Portfolio Company Investments

12 Months Ended

Dec. 31, 2023

Note 3. Portfolio Company Investments

The Company’s portfolio investments principally consist of secured and unsecured debt, equity warrants and direct equity investments primarily in privately held companies. The debt investments may or may not be secured by either a first or second lien on the assets of the portfolio company. The debt investments generally bear interest at fixed rates or variable rates, and generally mature between five and seven years from the original investment. In connection with a debt investment, the Company also may receive nominally priced equity warrants and/or make a direct equity investment in the portfolio company. The Company’s warrants or equity investments may be investments in a holding company related to the portfolio company. In addition, the Company periodically makes equity investments in its portfolio companies organized as LLCs or other forms of pass-through entities through Taxable Subsidiaries. In both situations, the investment is generally reported under the name of the operating company on the consolidated schedules of investments.

As of December 31, 2023, the Company had active investments in 81 portfolio companies and residual investments in one portfolio company that has sold its underlying operations. The aggregate fair value of the total portfolio was $957,906 and the weighted average effective yield on the Company’s debt investments was 14.2% as of such date. As of December 31, 2023, the Company held equity investments in 79.3% of its portfolio companies and the average fully diluted equity ownership in those portfolio companies was 3.0%.

As of December 31, 2022, the Company had active investments in 76 portfolio companies and residual investments in two portfolio companies that have sold their underlying operations. The aggregate fair value of the total portfolio was $860,329 and the weighted average effective yield on the Company’s debt investments was 13.8% as of such date. As of December 31, 2022, the Company held equity investments in 74.4% of its portfolio companies and the average fully diluted equity ownership in those portfolio companies was 4.0%.

The weighted average yield of the Company’s debt investments is not the same as a return on investment for its stockholders but, rather, relates to a portion of the Company’s investment portfolio and is calculated before the payment of all of the Company’s and its subsidiaries’ fees and expenses. The weighted average yields were computed using the effective interest rates for debt investments at cost as of December 31, 2023 and 2022, including accretion of OID and debt investment origination fees, but excluding investments on non-accrual status and investments recorded as a secured borrowing, if any.

Purchases of debt and equity investments for the years ended December 31, 2023, 2022 and 2021 totaled $336,741, $333,846, and $346,737, respectively. Proceeds from sales and repayments, including principal, return of capital distributions and realized gains, of portfolio investments for the years ended December 31, 2023, 2022 and 2021 totaled $258,875, $193,980, and $472,782 respectively.

Investments by type with corresponding percentage of total portfolio investments consisted of the following:


	Fair Value								Cost
	December 31,				December 31,				December 31,				December 31,
	2023				2022				2023				2022
First Lien Debt(1)	$	578,140	60.3	%	$	456,105	53.0	%	$	577,684	61.6	%	$	453,585	54.7	%
Second Lien Debt		119,561	12.5			182,948	21.3			148,806	15.9			213,654	25.8
Subordinated Debt		135,173	14.1			101,456	11.8			135,447	14.5			100,634	12.1
Equity		120,264	12.6			117,741	13.7			71,740	7.7			57,868	7.0
Warrants		4,768	0.5			2,079	0.2			2,952	0.3			2,952	0.4
Total	$	957,906	100.0	%	$	860,329	100.0	%	$	936,629	100.0	%	$	828,693	100.0	%

(1) Includes unitranche investments, which account for 37.6% and 38.5% of our portfolio on a fair value and cost basis as of December 31, 2023, respectively. Includes unitranche investments, which account for 42.1% and 43.4% of our portfolio on a fair value and cost basis as of December 31, 2022, respectively.

The following table shows portfolio composition by geographic region at fair value and cost and as a percentage of total investments. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business.


	Fair Value								Cost
	December 31,				December 31,				December 31,				December 31,
	2023				2022				2023				2022
United States
Midwest	$	112,607	11.8	%	$	180,556	21.0	%	$	75,436	8.1	%	$	132,177	16.0	%
Southeast		292,408	30.6			265,902	31.0			286,329	30.5			258,373	31.1
Northeast		181,412	18.9			127,427	14.8			176,389	18.8			134,897	16.3
West		172,705	18.0			151,487	17.6			191,545	20.5			161,935	19.5
Southwest		186,274	19.4			122,519	14.2			194,466	20.8			128,873	15.6
Canada		12,500	1.3			12,438	1.4			12,464	1.3			12,438	1.5
Total	$	957,906	100.0	%	$	860,329	100.0	%	$	936,629	100.0	%	$	828,693	100.0	%

The following table shows portfolio composition by type and by geographic region at fair value as a percentage of net assets.


By Type							By Geographic Region
	December 31,			December 31,				December 31,			December 31,
	2023			2022				2023			2022
First Lien Debt		98.1	%		95.0	%	United States
Second Lien Debt		20.3			38.1		Midwest		19.1	%		37.6	%
Subordinated Debt		22.9			21.1		Southeast		49.6			55.4
Equity		20.4			24.5		Northeast		30.8			26.5
Warrants		0.8			0.4		West		29.3			31.5
Total		162.5	%		179.1	%	Southwest		31.6			25.5
							Canada		2.1			2.6
							Total		162.5	%		179.1	%

As of December 31, 2023 and 2022, the Company had no portfolio company investments that represented more than 10% of the total investment portfolio on a fair value or cost basis. As of December 31, 2023, the Company and no investments that exceeded 5% of totals assets. As of December 31, 2022, the Company's investment in Pfanstiehl, Inc. totaled $51,992 or 5.6% of total assets.

As of December 31, 2023 and 2022, the Company had debt investments in three and four portfolio companies, respectively, on non-accrual status:


	December 31, 2023						December 31, 2022
	Fair						Fair
Portfolio Company	Value			Cost			Value			Cost
EBL, LLC (EbLens)	$	—	(2)	$	—	(2)	$	—		$	9,332
US GreenFiber, LLC		—			5,223			—			5,223
K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.)		—	(2)		—	(2)		2,123			2,368
Allredi, LLC (fka Marco Group International OpCo, LLC)		—	(3)		—	(3)		8,144			10,281
Suited Connector LLC		4,324			15,933			—	(1)		—	(1)
Virtex Enterprises, LP		5,340			10,906			—	(1)		—	(1)
Total	$	9,664		$	32,062		$	10,267		$	27,204

        (1)
(2)
(3)

        Debt investment in portfolio company was not on non-accrual status as of December 31, 2022.
Portfolio company debt investment was not held as of December 31, 2023.
Portfolio company debt investment was not on non-accrual status as of December 31, 2023.

       

Consolidated Schedule of Investments In and Advances To Affiliates

The table below represents the fair value of control and affiliate investments as of December 31, 2022 and any additions and reductions made to such investments during the year ended December 31, 2023, including the total investment income earned on such investments during the period.


												Year Ended December 31, 2023
Portfolio Company (1)	December 31, 2023 Principal Amount - Debt Investments		December 31, 2022 Fair Value		Gross Additions (2)		Gross Reductions (3)			December 31, 2023 Fair Value		Net Realized Gains (Losses) (4)			Net Change in Unrealized Appreciation (Depreciation)			Interest Income		Payment-in-kind Interest Income		Dividend Income		Fee Income
Control Investments
EBL, LLC (EbLens)	$	—	$	—	$	11,458	$	(11,458	)	$	—	$	(11,458	)	$	11,083		$	—	$	—	$	—	$	—
US GreenFiber, LLC		5,226		—		—		—			—		—			—			—		—		—		—
Total Control Investments	$	5,226	$	—	$	11,458	$	(11,458	)	$	—	$	(11,458	)	$	11,083		$	—	$	—	$	—	$	—
Affiliate Investments
Applegate Greenfiber Intermediate Inc. (fka US GreenFiber, LLC)	$	9,602	$	23,168	$	1,422	$	—		$	24,590	$	—		$	1,422		$	974	$	—	$	—	$	—
Medsurant Holdings, LLC		—		2,540		3,463		(73	)		5,930		—			3,463			—		—		—		—
Pfanstiehl, Inc.		—		51,992		46		(18,717	)		33,321		—			(8,717	)		673		—		347		—
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)		15,000		19,118		2,208		(6,005	)		15,321		—			(4,505	)		2,379		—		—		65
Steward Holding LLC (dba Steward Advanced Materials)		—		4,772		-		(58	)		4,714		—			(58	)		—		—		172		—
Total Affiliate Investments	$	24,602	$	101,590	$	7,139	$	(24,853	)	$	83,876	$	—		$	(8,395	)	$	4,026	$	—	$	519	$	65


(1)	The investment type, industry, ownership detail for equity investments, interest rate and maturity date for debt investments, and if the investment is income producing is disclosed in the consolidated schedule of investments.
(2)	Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest and PIK dividend income, accretion of OID and origination fees, and net unrealized appreciation recognized during the period. Gross additions also include transfers of portfolio companies into the control or affiliate classification during the period, as applicable.
(3)	Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and net unrealized (depreciation) recognized during the period. Gross reductions also include transfers of portfolio companies out of the control or affiliate classification during the period, as applicable.
(4)	The schedule does not reflect realized gains or losses on escrow receivables for investments which were previously exited and were not held during the period presented. Gains and losses on escrow receivables are classified in the consolidated statements of operations according to the control classification at the time the investment was exited. Escrow receivables are presented in prepaid expenses and other assets on the consolidated statements of assets and liabilities.

The table below represents the fair value of control and affiliate investments as of December 31, 2021 and any additions and reductions made to such investments during the year ended December 31, 2022, including the total investment income earned on such investments during the period.


												Year Ended December 31, 2022
Portfolio Company (1)	December 31, 2022 Principal Amount - Debt Investments		December 31, 2021 Fair Value		Gross Additions (2)		Gross Reductions (3)			December 31, 2022 Fair Value		Net Realized Gains (Losses) (4)			Net Change in Unrealized Appreciation (Depreciation)			Interest Income		Payment-in-kind Interest Income		Dividend Income		Fee Income
Control Investments
EBL, LLC (EbLens) (5)	$	9,350	$	—	$	19,628	$	(19,628	)	$	—	$	—		$	(11,083	)	$	—	$	—	$	—	$	—
Hilco Plastics Holdings, LLC (dba Hilco Technologies)		—		—		353		(353	)	$	—		(352	)		—			—		—		—		—
Mesa Line Services, LLC		—		2,151		193		(2,344	)		—		194			(2,150	)		—		—		—		—
US GreenFiber, LLC		5,226		—		—		—			—		—			—			—		—		—		—
Total Control Investments	$	14,576	$	2,151	$	20,174	$	(22,325	)	$	—	$	(158	)	$	(13,233	)	$	—	$	—	$	—	$	—
Affiliate Investments
Applegate Greenfiber Intermediate Inc. (fka US GreenFiber, LLC)	$	9,602	$	22,405	$	13,566	$	(12,803	)	$	23,168	$	—		$	763		$	973	$	—	$	—	$	—
FAR Research Inc.		—		28		—		(28	)		—		—			(28	)		—		—		—		—
Medsurant Holdings, LLC		—		3,662		—		(1,122	)		2,540		—			(1,122	)		—		—		—		—
Mirage Trailers LLC		—		10,675		355		(11,030	)		—		324			(1,694	)		248		29		—		132
Pfanstiehl, Inc.		10,000		57,639		34,335		(39,982	)		51,992		24,330			(15,432	)		421		—		—		150
Pinnergy, Ltd. (6)		—		21,178		15,300		(36,478	)		—		15,300			(18,177	)		—		—		656		—
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)		15,000		18,359		5,487		(4,728	)		19,118		(121	)		(1,723	)		1,822		—		—		175
Steward Holding LLC (dba Steward Advanced Materials)		—		3,338		1,434		—			4,772		—			1,434			—		1		69		—
Total Affiliate Investments	$	34,602	$	137,284	$	70,477	$	(106,171	)	$	101,590	$	39,833		$	(35,979	)	$	3,464	$	30	$	725	$	457


(1)	The investment type, industry, ownership detail for equity investments, interest rate, maturity date, and if the investment is income producing is disclosed in the consolidated schedule of investments.


(2)	Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest and PIK dividend income, accretion of OID and origination fees, and net unrealized appreciation recognized during the period. Gross additions also include transfers of portfolio companies into the control or affiliate classification during the period, as applicable.
(3)	Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and net unrealized (depreciation) recognized during the period. Gross reductions also include transfers of portfolio companies out of the control or affiliate classification during the period, as applicable.
(4)	The schedule does not reflect realized gains or losses on escrow receivables for investments which were previously exited and were not held during the period presented. Gains and losses on escrow receivables are classified in the consolidated statements of operations according to the control classification at the time the investment was exited. Escrow receivables are presented in prepaid expenses and other assets on the consolidated statements of assets and liabilities.
(5)	Portfolio company was transferred to Control investments from Non-control/Non-affiliate investments during the year ended December 31, 2022.
(6)	Portfolio company was transferred to Non-control/Non-affiliate investments from Affiliate investments during the year ended December 31, 2022.