# Nuveen Churchill Direct Lending Corp.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Nuveen Churchill Direct Lending Corp.](/companies/ncdl.md) (CIK 1737924)
- Form: 10-Q
- Filed: 2023-10-30
- Accepted by EDGAR: Oct 30, 2023, 17:29 ET
- Period: 2023-09-30
- Accession: 0001628280-23-035545
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1737924/000162828023035545/ncdlc-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1737924/000162828023035545/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $20.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $47.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.62 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.83 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.62 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.83 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 34,812,720,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 31,409,296,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$234.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $46.5m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2023-09-30 | $36.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2023-09-30 | $1.54bn | us-gaap:Assets |
| Total liabilities | at 2023-09-30 | $899.7m | us-gaap:Liabilities |
| Long-term debt | at 2023-09-30 | $866.5m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2023-09-30 | $639.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 78,610 characters.

*The discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The information in this section contains forward-looking statements, which relate to future events, or the future performance or financial condition of Nuveen Churchill Direct Lending Corp., including its wholly owned subsidiaries (collectively, "we", "us", "our", or the "Company"), and involves numerous risks and uncertainties, including, but not limited to, those set forth in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 and Part II, Item 1A of and elsewhere in this Quarterly Report on Form 10-Q. This discussion also should be read in conjunction with the “Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Actual results could differ materially from those implied or expressed in any forward-looking statements.*

### Overview

We were formed on March 13, 2018 as a Delaware limited liability company and converted into a Maryland corporation on June 18, 2019, prior to the commencement of operations. We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, we have elected, and intend to qualify annually thereafter, to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

Our investment objective is to generate attractive risk-adjusted returns primarily through current income by investing primarily in senior secured loans to private equity-owned U.S. middle market companies, which we define as companies with approximately $10 million to $250 million of annual earnings before interest, taxes, depreciation and amortization (“EBITDA”). We primarily focus on investing in U.S. middle market companies, with $10 million to $100 million in EBITDA, which we consider the core middle market. Our portfolio is comprised primarily of first-lien senior secured debt and unitranche loans. Although it is not our primary strategy, we also opportunistically invest in junior capital opportunities, including second-lien loans, subordinated debt, and equity co-investments and similar equity-related securities.

We have entered into an investment advisory agreement (the “Investment Advisory Agreement”) with Churchill DLC Advisor LLC (f/k/a Nuveen Churchill Advisors LLC) (the “Adviser”), under which the Adviser has delegated substantially all of its day-to-day portfolio management obligations through a sub-advisory agreement (as amended and restated, the “Sub-Advisory Agreement” and, together with the Investment Advisory Agreement, the “Advisory Agreements”) to Churchill Asset Management LLC (the “Sub-Adviser” or “Churchill” and, together with the Adviser, the “Advisers”). Under the administration agreement (the “Administration Agreement”), we are provided with certain services by an administrator, Churchill BDC Administration LLC (f/k/a Nuveen Churchill Administration LLC) (the “Administrator”). The Adviser, Sub-Adviser, and Administrator are all affiliates and subsidiaries of Nuveen, LLC (“Nuveen”), a wholly owned subsidiary of Teachers Insurance and Annuity Association of America (“TIAA”).

Churchill NCDLC CLO-I, LLC (“CLO-I”), Nuveen Churchill BDC SPV II, LLC (“SPV II”), Nuveen Churchill BDC SPV III, LLC (“SPV III”), Nuveen Churchill BDC SPV IV, LLC (“SPV IV”) and NCDL Equity Holdings LLC ("NCDL Equity Holdings") are wholly owned subsidiaries of the Company and are consolidated in these financial statements. In May 2022, CLO-I completed a term debt securitization. SPV II, SPV III and SPV IV primarily invest in first-lien senior secured debt and unitranche loans. NCDL Equity Holdings was formed to hold certain equity-related securities.

Beginning with our initial closing in March 2020, we have conducted private offerings of our shares of common stock to accredited investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). As of September 30, 2023, as a result of these private offerings, we had received aggregate capital commitments totaling $906.4 million ($242.4 million remaining undrawn), of which $100.0 million ($26.7 million remaining undrawn) were from TIAA.

### Key Components of Our Results of Operations

### Investments

Our level of investment activity varies substantially from period to period depending on many factors, including the amount we have available to invest as well as the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity in the middle market, the general economic environment and the competitive environment for the types of investments we make.

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. To the extent we continue to qualify as a RIC, we generally will not be subject to U.S federal income tax on any income we timely distribute to our shareholders.

As a BDC, we are required to comply with certain regulatory requirements. For instance, we are generally required to invest at least 70% of our total assets in “qualifying assets,” including securities of private or thinly traded public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less.

As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the 1940 Act, the term “eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250.0 million. In addition, we must be organized in the United States to qualify as a BDC.

### Revenues

We generate revenue primarily in the form of interest income on debt investments we hold. In addition, we may generate income from dividends on direct equity investments, and capital gains on the sales of loans or debt and equity securities. Our debt investments generally bear interest at a floating rate usually determined on the basis of a benchmark, such as the Secured Overnight Financing Rate (“SOFR”). Interest on these debt investments is generally paid quarterly. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we may receive repayments of some of our debt investments prior to their scheduled maturity dates. The frequency or volume of these repayments fluctuates significantly from period to period. Our portfolio activity also may reflect the proceeds of sales of securities. In addition, we may generate revenue in the form of commitment, origination, structuring, diligence, consulting or prepayment fees associated with our investment activities as well as any fees for managerial assistance services rendered by us to portfolio companies and other investment related income.

### Expenses

The Adviser, the Sub-Adviser and their affiliates are responsible for bearing the compensation and routine overhead expenses allocable to personnel providing investment advisory and management services to us. We bear all other out-of-pocket costs and expenses of its operations and transactions, including those costs and expenses incidental to the provision of investment advisory and management services to us (such as items in the third and fourth bullets listed below).

- our organizational costs;
- calculating net asset value (including the cost and expenses of any independent valuation firm);
- expenses, including travel, entertainment, lodging and meal expenses, incurred by the Advisers, or members of their investment teams or payable to third parties, in evaluating, developing, negotiating, structuring and performing due diligence on prospective portfolio companies, including such expenses related to potential investments that were not consummated, and, if necessary, enforcing our rights;
- fees and expenses incurred by the Advisers (and their affiliates) or the Administrator (or its affiliates) payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in conducting research and due diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring investments and portfolio companies on an ongoing basis;
- costs and expenses incurred in connection with the incurrence of leverage and indebtedness, including borrowings, credit facilities, securitizations, margin financing, and including any principal or interest on our borrowings and indebtedness;
- offerings, sales, and repurchases of our shares and other securities;
- fees and expenses payable under any underwriting, dealer manager or placement agent agreements;
- investment advisory fees payable under the Investment Advisory Agreement;
- administration fees and expenses, if any, payable under the Administration Agreement (including payments under the Administration Agreement between us and the Administrator, based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief financial officer and chief compliance officer, and their respective staffs);
- any applicable administrative agent fees or loan arranging fees incurred with respect to portfolio investments by the Advisers, the Administrator or an affiliate thereof;
- costs and expenses incurred in implementing or maintaining third-party or proprietary software tools, programs or other technology;
- transfer agent, dividend agent and custodial fees and expenses;
- federal and state registration fees;
- all costs of registration and listing our shares on any securities exchange;
- federal, state and local taxes;
- independent directors’ fees and expenses, including reasonable travel, entertainment, lodging and meal expenses, and any legal counsel or other advisors retained by, or at the discretion or for the benefit of, the independent directors;
- costs of preparing and filing reports or other documents required by the SEC or other regulators, and all fees, costs and expenses related to compliance-related matters and regulatory filings related to our activities and/or other regulatory filings, notices or disclosures of the Advisers and their affiliates relating to us and its activities;
- costs of any reports, proxy statements or other notices to shareholders, including printing costs;
- fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
- direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors, tax preparers and outside legal costs;
- proxy voting expenses;
- all expenses relating to payments of dividends or interest or distributions in cash or any other form made or caused to be made by our Board to or on account of holders of our securities, including in connection with any dividend reinvestment plan or direct stock purchase plan;
- costs incurred in connection with the formation or maintenance of entities or vehicles to hold our assets for tax or other purposes;
- the allocated costs incurred by the Advisers and/or the Administrator in providing managerial assistance to those portfolio companies that request;
- allocable fees and expenses associated with marketing efforts on our behalf;
- all fees, costs and expenses of any litigation involving us or our portfolio companies and the amount of any judgments or settlements paid in connection therewith, directors and officers, liability or other insurance (including costs of title insurance) and indemnification (including advancement of any fees, costs or expenses to persons entitled to indemnification) or extraordinary expense or liability relating to our affairs;
- fees, costs and expenses of winding up and liquidating our assets; and
- all other expenses incurred by us, the Advisers or the Administrator in connection with administering our business.

### Portfolio and Investment Activity

### Portfolio Composition

Our portfolio and investment activity for the three and nine months ended September 30, 2023 and 2022 is presented below (information presented herein is at amortized cost unless otherwise indicated) (dollar amounts in thousands):

| Investments: | Three Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Total investments, beginning of period | $1,391,333 | $989,885 |
| Purchase of investments | 150,866 | 137,101 |
| Proceeds from principal repayments and sales of investments | (20,490) | (5,739) |
| Payment-in-kind interest | 951 | 74 |
| Amortization of premium/accretion of discount, net | 461 | 344 |
| Net realized gain (loss) on investments | (13,107) | (501) |
| **Total investments, end of period** | $1,510,014 | $1,121,164 |
| Portfolio companies at beginning of period | 161 | 121 |
| Number of new portfolio companies funded | 14 | 14 |
| Number of portfolio companies sold or repaid | (1) | — |
| **Portfolio companies at end of period** | 174 | 135 |
| Count of investments | 363 | 267 |
| Count of industries | 24 | 23 |

| Investments: | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Total investments, beginning of period | $1,225,573 | $770,298 |
| Purchase of investments | 352,883 | 385,140 |
| Proceeds from principal repayments and sales of investments | (65,851) | (35,483) |
| Payment-in-kind interest | 1,823 | 385 |
| Amortization of premium/accretion of discount, net | 1,994 | 1,233 |
| Net realized gain (loss) on investments | (6,408) | (409) |
| **Total investments, end of period** | $1,510,014 | $1,121,164 |
| Portfolio companies at beginning of period | 145 | 96 |
| Number of new portfolio companies funded | 34 | 40 |
| Number of portfolio companies sold or repaid | (5) | (1) |
| **Portfolio companies at end of period** | 174 | 135 |
| Count of investments | 363 | 267 |
| Count of industries | 24 | 23 |

As of September 30, 2023, our portfolio companies had a weighted average reported EBITDA of $74.2 million. These calculations include all private debt investments for which fair value is determined by the Adviser in its capacity as the Valuation Designee of the Company's board of directors (the “Board”), and excludes quoted assets. Amounts are weighted based on fair market value of each respective investment as of its most recent quarterly valuation, which are derived from the most recently available portfolio company financial statements.

As of September 30, 2023 and December 31, 2022, our investments consisted of the following (dollar amounts in thousands):

|  | September 30, 2023 Amortized Cost | Fair Value | % of Fair Value | December 31, 2022 Amortized Cost | Fair Value | % of Fair Value |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| First-Lien Term Loans | $1,305,396 | $1,277,944 | 86.29% | $1,071,012 | $1,039,820 | 86.62% |
| Subordinated Debt | $181,086 | $175,053 | 11.82% | 136,353 | 133,243 | 11.10% |
| Equity Investments | $23,532 | $28,015 | 1.89% | 18,208 | 27,313 | 2.28% |
| **Total** | **$1,510,014** | **$1,481,012** | **100.00%** | **$1,225,573** | **$1,200,376** | **100.00%** |
| Largest portfolio company investment | $26,977 | $26,480 | 1.79% | $18,189 | $23,162 | 1.93% |
| Average portfolio company investment | $8,678 | $8,512 | 0.57% | $8,452 | $8,278 | 0.69% |

The industry composition of our portfolio as a percentage of fair value as of September 30, 2023 and December 31, 2022 was as follows:

| Industry | September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Aerospace & Defense | 2.47% | 2.76% |
| Automotive | 5.04% | 6.14% |
| Banking, Finance, Insurance, Real Estate | 4.87% | 4.44% |
| Beverage, Food & Tobacco | 6.98% | 6.40% |
| Capital Equipment | 5.16% | 4.14% |
| Chemicals, Plastics, & Rubber | 2.60% | 2.88% |
| Construction & Building | 3.63% | 2.65% |
| Consumer Goods: Durable | 1.72% | 1.91% |
| Consumer Goods: Non-durable | 3.67% | 4.01% |
| Containers, Packaging & Glass | 3.32% | 3.80% |
| Environmental Industries | 2.37% | 1.65% |
| Healthcare & Pharmaceuticals | 10.94% | 9.21% |
| High Tech Industries | 8.55% | 9.14% |
| Media: Advertising, Printing & Publishing | 1.26% | 1.25% |
| Media: Diversified & Production | 1.07% | 1.35% |
| Retail | 0.39% | 0.47% |
| Services: Business | 20.58% | 21.92% |
| Services: Consumer | 5.83% | 4.47% |
| Sovereign & Public Finance | 0.71% | 0.85% |
| Telecommunications | 3.42% | 4.09% |
| Transportation: Cargo | 3.18% | 3.62% |
| Transportation: Consumer | 0.15% | —% |
| Utilities: Electric | 1.03% | 0.39% |
| Wholesale | 1.06% | 2.46% |
| **Total** | 100.00% | 100.00% |

The weighted average yields of our investments as of September 30, 2023 and December 31, 2022 were as follows:

|  | September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Weighted average yield on debt and income producing investments, at cost | 11.60% | 10.61% |
| Weighted average yield on debt and income producing investments, at fair value | 11.85% | 10.87% |
| Percentage of debt investments bearing a floating rate | 94.22% | 95.42% |
| Percentage of debt investments bearing a fixed rate | 5.78% | 4.58% |

68

As of September 30, 2023, 92.43% and 92.49% of our debt and income producing investments at cost and at fair value, respectively, had interest rate floors that limit the minimum applicable interest rates on such loans. As of December 31, 2022, 95.13% and 95.09% of our debt and income producing investments at cost and at fair value, respectively, had interest rate floors that limit the minimum applicable interest rates on such loans.

The weighted average yield of our debt and income producing securities is not the same as a return on investment for our shareholders, but rather relates to our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yield was computed using the effective interest rates as of each respective date, including accretion of original issue discount, but excluding any investments on non-accrual status, if any. There can be no assurance that the weighted average yield will remain at its current level. Total weighted average yields of our debt and income producing investments, at cost, increased from 10.61% to 11.60% from December 31, 2022 to September 30, 2023. The increase in weighted average yields was primarily due to rising benchmark interest rates.

Based on current market conditions, the pace of our investment activities, including originations and repayments, may vary. Credit markets continued to be under pressure during the nine months ended September 30, 2023 amid a risk-off environment and sustained macro-economic uncertainty due to rising Treasury yields, record-high inflation, tighter financial conditions, financial market instability (including volatility in the banking system, particularly with small and regional banks), elements of geopolitical instability (including the ongoing war in Ukraine, the ongoing war in the Middle East, and U.S. and China relations) and growing recession risk. Central banks have remained focused on restoring price stability by raising interest rates and have signaled that growth may be hindered until inflation comes under control. There have been headwinds in the financing and merger and acquisition markets resulting from the foregoing factors. In the event that the U.S. economy enters into a protracted recession, it is possible that the performance of certain U.S. middle market companies could deteriorate. We are closely monitoring the effect of such market volatility may have on our portfolio companies and our investment activities, and we will continue to seek to invest in defensive businesses with low levels of cyclicality and strong levels of free cash flow generation. While we are not seeing signs of a broad-based deterioration in our performance or that of our portfolio companies at this time, there can be no assurance that the performance of certain of our portfolio companies will not be negatively impacted by economic conditions, which could have a negative impact on our future results.

### Asset Quality

In addition to various risk management and monitoring tools, we use the Advisers’ investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. Each investment team intends to utilize a systematic, consistent approach to credit evaluation, with a particular focus on an acceptable level of debt repayment and deleveraging under a “base case” set of projections (the “Base Case”), which reflects a more conservative estimate than the set of projections provided by a prospective portfolio company, which the Advisers refer to as the “Management Case.” The following is a description of the conditions associated with each investment rating:

**1. Performing - Superior:** Borrower is performing significantly above Management Case.

**2. Performing - High:** Borrower is performing at or near the Management Case (i.e., in a range slightly below to slightly above).

**3. Performing - Low Risk:** Borrower is operating well ahead of the Base Case to slightly below the Management Case.

**4. Performing - Stable Risk:** Borrower is operating at or near the Base Case (i.e., in a range slightly below to slightly above). This is the initial rating assigned to all new borrowers.

**5. Performing - Management Notice:** Borrower is operating below the Base Case. Adverse trends in business conditions and/or industry outlook are viewed as temporary. There is no immediate risk of payment default and only a low to moderate risk of covenant default.

**6. Watch List - Low Maintenance:** Borrower is operating below the Base Case, with declining margin of protection. Adverse trends in business conditions and/or industry outlook are viewed as probably lasting for more than a year. Payment default is still considered unlikely, but there is a moderate to high risk of covenant default.

**7. Watch List - Medium Maintenance:** Borrower is operating well below the Base Case, but has adequate liquidity. Adverse trends are more pronounced than in Internal Risk Rating 6 above. There is a high risk of covenant default, or it may have already occurred. Payments are current, although subject to greater uncertainty, and there is a moderate to high risk of payment default.

**8. Watch List - High Maintenance:** Borrower is operating well below the Base Case. Liquidity may be strained. Covenant default is imminent or may have occurred. Payments are current, but there is a high risk of payment default. Negotiations to restructure or refinance debt on normal terms may have begun. Further significant deterioration appears unlikely and no loss of principal is currently anticipated.

**9. Watch List - Possible Loss:** At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Liquidity is strained. Payment default may have occurred or is very likely in the short term unless creditors grant some relief. Loss of principal is possible.

**10. Watch List - Probable Loss:** At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have already occurred. Liquidity is extremely limited. The prospects for improvement in the borrower’s situation are sufficiently negative that loss of some or all principal is probable.

The Sub-Adviser regularly monitors and, when appropriate, changes the investment rating assigned to each investment in our portfolio. Each investment team will review the investment ratings in connection with monthly or quarterly portfolio reviews. Based on a generally uncertain economic outlook in the United States (which includes a possible recession), we have increased oversight and analysis of credits in any vulnerable industries in an attempt to improve loan performance and reduce credit risk.

The following table shows the investment ratings of the investments in our portfolio (dollar amounts in thousands):

|  | September 30, 2023 Fair Value | % of Portfolio | Number of Portfolio Companies | December 31, 2022 Fair Value | % of Portfolio | Number of Portfolio Companies |
| ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| 1 | $— | —% | — | $— | —% | — |
| 2 | — | —% | — | — | —% | — |
| 3 | 64,424 | 4.35% | 7 | 42,921 | 3.58% | 4 |
| 4 | 1,228,370 | 82.94% | 139 | 1,028,738 | 85.70% | 124 |
| 5 | 135,410 | 9.14% | 19 | 71,433 | 5.95% | 11 |
| 6 | 30,351 | 2.05% | 5 | 48,386 | 4.03% | 5 |
| 7 | 14,268 | 0.96% | 2 | — | —% | — |
| 8 | 6,445 | 0.44% | 1 | — | —% | — |
| 9 | — | —% | — | 8,898 | 0.74% | 1 |
| 10 | 1,744 | 0.12% | 1 | — | —% | — |
| **Total** | **$1,481,012** | **100.00%** | **174** | **$1,200,376** | **100.00%** | **145** |

As of September 30, 2023 and December 31, 2022, the weighted average Internal Risk Rating of our investment portfolio was 4.17 and 4.14, respectively. As of September 30, 2023 and December 31, 2022, the fair value of the loans on non-accrual status was $1.7 million and $8.9 million, respectively, which represents approximately 0.12% and 0.74%, respectively, of total investments at fair value. As of September 30, 2023 and December 31, 2022, the amortized cost of the loans on non-accrual status was $3.4 million and $14.7 million, respectively, which represents approximately 0.23% and 1.20%, respectively, of total investments at amortized cost.

### Results of Operations

Operating results for the three and nine months ended September 30, 2023 and 2022 were as follows (dollars amounts in thousands):

| Investment Income | Three Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Interest income | $40,370 | $21,438 |
| Payment-in-kind interest income | 951 | 216 |
| Dividend income | 16 | 130 |
| Other income | 409 | 816 |
| Total investment income | 41,746 | 22,600 |
| **Expenses** |  |  |
| Interest and debt financing expenses | 16,048 | 7,301 |
| Management fees | 2,722 | 2,000 |
| Professional fees | 730 | 296 |
| Directors' fees | 96 | 96 |
| Administration fees | 370 | 210 |
| Other general and administrative expenses | 98 | 332 |
| Total expenses before expense support | 20,064 | 10,235 |
| Expense support | — | (55) |
| Net expenses after expense support | 20,064 | 10,180 |
| Net investment income | $21,682 | $12,420 |
| **Net Realized and Change in Unrealized Gains (Losses)** |  |  |
| Net realized gains (losses) | $(13,107) | $(501) |
| Net change in unrealized gains (losses) | 11,574 | (5,924) |
| Total net realized and change in unrealized gains (losses) | (1,533) | (6,425) |
| Net increase (decrease) in net assets resulting from operations | $20,149 | $5,995 |

71

| Investment Income | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Interest income | $110,049 | $51,105 |
| Payment-in-kind interest income | 1,823 | 544 |
| Dividend income | 56 | 130 |
| Other income | 879 | 1,421 |
| Total investment income | 112,807 | 53,200 |
| **Expenses** |  |  |
| Interest and debt financing expenses | 43,089 | 14,559 |
| Management fees | 7,503 | 5,252 |
| Professional fees | 2,284 | 741 |
| Directors' fees | 287 | 287 |
| Administration fees | 1,029 | 615 |
| Other general and administrative expenses | 1,388 | 645 |
| Total expenses before expense support | 55,580 | 22,099 |
| Expense support | (158) | (149) |
| Net expenses after expense support | 55,422 | 21,950 |
| Net investment income | $57,385 | $31,250 |
| **Net Realized and Change in Unrealized Gains (Losses)** |  |  |
| Net realized gains (losses) | $(6,408) | $(409) |
| Net change in unrealized gains (losses) | (3,805) | (20,815) |
| Total net realized and change in unrealized gains (losses) | (10,213) | (21,224) |
| Net increase (decrease) in net assets resulting from operations | $47,172 | $10,026 |

Net increase (decrease) in net assets resulting from operations can vary from period to period as a result of various factors, including the level of new investment commitments, expenses, the recognition of realized gains and losses, and changes in unrealized appreciation and depreciation on the investment portfolio.

#### Investment income

Investment income, attributable to interest and fees on our debt investments, increased to $41.7 million and $112.8 million for the three and nine months ended September 30, 2023, respectively, from $22.6 million and $53.2 million for the comparable periods in the prior year, primarily due to increased investment activity driven by an increase in our deployed capital and an increase in interest income from higher weighted average interest rates. As of September 30, 2023, the size of our portfolio increased to $1.5 billion from $1.1 billion as of September 30, 2022, at cost. As of September 30, 2023, the weighted average yield of our debt and income producing investments increased to 11.60% from 9.55% as of September 30, 2022 on cost, primarily due to increases in base interest rates. The shifting environment in base interest rates, such as SOFR and alternate rates, may continue to affect our investment income over the long term.

#### Expenses

Total expenses before expense support increased to $20.1 million and $55.6 million for the three and nine months ended September 30, 2023, respectively, from $10.2 million and $22.1 million for the three and nine ended September 30, 2022.

Interest and debt financing expenses increased for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022 primarily due to higher average daily borrowings, higher average interest rates, and the 2022 Debt Securitization (as defined below), which was completed on May 20, 2022. The average daily borrowings for the three and nine months ended September 30, 2023 was $819.0 million and $777.5 million compared to $614.0 million and $516.8 million for the three and nine months ended September 30, 2022. The average interest rate for the three and nine months ended September 30, 2023 was 7.51% and 7.17% compared to 4.49% and 3.52% for the three and nine months ended September 30, 2022.

The increase in management fees for the three and nine months ended September 30, 2023 from the comparable period in 2022 were driven by our increased deployment of capital and our increasing invested balance.

Professional fees include legal, audit, tax, valuation, and other professional fees incurred related to the management of us. Administrative fees represent fees paid to the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of the our chief financial officer and chief compliance officer, and their respective staffs. Other general and administrative expenses include insurance, filing, research, rating agencies, subscriptions and other costs. The increase in professional fees, administration fees and other general and administrative fees for the three and nine months ended September 30, 2023 from the comparable period in 2022 was driven by growing needs of the business given the increase in the Company's size.

The expense support amount represents the amount of expenses paid by the Adviser on our behalf in accordance with the Expense Support Agreement (described further below). These expenses are subject to reimbursement by us in accordance with the terms of the Expense Support Agreement. Refer to the "Related Party Transactions" section below for further details on the Expense Support Agreement.

#### Net realized gain (loss) and Net change in unrealized gains (losses) on investments

For the three months ended September 30, 2023, we had a net realized loss on investments of $(13.1) million compared to a net realized loss of $(501) thousand for the three months ended September 30, 2022. The increase in the net realized loss is primarily driven by a final realization related to an underperforming debt position during the three months ended September 30, 2023. For the nine months ended September 30, 2023 we had a net realized loss on investments of $(6.4) million compared to a net realized loss of $(409) thousand for the nine months ended September 30, 2022. The increase in the net realized loss is primarily driven by a final realization of an underperforming debt position at a loss in the third quarter of 2023 partially offset by the sale of two equity investments in our portfolio during the first quarter of 2023, which generated realized gains.

We recorded a net change in unrealized gain of $11.6 million for the three months ended September 30, 2023, compared to a net unrealized loss of $(5.9) million for three months ended September 30, 2022, which reflects the net change in the fair value of our investment portfolio relative to its cost basis over the period. The unrealized gain for the three months ended September 30, 2023, resulted primarily from a reversal of an unrealized loss on an underperforming debt position and the tightening of market spreads combined with an improvement in our portfolio companies' credit metrics.

We recorded a net change in unrealized loss of $(3.8) million for the nine months ended September 30, 2023, compared to a net unrealized loss of $(20.8) million for the nine months ended September 30, 2022, which reflects the net change in the fair value of our investment portfolio relative to its cost basis over the period. The decrease in unrealized losses for the nine months ended September 30, 2023 compared to the comparable period in 2022 resulted primarily from a reversal of an unrealized loss on an underperforming debt position and the tightening of market spreads combined with an improvement in our portfolio companies' credit metrics.

### Liquidity and Capital Resources

Our liquidity and capital resources are generated primarily from the proceeds of capital drawdowns of our privately placed capital commitments, cash flows from income earned from our investments and principal repayments, and our net borrowings from our credit facilities and CLO-I debt issuance (discussed further below). Due to the diverse capital sources available to us at this time, we believe we have adequate liquidity to support our near-term capital requirements. Due to an uncertain economic outlook and current market volatility, we regularly evaluate our overall liquidity position and take proactive steps to maintain that position based on such circumstances. The primary uses of our cash are (i) purchases of investments in portfolio companies, (ii) funding the cost of our operations (including fees paid to our Adviser), (iii) debt service, repayment and other financing costs of our borrowings and (iv) cash distributions to the holders of our shares.

We are generally permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our shares if our asset coverage, as defined in the 1940 Act, is at least equal to 150%, if certain requirements are met. In connection with our organization, our Board and TIAA (as our initial shareholder) authorized us to adopt the 150% asset coverage ratio. As of September 30, 2023 and December 31, 2022, our asset coverage ratio was 173.74% and 174.41%, respectively.

Cash and restricted cash as of September 30, 2023, taken together with our uncalled capital commitments of $242.4 million, is expected to be sufficient for our investment activities and to conduct our operations in the near term. As of September 30, 2023, we had $88.9 million available under our Wells Fargo Financing Facility (as defined below), $12.2 million available under our SMBC Financing Facility (as defined below), and $113.5 million available under our SMBC Corporate Revolver (as defined below).

For the nine months ended September 30, 2023, our cash and cash equivalents balance decreased by $(3.3) million. During that period, $234.8 million was used in operating activities, primarily relating to investment purchases of $352.9 million, offset by $65.9 million in repayments and sales of investments in portfolio companies. During the same period, $231.5 million was provided by financing activities, consisting primarily of proceeds from issuance of common shares and secured borrowings of $119.0 million and $340.6 million, respectively, net of shareholder distributions and repayments of secured borrowings of $46.5 million and $179.5 million, respectively.

### Equity

#### Subscriptions and Drawdowns

Our authorized stock consists of 500,000,000 shares of stock, par value $0.01 per share, all of which are initially designated as common stock. On December 19, 2019, we issued our initial 50 shares to TIAA in connection with our formation. Churchill Middle Market CLO V Ltd., an entity that merged with and into SPV I immediately before our BDC election (the "Predecessor Entity") with SPV I as the surviving entity (the "Merger"), authorized the issuance of up to 497,500,000 redeemable Preference Shares (“Preference Shares”), par value of U.S. $0.0001 per share. The Predecessor Entity issued its Preference Shares to TIAA as the sole preference shareholder. On December 31, 2019, as a result of the Merger, the Preference Shares issued by the Predecessor Entity were converted and exchanged for 3,310,540 shares of our common stock. As of September 30, 2023, TIAA owned 3,671,631 shares of our common stock, or 10.32% of our shares outstanding.

On March 13, 2020, we held our initial closing in connection with the initial fundraising period and entered into subscription agreements with investors providing for the private placement of our shares. We held several closings subsequent to the initial closing until March 13, 2022. On March 8, 2022, our Board determined to conduct a follow-on offering of our shares of common stock following the end of the initial fundraising period, which ended on March 13, 2022 (the “Initial Follow-on Offering”). The final closing of the Initial Follow-on Offering was held on June 15, 2022. Subsequently, on March 7, 2023, our Board determined to conduct an additional follow-on private offering of our shares of common stock (the "Follow-on Offering"). The final closing of the Follow-on Offering was April 28, 2023. Under the terms of the subscription agreements, investors are required to fund drawdowns to purchase our shares of common stock up to the amount of their respective capital commitment each time we deliver a drawdown notice. As of September 30, 2023, we had received capital commitments totaling $906.4 million ($242.4 million remaining undrawn), of which $100.0 million ($26.7 million remaining undrawn) is from TIAA, an entity affiliated with the Company.

The following table summarizes total shares issued and proceeds received related to capital activity from inception to September 30, 2023 (dollar amounts in thousands, except per share data):

| Date | Shares Issued | Proceeds Received | Issuance Price per Share |
| --- | ---: | ---: | ---: |
| July 17, 2023 | 4,357,515 | $78,565 | $18.03 |
| April 20, 2023 | 2,205,038 | $40,000 | $18.14 |
| December 21, 2022 | 3,193,195 | $60,000 | $18.79 |
| August 1, 2022 | 2,652,775 | $50,082 | $18.88 |
| April 25, 2022 | 1,800,426 | $34,964 | $19.42 |
| January 21, 2022 | 1,541,568 | $30,000 | $19.46 |
| December 9, 2021 | 1,491,676 | $29,207 | $19.58 |
| November 1, 2021 | 1,546,427 | $30,000 | $19.40 |
| August 23, 2021 | 2,593,357 | $50,000 | $19.28 |
| July 26, 2021 | 1,564,928 | $30,000 | $19.17 |
| June 22, 2021 | 1,034,668 | $20,000 | $19.33 |
| April 23, 2021 | 1,845,984 | $35,000 | $18.96 |
| March 11, 2021 | 785,751 | $15,000 | $19.09 |
| November 6, 2020 | 1,870,660 | $35,000 | $18.71 |
| October 16, 2020 | 1,057,641 | $20,000 | $18.91 |
| August 6, 2020 | 1,105,425 | $20,000 | $18.09 |
| May 7, 2020 | 1,069,522 | $20,000 | $18.70 |
| December 31, 2019 | 3,310,540 | $66,211 | $20.00 |
| December 19, 2019 | 50 | $1 | $20.00 |

74

#### Dividends and Distributions

To the extent that we have taxable income available, we intend to make quarterly distributions to our common shareholders. Dividends and distributions to common shareholders are recorded on the applicable record date. The amount to be distributed to common shareholders is determined by our Board each quarter and is generally based upon the taxable earnings estimated by management and available cash. Net realized capital gains, if any, will generally be distributed at least annually, although we may decide to retain such capital gains for investment.

We have adopted a dividend reinvestment plan under which shareholders will automatically receive dividends and other distributions in cash unless they elect to have their dividends and other distributions reinvested in additional shares. As a result of the foregoing, if our Board authorizes, and we declare, a cash dividend or distribution, shareholders that have “opted in” to our dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares rather than receiving cash.

The following table summarizes the dividends declared from inception through September 30, 2023:

| Date Declared | Record Date | Payment Date | Dividend per Share |
| --- | --- | --- | ---: |
| September 28, 2023 | September 28, 2023 | October 12, 2023 | $0.50 |
| September 28, 2023 | September 28, 2023 | October 12, 2023 | $0.05 (2) |
| June 28, 2023 | June 28, 2023 | July 12, 2023 | $0.50 |
| June 28, 2023 | June 28, 2023 | July 12, 2023 | $0.05 (2) |
| March 30, 2023 | March 30, 2023 | April 12, 2023 | $0.50 |
| March 30, 2023 | March 30, 2023 | April 12, 2023 | $0.26 (1) |
| December 29, 2022 | December 29, 2022 | January 17, 2023 | $0.50 |
| September 28, 2022 | September 28, 2022 | October 11, 2022 | $0.47 |
| June 30, 2022 | June 30, 2022 | July 12, 2022 | $0.43 |
| March 30, 2022 | March 31, 2022 | April 12, 2022 | $0.41 |
| December 29, 2021 | December 29, 2021 | January 18, 2022 | $0.40 |
| September 29, 2021 | September 29, 2021 | October 11, 2021 | $0.38 |
| June 29, 2021 | June 29, 2021 | July 12, 2021 | $0.31 |
| March 29, 2021 | March 29, 2021 | April 19, 2021 | $0.30 |
| December 29, 2020 | December 29, 2020 | January 18, 2021 | $0.28 |
| November 4, 2020 | November 4, 2020 | November 11, 2020 | $0.23 |
| August 4, 2020 | August 4, 2020 | August 11, 2020 | $0.28 |
| April 16, 2020 | April 16, 2020 | April 21, 2020 | $0.17 |

(1) Represents a special dividend attributable to net realized gains on investments and a supplemental dividend attributable to accrued net investment income.

(2) Represents a supplemental dividend attributable to accrued net investment income.

The following table reflects the shares issued pursuant to the dividend reinvestment plan from inception through September 30, 2023:

| Date Declared | Record Date | Payment Date | Shares Issued |
| --- | --- | --- | ---: |
| September 28, 2023 | September 28, 2023 | October 12, 2023 | 158,545 |
| June 28, 2023 | June 28, 2023 | July 12, 2023 | 128,818 |
| March 30, 2023 | March 30, 2023 | April 12, 2023 | 150,703 |
| December 29, 2022 | December 29, 2022 | January 17, 2023 | 93,329 |
| September 28, 2022 | September 28, 2022 | October 11, 2022 | 68,093 |
| June 30, 2022 | June 30, 2022 | July 12, 2022 | 45,341 |
| March 30, 2022 | March 31, 2022 | April 12, 2022 | 32,320 |
| December 29, 2021 | December 29, 2021 | January 18, 2022 | 23,017 |
| September 29, 2021 | September 29, 2021 | October 11, 2021 | 10,639 |
| June 29, 2021 | June 29, 2021 | July 12, 2021 | 3,039 |
| March 29, 2021 | March 29, 2021 | April 19, 2021 | 1,824 |
| December 29, 2020 | December 29, 2020 | January 18, 2021 | 1,550 |
| November 4, 2020 | November 4, 2020 | November 11, 2020 | 98 |
| August 4, 2020 | August 4, 2020 | August 11, 2020 | 34 |

#### Income Taxes

We have elected and intend to qualify annually to be treated as a RIC for U.S. federal income tax purposes under the Code. If we qualify as a RIC, we will not be taxed on our investment company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to shareholders on a timely basis.

Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation until realized. Dividends declared and paid by us in a year may differ from taxable income for that year as such dividends may include the distribution of current year taxable income or the distribution of prior year taxable income carried forward into and distributed in the current year. Distributions also may include returns of capital.

To qualify for RIC tax treatment, we must, among other things, distribute, with respect to each taxable year, at least 90% of our investment company net taxable income (i.e., our net ordinary income and our realized net short-term capital gains in excess of realized net long-term capital losses, if any). If we qualify as a RIC, we may also be subject to a U.S. federal excise tax, based on distribution requirements of our taxable income on a calendar year basis. Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next year and pay a 4% U.S. federal excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year that generated such taxable income.

We intend to distribute to our shareholders between 90% and 100% of our annual taxable income (which includes our taxable interest and fee income). We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. We cannot assure shareholders that they will receive any distributions or distributions at a particular level.

#### Secured Debt

See Note 5 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our debt.

#### Wells Fargo Financing Facility

The Predecessor Entity borrowed funds under a credit agreement (the “Credit Agreement”), dated October 23, 2018, by and among the Predecessor Entity, Nuveen Alternatives Advisors LLC, as the original collateral manager to the Predecessor Entity, TIAA, as the sole preference shareholder (the “Preference Shareholder”), and Wells Fargo Bank, N.A., as lender (“Wells Fargo”) and administrative agent. As part of the Credit Agreement, the Predecessor Entity issued to Wells Fargo a $175 million variable funding note (the “Wells Fargo Financing Facility”). On December 31, 2019, effective on the date of the Merger, the Credit Agreement was transferred to SPV I and the borrowings under the Credit Agreement were assumed by SPV I and the Company serves as the collateral manager (the “Wells Fargo Financing Facility Agreement”).

The Wells Fargo Financing Facility Agreement was amended on October 28, 2020 and March 31, 2022. The most recent amendment on March 31, 2022, among other changes, extended the reinvestment period from October 28, 2023 to March 31, 2025 and the maturity date from October 28, 2025 to March 31, 2027, and changed the interest rate payable under the Agreement to the sum of 2.20% plus SOFR.

On May 5, 2022, SPV III entered into the borrower joinder agreement (the “Joinder”) to become party to the Wells Fargo Financing Facility Agreement. Effective May 20, 2022, following the closing of the 2022 Debt Securitization (discussed further below), the maximum facility amount available was reduced to $275 million from $350 million and SPV III began borrowing under the Wells Fargo Financing Facility.

The Wells Fargo Financing Facility Agreement, as amended, also requires the Company to maintain an asset coverage ratio equal to at least 1.50:1.00. The amount of the borrowings under the Wells Fargo Financing Facility equals the amount of the outstanding advances. Advances under the Wells Fargo Financing Facility may be prepaid and reborrowed at any time during the reinvestment period, but any termination or reduction of the facility amount prior to the first anniversary of the date of the amendment (subject to certain exceptions) is subject to a commitment reduction fee of 1%.

As of September 30, 2023 the Wells Fargo Financing Facility bore interest at a rate of SOFR, reset daily plus 2.20% per annum. As of December 31, 2022, the Wells Fargo Financing Facility bore interest at monthly SOFR, reset daily plus 2.20% per annum.

CLO-I and SPV III, beginning May 5, 2022, have pledged all of their assets to the collateral agent to secure their obligations under the Wells Fargo Financing Facility. Each of the Company, CLO-I, and SPV III have made customary representations and warranties and are required to comply with various financial covenants related to liquidity and other maintenance covenants, reporting requirements and other customary requirements for similar facilities.

#### Subscription Facility

On September 10, 2020, we entered into a revolving credit agreement (the “Subscription Facility Agreement” and the facility thereunder, the “Subscription Facility”) with Sumitomo Mitsui Banking Corporation (“SMBC”), as the administrative agent for certain secured parties, the syndication agent, the lead arranger, the book manager, the letter of credit issuer and the lender. The Subscription Facility had a maximum commitment of $50 million, subject to availability under the "Borrowing Base." The Borrowing Base is calculated based on the unfunded capital commitments of certain investors that have subscribed to purchase shares of the Company, to the extent the capital commitments of such investors also have been approved by SMBC for inclusion in the Borrowing base and meet certain additional criteria. The Subscription Facility Agreement expired on September 8, 2023, and we fully paid down the outstanding balance including the accrued interest expense.

#### SMBC Financing Facility

On November 24, 2020, SPV II entered into a senior secured revolving credit facility (the “SMBC Financing Facility” and the agreement relating thereto the “SMBC Financing Facility Agreement”) with SMBC, as the administrative agent, the collateral agent and the lender.

The SMBC Financing Facility Agreement was amended on December 23, 2021 and June 29, 2022. The most recent amendment on June 29, 2022, among other thing, increased the maximum facility amount available from $225 million to $300 million (the “Maximum Facility Amount”), and changed the benchmark used to compute interest from LIBOR plus 2.15% to SOFR plus 2.15%. In addition to the interest rate payable, there is a structuring fee of 1.00% and an unused commitment fee of 0.50% per annum on the undrawn amount under the SMBC Financing Facility. Advances under the SMBC Financing Facility Agreement may be prepaid and reborrowed at any time during the reinvestment period.

Under the SMBC Financing Facility, which matures on November 24, 2025, the lender has agreed to extend credit to SPV II in an aggregate principal amount up to the Maximum Facility Amount. The Company's ability to draw under the SMBC Financing Facility is scheduled to terminate on November 24, 2023. As of September 30, 2023 and December 31, 2022, the SMBC Financing Facility bore interest at one-month SOFR plus 2.15%, respectively, per annum.

SPV II has pledged all of its assets to the collateral agent to secure its obligations under the SMBC Financing Facility. Both the Company and SPV II have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar facilities.

#### CLO-I

On May 20, 2022 (the “Closing Date”), the Company completed a $448.3 million term debt securitization (the “2022 Debt Securitization”). Term debt securitization is also known as a collateralized loan obligation and is a form of secured financing incurred by the Company.

The notes offered in the 2022 Debt Securitization (the “2022 Notes”) were issued by CLO-I, an indirect, wholly owned, consolidated subsidiary of the Company. The 2022 Notes consist of $199.0 million of AAA Class A-1 2022 Notes, which bear interest at the three-month Term SOFR plus 1.80%; $34.3 million of AAA Class A-1F 2022 Notes, which bear interest at 4.42%; $47.3 million of AA Class B 2022 Notes, which bear interest at the three-month Term SOFR plus 2.30%; $31.5 million of A Class C 2022 Notes, which bear interest at the three-month Term SOFR plus 3.15%; $27.0 million of BBB Class D 2022 Notes, which bear interest at the three-month Term SOFR plus 4.15%; and approximately $79.3 million of Subordinated 2022 Notes, which do not bear interest. The Company directly owns all of the BBB Class D 2022 Notes and the Subordinated 2022 Notes and as such, these notes are eliminated in consolidation.

As part of the 2022 Debt Securitization, CLO-I also entered into a loan agreement (the “CLO-I Loan Agreement”) on the Closing Date, pursuant to which various financial institutions and other persons which are, or may become, parties to the CLO-I Loan Agreement as lenders (the “Lenders”) committed to make $30.0 million of AAA Class A-L 2022 Loans to CLO-I (the “2022 Loans” and, together with the 2022 Notes, the “2022 Debt”). The 2022 Loans bear interest at the three-month Term SOFR plus 1.80% and were fully drawn upon the closing of the transactions. Any Lender may elect to convert all of the Class A-L 2022 Loans held by such Lenders into Class A-1 2022 Notes upon written notice to CLO-I in accordance with the CLO-I Loan Agreement.

The 2022 Debt is backed by a diversified portfolio of senior secured and second lien loans. Through April 20, 2026, all principal collections received on the underlying collateral may be used by CLO-I to purchase new collateral under the direction of the Company, in its capacity as collateral manager of CLO-I and in accordance with the Company’s investment strategy, allowing the Company to maintain the initial leverage in the 2022 Debt Securitization. The 2022 Notes are due on April 20, 2034. The 2022 Loans are scheduled to mature, and, unless earlier repaid, the entire unpaid principal balance thereof is due and payable on April 20, 2034.

The 2022 Debt is the secured obligation of CLO-I, and the indenture and the CLO-I Loan Agreement, as applicable, governing the 2022 Debt includes customary covenants and events of default. The 2022 Debt has not been, and will not be, registered under the Securities Act, or any state “blue sky” laws.

The Company serves as collateral manager to CLO-I under a collateral management agreement (the “Collateral Management Agreement”) and has waived the management fee due to it in consideration for providing these services.

#### Revolving Credit Facility

On June 23, 2023, we entered into a senior secured revolving credit agreement (the “Senior Secured Revolving Credit Agreement” and facility thereunder, the “Revolving Credit Facility” and together with the Wells Fargo Financing Facility and SMBC Financing Facility, the “Financing Facilities”) with SMBC as the lender, administrative agent, and one of the lead arrangers along with Wells Fargo. The Revolving Credit Facility is guaranteed by NCDL Equity Holdings and will be guaranteed by certain of our subsidiaries that are formed or acquired in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility will be used for general corporate purposes, including the funding of portfolio investments.

The initial maximum principal amount of the Revolving Credit Facility is $185 million, subject to availability under the borrowing base, which is based on our portfolio investments and other outstanding indebtedness. Maximum capacity under the Revolving Credit Facility may be increased to $300 million through the exercise by us of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility is secured by a perfected first-priority interest in substantially all of the portfolio investments held by the Company and each Guarantor, subject to certain exceptions, and includes a $25 million limit for swingline loans.

The availability period under the Revolving Credit Facility will terminate on June 23, 2027 (the “Commitment Termination Date”) and will mature on June 23, 2028 (the “Final Maturity Date”). During the period from the Commitment Termination Date to the Final Maturity Date, we will be obligated to make mandatory prepayments out of the proceeds of certain asset sales and other recovery events and equity and debt issuances.

We may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn in U.S. dollars will bear interest at either term SOFR plus a margin, or the prime rate plus a margin. We may elect either the term SOFR or prime rate at the time of drawdown, and loans denominated in U.S. dollars may be converted from one rate to another at any time at our option, subject to certain conditions. Amounts drawn in other permitted currencies will bear interest at the relevant rate specified therein plus an applicable margin. We also will pay a fee of 0.375% on average daily undrawn amounts. As of September 30, 2023, the Revolving Credit Facility bore interest at one-month SOFR plus 2.25% per annum.

The Senior Secured Revolving Credit Agreement includes customary covenants, including certain limitations on the incurrence by the Company of additional indebtedness and on the Company’s ability to make distributions to its shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and certain financial covenants related to asset coverage and minimum shareholders’ equity, as well as customary events of default.

### Contractual Obligations

The following tables show the contractual maturities of our debt obligations as of September 30, 2023 and December 31, 2022 (dollar amounts in thousands):

| As of September 30, 2023 | Payments Due by Period Total | Less than 1 Year | 1 to 3 years | 3 to 5 years | More than 5 Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Wells Fargo Financing Facility | $185,700 | $— | $— | $185,700 | $— |
| SMBC Financing Facility | 286,347 | — | 286,347 | — | — |
| Revolving Credit Facility | 52,500 | — | — | — | 52,500 |
| CLO-I | 342,000 | — | — | — | 342,000 |
| **Total debt obligations** | $866,547 | $— | $286,347 | $185,700 | $394,500 |

| As of December 31, 2022 | Payments Due by Period Total | Less than 1 Year | 1 to 3 years | 3 to 5 years | More than 5 Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Wells Fargo Financing Facility | $111,300 | $— | $— | $111,300 | $— |
| Subscription Facility | — | — | — | — | — |
| SMBC Financing Facility | 252,147 | — | 252,147 | — | — |
| CLO-I | 342,000 | — | — | — | 342,000 |
| **Total debt obligations** | $705,447 | $— | $252,147 | $111,300 | $342,000 |

### Related-Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

- the Investment Advisory Agreement;
- the Sub-Advisory Agreement;
- the Administration Agreement; and
- the Expense Support Agreement.

In addition, on June 7, 2019, the SEC granted an exemptive order (the “Order”) that permits us to participate in negotiated co-investment transactions with certain other funds and accounts sponsored or managed by either of the Advisers and/or their affiliates, subject to the conditions of the Order. Pursuant to the Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Board's independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of the Company's stockholders and is consistent with its then-current investment objective and strategies. Neither we nor the affiliated funds are obligated to invest or co-invest when investment opportunities are referred to us or them.

In addition, pursuant to an exemptive order issued by the SEC on April 8, 2020 and applicable to all BDCs through December 31, 2020 (the “Temporary Relief”), the Company was permitted, subject to the satisfaction of certain conditions, to complete follow-on investments in our existing portfolio companies with certain affiliates that are private funds if such private funds did not hold an investment in such existing portfolio company. Without the Temporary Relief, such private funds would not be able to participate in such follow-on investments with us unless the private funds had previously acquired securities of the portfolio company in a co-investment transaction with the Company. Although the Temporary Relief expired on December 31, 2020, the SEC’s Division of Investment Management had indicated that until March 31, 2022, it would not recommend enforcement action, to the extent that any BDC with an existing co-investment order continues to engage in certain transactions described in the Temporary Relief, pursuant to the same terms and conditions described therein. The conditional exemptive order is no longer effective; however, on October 14, 2022, the SEC granted an exemptive order to permit the Company to continue to complete follow-on investments in its existing portfolio companies with certain affiliates that are private funds if such private funds did not hold an investment in such existing portfolio company, subject to certain conditions.

### Expense Support Agreement

We have entered into the Expense Support Agreement with the Adviser. The Adviser may pay certain of our expenses (each, an “Expense Payment”), provided that no portion of the payment will be used to pay any of our interest expense. Such Expense Payment will be made in any combination of cash or other immediately available funds no later than forty-five days after a written commitment from the Adviser to pay such expense, and/or by an offset against amounts due from us to the Adviser or its affiliates.

Following any calendar quarter in which Available Operating Funds (as defined below) exceed the cumulative distributions accrued to our shareholders based on distributions declared with respect to record dates occurring in such calendar quarter (such amount referred to as the “Excess Operating Funds”), we will pay such Excess Operating Funds, or a portion thereof (each, a “Reimbursement Payment”), to the Adviser until such time as all Expense Payments made by the Adviser to us within three years prior to the last business day of such calendar quarter have been reimbursed. “Available Operating Fund" means the sum of (i) net investment income (including net realized short-term capital gains reduced by net realized long-term capital losses), (ii) net capital gains (including the excess of net realized long-term capital gains over net realized short-term capital losses) and (iii) dividends and other distributions paid to us on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above). The amount of the Reimbursement Payment for any calendar quarter will equal the lesser of (i) the Excess Operating Funds in such quarter and (ii) the aggregate amount of all Expense Payments made by the Adviser to us within three years prior to the last business day of such calendar quarter that have not been previously reimbursed by us to the Adviser.

No Reimbursement Payment will be made for any quarter if: (1) the annualized rate (based on a 365-day year) of regular cash distributions per share of common stock declared by our Board exclusive of returns of capital, distribution rate reductions due to any fees (including to a transfer agent) payable in connection with distributions, and any declared special dividends or distributions (the “Effective Rate of Distributions Per Share”) declared by us at the time of such Reimbursement Payment, is less than the Effective Rate of Distributions Per Share at the time the Expense Payment was made to which such Reimbursement Payment relates, or (2) our Operating Expense Ratio (as defined below) at the time of such Reimbursement Payment is greater than the Operating Expense Ratio at the time the Expense Payment was made to which such Reimbursement Payment relates. The “Operating Expense Ratio” is calculated by dividing Operating Expenses (as defined below), less organizational and offering expenses, base management and incentive fees owed to the Adviser, and interest expense, by our net assets. “Operating Expenses” means all of our operating costs and expenses incurred, as determined in accordance with U.S. GAAP. The Adviser may waive its right to receive all or a portion of any Reimbursement Payment in any particular calendar quarter, in which case such Reimbursement Payment may be reimbursable in a future calendar quarter.

The following table presents a cumulative summary of the Expense Payments and Reimbursement Payments since our commencement of operations (dollars amounts in thousands):

| For the Quarter Ended | Expense Payments by Adviser | Reimbursement Payments to Adviser | Expired Expense Support | Unreimbursed Expense Payments | Reimbursement Eligibility Expiration |
| --- | ---: | ---: | ---: | ---: | --- |
| December 31, 2019 | $1,696 | $— | $(1,696) | $— | December 31, 2022 |
| March 31, 2020 | 182 | — | (182) | — | March 31, 2023 |
| June 30, 2020 | 3 | (3) | — | 0 | June 30, 2023 |
| September 30, 2020 | 466 | (466) | — | 0 | September 30, 2023 |
| December 31, 2020 | 56 | — | — | 56 | December 31, 2023 |
| March 31, 2021 | 97 | — | — | 97 | March 31, 2024 |
| June 30, 2021 | 62 | — | — | 62 | June 30, 2024 |
| September 30, 2021 | 47 | — | — | 47 | September 30, 2024 |
| December 31, 2021 | 42 | — | — | 42 | December 31, 2024 |
| March 31, 2022 | 71 | — | — | 71 | March 31, 2025 |
| June 30, 2022 | 54 | — | — | 54 | June 30, 2025 |
| September 30, 2022 | 67 | — | — | 67 | September 30, 2025 |
| December 31, 2022 | — | — | — | — | December 31, 2025 |
| March 31, 2023 | — | — | — | — | March 31, 2026 |
| June 30, 2023 | 136 | — | — | 136 | June 30, 2026 |
| **Total** | **$2,979** | **$(469)** | **$(1,878)** | **$632** |  |

### Off-Balance Sheet Arrangements

In the ordinary course of its business, the Company enters into contracts or agreements that contain indemnifications or warranties. Future events could occur which may give rise to liabilities arising from these provisions against us. We believe that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in these consolidated financial statements as of September 30, 2023 and December 31, 2022. We have in the past and may in the future become obligated to fund commitments such as delayed draw commitments.

*For more information on our off-balance sheet arrangements, commitments and contingencies see Note 6 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report Form 10-Q.*

### Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies and estimates, including those relating to the valuation of our portfolio investments, are described below. We consider the most significant accounting policies to be those related to our Valuation of Portfolio Investments, Revenue Recognition, and U.S. Federal Income Taxes, are described below. The valuation of investments is our most significant critical estimate. The critical accounting policies and estimates should be read in connection with our risk factors as disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for year ended December 31, 2022.

#### Valuation of Portfolio Investments

At all times, consistent with U.S. GAAP and the 1940 Act, we conduct a valuation of our assets, pursuant to which our net asset value is determined.

Our assets are valued on a quarterly basis, or more frequently if required under the 1940 Act. Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated the Adviser as the Company's valuation designee (the “Valuation Designee”) to determine the fair value of the Company's investments that do not have readily available market quotations, which became effective beginning with the fiscal quarter ended March 31, 2023. Pursuant to the Company's valuation policy approved by the Board, a valuation committee comprised of employees of the Adviser (the “Valuation Committee”) is responsible for determining the fair value of the Company's assets for which market quotations are not readily available, subject to the oversight of the Board.

Investments for which market quotations are readily available are typically valued at those market quotations. Market quotations are obtained from independent pricing services, where available. Generally investments marked in this manner will be marked at the mean of the bid and ask of the quotes obtained. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations.

With respect to investments for which market quotations are not readily available, we or an independent third-party valuation firm engaged by the Valuation Designee, will take into account relevant factors in determining the fair value of our investments, including and in combination of: comparison to publicly traded securities, including factors such as yield, maturity and measures of credit quality; the enterprise value of a portfolio company; the nature and realizable value of any collateral; the portfolio company's ability to make payments and its earnings and discounted cash flows; and the markets in which the portfolio company does business. Investment performance data utilized are the most recently available financial statements and compliance certificates received from the portfolio companies as of the measurement date which in many cases may reflect a lag in information. The independent third-party valuation firm provides a fair valuation report, a description of the methodology used to determine the fair value and their analysis and calculations to support their conclusion.

When an external event such as a purchase transaction, public offering or subsequent sale or paydown occurs, we use the pricing indicated by the external event to corroborate our valuation.

U.S. GAAP establishes a hierarchical disclosure framework which ranks the level of observability of market price inputs used in measuring investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value. We review pricing and methodologies in order to determine if observable market information is being used, versus unobservable inputs.

Our accounting policy on the fair value of our investments is critical because the determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of these valuations, and any change in these valuations, on the consolidated financial statements.

*For more information on the fair value hierarchies, our framework for determining fair value and the composition of our portfolio see Note 3 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report Form 10-Q.*

#### Revenue Recognition

Our revenue recognition policies are as follows:

*Net realized gains (losses) on investments:* Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method.

*Investment Income:* Interest income, including amortization of premium and accretion of discount on loans are recorded on the accrual basis. We accrue interest income based on the effective yield if we expect that, ultimately, we will be able to collect such income. We may have loans in our portfolio that contain payment-in-kind (“PIK”) income provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity.

Other income may include income such as consent, waiver, amendment, unused, and prepayment fees associated with our investment activities as well as any fees for managerial assistance services rendered by us to our portfolio companies. Such fees are recognized as income when earned or the services are rendered.

Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

*Non-accrual:* Generally, if a payment default occurs on a loan in the portfolio, or if management otherwise believes that the issuer of the loan will not be able to make contractual interest payments or principal payments, the Sub-Adviser will place the loan on non-accrual status and we will cease recognizing interest income on that loan until all principal and interest is current through payment or until a restructuring occurs, such that the interest income is deemed to be collectible even though we remain contractually entitled to this interest. We may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. Accrued interest is written off when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated.

#### U.S. Federal Income Taxes

We have elected to be treated as a BDC under the 1940 Act. We have elected, and intend to qualify annually thereafter, to be treated as a RIC under the Code. So long as we maintain our qualification as a RIC, we generally will not be subject to U.S. federal income or excise taxes on any ordinary income or capital gains that we timely distribute at least annually to our stockholders as dividends. As a result, any tax liability related to income earned and distributed by us represents obligations of our stockholders and will not be reflected in our consolidated financial statements.

We evaluate tax positions taken or expected to be taken in the course of preparing our financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. As of September 30, 2023, the Company did not have any uncertain tax positions that met the recognition or measurement criteria, nor did the Company have any unrecognized tax benefits.

Our accounting policy on income taxes is critical because if we are unable to maintain our status as a RIC, we would be required to record a provision for U.S. federal income taxes which may be significant to our financial results.

### Recent Developments

On October 19, 2023, SPV IV entered into a borrower joinder agreement to become party to the SMBC Financing Facility Agreement.

On October 20, 2023, we delivered a drawdown notice to our shareholders for an aggregate offering price of $100 million. The capital call is due on November 3, 2023.

## Market risk

As filed, 5,419 characters.

Uncertainty with respect to, among other things, the rising interest rates, inflationary pressures, risks relating to a failure to increase the U.S. debt ceiling, and the failure of major financial institutions introduced significant volatility in the financial markets, and the effects of this volatility has materially impacted and could continue to materially impact our market risks, including those listed below.

### Valuation Risk

We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of private companies. Most of our investments do not have a readily available market price, and we value these investments at fair value as determined in good faith by the Adviser, as the Valuation Designee, in accordance with our valuation policy subject to the oversight of the Board and, based on, among other things, the input of the independent third-party valuation firms engaged by the Valuation Designee. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.

### Interest Rate Risk

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 internals between our assets and liabilities and the effect that interest rates may have on our cash flows. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. Our net investment income is also affected by fluctuations in various interest rates, including the replacement of LIBOR with alternate rates and prime rates, to the extent our debt investments include floating interest rates. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

Since March 2022, the Federal Reserve has been rapidly raising interest rates bringing it to the 5.25% to 5.50% range and has indicated that it may consider an additional rate hike. In a rising interest rate environment, 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. It is possible that the Federal Reserve's tightening cycle could result the United States into a recession, which would likely decrease interest rates. 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 base rates, such as SOFR or other alternate rates, are not offset by corresponding increases in the spread over such base rate that we earn on any portfolio investments, a decrease in our operating expenses, or a decrease in the interest rate associated with our borrowings.

As of September 30, 2023, on a fair value basis, approximately 5.78% of our debt investments bear interest at a fixed rate and approximately 94.22% of our debt investments bear interest at a floating rate. As of September 30, 2023, 98.04% of our floating rate debt investments are subject to interest rate floors. Additionally, our Financing Facilities and Subscription Facility are also subject to floating interest rates and are currently paid based on floating SOFR rates.

The following table estimates the potential changes in net cash flow generated from interest income and expenses, should interest rates increase or decrease by 100, 200 or 300 basis points. Interest income is calculated as revenue from interest generated from our portfolio of investments held on September 30, 2023. Interest expense is calculated based on the terms of the Financing Facilities and Subscription Facility, using the outstanding balance as of September 30, 2023. Interest expense on the Financing Facilities and Subscription Facility is calculated using the interest rate as of September 30, 2023, adjusted for the impact of hypothetical changes in rates, as shown below. The base interest rate case assumes the rates on our portfolio investments remain unchanged from the actual effective interest rates as of September 30, 2023. These hypothetical calculations are based on a model of the investments in our portfolio, held as of September 30, 2023, and are only adjusted for assumed changes in the underlying base interest rates.

Actual results could differ significantly from those estimated in the table (dollars amounts in thousands).

| Changes in Interest Rates | Interest Income | Interest Expense | Net Income |
| --- | ---: | ---: | ---: |
| -300 Basis Points | $(31,646) | $(18,266) | $(13,380) |
| -200 Basis Points | $(21,099) | $(12,177) | $(8,922) |
| -100 Basis Points | $(10,549) | $(6,089) | $(4,460) |
| +100 Basis Points | $10,549 | $6,089 | $4,460 |
| +200 Basis Points | $21,099 | $12,177 | $8,922 |
| +300 Basis Points | $31,648 | $18,266 | $13,382 |

85

## Controls and procedures

As filed, 4,580 characters.

### (a) Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on that evaluation, we, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of September 30, 2023 and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

**(b) Management’s Report on Internal Control Over Financial Reportin**g

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). The Company’s internal control over financial reporting is a process designed under the supervision of its Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

The Company’s internal control over financial reporting includes policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management (with the participation of our Chief Executive Officer and Chief Financial Officer) conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023 based on the framework established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that the Company’s internal control over financial reporting as of September 30, 2023 was effective.

This Quarterly Report does not include an attestation report of the Company’s independent registered public accounting firm due to an exemption for emerging growth companies under the JOBS Act.

### (c) Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 5,751 characters.

Except for the risk factor set forth below, there have been no material changes to the risk factors previously disclosed under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2022. For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 9, 2023, which is accessible on the SEC’s website at sec.gov.

***The alternative reference rates that have replaced LIBOR in our credit arrangements and other financial instruments may not yield the same or similar economic results as LIBOR over the life of such transactions.***

LIBOR is an index rate that historically was widely used in lending transactions and was a common reference rate for setting the floating interest rate on private loans. LIBOR was typically the reference rate used in floating-rate loans extended to our portfolio companies.

The ICE Benchmark Administration (“IBA”) (the entity that is responsible for calculating LIBOR) ceased providing overnight, one, three, six and twelve months USD LIBOR tenors on September 30, 2023. In addition, the United Kingdom's Financial Conduct Authority (“FCA"), which oversees the IBA, now prohibits entities supervised by the FCA from using LIBOR, including USD LIBOR, except in very limited circumstances.

In the United States, SOFR is the preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. SOFR is published by the Federal Reserve Bank of New York each U.S. Government Securities Business Day, for transactions made on the immediately preceding U.S. Government Securities Business Day. Alternative reference rates that may replace LIBOR, including SOFR for USD transactions, may not yield the same or similar economic results as LIBOR over the lives of such transactions.

As of the filing date of this Quarterly Report on Form 10-Q, substantially all of our loans that referenced LIBOR have been amended to reference the forward-looking term rate published by CME Group Benchmark Administration Limited based on the secured overnight financing rate (“CME Term SOFR”). CME Term SOFR rates are forward-looking rates that are derived by compounding projected overnight SOFR rates over one, three, and six months taking into account the values of multiple consecutive, executed, one-month and three-month CME Group traded SOFR futures contracts and, in some cases, over-the-counter SOFR Overnight Indexed Swaps as an indicator of CME Term SOFR reference rate values. CME Term SOFR and the inputs on which it is based are derived from SOFR. Because CME Term SOFR is a relatively new market rate, there will likely be no established trading market for credit agreements or other financial instruments when they are issued, and an established market may never develop or may not be liquid. Market terms for instruments referencing CME Term SOFR rates may be lower than those of later-issued CME Term SOFR indexed instruments. Similarly, if CME Term SOFR does not prove to be widely used, the trading price of instruments referencing CME Term SOFR may be lower than those of instruments indexed to indices that are more widely used.

There can be no guarantee that SOFR will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of investors in loans referencing SOFR. If the manner in which SOFR or CME Term SOFR is calculated is changed, that change may result in a reduction of the amount of interest payable on such loans and the trading prices of the SOFR Loans. In addition, there can be no guarantee that loans referencing SOFR or CME Term SOFR will continue to reference those rates until maturity or that, in the future, our loans will reference benchmark rates other than CME Term SOFR. Should any of these events occur, our loans, and the yield generated thereby, could be affected. Specifically, the anticipated yield on our loans may not be fully realized and our loans may be subject to increased pricing volatility and market risk.

***Our business is dependent on bank relationships and recent strain on the banking system may adversely impact us.***

The financial markets recently have encountered volatility associated with concerns about the balance sheets of banks, especially small and regional banks that may have significant losses associated with investments that make it difficult to fund demands to withdraw deposits and other liquidity needs. Although the federal government has announced measures to assist these banks and protect depositors, some banks have already been impacted and others may be materially and adversely impacted. Our business is dependent on bank relationships, including small and regional banks, and we are proactively monitoring the financial health of banks with which we (or our portfolio companies) do or may in the future do business. To the extent that our portfolio companies work with banks that are negatively impacted by the foregoing, such portfolio companies’ ability to access their own cash, cash equivalents and investments may be threatened. In addition, such affected portfolio companies may not be able to enter into new banking arrangements or credit facilities, or receive the benefits of their existing banking arrangements or credit facilities. Any such developments could harm our business, financial condition, and operating results, and prevent us from fully implementing our investment plan. Continued strain on the banking system may adversely impact our business, financial condition and results of operations.

Filed Oct 30, 2023.
Source: SEC EDGAR, the filing index for accession 0001628280-23-035545. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.