.

(3)  

For a particular portfolio company, EBITDA typically representswe calculate the level of contractual indebtedness net income before of cash (“net interest expense, income tax expense, depreciationdebt”) owed by the portfolio company and amortization. Thecompare that amount to measures of cash flow available to service the net debt. To calculate net debt, we include debt that is both senior and pari passu to EBITDA represents the ratiotranche of debt owned by us but exclude debt that is legally and contractually subordinated in ranking to the debt owned by us. We believe this calculation method assists in describing the risk of our portfolio investments, as it takes into consideration contractual rights of repayment of the tranche of debt owned by us relative to other senior and junior creditors of a portfolio company’s totalcompany. We typically calculate cash flow available for debt (net of cash) and excluding debt subordinated to our investment inservice at a portfolio company to a portfolio company’s EBITDA. The interest coverage ratio representsby taking EBITDA for the ratio of a portfolio company’s EBITDA as a multiple of a portfolio company’s interest expense.trailing twelve month period. Weighted average net debt to EBITDA is weighted based on the fair value of our debt investments, excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue. Weighted average interest coverage is weighted based on the fair value of our performing debt investments, excluding investments where interest coverage may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue. Median EBITDA is based on our debt investments, excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue. As of March 31, 2018 and December 31, 2017, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 22.9% and 22.2%

For a particular portfolio company, we also calculate the level of contractual interest expense owed by the portfolio company, and compare that amount to EBITDA (“interest coverage ratio”). We believe this calculation method assists in describing the risk of our portfolio investments, as it takes into consideration contractual interest obligations of the portfolio company. Weighted average interest coverage is weighted based on the fair value of our performing debt investments, excluding investments where interest coverage may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.

Median EBITDA is based on our debt investments, excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.

Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the reported end date. Statistics of the portfolio companies have not been independently verified by us and may reflect a normalized or adjusted amount.

As of March 31, 2019 and December 31, 2018, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 27.1% and 28.9%, respectively, of total debt investments at fair value. Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the respective reported end date. Portfolio company statistics have not been independently verified by us and may reflect a normalized or adjusted amount.

36

Floating rates are primarily London InterBank Offered Rate (“LIBOR”) plus a spread.

Our Investment Adviser monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if it is meeting its respective business plan and to assess the appropriate course of action for each company. Our Investment 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.

As part of the monitoring process, our Investment Adviser also employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Investment Adviser grades the credit risk of all investments on a scale of 1 to 4 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account in certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The grading system is as follows:

 

investments with a grade of 1 involve the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit;

 

investments with a grade of 2 involve a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 2;

 

investments with a grade of 3 indicate that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance andnon-compliance with debt covenants; however, payments are generally not more than 120 days past due; and

��

investments with a grade of 4 indicate that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt investments with an investment grade of 4, in most cases, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 4, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit.

 

3742

Our Investment Adviser grades the investments in our portfolio at least each quarter and it is possible that the grade of a portfolio investment may be reduced or increased over time. For investments with a grade of 3 or 4, the Investment Adviser enhances its level of scrutiny over the monitoring of such portfolio company. The following table shows the composition of our portfolio (excluding our investment in a money market fund managed by an affiliate of Group Inc.) on the 1 to 4 grading scale as of March 31, 20182019 and December 31, 2017:2018:

 

  As of   As of 
  March 31, 2018 December 31, 2017   March 31, 2019 December 31, 2018 

Investment

Performance Rating

  Fair Value   Percentage
of Total
Portfolio
at Fair
Value		 Fair Value   Percentage
of Total
Portfolio
at Fair
Value		   Fair
Value		   Percentage
of Total
Portfolio
at Fair
Value		 Fair
Value		   Percentage
of Total
Portfolio
at Fair
Value		 
  (in millions)     (in millions)       

(in

millions)

     

(in

millions)

     
Grade 1  $–    –%  $–    –%   $55.56    3.8%  $–    –% 
Grade 2   966.65    100.0  875.61    100.0    1,391.44    94.6  1,364.89    97.5 
Grade 3   –    –   –    –    22.69    1.5  34.47    2.5 
Grade 4   –    –   –    –    1.38    0.1   –    – 
  

 

   

 

  

 

   

 

   

 

   

 

  

 

   

 

 

Total Investments

  $966.65    100.0%  $875.61    100.0%   $1,471.07    100.0%  $1,399.36    100.0% 
  

 

   

 

  

 

   

 

   

 

   

 

  

 

   

 

 

The increase in theinvestments with a grade 1 investment performance rating as of March 31, 2019 compared to December 31, 2018 was driven by one portfolio company with an aggregate fair value of $55.56 million being upgraded due to a potential exit. The increase in investments with a grade 2 investment performance rating as of March 31, 20182019 compared to December 31, 20172018 was primarily driven by an increase in net investment activity. The decrease in investments with a grade 3 investment performance rating as of March 31, 2019 compared to December 31, 2018 was driven by one investment with a fair value of $1.38 million being downgraded to grade 4 investment performance rating due to its placement on non-accrual, partially offset by one investment with a fair value of $0.42 million being downgraded to grade 3 investment performance rating due to financial underperformance. The increase in investments with a grade 4 investment performance rating as of March 31, 2019 compared to December 31, 2018 was driven by one investment with a fair value of $1.38 million being placed on non-accrual status due to financial underperformance.

The following table shows the amortized cost of our performing andnon-accrual investments (excluding our investment in a money market fund managed by an affiliate of Group Inc.) as of March 31, 20182019 and December 31, 2017:2018:

 

  As of   As of 
  March 31, 2018 December 31, 2017   March 31, 2019 December 31, 2018 
  Amortized
Cost		   Percentage
of Total
Portfolio
at
Amortized
Cost		 Amortized
Cost		   Percentage
of Total
Portfolio
at
Amortized
Cost		   Amortized
Cost		   Percentage
of Total
Portfolio
at
Amortized
Cost		 Amortized
Cost		   Percentage
of Total
Portfolio
at
Amortized
Cost		 
  (in millions)     (in millions)       

(in

millions)

     

(in

millions)

     
Performing  $965.07    100.0%  $873.99    100.0%   $1,476.92    99.1%  $1,408.03    100.0% 
Non-accrual   –    –   –    –    13.57    0.9   –    – 
  

 

   

 

  

 

   

 

   

 

   

 

  

 

   

 

 

Total Investments

  $965.07    100.0%  $873.99    100.0%   $1,490.49    100.0%  $1,408.03    100.0% 
  

 

   

 

  

 

   

 

   

 

   

 

  

 

   

 

 

Loans or debt securitiesInvestments are placed onnon-accrual status when it is probable that principal, interest or interestdividends will not be collected according to the contractual terms. Accrued interest or dividends generally isare reversed when a loan or debt securityan investment is placed onnon-accrual status. Interest or dividend payments received onnon-accrual loans or debt securitiesinvestments may be recognized as income or applied to principal depending upon management’s judgment.Non-accrual loans and debt securitiesinvestments are restored to accrual status when past due principal and interest isor dividends are paid and, in management’s judgment, principal and interest or dividend payments are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection.

 

3843

The following table shows our investment activity for the three months ended March 31, 20182019 and 20172018 by investment type:

 

  For the Three Months Ended   For the Three Months Ended 
    March 31,  
2018		 March 31,
2017		     March 31,  
2019		   March 31,
2018		 
  ($ in millions)   ($ in millions) 
New investments committed at cost:       
Gross originations  $161.37  $145.12   $222.48   $161.37 
Less: Syndications(1)   –   –    –    – 
  

 

  

 

 
     

 

   

 

 
Net amount of new investments committed at cost:  $161.37  $145.12   $222.48   $161.37 
Amount of investments committed at cost(2):       
First Lien/Senior Secured Debt  $28.74  $32.27   $195.77   $28.74 
FirstLien/Last-Out Unitranche   80.59  48.33    –    80.59 
Second Lien/Senior Secured Debt   50.14  62.26    26.71    50.14 
Unsecured Debt   –   –    –    – 
Preferred Stock   –   –    –    – 
Common Stock   1.90  2.26    –    1.90 
Warrants   –   –    –    – 
  

 

  

 

   

 

   

 

 

Total

  $161.37  $145.12   $222.48   $161.37 
  

 

  

 

   

 

   

 

 
Proceeds from investments sold or repaid:   
Proceeds from investments sold or repaid(9):    
First Lien/Senior Secured Debt  $4.55  $0.06   $10.89   $4.55 
FirstLien/Last-Out Unitranche   29.20  3.92    0.14    29.20 
Second Lien/Senior Secured Debt   15.39   –    39.58    15.39 
Unsecured Debt   –   –    –    – 
Preferred Stock   –   –    –    – 
Common Stock   3.22   –    –    3.22 
Warrants   –   –    –    – 
  

 

  

 

   

 

   

 

 

Total

  $52.36  $3.98   $50.61   $52.36 
  

 

  

 

   

 

   

 

 

Net increase (decrease) in portfolio

  $109.01  $141.14   $171.87   $109.01 
  

 

  

 

   

 

   

 

 
Number of new portfolio companies with new investment commitments(3)   5  7    7    5 
Total new investment commitment amount in new portfolio companies(3)  $50.77  $130.61   $183.46   $50.77 
Average new investment commitment amount in new portfolio companies(3)  $10.15  $18.66   $26.21   $10.15 
Number of existing portfolio companies with new investment commitments(3)   7  2    5    7 
Total new investment commitment amount in existing portfolio companies(3)  $110.60  $14.51   $39.02   $110.60 
Weighted average remaining term for new investment commitments (in years)(3)(4)   5.5  6.0    5.8    5.5 
Percentage of new debt investment commitments at floating interest rates(3)   93.8%  100.0% 
Percentage of new debt investment commitments at fixed interest rates(3)   6.3%  0.0% 
Weighted average yield on new debt and income producing investment commitments(2) (3)   10.4%(5)   10.1%(9) 
Weighted average yield on new investment commitments(2) (3)   10.3%(6)   9.9%(10) 
Weighted average yield on debt and income producing investments sold or paid down   9.9%(7)   10.0%(11) 
Weighted average yield on investments sold or paid down   9.3%(8)   10.0%(12) 
Percentage of new debt investment commitments at floating interest rates(3)(10)   100.0%    99.4% 
Percentage of new debt investment commitments at fixed interest rates(3)(10)   0.0%    0.6% 
Weighted average yield on new debt and income producing investment commitments(2)(3)(5)   8.9%    10.4% 
Weighted average yield on new investment commitments(2)(3)(6)   8.9%    10.3% 
Weighted average yield on debt and income producing investments sold or paid down(7)(9)   11.4%    9.9% 
Weighted average yield on investments sold or paid down(8)(9)   11.4%    9.3% 

 

(1)  

Only includes syndications, if any, that occurred at the initial close of the investment.

(2)  

Net of capitalized fees, expenses and original issue discount (“OID”). that occurred at the initial close of the investment.

(3)  

May include positions originated during the period but not held at the reporting date.

(4)  

Calculated as of the end of the relevant period and the maturity date of the individual investments.

(5) 

Computed based on (a) the annual actual interest rate on new debt and income producing investment commitments as of the reporting date, divided by (b) the total new debt and income producing investment commitments. The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments and excludes investments that are non-accrual.

(6)

Computed based on (a) the annual actual interest rate on new investment commitments as of the reporting date, divided by (b) the total new investment commitments (including investments on non-accrual and non-income producing investments). The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments.

(7)

Computed based on (a) the annual actual interest rate on debt and income producing investments sold or paid down as of the reporting date, divided by (b) the total debt and income producing investments sold or paid down. The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments and excludes prepayment premiums earned on exited investments and investments that are non-accrual.

(8)

Computed based on (a) the annual actual interest rate on investments sold or paid down as of the reporting date, divided by (b) the total investments sold or paid down (including investments on non-accrual and non-income producing investments). The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments and excludes prepayment premiums earned on exited investments

(9)

Computed based on (a) the annual stated interest rate on new debt and income producing investment commitments, divided by (b) the total new debt and income producing investment commitments. The calculation includes incremental yield earned on the “last-out”“last-out” portion of the unitranche loan investments and excludes investments that arenon-accrual. For investments that are subject to a LIBOR floor, the calculation assumes the greater of the applicable LIBOR floor or 3 month LIBOR The annual actual interest rate used is as of the respective periodquarter end date. The actual interest rate may vary.date when the investment activity occurred.

(10)(6) 

Computed based on (a) the annual statedactual interest rate on new investment commitments, divided by (b) the total new investment commitments (including investments onnon-accrual andnon-income producing investments). The calculation includes incremental yield earned on the “last-out”“last-out” portion of the unitranche loan investments. For investments that are subject to a LIBOR floor, the calculation assumes the greater of the applicable LIBOR floor or 3 month LIBORThe annual actual interest rate used is as of the respective periodquarter end date. The actual interest rate may vary.date when the investment activity occurred.

(11)(7) 

Computed based on (a) the annual statedactual interest rate on debt and income producing investments sold or paid down, divided by (b) the total debt and income producing investments sold or paid down. The calculation includes incremental yield earned on the “last-out”“last-out” portion of the unitranche loan investments and excludes prepayment premiums earned on exited investments and investments that arenon-accrual. For investments that are subject to a LIBOR floor, the calculation assumes the greater of the applicable LIBOR floor or 3 month LIBOR as of the respective period end date. The actual interest rate may vary.

(12)(8) 

Computed based on (a) the annual statedactual interest rate on investments sold or paid down, divided by (b) the total investments sold or paid down (including investments onnon-accrual andnon-income producing investments). The calculation includes incremental yield earned on the “last-out”“last-out” portion of the unitranche loan investments and excludes prepayment premiums earned on exited investments. For

(9)

Excludes unfunded commitments that may have expired or otherwise been terminated without receipt of cash proceeds or other consideration.

(10)

Computed based on amount of investments that are subject to a LIBOR floor, the calculation assumes the greater of the applicable LIBOR floor or 3 month LIBOR as of the respective period end date. The actual interest rate may vary.committed at cost.

 

3944

RESULTS OF OPERATIONS

Our operating results for the three months ended March 31, 20182019 and 20172018 were as follows:

 

  For the Three Months Ended   For the Three Months Ended 
  March 31,
2018		 March 31,
2017		   March 31,
2019		 March 31,
2018		 
  ($ in millions)   ($ in millions) 
Total investment income  $25.14  $6.94   $37.73  $25.14 
Net expenses   (11.50)  (2.60)    (15.62)  (11.50) 
  

 

  

 

   

 

  

 

 

Net investment income (loss)

   13.64  4.34 

Net investment income

   22.11  13.64 
  

 

  

 

   

 

  

 

 
Net realized gain (loss) on investments   2.32   –    –  2.32 
Net realized gain (loss) on foreign currency transactions   0.01   – 
Net unrealized appreciation (depreciation) on investments   (0.04)   –    (10.76)  (0.04) 
Income tax provision, realized gain   (0.67)   – 
Net unrealized appreciation (depreciation) on foreign currency forward contracts and translations   1.31   – 
Income tax provision, realized and unrealized gain   (0.11)  (0.67) 
  

 

  

 

   

 

  

 

 

Net increase (decrease) in Members’ Capital resulting from operations

  $15.25  $4.34   $12.56  $15.25 
  

 

  

 

   

 

  

 

 

Net increase in Members’ Capital resulting from operations can vary from period to period as a result of various factors, including acquisitions, the level of new investment commitments, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. As a result, comparisons may not be meaningful.

Investment Income

 

  For the Three Months Ended   For the Three Months Ended 
  March 31,
2018		   March 31,
2017		   March 31,
2019		   March 31,
2018		 
  ($ in millions)   ($ in millions) 
Interest  $24.77   $6.77   $37.15   $24.77 
Dividend income   0.04    0.01    0.09    0.04 
Other income   0.33    0.16    0.49    0.33 
  

 

   

 

   

 

   

 

 

Total investment income

  $25.14   $6.94   $37.73   $25.14 
  

 

   

 

   

 

   

 

 

Interest

Interest from investments, which includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts, increased from $6.77 million for the three months ended March 31, 2017 to $24.77 million for the three months ended March 31, 2018 to $37.15 million for the three months ended March 31, 2019, primarily due to an increase in the size of our portfolio. The amortized cost of the portfolio increased from $348.13 million as of March 31, 2017 to $965.07 million as of March 31, 2018.2018 to $1,490.49 million as of March 31, 2019. Included in interest for the three months ended March 31, 2019 and 2018 and 2017 is $0.74$0.08 million and $0$0.74 million, respectively, in prepayment premiums and $0.74$0.58 million and $0$0.74 million, respectively, in accelerated accretion of upfront loan origination fees and unamortized discounts.

Dividend and other income

Dividend and other income for the three months ended March 31, 2018 remained relatively consistent as compared to the three months ended March 31, 2019.

Expenses

 

  For the Three Months Ended   For the Three Months Ended 
  March 31,
2018		   March 31,
2017		   March 31,
2019		   March 31,
2018		 
  ($ in millions)   ($ in millions) 
Interest and other debt expenses  $5.87   $0.97   $9.18   $5.87 
Management fees   1.94    0.79    3.22    1.94 
Incentive fees   2.74    –    2.40    2.74 
Offering costs   –    0.42 
Professional fees   0.51    0.21    0.32    0.51 
Administration, custodian and transfer agent fees   0.21    0.10    0.30    0.21 
Directors’ fees   0.08    0.03    0.09    0.08 
Other expenses   0.15    0.08    0.11    0.15 
  

 

   

 

   

 

   

 

 

Net expenses

  $11.50   $2.60   $15.62   $11.50 
  

 

   

 

   

 

   

 

 

Interest and other debt expenses

Interest and other debt expense increased from $0.97 million for the three months ended March 31, 2017 to $5.87 million for the three months ended March 31, 2018.2018 to $9.18 million for the three months ended March 31, 2019. This was primarily due to an increase in the average aggregate daily borrowings from $68.71$412.85 million to $412.85 million.$587.05 million, which was driven by an increase in the size of our portfolio.

 

4045

Management Fees and Incentive Fees

Management Fees increased from $0.79 million for the three months ended March 31, 2017 to $1.94 million for the three months ended March 31, 2018 to $3.22 million for the three months ended March 31, 2019 as a result of an increase in the size of our portfolio, excluding cash and investments in a money market fund managed by an affiliate of Group Inc. The accrual for Incentive Fees increaseddecreased from $0 million for the three months ended March 31, 2017 to $2.74 million for the three months ended March 31, 2018 to $2.40 million for the three months ended March 31, 2019 as a result of an increasea net decrease in net investment income.total results from operations.

Professional fees and other general and administrative expenses

Professional fees and other general and administrative expenses increased from $0.21 million and $0.21 million, respectively, for the three months ended March 31, 20172019 remained relatively consistent as compared to $0.51 million and $0.44 million, respectively, for the three months ended March 31, 2018 due primarily to an increase in the size of the portfolio and an increase in costs associated with servicing a larger investment portfolio.2018.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation) on Investments

The realized gains and losses on fully exited and partially exited portfolio companies for the three months ended March 31, 20182019 and 20172018 consisted of the following:

 

  For the Three Months Ended   For the Three Months Ended 
  March 31,
2018		   March 31,
2017		   March 31,
2019		 March 31,
2018		 
  ($ in millions)   (in millions) 
myON Holdings, LLC  $2.32   $–   
MyON Holdings, LLC  $–  $2.32 
Other, net   –      –      –(1)   – 
  

 

   

 

   

 

  

 

 

Net realized gain (loss)

  $2.32   $–     $–  $2.32 
  

 

   

 

   

 

  

 

 

(1)

Amount rounds to less than $(0.00) million.

In connection with the proceeds received from the exit of our equity investment in myON, LLC, we recorded an income tax provision on realized gains of $0.67 million for the three months ended March 31, 2018.

Any changes in fair value are recorded in change in unrealized appreciation (depreciation) on investments. For further details on the valuation process, refer to “Critical Accounting Policies—Valuation of Portfolio Investments.” Net change in unrealized appreciation (depreciation) on investments for the three months ended March 31, 20182019 and 20172018 were as follows:

 

   March 31,
2018		  March 31,
2017		 
   ($ in millions) 
Unrealized appreciation  $1.53  $0.78 
Unrealized depreciation   (1.57)   (0.09) 
  

 

 

  

 

 

 

Net change in unrealized appreciation (depreciation) on investments

  $(0.04)  $0.69 
  

 

 

  

 

 

 

41

   For the Three Months Ended 
   March 31,
2019		  March 31,
2018		 
   ($ in millions) 
Unrealized appreciation  $4.83  $1.53 
Unrealized depreciation   (15.59)   (1.57) 
  

 

 

  

 

 

 

Net change in unrealized appreciation (depreciation) on investments

  $(10.76)  $(0.04) 
  

 

 

  

 

 

 

The change in unrealized appreciation (depreciation) on investments for the three months ended March 31, 20182019 and 20172018 consisted of the following:

 

��  For the Three Months Ended 
   March 31,
2018		  March 31,
2017		 
   ($ in millions) 
Portfolio Company:   
Collaborative Imaging, LLC  $(0.13)  $– 
Continuum Managed Services LLC—Class A   0.08   – 
Continuum Managed Services LLC—Class B   0.34   – 
Country Fresh Holdings, LLC   (0.15)   – 
Datacor Holdings, Inc.   0.11   0.06 
DuBois Chemicals, Inc.   (0.01)   0.25 
Granicus, Inc.   0.05   0.05 
Intelligent Document Solutions, Inc.   (0.17)   – 
Odyssey Logistics & Technology Corporation   0.14   – 
SF Home Décor, LLC   0.27   – 
Smarsh, Inc.   0.11   – 
Vantage Mobility International, LLC   (0.53)   – 
Yasso, Inc.   (0.22)   – 
You Fit, LLC   (0.05)   0.39 
Other, net(1)   0.12   (0.06) 
  

 

 

  

 

 

 

Total

  $(0.04)  $0.69 
  

 

 

  

 

 

 
   For the Three Months Ended 
   March 31,
2019		  March 31,
2018		 
   ($ in millions) 
Portfolio Company:   
Accuity Delivery Systems, LLC  $0.58  $– 
Continuum Managed Services LLC - Class B   1.23   0.34 
Country Fresh Holdings, LLC   (10.07)   (0.15) 
Diligent Corporation   (0.62)   – 
Fenergo Finance 3 Limited   (0.71)   – 
Vantage Mobility International, LLC   (0.78)   (0.53) 
You Fit, LLC   0.55   (0.05) 
Zep Inc.   (1.09)   0.07 
Other, net(1)   0.15   0.28 
  

 

 

  

 

 

 

Total

  $(10.76)  $(0.04) 
  

 

 

  

 

 

 

 

(1)  

For the three months ended March 31, 20182019 and 2017,2018, other, net includes gross unrealized appreciation of $0.43$2.47 million and $0.03$1.12 million, respectively, and gross unrealized depreciation of $(0.31)$(2.32) million and $(0.09)$(0.84) million, respectively.

 

4246

Net change in unrealized appreciation (depreciation) in our investments for the three months ended March 31, 2019 was primarily driven by Country Fresh Holdings, LLC, which was placed on non-accrual status due to financial underperformance.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The primary use of existing funds and any funds raised in the future is expected to be for our investments in portfolio companies, cash distributions to our unitholdersUnitholders or for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities.

We expect to generate cash primarily from the net proceeds of any future offerings of securities, drawdowns of capital commitments, future borrowings and cash flows from operations. To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our Board of Directors otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our unitholders,Unitholders, we may enter into credit facilities in addition to our Revolving Credit Facilities, or issue other senior securities. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, is at least 200% after such borrowing (or 150% if certain requirements are met). See “—Key Components of Operations—Leverage” for more information regarding the recently passed Small Business Credit Availability Act.Leverage.” As of March 31, 20182019 and December 31, 2017,2018, our asset coverage ratio based on the aggregate borrowingsamount outstanding of our senior securities (which includes the Revolving Credit Facilities) was 224%259% and 227%239%, respectively. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions.

We may enter into commitments either verbally or through signed commitment letters which may ultimately become investment transactions in the future. We regularly evaluate and carefully consider our unfunded commitments using GSAM’s proprietary risk management framework for the purpose of planning our capital resources and ongoing liquidity, including our financial leverage.

As of March 31, 2019, we had cash of approximately $29.94 million, an increase of $4.40 million from December 31, 2018. In addition, as of March 31, 2019, we had an investment in a money market fund managed by an affiliate of Group Inc. of $11.50 million. Cash used by operating activities for the three months ended March 31, 2019 was approximately $70.83 million, primarily driven by net purchases of investments of $80.42 million, net purchases of investments in the affiliated money market fund of $11.50 million, offset by other operating activities of $8.53 million and an increase in Members’ Capital resulting from operations of $12.56 million. Cash provided by financing activities for the three months ended March 31, 2019 was approximately $75.23 million, primarily driven by proceeds from the issuance of common Units of $109.74 million, offset by net borrowings on debt of $8.17 million, distributions paid of $25.50 million and other financing activities of $0.84 million.

As of March 31, 2018, we had cash of approximately $12.92 million, an increase of $4.70 million from December 31, 2017. In addition, as of March 31, 2018, we had an investment in a money market fund managed by an affiliate of Group Inc. of $18.42 million. Cash used by operating activities for the three months ended March 31, 2018 was approximately $87.47 million, primarily driven by net purchases of investments of $87.28 million, offset by other operating activities of $1.66 million, net sales of investments in the affiliated money market fund of $17.10 million and an increase in Members’ Capital resulting from operations of $15.25 million. Cash provided by financing activities for the three months ended March 31, 2018 was approximately $92.18 million, primarily driven by proceeds from the issuance of common Units of $54.87 million and net borrowings on debt of $51.50 million, partially offset by distributions paid of $14.19 million.

As of March 31, 2017, we had cash of approximately $5.81 million, an increase of $1.95 million from December 31, 2016. In addition, as of March 31, 2017, we had an investment in a money market fund managed by an affiliate of Group Inc. of $64.36 million. Cash used by operating activities for the three months ended March 31, 2017 was approximately $70.07 million, primarily driven by net purchases of investments of $148.78 million and other operating activities of $0.28 million, offset by net sales of investments in the affiliated money market fund of $73.96 million, and increase in Members’ Capital resulting from operations of $5.03 million. Cash provided by financing activities for the three months ended March 31, 2017 was approximately $72.02 million, primarily driven by net borrowings on debt of $75.50 million, partially offset by a distribution paid of $3.00 million and other financing activities of $0.48 million.

To the extent permissible under the risk retention rules and applicable provisions of the Investment Company Act, we may raise capital by securitizing certain of our investments, including through the formation of one or more collateralized loan obligations or asset based facilities, while retaining all or most of the exposure to the performance of these investments. This would involve contributing a pool of assets to a special purpose entity, and selling debt interests in such entity on anon-recourse or limited-recourse basis to purchasers. We may also pursue other forms of debt financing, including potentially from the Small Business Administration through a future small business investment company (“SBIC”) subsidiary (subject to regulatory approvals).

Credit Alternatives GP LLC (the “Initial Member”), an affiliate of our Investment Adviser, made a capital contribution to us of $100 on June 9, 2016 and served as our sole initial member. We cancelled the Initial Member’s interest in the Company on July 14, 2016. On May 6, 2016, we began accepting subscription agreements (“Subscription Agreements”) from investors acquiring common Units in our private offering. Under the terms of the Subscription Agreements, investors are required to make capital contributions up to the amount of their undrawn capital commitment to purchase Units each time we deliver a drawdown notice.

 

4347

As of March 31, 20182019 and December 31, 2017,2018, we had aggregate capital commitments and undrawn capital commitments from investors as follows:

 

   

March 31, 2018

   December 31, 2017 
   

Capital

Commitments

($ in millions)

  Unfunded
Capital
Commitments
($ in millions)		   % of Capital
Commitments
Funded		   Capital
Commitments
($ in millions)		   Unfunded
Capital
Commitments
($ in millions)		   % of Capital
Commitments
Funded		 
Common Units  $1,097.43   $548.72    50%    $1,097.43    $603.59    45% 
   March 31, 2019  December 31, 2018 
    

Capital

Commitments

($ in millions)

   

Unfunded

Capital

Commitments

($ in millions)

   

% of Capital

Commitments

Funded

  

Capital

Commitments

($ in millions)

   

Unfunded

Capital

Commitments

($ in millions)

   

% of Capital

Commitments

Funded

 
Common Units  $1,097.43   $153.64    86%  $1,097.43   $263.38    76% 

The following table summarizes the total Units issued and proceeds receivedrelated to capital drawdowns for the three months ended March 31, 2019:

Unit Issue Date  Units Issued   

Proceeds

($ in millions)

 
February 22, 2019   689,032   $65.84 
March 28, 2019   455,946    43.90 

Total capital drawdowns

   1,144,978   $109.74 

The following table summarizes the total Units issued and proceeds related to capital drawdowns for the three months ended March 31, 2018:

 

Unit Issue Date

  Units Issued   Proceeds
Received
($ in millions)		 
February 21, 2018   335,966   $32.92 
March 28, 2018   222,135   $21.95 
  

 

 

   

 

 

 

Total capital drawdowns

   558,101   $54.87 
  

 

 

   

 

 

 

There were no capital drawdowns delivered pursuant to the Subscription Agreements for the three months ended March 31, 2017.

Unit Issue Date  Units Issued   

Proceeds

($ in millions)

 
February 21, 2018   335,966   $32.92 
March 28, 2018   222,135    21.95 

Total capital drawdowns

   558,101   $54.87 

Contractual Obligations

We have entered into certain contracts under which we have future commitments. Payments under the Investment Advisory Agreement, pursuant to which GSAM has agreed to serve as our Investment Adviser, are equal to (1) a percentage of our average NAV and (2) an Incentive Fee based on investment performance. Under the Administration Agreement, pursuant to which State Street Bank and Trust Company has agreed to furnish us with the administrative services necessary to conduct ourday-to-day operations, we pay our administrator such fees as may be agreed between us and our administrator that we determine are commercially reasonable in our sole discretion. Generally, either party may terminate the Investment Advisory Agreement without penalty on at least 60 days’ written notice to the other party. Either party may terminate the Administration Agreement without penalty upon at least 30 days’ written notice to the other party.

The following table shows our contractual obligations as of March 31, 2018:2019:

 

  Payments Due by Period ($ in millions)   Payments Due by Period ($ in millions) 
  Total   Less Than
1 Year		   1 – 3 Years   3 – 5 Years   More Than
5 Years		   Total   Less Than
1 Year		   1 – 3 Years   3 – 5 Years   More Than
5 Years		 
BoA Revolving Credit Facility  $235.00   $235.00   $–   $–   $–   $35.25   $35.25   $–   $–   $– 
JPM Revolving Credit Facility  $200.00   $–   $–   $200.00   $–   $473.94   $–   $–   $473.94   $– 
JPM Revolving Credit Facility  €50.90   €–   €–   €50.90   €– 

BoA Revolving Credit Facility

We entered into the BoA Revolving Credit Facility on July 18, 2016 with Bank of America, N.A. as administrative agent (the “Administrative Agent”), lead arranger, letter of credit issuer and a lender.

On March 3, 2017, we We amended the BoA Revolving Credit Facility to, among other things:

temporarily increase the maximum committed principal amount of the BoA Revolving Credit Facility by $100.00 million to $350.00 million, which temporary increase expired on December 29, 2017;March 3, 2017, July 16, 2018 and August 1, 2018

increase the interest rate on obligations under the BoA Revolving Credit Facility to either (1) the prevailing LIBOR for one, two, three or six months plus 3.00% per annum (increased from 2.25% per annum) or (2) an alternate base rate (the greater of the prime rate of such commercial bank, the federal funds rate plus 0.50%, and LIBOR plus 1.00%) plus 2.00% per annum (increased from 1.25% per annum).

 

4448

Subject to availability under the “Borrowing Base,” the maximum principal amount of the BoA Revolving Credit Facility was $250.00$50.00 million as of March 31, 2018,2019. The maximum principal amount of which $235.00 million was drawn as of March 31, 2018.the BoA Revolving Credit Facility will decrease on a monthly basis until the stated maturity date (unless reduced further at our discretion). The Borrowing Base is calculated based on the unfunded capital commitments of the investors meeting various eligibility requirements (subject to investor concentration limits) multiplied by specified advance rates. We have the ability to increase the maximum principal amount of the BoA Revolving Credit Facility up to $750.00 million, subject to increasing commitments of existing lenders and/or obtaining commitments of new lenders and certain other conditions. The stated maturity date of the BoA Revolving Credit Facility will mature on July 17, 2018, subject to extension withis May 31, 2019.

Under the consent of the Administrative Agent and the extending lenders, and certain other conditions.

WeBoA Revolving Credit Facility, we have the ability to elect either LIBOR or the alternative base rate at the time of draw-down, and loans may be converted from one rate to another at any time, subject to certain conditions. Interest rate on obligations under the BoA Revolving Credit Facility is the prevailing LIBOR for one, two, three or six months (the “Applicable LIBOR”) plus 2.50% per annum or (B) an alternate base rate (the greater of the prime rate of such commercial bank, the federal funds rate plus 0.50%, and LIBOR plus 1.00%) (“ABR”) plus 1.50% per annum. We pay a 0.25% annualized fee on a quarterly basis on committed but undrawn amounts under the BoA Revolving Credit Facility.

Amounts drawn under the BoA Revolving Credit Facility may be prepaid at any time without premium or penalty, subject to applicable breakage costs. Loans are subject to mandatory prepayment for amounts exceeding the Borrowing Base or the lenders’ aggregate commitment and to the extent required to comply with the Investment Company Act, as applied to BDCs. Transfers of interests in the Company by investors are subject to certain restrictions under the BoA Revolving Credit Facility and may trigger mandatory prepayment obligations.

The BoA Revolving Credit Facility is secured by a perfected first priority security interest in the unfunded capital commitments of our investors (with certain exceptions) and the proceeds thereof, including assignment of the right to make capital calls, receive and apply capital contributions, and enforce remedies and claims related thereto, and a pledge of the collateral account into which capital call proceeds are deposited. Additionally, under the BoA Revolving Credit Facility, the lenders can directly require investors to fund their capital commitments, but lenders cannot seek recourse against a unitholderUnitholder in excess of such unitholder’sUnitholder’s obligation to contribute capital to us.

The BoA Revolving Credit Facility contains customary representations, warranties, and affirmative and negative covenants, including without limitation, treatment as a RIC under the Code and as a BDC under the Investment Company Act and restrictions on certain operations, including without limitation, certain distributions. The BoA Revolving Credit Facility includes customary conditions precedent to draw-down of loans and customary events of default. We are in compliance with these covenants.

JPM Revolving Credit Facility

On November 21, 2017, Goldman Sachs Private Middle Market Credit SPV LLC (“SPV”), our wholly-owned subsidiary, entered into the JPM Revolving Credit Facility. JPMorgan Chase Bank, National Association (“JPM”) serves as administrative agent, State Street Bank and Trust Company serves as collateral agent, collateral administrator, bank and securities intermediary and we serve as portfolio manager under the JPM Revolving Credit Facility. State Street Bank and Trust Company also acts as our transfer agent, disbursing agent, custodian and administrator as well as SPV’s custodian. The Company amended the JPM Revolving Credit Facility on August 17, 2018, December 10, 2018 and February 22, 2019.

Borrowings under the JPM Revolving Credit Facility bear interest (at SPV’s election) at a per annum rate equal to either (x) the three-month LIBOR (or other listed offered rate, depending upon the currency of borrowing) in effect or (y) a rate per annum equal to the greater of (i) the prime rate of JPM in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 0.50%,; and, with respect to advances denominated in a currency other than USD, the annual rate of interest is the reference rate then in effect for determining interest rates on commercial loans made in the applicable jurisdiction of such currency, in all cases, in each case, plus the applicable margin. The applicable margin is 3.50% per annum. SPV will also payinitially paid a commitment fee of 1.00% per annum (or 0.50% per annum during the first nine months from the date the JPM Revolving Credit Facility was entered into) on the average daily unused amount of the financing commitments until the third anniversary of the JPM Revolving Credit Facility.

The JPM Revolving Credit Facility is a multicurrency facility. As of March 31, 2018,2019, the total commitments under the JPM Revolving Credit Facility were $400.00 million, of which $200.00 million was drawn.$630.00 million. The JPM Revolving Credit Facility also has an accordion feature, subject to the satisfaction of various conditions, which could bring total commitments under the JPM Revolving Credit Facility to $750.00 million. All amounts outstanding under the JPM Revolving Credit Facility must be repaid by the fourth anniversary of the JPM Revolving Credit Facility, subject to a six month extension of the maturity date with the consent of the administrative agent at such time.

SPV’s obligations to the lenders under the JPM Revolving Credit Facility are secured by a first priority security interest in all of SPV’s portfolio of investments and cash. The obligations of SPV under the JPM Revolving Credit Facility arenon-recourse to us, and our exposure under the JPM Revolving Credit Facility is limited to the value of our investment in SPV.

In connection with the JPM Revolving Credit Facility, SPV has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolving Credit Facility contains customary events of default for similar financing transactions, including if a change of control of SPV occurs or if we are no longer the portfolio manager of SPV. Upon the occurrence and during the continuation of an event of default, JPM may declare the outstanding advances and all other obligations under the JPM Revolving Credit Facility immediately due and payable.

 

4549

HEDGING

Subject to applicable provisions of the Investment Company Act and applicable Commodity Futures Trading Commission (“CFTC”) regulations, we may enter into hedging transactions in a manner consistent with SEC guidance. To the extent that any of our loans are denominated in a currency other than U.S. dollars, we may enter into currency hedging contracts to reduce our exposure to fluctuations in currency exchange rates. We may also enter into interest rate hedging agreements. Such hedging activities, which will be subject to compliance with applicable legal requirements, may include the use of futures, options, swaps and forward contracts. Costs incurred in entering into such contracts or in settling them, if any, will be borne by us. Our Investment Adviser has claimedno-action relief from CFTC registration and regulation as a commodity pool operator pursuant to a CFTC staffno-action letter (the “BDC CFTCNo-Action Letter”) with respect to our operations, with the result that we will be limited in our ability to use futures contracts or options on futures contracts or engage in swap transactions. Specifically, the BDC CFTCNo-Action Letter imposes strict limitations on using such derivatives other than for hedging purposes, whereby the use of derivatives not used solely for hedging purposes is generally limited to situations where (i) the aggregate initial margin and premiums required to establish such positions does not exceed five percent of the liquidation value of our portfolio, after taking into account unrealized profits and unrealized losses on any such contracts it has entered into; or (ii) the aggregate net notional value of such derivatives does not exceed 100% of the liquidation value of our portfolio. Moreover, we anticipate entering into transactions involving such derivatives to a very limited extent solely for hedging purposes or otherwise within the limitations of the BDC CFTCNo-Action Letter. As of March 31, 2018, no hedging arrangements were used.

OFF-BALANCE SHEET ARRANGEMENTS

We may become a party to investment commitments and 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 balance sheet. As of March 31, 2018,2019, we believed that we had adequate financial resources to satisfy our unfunded commitments. As of March 31, 20182019 and December 31, 2017,2018, our unfunded commitments to provide funds to portfolio companies were as follows:

 

  As of   As of 
  March 31,
2018		   December 31,
2017		   March 31,
2019		   December 31,
2018		 
  (in millions)   (in millions) 
Unfunded Commitments        
First Lien/Senior Secured Debt  $27.34   $29.94   $182.02   $90.32 
FirstLien/Last-Out Unitranche   21.10    –    4.18    8.36 
Second Lien/Senior Secured Debt   9.00    5.80    17.22    17.22 
  

 

   

 

   

 

   

 

 

Total

  $57.44   $35.74   $203.42   $115.90 
  

 

   

 

   

 

   

 

 

As of March 31, 2018,2019, we had aggregate Commitments and undrawn Commitments from investors as follows:

 

   March 31, 2018 
   Capital
Commitments
($ in millions)		   Unfunded
Capital
Commitments
($ in millions)		   % of Capital
Commitments
Funded		 
Common Units  $1,097.43   $548.72    50% 
   March 31, 2019 
    

Capital

Commitments

($ in millions)

   

Unfunded

Capital

Commitments

($ in millions)

   

% of Capital

Commitments

Funded

 
Common Units  $1,097.43   $153.64    86% 

RECENT DEVELOPMENTS

On April 20, 2018,22, 2019, the Company delivered a capital drawdown notice to its investors relating to the sale of 339,498234,200 common Units for an aggregate offering price of approximately $32.92$21.95 million. The common Units were issued on April 27, 2018.29, 2019.

On May 1, 2018, the Board of Directors elected Susan B. McGee as a director of the Company effective June 1, 2018. Ms. McGee has also been appointed to serve on the Company’s audit committee, governance and nominating committee, compensation committee, compliance committee and contract review committee. As previously disclosed, in connection with Ms. McGee’s election, Janet Clark resigned from the Board of Directors effective at the conclusion of the meeting held on May 1, 2018. Ms. McGee was not appointed to the Board of Directors pursuant to any arrangement or understanding with any other person. Ms. McGee has no family relationships with any director or executive officer of the Company and there are no transactions in which Ms. McGee has an interest requiring disclosure under Item 404(a) of Regulation S-K promulgated by the SEC. Ms. McGee will be entitled to receive compensation for her service on the Board consistent with7, 2019, our director compensation program for independent directors.

On May 1, 2018, the Board of Directors declared a distribution equal to an amount up to the Company’sour taxable earnings per unit, including net investment income (if positive), for the period April 1, 20182019 through June 30, 2018,2019, payable on or about July 25, 201826, 2019 to unitholdersUnitholders of record as of June 30, 2018.28, 2019.

50

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ materially. In addition to the discussion below, our critical accounting policies are further described in the notes to the consolidated financial statements.

Valuation of Portfolio Investments

As a BDC, we conduct the valuation of our assets, pursuant to which our NAV is determined, consistent with GAAP and the Investment Company Act. Our Board of Directors, with the assistance of our Audit Committee, determines the fair value of our assets within the meaning of the Investment Company Act, on at least a quarterly basis, in accordance with the terms of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures (“ASC 820”).

46

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

ASC 820 establishes a hierarchal disclosure framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value. The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities.

The three-level hierarchy for fair value measurement is defined as follows:

Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date. The types of financial instruments included in Level 1 include unrestricted securities, including equities and derivatives, listed in active markets.

Level 2—inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The type of financial instruments in this category includes less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certainover-the-counter derivatives where the fair value is based on observable inputs.

Level 3—inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category include investments in privately held entities and certainover-the-counter derivatives where the fair value is based on unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the financial instrument.

Currently, the majority of our investments fall within Level 3 of the fair value hierarchy. We do not expect that there will be readily available market values for most of the investments which are in our portfolio, and we value such investments at fair value as determined in good faith by or under the direction of our Board of Directors using a documented valuation policy, described below, and a consistently applied valuation process. The factors that may be taken into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, and the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. Available current market data are considered such as applicable market yields and multiples of publicly traded securities, comparison of financial ratios of peer companies, and changes in the interest rate environment and the credit markets that may affect the price at which similar investments would trade in their principal market, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation.

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With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, the valuation procedures adopted by our Board of Directors contemplates a multi-step valuation process each quarter, as described below:

 

 (1)

Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Investment Adviser responsible for the portfolio investment;

 

 (2)

Our Board of Directors also engages independent valuation firms (the “Independent Valuation Advisors”) to provide independent valuations of the investments for which market quotations are not readily available, or are readily available but deemed not reflective of the fair value of an investment. The Independent Valuation Advisors independently value such investments using quantitative and qualitative information provided by the investment professionals of our Investment Adviser as well as any market quotations obtained from independent pricing services, brokers, dealers or market dealers. The Independent Valuation Advisors also provide analyses to support their valuation methodology and calculations. The Independent Valuation Advisors provide an opinion on a final range of values on such investments to our Board of Directors or the Audit Committee. The Independent Valuation Advisors define fair value in accordance with ASC 820 and utilize valuation approaches including the market approach, the income approach or both. A portion of the portfolio is reviewed on a quarterly basis, and all investments in the portfolio for which market quotations are not readily available, or are readily available, but deemed not reflective of the fair value of an investment, are reviewed at least annually by an Independent Valuation Advisor;

 

47

 (3)

The Independent Valuation Advisors’ preliminary valuations are reviewed by our Investment Adviser and the Valuation Oversight Group (“VOG”), a team that is part of the Controllers Department within the Finance Division of Goldman Sachs. The Independent Valuation Advisors’ ranges are compared to our Investment Adviser’s valuations to ensure our Investment Adviser’s valuations are reasonable. VOG presents the valuations to the Private Investment Valuation and Side PocketSub-Committee Working Group of the Investment Management Division Valuation Committee, which is comprised of representatives from GSAM who are independent of the investment making decision process;

 

 (4)

The Investment Management Division Valuation Committee ratifies fair valuations and makes recommendations to the Audit Committee of the Board of Directors;

 

 (5)

The Audit Committee of our Board of Directors reviews valuation information provided by the Investment Management Division Valuation Committee, our Investment Adviser and the Independent Valuation Advisors. The Audit Committee then assesses such valuation recommendations; and

 

 (6)

Our Board of Directors discusses the valuations and, within the meaning of the Investment Company Act, determines the fair value of our investments in good faith, based on the input of our Investment Adviser, the Independent Valuation Advisors and the Audit Committee.

When our NAV is determined other than on aquarter-end (such as in connection with issuances of Units on dates occurringmid-quarter), it is determined by our Investment Adviser, acting under delegated authority from, and subject to the supervision of, our Board of Directors and in accordance with procedures adopted by our Board of Directors.

Investment Transactions and Related Investment Income

We record our investment transactions on a trade date basis.basis, which is the date when we assume the risks for gains and losses related to that instrument. Realized gains and losses are based on the specific identification method. Dividend income on common equity investments is recorded on the record date for private portfolio companies or on theex-dividend date for publicly traded portfolio companies. Interest income and dividend income are presented net of withholding tax, if any. Accretion of discounts and amortization of premiums, which are included in interest income and expense, are recorded over the life of the underlying instrument using the effective interest method.

Fair value generally is based on quoted market prices, broker or dealer quotations, or alternative price sources. In the absence of quoted market prices, broker or dealer quotations, or alternative price sources, investments in securities are measured at fair value as determined by our Investment Adviser and/or by one or more independent third parties.

Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. For additional information, see Note 2 “Significant Accounting Policies” to our consolidated financial statements included in this report.

We may also invest in newly-issued debt securities that are sold by issuers with an OID to par value of 1% to 3%, although we do not expect OID securities to comprise a material portion of our portfolio. To the extent we purchase new issues with OID, the discounts will be accreted over the life of the securities, as required under GAAP. Loan origination fees, OID and market discounts or premiums are capitalized, and we accrete or amortize such amounts into income over the life of the loan. We record contractual prepayment premiums on loans and debt securities as interest income.

52

Non-Accrual Status

Loans or debt securitiesInvestments are placed onnon-accrual status when it is probable that principal, interest or interestdividends will not be collected according to contractual terms. Accrued interest or dividends generally isare reversed when a loan or debt securityan investment is placed onnon-accrual status. Interest or dividend payments received onnon-accrual loans or debt securitiesinvestments may be recognized as income or applied to principal depending upon management’s judgment.Non-accrual loans and debt securitiesinvestments are restored to accrual status when past due principal and interest isor dividends are paid and, in management’s judgment, principal and interest or dividend payments are likely to remain current. We may make exceptions to this treatment if the loaninvestment has sufficient collateral value and is in the process of collection. As of March 31, 20182019, we had one investmenton non-accrual status, which represented 0.9% and 0.1% of the total investments (excluding an investment in a money market fund managed by an affiliate of Group Inc. of $11.50 million) at amortized cost and at fair value, respectively. On December 31, 2017,2018, we had no investments onnon-accrual status.

Distribution Policy

We intend to pay quarterly distributions to our unitholdersUnitholders out of assets legally available for distribution. Future quarterly distributions, if any, will be determined by our Board of Directors. All distributions will be subject to lawfully available funds therefor, and no assurance can be given that we will be able to declare distributions in future periods.

48

We have elected to be treated, and expect to qualify annually, as a RIC under Subchapter M of the Code, commencing with our taxable year ended December 31, 2016. To qualify and maintain our statustax treatment as a RIC, we must, among other things, timely distribute to our unitholdersUnitholders at least 90% of our investment company taxable income for each taxable year. We intend to timely distribute to our unitholdersUnitholders substantially all of our annual taxable income for each year, except that we may retain certain net capital gains for reinvestment and depending upon the level of taxable income earned in a year, we may choose to carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax. The distributions we pay to our unitholdersUnitholders in a year may exceed our net ordinary income and capital gains for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. The specific tax characteristics of our distributions will be reported to unitholdersUnitholders after the end of the calendar year. unitholdersUnitholders should read carefully any written disclosure regarding a distribution from us and should not assume that the source of any distribution is our net ordinary income or capital gains.

Federal Income Taxes

As a RIC, we generally will not be required to pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that we timely distribute to our unitholdersUnitholders as dividends. To maintain our RIC status, we must meet specifiedsource-of-income and asset diversification requirements and timely distribute to our unitholdersUnitholders at least 90% of our investment company taxable income for each year. Depending upon the level of taxable income earned in a year, we may choose to carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax. We generally will be required to pay sucha U.S. federal excise tax if our distributions during a calendar year do not exceed the sum of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for theone-year period ending on October 31 of the calendar year and (3) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years.

Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

 

49

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, most significantly changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we expect to fund a portion of our investments with borrowings, our net investment income is expected to be affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

As of March 31, 20182019 and December 31, 2017,2018, on a fair value basis, approximately 1.9%1.2% and 2.0%1.3%, respectively, of our performing debt investments (including income-producing preferred stock) bore interest at a fixed rate and approximately 98.1%98.8% and 98.0%98.7%, respectively, of our performing debt investments bore interest at a floating rate. Our borrowings under the Revolving Credit Facilities bear interest at a floating rate.

We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities.

53

Based on our March 31, 20182019 balance sheet, the following table shows the annual impact on net income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:

 

As of March 31, 2018

Basis Point Change

  Interest
Income		   Interest
Expense		   Net
Income		 
($ in millions)            

As of March 31, 2019

Basis Point Change

  Interest
Income		   Interest
Expense		   Net
Income		 
( in millions)            
Up 300 basis points  $25.53   $(12.07)   $13.46   $38.82   $(15.90)   $22.92 
Up 200 basis points   17.02    (8.05)    8.97    25.88    (10.60)    15.28 
Up 100 basis points   8.51    (4.02)    4.49    12.94    (5.30)    7.64 
Up 75 basis points   6.39    (3.02)    3.37    9.70    (3.98)    5.72 
Up 50 basis points   4.25    (2.01)    2.24    6.47    (2.65)    3.82 
Up 25 basis points   2.13    (1.01)    1.12    3.23    (1.33)    1.90 
Down 25 basis points   (2.13)    1.01    (1.12)    (3.23)    1.33    (1.90) 
Down 50 basis points   (4.25)    2.01    (2.24)    (6.47)    2.65    (3.82) 
Down 75 basis points   (6.39)    3.02    (3.37)    (9.70)    3.98    (5.72) 
Down 100 basis points   (7.98)    4.02    (3.96)    (12.94)    5.30    (7.64) 
Down 200 basis points   (9.21)    7.58    (1.63)    (20.27)    10.60    (9.67) 
Down 300 basis points   (9.22)    7.58    (1.64)    (20.81)    13.22    (7.59) 

We may, in the future, hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the Investment Company Act, applicable CFTC regulations and in a manner consistent with SEC guidance. 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

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2018.2019. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter ended March 31, 20182019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

5054

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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 loans to or other contracts with our portfolio companies. We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.

Item 1A. Risk Factors.

An investment in our securities involves a high degree of risk. Except as set forth below, there have been no material changes to the risk factors previously reported under Item 1A: “Risk Factors” of our Annual Report on Form10-K for the year ended December 31, 2017,2018, which was filed with the SEC on February 22, 2018.28, 2019. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially affect our business, financial condition and/or operating results.

Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital. These constraints may hinder our Investment Adviser’s ability to take advantage of attractive investment opportunities and to achieve our investment objective.

Regulations governing our operation as a BDC affect our ability to raise additional capital, and the ways in which we can do so. Raising additional capital may expose us to risks, including the typical risks associated with leverage, and may result in dilution to our current unitholders. The Investment Company Act limits our ability to borrow amounts or issue debt securities or preferred units, which we refer to collectively as “senior securities,” to amounts such that our asset coverage ratio, as defined under the Investment Company Act, equals at least 200% immediately after such borrowing or issuance (except in connection with certain trading practices or investments) or 150% if certain requirements are met, as described below. Consequently, if the value of our assets declines, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when this may be disadvantageous to us and, as a result, our unitholders. The recently passed Small Business Credit Availability Act modified the applicable provisions of the Investment Company Act to reduce the required asset coverage ratio applicable to BDCs to 150%, subject to certain approval and disclosure requirements. Under the legislation, BDCs are able to increase their leverage capacity if shareholders approve a proposal to do so. If a BDC receives shareholder approval, it would be allowed to increase its leverage capacity on the first day after such approval. Alternatively, the legislation allows the majority of the directors who are not “interested persons,” as defined in the Investment Company Act, of the BDC to approve an increase in its leverage capacity, and such approval would become effective after one year. As a result, BDCs may be able to incur additional leverage in the future, and the risks associated with an investment in BDCs may increase.

Changes in laws or regulations governing our operations or the operations of our portfolio companies, changes in the interpretation thereof or newly enacted laws or regulations, or any failure by us or our portfolio companies to comply with these laws or regulations, could require changes to certain of our or our portfolio companies’ business practices, negatively impact our or our portfolio companies’ operations, cash flows or financial condition, impose additional costs on us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

We and our portfolio companies are subject to regulation at the local, state, federal and, in some cases, foreign levels. These laws and regulations, as well as their interpretation, are likely to change from time to time, and new laws and regulations may be enacted. Accordingly, any change in these laws or regulations, changes in their interpretation, or newly enacted laws or regulations, or any failure by us or our portfolio companies to comply with these laws or regulations, could require changes to certain of our or our portfolio companies’ business practices, negatively impact our or our portfolio companies’ operations, cash flows or financial condition, impose additional costs on us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies. In addition to the legal, tax and regulatory changes that are expected to occur, there may be unanticipated changes and uncertainty regarding any such changes. The legal, tax and regulatory environment for BDCs, investment advisers and the instruments that they utilize (including derivative instruments) is continuously evolving. In addition, there is significant uncertainty regarding certain legislation and the regulations that have been adopted and future regulations that will need to be adopted pursuant to such legislation) and, consequently, the full impact that such legislation will ultimately have on us and the markets in which we trade and invest is not fully known. Such uncertainty and any resulting confusion may itself be detrimental to the efficient functioning of the markets and the success of certain investment strategies.

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which impacts many aspects of the financial services industry. Many of the provisions of the Dodd-Frank Act have been implemented, while others will still require final rulemaking by regulatory authorities. While the full impact of the Dodd-Frank Act on us and our portfolio companies may not be known for an extended period of time, the Dodd-Frank Act, including current rules and regulations and proposed rules implementing its provisions and the interpretation of those rules, along with other legislative and regulatory proposals directed at the financial services industry that are proposed or pending in the U.S. Congress, may negatively impact the operations, cash flows or financial condition of us and our portfolio companies, impose additional costs on us and our portfolio companies, intensify the regulatory supervision of us and our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

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Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that some portion of thenon-bank financial sector will be subject to new regulation. While it cannot be known at this time whether any regulation will be implemented or what form it will take, increased regulation ofnon-bank credit extension could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business.

On March 23, 2018, President Trump signed into law the Small Business Credit Availability Act, which modified the applicable provisions of the Investment Company Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150%, subject to certain approval and disclosure requirements (including either unitholder approval or approval of both a majority of the directors who have no financial interest in the matter and a majority of the directors who are not “interested persons,” as defined in the Investment Company Act, of the BDC). As a result, BDCs may be able to incur additional leverage in the future, and the risks associated with an investment in BDCs may increase. See “—Regulations governing our operations as a BDC affect our ability to, and the way in which we, raise additional capital. These constraints may hinder our Investment Adviser’s ability to take advantage of attractive investment opportunities and to achieve our investment objective.”

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

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

 

Unit Issue Date  Units Issued  

Proceeds Received

($ in millions)

   Units Issued   

Proceeds

($ in millions)

 
February 21, 2018  335,966  $32.92 
March 28, 2018  222,135  $21.95 
February 22, 2019   689,032   $65.84 
March 28, 2019   455,946   $43.90 

Total capital drawdowns

  558,101  $54.87    1,144,978   $109.74 

Each of the above issuances and sales of the common Units was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Regulation D or Regulation S under the Securities Act. Each purchaser of common Units was required to represent that it is (i) either an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act or, in the case of Units sold outside the United States, not a “U.S. person” in accordance with Regulation S of the Securities Act and (ii) was acquiring the common Units purchased by it for investment and not with a view to resell or distribute. We did not engage in general solicitation or advertising, and did not offer securities to the public, in connection with such issuances and sales.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On May 1, 2018, the Board of Directors elected Susan B. McGee as a director of the Company effective June 1, 2018. Ms. McGee has also been appointed to serve on the Company’s audit committee, governance and nominating committee, compensation committee, compliance committee and contract review committee. As previously disclosed, in connection with Ms. McGee’s election, Janet Clark resigned from the Board of Directors effective at the conclusion of the meeting held on May 1, 2018. Ms. McGee was not appointed to the Board of Directors pursuant to any arrangement or understanding with any other person. Ms. McGee has no family relationships with any director or executive officer of the Company and there are no transactions in which Ms. McGee has an interest requiring disclosure under Item 404(a) of Regulation S-K promulgated by the SEC. Ms. McGee will be entitled to receive compensation for her service on the Board consistent with our director compensation program for independent directors.None.

Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report on Form10-Q are set forth on the Index to Exhibits, which is incorporated herein by reference.

 

5255

INDEX TO EXHIBITS

 

EXHIBIT


NO.

 

EXHIBIT

  3.1 

Certificate of Formation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 (File No. 000-55660), filed on July 13, 2016).

  3.2 

Second Amended and Restated Limited Liability Company Agreement dated November 1, 2016 (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form10-Q (File No. 000-55660), filed on November 3, 2016).

31.110.1

Letter Agreement, dated as of January 25, 2019, among Goldman Sachs Private Middle Market Credit SPV LLC, as borrower, Goldman Sachs Private Middle Market Credit LLC, State Street Bank and Trust Company, as collateral agent, collateral administrator and securities intermediary and JPMorgan Chase Bank, National Association, as administrative agent and lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K (File No. 000-55660), filed on January 30, 2019).

10.2

Commitment Increase Request and Amendment, dated as of February 22, 2019, among Goldman Sachs Private Middle Market Credit SPV LLC, as borrower, Goldman Sachs Private Middle Market Credit LLC, as portfolio manager, State Street Bank and Trust Company, in its capacities as collateral agent, collateral administrator, securities intermediary and bank, and JPMorgan Chase Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.7.5 to the Company’s Annual Report on Form10-K (File No. 000-55660), filed on February 28, 2019).

31.1* 

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.231.2* 

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

3232.1* 

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*

Filed herewith.

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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.

 

   GOLDMAN SACHS PRIVATE MIDDLE MARKET CREDIT LLC
Date: May 3, 20189, 2019   /s/ Brendan McGovern
   

Brendan McGovern

Chief Executive Officer and President

(Principal Executive Officer)

Date: May 3, 20189, 2019   /s/ Jonathan Lamm
   

Jonathan Lamm

Chief Financial Officer and Treasurer

(Principal Financial Officer)

57