UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
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ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017March 31, 2021
OR
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¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 814-00733
Triangle Capital CorporationBarings BDC, Inc.
(Exact name of registrant as specified in its charter)
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| | | | | | | |
Maryland | | 06-1798488 |
(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
| |
3700 Glenwood Avenue,300 South Tryon Street, Suite 530
Raleigh,2500 Charlotte, North Carolina
| | 2761228202 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’sRegistrant's telephone number, including area code: (919) 719-4770(704) 805-7200
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Common Stock, par value $0.001 per share | BBDC | The New York Stock Exchange |
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 ý 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 Regulation S-T 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, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company”company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
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| | | | | | | | | | |
Large accelerated filer | ý¨ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) ý | Smaller reporting company | ¨ |
| | Emerging growth company | ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý
The number of shares outstanding of the registrant’s Common Stockcommon stock on November 1, 2017May 6, 2021 was 47,740,832.65,316,085.
TRIANGLE CAPITAL CORPORATIONBARINGS BDC, INC.
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
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PART I – FINANCIAL INFORMATION |
Item 1. | | |
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| | |
| | |
| March 31, 2021 | |
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| | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
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PART II – OTHER INFORMATION |
Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
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| |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Consolidated Balance Sheets
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
| (Unaudited) | | |
Assets: | | | |
Investments at fair value: | | | |
Non-Control / Non-Affiliate investments (cost of $998,836,068 and $888,974,154 as of September 30, 2017 and December 31, 2016, respectively) | $ | 908,181,226 |
| | $ | 857,604,639 |
|
Affiliate investments (cost of $153,091,223 and $162,539,224 as of September 30, 2017 and December 31, 2016, respectively) | 146,607,453 |
| | 161,510,773 |
|
Control investments (cost of $86,861,024 and $45,418,113 as of September 30, 2017 and December 31, 2016, respectively) | 36,403,000 |
| | 18,791,769 |
|
Total investments at fair value | 1,091,191,679 |
| | 1,037,907,181 |
|
Cash and cash equivalents | 81,003,756 |
| | 107,087,663 |
|
Interest, fees and other receivables | 9,744,381 |
| | 10,189,788 |
|
Prepaid expenses and other current assets | 1,827,994 |
| | 1,659,570 |
|
Deferred financing fees | 5,439,945 |
| | 2,699,960 |
|
Property and equipment, net | 91,195 |
| | 106,494 |
|
Total assets | $ | 1,189,298,950 |
| | $ | 1,159,650,656 |
|
Liabilities: | | | |
Accounts payable and accrued liabilities | $ | 5,540,240 |
| | $ | 6,797,244 |
|
Interest payable | 1,723,664 |
| | 3,996,940 |
|
Taxes payable | — |
| | 489,691 |
|
Deferred income taxes | 1,196,745 |
| | 2,053,701 |
|
Borrowings under credit facility | 141,118,837 |
| | 127,011,475 |
|
Notes | 163,241,179 |
| | 162,755,381 |
|
SBA-guaranteed debentures payable | 246,084,869 |
| | 245,389,966 |
|
Total liabilities | 558,905,534 |
| | 548,494,398 |
|
Commitments and contingencies (Note 8) | | | |
Net Assets: | | | |
Common stock, $0.001 par value per share (150,000,000 shares authorized, 47,740,832 and 40,401,292 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 47,741 |
| | 40,401 |
|
Additional paid-in capital | 822,780,495 |
| | 686,835,054 |
|
Net investment income in excess of (less than) distributions | (4,483,783 | ) | | 5,884,512 |
|
Accumulated realized losses | (41,242,051 | ) | | (24,211,594 | ) |
Net unrealized depreciation | (146,708,986 | ) | | (57,392,115 | ) |
Total net assets | 630,393,416 |
| | 611,156,258 |
|
Total liabilities and net assets | $ | 1,189,298,950 |
| | $ | 1,159,650,656 |
|
Net asset value per share | $ | 13.20 |
| | $ | 15.13 |
|
| | | | | | | | | | | |
| March 31, 2021 | | December 31, 2020 |
| (Unaudited) | | |
Assets: | | | |
Investments at fair value: | | | |
Non-Control / Non-Affiliate investments (cost of $1,389,212,763 and $1,318,614,617 as of March 31, 2021 and December 31, 2020, respectively) | $ | 1,401,742,025 | | | $ | 1,325,783,281 | |
Affiliate investments (cost of $95,442,223 and $76,055,873 as of March 31, 2021 and December 31, 2020, respectively) | 100,429,674 | | | 78,598,633 | |
Control investments (cost of $30,326,428 and $25,826,428 as of March 31, 2021 and December 31, 2020, respectively) | 26,386,362 | | | 25,855,796 | |
Short-term investments (cost of $73,569,174 and $65,558,227 as of March 31, 2021 and December 31, 2020, respectively) | 73,565,676 | | | 65,558,227 | |
Total investments at fair value | 1,602,123,737 | | | 1,495,795,937 | |
Cash (restricted cash of $3,488,403 and $3,488,336 at March 31, 2021 and December 31, 2020, respectively) | 21,168,184 | | | 62,651,340 | |
Foreign currencies (cost of $19,342,513 and $29,555,465 as of March 31, 2021 and December 31, 2020, respectively) | 19,346,907 | | | 29,836,121 | |
Interest and fees receivable | 19,637,124 | | | 21,617,843 | |
Prepaid expenses and other assets | 1,123,361 | | | 2,014,558 | |
Credit support agreement (cost of $13,600,000 as of both March 31, 2021 and December 31, 2020) | 12,000,000 | | | 13,600,000 | |
Deferred financing fees | 3,802,971 | | | 4,110,564 | |
Receivable from unsettled transactions | 47,911,907 | | | 47,412,382 | |
Total assets | $ | 1,727,114,191 | | | $ | 1,677,038,745 | |
Liabilities: | | | |
Accounts payable and accrued liabilities | $ | 2,528,070 | | | $ | 6,045,443 | |
Interest payable | 4,084,372 | | | 2,219,274 | |
Administrative fees payable | 500,000 | | | 675,000 | |
Base management fees payable | 3,929,251 | | | 3,413,270 | |
Incentive management fees payable | 2,721,741 | | | — | |
Derivative liabilities | 142,099 | | | 1,336,283 | |
Payable from unsettled transactions | — | | | 1,548,578 | |
Borrowings under credit facilities | 611,144,523 | | | 719,660,707 | |
| | | |
Notes payable (net of deferred financing fees) | 374,181,388 | | | 224,335,666 | |
Total liabilities | 999,231,444 | | | 959,234,221 | |
Commitments and contingencies (Note 7) | | | |
Net Assets: | | | |
Common stock, $0.001 par value per share (150,000,000 shares authorized and 65,316,085 shares issued and outstanding as of both March 31, 2021 and December 31, 2020) | 65,316 | | | 65,316 | |
Additional paid-in capital | 1,027,707,047 | | | 1,027,707,047 | |
Total distributable earnings (loss) | (299,889,616) | | | (309,967,839) | |
Total net assets | 727,882,747 | | | 717,804,524 | |
Total liabilities and net assets | $ | 1,727,114,191 | | | $ | 1,677,038,745 | |
Net asset value per share | $ | 11.14 | | | $ | 10.99 | |
See accompanying notes.
TRIANGLE CAPITAL CORPORATION
Barings BDC, Inc.
Unaudited Consolidated Statements of Operations
| | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | | | |
| March 31, 2021 | | March 31, 2020 | | | | |
Investment income: | | | | | | | |
Interest income: | | | | | | | |
Non-Control / Non-Affiliate investments | $ | 25,096,325 | | | $ | 17,396,411 | | | | | |
| | | | | | | |
Control investments | 107,237 | | | — | | | | | |
Short-term investments | 10,679 | | | 277,991 | | | | | |
Total interest income | 25,214,241 | | | 17,674,402 | | | | | |
Dividend income: | | | | | | | |
| | | | | | | |
Affiliate investments | 71,500 | | | — | | | | | |
| | | | | | | |
Total dividend income | 71,500 | | | — | | | | | |
Fee and other income: | | | | | | | |
Non-Control / Non-Affiliate investments | 1,973,062 | | | 960,993 | | | | | |
| | | | | | | |
Control investments | 160,113 | | | — | | | | | |
Total fee and other income | 2,133,175 | | | 960,993 | | | | | |
Payment-in-kind interest income: | | | | | | | |
Non-Control / Non-Affiliate investments | 3,037,325 | | | 43,572 | | | | | |
Affiliate investments | 136,462 | | | — | | | | | |
| | | | | | | |
Total payment-in-kind interest income | 3,173,787 | | | 43,572 | | | | | |
Interest income from cash | 528 | | | 631 | | | | | |
Total investment income | 30,593,231 | | | 18,679,598 | | | | | |
Operating expenses: | | | | | | | |
Interest and other financing fees | 7,284,709 | | | 6,004,133 | | | | | |
Base management fee (Note 2) | 3,929,251 | | | 3,912,373 | | | | | |
Incentive management fees (Note 2) | 2,721,741 | | | — | | | | | |
| | | | | | | |
Compensation expenses | — | | | 48,410 | | | | | |
General and administrative expenses (Note 2) | 2,301,434 | | | 1,420,613 | | | | | |
Total operating expenses | 16,237,135 | | | 11,385,529 | | | | | |
| | | | | | | |
| | | | | | | |
Net investment income | 14,356,096 | | | 7,294,069 | | | | | |
Income taxes, including excise tax benefit | (18,038) | | | — | | | | | |
Net investment income after taxes | 14,374,134 | | | 7,294,069 | | | | | |
| | | | | | | |
| Barings BDC, Inc. Unaudited Consolidated Statements of Operations - (Continued) | | Barings BDC, Inc. Unaudited Consolidated Statements of Operations - (Continued) | |
| | | Three Months Ended | | Three Months Ended | |
| | | | | | | | | | | March 31, 2021 | | March 31, 2020 | |
| Three Months Ended | | Three Months Ended | | Nine Months Ended | | Nine Months Ended | |
| September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 | |
Investment income: | | | | | | | | |
Interest income: | | | | | | | | |
Non-Control / Non-Affiliate investments | $ | 20,629,534 |
| | $ | 17,270,300 |
| | $ | 62,755,411 |
| | $ | 52,938,976 |
| |
Affiliate investments | 3,329,256 |
| | 3,380,867 |
| | 10,580,976 |
| | 10,121,974 |
| |
Control investments | 281,147 |
| | 303,708 |
| | 861,294 |
| | 764,622 |
| |
Total interest income | 24,239,937 |
| | 20,954,875 |
| | 74,197,681 |
| | 63,825,572 |
| |
Dividend income: | | | | | | | | |
Non-Control / Non-Affiliate investments | 57,515 |
| | 167,468 |
| | 1,318,748 |
| | (1,030,703 | ) | |
Affiliate investments | 137,470 |
| | 244,233 |
| | 241,714 |
| | 706,495 |
| |
Control investments | — |
| | — |
| | — |
| | 300,000 |
| |
Total dividend income | 194,985 |
| | 411,701 |
| | 1,560,462 |
| | (24,208 | ) | |
Fee and other income: | | | | | | | | |
Non-Control / Non-Affiliate investments | 2,104,631 |
| | 1,585,403 |
| | 4,980,285 |
| | 5,662,081 |
| |
Affiliate investments | 479,802 |
| | 319,289 |
| | 951,091 |
| | 855,855 |
| |
Control investments | 107,292 |
| | 110,000 |
| | 307,292 |
| | 310,000 |
| |
Total fee and other income | 2,691,725 |
| | 2,014,692 |
| | 6,238,668 |
| | 6,827,936 |
| |
Payment-in-kind interest income: | | | | | | | | |
Non-Control / Non-Affiliate investments | 1,963,525 |
| | 2,719,831 |
| | 6,756,172 |
| | 8,373,124 |
| |
Affiliate investments | 622,613 |
| | 1,175,899 |
| | 2,118,550 |
| | 3,259,634 |
| |
Total payment-in-kind interest income | 2,586,138 |
| | 3,895,730 |
| | 8,874,722 |
| | 11,632,758 |
| |
Interest income from cash and cash equivalents | 175,273 |
| | 135,459 |
| | 421,062 |
| | 228,129 |
| |
Total investment income | 29,888,058 |
| | 27,412,457 |
| | 91,292,595 |
| | 82,490,187 |
| |
Operating expenses: | | | | | | | | |
Interest and other financing fees | 7,394,241 |
| | 6,757,718 |
| | 21,418,371 |
| | 20,040,942 |
| |
Compensation expenses | 4,323,708 |
| | 3,963,797 |
| | 12,149,527 |
| | 17,510,762 |
| |
General and administrative expenses | 1,019,192 |
| | 859,785 |
| | 3,403,385 |
| | 3,170,330 |
| |
Total operating expenses | 12,737,141 |
| | 11,581,300 |
| | 36,971,283 |
| | 40,722,034 |
| |
Net investment income | 17,150,917 |
| | 15,831,157 |
| | 54,321,312 |
| | 41,768,153 |
| |
Realized and unrealized gains (losses) on investments and foreign currency borrowings: | | | | | | | | |
Realized and unrealized gains (losses) on investments, credit support agreement and foreign currency transactions: | | Realized and unrealized gains (losses) on investments, credit support agreement and foreign currency transactions: | | | | |
Net realized gains (losses): | | | | | | | | Net realized gains (losses): | | |
Non-Control / Non-Affiliate investments | 4,066,263 |
| | (11,213,561 | ) | | (3,036,048 | ) | | (5,007,647 | ) | Non-Control / Non-Affiliate investments | 2,891,040 | | | (157,978) | | |
Affiliate investments | (4,443,680 | ) | | 2,106 |
| | (999,336 | ) | | (1,680,198 | ) | Affiliate investments | (76,631) | | | — | | |
Control investments | (8,503,633 | ) | | — |
| | (12,995,073 | ) | | — |
| |
Net realized losses | (8,881,050 | ) | | (11,211,455 | ) | | (17,030,457 | ) | | (6,687,845 | ) | |
| Net realized gains (losses) on investments | | Net realized gains (losses) on investments | 2,814,409 | | | (157,978) | | |
Foreign currency transactions | | Foreign currency transactions | (974,829) | | | (144,394) | | |
Net realized gains (losses) | | Net realized gains (losses) | 1,839,580 | | | (302,372) | | |
Net unrealized appreciation (depreciation): | | | | | | | | Net unrealized appreciation (depreciation): | | |
Non-Control / Non-Affiliate investments | (64,601,974 | ) | | 11,731,534 |
| | (70,083,204 | ) | | (596,458 | ) | Non-Control / Non-Affiliate investments | 5,357,095 | | | (117,361,056) | | |
Affiliate investments | (2,313,261 | ) | | (303,939 | ) | | (11,651,017 | ) | | 1,130,412 |
| Affiliate investments | 2,444,697 | | | (3,833,223) | | |
Control investments | 2,047,411 |
| | (8,546,464 | ) | | (5,981,149 | ) | | (8,098,464 | ) | Control investments | (3,969,434) | | | — | | |
Net unrealized appreciation (depreciation) on investments | (64,867,824 | ) | | 2,881,131 |
| | (87,715,370 | ) | | (7,564,510 | ) | Net unrealized appreciation (depreciation) on investments | 3,832,358 | | | (121,194,279) | | |
Foreign currency borrowings | (897,734 | ) | | 342,409 |
| | (1,601,501 | ) | | (569,382 | ) | |
Credit support agreement | | Credit support agreement | (1,600,000) | | | — | | |
| Foreign currency transactions | | Foreign currency transactions | 4,041,797 | | | 1,798,226 | | |
Net unrealized appreciation (depreciation) | (65,765,558 | ) | | 3,223,540 |
| | (89,316,871 | ) | | (8,133,892 | ) | Net unrealized appreciation (depreciation) | 6,274,155 | | | (119,396,053) | | |
Net realized and unrealized losses on investments and foreign currency borrowings | (74,646,608 | ) | | (7,987,915 | ) | | (106,347,328 | ) | | (14,821,737 | ) | |
Tax benefit (provision) | (985 | ) | | 36,431 |
| | (305,166 | ) | | 47,342 |
| |
Net realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreement and foreign currency transactions | | Net realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreement and foreign currency transactions | 8,113,735 | | | (119,698,425) | | |
Loss on extinguishment of debt | | Loss on extinguishment of debt | — | | | (137,390) | | |
Benefit from taxes | | Benefit from taxes | 410 | | | 19,999 | | |
Net increase (decrease) in net assets resulting from operations | $ | (57,496,676 | ) | | $ | 7,879,673 |
| | $ | (52,331,182 | ) | | $ | 26,993,758 |
| Net increase (decrease) in net assets resulting from operations | $ | 22,488,279 | | | $ | (112,521,747) | | |
Net investment income per share—basic and diluted | $ | 0.36 |
| | $ | 0.42 |
| | $ | 1.18 |
| | $ | 1.19 |
| Net investment income per share—basic and diluted | $ | 0.22 | | | $ | 0.15 | | |
Net increase (decrease) in net assets resulting from operations per share—basic and diluted | $ | (1.20 | ) | | $ | 0.21 |
| | $ | (1.14 | ) | | $ | 0.77 |
| Net increase (decrease) in net assets resulting from operations per share—basic and diluted | $ | 0.34 | | | $ | (2.30) | | |
Dividends/distributions per share: | | | | | | | | Dividends/distributions per share: | | | | |
Regular quarterly dividends/distributions | $ | 0.45 |
| | $ | 0.45 |
| | $ | 1.35 |
| | $ | 1.44 |
| |
| Total dividends/distributions per share | $ | 0.45 |
| | $ | 0.45 |
| | $ | 1.35 |
| | $ | 1.44 |
| Total dividends/distributions per share | $ | 0.19 | | | $ | 0.16 | | |
Weighted average shares outstanding—basic and diluted | 47,743,990 |
| | 38,115,449 |
| | 46,079,139 |
| | 35,199,704 |
| Weighted average shares outstanding—basic and diluted | 65,316,085 | | | 48,887,393 | | |
See accompanying notes.
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Unaudited Consolidated Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional Paid-In Capital | | Total Distributable Earnings (Loss) | | Total Net Assets |
| Number of Shares | | Par Value | | | |
Balance, December 31, 2019 | 48,950,803 | | | $ | 48,951 | | | $ | 853,766,370 | | | $ | (282,940,612) | | | $ | 570,874,709 | |
Net investment income | — | | | — | | | — | | | 7,314,068 | | | 7,314,068 | |
| | | | | | | | | |
Net realized loss on investments / foreign currency transactions | — | | | — | | | — | | | (302,372) | | | (302,372) | |
Net unrealized depreciation of investments / foreign currency transactions | — | | | — | | | — | | | (119,396,053) | | | (119,396,053) | |
Loss on extinguishment of debt | — | | | — | | | — | | | (137,390) | | | (137,390) | |
| | | | | | | | | |
Dividends / distributions | — | | | — | | | — | | | (7,823,964) | | | (7,823,964) | |
| | | | | | | | | |
| | | | | | | | | |
Purchases of shares in repurchase plan | (661,981) | | | (662) | | | (4,783,428) | | | — | | | (4,784,090) | |
| | | | | | | | | |
| | | | | | | | | |
Balance, March 31, 2020 | 48,288,822 | | | $ | 48,289 | | | $ | 848,982,942 | | | $ | (403,286,323) | | | $ | 445,744,908 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional Paid-In Capital | | Investment Income in Excess of Distributions | | Accumulated Realized Losses on Investments | | Net Unrealized Depreciation | | Total Net Assets |
| Number of Shares | | Par Value | | | | | |
Balance, December 31, 2015 | 33,375,126 |
| | $ | 33,375 |
| | $ | 549,242,439 |
| | $ | 16,127,141 |
| | $ | (25,813,329 | ) | | $ | (31,221,871 | ) | | $ | 508,367,755 |
|
Net investment income | — |
| | — |
| | — |
| | 41,768,153 |
| | — |
| | — |
| | 41,768,153 |
|
Stock-based compensation | — |
| | — |
| | 7,502,500 |
| | — |
| | — |
| | — |
| | 7,502,500 |
|
Realized gain (loss) on investments | — |
| | — |
| | — |
| | — |
| | (6,687,845 | ) | | 7,532,502 |
| | 844,657 |
|
Net unrealized loss on investments / foreign currency | — |
| | — |
| | — |
| | — |
| | — |
| | (15,666,394 | ) | | (15,666,394 | ) |
Tax benefit | — |
| | — |
| | — |
| | 47,342 |
| | — |
| | — |
| | 47,342 |
|
Dividends / distributions | 120,562 |
| | 120 |
| | 2,325,851 |
| | (51,389,199 | ) | | — |
| | — |
| | (49,063,228 | ) |
Public offering of common stock | 6,742,362 |
| | 6,742 |
| | 129,129,554 |
| | — |
| | — |
| | — |
| | 129,136,296 |
|
Issuance of restricted stock | 364,605 |
| | 365 |
| | (365 | ) | | — |
| | — |
| | — |
| | — |
|
Common stock withheld for payroll taxes upon vesting of restricted stock | (197,252 | ) | | (197 | ) | | (3,581,675 | ) | | — |
| | — |
| | — |
| | (3,581,872 | ) |
Balance, September 30, 2016 | 40,405,403 |
| | $ | 40,405 |
| | $ | 684,618,304 |
| | $ | 6,553,437 |
| | $ | (32,501,174 | ) | | $ | (39,355,763 | ) | | $ | 619,355,209 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional Paid-In Capital | | Total Distributable Earnings (Loss) | | Total Net Assets |
| Number of Shares | | Par Value | | | |
Balance, December 31, 2020 | 65,316,085 | | | $ | 65,316 | | | $ | 1,027,707,047 | | | $ | (309,967,839) | | | $ | 717,804,524 | |
Net investment income | — | | | — | | | — | | | 14,374,134 | | | 14,374,134 | |
| | | | | | | | | |
Net realized gain on investments / foreign currency transactions | — | | | — | | | — | | | 1,839,580 | | | 1,839,580 | |
Net unrealized appreciation of investments / CSA / foreign currency transactions | — | | | — | | | — | | | 6,274,155 | | | 6,274,155 | |
| | | | | | | | | |
Benefit from taxes | — | | | — | | | — | | | 410 | | | 410 | |
Dividends / distributions | — | | | — | | | — | | | (12,410,056) | | | (12,410,056) | |
| | | | | | | | | |
Deemed contribution - from Adviser | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Balance, March 31, 2021 | 65,316,085 | | | $ | 65,316 | | | $ | 1,027,707,047 | | | $ | (299,889,616) | | | $ | 727,882,747 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional Paid-In Capital | | Investment Income in Excess of (Less Than) Distributions | | Accumulated Realized Losses on Investments | | Net Unrealized Depreciation | | Total Net Assets |
| Number of Shares | | Par Value | | | | | |
Balance, December 31, 2016 | 40,401,292 |
| | $ | 40,401 |
| | $ | 686,835,054 |
| | $ | 5,884,512 |
| | $ | (24,211,594 | ) | | $ | (57,392,115 | ) | | $ | 611,156,258 |
|
Net investment income | — |
| | — |
| | — |
| | 54,321,312 |
| | — |
| | — |
| | 54,321,312 |
|
Stock-based compensation | — |
| | — |
| | 4,499,374 |
| | — |
| | — |
| | — |
| | 4,499,374 |
|
Realized gain (loss) on investments | — |
| | — |
| | — |
| | — |
| | (17,030,457 | ) | | 18,724,566 |
| | 1,694,109 |
|
Net unrealized loss on investments / foreign currency | — |
| | — |
| | — |
| | — |
| | — |
| | (108,041,437 | ) | | (108,041,437 | ) |
Tax provision | — |
| | — |
| | — |
| | (305,166 | ) | | — |
| | — |
| | (305,166 | ) |
Dividends / distributions | 91,366 |
| | 91 |
| | 1,637,467 |
| | (64,384,441 | ) | | — |
| | — |
| | (62,746,883 | ) |
Public offering of common stock | 7,000,000 |
| | 7,000 |
| | 131,989,144 |
| | — |
| | — |
| | — |
| | 131,996,144 |
|
Issuance of restricted stock | 360,470 |
| | 361 |
| | (361 | ) | | — |
| | — |
| | — |
| | — |
|
Common stock withheld for payroll taxes upon vesting of restricted stock | (112,296 | ) | | (112 | ) | | (2,180,183 | ) | | — |
| | — |
| | — |
| | (2,180,295 | ) |
Balance, September 30, 2017 | 47,740,832 |
| | $ | 47,741 |
| | $ | 822,780,495 |
| | $ | (4,483,783 | ) | | $ | (41,242,051 | ) | | $ | (146,708,986 | ) | | $ | 630,393,416 |
|
See accompanying notes.
TRIANGLE CAPITAL CORPORATION
Barings BDC, Inc.
Unaudited Consolidated Statements of Cash Flows
|
| | | | | | | |
| Nine Months Ended | | Nine Months Ended |
| September 30, 2017 | | September 30, 2016 |
Cash flows from operating activities: | | | |
Net increase (decrease) in net assets resulting from operations | $ | (52,331,182 | ) | | $ | 26,993,758 |
|
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | | | |
Purchases of portfolio investments | (391,502,625 | ) | | (163,867,651 | ) |
Repayments received/sales of portfolio investments | 231,730,067 |
| | 182,153,894 |
|
Loan origination and other fees received | 5,733,890 |
| | 3,205,460 |
|
Net realized loss on investments | 17,030,457 |
| | 6,687,845 |
|
Net unrealized depreciation on investments | 88,572,326 |
| | 9,525,827 |
|
Net unrealized depreciation on foreign currency borrowings | 1,601,501 |
| | 569,382 |
|
Deferred income taxes | (856,956 | ) | | (1,961,317 | ) |
Payment-in-kind interest accrued, net of payments received | (519,326 | ) | | (4,177,550 | ) |
Amortization of deferred financing fees | 1,857,810 |
| | 1,644,826 |
|
Accretion of loan origination and other fees | (3,863,096 | ) | | (3,676,003 | ) |
Accretion of loan discounts | (466,191 | ) | | (307,081 | ) |
Accretion of discount on SBA-guaranteed debentures payable | — |
| | 31,899 |
|
Depreciation expense | 51,275 |
| | 52,369 |
|
Stock-based compensation | 4,499,374 |
| | 7,502,500 |
|
Changes in operating assets and liabilities: | | | |
Interest, fees and other receivables | 445,407 |
| | (2,074,332 | ) |
Prepaid expenses and other current assets | (168,424 | ) | | (743,114 | ) |
Accounts payable and accrued liabilities | (1,257,004 | ) | | (2,827,297 | ) |
Interest payable | (2,273,276 | ) | | (2,176,980 | ) |
Taxes payable | (489,691 | ) | | (735,498 | ) |
Net cash provided by (used in) operating activities | (102,205,664 | ) | | 55,820,937 |
|
Cash flows from investing activities: | | | |
Purchases of property and equipment | (35,976 | ) | | (69,177 | ) |
Net cash used in investing activities | (35,976 | ) | | (69,177 | ) |
Cash flows from financing activities: | | | |
Borrowings under SBA-guaranteed debentures payable | — |
| | 32,800,000 |
|
Repayments of SBA-guaranteed debentures payable | — |
| | (7,800,000 | ) |
Borrowings under credit facility | 106,700,000 |
| | 68,901,849 |
|
Repayments of credit facility | (94,194,139 | ) | | (109,300,000 | ) |
Financing fees paid | (3,417,094 | ) | | (1,123,400 | ) |
Net proceeds related to public offering of common stock | 131,996,144 |
| | 129,136,296 |
|
Common stock withheld for payroll taxes upon vesting of restricted stock | (2,180,295 | ) | | (3,581,872 | ) |
Cash dividends/distributions paid | (62,746,883 | ) | | (49,063,228 | ) |
Net cash provided by financing activities | 76,157,733 |
| | 59,969,645 |
|
Net increase (decrease) in cash and cash equivalents | (26,083,907 | ) | | 115,721,405 |
|
Cash and cash equivalents, beginning of period | 107,087,663 |
| | 52,615,418 |
|
Cash and cash equivalents, end of period | $ | 81,003,756 |
| | $ | 168,336,823 |
|
Supplemental disclosure of cash flow information: | | | |
Cash paid for interest | $ | 20,955,808 |
| | $ | 19,929,857 |
|
Summary of non-cash financing transactions: | | | |
Dividends/distributions paid through DRIP share issuances | $ | 1,637,558 |
| | $ | 2,325,971 |
|
| | | | | | | | | | | |
| Three Months Ended | | Three Months Ended |
| March 31, 2021 | | March 31, 2020 |
Cash flows from operating activities: | | | |
Net increase (decrease) in net assets resulting from operations | $ | 22,488,279 | | | $ | (112,521,747) | |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | | | |
Purchases of portfolio investments | (276,455,607) | | | (123,200,667) | |
| | | |
Repayments received / sales of portfolio investments | 188,160,373 | | | 155,852,583 | |
| | | |
Purchases of short-term investments | (198,550,029) | | | (221,916,363) | |
Sales of short-term investments | 190,541,780 | | | 218,025,496 | |
Loan origination and other fees received | 4,578,368 | | | 2,704,423 | |
Net realized (gain) loss on investments | (2,814,409) | | | 157,978 | |
Net realized loss on foreign currency transactions | 974,829 | | | 144,394 | |
Net unrealized (appreciation) depreciation of investments | (3,832,358) | | | 121,194,279 | |
Net unrealized depreciation of CSA | 1,600,000 | | | — | |
Net unrealized appreciation of foreign currency transactions | (4,041,797) | | | (1,798,226) | |
| | | |
Payment-in-kind interest | (3,173,786) | | | (43,572) | |
Amortization of deferred financing fees | 343,997 | | | 375,257 | |
Loss on extinguishment of debt | — | | | 137,390 | |
| | | |
Accretion of loan origination and other fees | (1,481,038) | | | (658,005) | |
Amortization / accretion of purchased loan premium / discount | (1,979,787) | | | (188,402) | |
| | | |
| | | |
| | | |
Changes in operating assets and liabilities: | | | |
Interest and fees receivables | (2,935,424) | | | (1,483,011) | |
Prepaid expenses and other assets | 1,264,058 | | | (798,647) | |
Accounts payable and accrued liabilities | (1,668,440) | | | 452,640 | |
Interest payable | 1,868,804 | | | (471,825) | |
| | | |
| | | |
Net cash provided by (used in) operating activities | (85,112,187) | | | 35,963,975 | |
| | | |
| | | |
| | | |
| | | |
Cash flows from financing activities: | | | |
| | | |
| | | |
Borrowings under credit facilities | 29,823,707 | | | 58,085,614 | |
Repayments of credit facilities | (134,083,152) | | | (69,000,000) | |
| | | |
Repayment of debt securitization | — | | | (26,974,371) | |
Proceeds from notes | 150,000,000 | | | — | |
Financing fees paid | (190,682) | | | — | |
| | | |
Purchases of shares in repurchase plan | — | | | (4,784,090) | |
| | | |
Cash dividends / distributions paid | (12,410,056) | | | (7,823,964) | |
Net cash provided by (used in) financing activities | 33,139,817 | | | (50,496,811) | |
Net decrease in cash and foreign currencies | (51,972,370) | | | (14,532,836) | |
Cash and foreign currencies, beginning of period | 92,487,461 | | | 21,991,565 | |
Cash and foreign currencies, end of period | $ | 40,515,091 | | | $ | 7,458,729 | |
Supplemental disclosure of cash flow information: | | | |
Cash paid for interest | $ | 4,903,435 | | | $ | 5,407,506 | |
| | | |
| | | |
See accompanying notes.
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments
March 31, 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
Non–Control / Non–Affiliate Investments: | | | | | | | |
| | | | | | | | | | | |
1WorldSync, Inc. (3.8%)*(7) (8) (9) | | IT Consulting & Other Services | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 07/19, Due 07/25) | | $ | 27,639,522 | | | $ | 27,174,789 | | | $ | 27,405,692 | | |
| | | | 27,639,522 | | | 27,174,789 | | | 27,405,692 | | |
| | | | | | | | | | | |
Accelerate Learning, Inc. (1.0%)*(7) (8) (11) | | Education Services | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/18, Due 12/24) | | 7,567,965 | | | 7,467,329 | | | 7,462,014 | | |
| | | | 7,567,965 | | | 7,467,329 | | | 7,462,014 | | |
| | | | | | | | | | | |
Accurus Aerospace Corporation (2.9%)*(7) (8) (11) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, 1.50% PIK, Acquired 10/18, Due 10/24) | | 24,500,000 | | | 24,265,957 | | | 20,874,000 | | |
| | | | 24,500,000 | | | 24,265,957 | | | 20,874,000 | | |
| | | | | | | | | | | |
ADE Holdings (d/b/a AD Education) (0.7%)*(3) (7) (8) (16) | | Education Services | | First Lien Senior Secured Term Loan (EURIBOR + 5.0%, 5.0% Cash, Acquired 01/20, Due 01/27) | | 5,244,442 | | | 4,981,803 | | | 5,244,442 | | |
| | | | 5,244,442 | | | 4,981,803 | | | 5,244,442 | | |
| | | | | | | | | | | |
Advantage Software Company (The), LLC (2.2%)*(7) (8) (11) | | Advertising, Printing & Publishing | | First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 01/21, Due 01/27) | | 15,872,836 | | | 15,487,093 | | | 15,476,015 | | |
| | Class A Partnership Units (7,054.59 units, Acquired 01/21) | | | | 705,459 | | | 712,443 | | |
| | Class B Partnership Units (3,496.31 units, Acquired 01/21) | | | | — | | | 22,656 | | |
| | | | 15,872,836 | | | 16,192,552 | | | 16,211,114 | | |
| | | | | | | | | | | |
AEP Holdings, Inc. (2.4%)*(7) (8) | | Wholesale | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/25) (15) | | 7,104,768 | | | 7,159,388 | | | 6,962,673 | | |
| | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/25) (11) | | 10,752,921 | | | 10,546,205 | | | 10,537,863 | | |
| | | | 17,857,689 | | | 17,705,593 | | | 17,500,536 | | |
| | | | | | | | | | | |
Aftermath Bidco Corporation (1.3%)* (7) (8) (11) | | Professional Services | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 04/19, Due 04/25) | | 9,425,284 | | | 9,273,369 | | | 9,425,284 | | |
| | | | 9,425,284 | | | 9,273,369 | | | 9,425,284 | | |
| | | | | | | | | | | |
Ahead DB Borrower, LLC. (0.3%)*(7) (8) (12) | | Technology Distributors | | Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 9.5% Cash, Acquired 10/20, Due 10/28) | | 2,139,295 | | | 2,077,504 | | | 2,075,117 | | |
| | | | 2,139,295 | | | 2,077,504 | | | 2,075,117 | | |
| | | | | | | | | | | |
Air Canada 2020-2 Class B Pass Through Trust (1.1%)* | | Airlines | | Structured Secured Note - Class B (9.0% Cash, Acquired 09/20, Due 10/25) | | 7,500,000 | | | 7,500,000 | | | 8,318,087 | | |
| | | | 7,500,000 | | | 7,500,000 | | | 8,318,087 | | |
| | | | | | | | | | | |
American Dental Partners, Inc. (1.3%)*(7) (8) (11) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 11/18, Due 03/23) | | 9,775,000 | | | 9,763,132 | | | 9,452,425 | | |
| | | | 9,775,000 | | | 9,763,132 | | | 9,452,425 | | |
| | | | | | | | | | | |
American Scaffold, Inc. (1.3%)*(7) (8) (11) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 09/19, Due 09/25) | | 9,662,226 | | | 9,493,555 | | | 9,662,226 | | |
| | | | 9,662,226 | | | 9,493,555 | | | 9,662,226 | | |
| | | | | | | | | | | |
Anagram Holdings, LLC (2.2%)*(3) | | Chemicals, Plastics, & Rubber | | First Lien Senior Secured Note (10.0% Cash, 5.0% PIK, Acquired 08/20, Due 08/25) | | 14,044,112 | | | 12,975,530 | | | 15,940,067 | | |
| | | 14,044,112 | | | 12,975,530 | | | 15,940,067 | | |
| | | | | | | | | | | |
Anchorage Capital CLO Ltd: Series 2013-1A (0.3%)*(3) (8) (11) | | Structured Finance | | Structured Secured Note - Class DR (LIBOR + 6.8%, 7.0% Cash, Acquired 03/20, Due 10/30) | | 2,000,000 | | | 1,747,226 | | | 1,954,474 | | |
| | | | 2,000,000 | | | 1,747,226 | | | 1,954,474 | | |
| | | | | | | | | | | |
Anju Software, Inc. (1.9%)*(7) (8) (9) | | Application Software | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 5.6% Cash, Acquired 02/19, Due 02/25) | | 13,666,508 | | | 13,422,227 | | | 13,603,917 | | |
| | | 13,666,508 | | | 13,422,227 | | | 13,603,917 | | |
| | | | | | | | | | | |
Apex Bidco Limited (0.3%)*(3) (7) | | Business Equipment & Services | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.25%, 6.8% Cash, Acquired 01/20, Due 01/27) (8) (13) | | 2,010,615 | | | 1,856,499 | | | 1,974,143 | | |
| | Subordinated Senior Unsecured Term Loan (8.0% PIK, Acquired 01/20, Due 07/27) | | 266,526 | | | 247,209 | | | 261,692 | | |
| | | | 2,277,141 | | | 2,103,708 | | | 2,235,835 | | |
| | | | | | | | | | | |
Apus Bidco Limited (2.6%)*(3) (7) (8) (14) | | Banking, Finance, Insurance & Real Estate | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.5% Cash, Acquired 02/21, Due 03/28) | | 19,530,223 | | | 18,987,653 | | | 18,993,142 | | |
| | | | 19,530,223 | | | 18,987,653 | | | 18,993,142 | | |
| | | | | | | | | | | |
AQA Acquisition Holding, Inc. (1.9%)*(7) (8) (11) | | High Tech Industries | | Second Lien Senior Secured Term Loan (LIBOR + 7.5%, 8.5% Cash, Acquired 03/21, Due 03/29) | | 14,477,878 | | | 14,075,714 | | | 14,075,393 | | |
| | | | 14,477,878 | | | 14,075,714 | | | 14,075,393 | | |
| | | | | | | | | | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
TRIANGLE CAPITAL CORPORATION Unaudited Consolidated Schedule of Investments September 30, 2017 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
Non–Control / Non–Affiliate Investments: | | | | | | |
| | | | | | | | | | |
Access Medical Acquisition, Inc. (3%)* | | Operator of Primary Care Clinics | | Subordinated Notes (10% Cash, 2% PIK, Due 01/22) | | $ | 13,819,514 |
| | $ | 13,620,530 |
| | $ | 13,620,530 |
|
| | Class A Units (1,500,000 units) | | | | 901,026 |
| | 2,610,000 |
|
| | | | 13,819,514 |
| | 14,521,556 |
| | 16,230,530 |
|
| | | | | | | | | | |
Aden & Anais Holdings, Inc. (0%)* | | Baby Products | | Common Stock (20,000 shares) | | | | 2,000,000 |
| | 1,117,000 |
|
| | | | | | 2,000,000 |
| | 1,117,000 |
|
| | | | | | | | | | |
AM General, LLC (5%)* | | Defense Manufacturing | | Senior Note (LIBOR + 7.25%, 8.5% Cash, Due 12/21)(8) | | 9,500,000 |
| | 9,368,788 |
| | 9,410,000 |
|
| | Second Lien Term Note (LIBOR +11.75%, 13.0% Cash, Due 06/22)(8) | | 20,000,000 |
| | 19,459,561 |
| | 19,641,000 |
|
| | | | 29,500,000 |
| | 28,828,349 |
| | 29,051,000 |
|
| | | | | | | | | | |
Avantor Performance Materials Holdings, LLC (2%)* | | Life Sciences and Advanced Technologies | | Second Lien Term Note (LIBOR + 8.25%, 9.5% Cash, Due 03/25)(8) | | 15,000,000 |
| | 14,856,508 |
| | 14,976,000 |
|
| | | | 15,000,000 |
| | 14,856,508 |
| | 14,976,000 |
|
| | | | | | | | | | |
AVL Holdings, Inc. (0%)* | | Manufacturer and Distributor for Independent Artists and Authors | | Common Stock (138 shares) | | | | 1,300,000 |
| | 2,049,000 |
|
| | | | | | 1,300,000 |
| | 2,049,000 |
|
| | | | | | | | | | |
Baker Hill Acquisition, LLC (2%)* | | Loan Origination Software Solutions Provider | | Second Lien Term Notes (LIBOR + 11.0%, 12.3% Cash, Due 03/21)(8) | | 13,500,000 |
| | 13,358,951 |
| | 11,000,000 |
|
| | Delayed Draw Term Note (LIBOR + 11.0%, 12.3% Cash, Due 03/21)(8) | | 1,500,000 |
| | 1,481,072 |
| | 1,481,072 |
|
| | Limited Partnership Interest | | | | 1,498,500 |
| | 103,000 |
|
| | | | 15,000,000 |
| | 16,338,523 |
| | 12,584,072 |
|
| | | | | | | | | | |
Cafe Enterprises, Inc. (1%)* | | Restaurant | | Second Lien Term Note (Prime + 5.75%, 10.0% Cash, Due 03/19)(6)(8) | | 2,000,000 |
| | 1,990,411 |
| | 1,454,000 |
|
| | Subordinated Note (7% Cash, 7% PIK, Due 09/19)(6) | | 14,632,863 |
| | 13,745,570 |
| | 2,801,000 |
|
| | Series C Preferred Stock (10,000 shares) | | | | 1,000,000 |
| | — |
|
| | | | 16,632,863 |
| | 16,735,981 |
| | 4,255,000 |
|
| | | | | | | | | | |
Captek Softgel International, Inc. (5%)* | | Nutraceuticals Manufacturer | | Subordinated Note (10% Cash, 1.5% PIK, Due 01/23) | | 30,695,433 |
| | 30,405,827 |
| | 30,405,827 |
|
Common Stock (38,023 shares) | | | | 3,957,697 |
| | 4,059,000 |
|
| | | 30,695,433 |
| | 34,363,524 |
| | 34,464,827 |
|
| | | | | | | | | | |
Carolina Beverage Group, LLC (0%)* | | Beverage Manufacturing and Packaging | | Class B Units (11,974 units) | | | | 119,735 |
| | 1,183,000 |
|
| | | | | 119,735 |
| | 1,183,000 |
|
| | | | | | | | | | |
Centerfield Media Holding Company (0%)* | | Digital Marketing | | Common Shares (500 shares) | | | | 500,000 |
| | 1,121,000 |
|
| | | |
|
| | 500,000 |
| | 1,121,000 |
|
| | | | | | | | | | |
CIBT Global, Inc. (2%)* | | Provider of Mobility Services | | Second Lien Term Note (LIBOR + 7.75%, 9.1% Cash, Due 06/25)(8) | | 10,000,000 |
| | 9,902,191 |
| | 9,840,000 |
|
| | | | 10,000,000 |
| | 9,902,191 |
| | 9,840,000 |
|
| | | | | | | | | | |
CIS Acquisition, LLC (0%)* | | Secure Communications and Computing Solutions Provider | | Units (1.09 units) | | | | 277,538 |
| | 277,538 |
|
| | | | | | 277,538 |
| | 277,538 |
|
| | | | | | | | | | |
Community Intervention Services, Inc. (1%)* | | Provider of Behavioral Health Services | | Subordinated Note (7% Cash, 6% PIK, Due 01/21) (6) | | 20,294,798 |
| | 17,732,558 |
| | 3,717,000 |
|
| | | | 20,294,798 |
| | 17,732,558 |
| | 3,717,000 |
|
| | | | | | | | | | |
Constellis Holdings, LLC (1%)* | | Provider of Security and Risk Management Services | | Second Lien Term Note (LIBOR + 9.0%, 10.3% Cash, Due 04/25)(8) | | 5,000,000 |
| | 4,928,155 |
| | 4,903,000 |
|
| | | | 5,000,000 |
| | 4,928,155 |
| | 4,903,000 |
|
| | | | | | | | | | |
CPower Ultimate HoldCo, LLC (0%)* | | Demand Response Business | | Units (345,542 units) | | | | 345,542 |
| | 345,542 |
|
| | | | | | 345,542 |
| | 345,542 |
|
| | | | | | | | | | |
CWS Holding Company, LLC (0%)* | | Manufacturer of Custom Windows and Sliding Doors | | Class A Units (1,500,000 units) | | | | 1,500,000 |
| | 1,624,000 |
|
| | | | | 1,500,000 |
| | 1,624,000 |
|
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
Arch Global Precision LLC (2.4%)*(7) (8) (11) | | Industrial Machinery | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.0% Cash, Acquired 04/19, Due 04/26) | | $ | 17,210,844 | | | $ | 17,064,183 | | | $ | 17,210,844 | | |
| | | | 17,210,844 | | | 17,064,183 | | | 17,210,844 | | |
| | | | | | | | | | | |
Archimede (0.7%)*(3) (7) (8) (15) | | Consumer Services | | First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 10/20, Due 10/27) | | 4,936,258 | | | 4,923,115 | | | 4,822,475 | | |
| | | | 4,936,258 | | | 4,923,115 | | | 4,822,475 | | |
| | | | | | | | | | | |
Argus Bidco Limited (0.4%)*(3) (7) (8) (13) | | High Tech Industries | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.8% Cash, Acquired 12/20, Due 12/27) | | 2,732,225 | | | 2,541,695 | | | 2,658,619 | | |
| | | 2,732,225 | | | 2,541,695 | | | 2,658,619 | | |
| | | | | | | | | | | |
Armstrong Transport Group (Pele Buyer, LLC ) (1.0%)*(7) (8) (11) | | Air Freight & Logistics | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24) | | 5,327,863 | | | 5,256,328 | | | 5,284,761 | | |
| | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 07/20, Due 06/24) | | 1,990,291 | | | 1,956,918 | | | 1,990,291 | | |
| | | | 7,318,154 | | | 7,213,246 | | | 7,275,052 | | |
| | | | | | | | | | | |
Ascensus Specialties, LLC (1.0%)*(7) (8) (9) | | Specialty Chemicals | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.9% Cash, Acquired 09/19, Due 09/26) | | 7,001,675 | | | 6,944,619 | | | 6,931,658 | | |
| | | | 7,001,675 | | | 6,944,619 | | | 6,931,658 | | |
| | | | | | | | | | | |
ASPEQ Heating Group LLC (1.2%)* (7) (8) (11) | | Building Products, Air & Heating | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 11/19, Due 11/25) | | 8,922,910 | | | 8,815,883 | | | 8,851,526 | | |
| | | 8,922,910 | | | 8,815,883 | | | 8,851,526 | | |
| | | | | | | | | | | |
Auxi International (0.2%)*(3) (7) (8) (16) | | Commercial Finance | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 12/19, Due 12/26) | | 1,645,419 | | | 1,516,306 | | | 1,619,866 | | |
| | | | 1,645,419 | | | 1,516,306 | | | 1,619,866 | | |
| | | | | | | | | | | |
AVSC Holding Corp. (1.5%)* | | Advertising | | First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, 0.25% PIK, Acquired 08/18, Due 03/25)(8) (11) | | 4,885,464 | | | 4,327,220 | | | 4,320,754 | | |
| | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, 1.0% PIK, Acquired 08/18, Due 03/25)(8) (11) | | 746,242 | | | 683,375 | | | 674,886 | | |
| | First Lien Senior Secured Term Loan (5.0% Cash, 10.0% PIK, Acquired 11/20, Due 10/26) | | 4,988,220 | | | 4,858,438 | | | 5,786,335 | | |
| | | | 10,619,926 | | | 9,869,033 | | | 10,781,975 | | |
| | | | | | | | | | | |
BDP International, Inc. (f/k/a BDP Buyer, LLC) (2.0%)*(7) (8) (9) | | Air Freight & Logistics | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 12/18, Due 12/24) | | 14,962,427 | | | 14,707,774 | | | 14,694,617 | | |
| | | | 14,962,427 | | | 14,707,774 | | | 14,694,617 | | |
| | | | | | | | | | | |
Beacon Pointe Advisors, LLC (0.1%)*(7) (8) (11) | | Asset Manager & Custody Bank | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 03/20, Due 03/26) | | 993,636 | | | 974,611 | | | 993,636 | | |
| | | | 993,636 | | | 974,611 | | | 993,636 | | |
| | | | | | | | | | | |
Benify (Bennevis AB) (0.2%)*(3) (7) (8) (17) | | High Tech Industries | | First Lien Senior Secured Term Loan (STIBOR + 5.25%, 5.3% Cash, Acquired 07/19, Due 07/26) | | 1,335,915 | | | 1,220,032 | | | 1,335,915 | | |
| | | | 1,335,915 | | | 1,220,032 | | | 1,335,915 | | |
| | | | | | | | | | | |
Bidwax (1.8%)*(3) (7) (8) (15) | | Non-durable Consumer Goods | | First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 02/21, Due 02/28) | | 13,868,533 | | | 13,702,817 | | | 13,383,722 | | |
| | | | 13,868,533 | | | 13,702,817 | | | 13,383,722 | | |
| | | | | | | | | | | |
BigHand UK Bidco Limited (0.7%)*(3) (7) (8) (13) | | High Tech Industries | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.5% Cash, Acquired 01/21, Due 01/28) | | 5,531,266 | | | 5,248,666 | | | 5,310,015 | | |
| | | | 5,531,266 | | | 5,248,666 | | | 5,310,015 | | |
| | | | | | | | | | | |
Black Diamond Equipment Rentals LLC (1.1%)*(7) (20) | | Equipment Rental | | Second Lien Loan (12.5% Cash, Acquired 12/20, Due 06/22) | | 7,500,000 | | | 7,500,000 | | | 7,500,000 | | |
| | Warrant (3.13 units, Acquired 12/20) | | | | 847,000 | | | 726,000 | | |
| | | | 7,500,000 | | | 8,347,000 | | | 8,226,000 | | |
| | | | | | | | | | | |
British Airways 2020-1 Class B Pass Through Trust (0.2%)* | | Airlines | | Structured Secured Note - Class B (8.4% Cash, Acquired 11/20, Due 11/28) | | 1,474,876 | | | 1,474,876 | | | 1,684,288 | | |
| | | | 1,474,876 | | | 1,474,876 | | | 1,684,288 | | |
| | | | | | | | | | | |
British Engineering Services Holdco Limited (2.1%)*(3) (7) (8) (14) | | Commercial Services & Supplies | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.25%, 5.5% Cash, Acquired 12/20, Due 12/27) | | 15,819,664 | | | 15,032,999 | | | 15,380,784 | | |
| | | | 15,819,664 | | | 15,032,999 | | | 15,380,784 | | |
| | | | | | | | | | | |
Brown Machine Group Holdings, LLC (0.9%)*(7) (8) (9) | | Industrial Equipment | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 10/24) | | 6,722,144 | | | 6,662,673 | | | 6,722,144 | | |
| | | | 6,722,144 | | | 6,662,673 | | | 6,722,144 | | |
| | | | | | | | | | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
TRIANGLE CAPITAL CORPORATION Unaudited Consolidated Schedule of Investments — (Continued) September 30, 2017 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
Data Source Holdings, LLC (0%)* | | Print Supply Chain Management Services | | Common Units (47,503 units) | | | | $ | 1,000,000 |
| | $ | 882,000 |
|
| | | | | 1,000,000 |
| | 882,000 |
|
| | | | | | | | | | |
Del Real, LLC (3%)* | | Hispanic Refrigerated Foods Company | | Subordinated Note (11% Cash, Due 04/23) | | $ | 14,000,000 |
| | 13,751,325 |
| | 13,751,325 |
|
| | Class A Units (3,000,000 units) | | | | 3,000,000 |
| | 3,442,000 |
|
| | | | 14,000,000 |
| | 16,751,325 |
| | 17,193,325 |
|
| | | | | | | | | | |
Dimora Brands, Inc. (3%)* | | Hardware Designer and Distributor | | Second Lien Term Note (LIBOR + 8.5%, 9.7% Cash, Due 08/25)(8) | | 20,000,000 |
| | 19,600,000 |
| | 19,600,000 |
|
| | | | 20,000,000 |
| | 19,600,000 |
| | 19,600,000 |
|
| | | | | | | | | | |
DLC Acquisition, LLC (6%)* | | Staffing Firm | | Senior Notes (LIBOR + 8.0%, 10% Cash, Due 12/20)(8) | | 21,978,125 |
| | 21,785,931 |
| | 21,785,931 |
|
| Senior Note (10% Cash, 2% PIK, Due 12/20) | | 17,187,831 |
| | 17,024,644 |
| | 17,024,644 |
|
| | | 39,165,956 |
| | 38,810,575 |
| | 38,810,575 |
|
| | | | | | | | | | |
Dyno Acquiror, Inc. (1%)* | | Sewing Products and Seasonal Decorative Products Supplier | | Subordinated Note (10.5% Cash, 1.5% PIK, Due 08/20) | | 4,646,082 |
| | 4,623,967 |
| | 4,623,967 |
|
| Series A Units (600,000 units) | | | | 600,000 |
| | 591,000 |
|
| | | 4,646,082 |
| | 5,223,967 |
| | 5,214,967 |
|
| | | | | | | | | | |
Eckler's Holdings, Inc. (0%)* | | Restoration Parts and Accessories for Classic Cars and Trucks | | Subordinated Note (7.7% Cash, Due 06/19)(6) | | 13,941,700 |
| | 13,242,814 |
| | 3,126,000 |
|
| Common Stock (18,029 shares) | | | | 183,562 |
| | — |
|
| Series A Preferred Stock (1,596 shares) | | | | 1,596,126 |
| | — |
|
| Series B Preferred Stock (702 shares) | | | | 435,127 |
| | — |
|
| | | 13,941,700 |
| | 15,457,629 |
| | 3,126,000 |
|
| | | | | | | | | | |
Fridababy Holdings, LLC (4%)* | | Baby Products | | Subordinated Notes (LIBOR + 9.0%, 10.3% Cash, Due 10/21)(8) | | 23,000,000 |
| | 22,614,777 |
| | 22,614,777 |
|
| | Class B Units (4,500 units) | | | | 273,401 |
| | 288,000 |
|
| | | | 23,000,000 |
| | 22,888,178 |
| | 22,902,777 |
|
| | | | | | | | | | |
FrontStream Holdings, LLC (1%)* | | Payment and Donation Management Product Service Provider | | Subordinated Note (LIBOR + 6.0%, 7.3% Cash, Due 12/20)(6)(8) | | 14,624,745 |
| | 14,272,931 |
| | 7,315,000 |
|
| | Series C-2 Preferred Shares (500 shares) | | | | 500,000 |
| | — |
|
| | | | 14,624,745 |
| | 14,772,931 |
| | 7,315,000 |
|
| | | | | | | | | | |
Frozen Specialties, Inc. (2%)* | | Frozen Foods Manufacturer | | Subordinated Note (10% Cash, 4% PIK, Due 3/18) | | 14,094,381 |
| | 14,094,381 |
| | 14,094,381 |
|
| | 14,094,381 |
| | 14,094,381 |
| | 14,094,381 |
|
| | | | | | | | | | |
GST AutoLeather, Inc. (0%)* | | Supplier of Automotive Interior Leather | | Subordinated Note (11% Cash, 2% PIK, Due 01/21)(6) | | 24,140,883 |
| | 23,073,507 |
| | 2,450,000 |
|
| | | | 24,140,883 |
| | 23,073,507 |
| | 2,450,000 |
|
| | | | | | | | | | |
Halo Branded Solutions, Inc. (2%)* | | Supply Chain Services | | Subordinated Notes (11% Cash, 1% PIK, Due 10/22) | | 10,490,124 |
| | 10,292,192 |
| | 10,292,192 |
|
| | Class A1 Units (2,600 units) | | | | 2,600,000 |
| | 4,034,000 |
|
| | | | 10,490,124 |
| | 12,892,192 |
| | 14,326,192 |
|
| | | | | | | | | | |
HemaSource, Inc. (2%)* | | Medical Products Distributor | | Subordinated Note (9.5% Cash, 1.5% PIK, Due 01/24) | | 10,030,833 |
| | 9,836,481 |
| | 9,836,481 |
|
| | Class A Units (1,000,000 units) | | | | 1,000,000 |
| | 1,000,000 |
|
| | | | 10,030,833 |
| | 10,836,481 |
| | 10,836,481 |
|
| | | | | | | | | | |
HKW Capital Partners IV, L.P. (0%)*(4) | | Multi-Sector Holdings | | 0.6% Limited Partnership Interest | | | | 922,279 |
| | 1,533,000 |
|
| | | | | | 922,279 |
| | 1,533,000 |
|
| | | | | | | | | | |
HTC Borrower, LLC (4%)* | | Hunting and Outdoor Products | | Subordinated Notes (10% Cash, 3% PIK, Due 09/20) | | 26,730,722 |
| | 26,501,283 |
| | 26,501,283 |
|
| | | | 26,730,722 |
| | 26,501,283 |
| | 26,501,283 |
|
| | | | | | | | | | |
ICP Industrial, Inc. (4%)* | | Coatings Formulator and Manufacturer | | Second Lien Term Note (LIBOR + 8.5%, 9.7% Cash, Due 04/22)(8) | | 7,500,000 |
| | 7,442,511 |
| | 7,442,511 |
|
| | Subordinated Notes (10% Cash, 1% PIK, Due 10/22) | | 8,149,614 |
| | 8,021,608 |
| | 8,021,608 |
|
| | Subordinated Notes (14% PIK, Due 10/22) | | 6,374,723 |
| | 6,325,018 |
| | 6,325,018 |
|
| | Class A Units (1,289 units) | | | | 1,751,483 |
| | 1,643,000 |
|
| | | | 22,024,337 |
| | 23,540,620 |
| | 23,432,137 |
|
| | | | | | | | | | |
IDERA, Inc. (2%)* | | Software Provider | | Second Lien Term Note (LIBOR + 9.0%, 10.2% Cash, Due 06/25)(8) | | 10,000,000 |
| | 9,853,115 |
| | 9,853,115 |
|
| | | | 10,000,000 |
| | 9,853,115 |
| | 9,853,115 |
|
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
Cadent, LLC (f/k/a Cross MediaWorks) (1.0%)*(7) (8) (11) | | Media & Entertainment | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 09/18, Due 09/23) | | $ | 7,532,846 | | | $ | 7,494,339 | | | $ | 7,532,846 | | |
| | | | 7,532,846 | | | 7,494,339 | | | 7,532,846 | | |
| | | | | | | | | | | |
Carlson Travel, Inc (1.0%)* | | Business Travel Management | | First Lien Senior Secured Note (6.8% Cash, Acquired 09/20, Due 12/25) | | 3,000,000 | | | 2,362,500 | | | 2,745,000 | | |
| | Super Senior Senior Secured Term Loan (10.5% Cash, Acquired 12/20, Due 3/25) | | 4,239,000 | | | 4,153,781 | | | 4,408,560 | | |
| | Common Stock (1,962 units, Acquired 11/20)(7) | | | | 88,290 | | | 88,290 | | |
| | | | 7,239,000 | | | 6,604,571 | | | 7,241,850 | | |
| | | | | | | | | | | |
Centralis Finco S.a.r.l. (0.1%)*(3) (7) (8) (15) | | Diversified Financial Services | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 05/20, Due 05/27) | | 833,687 | | | 734,407 | | | 833,687 | | |
| | | | 833,687 | | | 734,407 | | | 833,687 | | |
| | | | | | | | | | | |
Cineworld Group PLC (1.4%)*(3) | | Leisure Products | | First Lien Senior Secured Term Loan (LIBOR + 2.50%, 3.5% Cash, Acquired 04/20, Due 02/25)(8) (11) | | 9,014,914 | | | 6,018,763 | | | 7,685,394 | | |
| | Super Senior Secured Term Loan (7.0% Cash, 8.3% PIK, Acquired 11/20, Due 05/24) | | 1,679,196 | | | 1,454,572 | | | 2,117,886 | | |
| | Warrants (553,375 units, Acquired 12/20) | | | | 101,602 | | | 457,332 | | |
| | | | 10,694,110 | | | 7,574,937 | | | 10,260,612 | | |
| | | | | | | | | | | |
Classic Collision (Summit Buyer, LLC) (1.8%)*(7) (8) (11) | | Auto Collision Repair Centers | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 01/20, Due 01/26) | | 13,191,054 | | | 12,969,490 | | | 12,918,142 | | |
| | | | 13,191,054 | | | 12,969,490 | | | 12,918,142 | | |
| | | | | | | | | | | |
CM Acquisitions Holdings Inc. (3.3%)*(7) (8) (12) | | Internet & Direct Marketing | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 05/19, Due 05/25) | | 24,001,562 | | | 23,662,616 | | | 23,899,349 | | |
| | | | 24,001,562 | | | 23,662,616 | | | 23,899,349 | | |
| | | | | | | | | | | |
CMT Opco Holding, LLC (Concept Machine) (0.6%)*(7) (8) (11) | | Distributors | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 01/20, Due 01/25) | | 4,155,516 | | | 4,089,508 | | | 3,877,097 | | |
| | LLC Units (8,782 units, Acquired 01/20) | | | | 351,709 | | | 251,973 | | |
| | | | 4,155,516 | | | 4,441,217 | | | 4,129,070 | | |
| | | | | | | | | | | |
Command Alkon (Project Potter Buyer, LLC) (2.8%)*(7) (8) (9) | | Software | | First Lien Senior Secured Term Loan (LIBOR + 8.25%, 9.3% Cash, Acquired 04/20, Due 04/27) | | 20,900,728 | | | 20,315,830 | | | 20,469,964 | | |
| | Class A Units (90.384 units, Acquired 04/20) | | | | 90,384 | | | 97,537 | | |
| | Class B Units (33,324.69 units, Acquired 04/20) | | | | — | | | 9,897 | | |
| | | | 20,900,728 | | | 20,406,214 | | | 20,577,398 | | |
| | | | | | | | | | | |
Confie Seguros Holding II Co. (0.3%)*(7) (8) (9) | | Insurance Brokerage Services | | Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 8.6% Cash, Acquired 10/19, Due 11/25) | | 2,500,000 | | | 2,375,861 | | | 2,437,500 | | |
| | | | 2,500,000 | | | 2,375,861 | | | 2,437,500 | | |
| | | | | | | | | | | |
Contabo Finco S.À R.L (0.2%)*(3) (7) (8) (15) | | Internet Software & Services | | First Lien Senior Secured Term Loan (EURIBOR + 4.75%, 4.8% Cash, Acquired 10/19, Due 10/26) | | 1,424,880 | | | 1,311,897 | | | 1,408,439 | | |
| | | | 1,424,880 | | | 1,311,897 | | | 1,408,439 | | |
| | | | | | | | | | | |
CSL DualCom (0.2%)*(3) (7) (8) (14) | | Tele-communications | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.5% Cash, Acquired 09/20, Due 09/27) | | 1,366,458 | | | 1,196,365 | | | 1,307,335 | | |
| | | | 1,366,458 | | | 1,196,365 | | | 1,307,335 | | |
| | | | | | | | | | | |
Custom Alloy Corporation (5.6%)*(7) (20) | | Manufacturer of Pipe Fittings & Forgings | | Second Lien Loan (15.0% PIK, Acquired 12/20, Due 04/22) | | 45,000,185 | | | 37,043,142 | | | 36,810,151 | | |
| | Revolver (15.0% PIK, Acquired 12/20, Due 04/21) | | 4,255,152 | | | 3,737,652 | | | 3,731,768 | | |
| | | | 49,255,337 | | | 40,780,794 | | | 40,541,919 | | |
| | | | | | | | | | | |
CW Group Holdings, LLC (0.7%)*(7) (8) (11) | | High Tech Industries | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 01/21, Due 01/27) | | 4,838,710 | | | 4,732,394 | | | 4,729,839 | | |
| | LLC Units (161,290.32 units, Acquired 01/21) | | | | 161,290 | | | 159,355 | | |
| | | | 4,838,710 | | | 4,893,684 | | | 4,889,194 | | |
| | | | | | | | | | | |
Dart Buyer, Inc. (1.7%)*(3) (7) (8) (11) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 04/19, Due 04/25) | | 12,279,705 | | | 12,073,545 | | | 12,181,587 | | |
| | | | 12,279,705 | | | 12,073,545 | | | 12,181,587 | | |
| | | | | | | | | | | |
Discovery Education, Inc. (3.3%)*(7) (8) (10) | | Publishing | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 10/20, Due 10/26) | | 23,940,000 | | | 23,546,094 | | | 23,940,000 | | |
| | | | 23,940,000 | | | 23,546,094 | | | 23,940,000 | | |
| | | | | | | | | | | |
Distinct Holdings, Inc. (1.0%)*(7) (8) (11) | | Systems Software | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 04/19, Due 12/23) | | 7,227,381 | | | 7,171,357 | | | 7,104,516 | | |
| | | | 7,227,381 | | | 7,171,357 | | | 7,104,516 | | |
| | | | | | | | | | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
TRIANGLE CAPITAL CORPORATION Unaudited Consolidated Schedule of Investments — (Continued) September 30, 2017 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
Inland Pipe Rehabilitation Holding Company LLC (0%)* | | Cleaning and Repair Services | | Membership Interest Purchase Warrant (3%) | | | | $ | 853,500 |
| | $ | 596,000 |
|
| | | | 853,500 |
| | 596,000 |
|
| | | | | | | | | | |
Integrated Efficiency Solutions, Inc. (3%)* | | Energy Services Contracting Firm | | Senior Secured Term Note (LIBOR + 9.25%, 10.6% Cash, Due 06/22)(8) | | $ | 18,500,000 |
| | 18,188,844 |
| | 18,188,844 |
|
Series B Preferred Units (238,095 units) | | | | 300,000 |
| | 300,000 |
|
| | 18,500,000 |
| | 18,488,844 |
| | 18,488,844 |
|
| | | | | | | | | | |
IPS Structural Adhesives Holdings, Inc. (2%)* | | Specialty Adhesives and Plumbing Products Manufacturer | | Second Lien Term Note (LIBOR + 9.5%, 10.7% Cash, Due 12/24)(8) | | 15,000,000 |
| | 14,718,778 |
| | 14,903,000 |
|
| | | | 15,000,000 |
| | 14,718,778 |
| | 14,903,000 |
|
| | | | | | | | | | |
Keystone Peer Review Organization, Inc. (0%)* | | Healthcare - Managed Care | | Second Lien Term Note (LIBOR + 9.25%, 10.6% Cash, Due 05/25)(8) | | 3,000,000 |
| | 2,942,497 |
| | 2,927,000 |
|
| | | | 3,000,000 |
| | 2,942,497 |
| | 2,927,000 |
|
| | | | | | | | | | |
KidKraft, Inc. (4%)* | | Children's Toy Manufacturer and Distributor | | Second Lien Term Note (11% Cash, 1% PIK, Due 03/22) | | 27,876,081 |
| | 27,401,586 |
| | 27,401,586 |
|
| | | | 27,876,081 |
| | 27,401,586 |
| | 27,401,586 |
|
| | | | | | | | | | |
K-Square Restaurant Partners, LP (0%)* | | Restaurant | | Class A Units of Limited Partnership (2,000 units) | | | | 638,260 |
| | 2,759,000 |
|
| | | | | | 638,260 |
| | 2,759,000 |
|
| | | | | | | | | | |
Lakeview Health Holdings, Inc. (3%)* | | Substance Abuse Treatment Service Provider | | Senior Note (LIBOR + 6.75%, 8.1% Cash, Due 12/21)(8) | | 18,473,037 |
| | 18,298,370 |
| | 18,298,370 |
|
| | Common Stock (2,000 shares) | | | | 2,000,000 |
| | 1,149,000 |
|
| | | | 18,473,037 |
| | 20,298,370 |
| | 19,447,370 |
|
| | | | | | | | | | |
Media Storm, LLC (1%)* | | Marketing Services | | Subordinated Note (10% Cash, Due 08/19)(6) | | 6,709,091 |
| | 6,541,519 |
| | 3,571,000 |
|
Membership Units (1,216,204 units) | | | | 1,176,957 |
| | — |
|
| | 6,709,091 |
| | 7,718,476 |
| | 3,571,000 |
|
| | | | | | | | | | |
MIC Holding LLC (1%)* | | Firearm Accessories Manufacturer and Distributor | | Preferred Units (1,470 units) | | | | 1,470,000 |
| | 3,333,000 |
|
| | Common Units (30,000 units) | | | | 30,000 |
| | 5,572,000 |
|
| | | | | | 1,500,000 |
| | 8,905,000 |
|
| | | | | | | | | | |
Micross Solutions LLC (3%)* | | Provider of Semiconductor Products and Services | | Senior Note (LIBOR + 5.50%, 6.8% Cash, Due 08/23)(8) | | 15,000,000 |
| | 14,820,000 |
| | 14,820,000 |
|
Class A-2 Common Units (1,979,524 units) | | | | 2,019,693 |
| | 2,246,000 |
|
| | 15,000,000 |
| | 16,839,693 |
| | 17,066,000 |
|
| | | | | | | | | | |
Motor Vehicle Software Corporation (3%)* | | Provider of EVR Services | | Subordinated Note (10% Cash, 0.5% PIK, Due 03/21) | | 20,321,960 |
| | 20,043,031 |
| | 20,043,031 |
|
| | Class A Units (1,000,000 units) | | | | 1,087,460 |
| | 1,526,000 |
|
| | | | 20,321,960 |
| | 21,130,491 |
| | 21,569,031 |
|
| | | | | | | | | | |
Nautic Partners VII, LP (0%)*(4) | | Multi-Sector Holdings | | 0.4% Limited Partnership Interest | | | | 1,180,910 |
| | 1,748,000 |
|
| | | | | | 1,180,910 |
| | 1,748,000 |
|
| | | | | | | | | | |
Nomacorc, LLC (3%)* | | Synthetic Wine Cork Producer | | Subordinated Note (10% Cash, 2.3% PIK, Due 07/21) | | 21,234,114 |
| | 20,972,775 |
| | 17,400,000 |
|
| | Limited Partnership Interest | | | | 2,161,185 |
| | — |
|
| | | | 21,234,114 |
| | 23,133,960 |
| | 17,400,000 |
|
| | | | | | | | | | |
Orchid Underwriters Agency, LLC (1%)* | | Insurance Underwriter | | Subordinated Note (10% Cash, 1.5% PIK, Due 03/23) | | 2,127,072 |
| | 2,086,080 |
| | 2,086,080 |
|
Subordinated Note (13.5% PIK, Due 03/24) | | 785,362 |
| | 770,531 |
| | 770,531 |
|
Class A Preferred Units (15,000 units) | | | | 338,158 |
| | 927,000 |
|
Class A Common Units (15,000 units) | | | | — |
| | 1,153,000 |
|
| | 2,912,434 |
| | 3,194,769 |
| | 4,936,611 |
|
| | | | | | | | | | |
ProAmpac PG Borrower LLC (2%)* | | Manufacturer of Flexible Packaging Products | | Second Lien Term Note (LIBOR + 8.5%, 9.8% Cash, Due 11/24)(8) | | 15,000,000 |
| | 14,789,664 |
| | 14,982,000 |
|
| | | | 15,000,000 |
| | 14,789,664 |
| | 14,982,000 |
|
| | | | | | | | | | |
Q International Courier, LLC (2%)* | | Third-Party Logistics Provider | | Second Lien Term Note (LIBOR + 8.25%, 9.6% Cash, Due 09/25)(8) | | 14,000,000 |
| | 13,720,000 |
| | 13,720,000 |
|
| | | | 14,000,000 |
| | 13,720,000 |
| | 13,720,000 |
|
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
DreamStart Bidco SAS (d/b/a SmartTrade) (0.3%)*(3) (7) (8) (16) | | Diversified Financial Services | | First Lien Senior Secured Term Loan (EURIBOR + 4.5%, 4.5% Cash, 1.25% PIK, Acquired 03/20, Due 03/27) | | $ | 2,151,891 | | | $ | 1,949,744 | | | $ | 2,096,657 | | |
| | | | 2,151,891 | | | 1,949,744 | | | 2,096,657 | | |
| | | | | | | | | | | |
Dukane IAS, LLC (0.6%)*(7) (20) | | Welding Equipment Manufacturer | | Second Lien Note (10.5% Cash, 2.5% PIK, Acquired 12/20, Due 12/24) | | 4,662,430 | | | 4,662,430 | | | 4,662,430 | | |
| | | | 4,662,430 | | | 4,662,430 | | | 4,662,430 | | |
| | | | | | | | | | | |
Entact Environmental Services, Inc. (1.6%)*(7) (8) (10) | | Environmental Industries | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 02/21, Due 12/25) | | 11,733,602 | | | 11,619,173 | | | 11,616,266 | | |
| | | | 11,733,602 | | | 11,619,173 | | | 11,616,266 | | |
| | | | | | | | | | | |
Exeter Property Group, LLC (2.6%)*(7) (8) (9) | | Real Estate | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.6% Cash, Acquired 02/19, Due 08/24) | | 19,313,644 | | | 19,067,722 | | | 19,054,572 | | |
| | | | 19,313,644 | | | 19,067,722 | | | 19,054,572 | | |
| | | | | | | | | | | |
F24 (Stairway BidCo Gmbh) (0.2%)*(3) (7) (8) (15) | | Software Services | | First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 08/20, Due 08/27) | | 1,674,814 | | | 1,636,558 | | | 1,674,814 | | |
| | | | 1,674,814 | | | 1,636,558 | | | 1,674,814 | | |
| | | | | | | | | | | |
Ferrellgas L.P. (0.4%)* | | Oil & Gas Equipment & Services | | OpCo Preferred Units (2,886 units, Acquired 03/21) | | | | 2,799,420 | | | 2,799,420 | | |
| | | | | | 2,799,420 | | | 2,799,420 | | |
| | | | | | | | | | | |
Fineline Technologies, Inc. (0.6%)*(7) (8) (11) | | Consumer Services | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 02/21, Due 02/27) | | 4,400,000 | | | 4,313,818 | | | 4,312,500 | | |
| | | | 4,400,000 | | | 4,313,818 | | | 4,312,500 | | |
| | | | | | | | | | | |
FitzMark Buyer, LLC (0.4%)*(7) (8) (10) | | Cargo & Transportation | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 12/26) | | 2,823,530 | | | 2,741,157 | | | 2,745,849 | | |
| | | | 2,823,530 | | | 2,741,157 | | | 2,745,849 | | |
| | | | | | | | | | | |
Foundation Risk Partners, Corp. (1.5%)*(7) (8) (11) | | Financial Services | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 11/23) | | 9,035,091 | | | 8,838,934 | | | 8,932,016 | | |
| | Second Lien Senior Secured Term Loan (LIBOR + 8.50%, 9.5% Cash, Acquired 09/20, Due 11/24) | | 1,722,222 | | | 1,596,554 | | | 1,657,638 | | |
| | | | 10,757,313 | | | 10,435,488 | | | 10,589,654 | | |
| | | | | | | | | | | |
GoldenTree Loan Opportunities IX, Limited: Series 2014-9A (0.2%)*(3) (8) (11) | | Structured Finance | | Structured Secured Note - Class DR2 (LIBOR + 3.0%, 3.2% Cash, Acquired 03/20, Due 10/29) | | 1,250,000 | | | 923,797 | | | 1,222,291 | | |
| | | | 1,250,000 | | | 923,797 | | | 1,222,291 | | |
| | | | | | | | | | | |
GTM Intermediate Holdings, Inc. (0.9%)*(7) (20) | | Medical Equipment Manufacturer | | Second Lien Loan (11.0% Cash, 1.0% PIK, Acquired 12/20, Due 11/24) | | 5,128,824 | | | 5,077,667 | | | 5,103,180 | | |
| | Common Stock (2 shares, Acquired 12/20) | | | | 1,078,778 | | | 1,200,288 | | |
| | | | 5,128,824 | | | 6,156,445 | | | 6,303,468 | | |
| | | | | | | | | | | |
Gulf Finance, LLC (0.1%)*(8) (9) | | Oil & Gas Exploration & Production | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 08/23) | | 1,045,438 | | | 950,087 | | | 863,229 | | |
| | | | 1,045,438 | | | 950,087 | | | 863,229 | | |
| | | | | | | | | | | |
Hawaiian Airlines 2020-1 Class B Pass Through Certificates (1.0%)* | | Airlines | | Structured Secured Note - Class B (11.3% Cash, Acquired 08/20, Due 09/25) | | 6,796,296 | | | 6,796,296 | | | 7,591,887 | | |
| | | | 6,796,296 | | | 6,796,296 | | | 7,591,887 | | |
| | | | | | | | | | | |
Heartland, LLC (1.2%)*(7) (8) (11) | | Commercial Services & Supplies | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 08/19, Due 08/25) | | 8,808,417 | | | 8,653,425 | | | 8,691,488 | | |
| | | | 8,808,417 | | | 8,653,425 | | | 8,691,488 | | |
| | | | | | | | | | | |
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.)) (2.7%)*(3) (7) (8) | | Insurance | | First Lien Senior Secured Term Loan (EURIBOR + 5.50%, 5.5% Cash, Acquired 09/19, Due 09/26)(15) | | 8,613,351 | | | 7,940,194 | | | 8,508,268 | | |
| | First Lien Senior Secured Term Loan (EURIBOR + 6.50%, 6.5% Cash, Acquired 07/20, Due 09/26) (16) | | 10,871,521 | | | 10,847,615 | | | 10,871,521 | | |
| | | | 19,484,872 | | | 18,787,809 | | | 19,379,789 | | |
| | | | | | | | | | | |
Highpoint Global LLC (0.7%)*(7) (20) | | Government Services | | Second Lien Note (12.0% Cash, 2.0% PIK, Acquired 12/20, Due 09/22) | | 5,334,928 | | | 5,313,697 | | | 5,334,928 | | |
| | | | 5,334,928 | | | 5,313,697 | | | 5,334,928 | | |
| | | | | | | | | | | |
Holley Performance Products (Holley Purchaser, Inc.) (2.3%)*(7) (8) (11) | | Automotive Parts & Equipment | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 5.2% Cash, Acquired 10/18, Due 10/25) | | 16,936,387 | | | 16,762,536 | | | 16,936,387 | | |
| | | | 16,936,387 | | | 16,762,536 | | | 16,936,387 | | |
| | | | | | | | | | | |
Home Care Assistance, LLC (0.9%)*(7) (8) (11) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 03/21, Due 03/27) | | 6,805,814 | | | 6,609,104 | | | 6,608,932 | | |
| | | | 6,805,814 | | | 6,609,104 | | | 6,608,932 | | |
| | | | | | | | | | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
TRIANGLE CAPITAL CORPORATION Unaudited Consolidated Schedule of Investments — (Continued) September 30, 2017 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
REP WWEX Acquisition Parent, LLC (2%)* | | Third-Party Logistics Provider | | Second Lien Term Note (LIBOR + 8.75%, 10.2% Cash, Due 02/25)(8) | | $ | 15,000,000 |
| | $ | 14,789,517 |
| | $ | 14,920,000 |
|
| | | | 15,000,000 |
| | 14,789,517 |
| | 14,920,000 |
|
| | | | | | | | | | |
RMP Group, Inc. (2%)* | | Provider of RCM Services to Hospitals and Physician Groups | | Subordinated Note (10.5% Cash, 1% PIK, Due 09/22) | | 10,058,460 |
| | 9,872,305 |
| | 9,872,305 |
|
| | Units (1,000 units) | | | | 1,000,000 |
| | 706,000 |
|
| | | | 10,058,460 |
| | 10,872,305 |
| | 10,578,305 |
|
| | | | | | | | | | |
RockYou, Inc. (0%)* | | Mobile Game Advertising Network | | Common Stock (67,585 shares) | | | | 111,000 |
| | 111,000 |
|
| | | | | | 111,000 |
| | 111,000 |
|
| | | | | | | | | | |
Rotolo Consultants, Inc. (2%)* | | Landscape Services | | Subordinated Note (11% Cash, 3% PIK, Due 08/21) | | 7,574,709 |
| | 7,467,551 |
| | 7,467,551 |
|
| | Series A Preferred Units (39 units) | | | | 3,654,253 |
| | 5,691,000 |
|
| | | | 7,574,709 |
| | 11,121,804 |
| | 13,158,551 |
|
| | | | | | | | | | |
SCA Pharmaceuticals, LLC (2%)* | | Provider of Pharmaceutical Products | | Subordinated Note (LIBOR + 9.0%, 10.3% Cash, Due 12/20)(8) | | 10,000,000 |
| | 9,820,631 |
| | 9,820,631 |
|
| | | | 10,000,000 |
| | 9,820,631 |
| | 9,820,631 |
|
| | | | | | | | | | |
Schweiger Dermatology Group, LLC (3%)* | | Provider of Dermatology Services | | Senior Notes (LIBOR + 8.5%, 9.8% Cash, Due 06/22)(8) | | 20,000,000 |
| | 19,639,784 |
| | 19,639,784 |
|
| | | | 20,000,000 |
| | 19,639,784 |
| | 19,639,784 |
|
| | | | | | | | | | |
SCUF Gaming, Inc. (4%)* | | Gaming Controller Manufacturer | | Senior Notes (LIBOR + 8.5%, 9.7% Cash, Due 12/21)(8) | | 25,008,000 |
| | 24,568,745 |
| | 24,568,745 |
|
| | Revolver Loan (LIBOR + 8.5%, 9.7% Cash, Due 06/18)(8) | | 1,500,000 |
| | 1,500,000 |
| | 1,500,000 |
|
| | Common Stock (27,112 shares) | | | | 742,000 |
| | 316,000 |
|
| | | | 26,508,000 |
| | 26,810,745 |
| | 26,384,745 |
|
| | | | | | | | | | |
Smile Brands, Inc. (4%)* | | Dental Service Organization | | Subordinated Notes (10% Cash, 2% PIK, Due 02/23) | | 22,681,843 |
| | 22,289,511 |
| | 22,289,511 |
|
| | Class A Units (3,000 units) | | | | 3,000,000 |
| | 2,876,000 |
|
| | | | 22,681,843 |
| | 25,289,511 |
| | 25,165,511 |
|
| | | | | | | | | | |
SPC Partners V, LP (0%)*(4) | | Multi-Sector Holdings | | 0.7% Limited Partnership Interest | | | | 2,247,369 |
| | 2,321,000 |
|
| | | | | | 2,247,369 |
| | 2,321,000 |
|
| | | | | | | | | | |
Specialized Desanders, Inc. (2%)*(4) | | Sand and Particulate Removal Equipment Provider for Oil and Gas Companies | | Subordinated Note (11% Cash, 2% PIK, Due 10/20) | | 10,117,769 |
| | 10,053,062 |
| | 7,463,727 |
|
Class C Partnership Units (2,000,000 units) | | | | 1,937,421 |
| | 3,662,000 |
|
| | | 10,117,769 |
| | 11,990,483 |
| | 11,125,727 |
|
| | | | | | | | | | |
St. Croix Hospice Acquisition Corp. (1%)* | | Hospice Services Provider | | Second Lien Term Note (LIBOR + 8.75%, 10.0% Cash, Due 03/24)(8) | | 9,200,000 |
| | 9,062,000 |
| | 9,062,000 |
|
| | Series A Preferred Units (500 units) | | | | 500,000 |
| | 500,000 |
|
| | Class B Common Units (500 units) | | | | — |
| | — |
|
| | | | 9,200,000 |
| | 9,562,000 |
| | 9,562,000 |
|
| | | | | | | | | | |
Tate's Bake Shop (2%)* | | Producer of Baked Goods | | Subordinated Note (10% Cash, 3% PIK, Due 02/20) | | 10,983,585 |
| | 10,879,180 |
| | 10,983,585 |
|
| | Limited Partnership Interest | | | | 925,000 |
| | 1,760,000 |
|
| | | | 10,983,585 |
| | 11,804,180 |
| | 12,743,585 |
|
| | | | | | | | | | |
Tax Advisors Group, LLC (2%)* | | Tax Advisory Services | | Subordinated Note (10% Cash, 2% PIK, Due 12/22) | | 12,400,000 |
| | 12,160,592 |
| | 12,160,592 |
|
| | Class A Units (386 units) | | | | 1,458,824 |
| | 1,458,824 |
|
| | | | 12,400,000 |
| | 13,619,416 |
| | 13,619,416 |
|
| | | | | | | | | | |
TCFI Merlin LLC ("Merlin") and TCFI CSG LLC ("CSG") (3%)* | | Specialty Staffing Service Provider | | Senior Notes (LIBOR + 8.5%, 9.7% Cash, Due 09/19)(8) | | 20,184,192 |
| | 19,918,528 |
| | 19,918,528 |
|
| | Limited Partnership Units - Merlin (500,500 units) | | | | 285,485 |
| | 645,000 |
|
| | Class A Units - CSG (100,000 units) | | | | 100,000 |
| | 158,000 |
|
| | | | 20,184,192 |
| | 20,304,013 |
| | 20,721,528 |
|
| | | | | | | | | | |
The Cook & Boardman Group, LLC (3%)* | | Distributor of Doors and Related Products | | Subordinated Note (10% Cash, 2.5% PIK, Due 03/20) | | 15,123,450 |
| | 14,977,282 |
| | 14,977,282 |
|
| | Class A Units (1,400,000 units) | | | | 1,400,000 |
| | 2,773,000 |
|
| | | | 15,123,450 |
| | 16,377,282 |
| | 17,750,282 |
|
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
HTI Technology & Industries (1.70%)* (7) (20) | | Electronic Component Manufacturing | | Second Lien Note (12.0% Cash, 4.8% PIK, Acquired 12/20, Due 09/24) | | $ | 12,773,156 | | | $ | 12,268,357 | | | $ | 12,262,230 | | |
| | | | 12,773,156 | | | 12,268,357 | | | 12,262,230 | | |
| | | | | | | | | | | |
HW Holdco, LLC (Hanley Wood LLC) (1.0%)*(7) (8) (11) | | Advertising | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/18, Due 12/24) | | 7,488,911 | | | 7,366,059 | | | 7,458,956 | | |
| | | | 7,488,911 | | | 7,366,059 | | | 7,458,956 | | |
| | | | | | | | | | | |
Hyperion Materials & Technologies, Inc. (1.9%)*(7) (8) (11) | | Industrial Machinery | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 08/19, Due 08/26) | | 13,820,806 | | | 13,616,971 | | | 13,737,881 | | |
| | | | 13,820,806 | | | 13,616,971 | | | 13,737,881 | | |
| | | | | | | | | | | |
IGL Holdings III Corp. (1.7%)*(7) (8) (11) | | Commercial Printing | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/26) | | 12,618,367 | | | 12,269,889 | | | 12,618,367 | | |
| | | | 12,618,367 | | | 12,269,889 | | | 12,618,367 | | |
| | | | | | | | | | | |
IM Analytics Holding, LLC (d/b/a NVT) (0.9%)*(7) (8) (11) | | Electronic Instruments & Components | | First Lien Senior Secured Term Loan (LIBOR + 7.0%, 8.0% Cash, Acquired 11/19, Due 11/23) | | 8,188,461 | | | 8,132,009 | | | 6,788,234 | | |
| | Warrant (68,950 units, Acquired 11/19) | | | | — | | | — | | |
| | | | 8,188,461 | | | 8,132,009 | | | 6,788,234 | | |
| | | | | | | | | | | |
INOS 19-090 GmbH (0.7%)*(3) (7) (8) (15) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (EURIBOR + 6.1%, 6.1% Cash, Acquired 12/20, Due 12/27) | | 5,447,702 | | | 5,460,878 | | | 5,269,155 | | |
| | | | 5,447,702 | | | 5,460,878 | | | 5,269,155 | | |
| | | | | | | | | | | |
International Precision Components (0.9%)*(7) (20) | | Plastic Injection Molding | | Second Lien Loan (12.0% Cash, 2.0% PIK, Acquired 12/20, Due 10/24) | | 6,825,092 | | | 6,723,232 | | | 6,756,841 | | |
| | | | 6,825,092 | | | 6,723,232 | | | 6,756,841 | | |
| | | | | | | | | | | |
ISS#2, LLC (d/b/a Industrial Services Solutions) (0.8%)*(7) (8) (11) | | Commercial Services & Supplies | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 02/20, Due 02/26) | | 6,802,373 | | | 6,688,583 | | | 6,074,519 | | |
| | | | 6,802,373 | | | 6,688,583 | | | 6,074,519 | | |
| | | | | | | | | | | |
Jade Bidco Limited (Jane's) (1.2%)*(3) (7) (8) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.8% Cash, 2.0% PIK, Acquired 11/19, Due 12/26)(12) | | 7,188,226 | | | 7,027,268 | | | 7,116,344 | | |
| | First Lien Senior Secured Term Loan (EURIBOR + 4.5%, 4.5% Cash, 2.0% PIK, Acquired 11/19, Due 12/26)(16) | | 1,347,749 | | | 1,239,285 | | | 1,334,272 | | |
| | | | 8,535,975 | | | 8,266,553 | | | 8,450,616 | | |
| | | | | | | | | | | |
Jedson Engineering, Inc. (0.4%)*(7) (20) | | Engineering & Construction Management | | First Lien Loan (12.0% Cash, 3.0% PIK, Acquired 12/20, Due 06/22) | | 3,000,000 | | | 3,000,000 | | | 3,000,000 | | |
| | | | 3,000,000 | | | 3,000,000 | | | 3,000,000 | | |
| | | | | | | | | | | |
JetBlue 2019-1 Class B Pass Through Trust (0.7%)* | | Airlines | | Structured Secured Note - Class B (8.0% Cash, Acquired 08/20, Due 11/27) | | 4,721,693 | | | 4,721,693 | | | 5,382,580 | | |
| | | | 4,721,693 | | | 4,721,693 | | | 5,382,580 | | |
| | | | | | | | | | | |
Kano Laboratories LLC (1.2%)*(7) (8) (11) | | Chemicals, Plastics & Rubber | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 11/20, Due 09/26) | | 8,845,864 | | | 8,592,780 | | | 8,845,864 | | |
| | Partnership Equity (203.2 units, Acquired 11/20) | | | | 203,198 | | | 200,281 | | |
| | | | 8,845,864 | | | 8,795,978 | | | 9,046,145 | | |
| | | | | | | | | | | |
Kene Acquisition, Inc. (En Engineering) (1.0%)*(7) (8) (11) | | Oil & Gas Equipment & Services | | First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 08/19, Due 08/26) | | 7,280,199 | | | 7,165,384 | | | 7,214,531 | | |
| | | | 7,280,199 | | | 7,165,384 | | | 7,214,531 | | |
| | | | | | | | | | | |
Kona Buyer, LLC (3.4%)*(7) (8) (11) | | High Tech Industries | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.3% Cash, Acquired 12/20, Due 12/27) | | 25,000,000 | | | 24,401,937 | | | 24,551,000 | | |
| | | | 25,000,000 | | | 24,401,937 | | | 24,551,000 | | |
| | | | | | | | | | | |
LAC Intermediate, LLC (f/k/a Lighthouse Autism Center) (4.7%)*(7) (8) (11) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 10/18, Due 10/24) | | 34,387,034 | | | 33,717,144 | | | 33,613,326 | | |
| | Class A LLC Units (154,320 units, Acquired 10/18) | | | | 154,320 | | | 323,300 | | |
| | | | 34,387,034 | | | 33,871,464 | | | 33,936,626 | | |
| | | | | | | | | | | |
LAF International (1.2%)*(3) (7) (8) (15) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 03/21, Due 03/28) | | 8,567,933 | | | 8,646,286 | | | 8,423,077 | | |
| | | | 8,567,933 | | | 8,646,286 | | | 8,423,077 | | |
| | | | | | | | | | | |
Learfield Communications, LLC (1.0%)* | | Broadcasting | | First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 08/20, Due 12/23)(8) (9) | | 136,446 | | | 96,195 | | | 125,315 | | |
| | First Lien Senior Secured Term Loan (LIBOR + 3.0%, 3.0% Cash, 10.2% PIK, Acquired 08/20, Due 12/23)(11) | | 7,365,032 | | | 7,305,433 | | | 7,352,732 | | |
| | | | 7,501,478 | | | 7,401,628 | | | 7,478,047 | | |
| | | | | | | | | | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
TRIANGLE CAPITAL CORPORATION Unaudited Consolidated Schedule of Investments — (Continued) September 30, 2017 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
Tosca Services, LLC (4%)* | | Perishable Food Supply Chain Management | | Senior Note (LIBOR + 9.5%, 10.7% Cash, Due 12/20)(8) | | $ | 28,258,474 |
| | $ | 27,997,197 |
| | $ | 27,997,197 |
|
| | | | 28,258,474 |
| | 27,997,197 |
| | 27,997,197 |
|
| | | | | | | | | | |
Trademark Global LLC (3%)* | | Supplier to Mass Market Internet Retail | | Subordinated Note (10% Cash, 1.3% PIK, Due 04/23) | | 14,800,000 |
| | 14,603,600 |
| | 14,603,600 |
|
| | Class A Units (1,500,000 units) | | | | 1,500,000 |
| | 1,500,000 |
|
| | Class B Units (1,500,000 units) | | | | — |
| | 363,000 |
|
| | | | 14,800,000 |
| | 16,103,600 |
| | 16,466,600 |
|
| | | | | | | | | | |
Travelpro Products, Inc. ("Travelpro") and TP - Holiday Group Limited ("TP") (3%)* | | Luggage and Travel Bag Supplier | | Second Lien Term Note - Travelpro (11% Cash, 2% PIK, Due 11/22) | | 10,280,411 |
| | 10,094,230 |
| | 10,094,230 |
|
| | Second Lien Term Note - TP (11% Cash, 2% PIK, Due 11/22)(4) | | 9,105,711 |
| | 8,938,148 |
| | 9,376,544 |
|
| | Common Units - Travelpro (2,000,000 units) | | | | 2,000,000 |
| | 2,266,000 |
|
| | | | 19,386,122 |
| | 21,032,378 |
| | 21,736,774 |
|
| | | | | | | | | | |
United Biologics, LLC (2%)* | | Allergy Immunotherapy | | Senior Note (12% Cash, 2% PIK, Due 04/18) | | 12,955,563 |
| | 12,955,562 |
| | 11,605,000 |
|
| Class A-1 Common Units (18,818 units) | | | | 137,324 |
| | — |
|
| Class A Common Units (177,935 units) | | | | 1,999,989 |
| | — |
|
| Class A-2 Common Kicker Units (444,003 units) | | | | — |
| | — |
|
| Class A-1 Common Kicker Units (14,114 units) | | | | — |
| | — |
|
| Class A, Class A-1, Class A-1 Kicker & Class B Unit Purchase Warrants | | | | 838,117 |
| | — |
|
| | | | 12,955,563 |
| | 15,930,992 |
| | 11,605,000 |
|
| | | | | | | | | | |
Vantage Mobility International, LLC (5%)* | | Wheelchair Accessible Vehicle Manufacturer | | Subordinated Notes (10.5% Cash, Due 09/21) | | 30,708,796 |
| | 30,189,737 |
| | 30,189,737 |
|
| | Class A Units (1,750,000 units) | | | | 1,750,000 |
| | 995,000 |
|
| | | | 30,708,796 |
| | 31,939,737 |
| | 31,184,737 |
|
| | | | | | | | | | |
Wheel Pros Holdings, Inc. (3%)* | | Wheel/Rim and Performance Tire Distributor | | Subordinated Note (LIBOR + 7.0%, 11% Cash, Due 06/20)(8) | | 16,435,000 |
| | 16,198,669 |
| | 16,198,669 |
|
| | Class A Units (2,000 units) | | | | 1,954,144 |
| | 2,087,000 |
|
| | | | 16,435,000 |
| | 18,152,813 |
| | 18,285,669 |
|
| | | | | | | | | | |
Women's Marketing, Inc. (0%)* | | Full-Service Media Organization | | Subordinated Note (11% Cash, 1.5% PIK, Due 06/21)(6) | | 18,537,823 |
| | 16,141,439 |
| | — |
|
| | Class A Common Units (16,300 units) | | | | 1,630,000 |
| | — |
|
| | | | 18,537,823 |
| | 17,771,439 |
| | — |
|
| | | | | | | | | | |
WSO Holdings, LP (0%)* | | Organic/Fair Trade Sugar, Syrup, Nectar and Honey Producer | | Common Points (3,121 points) | | | | 3,089,581 |
| | 2,396,000 |
|
| | | | | 3,089,581 |
| | 2,396,000 |
|
| | | | | | |
YummyEarth Inc. (4%)* | | Organic Candy Manufacturer | | Senior Notes (LIBOR + 8.5%, 9.8% Cash, Due 08/20)(8) | | 30,250,000 |
| | 29,943,370 |
| | 24,657,000 |
|
| | Limited Partnership Interest | | | | 3,496,500 |
| | — |
|
| | | | 30,250,000 |
| | 33,439,870 |
| | 24,657,000 |
|
| | | | | | |
Subtotal Non–Control / Non–Affiliate Investments | | 942,022,874 |
| | 998,836,068 |
| | 908,181,226 |
|
| | | | | | | | | | |
Affiliate Investments: | | | | | | | | | | |
All Metals Holding, LLC (1%)* | | Steel Processor and Distributor | | Subordinated Note (12% Cash, 1% PIK, Due 12/21) | | 6,482,284 |
| | 6,319,348 |
| | 6,319,348 |
|
| | Units (318,977 units) | | | | 793,331 |
| | 790,000 |
|
| | | | 6,482,284 |
| | 7,112,679 |
| | 7,109,348 |
|
| | | | | | | | | | |
Consolidated Lumber Holdings, LLC (0%)* | | Lumber Yard Operator | | Class A Units (15,000 units) | | | | 1,500,000 |
| | 2,972,000 |
|
| | | |
|
| | 1,500,000 |
| | 2,972,000 |
|
| | | | | | | | | | |
DPII Holdings, LLC (0%)* | | Satellite Communication Business | | Tranche III Subordinated Note (19% PIK, Due 01/18)(6) | | 2,778,885 |
| | 2,148,462 |
| | 2,148,000 |
|
| | Tranche I & II Subordinated Notes (12% Cash, 4% PIK, Due 01/18)(6) | | 3,859,842 |
| | 2,881,603 |
| | 502,000 |
|
| | Class A Membership Interest (17,308 units) | | | | 1,107,692 |
| | — |
|
| | | | 6,638,727 |
| | 6,137,757 |
| | 2,650,000 |
|
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
Legal Solutions Holdings (1.4%)*(7) (20) | | Business Services | | Senior Subordinated Loan (6.0% Cash, 10.0% PIK, Acquired 12/20, Due 03/22) | | $ | 10,663,569 | | | $ | 9,862,913 | | | $ | 9,863,801 | | |
| | | | 10,663,569 | | | 9,862,913 | | | 9,863,801 | | |
| | | | | | | | | | | |
LivTech Purchaser, Inc. (0.1%)*(7) (8) (11) | | Business Services | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 01/21, Due 12/25) | | 552,248 | | | 540,237 | | | 539,748 | | |
| | | | 552,248 | | | 540,237 | | | 539,748 | | |
| | | | | | | | | | | |
Media Recovery, Inc. (SpotSee) (1.0%)*(7) (8) | | Containers, Packaging & Glass | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 11/25) (11) | | 2,955,281 | | | 2,906,802 | | | 2,903,564 | | |
| | First Lien Senior Secured Term Loan (GBP LIBOR + 6.0%, 7.0% Cash, Acquired 12/20, Due 12/26) (14) | | 4,584,486 | | | 4,347,360 | | | 4,504,258 | | |
| | | | 7,539,767 | | | 7,254,162 | | | 7,407,822 | | |
| | | | | | | | | | | |
Modern Star Holdings Bidco Pty Limited. (0.6%)*(3) (7) (8) (18) | | Non-durable Consumer Goods | | First Lien Senior Secured Term Loan (BBSY + 6.25%, 6.8% Cash, Acquired 12/20, Due 12/26) | | 4,672,838 | | | 4,440,698 | | | 4,488,221 | | |
| | | | 4,672,838 | | | 4,440,698 | | | 4,488,221 | | |
| | | | | | | | | | | |
MSG National Properties (0.3%)*(3) (7) (8) (11) | | Hotel, Gaming, & Leisure | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.0% Cash, Acquired 11/20, Due 11/25) | | 2,461,759 | | | 2,392,506 | | | 2,523,303 | | |
| | | | 2,461,759 | | | 2,392,506 | | | 2,523,303 | | |
| | | | | | | | | | | |
Murphy Midco Limited (0.6%)*(3) (7) (8) (13) | | Media, Diversified & Production | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.5% Cash, Acquired 11/20, Due 11/27) | | 4,683,649 | | | 4,262,242 | | | 4,472,750 | | |
| | | | 4,683,649 | | | 4,262,242 | | | 4,472,750 | | |
| | | | | | | | | | | |
Music Reports, Inc. (0.8%)*(7) (8) (9) | | Media & Entertainment | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 08/20, Due 08/26) | | 5,578,990 | | | 5,450,971 | | | 5,523,200 | | |
| | | | 5,578,990 | | | 5,450,971 | | | 5,523,200 | | |
| | | | | | | | | | | |
Navia Benefit Solutions, Inc. (0.8%)* (7) (8) (11) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 02/21, Due 02/27) | | 6,000,000 | | | 5,829,009 | | | 5,825,000 | | |
| | | | 6,000,000 | | | 5,829,009 | | | 5,825,000 | | |
| | | | | | | | | | | |
NGS US Finco, LLC (f/k/a Dresser Natural Gas Solutions) (1.6%)*(7) (8) (9) | | Energy Equipment & Services | | First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 10/18, Due 10/25) | | 11,825,516 | | | 11,785,078 | | | 11,683,609 | | |
| | | | 11,825,516 | | | 11,785,078 | | | 11,683,609 | | |
| | | | | | | | | | | |
Odeon Cinemas Group Limited (0.5%)*(3) (7) | | Hotel, Gaming, & Leisure | | First Lien Senior Secured Term Loan (10.75% Cash, Acquired 02/21, Due 08/23) | | 1,376,251 | | | 1,332,439 | | | 1,390,014 | | |
| | First Lien Senior Secured Term Loan (10.75% Cash, Acquired 02/21, Due 08/23) | | 2,478,707 | | | 2,472,983 | | | 2,503,494 | | |
| | | | 3,854,958 | | | 3,805,422 | | | 3,893,508 | | |
| | | | | | | | | | | |
Omni Intermediate Holdings, LLC (1.2%)*(7) (8) (9) | | Transportation | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) | | 9,000,000 | | | 8,739,450 | | | 8,752,500 | | |
| | | | 9,000,000 | | | 8,739,450 | | | 8,752,500 | | |
| | | | | | | | | | | |
Options Technology Ltd. (1.3%)*(3) (7) (8) (11) | | Computer Services | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/19, Due 12/25) | | 9,771,813 | | | 9,569,224 | | | 9,628,377 | | |
| | | | 9,771,813 | | | 9,569,224 | | | 9,628,377 | | |
| | | | | | | | | | | |
Pacific Health Supplies Bidco Pty Limited (1.2%)*(3) (7) (8) (18) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (BBSY + 6.0%, 6.5% Cash, Acquired 12/20, Due 12/25) | | 9,196,755 | | | 8,642,055 | | | 8,914,484 | | |
| | | | 9,196,755 | | | 8,642,055 | | | 8,914,484 | | |
| | | | | | | | | | | |
Pare SAS (SAS Maurice MARLE) (0.7%)*(3) (7) (8) (16) | | Health Care Equipment | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, 1.5% PIK, Acquired 12/19, Due 12/26) | | 4,848,650 | | | 4,529,605 | | | 4,800,164 | | |
| | | | 4,848,650 | | | 4,529,605 | | | 4,800,164 | | |
| | | | | | | | | | | |
Patriot New Midco 1 Limited (Forensic Risk Alliance) (1.1%)*(3) (7) (8) | | Diversified Financial Services | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 02/20, Due 02/27)(11) | | 4,489,471 | | | 4,377,523 | | | 4,426,619 | | |
| | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 02/20, Due 02/27) (15) | | 3,964,194 | | | 3,584,353 | | | 3,908,695 | | |
| | | | 8,453,665 | | | 7,961,876 | | | 8,335,314 | | |
| | | | | | | | | | | |
PerTronix, LLC (1.0%)*(7) (8) (12) | | Automotive | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/20, Due 10/26) | | 7,287,692 | | | 7,184,750 | | | 7,287,692 | | |
| | | | 7,287,692 | | | 7,184,750 | | | 7,287,692 | | |
| | | | | | | | | | | |
Premier Technical Services Group (Project Graphite) (0.4%)*(3) (7) (8) (13) | | Construction & Engineering | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 7.3% Cash, Acquired 08/19, Due 06/26) | | 3,137,901 | | | 2,686,018 | | | 3,085,003 | | |
| | | | 3,137,901 | | | 2,686,018 | | | 3,085,003 | | |
| | | | | | | | | | | |
Premium Franchise Brands, LLC (3.0%)*(7) (8) (11) | | Research & Consulting Services | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 12/26) | | 21,945,000 | | | 21,522,183 | | | 21,545,820 | | |
| | | | 21,945,000 | | | 21,522,183 | | | 21,545,820 | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
TRIANGLE CAPITAL CORPORATION Unaudited Consolidated Schedule of Investments — (Continued) September 30, 2017 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
FCL Holding SPV, LLC (0%)* | | Commercial Printing Services | | Class A Interest (24,873 units) | | | | $ | 292,000 |
| | $ | 602,000 |
|
| | Class B Interest (48,427 units) | | | | — |
| | — |
|
| | Class C Interest (3,746 units) | | | | — |
| | — |
|
| | | | | | 292,000 |
| | 602,000 |
|
| | | | | | | | | | |
Mac Land Holdings, Inc. (0%)* | | Environmental and Facilities Services | | Common Stock (139 shares) | | | | 369,000 |
| | 369,000 |
|
| | | | | | 369,000 |
| | 369,000 |
|
| | | | | | | | | | |
NB Products, Inc. (8%)* | | Distributor of Work Apparel and Accessories | | Subordinated Note (12% Cash, 2% PIK, Due 02/20) | | $ | 23,453,631 |
| | 23,166,924 |
| | 23,166,924 |
|
| Jr. Subordinated Note (10% PIK, Due 02/20) | | 5,067,665 |
| | 4,980,083 |
| | 4,980,083 |
|
| Jr. Subordinated Bridge Note (20% PIK, Due 05/21) | | 2,318,244 |
| | 2,294,294 |
| | 2,294,294 |
|
| Series A Redeemable Senior Preferred Stock (7,839 shares) | | | | 7,621,648 |
| | 10,134,000 |
|
| Common Stock (1,668,691 shares) | | | | 333,738 |
| | 11,133,000 |
|
| | | 30,839,540 |
| | 38,396,687 |
| | 51,708,301 |
|
| | | | | | | | | | |
Passport Food Group, LLC (3%)* | | Manufacturer of Ethnic Food Products | | Senior Notes (LIBOR + 9.0%, 10.3% Cash, Due 03/22)(8) | | 20,000,000 |
| | 19,631,708 |
| | 17,684,000 |
|
| | Common Stock (20,000 shares) | | | | 2,000,000 |
| | 783,000 |
|
| | | | 20,000,000 |
| | 21,631,708 |
| | 18,467,000 |
|
| | | | | | | | | | |
PCX Aerostructures, LLC (4%)* | | Aerospace Components Manufacturer | | Subordinated Note (10.5% Cash, Due 10/19) | | 31,647,359 |
| | 31,219,054 |
| | 24,799,000 |
|
| Series A Preferred Stock (6,066 shares) | | | | 6,065,621 |
| | — |
|
Series B Preferred Stock (411 shares) | | | | 410,514 |
| | — |
|
Class A Common Stock (121,922 shares) | | | | 30,480 |
| | — |
|
| | | 31,647,359 |
| | 37,725,669 |
| | 24,799,000 |
|
| | | | | | | | | | |
Team Waste, LLC (2%)* | | Environmental and Facilities Services | | Subordinated Note (10% Cash, 2% PIK, Due 8/23) | | 4,006,667 |
| | 3,916,667 |
| | 3,916,667 |
|
| | Preferred Units (500,000 units) | | | | 10,000,000 |
| | 10,000,000 |
|
| | | | 4,006,667 |
| | 13,916,667 |
| | 13,916,667 |
|
| | | | | | | | | | |
Technology Crops, LLC (1%)* | | Supply Chain Management Services | | Subordinated Notes (12% Cash, 5% PIK, Due 11/17) | | 12,294,102 |
| | 12,294,102 |
| | 9,451,000 |
|
Common Units (50 units) | | | | 500,000 |
| | — |
|
| | | 12,294,102 |
| | 12,794,102 |
| | 9,451,000 |
|
| | | | | | | | | | |
TGaS Advisors, LLC (2%)* | | Advisory Solutions to Pharmaceutical Companies | | Senior Note (10% Cash, 1% PIK, Due 11/19) | | 9,560,682 |
| | 9,453,137 |
| | 9,453,137 |
|
| Preferred Units (1,685,357 units) | | | | 1,556,069 |
| | 1,336,000 |
|
| | | 9,560,682 |
| | 11,009,206 |
| | 10,789,137 |
|
| | | | | | | | | | |
Tulcan Fund IV, L.P. (0%)* | | Custom Forging and Fastener Supplies | | Common Units (1,000,000 units) | | | | 1,000,000 |
| | — |
|
| | | | | | 1,000,000 |
| | — |
|
| | | | | | | | | | |
United Retirement Plan Consultants, Inc. (0%)* | | Retirement Plan Administrator | | Series A Preferred Shares (9,400 shares) | | | | 205,748 |
| | 286,000 |
|
| | Common Shares (100,000 shares) | | | | 1,000,000 |
| | 348,000 |
|
| | | | | | 1,205,748 |
| | 634,000 |
|
| | | | | | | | | | |
Wythe Will Tzetzo, LLC (0%)* | �� | Confectionery Goods Distributor | | Series A Preferred Units (99,829 units) | | | | — |
| | 3,140,000 |
|
| | | | | | — |
| | 3,140,000 |
|
| | | | | | | | | | |
Subtotal Affiliate Investments | | | | 121,469,361 |
| | 153,091,223 |
| | 146,607,453 |
|
| | | | | | | | | | |
Control Investments: | | | | | | | | | | |
CRS Reprocessing, LLC (1%)* | | Fluid Reprocessing Services | | Debtor in Possession Loan (8% PIK, Due (11/17)(6) | | 700,000 |
| | 700,000 |
| | 700,000 |
|
| | Senior Notes (LIBOR + 3.5%, Due 06/17)(6)(8) | | 2,942,769 |
| | 2,942,769 |
| | 502,000 |
|
| | Split Collateral Term Loans (8% Cash, Due 06/17)(6) | | 31,243,725 |
| | 17,542,464 |
| | 6,557,000 |
|
| Subordinated Note (5% Cash, Due 09/17)(6) | | 7,136,824 |
| | 125,000 |
| | — |
|
Series F Preferred Units (705,321 units) | | | | 9,134,807 |
| | — |
|
| Common Units (15,174 units) | | | | — |
| | — |
|
| | | 42,023,318 |
| | 30,445,040 |
| | 7,759,000 |
|
| | | | | | | | | | |
DialogDirect, Inc. (2%)* | | Business Process Outsourcing Provider | | Subordinated Notes (8% PIK, Due 10/19)(6) | | 21,005,082 |
| | 20,020,226 |
| | 10,197,000 |
|
| | Class A Common Units (1,176,500 units) | |
|
| | — |
| | — |
|
| | | | 21,005,082 |
| | 20,020,226 |
| | 10,197,000 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
| | | | | | | | | | | |
Process Equipment, Inc. (ProcessBarron) (0.8%)*(7) (8) (11) | | Industrial Air & Material Handling Equipment | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 03/19, Due 03/25) | | $ | 6,173,594 | | | $ | 6,096,724 | | | $ | 5,543,887 | | |
| | | | 6,173,594 | | | 6,096,724 | | | 5,543,887 | | |
| | | | | | | | | | | |
Professional Datasolutions, Inc. (PDI) (2.3%)*(7) (8) (19) | | Application Software | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 03/19, Due 10/24) | | 16,881,613 | | | 16,863,369 | | | 16,785,556 | | |
| | | | 16,881,613 | | | 16,863,369 | | | 16,785,556 | | |
| | | | | | | | | | | |
Protego Bidco B.V. (1.2%)*(3) (7) (8) (15) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 03/21, Due 03/28) | | 9,208,487 | | | 8,955,994 | | | 8,771,084 | | |
| | | | 9,208,487 | | | 8,955,994 | | | 8,771,084 | | |
| | | | | | | | | | | |
PSC UK Pty Ltd. (0.4%)*(3) (7) (8) (13) | | Insurance Services | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.0%, 6.5% Cash, Acquired 11/19, Due 10/24) | | 2,709,861 | | | 2,444,000 | | | 2,648,176 | | |
| | | | 2,709,861 | | | 2,444,000 | | | 2,648,176 | | |
| | | | | | | | | | | |
Questel Unite (2.8%)*(3) (7) (8) (15) | | Business Services | | First Lien Senior Secured Term Loan (EURIBOR + 6.25%, 6.8% Cash, Acquired 12/20, Due 12/27) | | 20,703,270 | | | 20,684,768 | | | 20,334,237 | | |
| | | | 20,703,270 | | | 20,684,768 | | | 20,334,237 | | |
| | | | | | | | | | | |
Radwell International, LLC (1.9%)*(7) (8) (11) | | Wholesale | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 12/26) | | 14,220,264 | | | 13,917,380 | | | 13,935,809 | | |
| | | | 14,220,264 | | | 13,917,380 | | | 13,935,809 | | |
| | | | | | | | | | | |
Recovery Point Systems, Inc. (1.6%)*(7) (8) (11) | | Technology | | First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 03/20, Due 07/26) | | 11,736,797 | | | 11,522,211 | | | 11,736,797 | | |
| | Partnership Equity (187,235 units, Acquired 03/21) | | | | 187,235 | | | 187,235 | | |
| | | | 11,736,797 | | | 11,709,446 | | | 11,924,032 | | |
| | | | | | | | | | | |
REP SEKO MERGER SUB LLC (1.1%)* (7) (8) (11) | | Air Freight & Logistics | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) | | 7,671,682 | | | 7,447,161 | | | 7,660,913 | | |
| | | | 7,671,682 | | | 7,447,161 | | | 7,660,913 | | |
| | | | | | | | | | | |
RPX Corporation (2.3%)*(7) (8) (11) | | Research & Consulting Services | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 10/20, Due 10/25) | | 16,712,500 | | | 16,358,646 | | | 16,612,225 | | |
| | | | 16,712,500 | | | 16,358,646 | | | 16,612,225 | | |
| | | | | | | | | | | |
Ruffalo Noel Levitz, LLC (1.3%)*(7) (8) (11) | | Media Services | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 01/19, Due 05/22) | | 9,592,266 | | | 9,539,242 | | | 9,555,336 | | |
| | | | 9,592,266 | | | 9,539,242 | | | 9,555,336 | | |
| | | | | | | | | | | |
Safety Products Holdings, LLC (2.1%)* (7) (8) (9) | | Non-durable Consumer Goods | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 12/20, Due 12/26) | | 15,574,673 | | | 15,099,325 | | | 15,127,000 | | |
| | Preferred Stock (372.1 shares, Acquired 12/20) | | | | 372,088 | | | 372,090 | | |
| | | | 15,574,673 | | | 15,471,413 | | | 15,499,090 | | |
| | | | | | | | | | | |
Scaled Agile, Inc. (0.7%)*(7) (8) (11) | | Research & Consulting Services | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24) | | 4,847,151 | | | 4,811,132 | | | 4,847,151 | | |
| | | | 4,847,151 | | | 4,811,132 | | | 4,847,151 | | |
| | | | | | | | | | | |
Serta Simmons Bedding LLC (1.5%)*(8) (9) | | Home Furnishings | | Super Priority First Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) | | 7,405,891 | | | 7,232,172 | | | 7,475,950 | | |
| | Super Priority Second Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) | | 3,634,684 | | | 3,378,205 | | | 3,463,163 | | |
| | | | 11,040,575 | | | 10,610,377 | | | 10,939,113 | | |
| | | | | | | | | | | |
Sigmatek Systems, LLC (1.3%)*(7) (8) (11) | | High Tech Industries | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/21, Due 01/27) | | 9,975,000 | | | 9,782,539 | | | 9,787,825 | | |
| | | | 9,975,000 | | | 9,782,539 | | | 9,787,825 | | |
| | | | | | | | | | | |
SISU ACQUISITIONCO., INC. (1.9%)*(7) (8) (11) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 12/20, Due 12/26) | | 14,097,503 | | | 13,826,164 | | | 13,841,069 | | |
| | | | 14,097,503 | | | 13,826,164 | | | 13,841,069 | | |
| | | | | | | | | | | |
SMA Holdings, Inc. (1.0%)*(7) (20) | | Consulting | | First Lien Loan (11.0% Cash, Acquired 12/20, Due 06/24) | | 7,000,000 | | | 6,720,000 | | | 6,720,000 | | |
| | Warrants (2.0 units, Acquired 12/20) | | | | 286,781 | | | 250,978 | | |
| | | | 7,000,000 | | | 7,006,781 | | | 6,970,978 | | |
| | | | | | | | | | | |
Smile Brands Group Inc. (2.0%)*(7) (8) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 5.17%, 5.4% Cash, Acquired 10/18, Due 10/24)(9) | | 5,861,902 | | | 5,825,907 | | | 5,768,111 | | |
| | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 10/24)(11) | | 9,287,715 | | | 9,024,221 | | | 9,033,598 | | |
| | | | 15,149,617 | | | 14,850,128 | | | 14,801,709 | | |
| | | | | | | | | | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
TRIANGLE CAPITAL CORPORATION Unaudited Consolidated Schedule of Investments — (Continued) September 30, 2017 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
| | | | | | | | | | |
Frank Entertainment Group, LLC (1%)* | | Movie Theatre and Family Entertainment Operator | | Senior Note (6% Cash, Due 06/19)(6) | | $ | 10,939,428 |
| | $ | 10,526,358 |
| | $ | 6,169,000 |
|
| | Second Lien Term Note (2.5% Cash, Due 09/19)(6) | | 2,078,396 |
| | 2,050,693 |
| | — |
|
| | Redeemable Preferred Units (2,800,000 units) | | | | 2,800,000 |
| | — |
|
| | Class B Redeemable Preferred Units (2,800,000 units) | | | | 2,800,000 |
| | — |
|
| | Class A Common Units (606,552 units) | | | | 1,000,000 |
| | — |
|
| | | | 13,017,824 |
| | 19,177,051 |
| | 6,169,000 |
|
| | | | | | | | | | |
Frontstreet Facility Solutions, Inc. (1%)* | | Retail, Restaurant and Commercial Facilities Maintenance | | Subordinated Note (13% Cash, Due 03/21) | | 8,462,629 |
| | 8,439,709 |
| | 4,250,000 |
|
| | Series A Convertible Preferred Stock (60,000 shares) | | | | 250,575 |
| | — |
|
| | Series B Convertible Preferred Stock (20,000 shares) | | | | 500,144 |
| | — |
|
| | Common Stock (27,890 shares) | | | | 279 |
| | |
| | | | 8,462,629 |
| | 9,190,707 |
| | 4,250,000 |
|
| | | | | | | | | | |
SRC Worldwide, Inc. (1%)* | | Specialty Chemical Manufacturer | | Common Stock (5,000 shares) | | | | 8,028,000 |
| | 8,028,000 |
|
| | | | | | 8,028,000 |
| | 8,028,000 |
|
| | | | | | | | | | |
| | | | | | | | | | |
Subtotal Control Investments | | | | 84,508,853 |
| | 86,861,024 |
| | 36,403,000 |
|
| | | | | | | | |
Total Investments, September 30, 2017 (173%)* | | | | $ | 1,148,001,088 |
| | $ | 1,238,788,315 |
| | $ | 1,091,191,679 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
SN BUYER, LLC (3.4%)*(7) (8) (11) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 11/26) | | $ | 25,000,000 | | | $ | 24,519,748 | | | $ | 24,650,000 | | |
| | | | 25,000,000 | | | 24,519,748 | | | 24,650,000 | | |
| | | | | | | | | | | |
Springbrook Software (SBRK Intermediate, Inc.) (1.3%)*(7) (8) (11) | | Enterprise Software & Services | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26) | | 9,303,664 | | | 9,114,611 | | | 9,265,286 | | |
| | | | 9,303,664 | | | 9,114,611 | | | 9,265,286 | | |
| | | | | | | | | | | |
SPT Acquico Limited (0.4%)*(3) (7) (8) (11) | | High Tech Industries | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 01/21, Due 12/27) | | 2,658,312 | | | 2,593,530 | | | 2,591,854 | | |
| | | | 2,658,312 | | | 2,593,530 | | | 2,591,854 | | |
| | | | | | | | | | | |
SSCP Pegasus Midco Limited (1.6%)*(3) (7) (8) (14) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 12/20, Due 11/27) | | 12,072,963 | | | 11,049,371 | | | 11,399,247 | | |
| | | | 12,072,963 | | | 11,049,371 | | | 11,399,247 | | |
| | | | | | | | | | | |
Syniverse Holdings, Inc. (2.4%)*(8) (11) | | Technology Distributors | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 08/18, Due 03/23) | | 17,435,517 | | | 16,149,215 | | | 17,175,903 | | |
| | | | 17,435,517 | | | 16,149,215 | | | 17,175,903 | | |
| | | | | | | | | | | |
The Hilb Group, LLC (2.0%)*(7) (8) (11) | | Insurance Brokerage | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26) | | 11,636,693 | | | 11,391,659 | | | 11,229,409 | | |
| | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/19, Due 12/26) | | 3,646,217 | | | 3,435,906 | | | 3,448,894 | | |
| | | | 15,282,910 | | | 14,827,565 | | | 14,678,303 | | |
| | | | | | | | | | | |
Total Safety U.S. Inc. (0.9%)*(8) (11) | | Diversified Support Services | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 08/25) | | 6,766,049 | | | 6,534,648 | | | 6,759,283 | | |
| | | | 6,766,049 | | | 6,534,648 | | | 6,759,283 | | |
| | | | | | | | | | | |
Transit Technologies LLC (0.7%)*(7) (8) (11) | | Software | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.0% Cash, Acquired 02/20, Due 02/25) | | 6,035,305 | | | 5,869,127 | | | 5,443,845 | | |
| | | | 6,035,305 | | | 5,869,127 | | | 5,443,845 | | |
| | | | | | | | | | | |
Transportation Insight, LLC (3.2%)*(7) (8) (9) | | Air Freight & Logistics | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.6% Cash, Acquired 08/18, Due 12/24) | | 24,444,375 | | | 24,293,447 | | | 23,637,711 | | |
| | | | 24,444,375 | | | 24,293,447 | | | 23,637,711 | | |
| | | | | | | | | | | |
Trident Maritime Systems, Inc. (3.4%)*(7) (8) (9) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 02/21, Due 02/27) | | 25,000,000 | | | 24,570,501 | | | 24,562,500 | | |
| | | | 25,000,000 | | | 24,570,501 | | | 24,562,500 | | |
| | | | | | | | | | | |
Truck-Lite Co., LLC (3.1%)*(7) (8) (11) | | Automotive Parts & Equipment | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/19, Due 12/26) | | 22,296,635 | | | 21,918,311 | | | 22,252,041 | | |
| | | | 22,296,635 | | | 21,918,311 | | | 22,252,041 | | |
| | | | | | | | | | | |
Trystar, LLC (2.3%)*(7) (8) (11) | | Power Distribution Solutions | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/18, Due 09/23) | | 16,185,659 | | | 16,004,667 | | | 16,120,916 | | |
| | Class A LLC Units (384.5 units, Acquired 09/18) | | | | 395,995 | | | 369,443 | | |
| | | | 16,185,659 | | | 16,400,662 | | | 16,490,359 | | |
| | | | | | | | | | | |
Tuf-Tug, Inc. (0.0%)*(7) (20) | | Safety Equipment Manufacturer | | Common Stock (24.6 shares, Acquired 12/20) | | | | 385,047 | | | — | | |
| | | | | | 385,047 | | | — | | |
| | | | | | | | | | | |
Turf Products, LLC (1.2%)*(7) (20) | | Landscaping & Irrigation Equipment Distributor | | Senior Subordinated Debt (10.0% Cash, Acquired 12/20, Due 10/23) | | 8,697,056 | | | 8,383,962 | | | 8,436,144 | | |
| | | | 8,697,056 | | | 8,383,962 | | | 8,436,144 | | |
| | | | | | | | | | | |
U.S. Gas & Electric, Inc. (0.2%)*(7) (20) | | Energy Services | | Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25) | | 2,285,250 | | | 1,785,250 | | | 1,785,250 | | |
| | Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25)(21) | | 2,485,469 | | | — | | | — | | |
| | | | 4,770,719 | | | 1,785,250 | | | 1,785,250 | | |
| | | | | | | | | | | |
U.S. Silica Company (0.2%)*(3) (8) (9) | | Metal & Glass Containers | | First Lien Senior Secured Term Loan (LIBOR + 4.0%, 5.0% Cash, Acquired 08/18, Due 05/25) | | 1,483,670 | | | 1,486,303 | | | 1,429,887 | | |
| | | | 1,483,670 | | | 1,486,303 | | | 1,429,887 | | |
| | | | | | | | | | | |
UKFast Leaders Limited (1.7%)*(3) (7) (8) (13) | | Technology | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 09/20, Due 9/27) | | 12,541,181 | | | 11,365,814 | | | 12,453,392 | | |
| | | | 12,541,181 | | | 11,365,814 | | | 12,453,392 | | |
| | | | | | | | | | | |
USLS Acquisition, Inc. (f/k/a US Legal Support, Inc.) (2.1%)*(7) (8) (11) | | Legal Services | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/18, Due 11/24) | | 16,305,092 | | | 16,096,032 | | | 15,408,312 | | |
| | | | 16,305,092 | | | 16,096,032 | | | 15,408,312 | | |
| | | | | | | | | | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
Utac Ceram (1.4%)*(3) (7) (8) | | Business Services | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 09/20, Due 09/27)(15) | | $ | 1,762,949 | | | $ | 1,701,654 | | | $ | 1,714,468 | | |
| | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 5.8% Cash, Acquired 02/21, Due 09/27)(10) | | 8,491,000 | | | 8,288,343 | | | 8,257,498 | | |
| | | | 10,253,949 | | | 9,989,997 | | | 9,971,966 | | |
| | | | | | | | | | | |
Validity, Inc. (0.7%)*(7) (8) (9) | | IT Consulting & Other Services | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.9% Cash, Acquired 07/19, Due 05/25) | | 5,013,118 | | | 4,891,028 | | | 4,767,474 | | |
| | | | 5,013,118 | | | 4,891,028 | | | 4,767,474 | | |
| | | | | | | | | | | |
W2O Holdings, Inc. (0.0%)* (7) (8) | | Healthcare Technology | | Undrawn Delayed Draw Term Loan (LIBOR + 5.0%, 5.0% Cash, Acquired 10/20, Due 06/25) | | — | | | (111,213) | | | — | | |
| | | | — | | | (111,213) | | | — | | |
| | | | | | | | | | | |
Winebow Group, LLC, (The) (2.3%)*(8) (9) | | Consumer Goods | | First Lien Senior Secured Term Loan (LIBOR + 3.75%, 4.8% Cash, Acquired 11/19, Due 07/21) | | 10,599,445 | | | 10,355,135 | | | 10,472,252 | | |
| | Second Lien Senior Secured Term Loan (LIBOR + 7.5%, 8.5% Cash, Acquired 10/19, Due 01/22) | | 7,141,980 | | | 6,125,843 | | | 6,427,782 | | |
| | | | 17,741,425 | | | 16,480,978 | | | 16,900,034 | | |
| | | | | | | | | | | |
World 50, Inc. (1.7%)*(7) (8) (9) | | Professional Services | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/20, Due 01/26) | | 3,304,887 | | | 3,214,069 | | | 3,304,887 | | |
| | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 01/26) | | 9,077,684 | | | 8,890,933 | | | 8,896,130 | | |
| | | | 12,382,571 | | | 12,105,002 | | | 12,201,017 | | |
| | | | | | | | | | | |
Subtotal Non–Control / Non–Affiliate Investments (192.6%) | | 1,430,510,004 | | | 1,389,212,763 | | | 1,401,742,025 | | |
| | | | | | | | | | | |
Affiliate Investments: (4) | | | | | | | | | | | |
Jocassee Partners LLC (4.0%)*(3) | | Investment Funds & Vehicles | | 9.1% Member Interest, Acquired 06/19 | | | | 25,158,270 | | | 28,950,050 | | |
| | | | | | 25,158,270 | | | 28,950,050 | | |
| | | | | | | | | | | |
JSC Tekers Holdings (0.7%)*(3) (7) (20) | | Real Estate Management | | Preferred Stock (9,159,085 shares, Acquired 12/20) | | | | 4,753,000 | | | 4,945,906 | | |
| | Common Stock (3,201 shares, Acquired 12/20) | | | | — | | | — | | |
| | | | | | 4,753,000 | | | 4,945,906 | | |
| | | | | | | | | | | |
Security Holdings B.V. (4.8%)*(3) (7) (20) | | Electrical Engineering | | Bridge Loan (5.0% PIK, Acquired 12/20, Due 05/22) | | 5,451,205 | | | 5,451,207 | | | 5,451,205 | | |
| | Senior Subordinated Loan (3.1% PIK, Acquired 12/20, Due 05/22) | | 8,815,745 | | | 8,815,746 | | | 8,815,745 | | |
| | Common Stock (1,099.5 shares, Acquired 12/20) | | | | 21,264,000 | | | 20,955,588 | | |
| | | | 14,266,950 | | | 35,530,953 | | | 35,222,538 | | |
| | | | | | | | | | | |
Thompson Rivers LLC (4.3%)*(3) | | Investment Funds & Vehicles | | 24.7% Member Interest, Acquired 06/20 | | | | 30,000,000 | | | 31,311,180 | | |
| | | | | | 30,000,000 | | | 31,311,180 | | |
| | | | | | | | | | | |
Subtotal Affiliate Investments (13.8%) | | 14,266,950 | | | 95,442,223 | | | 100,429,674 | | |
| | | | | | | | | | | |
Control Investments:(5) | | | | | | | | | | | |
MVC Automotive Group Gmbh (1.9%)*(3) (7) (20) | | Other Diversified Financial Services | | Bridge Loan (6.0% Cash, Acquired 12/20, Due 12/21) | | 7,149,166 | | | 7,149,166 | | | 7,149,166 | | |
| | Common Equity Interest (18,000 shares, Acquired 12/20) | | | | 9,553,000 | | | 6,922,044 | | |
| | | | 7,149,166 | | | 16,702,166 | | | 14,071,210 | | |
| | | | | | | | | | | |
MVC Private Equity Fund LP (1.1%)*(3) (20) | | Investment Funds & Vehicles | | General Partnership Interest | | | | 224,978 | | | 194,174 | | |
| | Limited Partnership Interest | | | | 8,899,284 | | | 7,646,750 | | |
| | | | | | 9,124,262 | | | 7,840,924 | | |
| | | | | | | | | | | |
Waccamaw River LLC (0.6%)*(3) | | Investment Funds & Vehicles | | 50% Member Interest, Acquired 02/21 | | | | 4,500,000 | | | 4,474,228 | | |
| | | | | | 4,500,000 | | | 4,474,228 | | |
| | | | | | | | | | | |
Subtotal Control Investments (3.6%) | | 7,149,166 | | | 30,326,428 | | | 26,386,362 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value | |
Short-Term Investments: | | | | | | | | | | | |
| | | | | | | | | | | |
BlackRock, Inc. (4.8%)* | | Money Market Fund | | BlackRock Liquidity Temporary Fund (0.05% yield) | | | | $ | 35,001,688 | | | $ | 34,998,190 | | |
| | | | | | 35,001,688 | | | 34,998,190 | | |
| | | | | | | | | | | |
JPMorgan Chase & Co. (5.3%)* | | Money Market Fund | | JPMorgan Prime Money Market Fund (0.09% yield) | | | | 38,567,486 | | | 38,567,486 | | |
| | | | | | 38,567,486 | | | 38,567,486 | | |
| | | | | | | | | | | |
Subtotal Short-Term Investments (10.1%) | | | | 73,569,174 | | | 73,565,676 | | |
| | | | | | | | | |
Total Investments, March 31, 2021 (220.1%)* | | | | $ | 1,451,926,120 | | | $ | 1,588,550,588 | | | $ | 1,602,123,737 | | |
| | | | | | | | | | | |
Derivative Instruments
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Credit Support Agreement(a)(b)(d) | | | | | | | | | | | | | |
Description | | | Counter Party | | | | Settlement Date(c) | | Notional Amount | | Value | | Unrealized Appreciation (Depreciation) |
Credit Support Agreement | | | Barings LLC | | | | 01/01/31 | | $ | 23,000,000 | | | $ | 12,000,000 | | | $ | (1,600,000) | |
| | | | | | | | | | | | | |
Total Credit Support Agreement, March 31, 2021 | | | | | | | | | | | | | $ | (1,600,000) | |
(a) The Credit Support Agreement covers all of the investments acquired by the Company from MVC Capital, Inc. ("MVC") in connection with the MVC Acquisition (as defined in “Note 1 – Organization, Business and Basis of Presentation”) and any investments received by the Company in connection with the restructuring, amendment, extension or other modification (including the issuance of new securities) of any of the investments acquired by the Company from MVC in connection with the MVC Acquisition (collectively, the “Reference Portfolio”). Each investment that is included in the Reference Portfolio is denoted in the above Schedule of Investments with footnote (20).
(b) The Company and Barings LLC entered into a Credit Support Agreement pursuant to which Barings LLC agreed to provide credit support to the Company in the amount of up to $23.0 million.
(c) Settlement Date means the earlier of (1) January 1, 2031 and (2) the date on which the entire Reference Portfolio has been realized or written off.
(d) See “Note 2 – Agreements and Related Party Transactions” for additional information regarding the Credit Support Agreement.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign Currency Forward Contracts: | | | | | | | | | | |
Description | | Notional Amount to be Purchased | | Notional Amount to be Sold | | | | Settlement Date | | Unrealized Appreciation (Depreciation) |
Foreign currency forward contract (AUD) | | $785,238 | | A$1,013,380 | | | | 04/06/21 | | $ | 13,397 | |
Foreign currency forward contract (AUD) | | A$1,013,380 | | $773,688 | | | | 04/06/21 | | (1,847) | |
Foreign currency forward contract (AUD) | | $545,678 | | A$714,511 | | | | 07/07/21 | | 1,269 | |
| | | | | | | | | | |
Foreign currency forward contract (EUR) | | €5,800,000 | | $6,809,925 | | | | 04/01/21 | | 6,812 | |
Foreign currency forward contract (EUR) | | $16,496,839 | | €13,762,578 | | | | 04/06/21 | | 321,689 | |
Foreign currency forward contract (EUR) | | €13,762,578 | | $16,201,506 | | | | 04/06/21 | | (26,356) | |
Foreign currency forward contract (EUR) | | $24,184,783 | | €20,518,045 | | | | 07/07/21 | | 22,423 | |
| | | | | | | | | | |
Foreign currency forward contract (GBP) | | $33,170,791 | | £24,072,758 | | | | 04/06/21 | | (42,405) | |
Foreign currency forward contract (GBP) | | £24,072,758 | | $33,277,695 | | | | 04/06/21 | | (64,500) | |
Foreign currency forward contract (GBP) | | $3,289,859 | | £2,388,498 | | | | 07/07/21 | | (6,517) | |
| | | | | | | | | | |
Foreign currency forward contract (SEK) | | $164,325 | | 1,356,628kr | | | | 04/06/21 | | 8,682 | |
Foreign currency forward contract (SEK) | | 1,356,628kr | | $156,117 | | | | 04/06/21 | | (475) | |
Foreign currency forward contract (SEK) | | $176,315 | | 1,530,825kr | | | | 07/07/21 | | 533 | |
Total Foreign Currency Forward Contracts, March 31, 2021 | | | | | | | | $ | 232,705 | |
* Fair value as a percentpercentage of net assets.
(1)All debt investments are income producing, unless otherwise noted. Equity and any equity-linked investments are non-income producing, unless otherwise noted. The Company's Board of Directors (the "Board") determined in good faith that all investments were valued at fair value in accordance with the Company's valuation policies and procedures and the Investment Company Act of 1940, as amended, (the "1940 Act") based on, among other things, the input of the Company's external investment adviser, Barings LLC ("Barings"), the Company’s Audit Committee and independent valuation firms that have been engaged to assist in the valuation of the Company's middle-market investments. In addition, all debt investments are variable rate investments unless otherwise noted. Index-based floating interest rates are generally subject to a contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to LIBOR, EURIBOR, GBP LIBOR, BBSY, STIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically reset semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan.
(2)All of the Company’s portfolio company investments (including joint venture and short-term investments), which as of March 31, 2021 represented 220.1% of the Company’s net assets, are subject to legal restrictions on sales. The acquisition date represents the date of the Company's initial investment in the relevant portfolio company.
| |
(1) | All debt investments are income producing, unless otherwise noted. Equity and equity-linked investments are non-income producing, unless otherwise noted. The fair values of all investments were determined using significant unobservable inputs. |
| |
(2) | Disclosures of interest rates on notes include cash interest rates and payment-in-kind (“PIK”) interest rates. |
| |
(3) | All investments are restricted as to resale and were valued at fair value as determined in good faith by the Board of Directors. |
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(4) | Investment is not a qualifying investment as defined under Section 55(a) of the Investment Company Act of 1940, as amended. Non-qualifying assets represent 2.4% of total investments at fair value as of September 30, 2017. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of the Company's total assets, the Company will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a). |
| |
(5) | PIK non-accrual investment |
| |
(6) | Non-accrual investment |
| |
(7) | All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's senior secured credit facility or in support of the SBA-guaranteed debentures issued by Triangle Mezzanine Fund LLLP and Triangle Mezzanine Fund II LP. |
| |
(8) | Index-based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. |
(3)Investment is not a qualifying investment as defined under Section 55(a) of the 1940 Act. Non-qualifying assets represent 25.5% of total investments at fair value as of March 31, 2021. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of the Company's total assets, the Company will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a).
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
(4)As defined in the 1940 Act, the Company is deemed to be an “affiliated person” of the portfolio company as the Company owns between 5% or more, up to 25% (inclusive), of the portfolio company's voting securities (“non-controlled affiliate”). Transactions related to investments in non-controlled "Affiliate Investments" for the three months ended March 31, 2021 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(b) | December 31, 2020 Value | Gross Additions (c) | Gross Reductions (d) | March 31, 2021 Value |
Portfolio Company | Type of Investment(a) |
Advantage Insurance, Inc.(e) | Preferred Stock (587,001 shares) | $ | (76,631) | | $ | — | | $ | 71,500 | | $ | 5,946,641 | | $ | — | | $ | 5,946,641 | | $ | — | |
| (76,631) | | — | | 71,500 | | 5,946,641 | | — | | 5,946,641 | | — | |
| | | | | | | | |
Jocassee Partners LLC | 9.1% Member Interest | — | | 1,326,230 | | — | | 22,623,820 | | 6,326,230 | | — | | 28,950,050 | |
| — | | 1,326,230 | | — | | 22,623,820 | | 6,326,230 | | — | | 28,950,050 | |
| | | | | | | | |
JSC Tekers Holdings(e) | Common Stock (3,201 shares) | — | | 192,909 | | — | | 4,753,000 | | 192,909 | | 3 | | 4,945,906 | |
Preferred Stock (9,159,085 shares) | — | | — | | — | | — | | — | | — | | — | |
| — | | 192,909 | | — | | 4,753,000 | | 192,909 | | 3 | | 4,945,906 | |
| | | | | | | | |
Security Holdings B.V(e) | Bridge Loan (5.0% PIK 5/31/2021) | — | | — | | 68,140 | | 5,187,508 | | 263,697 | | — | | 5,451,205 | |
Senior Subordinated Loan (3.1% PIK) | — | | — | | 68,322 | | 8,746,454 | | 69,291 | | — | | 8,815,745 | |
Common Equity Interest | — | | (373,782) | | — | | 21,329,370 | | — | | 373,782 | | 20,955,588 | |
| — | | (373,782) | | 136,462 | | 35,263,332 | | 332,988 | | 373,782 | | 35,222,538 | |
| | | | | | | | |
Thompson Rivers LLC | 24.7% Member Interest | — | | 1,299,340 | | — | | 10,011,840 | | 21,299,340 | | — | | 31,311,180 | |
| — | | 1,299,340 | | — | | 10,011,840 | | 21,299,340 | | — | | 31,311,180 | |
| | | | | | | | |
Total Affiliate Investments | $ | (76,631) | | $ | 2,444,697 | | $ | 207,962 | | $ | 78,598,633 | | $ | 28,151,467 | | $ | 6,320,426 | | $ | 100,429,674 | |
(a) Equity and equity-linked investments are non-income producing, unless otherwise noted.
(b) Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Affiliate category.
(c) Gross additions include increases in the cost basis of investments resulting from new investments and follow-on investments. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(d) Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(e) The fair value of the investment was determined using significant unobservable inputs.
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
March 31, 2021
(5) As defined in the 1940 Act, the Company is deemed to be both an “affiliated person” and “control” the portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions as of and during the three months ended March 31, 2021 in which the portfolio company is deemed to be a "Control Investment" of the Company are as follows:
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| Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(b) | December 31, 2020 Value | Gross Additions (c) | Gross Reductions (d) | March 31, 2021 Value |
Portfolio Company | Type of Investment(a) |
MVC Automotive Group GmbH(e) | Common Equity Interest | $ | — | | $ | (2,660,324) | | $ | — | | $ | 9,582,368 | | $ | — | | $ | 2,660,324 | | $ | 6,922,044 | |
Bridge Loan (6.0% PIK 12/31/2021) | — | | — | | 107,237 | | 7,149,166 | | — | | — | | 7,149,166 | |
| — | | (2,660,324) | | 107,237 | | 16,731,534 | | — | | 2,660,324 | | 14,071,210 | |
| | | | | | | | |
MVC Private Equity Fund LP(e) | Limited Partnership Interest | — | | (1,252,534) | | — | | 8,899,284 | | — | | 1,252,534 | | 7,646,750 | |
General Partnership Interest | — | | (30,804) | | 160,113 | | 224,978 | | — | | 30,804 | | 194,174 | |
| — | | (1,283,338) | | 160,113 | | 9,124,262 | | — | | 1,283,338 | | 7,840,924 | |
Waccamaw River LLC | 50% Member Interest | — | | (25,772) | | — | | — | | 4,500,000 | | 25,772 | | 4,474,228 | |
| — | | (25,772) | | — | | — | | 4,500,000 | | 25,772 | | 4,474,228 | |
| | | | | | | | |
Total Control Investments | $ | — | | $ | (3,969,434) | | $ | 267,350 | | $ | 25,855,796 | | $ | 4,500,000 | | $ | 3,969,434 | | $ | 26,386,362 | |
(a) Equity and equity-linked investments are non-income producing, unless otherwise noted.
(b) Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Control category.
(c) Gross additions include increases in the cost basis of investments resulting from new investments and follow-on investments. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(d) Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(e) The fair value of the investment was determined using significant unobservable inputs.
(6)Some or all of the investment is or will be encumbered as security for the Company's $800.0 million senior secured credit facility with ING Capital LLC initially entered into in February 2019 (as amended, restated and otherwise modified from time to time, the "February 2019 Credit Facility").
(7)The fair value of the investment was determined using significant unobservable inputs.
(8)Debt investment includes interest rate floor feature.
(9)The interest rate on these loans is subject to 1 Month LIBOR, which as of March 31, 2021 was 0.11113%.
(10)The interest rate on these loans is subject to 2 Month LIBOR, which as of March 31, 2021 was 0.13363%.
(11)The interest rate on these loans is subject to 3 Month LIBOR, which as of March 31, 2021 was 0.19425%.
(12)The interest rate on these loans is subject to 6 Month LIBOR, which as of March 31, 2021 was 0.20525%.
(13)The interest rate on these loans is subject to 3 Month GBP LIBOR, which as of March 31, 2021 was 0.08788%.
(14)The interest rate on these loans is subject to 6 Month GBP LIBOR, which as of March 31, 2021 was 0.11275%.
(15)The interest rate on these loans is subject to 3 Month EURIBOR, which as of March 31, 2021 was -0.53800%.
(16)The interest rate on these loans is subject to 6 Month EURIBOR, which as of March 31, 2021 was -0.50900%.
(17)The interest rate on these loans is subject to 3 Month STIBOR, which as of March 31, 2021 was -0.01100%.
(18)The interest rate on these loans is subject to 1 Month BBSY, which as of March 31, 2021 was 0.01470%.
(19)The interest rate on these loans is subject to 12 Month LIBOR, which as of March 31, 2021 was 0.28313%.
(20)Investment was purchased as part of the MVC Acquisition and is part of the Reference Portfolio for purposes of the Credit Support Agreement.
(21)In 2017, MVC received $5.7 million of 9.5% second lien callable notes due in 2025, in lieu of an escrow to satisfy any indemnification claims associated with MVC’s sale of its equity investment in U.S. Gas & Electric. Effective January 1, 2018, the cost basis of the U.S. Gas second lien loan was decreased by approximately $3.0 million due to a working capital adjustment. This loan is still subject to indemnification adjustments.
See accompanying notes.
Barings BDC, Inc.
Consolidated Schedule of Investments
December 31, 2020
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Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
Non–Control / Non–Affiliate Investments: | | | | | | |
| | | | | | | | | | |
1WorldSync, Inc. (4.0%)*(7) (9) (12) | | IT Consulting & Other Services | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 07/19, Due 07/25) | | $ | 29,000,000 | | | $ | 28,490,102 | | | $ | 28,420,000 | |
| | | | 29,000,000 | | | 28,490,102 | | | 28,420,000 | |
| | | | | | | | | | |
Accelerate Learning, Inc. (1.0%)*(7) (9) (12) | | Education Services | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/18, Due 12/24) | | 7,567,965 | | | 7,461,410 | | | 7,258,435 | |
| | | | 7,567,965 | | | 7,461,410 | | | 7,258,435 | |
| | | | | | | | | | |
Accurus Aerospace Corporation (2.9%)*(7) (9) (12) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 10/18, Due 10/24) | | 24,500,000 | | | 24,251,575 | | | 20,506,500 | |
| | | | 24,500,000 | | | 24,251,575 | | | 20,506,500 | |
| | | | | | | | | | |
ADE Holding (d/b/a AD Education) (0.8%)*(3) (7) (9) (19) | | Education Services | | First Lien Senior Secured Term Loan (EURIBOR + 5.0%, 5.0% Cash, Acquired 01/20, Due 01/27) | | 5,459,746 | | | 4,977,557 | | | 5,459,746 | |
| | | | 5,459,746 | | | 4,977,557 | | | 5,459,746 | |
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AEP Holdings, Inc. (1.8%)*(7) (9) | | Wholesale | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/25) (18) | | 4,362,794 | | | 4,143,810 | | | 4,275,538 | |
| | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/25) (12) | | 8,902,516 | | | 8,727,725 | | | 8,724,466 | |
| | | | 13,265,310 | | | 12,871,535 | | | 13,000,004 | |
| | | | | | | | | | |
Aftermath Bidco Corporation (1.3%)* (7) (9) (12) | | Professional Services | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 04/19, Due 04/25) | | 9,425,284 | | | 9,265,301 | | | 9,335,155 | |
| | | | 9,425,284 | | | 9,265,301 | | | 9,335,155 | |
| | | | | | | | | | |
Ahead DB Borrower, LLC. (0.3%)*(7) (9) (12) | | Technology Distributors | | Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 9.5% Cash, Acquired 10/20, Due 10/28) | | 2,139,295 | | | 2,076,161 | | | 2,075,117 | |
| | | | 2,139,295 | | | 2,076,161 | | | 2,075,117 | |
| | | | | | | | | | |
Air Canada 2020-2 Class B Pass Through Trust (1.1%)* | | Airlines | | Structured Secured Note - Class B (9.0% Cash, Acquired 09/20, Due 10/25) | | 7,500,000 | | | 7,500,000 | | | 8,077,169 | |
| | | | 7,500,000 | | | 7,500,000 | | | 8,077,169 | |
| | | | | | | | | | |
American Dental Partners, Inc. (1.3%)*(7) (9) (12) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 11/18, Due 03/23) | | 9,800,000 | | | 9,786,672 | | | 9,396,240 | |
| | | | 9,800,000 | | | 9,786,672 | | | 9,396,240 | |
| | | | | | | | | | |
American Scaffold, Inc. (1.3%)*(7) (9) (12) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 09/19, Due 09/25) | | 9,686,750 | | | 9,509,443 | | | 9,686,750 | |
| | | | 9,686,750 | | | 9,509,443 | | | 9,686,750 | |
| | | | | | | | | | |
Anagram Holdings, LLC (2.2%)*(3) | | Chemicals, Plastics, & Rubber | | First Lien Senior Secured Note (10.0% Cash, 5.0% PIK, Acquired 08/20, Due 08/25) | | 13,673,780 | | | 12,565,289 | | | 15,588,108 | |
| | | 13,673,780 | | | 12,565,289 | | | 15,588,108 | |
| | | | | | | | | | |
Anchorage Capital CLO Ltd: Series 2013-1A (0.3%)*(3) (9) (12) | | Structured Finance | | Structured Secured Note - Class DR (LIBOR + 6.8%, 7.0% Cash, Acquired 03/20, Due 10/30) | | 2,000,000 | | | 1,743,066 | | | 2,000,156 | |
| | | | 2,000,000 | | | 1,743,066 | | | 2,000,156 | |
| | | | | | | | | | |
Anju Software, Inc. (1.9%)*(7) (12) | | Application Software | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 6.4% Cash, Acquired 02/19, Due 02/25) | | 13,701,182 | | | 13,442,543 | | | 13,385,963 | |
| | | 13,701,182 | | | 13,442,543 | | | 13,385,963 | |
| | | | | | | | | | |
Apex Bidco Limited (0.3%)*(3) (7) | | Business Equipment & Services | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.50%, 7.0% Cash, Acquired 01/20, Due 01/27) (9) (15) | | 1,992,033 | | | 1,851,359 | | | 1,950,974 | |
| | Subordinated Senior Unsecured Term Loan (8.0% PIK, Acquired 01/20, Due 07/27) | | 258,955 | | | 241,837 | | | 253,618 | |
| | | | 2,250,988 | | | 2,093,196 | | | 2,204,592 | |
| | | | | | | | | | |
AQA Acquisition Holding, Inc. (f/k/a SmartBear) (0.7%)*(7) (9) (12) | | High Tech Industries | | Second Lien Senior Secured Term Loan (LIBOR + 8.0%, 9.0% Cash, Acquired 10/18, Due 05/24) | | 4,959,088 | | | 4,877,581 | | | 4,959,088 | |
| | | | 4,959,088 | | | 4,877,581 | | | 4,959,088 | |
| | | | | | | | | | |
Arch Global Precision LLC (2.3%)*(7) (12) | | Industrial Machinery | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.0% Cash, Acquired 04/19, Due 04/26) | | 16,649,218 | | | 16,496,045 | | | 16,557,510 | |
| | | | 16,649,218 | | | 16,496,045 | | | 16,557,510 | |
| | | | | | | | | | |
Archimede (0.4%)*(3) (7) (9) (17) | | Consumer Services | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 10/20, Due 10/27) | | 2,677,354 | | | 2,510,391 | | | 2,610,420 | |
| | | | 2,677,354 | | | 2,510,391 | | | 2,610,420 | |
| | | | | | | | | | |
Argus Bidco Limited (0.8%)*(3) (7) (9) (15) | | High Tech Industries | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.8% Cash, Acquired 12/20, Due 12/27) | | 5,715,005 | | | 5,383,300 | | | 5,543,555 | |
| | | 5,715,005 | | | 5,383,300 | | | 5,543,555 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
TRIANGLE CAPITAL CORPORATION Consolidated Schedule of Investments December 31, 2016
|
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
Non–Control / Non–Affiliate Investments: | | | | | | |
ACA Holdings LLC (0%)* | | Security Company | | Preferred Units (2,000,000 units) | | | | $ | 2,000,000 |
| | $ | 1,242,000 |
|
| | | | | | 2,000,000 |
| | 1,242,000 |
|
| | | | | | | | | | |
Access Medical Acquisition, Inc. (3%)* | | Operator of Primary Care Clinics | | Subordinated Notes (10% Cash, 2% PIK, Due 01/22) | | $ | 13,819,514 |
| | 13,593,292 |
| | 13,593,292 |
|
| | Class A Units (1,500,000 units) | | | | 901,026 |
| | 3,618,000 |
|
| | | | 13,819,514 |
| | 14,494,318 |
| | 17,211,292 |
|
| | | | | | | | | | |
Aden & Anais Holdings, Inc. (0%)* | | Baby Products | | Common Stock (20,000 shares) | | | | 2,000,000 |
| | 2,000,000 |
|
| | | | | | 2,000,000 |
| | 2,000,000 |
|
| | | | | | | | | | |
Agilex Flavors & Fragrances, Inc. (2%)* | | Custom Fragrance Producer | | Subordinated Note (12% Cash, Due 11/21) | | 13,168,124 |
| | 13,048,983 |
| | 13,048,983 |
|
Common Units (1,250 units) | | | | 1,250,000 |
| | 2,227,000 |
|
| | | 13,168,124 |
| | 14,298,983 |
| | 15,275,983 |
|
| | | | | | | | | | |
AGM Automotive, LLC (1%)* | | Auto Industry Interior Components Supplier | | Units (1,500,000 units) | | | | 630,134 |
| | 4,266,000 |
|
| | | | | 630,134 |
| | 4,266,000 |
|
| | | | | | | | | | |
Avkem International, LLC (1%)* | | Flux and Foundry Manufacturer and Supplier | | Subordinated Note (10% Cash, 4% PIK, Due 12/17) | | 4,112,935 |
| | 4,075,177 |
| | 4,075,177 |
|
| | | | 4,112,935 |
| | 4,075,177 |
| | 4,075,177 |
|
| | | | | | | | | | |
AVL Holdings, Inc. (0%)* | | Manufacturer and Distributor for Independent Artists and Authors | | Common Stock (138 shares) | | | | 1,300,000 |
| | 1,767,000 |
|
| | | | | | 1,300,000 |
| | 1,767,000 |
|
| | | | | | | | | | |
Baker Hill Acquisition, LLC (2%)* | | Loan Origination Software Solutions Provider | | Subordinated Notes (LIBOR + 11.0%, 12% Cash, Due 03/21)(8) | | 13,500,000 |
| | 13,334,260 |
| | 12,320,000 |
|
| | Limited Partnership Interest | | | | 1,498,500 |
| | 721,000 |
|
| | | | 13,500,000 |
| | 14,832,760 |
| | 13,041,000 |
|
| | | | | | | | | | |
Cafe Enterprises, Inc. (2%)* | | Restaurant | | Subordinated Note (7% Cash, 7% PIK, Due 09/19) | | 13,882,800 |
| | 13,743,461 |
| | 10,331,000 |
|
| | Series C Preferred Stock (10,000 shares) | | | | 1,000,000 |
| | — |
|
| | | | 13,882,800 |
| | 14,743,461 |
| | 10,331,000 |
|
| | | | | | | | | | |
Capital Contractors, Inc. (0%)* | | Janitorial and Facilities Maintenance Services | | Subordinated Notes (5% Cash, Due 6/20) | | 9,843,542 |
| | 9,711,658 |
| | — |
|
Series A Redeemable Preferred Stock (200 shares) | | | | 2,000,000 |
| | — |
|
Common Stock Warrants (20 shares) | | | | 492,000 |
| | — |
|
| | 9,843,542 |
| | 12,203,658 |
| | — |
|
| | | | | | | | | | |
Captek Softgel International, Inc. (3%)* | | Nutraceutical Manufacturer | | Subordinated Note (10% Cash, 2.5% PIK, Due 06/21) | | 15,407,336 |
| | 15,150,497 |
| | 15,150,497 |
|
Common Stock (15,000 shares) | | | | 1,500,000 |
| | 1,500,000 |
|
| | | 15,407,336 |
| | 16,650,497 |
| | 16,650,497 |
|
| | | | | | | | | | |
Carolina Beverage Group, LLC (0%)* | | Beverage Manufacturing and Packaging | | Class B Units (11,974 units) | | | | 119,735 |
| | 264,000 |
|
| | | | | 119,735 |
| | 264,000 |
|
| | | | | | | | | | |
Centerfield Media Holding Company (4%)* | | Digital Marketing | | Subordinated Note (10% Cash, 3.5% PIK, Due 03/21) | | 18,857,978 |
| | 18,567,590 |
| | 19,235,000 |
|
| | Common Shares (1,000 shares) | | | | 1,000,000 |
| | 2,220,000 |
|
| | | | 18,857,978 |
| | 19,567,590 |
| | 21,455,000 |
|
| | | | | | | | | | |
Community Intervention Services, Inc. (2%)* | | Provider of Behavioral Health Services | | Subordinated Note (7% Cash, 6% PIK, Due 01/21) (5) | | 18,736,265 |
| | 17,717,756 |
| | 14,134,000 |
|
| | | | 18,736,265 |
| | 17,717,756 |
| | 14,134,000 |
|
| | | | | | | | | | |
Comverge, Inc. (3%)* | | Provider of Intelligent Energy Management Solutions | | Senior Note (12% Cash, Due 05/18) | | 15,505,583 |
| | 15,406,749 |
| | 15,406,749 |
|
Preferred Stock (703 shares) | | | | 554,458 |
| | 835,000 |
|
Common Stock (1,000,000 shares) | | | | 100,000 |
| | 353,000 |
|
| | | 15,505,583 |
| | 16,061,207 |
| | 16,594,749 |
|
| | | | | | | | | | |
CPower Ultimate HoldCo, LLC (0%)* | | Demand Response Business | | Units (345,542 units) | | | | 345,542 |
| | 345,542 |
|
| | | | | | 345,542 |
| | 345,542 |
|
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
Armstrong Transport Group (Pele Buyer, LLC ) (1.0%)*(7) (9) (12) | | Air Freight & Logistics | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24) | | $ | 5,354,941 | | | $ | 5,277,976 | | | $ | 5,302,778 | |
| | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 07/20, Due 06/24) | | 2,000,318 | | | 1,964,493 | | | 2,000,318 | |
| | | | 7,355,259 | | | 7,242,469 | | | 7,303,096 | |
| | | | | | | | | | |
Ascensus Specialties, LLC (1.0%)*(7) (9) (10) | | Specialty Chemicals | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.9% Cash, Acquired 09/19, Due 09/26) | | 7,019,401 | | | 6,959,939 | | | 6,978,909 | |
| | | | 7,019,401 | | | 6,959,939 | | | 6,978,909 | |
| | | | | | | | | | |
ASPEQ Heating Group LLC (1.2%)* (7) (9) (12) | | Building Products, Air & Heating | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 11/19, Due 11/25) | | 8,945,499 | | | 8,833,249 | | | 8,862,629 | |
| | | 8,945,499 | | | 8,833,249 | | | 8,862,629 | |
| | | | | | | | | | |
Auxi International (0.2%)*(3) (7) (9) (19) | | Commercial Finance | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 12/19, Due 12/26) | | 1,712,970 | | | 1,514,901 | | | 1,682,438 | |
| | | | 1,712,970 | | | 1,514,901 | | | 1,682,438 | |
| | | | | | | | | | |
AVSC Holding Corp. (1.4%)*(9) (12) | | Advertising | | First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, 0.25% PIK, Acquired 08/18, Due 03/25) | | 4,904,496 | | | 4,313,104 | | | 4,165,780 | |
| | First Lien Senior Secured Term Loan (LIBOR + 4.50%, 5.5% Cash, 1.0% PIK, Acquired 08/18, Due 03/25) | | 748,116 | | | 682,722 | | | 665,823 | |
| | First Lien Senior Secured Term Loan (5.0% Cash, 10.0% PIK, Acquired 11/20, Due 10/26) | | 4,951,086 | | | 4,816,560 | | | 5,668,994 | |
| | | | 10,603,698 | | | 9,812,386 | | | 10,500,597 | |
| | | | | | | | | | |
Bass Pro Group, LLC (0.3%)*(9) (12) | | General Merchandise Stores | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 5.8% Cash, Acquired 03/20, Due 09/24) | | 1,979,540 | | | 1,793,950 | | | 1,983,083 | |
| | | | 1,979,540 | | | 1,793,950 | | | 1,983,083 | |
| | | | | | | | | | |
BDP International, Inc. (f/k/a BDP Buyer, LLC) (4.8%)*(7) (9) (12) | | Air Freight & Logistics | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 12/18, Due 12/24) | | 34,937,500 | | | 34,387,459 | | | 34,238,750 | |
| | | | 34,937,500 | | | 34,387,459 | | | 34,238,750 | |
| | | | | | | | | | |
Beacon Pointe Advisors, LLC (0.1%)*(7) (9) (12) | | Asset Manager & Custody Bank | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 03/20, Due 03/26) | | 631,591 | | | 611,703 | | | 631,591 | |
| | | | 631,591 | | | 611,703 | | | 631,591 | |
| | | | | | | | | | |
Benify (Bennevis AB) (0.2%)*(3) (7) (9) (20) | | High Tech Industries | | First Lien Senior Secured Term Loan (STIBOR + 5.25%, 5.3% Cash, Acquired 07/19, Due 07/26) | | 1,588,980 | | | 1,366,586 | | | 1,576,555 | |
| | | | 1,588,980 | | | 1,366,586 | | | 1,576,555 | |
| | | | | | | | | | |
Black Diamond Equipment Rentals LLC (1.2%)*(7) (23) | | Equipment Rental | | Second Lien Loan (12.5% Cash, Acquired 12/20, Due 06/22) | | 7,500,000 | | | 7,500,000 | | | 7,500,000 | |
| | Warrant (1.0 unit, Acquired 12/20) | | | | 847,000 | | | 847,000 | |
| | | | 7,500,000 | | | 8,347,000 | | | 8,347,000 | |
| | | | | | | | | | |
British Airways 2020-1 Class B Pass Through Trust (0.2%)* | | Airlines | | Structured Secured Note - Class B (8.4% Cash, Acquired 11/20, Due 11/28) | | 1,500,000 | | | 1,500,000 | | | 1,661,827 | |
| | | | 1,500,000 | | | 1,500,000 | | | 1,661,827 | |
| | | | | | | | | | |
British Engineering Services Holdco Limited (1.1%)*(3) (7) (9) (15) | | Commercial Services & Supplies | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.25%, 5.5% Cash, Acquired 12/20, Due 12/27) | | 8,667,451 | | | 7,989,566 | | | 8,191,066 | |
| | | | 8,667,451 | | | 7,989,566 | | | 8,191,066 | |
| | | | | | | | | | |
Brown Machine Group Holdings, LLC (0.7%)*(7) (9) (12) | | Industrial Equipment | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 10/24) | | 5,286,022 | | | 5,241,933 | | | 5,286,022 | |
| | | | 5,286,022 | | | 5,241,933 | | | 5,286,022 | |
| | | | | | | | | | |
Cadent, LLC (f/k/a Cross MediaWorks) (1.0%)*(7) (9) (12) | | Media & Entertainment | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 09/18, Due 09/23) | | 7,532,846 | | | 7,490,785 | | | 7,361,851 | |
| | | | 7,532,846 | | | 7,490,785 | | | 7,361,851 | |
| | | | | | | | | | |
Carlson Travel, Inc (1.0%)* | | Business Travel Management | | First Lien Senior Secured Note (6.8% Cash, Acquired 09/20, Due 12/25) | | 3,000,000 | | | 2,362,500 | | | 2,471,250 | |
| | Super Senior Senior Secured Term Loan (10.5% Cash, Acquired 12/20, Due 3/25) | | 4,239,000 | | | 4,149,608 | | | 4,376,768 | |
| | Common Stock (1,962 units, Acquired 11/20)(7) | | | | 88,290 | | | 68,670 | |
| | | | 7,239,000 | | | 6,600,398 | | | 6,916,688 | |
| | | | | | | | | | |
Carlyle Aviation Partners Ltd. (0.2%)* | | Structured Finance | | Structured Secured Note, Series 2019-2 - Class A (3.4% Cash, Acquired 3/20, Due 11/39) | | 912,844 | | | 826,343 | | | 863,003 | |
| | Structured Secured Note, Series 2018-2 - Class A (4.5% Cash, Acquired 3/20, Due 11/38) | | 432,194 | | | 391,920 | | | 408,302 | |
| | | | 1,345,038 | | | 1,218,263 | | | 1,271,305 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
TRIANGLE CAPITAL CORPORATION Consolidated Schedule of Investments — (Continued) December 31, 2016 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
CWS Holding Company, LLC (0%)* | | Manufacturer of Custom Windows and Sliding Doors | | Class A Units (1,500,000 units) | | | | $ | 1,500,000 |
| | $ | 2,076,000 |
|
| | | | | 1,500,000 |
| | 2,076,000 |
|
| | | | | | | | | | |
Data Source Holdings, LLC (0%)* | | Print Supply Chain Management Services | | Common Units (47,503 units) | | | | 1,000,000 |
| | 940,000 |
|
| | | | | 1,000,000 |
| | 940,000 |
|
| | | | | | | | | | |
Del Real, LLC (2%)* | | Hispanic Refrigerated Foods Company | | Subordinated Note (11% Cash, Due 04/23) | | $ | 14,000,000 |
| | 13,727,515 |
| | 13,727,515 |
|
| | Class A Units (3,000,000 units) | | | | 3,000,000 |
| | 3,000,000 |
|
| | | | 14,000,000 |
| | 16,727,515 |
| | 16,727,515 |
|
| | | | | | | | | | |
DialogDirect, Inc. (2%)* | | Business Process Outsourcing Provider | | Subordinated Notes (12% Cash, 1.5% PIK, Due 04/20) | | 16,126,541 |
| | 16,020,226 |
| | 11,994,000 |
|
| | | 16,126,541 |
| | 16,020,226 |
| | 11,994,000 |
|
| | | | | | | | | | |
Dimora Brands, Inc. (2%)* | | Hardware Designer and Distributor | | Subordinated Note (LIBOR + 10.0%, 11% Cash, Due 10/23)(8) | | 12,500,000 |
| | 12,267,514 |
| | 12,267,514 |
|
| | | | 12,500,000 |
| | 12,267,514 |
| | 12,267,514 |
|
| | | | | | | | | | |
DLC Acquisition, LLC (6%)* | | Staffing Firm | | Senior Notes (LIBOR + 8.0%, 10% Cash, Due 12/20)(8) | | 21,312,500 |
| | 21,047,577 |
| | 21,047,577 |
|
| Senior Note (10% Cash, 2% PIK, Due 12/20) | | 16,929,763 |
| | 16,735,793 |
| | 16,735,793 |
|
| | | 38,242,263 |
| | 37,783,370 |
| | 37,783,370 |
|
| | | | | | | | | | |
Dyno Acquiror, Inc. (1%)* | | Sewing Products and Seasonal Decorative Products Supplier | | Subordinated Note (12% Cash, 2% PIK, Due 11/19) | | 7,531,330 |
| | 7,474,744 |
| | 7,474,744 |
|
| Series A Units (600,000 units) | | | | 600,000 |
| | 739,000 |
|
| | | 7,531,330 |
| | 8,074,744 |
| | 8,213,744 |
|
| | | | | | | | | | |
Eckler's Holdings, Inc. (1%)* | | Restoration Parts and Accessories for Classic Cars and Trucks | | Subordinated Note (11% Cash, 4.5% PIK, Due 07/18) | | 9,941,563 |
| | 9,882,596 |
| | 8,396,000 |
|
| Common Stock (18,029 shares) | | | | 183,562 |
| | — |
|
| Series A Preferred Stock (1,596 shares) | | | | 1,596,126 |
| | — |
|
| Series B Preferred Stock (185 shares) | | | | 185,127 |
| | — |
|
| | | 9,941,563 |
| | 11,847,411 |
| | 8,396,000 |
|
| | | | | | | | | | |
Fresh-G Restaurant Holding, LLC (0%)* | | Restaurant | | Class A Units (5,000 units) | | | | 500,000 |
| | — |
|
| | | | | | 500,000 |
| | — |
|
| | | | | | | | | | |
Flowchem Holdings LLC (0%)* | | Services to Crude Oil Pipeline Operators | | Common Units (1,000,000 units) | | | | 782,356 |
| | 2,552,000 |
|
| | | | | 782,356 |
| | 2,552,000 |
|
| | | | | | | | | | |
Fridababy Holdings, LLC (4%)* | | Baby Products | | Senior Notes (LIBOR + 9.0%, 10% Cash, Due 10/21)(8) | | 23,000,000 |
| | 22,558,007 |
| | 22,558,007 |
|
| | Class B Units (4,500 units) | | | | 273,401 |
| | 273,401 |
|
| | | | 23,000,000 |
| | 22,831,408 |
| | 22,831,408 |
|
| | | | | | | | | | |
FrontStream Holdings, LLC (2%)* | | Payment and Donation Management Product Service Provider | | Subordinated Note (12.5% Cash, Due 12/20) | | 13,375,000 |
| | 13,254,632 |
| | 12,643,000 |
|
| | Series C-2 Preferred Shares (500 shares) | | | | 500,000 |
| | 435,000 |
|
| | | | 13,375,000 |
| | 13,754,632 |
| | 13,078,000 |
|
| | | | | | | | | | |
Frontstreet Facility Solutions, Inc. (1%)* | | Retail, Restaurant and Commercial Facilities Maintenance | | Subordinated Note (11% Cash, 2% PIK, Due 07/18) | | 8,462,629 |
| | 8,418,332 |
| | 6,771,000 |
|
| | Series A Convertible Preferred Stock (2,500 shares) | | | | 250,000 |
| | — |
|
| | Series B Convertible Preferred Stock (5,556 shares) | | | | 500,000 |
| | — |
|
| | | | 8,462,629 |
| | 9,168,332 |
| | 6,771,000 |
|
| | | | | | | | | | |
Frozen Specialties, Inc. (2%)* | | Frozen Foods Manufacturer | | Subordinated Note (10% Cash, 4% PIK, Due 12/17) | | 13,675,353 |
| | 13,675,353 |
| | 13,675,353 |
|
| | 13,675,353 |
| | 13,675,353 |
| | 13,675,353 |
|
| | | | | | | | | | |
GST AutoLeather, Inc. (4%)* | | Supplier of Automotive Interior Leather | | Subordinated Note (11% Cash, 2% PIK, Due 01/21) | | 23,131,473 |
| | 22,812,032 |
| | 22,812,032 |
|
| | | | 23,131,473 |
| | 22,812,032 |
| | 22,812,032 |
|
| | | | | | | | | | |
Halo Branded Solutions, Inc. (2%)* | | Supply Chain Services | | Subordinated Notes (11% Cash, 1% PIK, Due 10/22) | | 10,410,398 |
| | 10,190,992 |
| | 10,190,992 |
|
| | Class A1 Units (2,600 units) | | | | 2,600,000 |
| | 3,308,000 |
|
| | | | 10,410,398 |
| | 12,790,992 |
| | 13,498,992 |
|
| | | | | | | | | | |
HKW Capital Partners IV, L.P. (0%)*(4) | | Multi-Sector Holdings | | 0.6% Limited Partnership Interest | | | | 835,283 |
| | 1,231,000 |
|
| | | | | | 835,283 |
| | 1,231,000 |
|
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
Centralis Finco S.a.r.l. (0.1%)*(3) (7) (9) (18) | | Diversified Financial Services | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 05/20, Due 05/27) | | $ | 867,913 | | | $ | 732,995 | | | $ | 867,913 | |
| | | | 867,913 | | | 732,995 | | | 867,913 | |
| | | | | | | | | | |
Cineworld Group PLC (1.1%)*(3) (9) (13) | | Leisure Products | | First Lien Senior Secured Term Loan (LIBOR + 2.50%, 2.8% Cash, Acquired 04/20, Due 02/25) | | 9,070,729 | | | 5,915,501 | | | 6,121,290 | |
| | Super Senior Secured Term Loan (7.0% Cash, 8.3% PIK, Acquired 11/20, Due 05/24) | | 1,618,242 | | | 1,446,976 | | | 1,920,318 | |
| | Warrants (553,375 units, Acquired 12/20) | | | | 101,602 | | | 166,416 | |
| | | | 10,688,971 | | | 7,464,079 | | | 8,208,024 | |
| | | | | | | | | | |
Classic Collision (Summit Buyer, LLC) (1.6%)*(7) (9) (12) | | Auto Collision Repair Centers | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 01/20, Due 01/26) | | 12,006,341 | | | 11,774,075 | | | 11,820,664 | |
| | | | 12,006,341 | | | 11,774,075 | | | 11,820,664 | |
| | | | | | | | | | |
CM Acquisitions Holdings Inc. (3.4%)*(7) (9) (13) | | Internet & Direct Marketing | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 05/19, Due 05/25) | | 24,655,278 | | | 24,287,477 | | | 24,196,657 | |
| | | | 24,655,278 | | | 24,287,477 | | | 24,196,657 | |
| | | | | | | | | | |
CMT Opco Holding, LLC (Concept Machine) (0.6%)*(7) (9) (12) | | Distributors | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 01/20, Due 01/25) | | 4,425,935 | | | 4,351,646 | | | 4,097,088 | |
| | LLC Units (8,309 units, Acquired 01/20) | | | | 332,904 | | | 230,492 | |
| | | | 4,425,935 | | | 4,684,550 | | | 4,327,580 | |
| | | | | | | | | | |
Command Alkon (Project Potter Buyer, LLC) (3.0%)*(7) (9) (10) | | Software | | First Lien Senior Secured Term Loan (LIBOR + 8.25%, 9.3% Cash, Acquired 04/20, Due 04/27) | | 22,166,804 | | | 21,527,201 | | | 21,501,800 | |
| | Class A Units (90.384 units, Acquired 04/20) | | | | 90,384 | | | 93,510 | |
| | Class B Units (33,324.69 units, Acquired 04/20) | | | | — | | | 8,165 | |
| | | | 22,166,804 | | | 21,617,585 | | | 21,603,475 | |
| | | | | | | | | | |
Confie Seguros Holding II Co. (0.3%)*(9) (12) | | Insurance Brokerage Services | | Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 8.7% Cash, Acquired 10/19, Due 11/25) | | 2,500,000 | | | 2,370,563 | | | 2,233,600 | |
| | | | 2,500,000 | | | 2,370,563 | | | 2,233,600 | |
| | | | | | | | | | |
Contabo Finco S.À R.L (0.2%)*(3) (7) (9) (18) | | Internet Software & Services | | First Lien Senior Secured Term Loan (EURIBOR + 4.75%, 4.8% Cash, Acquired 10/19, Due 10/26) | | 1,483,377 | | | 1,310,386 | | | 1,454,918 | |
| | | | 1,483,377 | | | 1,310,386 | | | 1,454,918 | |
| | | | | | | | | | |
CSL DualCom (0.5%)*(3) (7) (9) (15) | | Tele-communications | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.6% Cash, Acquired 09/20, Due 09/27) | | 3,776,936 | | | 3,339,563 | | | 3,646,170 | |
| | | | 3,776,936 | | | 3,339,563 | | | 3,646,170 | |
| | | | | | | | | | |
Custom Alloy Corporation (4.8%)*(7) (23) | | Manufacturer of Pipe Fittings & Forgings | | Second Lien Loan (15.0% PIK, Acquired 12/20, Due 04/22) | | 39,391,300 | | | 31,434,257 | | | 31,434,257 | |
| | Revolver (15.0% PIK, Acquired 12/20, Due 04/21) | | 3,745,808 | | | 3,228,308 | | | 3,228,308 | |
| | | | 43,137,108 | | | 34,662,565 | | | 34,662,565 | |
| | | | | | | | | | |
Dart Buyer, Inc. (1.7%)*(3) (7) (9) (12) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 04/19, Due 04/25) | | 12,310,907 | | | 12,092,929 | | | 12,188,061 | |
| | | | 12,310,907 | | | 12,092,929 | | | 12,188,061 | |
| | | | | | | | | | |
Diamond Sports Group, LLC (0.1%)*(9) (10) | | Broadcasting | | First Lien Senior Secured Term Loan (LIBOR + 3.25%, 3.4% Cash, Acquired 03/20, Due 08/26) | | 989,975 | | | 790,536 | | | 872,208 | |
| | | | 989,975 | | | 790,536 | | | 872,208 | |
| | | | | | | | | | |
Discovery Education, Inc. (3.7%)*(7) (9) (10) | | Publishing | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 10/20, Due 10/26) | | 27,000,000 | | | 26,538,991 | | | 26,527,500 | |
| | | | 27,000,000 | | | 26,538,991 | | | 26,527,500 | |
| | | | | | | | | | |
Distinct Holdings, Inc. (1.0%)*(7) (9) (10) | | Systems Software | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 04/19, Due 12/23) | | 7,516,792 | | | 7,453,665 | | | 7,475,638 | |
| | | | 7,516,792 | | | 7,453,665 | | | 7,475,638 | |
| | | | | | | | | | |
DreamStart Bidco SAS (d/b/a SmartTrade) (0.3%)*(3) (7) (9) (19) | | Diversified Financial Services | | First Lien Senior Secured Term Loan (EURIBOR + 4.5%, 4.5% Cash, 1.8% PIK, Acquired 03/20, Due 03/27) | | 2,232,173 | | | 1,939,189 | | | 2,176,655 | |
| | | | 2,232,173 | | | 1,939,189 | | | 2,176,655 | |
| | | | | | | | | | |
Dukane IAS, LLC (0.6%)*(7) (23) | | Welding Equipment Manufacturer | | Second Lien Note (10.5% Cash, 2.5% PIK, Acquired 12/20, Due 12/24) | | 4,604,374 | | | 4,604,374 | | | 4,604,374 | |
| | | | 4,604,374 | | | 4,604,374 | | | 4,604,374 | |
| | | | | | | | | | |
Envision Healthcare Corp. (0.4%)*(9) (10) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 3.75%, 3.9% Cash, Acquired 03/20, Due 10/25) | | 3,156,772 | | | 2,259,339 | | | 2,623,688 | |
| | | | 3,156,772 | | | 2,259,339 | | | 2,623,688 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
TRIANGLE CAPITAL CORPORATION Consolidated Schedule of Investments — (Continued) December 31, 2016 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
| | | | | | | | | | |
HTC Borrower, LLC (4%)* | | Hunting and Outdoor Products | | Subordinated Notes (10% Cash, 3% PIK, Due 09/20) | | $ | 26,131,706 |
| | $ | 25,854,767 |
| | $ | 25,854,767 |
|
| | | | 26,131,706 |
| | 25,854,767 |
| | 25,854,767 |
|
| | | | | | | | | | |
ICP Industrial, Inc. (4%)* | | Coatings Formulator and Manufacturer | | Second Lien Term Note (LIBOR + 8.5%, 9.5% Cash, Due 04/22)(8) | | 7,500,000 |
| | 7,435,556 |
| | 7,435,556 |
|
| | Subordinated Notes (10% Cash, 1% PIK, Due 10/22) | | 8,088,123 |
| | 7,946,278 |
| | 7,946,278 |
|
| | Subordinated Notes (14% PIK, Due 10/22) | | 5,743,159 |
| | 5,688,352 |
| | 5,688,352 |
|
| | Class A Units (1,289 units) | | | | 1,751,483 |
| | 1,929,000 |
|
| | | | 21,331,282 |
| | 22,821,669 |
| | 22,999,186 |
|
| | | | | | | | | | |
Inland Pipe Rehabilitation Holding Company LLC (0%)* | | Cleaning and Repair Services | | Membership Interest Purchase Warrant (3%) | | | | 853,500 |
| | 1,527,000 |
|
| | | | 853,500 |
| | 1,527,000 |
|
| | | | | | | | | | |
IPS Structural Adhesives Holdings, Inc. (2%)* | | Specialty Adhesives and Plumbing Products Manufacturer | | Second Lien Term Note (LIBOR + 9.5%, 10.5% Cash, Due 12/24)(8) | | 15,000,000 |
| | 14,700,000 |
| | 14,700,000 |
|
| | | | 15,000,000 |
| | 14,700,000 |
| | 14,700,000 |
|
| | | | | | | | | | |
KidKraft, Inc. (4%)* | | Children's Toy Manufacturer and Distributor | | Second Lien Term Note (11% Cash, 1% PIK, Due 03/22) | | 27,668,623 |
| | 27,135,218 |
| | 27,135,218 |
|
| | | | 27,668,623 |
| | 27,135,218 |
| | 27,135,218 |
|
| | | | | | | | | | |
K-Square Restaurant Partners, LP (1%)* | | Restaurant | | Class A Units of Limited Partnership (2,000 units) | | | | 638,260 |
| | 3,830,000 |
|
| | | | | | 638,260 |
| | 3,830,000 |
|
| | | | | | | | | | |
Lakeview Health Holdings, Inc. (3%)* | | Substance Abuse Treatment Service Provider | | Senior Note (LIBOR + 6.75%, 7.8% Cash, Due 12/21)(8) | | 18,612,633 |
| | 18,412,633 |
| | 18,412,633 |
|
| | Common Stock (2,000 shares) | | | | 2,000,000 |
| | 2,000,000 |
|
| | | | 18,612,633 |
| | 20,412,633 |
| | 20,412,633 |
|
| | | | | | | | | | |
Media Storm, LLC (1%)* | | Marketing Services | | Subordinated Note (10% Cash, Due 08/19) | | 6,545,455 |
| | 6,533,934 |
| | 5,055,000 |
|
Membership Units (1,216,204 units) | | | | 1,176,957 |
| | 260,000 |
|
| | 6,545,455 |
| | 7,710,891 |
| | 5,315,000 |
|
| | | | | | | | | | |
MIC Holding LLC (2%)* | | Firearm Accessories Manufacturer and Distributor | | Preferred Units (1,470 units) | | | | 1,470,000 |
| | 3,012,000 |
|
| | Common Units (30,000 units) | | | | 30,000 |
| | 8,837,000 |
|
| | | | | | 1,500,000 |
| | 11,849,000 |
|
| | | | | | | | | | |
Micross Solutions LLC (4%)* | | Provider of Semiconductor Products and Services | | Subordinated Note (12% Cash, 3% PIK, Due 06/18) | | 24,435,074 |
| | 24,342,230 |
| | 24,342,230 |
|
Class A-2 Common Units (1,979,524 units) | | | | 2,019,693 |
| | 1,875,000 |
|
| | 24,435,074 |
| | 26,361,923 |
| | 26,217,230 |
|
| | | | | | | | | | |
Motor Vehicle Software Corporation (3%)* | | Provider of EVR Services | | Subordinated Note (10% Cash, 0.5% PIK, Due 03/21) | | 20,245,100 |
| | 19,917,945 |
| | 19,917,945 |
|
| | Class A Units (1,000,000 units) | | | | 1,076,210 |
| | 1,372,000 |
|
| | | | 20,245,100 |
| | 20,994,155 |
| | 21,289,945 |
|
| | | | | | | | | | |
Nautic Partners VII, LP (0%)*(4) | | Multi-Sector Holdings | | 0.4% Limited Partnership Interest | | | | 1,093,312 |
| | 1,520,000 |
|
| | | | | | 1,093,312 |
| | 1,520,000 |
|
| | | | | | | | | | |
Nomacorc, LLC (3%)* | | Synthetic Wine Cork Producer | | Subordinated Note (10% Cash, 2.3% PIK, Due 07/21) | | 20,875,890 |
| | 20,572,926 |
| | 16,597,000 |
|
| | Limited Partnership Interest | | | | 2,150,637 |
| | — |
|
| | | | 20,875,890 |
| | 22,723,563 |
| | 16,597,000 |
|
| | | | | | | | | | |
Orchid Underwriters Agency, LLC (4%)* | | Insurance Underwriter | | Term B Note (10% Cash, Due 11/19) | | 21,409,670 |
| | 21,125,036 |
| | 21,125,036 |
|
Class A Preferred Units (15,000 units) | | | | 1,500,000 |
| | 1,972,000 |
|
Class A Common Units (15,000 units) | | | | — |
| | 1,624,000 |
|
| | 21,409,670 |
| | 22,625,036 |
| | 24,721,036 |
|
| | | | | | | | | | |
PowerDirect Marketing, LLC (0%)* | | Marketing Services | | Senior Note (13% Cash, 2% PIK, Due 06/17)(6) | | 8,573,531 |
| | 5,077,482 |
| | 850,000 |
|
Common Unit Purchase Warrants | | | | 590,200 |
| | — |
|
| | 8,573,531 |
| | 5,667,682 |
| | 850,000 |
|
| | | | | | | | | | |
ProAmpac PG Borrower LLC (2%)* | | Manufacturer of Flexible Packaging Products | | Second Lien Term Note (LIBOR + 8.5%, 9.5% Cash, Due 11/24)(8) | | 15,000,000 |
| | 14,775,000 |
| | 14,775,000 |
|
| | | | 15,000,000 |
| | 14,775,000 |
| | 14,775,000 |
|
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
Exeter Property Group, LLC (2.6%)*(7) (9) (10) | | Real Estate | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.7% Cash, Acquired 02/19, Due 08/24) | | $ | 19,363,647 | | | $ | 19,100,177 | | | $ | 18,976,374 | |
| | | | 19,363,647 | | | 19,100,177 | | | 18,976,374 | |
| | | | | | | | | | |
F24 (Stairway BidCo Gmbh) (0.3%)*(3) (7) (9) (18) | | Software Services | | First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 08/20, Due 08/27) | | 1,855,625 | | | 1,734,062 | | | 1,805,715 | |
| | | | 1,855,625 | | | 1,734,062 | | | 1,805,715 | |
| | | | | | | | | | |
FitzMark Buyer, LLC (0.5%)*(7) (9) (10) | | Cargo & Transportation | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 12/26) | | 3,529,412 | | | 3,429,854 | | | 3,429,412 | |
| | | | 3,529,412 | | | 3,429,854 | | | 3,429,412 | |
| | | | | | | | | | |
Foundation Risk Partners, Corp. (1.4%)*(7) (9) (12) | | Financial Services | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 11/23) | | 8,789,777 | | | 8,575,855 | | | 8,576,718 | |
| | Second Lien Senior Secured Term Loan (LIBOR + 8.50%, 9.5% Cash, Acquired 09/20, Due 11/24) | | 1,722,222 | | | 1,588,593 | | | 1,602,355 | |
| | | | 10,511,999 | | | 10,164,448 | | | 10,179,073 | |
| | | | | | | | | | |
GoldenTree Loan Opportunities IX, Limited: Series 2014-9A (0.2%)*(3) (9) (12) | | Structured Finance | | Structured Secured Note - Class DR2 (LIBOR + 3.0%, 3.2% Cash, Acquired 03/20, Due 10/29) | | 1,250,000 | | | 916,935 | | | 1,231,963 | |
| | | | 1,250,000 | | | 916,935 | | | 1,231,963 | |
| | | | | | | | | | |
GTM Intermediate Holdings, Inc. (0.9%)*(7) (23) | | Medical Equipment Manufacturer | | Second Lien Loan (11.0% Cash, 1.0% PIK, Acquired 12/20, Due 11/24) | | 5,115,750 | | | 5,064,593 | | | 5,064,593 | |
| | Common Stock (2 shares, Acquired 12/20) | | | | 1,078,778 | | | 1,078,778 | |
| | | | 5,115,750 | | | 6,143,371 | | | 6,143,371 | |
| | | | | | | | | | |
Gulf Finance, LLC (0.1%)*(9) (10) | | Oil & Gas Exploration & Production | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 08/23) | | 1,048,305 | | | 944,246 | | | 788,105 | |
| | | | 1,048,305 | | | 944,246 | | | 788,105 | |
| | | | | | | | | | |
Hawaiian Airlines 2020-1 Class B Pass Through Certificates (1.1%)* | | Airlines | | Structured Secured Note - Class B (11.3% Cash, Acquired 08/20, Due 09/25) | | 7,500,000 | | | 7,500,000 | | | 7,738,286 | |
| | | | 7,500,000 | | | 7,500,000 | | | 7,738,286 | |
| | | | | | | | | | |
Heartland, LLC (1.2%)*(7) (9) (12) | | Commercial Services & Supplies | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 08/19, Due 08/25) | | 8,831,018 | | | 8,667,194 | | | 8,582,892 | |
| | | | 8,831,018 | | | 8,667,194 | | | 8,582,892 | |
| | | | | | | | | | |
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.)) (1.6%)*(3) (7) (9) | | Insurance | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 09/19, Due 09/26)(19) | | 10,413,655 | | | 9,216,174 | | | 10,266,128 | |
| | First Lien Senior Secured Term Loan (EURIBOR + 6.25%, 6.3% Cash, Acquired 07/20, Due 09/26) (18) | | 1,092,757 | | | 820,169 | | | 1,092,757 | |
| | | | 11,506,412 | | | 10,036,343 | | | 11,358,885 | |
| | | | | | | | | | |
Highbridge Loan Management Ltd: Series 2014A-19 (0.1%)*(3) (9) (12) | | Structured Finance | | Structured Secured Note - Class E (LIBOR + 6.75%, 7.0% Cash, Acquired 03/20, Due 07/30) | | 1,000,000 | | | 833,749 | | | 978,180 | |
| | | | 1,000,000 | | | 833,749 | | | 978,180 | |
| | | | | | | | | | |
Highpoint Global LLC (0.7%)*(7) (23) | | Government Services | | Second Lien Note (12.0% Cash, 2.0% PIK, Acquired 12/20, Due 09/22) | | 5,307,799 | | | 5,286,568 | | | 5,286,568 | |
| | | | 5,307,799 | | | 5,286,568 | | | 5,286,568 | |
| | | | | | | | | | |
Holley Performance Products (Holley Purchaser, Inc.) (2.4%)*(7) (9) (12) | | Automotive Parts & Equipment | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 5.2% Cash, Acquired 10/18, Due 10/25) | | 16,936,387 | | | 16,754,221 | | | 16,936,387 | |
| | | | 16,936,387 | | | 16,754,221 | | | 16,936,387 | |
| | | | | | | | | | |
HTI Technology & Industries (1.70%)* (7) (23) | | Electronic Component Manufacturing | | Second Lien Note (12.0% Cash, 4.8% PIK, Acquired 12/20, Due 09/24) | | 12,619,964 | | | 12,115,165 | | | 12,115,165 | |
| | | | 12,619,964 | | | 12,115,165 | | | 12,115,165 | |
| | | | | | | | | | |
HW Holdco, LLC (Hanley Wood LLC) (1.0%)*(7) (9) (12) | | Advertising | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/18, Due 12/24) | | 7,527,218 | | | 7,396,115 | | | 7,527,218 | |
| | | | 7,527,218 | | | 7,396,115 | | | 7,527,218 | |
| | | | | | | | | | |
Hyperion Materials & Technologies, Inc. (1.9%)*(7) (9) (12) | | Industrial Machinery | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 08/19, Due 08/26) | | 13,855,795 | | | 13,643,767 | | | 13,700,560 | |
| | | | 13,855,795 | | | 13,643,767 | | | 13,700,560 | |
| | | | | | | | | | |
IGL Holdings III Corp. (1.9%)*(7) (9) (12) | | Commercial Printing | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/26) | | 14,025,147 | | | 13,635,887 | | | 13,626,360 | |
| | | | 14,025,147 | | | 13,635,887 | | | 13,626,360 | |
| | | | | | | | | | |
IM Analytics Holding, LLC (d/b/a NVT) (1.0%)*(7) (9) (12) | | Electronic Instruments & Components | | First Lien Senior Secured Term Loan (LIBOR + 7.0%, 8.0% Cash, Acquired 11/19, Due 11/23) | | 8,209,191 | | | 8,147,872 | | | 6,982,738 | |
| | Warrant (68,950 units, Acquired 11/19) | | | | — | | | — | |
| | | | 8,209,191 | | | 8,147,872 | | | 6,982,738 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
TRIANGLE CAPITAL CORPORATION Consolidated Schedule of Investments — (Continued) December 31, 2016 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
RockYou, Inc. (0%)* | | Mobile Game Advertising Network | | Common Stock (67,585 shares) | | | | $ | 111,000 |
| | $ | 111,000 |
|
| | | | | | 111,000 |
| | 111,000 |
|
| | | | | | | | | | |
Rotolo Consultants, Inc. (1%)* | | Landscape Services | | Subordinated Note (11% Cash, 3% PIK, Due 08/21) | | $ | 6,904,210 |
| | 6,792,686 |
| | 6,792,686 |
|
| | Series A Preferred Units (39 units) | | | | 3,654,253 |
| | 1,671,000 |
|
| | | | 6,904,210 |
| | 10,446,939 |
| | 8,463,686 |
|
| | | | | | | | | | |
SCA Pharmaceuticals, LLC (0%)* | | Provider of Pharmaceutical Products | | Subordinated Note (LIBOR + 9.0%, 10% Cash, Due 12/20)(8) | | 3,000,000 |
| | 2,700,000 |
| | 2,700,000 |
|
| | | | 3,000,000 |
| | 2,700,000 |
| | 2,700,000 |
|
| | | | | | | | | | |
SCUF Gaming, Inc. (4%)* | | Gaming Controller Manufacturer | | Senior Notes (LIBOR + 8.5%, 9.5% Cash, Due 12/21)(8) | | 25,008,000 |
| | 24,507,840 |
| | 24,507,840 |
|
| | Common Stock (27,112 shares) | | | | 742,000 |
| | 742,000 |
|
| | | | 25,008,000 |
| | 25,249,840 |
| | 25,249,840 |
|
| | | | | | | | | | |
Smile Brands, Inc. (4%)* | | Dental Service Organization | | Subordinated Notes (10% Cash, 2% PIK, Due 02/23) | | 22,341,283 |
| | 21,910,129 |
| | 21,910,129 |
|
| | Class A Units (3,000 units) | | | | 3,000,000 |
| | 3,000,000 |
|
| | | | 22,341,283 |
| | 24,910,129 |
| | 24,910,129 |
|
| | | | | | | | | | |
SPC Partners V, LP (0%)*(4) | | Multi-Sector Holdings | | 0.7% Limited Partnership Interest | | | | 1,922,865 |
| | 2,019,000 |
|
| | | | | | 1,922,865 |
| | 2,019,000 |
|
| | | | | | | | | | |
Specialized Desanders, Inc. (2%)*(4) | | Sand and Particulate Removal Equipment Provider for Oil and Gas Companies | | Subordinated Note (12% Cash, 2% PIK, Due 03/20) | | 16,110,042 |
| | 15,966,524 |
| | 12,524,143 |
|
Class C Partnership Units (2,000,000 units) | | | | 1,937,421 |
| | 2,813,000 |
|
| | | 16,110,042 |
| | 17,903,945 |
| | 15,337,143 |
|
| | | | | | | | | | |
Tate's Bake Shop (2%)* | | Producer of Baked Goods | | Subordinated Note (10% Cash, 3% PIK, Due 02/20) | | 10,737,451 |
| | 10,606,430 |
| | 10,606,430 |
|
| | Limited Partnership Interest | | | | 925,000 |
| | 1,310,000 |
|
| | | | 10,737,451 |
| | 11,531,430 |
| | 11,916,430 |
|
| | | | | | | | | | |
TCFI Merlin LLC (2%)* | | Specialty Staffing Service Provider | | Senior Notes (10% Cash, 1% PIK, Due 09/19) | | 13,396,027 |
| | 13,212,935 |
| | 13,212,935 |
|
| | Limited Partnership Units (500,500 units) | | | | 500,000 |
| | 578,000 |
|
| | | | 13,396,027 |
| | 13,712,935 |
| | 13,790,935 |
|
| | | | | | | | | | |
The Cook & Boardman Group, LLC (3%)* | | Distributor of Doors and Related Products | | Subordinated Note (10% Cash, 2.5% PIK, Due 03/20) | | 14,840,320 |
| | 14,656,890 |
| | 14,656,890 |
|
| | Class A Units (1,400,000 units) | | | | 1,400,000 |
| | 2,663,000 |
|
| | | | 14,840,320 |
| | 16,056,890 |
| | 17,319,890 |
|
| | | | | | | | | | |
Trademark Global LLC (3%)* | | Supplier to Mass Market Internet Retail | | Subordinated Note (10% Cash, 1.3% PIK, Due 04/23) | | 14,800,000 |
| | 14,584,165 |
| | 14,584,165 |
|
| | Class A Units (1,500,000 units) | | | | 1,500,000 |
| | 1,500,000 |
|
| | Class B Units (1,500,000 units) | | | | — |
| | — |
|
| | | | 14,800,000 |
| | 16,084,165 |
| | 16,084,165 |
|
| | | | | | | | | | |
Travelpro Products, Inc. ("Travelpro") and TP - Holiday Group Limited ("TP") (3%)* | | Luggage and Travel Bag Supplier | | Second Lien Term Note - Travelpro (11% Cash, 2% PIK, Due 11/22) | | 10,126,055 |
| | 9,919,675 |
| | 9,919,675 |
|
| | Second Lien Term Note - TP (11% Cash, 2% PIK, Due 11/22)(4) | | 8,970,540 |
| | 8,784,798 |
| | 8,562,599 |
|
| | Common Units - Travelpro (2,000,000 units) | | | | 2,000,000 |
| | 2,077,000 |
|
| | | | 19,096,595 |
| | 20,704,473 |
| | 20,559,274 |
|
| | | | | | | | | | |
United Biologics, LLC (2%)* | | Allergy Immunotherapy | | Senior Note (12% Cash, 2% PIK, Due 04/18) | | 12,758,807 |
| | 12,686,184 |
| | 12,686,184 |
|
| Class A-1 Common Units (18,818 units) | | | | 137,324 |
| | 137,000 |
|
| Class A Common Units (177,935 units) | | | | 1,999,989 |
| | 1,767,000 |
|
| Class A-2 Common Kicker Units (444,003 units) | | | | — |
| | — |
|
| Class A-1 Common Kicker Units (14,114 units) | | | | — |
| | — |
|
| Class A, Class A-1, Class A-1 Kicker & Class B Unit Purchase Warrants | | | | 838,117 |
| | 361,000 |
|
| | | | 12,758,807 |
| | 15,661,614 |
| | 14,951,184 |
|
| | | | | | | | | | |
Vantage Mobility International, LLC (5%)* | | Wheelchair Accessible Vehicle Manufacturer | | Subordinated Notes (10.2% Cash, Due 09/21) | | 29,350,000 |
| | 28,785,893 |
| | 28,785,893 |
|
| | Class A Units (1,750,000 units) | | | | 1,750,000 |
| | 1,750,000 |
|
| | | | 29,350,000 |
| | 30,535,893 |
| | 30,535,893 |
|
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
INOS 19-090 GmbH (1.7%)*(3) (7) (9) (18) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (EURIBOR + 6.1%, 6.1% Cash, Acquired 12/20, Due 10/27) | | $ | 12,275,911 | | | $ | 11,888,699 | | | $ | 11,934,913 | |
| | | | 12,275,911 | | | 11,888,699 | | | 11,934,913 | |
| | | | | | | | | | |
Institutional Shareholder Services, Inc. (0.7%)*(7) (9) (12) | | Diversified Support Services | | Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 8.7% Cash, Acquired 03/19, Due 03/27) | | 4,951,685 | | | 4,830,132 | | | 4,951,685 | |
| | | | 4,951,685 | | | 4,830,132 | | | 4,951,685 | |
| | | | | | | | | | |
International Precision Components (1.0%)*(7) (23) | | Plastic Injection Molding | | Second Lien Loan (12.0% Cash, 2.0% PIK, Acquired 12/20, Due 10/24) | | 7,000,000 | | | 6,895,000 | | | 6,895,000 | |
| | | | 7,000,000 | | | 6,895,000 | | | 6,895,000 | |
| | | | | | | | | | |
ISS#2, LLC (d/b/a Industrial Services Solutions) (0.9%)*(7) (9) (12) | | Commercial Services & Supplies | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 02/20, Due 02/26) | | 6,819,551 | | | 6,700,432 | | | 6,300,583 | |
| | | | 6,819,551 | | | 6,700,432 | | | 6,300,583 | |
| | | | | | | | | | |
Jade Bidco Limited (Jane's) (1.7%)*(3) (7) (9) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.8% Cash, 2.0% PIK, Acquired 11/19, Due 12/26)(13) | | 10,538,414 | | | 10,291,098 | | | 10,353,797 | |
| | First Lien Senior Secured Term Loan (EURIBOR + 4.5%, 4.5% Cash, 2.0% PIK, Acquired 11/19, Due 12/26)(19) | | 2,057,007 | | | 1,813,166 | | | 2,020,971 | |
| | | | 12,595,421 | | | 12,104,264 | | | 12,374,768 | |
| | | | | | | | | | |
Jedson Engineering, Inc. (0.4%)*(7) (8) (23) | | Engineering & Construction Management | | First Lien Loan (12.0% Cash, 3.0% PIK, Acquired 12/20, Due 06/22) | | 9,560,423 | | | 3,000,000 | | | 3,000,000 | |
| | | | 9,560,423 | | | 3,000,000 | | | 3,000,000 | |
| | | | | | | | | | |
JetBlue 2019-1 Class B Pass Through Trust (0.7%)* | | Airlines | | Structured Secured Note - Class B (8.0% Cash, Acquired 08/20, Due 11/27) | | 4,721,693 | | | 4,721,693 | | | 5,048,044 | |
| | | | 4,721,693 | | | 4,721,693 | | | 5,048,044 | |
| | | | | | | | | | |
Kano Laboratories LLC (1.4%)*(7) (9) (12) | | Chemicals, Plastics & Rubber | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 11/20, Due 09/26) | | 9,873,095 | | | 9,589,856 | | | 9,584,754 | |
| | Partnership Equity (227.2 units, Acquired 11/20) | | | | 227,198 | | | 227,200 | |
| | | | 9,873,095 | | | 9,817,054 | | | 9,811,954 | |
| | | | | | | | | | |
Kenan Advantage Group Inc. (0.6%)* (9) (10) | | Trucking | | First Lien Senior Secured Term Loan (LIBOR + 3.0%, 4.0% Cash, Acquired 08/18, Due 07/22) | | 4,265,453 | | | 4,263,951 | | | 4,217,125 | |
| | | | 4,265,453 | | | 4,263,951 | | | 4,217,125 | |
| | | | | | | | | | |
Kene Acquisition, Inc. (En Engineering) (1.0%)*(7) (9) (12) | | Oil & Gas Equipment & Services | | First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 08/19, Due 08/26) | | 7,298,712 | | | 7,173,784 | | | 7,202,679 | |
| | | | 7,298,712 | | | 7,173,784 | | | 7,202,679 | |
| | | | | | | | | | |
Kona Buyer, LLC (4.8%)*(7) (9) (12) | | High Tech Industries | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.3% Cash, Acquired 12/20, Due 12/27) | | 35,000,000 | | | 34,132,135 | | | 34,125,000 | |
| | | | 35,000,000 | | | 34,132,135 | | | 34,125,000 | |
| | | | | | | | | | |
LAC Intermediate, LLC (f/k/a Lighthouse Autism Center) (1.3%)*(7) (9) (12) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 10/18, Due 10/24) | | 9,218,032 | | | 9,083,136 | | | 8,987,581 | |
| | Class A LLC Units (154,320 units, Acquired 10/18) | | | | 154,320 | | | 184,312 | |
| | | | 9,218,032 | | | 9,237,456 | | | 9,171,893 | |
| | | | | | | | | | |
Learfield Communications, LLC (1.0%)* | | Broadcasting | | First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 08/20, Due 12/23)(9)(10) | | 136,803 | | | 96,446 | | | 123,073 | |
| | First Lien Senior Secured Term Loan (LIBOR + 3.00%, 3.2% Cash, 10.0% PIK, Acquired 08/20, Due 12/23)(12) | | 7,181,368 | | | 7,117,163 | | | 7,133,468 | |
| | | | 7,318,171 | | | 7,213,609 | | | 7,256,541 | |
| | | | | | | | | | |
Legal Solutions Holdings (1.3%)*(7) (23) | | Business Services | | Senior Subordinated Loan (6.0% Cash, 10.0% PIK, Acquired 12/20, Due 03/22) | | 10,398,126 | | | 9,597,471 | | | 9,597,471 | |
| | | | 10,398,126 | | | 9,597,471 | | | 9,597,471 | |
| | | | | | | | | | |
MB2 Dental Solutions, LLC (1.0%)*(7) (9) (12) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 6.5%, 6.7% Cash, Acquired 09/19, Due 09/23) | | 7,443,622 | | | 7,381,819 | | | 7,443,622 | |
| | | | 7,443,622 | | | 7,381,819 | | | 7,443,622 | |
| | | | | | | | | | |
Media Recovery, Inc. (SpotSee) (1.3%)*(7) (9) (12) | | Containers, Packaging & Glass | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 11/25) | | 9,179,626 | | | 8,873,020 | | | 9,018,983 | |
| | | | 9,179,626 | | | 8,873,020 | | | 9,018,983 | |
| | | | | | | | | | |
Modern Star Holdings Bidco Pty Limited. (1.4%)*(3) (7) (9) (22) | | Non-durable Consumer Goods | | First Lien Senior Secured Term Loan (BBSY + 6.25%, 6.8% Cash, Acquired 12/20, Due 12/26) | | 10,482,797 | | | 9,973,821 | | | 10,101,881 | |
| | | | 10,482,797 | | | 9,973,821 | | | 10,101,881 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
TRIANGLE CAPITAL CORPORATION Consolidated Schedule of Investments — (Continued) December 31, 2016 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
Water Pik, Inc. (5%)* | | Oral Health and Shower Head Supplier | | Second Lien Term Loan (LIBOR + 8.75%, 9.8% Cash, Due 01/21)(8) | | $ | 31,150,970 |
| | $ | 30,769,847 |
| | $ | 30,769,847 |
|
| | | | 31,150,970 |
| | 30,769,847 |
| | 30,769,847 |
|
| | | | | | | | | | |
Wheel Pros Holdings, Inc. (3%)* | | Wheel/Rim and Performance Tire Distributor | | Subordinated Note (LIBOR + 7.0%, 11% Cash, Due 06/20)(8) | | 13,822,500 |
| | 13,605,040 |
| | 13,605,040 |
|
| | Class A Units (2,000 units) | | | | 1,954,144 |
| | 1,954,000 |
|
| | | | 13,822,500 |
| | 15,559,184 |
| | 15,559,040 |
|
| | | | | | | | | | |
Women's Marketing, Inc. (2%)* | | Full-Service Media Organization | | Subordinated Note (11% Cash, 1.5% PIK, Due 06/21)(6) | | 16,868,045 |
| | 16,141,439 |
| | 11,093,000 |
|
| | Class A Common Units (16,300 units) | | | | 1,630,000 |
| | — |
|
| | | | 16,868,045 |
| | 17,771,439 |
| | 11,093,000 |
|
| | | | | | | | | | |
WSO Holdings, LP (1%)* | | Organic/Fair Trade Sugar, Syrup, Nectar and Honey Producer | | Common Points (3,000 points) | | | | 3,000,000 |
| | 3,576,000 |
|
| | | | | 3,000,000 |
| | 3,576,000 |
|
| | | | | | |
YummyEarth Inc. (3%)* | | Organic Candy Manufacturer | | Senior Notes (LIBOR + 8.5%, 9.5% Cash, Due 08/20)(8) | | 22,000,000 |
| | 21,565,471 |
| | 19,564,000 |
|
| | Limited Partnership Interest | | | | 3,496,500 |
| | — |
|
| | | | 22,000,000 |
| | 25,061,971 |
| | 19,564,000 |
|
| | | | | | |
Subtotal Non–Control / Non–Affiliate Investments | | 825,243,841 |
| | 888,974,154 |
| | 857,604,639 |
|
| | | | | | | | | | |
Affiliate Investments: | | | | | | | | | | |
All Metals Holding, LLC (1%)* | | Steel Processor and Distributor | | Subordinated Note (12% Cash, 1% PIK, Due 12/21) | | 6,433,333 |
| | 6,249,220 |
| | 6,249,220 |
|
| | Units (318,977 units) | | | | 793,331 |
| | 754,000 |
|
| | | | 6,433,333 |
| | 7,042,551 |
| | 7,003,220 |
|
| | | | | | | | | | |
CIS Secure Computing Inc. (2%)* | | Secure Communications and Computing Solutions Provider | | Subordinated Note (12% Cash, 3% PIK, Due 03/18) | | 11,670,708 |
| | 11,670,708 |
| | 11,670,708 |
|
Common Stock (84 shares) | | | | 502,320 |
| | 2,155,000 |
|
| | 11,670,708 |
| | 12,173,028 |
| | 13,825,708 |
|
| | | | | | | | | | |
Consolidated Lumber Company LLC (1%)* | | Lumber Yard Operator | | Subordinated Note (10% Cash, 2% PIK, Due 09/20) | | 4,193,848 |
| | 4,121,389 |
| | 4,278,000 |
|
| | Class A Units (15,000 units) | | | | 1,500,000 |
| | 2,481,000 |
|
| | | | 4,193,848 |
| | 5,621,389 |
| | 6,759,000 |
|
| | | | | | | | | | |
DPII Holdings, LLC (0%)* | | Satellite Communication Business | | Tranche I & II Subordinated Notes (12% Cash, 4% PIK, Due 01/18)(6) | | 3,744,709 |
| | 3,227,001 |
| | 2,356,001 |
|
| | Tranche III Subordinated Note (19% PIK, Due 01/18)(6) | | 2,408,752 |
| | 2,148,462 |
| | — |
|
| | Class A Membership Interest (17,308 units) | | | | 1,107,692 |
| | — |
|
| | | | 6,153,461 |
| | 6,483,155 |
| | 2,356,001 |
|
| | | | | | | | | | |
FCL Holding SPV, LLC (0%)* | | Commercial Printing Services | | Class A Interest (24,873 units) | | | | 292,000 |
| | 645,000 |
|
| | Class B Interest (48,427 units) | | | | — |
| | 101,000 |
|
| | Class C Interest (3,746 units) | | | | — |
| | — |
|
| | | | | | 292,000 |
| | 746,000 |
|
| | | | | | | | | | |
Frank Entertainment Group, LLC (3%)* | | Movie Theatre and Family Entertainment Operator | | Senior Note (LIBOR + 7%, 10% Cash, 5.8% PIK, Due 06/18)(8) | | 9,997,644 |
| | 9,940,684 |
| | 9,940,684 |
|
| | Class A Redeemable Preferred Units (10.5% Cash) (196,718 units) | | | | 3,934,666 |
| | 4,566,904 |
|
| | Class B Redeemable Preferred Units (18,667 units) | | | | 433,334 |
| | 1,660,810 |
|
| | Class C Redeemable Preferred Units (25,846 units) | | | | 600,000 |
| | 600,000 |
|
| | Class A Common Units (43,077 units) | | | | 1,000,000 |
| | — |
|
| | Class A Common Warrants | | | | 632,000 |
| | — |
|
| | | | 9,997,644 |
| | 16,540,684 |
| | 16,768,398 |
|
| | | | | | | | | | |
MS Bakery Holdings, Inc. (1%)* | | Baked Goods Provider | | Preferred Units (233 units) | | | | 211,867 |
| | 397,000 |
|
| Common B Units (3,000 units) | | | | 23,140 |
| | 2,110,000 |
|
| Common A Units (1,652 units) | | | | 14,993 |
| | 1,162,000 |
|
| | | | | | 250,000 |
| | 3,669,000 |
|
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
MSG National Properties (0.3%)*(3) (7) (9) (12) | | Hotel, Gaming, & Leisure | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.0% Cash, Acquired 11/20, Due 11/25) | | $ | 2,461,759 | | | $ | 2,389,417 | | | $ | 2,474,068 | |
| | | | 2,461,759 | | | 2,389,417 | | | 2,474,068 | |
| | | | | | | | | | |
Murphy Midco Limited (1.3%)*(3) (7) (9) (16) | | Media, Diversified & Production | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.50%, 5.5% Cash, Acquired 11/20, Due 11/27) | | 9,904,416 | | | 9,228,222 | | | 9,508,239 | |
| | | | 9,904,416 | | | 9,228,222 | | | 9,508,239 | |
| | | | | | | | | | |
Music Reports, Inc. (0.8%)*(7) (9) (10) | | Media & Entertainment | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 08/20, Due 08/26) | | 5,592,972 | | | 5,459,912 | | | 5,469,461 | |
| | | | 5,592,972 | | | 5,459,912 | | | 5,469,461 | |
| | | | | | | | | | |
Neuberger Berman CLO Ltd: Series 2020-36A (0.3%)*(3) (9) (12) | | Structured Finance | | Structured Secured Note - Class E (LIBOR + 7.81%, 8.0% Cash, Acquired 03/20, Due 04/33) | | 2,500,000 | | | 2,476,562 | | | 2,501,790 | |
| | | | 2,500,000 | | | 2,476,562 | | | 2,501,790 | |
| | | | | | | | | | |
NGS US Finco, LLC (f/k/a Dresser Natural Gas Solutions) (1.6%)*(7) (9) (10) | | Energy Equipment & Services | | First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 10/18, Due 10/25) | | 11,855,804 | | | 11,813,315 | | | 11,645,956 | |
| | | | 11,855,804 | | | 11,813,315 | | | 11,645,956 | |
| | | | | | | | | | |
Omni Intermediate Holdings, LLC (1.4%)*(7) (9) (10) | | Transportation | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) | | 10,000,000 | | | 9,700,263 | | | 9,700,000 | |
| | | | 10,000,000 | | | 9,700,263 | | | 9,700,000 | |
| | | | | | | | | | |
Options Technology Ltd. (1.3%)*(3) (7) (9) (12) | | Computer Services | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/19, Due 12/25) | | 9,796,552 | | | 9,583,342 | | | 9,633,049 | |
| | | | 9,796,552 | | | 9,583,342 | | | 9,633,049 | |
| | | | | | | | | | |
Pacific Health Supplies Bidco Pty Limited (2.5%)*(3) (7) (9) (21) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (BBSY + 6.0%, 6.5% Cash, Acquired 12/20, Due 12/25) | | 18,489,367 | | | 17,237,355 | | | 17,919,335 | |
| | | | 18,489,367 | | | 17,237,355 | | | 17,919,335 | |
| | | | | | | | | | |
Pare SAS (SAS Maurice MARLE) (0.7%)*(3) (7) (9) (19) | | Health Care Equipment | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, 1.5% PIK, Acquired 12/19, Due 12/26) | | 4,817,430 | | | 4,305,403 | | | 4,683,024 | |
| | | | 4,817,430 | | | 4,305,403 | | | 4,683,024 | |
| | | | | | | | | | |
Patriot New Midco 1 Limited (Forensic Risk Alliance) (1.2%)*(3) (7) (9) | | Diversified Financial Services | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 02/20, Due 02/27)(12) | | 4,489,471 | | | 4,372,581 | | | 4,388,907 | |
| | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 02/20, Due 02/27) (18) | | 4,126,940 | | | 3,579,755 | | | 4,034,496 | |
| | | | 8,616,411 | | | 7,952,336 | | | 8,423,403 | |
| | | | | | | | | | |
PerTronix, LLC (1.1%)*(7) (9) (13) | | Automotive | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/20, Due 10/26) | | 8,308,515 | | | 8,186,879 | | | 8,183,887 | |
| | | | 8,308,515 | | | 8,186,879 | | | 8,183,887 | |
| | | | | | | | | | |
Playtika Holding Corp. (0.5%)*(9) (12) | | Leisure, Amusement & Entertainment | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 03/20, Due 12/24) | | 3,800,000 | | | 3,536,230 | | | 3,818,582 | |
| | | | 3,800,000 | | | 3,536,230 | | | 3,818,582 | |
| | | | | | | | | | |
Premier Technical Services Group (Project Graphite) (0.4%)*(3) (7) (9) (15) | | Construction & Engineering | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 7.3% Cash, Acquired 08/19, Due 06/26) | | 3,108,900 | | | 2,681,906 | | | 3,039,998 | |
| | | | 3,108,900 | | | 2,681,906 | | | 3,039,998 | |
| | | | | | | | | | |
Premium Franchise Brands, LLC (3.4%)*(7) (9) (12) | | Research & Consulting Services | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 12/26) | | 25,000,000 | | | 24,501,666 | | | 24,500,000 | |
| | | | 25,000,000 | | | 24,501,666 | | | 24,500,000 | |
| | | | | | | | | | |
Process Equipment, Inc. (ProcessBarron) (0.8%)*(7) (9) (12) | | Industrial Air & Material Handling Equipment | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 03/19, Due 03/25) | | 6,173,594 | | | 6,090,812 | | | 5,612,414 | |
| | | | 6,173,594 | | | 6,090,812 | | | 5,612,414 | |
| | | | | | | | | | |
Professional Datasolutions, Inc. (PDI) (2.3%)*(7) (9) (12) | | Application Software | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 03/19, Due 10/24) | | 16,924,678 | | | 16,905,254 | | | 16,628,496 | |
| | | | 16,924,678 | | | 16,905,254 | | | 16,628,496 | |
| | | | | | | | | | |
PSC UK Pty Ltd. (0.4%)*(3) (7) (9) (15) | | Insurance Services | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.0%, 6.5% Cash, Acquired 11/19, Due 10/24) | | 2,684,817 | | | 2,439,292 | | | 2,614,299 | |
| | | | 2,684,817 | | | 2,439,292 | | | 2,614,299 | |
| | | | | | | | | | |
Questel Unite (3.1%)*(3) (7) (9) (18) | | Business Services | | First Lien Senior Secured Term Loan (EURIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 12/27) | | 22,451,369 | | | 21,728,443 | | | 21,905,058 | |
| | | | 22,451,369 | | | 21,728,443 | | | 21,905,058 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
TRIANGLE CAPITAL CORPORATION Consolidated Schedule of Investments — (Continued) December 31, 2016 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
NB Products, Inc. (8%)* | | Distributor of Work Apparel and Accessories | | Subordinated Note (12% Cash, 2% PIK, Due 02/20) | | $ | 23,105,315 |
| | $ | 22,751,190 |
| | $ | 22,751,190 |
|
| Jr. Subordinated Note (10% PIK, Due 02/20) | | 4,705,830 |
| | 4,595,921 |
| | 4,595,921 |
|
| Jr. Subordinated Bridge Note (20% PIK, Due 05/21) | | 2,002,586 |
| | 1,972,727 |
| | 1,972,727 |
|
| Series A Redeemable Senior Preferred Stock (7,839 shares) | | | | 7,621,648 |
| | 9,412,000 |
|
| Common Stock (1,668,691 shares) | | | | 333,738 |
| | 9,779,000 |
|
| | | 29,813,731 |
| | 37,275,224 |
| | 48,510,838 |
|
| | | | | | | | | | |
PCX Aerostructures, LLC (4%)* | | Aerospace Component Manufacturer | | Subordinated Note (10.5% Cash, Due 10/19) | | 29,647,359 |
| | 29,148,152 |
| | 21,960,000 |
|
| Series A Preferred Stock (6,066 shares) | | | | 6,065,621 |
| | — |
|
Series B Preferred Stock (411 shares) | | | | 410,514 |
| | — |
|
Class A Common Stock (121,922 shares) | | | | 30,480 |
| | — |
|
| | | 29,647,359 |
| | 35,654,767 |
| | 21,960,000 |
|
| | | | | | | | | | |
Team Waste, LLC (1%)* | | Environmental and Facilities Services | | Preferred Units (455,000 units) | | | | 9,100,000 |
| | 9,100,000 |
|
| | | | | | | 9,100,000 |
| | 9,100,000 |
|
| | | | | | | | | | |
Technology Crops, LLC (2%)* | | Supply Chain Management Services | | Subordinated Notes (12% Cash, 5% PIK, Due 09/17) | | 11,837,622 |
| | 11,837,622 |
| | 11,837,622 |
|
Common Units (50 units) | | | | 500,000 |
| | — |
|
| | | 11,837,622 |
| | 12,337,622 |
| | 11,837,622 |
|
| | | | | | | | | | |
TGaS Advisors, LLC (2%)* | | Advisory Solutions to Pharmaceutical Companies | | Senior Note (10% Cash, 1% PIK, Due 11/19) | | 9,674,276 |
| | 9,521,986 |
| | 9,521,986 |
|
| Preferred Units (1,685,357 units) | | | | 1,556,069 |
| | 1,270,000 |
|
| | | 9,674,276 |
| | 11,078,055 |
| | 10,791,986 |
|
| | | | | | | | | | |
Tulcan Fund IV, L.P. (0%)* | | Custom Forging and Fastener Supplies | | Common Units (1,000,000 units) | | | | 1,000,000 |
| | — |
|
| | | | | | 1,000,000 |
| | — |
|
| | | | | | | | | | |
United Retirement Plan Consultants, Inc. (0%)* | | Retirement Plan Administrator | | Series A Preferred Shares (9,400 shares) | | | | 205,748 |
| | 257,000 |
|
| | Common Shares (100,000 shares) | | | | 1,000,000 |
| | 301,000 |
|
| | | | | | 1,205,748 |
| | 558,000 |
|
| | | | | | | | | | |
Waste Recyclers Holdings, LLC (0%)* | | Environmental and Facilities Services | | Class A Preferred Units (280 units) | | | | 2,251,100 |
| | — |
|
Class B Preferred Units (11,484,867 units) | | | | 3,304,218 |
| | 817,000 |
|
Common Unit Purchase Warrant (1,170,083 units) | | | | 748,900 |
| | — |
|
Common Units (153,219 units) | | | | 180,783 |
| | — |
|
| | | | | 6,485,001 |
| | 817,000 |
|
| | | | | | | | | | |
Wythe Will Tzetzo, LLC (1%)* | | Confectionery Goods Distributor | | Series A Preferred Units (99,829 units) | | | | — |
| | 6,808,000 |
|
| | | | | | — |
| | 6,808,000 |
|
| | | | | | | | | | |
Subtotal Affiliate Investments | | | | 119,421,982 |
| | 162,539,224 |
| | 161,510,773 |
|
| | | | | | | | | | |
Control Investments: | | | | | | | | | | |
CRS Reprocessing, LLC (1%)* | | Fluid Reprocessing Services | | Senior Notes (LIBOR + 3.5%, 4.3% Cash, Due 06/17)(8) | | 2,942,769 |
| | 2,942,769 |
| | 2,942,769 |
|
| Split Collateral Term Loans (8% Cash, Due 06/17) | | 11,192,464 |
| | 11,192,464 |
| | 6,182,000 |
|
Series F Preferred Units (705,321 units) | | | | 9,134,807 |
| | — |
|
| Common Units (15,174 units) | | | | — |
| | — |
|
| | | 14,135,233 |
| | 23,270,040 |
| | 9,124,769 |
|
| | | | | | | | | | |
DCWV Acquisition Corporation (0%)* | | Arts & Crafts and Home Decor Products Designer and Supplier | | Senior Subordinated Note (15% PIK, Due 12/19)(6) | | 291,875 |
| | 250,000 |
| | 250,000 |
|
| | Subordinated Note (12% Cash, 3% PIK, Due 12/19)(6) | | 8,090,699 |
| | 6,178,633 |
| | 1,389,000 |
|
| Jr. Subordinated Note (15% PIK, Due 12/19)(6) | | 2,440,829 |
| | 2,000,000 |
| | — |
|
| Series A Preferred Equity (1,200 shares) | | | | 1,200,000 |
| | — |
|
| 100% Common Shares | | | | — |
| | — |
|
| | | 10,823,403 |
| | 9,628,633 |
| | 1,639,000 |
|
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
Radwell International, LLC (1.9%)*(7) (9) (12) | | Wholesale | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 12/26) | | $ | 14,264,053 | | | $ | 13,916,962 | | | $ | 13,914,053 | |
| | | | 14,264,053 | | | 13,916,962 | | | 13,914,053 | |
| | | | | | | | | | |
Recovery Point Systems, Inc. (1.6%)*(7) (9) (10) | | Technology | | First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 03/20, Due 07/26) | | 11,795,776 | | | 11,572,084 | | | 11,766,287 | |
| | | | 11,795,776 | | | 11,572,084 | | | 11,766,287 | |
| | | | | | | | | | |
REP SEKO MERGER SUB LLC (1.2%)* (7) (9) (10) | | Air Freight & Logistics | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) | | 8,545,455 | | | 8,290,487 | | | 8,345,456 | |
| | | | 8,545,455 | | | 8,290,487 | | | 8,345,456 | |
| | | | | | | | | | |
RPX Corporation (2.4%)*(7) (9) (12) | | Research & Consulting Services | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 10/20, Due 10/25) | | 17,500,000 | | | 17,110,715 | | | 17,106,250 | |
| | | | 17,500,000 | | | 17,110,715 | | | 17,106,250 | |
| | | | | | | | | | |
RR Ltd: Series 2019-6A (0.3%)*(3) (12) | | Structured Finance | | Structured Secured Note - Class D (LIBOR + 6.75%, 7.0% Cash, Acquired 03/20, Due 04/30) | | 2,000,000 | | | 1,661,539 | | | 2,000,124 | |
| | | | 2,000,000 | | | 1,661,539 | | | 2,000,124 | |
| | | | | | | | | | |
Ruffalo Noel Levitz, LLC (1.3%)*(7) (9) (12) | | Media Services | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 01/19, Due 05/22) | | 9,616,736 | | | 9,552,719 | | | 9,567,718 | |
| | | | 9,616,736 | | | 9,552,719 | | | 9,567,718 | |
| | | | | | | | | | |
Safety Products Holdings, LLC (2.5%)* (9) (12) | | Non-durable Consumer Goods | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 12/20, Due 12/26)(7) | | 18,108,567 | | | 17,559,056 | | | 17,555,609 | |
| | Common Stock (424.1 units, Acquired 12/20) | | | | 424,088 | | | 424,090 | |
| | | | 18,108,567 | | | 17,983,144 | | | 17,979,699 | |
| | | | | | | | | | |
Scaled Agile, Inc. (0.7%)*(7) (9) (10) | | Research & Consulting Services | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24) | | 4,845,720 | | | 4,807,839 | | | 4,797,263 | |
| | | | 4,845,720 | | | 4,807,839 | | | 4,797,263 | |
| | | | | | | | | | |
Serta Simmons Bedding LLC (1.5%)*(9) (10) | | Home Furnishings | | Super Priority First Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) | | 7,424,499 | | | 7,234,063 | | | 7,498,744 | |
| | Super Priority Second Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) | | 3,643,817 | | | 3,379,870 | | | 3,272,913 | |
| | | | 11,068,316 | | | 10,613,933 | | | 10,771,657 | |
| | | | | | | | | | |
SISU ACQUISITIONCO., INC. (2.2%)*(7) (9) (12) | | Aerospace & Defense | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 12/20, Due 12/26) | | 16,132,835 | | | 15,811,282 | | | 15,810,178 | |
| | | | 16,132,835 | | | 15,811,282 | | | 15,810,178 | |
| | | | | | | | | | |
SMA Holdings, Inc. (1.0%)*(7) (23) | | Consulting | | First Lien Loan (11.0% Cash, Acquired 12/20, Due 06/24) | | 7,000,000 | | | 6,720,000 | | | 6,720,000 | |
| | Warrants (2.0 units, Acquired 12/20) | | | | 286,781 | | | 286,781 | |
| | | | 7,000,000 | | | 7,006,781 | | | 7,006,781 | |
| | | | | | | | | | |
Smile Brands Group Inc. (2.1%)*(7) (9) (12) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 5.17%, 5.4% Cash, Acquired 10/18, Due 10/24) | | 5,880,607 | | | 5,842,184 | | | 5,824,154 | |
| | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 10/24) | | 9,310,993 | | | 9,030,258 | | | 9,024,500 | |
| | | | 15,191,600 | | | 14,872,442 | | | 14,848,654 | |
| | | | | | | | | | |
SN BUYER, LLC (4.8%)*(7) (9) (12) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 11/26) | | 35,000,000 | | | 34,304,393 | | | 34,300,000 | |
| | | | 35,000,000 | | | 34,304,393 | | | 34,300,000 | |
| | | | | | | | | | |
Springbrook Software (SBRK Intermediate, Inc.) (1.3%)*(7) (9) (12) | | Enterprise Software & Services | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26) | | 9,349,719 | | | 9,152,983 | | | 9,201,599 | |
| | | | 9,349,719 | | | 9,152,983 | | | 9,201,599 | |
| | | | | | | | | | |
SSCP Pegasus Midco Limited (2.3%)*(3) (7) (9) (16) | | Healthcare & Pharmaceuticals | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 12/20, Due 11/27) | | 17,664,989 | | | 16,498,614 | | | 16,733,353 | |
| | | | 17,664,989 | | | 16,498,614 | | | 16,733,353 | |
| | | | | | | | | | |
Syniverse Holdings, Inc. (2.2%)*(9) (12) | | Technology Distributors | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 08/18, Due 03/23) | | 17,480,454 | | | 16,048,735 | | | 15,749,365 | |
| | | | 17,480,454 | | | 16,048,735 | | | 15,749,365 | |
| | | | | | | | | | |
Team Health Holdings, Inc. (0.8%)*(9) (10) | | Health Care Services | | First Lien Senior Secured Term Loan (LIBOR + 2.75%, 3.8% Cash, Acquired 09/18, Due 02/24) | | 6,822,785 | | | 6,659,174 | | | 6,058,906 | |
| | | | 6,822,785 | | | 6,659,174 | | | 6,058,906 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
TRIANGLE CAPITAL CORPORATION Consolidated Schedule of Investments — (Continued) December 31, 2016 |
| | | | | | | | | | | | | | | | |
Portfolio Company | | Industry | | Type of Investment(1)(2)(7) | | Principal Amount | | Cost | | Fair Value(3) |
Gerli & Company (0%)* | | Specialty Woven Fabrics Manufacturer | | Subordinated Note (13% Cash, Due 1/17)(6) | | $ | 648,527 |
| | $ | 375,000 |
| | $ | — |
|
Subordinated Note (8.5% Cash, Due 1/17)(6) | | 4,900,843 |
| | 3,000,000 |
| | — |
|
Class A Preferred Shares (1,211 shares) | | | | 855,000 |
| | — |
|
Class C Preferred Shares (744 shares) | | | | — |
| | — |
|
Class E Preferred Shares (400 shares) | | | | 161,440 |
| | — |
|
Common Stock (300 shares) | | | | 100,000 |
| | — |
|
| | | 5,549,370 |
| | 4,491,440 |
| | — |
|
| | | | | | | | |
SRC Worldwide, Inc. (1%)* | | Specialty Chemical Manufacturer | | Common Stock (5,000 shares) | | | | 8,028,000 |
| | 8,028,000 |
|
| | | | | | 8,028,000 |
| | 8,028,000 |
|
| | | | | | | | | | |
| | | | | | | | | | |
Subtotal Control Investments | | | | 30,508,006 |
| | 45,418,113 |
| | 18,791,769 |
|
| | | | | | | | |
Total Investments, December 31, 2016 (170%)* | | | | $ | 975,173,829 |
| | $ | 1,096,931,491 |
| | $ | 1,037,907,181 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
The Hilb Group, LLC (2.1%)*(7) (9) | | Insurance Brokerage | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26)(11) | | $ | 11,667,719 | | | $ | 11,413,365 | | | $ | 11,541,707 | |
| | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 12/19, Due 12/26)(12) | | 3,602,001 | | | 3,374,934 | | | 3,373,303 | |
| | | | 15,269,720 | | | 14,788,299 | | | 14,915,010 | |
| | | | | | | | | | |
Total Safety U.S. Inc. (0.9%)* (12) | | Diversified Support Services | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 08/25) | | 6,857,482 | | | 6,611,003 | | | 6,576,325 | |
| | | | 6,857,482 | | | 6,611,003 | | | 6,576,325 | |
| | | | | | | | | | |
Transit Technologies LLC (0.7%)*(7) (9) (12) | | Software | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.0% Cash, Acquired 02/20, Due 02/25) | | 6,035,305 | | | 5,859,123 | | | 5,221,746 | |
| | | | 6,035,305 | | | 5,859,123 | | | 5,221,746 | |
| | | | | | | | | | |
Transportation Insight, LLC (3.3%)*(7) (9) (12) | | Air Freight & Logistics | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.6% Cash, Acquired 08/18, Due 12/24) | | 24,506,875 | | | 24,346,335 | | | 23,899,105 | |
| | | | 24,506,875 | | | 24,346,335 | | | 23,899,105 | |
| | | | | | | | | | |
Truck-Lite Co., LLC (3.0%)*(7) (9) (12) | | Automotive Parts & Equipment | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/19, Due 12/26) | | 22,352,885 | | | 21,960,470 | | | 21,791,827 | |
| | | | 22,352,885 | | | 21,960,470 | | | 21,791,827 | |
| | | | | | | | | | |
Trystar, LLC (2.5%)*(7) (9) (12) | | Power Distribution Solutions | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/18, Due 09/23) | | 17,596,398 | | | 17,384,658 | | | 17,288,461 | |
| | Class A LLC Units (384.5 units, Acquired 09/18) | | | | 395,995 | | | 339,474 | |
| | | | 17,596,398 | | | 17,780,653 | | | 17,627,935 | |
| | | | | | | | | | |
Tuf-Tug, Inc. (0.1%)*(7) (23) | | Safety Equipment Manufacturer | | Common Stock (24.6 shares, Acquired 12/20) | | | | 385,047 | | | $ | 385,047 | |
| | | | | | 385,047 | | | 385,047 | |
| | | | | | | | | | |
Turf Products, LLC (1.2%)*(7) (23) | | Landscaping & Irrigation Equipment Distributor | | Senior Subordinated Debt (10.0% Cash, Acquired 12/20, Due 10/23) | | 8,697,056 | | | 8,383,962 | | | 8,383,962 | |
| | | | 8,697,056 | | | 8,383,962 | | | 8,383,962 | |
| | | | | | | | | | |
U.S. Gas & Electric, Inc. (0.2%)*(7) (23) | | Energy Services | | Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25) | | 2,285,250 | | | 1,785,250 | | | 1,785,250 | |
| | Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25)(24) | | 2,485,469 | | | — | | | — | |
| | | | 4,770,719 | | | 1,785,250 | | | 1,785,250 | |
| | | | | | | | | | |
U.S. Silica Company (0.2%)*(3) (9) (10) | | Metal & Glass Containers | | First Lien Senior Secured Term Loan (LIBOR + 4.0%, 5.0% Cash, Acquired 08/18, Due 05/25) | | 1,487,525 | | | 1,490,312 | | | 1,299,724 | |
| | | | 1,487,525 | | | 1,490,312 | | | 1,299,724 | |
| | | | | | | | | | |
UKFast Leaders Limited (3.3%)*(3) (7) (9) (14) | | Technology | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 09/20, Due 9/27) | | 24,226,278 | | | 22,140,865 | | | 23,625,466 | |
| | | | 24,226,278 | | | 22,140,865 | | | 23,625,466 | |
| | | | | | | | | | |
USF Holdings LLC (U.S. Farathane, LLC) (0.4%)*(9) (12) | | Auto Parts & Equipment | | First Lien Senior Secured Term Loan (LIBOR + 3.5%, 4.5% Cash, Acquired 08/18, Due 12/21) | | 3,088,580 | | | 3,092,541 | | | 2,849,214 | |
| | | | 3,088,580 | | | 3,092,541 | | | 2,849,214 | |
| | | | | | | | | | |
USLS Acquisition, Inc. (f/k/a US Legal Support, Inc.) (2.1%)*(7) (9) (12) | | Legal Services | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/18, Due 11/24) | | 16,388,428 | | | 16,165,710 | | | 15,226,488 | |
| | | | 16,388,428 | | | 16,165,710 | | | 15,226,488 | |
| | | | | | | | | | |
Utac Ceram (0.2%)*(3) (7) (9) (18) | | Business Services | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 09/20, Due 09/27) | | 1,713,064 | | | 1,524,242 | | | 1,651,143 | |
| | | | 1,713,064 | | | 1,524,242 | | | 1,651,143 | |
| | | | | | | | | | |
Validity, Inc. (0.6%)*(7) (9) (10) | | IT Consulting & Other Services | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.9% Cash, Acquired 07/19, Due 05/25) | | 5,025,862 | | | 4,896,882 | | | 4,586,098 | |
| | | | 5,025,862 | | | 4,896,882 | | | 4,586,098 | |
| | | | | | | | | | |
W2O Holdings, Inc. (0.0%)* (7) (9) | | Healthcare Technology | | Undrawn Delayed Draw Term Loan (LIBOR + 5.0%, 5.0% Cash, Acquired 10/20, Due 06/25) | | — | | | (115,981) | | | (104,214) | |
| | | | — | | | (115,981) | | | (104,214) | |
| | | | | | | | | | |
Winebow Group, LLC, (The) (2.1%)*(9) (10) | | Consumer Goods | | First Lien Senior Secured Term Loan (LIBOR + 3.75%, 4.8% Cash, Acquired 11/19, Due 07/21) | | 10,599,445 | | | 10,113,510 | | | 9,690,543 | |
| | Second Lien Senior Secured Term Loan (LIBOR + 7.5%, 8.5% Cash, Acquired 10/19, Due 01/22) | | 7,141,980 | | | 4,813,864 | | | 5,713,584 | |
| | | | 17,741,425 | | | 14,927,374 | | | 15,404,127 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company(6) | | Industry | | Type of Investment(1) (2) | | Principal Amount | | Cost | | Fair Value |
World 50, Inc. (1.7%)*(7) (9) (10) | | Professional Services | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/20, Due 01/26) | | $ | 3,313,191 | | | $ | 3,218,141 | | | $ | 3,313,191 | |
| | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 01/26) | | 9,100,607 | | | 8,905,025 | | | 8,940,436 | |
| | | | 12,413,798 | | | 12,123,166 | | | 12,253,627 | |
| | | | | | | | | | |
Subtotal Non–Control / Non–Affiliate Investments (184.7%) | | 1,378,776,392 | | | 1,318,614,617 | | | 1,325,783,281 | |
| | | | | | | | | | |
Affiliate Investment: (4) | | | | | | | | | | |
Advantage Insurance, Inc. (0.8%)*(7) (23) | | Banking, Finance, Insurance, & Real Estate | | Preferred Stock (587,001 shares, Acquired 12/20) | | | | 5,946,641 | | | 5,946,641 | |
| | | | | | 5,946,641 | | | 5,946,641 | |
| | | | | | | | | | |
Jocassee Partners LLC (3.2%)*(3) | | Investment Funds & Vehicles | | 9.1% Member Interest, Acquired 06/19 | | | | 20,158,270 | | | 22,623,820 | |
| | | | | | 20,158,270 | | | 22,623,820 | |
| | | | | | | | | | |
JSC Tekers Holdings (0.7%)*(3) (7) (23) | | Real Estate Management | | Preferred Stock (9,159,085 shares, Acquired 12/20) | | | | 4,753,000 | | | 4,753,000 | |
| | Common Stock (3,201 shares, Acquired 12/20) | | | | — | | | — | |
| | | | | | 4,753,000 | | | 4,753,000 | |
| | | | | | | | | | |
Security Holdings B.V. (4.9%)*(3) (7) (23) | | Electrical Engineering | | Bridge Loan (5.0% PIK, Acquired 12/20, Due 05/22) | | 5,187,506 | | | 5,187,508 | | | 5,187,508 | |
| | Senior Subordinated Loan (3.1% PIK, Acquired 12/20, Due 05/22) | | 8,746,454 | | | 8,746,454 | | | 8,746,454 | |
| | Common Stock (1,099.5 shares, Acquired 12/20) | | | | 21,264,000 | | | 21,329,370 | |
| | | | 13,933,960 | | | 35,197,962 | | | 35,263,332 | |
| | | | | | | | | | |
Thompson Rivers LLC (1.4%)*(3) | | Investment Funds & Vehicles | | 10% Member Interest, Acquired 06/20 | | | | 10,000,000 | | | 10,011,840 | |
| | | | | | 10,000,000 | | | 10,011,840 | |
| | | | | | | | | | |
Subtotal Affiliate Investments (11.0%) | | 13,933,960 | | | 76,055,873 | | | 78,598,633 | |
| | | | | | | | | | |
Control Investments:(5) | | | | | | | | | | |
MVC Automotive Group Gmbh (2.3%)*(3) (7) (23) | | Other Diversified Financial Services | | Bridge Loan (6.0% Cash, Acquired 12/20, Due 12/21) | | 7,149,166 | | | 7,149,166 | | | 7,149,166 | |
| | Common Equity Interest (18,000 shares, Acquired 12/20) | | | | 9,553,000 | | | 9,582,368 | |
| | | | 7,149,166 | | | 16,702,166 | | | 16,731,534 | |
| | | | | | | | | | |
MVC Private Equity Fund LP (1.3%)*(3) (23) | | Investment Funds & Vehicles | | General Partnership Interest | | | | 224,978 | | | 224,978 | |
| | Limited Partnership Interest | | | | 8,899,284 | | | 8,899,284 | |
| | | | | | | | 9,124,262 | | | 9,124,262 | |
| | | | | | | | | | |
Subtotal Control Investments (3.6%) | | 7,149,166 | | | 25,826,428 | | | 25,855,796 | |
| | | | | | | | | | |
Short-Term Investments: | | | | | | | | | | |
| | | | | | | | | | |
BlackRock, Inc. (4.2%)* | | Money Market Fund | | BlackRock Liquidity Temporary Fund (0.08% yield) | | | | 30,000,000 | | | 30,000,000 | |
| | | | | | 30,000,000 | | | 30,000,000 | |
| | | | | | | | | | |
JPMorgan Chase & Co. (5.0%)* | | Money Market Fund | | JPMorgan Prime Money Market Fund (0.09% yield) | | | | 35,558,227 | | | 35,558,227 | |
| | | | | | 35,558,227 | | | 35,558,227 | |
| | | | | | | | | | |
Subtotal Short-Term Investments (9.1%) | | | | 65,558,227 | | | 65,558,227 | |
| | | | | | | | |
Total Investments, December 31, 2020 (208.4%)* | | | | $ | 1,399,859,518 | | | $ | 1,486,055,145 | | | $ | 1,495,795,937 | |
| | | | | | | | | | |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
Derivative Instruments
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Credit Support Agreement(a)(b)(d) | | | | | | | | | | | | | |
Description | | | Counter Party | | | | Settlement Date(c) | | Notional Amount | | Value | | Unrealized Appreciation (Depreciation) |
Credit Support Agreement | | | Barings LLC | | | | 01/01/31 | | $ | 23,000,000 | | | $ | 13,600,000 | | | $ | — | |
| | | | | | | | | | | | | |
Total Credit Support Agreement, December 31, 2020 | | | | | | | | | | | | | $ | — | |
(a) The Credit Support Agreement covers all of the investments acquired by the Company from MVC in connection with the MVC Acquisition (as defined in “Note 1 – Organization, Business and Basis of Presentation”) and any investments received by the Company in connection with the restructuring, amendment, extension or other modification (including the issuance of new securities) of any of the investments acquired by the Company from MVC in connection with the MVC Acquisition (collectively, the “Reference Portfolio”). Each investment that is included in the Reference Portfolio is denoted in the above Schedule of Investments with footnote (23).
(b) The Company and Barings LLC entered into a Credit Support Agreement pursuant to which Barings LLC agreed to provide credit support to the Company in the amount of up to $23.0 million.
(c) Settlement Date means the earlier of (1) January 1, 2031 and (2) the date on which the entire Reference Portfolio has been realized or written off.
(d) See “Note 2 – Agreements and Related Party Transactions” for additional information regarding the Credit Support Agreement.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign Currency Forward Contracts: | | | | | | | | | | |
Description | | Notional Amount to be Purchased | | Notional Amount to be Sold | | | | Settlement Date | | Unrealized Appreciation (Depreciation) |
Foreign currency forward contract (AUD) | | $8,471,304 | | A$11,378,670 | | | | 01/05/21 | | $ | (309,049) | |
Foreign currency forward contract (AUD) | | A$11,378,670 | | $8,610,504 | | | | 01/05/21 | | 169,849 | |
Foreign currency forward contract (AUD) | | $148,019 | | A$193,882 | | | | 04/06/21 | | (1,698) | |
| | | | | | | | | | |
Foreign currency forward contract (EUR) | | $13,472,749 | | €11,406,604 | | | | 01/05/21 | | (483,801) | |
Foreign currency forward contract (EUR) | | €11,406,604 | | $13,518,023 | | | | 01/05/21 | | 438,526 | |
Foreign currency forward contract (EUR) | | $561,754 | | €456,604 | | | | 04/06/21 | | 1,944 | |
| | | | | | | | | | |
Foreign currency forward contract (GBP) | | $13,554,607 | | £10,215,299 | | | | 01/05/21 | | (409,190) | |
Foreign currency forward contract (GBP) | | £10,215,299 | | $13,717,678 | | | | 01/05/21 | | 246,118 | |
Foreign currency forward contract (GBP) | | $13,109,849 | | £9,672,758 | | | | 04/06/21 | | (119,769) | |
| | | | | | | | | | |
Foreign currency forward contract (SEK) | | $141,603 | | 1,259,406kr | | | | 01/05/21 | | (11,748) | |
Foreign currency forward contract (SEK) | | 1,259,406kr | | $152,396 | | | | 01/05/21 | | 955 | |
Foreign currency forward contract (SEK) | | $164,325 | | 1,356,628kr | | | | 04/06/21 | | (1,028) | |
| | | | | | | | | | |
Total Foreign Currency Forward Contracts, December 31, 2020 | | | | | | | | $ | (478,891) | |
* Fair value as a percentpercentage of net assetsassets.
(1)All debt investments are income producing, unless otherwise noted. Equity and any equity-linked investments are non-income producing, unless otherwise noted. The Board determined in good faith that all investments were valued at fair value in accordance with the Company's valuation policies and procedures and the 1940 Act based on, among other things, the input of the Company's external investment adviser, Barings, the Company’s Audit Committee and independent valuation firms that have been engaged to assist in the valuation of the Company's middle-market investments. In addition, all debt investments are variable rate investments unless otherwise noted. Index-based floating interest rates are generally subject to a contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to LIBOR, EURIBOR, GBP LIBOR, BBSY, STIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically reset semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan.
(2)All of the Company’s portfolio company investments (including joint venture and short-term investments), which as of December 31, 2020 represented 208.4% of the Company’s net assets, are subject to legal restrictions on sales. The acquisition date represents the date of the Company's initial investment in the relevant portfolio company.
(3)Investment is not a qualifying investment as defined under Section 55(a) of the 1940 Act. Non-qualifying assets represent 23.4% of total investments at fair value as of December 31, 2020. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of the Company's total assets, the Company will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a).
| |
(1) | All debt investments are income producing, unless otherwise noted. Equity and equity-linked investments are non-income producing, unless otherwise noted. The fair values of all investments were determined using significant unobservable inputs. |
| |
(2) | Disclosures of interest rates on notes include cash interest rates and payment-in-kind (“PIK”) interest rates. |
| |
(3) | All investments are restricted as to resale and were valued at fair value as determined in good faith by the Board of Directors. |
| |
(4) | Investment is not a qualifying investment as defined under Section 55(a) of the Investment Company Act of 1940, as amended. Non-qualifying assets represent 2.5% of total investments at fair value as of December 31, 2016. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of the Company's total assets, the Company will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a). |
| |
(5) | PIK non-accrual investment |
| |
(6) | Non-accrual investment |
| |
(7) | All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's senior secured credit facility or in support of the SBA-guaranteed debentures issued by Triangle Mezzanine Fund LLLP and Triangle Mezzanine Fund II LP. |
| |
(8) | Index-based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. |
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
(4)As defined in the 1940 Act, the Company is deemed to be an “affiliated person” of the portfolio company as the Company owns between 5% or more, up to 25% (inclusive), of the portfolio company's voting securities (“non-controlled affiliate”). Transactions related to investments in non-controlled "Affiliate Investments" for the year ended December 31, 2020 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(b) | December 31, 2019 Value | Gross Additions (c) | Gross Reductions (d) | December 31, 2020 Value |
Portfolio Company | Type of Investment(a) |
Advantage Insurance, Inc.(e) | Preferred Stock (587,001 shares) | $ | — | | $ | — | | $ | — | | $ | — | | $ | 5,946,641 | | $ | — | | $ | 5,946,641 | |
| — | | — | | — | | — | | 5,946,641 | | — | | 5,946,641 | |
| | | | | | | | |
Jocassee Partners LLC | 9.1% Member Interest | — | | 2,394,007 | | — | | 10,229,813 | | 12,394,007 | | — | | 22,623,820 | |
| — | | 2,394,007 | | — | | 10,229,813 | | 12,394,007 | | — | | 22,623,820 | |
| | | | | | | | |
JSC Tekers Holdings(e) | Common Stock (3,201 shares) | — | | — | | — | | — | | — | | — | | — | |
Preferred Stock (9,159,085 shares) | — | | — | | — | | — | | 4,753,000 | | — | | 4,753,000 | |
| — | | — | | — | | — | | 4,753,000 | | — | | 4,753,000 | |
| | | | | | | | |
Security Holdings B.V(e) | Bridge Loan (5.0% PIK) | — | | — | | — | | — | | 5,187,508 | | — | | 5,187,508 | |
Senior Subordinated Loan (3.1% PIK) | — | | — | | — | | — | | 8,746,454 | | — | | 8,746,454 | |
Common Stock (1,099.5 shares) | — | | 65,370 | | — | | — | | 21,329,370 | | — | | 21,329,370 | |
| — | | 65,370 | | — | | — | | 35,263,332 | | — | | 35,263,332 | |
| | | | | | | | |
Thompson Rivers LLC | 10% Member Interest | — | | 11,840 | | — | | — | | 10,011,840 | | — | | 10,011,840 | |
| — | | 11,840 | | — | | — | | 10,011,840 | | — | | 10,011,840 | |
| | | | | | | | |
Total Affiliate Investments | $ | — | | $ | 2,471,217 | | $ | — | | $ | 10,229,813 | | $ | 68,368,820 | | $ | — | | $ | 78,598,633 | |
(a) Equity and equity-linked investments are non-income producing, unless otherwise noted.
(b) Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Affiliate category.
(c) Gross additions include increases in the cost basis of investments resulting from new investments and follow-on investments. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(d) Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(e) The fair value of the investment was determined using significant unobservable inputs.
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020
(5) As defined in the 1940 Act, the Company is deemed to be both an “affiliated person” and “control” the portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions as of and during the year ended December 31, 2020 in which the portfolio company is deemed to be a "Control Investment" of the Company are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(b) | December 31, 2019 Value | Gross Additions (c) | Gross Reductions (d) | December 31, 2020 Value |
Portfolio Company | Type of Investment(a) |
MVC Automotive Group GmbH(e) | Common Equity Interest (18,000 shares) | $ | — | | $ | 29,368 | | $ | — | | $ | — | | $ | 9,582,368 | | $ | — | | $ | 9,582,368 | |
Bridge Loan (6.0% PIK) | — | | — | | 9,532 | | — | | 7,149,166 | | — | | 7,149,166 | |
| — | | 29,368 | | 9,532 | | — | | 16,731,534 | | — | | 16,731,534 | |
| | | | | | | | |
MVC Private Equity Fund LP(e) | Limited Partnership Interest | — | | — | | — | | — | | 8,899,284 | | — | | 8,899,284 | |
General Partnership Interest | — | | — | | 5,292 | | — | | 224,978 | | — | | 224,978 | |
| — | | — | | 5,292 | | — | | 9,124,262 | | — | | 9,124,262 | |
| | | | | | | | |
Total Control Investments | $ | — | | $ | 29,368 | | $ | 14,824 | | $ | — | | $ | 25,855,796 | | $ | — | | $ | 25,855,796 | |
(a) Equity and equity-linked investments are non-income producing, unless otherwise noted.
(b) Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Control category.
(c) Gross additions include increases in the cost basis of investments resulting from new investments and follow-on investments. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(d) Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(e) The fair value of the investment was determined using significant unobservable inputs.
(6)Some or all of the investment is or will be encumbered as security for the February 2019 Credit Facility.
(7)The fair value of the investment was determined using significant unobservable inputs.
(8)Non-accrual investment.
(9)Debt investment includes interest rate floor feature.
(10)The interest rate on these loans is subject to 1 Month LIBOR, which as of December 31, 2020 was 0.14388%.
(11)The interest rate on these loans is subject to 2 Month LIBOR, which as of December 31, 2020 was 0.19038%.
(12)The interest rate on these loans is subject to 3 Month LIBOR, which as of December 31, 2020 was 0.23838%.
(13)The interest rate on these loans is subject to 6 Month LIBOR, which as of December 31, 2020 was 0.25763%.
(14)The interest rate on these loans is subject to 2 month GBP LIBOR, which as of December 31, 2020 was 0.06088%.
(15)The interest rate on these loans is subject to 3 Month GBP LIBOR, which as of December 31, 2020 was 0.02550%.
(16)The interest rate on these loans is subject to 6 Month GBP LIBOR, which as of December 31, 2020 was 0.02988%.
(17)The interest rate on these loans is subject to 1 Month EURIBOR, which as of December 31, 2020 was -0.55400%.
(18)The interest rate on these loans is subject to 3 Month EURIBOR, which as of December 31, 2020 was -0.54500%.
(19)The interest rate on these loans is subject to 6 Month EURIBOR, which as of December 31, 2020 was -0.526%.
(20)The interest rate on these loans is subject to 3 Month STIBOR, which as of December 31, 2020 was -0.08500%.
(21)The interest rate on these loans is subject to 1 Month BBSY, which as of December 31, 2020 was 0.01000%.
(22)The interest rate on these loans is subject to 3 Month BBSY, which as of December 31, 2020 was 0.01000%.
(23)Investment was purchased as part of the MVC Acquisition and is part of the Reference Portfolio for purposes of the Credit Support Agreement.
(24)In 2017, MVC Capital, Inc. received $5.7 million of 9.5% second lien callable notes due in 2025, in lieu of an escrow to satisfy any indemnification claims associated with MVC Capital, Inc's sale of its equity investment in U.S. Gas & Electric. Effective January 1, 2018, the cost basis of the U.S. Gas second lien loan was decreased by approximately $3.0 million due to a working capital adjustment. This loan is still subject to indemnification adjustments.
See accompanying notes.
TRIANGLE CAPITAL CORPORATION
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements
1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
Organization and Business
Triangle Capital CorporationBarings BDC, Inc. (the “Company”) and its wholly ownedwholly-owned subsidiaries including Triangle Mezzanine Fund LLLP (“Triangle SBIC”), Triangle Mezzanine Fund II LP (“Triangle SBIC II”) and Triangle Mezzanine Fund III LP (“Triangle SBIC III”) (collectively, the “Company”), are specialty finance companies. Triangle SBIC, Triangle SBIC II and Triangle SBIC III are specialty finance limited partnerships formed to make investments primarily in lower middle market companies located throughout the United States. On September 11, 2003, Triangle SBIC was licensed to operate as a Small Business Investment Company (“SBIC”) under the authority of the United States Small Business Administration (“SBA”). On May 26, 2010, Triangle SBIC II obtained its license to operate as an SBIC and on January 6, 2017, Triangle SBIC III obtained its license to operate as an SBIC. As SBICs, Triangle SBIC, Triangle SBIC II and Triangle SBIC III are subject to a variety of regulations concerning, among other things, the size and nature of the companies in which they may invest and the structure of those investments.
The Company currently operates as a closed-end, non-diversified investment company and has elected to be treated as a business development company ("BDC"(“BDC”) under the Investment Company Act of 1940 as amended (the "1940 Act").Act. The Company is internally managed by its executive officers under the supervision of its Board of Directors (the "Board"). The Company does not pay management or advisory fees, but instead incurs the operating costs associated with employing executive management and investment and portfolio management professionals. Triangle SBIC has also elected for federal income tax purposes to be treated as a BDCregulated investment company (“RIC”) under the 1940 Act.Internal Revenue Code of 1986, as amended (the “Code”).
Organization
The Company is a Maryland corporation incorporated on October 10, 2006. On August 2, 2018, the Company entered into an investment advisory agreement (the “Original Advisory Agreement”) and an administration agreement (the “Administration Agreement”) and became an externally-managed BDC managed by Barings LLC (“Barings” or the “Adviser”). An externally-managed BDC generally does not have any employees, and its investment and management functions are provided by an outside investment adviser and administrator under an investment advisory agreement and administration agreement. Instead of the Company directly compensating employees, the Company pays the Adviser for investment and management services pursuant to the terms of the Amended and Restated Advisory Agreement (as defined in “Note 2 - Agreements and Related Party Transactions”) (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement) and the Administration Agreement. See “Note 2 - Agreements and Related Party Transactions” for additional information regarding the Company’s investment advisory agreement and administration agreement.
Basis of Presentation
The financial statements of the Company include the accounts of Triangle Capital CorporationBarings BDC, Inc. and its wholly-owned subsidiaries. The effects of all intercompany transactions between Triangle Capital Corporationthe Company and its wholly-owned subsidiaries have been eliminated in consolidation. Under theThe Company is an investment company rules and, regulations pursuant to Article 6 of Regulation S-Xtherefore, applies the specialized accounting and Financial Accounting Standards Board ("FASB")reporting guidance in Accounting Standards Codification ("ASC"(“ASC”) Topic 946, Financial Services -– Investment Companies,Companies. ASC Topic 946 states that consolidation by the Company of an investee that is precluded from consolidating portfolio company investments, including those in which it has a controlling interest, unless the portfolionot an investment company is another investment company. An exception to this general principle occurs ifnot appropriate, except when the Company holds a controlling interest in an operating company that provides all or substantially all of its services directly to the Company or to its portfolio companies. None of the portfolio investments made by the Company qualify for this exception. Therefore, the Company's investment portfolio is carried on the Unaudited and Audited Consolidated Balance Sheets at fair value, as discussed further in Note 2,3, with any adjustments to fair value recognized as “Net unrealized appreciation (depreciation)” on the Unaudited Consolidated Statements of Operations.
The accompanying unaudited consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and ArticleArticles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of financial statements for the interim period, have been reflected in the unaudited consolidated financial statements. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the full fiscal year. Additionally, the unaudited consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2016.2020. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the unaudited consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.
Public OfferingRecently Issued Accounting Standards
In March 2020, the FASB issued Accounting Standards Update, 2020-04, Facilitation of Common Stockthe Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of adopting ASU 2020-04 on its consolidated financial statements.
On February 28, 2017, the Company filed a prospectus supplement pursuant to which 7,000,000 shares of common stock were offered for sale at a price to the public of $19.50 per share. Pursuant to this offering, 7,000,000 shares were sold and delivered resulting in net proceeds to the Company, after underwriting discounts and offering expenses, of approximately $132.0 million.
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Share Purchase Programs
On February 27, 2020, the Board approved an open-market share repurchase program for the 2020 fiscal year (the “2020 Share Repurchase Program”). Under the 2020 Share Repurchase Program, the Company was authorized during fiscal year 2020 to repurchase up to a maximum of 5.0% of the amount of shares outstanding as of February 27, 2020 if shares traded below net asset value (“NAV”) per share, subject to liquidity and regulatory constraints.
Purchases under the 2020 Share Repurchase Program were made in open-market transactions and included transactions being executed by a broker selected by the Company that had been delegated the authority to repurchase shares on the Company's behalf in the open market in accordance with applicable rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including Rules 10b5-1 and 10b-18 thereunder, and pursuant to, and under the terms and limitations of, the 2020 Share Repurchase Program. During the three months ended March 31, 2020, the Company repurchased a total of 661,981 shares of its common stock in the open market under the 2020 Share Repurchase Program at an average price of $7.23 per share, including broker commissions.
In connection with the completion of the Company’s acquisition of MVC Capital, Inc. (“MVC”), a Delaware corporation, on December 23, 2020 (the “MVC Acquisition”), the Company committed to make open-market purchases of shares of its common stock in an aggregate amount of up to $15.0 million at then-current market prices at any time shares trade below 90% of the Company’s then most recently disclosed NAV per share. Any repurchases pursuant to the authorized program will occur during the 12-month period commencing upon the filing of this quarterly report on Form 10-Q for the quarter ended March 31, 2021 and will be made in accordance with applicable legal, contractual and regulatory requirements.
2. AGREEMENTS AND RELATED PARTY TRANSACTIONS
On August 2, 2018, the Company entered into the Original Advisory Agreement and the Administration Agreement with the Adviser, an investment adviser registered under the Investment Advisers Act of 1940, as amended. In connection with the MVC Acquisition, on December 23, 2020, the Company entered into an amended and restated investment advisory agreement (the “Amended and Restated Advisory Agreement”) with the Adviser, following approval of the Amended and Restated Advisory Agreement by the Company’s stockholders at its December 23, 2020 special meeting of stockholders. The terms of the Amended and Restated Advisory Agreement became effective on January 1, 2021.
The Amended and Restated Advisory Agreement amended the Original Advisory Agreement to, among other things, (i) reduce the annual base management fee payable to the Adviser from 1.375% to 1.250% of the Company’s gross assets, (ii) reset the commencement date for the rolling 12-quarter “look-back” provision used to calculate the income incentive fee and incentive fee cap to January 1, 2021 from January 1, 2020 and (iii) describe the fact that the Company may enter into guarantees, sureties and other credit support arrangements with respect to one or more of its investments, including the impact of these arrangements on the income incentive fee cap.
Investment Advisory Agreement
Pursuant to the Amended and Restated Advisory Agreement, the Adviser manages the Company's day-to-day operations and provides the Company with investment advisory services. Among other things, the Adviser (i) determines the composition of the portfolio of the Company, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identifies, evaluates and negotiates the structure of the investments made by the Company; (iii) executes, closes, services and monitors the investments that the Company makes; (iv) determines the securities and other assets that the Company will purchase, retain or sell; (v) performs due diligence on prospective portfolio companies and (vi) provides the Company with such other investment advisory, research and related services as the Company may, from time to time, reasonably require for the investment of its funds.
The Amended and Restated Advisory Agreement provides that, absent fraud, willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, the Adviser, and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser (collectively, the "IA Indemnified Parties"), are entitled to indemnification from the Company for any damages, liabilities, costs, demands, charges, claims and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the IA Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its security holders) arising out of any actions or omissions or otherwise based upon the performance of any of the Adviser’s duties or obligations under the Amended and Restated Advisory Agreement or otherwise as an investment adviser of the Company. The Adviser’s services under the Amended and Restated Advisory Agreement are not exclusive, and the Adviser is generally free to furnish similar
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Notes to Unaudited Consolidated Financial Statements — (Continued)
services to other entities so long as its performance under the Amended and Restated Advisory Agreement is not adversely affected.
The Adviser has entered into a personnel-sharing arrangement with its affiliate, Barings International Investment Limited (“BIIL”). BIIL is a wholly-owned subsidiary of Baring Asset Management Limited, which in turn is an indirect, wholly-owned subsidiary of the Adviser. Pursuant to this arrangement, certain employees of BIIL may serve as “associated persons” of the Adviser and, in this capacity, subject to the oversight and supervision of the Adviser, may provide research and related services, and discretionary investment management and trading services (including acting as portfolio managers) to the Company on behalf of the Adviser. This arrangement is based on no-action letters of the staff of the Securities and Exchange Commission (the “SEC”) that permit SEC-registered investment advisers to rely on and use the resources of advisory affiliates or "participating affiliates," subject to the supervision of that SEC-registered investment adviser. BIIL is a “participating affiliate” of the Adviser, and the BIIL employees are “associated persons” of the Adviser.
Under the Amended and Restated Advisory Agreement, the Company pays the Adviser (i) a base management fee (the “Base Management Fee”) and (ii) an incentive fee (the “Incentive Fee”) as compensation for the investment advisory and management services it provides the Company thereunder.
Pre-January 1, 2021 Base Management Fee
For the period from January 1, 2020 through December 31, 2020, the Base Management Fee was calculated based on the Company's gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents, at an annual rate of 1.375%.
The Base Management Fee was payable quarterly in arrears on a calendar quarter basis. The Base Management Fee was calculated based on the average value of the Company’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. Base Management Fees for any partial month or quarter were appropriately pro-rated.
Post-December 31, 2020 Base Management Fee
Beginning January 1, 2021, the Base Management Fee is calculated based on the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents, at an annual rate of 1.25%. The Base Management Fee is payable quarterly in arrears on a calendar quarter basis. The Base Management Fee will be calculated based on the average value of the Company’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. Base Management Fees for any partial month or quarter will be appropriately pro-rated.
For the three months ended March 31, 2021, the Base Management Fee determined in accordance with the terms of the Amended and Restated Advisory Agreement was approximately $3.9 million. For the three months ended, March 31, 2020, the Base Management Fee determined in accordance with the terms of the Original Advisory Agreement was approximately $3.9 million. As of March 31, 2021, the Base Management Fee of $3.9 million for the three months ended March 31, 2021 was unpaid and included in “Base management fees payable” in the accompanying Unaudited Consolidated Balance Sheet. As of December 31, 2020, the Base Management Fee of $3.4 million for the three months ended December 31, 2020 was unpaid and included in “Base management fees payable” in the accompanying Consolidated Balance Sheet.
Pre-January 1, 2021 Incentive Fee
For the period from August 2, 2018 through December 31, 2020, under the Original Advisory Agreement, the Incentive Fee was comprised of two parts: (1) a portion based on the Company’s pre-incentive fee net investment income (the "Pre-2021 Income-Based Fee") and (2) a portion based on the net capital gains received on the Company’s portfolio of securities on a cumulative basis for each calendar year, net of all realized capital losses and all unrealized capital depreciation for that same calendar year (the "Pre-2021 Capital Gains Fee").
The Pre-2021 Income-Based Fee was calculated as follows:
(i)For each quarter from and after August 2, 2018 through December 31, 2019 (the "Pre-2020 Period"), the Pre-2021 Income-Based Fee was calculated and payable quarterly in arrears based on the Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter for which such fees were being calculated. In respect of the Pre-2020 Period, "Pre-Incentive Fee Net Investment Income" meant interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial assistance and consulting fees or other fees that the Company receives from portfolio companies) accrued during the relevant
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
calendar quarter, minus the Company’s operating expenses for such quarter (including the Base Management Fee, expenses payable under the Administration Agreement, any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee Net Investment Income included, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income not yet received in cash. Pre-Incentive Fee Net Investment Income did not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
(ii)For each quarter beginning on and after January 1, 2020 (the "Post-2019 Period"), the Pre-2021 Income-Based Fee was calculated and payable quarterly in arrears based on the Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter and the eleven preceding calendar quarters (or such fewer number of preceding calendar quarters counting each calendar quarter beginning on or after January 1, 2020) (each such period referred to as the "Pre-2021 Trailing Twelve Quarters") for which such fees were being calculated and was payable promptly following the filing of the Company’s financial statements for such quarter. In respect of the Post-2019 Period, "Pre-Incentive Fee Net Investment Income" meant interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial assistance and consulting fees or other fees that the Company receives from portfolio companies) accrued during the relevant Pre-2021 Trailing Twelve Quarters, minus the Company’s operating expenses for such Pre-2021 Trailing Twelve Quarters (including the Base Management Fee, expenses payable under the Administration Agreement, any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee) divided by the number of quarters that comprise the relevant Pre-2021 Trailing Twelve Quarters. Pre-Incentive Fee Net Investment Income included, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income not yet received in cash. Pre-Incentive Fee Net Investment Income did not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
(iii)Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less senior securities constituting indebtedness and preferred stock) at the end of the calendar quarter for which such fees were being calculated, was compared to a "hurdle rate", expressed as a rate of return on the value of the Company’s net assets at the end of the most recently completed calendar quarter, of 2% per quarter (8% annualized). The Company paid the Adviser the Pre-2021 Income-Based Fee with respect to the Company’s Pre-Incentive Fee Net Investment Income in each calendar quarter as follows:
(1)(a) With respect to the Pre-2020 Period, no Pre-2021 Income-Based Fee for any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) did not exceed the hurdle rate;
(b) With respect to the Post-2019 Period, no Pre-2021 Income-Based Fee for any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) did not exceed the hurdle rate;
(2)(a) With respect to the Pre-2020 Period, 100% of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) for any calendar quarter with respect to that portion of the Pre-Incentive Fee Net Investment Income for such quarter, if any, that exceeded the hurdle rate but was less than 2.5% (10% annualized) (the "Pre-2020 Catch-Up Amount"). The Pre-2020 Catch-Up Amount was intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) when the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) reached 2% per quarter (8% annualized);
(b) With respect to the Post-2019 Period, 100% of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) with respect to that portion of the Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above), if any, that exceeded the hurdle rate but was less than 2.5% (10% annualized) (the "Post-2019 Catch-Up Amount"). The Post-2019 Catch-Up Amount was intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) when the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) reached 2% per quarter (8% annualized);
(3)(a) With respect to the Pre-2020 Period, 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) for any calendar quarter with respect to that portion of the Pre-
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Notes to Unaudited Consolidated Financial Statements — (Continued)
Incentive Fee Net Investment Income (as defined in paragraph (i) above) for such quarter, if any, that exceeded the Pre-2020 Catch-Up Amount; and
(b) With respect to the Post-2019 Period, 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) for any calendar quarter with respect to that portion of the Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above), if any, that exceeded the Post-2019 Catch-Up Amount.
However, with respect to the Post-2019 Period, the Pre-2021 Income-Based Fee paid to the Adviser would in no event be in excess of the Pre-2021 Incentive Fee Cap. With respect to the Post-2019 Period, the "Pre-2021 Incentive Fee Cap" for any quarter was an amount equal to (a) 20% of the Cumulative Net Return (as defined below) during the relevant Pre-2021 Trailing Twelve Quarters minus (b) the aggregate Pre-2021 Income-Based Fee that was paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Pre-2021 Trailing Twelve Quarters.
Cumulative Net Return meant (x) the aggregate net investment income in respect of the relevant Pre-2021 Trailing Twelve Quarters minus (y) any Net Capital Loss (as defined below), if any, in respect of the relevant Pre-2021 Trailing Twelve Quarters. If, in any quarter, the Pre-2021 Incentive Fee Cap was zero or a negative value, the Company paid no Pre-2021 Income-Based Fee to the Adviser for such quarter. If, in any quarter, the Pre-2021 Incentive Fee Cap for such quarter was a positive value but was less than the Pre-2021 Income-Based Fee that was payable to the Adviser for such quarter (before giving effect to the Pre-2021 Incentive Fee Cap) calculated as described above, the Company paid a Pre-2021 Income-Based Fee to the Adviser equal to the Pre-2021 Incentive Fee Cap for such quarter. If, in any quarter, the Pre-2021 Incentive Fee Cap for such quarter was equal to or greater than the Pre-2021 Income-Based Fee that was payable to the Adviser for such quarter (before giving effect to the Pre-2021 Incentive Fee Cap) calculated as described above, the Company paid an Pre-2021 Income-Based Fee to the Adviser equal to the Pre-2021 Income-Based Fee calculated as described above for such quarter without regard to the Pre-2021 Incentive Fee Cap.
Net Capital Loss in respect of a particular period meant the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period.
The Pre-2021 Capital Gains Fee was determined and payable in arrears as of the end of each calendar year, commencing with the calendar year ended on December 31, 2018, and was calculated at the end of each applicable year by subtracting (1) the sum of the Company’s cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (2) the Company’s cumulative aggregate realized capital gains, in each case calculated from August 2, 2018. If such amount was positive at the end of such year, then the Pre-2021 Capital Gains Fee payable for such year was equal to 20% of such amount, less the cumulative aggregate amount of Pre-2021 Capital Gains Fees paid in all prior years. If such amount was negative, then there was no Pre-2021 Capital Gains Fee payable for such year.
Post-December 31, 2020 Incentive Fee
Beginning January 1, 2021, the Incentive Fee continues to consist of two components that are independent of each other, with the result that one component may be payable even if the other is not. Under the Amended and Restated Advisory Agreement, a portion of the Incentive Fee is based on the Company's income (the “Income-Based Fee”) and a portion is based on the Company's capital gains (the “Capital Gains Fee”), each as described below:
(i) The Income-Based Fee will be determined and paid quarterly in arrears based on the amount by which (x) the aggregate “Pre-Incentive Fee Net Investment Income” (as defined below) in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after January 1, 2021, as the case may be (or the appropriate portion thereof in the case of any of the Company's first eleven calendar quarters that commences on or after January 1, 2021) (in either case, the “Trailing Twelve Quarters”) exceeds (y) the Hurdle Amount (as defined below) in respect of the Trailing Twelve Quarters. The Hurdle Amount will be determined on a quarterly basis, and will be calculated by multiplying 2.0% (8% annualized) by the aggregate of the Company's NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. For this purpose, under the Amended and Restated Advisory Agreement, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including, without limitation, any accrued income that we have not yet received in cash and any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus the Company's operating expenses accrued during the calendar quarter (including, without limitation, the Base Management Fee, administration expenses and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the Income-Based Fee and the Capital Gains Fee). For the
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Notes to Unaudited Consolidated Financial Statements — (Continued)
avoidance of doubt, Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation:
The calculation of the Income-Based Fee for each quarter is as follows:
(A) No Income-Based Fee will be payable to the Adviser in any calendar quarter in which the Company's aggregate Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters does not exceed the Hurdle Amount;
(B) 100% of the Company's aggregate Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters, if any, that exceeds the Hurdle Amount but is less than or equal to an amount (the “Catch-Up Amount”) determined on a quarterly basis by multiplying 2.5% (10% annualized) by the Company's NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The Catch-Up Amount is intended to provide the Adviser with an incentive fee of 20% on all of the Company's Pre-Incentive Fee Net Investment Income when the Company's Pre-Incentive Fee Net Investment Income reaches the Catch-Up Amount for the Trailing Twelve Quarters; and
(C) For any quarter in which the Company's aggregate Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters exceeds the Catch-Up Amount, the Income-Based Fee shall equal 20% of the amount of the Company's Pre-Incentive Fee Net Investment Income for such Trailing Twelve Quarters, as the Hurdle Amount and Catch-Up Amount will have been achieved.
Subject to the Incentive Fee Cap described below, the amount of the Income-Based Fee that will be paid to the Adviser for a particular quarter will equal the excess of the aggregate Income-Based Fee so calculated less the aggregate Income-Based Fees that were paid to the Adviser in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.
(ii) The Income-Based Fee is subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in any quarter is an amount equal to (a) 20% of the Cumulative Pre-Incentive Fee Net Return (as defined below) during the relevant Trailing Twelve Quarters less (b) the aggregate Income-Based Fee that were paid to the Adviser in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters. For this purpose, “Cumulative Pre-Incentive Fee Net Return” during the relevant Trailing Twelve Quarters means (x) Pre-Incentive Fee Net Investment Income in respect of the Trailing Twelve Quarters less (y) any Net Capital Loss, if any, in respect of the Trailing Twelve Quarters. If, in any quarter, the Incentive Fee Cap is zero or a negative value, we will pay no Income-Based Fee to the Adviser in that quarter. If, in any quarter, the Incentive Fee Cap is a positive value but is less than the Income-Based Fee calculated in accordance with paragraph (i) above, we will pay the Adviser the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap is equal to or greater than the Income-Based Fee calculated in accordance with paragraph (i) above, we will pay the Adviser the Income-Based Fee for such quarter.
“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses on the Company's assets, whether realized or unrealized, in such period and (ii) aggregate capital gains or other gains on the Company's assets (including, for the avoidance of doubt, the value ascribed to any credit support arrangement in the Company's financial statements even if such value is not categorized as a gain therein), whether realized or unrealized, in such period.
(iii) The second part of the Incentive Fee (the “Capital Gains Fee”) will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Amended and Restated Advisory Agreement), commencing with the calendar year ended on December 31, 2018, and is calculated at the end of each applicable year by subtracting (1) the sum of the Company's cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (2) the Company's cumulative aggregate realized capital gains, in each case calculated from August 2, 2018. If such amount is positive at the end of such year, then the Capital Gains Fee payable for such year is equal to 20% of such amount, less the cumulative aggregate amount of Capital Gains Fees paid in all prior years commencing with the calendar year ended on December 31, 2018. If such amount is negative, then there is no Capital Gains Fee payable for such year. If this Agreement is terminated as of a date that is not a calendar year end, the termination date will be treated as though it were a calendar year end for purposes of calculating and paying a Capital Gains Fee.
Under the Amended and Restated Advisory Agreement, the "cumulative aggregate realized capital gains" are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in the Company's portfolio when sold and (b) the accreted or amortized cost basis of such investment.
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Notes to Unaudited Consolidated Financial Statements — (Continued)
The cumulative aggregate realized capital losses are calculated as the sum of the differences, if negative, between (a) the net sales price of each investment in the Company's portfolio when sold and (b) the accreted or amortized cost basis of such investment.
The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company's portfolio as of the applicable Capital Gains Fee calculation date and (b) the accreted or amortized cost basis of such investment.
Under the Amended and Restated Advisory Agreement, the “accreted or amortized cost basis of an investment” shall mean the accreted or amortized cost basis of such investment as reflected in the Company’s financial statements.
For the three months ended March 31, 2021, the Income-Based Fee determined in accordance with the terms of the Amended and Restated Advisory Agreement was $2.7 million. As of March 31, 2021, the Income-Based Fee of $2.7 million was unpaid and included in “Incentive management fees payable” in the accompanying Unaudited Consolidated Balance Sheet. The Company did not pay any Pre-2021 Income-Based Fee for the three months ended March 31, 2020.
The Company did not pay any capital gains fees for either of the three months ended March 31, 2021 or 2020.
Payment of Company Expenses
Under the Amended and Restated Advisory Agreement, all investment professionals of the Adviser and its staff, when and to the extent engaged in providing services required to be provided by the Adviser under the Amended and Restated Advisory Agreement, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser and not by the Company, except that all costs and expenses relating to the Company's operations and transactions, including, without limitation, those items listed in the Amended and Restated Advisory Agreement, will be borne by the Company.
Administration Agreement
Under the terms of the Administration Agreement, the Adviser performs (or oversees, or arranges for, the performance of) the administrative services necessary for the operation of the Company, including, but not limited to, office facilities, equipment, clerical, bookkeeping and record-keeping services at such office facilities and such other services as the Adviser, subject to review by the Board, from time to time, determines to be necessary or useful to perform its obligations under the Administration Agreement. The Adviser also, on behalf of the Company and subject to oversight by the Board, arranges for the services of, and oversees, custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, valuation experts, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable.
The Company will reimburse Barings for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to by the Company and Barings quarterly in arrears. In no event will the agreed-upon quarterly expense amount exceed the amount of expenses that would otherwise be reimbursable by the Company under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount. The costs and expenses incurred by the Adviser on behalf of the Company under the Administration Agreement include, but are not limited to:
•the allocable portion of the Adviser’s rent for the Company’s Chief Financial Officer and the Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the usage thereof by such personnel in connection with their performance of administrative services under the Administration Agreement;
•the allocable portion of the salaries, bonuses, benefits and expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the time spent by such personnel in connection with performing administrative services for the Company under the Administration Agreement;
•the actual cost of goods and services used for the Company and obtained by the Adviser from entities not affiliated with the Company, which is reasonably allocated to the Company on the basis of assets, revenues, time records or other methods conforming with generally accepted accounting principles;
•all fees, costs and expenses associated with the engagement of a sub-administrator, if any; and
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
•costs associated with (a) the monitoring and preparation of regulatory reporting, including registration statements and amendments thereto, prospectus supplements, and tax reporting, (b) the coordination and oversight of service provider activities and the direct cost of such contractual matters related thereto and (c) the preparation of all financial statements and the coordination and oversight of audits, regulatory inquiries, certifications and sub-certifications.
For the three months ended March 31, 2021 and March 31, 2020, the Company incurred and was invoiced by the Adviser for expenses of approximately $0.5 million and $0.4 million, respectively, under the terms of the Administration Agreement, which amounts are included in “General and administrative expenses” in the accompanying Unaudited Consolidated Statements of Operations. As of March 31, 2021, the administrative expenses of $0.5 million for the three months ended March 31, 2021 were unpaid and included in “Administrative fees payable” in the accompanying Unaudited Consolidated Balance Sheet. As of December 31, 2020, the administrative expenses of $0.7 million incurred for the three months ended December 31, 2020 were unpaid and included in “Administrative fees payable” in the accompanying Consolidated Balance Sheet.
Credit Support Agreement
In connection with the MVC Acquisition, on December 23, 2020, promptly following the closing of the Company’s merger with MVC, the Company entered into a Credit Support Agreement (the “Credit Support Agreement”) with the Adviser, pursuant to which the Adviser has agreed to provide credit support to the Company in the amount of up to $23.0 million relating to the net cumulative realized and unrealized losses on the acquired MVC investment portfolio over a 10-year period. A summary of the material terms of the Credit Support Agreement are as follows:
•The Credit Support Agreement covers all of the investments in the Reference Portfolio.
•The Adviser has an obligation to provide credit support to the Company in an amount equal to the excess of (1) the aggregate realized and unrealized losses on the Reference Portfolio over (2) the aggregate realized and unrealized gains on the Reference Portfolio, in each case from the date of the closing of the Company’s merger with MVC through the Designated Settlement Date (up to a $23.0 million cap) (such amount, the “Covered Losses”). For purposes of the Credit Support Agreement, “Designated Settlement Date” means the earlier of (1) January 1, 2031 and (2) the date on which the entire Reference Portfolio has been realized or written off. No credit support is required to be made by the Adviser to the Company under the Credit Support Agreement if the aggregate realized and unrealized gains on the Reference Portfolio exceed realized and unrealized losses of the Reference Portfolio on the Designated Settlement Date.
•The Adviser will settle any credit support obligation under the Credit Support Agreement as follows. If the Covered Losses are greater than $0.00, then, in satisfaction of the Adviser’s obligation set forth in the Credit Support Agreement, the Adviser will irrevocably waive during the Waiver Period (as defined below) (1) the incentive fees payable under the Amended and Restated Advisory Agreement (including any incentive fee calculated on an annual basis during the Waiver Period), and (2) in the event that Covered Losses exceed such incentive fee, the base management fees payable under the Amended and Restated Advisory Agreement. The “Waiver Period” means the four quarterly measurement periods immediately following the quarter in which the Designated Settlement Date occurs. If the Covered Losses exceed the aggregate amount of incentive fees and base management fees waived by the Adviser during the Waiver Period, then, on the date on which the last incentive fee or base management fee payment would otherwise be due during the Waiver Period, the Adviser shall make a cash payment to the Company equal to the positive difference between the Covered Losses and the aggregate amount of incentive fees and base management fees previously waived by the Adviser during the Waiver Period.
•The Credit Support Agreement and the rights of the Company thereunder shall automatically terminate if the Adviser (or an affiliate of the Adviser) ceases to serve as the investment adviser to the Company or any successor thereto, other than as a result of the voluntary termination by the Adviser of its investment advisory agreement with the Company. In the event of such a voluntary termination by the Adviser of the then-current investment advisory agreement with the Company, the Adviser will remain obligated to provide the credit support contemplated by the Credit Support Agreement. In the event of a non-voluntary termination of the advisory agreement or its expiration (due to non-renewal by the Board, the Adviser will have no obligations under the Credit Support Agreement.
The Credit Support Agreement is intended to give stockholders of the combined company following the MVC Acquisition downside protection from net cumulative realized and unrealized losses on the acquired MVC portfolio and insulate the combined company’s stockholders from potential value volatility and losses in MVC’s portfolio following the closing of the Company’s merger with MVC. There is no fee or other payment by the Company to the Adviser or any of its affiliates in connection with the Credit Support Agreement. Any cash payment from the Adviser to the Company under the Credit Support
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Agreement will be excluded from the Company’s incentive fee calculations under the Amended and Restated Advisory Agreement.
When the Company and the Adviser entered into the Credit Support Agreement, it was accounted for as a deemed contribution from the Adviser and is included in "Additional paid-in capital" in the accompanying Unaudited Consolidated Balance Sheet and Consolidated Balance Sheet. In addition, the Credit Support Agreement will be accounted for as a derivative in accordance with ASC 815, Derivatives and Hedging, and is included in "Credit support agreement" in the accompanying Unaudited Consolidated Balance Sheet and Consolidated Balance Sheet.
3. INVESTMENTS
Portfolio Composition
The Company invests predominately in senior secured private debt investments in well-established middle-market businesses that operate across a wide range of industries, as well as syndicated senior secured loans, structured product investments, bonds and subordinated debt securities of privately held companies, generally secured by security interests in portfolio company assets. In addition,other fixed income securities. Structured product investments include collateralized loan obligations and asset-backed securities. The Adviser's existing SEC co-investment exemptive relief under the 1940 Act, permits the Company generally invests in one or more equity instruments ofand the borrower, such as direct preferred or common equity interests. The Company's investments generally range from $5.0 million to $50.0 million per portfolio company. In certain situations, we have partnered with otherAdviser's affiliated private funds and SEC-registered funds to provide larger financing commitments.co-invest in loans originated by the Adviser, which allows the Adviser to efficiently implement its senior secured private debt investment strategy for the Company.
The cost basis of the Company's debt investments includes any unamortized original issuepurchased premium or discount, unamortized loan origination fees and payment-in-kind (“PIK”)PIK interest, if any. Summaries of the composition of the Company’s investment portfolio at cost and fair value, and as a percentage of total investments, are shown in the following tables:
| | | | | | | | | | | | Cost | | Percentage of Total Portfolio | | Fair Value | | Percentage of Total Portfolio | | Percentage of Total Net Assets |
| Cost | | Percentage of Total Portfolio | | Fair Value | | Percentage of Total Portfolio | |
September 30, 2017: | | | | | | | | |
March 31, 2021: | | March 31, 2021: | | | | | | | | | |
Senior debt and 1st lien notes | | Senior debt and 1st lien notes | $ | 1,228,983,292 | | | 77 | % | | $ | 1,238,178,055 | | | 77 | % | | 170 | % |
Subordinated debt and 2nd lien notes | $ | 812,599,788 |
| | 66 | % | | $ | 688,995,595 |
| | 63 | % | Subordinated debt and 2nd lien notes | 150,273,105 | | | 10 | | | 150,597,961 | | | 9 | | | 21 | |
Senior debt and 1st lien notes | 290,613,735 |
| | 23 |
| | 270,479,180 |
| | 25 |
| |
Structured products | | Structured products | 23,163,888 | | | 1 | | | 26,153,607 | | | 2 | | | 4 | |
Equity shares | 133,883,175 |
| | 11 |
| | 131,120,904 |
| | 12 |
| Equity shares | 42,543,214 | | | 3 | | | 39,617,746 | | | 2 | | | 5 | |
Equity warrants | 1,691,617 |
| | — |
| | 596,000 |
| | — |
| Equity warrants | 1,235,383 | | | — | | | 1,434,309 | | | — | | | — | |
Investment in joint ventures / PE fund | | Investment in joint ventures / PE fund | 68,782,532 | | | 4 | | | 72,576,383 | | | 5 | | | 10 | |
Short-term investments | | Short-term investments | 73,569,174 | | | 5 | | | 73,565,676 | | | 5 | | | 10 | |
| $ | 1,238,788,315 |
| | 100 | % | | $ | 1,091,191,679 |
| | 100 | % | | $ | 1,588,550,588 | | | 100 | % | | $ | 1,602,123,737 | | | 100 | % | | 220 | % |
December 31, 2016: | | | | | | | | |
December 31, 2020: | | December 31, 2020: | | | | | | | | | |
Senior debt and 1st lien notes | | Senior debt and 1st lien notes | $ | 1,167,436,742 | | | 79 | % | | $ | 1,171,250,512 | | | 79 | % | | 163 | % |
Subordinated debt and 2nd lien notes | $ | 753,635,857 |
| | 69 | % | | $ | 690,159,367 |
| | 67 | % | Subordinated debt and 2nd lien notes | 137,776,808 | | | 9 | | | 138,767,120 | | | 9 | | | 19 | |
Senior debt and 1st lien notes | 198,616,110 |
| | 18 |
| | 191,643,157 |
| | 18 |
| |
Structured products | | Structured products | 30,071,808 | | | 2 | | | 32,508,845 | | | 2 | | | 5 | |
Equity shares | 140,524,807 |
| | 13 |
| | 154,216,657 |
| | 15 |
| Equity shares | 44,693,645 | | | 3 | | | 44,651,114 | | | 3 | | | 6 | |
Equity warrants | 4,154,717 |
| | — |
| | 1,888,000 |
| | — |
| Equity warrants | 1,235,383 | | | — | | | 1,300,197 | | | — | | | — | |
Investment in joint ventures / PE fund | | Investment in joint ventures / PE fund | 39,282,532 | | | 3 | | | 41,759,922 | | | 3 | | | 6 | |
Short-term investments | | Short-term investments | 65,558,227 | | | 4 | | | 65,558,227 | | | 4 | | | 9 | |
| $ | 1,096,931,491 |
| | 100 | % | | $ | 1,037,907,181 |
| | 100 | % | | $ | 1,486,055,145 | | | 100 | % | | $ | 1,495,795,937 | | | 100 | % | | 208 | % |
During the three months ended September 30, 2017,March 31, 2021, the Company made seven18 new investments totaling approximately $110.3$172.2 million, andmade investments in sixteen existing portfolio companies totaling approximately $30.2 million. During the nine months ended September 30, 2017, the Company$73.2 million, made twenty-twoa new investmentsjoint venture equity investment totaling approximately $328.2$4.5 million and additional investments in twenty-five existingjoint venture equity portfolio companies totaling approximately $63.3$25.0 million.
During the three months ended September 30, 2016,March 31, 2020, the Company made three30 new investments totaling approximately $83.9$111.2 million and made investments in nine existing portfolio companies totaling approximately $4.5$20.9 million. During the nine months ended September 30, 2016,
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The industry composition of investments at fair value at March 31, 2021 and December 31, 2020, excluding short-term investments, was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2021 | | December 31, 2020 |
Aerospace and Defense | $ | 103,612,237 | | | 6.8 | % | | $ | 82,501,170 | | | 5.8 | % |
Automotive | 59,394,262 | | | 3.9 | | | 61,581,980 | | | 4.3 | |
Banking, Finance, Insurance and Real Estate | 118,580,033 | | | 7.8 | | | 99,099,552 | | | 6.9 | |
Beverage, Food and Tobacco | 16,900,033 | | | 1.1 | | | 15,404,126 | | | 1.1 | |
Capital Equipment | 32,078,431 | | | 2.1 | | | 30,899,579 | | | 2.2 | |
Chemicals, Plastics, and Rubber | 31,917,870 | | | 2.1 | | | 32,378,972 | | | 2.3 | |
Construction and Building | 65,281,876 | | | 4.3 | | | 59,861,616 | | | 4.2 | |
Consumer goods: Durable | 38,394,329 | | | 2.5 | | | 38,165,784 | | | 2.7 | |
Consumer goods: Non-durable | 33,371,033 | | | 2.2 | | | 28,081,580 | | | 2.0 | |
Containers, Packaging and Glass | 7,407,821 | | | 0.5 | | | 9,018,983 | | | 0.6 | |
Energy: Electricity | 16,490,359 | | | 1.1 | | | 17,627,935 | | | 1.2 | |
Energy: Oil and Gas | 3,662,649 | | | 0.2 | | | 788,105 | | | 0.1 | |
Environmental Services | 11,616,266 | | | 0.8 | | | — | | | — | |
Healthcare and Pharmaceuticals | 148,719,048 | | | 9.7 | | | 142,708,050 | | | 10.0 | |
High Tech Industries | 165,576,202 | | | 10.8 | | | 152,413,985 | | | 10.6 | |
Hotel, Gaming and Leisure | 16,677,421 | | | 1.1 | | | 10,682,093 | | | 0.7 | |
Investment Funds and Vehicles | 72,576,383 | | | 4.7 | | | 41,759,922 | | | 2.9 | |
Media: Advertising, Printing and Publishing | 67,947,381 | | | 4.4 | | | 54,123,033 | | | 3.8 | |
Media: Broadcasting and Subscription | 5,648,515 | | | 0.4 | | | 6,464,741 | | | 0.4 | |
Media: Diversified and Production | 43,257,677 | | | 2.8 | | | 48,200,216 | | | 3.4 | |
Metals and Mining | 18,640,733 | | | 1.2 | | | 17,857,236 | | | 1.2 | |
Retail | — | | | — | | | 1,983,083 | | | 0.1 | |
Services: Business | 218,683,424 | | | 14.3 | | | 209,974,914 | | | 14.7 | |
Services: Consumer | 58,147,463 | | | 3.8 | | | 54,450,324 | | | 3.8 | |
Structured Products | 26,153,607 | | | 1.7 | | | 32,508,845 | | | 2.3 | |
Telecommunications | 30,936,630 | | | 2.0 | | | 43,021,001 | | | 3.0 | |
Transportation: Cargo | 64,766,643 | | | 4.2 | | | 91,132,943 | | | 6.4 | |
| | | | | | | |
Utilities: Electric | 8,999,781 | | | 0.6 | | | 8,987,929 | | | 0.6 | |
Utilities: Oil and Gas | 11,683,609 | | | 0.8 | | | 11,645,956 | | | 0.8 | |
Wholesale | 31,436,345 | | | 2.1 | | | 26,914,057 | | | 1.9 | |
Total | $ | 1,528,558,061 | | | 100.0 | % | | $ | 1,430,237,710 | | | 100.0 | % |
Jocassee Partners LLC
On May 8, 2019, the Company made six newentered into an agreement with South Carolina Retirement Systems Group Trust ("SCRS") to create and co-manage Jocassee Partners LLC ("Jocassee"), a joint venture, which invests in a highly diversified asset mix including senior secured, middle-market, private debt investments, totaling approximately $130.2syndicated senior secured loans and structured product investments. The Company and SCRS committed to initially provide $50.0 million and $500.0 million, respectively, of equity capital to Jocassee. Equity contributions will be called from each member on a pro-rata basis, based on their equity commitments. As of March 31, 2021, Jocassee had $272.1 million in senior secured private middle-market debt investments, $0.7 million in second lien and subordinated private middle-market debt investments, $384.5 million in U.S. syndicated senior secured loans, $9.1 million in U.S. syndicated second lien and subordinated loans, $146.8 million in European syndicated senior secured loans, $5.7 million in structured product investments, $5.4 million in equity investments, $100.0 million in joint venture investments and $21.5 million in short-term investments.As of December 31, 2020, Jocassee had $180.6 million in senior secured private middle-market debt investments, $382.9 million in U.S. syndicated senior secured loans, $161.5 million in European syndicated senior secured loans, $25.6 million in structured product investments, $5.8 million in an equity investment, $90.1 million in a joint venture investment and $23.1 million in short-term investments.
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The Company may sell portions of its investments via assignment to Jocassee. Since inception, as of March 31, 2021 and December 31, 2020, the Company had sold $256.9 million and $162.2 million, respectively, of its investments to Jocassee. As of each of March 31, 2021 and December 31, 2020, the Company had $44.2 million in unsettled receivables due from Jocassee that were included in "Receivable from unsettled transactions" in the accompanying Unaudited and Audited Consolidated Balance Sheets. The sale of the investments met the criteria set forth in ASC 860, Transfers and Servicing for treatment as a sale and satisfies the following conditions:
•Assigned investments have been isolated from the Company, and put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership;
•each participant has the right to pledge or exchange the assigned investments it received, and no condition both constrains the participant from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the Company; and
•the Company, its consolidated affiliates or its agents do not maintain effective control over the assigned investments through either: (i) an agreement that entitles and/or obligates the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.
The Company has determined that Jocassee is an investment company under ASC, Topic 946, Financial Services - Investment Companies, however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a substantially wholly owned investment company subsidiary, which is an extension of the operations of the Company, or a controlled operating company whose business consists of providing services to the Company. The Company does not consolidate its interest in Jocassee as it is not a substantially wholly owned investment company subsidiary. In addition, the Company does not control Jocassee due to the allocation of voting rights among Jocassee members.
As of March 31, 2021 and December 31, 2020, Jocassee had the following commitments, contributions and unfunded commitments from its members:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2021 |
Member | | Total Commitments | | Contributed Capital | | Return of Capital (not recallable) | | Unfunded Commitments |
Barings BDC, Inc. | | $ | 50,000,000 | | | $ | 25,000,000 | | | $ | — | | | $ | 25,000,000 | |
South Carolina Retirement Systems Group Trust | | 500,000,000 | | | 250,000,000 | | | — | | | 250,000,000 | |
Total | | $ | 550,000,000 | | | $ | 275,000,000 | | | $ | — | | | $ | 275,000,000 | |
| | | | | | | | |
| | As of December 31, 2020 |
Member | | Total Commitments | | Contributed Capital | | Return of Capital (not recallable) | | Unfunded Commitments |
Barings BDC, Inc. | | $ | 50,000,000 | | | $ | 20,000,000 | | | $ | — | | | $ | 30,000,000 | |
South Carolina Retirement Systems Group Trust | | 500,000,000 | | | 200,000,000 | | | — | | | 300,000,000 | |
Total | | $ | 550,000,000 | | | $ | 220,000,000 | | | $ | — | | | $ | 330,000,000 | |
Thompson Rivers LLC
On April 28, 2020, Thompson Rivers LLC (“Thompson Rivers”) was formed as a Delaware limited liability company. On May 13, 2020, the Company entered into a limited liability company agreement with Jocassee. The Company and Jocassee committed to initially provide $10.0 million and $90.0 million, respectively, of equity capital to Thompson Rivers. Equity contributions (and equity ownership) are on a pro-rata basis, based on their equity commitments (10% for the Company and 90% for Jocassee). On January 29, 2021, the Company and Jocassee entered into a Second Amended and Restated Limited Liability Company Agreement (“Amended LLC Agreement”). The Amended LLC Agreement increased the Company's commitment to $30.0 million. As of March 31, 2021, Thompson Rivers had $938.8 million in Ginnie Mae early buyout loans and $62.1 million in cash. As of December 31, 2020, Thompson Rivers had $715.2 million in Ginnie Mae early buyout loans.
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The Company has determined that Thompson Rivers is an investment company under ASC, Topic 946, Financial Services - Investment Companies, however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a substantially wholly owned investment company subsidiary, which is an extension of the operations of the Company, or a controlled operating company whose business consists of providing services to the Company. The Company does not consolidate its interest in Thompson Rivers as it is not a substantially wholly owned investment company subsidiary. In addition, the Company does not control Thompson Rivers due to the allocation of voting rights among Thompson Rivers members.
As of March 31, 2021 and December 31, 2020, Thompson Rivers had the following commitments, contributions and unfunded commitments from its members:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2021 |
Member | | Total Commitments | | Contributed Capital | | Return of Capital (not recallable) | | Unfunded Commitments |
Barings BDC, Inc. | | $ | 30,000,000 | | | $ | 30,000,000 | | | $ | — | | | $ | — | |
Jocassee Partners LLC | | 90,000,000 | | | 90,000,000 | | | — | | | — | |
Total | | $ | 120,000,000 | | | $ | 120,000,000 | | | $ | — | | | $ | — | |
| | | | | | | | |
| | As of December 31, 2020 |
Member | | Total Commitments | | Contributed Capital | | Return of Capital (not recallable) | | Unfunded Commitments |
Barings BDC, Inc. | | $ | 10,000,000 | | | $ | 10,000,000 | | | $ | — | | | $ | — | |
Jocassee Partners LLC | | 90,000,000 | | | 90,000,000 | | | — | | | — | |
Total | | $ | 100,000,000 | | | $ | 100,000,000 | | | $ | — | | | $ | — | |
Waccamaw River LLC
On January 4, 2021, Waccamaw River LLC (“Waccamaw River”) was formed as a Delaware limited liability company. On February 8, 2021, the Company entered into a limited liability company agreement (“Waccamaw LLC Agreement”) with Jocassee. The Company and Jocassee have committed to initially each provide $25.0 million, of equity capital to Waccamaw River. Equity contributions (and equity ownership) are on a pro-rata basis, based on their equity commitments (50% for the Company and 50% for Jocassee). As of March 31, 2021, Waccamaw River had $7.8 million in unsecured consumer loans and $0.6 million in cash.
The Company has determined that Waccamaw River is an investment company under ASC, Topic 946, Financial Services - Investment Companies, however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a substantially wholly owned investment company subsidiary, which is an extension of the operations of the Company, or a controlled operating company whose business consists of providing services to the Company. The Company does not consolidate its interest in Waccamaw River as it is not a substantially wholly owned investment company subsidiary. In addition, the Company does not control Waccamaw River due to the allocation of voting rights among Waccamaw River members.
As of March 31, 2021, Waccamaw River had the following commitments, contributions and unfunded commitments from its members:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2021 |
Member | | Total Commitments | | Contributed Capital | | Return of Capital (not recallable) | | Unfunded Commitments |
Barings BDC, Inc. | | $ | 25,000,000 | | | $ | 4,500,000 | | | $ | — | | | $ | 20,500,000 | |
Jocassee Partners LLC | | 25,000,000 | | | 4,500,000 | | | — | | | 20,500,000 | |
Total | | $ | 50,000,000 | | | $ | 9,000,000 | | | $ | — | | | $ | 41,000,000 | |
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Valuation of Investments
The Company conducts the valuation of its investments, upon which its net asset value is primarily based, in accordance with its valuation policy, as well as established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring (at least quarterly) basis in accordance with the 1940 Act and FASB ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). The Company's current valuation policy and processes were established by the Adviser and have been approved by the Board.
Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For the Company’s portfolio securities, fair value is generally the amount that the Company might reasonably expect to receive upon the current sale of the security. Under ASC Topic 820, the fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. Under ASC Topic 820, if no market for the security exists or if the Company does not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market.
Under ASC Topic 820, there are three levels of valuation inputs, as follows:
Level 1 Inputs – include quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 Inputs – include inputs that are unobservable and significant to the fair value measurement.
A financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
The Company’s investment portfolio includes certain debt and equity instruments of privately held companies for which quoted prices or other observable inputs falling within the categories of Level 1 and Level 2 are generally not available. In such cases, the Company determines the fair value of its investments in seventeen existinggood faith primarily using Level 3 inputs. In certain cases, quoted prices or other observable inputs exist, and if so, the Company assesses the appropriateness of the use of these third-party quotes in determining fair value based on (i) its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer and (ii) the depth and consistency of broker quotes and the correlation of changes in broker quotes with the underlying performance of the portfolio companies totaling approximately $33.7 million.company.
There is no single standard for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of the Company’s Level 3 investments may differ significantly from fair values that would have been used had an active market for the securities existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.
Investment Valuation Process
The CompanyAdviser has established a valuation policy, as well as establishedpricing committee that is, subject to the oversight of the Board, responsible for the approval, implementation and documentedoversight of the processes and methodologies for determiningthat relate to the fair valuespricing and valuation of assets held by the Company. The Adviser uses independent third-party providers to price the portfolio, company investments on a recurring basisbut in the event an acceptable price cannot be obtained from an approved external source, the Adviser will utilize alternative methods in accordance with the 1940 Act and FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). The Company's valuation policy and processes wereinternal pricing procedures established by managementthe Adviser's pricing committee.
At least annually, the Adviser conducts reviews of the Company withprimary pricing vendors to validate that the assistance of certain third-party advisors and were approved byinputs used in the Board. Under ASC Topic 820, therevendors’ pricing process are three levels of valuation inputs, as follows:
Level 1 Inputs – include quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable fordeemed to be market observable. While the asset or liability, either directly or indirectly, for substantially the full termAdviser is not provided access to proprietary models of the financial instrument.
Level 3 Inputs – include inputs that are unobservablevendors, the reviews have included on-site walkthroughs of the pricing process, methodologies and significant to the fair value measurement.
The Company’s investment portfolio is primarily comprised of debtcontrol procedures for each asset class and equity instruments of privately held companieslevel for which quoted prices or otherare provided. The review also includes an examination of the underlying inputs falling withinand assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process the categoriesAdviser continues to perform annually. In addition, the pricing vendors have an established challenge process in place for all security valuations, which facilitates identification and resolution of Level 1 and Level 2prices that fall outside expected ranges. The Adviser believes that the prices received from the pricing vendors are generally not available. Therefore,representative of prices that would be received to sell the Company determinesassets at the fair value of its investments in good faith primarily using Level 3 inputs. In certainmeasurement date (i.e., exit prices).
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The Company's money market fund investments are generally valued using Level 1 inputs and its equity investments listed on an exchange or on the NASDAQ National Market System are valued using Level 1 inputs, using the last quoted sale price of that day. The Company’s syndicated senior secured loans and structured product investments are generally valued using Level 2 inputs, which are generally valued at the bid quotation obtained from dealers in loans by an independent pricing service. The Company's middle-market, private debt and equity investments are generally valued using Level 3 inputs.
cases, quoted pricesIndependent Valuation
The fair value of loans and equity investments that are not syndicated or other observable inputs may exist,for which market quotations are not readily available, including middle-market loans, are generally submitted to independent providers to perform an independent valuation on those loans and if so, the Company assesses the appropriatenessequity investments as of the useend of these third-party quotes in determiningeach quarter. Such loans and equity investments are initially held at cost, as that is a reasonable approximation of fair value based on (i) its understandingthe acquisition date, and monitored for material changes that could affect the valuation (for example, changes in interest rates or the credit quality of the level of actual transactions used byborrower). At the brokerquarter end following the initial acquisition, such loans and equity investments are generally sent to develop the quote and whether the quote was an indicative price or binding offer and (ii) the depth and consistency of broker quotes and the correlation of changes in broker quotes with the underlying performance of the portfolio company.
Under ASC Topic 820, a financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
There is no single standard for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of the Company’s investments may differ significantly from fair values that would have been used had an active market for the securities existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.
The Company’s valuation process is led by the Company’s executive officers. The Company’s valuation process begins with a quarterly review of each investment in the Company’s investment portfolio by the Company’s executive officers and investment committee. Valuations of each portfolio security are then prepared by the Company’s investment professionals, who have direct responsibility for the origination, management and monitoring of each investment. Under the Company’s valuation policy, each investment valuation is subject to (i) a review by the lead investment officer responsible for the portfolio company investment and (ii) a peer review by a second investment officer or executive officer of the Company. Generally, any investment that is valued below cost is subjected to review by one of the Company’s executive officers. After the peer review is complete, the Company engages two independent valuation firms, including Duff & Phelps, LLC (collectively, the “Valuation Firms”), to provide third-party reviews of certain investments, as described further below. Finally, the Board has the responsibility for reviewing and approving, in good faith,provider which will determine the fair value of each investment. The independent valuation providers apply various methods (synthetic rating analysis, discounting cash flows, and re-underwriting analysis) to establish the Company’s investmentsrate of return a market participant would require (the “discount rate”) as of the valuation date, given market conditions, prevailing lending standards and the perceived credit quality of the issuer. Future expected cash flows for each investment are discounted back to present value using these discount rates in accordancethe discounted cash flow analysis. A range of values will be provided by the valuation provider and the Adviser will determine the point within that range that it will use in making valuation recommendations to the Board, and will report to the Board on its rationale for each such determination. The Adviser uses its internal valuation model as a comparison point to validate the price range provided by the valuation provider and, where applicable, in determining the point within that range that it will use in making valuation recommendations to the Board. If the Adviser’s pricing committee disagrees with the 1940 Act.
The Valuation Firms provide third-party valuation consulting servicesprice range provided, it may make a fair value recommendation to the Company which consist of certain proceduresBoard that the Company identified and requested the Valuation Firms to perform (hereinafter referred to as the “Procedures”). The Procedures are performed with respect to each portfolio company at least once in every calendar year and for new portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In addition, the Procedures are generally performed with respect to a portfolio company when there has been a significant change in the fair valueis outside of the investment.range provided by the independent valuation provider, and will notify the Board of any such override and the reasons therefore. In certain instances, the Company may determine that it is not cost-effective, and as a result is not in the Company’s stockholders’stockholders' best interest,interests, to request the Valuation Firmsan independent valuation firm to perform the Proceduresan independent valuation on one or more portfolio companies.certain investments. Such instances include, but are not limited to, situations where the fair value of the investment in the portfolio company is determined to be insignificant relative to the total investment portfolio.
The total number ofPursuant to these procedures, the Board determines in good faith whether the Company's investments were valued at fair value in accordance with the Company's valuation policies and procedures and the percentage1940 Act based on, among other things, the input of Barings, the Company’s Audit Committee and the independent valuation firm.
Valuation Techniques
The Company's valuation techniques are based upon both observable and unobservable pricing inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. An independent pricing service provider is the preferred source of pricing a loan, however, to the extent the independent pricing service provider price is unavailable or not relevant and reliable, the Company will utilize alternative approaches such as broker quotes or manual prices. The Company attempts to maximize the use of observable inputs and minimize the use of unobservable inputs. The availability of observable inputs can vary from investment portfolio on whichto investment and is affected by a wide variety of factors, including the Procedures were performed are summarized below by period:type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security.
Valuation of Investment in Jocassee |
| | | |
For the quarter ended: | Total companies | | Percent of total investments at fair value(1) |
March 31, 2016 | 18 | | 27% |
June 30, 2016 | 19 | | 30% |
September 30, 2016 | 19 | | 33% |
December 31, 2016 | 20 | | 33% |
March 31, 2017 | 18 | | 30% |
June 30, 2017 | 20 | | 29% |
September 30, 2017 | 22 |
| 25% |
| |
(1) | Exclusive of the fair value of new investments made during the quarter. |
Upon completion of the Procedures, the Valuation Firms concluded that, with respect to each investment reviewed by each Valuation Firm,The Company estimates the fair value of those investments subjected toits investment in Jocassee using the Procedures appeared reasonable.NAV of Jocassee and its ownership percentage. The BoardNAV of Jocassee is ultimately responsibledetermined in accordance with the specialized accounting guidance for determininginvestment companies.
Valuation of Investment in Thompson Rivers
The Company estimates the fair value of its investment in Thompson Rivers using the Company’s investmentsNAV of Thompson Rivers and its ownership percentage. The NAV of Thompson Rivers is determined in good faith.accordance with the specialized accounting guidance for investment companies.
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Valuation of Investment in Waccamaw River
Investment Valuation Inputs
Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For the Company’s portfolio securities, fair value is generally the amount that the Company might reasonably expect to receive upon the current sale of the security. Under ASC Topic 820, the fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. Under ASC Topic 820, if no market for the security exists or if the Company does not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market. The securities in which the Company invests are generally only purchased and sold in merger and acquisition transactions, in which case the entire portfolio company is sold to a third-party purchaser. As a result, unless the Company has the ability to control such a transaction, the assumed principal market for the Company’s securities is a hypothetical secondary market. The Level 3 inputs to the Company’s valuation process reflect the Company’s best estimate of the assumptions that would be used by market participants in pricing the investment in a transaction in a hypothetical secondary market.
Enterprise Value Waterfall Approach
In valuing equity securities (including warrants), the Company estimates fair value using an “Enterprise Value Waterfall” valuation model. The Company estimates the enterprise value of a portfolio company and then allocates the enterprise value to the portfolio company’s securities in order of their relative liquidation preference. In addition, the model assumes that any outstanding debt or other securities that are senior to the Company’s equity securities are required to be repaid at par. Additionally, the Company estimates the fair value of a limited numberits investment in Waccamaw River using the NAV of Waccamaw River and its ownership percentage. The NAV of Waccamaw River is determined in accordance with the specialized accounting guidance for investment companies.
Valuation of Investments in MVC Private Equity Fund LP
The Company estimates the fair value of its debt securitiesinvestment in MVC Private Equity Fund LP (the "MVC PE Fund") using the Enterprise Value Waterfall approachNAV of the MVC PE Fund and its ownership percentage. The NAV of the MVC PE Fund is determined in cases whereaccordance with the specialized accounting guidance for investment companies.
Level 3 Unobservable Inputs
The following tables summarize the significant unobservable inputs the Company does not expect to receive full repayment.
To estimateused in the enterprisevaluation of its Level 3 debt and equity securities as of March 31, 2021 and December 31, 2020. The weighted average range of unobservable inputs is based on fair value of the portfolio company,investments.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
March 31, 2021: | Fair Value | | Valuation Model | | Level 3 Input | | Range of Inputs | | Weighted Average |
Senior debt and 1st lien notes(1)(2) | $ | 886,013,699 | | | Yield Analysis | | Market Yield | | 5.4% – 18.2% | | 7.8% |
3,000,000 | | | Liquidation Analysis | | Adjusted EBITDA Multiple | | 0.1x – 0.1x | | 0.10x |
231,246,561 | | | Recent Transaction | | Transaction Price | | 97.0% – 99.0% | | 98.0% |
Subordinated debt and 2nd lien notes(3) | 102,508,414 | | | Yield Analysis | | Market Yield | | 8.5% – 28.0% | | 18.6% |
21,416,118 | | | Market Approach | | Adjusted EBITDA Multiple | | 3.5x – 7.5x | | 4.8x |
| 15,733,031 | | | Recent Transaction | | Transaction Price | | 97.2% – 98.8% | | 97.4% |
Equity shares(4) | 31,596,895 | | | Market Approach | | Adjusted EBITDA Multiple | | 3.5x – 16.3x | | 5.3x |
4,945,906 | | | Real Estate - Cost Approach | | Replacement Cost (CZK/m2) | | 1,237 to 1,892 | | 1,892 |
| Real Estate - Cost Approach | | Depreciation Factor | | 0.50 to 1.00 | | 0.81 |
| Real Estate - Income Approach | | Market Rent CZK/Year | | CZK5,011,718 to CZK8,700,000 | | CZK5,011,718 |
| Real Estate - Income Approach | | Cap Rate | | 6.0% to 7.0% | | 6.5% |
| Real Estate - Income Approach | | Adj. Factor for Development Zone | | n/a | | 1.15 |
187,235 | | | Recent Transaction | | Transaction Price | | $1 | | $1 |
Equity warrants | 976,978 | | | Market Approach | | Adjusted EBITDA Multiple | | 5.5x-13.4x | | 6.1x |
(1)Excludes investments with an aggregate fair value amounting to $6,416,810, which the Company primarily usesvalued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(2)Senior debt investments with a valuation model based on a transaction multiple,total fair value of $12,704,389, were valued using unobservable market transactions.
(3)Excludes investments with an aggregate fair value amounting to $4,512,617, which generally is the original transaction multiple, and measures of the portfolio company’s financial performance. In addition, the Company considers other factors, including butvalued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not limitedreadily available.
(4)Excludes investments with an aggregate fair value amounting to (i) offers from third parties to purchase the portfolio company, (ii) the implied value of recent investments in the equity securities of the portfolio company, (iii) publicly available information regarding recent sales of private companies in comparable transactions and (iv) when$88,290, which the Company believes therevalued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are comparable companies that are publicly traded, the Company performs a review of these publicly traded companies and the market multiple of their equity securities. For certain non-performing assets, the Company may utilize the liquidation or collateral value of the portfolio company's assets in its estimation of enterprise value.not readily available.
The significant Level 3 inputs to the Enterprise Value Waterfall model are (i) an appropriate transaction multiple and (ii) a measure of the portfolio company’s financial performance, which generally is either earnings before interest, taxes, depreciation and amortization, as adjusted (“Adjusted EBITDA”) or revenues. Such inputs can be based on historical operating results, projections of future operating results or a combination thereof. The operating results of a portfolio company may be unaudited, projected or pro forma financial information and may require adjustments for certain non-recurring items. In determining the operating results input, the Company utilizes the most recent portfolio company financial statements and forecasts available as of the valuation date. The Company also consults with the portfolio company’s senior management to obtain updates on the portfolio company’s performance, including information such as industry trends, new product development, loss of customers and other operational issues.
Fair value measurements using the Enterprise Value Waterfall model can be sensitive to changes in one or more of the inputs. Assuming all other inputs to the Enterprise Value Waterfall model remain constant, any increase (decrease) in either the transaction multiple, Adjusted EBITDA or revenues for a particular equity security would result in a higher (lower) fair value for that security.
Income Approach
In valuing debt securities, the Company utilizes an “Income Approach” model that considers factors including, but not limited to, (i) the stated yield on the debt security, (ii) the portfolio company’s current Adjusted EBITDA as compared to the portfolio company’s historical or projected Adjusted EBITDA as of the date the investment was made and the portfolio company’s anticipated Adjusted EBITDA for the next twelve months of operations, (iii) the portfolio company’s current Leverage Ratio (defined as the portfolio company’s total indebtedness divided by Adjusted EBITDA) as compared to its Leverage Ratio as of the date the investment was made, (iv) publicly available information regarding current pricing and credit metrics for similar proposed and executed investment transactions of private companies and (v) when the Company believes a relevant comparison exists, current pricing and credit metrics for similar proposed and executed investment transactions of
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, 2020: | Fair Value | | Valuation Model | | Level 3 Input | | Range of Inputs | | Weighted Average |
Senior debt and 1st lien notes(1) | $ | 650,550,710 | | | Yield Analysis | | Market Yield | | 4.7% – 16.2% | | 7.4% |
3,000,000 | | | Liquidation Analysis | | Adjusted EBITDA Multiple | | 0.05x – 0.15x | | 0.10x |
399,692,333 | | | Recent Transaction | | Transaction Price | | 96.0% – 100.0% | | 97.8% |
Subordinated debt and 2nd lien notes(2) | 109,851,771 | | | Yield Analysis | | Market Yield | | 6.0% – 26.0% | | 16.7% |
13,933,960 | | | Market Approach | | Adjusted EBITDA Multiple | | 5.0x – 6.0x | | 5.5x |
| 4,959,088 | | | Recent Transaction | | Transaction Price | | 100% | | 100% |
Equity shares(3) | 39,178,157 | | | Market Approach | | Adjusted EBITDA Multiple | | 0.8x – 11.8x | | 4.8x |
4,752,997 | | | Real Estate - Cost Approach | | Replacement Cost (CZK/m2) | | 1,237 to 1,892 | | 1,892 |
| Real Estate - Cost Approach | | Depreciation Factor | | 0.50 to 1.00 | | 0.81 |
| Real Estate - Income Approach | | Market Rent CZK/Year | | CZK5,011,718 to CZK8,700,000 | | CZK5,011,718 |
| Real Estate - Income Approach | | Cap Rate | | 6.0% to 7.0% | | 6.5% |
| Real Estate - Income Approach | | Adj. Factor for Development Zone | | n/a | | 1.15 |
227,200 | | | Recent Transaction | | Transaction Price | | $1,000 | | $1,000 |
Equity warrants | 1,133,781 | | | Market Approach | | Adjusted EBITDA Multiple | | 4.8x-9.0x | | 6.0x |
publicly traded debt. In addition,(1)Excludes investments with an aggregate fair value amounting to $2,474,068, which the Company uses a risk rating systemvalued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(2)Excludes investments with an aggregate fair value amounting to estimate$2,075,117, which the probability of default onCompany valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(3)Excludes investments with an aggregate fair value amounting to $68,670, which the debt securitiesCompany valued using unadjusted prices from independent pricing services and the probability of loss if there is a default. This risk rating system covers both qualitative and quantitative aspectsindependent indicative broker quotes where pricing inputs are not readily available.
Significant increases or decreases in any of the business and the securities held.
The Company considers the factors above particularly any significantunobservable inputs in isolation, including changes in the portfolio company’s results of operations and leverage, and develops an expectation of the yield that a hypothetical market participant would require when purchasing the debt investment (the “Required Rate of Return”). The Required Rate of Return, along with the Leverage Ratio and Adjustedyields, discount rates or EBITDA are the significant Level 3 inputs to the Income Approach model. For investments where the Leverage Ratio and Adjusted EBITDA have not fluctuated significantly from the date the investment was made or have not fluctuated significantly from the Company’s expectations as of the date the investment was made, and where there have been no significant fluctuations in the market pricing for such investments, the Companymultiples, may conclude that the Required Rate of Return is equal to the stated rate on the investment and therefore, the debt security is appropriately priced. In instances where the Company determines that the Required Rate of Return is different from the stated rate on the investment, the Company discounts the contractual cash flows on the debt instrument using the Required Rate of Return in order to estimatechange the fair value of the debt security.
Fair value measurements using the Income Approach model can be sensitive to changes in one or morecertain of the inputs. Assuming all other inputs to the Income Approach model remain constant, anyCompany’s investments. Generally, an increase (decrease) in the Required Rate of Returnmarket yields or Leverage Ratio inputs for a particular debt security woulddecrease in EBITDA multiples may result in a lower (higher) fair value for that security. Assuming all other inputs to the Income Approach model remain constant, any increase (decrease)decrease in the Adjusted EBITDA input for a particular debt security would result in a higher (lower) fair value for that security.
The fair value of the Company’s royalty rights are calculated based on specific provisions contained in the pertinent operating or royalty agreements. The determination of the fair value of such royalty rights is not a significant componentcertain of the Company’s valuation process.
The ranges and weighted average values of the significant Level 3 inputs used in the valuation of the Company’s debt and equity securities at September 30, 2017 and December 31, 2016 are summarized as follows:Company's investments.
|
| | | | | | | | | | | |
September 30, 2017: | Fair Value(1) | | Valuation Model | | Level 3 Inputs | | Range of Inputs | | Weighted Average |
Subordinated debt and 2nd lien notes | $ | 637,935,010 |
| | Income Approach | | Required Rate of Return | | 9.6% – 25.0% | | 12.1% |
| | | | Leverage Ratio | | 1.6x – 10.3x | | 4.7x |
| | | | Adjusted EBITDA | | $2.6 million – $280.6 million | | $45.9 million |
Subordinated debt and 2nd lien notes | 40,077,000 |
| | Enterprise Value Waterfall Approach | | Adjusted EBITDA Multiple | | 3.9x – 10.0x | | 6.9x |
| | | | Adjusted EBITDA | | $1.8 million – $31.4 million | | $11.2 million |
| | | | | Revenue Multiple | | 0.8x – 0.8x | | 0.8x |
| | | | | Revenues | | $80.0 million – $80.0 million | | $80.0 million |
Senior debt and 1st lien notes | 270,479,180 |
| | Income Approach | | Required Rate of Return | | 6.8% – 25.0% | | 11.4% |
| | | | Leverage Ratio | | 1.0x – 7.4x | | 4.0x |
| | | | Adjusted EBITDA | | $3.5 million – $129.5 million | | $17.4 million |
Equity shares and warrants | 131,716,904 |
| | Enterprise Value Waterfall Approach | | Adjusted EBITDA Multiple | | 3.3x – 14.9x | | 7.7x |
| | | | Adjusted EBITDA | | $0.5 million – $60.0 million | | $15.9 million |
| | | | | Revenue Multiple | | 0.8x – 3.0x | | 1.2x |
| | | | | Revenues | | $17.5 million – $80.0 million | | $52.8 million |
| |
(1) | One subordinated debt investment with a fair value of $10,983,585 was repaid subsequent to the end of the reporting period and was valued at its transaction price. |
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | |
December 31, 2016: | Fair Value(1) | | Valuation Model | | Level 3 Input | | Range of Inputs | | Weighted Average |
Subordinated debt and 2nd lien notes | $ | 646,856,367 |
| | Income Approach | | Required Rate of Return | | 9.5% – 35.0% | | 13.8% |
| | | | Leverage Ratio | | 0.1x – 9.5x | | 4.8x |
| | | | Adjusted EBITDA | | $2.6 million – $169.8 million | | $27.9 million |
Subordinated debt and 2nd lien notes | 19,790,000 |
| | Enterprise Value Waterfall Approach | | Adjusted EBITDA Multiple | | 5.0x – 6.7x | | 5.8x |
| | | | Adjusted EBITDA | | $0.6 million – 4.9 million | | $2.1 million |
| | | | Revenue Multiple | | 0.8x – 0.8x | | 0.8x |
| | | | Revenues | | $98.0 million – $98.0 million | | $98.0 million |
Senior debt and 1st lien notes | 190,793,157 |
| | Income Approach | | Required Rate of Return | | 4.3% – 20.0% | | 11.0% |
| | | | Leverage Ratio | | 0.0x – 8.3x | | 3.2x |
| | | | Adjusted EBITDA | | $4.0 million – $14.1 million | | $9.3 million |
Equity shares and warrants | 152,435,657 |
| | Enterprise Value Waterfall Approach | | Adjusted EBITDA Multiple | | 3.3x – 14.9x | | 7.4x |
| | | | Adjusted EBITDA | | ($1.4 million) – $82.1 million | | $15.0 million |
| | | | | Revenue Multiple | | 0.8x – 4.0x | | 1.4x |
| | | | | Revenues | | $19.0 million – $98.0 million | | $61.7 million |
| |
(1) | Certain subordinated debt investments with a total fair value of $23,513,000 and certain equity securities with a total fair value of $3,669,000 were repaid or redeemed subsequent to the end of the reporting period and were valued at their transaction price. One senior debt investment with a total fair value of $850,000 was expected to be repaid subsequent to the end of the reporting period and was valued at its expected settlement value. |
The following table presentstables present the Company’s investment portfolio at fair value as of September 30, 2017March 31, 2021 and December 31, 2016,2020, categorized by the ASC Topic 820 valuation hierarchy, as previously described:
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value as of March 31, 2021 |
| Level 1 | | Level 2 | | Level 3 | | Total |
Senior debt and 1st lien notes | $ | — | | | $ | 98,796,596 | | | $ | 1,139,381,459 | | | $ | 1,238,178,055 | |
Subordinated debt and 2nd lien notes | — | | | 6,427,781 | | | 144,170,180 | | | 150,597,961 | |
Structured products | — | | | 26,153,607 | | | — | | | 26,153,607 | |
Equity shares | — | | | 2,799,420 | | | 36,818,326 | | | 39,617,746 | |
Equity warrants | — | | | 457,331 | | | 976,978 | | | 1,434,309 | |
Short-term investments | 73,565,676 | | | — | | | — | | | 73,565,676 | |
Investments subject to leveling | $ | 73,565,676 | | | $ | 134,634,735 | | | $ | 1,321,346,943 | | | $ | 1,529,547,354 | |
Investment in joint ventures / PE fund(1) | | | | | | | 72,576,383 | |
| | | | | | | $ | 1,602,123,737 | |
| | | | | | | |
| Fair Value as of December 31, 2020 |
| Level 1 | | Level 2 | | Level 3 | | Total |
Senior debt and 1st lien notes | $ | — | | | $ | 115,533,401 | | | $ | 1,055,717,111 | | | $ | 1,171,250,512 | |
Subordinated debt and 2nd lien notes | — | | | 7,947,184 | | | 130,819,936 | | | 138,767,120 | |
Structured products | — | | | 32,508,845 | | | — | | | 32,508,845 | |
Equity shares | — | | | 424,090 | | | 44,227,024 | | | 44,651,114 | |
Equity warrants | — | | | 166,416 | | | 1,133,781 | | | 1,300,197 | |
Short-term investments | 65,558,227 | | | — | | | — | | | 65,558,227 | |
Investments subject to leveling | $ | 65,558,227 | | | $ | 156,579,936 | | | $ | 1,231,897,852 | | | $ | 1,454,036,015 | |
Investment in joint ventures / PE fund(1) | | | | | | | 41,759,922 | |
| | | | | | | $ | 1,495,795,937 | |
|
| | | | | | | | | | | | | | | |
| Fair Value as of September 30, 2017 |
| Level 1 | | Level 2 | | Level 3 | | Total |
Subordinated debt and 2nd lien notes | $ | — |
| | $ | — |
| | $ | 688,995,595 |
| | $ | 688,995,595 |
|
Senior debt and 1st lien notes | — |
| | — |
| | 270,479,180 |
| | 270,479,180 |
|
Equity shares | — |
| | — |
| | 131,120,904 |
| | 131,120,904 |
|
Equity warrants | — |
| | — |
| | 596,000 |
| | 596,000 |
|
| $ | — |
| | $ | — |
| | $ | 1,091,191,679 |
| | $ | 1,091,191,679 |
|
| | | | | | | |
| Fair Value as of December 31, 2016 |
| Level 1 | | Level 2 | | Level 3 | | Total |
Subordinated debt and 2nd lien notes | $ | — |
| | $ | — |
| | $ | 690,159,367 |
| | $ | 690,159,367 |
|
Senior debt and 1st lien notes | — |
| | — |
| | 191,643,157 |
| | 191,643,157 |
|
Equity shares | — |
| | — |
| | 154,216,657 |
| | 154,216,657 |
|
Equity warrants | — |
| | — |
| | 1,888,000 |
| | 1,888,000 |
|
| $ | — |
| | $ | — |
| | $ | 1,037,907,181 |
| | $ | 1,037,907,181 |
|
(1)The Company's investments in Jocassee, Thompson Rivers, Waccamaw River and the MVC PE Fund are measured at fair value using NAV and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Unaudited Consolidated Balance Sheet and Consolidated Balance Sheet.
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The following tables reconcile the beginning and ending balances of the Company’s investment portfolio measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the ninethree months endedSeptember 30, 2017 March 31, 2021 and 2016:2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended March 31, 2021: | Senior Debt and 1st Lien Notes | | Subordinated Debt and 2nd Lien Notes | | Equity Shares | | Equity Warrants | | | | Total |
Fair value, beginning of period | $ | 1,055,717,111 | | | $ | 130,819,936 | | | $ | 44,227,024 | | | $ | 1,133,781 | | | | | $ | 1,231,897,852 | |
New investments | 227,056,942 | | | 14,477,878 | | | 1,072,790 | | | — | | | | | 242,607,610 | |
Transfers into Level 3 | — | | | 2,233,600 | | | 424,090 | | | — | | | | | 2,657,690 | |
Proceeds from sales of investments | (130,763,019) | | | — | | | (5,946,010) | | | — | | | | | (136,709,029) | |
Loan origination fees received | (4,176,205) | | | (402,163) | | | — | | | — | | | | | (4,578,368) | |
Principal repayments received | (12,259,911) | | | (10,120,108) | | | — | | | — | | | | | (22,380,019) | |
Payment-in-kind interest earned | 228,937 | | | 7,007,695 | | | — | | | — | | | | | 7,236,632 | |
| | | | | | | | | | | |
Accretion of loan premium | 3,089 | | | 6,640 | | | — | | | — | | | | | 9,729 | |
Accretion of deferred loan origination revenue | 1,213,446 | | | 211,236 | | | — | | | — | | | | | 1,424,682 | |
Realized gain (loss) | 1,605,025 | | | 3,140 | | | (76,631) | | | — | | | | | 1,531,534 | |
Unrealized appreciation (depreciation) | 756,044 | | | (67,674) | | | (2,882,937) | | | (156,803) | | | | | (2,351,370) | |
Fair value, end of period | $ | 1,139,381,459 | | | $ | 144,170,180 | | | $ | 36,818,326 | | | $ | 976,978 | | | | | $ | 1,321,346,943 | |
| | Nine Months Ended September 30, 2017: | Subordinated Debt and 2nd Lien Notes | | Senior Debt and 1st Lien Notes | | Equity Shares | | Equity Warrants | | Total | |
Three Months Ended March 31, 2020: | | Three Months Ended March 31, 2020: | Senior Debt and 1st Lien Notes | | Subordinated Debt and 2nd Lien Notes | | Equity Shares | | | Total |
Fair value, beginning of period | $ | 690,159,367 |
| | $ | 191,643,157 |
| | $ | 154,216,657 |
| | $ | 1,888,000 |
| | $ | 1,037,907,181 |
| Fair value, beginning of period | $ | 555,500,307 | | | $ | 12,011,965 | | | $ | 760,716 | | | | $ | 568,272,988 | |
New investments | 220,193,495 |
| | 158,635,429 |
| | 12,673,701 |
| | — |
| | 391,502,625 |
| New investments | 97,129,668 | | | 660,263 | | | 403,774 | | | | 98,193,705 | |
Reclassifications | 22,558,007 |
| | (22,558,007 | ) | | — |
| | — |
| | — |
| |
Transfers in (out) of Level 3 | | Transfers in (out) of Level 3 | 57,635,811 | | | (2,312,500) | | | — | | | | 55,323,311 | |
Proceeds from sales of investments | — |
| | — |
| | (27,036,478 | ) | | (479,408 | ) | | (27,515,886 | ) | Proceeds from sales of investments | (37,037,339) | | | — | | | — | | | | (37,037,339) | |
Loan origination fees received | (3,471,655 | ) | | (2,262,235 | ) | | — |
| | — |
| | (5,733,890 | ) | Loan origination fees received | (2,662,115) | | | (19,808) | | | — | | | | (2,681,923) | |
Principal repayments received | (163,054,918 | ) | | (41,159,263 | ) | | — |
| | — |
| | (204,214,181 | ) | Principal repayments received | (10,114,829) | | | — | | | — | | | | (10,114,829) | |
PIK interest earned | 8,033,507 |
| | 841,215 |
| | — |
| | — |
| | 8,874,722 |
| |
PIK interest payments received | (7,847,417 | ) | | (507,979 | ) | | — |
| | — |
| | (8,355,396 | ) | |
Accretion of loan discounts | 411,497 |
| | 54,694 |
| | — |
| | — |
| | 466,191 |
| |
Accretion of loan premium | | Accretion of loan premium | (6,389) | | | — | | | — | | | | (6,389) | |
Accretion of deferred loan origination revenue | 2,798,373 |
| | 1,064,723 |
| | — |
| | — |
| | 3,863,096 |
| Accretion of deferred loan origination revenue | 649,657 | | | 8,351 | | | — | | | | 658,008 | |
Realized gain (loss) | (20,656,958 | ) | | (2,110,952 | ) | | 7,721,145 |
| | (1,983,692 | ) | | (17,030,457 | ) | |
Unrealized gain (loss) | (60,127,703 | ) | | (13,161,602 | ) | | (16,454,121 | ) | | 1,171,100 |
| | (88,572,326 | ) | |
Realized loss | | Realized loss | (145,784) | | | — | | | — | | | | (145,784) | |
Unrealized depreciation | | Unrealized depreciation | (42,233,042) | | | (370,142) | | | (121,316) | | | | (42,724,500) | |
Fair value, end of period | $ | 688,995,595 |
| | $ | 270,479,180 |
| | $ | 131,120,904 |
| | $ | 596,000 |
| | $ | 1,091,191,679 |
| Fair value, end of period | $ | 618,715,945 | | | $ | 9,978,129 | | | $ | 1,043,174 | | | | $ | 629,737,248 | |
|
| | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2016: | Subordinated Debt and 2nd Lien Notes | | Senior Debt and 1st Lien Notes | | Equity Shares | | Equity Warrants | | Total |
Fair value, beginning of period | $ | 699,125,083 |
| | $ | 132,929,264 |
| | $ | 141,555,369 |
| | $ | 3,667,000 |
| | $ | 977,276,716 |
|
New investments | 145,487,825 |
| | 3,000,000 |
| | 14,729,826 |
| | 650,000 |
| | 163,867,651 |
|
Reclassifications | 4,020,247 |
| | (4,020,247 | ) | | — |
| | — |
| | — |
|
Proceeds from sales of investments | — |
| | — |
| | (14,838,506 | ) | | (5,627,106 | ) | | (20,465,612 | ) |
Loan origination fees received | (3,165,460 | ) | | (40,000 | ) | | — |
| | — |
| | (3,205,460 | ) |
Principal repayments received | (157,151,997 | ) | | (4,536,285 | ) | | — |
| | — |
| | (161,688,282 | ) |
PIK interest earned | 10,548,903 |
| | 1,083,855 |
| | — |
| | — |
| | 11,632,758 |
|
PIK interest payments received | (7,219,058 | ) | | (236,150 | ) | | — |
| | — |
| | (7,455,208 | ) |
Accretion of loan discounts | 156,879 |
| | 150,202 |
| | — |
| | — |
| | 307,081 |
|
Accretion of deferred loan origination revenue | 3,289,162 |
| | 386,841 |
| | — |
| | — |
| | 3,676,003 |
|
Realized gain (loss) | (15,371,087 | ) | | (1,560,322 | ) | | 7,090,358 |
| | 3,153,206 |
| | (6,687,845 | ) |
Unrealized gain (loss) | (10,065,698 | ) | | (168,648 | ) | | 253,619 |
| | 454,900 |
| | (9,525,827 | ) |
Fair value, end of period | $ | 669,654,799 |
| | $ | 126,988,510 |
| | $ | 148,790,666 |
| | $ | 2,298,000 |
| | $ | 947,731,975 |
|
All realized and unrealized gains and losses and unrealized appreciation and depreciation are included in earnings (changes in net assets) and are reported on separate line items within the Company’s Unaudited Consolidated Statements of Operations. Pre-tax net unrealized lossesdepreciation on Level 3 investments of $73.4 million and $111.6$0.4 million during the three and nine months ended September 30, 2017, wereMarch 31, 2021 was related to portfolio company investments that were still held by the Company as of September 30, 2017.March 31, 2021. Pre-tax net unrealized lossesdepreciation on Level 3 investments of $11.1 million and $17.2$42.6 million during the three and nine months ended September 30, 2016, respectively, wereMarch 31, 2020 was related to portfolio company investments that were still held by the Company as of September 30, 2016.March 31, 2020.
The Company’s primary investment objective is to generate current income and capital appreciation by investing directly in privately-held lower middle market companies to help these companies fund acquisitions, growth or refinancing. DuringExclusive of short-term investments, during the ninethree months ended September 30, 2017,March 31, 2021, the Company made investments of approximately $382.3 million in portfolio
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
companies to which it was not previously contractually committed to provide such financing. During the nine months ended September 30, 2017, the Company made investments of $9.2 million in companies to which it was previously committed to provide such financing.
During the nine months ended September 30, 2016, the Company made investments of approximately $157.0$247.6 million in portfolio companies to which it was not previously contractually committed to provide such financing. During the ninethree months ended September 30, 2016,March 31, 2021, the Company made investments of $6.9$27.3 million in portfolio companies to which it was previously committed to provide such financing. The details
Exclusive of short-term investments, during the three months ended March 31, 2020, the Company made investments of approximately $123.1 million in portfolio companies to which it was not previously contractually committed to provide such financing. During the three months ended March 31, 2020, the Company made investments of $5.8 million in portfolio companies to which it was previously committed to provide such financing.
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Unsettled Purchases and Sales of Investments
Investment transactions are recorded based on the trade date of the Company’s investments have been disclosedtransaction. As a result, unsettled purchases and sales are recorded as payables and receivables from unsettled transactions, respectively. While purchases and sales of the Company's syndicated senior secured loans generally settle on a T+7 basis, the settlement period will sometimes extend past the scheduled settlement. In such cases, the Company generally is contractually owed and recognizes interest income equal to the applicable margin ("spread") beginning on the Consolidated Schedules of Investments.
Warrants
When originating a debt security, the Company will sometimes receive warrants or other equity-related securities from the borrower. The Company determines the cost basisT+7 date. Such income is accrued as interest receivable and is collected upon settlement of the warrants or other equity-related securities received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and warrants or other equity-related securities received. Any resulting difference between the face amount of the debt and its recorded fair value resulting from the assignment of value to the warrant or other equity instruments is treated as original issue discount and accreted into interest income over the life of the loan.investment transaction.
Realized Gain or Loss and Unrealized Appreciation or Depreciation of Portfolio Investments
Realized gains or losses are recorded upon the sale or liquidation of investments and are calculated as the difference between the net proceeds from the sale or liquidation, if any, and the cost basis of the investment using the specific identification method. Unrealized appreciation or depreciation reflects the difference between the fair value of the investments and the cost basis of the investments.
Investment Classification
In accordance with the provisions of the 1940 Act, the Company classifies investments by level of control. As defined in the 1940 Act, “Control Investments”"Control Investments" are investments in those companies that the Company is deemed to “Control.” “Affiliate Investments”"Control." "Affiliate Investments" are investments in those companies that are “Affiliated Companies”"Affiliated Persons" of the Company, as defined in the 1940 Act, other than Control Investments. “Non-Control"Non-Control / Non-Affiliate Investments”Investments" are those that are neither Control Investments nor Affiliate Investments. Generally, under the 1940 Act, the Company is deemed to control a company in which it has invested if the Company owns more than 25.0% of the voting securities of such company, has greater than 50.0% representation on its board (i.e., securities with the right to elect directors) and/or has the power to exercise control over the management or policies of such portfolio company. The Company is deemed to be an affiliate of a companyGenerally, under the 1940 Act, “Affiliate Investments” that are not otherwise “Control Investments” are defined as investments in which the Company has invested if it owns at least 5.0%, but no more thanup to 25.0% (inclusive), of the voting securities and does not have the power to exercise control over the management or policies of such portfolio company.
Investment Income
Interest income, adjusted forincluding amortization of premium and accretion of original issue discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The Company writes off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible. Dividend income is recorded on the ex-dividend date. The Company had negative dividend income of $24,208 during the nine months ended September 30, 2016, consisting of dividend income of approximately $1.3 million and a negative true-up adjustment of $1.3 million related to a portfolio company distribution that was received in 2015. In 2015, the Company received information that indicated that the tax character of the distribution was 100% dividend income, but received updated information in the first quarter of 2016 indicating that only 14% of the distribution was dividend income and the remainder was a return of capital, which necessitated the adjustment.
Fee Income
Origination, facility, commitment, consent and other advance fees received in connection with loan agreements ("Loan Origination Fees") are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized Loan Origination Fees are recorded as investment income. In the general course of its
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
business, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and loan waiver and amendment fees, and are recorded as investment income when earned.
Fee income for the three and nine months ended September 30, 2017 and 2016 was as follows: |
| | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | Nine Months Ended | | Nine Months Ended |
| September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 |
Recurring Fee Income: | | | | | | | |
Amortization of loan origination fees | $ | 598,288 |
| | $ | 498,733 |
| | $ | 1,828,783 |
| | $ | 1,584,691 |
|
Management, valuation and other fees | 232,272 |
| | 298,033 |
| | 689,663 |
| | 716,328 |
|
Total Recurring Fee Income | 830,560 |
| | 796,766 |
| | 2,518,446 |
| | 2,301,019 |
|
Non-Recurring Fee Income: | | | | | | | |
Prepayment fees | 273,106 |
| | 374,778 |
| | 1,004,509 |
| | 1,863,135 |
|
Acceleration of unamortized loan origination fees | 1,340,781 |
| | 626,648 |
| | 2,344,435 |
| | 2,091,313 |
|
Advisory and structuring fees | 230,000 |
| | 200,000 |
| | 230,000 |
| | 200,000 |
|
Loan amendment fees | 17,278 |
| | — |
| | 132,278 |
| | 17,770 |
|
Other fees | — |
| | 16,500 |
| | 9,000 |
| | 354,699 |
|
Total Non-Recurring Fee Income | 1,861,165 |
| | 1,217,926 |
| | 3,720,222 |
| | 4,526,917 |
|
Total Fee Income | $ | 2,691,725 |
| | $ | 2,014,692 |
| | $ | 6,238,668 |
| | $ | 6,827,936 |
|
Payment-in-Kind Interest
The Company currently holds, and expects to hold in the future, some loans in its portfolio that contain PIKpayment-in-kind ("PIK") interest provisions. The PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to the Company in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.
PIK interest, which is a non-cash source of income at the time of recognition, is included in the Company’s taxable income and therefore affects the amount the Company is required to distribute to its stockholders to maintain its tax treatment as a regulated investment company ("RIC")RIC for federal income tax purposes, even though the Company has not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The Company writes off any accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Fee Income
Origination, facility, commitment, consent and other advance fees received in connection with loan agreements ("Loan Origination Fees") are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized Loan Origination Fees are recorded as investment income. In the general course of its business, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and loan waiver and amendment fees, and are recorded as investment income when earned.
Fee income for the three months ended March 31, 2021 and 2020 was as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | | | |
| March 31, 2021 | | March 31, 2020 | | | | |
Recurring Fee Income: | | | | | | | |
Amortization of loan origination fees | $ | 1,078,090 | | | $ | 429,549 | | | | | |
Management, valuation and other fees | 581,395 | | | 175,755 | | | | | |
Total Recurring Fee Income | 1,659,485 | | | 605,304 | | | | | |
Non-Recurring Fee Income: | | | | | | | |
Prepayment fees | 49,517 | | | 84,151 | | | | | |
Acceleration of unamortized loan origination fees | 402,948 | | | 228,456 | | | | | |
Advisory, loan amendment and other fees | 21,225 | | | 43,082 | | | | | |
Total Non-Recurring Fee Income | 473,690 | | | 355,689 | | | | | |
Total Fee Income | $ | 2,133,175 | | | $ | 960,993 | | | | | |
Concentration of Credit Risk
The Company’s investments are generally in lower middle market companies in a variety of industries. As of both September 30, 2017March 31, 2021 and December 31, 2016,2020, there were no individual investments representing greater than 10% of the fair value of the Company’s portfolio. As of both September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company’s largest single portfolio company investment, excluding short-term investments, represented approximately 4.7%2.7% and 2.5%, respectively, of the fair value of the Company’s portfolio.portfolio, exclusive of short-term investments. Income, consisting of interest, dividends, fees, other investment income and realization of gains or losses on equity interests, can fluctuate dramatically upon repayment of an investment or sale of an equity interest and in any given year can be highly concentrated among several portfolio companies.
The Company’s investments carry a number of risks including, but not limited to: (i) investing in lower middle market companies whichCompany places its cash with financial institutions and, at times, cash may have limited financial resources and may have limited operating histories, (ii) investing in senior subordinated debt which ranks equal to or lower than debt held by other investors and (iii) holding investments that are not publicly traded and are subject to legal and other restrictions on resale and other risks common to investing in below investment grade debt and equity instruments.
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
exceed insured limits under applicable law.
As of September 30, 2017, $815.4 millionMarch 31, 2021, all of the Company's assets were or will be pledged as collateral for the Company's third amended and restated senior secured credit facility, as amended on May 1, 2017 (the “Credit Facility”), and $373.9 million were subject to superior claim over the Company's stockholders by the SBA. If the Company defaults on its obligations under theFebruary 2019 Credit Facility or its SBA-guaranteed debentures, the lenders and/or the SBA may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claims.
Facility.
Investments Denominated in Foreign CurrencyCurrencies
As of both September 30, 2017 and DecemberMarch 31, 2016,2021 the Company held investments in two portfolio companiesinvestments that were denominated in Canadian dollars.Australian dollars, one investment that was denominated in Swedish kronas, 21 investments that were denominated in Euros and 14 investments that were denominated in British pounds sterling. As of December 31, 2020, the Company held two investments that were denominated in Australian dollars, one investment that was denominated in Swedish kronas, 17 investments that were denominated in Euros and 11 investments that were denominated in British pounds sterling.
At each balance sheet date, portfolio company investments denominated in foreign currencies are translated into United States dollars using the spot exchange rate on the last business day of the period. Purchases and sales of foreign portfolio company investments, and any income from such investments, are translated into United States dollars using the rates of exchange prevailing on the respective dates of such transactions.
Although the fair values of foreign portfolio company investments and the fluctuation in such fair values are translated into United States dollars using the applicable foreign exchange rates described above, the Company does not isolateseparately report that portion of the change in fair values resulting from foreign currency exchange rates fluctuations from the change in fair values of the underlying investment. All fluctuations in fair value are included in net unrealized appreciation (depreciation) of investments in the Company's Unaudited Consolidated Statements of Operations.
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
In addition, during both the three months ended March 31, 2021 and March 31, 2020, the Company entered into forward currency contracts primarily to help mitigate the impact that an adverse change in foreign exchange rates would have on net interest income from the Company's investments and related borrowings denominated in foreign currencies. Net unrealized appreciation or depreciation on foreign currency contracts are included in "Net unrealized appreciation (depreciation) - foreign currency transactions" and net realized gains or losses on forward currency contracts are included in "Net realized gains (losses) - foreign currency transactions" in the Company's Unaudited Consolidated Statements of Operations.
Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the United StatesU.S. Dollar.
3. SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
The following schedules present information about investments in and advances to affiliates for the nine months ended September 30, 2017 and year ended December 31, 2016:
|
| | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2017: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2016 Value | Gross Additions (3) | Gross Reductions(4) | September 30, 2017 Value |
Portfolio Company | Type of Investment(1) |
Control Investments: | | | | | | | | |
CRS Reprocessing, LLC | Debtor in Possession Loan (8% PIK)(5) | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 700,000 |
| $ | — |
| $ | 700,000 |
|
Senior Notes (LIBOR + 3.5%)(5)(6) | — |
| (2,440,769 | ) | 66,184 |
| 2,942,769 |
| — |
| 2,440,769 |
| 502,000 |
|
Split Collateral Term Loans (8% Cash)(5) | — |
| (5,975,000 | ) | 513,963 |
| 6,182,000 |
| 6,350,000 |
| 5,975,000 |
| 6,557,000 |
|
Subordinated Note (5% Cash)(5) | — |
| (125,000 | ) | — |
| — |
| 125,000 |
| 125,000 |
| — |
|
Series F Preferred Units (705,321 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Common Units (15,174 units) | — |
| — |
| — |
| — |
| — |
| | — |
|
| — |
| (8,540,769 | ) | 580,147 |
| 9,124,769 |
| 7,175,000 |
| 8,540,769 |
| 7,759,000 |
|
| | | | | | | | |
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2017: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2016 Value | Gross Additions (3) | Gross Reductions(4) | September 30, 2017 Value |
Portfolio Company | Type of Investment(1) |
DCWV Acquisition Corporation | Senior Subordinated Note (15% PIK) | $ | (250,000 | ) | $ | — |
| $ | — |
| $ | 250,000 |
| $ | — |
| $ | 250,000 |
| $ | — |
|
Subordinated Note (12% Cash, 3% PIK) | (7,053,633 | ) | 6,789,633 |
| — |
| 1,389,000 |
| 6,789,633 |
| 8,178,633 |
| — |
|
Jr. Subordinated Note (15% PIK) | (1,200,000 | ) | 1,200,000 |
| — |
| — |
| — |
| — |
| — |
|
Series A Preferred Equity (1,200 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
100% Common Shares | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| (8,503,633 | ) | 7,989,633 |
| — |
| 1,639,000 |
| 6,789,633 |
| 8,428,633 |
| — |
|
| | | | | | | | |
DialogDirect, Inc. | Subordinated Note (8% PIK)(5) | — |
| (3,183,000 | ) | — |
| — |
| 13,380,000 |
| 3,183,000 |
| 10,197,000 |
|
Class A Common Units (1,176,500 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| (3,183,000 | ) | — |
| — |
| 13,380,000 |
| 3,183,000 |
| 10,197,000 |
|
| | | | | | | | |
Frank Entertainment Group, LLC(7) | Senior Note (6% Cash, Due 06/19)(5) | — |
| (3,279,470 | ) | — |
| — |
| 9,448,470 |
| 3,279,470 |
| 6,169,000 |
|
Second Lien Term Note (2.5% Cash)(5) | — |
| (1,876,693 | ) | — |
| — |
| 1,876,693 |
| 1,876,693 |
| — |
|
Redeemable Preferred Units (2,800,000 units) | — |
| (1,074,000 | ) | — |
| — |
| 1,074,000 |
| 1,074,000 |
| — |
|
Redeemable Class B Preferred Units (2,800,000 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Class A Common Units (606,552 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| (6,230,163 | ) | — |
| — |
| 12,399,163 |
| 6,230,163 |
| 6,169,000 |
|
| | | | | | | | |
Frontstreet Facility Solutions, Inc. | Subordinated Note (13% Cash) | — |
| (507,292 | ) | 288,439 |
| — |
| 4,757,292 |
| 507,292 |
| 4,250,000 |
|
Series A Convertible Preferred Stock (60,000 shares) | — |
| (575 | ) | — |
| — |
| 575 |
| 575 |
| — |
|
Series B Convertible Preferred Stock (20,000 shares) | — |
| (144 | ) | — |
| — |
| 144 |
| 144 |
| — |
|
Common Stock (27,890 shares) | — |
| (279 | ) | — |
| — |
| 279 |
| 279 |
| — |
|
| — |
| (508,290 | ) | 288,439 |
| — |
| 4,758,290 |
| 508,290 |
| 4,250,000 |
|
| | | | | | | | |
Gerli & Company | Subordinated Note (13% Cash) | (375,000 | ) | 375,000 |
| — |
| — |
| 375,000 |
| 375,000 |
| — |
|
Subordinated Note (8.5% Cash) | (3,000,000 | ) | 3,000,000 |
| — |
| — |
| 3,000,000 |
| 3,000,000 |
| — |
|
Class A Preferred Shares (1,211 shares) | (855,000 | ) | 855,000 |
| — |
| — |
| 855,000 |
| 855,000 |
| — |
|
Class C Preferred Shares (744 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Class E Preferred Shares (400 shares) | (161,440 | ) | 161,440 |
| — |
| — |
| 161,440 |
| 161,440 |
| — |
|
Common Stock (300 shares) | (100,000 | ) | 100,000 |
| — |
| — |
| 100,000 |
| 100,000 |
| — |
|
| (4,491,440 | ) | 4,491,440 |
| — |
| — |
| 4,491,440 |
| 4,491,440 |
| — |
|
| | | | | | | | |
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2017: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2016 Value | Gross Additions (3) | Gross Reductions(4) | September 30, 2017 Value |
Portfolio Company | Type of Investment(1) |
SRC Worldwide, Inc. | Common Stock (5,000 shares) | $ | — |
| $ | — |
| $ | 300,000 |
| $ | 8,028,000 |
| $ | — |
| $ | — |
| $ | 8,028,000 |
|
| — |
| — |
| 300,000 |
| 8,028,000 |
| — |
| — |
| 8,028,000 |
|
| | | | | | | | |
Total Control Investments | (12,995,073 | ) | (5,981,149 | ) | 1,168,586 |
| 18,791,769 |
| 48,993,526 |
| 31,382,295 |
| 36,403,000 |
|
| | | | | | | | |
Affiliate Investments: | | | | | | | | |
All Metals Holding, LLC | Subordinated Note (12% Cash, 1% PIK) | — |
| — |
| 657,541 |
| 6,249,220 |
| 70,128 |
| — |
| 6,319,348 |
|
Units (318,977 units) | — |
| 36,000 |
| — |
| 754,000 |
| 36,000 |
| — |
| 790,000 |
|
| — |
| 36,000 |
| 657,541 |
| 7,003,220 |
| 106,128 |
| — |
| 7,109,348 |
|
| | | | | | | | |
CIS Secure Computing Inc. | Subordinated Note (12% Cash, 3% PIK) | — |
| — |
| 1,154,260 |
| 11,670,708 |
| 207,319 |
| 11,878,027 |
| — |
|
Common Stock (84 shares) | 1,672,321 |
| (1,652,680 | ) | — |
| 2,155,000 |
| 1,672,322 |
| 3,827,322 |
| — |
|
| 1,672,321 |
| (1,652,680 | ) | 1,154,260 |
| 13,825,708 |
| 1,879,641 |
| 15,705,349 |
| — |
|
| | | | | | | | |
Consolidated Lumber Holdings, LLC | Subordinated Note (10% Cash, 2% PIK) | — |
| (156,611 | ) | 194,082 |
| 4,278,000 |
| 78,750 |
| 4,356,750 |
| — |
|
Class A Units (15,000 units) | — |
| 491,000 |
| 196,262 |
| 2,481,000 |
| 491,000 |
| — |
| 2,972,000 |
|
| — |
| 334,389 |
| 390,344 |
| 6,759,000 |
| 569,750 |
| 4,356,750 |
| 2,972,000 |
|
| | | | | | | | |
DPII Holdings, LLC | Tranche III Subordinated Note (19% PIK)(5) | — |
| 2,148,000 |
| — |
| — |
| 2,148,000 |
| — |
| 2,148,000 |
|
Tranche I & II Subordinated Notes (12% Cash, 4% PIK)(5) | — |
| (1,508,603 | ) | — |
| 2,356,001 |
| — |
| 1,854,001 |
| 502,000 |
|
Class A Membership Interest (17,308 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| 639,397 |
| — |
| 2,356,001 |
| 2,148,000 |
| 1,854,001 |
| 2,650,000 |
|
| | | | | | | | |
FCL Holding SPV, LLC | Class A Interest (24,873 units) | — |
| (43,000 | ) | 45,452 |
| 645,000 |
| — |
| 43,000 |
| 602,000 |
|
Class B Interest (48,427 units) | — |
| (101,000 | ) | — |
| 101,000 |
| — |
| 101,000 |
| — |
|
Class B Interest (3,746 units) | — |
| | — |
| — |
| — |
| — |
| — |
|
| — |
| (144,000 | ) | 45,452 |
| 746,000 |
| — |
| 144,000 |
| 602,000 |
|
| | | | | | | | |
Frank Entertainment Group, LLC(7) | Senior Note (LIBOR + 7%, 10% Cash, 5.8% PIK)(6) | — |
| (1,077,888 | ) | 823,087 |
| 9,940,684 |
| 351,600 |
| 10,292,284 |
| — |
|
Second Lien Term Note (10% Cash) | — |
| (174,000 | ) | 15,000 |
| — |
| 1,200,000 |
| 1,200,000 |
| — |
|
Class A Redeemable Preferred Units (10.5% Cash) (196,718 units) | — |
| (3,492,904 | ) | — |
| 4,566,904 |
| — |
| 4,566,904 |
| — |
|
Class B Redeemable Preferred Units (18,667 units) | — |
| (1,660,810 | ) | — |
| 1,660,810 |
| — |
| 1,660,810 |
| — |
|
Class C Redeemable Preferred Units (25,846 units) | — |
| (600,000 | ) | — |
| 600,000 |
| — |
| 600,000 |
| — |
|
Class A Common Units (43,077 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Class A Common Warrants | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| (7,005,602 | ) | 838,087 |
| 16,768,398 |
| 1,551,600 |
| 18,319,998 |
| — |
|
| | | | | | | | |
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2017: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2016 Value | Gross Additions (3) | Gross Reductions(4) | September 30, 2017 Value |
Portfolio Company | Type of Investment(1) |
Mac Land Holdings, Inc. | Common Stock (139 shares) | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 369,000 |
| $ | — |
| $ | 369,000 |
|
| — |
| — |
| — |
| — |
| 369,000 |
| — |
| 369,000 |
|
| | | | | | | | |
MS Bakery Holdings, Inc. | Preferred Units (233 units) | 185,133 |
| (185,133 | ) | — |
| 397,000 |
| 185,133 |
| 582,133 |
| — |
|
Common B Units (3,000 units) | 2,087,323 |
| (2,086,860 | ) | — |
| 2,110,000 |
| 2,087,323 |
| 4,197,323 |
| — |
|
Common A Units (1,652 units) | 1,147,007 |
| (1,147,007 | ) | — |
| 1,162,000 |
| 1,147,007 |
| 2,309,007 |
| — |
|
| 3,419,463 |
| (3,419,000 | ) | — |
| 3,669,000 |
| 3,419,463 |
| 7,088,463 |
| — |
|
| | | | | | | | |
Native Maine Operations, Inc. | Senior Notes (LIBOR + 9%)(6) | — |
| — |
| 1,476,540 |
| — |
| 18,000,000 |
| 18,000,000 |
| — |
|
Preferred Units (20,000 units) | — |
| — |
| — |
| — |
| 2,000,000 |
| 2,000,000 |
| — |
|
| — |
| — |
| 1,476,540 |
| — |
| 20,000,000 |
| 20,000,000 |
| — |
|
| | | | | | | | |
NB Products, Inc. | Subordinated Note (12% Cash, 2% PIK) | — |
| — |
| 2,643,824 |
| 22,751,190 |
| 415,734 |
| — |
| 23,166,924 |
|
Jr. Subordinated Note (10% PIK) | — |
| — |
| 376,848 |
| 4,595,921 |
| 384,162 |
| — |
| 4,980,083 |
|
Jr. Subordinated Bridge Note (20% PIK) | — |
| — |
| 321,567 |
| 1,972,727 |
| 321,567 |
| — |
| 2,294,294 |
|
Series A Redeemable Senior Preferred Stock (7,839 shares) | — |
| 722,000 |
| — |
| 9,412,000 |
| 722,000 |
| — |
| 10,134,000 |
|
Common Stock (1,668,691 shares) | — |
| 1,354,000 |
| — |
| 9,779,000 |
| 1,354,000 |
| — |
| 11,133,000 |
|
| — |
| 2,076,000 |
| 3,342,239 |
| 48,510,838 |
| 3,197,463 |
| — |
| 51,708,301 |
|
| | | | | | | | |
Passport Food Group, LLC | Senior Notes (LIBOR + 9.0%, 10.3% Cash, Due 03/22)(6) | — |
| (1,947,708 | ) | 1,076,866 |
| — |
| 19,631,708 |
| 1,947,708 |
| 17,684,000 |
|
Common Stock (20,000 shares) | — |
| (1,217,000 | ) | — |
| — |
| 2,000,000 |
| 1,217,000 |
| 783,000 |
|
| — |
| (3,164,708 | ) | 1,076,866 |
| — |
| 21,631,708 |
| 3,164,708 |
| 18,467,000 |
|
| | | | | | | | |
PCX Aerostructures, LLC | Subordinated Note (10.5% Cash) | — |
| 768,098 |
| 2,460,740 |
| 21,960,000 |
| 2,839,000 |
| — |
| 24,799,000 |
|
Series A Preferred Stock (6,066 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Series B Preferred Stock (411 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Class A Common Stock (121,922 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| 768,098 |
| 2,460,740 |
| 21,960,000 |
| 2,839,000 |
| — |
| 24,799,000 |
|
| | | | | | | | |
Team Waste, LLC | Subordinated Note (10% Cash, 2% PIK) | — |
| — |
| 40,000 |
| — |
| 3,916,667 |
| — |
| 3,916,667 |
|
Preferred Units (500,000 units) | — |
| — |
| 9,000 |
| 9,100,000 |
| 900,000 |
| — |
| 10,000,000 |
|
| — |
| — |
| 49,000 |
| 9,100,000 |
| 4,816,667 |
| — |
| 13,916,667 |
|
| | | | | | | | |
Technology Crops, LLC | Subordinated Notes (12% Cash, 5% PIK) | — |
| (2,843,102 | ) | 1,552,035 |
| 11,837,622 |
| 456,480 |
| 2,843,102 |
| 9,451,000 |
|
Common Units (50 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| (2,843,102 | ) | 1,552,035 |
| 11,837,622 |
| 456,480 |
| 2,843,102 |
| 9,451,000 |
|
| | | | | | | | |
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2017: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2016 Value | Gross Additions (3) | Gross Reductions(4) | September 30, 2017 Value |
Portfolio Company | Type of Investment(1) |
TGaS Advisors, LLC | Senior Note (10% Cash, 1% PIK) | $ | — |
| $ | — |
| $ | 849,227 |
| $ | 9,521,986 |
| $ | 117,880 |
| $ | 186,729 |
| $ | 9,453,137 |
|
Preferred Units (1,685,357 units) | — |
| 66,000 |
| — |
| 1,270,000 |
| 66,000 |
| — |
| 1,336,000 |
|
| — |
| 66,000 |
| 849,227 |
| 10,791,986 |
| 183,880 |
| 186,729 |
| 10,789,137 |
|
| | | | | | | | |
Tulcan Fund IV, L.P. | Common Units (1,000,000 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| | | | | | | | |
United Retirement Plan Consultants, Inc. | Series A Preferred Shares (9,400 shares) | — |
| 29,000 |
| — |
| 257,000 |
| 29,000 |
| — |
| 286,000 |
|
Common Shares (100,000 shares) | — |
| 47,000 |
| — |
| 301,000 |
| 47,000 |
| — |
| 348,000 |
|
| — |
| 76,000 |
| — |
| 558,000 |
| 76,000 |
| — |
| 634,000 |
|
| | | | | | | | |
Waste Recyclers Holdings, LLC | Class A Preferred Units (280 units) | (2,251,100 | ) | 2,251,100 |
| — |
| — |
| 2,251,100 |
| 2,251,100 |
| — |
|
Class B Preferred Units (11,484,867 units) | (2,935,218 | ) | 2,487,218 |
| — |
| 817,000 |
| 2,487,218 |
| 3,304,218 |
| — |
|
Common Unit Purchase Warrant (1,170,083 units) | (748,900 | ) | 748,900 |
| — |
| — |
| 748,900 |
| 748,900 |
| — |
|
Common Units (153,219 units) | (180,783 | ) | 180,783 |
| — |
| — |
| 180,783 |
| 180,783 |
| — |
|
| (6,116,001 | ) | 5,668,001 |
| — |
| 817,000 |
| 5,668,001 |
| 6,485,001 |
| — |
|
| | | | | | | | |
Wythe Will Tzetzo, LLC | Series A Preferred Units (99,829 units) | — |
| (3,668,000 | ) | — |
| 6,808,000 |
| — |
| 3,668,000 |
| 3,140,000 |
|
| — |
| (3,668,000 | ) | — |
| 6,808,000 |
| — |
| 3,668,000 |
| 3,140,000 |
|
| | | | | | | | |
Investments not held at the end of the period | | 24,881 |
| — |
| — |
| — |
| 24,881 |
| 24,881 |
| — |
|
Deferred taxes | | — |
| 582,190 |
| — |
| — |
| — |
| — |
| — |
|
| | | | | | | | |
Total Affiliate Investments | $ | (999,336 | ) | $ | (11,651,017 | ) | $ | 13,892,331 |
| $ | 161,510,773 |
| $ | 68,937,662 |
| $ | 83,840,982 |
| $ | 146,607,453 |
|
| |
(1) | All debt investments are income producing, unless otherwise noted. Equity and equity-linked investments are non-income producing, unless otherwise noted. The fair values of all investments were determined using significant unobservable inputs. |
| |
(2) | Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in Control or Affiliate categories, respectively. Amounts include accrued PIK interest if the description of the security includes disclosure of a PIK interest rate. |
| |
(3) | Gross additions include increase in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation. |
| |
(4) | Gross reductions include decreases in the total cost basis of investments resulting from principal or PIK repayments or sales. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation. |
| |
(5) | Non-accrual investment |
| |
(6) | Index-based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. |
| |
(7) | During the quarter ended September 30, 2017, as a result of a balance sheet restructuring, Frank Entertainment Group, LLC moved from an affiliate investment to a control investment. |
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | |
Year Ended December 31, 2016: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2015 Value | Gross Additions (3) | Gross Reductions(4) | December 31, 2016 Value |
Portfolio Company | Type of Investment(1) |
Control Investments: | | | | | | | | |
CRS Reprocessing, LLC | Senior Notes (LIBOR + 3.5%, 4.3% Cash)(6) | $ | — |
| $ | — |
| $ | 120,067 |
| $ | 2,942,769 |
| $ | — |
| $ | — |
| $ | 2,942,769 |
|
Split Collateral Term Loans (8% Cash) | — |
| (5,010,464 | ) | 897,649 |
| 6,192,464 |
| 5,000,000 |
| 5,010,464 |
| 6,182,000 |
|
Series F Preferred Units (705,321 units) | — |
| (5,221,000 | ) | — |
| 5,221,000 |
| — |
| 5,221,000 |
| — |
|
Common Units (15,174 units) | — |
| — |
| 333 |
| — |
| — |
| | — |
|
| — |
| (10,231,464 | ) | 1,018,049 |
| 14,356,233 |
| 5,000,000 |
| 10,231,464 |
| 9,124,769 |
|
| | | | | | | | |
DCWV Acquisition Corporation | Senior Subordinated Note (15% PIK)(5) | — |
| — |
| — |
| 250,000 |
| — |
| — |
| 250,000 |
|
Subordinated Note (12% Cash, 3% PIK)(5) | — |
| (1,728,000 | ) | — |
| 3,117,000 |
| — |
| 1,728,000 |
| 1,389,000 |
|
Jr. Subordinated Note (15% PIK)(5) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Series A Preferred Equity (1,200 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
100% Common Shares | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| (1,728,000 | ) | — |
| 3,367,000 |
| — |
| 1,728,000 |
| 1,639,000 |
|
| | | | | | | | |
Gerli & Company | Subordinated Note (13% Cash)(5) | — |
| (375,000 | ) | — |
| 375,000 |
| — |
| 375,000 |
| — |
|
Subordinated Note (8.5% Cash)(5) | — |
| (437,000 | ) | — |
| 437,000 |
| — |
| 437,000 |
| — |
|
Class A Preferred Shares (1,211 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Class C Preferred Shares (744 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Class E Preferred Shares (400 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Common Stock (300 shares) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| (812,000 | ) | — |
| 812,000 |
| — |
| 812,000 |
| — |
|
| | | | | | | | |
SRC Worldwide, Inc. | Common Stock (5,000 shares) | — |
| 1,307,000 |
| 700,000 |
| 6,921,000 |
| 1,307,000 |
| 200,000 |
| 8,028,000 |
|
| — |
| 1,307,000 |
| 700,000 |
| 6,921,000 |
| 1,307,000 |
| 200,000 |
| 8,028,000 |
|
| | | | | | | | |
Total Control Investments | — |
| (11,464,464 | ) | 1,718,049 |
| 25,456,233 |
| 6,307,000 |
| 12,971,464 |
| 18,791,769 |
|
| | | | | | | | |
Affiliate Investments: | | | | | | | | |
All Aboard America! Holdings Inc. | Subordinated Note (12% Cash, 3% PIK) | — |
| — |
| 2,440,362 |
| 14,953,191 |
| 577,433 |
| 15,530,624 |
| — |
|
Membership Units in LLC | 3,118,958 |
| (2,723,218 | ) | — |
| 5,024,000 |
| 3,118,958 |
| 8,142,958 |
| — |
|
| 3,118,958 |
| (2,723,218 | ) | 2,440,362 |
| 19,977,191 |
| 3,696,391 |
| 23,673,582 |
| — |
|
| | | | | | | | |
All Metals Holding, LLC | Subordinated Note (12% Cash, 1% PIK) | — |
| — |
| — |
| — |
| 6,249,220 |
| — |
| 6,249,220 |
|
Units (318,977 units) | — |
| (55,331 | ) | — |
| — |
| 809,331 |
| 55,331 |
| 754,000 |
|
| — |
| (55,331 | ) | — |
| — |
| 7,058,551 |
| 55,331 |
| 7,003,220 |
|
| | | | | | | | |
American De-Rosa Lamparts, LLC and Hallmark Lighting, LLC | Subordinated Note (12% Cash, 3% PIK) | — |
| — |
| 663,502 |
| 7,186,235 |
| 227,130 |
| 7,413,365 |
| — |
|
Membership Units (8,364 units) | 3,555,652 |
| (3,251,347 | ) | 102,800 |
| 3,872,000 |
| 3,555,652 |
| 7,427,652 |
| — |
|
| 3,555,652 |
| (3,251,347 | ) | 766,302 |
| 11,058,235 |
| 3,782,782 |
| 14,841,017 |
| — |
|
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | |
Year Ended December 31, 2016: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2015 Value | Gross Additions (3) | Gross Reductions(4) | December 31, 2016 Value |
Portfolio Company | Type of Investment(1) |
| | | | | | | | |
CIS Secure Computing Inc. | Subordinated Note (12% Cash, 3% PIK) | $ | — |
| $ | — |
| $ | 1,757,750 |
| $ | 11,323,440 |
| $ | 347,268 |
| $ | — |
| $ | 11,670,708 |
|
Common Stock (84 shares) | — |
| 1,956,000 |
| — |
| 199,000 |
| 1,956,000 |
| — |
| 2,155,000 |
|
| — |
| 1,956,000 |
| 1,757,750 |
| 11,522,440 |
| 2,303,268 |
| — |
| 13,825,708 |
|
| | | | | | | | |
Consolidated Lumber Company LLC | Subordinated Note (10% Cash, 2% PIK) | — |
| 156,611 |
| 1,480,383 |
| 14,332,445 |
| 564,627 |
| 10,619,072 |
| 4,278,000 |
|
Class A Units (15,000 units) | — |
| 981,000 |
| 451,128 |
| 1,500,000 |
| 981,000 |
| — |
| 2,481,000 |
|
| — |
| 1,137,611 |
| 1,931,511 |
| 15,832,445 |
| 1,545,627 |
| 10,619,072 |
| 6,759,000 |
|
| | | | | | | | |
DPII Holdings, LLC | Tranche I & II Subordinated Notes (12% Cash, 4% PIK)(5) | — |
| (871,000 | ) | 115,147 |
| 3,558,804 |
| 5,708 |
| 1,208,511 |
| 2,356,001 |
|
Tranche III Subordinated Note (19% PIK)(5) | — |
| (2,148,462 | ) | — |
| — |
| 2,148,462 |
| 2,148,462 |
| — |
|
Class A Membership Interest (17,308 units) | — |
| (795,000 | ) | — |
| 795,000 |
| — |
| 795,000 |
| — |
|
| — |
| (3,814,462 | ) | 115,147 |
| 4,353,804 |
| 2,154,170 |
| 4,151,973 |
| 2,356,001 |
|
| | | | | | | | |
FCL Holding SPV, LLC | Class A Interest (24,873 units) | — |
| 195,000 |
| — |
| — |
| 645,000 |
| — |
| 645,000 |
|
Class B Interest (48,427 units) | — |
| 101,000 |
| — |
| — |
| 101,000 |
| — |
| 101,000 |
|
Class B Interest (3,746 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| 296,000 |
| — |
| — |
| 746,000 |
| — |
| 746,000 |
|
| | | | | | | | |
Frank Entertainment Group, LLC | Senior Note (LIBOR +7%, 10% Cash, 5.8% PIK)(6) | — |
| — |
| 1,599,606 |
| 9,592,545 |
| 605,281 |
| 257,142 |
| 9,940,684 |
|
Class A Redeemable Preferred Units (10.5% Cash) (196,718 units) | — |
| — |
| 324,995 |
| 4,566,904 |
| — |
| — |
| 4,566,904 |
|
Class B Redeemable Preferred Units (18,667 units) | — |
| — |
| — |
| 1,660,810 |
| — |
| — |
| 1,660,810 |
|
Class C Redeemable Preferred Units (25,846 units) | — |
| — |
| — |
| 600,000 |
| — |
| — |
| 600,000 |
|
Class A Common Units (43,077 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Class A Common Warrants | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| — |
| 1,924,601 |
| 16,420,259 |
| 605,281 |
| 257,142 |
| 16,768,398 |
|
| | | | | | | | |
GenPref LLC | 7.0% LLC Interest | 30,823 |
| 6,762 |
| — |
| 16,400 |
| 37,585 |
| 53,985 |
| — |
|
| 30,823 |
| 6,762 |
| — |
| 16,400 |
| 37,585 |
| 53,985 |
| — |
|
| | | | | | | | |
MS Bakery Holdings, Inc. | Preferred Units (233 units) | — |
| 30,000 |
| — |
| 367,000 |
| 30,000 |
| — |
| 397,000 |
|
Common B Units (3,000 units) | — |
| 303,000 |
| — |
| 1,807,000 |
| 303,000 |
| — |
| 2,110,000 |
|
Common A Units (1,652 units) | — |
| 167,000 |
| — |
| 995,000 |
| 167,000 |
| — |
| 1,162,000 |
|
| — |
| 500,000 |
| — |
| 3,169,000 |
| 500,000 |
| — |
| 3,669,000 |
|
| | | | | | | | |
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | |
Year Ended December 31, 2016: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2015 Value | Gross Additions (3) | Gross Reductions(4) | December 31, 2016 Value |
Portfolio Company | Type of Investment(1) |
NB Products, Inc. | Subordinated Note (12% Cash, 2% PIK) | $ | — |
| $ | — |
| $ | 3,368,353 |
| $ | 20,327,140 |
| $ | 2,424,050 |
| $ | — |
| $ | 22,751,190 |
|
Jr. Subordinated Note (10% PIK) | — |
| — |
| 462,929 |
| 4,126,030 |
| 469,891 |
| — |
| 4,595,921 |
|
Jr. Subordinated Bridge Note (20% PIK) | — |
| — |
| 244,654 |
| — |
| 1,972,727 |
| — |
| 1,972,727 |
|
Series A Redeemable Senior Preferred Stock (7,839 shares) | — |
| 887,000 |
| — |
| 8,525,000 |
| 887,000 |
| — |
| 9,412,000 |
|
Common Stock (1,668,691 shares) | — |
| 5,782,000 |
| — |
| 3,997,000 |
| 5,782,000 |
| — |
| 9,779,000 |
|
| — |
| 6,669,000 |
| 4,075,936 |
| 36,975,170 |
| 11,535,668 |
| — |
| 48,510,838 |
|
| | | | | | | | |
PCX Aerostructures, LLC | Subordinated Note (10.5% Cash) | — |
| (6,001,060 | ) | 3,339,521 |
| 18,612,000 |
| 9,409,060 |
| 6,061,060 |
| 21,960,000 |
|
Series A Preferred Stock (6,066 shares) | — |
| (1,912,668 | ) | — |
| 1,191,000 |
| 721,668 |
| 1,912,668 |
| — |
|
Series B Preferred Stock (411 shares) | — |
| (410,514 | ) | — |
| — |
| 410,514 |
| 410,514 |
| — |
|
Class A Common Stock (121,922 shares) | — |
| (3,626 | ) | — |
| — |
| 3,626 |
| 3,626 |
| — |
|
| — |
| (8,327,868 | ) | 3,339,521 |
| 19,803,000 |
| 10,544,868 |
| 8,387,868 |
| 21,960,000 |
|
| | | | | | | | |
Team Waste, LLC | Preferred Units (455,000 units) | — |
| — |
| 36,000 |
| 5,500,000 |
| 3,600,000 |
| — |
| 9,100,000 |
|
| — |
| — |
| 36,000 |
| 5,500,000 |
| 3,600,000 |
| — |
| 9,100,000 |
|
| | | | | | | | |
Technology Crops, LLC | Subordinated Notes (12% Cash, 5% PIK) | — |
| — |
| 1,944,252 |
| 11,252,123 |
| 585,499 |
| — |
| 11,837,622 |
|
Common Units (50 units) | — |
| (400,000 | ) | — |
| 400,000 |
| — |
| 400,000 |
| — |
|
| — |
| (400,000 | ) | 1,944,252 |
| 11,652,123 |
| 585,499 |
| 400,000 |
| 11,837,622 |
|
| | | | | | | | |
TGaS Advisors, LLC | Senior Note (10% Cash, 1% PIK) | — |
| — |
| 1,180,938 |
| 9,633,898 |
| 177,061 |
| 288,973 |
| 9,521,986 |
|
Preferred Units (1,685,357 units) | — |
| (27,712 | ) | 33,000 |
| 1,427,000 |
| — |
| 157,000 |
| 1,270,000 |
|
| — |
| (27,712 | ) | 1,213,938 |
| 11,060,898 |
| 177,061 |
| 445,973 |
| 10,791,986 |
|
| | | | | | | | |
Tulcan Fund IV, L.P. | Common Units (1,000,000 units) | — |
| (416,000 | ) | — |
| 416,000 |
| — |
| 416,000 |
| — |
|
| — |
| (416,000 | ) | — |
| 416,000 |
| — |
| 416,000 |
| — |
|
| | | | | | | | |
UCS Super HoldCo LLC | Membership Units (1,000 units) | (2,000,000 | ) | 2,000,000 |
| — |
| — |
| 2,000,000 |
| 2,000,000 |
| — |
|
Participation Interest | (626,437 | ) | 700,000 |
| — |
| 300,000 |
| 700,000 |
| 1,000,000 |
| — |
|
| (2,626,437 | ) | 2,700,000 |
| — |
| 300,000 |
| 2,700,000 |
| 3,000,000 |
| — |
|
| | | | | | | | |
United Retirement Plan Consultants, Inc. | Series A Preferred Shares (9,400 shares) | — |
| 505,252 |
| — |
| 446,000 |
| 265,000 |
| 454,000 |
| 257,000 |
|
Common Shares (100,000 shares) | — |
| (599,000 | ) | — |
| — |
| 611,000 |
| 310,000 |
| 301,000 |
|
| — |
| (93,748 | ) | — |
| 446,000 |
| 876,000 |
| 764,000 |
| 558,000 |
|
| | | | | | | | |
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | |
Year Ended December 31, 2016: | Amount of Realized Gain (Loss) | Amount of Unrealized Gain (Loss) | Amount of Interest or Dividends Credited to Income(2) | December 31, 2015 Value | Gross Additions (3) | Gross Reductions(4) | December 31, 2016 Value |
Portfolio Company | Type of Investment(1) |
Waste Recyclers Holdings, LLC | Class A Preferred Units (280 units) | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Class B Preferred Units (11,484,867 units) | — |
| 74,000 |
| — |
| 743,000 |
| 74,000 |
| — |
| 817,000 |
|
Common Unit Purchase Warrant (1,170,083 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Common Units (153,219 units) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| — |
| 74,000 |
| — |
| 743,000 |
| 74,000 |
| — |
| 817,000 |
|
| | | | | | | | |
Wythe Will Tzetzo, LLC | Series A Preferred Units (99,829 units) | — |
| (1,528,000 | ) | 195,997 |
| 8,336,000 |
| — |
| 1,528,000 |
| 6,808,000 |
|
| — |
| (1,528,000 | ) | 195,997 |
| 8,336,000 |
| — |
| 1,528,000 |
| 6,808,000 |
|
| | | | | | | | |
Investments not held at the end of the period | | 319,802 |
| — |
| — |
| — |
| 319,802 |
| 319,802 |
| — |
|
Deferred taxes | | — |
| 1,825,301 |
| — |
| — |
| — |
| — |
| — |
|
| | | | | | | | |
Total Affiliate Investments | $ | 4,398,798 |
| $ | (5,473,012 | ) | $ | 19,741,317 |
| $ | 177,581,965 |
| $ | 52,842,553 |
| $ | 68,913,745 |
| $ | 161,510,773 |
|
| |
(1) | All debt investments are income producing, unless otherwise noted. Equity and equity-linked investments are non-income producing, unless otherwise noted. The fair values of all investments were determined using significant unobservable inputs. |
| |
(2) | Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in Control or Affiliate categories, respectively. Amounts include accrued PIK interest if the description of the security includes disclosure of a PIK interest rate. |
| |
(3) | Gross additions include increase in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation. |
| |
(4) | Gross reductions include decreases in the total cost basis of investments resulting from principal or PIK repayments or sales. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation. |
| |
(5) | Non-accrual investment |
| |
(6) | Index-based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. |
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
4. INCOME TAXES
The Company has elected for federal income tax purposes to be treated, and intends to qualify annually, as a RIC under the Internal Revenue Code of 1986, as amended (the "Code"), and intends to make the required distributions to its stockholders as specified therein. In order to maintain its tax treatment as a RIC, the Company must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then the Company is generally required to pay taxes only on the portion of its taxable income and gains it does not distribute (actually or constructively) and certain built-in gains. The Company has historically met its minimum distribution requirements and continually monitors its distribution requirements with the goal of ensuring compliance with the Code.
The minimum distribution requirements applicable to RICs requireDepending on the Company to distribute to its stockholders at least 90%level of its investment company taxable income (“ICTI”), as defined by the Code, each year. Depending on the level of ICTI earned in a tax year, and net capital gains, if any, or taxable income, the Company may choose to carry forward ICTI in excess of current year distributions into the next tax yearundistributed taxable income and pay a 4% nondeductible U.S. federal excise tax on such excess.certain undistributed income unless the Company distributes, in a timely manner, an amount at least equal to the sum of (i) 98% of net ordinary income for each calendar year, (ii) 98.2% of the amount by which capital gains exceed capital losses (adjusted for certain ordinary losses) for the one-year period ending October 31 in that calendar year and (iii) certain undistributed amounts from previous years on which the Company paid no U.S. federal income tax. Any such carryover ICTIof taxable income must be distributed before the end of that next tax year through a dividend declared prior to filing of the final tax return related to the year which generated such ICTI.taxable income not to be subject to U.S. federal income tax.
ICTITaxable income generally differs from increase in net investment income for financial reporting purposesassets resulting from operations due to temporary and permanent differences in the recognition of income and expenses. The Company may be required to recognize ICTI in certain circumstances in which it does not receive cash. For example, if the Company holds debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants), the Company must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by the Company in the same taxable year. The Company may also have to include in ICTI other amounts that it has not yet received in cash, such as (i) PIK interest incomeexpenses, and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in the Company’s ICTI for the year of accrual, the Company may be required to make a distribution to its stockholders in order to satisfy the minimum distribution requirements, even though the Company will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciationgains or depreciation,losses, as investmentunrealized gains or losses are generally not included in taxable income until they are realized.
The Company makes certain adjustments to the classification of net assets as a result of permanent book-to-tax differences, which include differences in the book and tax basis of certain assets and liabilities, and nondeductible federal taxes or losses among other items. To the extent these differences are permanent, they are charged or credited to additional paid in capital, or total distributable earnings (loss), as appropriate.
For federal income tax purposes, the cost of investments owned as of March 31, 2021 and December 31, 2020 was approximately $1,588.4 million and $1,486.0 million, respectively. As of March 31, 2021, net unrealized appreciation on the Company's investments (tax basis) was approximately $5.0 million, consisting of gross unrealized appreciation, where the fair value of the Company's investments exceeds their tax cost, of approximately $30.0 million and gross unrealized depreciation, where the tax cost of the Company's investments exceeds their fair value, of approximately $25.1 million. As of December 31, 2020, net unrealized depreciation on the Company's investments (tax basis) was approximately $1.3 million, consisting of gross unrealized appreciation, where the fair value of the Company's investments exceeds their tax cost, of approximately $23.4 million and gross unrealized depreciation, where the tax cost of the Company's investments exceeds their fair value, of approximately $24.7 million.
In addition, the Company has certain wholly-owned taxable subsidiaries (the “Taxable Subsidiaries”), each of which holds one or more of itshold certain portfolio investments that are listed on the Unaudited and Audited Consolidated ScheduleSchedules of Investments. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that the Company’s consolidated financial statements reflect the Company’s investments in the portfolio companies owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries is to permit the Company to hold certain portfolio companies that are organized as limited liability companies (“LLCs”)LLCs (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of the RIC’s gross revenue for income tax purposes must consist of qualifying investment income. Absent the Taxable Subsidiaries, a proportionate amount of any gross income of an LLC (or other pass-through entity) portfolio investment would flow through directly to the RIC. To the extent that such income did not consist of qualifying investment income, it could jeopardize the Company’s ability to qualify as a RIC and therefore cause the Company to incur significant amounts of federal income taxes. When LLCs (or other pass-through entities) are owned by the Taxable Subsidiaries, their income is taxed to the Taxable Subsidiaries and does not flow through to the RIC, thereby helping the Company preserve its RIC statustax treatment and resultant tax advantages. The Taxable Subsidiaries are not consolidated for income tax purposes and may generate income tax expense as a result of their ownership of the portfolio
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
companies. This income tax expense or benefit, if any, is reflected in the Company’s Unaudited Consolidated Statements of Operations. Additionally, any unrealized appreciation related to portfolio investments held by the Taxable Subsidiaries (net of unrealized depreciation related to portfolio investments held by the Taxable Subsidiaries) is reflected net of applicable federal and state income taxes, if any, in the Company's Unaudited Consolidated Statements of Operations, with the related deferred tax assets or liabilities, presentedif any, included in "Accounts payable and accrued liabilities" in the Company's Unaudited and Audited Consolidated Balance Sheet.Sheets.
For federal income tax purposes, the cost of investments owned as of September 30, 2017 and December 31, 2016 was approximately $1.2 billion and $1.1 billion, respectively.
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
5. BORROWINGS
The Company had the following borrowings outstanding as of September 30, 2017 and DecemberMarch 31, 2016:
|
| | | | | | | | | | | |
Issuance/Pooling Date | Maturity Date | | Interest Rate as of September 30, 2017 | | September 30, 2017 | | December 31, 2016 |
SBA-Guaranteed Debentures: | | | | | | | |
March 25, 2009 | March 1, 2019 | | 5.337% | | $ | 22,000,000 |
| | $ | 22,000,000 |
|
March 24, 2010 | March 1, 2020 | | 4.825% | | 6,800,000 |
| | 6,800,000 |
|
September 22, 2010 | September 1, 2020 | | 3.687% | | 32,590,000 |
| | 32,590,000 |
|
March 29, 2011 | March 1, 2021 | | 4.474% | | 75,400,000 |
| | 75,400,000 |
|
September 21, 2011 | September 1, 2021 | | 3.392% | | 19,100,000 |
| | 19,100,000 |
|
March 27, 2013 | March 1, 2023 | | 3.155% | | 30,000,000 |
| | 30,000,000 |
|
September 24, 2014 | September 1, 2024 | | 3.790% | | 31,310,000 |
| | 31,310,000 |
|
September 21, 2016 | September 1, 2026 | | 2.723% | | 32,800,000 |
| | 32,800,000 |
|
Less: Deferred financing fees | | | | | (3,915,131 | ) | | (4,610,034 | ) |
Total SBA-Guaranteed Debentures | | | | | $ | 246,084,869 |
| | $ | 245,389,966 |
|
Credit Facility: | | | | | | | |
May 1, 2017 | April 30, 2022 | | 3.998% | | $ | 141,118,837 |
| | $ | 127,011,475 |
|
Total Credit Facility | | | | | $ | 141,118,837 |
| | $ | 127,011,475 |
|
Notes: | | | | | | | |
October 19, 2012 | December 15, 2022 | | 6.375% | | $ | 80,500,000 |
| | $ | 80,500,000 |
|
February 6, 2015 | March 15, 2022 | | 6.375% | | 86,250,000 |
| | 86,250,000 |
|
Less: Deferred financing fees | | | | | (3,508,821 | ) | | (3,994,619 | ) |
Total Notes | | | | | $ | 163,241,179 |
| | $ | 162,755,381 |
|
SBA-Guaranteed Debentures
Under the Small Business Investment Act of 1958, as amended, and current SBA policy applicable to SBICs, an SBIC (or group of SBICs under common control) can have outstanding at any time, SBA-guaranteed debentures up to two times (and in certain cases, up to three times) the amount of its regulatory capital. As of September 30, 2017, the maximum statutory limit on the dollar amount of outstanding SBA-guaranteed debentures that can be issued by a single SBIC was $150.0 million and by a group of SBICs under common control was $350.0 million. As of September 30, 2017, Triangle SBIC had issued the maximum $150.0 million of SBA-guaranteed debentures and Triangle SBIC II had issued $100.0 million of SBA-guaranteed debentures, leaving borrowing capacity of a maximum of $100.0 million of SBA-guaranteed debentures for Triangle SBIC III. Interest payments on SBA-guaranteed debentures are payable semi-annually and there are no principal payments required on these debentures prior to maturity, nor do the debentures carry any prepayment penalties. The weighted average interest rate for all SBA-guaranteed debentures as of both September 30, 2017 and December 31, 2016 was 3.90%. As of both September 30, 20172021 and December 31, 2016, all SBA-guaranteed debentures were pooled.2020:
In addition to a one-time 1.0% fee on the total commitment from the SBA, the Company also pays a one-time 2.425% fee on the amount of each SBA-guaranteed debenture issued. These fees are capitalized as deferred financing costs and are amortized over the term of the debt agreements using the effective interest method. Upon prepayment of an SBA-guaranteed debenture, any unamortized deferred financing costs related to the SBA-guaranteed debenture are written off and recognized as a loss on extinguishment of debt in the Unaudited Consolidated Statements of Operations. | | | | | | | | | | | | | | | | | | | | | | | |
Issuance Date | Maturity Date | | Interest Rate as of March 31, 2021 | | March 31, 2021 | | December 31, 2020 |
Credit Facilities: | | | | | | | |
February 21, 2019 | February 21, 2024 | | 2.096% | | $ | 611,144,523 | | | $ | 719,660,707 | |
Total Credit Facilities | | | | | $ | 611,144,523 | | | $ | 719,660,707 | |
Notes: | | | | | | | |
September 24, 2020 - August 2025 Notes | August 4, 2025 | | 4.660% | | $ | 25,000,000 | | | $ | 25,000,000 | |
September 29, 2020 - August 2025 Notes | August 4, 2025 | | 4.660% | | 25,000,000 | | | 25,000,000 | |
November 5, 2020 - Series B Notes | November 4, 2025 | | 4.250% | | 62,500,000 | | | 62,500,000 | |
November 5, 2020 - Series C Notes | November 4, 2027 | | 4.750% | | 112,500,000 | | | 112,500,000 | |
February 25, 2021 Series D Notes | February 26, 2026 | | 3.410% | | 80,000,000 | | | — | |
February 25, 2021 Series E Notes | February 26, 2028 | | 4.060% | | 70,000,000 | | | — | |
(Less: Deferred financing fees) | | | | | (818,612) | | | (664,334) | |
Total Notes | | | | | $ | 374,181,388 | | | $ | 224,335,666 | |
The fair values of the SBA-guaranteed debentures are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model. As of September 30, 2017 and December 31, 2016, the carrying amounts of the SBA-guaranteed debentures were approximately $246.1 million and $245.4 million, respectively. As of September 30, 2017 and December 31, 2016, the fair values of the SBA-guaranteed debentures were $260.5 million and $264.9 million, respectively.
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements — (Continued)
February 2019 Credit Facility
In May 2015,On February 21, 2019, the Company entered into the February 2019 Credit Facility which was(as subsequently amended in May 2017.December 2019) with ING Capital LLC ("ING"), as administrative agent, and the lenders party thereto. The amendment, among other things, increasedinitial commitments from $300.0 million to $435.0 million and extendedunder the maturity by two years. The revolving period of theFebruary 2019 Credit Facility ends April 30, 2021 followed by a one-year amortization period with a final maturity date of April 30, 2022.total $800.0 million. The Company has the ability to borrow in both United States dollars as well as foreign currencies under the Credit Facility. The Credit Facility, which is structured to operate like a revolving credit facility, is secured primarily by the Company's assets, excluding the assets of the Company’s wholly-owned SBIC subsidiaries. TheFebruary 2019 Credit Facility has an accordion feature that allows for an increase in the total borrowing sizecommitments by up to $550.0$400.0 million, subject to certain conditions and the satisfaction of specified financial covenants. Using this accordion feature, in July 2017, theThe Company increased its commitmentscan borrow foreign currencies directly under the February 2019 Credit Facility. The February 2019 Credit Facility, from $435.0 million to $465.0 million,which is structured as a revolving credit facility, is secured primarily by a material portion of the Company's assets and guaranteed by certain subsidiaries of the Company. Following the termination on June 30, 2020 of Barings BDC Senior Funding I, LLC’s (“BSF”) credit facility entered into in September 2017,August 2018 with Bank of America, N.A. (the “August 2018 Credit Facility”), BSF became a subsidiary guarantor and its assets will secure the Company again increased its commitments underFebruary 2019 Credit Facility. The revolving period of the February 2019 Credit Facility from $465.0 million to $480.0 million.ends on February 21, 2023, followed by a one-year repayment period with a final maturity date of February 21, 2024.
Borrowings under the February 2019 Credit Facility bear interest, subject to the Company's election, on a per annum basis equal to (i) the applicable base rate plus 1.75%1.00% (or 1.50%1.25% if the Company receivesno longer maintains an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.75%2.00% (or 2.50%2.25% if the Company receivesno longer maintains an investment grade credit rating), (iii) for borrowings denominated in certain foreign currencies other than Australian dollars, the applicable currency rate for the foreign currency as defined in the credit agreement plus 2.00% (or 2.25% if the Company no longer maintains an investment grade credit rating) or (iii)(iv) for borrowings denominated in CanadianAustralian dollars, the applicable Canadian Dealer OfferedAustralian dollars Screen Rate, plus 2.75%2.20% (or 2.50%2.45% if the Company receivesno longer maintains an investment grade credit rating). The applicable base rate is equal to the greatergreatest of (i) the prime rate, (ii) the federal funds rate plus 0.5% or, (iii) the Overnight Bank Funding Rate plus 0.5%, (iv) the adjusted one-month LIBORthree-month applicable currency rate plus 2.0%1.0% and (v) 1.0%. The applicable LIBOR rate dependsand currency rates depend on the currency and term of the draw under the February 2019 Credit Facility. TheFacility, and cannot be less than zero.
In addition, the Company pays a commitment fee of 1.00%(i) 0.5% per annum on undrawn amounts if the usedunused portion of the February 2019 Credit Facility is lessgreater than or equal to 25.0%two-thirds of total commitments or (ii) 0.375% per annum on undrawn amounts if the usedunused portion of the February 2019 Credit Facility is greaterequal to or less than 25.0%two-thirds of total commitments. These commitment fees are included in interest and otherIn connection with entering into the February 2019 Credit Facility, the Company incurred financing fees onof approximately $6.4 million, which will be amortized over the Company'sremaining life of the February 2019 Credit Facility.
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements of Operations. Borrowings under the Credit Facility are limited to a borrowing base, which includes certain cash and a portion of eligible debt investments.— (Continued)
As of September 30, 2017, the Company had United States dollar borrowings of $124.3 million outstanding under the Credit Facility with an interest rate of 3.99% and non-United States dollar borrowings denominated in Canadian dollars of $21.0 million ($16.8 million in United States dollars) outstanding under the Credit Facility with a weighted average interest rate of 4.06%. The borrowings denominated in Canadian dollars are translated into United States dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign exchange rates on the Credit Facility borrowings is included in unrealized appreciation (depreciation) on foreign currency borrowings in the Company's Unaudited Consolidated Statements of Operations. The borrowings denominated in Canadian dollars may be positively or negatively affected by movements in the rate of exchange between the United States dollar and the Canadian dollar. This movement is beyond the control of the Company and cannot be predicted. As of December 31, 2016, the Company had United States dollar borrowings of $105.7 million outstanding under the Credit Facility with an interest rate of 3.37% and non-United States dollar borrowings denominated in Canadian dollars of $28.6 million ($21.3 million United States dollars) outstanding under the Credit Facility with an interest rate of 3.64%.
The fair value of the borrowings outstanding under the Credit Facility are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model. As of September 30, 2017 and December 31, 2016, the fair values of the borrowings outstanding under the Credit Facility were $141.1 million and $127.0 million, respectively.
TheFebruary 2019 Credit Facility contains certain affirmative and negative covenants, including but not limited to (i) maintaining a minimum interest coverage ratio,stockholders' equity, (ii) maintaining a minimum consolidated tangibleobligors' net worth, (iii) maintaining a minimum asset coverage ratio, (iv) meeting a minimum liquidity test and (iv)(v) maintaining the Company's status as a RICregulated investment company and as a BDC.business development company. The February 2019 Credit Facility also contains customary events of default with customary cure and notice provisions, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change of control, and material adverse effect. The February 2019 Credit Facility also permits Branch Banking and Trust Company, the administrative agent to select an independent third-party valuation firm to determine valuations of certain portfolio investments for purposes of borrowing base provisions. In connection with the February 2019 Credit Facility, the Company also entered into new collateral documents. As of September 30, 2017 and DecemberMarch 31, 2016,2021, the Company was in compliance with all covenants ofunder the February 2019 Credit Facility.
TRIANGLE CAPITAL CORPORATION
Notes toAs of March 31, 2021, the Company had U.S. dollar borrowings of $357.0 million outstanding under the February 2019 Credit Facility with a weighted average interest rate of 2.125% (weighted average one month LIBOR of 0.125%), borrowings denominated in Swedish kronas of 12.8kr million ($1.5 million U.S. dollars) with an interest rate of 2.000% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £85.3 million ($117.7 million U.S. dollars) with an interest rate of 2.063% (one month GBP LIBOR of 0.063%), borrowings denominated in Australian dollars of A$36.6 million ($27.9 million U.S. dollars) with an interest rate of 2.250% (one month AUD Screen Rate of 0.050%) and borrowings denominated in Euros of €91.1 million ($107.1 million U.S. dollars) with an interest rate of 2.000% (one month EURIBOR of 0.000%). The borrowings denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date. The impact resulting from changes in foreign exchange rates on the February 2019 Credit Facility borrowings is included in "Net unrealized appreciation (depreciation) - foreign currency transactions" in the Company's Unaudited Consolidated Financial Statements — (Continued)
of Operations.
Notes
In October 2012,As of December 31, 2020, the Company issued $70.0had U.S. dollar borrowings of $472.0 million outstanding under the February 2019 Credit Facility with a weighted average interest rate of 2.188% (weighted average one month LIBOR of 0.188%), borrowings denominated in Swedish kronas of 12.8kr million ($1.6 million U.S. dollars) with an interest rate of 2.000% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £69.3 million ($94.8 million U.S. dollars) with a weighted average interest rate of 2.063% (weighted average one month GBP LIBOR of 0.063%), borrowings denominated in Australian dollars of A$36.6 million ($28.2 million U.S. dollars) with a weighted average interest rate of 2.250% (weighted average one month AUD Screen Rate of 0.050%) and borrowings denominated in Euros of €100.6 million ($123.1 million U.S. dollars) with a weighted average interest rate of 2.00% (weighted average one month EURIBOR of 0.000%). The borrowings denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date. The impact resulting from changes in foreign exchange rates on the February 2019 Credit Facility borrowings is included in "Net unrealized appreciation (depreciation) - foreign currency transactions" in the Company's Unaudited Consolidated Statements of Operations.
As of March 31, 2021 and December 31, 2020, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $611.1 million and $719.7 million, respectively. The fair values of the borrowings outstanding under the February 2019 Credit Facility are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
August 2025 Notes
On August 3, 2020, the Company entered into a Note Purchase Agreement (the "August 2020 NPA") with Massachusetts Mutual Life Insurance Company governing the issuance of (1) $50.0 million in aggregate principal amount of Series A senior unsecured notes due 2022August 2025 (the "December 2022"Series A Notes due 2025") with a fixed interest rate of 4.66% per year, and (2) up to $50.0 million in aggregate principal amount of additional senior unsecured notes due August 2025 with a fixed interest rate per year to be determined (the "Additional Notes") and, collectively with the Series A Notes due 2025, the "August 2025 Notes"), in November 2012, issued $10.5each case, to qualified institutional investors in a private placement. An aggregate principal amount of $25.0 million of December 2022the Series A Notes pursuantdue 2025 was issued on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 29, 2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms. Interest on the August 2025 Notes will be due semiannually in March and September, beginning in March 2021. In addition, the Company is obligated to offer to repay the August 2025 Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the exerciseterms of an over-allotment option. The December 2022the August 2020 NPA, the Company may redeem the August 2025 Notes mature on December 15, 2022, and may be redeemed in whole or in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date and, if redeemed on or before November 3, 2024, a make-whole premium. The August 2025 Notes are guaranteed by certain of the
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Company's option. subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
On November 4, 2020, the Company amended the August 2020 NPA to reduce the aggregate principal amount of unissued Additional Notes from $50.0 million to $25.0 million.
The December 2022August 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The August 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the August 2025 Notes bear interest at a rate of 6.375% per year payable quarterly on March 15, June 15, September 15the time outstanding may declare all August 2025 Notes then outstanding to be immediately due and December 15 of each year, beginning December 15, 2012.payable. As of September 30, 2017March 31, 2021, the Company was in compliance with all covenants under the August 2020 NPA.
The August 2025 Notes were offered in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The August 2025 Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of both March 31, 2021 and December 31, 2016,2020, the carrying amountsfair value of the December 2022outstanding August 2025 Notes were $78.9 million and $78.7 million, respectively. As of September 30, 2017 and December 31, 2016, thewas $50.0 million. The fair valuesvalue determination of the December 2022August 2025 Notes were $81.7 millionwas based on a market yield approach and $81.9 million, respectively.current interest rates, which are Level 3 inputs to the market yield model.
In February 2015,November Notes
On November 4, 2020, the Company issued $86.3entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due 2022November 2025 (the "March 2022 Notes"“Series B Notes”). with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/or (y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The March 2022November Notes were delivered and paid for on November 5, 2020. The Series B Notes will mature on March 15, 2022November 4, 2025, and the Series C Notes will mature on November 4, 2027 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms. Interest on the November Notes will be due semiannually in May and November, beginning in May 2021. In addition, the Company is obligated to offer to repay the November Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the November 2020 NPA, the Company may be redeemedredeem the Series B Notes and the Series C Notes in whole or in part at any time or from time to time at the Company'sCompany’s option at par plus accrued interest to the prepayment date and, if redeemed on or after March 15, 2018. The March 2022 Notes bear interest at a rate of 6.375% per year payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning March 15, 2015. The net proceedsbefore May 4, 2025, with respect to the Company fromSeries B Notes, or on or before May 4, 2027, with respect to the saleSeries C Notes, a make-whole premium. The November Notes are guaranteed by certain of the March 2022 Notes, after underwriting discountsCompany’s subsidiaries, and offering expenses, were approximately $83.4 million. As of September 30, 2017are the Company's general unsecured obligations that rank pari passu with all outstanding and December 31, 2016,future unsecured unsubordinated indebtedness issued by the carrying amountsCompany.
The November 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the March 2022 Notes were $84.4 million and $84.1 million, respectively. As of September 30, 2017 and December 31, 2016,Company’s status as a BDC within the fair values of the March 2022 Notes were $88.2 million and $87.7 million, respectively. The fair values of the December 2022 Notes and the March 2022 Notes are based on the closing prices of each respective security on the New York Stock Exchange, which are Level 1 inputs under ASC 820.
The indenture and supplements thereto relating to the December 2022 Notes and the March 2022 Notes contain certain covenants, including but not limited to (i) a requirement that the Company comply with the asset coverage requirementmeaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The November 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or any successor provisions, after giving effect to any exemptive relief granted tothat of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the Company byoccurrence of an event of default, the Securities and Exchange Commission (“SEC”), (ii) a requirement thatholders of at least 66-2/3% in principal amount of the Company will not declare any cash dividend, or declare any other cash distribution, upon a class of its capital stock, or purchase any such capital stock, unless, in every such case,November Notes at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, the Company has an asset coverage (as defined in the 1940 Act) of at least 200% after deducting the amount of such dividend, distribution or purchase price, as the caseoutstanding may declare all November Notes then outstanding to be giving effect to any exemptive relief granted to the Company by the SECimmediately due and (iii) a requirement to provide financial information to the holders of the notes and the trustee under the indenture if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).payable. As of September 30, 2017 and DecemberMarch 31, 2016,2021, the Company was in compliance with all covenants of the December 2022 Notes and the March 2022 Notes.
6. EQUITY-BASED AND OTHER COMPENSATION PLANS
In February 2017, both the compensation committee of the Board and the Board adopted the Triangle Capital Corporation Omnibus Incentive Plan (the "Omnibus Plan"), and in May 2017, the Company’s stockholders approved the Omnibus Plan at the Company’s 2017 Annual Meeting of Stockholders. Prior to the approval of the Omnibus Plan, the Company compensated its professionals through two separate plans: the Amended and Restated 2007 Equity Incentive Plan (the "Equity Incentive Plan"), which provided for grants of restricted stock and options to employees, officers and directors, and the 2012 Executive Cash Incentive Plan (the "Cash Incentive Plan"), which provided for the payment of cash bonuses to employees and officers. The Omnibus Plan was created primarily for the purpose of combining the Equity Incentive Plan and the Cash Incentive Plan in order to reduce the administrative burden of monitoring the terms and conditions of two separate plans. The terms of the Equity Incentive Plan and the Cash Incentive Plan, as combined and reflected in the Omnibus Plan, are substantially similar to the respective terms of each standalone plan.
The Omnibus Plan provides for grants of restricted stock, incentive stock options, non-statutory stock options and cash-based and/or stock-based performance awards, collectively, “Awards,” to the Company’s existing and future employees. Equity-based awards granted under the Omnibus Plan to independent directors generally will vest over a one-year period and equity-based awards granted under the Omnibus Plan to executive officers and employees generally will vest ratably over a four-year period. In addition, the Omnibus Plan increased the maximum number of shares of the Company’s common stock with respect to which Awards may be granted under the Omnibus Plan to 4,000,000 shares of the Company’s common stock from 2,400,000 shares of the Company’s common stock that were approved under the Equity Incentive Plan. The Omnibus Plan expires May 3, 2027.November 2020 NPA.
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The November Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The November Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
The Company accounts for its equity-based compensation usingAs of both March 31, 2021 and December 31, 2020, the fair value method, as prescribed by ASC Topic 718, Stock Compensation. Accordingly, for restricted stock awards,of the outstanding Series B Notes and the Series C Notes was $62.5 million and $112.5 million, respectively. The fair value determinations of the Series B Notes and Series C Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
February Notes
On February 25, 2021, the Company measuresentered into a Note Purchase Agreement (the “February 2021 NPA”) governing the grant date fair value based uponissuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26, 2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the market priceSeries D Notes, the “February Notes”) with a fixed interest rate of 4.06% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable February Notes do not satisfy certain investment grade rating conditions and/or (y) 1.50% per year, to the extent the ratio of the Company’s common stocksecured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes will mature on February 26, 2026, and the Series E Notes will mature on February 26, 2028 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with the terms of the February 2021 NPA. Interest on the February Notes will be due semiannually in February and August of each year, beginning in August 2021. In addition, the Company is obligated to offer to repay the February Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the February 2021 NPA, the Company may redeem the Series D Notes and the Series E Notes in whole or in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date and, if redeemed on or before August 26, 2025, with respect to the Series D Notes, or on or before August 26, 2027, with respect to the Series E Notes, a make-whole premium. The February Notes are guaranteed by certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
The February 2021 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement , including, without limitation, information reporting, maintenance of the Company’s status as a BDC within the meaning of the 1940 Act, and certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments. In addition, the February 2021 NPA contains the following financial covenants: (a) maintaining a minimum obligors’ net worth, measured as of each fiscal quarter end; (b) not permitting the Company’s asset coverage ratio, as of the date of the grant and amortizes this fair valueincurrence of any debt for borrowed money or the making of any cash dividend to compensation expense ratably overshareholders, to be less than the requisite service period or vesting term.
The following table presents information with respectstatutory minimum then applicable to equity-based compensation for the nine months ended September 30, 2017 and 2016:
|
| | | | | | | | | |
| Nine Months Ended September 30, 2017 | | Nine Months Ended September 30, 2016 |
| Number of Shares | | Weighted Average Grant Date Fair Value per Share | | Number of Shares | | Weighted Average Grant Date Fair Value per Share |
Unvested shares, beginning of period | 631,622 |
| | $21.23 | | 778,116 |
| | $24.10 |
Shares granted during the period | 360,470 |
| | $19.22 | | 364,605 |
| | $17.56 |
Shares vested during the period | (243,418 | ) | | $22.69 | | (417,815 | ) | | $23.28 |
Unvested shares, end of period | 748,674 |
| | $19.79 | | 724,906 |
| | $21.29 |
In the three months ended September 30, 2017, the Company recognized equity-based compensation expenseunder the 1940 Act; and (c) not permitting the Company’s net debt to equity ratio to exceed 2.0x, measured as of approximately $1.5 million,each fiscal quarter end.
The February 2021 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under other indebtedness or that of the Company’s subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of certain events of default, the holders of at least 66-2/3% in principal amount of the February Notes at the time outstanding may declare all February Notes then outstanding to be immediately due and payable. As of March 31, 2021, the Company was in compliance with all covenants under the February 2021 NPA.
The February Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The February Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the nine months ended September 30, 2017, the Company recognized equity-based compensation expense of approximately $4.5 million. In the three months ended September 30, 2016, the Company recognized equity-based compensation expense of approximately $1.6 million. In the nine months ended September 30, 2016, the Company recognized equity-based compensation expense of approximately $7.5 million, $2.7 million of which relatedUnited States except pursuant to an exemption from, or in a transaction not subject to, the accelerated vesting of outstanding shares of restricted stockregistration requirements of the Company's former Chief Executive Officer, Garland S. Tucker III, who retired from his officer positions in February 2016.Securities Act, as applicable.
As of September 30, 2017, thereMarch 31, 2021, the fair value of the outstanding Series D Notes and the Series E Notes was approximately $11.1$80.0 million and $70.0 million, respectively. The fair value determinations of total unrecognized compensation cost relatedthe Series D Notes and Series E Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the Company’s non-vested restricted shares. This cost is expected to be recognized over a weighted average period of approximately 2.0 years.market yield model.
The Board has adopted a nonqualified deferred compensation plan covering the Company’s executive officers and key employees. Any compensation deferred and the Company’s contributions will earn a return based on the returns on certain investments designated by the Compensation Committee of the Board. Participants are 100% vested in amounts deferred under the deferred compensation plan and the earnings thereon. Contributions to the plan and earnings thereon generally vest ratably over a four-year period.
The Company maintains a 401(k) plan in which all full-time employees who are at least 21 years of age are eligible to participate and receive employer contributions. Eligible employees may contribute a portion of their compensation on a pretax basis into the 401(k) plan up to the maximum amount allowed under the Code, and direct the investment of their contributions.
7. TRANSACTIONS WITH CONTROLLED COMPANIES
During each of the three months ended September 30, 2017 and 2016, the Company received management fees from SRC Worldwide, Inc., a 100%-owned portfolio company, of $100,000. During each of the nine months ended September 30, 2017 and 2016, the Company received management fees from SRC Worldwide, Inc. of $300,000. These fees were recognized as fee income in the Company's Unaudited Consolidated Statements of Operations. In addition, during the nine months ended September 30, 2016, the Company recognized $300,000 as dividend income from SRC Worldwide, Inc.
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
6. DERIVATIVE INSTRUMENTS
8.Credit Support Agreement
In connection with the MVC Acquisition, on December 23, 2020, promptly following the closing of the Company’s merger with MVC, the Company and the Adviser entered into the Credit Support Agreement, pursuant to which the Adviser has agreed to provide credit support to the Company in the amount of up to $23.0 million relating to the net cumulative realized and unrealized losses on the acquired MVC investment portfolio over a 10-year period. See “Note 2 - Agreements and Related Party Transactions” for additional information regarding the Credit Support Agreement. Net unrealized depreciation on the Credit Support Agreement is included in "Net unrealized appreciation (depreciation) - credit support agreement" in the Company’s Unaudited Consolidated Statements of Operations.
The following tables presents the fair value and aggregate unrealized depreciation of the Company's Credit Support Agreement as of March 31, 2021 and December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of March 31, 2021: Description | | | Counter Party | | | | Settlement Date | | Notional Amount | | Value | | Unrealized Appreciation (Depreciation) |
Credit Support Agreement | | | Barings LLC | | | | 01/01/31 | | $ | 23,000,000 | | | $ | 12,000,000 | | | $ | (1,600,000) | |
| | | | | | | | | | | | | |
Total Credit Support Agreement | | | | | | | | | | $ | (1,600,000) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2020: Description | | | Counter Party | | | | Settlement Date | | Notional Amount | | Value | | Unrealized Appreciation (Depreciation) |
Credit Support Agreement | | | Barings LLC | | | | 01/01/31 | | $ | 23,000,000 | | | $ | 13,600,000 | | | $ | — | |
| | | | | | | | | | | | | |
Total Credit Support Agreement | | | | | | | | | | $ | — | |
As of March 31, 2021 and December 31, 2020, the fair value of the Credit Support Agreement was $12.0 million and $13.6 million, respectively, and is included in "Credit support agreement" in the accompanying Unaudited and Audited Consolidated Balance Sheets. The fair value of the Credit Support Agreement was determined based on an income approach, with the primary inputs being the enterprise value, the continuously annual risk-free interest rate, a measure of expected asset volatility, and the expected time until an exit event for each portfolio company in the Reference Portfolio, which are all Level 3 inputs.
Foreign Currency Forward Contracts
The Company enters into forward currency contracts from time to time to primarily help mitigate the impact that an adverse change in foreign exchange rates would have on net interest income from the Company's investments and related borrowings denominated in foreign currencies. Net unrealized appreciation or depreciation on foreign currency contracts are included in "Net unrealized appreciation (depreciation) - foreign currency transactions" and net realized gains or losses on forward currency contracts are included in "Net realized gains (losses) - foreign currency transactions" in the Company’s Unaudited Consolidated Statements of Operations. Forward currency contracts are considered undesignated derivative instruments.
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The following tables presents the Company's foreign currency forward contracts as of March 31, 2021 and December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of March 31, 2021: Description | | Notional Amount to be Purchased | | Notional Amount to be Sold | | Maturity Date | | Gross Amount of Recognized Assets (Liabilities) | | | | Balance Sheet Location of Net Amounts |
Foreign currency forward contract (AUD) | | $785,238 | | A$1,013,380 | | 04/06/21 | | $ | 13,397 | | | | | Prepaid expenses and other assets |
Foreign currency forward contract (AUD) | | A$1,013,380 | | $773,688 | | 04/06/21 | | (1,847) | | | | | Derivative liability |
Foreign currency forward contract (AUD) | | $545,678 | | A$714,511 | | 07/07/21 | | 1,269 | | | | | Prepaid expenses and other assets |
| | | | | | | | | | | | |
Foreign currency forward contract (EUR) | | €5,800,000 | | $6,809,925 | | 04/01/21 | | 6,812 | | | | | Prepaid expenses and other assets |
Foreign currency forward contract (EUR) | | $16,496,839 | | €13,762,578 | | 04/06/21 | | 321,689 | | | | | Prepaid expenses and other assets |
Foreign currency forward contract (EUR) | | €13,762,578 | | $16,201,506 | | 04/06/21 | | (26,356) | | | | | Derivative liability |
Foreign currency forward contract (EUR) | | $24,184,783 | | €20,518,045 | | 07/07/21 | | 22,423 | | | | | Prepaid expenses and other assets |
| | | | | | | | | | | | |
Foreign currency forward contract (GBP) | | $33,170,791 | | £24,072,758 | | 04/06/21 | | (42,405) | | | | | Derivative liability |
Foreign currency forward contract (GBP) | | £24,072,758 | | $33,277,695 | | 04/06/21 | | (64,500) | | | | | Derivative liability |
Foreign currency forward contract (GBP) | | $3,289,859 | | £2,388,498 | | 07/07/21 | | (6,517) | | | | | Derivative liability |
| | | | | | | | | | | | |
Foreign currency forward contract (SEK) | | $164,325 | | 1,356,628kr | | 04/06/21 | | 8,682 | | | | | Prepaid expenses and other assets |
Foreign currency forward contract (SEK) | | 1,356,628kr | | $156,117 | | 04/06/21 | | (474) | | | | | Derivative liability |
Foreign currency forward contract (SEK) | | $176,315 | | 1,530,825kr | | 07/07/21 | | 532 | | | | | Prepaid expenses and other assets |
Total | | | | | | $ | 232,705 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2020: Description | | Notional Amount to be Purchased | | Notional Amount to be Sold | | Maturity Date | | Gross Amount of Recognized Assets (Liabilities) | | | | Balance Sheet Location of Net Amounts |
Foreign currency forward contract (AUD) | | $8,471,304 | | A$11,378,670 | | 01/05/21 | | $ | (309,049) | | | | | Derivative liability |
Foreign currency forward contract (AUD) | | A$11,378,670 | | $8,610,504 | | 01/05/21 | | 169,849 | | | | | Prepaid expenses and other assets |
Foreign currency forward contract (AUD) | | $148,019 | | A$193,882 | | 04/06/21 | | (1,698) | | | | | Derivative liability |
| | | | | | | | | | | | |
Foreign currency forward contract (EUR) | | $13,472,749 | | €11,406,604 | | 01/05/21 | | (483,801) | | | | | Derivative liability |
Foreign currency forward contract (EUR) | | €11,406,604 | | $13,518,023 | | 01/05/21 | | 438,526 | | | | | Prepaid expenses and other assets |
Foreign currency forward contract (EUR) | | $561,754 | | €456,604 | | 04/06/21 | | 1,944 | | | | | Derivative liability |
| | | | | | | | | | | | |
Foreign currency forward contract (GBP) | | $13,554,607 | | £10,215,299 | | 01/05/21 | | (409,190) | | | | | Derivative liability |
Foreign currency forward contract (GBP) | | £10,215,299 | | $13,717,678 | | 01/05/21 | | 246,118 | | | | | Prepaid expenses and other assets |
Foreign currency forward contract (GBP) | | $13,109,849 | | £9,672,758 | | 04/06/21 | | (119,769) | | | | | Derivative liability |
| | | | | | | | | | | | |
Foreign currency forward contract (SEK) | | $141,603 | | 1,259,406kr | | 01/05/21 | | (11,748) | | | | | Derivative liability |
Foreign currency forward contract (SEK) | | 1,259,406kr | | $152,396 | | 01/05/21 | | 955 | | | | | Prepaid expenses and other assets |
Foreign currency forward contract (SEK) | | $164,325 | | 1,356,628kr | | 04/06/21 | | (1,028) | | | | | Derivative liability |
Total | | | | | | $ | (478,891) | | | | | |
As of March 31, 2021 and December 31, 2020, the total fair value of the Company's foreign currency forward contracts was $232,705 and $(478,891), respectively. The fair values of the Company's foreign currency forward contracts are based on unadjusted prices from independent pricing services and independent indicative broker quotes, which are Level 2 inputs.
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is party to financial instruments with off-balance sheet risk, consisting primarily of unused commitments to extend financing to the Company's portfolio companies. Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. As of March 31, 2021 and December 31, 2020, the Company believed that it had adequate financial resources to satisfy its unfunded commitments. The balances of unused commitments to extend financing as of September 30, 2017March 31, 2021 and December 31, 20162020 were as follows:
| | | | | | | | | | | | | | |
Portfolio Company(1) | Investment Type | March 31, 2021 | | December 31, 2020 |
ADE Holding(3) | Committed Capex Line | $ | 88,194 | | | $ | 91,814 | |
Anju Software, Inc. | Delayed Draw Term Loan | 1,981,371 | | | 1,981,371 | |
Arch Global Precision, LLC | Delayed Draw Term Loan | 3,631,849 | | | 4,193,475 | |
Beacon Pointe Advisors, LLC | Delayed Draw Term Loan | — | | | 363,636 | |
Bidwax(2)(3) | Acquisition Capex Facility | 3,760,958 | | | — | |
BigHand UK Bidco Limited(4) | Acquisition Capex Facility | 1,843,756 | | | — | |
British Engineering Services Holdco Limited(4) | Acquisition Facility | — | | | 7,006,008 | |
British Engineering Services Holdco Limited(4) | Bridge Revolver | 623,944 | | | 618,177 | |
Centralis Finco S.a.r.l.(3) | Acquisition Facility | 476,392 | | | 495,950 | |
Classic Collision (Summit Buyer, LLC)(2) | Delayed Draw Term Loan | 454,562 | | | 1,672,446 | |
CM Acquisitions Holdings Inc. | Delayed Draw Term Loan | 1,551,602 | | | 1,551,602 | |
Contabo Finco S.À R.L(3) | Delayed Draw Term Loan | 219,212 | | | 228,211 | |
CSL Dualcom(4) | Delayed Draw Term Loan | 1,016,577 | | | 1,007,182 | |
Dart Buyer, Inc. | Delayed Draw Term Loan | 2,430,569 | | | 2,430,569 | |
DreamStart Bidco SAS(3) | Acquisition Facility | 956,378 | | | 995,640 | |
F24 (Stairway BidCo GmbH)(3) | Acquisition Facility | 418,703 | | | 323,840 | |
Fineline Technologies, Inc.(2) | Delayed Draw Term Loan | 600,000 | | | — | |
FitzMark Buyer, Inc. | Delayed Draw Term Loan | 1,470,588 | | | 1,470,588 | |
Foundation Risk Partners, Corp. | Delayed Draw Term Loan | 4,716,805 | | | 4,984,771 | |
Heartland, LLC | Delayed Draw Term Loan | 5,347,666 | | | 5,347,666 | |
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.))(3) | Accordion Facility | — | | | 10,225,081 | |
Home Care Assistance, LLC(2) | Delayed Draw Term Loan | 3,038,310 | | | — | |
IGL Holdings III Corp. | Delayed Draw Term Loan | 5,914,219 | | | 5,914,219 | |
INOS 19-090 GmbH(2)(3) | Acquisition Facility | 2,620,403 | | | 2,727,980 | |
Jocassee Partners LLC | Joint Venture | 25,000,000 | | | 30,000,000 | |
Kano Laboratories LLC(2) | Delayed Draw Term Loan | 4,543,950 | | | 4,543,950 | |
Kene Acquisition, Inc. | Delayed Draw Term Loan | — | | | 322,928 | |
LAF International(2)(3) | Acquisition Facility | 364,343 | | | — | |
LivTech Purchaser, Inc.(2) | Delayed Draw Term Loan | 447,752 | | | — | |
Modern Star Holdings Bidco Pty Limited(5) | Capex Term Loan | 2,285,953 | | | 2,315,967 | |
Murphy Midco Limited(4) | Delayed Draw Term Loan | 3,332,269 | | | 3,301,472 | |
Navia Benefit Solutions, Inc.(2) | Delayed Draw Term Loan | 4,000,000 | | | — | |
Options Technology Ltd. | Delayed Draw Term Loan | 2,604,080 | | | 2,604,080 | |
Pacific Health Supplies Bidco Pty Limited(5) | CapEx Term Loan | 1,343,603 | | | 1,535,025 | |
Premier Technical Services Group(4) | Acquisition Facility | 1,208,676 | | | 1,197,505 | |
Protego Bidco B.V.(2)(3) | Delayed Draw Term Loan | 3,836,870 | | | — | |
Protego Bidco B.V.(2)(3) | Revolver | 2,302,121 | | | — | |
PSC UK Pty Ltd.(4) | Acquisition Facility | 540,149 | | | 535,157 | |
Questel Unite(2)(3) | Cap Acquisition Facility | 4,747,241 | | | 10,300,913 | |
Radwell International, LLC | Delayed Draw Term Loan | 1,617,973 | | | 3,235,947 | |
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
|
| | | | | | | | |
Portfolio Company | Investment Type | September 30, 2017 | | December 31, 2016 |
Baker Hill Acquisition, LLC(1) | Delayed Draw Term Loan | $ | 500,000 |
| | $ | — |
|
CRS Reprocessing, LLC | Debtor in Possession Loan | 3,300,000 |
| | — |
|
DPII Holdings LLC(1) | Guaranty | 576,925 |
| | 576,925 |
|
DLC Acquisition, LLC | Revolver | 1,800,000 |
| | 3,000,000 |
|
Eckler's Holdings, Inc.(1) | Equity Investment | 1,000,000 |
| | — |
|
Frank Entertainment Group, LLC(1) | Delayed Draw Senior Note | 489,796 |
| | — |
|
Frank Entertainment Group, LLC(1) | Delayed Draw Second Lien Term Note | 1,142,857 |
| | — |
|
Halo Branded Solutions, Inc. | Delayed Draw Term Loan | 3,250,000 |
| | 3,250,000 |
|
HKW Capital Partners IV, L.P. | Private Equity | 128,204 |
| | 530,032 |
|
Lakeview Health Acquisition Company | Revolver | 1,387,367 |
| | 1,387,367 |
|
Micross Solutions LLC | Delayed Draw Term Loan | 3,000,000 |
| | — |
|
Nautic Partners VII, LP | Private Equity | 532,532 |
| | 642,172 |
|
Nomacorc, LLC(1) | Equity Investment | 838,813 |
| | 849,362 |
|
Orchid Underwriters Agency, LLC | Delayed Draw Term Loan | 649,143 |
| | 8,400,000 |
|
Orchid Underwriters Agency, LLC | Revolver | — |
| | 5,000,000 |
|
SCA Pharmaceuticals, LLC | Delayed Draw Term Loan | — |
| | 12,000,000 |
|
Schweiger Dermatology Group, LLC | Delayed Draw Term Loan | 10,000,000 |
| | — |
|
SCUF Gaming, Inc. | Revolver | 2,000,000 |
| | 3,500,000 |
|
Smile Brands, Inc. | Equity Investment | 1,000,000 |
| | 1,000,000 |
|
Smile Brands, Inc. | Delayed Draw Term Loan | 18,826,531 |
| | 18,826,531 |
|
SPC Partners V, LP | Private Equity | 198,378 |
| | 522,881 |
|
SPC Partners VI, LP | Private Equity | 3,000,000 |
| | 3,000,000 |
|
TCFI Merlin LLC and TCFI CSG LLC | Revolver | 500,000 |
| | — |
|
Team Waste, LLC | Equity Investment | — |
| | 900,000 |
|
Team Waste, LLC | Delayed Draw Term Loan | 1,000,000 |
| | — |
|
TGaS Advisors, LLC | Revolver | 2,000,000 |
| | 2,000,000 |
|
YummyEarth Inc.(1) | Delayed Draw Term Loan | 1,000,000 |
| | 1,500,000 |
|
Total unused commitments to extend financing | | $ | 58,120,546 |
| | $ | 66,885,270 |
|
| | | | | | | | | | | | | | |
Portfolio Company(1) | Investment Type | March 31, 2021 | | December 31, 2020 |
Rep Seko Merger Sub LLC | Delayed Draw Term Loan | 1,454,545 | | | 1,454,546 | |
Safety Products Holdings, LLC | Delayed Draw Term Loan | 6,467,345 | | | 6,467,345 | |
Smile Brands Group, Inc.(2) | Delayed Draw Term Loan | 2,148,691 | | | 2,148,691 | |
Springbrook Software (SBRK Intermediate, Inc.) | Delayed Draw Term Loan | 3,489,026 | | | 3,489,026 | |
SSCP Pegasus Midco Limited(4) | Delayed Draw Term Loan | 13,514,446 | | | 13,389,546 | |
The Hilb Group, LLC(2) | Delayed Draw Term Loan | 5,105,694 | | | 5,545,939 | |
Transit Technologies LLC(2) | Delayed Draw Term Loan | 6,035,305 | | | 6,035,305 | |
USLS Acquisition, Inc.(2) | Delayed Draw Term Loan | 450,466 | | | 450,466 | |
Utac Ceram(2)(3) | Delayed Draw Term Loan | — | | | 743,327 | |
Waccamaw River | Joint Venture | 20,500,000 | | | — | |
W2O Holdings, Inc. | Delayed Draw Term Loan | 5,989,298 | | | 5,989,298 | |
Total unused commitments to extend financing | | $ | 166,491,854 | | | $ | 159,236,659 | |
| |
(1) | Represents a commitment to extend financing to a portfolio company where one or more of the Company's current investments in the portfolio company are carried at less than cost. The Company's estimate of the fair value of the current investments in this portfolio company includes an analysis of the value of any unfunded commitments. |
(1)The Company's estimate of the fair value of the current investments in these portfolio companies includes an analysis of the fair value of any unfunded commitments.
(2)Represents a commitment to extend financing to a portfolio company where one or more of the Company's current investments in the portfolio company are carried at less than cost.
(3)Actual commitment amount is denominated in Euros. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(4)Actual commitment amount is denominated in British pounds sterling. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(5)Actual commitment amount is denominated in Australian dollars. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
In the normal course of business, the Company guarantees certain obligations in connection with its portfolio companies (in particular, certain controlled portfolio companies). Under these guarantee arrangements, payments may be required to be made to third parties if such guarantees are called upon or if the portfolio companies were to default on their related obligations, as applicable. As of March 31, 2021 and December 31, 2020, the Company had guaranteed €9.9 million ($11.6 million U.S. dollars and $12.1 million U.S. dollars, respectively) relating to credit facilities among Erste Bank and MVC Automotive Group Gmbh ("MVC Auto"). The Company may,would be required to make payments to Erste Bank if MVC Auto were to default on their related payment obligations. None of the credit facility guarantees are recorded as a liability on the Company's Unaudited and Audited Consolidated Balance Sheets, as such the credit facility liabilities are considered in the future,valuation of the investments in MVC Auto. The guarantees denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
In addition, the Company agreed to cash collateralize a $3.5 million letter of credit for Security Holdings B.V. The $3.5 million cash collateralization is reflected as "Restricted cash" on the accompanying Unaudited and Audited Consolidated Balance Sheets.
The Company and certain of its former executive officers have been named as defendants in two putative securities class action lawsuits, each filed in the United States District Court for the Southern District of New York (and then transferred to the United States District Court for the Eastern District of North Carolina) on behalf of all persons who purchased or otherwise acquired our common stock between May 7, 2014 and November 1, 2017. The first lawsuit was filed on November 21, 2017, and was captioned Elias Dagher, et al., v. Triangle Capital Corporation, et al., Case No. 5:18-cv-00015-FL (the “Dagher Action”). The second lawsuit was filed on November 28, 2017, and was captioned Gary W. Holden, et al., v. Triangle Capital Corporation, et al., Case No. 5:18-cv-00010-FL (the “Holden Action”). The Dagher Action and the Holden Action were consolidated and are currently captioned In re Triangle Capital Corp. Securities Litigation, Master File No. 5:18-cv-00010-FL.
On April 10, 2018, the plaintiff filed its First Consolidated Amended Complaint. The complaint alleged certain violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements and omissions regarding the Company’s business, operations and prospects between May 7, 2014 and November 1, 2017. The plaintiff seeks compensatory damages and attorneys’ fees and costs, among other relief, but did not specify the amount of damages being sought. On May 25, 2018, the defendants filed a motion to dismiss the complaint. On March 7, 2019, the court entered an order granting the defendants’ motion to dismiss. On March 28, 2019, the plaintiff filed a motion seeking leave to file a Second Consolidated Amended Complaint. On September 20, 2019, the court entered an order denying the plaintiff’s motion for leave to file a Second Consolidated Amended Complaint and dismissing the action with prejudice. On October 17, 2019, the plaintiff filed a notice of appeal seeking review of the court’s September 20, 2019 order. The plaintiff
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
filed its opening brief with the United States Court of Appeals for the Fourth Circuit on January 6, 2020. The defendants filed their response brief on February 28, 2020, and the plaintiff filed its reply brief on March 27, 2020. The United States Court of Appeals for the Fourth Circuit heard oral argument on the appeal on December 9, 2020. On February 22, 2021, the United States Court of Appeals for the Fourth Circuit affirmed the court’s September 20, 2019 order dismissing the action with prejudice.
Other than as set forth above, neither the Company, the Adviser, nor the Company’s subsidiaries are currently subject to any material pending legal proceedings, other than ordinary routine litigation incidental to their respective businesses. The Company, the Adviser, and the Company’s subsidiaries may from time to time, however, be involved in litigation arising out of its operations in the normal course of business or otherwise.otherwise, including in connection with strategic transactions. Furthermore, third parties may try to seek to impose liability on the Company in connection with the activities of its portfolio companies. SinceWhile the outcome of any current legal proceedings cannot at this time be predicted with certainty, the Company does not expect any current matters will materially affect its inception, neither Triangle Capital Corporation norfinancial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on the Company’s financial condition or results of operations in any future reporting period.
COVID-19 Developments
During the three months ended March 31, 2021, the spread of the Coronavirus and the COVID-19 pandemic continued to have a significant impact on the U.S and global economies. To the extent the Company's portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, it may have a material adverse impact on the Company's future net investment income, the fair value of its subsidiaries have been party to any material legal proceedings.portfolio investments, its financial condition and the results of operations and financial condition of the Company's portfolio companies.
TRIANGLE CAPITAL CORPORATIONBarings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
9.8. FINANCIAL HIGHLIGHTS
The following is a schedule of financial highlights for the ninethree months ended March 31, 2021 and 2020:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2021 | | 2020 |
Per share data: | | | |
Net asset value at beginning of period | $ | 10.99 | | | $ | 11.66 | |
Net investment income(1) | 0.22 | | | 0.15 | |
Net realized gain (loss) on investments / foreign currency transactions(1) | 0.03 | | | (0.01) | |
Net unrealized appreciation (depreciation) on investments/ CSA / foreign currency transactions(1) | 0.10 | | | (2.44) | |
Total increase (decrease) from investment operations(1) | 0.35 | | | (2.30) | |
Dividends/distributions paid to stockholders from net investment income | (0.19) | | | (0.16) | |
| | | |
| | | |
| | | |
| | | |
| | | |
Purchases of shares in share repurchase plan | — | | | 0.03 | |
| | | |
| | | |
| | | |
Other | (0.01) | | | — | |
Net asset value at end of period | $ | 11.14 | | | $ | 9.23 | |
Market value at end of period(2) | $ | 9.98 | | | $ | 7.48 | |
Shares outstanding at end of period | 65,316,085 | | | 48,288,822 | |
Net assets at end of period | $ | 727,882,747 | | | $ | 445,744,908 | |
Average net assets | $ | 727,272,534 | | | $ | 569,862,251 | |
Ratio of total expenses, including loss on extinguishment of debt and provision for taxes, to average net assets (annualized)(3) | 8.92 | % | | 8.07 | % |
| | | |
Ratio of net investment income to average net assets (annualized) | 7.91 | % | | 5.13 | % |
Portfolio turnover ratio (annualized) | 16.82 | % | | 10.37 | % |
Total return(4) | 10.54 | % | | (25.02) | % |
| | | |
| | | |
(1)September 30, 2017Weighted average per share data—basic and 2016:diluted; per share data was derived by using the weighted average shares outstanding during the applicable period.
(2)Represents the closing price of the Company’s common stock on the last day of the period.
(3)Does not include expenses of underlying investment companies, including joint ventures and short-term investments.
(4)Total return is based on purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by the Company's dividend reinvestment plan during the period. Total return is not annualized.
|
| | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 |
Per share data: | | | |
Net asset value at beginning of period | $ | 15.13 |
| | $ | 15.23 |
|
Net investment income(1) | 1.18 |
| | 1.19 |
|
Net realized loss on investments(1) | (0.37 | ) | | (0.19 | ) |
Net unrealized depreciation on investments / foreign currency(1) | (1.94 | ) | | (0.23 | ) |
Total increase (decrease) from investment operations(1) | (1.13 | ) | | 0.77 |
|
Dividends paid to stockholders from net investment income | (1.35 | ) | | (1.44 | ) |
Total dividends paid | (1.35 | ) | | (1.44 | ) |
Shares issued pursuant to Dividend Reinvestment Plan | 0.01 |
| | 0.03 |
|
Common stock offering | 0.61 |
| | 0.72 |
|
Stock-based compensation | (0.04 | ) | | 0.03 |
|
Tax provision(1) | (0.01 | ) | | — |
|
Other(2) | (0.02 | ) | | (0.01 | ) |
Net asset value at end of period | $ | 13.20 |
| | $ | 15.33 |
|
Market value at end of period(3) | $ | 14.28 |
| | $ | 19.70 |
|
Shares outstanding at end of period | 47,740,832 |
| | 40,405,403 |
|
Net assets at end of period | $ | 630,393,416 |
| | $ | 619,355,209 |
|
Average net assets | $ | 676,951,030 |
| | $ | 534,714,702 |
|
Ratio of total expenses, including provision for taxes, to average net assets (annualized) | 7.34 | % | | 10.14 | % |
Ratio of net investment income to average net assets (annualized) | 10.70 | % | | 10.42 | % |
Portfolio turnover ratio | 21.59 | % | | 16.89 | % |
Total return(4) | (15.56 | )% | | 10.62 | % |
Supplemental Data: | | | |
Efficiency ratio(5) | 17.04 | % | | 25.07 | % |
| |
(1) | Weighted average basic per share data. |
| |
(2) | Represents the impact of the different share amounts used in calculating per share data as a result of calculating certain per share data based upon the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. |
| |
(3) | Represents the closing price of the Company’s common stock on the last day of the period. |
| |
(4) | Total return is based on purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by the Company's dividend reinvestment plan during the period. Total return is not annualized. |
| |
(5) | Efficiency ratio equals the sum of (i) compensation and related expenses and (ii) general and administrative expenses divided by total investment income. |
10.9. SUBSEQUENT EVENTS
In October 2017,Subsequent to March 31, 2021, the Company invested $32.5made approximately $156.3 million inof new commitments, of which $106.4 million closed and funded. The $106.4 million of investments consist of $82.6 million of first lien senior secured debt investments, $20.9 million of second lien senior secured and subordinated debt investments and a $2.9 million equity investments with a combined weighted average yield on debt securityinvestments of Deva Holdings, Inc. Under6.7%. In addition, the termsCompany funded $5.1 million of previously committed delayed draw term loans.
On May 6, 2021, the investment, the debt security bears interest atBoard declared a ratequarterly distribution of LIBOR plus 6.75%$0.20 per annum.share payable on June 16, 2021 to holders of record as of June 9, 2021.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion is designed to provide a better understanding of our unaudited consolidated financial statements for the ninethree months ended September 30, 2017,March 31, 2021, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2016.2020. Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods.
Forward-Looking Statements
Some of the statements in this Quarterly Report constitute forward-looking statements because they relate to future events or our future performance or financial condition. Forward-looking statements may include, among other things, statements as to our future operating results, our business prospects and the prospects of our portfolio companies, the impact of the investments that we expect to make, the ability of our portfolio companies to achieve their objectives, our expected financings and investments, the adequacy of our cash resources and working capital, and the timing of cash flows, if any, from the operations of our portfolio companies. Words such as “expect,” “anticipate,” “target,” “goals,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “forecast,” “may,” “should,” “potential,”"expect," "anticipate," "target," "goals," "project," "intend," "plan," "believe," "seek," "estimate," "continue," "forecast," "may," "should," "potential," variations of such words, and similar expressions indicate a forward-looking statement, although not all forward-looking statements include these words. Readers are cautioned that the forward-looking statements contained in this Quarterly Report are only predictions, are not guarantees of future performance, and are subject to risks, events, uncertainties and assumptions that are difficult to predict. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factorsitems discussed herein, and in Item 1A entitled “Risk Factors”"Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended December 31, 2016.2020 and in Item 1A entitled "Risk Factors" in Part II of our subsequently filed Quarterly Reports on Form 10-Q. Other factors that could cause our actual results and financial condition to differ materially include, but are not limited to, changes in political, economic or industry conditions, the economy,interest rate environment or conditions affecting the financial and capital markets, including with respect to changes from the impact of the COVID-19 pandemic; the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak; the effect of the COVID-19 pandemic on our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives; the effect of the disruptions caused by the COVID-19 pandemic on our ability to continue to effectively manage our business and on the availability of equity and debt capital and our use of borrowed money to finance a portion of our investments; risks associated with possible disruption due to terrorism in our operations or the economy generally,generally; and future changes in laws or regulations and conditions in our operating areas. These statements are based on our current expectations, estimates, forecasts, information and projections about the industry in which we operate and the beliefs and assumptions of our management as of the date of filing of this Quarterly Report. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless we are required to do so by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview of Our Business
We are a Maryland corporation incorporated on October 10, 2006. In August 2018, in connection with the closing of an externalization transaction through which has electedBarings LLC (“Barings”) agreed to be treatedbecome our external investment adviser, we entered into an investment advisory agreement (the “Original Advisory Agreement”) and operatesan administration agreement (the “Administration Agreement”) with Barings. In connection with the completion of our acquisition of MVC Capital, Inc., a Delaware corporation, on December 23, 2020 (the “MVC Acquisition”), we entered into an amended and restated investment advisory agreement (the “Amended and Restated Advisory Agreement”) with Barings on December 23, 2020, following approval of the Amended and Restated Advisory Agreement by our stockholders at our December 23, 2020 special meeting of stockholders. The terms of the Amended and Restated Advisory Agreement became effective on January 1, 2021. Under the terms of the Amended and Restated Advisory Agreement and the Administration Agreement, Barings serves as our investment adviser and administrator and manages our investment portfolio and performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation.
An externally-managed BDC generally does not have any employees, and its investment and management functions are provided by an internally managed business development company, or BDC,outside investment adviser and administrator under an advisory agreement and administration agreement.
Instead of directly compensating employees, we pay Barings for investment and management services pursuant to the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, pursuant to the terms of the Original Advisory Agreement) and the Administration Agreement. Under the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the Investmentterms of the Original Advisory Agreement), the fees paid to Barings for managing our affairs are determined based upon an objective and fixed formula, as compared with the subjective and variable nature of the costs associated with employing management and employees in an internally-managed BDC structure, which include bonuses that cannot be directly tied to Company Actperformance because of 1940, as amended, or the 1940 Act. Our wholly-owned subsidiaries, Triangle Mezzanine Fund LLLP, or Triangle SBIC, Triangle Mezzanine Fund II LP, or Triangle SBIC II and Triangle Mezzanine Fund III LP, or Triangle SBIC III, are licensed as small business investment companies, or SBICs, by the United States Small Business Administration, or SBA. In addition, Triangle SBIC has also elected to be treated as a BDCrestrictions on incentive compensation under the 1940 Act. We, Triangle SBIC, Triangle SBIC II and Triangle SBIC III
Beginning in August 2018, Barings shifted our investment focus to invest primarily in debt instruments, equity investments, warrantssyndicated senior secured loans, bonds and other securitiesfixed income securities. Since that time, Barings has transitioned our portfolio to primarily senior secured private debt investments in well-established middle-market businesses that operate across a wide range of lower middle market privately-held companies located primarilyindustries. Barings’ existing SEC co-investment exemptive relief under the 1940 Act (the “Exemptive Relief”) permits us and Barings’ affiliated private and SEC-registered funds to co-invest in Barings-originated loans, which allows Barings to efficiently implement its senior secured private debt investment strategy for us.
Barings employs fundamental credit analysis, and targets investments in businesses with relatively low levels of cyclicality and operating risk. The holding size of each position will generally be dependent upon a number of factors including total facility size, pricing and structure, and the number of other lenders in the United States.
Our business isfacility. Barings has experience managing levered vehicles, both public and private, and will seek to provide capital to lower middle market companies located primarily inenhance our returns through the United States. We focus on investments in companiesuse of leverage with a history of generating revenuesprudent approach that prioritizes capital preservation. Barings believes this strategy and positive cash flows, an establishedapproach offers attractive risk/return with lower volatility given the potential for fewer defaults and greater resilience through market position and a proven management team with a strong operating discipline. Our target portfolio company has annual revenues between $20.0 million and $300.0 million and annual earnings before interest, taxes, depreciation and amortization, or EBITDA, between $5.0 million and $75.0 million.
We invest in senior and subordinated debt securities of privately held companies, generally secured by security interests in portfolio company assets. In addition, we generally invest in one or more equity instruments of the borrower, such as direct preferred or common equity interests. Our investments generally range from $5.0 million to $50.0 million per portfolio company. In certain situations, we have partnered with other funds to provide larger financing commitments.
cycles.
We generate revenues in the form of interest income, primarily from our investments in debt securities, loan origination and other fees and dividend income. Fees generated in connection with our debt investments are recognized over the life of the loan using the effective interest method or, in some cases, recognized as earned. In addition, we generate revenue in the form of capital gains, if any, on warrants or other equity-related securities that we acquire from our portfolio companies. Our syndicated senior secured loans generally bear interest between LIBOR plus 300 basis points and LIBOR plus 400 points. Our senior secured, middle-market, private debt investments generally have a termterms of between threefive and seven years. In addition, our fixedOur senior secured, middle-market, first lien private debt investments typicallygenerally bear interest between 10.0%LIBOR (or the applicable currency rate for investments in foreign currencies) plus 450 basis points and 15.0%LIBOR plus 650 basis points per annum and our variableannum. Our subordinated middle-market, private debt investments are generally LIBOR-based and typically bear interest between 8.0%LIBOR (or the applicable currency rate for investments in foreign currencies) plus 700 basis points and 13.0%LIBOR plus 900 basis points per annum. Certainannum if floating rate, and between 8% and 15% if fixed rate. From time to time, certain of our debt investments may have a form of interest, referred to as payment-in-kind, or PIK, interest, thatwhich is not paid currently but is instead accrued and added to the loan balance and paid at the end of the term. In our negotiations with potential portfolio companies, we generally seek to minimize PIK interest. Cash interest on our debt investments is generally payable monthly; however, some of our debt investments pay cash interest on a quarterly basis.
As of September 30, 2017March 31, 2021 and December 31, 2016,2020, the weighted average yield on the principal amount of our outstanding debt investments other than non-accrual debt investments was approximately 11.2%7.2% and 11.7%7.1%, respectively. The weighted average yield on all of our outstanding investments (including equity and equity-linked investments but excluding non-accrual debt investments) was approximately 9.8% and 10.2% as of September 30, 2017 and December 31, 2016, respectively. The weighted average yield onthe principal amount all of our outstanding investments (including equity and equity-linked investments and short-term investments but excluding non-accrual debt investments) was approximately 8.3% and 9.7%6.4% as of September 30, 2017both March 31, 2021 and December 31, 2016, respectively.
2020. The weighted average yields across our investment portfolio dependyield on the relative seniorityprincipal amount all of our outstanding investments within(including equity and equity-linked investments and short-term investments) was approximately 6.4% and 6.5% as of March 31, 2021 and December 31, 2020, respectively.
COVID-19 Developments
The spread of the capital structuresCoronavirus and the COVID-19 pandemic, and the related effect on the U.S. and global economies, has had adverse consequences for the business operations of some of our portfolio companies and has adversely affected, and threatens to continue to adversely affect, our operations and the operations of Barings, including with respect to us. Barings has taken proactive steps around COVID-19 to address the potential impacts on their people, clients, communities and everyone they come in contact with, directly or through their premises. Protecting their employees and supporting the communities in which they live and work is a priority. Barings continues to operate with the majority of employees globally working remotely while maintaining service levels to our partners and clients. In the United States, the firm’s global headquarters in Charlotte and the office in Hartford, Connecticut are currently the only offices that are open. In Europe the regional headquarters in London is open while the majority of other offices in Europe are currently closed. In Asia, all offices remain open. Barings return-to-office taskforce continues to plan for the safe return of employees to all office locations with a target date for a widespread return of associates to all office locations globally planned for September 2021. This date is subject to the continued success of the global vaccination program and reduction in COVID-19 case numbers. Barings’ cybersecurity policies are applied consistently when working remotely or in the office.
While we have been carefully monitoring the COVID-19 pandemic and its impact on our security interests inbusiness and the business of our portfolio company assets. Historically, since our IPO in 2007,companies, we have primarily focused on investmentscontinued to fund our existing debt commitments. In addition, we have continued to make and originate, and expect to continue to make and originate, new loans.
We cannot predict the full impact of the COVID-19 pandemic, including its duration in subordinated debt securities, which generally produce higher yields than more senior securities duethe United States and worldwide and the magnitude of the economic impact of the outbreak, including with respect to the risks inherent in investing in less senior positions. Beginning in 2016, we begantravel restrictions, business closures and other quarantine measures imposed on service providers and other individuals by various local, state, and federal governmental authorities, as well as non-U.S. governmental authorities. We are unable to shiftpredict the duration of any business and supply-chain disruptions, the extent to which COVID-19 will negatively affect our focus toward largerportfolio companies’ operating results or the impact that such disruptions may have on our results of operations and less cyclicalfinancial condition. Depending on the duration and extent of the disruption to the operations of our portfolio companies, certain portfolio companies could experience financial distress and began steeringpossibly default on their financial obligations to us and their other capital providers. Some of our portfolio composition with a focuscompanies may significantly curtail business operations, furlough or lay off employees and terminate service providers, and defer capital expenditures if subjected to prolonged and severe financial distress, which would likely impair their business on a balance between senior and subordinated securities. This shift toward more senior securities is intended to reduce our credit risks in exchange for lower-yielding investments, which in turn has resultedpermanent basis. These developments would likely result in a decrease in the weighted average yield on our investment portfolio. As we continue this balanced strategy, and as the percentagevalue of our investment in any such portfolio company.
We will continue to monitor the situation relating to the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plan of operation. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future. However, to the extent our portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, it may have a material adverse impact on our future net investment income, the fair value of our portfolio investments, our financial condition and the results of operations and financial condition of our portfolio companies.
Relationship with Our Adviser, Barings
Our investment adviser, Barings, a wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company, is a leading global asset management firm and is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended. Barings’ primary investment capabilities include fixed income, private credit, real estate, equity, and alternative investments. Subject to the overall supervision of our board of directors (the “Board”), Barings’ Global Private Finance Group (“BGPF”) manages our day-to-day operations, and provides investment advisory and management services to us. BGPF is part of Barings’ $244.2 billion Global Fixed Income Platform that is comprisedinvests in liquid, private and structured credit. BGPF manages private funds and separately managed accounts, along with multiple public vehicles.
Among other things, Barings (i) determines the composition of senior debtour portfolio, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identifies, evaluates and negotiates the structure of the investments increases,made by us; (iii) executes, closes, services and monitors the investments that we expectmake; (iv) determines the securities and other assets that we will purchase, retain or sell; (v) performs due diligence on prospective portfolio companies and (vi) provides us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment of our investment-related risksfunds.
Under the terms of the Administration Agreement, Barings has agreed to perform (or oversee, or arrange for, the performance of) the administrative services necessary for our operation, including, but not limited to, office facilities, equipment, clerical, bookkeeping and record keeping services at such office facilities and such other services as Barings, subject to review by the Board, will from time to time determine to be mitigatednecessary or useful to an extent, but weperform its obligations under the Administration Agreement. Barings will also, expect the weighted average yields on our portfolio to continue to decrease.
Triangle SBIC, Triangle SBIC IIbehalf and Triangle SBIC III are eligible to issue debenturessubject to the SBA, which pools theseBoard’s oversight, arrange for the services of, and oversee, custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. Barings is responsible for the financial and other records that we are required to maintain and will prepare all reports and other materials required to be filed with debenturesthe SEC or any other regulatory authority.
Stockholder Approval of other SBICs and sells them inReduced Asset Coverage Ratio
On July 24, 2018, our stockholders voted at a special meeting of stockholders (the “2018 Special Meeting”) to approve a proposal to authorize us to be subject to a reduced asset coverage ratio of at least 150% under the capital markets at favorable interest rates, in part as1940 Act. As a result of the guaranteestockholder approval at the 2018 Special Meeting, effective July 25, 2018, our applicable asset coverage ratio under the 1940 Act has been decreased to 150% from 200%. As a result, we are permitted under the 1940 Act to incur indebtedness at a level which is more consistent with a portfolio of payment from the SBA. Triangle SBIC, Triangle SBIC II and Triangle SBIC III invest these funds in portfolio companies. We intend to continue to operate Triangle SBIC, Triangle SBIC II and Triangle SBIC III as SBICs, subject to SBA approval, and to utilize the proceeds from the issuancesenior secured debt. As of SBA-guaranteed debentures, referred to herein as SBA leverage, to enhance returns toMarch 31, 2021, our stockholders.
asset coverage ratio was 173.8%.
Portfolio Investment Composition
The total value of our investment portfolio was $1.1 billion$1,602.1 million as of September 30, 2017,March 31, 2021, as compared to $1.0 billion$1,495.8 million as of December 31, 2016.2020. As of September 30, 2017,March 31, 2021, we had investments in 91150 portfolio companies and two money market funds with an aggregate cost of $1.2 billion.$1,588.6 million. As of December 31, 2016,2020, we had investments in 88146 portfolio companies and two money market funds with an aggregate cost of $1.1 billion.$1,486.1 million. As of both September 30, 2017March 31, 2021 and December 31, 2016,2020, none of our portfolio investments represented greater than 10% of the total fair value of our investment portfolio.
As of September 30, 2017March 31, 2021 and December 31, 2016,2020, our investment portfolio consisted of the following investments:
| | | | | | | | | | | | Cost | | Percentage of Total Portfolio | | Fair Value | | Percentage of Total Portfolio |
| Cost | | Percentage of Total Portfolio | | Fair Value | | Percentage of Total Portfolio | |
September 30, 2017: | | | | | | | | |
March 31, 2021: | | March 31, 2021: | | | | | | | |
Senior debt and 1st lien notes | | Senior debt and 1st lien notes | $ | 1,228,983,292 | | | 77 | % | | $ | 1,238,178,055 | | | 77 | % |
Subordinated debt and 2nd lien notes | $ | 812,599,788 |
| | 66 | % | | $ | 688,995,595 |
| | 63 | % | Subordinated debt and 2nd lien notes | 150,273,105 | | | 10 | | | 150,597,961 | | | 9 | |
Senior debt and 1st lien notes | 290,613,735 |
| | 23 |
| | 270,479,180 |
| | 25 |
| |
Structured products | | Structured products | 23,163,888 | | | 1 | | | 26,153,607 | | | 2 | |
Equity shares | 133,883,175 |
| | 11 |
| | 131,120,904 |
| | 12 |
| Equity shares | 42,543,214 | | | 3 | | | 39,617,746 | | | 2 | |
Equity warrants | 1,691,617 |
| | — |
| | 596,000 |
| | — |
| Equity warrants | 1,235,383 | | | — | | | 1,434,309 | | | — | |
Investment in joint ventures / PE fund | | Investment in joint ventures / PE fund | 68,782,532 | | | 4 | | | 72,576,383 | | | 5 | |
Short-term investments | | Short-term investments | 73,569,174 | | | 5 | | | 73,565,676 | | | 5 | |
| $ | 1,238,788,315 |
| | 100 | % | | $ | 1,091,191,679 |
| | 100 | % | | $ | 1,588,550,588 | | | 100 | % | | $ | 1,602,123,737 | | | 100 | % |
December 31, 2016: | | | | | | | | |
December 31, 2020: | | December 31, 2020: | | | | | | | |
Senior debt and 1st lien notes | | Senior debt and 1st lien notes | $ | 1,167,436,742 | | | 79 | % | | $ | 1,171,250,512 | | | 79 | % |
Subordinated debt and 2nd lien notes | $ | 753,635,857 |
| | 69 | % | | $ | 690,159,367 |
| | 67 | % | Subordinated debt and 2nd lien notes | 137,776,808 | | | 9 | | | 138,767,120 | | | 9 | |
Senior debt and 1st lien notes | 198,616,110 |
| | 18 |
| | 191,643,157 |
| | 18 |
| |
Structured products | | Structured products | 30,071,808 | | | 2 | | | 32,508,845 | | | 2 | |
Equity shares | 140,524,807 |
| | 13 |
| | 154,216,657 |
| | 15 |
| Equity shares | 44,693,645 | | | 3 | | | 44,651,114 | | | 3 | |
Equity warrants | 4,154,717 |
| | — |
| | 1,888,000 |
| | — |
| Equity warrants | 1,235,383 | | | — | | | 1,300,197 | | | — | |
Investment in joint ventures / PE fund | | Investment in joint ventures / PE fund | 39,282,532 | | | 3 | | | 41,759,922 | | | 3 | |
Short-term investments | | Short-term investments | 65,558,227 | | | 4 | | | 65,558,227 | | | 4 | |
| $ | 1,096,931,491 |
| | 100 | % | | $ | 1,037,907,181 |
| | 100 | % | | $ | 1,486,055,145 | | | 100 | % | | $ | 1,495,795,937 | | | 100 | % |
Investment Activity
During the ninethree months ended September 30, 2017,March 31, 2021, we made twenty-two18 new investments totaling $328.2$172.2 million, debtmade investments in seventeen existing portfolio companies totaling $58.9$73.2 million, made one new investment in a joint venture equity portfolio company totaling $4.5 million and equitymade additional investments in eleven existing joint venture equity portfolio companies totaling $4.4$25.0 million. We had fourteen portfolio companysix loans repaid at par totaling $185.3$26.2 million and received normal principal repayments and partial loan prepayments totaling $18.9$6.0 million in the nine months ended September 30, 2017. We converted a portion of a subordinated debt investment in one portfolio company into an equity investment and recognizedprincipal payments. In addition, we sold $57.1 million of loans, recognizing a net realized lossgain on such conversion totaling $0.3 million. We wrote off equity investments in seven portfolio companies and recognized realized losses on the write-offsthese transactions of $14.0$2.4 million, and wrote offsold $94.7 million of middle-market portfolio company debt investments in four portfolio companiesto one of our joint ventures and recognized realized lossesa gain on the write-offsthese transactions of $22.5$0.5 million. In addition,Lastly, we received proceeds related to the salessale of certainan equity securitiesinvestment totaling $27.5$5.9 million and recognized a net realized gainsloss on such salessale totaling $19.8 million in the nine months ended September 30, 2017.$0.1 million.
During the ninethree months ended September 30, 2016,March 31, 2020, we made six30 new investments totaling $130.2$111.2 million debtand made investments in ten existing portfolio companies totaling $27.8 million and equity investments in nine existing portfolio companies totaling $5.9$20.9 million. We had ten portfolio companynine loans repaid at par totaling $137.4total $41.1 million, resulting in realized gains totaling $0.7received $3.0 million and received normal principal repayments and partial loan prepayments totaling $24.0 million in the nine months ended September 30, 2016. We converted subordinated debt investments in oneof portfolio company into an equity investment and recognizedprincipal payments. In addition, we sold $39.6 million of syndicated senior secured loans, recognizing a net realized loss on such conversion totaling $1.6 million. We wrote off an equity investment in onethese transactions of $0.2 million and sold $30.8 million of middle-market portfolio company and recognized a realized loss on the write-off of $2.0 million and wrote off a debt investment in one portfolio company and recognized a realized loss on the write-off of $16.1 million. In addition,investments to our joint venture. Lastly, we received proceeds related to the sales of certain equity securities totaling $20.8 million and recognized net realized gains on such sales totaling $12.2$0.2 million in the nine months ended September 30, 2016.escrow distributions from two legacy portfolio companies, which were recognized as realized gains.
Total portfolio investment activity for the ninethree months ended September 30, 2017March 31, 2021 and 20162020 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended March 31, 2021: | Senior Debt and 1st Lien Notes | | Subordinated Debt and 2nd Lien Notes | | Structured Products | | Equity Shares | | Equity Warrants | | Investments in Joint Ventures / PE Fund | | Short-term Investments | | Total |
Fair value, beginning of period | $ | 1,171,250,512 | | | $ | 138,767,120 | | | $ | 32,508,845 | | | $ | 44,651,114 | | | $ | 1,300,197 | | | $ | 41,759,922 | | | $ | 65,558,227 | | | $ | 1,495,795,937 | |
New investments | 227,056,942 | | | 14,477,877 | | | — | | | 3,872,210 | | | — | | | 29,500,000 | | | 198,550,029 | | | 473,457,058 | |
Proceeds from sales of investments | (144,892,665) | | | — | | | (6,823,471) | | | (5,971,996) | | | — | | | — | | | (190,541,780) | | | (348,229,912) | |
Loan origination fees received | (4,176,205) | | | (402,163) | | | — | | | — | | | — | | | — | | | — | | | (4,578,368) | |
Principal repayments received | (21,392,290) | | | (10,120,108) | | | (752,526) | | | — | | | — | | | — | | | — | | | (32,264,924) | |
Payment-in-kind interest earned | 828,659 | | | 7,007,695 | | | — | | | — | | | — | | | — | | | — | | | 7,836,354 |
Accretion of loan discounts | 645,409 | | | 1,318,620 | | | 15,758 | | | — | | | — | | | — | | | — | | | 1,979,787 | |
Accretion of deferred loan origination revenue | 1,269,802 | | | 211,236 | | | — | | | — | | | — | | | — | | | — | | | 1,481,038 | |
Realized gain (loss) | 2,206,896 | | 3,140 | | 652,320 | | (50,645) | | — | | — | | 2,698 | | 2,814,409 | |
Unrealized appreciation (depreciation) | 5,380,995 | | (665,456) | | 552,681 | | (2,882,937) | | 134,112 | | 1,316,461 | | (3,498) | | 3,832,358 | |
Fair value, end of period | $ | 1,238,178,055 | | | $ | 150,597,961 | | | $ | 26,153,607 | | | $ | 39,617,746 | | | $ | 1,434,309 | | | $ | 72,576,383 | | | $ | 73,565,676 | | | $ | 1,602,123,737 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended March 31, 2020: | Senior Debt and 1st Lien Notes | | Subordinated Debt and 2nd Lien Notes | | Structured Products | | Equity Shares | | Investment in Joint Venture | | Short-term Investments | | Total |
Fair value, beginning of period | $ | 1,050,863,370 | | | $ | 15,220,969 | | | $ | — | | | $ | 760,716 | | | $ | 10,229,813 | | | $ | 96,568,939 | | | $ | 1,173,643,807 | |
New investments | 118,056,710 | | | 2,160,082 | | | 11,518,233 | | | 403,774 | | | — | | | 221,916,363 | | | $ | 354,055,162 | |
Proceeds from sales of investments | (70,448,795) | | | — | | | — | | | (152,467) | | | — | | | (218,025,496) | | | $ | (288,626,758) | |
Loan origination fees received | (2,684,615) | | | (19,808) | | | — | | | — | | | — | | | — | | | $ | (2,704,423) | |
Principal repayments received | (44,108,598) | | | — | | | — | | | — | | | — | | | — | | | $ | (44,108,598) | |
Accretion of loan discounts | 180,698 | | | 4,465 | | | 3,239 | | | — | | | — | | | — | | | $ | 188,402 | |
Accretion of deferred loan origination revenue | 649,654 | | | 8,351 | | | — | | | — | | | — | | | — | | | $ | 658,005 | |
Realized gain (loss) | (310,445) | | | — | | | — | | | 152,467 | | | — | | | — | | | $ | (157,978) | |
Unrealized depreciation | (113,033,296) | | | (1,389,918) | | | (2,816,526) | | | (121,316) | | | (3,833,223) | | | — | | | $ | (121,194,279) | |
Fair value, end of period | $ | 939,164,683 | | | $ | 15,984,141 | | | $ | 8,704,946 | | | $ | 1,043,174 | | | $ | 6,396,590 | | | $ | 100,459,806 | | | $ | 1,071,753,340 | |
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Nine Months Ended September 30, 2017: | Subordinated Debt and 2nd Lien Notes | | Senior Debt and 1st Lien Notes | | Equity Shares | | Equity Warrants | | Total |
Fair value, beginning of period | $ | 690,159,367 |
| | $ | 191,643,157 |
| | $ | 154,216,657 |
| | $ | 1,888,000 |
| | $ | 1,037,907,181 |
|
New investments | 220,193,495 |
| | 158,635,429 |
| | 12,673,701 |
| | — |
| | 391,502,625 |
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Reclassifications | 22,558,007 |
| | (22,558,007 | ) | | — |
| | — |
| | — |
|
Proceeds from sales of investments | — |
| | — |
| | (27,036,478 | ) | | (479,408 | ) | | (27,515,886 | ) |
Loan origination fees received | (3,471,655 | ) | | (2,262,235 | ) | | — |
| | — |
| | (5,733,890 | ) |
Principal repayments received | (163,054,918 | ) | | (41,159,263 | ) | | — |
| | — |
| | (204,214,181 | ) |
PIK interest earned | 8,033,507 |
| | 841,215 |
| | — |
| | — |
| | 8,874,722 |
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PIK interest payments received | (7,847,417 | ) | | (507,979 | ) | | — |
| | — |
| | (8,355,396 | ) |
Accretion of loan discounts | 411,497 |
| | 54,694 |
| | — |
| | — |
| | 466,191 |
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Accretion of deferred loan origination revenue | 2,798,373 |
| | 1,064,723 |
| | — |
| | — |
| | 3,863,096 |
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Realized gain (loss) | (20,656,958 | ) | | (2,110,952 | ) | | 7,721,145 |
| | (1,983,692 | ) | | (17,030,457 | ) |
Unrealized gain (loss) | (60,127,703 | ) | | (13,161,602 | ) | | (16,454,121 | ) | | 1,171,100 |
| | (88,572,326 | ) |
Fair value, end of period | $ | 688,995,595 |
| | $ | 270,479,180 |
| | $ | 131,120,904 |
| | $ | 596,000 |
| | $ | 1,091,191,679 |
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Weighted average yield on debt investments at end of period(1) | | | | 11.2 | % |
Weighted average yield on total investments at end of period(1) | | | | 9.8 | % |
Weighted average yield on total investments at end of period | | | | 8.3 | % |
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(1) | Excludes non-accrual debt investments |
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Nine Months Ended September 30, 2016: | Subordinated Debt and 2nd Lien Notes | | Senior Debt and 1st Lien Notes | | Equity Shares | | Equity Warrants | | Total |
Fair value, beginning of period | $ | 699,125,083 |
| | $ | 132,929,264 |
| | $ | 141,555,369 |
| | $ | 3,667,000 |
| | $ | 977,276,716 |
|
New investments | 145,487,825 |
| | 3,000,000 |
| | 14,729,826 |
| | 650,000 |
| | 163,867,651 |
|
Reclassifications | 4,020,247 |
| | (4,020,247 | ) | | — |
| | — |
| | — |
|
Proceeds from sales of investments | — |
| | — |
| | (14,838,506 | ) | | (5,627,106 | ) | | (20,465,612 | ) |
Loan origination fees received | (3,165,460 | ) | | (40,000 | ) | | — |
| | — |
| | (3,205,460 | ) |
Principal repayments received | (157,151,997 | ) | | (4,536,285 | ) | | — |
| | — |
| | (161,688,282 | ) |
PIK interest earned | 10,548,903 |
| | 1,083,855 |
| | — |
| | — |
| | 11,632,758 |
|
PIK interest payments received | (7,219,058 | ) | | (236,150 | ) | | — |
| | — |
| | (7,455,208 | ) |
Accretion of loan discounts | 156,879 |
| | 150,202 |
| | — |
| | — |
| | 307,081 |
|
Accretion of deferred loan origination revenue | 3,289,162 |
| | 386,841 |
| | — |
| | — |
| | 3,676,003 |
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Realized gain (loss) | (15,371,087 | ) | | (1,560,322 | ) | | 7,090,358 |
| | 3,153,206 |
| | (6,687,845 | ) |
Unrealized gain (loss) | (10,065,698 | ) | | (168,648 | ) | | 253,619 |
| | 454,900 |
| | (9,525,827 | ) |
Fair value, end of period | $ | 669,654,799 |
| | $ | 126,988,510 |
| | $ | 148,790,666 |
| | $ | 2,298,000 |
| | $ | 947,731,975 |
|
Weighted average yield on debt investments at end of period(1) | | | | 12.3 | % |
Weighted average yield on total investments at end of period(1) | | | | 10.5 | % |
Weighted average yield on total investments at end of period | | | | 10.0 | % |
| |
(1) | Excludes non-accrual debt investments |
Non-Accrual Assets
Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. As of September 30, 2017,March 31, 2021, we had no non-accrual assets. As of December 31, 2020, the fair value of our non-accrual assetsasset was $51.2$3.0 million, which comprised 4.7%0.2% of the total fair value of our portfolio, and the cost of our non-accrual assetsasset was $165.7$3.0 million, which comprised 13.4% of the total cost of our portfolio. As of December 31, 2016, the fair value of our non-accrual assets was $15.9 million, which comprised 1.5% of the total fair value of our portfolio, and the cost of our non-accrual assets was $38.4 million, which comprised 3.5%0.2% of the total cost of our portfolio.
Our non-accrual assets as of September 30, 2017 were as follows:
Cafe Enterprises, Inc.
During the three months ended June 30, 2017, we placed our subordinated debt investment in Cafe Enterprises, Inc., or Cafe, on PIK non-accrual status. During the three months ended June 30, 2017, we invested approximately $1.5 million in a second lien term note in order to provide liquidity to support Cafe. In September 2017, we placed our debt investments in Cafe on non-accrual status effective with the quarterly payments due September 30, 2017. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investments in Cafe for financial reporting purposes. As of September 30, 2017, the cost of our debt investments in Cafe was $15.7 million and the fair value of such investments was $4.3 million.
Community Intervention Services, Inc.
In June 2017, we placed our debt investment in Community Intervention Services, Inc., or Community, on non-accrual status effective with the quarterly payment due June 30, 2017. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investment in Community for financial reporting purposes. As of September 30, 2017, the cost of our debt investment in Community was $17.7 million and the fair value of such investment was $3.7 million.
CRS Reprocessing, LLC
On August 7, 2017, CRS Reprocessing, LLC, or CRS, filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. As a result, we placed our debt investments in CRS on non-accrual status and under U.S. GAAP, we no longer recognize interest income on our debt investments in CRS for financial reporting purposes. As of September 30, 2017, the cost of our debt investments in CRS was $21.3 million and the fair value of such investments was $7.8 million.
DialogDirect, Inc.
In March 2017, we placed our debt investments in DialogDirect, Inc., or Dialog, on non-accrual status effective with the monthly payments due January 31, 2017. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investments in Dialog for financial reporting purposes. As of September 30, 2017, the cost of our debt investments in Dialog was $20.0 million and the fair value of such investments was $10.2 million.
DPII Holdings, LLC
During the three months ended March 31, 2016, we placed our Tranche I & II subordinated debt investments in DPII Holdings, LLC, or Datapath, on PIK non-accrual status. During the three months ended June 30, 2016, we invested approximately $1.6 million in a Tranche III subordinated debt investment in order to provide liquidity to support Datapath. This Tranche III subordinated debt investment bears interest at a rate of 0% Cash and 19% PIK. In the three months ended June 30, 2016, we placed both our Tranche I & II subordinated debt investments and our Tranche III subordinated debt investment in Datapath on full non-accrual status. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investments in Datapath for financial reporting purposes. As of September 30, 2017, the cost of our debt investments in Datapath was $5.0 million and the fair value of such investments was $2.7 million.
Eckler's Holdings, Inc.
During the three months ended June 30, 2017, we placed our subordinated debt investment in Eckler's Holdings, Inc., or Eckler's, on PIK non-accrual status. During the three months ended June 30, 2017, we invested approximately $0.7 million in subordinated debt in order to provide liquidity to support Eckler's. In September 2017, we placed our debt investment in Eckler's on non-accrual status effective with the quarterly payment due September 30, 2017. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investment in Eckler's for financial reporting purposes. As of September 30, 2017, the cost of our debt investment in Eckler's was $13.2 million and the fair value of such investment was $3.1 million.
Frank Entertainment Group, LLC
In September 2017, we placed our debt investments in Frank Entertainment Group, LLC, or Frank, on non-accrual status effective with the monthly payments due July 31, 2017. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investments in Frank for financial reporting purposes. As of September 30, 2017, the cost of our debt investments in Frank was $12.6 million and the fair value of such investments was $6.2 million.
FrontStream Holdings, LLC
In September 2017, we placed our debt investment in FrontStream Holdings, LLC, or Frontstream, on non-accrual status effective with the quarterly payment due September 30, 2017. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investment in Frontstream for financial reporting purposes. As of September 30, 2017, the cost of our debt investment in Frontstream was $14.3 million and the fair value of such investment was $7.3 million.
GST AutoLeather, Inc.
On October 3, 2017, GST AutoLeather, Inc., or GST, filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. As a result, we placed our debt investment in GST on non-accrual status effective with the quarterly payment due September 30, 2017 and under U.S. GAAP, we no longer recognize interest income on our debt investment in GST for financial reporting purposes. As of September 30, 2017, the cost of our debt investment in GST was $23.1 million and the fair value of such investment was $2.5 million.
Media Storm, LLC.
In September 2017, we placed our debt investment in Media Storm, LLC, or Media Storm, on non-accrual status effective with the quarterly payment due September 30, 2017. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investment in Media Storm for financial reporting purposes. As of September 30, 2017, the cost of our debt investment in Media Storm was $6.5 million and the fair value of such investment was $3.6 million.
Women's Marketing, Inc.
During the three months ended September 30, 2016, we placed our debt investment in Women's Marketing, Inc., or Women's Marketing, on PIK non-accrual status. In December 2016, we placed our debt investment in Women's Marketing on non-accrual status effective with the monthly payment due November 30, 2016. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investment in Women's Marketing for financial reporting purposes. As of September 30, 2017, the cost of our debt investment in Women's Marketing was $16.1 million and the fair value of such investment was zero.
Results of Operations
Comparison of three months ended September 30, 2017 and September 30, 2016
Investment Income
For the three months ended September 30, 2017, total investment income was $29.9 million,March 31, 2021 and March 31, 2020
Operating results for the three months ended March 31, 2021 and 2020 were as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | | | |
| March 31, 2021 | | March 31, 2020 | | | | |
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Total investment income | $ | 30,593,231 | | | $ | 18,679,598 | | | | | |
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Total operating expenses | 16,237,135 | | | 11,385,529 | | | | | |
Net investment income | 14,356,096 | | | 7,294,069 | | | | | |
Income taxes, including excise tax benefit | (18,038) | | | — | | | | | |
Net investment income after taxes | 14,374,134 | | | 7,294,069 | | | | | |
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Net realized gains (losses) | 1,839,580 | | | (302,372) | | | | | |
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Net unrealized appreciation (depreciation) | 6,274,155 | | | (119,396,053) | | | | | |
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Loss on extinguishment of debt | — | | | (137,390) | | | | | |
Benefit from taxes | 410 | | | 19,999 | | | | | |
Net increase (decrease) in net assets resulting from operations | $ | 22,488,279 | | | $ | (112,521,747) | | | | | |
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Net increases or decreases in net assets resulting from operations can vary substantially from period to period due to various factors, including recognition of realized gains and losses and unrealized appreciation and depreciation. As a 9.0% increaseresult, quarterly comparisons of net changes in net assets resulting from $27.4 million of totaloperations may not be meaningful.
Investment Income
| | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | | | |
| March 31, 2021 | | March 31, 2020 | | | | |
Investment income: | | | | | | | |
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Interest income | $ | 25,214,241 | | | $ | 17,674,402 | | | | | |
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Dividend income | 71,500 | | | — | | | | | |
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Fee and other income | 2,133,175 | | | 960,993 | | | | | |
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Payment-in-kind interest income | 3,173,787 | | | 43,572 | | | | | |
Interest income from cash | 528 | | | 631 | | | | | |
Total investment income | $ | 30,593,231 | | | $ | 18,679,598 | | | | | |
The change in investment income for the three months ended September 30, 2016. This increaseMarch 31, 2021, as compared to the three months ended March 31, 2020, was primarily attributabledue to an increase in portfoliothe average size of our portfolio. The amount of our outstanding debt investments from September 30, 2016was $1,451.9 million as of March 31, 2021, as compared to September 30, 2017 and a $0.6$1,119.9 million as of March 31, 2020, which increase is in non-recurring fee income, partially offset by a $0.1 million decrease in non-recurring dividend income, a decrease in PIK interest incomepart due to a decreasethe acquisition of investment assets in PIK yieldingthe MVC Acquisition. The weighted average yield on the principal amount of our outstanding debt investments from September 30, 2016was 7.2% as of March 31, 2021, as compared to September 30, 20175.8% as of March 31, 2020.
Operating Expenses
| | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | | | |
| March 31, 2021 | | March 31, 2020 | | | | |
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Operating expenses: | | | | | | | |
Interest and other financing fees | $ | 7,284,709 | | | $ | 6,004,133 | | | | | |
Base management fees | 3,929,251 | | | 3,912,373 | | | | | |
Incentive management fees | 2,721,741 | | | — | | | | | |
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Compensation expenses | — | | | 48,410 | | | | | |
General and administrative expenses | 2,301,434 | | | 1,420,613 | | | | | |
Total operating expenses | $ | 16,237,135 | | | $ | 11,385,529 | | | | | |
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Interest and a $3.5 million decrease in investment income relating to non-accrual assetsOther Financing Fees
Interest and PIK non-accrual assets. Non-recurring fee income was $1.9 million forother financing fees during the three months ended September 30, 2017,March 31, 2021 were attributable to borrowings under the February 2019 Credit Facility, the August 2025 Notes, the November Notes and the February Notes (each as compared to $1.2 million fordefined below under “Liquidity and Capital Resources”). Interest and other financing fees during the three months ended September 30, 2016. Non-recurring dividend income was $0.2March 31, 2020 were attributable to borrowings under Barings BDC Senior Funding I, LLC’s credit facility entered into in August 2018 with Bank of America, N.A. (the “August 2018 Credit Facility”), the February 2019 Credit Facility and our May 2019 $449.3 million for the three months ended September 30, 2017, as compared to $0.3 million for the three months ended September 30, 2016term debt securitization (the “Debt Securitization”).
Operating Expenses
For the three months ended September 30, 2017, operating expenses increased by 10.0% to $12.7 million from $11.6 million for the three months ended September 30, 2016. Our operating expenses consist of interest and other financing fees, compensation expenses and general and administrative expenses.
For the three months ended September 30, 2017, interest and other financing fees increased by 9.4% to $7.4 million from $6.8 million for the three months ended September 30, 2016. The increase in interest and other financing fees for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, was primarily relatedattributable to the issuance of the August 2025 Notes, the November Notes and the February Notes and increased borrowings under our third amendedthe February 2019 Credit Facility, partially offset by the repayment of the Debt Securitization and restated senior secured credit facility, as amended on May 1, 2017, or the repayment of the borrowings under the August 2018 Credit Facility.
Compensation expensesBase Management Fees
Under the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement), we pay Barings a base management fee (the “Base Management Fee”), quarterly in arrears on a calendar quarter basis. The Base Management Fee is calculated based on the average value of our gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are primarily influenced by headcountbeing calculated. Base Management Fees for any partial month or quarter are appropriately pro-rated. See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Amended and levelsRestated Advisory Agreement (and, prior to January 1, 2021, the terms of business activity. Our compensation expenses include salaries, discretionary compensation, equity-based compensation and benefits. Discretionary compensation is significantly impacted by our level of total investment income, our investment results including investment realizations, prevailing labor marketsthe Original Advisory Agreement) and the external environment. As a result of thesefee arrangements thereunder. For both the three months ended March 31, 2021 and other factors, our compensation expenses can fluctuate materially from period to period. Accordingly,March 31, 2020, the amount of compensation expenses recognized in any particular period may not be indicative of compensation expenses in a future period.
Base Management Fee incurred was approximately $3.9 million. For the three months ended September 30, 2017, compensation expenses increased by 9.1% to $4.3 million from $4.0 millionMarch 31, 2021 and March 31, 2020, the Base Management Fee rate was 1.250% and 1.375%, respectively. Although the Base Management Fee rate decreased for the three months ended September 30, 2016.March 31, 2021 versus March 31, 2020, the average value of gross assets increased from $1,138.1 million as of the end of the two most recently completed calendar quarters prior to March 31, 2020 to $1,257.4 million as of the end of the two most recently completed calendar quarters prior to March 31, 2021, which resulted in a slight increase in fees between periods.
Incentive Fee (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement)
Under the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement), we pay Barings an incentive fee. A portion of the incentive fee is based on our income and a portion is based on our capital gains. The income-based fee will be determined and paid quarterly in arrears based on the amount by which (x) the aggregate pre-incentive fee net investment income in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after January 1, 2021, as the case may be (or the appropriate portion thereof in the case of any of our first eleven calendar quarters that commences on or after January 1, 2021) exceeds (y) the hurdle amount as calculated for the same period. See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Amended and Restated Advisory Agreement and the fee arrangements thereunder. For the three months ended September 30, 2017,March 31, 2021, the amount of income-based fee incurred was $2.7 million.
General and Administrative Expenses
We entered into the Administration Agreement with Barings in August 2018. Under the terms of the Administration Agreement, Barings performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operations. We will reimburse Barings for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to by us and Barings quarterly in arrears; provided that the agreed-upon quarterly expense amount will not exceed the amount of expenses that would otherwise be reimbursable by us under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount. See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the Administration Agreement. For the three months ended March 31, 2021, the amount of administration expense incurred and invoiced by Barings for expenses was approximately $0.5 million. For the three months ended March 31, 2020, the amount of administration expense incurred and invoiced by the Adviser for expenses was approximately $0.4 million. In addition to expenses incurred under the Administration Agreement, general and administrative expenses increased by 18.5% to $1.0 million from $0.9 million forinclude Board fees, D&O insurance costs, as well as legal and accounting expenses.
Net Realized Gains (Losses)
Net realized gains (losses) during the three months ended September 30, 2016.March 31, 2021 and 2020 were as follows:
In addition, our efficiency ratio (defined as the sum of compensation expenses and general and administrative expenses as a percentage of total investment income) increased to 17.9% for the three months ended September 30, 2017 from 17.6% for the three months ended September 30, 2016. | | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | | | |
| March 31, 2021 | | March 31, 2020 | | | | |
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Net realized gain (losses): | | | | | | | |
Non-Control / Non-Affiliate investments | $ | 2,891,040 | | | $ | (157,978) | | | | | |
Affiliate investments | (76,631) | | | — | | | | | |
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Net realized gains (losses) on investments | 2,814,409 | | | (157,978) | | | | | |
Foreign currency transactions | (974,829) | | | (144,394) | | | | | |
Net realized gains (losses) | $ | 1,839,580 | | | $ | (302,372) | | | | | |
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Net Investment Income
As a result of the $2.5 million increase in total investment income and the $1.2 million increase in operating expenses, net investment income increased by 8.3% to $17.2 million for the three months ended September 30, 2017 as compared to $15.8 million for the three months ended September 30, 2016.
Net Increase/Decrease in Net Assets Resulting from Operations
In the three months ended September 30, 2017,March 31, 2021, we recognized net realized gains totaling $1.8 million, which consisted primarily of a net gain on our loan portfolio of $2.8 million partially offset by a net loss on foreign currency transactions of $1.0 million. In the three months ended March 31, 2020, we recognized net realized losses totaling $8.9$0.3 million, which consisted primarily of a net loss on the write-offour loan portfolio of one control investment totaling $8.5 million, a net loss on the write-off of one affiliate investment totaling $6.1$0.3 million and a net loss on the write-offforeign currency transactions of one non-control/non-affiliate investments totaling $2.0$0.1 million, partially offset by net gains$0.2 million in escrow distributions we received from the sale of five non-control/non-affiliate investments totaling $6.1 million, and a net gain from the sale of one affiliate investment totaling $1.7 million. In addition,two legacy portfolio companies, which were recognized as realized gains.
Net Unrealized Appreciation (Depreciation)
Net unrealized appreciation (depreciation) during the three months ended September 30, 2017,March 31, 2021 and 2020 was as follows:
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| Three Months Ended | | Three Months Ended | | | | |
| March 31, 2021 | | March 31, 2020 | | | | |
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Net unrealized appreciation (depreciation): | | | | | | | |
Non-Control / Non-Affiliate investments | $ | 5,357,095 | | | $ | (117,361,056) | | | | | |
Affiliate investments | 2,444,697 | | | (3,833,223) | | | | | |
Control investments | (3,969,434) | | | — | | | | | |
Net unrealized appreciation (depreciation) on investments | 3,832,358 | | | (121,194,279) | | | | | |
Credit support agreement | (1,600,000) | | | — | | | | | |
Foreign currency transactions | 4,041,797 | | | 1,798,226 | | | | | |
Net unrealized appreciation (depreciation) | $ | 6,274,155 | | | $ | (119,396,053) | | | | | |
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During the three months ended March 31, 2021, we recorded net unrealized appreciation totaling $6.3 million, consisting of net unrealized appreciation on our current portfolio of $6.4 million and unrealized appreciation related to foreign currency transactions of $4.0 million, net of unrealized depreciation of $1.6 million on the credit support agreement with Barings and net of unrealized depreciation reclassification adjustments of $2.6 million related to the net realized gains on the sales / repayments of certain investments. The net unrealized appreciation on our current portfolio of $6.4 million was driven primarily by broad market moves for investments of $13.8 million, partially offset by depreciation from the credit or fundamental performance of investments of $3.0 million and the impact of foreign currency exchange rates on investments of $4.4 million.
During the three months ended March 31, 2020, we recorded net unrealized depreciation totaling $65.8$119.4 million, consisting of net unrealized depreciation on our current portfolio of $74.5$121.6 million, and partially offset by net unrealized
appreciation related to foreign currency transactions of $1.8 million and net unrealized appreciation reclassification adjustments of $8.8$0.4 million related to the realized gains and losses noted above.
In the three months ended September 30, 2016, we recognizednet realized losses totaling $11.2 million, which consisted primarily of a net loss on the write-off of one non-control/non-affiliate investment totaling $16.1 million, partially offset by net gains on the sales / repayments of four non-control/non-affiliate investments totaling $4.9 million. In addition, during the three months ended
September 30, 2016, we recorded net unrealized appreciation totaling $3.2 million, consisting ofcertain syndicated secured loans. The net unrealized depreciation on ourthe Company’s current portfolio of $9.0$121.6 million was driven by broad market moves for liquid syndicated secured loans and structured product investments totaling $82.6 million, broad market moves for middle-market debt investments of $25.5 million, the credit or fundamental performance of middle-market debt investments totaling $8.2 million, the impact of foreign currency exchange rates on middle-market debt investments of $1.3 million, and net unrealized appreciation reclassification adjustments of $12.2 million related to the realized gains and losses noted above.
As a result of these events, our net decrease in net assets resulting from operations was $57.5 million for the three months ended September 30, 2017, as compared to a net increase in net assets resulting from operations of $7.9 million for the three months ended September 30, 2016.
Comparison of nine months ended September 30, 2017 and September 30, 2016
Investment Income
For the nine months ended September 30, 2017, total investment income was $91.3 million, a 10.7% increase from $82.5 million of total investment income for the nine months ended September 30, 2016. This increase was primarily attributable to an increase in portfolio debt investments from September 30, 2016 to September 30, 2017 and a $1.9 million increase in non-recurring dividend income, partially offset by a $0.8 million decrease in non-recurring fee income, a decrease in PIK interest income due to a decrease in PIK yielding investments from September 30, 2016 to September 30, 2017 and a $5.1 million decrease in investment income relating to non-accrual assets and PIK non-accrual assets. Non-recurring fee income was $3.7 million for the nine months ended September 30, 2017 as compared to $4.5 million for the nine months ended September 30, 2016. Net non-recurring dividend income was $1.6 million for the nine months ended September 30, 2017 as compared to $(0.3) million for the nine months ended September 30, 2016. Our net negative non-recurring dividend income during the nine months ended September 30, 2016 consisted of non-recurring dividend income of approximately $0.9 million and a negative true-up adjustment of $1.3 million related to a portfolio company distribution that was received in 2015. In 2015, we received information that indicated that the tax character of the distribution was 100% dividend income, but received updated information in 2016 indicating that only 14% of the distribution was dividend income and the remainder was a return of capital, which necessitated the adjustment.
Operating Expenses
For the nine months ended September 30, 2017, operating expenses decreased by 9.2% to $37.0 million from $40.7 million for the nine months ended September 30, 2016. Our operating expenses consist of interest and other financing fees, compensation expenses and general and administrative expenses.
For the nine months ended September 30, 2017, interest and other financing fees increased by 6.9% to $21.4 million from $20.0 million for the nine months ended September 30, 2016. The increase in interest and other financing fees was related primarily to interest and fee amortization of $0.5 milliondepreciation on the incremental $25.0 millionCompany’s total equity and joint venture investments of borrowings outstanding under our SBA-guaranteed debentures and an increase of $0.8 million related to increased borrowings under our Credit Facility.$4.0 million.
For the nine months ended September 30, 2017, compensation expenses decreased by 30.6% to $12.1 million from $17.5 million for the nine months ended September 30, 2016. The higher level of compensation expenses in the nine months ended September 30, 2016 was primarily related to one-time expenses associated with the retirement of our former Chief Executive Officer, Garland S. Tucker, III, from his officer positions in February 2016. Our Board of Directors awarded Mr. Tucker a $2.5 million cash bonus and accelerated the vesting of his outstanding shares of restricted stock, including 47,000 shares of restricted stock awarded to him in February 2016 based on his performance during 2015, and certain other compensation in connection with his retirement and in recognition of his long service. We recognized $5.5 million in one-time compensation expenses in the nine months ended September 30, 2016 associated with Mr. Tucker's retirement.
For the nine months ended September 30, 2017, general and administrative expenses increased by 7.4% to $3.4 million from $3.2 million for the nine months ended September 30, 2016.
In addition, our efficiency ratio (defined as the sum of compensation expenses and general and administrative expenses as a percentage of total investment income) decreased to 17.0% for the nine months ended September 30, 2017 from 25.1% for the nine months ended ended September 30, 2016.
Net Investment Income
As a result of the $8.8 million increase in total investment income and the $3.8 million decrease in operating expenses, net investment income increased by 30.1% to $54.3 million for the nine months ended September 30, 2017 as compared to $41.8 million for the nine months ended September 30, 2016.
Net Increase/Decrease in Net Assets Resulting from Operations
In the nine months ended September 30, 2017, we recognized realized losses totaling $17.0 million, which consisted primarily of net losses on the write-offs of two control investments totaling $13.0 million, a net loss on the write-off of one affiliate investment totaling $6.1 million and net losses on the restructurings/write-offs of five non-control/non-affiliate investments totaling $17.7 million, partially offset by net gains on the sales of twelve non-control/non-affiliate investments totaling $14.6 million and net gains on the sales of five affiliate investments totaling $5.1 million. In addition, during the nine months ended September 30, 2017, we recorded net unrealized depreciation totaling $89.3 million consisting of net unrealized depreciation on our current portfolio of $108.0 million and net unrealized appreciation reclassification adjustments of $18.7 million related to the realized gains and losses noted above.
In the nine months ended September 30, 2016, we recognized realized losses totaling $6.7 million, which consisted primarily of net losses on the the write-off/sales of four affiliate investments totaling $1.7 million, a loss on the restructuring of one non-control/non-affiliate investment totaling $1.6 million and a loss on the write-off of one non-control/non-affiliate investment totaling $16.1 million, partially off-set by net gains on the sales/repayments of fourteen non-control/non-affiliate investments totaling $12.7 million. In addition, during the nine months ended September 30, 2016, we recorded net unrealized depreciation totaling $8.1 million, consisting of net unrealized depreciation on our current portfolio of $15.7 million and net unrealized appreciation reclassification adjustments of $7.5 million related to the realized gains and losses noted above.
As a result of these events, our net decrease in net assets resulting from operations was $52.3 million for the nine months ended September 30, 2017, as compared to a net increase in net assets resulting from operations of $27.0 million for the nine months ended September 30, 2016.
Liquidity and Capital Resources
We believe that our current cash and cash equivalents on hand, our short-term investments, our available borrowing capacity under our $800 million senior secured revolving credit facility with ING Capital LLC (as amended, restated and otherwise modified from time to time, (the "February 2019 Credit Facility") and the Credit FacilityAugust 2020 NPA (as defined below under "Financing Transactions") and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months.
In This “Liquidity and Capital Resources” section should be read in conjunction with “COVID-19 Developments” above, as well as with the future, depending on the valuation of Triangle SBIC’s assets, Triangle SBIC II's assets and Triangle SBIC III’s assets pursuantnotes to SBA guidelines, Triangle SBIC, Triangle SBIC II and Triangle SBIC III may be limited by provisions of the Small Business Investment Act of 1958, as amended, or the Small Business Investment Act, and SBA regulations governing SBICs, from making certain distributions to Triangle Capital Corporation that may be necessary to enable Triangle Capital Corporation to make the minimum required distributions to its stockholders and qualify as a regulated investment company, or RIC.our Unaudited Consolidated Financial Statements.
Cash Flows
For the ninethree months ended September 30, 2017,March 31, 2021, we experienced a net decrease in cash and cash equivalents in the amount of $26.1$52.0 million. During that period, our operating activities used $102.2$85.1 million in cash, consisting primarily of newpurchases of portfolio investments of $391.5$276.5 million and purchases of short-term investments of $198.6 million, partially offset by repayments received from portfolio companies and proceeds from sales of portfolio investments totaling $188.2 million and sales of approximately $231.7short-term investments of $190.5 million. In addition, our financing activities increasedprovided $33.1 million of cash, consisting of net proceeds of $149.8 million from the issuance of the February Notes (as defined below under “Financing Transactions”), partially offset by $76.2 million, consisting primarily of proceeds from our public stock offering of $132.0 million and net borrowingsrepayments under the February 2019 Credit Facility of $12.5$104.3 million partially offset by cashand dividends paid in the amount of $62.7$12.4 million. As of September 30, 2017,March 31, 2021, we had $81.0$40.5 million of cash and cash equivalentsforeign currencies on hand.
For the ninethree months ended September 30, 2016,March 31, 2020, we experienced a net increasedecrease in cash and cash equivalents in the amount of $115.7$14.5 million. During that period, our operating activities provided $55.8$36.0 million in cash, consisting primarily of repayments received from portfolio companies and proceeds from sales of portfolio investments totaling $155.9 million and sales of approximately $182.2short-term investments of $218.0 million, partially offset by newpurchases of portfolio investments of $163.9$123.2 million and purchases of short-term investments of $221.9 million. In addition, our financing activities increasedused $50.5 million of cash, by $60.0 million, consisting primarily of proceeds fromnet repayments under the public stock offeringAugust 2018 Credit Facility and the February 2019 Credit Facility of $129.1$10.9 million, and borrowings under SBA-guaranteed debenturesrepayments of $32.8the Debt Securitization of $27.0 million, partially offset by cashshare repurchases of $4.8 million and dividends paid in the amount of $49.1 million, net repayments under the Credit Facility of $40.4 million and the repayment of our SBA-guaranteed Low or Moderate Income debenture of $7.8 million. As of September 30, 2016,March 31, 2020, we had $168.3$7.5 million of cash and cash equivalentsforeign currencies on hand.
Financing Transactions
Due to Triangle SBIC’s, Triangle SBIC II's and Triangle SBIC III’s status as licensed SBICs, Triangle SBIC, Triangle SBIC II and Triangle SBIC III have the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the Small Business Investment Act and the SBA rules applicable to SBICs, an SBIC (or group of SBICs under common control) can have outstanding at any time debentures guaranteed by the SBA up to two times (and in certain cases, up to three times) theFebruary 2019 Credit Facility
amount of its regulatory capital, which generally is the amount raised from private investors. The maximum statutory limit on the dollar amount of outstanding debentures guaranteed by the SBA issued by a single SBIC is currently $150.0 million and by a group of SBICs under common control is $350.0 million. Debentures guaranteed by the SBA have a maturity of ten years, with interest payable semi-annually. The principal amount of the debentures is not required to be paid before maturity but may be prepaid at any time, without penalty. As a result of its guarantee of our SBA-guaranteed debentures, the SBA has fixed-dollar claims on the assets of Triangle SBIC, Triangle SBIC II and Triangle SBIC III that are superior to the claims of our security holders.
As of September 30, 2017, Triangle SBIC had issued the maximum $150.0 million of SBA-guaranteed debentures and Triangle SBIC II had issued $100.0 million of SBA-guaranteed debentures, leaving borrowing capacity of a maximum of $100.0 million of SBA-guaranteed debentures for Triangle SBIC III. In addition to the one-time 1.0% fee on the total commitment from the SBA, we also pay a one-time 2.425% fee on the amount of each debenture issued. These fees are capitalized as deferred financing costs and are amortized over the term of the debt agreements using the effective interest method. The weighted average interest rate for all SBA-guaranteed debentures as of September 30, 2017 was 3.90%. As of both September 30, 2017 and December 31, 2016, all SBA-guaranteed debentures were pooled.
In May 2015,On February 21, 2019, we entered into the February 2019 Credit Facility which was(as subsequently amended in May 2017.December 2019), with ING Capital LLC (“ING”), as administrative agent, and the lenders party thereto. The amendment, among other things, increasedinitial commitments from $300.0 million to $435.0 million and extendedunder the maturity by two years. The revolving period of theFebruary 2019 Credit Facility ends April 30, 2021 followed by a one-year amortization period with a final maturity date of April 30, 2022. We have the ability to borrow in both United States dollars as well as foreign currencies under the Credit Facility.total $800.0 million. The Credit Facility, which is structured to operate like a revolving credit facility, is secured primarily by our assets, excluding the assets of our wholly-owned SBIC subsidiaries. TheFebruary 2019 Credit Facility has an accordion feature that allows for an increase in the total borrowing sizecommitments by up to $550.0$400.0 million, subject to certain conditions and the satisfaction of specified financial covenants. Using this accordion feature, in July 2017, we increased our commitmentsWe can borrow foreign currencies directly under the February 2019 Credit Facility. The February 2019 Credit Facility, from $435.0 million to $465.0 million,which is structured as a revolving credit facility, is secured primarily by a material portion of our assets and in September 2017, we again increasedguaranteed by certain of our commitments undersubsidiaries. Following the termination of the August 2018 Credit Facility from $465.0 million to $480.0 million.on June 30, 2020, Barings BDC Senior Funding I, LLC became a subsidiary guarantor and its assets will secure the February 2019 Credit Facility. The revolving period of the February 2019 Credit Facility ends on February 21, 2023, followed by a one-year repayment period with a final maturity date of February 21, 2024.
Borrowings under the February 2019 Credit Facility bear interest, subject to our election, on a per annum basis equal to (i) the applicable base rate plus 1.75%1.00% (or 1.50%1.25% if we receiveno longer maintain an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.75%2.00% (or 2.50%2.25% if we receiveno longer maintain an investment grade credit rating) or, (iii) for borrowings denominated in Canadiancertain foreign currencies other than Australian dollars, the applicable Canadian Dealer Offeredcurrency rate for the foreign currency as defined in the credit agreement plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating), or (iv) for borrowings denominated in Australian dollars, the applicable Australian dollars Screen Rate, plus 2.75%2.20% (or 2.50%2.45% if we receiveno longer maintain an investment grade credit rating). The applicable base rate is equal to the greatergreatest of (i) the prime rate, (ii) the federal funds rate plus 0.5% or, (iii) the Overnight Bank Funding Rate plus 0.5%, (iv) the adjusted one-month LIBOR three-month applicable currency rate
plus 2.0%1.0% and (v) 1.0%. The applicable LIBOR rate dependsand currency rates depend on the currency and term of the draw under the February 2019 Credit Facility. WeFacility, and cannot be less than zero.
In addition, we pay a commitment fee of 1.00%(i) 0.5% per annum on undrawn amounts if the usedunused portion of the February 2019 Credit Facility is lessgreater than or equal to 25.0%two-thirds of total commitments or (ii) 0.375% per annum on undrawn amounts if the usedunused portion of the February 2019 Credit Facility is greaterequal to or less than 25.0%two-thirds of total commitments. In connection with entering into the February 2019 Credit Facility, we incurred financing fees of approximately $6.4 million, which will be amortized over the life of the February 2019 Credit Facility.
As of September 30, 2017,March 31, 2021, we were in compliance with all covenants under the February 2019 Credit Facility and had United StatesU.S. dollar borrowings of $124.3$357.0 million outstanding under the Credit Facility with an interest rate of 3.99% and non-United States dollar borrowings denominated in Canadian dollars of $21.0 million ($16.8 million in United States dollars) outstanding under theFebruary 2019 Credit Facility with a weighted average interest rate of 4.06%2.125% (weighted average one month LIBOR of 0.125%), borrowings denominated in Swedish kronas of 12.8kr million ($1.5 million U.S. dollars) with an interest rate of 2.000% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £85.3 million ($117.7 million U.S. dollars) with an interest rate of 2.063% (one month GBP LIBOR of 0.063%), borrowings denominated in Australian dollars of A$36.6 million ($27.9 million U.S. dollars) with an interest rate of 2.250% (one month AUD Screen Rate of 0.050%) and borrowings denominated in Euros of €91.1 million ($107.1 million U.S. dollars) with an interest rate of 2.000% (one month EURIBOR of 0.000%). The borrowings denominated in Canadian dollars areforeign currencies were translated into United StatesU.S. dollars based on the spot rate at eachthe relevant balance sheet date. The impact resulting from changes in foreign exchange rates on the February 2019 Credit Facility borrowings is included in "Net unrealized appreciation (depreciation) on- foreign currency borrowingstransactions" in the our Unaudited Consolidated Statements of Operations. The borrowings denominated in Canadian dollars may be positively or negatively affected by movements in the rate of exchange between the United States dollar and the Canadian dollar. This movement is beyond our control and cannot be predicted.
The fair values of the borrowings outstanding under the February 2019 Credit Facility contains certain affirmativeare based on a market yield approach and negative covenants, including but not limitedcurrent interest rates, which are Level 3 inputs to (i) maintaining a minimum interest coverage ratio, (ii) maintaining a minimum consolidated tangible net worth, (iii) maintaining a minimum asset coverage ratio and (iv) maintaining our status as a RIC and as a BDC. Thethe market yield model. As of March 31, 2021, the total fair value of the borrowings outstanding under the February 2019 Credit Facility also contains customary events of default with customary cure and notice provisions, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-defaultwas $611.1 million. See Note 5 to other indebtedness, bankruptcy, change of control, and material adverse effect. The Credit Facility also permits Branch Banking and Trust Company,our Unaudited Consolidated Financial Statements for additional information regarding the administrative agent, to select an independent third-party valuation firm to determine valuations of certain portfolio investments for purposes of borrowing base provisions. In connection with the Credit Facility, we also entered into collateral documents. As of September 30, 2017, we were in compliance with all covenants of theFebruary 2019 Credit Facility.
In October 2012,August 2025 Notes
On August 3, 2020, we issued $70.0entered into a Note Purchase Agreement (the “August 2020 NPA”) with Massachusetts Mutual Life Insurance Company governing the issuance of (1) $50.0 million in aggregate principal amount of Series A senior unsecured notes due December 2022, or the December 2022August 2025 (the “Series A Notes and in November 2012, we issued $10.5 million of December 2022 Notes pursuant to the exercise of an over-allotment option. The December 2022 Notes mature on December 15, 2022, and may be redeemed in whole or in part at any time or from time to
time at our option. The December 2022 Notes beardue 2025”) with a fixed interest at a rate of 6.375%4.66% per year, payable quarterly on March 15, June 15, September 15 and December 15(2) up to $50.0 million in aggregate principal amount of each year, beginning December 15, 2012.
In February 2015, we issued $86.3 million ofadditional senior unsecured notes due March 2022, orAugust 2025 with a fixed interest rate per year to be determined (the “Additional Notes” and, collectively with the March 2022 Notes. The March 2022Series A Notes due 2025, the “August 2025 Notes”), in each case, to qualified institutional investors in a private placement. An aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 29, 2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such date by us in accordance with their terms. Interest on the August 2025 Notes will be due semiannually in March 15, 2022 and September, beginning in March 2021. In addition, we are obligated to offer to repay the August 2025 Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the August 2020 NPA, we may be redeemedredeem the August 2025 Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or after March 15, 2018.before November 3, 2024, a make-whole premium. The March 2022August 2025 Notes bear interest at a rateare guaranteed by certain of 6.375% per year payable quarterly on March 15, June 15, September 15our subsidiaries, and December 15are our general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
On November 4, 2020, we amended the August 2020 NPA to reduce the aggregate principal amount of each year, beginning March 15, 2015. The net proceedsunissued Additional Notes from the sale of the March 2022 Notes, after underwriting discounts and offering expenses, were $83.4$50.0 million to $25.0 million.
The indentureAugust 2020 NPA contains certain representations and related supplements thereto relating towarranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the December 2022 Notes and the March 2022 Notes contain certain covenants, including but not limited to (i) a requirement that we comply with the asset coverage requirementmeaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The August 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or any successor provisions, after giving effect to any exemptive relief granted to us by the SEC, (ii) a requirement that we will not declare any cash dividend, or declare any other cash distribution, upon a class of our capital stock, or purchase any such capital stock, unless,subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in every such case,principal amount of the August 2025 Notes at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, we have an asset coverage (as defined in the 1940 Act) of at least 200% after deducting the amount of such dividend, distribution or purchase price, as the caseoutstanding may declare all August 2025 Notes then outstanding to be giving effect to any exemptive relief granted to us by the SEC,immediately due and (iii) a requirement that we provide financial information to the holders of the notes and the trustee under the indenture if we should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, or the Exchange Act.payable. As of September 30, 2017 and DecemberMarch 31, 2016,2021, we were in compliance with all covenants under the August 2020 NPA.
The August 2025 Notes were offered in reliance on Section 4(a)(2) of the December 2022Securities Act of 1933, as amended (the “Securities Act”). The August 2025 Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of March 31, 2021, the fair value of the outstanding August 2025 Notes was $50.0 million. The fair value determination of the August 2025 Notes was based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
November Notes
On November 4, 2020, we entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes,” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/or (y) 1.50% per year, to the extent the ratio of our secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The November Notes were delivered and paid for on November 5, 2020.
The Series B Notes will mature on November 4, 2025, and the Series C Notes will mature on November 4, 2027 unless redeemed, purchased or prepaid prior to such date by us in accordance with their terms. Interest on the November Notes will be due semiannually in May and November, beginning in May 2021. In addition, we are obligated to offer to repay the November Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the November 2020 NPA, we may redeem the Series B Notes and the Series C Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before May 4, 2025, with respect to the Series B Notes, or on or before May 4, 2027, with respect to the Series C Notes, a make-whole premium. The November Notes are guaranteed by certain of our subsidiaries, and are our general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
The November 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The November 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the November Notes at the time outstanding may declare all November Notes then outstanding to be immediately due and payable. As of March 2022 Notes.31, 2021, we were in compliance with all covenants under the November 2020 NPA.
The November Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The November Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of March 31, 2021, the fair value of the outstanding Series B Notes and the Series C Notes was $62.5 million and $112.5 million, respectively. The fair value determinations of the Series B Notes and Series C Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
February Notes
On February 25, 2021, we entered into a Note Purchase Agreement (the “February 2021 NPA”) governing the issuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26, 2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the Series D Notes, the “February Notes”) with a fixed interest rate of 4.06% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable February Notes do not satisfy certain
investment grade rating conditions and/or (y) 1.50% per year, to the extent the ratio of our secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes will mature on February 26, 2026, and the Series E Notes will mature on February 26, 2028 unless redeemed, purchased or prepaid prior to such date by us in accordance with the terms of the February 2021 NPA. Interest on the February Notes will be due semiannually in February and August of each year, beginning in August 2021. In addition, we are obligated to offer to repay the February Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the February 2021 NPA, we may redeem the Series D Notes and the Series E Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before August 26, 2025, with respect to the Series D Notes, or on or before August 26, 2027, with respect to the Series E Notes, a make-whole premium. The February Notes are guaranteed by certain of our subsidiaries, and are our general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
The February 2021 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, and certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments. In addition, the February 2021 NPA contains the following financial covenants: (a) maintaining a minimum obligors’ net worth, measured as of each fiscal quarter end; (b) not permitting our asset coverage ratio, as of the date of the incurrence of any debt for borrowed money or the making of any cash dividend to shareholders, to be less than the statutory minimum then applicable to us under the 1940 Act; and (c) not permitting our net debt to equity ratio to exceed 2.0x, measured as of each fiscal quarter end.
The February 2021 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of certain events of default, the holders of at least 66-2/3% in principal amount of the February Notes at the time outstanding may declare all February Notes then outstanding to be immediately due and payable. As of March 31, 2021, we were in compliance with all covenants under the February 2021 NPA.
The February Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The February Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of March 31, 2021, the fair value of the outstanding Series D Notes and the Series E Notes was $80.0 million and $70.0 million, respectively. The fair value determinations of the Series D Notes and Series E Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
Share Repurchases
On February 27, 2020, the Board approved an open-market share repurchase program for the 2020 fiscal year (the “2020 Share Repurchase Program”). Under the 2020 Share Repurchase Program, we were authorized during fiscal year 2020 to repurchase up to a maximum of 5.0% of the amount of shares outstanding as of February 27, 2020 if shares traded below NAV per share, subject to liquidity and regulatory constraints.
Purchases under the 2020 Share Repurchase Program were made in open-market transactions and included transactions being executed by a broker selected us that had been delegated the authority to repurchase shares on our behalf in the open market in accordance with applicable rules under the Exchange Act, including Rules 10b5-1 and 10b-18 thereunder, and pursuant to, and under the terms and limitations of, the 2020 Share Repurchase Program. During the three months ended March 31, 2020, we repurchased a total of 661.981 shares of our common stock in the open market under the 2020 Share Repurchase Program at an average price of $7.23 per share, including broker commissions.
In addition, in connection with the closing of the MVC Acquisition on December 23, 2020, we committed to make open-market purchases of shares of our common stock in an aggregate amount of up to $15.0 million at then-current market prices at any time shares trade below 90% of our then most recently disclosed NAV per share. Any repurchases pursuant to the authorized program will occur during the 12-month period commencing upon the filing of this quarterly report on Form 10-Q for the quarter ended March 31, 2021 and will be made in accordance with applicable legal, contractual and regulatory requirements.
Distributions to Stockholders
We intend to pay quarterly distributions to our stockholders out of assets legally available for distribution. We have adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of dividends on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, when we declare a dividend, stockholders who have not opted out of the DRIP will have their dividends automatically reinvested in shares of our common stock, rather than receiving cash dividends.
We have elected to be treated as a RIC under the Internal Revenue Code of 1986, as amended, or the Code, and intend to make the required distributions to our stockholders as specified therein. In order to maintain our tax treatment as a RIC and to obtain RIC tax benefits, we must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then we are generally required to pay income taxes only on the portion of our taxable income and gains we do not distribute (actually or constructively) and certain built-in gains. We have historically met our minimum distribution requirements and continually monitor our distribution requirements with the goal of ensuring compliance with the Code. We can offer no assurance that we will achieve results that will permit the payment of any level of cash distributions and our ability to make distributions will be limited by the asset coverage requirement and related provisions under the 1940 Act and contained in theany applicable indenture and related supplements governingsupplements. In addition, in order to satisfy the December 2022 Notesannual distribution requirement applicable to RICs, we may declare a significant portion of our dividends in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend under published guidance from the Internal Revenue Service) and certain requirements are met, the March 2022 Notes.entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder generally would be subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the stockholder in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock.
The minimum distribution requirements applicable to RICs require us to distribute to our stockholders each year at least 90% of our investment company taxable income, or ICTI, as defined by the Code. Depending on the level of ICTI and net capital gain, if any, earned in a tax year, we may choose to carry forward ICTI in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such excess. Any such carryover ICTI must be distributed before the end of the next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.
ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. We may be required to recognize ICTI in certain circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants), we must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in ICTI other amounts that we have not yet received in cash, such as (i) PIK interest income and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in our ICTI for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.
Recent Developments
Subsequent to March 31, 2021, we made approximately $156.3 million of new commitments, of which $106.4 million closed and funded. The $106.4 million of investments consist of $82.6 million of first lien senior secured debt investments, $20.9 million of second lien senior secured and subordinated debt investments and a $2.9 million equity investments with a combined weighted average yield on debt investments of 6.7%. In October 2017,addition, we invested $32.5funded $5.1 million inof previously committed delayed draw term loans.
On May 6, 2021, the Board declared a debt securityquarterly distribution of Deva Holdings, Inc. Under the terms$0.20 per share payable on June 16, 2021 to holders of the investment, the debt security bears interest at a raterecord as of LIBOR plus 6.75% per annum.June 9, 2021.
Critical Accounting Policies and Use of Estimates
The preparation of our unaudited financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods covered by such financial statements. We have identified investment valuation and revenue recognition as our most critical accounting estimates. On an on-goingongoing basis, we evaluate our estimates, including those related to the matters described below. These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. A discussion of our critical accounting policies follows.
Investment Valuation
The most significant estimate inherent in the preparation of our financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. We have a valuation policy, as well as established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring (quarterly)(at least quarterly) basis in accordance with the 1940 Act and FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC Topic 820. Our current valuation policy and processes were established by our management with the assistance of certain third-party advisorsBarings and werehave been approved by the Board.
Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For our portfolio securities, fair value is generally the amount that we might reasonably expect to receive upon the current sale of the security. The fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. If no market for the security exists or if we do not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market.
Under ASC Topic 820, there are three levels of valuation inputs, as follows:
Level 1 Inputs – include quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 Inputs – include inputs that are unobservable and significant to the fair value measurement.
A financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables in the notes to our consolidated financial statements may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
Our investment portfolio is primarily comprised ofincludes certain debt and equity instruments of privately held companies for which quoted prices or other observable inputs falling within the categories of Level 1 and Level 2 are generally not available. Therefore,In such cases, we determine the fair value of our investments in good faith primarily using Level 3 inputs. In certain cases, quoted prices or other observable inputs may exist, and if so, we assess the appropriateness of the use of these third-party quotes in determining fair value based on (i) our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer and (ii) the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company.
Under ASC Topic 820, a financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
There is no single standard for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of our Level 3 investments may differ significantly from fair values that would have been used had an active market for the securities existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.
Our valuation process is led by our executive officers. The valuation process begins withInvestment Valuation Process
Barings has established a quarterly review of each investment in our investment portfolio by our executive officers and our investment committee. Valuations of each portfolio security are then prepared by our investment professionals, who have direct responsibility for the origination, management and monitoring of each investment. Under our valuation policy, each investment valuationpricing committee that is, subject to (i) a review by the lead investment officeroversight of the Board, responsible for the approval, implementation and oversight of the processes and methodologies that relate to the pricing and valuation of assets we hold. Barings uses independent third-party providers to price the portfolio, company investmentbut in the event an acceptable price cannot be obtained
from an approved external source, Barings will utilize alternative methods in accordance with internal pricing procedures established by Barings' pricing committee.
At least annually, Barings conducts reviews of the primary pricing vendors to validate that the inputs used in the vendors’ pricing process are deemed to be market observable. While Barings is not provided access to proprietary models of the vendors, the reviews have included on-site walkthroughs of the pricing process, methodologies and (ii)control procedures for each asset class and level for which prices are provided. The review also includes an examination of the underlying inputs and assumptions for a peer reviewsample of individual securities across asset classes, credit rating levels and various durations, a process Barings continues to perform annually. In addition, the pricing vendors have an established challenge process in place for all security valuations, which facilitates identification and resolution of prices that fall outside expected ranges. Barings believes that the prices received from the pricing vendors are representative of prices that would be received to sell the assets at the measurement date (i.e., exit prices).
Our money market fund investments are generally valued using Level 1 inputs and our equity investments listed on an exchange or on the NASDAQ National Market System are valued using Level 1 inputs, using the last quoted sale price of that day. Our syndicated senior secured loans and structured product investments are generally valued using Level 2 inputs, which are generally valued at the bid quotation obtained from dealers in loans by a second investment officeran independent pricing service. Our middle-market, private debt and equity investments are generally valued using Level 3 inputs.
Independent Valuation
The fair value of loans and equity investments that are not syndicated or executive officer. Generally, any investmentfor which market quotations are not readily available, including middle-market loans, are generally submitted to independent providers to perform an independent valuation on those loans and equity investments as of the end of each quarter. Such loans and equity investments are initially held at cost, as that is valued below cost is subjecteda reasonable approximation of fair value on the acquisition date, and monitored for material changes that could affect the valuation (for example, changes in interest rates or the credit quality of the borrower). At the quarter end following the initial acquisition, such loans and equity investments are generally sent to review by one of our executive officers. After the peer review is complete, we engage two independenta valuation firms, including Duff & Phelps, LLC, collectively referred to as the Valuation Firms, to provide third-party reviews of certain investments, as described further below. Finally, the Board has the responsibility for reviewing and approving, in good faith,provider which will determine the fair value of our investmentseach investment. The independent valuation providers apply various methods (synthetic rating analysis, discounting cash flows, and re-underwriting analysis) to establish the rate of return a market participant would require (the “discount rate”) as of the valuation date, given market conditions, prevailing lending standards and the perceived credit quality of the issuer. Future expected cash flows for each investment are discounted back to present value using these discount rates in accordancethe discounted cash flow analysis. A range of values will be provided by the valuation provider and Barings will determine the point within that range that it will use in making valuation recommendations to the Board, and will report to the Board on its rationale for each such determination. Barings continues to use its internal valuation model as a comparison point to validate the price range provided by the valuation provider and, where applicable, in determining the point within that range that it will use in making valuation recommendations to the Board. If Barings’ pricing committee disagrees with the 1940 Act.
The Valuation Firms provide third-party valuation consulting services to us which consist of certain limited procedures that we identified and requested the Valuation Firms to perform, which we refer to herein as the Procedures. The Procedures are performed with respect to each portfolio company at least once in every calendar year and for new portfolio companies, at least
once in the twelve-month period subsequentprice range provided, it may make a fair value recommendation to the initial investment. In addition, the Procedures are generally performed with respect to a portfolio company when there has been a significant change in the fair valueBoard that is outside of the investment.range provided by the independent valuation provider, and will notify the Board of any such override and the reasons therefore. In certain instances, we may determine that it is not cost-effective, and as a result is not in our stockholders’the stockholders' best interest,interests, to request the Valuation Firmsan independent valuation firm to perform the Proceduresan independent valuation on one or more portfolio companies.certain investments. Such instances include, but are not limited to, situations where the fair value of the investment in the portfolio company is determined to be insignificant relative to the total investment portfolio.
The total number of Pursuant to these procedures, the Board determines in good faith whether our investments were valued at fair value in accordance with our valuation policies and procedures and the percentage1940 Act based on, among other things, the input of Barings, our investment portfolio on whichAudit Committee and the Procedures were performed are summarized below by period:independent valuation firm. |
| | | |
For the quarter ended: | Total companies | | Percent of total investments at fair value(1) |
March 31, 2016 | 18 | | 27% |
June 30, 2016 | 19 | | 30% |
September 30, 2016 | 19 | | 33% |
December 31, 2016 | 20 | | 33% |
March 31, 2017 | 18 | | 30% |
June 30, 2017 | 20 | | 29% |
September 30, 2017 | 22 | | 25% |
| |
(1) | Exclusive of the fair value of new investments made during the quarter. |
Upon completionThe SEC recently adopted new Rule 2a-5 under the 1940 Act. This rule establishes requirements for determining fair value in good faith for purposes of the Procedures,1940 Act. We will comply with the new rule’s valuation requirements on or before the SEC’s compliance date in 2022.
Valuation Firms concluded that, with respectTechniques
Our valuation techniques are based upon both observable and unobservable pricing inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Our assessment of the significance of a particular input to each investment reviewed by each Valuation Firm, the fair value of those investments subjectedmeasurement in its entirety requires judgment and considers factors specific to the Procedures appeared reasonable.financial instrument. An independent pricing service provider is the preferred source of pricing a loan, however, to the extent the independent pricing service provider price is unavailable or not relevant and reliable, we will utilize alternative approaches such as broker quotes or manual prices. We attempt to maximize the use of observable inputs and minimize the use of unobservable inputs. The Boardavailability of observable inputs can vary from investment to investment and is ultimately responsible for determiningaffected by a wide
variety of factors, including the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security.
Valuation of Investment in Jocassee
We estimate the fair value of our investments in good faith.
Investment Valuation Inputs
Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For our portfolio securities, fair value is generally the amount that we might reasonably expect to receive upon the current sale of the security. Under ASC Topic 820, the fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. Under ASC Topic 820, if no market for the security exists or if we do not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market. The securities in which we invest are generally only purchased and sold in merger and acquisition transactions, in which case the entire portfolio company is sold to a third-party purchaser. As a result, unless we have the ability to control such a transaction, the assumed principal market for our securities is a hypothetical secondary market. The Level 3 inputs to our valuation process reflect management’s best estimate of the assumptions that would be used by market participants in pricing the investment in a transactionJocassee Partners LLC, or Jocassee, using the NAV of Jocassee and our ownership percentage. The NAV of Jocassee is determined in a hypothetical secondary market.accordance with the specialized accounting guidance for investment companies.
Enterprise Value Waterfall ApproachValuation of Investment in Thompson Rivers
In valuing equity securities (including warrants), we estimate fair value using an “Enterprise Value Waterfall” valuation model. We estimate the enterprise value of a portfolio company and then allocate the enterprise value to the portfolio company’s securities in order of their relative liquidation preference. In addition, the model assumes that any outstanding debt or other securities that are senior to our equity securities are required to be repaid at par. Additionally, we estimate the fair value of a limited number of our debt securitiesinvestment in Thompson Rivers LLC, or Thompson Rivers, using the Enterprise Value Waterfall approachNAV of Thompson Rivers and our ownership percentage. The NAV of Thompson Rivers is determined in cases where we do not expect to receive full repayment.
To estimate the enterprise value of the portfolio company, we primarily use a valuation model based on a transaction multiple, which generally is the original transaction multiple, and measures of the portfolio company’s financial performance. In addition, we consider other factors, including but not limited to (i) offers from third parties to purchase the portfolio company, (ii) the implied value of recent investments in the equity securities of the portfolio company, (iii) publicly available information regarding recent sales of private companies in comparable transactions and (iv) when management believes there are comparable companies that are publicly traded, we perform a review of these publicly traded companies and the market multiple of their equity securities. For certain non-performing assets, we may utilize the liquidation or collateral value of the portfolio company's assets in our estimation of enterprise value.
The significant Level 3 inputs to the Enterprise Value Waterfall model are (i) an appropriate transaction multiple and (ii) a measure of the portfolio company’s financial performance, which generally is either earnings before interest, taxes,
depreciation and amortization, as adjusted, or Adjusted EBITDA, or revenues. Such inputs can be based on historical operating results, projections of future operating results or a combination thereof. The operating results of a portfolio company may be unaudited, projected or pro forma financial information and may require adjustments for certain non-recurring items. In determining the operating results input, we utilize the most recent portfolio company financial statements and forecasts available as of the valuation date. Management also consultsaccordance with the portfolio company’s senior management to obtain updates on the portfolio company’s performance, including information such as industry trends, new product development, lossspecialized accounting guidance for investment companies.
Valuation of customers and other operational issues. Additionally, we consider some or all of the following factors:
financial standing of the issuer of the security;
comparison of the business and financial plan of the issuer with actual results;
the size of the security held;
pending reorganization activity affecting the issuer, such as merger or debt restructuring;
ability of the issuer to obtain needed financing;
changesInvestments in the economy affecting the issuer;
financial statements and reports from portfolio company senior management and ownership;
the type of security, the security’s cost at the date of purchase and any contractual restrictions on the disposition of the security;
information as to any transactions or offers with respect to the security and/or sales to third parties of similar securities;
the issuer’s ability to make payments and the type of collateral;
the current and forecasted earnings of the issuer;
statistical ratios compared to lending standards and to other similar securities;
pending public offering of common stock by the issuer of the security;
special reports prepared by analysts; and
any other factors we deem pertinent with respect to a particular investment.
Fair value measurements using the Enterprise Value Waterfall model can be sensitive to changes in one or more of the inputs. Assuming all other inputs to the Enterprise Value Waterfall model remain constant, any increase (decrease) in either the transaction multiple, Adjusted EBITDA or revenues for a particular equity security would result in a higher (lower) fair value for that security.
Income Approach
In valuing debt securities, we utilize an “Income Approach” model that considers factors including, but not limited to, (i) the stated yield on the debt security, (ii) the portfolio company’s current Adjusted EBITDA as compared to the portfolio company’s historical or projected Adjusted EBITDA as of the date the investment was made and the portfolio company’s anticipated Adjusted EBITDA for the next twelve months of operations, (iii) the portfolio company’s current Leverage Ratio (defined as the portfolio company’s total indebtedness divided by Adjusted EBITDA) as compared to its Leverage Ratio as of the date the investment was made, (iv) publicly available information regarding current pricing and credit metrics for similar proposed and executed investment transactions of private companies and (v) when management believes a relevant comparison exists, current pricing and credit metrics for similar proposed and executed investment transactions of publicly traded debt. In addition, we use a risk rating system to estimate the probability of default on the debt securities and the probability of loss if there is a default. This risk rating system covers both qualitative and quantitative aspects of the business and the securities held.MVC Private Equity Fund LP
We consider the factors above, particularly any significant changes in the portfolio company’s results of operations and leverage, and develop an expectation of the yield that a hypothetical market participant would require when purchasing the debt investment, which we refer to herein as the Required Rate of Return. The Required Rate of Return, along with the Leverage Ratio and Adjusted EBITDA, are the significant Level 3 inputs to the Income Approach model. For investments where the Leverage Ratio and Adjusted EBITDA have not fluctuated significantly from the date the investment was made or have not fluctuated significantly from management’s expectations as of the date the investment was made, and where there have been no significant fluctuations in the market pricing for such investments, we may conclude that the Required Rate of Return is equal to the stated rate on the investment and therefore, the debt security is appropriately priced. In instances where we determine
that the Required Rate of Return is different from the stated rate on the investment, we discount the contractual cash flows on the debt instrument using the Required Rate of Return in order to estimate the fair value of the debt security.
Fair value measurementsour investment in MVC Private Equity Fund LP, or MVC PE Fund, using the Income Approach model can be sensitive to changes in one or moreNAV of the inputs. Assuming all other inputs toMVC PE Fund and our ownership percentage. The NAV of the Income Approach model remain constant, any increase (decrease)MVC PE Fund is determined in accordance with the Required Ratespecialized accounting guidance for investment companies.
Valuation of Return or Leverage Ratio inputs for a particular debt security would resultInvestment in a lower (higher) fair value for that security. Assuming all other inputs toWaccamaw River
We estimate the Income Approach model remain constant, any increase (decrease) in the Adjusted EBITDA input for a particular debt security would result in a higher (lower) fair value for that security.
The fair value of our royalty rights are calculated based on specific provisions containedinvestment in Waccamaw River LLC, or Waccamaw River, using the pertinent operating or royalty agreements.NAV of Waccamaw River and our ownership percentage. The determinationNAV of Waccamaw River is determined in accordance with the fair value of such royalty rights is not a significant component of our valuation process.specialized accounting guidance for investment companies.
Revenue Recognition
Interest and Dividend Income
Interest income, adjusted forincluding amortization of premium and accretion of original issue discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The cessation of recognition of such interest will negatively impact the reported fair value of the investment. We write off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible. Dividend income is recorded on the ex-dividend date.
We may have to include interest income in our ICTI, interest income, including original issue discount income, from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. As a result, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements to maintain our RIC tax treatment, even though we will not have received and may not ever receive any corresponding cash amount. Additionally, any loss recognized by us for U.S. federal income tax purposes on previously accrued interest income will be treated as a capital loss.
Fee Income
Origination, facility, commitment, consent and other advance fees received in connection with the origination of a loan, or Loan Origination Fees, are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized Loan Origination Fees are recorded as investment income. In the general course of our business, we receive certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring feesadvisory, loan amendment and loan waiver and amendmentother fees, and are recorded as investment income when earned.
Fee income for the three months ended March 31, 2021 and 2020 was as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | | | |
| March 31, 2021 | | March 31, 2020 | | | | |
Recurring Fee Income: | | | | | | | |
Amortization of loan origination fees | $ | 1,078,090 | | | $ | 429,549 | | | | | |
Management, valuation and other fees | 581,395 | | | 175,755 | | | | | |
Total Recurring Fee Income | 1,659,485 | | | 605,304 | | | | | |
Non-Recurring Fee Income: | | | | | | | |
Prepayment fees | 49,517 | | | 84,151 | | | | | |
Acceleration of unamortized loan origination fees | 402,948 | | | 228,456 | | | | | |
Advisory, loan amendment and other fees | 21,225 | | | 43,082 | | | | | |
Total Non-Recurring Fee Income | 473,690 | | | 355,689 | | | | | |
Total Fee Income | $ | 2,133,175 | | | $ | 960,993 | | | | | |
Payment-in-Kind (PIK) Interest Income
We currently hold, and we expect to hold in the future, some loans in our portfolio that contain PIK interest provisions. The PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to us in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.
PIK interest, which is a non-cash source of income at the time of recognition, is included in our taxable income and therefore affects the amount we are required to distribute to our stockholders to maintain our tax treatment as a RIC for U.S. federal income tax purposes, even though we have not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. We write off any previously accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.
We may have to include in our ICTI, PIK interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. As a result, we may be required to make a distribution to our stockholders in order to satisfy
the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount.
Off-Balance Sheet Arrangements
In the normal course of business, we are party to financial instruments with off-balance sheet risk, consisting primarily of unused commitments to extend financing to our portfolio companies. Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. As of March 31, 2021 and December 31, 2020, the Company believed that it had adequate financial resources to satisfy its unfunded commitments. The balances of unused commitments to extend financing as of September 30, 2017March 31, 2021 and December 31, 20162020 were as follows:
| | | | | | | | | | | | | | |
Portfolio Company(1) | Investment Type | March 31, 2021 | | December 31, 2020 |
ADE Holding(3) | Committed Capex Line | $ | 88,194 | | | $ | 91,814 | |
Anju Software, Inc. | Delayed Draw Term Loan | 1,981,371 | | | 1,981,371 | |
Arch Global Precision, LLC | Delayed Draw Term Loan | 3,631,849 | | | 4,193,475 | |
Beacon Pointe Advisors, LLC | Delayed Draw Term Loan | — | | | 363,636 | |
Bidwax(2)(3) | Acquisition Capex Facility | 3,760,958 | | | — | |
BigHand UK Bidco Limited(4) | Acquisition Capex Facility | 1,843,756 | | | — | |
British Engineering Services Holdco Limited(4) | Acquisition Facility | — | | | 7,006,008 | |
British Engineering Services Holdco Limited(4) | Bridge Revolver | 623,944 | | | 618,177 | |
Centralis Finco S.a.r.l.(3) | Acquisition Facility | 476,392 | | | 495,950 | |
Classic Collision (Summit Buyer, LLC)(2) | Delayed Draw Term Loan | 454,562 | | | 1,672,446 | |
CM Acquisitions Holdings Inc. | Delayed Draw Term Loan | 1,551,602 | | | 1,551,602 | |
Contabo Finco S.À R.L(3) | Delayed Draw Term Loan | 219,212 | | | 228,211 | |
CSL Dualcom(4) | Delayed Draw Term Loan | 1,016,577 | | | 1,007,182 | |
Dart Buyer, Inc. | Delayed Draw Term Loan | 2,430,569 | | | 2,430,569 | |
DreamStart Bidco SAS(3) | Acquisition Facility | 956,378 | | | 995,640 | |
F24 (Stairway BidCo GmbH)(3) | Acquisition Facility | 418,703 | | | 323,840 | |
Fineline Technologies, Inc.(2) | Delayed Draw Term Loan | 600,000 | | | — | |
FitzMark Buyer, Inc. | Delayed Draw Term Loan | 1,470,588 | | | 1,470,588 | |
Foundation Risk Partners, Corp. | Delayed Draw Term Loan | 4,716,805 | | | 4,984,771 | |
Heartland, LLC | Delayed Draw Term Loan | 5,347,666 | | | 5,347,666 | |
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.))(3) | Accordion Facility | — | | | 10,225,081 | |
Home Care Assistance, LLC(2) | Delayed Draw Term Loan | 3,038,310 | | | — | |
IGL Holdings III Corp. | Delayed Draw Term Loan | 5,914,219 | | | 5,914,219 | |
INOS 19-090 GmbH(2)(3) | Acquisition Facility | 2,620,403 | | | 2,727,980 | |
Jocassee Partners LLC | Joint Venture | 25,000,000 | | | 30,000,000 | |
Kano Laboratories LLC(2) | Delayed Draw Term Loan | 4,543,950 | | | 4,543,950 | |
Kene Acquisition, Inc. | Delayed Draw Term Loan | — | | | 322,928 | |
LAF International(2)(3) | Acquisition Facility | 364,343 | | | — | |
LivTech Purchaser, Inc.(2) | Delayed Draw Term Loan | 447,752 | | | — | |
Modern Star Holdings Bidco Pty Limited(5) | Capex Term Loan | 2,285,953 | | | 2,315,967 | |
Murphy Midco Limited(4) | Delayed Draw Term Loan | 3,332,269 | | | 3,301,472 | |
Navia Benefit Solutions, Inc.(2) | Delayed Draw Term Loan | 4,000,000 | | | — | |
Options Technology Ltd. | Delayed Draw Term Loan | 2,604,080 | | | 2,604,080 | |
Pacific Health Supplies Bidco Pty Limited(5) | CapEx Term Loan | 1,343,603 | | | 1,535,025 | |
Premier Technical Services Group(4) | Acquisition Facility | 1,208,676 | | | 1,197,505 | |
Protego Bidco B.V.(2)(3) | Delayed Draw Term Loan | 3,836,870 | | | — | |
Protego Bidco B.V.(2)(3) | Revolver | 2,302,121 | | | — | |
PSC UK Pty Ltd.(4) | Acquisition Facility | 540,149 | | | 535,157 | |
Questel Unite(2)(3) | Cap Acquisition Facility | 4,747,241 | | | 10,300,913 | |
Radwell International, LLC | Delayed Draw Term Loan | 1,617,973 | | | 3,235,947 | |
|
| | | | | | | | |
Portfolio Company | Investment Type | September 30, 2017 | | December 31, 2016 |
Baker Hill Acquisition, LLC(1) | Delayed Draw Term Loan | $ | 500,000 |
| | $ | — |
|
CRS Reprocessing, LLC | Debtor in Possession Loan | 3,300,000 |
| | — |
|
DPII Holdings LLC(1) | Guaranty | 576,925 |
| | 576,925 |
|
DLC Acquisition, LLC | Revolver | 1,800,000 |
| | 3,000,000 |
|
Eckler's Holdings, Inc.(1) | Equity Investment | 1,000,000 |
| | — |
|
Frank Entertainment Group, LLC(1) | Delayed Draw Senior Note | 489,796 |
| | — |
|
Frank Entertainment Group, LLC(1) | Delayed Draw Second Lien Term Note | 1,142,857 |
| | — |
|
Halo Branded Solutions, Inc. | Delayed Draw Term Loan | 3,250,000 |
| | 3,250,000 |
|
HKW Capital Partners IV, L.P. | Private Equity | 128,204 |
| | 530,032 |
|
Lakeview Health Acquisition Company | Revolver | 1,387,367 |
| | 1,387,367 |
|
Micross Solutions LLC | Delayed Draw Term Loan | 3,000,000 |
| | — |
|
Nautic Partners VII, LP | Private Equity | 532,532 |
| | 642,172 |
|
Nomacorc, LLC(1) | Equity Investment | 838,813 |
| | 849,362 |
|
Orchid Underwriters Agency, LLC | Delayed Draw Term Loan | 649,143 |
| | 8,400,000 |
|
Orchid Underwriters Agency, LLC | Revolver | — |
| | 5,000,000 |
|
SCA Pharmaceuticals, LLC | Delayed Draw Term Loan | — |
| | 12,000,000 |
|
Schweiger Dermatology Group, LLC | Delayed Draw Term Loan | 10,000,000 |
| | — |
|
SCUF Gaming, Inc. | Revolver | 2,000,000 |
| | 3,500,000 |
|
Smile Brands, Inc. | Equity Investment | 1,000,000 |
| | 1,000,000 |
|
Smile Brands, Inc. | Delayed Draw Term Loan | 18,826,531 |
| | 18,826,531 |
|
SPC Partners V, LP | Private Equity | 198,378 |
| | 522,881 |
|
SPC Partners VI, LP | Private Equity | 3,000,000 |
| | 3,000,000 |
|
TCFI Merlin LLC and TCFI CSG LLC | Revolver | 500,000 |
| | — |
|
Team Waste, LLC | Equity Investment | — |
| | 900,000 |
|
Team Waste, LLC | Delayed Draw Term Loan | 1,000,000 |
| | — |
|
TGaS Advisors, LLC | Revolver | 2,000,000 |
| | 2,000,000 |
|
YummyEarth Inc.(1) | Delayed Draw Term Loan | 1,000,000 |
| | 1,500,000 |
|
Total unused commitments to extend financing | | $ | 58,120,546 |
| | $ | 66,885,270 |
|
| |
(1) | Represents a commitment to extend financing to a portfolio company where one or more of our current investments in the portfolio company are carried at less than cost. Our estimate of the fair value of the current investments in this portfolio company includes an analysis of the value of any unfunded commitments. |
| | | | | | | | | | | | | | |
Portfolio Company(1) | Investment Type | March 31, 2021 | | December 31, 2020 |
Rep Seko Merger Sub LLC | Delayed Draw Term Loan | 1,454,545 | | | 1,454,546 | |
Safety Products Holdings, LLC | Delayed Draw Term Loan | 6,467,345 | | | 6,467,345 | |
Smile Brands Group, Inc.(2) | Delayed Draw Term Loan | 2,148,691 | | | 2,148,691 | |
Springbrook Software (SBRK Intermediate, Inc.) | Delayed Draw Term Loan | 3,489,026 | | | 3,489,026 | |
SSCP Pegasus Midco Limited(4) | Delayed Draw Term Loan | 13,514,446 | | | 13,389,546 | |
The Hilb Group, LLC(2) | Delayed Draw Term Loan | 5,105,694 | | | 5,545,939 | |
Transit Technologies LLC(2) | Delayed Draw Term Loan | 6,035,305 | | | 6,035,305 | |
USLS Acquisition, Inc.(2) | Delayed Draw Term Loan | 450,466 | | | 450,466 | |
Utac Ceram(2)(3) | Delayed Draw Term Loan | — | | | 743,327 | |
Waccamaw River | Joint Venture | 20,500,000 | | | — | |
W2O Holdings, Inc. | Delayed Draw Term Loan | 5,989,298 | | | 5,989,298 | |
Total unused commitments to extend financing | | $ | 166,491,854 | | | $ | 159,236,659 | |
(1)Our estimate of the fair value of the current investments in these portfolio companies includes an analysis of the fair value of any unfunded commitments.
(2)Represents a commitment to extend financing to a portfolio company where one or more of our current investments in the portfolio company are carried at less than cost.
(3)Actual commitment amount is denominated in Euros. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(4)Actual commitment amount is denominated in British pounds sterling. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(5)Actual commitment amount is denominated in Australian dollars. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
In the normal course of business, we guarantee certain obligations in connection with our portfolio companies (in particular, certain controlled portfolio companies). Under these guarantee arrangements, payments may be required to be made to third parties if such guarantees are called upon or if the portfolio companies were to default on their related obligations, as applicable. As of March 31, 2021 and December 31, 2020, we had guaranteed €9.9 million ($11.6 million U.S. dollars and $12.1 million U.S. dollars, respectively) relating to credit facilities among Erste Bank and MVC Automotive Group Gmbh, or MVC Auto. We would be required to make payments to Erste Bank if MVC Auto were to default on their related payment obligations. None of the credit facility guarantees are recorded as a liability on our Unaudited and Audited Consolidated Balance Sheets. As such, the credit facility liabilities are considered in the valuation of our investments in MVC Auto. The guarantees denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
In addition, we agreed to cash collateralize a $3.5 million letter of credit for Security Holdings B.V. The $3.5 million cash collateralization is reflected as "Restricted cash" on the accompanying Unaudited and Audited Consolidated Balance Sheets.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to market risk. Market risk includes risks that arise from changes in interest rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The prices of securities held by us may decline in response to certain events, including those directly involving the companies we invest in; conditions affecting the general economy; overall market changes; global pandemics; legislative reform; local, regional, national or global political, social or economic instability; and interest rate fluctuations.
In addition, we are subject to interest rate risk. Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between the interest income earned on interest earning assets and our interest expense incurred in connection with our interest bearing debt and liabilities. Changes in interest rates can also affect, among other things, our ability to acquire and originate loans and securities and the value of our investment portfolio. Our net investment income is affected by fluctuations in various interest rates, including LIBOR, Canadian Dealer OfferedAUD Screen Rate, CDOR, GBP LIBOR, EURIBOR and prime rates.STIBOR. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. We regularly measure exposure to interest rate risk and determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates. As of September 30, 2017,March 31, 2021, we were not a party to any interest rate hedging arrangements.
In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in in our operating expenses, including with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR.
As of September 30, 2017, 55.3%, or $610.0March 31, 2021, approximately $1,252.3 million (at cost), of our debt portfolio investments bore interest at fixed rates and 44.7%, or $493.2 million (at cost), (principal amount) of our debt portfolio investments bore interest at variable rates, which generally are LIBOR-based (or based on an equivalent applicable currency rate), and many of which are subject to certain floors. A hypothetical 200 basis point increase or decrease in the interest rates on our variable-rate debt investments could increase or decrease, as applicable, our investment income by a maximum of $9.9$25.0 million on an annual basis. All of our SBA-guaranteed debentures, our December 2022 Notes and our March 2022 Notes bear interest at fixed rates. Our
Borrowings under the February 2019 Credit Facility bearsbear interest, subject to our election, on a per annum basis equal to (i) the applicable base rate plus 1.75%1.00% (or 1.50%1.25% if we receiveno longer maintain an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.75%2.00% (or 2.50%2.25% if we receiveno longer maintain an investment grade credit rating), or (iii) for borrowings denominated in Canadiancertain foreign currencies other than Australian dollars, the applicable Canadian Dealer Offeredcurrency rate for the foreign currency as defined in the credit agreement plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating) or (iv) for borrowings denominated in Australian dollars, the applicable Australian dollars Screen Rate, plus 2.75%2.20% (or 2.50%2.45% if we receiveno longer maintain an investment grade credit rating). The applicable base rate is equal to the greatergreatest of (i) the prime rate, (ii) the federal funds rate plus 0.5% or, (iii) the Overnight Bank Funding Rate plus 0.5%, (iv) the adjusted one-month LIBORthree-month applicable currency rate plus 2.0%1.0% and (v) 1.0%. The applicable LIBOR rate dependsand currency rates depend on the currency and term of the draw under the February 2019 Credit Facility.Facility, and cannot be less than zero. A hypothetical 200 basis point increase or decrease in the interest rates on the February 2019 Credit Facility could increase or decrease, as applicable, our interest expense by a maximum of $12.2 million on an annual basis (based on the amount of outstanding borrowings under the February 2019 Credit Facility as of March 31, 2021). We pay a commitment fee of 1.00%(x) 0.5% per annum on undrawn amounts if the usedunused portion of the facilityFebruary 2019 Credit Facility is lessgreater than or equal to 25.0%two-thirds of total commitments or (y) 0.375% per annum on undrawn amounts if the usedunused portion of the facilityFebruary 2019 Credit Facility is greaterequal to or less than 25.0%two-thirds of total commitments.
In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of LIBOR by the end of 2021. There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate. As such, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market value for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us and could have a material adverse effect on our business, financial condition and results of operations.
Because we currently borrow,have previously borrowed, and plan to borrow in the future, money to make investments, our net investment income iswill be dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income if there is not a corresponding increase in interest income generated by our investment portfolio.
We may also have exposure to foreign currencies (currently the Canadian dollar) related to certain investments. Such investments are translated into United StatesU.S. dollars based on the spot rate at eachthe relevant balance sheet date, exposing us to movements in the exchange rate. In order to reduce our exposure to fluctuations in exchange rates, we generally borrow in Canadian dollarslocal foreign currencies under ourthe February 2019 Credit Facility to finance such investments. As of September 30, 2017,March 31, 2021, we had non-United States dollar borrowings denominated in Canadian dollarsSwedish kronas of $21.012.8kr million ($16.81.5 million United StatesU.S. dollars) outstanding under the Credit Facility with a weighted averagean interest rate of 4.06%2.000%, borrowings denominated in British pounds sterling of £85.3 million ($117.7 million U.S. dollars) with an interest rate of 2.063%, borrowings denominated in Australian dollars of A$36.6 million ($27.9 million U.S. dollars) with an interest rate of 2.250% and borrowings denominated in Euros of €91.1 million ($107.1 million U.S. dollars) with an interest rate of 2.000%.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.effective as of March 31, 2021. It should be noted that any system of controls,
however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the thirdfirst quarter of 20172021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
NeitherWe and certain of our former executive officers have been named as defendants in two putative securities class action lawsuits, each filed in the United States District Court for the Southern District of New York (and then transferred to the United States District Court for the Eastern District of North Carolina) on behalf of all persons who purchased or otherwise acquired our common stock between May 7, 2014 and November 1, 2017. The first lawsuit was filed on November 21, 2017, and was captioned Elias Dagher, et al., v. Triangle Capital Corporation, et al., Case No. 5:18-cv-00015-FL (the “Dagher Action”). The second lawsuit was filed on November 28, 2017, and was captioned Gary W. Holden, et al., v. Triangle Capital Corporation, et al., Case No. 5:18-cv-00010-FL (the “Holden Action”). The Dagher Action and the Holden Action were consolidated and are currently captioned In re Triangle Capital Corp. Securities Litigation, Master File No. 5:18-cv-00010-FL.
On April 10, 2018, the plaintiff filed its First Consolidated Amended Complaint. The complaint alleged certain violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements and omissions regarding our business, operations and prospects between May 7, 2014 and November 1, 2017. The plaintiff seeks compensatory damages and attorneys’ fees and costs, among other relief, but did not specify the amount of damages being sought. On May 25, 2018, the defendants filed a motion to dismiss the complaint. On March 7, 2019, the court entered an order granting the defendants’ motion to dismiss. On March 28, 2019, the plaintiff filed a motion seeking leave to file a Second Consolidated Amended Complaint. On September 20, 2019, the court entered an order denying the plaintiff’s motion for leave to file a Second Consolidated Amended Complaint and dismissing the action with prejudice. On October 17, 2019, the plaintiff filed a notice of appeal seeking review of the court’s September 20, 2019 order. The plaintiff filed its opening brief with the United States Court of Appeals for the Fourth Circuit on January 6, 2020. The defendants filed their response brief on February 28, 2020, and the plaintiff filed its reply brief on March 27, 2020. The United States Court of Appeals for the Fourth Circuit heard oral argument on the appeal on December 9, 2020. On February 22, 2021, the United States Court of Appeals for the Fourth Circuit affirmed the court’s September 20, 2019 order dismissing the action with prejudice.
Other than as set forth above, neither we, the Adviser, nor any of itsour subsidiaries isare currently a partysubject to any material pending legal proceedings.proceedings, other than ordinary routine litigation incidental to our respective businesses. We, the Adviser, and our subsidiaries may from time to time, however, be involved in litigation arising out of operations in the normal course of business or otherwise, including in connection with strategic transactions. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.
Item 1A. Risk Factors.
In addition to the other information set forth in this report, youYou should carefully consider the factors discussedrisks described in Item 1A entitled "Risk Factors" in Part I, “Item 1A. Risk Factors” in1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2020, which was filed with the SEC on February 22, 2017, which could materially affect our business, financial condition or operating results. There have been no material changes during the nine months ended September 30, 2017 to the risk factors discussedMarch 23, 2021, and all information contained in our Annualthis Quarterly Report on Form 10-K. The risks described in10-Q, including our Annual Report on Form 10-K are notinterim financial statements and the only risks that we face. Additional risksrelated notes thereto, before making a decision to purchase our securities. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affecthave a material adverse effect on our business, financial condition and/or operating results.results, as well as the market price of our securities.
There have been no material changes during the three months ended March 31, 2021 to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. If any of such risks actually occur, our business, financial condition or results of operations could be materially adversely affected. If that happens, the market price of our securities could decline, and you may lose all or part of your investment.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
During the three months ended September 30, 2017,March 31, 2021, in connection with our Dividend Reinvestment PlanDRIP for our common stockholders, we directed the plan administrator to purchase 68,35245,120 shares of our common stock for $956,662.13an aggregate of $451,326 in the open market in order to satisfy our obligations to deliver shares of common stock to our stockholders with respect to our dividend declared on August 2, 2017. In addition, during the three months ended September 30, 2017, 4,842 shares of our common stock were delivered to us at an average price per share of $13.77 in satisfaction of tax withholding obligations of a holder of restricted shares issued under the Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan that vested during the period. The following chart summarizes repurchases of our common stock for the three months ended September 30, 2017:February 7, 2021.
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Period | Total Number of Shares Purchased | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
July 1 through July 31, 2017 | — |
| | — |
| | — |
| | — |
|
August 1 through August 31, 2017 | 4,842 |
| | $ | 13.77 |
| | — |
| | — |
|
September 1 through September 30, 2017 | 68,352 |
| (1) | $ | 14.00 |
| | — |
| | — |
|
Total | 73,194 |
| | $ | 13.98 |
| | — |
| | — |
|
(1) These shares were purchased in the open market pursuant to the terms of our Dividend Reinvestment Plan.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not applicable.
Applicable
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Number | Exhibit |
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3.1 | |
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3.2 | |
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4.13.3 | |
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4.2 | |
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4.3 | |
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4.4 | |
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4.5 | |
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4.63.4 | |
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4.710.1 | |
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4.8 | |
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4.9 | First Amendment to Third Amended and Restated Credit Agreement, dated May 1, 2017, among the Company, Branch Banking and Trust Company, ING Capital LLC, Fifth Third Bank, Morgan Stanley Bank, N.A., Bank of North Carolina, EverBank Commercial Finance, Inc., First Tennessee Bank National Association, First National Bank of Pennsylvania, Capital Bank Corporation, Park Sterling Bank, Paragon Commercial Bank, Raymond James Bank, N.A. and Stifel Bank & Trust25, 2021 (Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 3, 2017February 25, 2021 and incorporated herein by reference). |
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10.1 | |
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10.2 | |
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11 | |
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31.1 | |
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31.2 | |
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32.1 | |
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32.2 | |
** Furnished Herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | | BARINGS BDC, INC. |
| | | |
| | | TRIANGLE CAPITAL CORPORATION |
| | | |
Date: | November 1, 2017May 6, 2021 | | /s/ E. Ashton PooleEric Lloyd |
| | | E. Ashton PooleEric Lloyd |
| | | President and Chief Executive Officer |
| | | (Principal Executive Officer) |
| | | |
Date: | November 1, 2017May 6, 2021 | | /s/ Steven C. LillyJonathan Bock |
| | | Steven C. LillyJonathan Bock |
| | | Chief Financial Officer and Secretary |
| | | (Principal Financial Officer) |
| | | |
Date: | November 1, 2017May 6, 2021 | | /s/ C. Robert Knox, Jr.Elizabeth A. Murray |
| | | C. Robert Knox, Jr.Elizabeth A. Murray |
| | | Principal Accounting Officer |
EXHIBIT INDEX
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Number | Exhibit |
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11 | |
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31.1 | |
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31.2 | |
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32.1 | |
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32.2 | |