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v3.23.3

Borrowings | 9 Months Ended
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Sep. 30, 2023
Debt Disclosure [Abstract] |
Borrowings | Borrowings SBA Debentures: The SBA debentures issued by SBIC I LP and other SBA regulations generally restrict assets held by SBIC I LP. On a stand-alone basis, as of September 30, 2023 and December 31, 2022, SBIC I LP held $152,322 and $176,521 in assets, respectively, which accounted for approximately 32% and 34% of the Company’s total consolidated assets, respectively. These assets cannot be pledged under any debt obligation of the Company. On March 1, 2023 and September 27, 2023, SBIC I LP redeemed SBA debentures of $5,000 and $14,000 respectively, that were contractually due March 1, 2025. As of September 30, 2023, SBIC I LP had outstanding debentures totaling $31,920, which bear a fixed interest rate of 2.87% and mature on March 1, 2025. For the three and nine months ended September 30, 2023 and 2022, the components of interest expense, cash paid for interest, effective interest rates and average outstanding balances for the SBA debentures were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Stated interest expense | $ | 328 |  |  | $ | 369 |  |  | $ | 1,006 |  |  | $ | 1,184 |
Amortization of debt issuance costs | 43 |  |  | 48 |  |  | 133 |  |  | 140 |
Total interest and debt financing costs | $ | 371 |  |  | $ | 417 |  |  | $ | 1,139 |  |  | $ | 1,324 |
Cash paid for interest expense | $ | 694 |  |  | $ | 737 |  |  | $ | 1,419 |  |  | $ | 1,739 |
Effective interest rate | 3.27 | % |  | 3.28 | % |  | 3.24 | % |  | 3.21 | %
Average outstanding balance | $ | 45,311 |  |  | $ | 50,920 |  |  | $ | 46,795 |  |  | $ | 55,026 |
BNP Facility: On June 20, 2019, OFSCC-FS entered into the BNP Facility, which provides for borrowings in an aggregate principal amount up to $150,000, subject to a borrowing base and other covenants. On June 24, 2022, OFSCC-FS amended the BNP facility to, among other things: (i) extend the reinvestment period under the BNP Facility for three years from June 20, 2022 to June 20, 2025; (ii) extend the maturity date under the BNP Facility from June 20, 2024 to June 20, 2027; (iii) convert the benchmark interest rate from LIBOR to SOFR; (iv) increase the applicable margin by 0.40% on all classes of loans; and (v) increase the applicable margin floor from 1.925% to 2.65%. OFSCC-FS also pays a non-usage fee depending on the size of the unused portion of the BNP Facility. Fees and legal costs incurred in connection with the BNP Facility are amortized over the life of the facility. The BNP Facility is collateralized by all the assets held by OFSCC-FS. OFSCC-FS and the Company have each made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. As of September 30, 2023 and December 31, 2022, OFSCC-FS had outstanding debt of $91,100 and $104,700, respectively. As of September 30, 2023, the unused commitment under the BNP Facility was $58,900. For the three and nine months ended September 30, 2023 and 2022, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the BNP Facility were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Stated interest expense(1) | $ | 2,012 |  |  | $ | 1,671 |  |  | $ | 6,008 |  |  | $ | 3,295 |
Amortization of debt issuance costs | 95 |  |  | 95 |  |  | 285 |  |  | 231 |
Total interest and debt financing costs | $ | 2,107 |  |  | $ | 1,766 |  |  | $ | 6,293 |  |  | $ | 3,526 |
Cash paid for interest expense | $ | 2,101 |  |  | $ | 1,520 |  |  | $ | 6,069 |  |  | $ | 2,906 |
Effective interest rate | 8.61 | % |  | 5.20 | % |  | 8.12 | % |  | 3.74 | %
Average outstanding balance | $ | 97,883 |  |  | $ | 135,680 |  |  | $ | 103,327 |  |  | $ | 125,574 |
(1) Stated interest expense includes unused fees. PWB Credit Facility: On March 7, 2018, the Company entered into the PWB Credit Facility. On April 22, 2022, the Company amended the PWB Credit Facility to: (i) increase the maximum amount available under the PWB Credit Facility from $25,000 to $35,000; and (ii) extend the maturity date of the PWB Credit Facility from February 28, 2023 to February 28, 2024. On December 15, 2022, the Company amended the PWB Credit Facility to: (i) reduce the maximum amount available under the PWB Credit Facility from $35,000 to $25,000; and (ii) eliminate the “No Net Losses” covenant, which restricted net losses (defined as income after adjustments to the investment portfolio for gains and losses, realized and unrealized, also shown as net increase (decrease) in net assets resulting from operations) in more than two quarters during the prior four quarters then ended. Fees and legal costs incurred in connection with the PWB Credit Facility are amortized over the life of the facility. The maximum availability of the PWB Credit Facility is equal to 50% of the aggregate outstanding principal amount of eligible loans included in the borrowing base as specified in the BLA. The PWB Credit Facility is guaranteed by OFSCC-MB and secured by all of our current and future assets, excluding assets held by SBIC I LP, OFSCC-FS, and the Company’s partnership interests in SBIC I LP and SBIC I GP. The Company has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. As of September 30, 2023 and December 31, 2022, the Company had $-0- and $-0-, respectively, of outstanding debt under the PWB Credit Facility. As of September 30, 2023, the unused commitment under the PWB Credit Facility was $25,000. For the three and nine months ended September 30, 2023 and 2022, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the PWB Credit Facility were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Stated interest expense(1) | $ | 25 |  |  | $ | 49 |  |  | $ | 136 |  |  | $ | 96 |
Amortization of debt issuance costs | — |  |  | 1 |  |  | 1 |  |  | 4 |
Total interest and debt financing costs | $ | 25 |  |  | $ | 50 |  |  | $ | 137 |  |  | $ | 100 |
Cash paid for interest expense | $ | 24 |  |  | $ | 49 |  |  | $ | 135 |  |  | $ | 95 |
Effective interest rate | n/m(2) |  | n/m(2) |  | n/m(2) |  | n/m(2)
Average outstanding balance | $ | 587 |  |  | $ | 1,391 |  |  | $ | 1,669 |  |  | $ | 719 |
(1) Stated interest expense includes unused fees. (2) Not meaningful due to a minimal average outstanding balance relative to the size of the total commitment and unused fees incurred during the periods. Unsecured Notes: As of September 30, 2023 and December 31, 2022, the Company had the following Unsecured Notes outstanding: Unsecured Notes Due February 2026: On February 10, 2021 and March 18, 2021, the Company issued $125,000 in aggregate principal of unsecured notes. The Unsecured Notes Due February 2026 bear interest at a rate of 4.75% per year payable semi-annually and mature on February 10, 2026. The Company may redeem the Unsecured Notes Due February 2026 in whole or in part at any time, or from time to time, at its option at par plus a “make-whole” premium, if applicable. Unsecured Notes Due October 2028: On October 28, 2021 and November 1, 2021, the Company issued $55,000 in aggregate principal of unsecured notes. The Unsecured Notes Due October 2028 bear interest at a rate of 4.95% per year payable semi-annually and mature on October 31, 2028. The Company may redeem the Unsecured Notes Due October 2028 in whole or in part at any time, or from time to time, at its option on or after October 31, 2023. The Unsecured Notes are direct unsecured obligations and rank equal in right of payment with all current and future unsecured indebtedness of the Company. Because the Unsecured Notes are not secured by any of the Company’s assets, they are effectively subordinated to all existing and future secured unsubordinated indebtedness (or any indebtedness that is initially unsecured as to which the Company subsequently grants a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the PWB Credit Facility. The indenture governing the Unsecured Notes contains certain covenants, including: (i) prohibiting additional borrowings, including through the issuance of additional debt securities, unless the Company's asset coverage, as defined in the 1940 Act, after giving effect to any exemptive relief granted to the Company by the SEC, equals at least 150% after such borrowings; and (ii) prohibiting (a) the declaration of any cash dividend or distribution upon any class of the Company’s capital stock (except to the extent necessary for the Company to maintain its treatment as a RIC under Subchapter M of the Code), or (b) the purchase of any capital stock unless the Company’s asset coverage, as defined in the 1940 Act, is at least 150% at the time of such capital transaction and after deducting the amount of such transaction. For the three and nine months ended September 30, 2023 and 2022, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the Unsecured Notes were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Stated interest expense | $ | 2,165 |  |  | $ | 2,165 |  |  | $ | 6,495 |  |  | $ | 6,495 |
Amortization of debt issuance costs | 245 |  |  | 259 |  |  | 734 |  |  | 779 |
Total interest and debt financing costs | $ | 2,410 |  |  | $ | 2,424 |  |  | $ | 7,229 |  |  | $ | 7,274 |
Cash paid for interest expense | $ | 3,649 |  |  | $ | 3,649 |  |  | $ | 7,979 |  |  | $ | 8,002 |
Effective interest rate | 5.35 | % |  | 5.39 | % |  | 5.35 | % |  | 5.39 | %
Average outstanding balance | $ | 180,000 |  |  | $ | 180,000 |  |  | $ | 180,000 |  |  | $ | 180,000 |
The following table shows the scheduled maturities of the principal balances of the Company’s outstanding borrowings as of September 30, 2023:
|  | Payments due by period
|  | Total |  | Less than 1 year |  | 1 to 3 years |  | 3 to 5 years |  | After 5 years
PWB Credit Facility |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Unsecured Notes |  | 180,000 |  |  | — |  |  | 125,000 |  |  | — |  |  | 55,000 |
SBA Debentures |  | 31,920 |  |  | — |  |  | 31,920 |  |  | — |  |  | — |
BNP Facility |  | 91,100 |  |  | — |  |  | — |  |  | 91,100 |  |  | — |
Total |  | $ | 303,020 |  |  | $ | — |  |  | $ | 156,920 |  |  | $ | 91,100 |  |  | $ | 55,000 |
For the three and nine months ended September 30, 2023 and 2022, the average dollar borrowings and weighted average effective interest rate on the Company’s outstanding borrowings were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Average dollar borrowings | $ | 323,781 |  |  | $ | 367,992 |  |  | $ | 331,792 |  |  | $ | 361,319 |
Weighted average effective interest rate | 6.07 | % |  | 5.06 | % |  | 5.95 | % |  | 4.51 | %

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