Nuveen Churchill Direct Lending Corp.: Form 10-Q for the period ended Jun 30, 2025

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, 2024 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, to be treated for U.S. federal income tax purposes as a regulated investment company (“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 (as amended and restated, the “Advisory Agreement”) with Churchill DLC Advisor 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 “CAM Sub-Advisory Agreement”) to Churchill Asset Management LLC (“Churchill”). In addition, the Adviser and Churchill have engaged Nuveen Asset Management, LLC (“Nuveen Asset Management” and together with the Adviser and Churchill, the "Advisers") pursuant to a sub-advisory agreement (the "NAM Sub-Advisory Agreement"), pursuant to which Nuveen Asset Management may manage a portion of our portfolio consisting of cash and cash equivalents, liquid fixed-income securities (including broadly syndicated loans) and other liquid credit instruments, subject to the pace and amount of investment activity in the middle market investment program. Under the administration agreement (the “Administration Agreement”), we are provided with certain services by an administrator, Churchill BDC Administration LLC (the “Administrator”). The Adviser, Churchill, Nuveen Asset Management 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”), Churchill NCDLC CLO-II, LLC (“CLO-II”), Churchill NCDLC CLO-III, LLC (“CLO-III”), Nuveen Churchill BDC SPV IV, LLC (“SPV IV”), Nuveen Churchill BDC SPV V, LLC (“SPV V”) and NCDL Equity Holdings LLC ("NCDL Equity Holdings") are wholly owned subsidiaries of the Company and are consolidated in these financial statements commencing from the date of their formation. CLO-I, CLO-II and CLO-III have completed term debt securitizations. SPV IV and SPV V 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 conducted private offerings ("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"). We held our final closing on April 28, 2023.

On January 29, 2024, we closed our initial public offering (“IPO”) and our common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “NCDL” on January 25, 2024.

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.

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, Churchill, Nuveen Asset Management and their respective 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 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 six months ended June 30, 2025 and 2024 is presented below (dollar amounts in thousands):

98

1 Gross commitments at par includes unfunded investment commitments.

As of June 30, 2025, our debt portfolio reflected the following characteristics, based on fair value:

• Weighted average reported annual EBITDA of $73.1 million.1
• Weighted average of 2.27x interest coverage ratio for our first-lien loans2
• Weighted average of 4.93x net leverage.3
• Approximately 87.80% of our debt investments have financial covenants.4

1 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.

2 The interest coverage ratio calculation is derived from the most recently available portfolio company financial information received by the Adviser and is a weighted average based on the fair market value of each respective first lien loan investment as of its most recent reporting to lenders. Such reporting may include assumptions regarding the impact of interest rate hedges established by borrowers to reduce their exposure to floating interest rates (resulting in a reduced hedging rate being used for the total interest expense in respect of such hedges, rather than any higher rates applicable under the documentation for such loans), even if such hedging instruments are not pledged as collateral to lenders in respect of such loans and do not secure the loans themselves. The interest rate coverage ratio excludes junior capital investments and equity co-investments and applies solely to traditional middle market first lien loans held by us, which also excludes any upper middle market or other first lien loans investments that do not have maintenance financial covenants and first lien loans that the Adviser has assigned a risk rating of ‘8’ or higher, as well as any portfolio companies with net senior leverage of 15x or greater. As a result of the foregoing exclusions, the interest coverage ratio shown herein applies to 79.12% of our total investments, and 87.93% of our total first lien loan investments, in each case based upon fair value.

3 Net leverage is the ratio of total debt minus cash divided by EBITDA, taking into account only the debt issued through the tranche in which we are a lender. Leverage is derived from the most recently available portfolio company financial statements and weighted by the fair value of each investment. Net leverage presented excludes equity investments as well as debt instruments to which the Adviser has assigned a risk rating of 8 or higher and any portfolio companies with net leverage of 15x or greater.

4 Represents the percentage of debt investments with one or more maintenance financial covenants.

As of June 30, 2025 and December 31, 2024, our investments consisted of the following (dollar amounts in thousands):

1As of June 30, 2025, Subordinated Debt was comprised of second lien term loans and/or second lien notes of $71,780, mezzanine debt of $85,812 and structured debt of $2,414 at fair value; Subordinated Debt was comprised of second lien term loans and/or second lien notes of $75,606, mezzanine debt of $95,044 and structured debt of $4,467 at amortized cost.

As of December 31, 2024, Subordinated Debt was comprised of second lien term loans and/or second lien notes of $67,780, mezzanine debt of $89,740 and structured debt of $1,618 at fair value; Subordinated Debt was comprised of second lien term loans and/or second lien notes of $71,622, mezzanine debt of $94,978 and structured debt of $4,357 at amortized cost.

The industry composition of our portfolio as a percentage of fair value as of June 30, 2025 and December 31, 2024 was as follows:

The weighted average yields of our investments as of June 30, 2025 and December 31, 2024 were as follows:

1 Weighted average yield inclusive of debt and income producing investments on non-accrual status, at cost, as of June 30, 2025 was 10.04%. Weighted average yield inclusive of debt and income producing investments on non-accrual status, at cost, as of December 31, 2024, was 10.30%.

2 Weighted average yield inclusive of debt and income producing investments on non-accrual status, at fair value, as of June 30, 2025 was 10.18%. Weighted average yield inclusive of debt and income producing investments on non-accrual status, at fair value, as of December 31, 2024, was 10.40%.

As of June 30, 2025, 99.96% and 99.96% of our floating rate debt and income producing investments at cost and at fair value, respectively, had interest rate floors that govern the minimum applicable interest rates on such loans. As of December 31, 2024, 99.10% and 99.09% of our floating rate debt and income producing investments at cost and at fair value, respectively, had interest rate floors that govern 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, decreased from 10.33% to 10.08% from December 31, 2024 to June 30, 2025. The decrease in weighted average yields was primarily due to lower base interest rates.

Private equity mergers and acquisitions ("M&A") activity began to rebound late in the second quarter of 2025, after a slow down at the beginning of the second quarter caused by uncertainty regarding the U.S. global trade policy, which resulted in market volatility. Repayment activity in the first half of 2025 remained in line with historical averages primarily as a result of new transaction activity, as well as some refinancings, as spreads remain attractive to borrowers. While repayments serve as an offset to new transaction activity, we believe that lenders who are well positioned with available liquidity, as well as incumbent positions in portfolio companies and existing relationships, will benefit from new deal activity in the market.

Changes to trade policies, including the imposition of new tariffs by the current administration, could disrupt supply chains and may negatively impact the financial condition of certain of our portfolio companies as well as the macro-economic environment. In light of these changes, we are closely monitoring the impacts to our portfolio companies, and we will continue to seek to invest in defensive businesses with low levels of cyclicality, strong levels of free cash flow generation, and multiple channels to source products or materials. 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. Churchill, in its capacity as sub-adviser, utilizes 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 (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.

Churchill 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.

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

As of June 30, 2025 and December 31, 2024, the weighted average Internal Risk Rating of our investment portfolio was 4.15 and 4.13, respectively. As of June 30, 2025, there were investments in one portfolio company on non-accrual with an aggregate amortized cost of $7,275, which represented approximately 0.36% of total investments at amortized cost. As of December 31, 2024, there were investments in one portfolio company on non-accrual with an aggregate amortized cost of $7,257, which represented approximately 0.35% of total investments at amortized cost.

Results of Operations

Operating results for the three and six months ended June 30, 2025 and 2024 were as follows (dollars amounts in thousands):

104

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 for the three and six months ended June 30, 2025 was $53.1 million and $106.7 million, respectively, compared to $55.1 million and $106.7 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2025 and June 30, 2024, the size of our portfolio was $2.0 billion and $2.0 billion, at cost, respectively. Average par value of funded debt investments for the three and six months ended June 30, 2025 was $2.0 billion and $2.1 billion, respectively, compared to $1.9 billion and $1.8 billion for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, the weighted average yield of our debt and income producing investments decreased to 10.08% from 11.32% as of June 30, 2024, at cost, primarily due to overall tightening of spreads in new investments and the decline in base interest rates. Shifting base interest rates, such as SOFR and any applicable alternate rates, may also affect our investment income.

Expenses

Total expenses before waived incentive fees increased to $30.3 million and $58.7 million for the three and six months ended June 30, 2025, respectively, from $27.2 million and $53.5 million for the three and six months ended June 30, 2024, respectively.

Interest and debt financing expenses increased for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024, primarily due to higher average daily borrowings and expenses relating to the termination of the

Wells Fargo Financing Facility and the CLO-I Refinancing (each as defined below) during the first quarter of 2025. Average daily borrowings increased during the period primarily due to the issuance of the 2030 Notes (defined below) on January 22, 2025 and the increase in borrowings on the Revolving Credit Facility (defined below) on October 4, 2024 and April 9, 2024. Additionally, for the six months ended June 30, 2025, we recorded $1.36 million of non-recurring interest and debt financing expenses relating to the acceleration of deferred financing costs relating to the termination of our Wells Fargo Financing Facility and the CLO-I Refinancing. The average daily borrowings for the three and six months ended June 30, 2025 were $1.2 billion and $1.2 billion, respectively, compared to $939.0 million and $879.5 million for the three and six months ended June 30, 2024, respectively. The average annual interest rate for the three and six months ended June 30, 2025 was 6.62% and 6.59%, respectively, compared to 7.73% and 7.71% for the three and six months ended June 30, 2024, respectively.

In accordance with the terms of the Advisory Agreement, effective March 31, 2025, the management fee base rate increased from 0.75% to 1.00%. Our increase in management fees for the three and six months ended June 30, 2025 from the comparable periods in 2024 was primarily attributable to the increase in the management fee base rate.

Additionally, effective March 31, 2025, our Adviser's waiver of incentive fees on income and on capital gains expired pursuant to the terms of the Advisory Agreement. For the three and six months ended June 30, 2025, our income based incentive fees were $2.8 million and $5.1 million, respectively, of which $2.3 million was waived in the first quarter of 2025 in accordance with the terms of the Advisory Agreement. For the three and six months ended June 30, 2024, income based incentive fees of $3.1 million and $7.5 million, respectively, were waived in accordance with the terms of the Advisory Agreement.

Professional fees include legal, audit, tax, valuation, and other professional fees incurred related to the management of the Company. 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 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. Professional, administration, and other general and administrative fees for the three and six months ended June 30, 2025 were $2.0 million and $3.4 million, respectively, compared to $1.6 million and $3.2 million for the three and six months ended June 30, 2024, respectively.

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

For the three months ended June 30, 2025, we had a net realized loss on investments of $(10.7) million compared to a net realized gain of $1.0 million for the three months ended June 30, 2024. The net realized loss for the three months ended June 30, 2025 was primarily driven by the restructuring of an underperforming debt position. For the six months ended June 30, 2025, we had a net realized loss on investments of $(9.6) million, compared to a net realized loss of $(2.6) million for the six months ended June 30, 2024, respectively. The net realized loss for the six months ended June 30, 2025 was primarily driven by the restructuring of an underperforming debt position offset by realized gains from full or partial repayments and sales of investments in portfolio companies.

We recorded a net change in unrealized gain of $3.8 million for the three months ended June 30, 2025, which resulted primarily from a reversal of an unrealized loss on an underperforming debt position that was restructured during the period offset by a decrease in fair value of certain underperforming portfolio investments. We recorded net change in unrealized loss of $(9.8) million for the six months ended June 30, 2025, which resulted from the reversal of an unrealized loss on an underperforming debt position that was restructured during the period offset by the underperformance of certain portfolio companies as market spreads remained relatively stable throughout the period.

We recorded a net change in unrealized loss of $(12.1) million for the three months ended June 30, 2024, which resulted from a decrease in fair value primarily attributable to two underperforming portfolio companies. We recorded a net change in unrealized loss of $(8.0) million for the six months ended June 30, 2024, which resulted from a decrease in fair value of investments in certain underperforming portfolio companies in the second quarter of 2024, offset by unrealized gains in the first quarter of 2024 driven primarily from the tightening of market spreads and a reversal of unrealized losses on certain of our underperforming debt positions that were ultimately realized.

Financial Condition, Liquidity and Capital Resources

Due to the diverse capital resources available to us at this time, we believe we have adequate liquidity to support our near-term capital requirements. Our liquidity and capital resources are generated primarily from cash flows from income earned from our investments and principal repayments, net proceeds of public offerings of debt securities and equity securities (including through the ATM Program, as described below), and our net borrowings from our Revolving Credit Facility (as defined below) and CLO debt issuances (discussed further below). 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, (iv) cash distributions to the holders of our shares, and (v) share repurchases under the Company 10b5-1 Plan (defined below).

To facilitate public offerings of equity securities and debt securities, on December 20, 2024, we filed a shelf registration statement with the SEC that is effective for a three-year term, expiring on December 20, 2027. As a well-known seasoned issuer, we are permitted to register an indeterminate number of securities under the shelf registration statement and, therefore, there is no specific dollar limit on the amount of securities we may issue. The shelf registration statement permits us to offer, from time to time, our common stock, preferred stock, subscription rights to purchase shares of our common stock, debt securities or warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, in one or more underwritten public offerings, at-the-market offerings, negotiated transactions, block trades, best efforts or a combination of these methods. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement at the time of any offering.

As of June 30, 2025 and December 31, 2024, our debt consisted of asset based leverage facilities, a revolving credit facility, debt securitizations, and an unsecured note issuance. We have and will continue to, from time to time, enter into additional credit facilities, increase the size of our existing credit facilities or issue further debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. 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. As of June 30, 2025 and December 31, 2024, our asset coverage ratio was 179.67% and 187.03%, respectively.

Cash and cash equivalents as of June 30, 2025, taken together with our unused capacity under our Revolving Credit Facility is expected to be sufficient for our investing activities and to conduct our operations in the near term. As of June 30, 2025, we had $260.3 million available under our Revolving Credit Facility.

Although we have historically been able to obtain sufficient borrowing capacity, a deterioration in economic conditions or any other negative economic developments could restrict our access to financing in the future. We may not be able to find new financing for future investments or liquidity needs and, even if we are able to obtain such financing, such financing may not be on as favorable terms as we have previously obtained. These factors may limit our ability to make new investments and adversely impact our results of operations.

For the six months ended June 30, 2025, our cash and cash equivalents balance increased by $704.0 thousand. During that period, $128.3 million was provided by operating activities, primarily relating to investment purchases of $234.1 million, offset by $310.6 million in repayments and sales of investments in portfolio companies. During the same period, $(127.6) million was used in financing activities, consisting primarily of net of repayments of secured borrowings of $1.2 million, shareholder distributions of $57.7 million and repurchases of common shares of $63.1 million.

For the six months ended June 30, 2024, our cash and cash equivalents balance increased by $3.6 million. During that period, $266.9 million was used in operating activities, primarily relating to investment purchases of $509.3 million, offset by $154.9 million in repayments and sales of investments in portfolio companies. During the same period, $270.5 million was used in financing activities, consisting primarily of proceeds from issuance of shares and proceeds from secured borrowings of $241.7 million and $546.3 million, respectively, net of shareholder distributions and repayments of secured borrowings of $40.8 million and $469.4 million, respectively.

Equity

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.

Initial Public Offering

On January 29, 2024, we closed our IPO, issuing 5,500,000 shares of our common stock at a public offering price of $18.05 per share. We received total cash proceeds of $99.3 million. Our common stock began trading on the NYSE under the symbol “NCDL” on January 25, 2024.

Private Offerings

Prior to April 28, 2023, in connection with our Private Offerings, we entered into subscription agreements (“Subscription Agreements”) with investors, pursuant to which investors were required to fund drawdowns to purchase our shares of common stock up to the amount of their respective capital commitment each time we delivered a drawdown notice. As of January 5, 2024, all capital commitments in the amount of $906.4 million had been drawn.

ATM Program

On March 10, 2025, we established an equity at-the-market offering program (the “ATM Program”), pursuant to which the Company may offer and sell, from time to time, through distribution managers, or to them, as principals for their own accounts, shares of its common stock having an aggregate offering price up to $200 million. Sales of common stock made pursuant to the ATM Program may be made in negotiated transactions or transactions that are deemed to be “at-the-market” offerings as defined in Rule 415(a)(5) under the Securities Act. We intend to use the net proceeds from the ATM Program for general corporate purposes, which may include, among other things, investing in accordance with its investment objective and strategies, and repaying indebtedness (which may be subject to re-borrowing).

As of June 30, 2025, we had not sold any shares of common stock through the ATM Program.

Dividends and Distributions

To the extent that we have taxable income, 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.

With respect to distributions, we have adopted an “opt out” dividend reinvestment plan for shareholders. As a result, in the event of a declared cash distribution or other distribution, each shareholder that has not “opted out” of the dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares rather than receiving cash distributions. Shareholders who receive distributions in the form of shares will be treated for U.S. federal income tax purposes as if they received cash distributions and subsequently used such cash to purchase additional shares of the Company.

See Note 9 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our distributions and dividend reinvestment plan.

The following table summarizes the Company's distributions recorded for the six months ended June 30, 2025:

(1) Represents a special dividend.

The following table summarizes the Company's distributions recorded for the six months ended June 30, 2024:

(1) Represents a special dividend.

The distributions declared were derived from investment company taxable income and net capital gain, if any. The federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscal year-end based upon our investment company taxable income for the full fiscal year and distributions paid during the full year.

The following table reflects the shares distributed pursuant to the dividend reinvestment plan for the six months ended June 30, 2025:

(1) In accordance with the Company’s dividend reinvestment plan, shares were purchased in the open market.

The following table reflects the shares issued pursuant to the dividend reinvestment for the six months ended June 30, 2024:

(1) In connection with the distributions with payment date on January 10, 2024 and April 29, 2024, 185,541 and 189,256 shares were newly issued under the dividend reinvestment plan respectively.

Share Repurchase Plan

On March 5, 2024, we entered into a share repurchase plan (the “Company 10b5-1 Plan”), pursuant to which we may purchase up to $99.3 million in the aggregate of its outstanding shares of common stock in the open market at prices below its net asset value (“NAV”) per share over a specified period. Any purchase of the shares pursuant to the Company 10b5-1 Plan will be conducted in accordance with the guidelines and conditions of Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We adopted the Company 10b5-1 Plan because we believe that, if our common stock is trading below its then-current NAV per share, it will be in the best interest of its stockholders for us to reinvest in our portfolio.

The Company 10b5-1 Plan is designed to allow us to repurchase our shares of common stock at times when we otherwise might be prevented from doing so under insider trading laws. The Company 10b5-1 Plan requires BofA Securities, Inc., as agent, to repurchase shares of common stock on the Company's behalf when the market price per share is below the most recently reported NAV per share (including any updates, corrections or adjustments publicly announced by us to any previously announced NAV per share). Under the Company 10b5-1 Plan, the agent will increase the volume of purchases made as the price of the shares of the our common stock declines, subject to volume restrictions. The timing and amount of any share repurchases will depend on the terms and conditions of the Company 10b5-1 Plan, the market price of the shares of our common stock and trading volumes, and no assurance can be given that any particular amount of shares of the common stock will be repurchased.

The Company 10b5-1 Plan became effective on March 29, 2024, commenced on April 1, 2024 and was amended on March 28, 2025. The amendment on March 28, 2025 (a) extended the Company 10b5-1 Plan for an additional 12-month period, and (b) amended certain terms of the Company 10b5-1 Plan as set forth in the guidelines thereto. As a result of the foregoing, the Company 10b5-1 Plan will terminate upon the earliest to occur of (i) 12-months from March 29, 2025 (tolled for periods during which the Company 10b5-1 Plan is suspended), (ii) the end of the trading day on which the aggregate purchase price for all shares of common stock purchased under the Company 10b5-1 Plan equals $99.3 million and (iii) the occurrence of certain other events described in the Company 10b5-1 Plan. Subsequent to the fiscal quarter ended June 30, 2025, the Company 10b5-1 Plan was terminated. See "Recent Developments" for more information.

The following table reflects the shares repurchased pursuant to the Company 10b5-1 Plan for each month from inception through June 30, 2025 (dollar amounts in thousands, except share and per share data):

110

Borrowings

See Note 7 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our borrowings.

Wells Fargo Financing Facility

On December 31, 2019, a wholly owned subsidiary of the Company entered into a credit agreement ("the “Wells Fargo Financing Facility” and the agreement relating thereto, as amended on October 28, 2020, March 31, 2022, March 14, 2024 and August 27, 2024, the “Wells Fargo Financing Facility Agreement”), with Wells Fargo Bank, N.A. as lender (“Wells Fargo”) and administrative agent. On March 14, 2024, SPV V entered into the borrower joinder agreement to become party to the Wells Fargo Financing Facility Agreement and pledged all of its assets to the collateral agent to secure their obligations under the Wells Fargo Financing Facility. The Company and SPV V made customary representations and warranties and were required to comply with various financial covenants related to liquidity and other maintenance covenants, reporting requirements and other customary requirements for similar facilities.

On January 23, 2025, the Wells Fargo Financing Facility Agreement was terminated in full, and the Company terminated the security interest over the collateral granted to Wells Fargo and the lenders pursuant to the Wells Fargo Financing Facility Agreement. The Wells Fargo Financing Facility Agreement was terminated concurrent with the satisfaction of all obligations and liabilities of the Company to the lenders thereunder, including, without limitation, payments of principal and interest, other fees, breakage costs and other amounts owing to the lenders.

The maximum facility amount available under the Wells Fargo Financing Facility was $225 million. Under the Wells Fargo Financing Facility Agreement, the Company paid a fee on daily undrawn amounts under the Wells Fargo Financing Facility of 0.25% per annum during the period ended June 14, 2024. For the six months following June 14, 2024, the Company paid a fee on daily undrawn amounts under the Wells Fargo Facility of 0.50% per annum. and, thereafter, paid 0.50% per annum on undrawn amounts of up to 40% of the maximum facility amount and 1.50% per annum on undrawn amounts in excess of 40% of the maximum facility amount.

As of December 31, 2024, the Wells Fargo Financing Facility bore interest at a rate of SOFR, reset daily, plus 2.20% per annum.

SMBC Financing Facility

On November 24, 2020, a wholly owned subsidiary of the Company entered into a senior secured revolving credit facility (the “SMBC Financing Facility” and the agreement relating thereto, as amended on December 23, 2021, June 29, 2022 and November 21, 2023, the “SMBC Financing Facility Agreement”) with SMBC, as the administrative agent, the collateral agent and the lender. On October 19, 2023, SPV IV entered into the borrower joinder agreement (the “SMBC Joinder”) to become party to the SMBC Financing Facility Agreement.

Effective December 7, 2023, following the closing of the 2023 Debt Securitization (discussed further below), the maximum facility amount available was reduced to $150 million from $300 million, subject to a subsequent increase to $250 million, in the sole discretion of the administrative agent, if so requested by the borrowers, and SPV IV began borrowing under the SMBC Financing Facility. On November 5, 2024, the Company terminated in full the SMBC Financing Facility Agreement and terminated the security interest over the collateral granted to SMBC and the lenders pursuant to the SMBC Financing Facility Agreement. The SMBC Financing Facility was terminated concurrent with the satisfaction of all obligations and liabilities of the Company to the lenders thereunder, including, without limitation, payments of principal and interest, other fees, breakage costs and other amounts owing to the lenders.

The interest rate for loans under the SMBC Financing Facility Agreement was either the Base Rate plus 1.65% or Term SOFR plus 2.65%. The SMBC Financing Facility Agreement provided for an unused commitment fee of 0.50% per annum on the unused commitments from February 21, 2024 through May 21, 2024 and, thereafter, 0.50% per annum on the unused commitments if such unused commitments are less than 50% of the total commitments and 1.00% per annum on the unused commitments if such unused commitments are greater than or equal to 50% of the total commitments.

Revolving Credit Facility

On June 23, 2023, we entered into a senior secured revolving credit agreement (as amended from time to time, the “Senior Secured Revolving Credit Agreement” and facility thereunder, the “Revolving Credit Facility” and together with the Wells Fargo 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”).

The Revolving Credit Facility was amended on April 9, 2024 and October 4, 2024. The most recent amendment on October 4, 2024, among other things: (i) extended the Commitment Termination Date and Final Maturity Date (each as defined below); (ii) added a term loan tranche; (iii) increased the total committed facility amount from $250 million to $325 million and (iv) reduced (a) the applicable margin with respect to the SONIA borrowings from 2.125% to 2.00%, (b) the credit spread adjustment from 0.15% to 0.10% for Term SOFR borrowings with a three-month tenor and from 0.25% to 0.10% for Term SOFR borrowings with a six-month tenor and (c) the applicable margin with respect to all other permitted borrowing rates from 1.125% to 1.000%. 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 October 4, 2028 (the “Commitment Termination Date”) and will mature on October 4, 2029 (the “Final Maturity Date”). During the period from the Commitment Termination Date to the Final Maturity Date, the Company 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% per annum on average daily undrawn amounts. As of June 30, 2025 and December 31, 2024, the Revolving Credit Facility bore interest at one-month SOFR plus 2.00% 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 to 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.

CLO-I

On May 20, 2022 (the “Original 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 consisted of $199.0 million of AAA Class A-1 2022 Notes, which bore interest at the three-month Term SOFR plus 1.80%; $34.3 million of AAA Class A-1F 2022 Notes, which bore interest at 4.42%; $47.3 million of AA Class B 2022 Notes, which bore interest at the three-month Term SOFR plus 2.30%; $31.5 million of A Class C 2022 Notes, which bore interest at the three-month Term SOFR plus 3.15%; $27.0 million of BBB Class D 2022 Notes, which bore interest at the three-month Term SOFR plus 4.15%; and $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 “CLO-I 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 bore interest at the three-month Term SOFR plus 1.80% and were fully drawn upon the closing of the transactions. Any CLO-I Lender may elect to convert all of the Class A-L 2022 Loans held by such CLO-I Lenders into Class A-1 2022 Notes upon written notice to CLO-I in accordance with the CLO-I Loan Agreement.

The 2022 Debt was 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 Debt was 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 was not registered under the Securities Act, or any state “blue sky” laws.

CLO-I Refinancing

On March 20, 2025 (the “ CLO-I Refinancing Date”), the Company completed a $457,975 refinancing of the 2022 Debt Securitization (the "CLO-I Refinancing").

The notes offered in the CLO-I Refinancing (the “2025 Notes”) were issued by CLO-I. The 2025 Notes consist of $1,900 of AAA Class X 2025 Notes, which bear interest at the three-month Term SOFR plus 1.05%; $233,250 of AAA Class A-R 2025 Notes, which bear interest at the three-month Term SOFR plus 1.38%; $56,250 of AA Class B-R 2025 Notes, which bear interest at the three-month Term SOFR plus 1.70%; and $136,575 of Subordinated 2025 Notes, which do not bear interest, and of which $79,325 were issued on the Original Closing Date and remained outstanding on the CLO-I Refinancing Date. The Company directly retained all of the Subordinated 2025 Notes and, as such, these notes are eliminated in consolidation.

As part of the CLO-I Refinancing, on the CLO-I Refinancing Date, the CLO-I also entered into an amended and restated loan agreement (the “Class A-L-R Loan Agreement”), pursuant to which various financial institutions and other persons which are, or may become, parties thereto as lenders (the “Class A-L-R Lenders”) committed to make $30,000 of AAA Class A-L-R 2025 Loans to CLO-I (the “Class A-L-R 2025 Loans” and, together with the 2025 Notes, the “2025 Debt”). The Class A-L-R 2025 Loans bear interest at the three-month Term SOFR plus 1.38% and were fully drawn on the Refinancing Date. Any Class A-L-R Lender may elect to convert a portion or all of the Class A-L-R 2025 Loans held by such Class A-L-R Lender into Class A-R 2025 Notes upon written notice to CLO-I in accordance with the Class A-L-R Loan Agreement.

The 2025 Debt is backed by a diversified portfolio of senior secured and second lien loans. Through April 20, 2030, 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 CLO-I Refinancing. The 2025 Notes are due on April 20, 2038. The Class A-L-R 2025 Loans are scheduled to mature on, and, unless earlier repaid, the entire unpaid principal balance thereof is due and payable on, April 20, 2038. The 2025 Notes may be optionally redeemed, and the Class A-L-R 2025 Loans may be optionally prepaid, on or after April 20, 2027.

The 2025 Debt is the secured obligation of CLO-I and the supplemental indenture and the Class A-L-R Loan Agreement, as applicable, governing the 2025 Debt include customary covenants and events of default. The 2025 Debt has not been, and will not be, registered under the Securities Act or any state “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or applicable exemption from registration.

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

CLO-II

On December 7, 2023 (the “CLO-II Closing Date”), the Company completed a $298.1 million term debt securitization (the “2023 Debt Securitization”).

The notes offered in the 2023 Debt Securitization (the “2023 Notes”) were issued by CLO-II, an indirect, wholly owned, consolidated subsidiary of the Company. The 2023 Notes consist of $2.0 million of AAA Class X 2023 Notes, which bear interest at the three-month Term SOFR plus 2.00%, $100.5 million of AAA Class A-1 2023 Notes, which bear interest at the three-month Term SOFR plus 2.35%; $37.5 million of AA Class B 2023 Notes, which bear interest at three-month Term SOFR plus 3.20% and approximately $83.1 million of Subordinated 2023 Notes, which do not bear interest. The Company directly owns all of the Subordinated 2023 Notes and as such, these notes are eliminated in consolidation.

As part of the 2023 Debt Securitization, CLO-II also entered into a loan agreement (the “CLO-II Loan Agreement”) on the CLO-II Closing Date, pursuant to which various financial institutions and other persons which are, or may become, parties to the CLO-II Loan Agreement as lenders (the “CLO-II Lenders”) committed to make $25.0 million of AAA Class A-L-A 2023 Loans and $50.0 million AAA Class A-L-B 2023 Loans to CLO-II (the “2023 Loans” and, together with the 2023 Notes, the “2023 Debt”). The 2023 Loans bear interest at the three-month Term SOFR plus 2.35% and were fully drawn upon the closing of the transactions. Any CLO-II Lender may elect to convert all or a portion of the Class A-L-A 2023 Loans held by such CLO-II Lenders into Class A-1 2023 Notes upon written notice to CLO-II in accordance with the CLO-II Loan Agreement.

The 2023 Debt is backed by a diversified portfolio of senior secured and second lien loans. Through January 20, 2028, all principal collections received on the underlying collateral may be used by CLO-II to purchase new collateral under the direction of the Company, in its capacity as collateral manager of CLO-II and in accordance with the Company’s investment strategy, allowing the Company to maintain the initial leverage in the 2023 Debt Securitization. The 2023 Notes are due on January 20, 2036. The 2023 Loans are scheduled to mature, and, unless earlier repaid, the entire unpaid principal balance thereof is due and payable on January 20, 2036.

The 2023 Debt is the secured obligation of CLO-II, and the indenture and the CLO-II Loan Agreement, as applicable, governing the 2023 Debt includes customary covenants and events of default. The 2023 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-II under a collateral management agreement and has waived the management fee due to it in consideration for providing these services.

CLO-III

On March 14, 2024 (the “CLO-III Closing Date”), the Company completed a $297.0 million term debt securitization (the “2024 Debt Securitization”).

The notes offered in the 2024 Debt Securitization (the “2024 Notes” or “2024 Debt”) were issued by CLO-III, a direct, wholly owned, consolidated subsidiary of the Company, pursuant to an indenture (the “CLO-III Indenture”) dated as of the CLO-III Closing Date. The 2024 Notes consist of $2.0 million of AAA Class X 2024 Notes, which bear interest at the three-month Term SOFR plus 1.40%; $175.5 million of AAA Class A 2024 Notes, which bear interest at the three-month Term SOFR plus 2.00%; $37.5 million of AA Class B 2024 Notes, which bear interest at the three-month Term SOFR plus 2.65%; and $82.0 million of Subordinated 2024 Notes, which do not bear interest. The Company directly retained all of the Subordinated 2024 Notes and as such, these notes are eliminated in consolidation.

The 2024 Notes are backed by a diversified portfolio of senior secured and second lien loans. The CLO-III Indenture contains certain conditions pursuant to which loans can be acquired by CLO-III, in accordance with rating agency criteria or as otherwise agreed with certain institutional investors who purchased the 2024 Notes. Through April 20, 2028, all principal collections received on the underlying collateral may be used by CLO-III, to purchase new collateral under the direction of the Company, in its capacity as collateral manager of CLO-III, and in accordance with the Company’s investment strategy, allowing the Company to maintain the initial leverage in the 2024 Debt Securitization. The 2024 Notes are due on April 20, 2036.

The 2024 Notes are the secured obligation of CLO-III, and the CLO-III Indenture governing the 2024 Notes includes customary covenants and events of default. The 2024 Notes have not been, and will not be, registered under the Securities Act or any state “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or applicable exemption from registration.

The Company serves as collateral manager to the 2024 Issuer under a collateral management agreement and has waived any management fee due to it in consideration for providing these services.

Unsecured Notes

On January 22, 2025, we issued $300 million in aggregate principal amount of the Company’s 6.650% Notes due 2030 (the “2030 Notes”). The 2030 Notes bear interest at a rate of 6.650% per year payable semi-annually in arrears on March 15 and September 15 of each year, beginning September 15, 2025. The March 2030 Notes will mature on March 15, 2030, and may be redeemed in whole or in part at the Company’s option at any time prior to February 15, 2030, at par plus a “make-whole” premium plus accrued interest, and thereafter at par. The 2030 Notes are the direct unsecured obligations of the Company and rank pari passu with all existing and future unsubordinated unsecured indebtedness issued by the Company, senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2030 Notes, effectively subordinated to all of the existing and future secured indebtedness issued by the Company (including indebtedness that is initially unsecured in respect of which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.

The indenture governing the 2030 Notes contains certain covenants, including certain covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a) of the 1940 Act, or any successor provisions, whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC; and to provide financial information to the holders of the 2030 Notes and the trustee if the Company is no longer subject to the reporting requirements under the Exchange Act. These covenants are subject to important limitations and exceptions that are described in the indenture.

On January 22, 2025, in connection with the issuance of the 2030 Notes, we entered into an interest rate swap agreement. See “Derivatives” below .

Contractual Obligations

The following tables show the contractual maturities of our debt obligations as of June 30, 2025 and December 31, 2024 (dollar amounts in thousands):

Derivatives

We use interest rate swaps to mitigate interest rate risk associated with our fixed rate liabilities and may designate certain interest rate swaps to be in a hedge accounting relationship.

On January 22, 2025, in connection with the issuance of the 2030 Notes, we entered into an interest rate swap agreement with Wells Fargo for a total notional amount of $300 million that matures on March 15, 2030. Under the interest rate swap agreement for the 2030 Notes, we receive a fixed interest rate of 6.65% and pay a floating interest rate of three-month Term SOFR + 2.3015%. We have designated the interest rate swap as a hedging instrument in a qualifying fair value hedge accounting relationship.

See the following footnotes to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q: (i) Note 2 for additional disclosures regarding our accounting for derivative instruments designated in a hedge accounting relationship, (ii) Note 4 for additional disclosures regarding these derivative instruments and (iii) Note 5 for additional disclosures regarding the carrying value of our borrowings.

Related-Party Transactions

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

• the Advisory Agreement;
• the CAM Sub-Advisory Agreement;
• the NAM Sub-Advisory Agreement; and
• the Administration Agreement.

On May 7, 2025, the Company and certain of its affiliates filed an application for co-investment exemptive relief based on an updated model of co-investment order that was recently granted by the SEC (as amended on June 30, 2025 and July 7, 2025, the “Application”). The SEC issued a notice for the Application on July 9, 2025, and the notice period expired on August 4, 2025. The Company expects that the SEC will grant the exemptive order on or around August 5, 2025 (the “Order”). The Order would supersede the prior exemptive order granted on June 7, 2019 and amended on October 14, 2022. The Order would permit the Company to participate in negotiated co-investment transactions with other funds managed by the Adviser or certain other affiliates pursuant to the conditions of the Order. The Order would require that a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Board make certain findings with respect to the following, among other things, (1) when the Company co-invests with an affiliated entity (as defined in the Application) in an issuer where an affiliated entity has an existing investment in the issuer under certain circumstances, and (2) if the Company disposes of an asset acquired in a co-investment transaction unless the disposition is done on a pro rata basis or the disposition is of a tradable security. Pursuant to the Order, the Board will oversee the Company’s participation in the co-investment program. As required by the Order, the Company has adopted, and the Board has approved, policies and procedures reasonably designed to ensure the Company’s compliance with the conditions of the Order, and the Adviser and the Company’s Chief Compliance Officer will provide reporting to the Board.

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 June 30, 2025 and December 31, 2024. We have in the past and may in the future become obligated to fund commitments such as delayed draw commitments, revolvers, and equity investment commitments.

For more information on our off-balance sheet arrangements, commitments and contingencies see Note 8 to the consolidated financials 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” included herein as well as in our Annual Report on Form 10-K for the year ended December 31, 2024.

Valuation of Portfolio Investments, including Derivative Instruments

At all times, consistent with U.S. GAAP and the 1940 Act, we conduct a valuation of our assets, pursuant to which our NAV 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. 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. Derivative instruments, including interest rate swaps, are modeled using market prices for reference securities, yield curves, volatility assumptions and correlations of such inputs.

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.

We apply the practical expedient relating to investments in certain portfolio companies that calculate NAV per share (or its equivalent). U,S, GAAP permits an entity holding investments in certain portfolio companies that either are investment companies, or have attributes similar to an investment company, and calculate NAV per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment. Investments which are valued using NAV per share or its equivalent as a practical expedient are not categorized within the fair value hierarchy, as described below.

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 as opposed to 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 5 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, Churchill 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, to be treated as a RIC under the Code; however, no assurance can be given that the Company will be able to qualify for and maintain RIC tax status. So long as we maintain our qualification as a RIC, we generally will not be subject to U.S. federal income or U.S. federal 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, ongoing analyses of tax laws, regulations and interpretations thereof. As of June 30, 2025, 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

Dividend Declaration

On July 30, 2025, the Board declared a regular dividend of $0.45 per share payable on or around October 28, 2025 to shareholders of record as of September 30, 2025.

Termination of the Company 10b5-1 Plan

On July 21, 2025, the aggregate purchase price for all shares of common stock purchased under the Company 10b5-1 Plan reached $99.3 million, and the Company 10b5-1 Plan was terminated in accordance with its terms on the same date.

Uncertainty with respect to, among other things, inflationary pressures, elevated interest rates, new tariffs and trade barriers, geopolitical conditions, including the ongoing conflict between Russia and Ukraine, the ongoing conflicts in the Middle East 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 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.

The Federal Reserve held interest rates steady in the first and second quarters of 2025, following three consecutive rate reductions in the third and fourth quarter of 2024. The Federal Reserve has indicated that there may be additional rate cuts in the future; however, future reductions to benchmark rates are not certain. Additionally, there can be no assurance that the Federal Reserve will not make upward adjustments to the federal funds rate in the future. In a high 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. 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 June 30, 2025, on a fair value basis, approximately 5.68% of our debt investments bear interest at a fixed rate and approximately 94.32% of our debt investments bear interest at a floating rate. As of June 30, 2025, 99.96% of our floating rate debt and income producing investments are subject to interest rate floors. Our credit facility, along with our debt issued in our collateralized loan obligations, are predominantly subject to floating interest rates and are currently paid based on floating SOFR rates. In connection with the issuance of the 2030 Notes, we entered into a fixed-to-floating interest rate swap under a designated hedge accounting relationship, in order to align the interest rates of our liabilities with our investment portfolio.

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 June 30, 2025. Interest expense is calculated based on our debt obligations is using the outstanding balances as of June 30, 2025. Interest expense on our debt obligations is calculated using the interest rates as of June 30, 2025, 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 June 30, 2025.

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

(1) Includes the impact of the effective hedge through the interest rate swap associated with the 2030 Notes.

(2) Excludes the impact of income based incentive fees.

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 June 30, 2025 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.

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.

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, 2024 other than those noted below. For a further 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 February 27, 2025, which is accessible on the SEC’s website at sec.gov.

Changes to U.S. tariff and import/export regulations may have a negative effect on the operations of our portfolio companies and, in turn, negatively impact us.

The U.S. government has recently imposed, and may in the future increase, tariffs on specific countries and commodities. In response, certain foreign trading partners, and others in the future, may impose retaliatory tariffs on certain U.S. goods. The foregoing has created significant uncertainty about the future relationship between the United States and certain other countries with respect to trade policies, treaties and new and increased tariffs. These developments, or the continued uncertainty relating to U.S. trade policies, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. The uncertainty relating to U.S. trade policies has increased market volatility. Any of these factors could depress economic activity and restrict certain of our portfolio companies’ access to suppliers or customers, and increase costs, decrease margins, and reduce the competitiveness of products and services offered by our portfolio companies. The foregoing may adversely affect the revenues and profitability of such portfolio companies and, in turn, negatively affect our results of operations, which could cause the market value of our shares of common stock and/or debt securities to decline. It is not possible to predict the impact that these or similar future events will have on the United States and other economies, specific industries, us or our underlying portfolio companies from an economic, tax or regulatory perspective, but any such impact could be material and adverse for us.

U.S. policy changes may adversely affect our business.

Political and governmental shifts in the United States have led to changing stances on numerous domestic and international issues. These changes, along with the resultant economic uncertainty, could impact our ability to source, negotiate, execute, manage, or exit investments. Actions taken by the United States government may have significant global effects—including on market and financial conditions, trade policies, tax rates, legal or regulatory regimes and broader economic and social dynamics. Such actions could also prompt reciprocal, retaliatory, or responsive measures from other countries, regional blocs (including the European Union), corporations, or other market participants. The United States has indicated that it may seek to withdraw from, renegotiate, amend, rescind or not abide by certain agreements, policies, regulations, statutes and other measures, and could pursue policy outcomes that may diverge significantly from prior assumptions. However, the specific measures that will be implemented or enacted, as well as their impact on us and our portfolio companies, remain uncertain and could change frequently. Any such developments could materially affect our projections, goals, assumptions, targets, estimates, forecasts, strategies or plans in ways that cannot currently be determined with any certainty, including through effects (inside and outside the United States) on the desirability of certain financial or nonfinancial assets, the investability of certain countries or regions, the business prospects of certain industries, the certainty or predictability of legal systems and otherwise.