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Investments
 6 Months Ended
Mar. 31, 2023
Investments, Debt and Equity Securities [Abstract]  
Investments

Note 3. Investments

 

The composition of our investments as of March 31, 2023 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

 

   Amortized Cost   Percentage   Fair Value   Percentage 
Senior Secured First Lien Term Loans  $139,319    53.0%  $96,603    48.3%
Senior Secured Notes   2,616    1.0    2,128    1.1 
Unsecured Debt   182    0.1    
-
    
-
 
Fund Investment   1,027    0.4    1,027    0.5 
Equity/Warrants   119,398    45.5    100,331    50.1 
Total Investments  $262,542    100.0%  $200,089    100.0%

 

The composition of our investments as of September 30, 2022 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

 

   Amortized Cost   Percentage   Fair Value   Percentage 
Senior Secured First Lien Term Loans  $128,482    48.7%  $88,248    45.6%
Senior Secured Second Lien Term Loans   2,603    1.0    2,607    1.4 
Senior Secured Notes   2,252    0.9    1,659    0.9 
Unsecured Debt   182    0.1    
-
    
-
 
Equity/Warrants   129,929    49.3    100,443    52.1 
Total Investments  $263,448    100.0%  $192,957    100.0%

 

In connection with certain of the Company’s investments, the Company receives warrants that are obtained for the objective of increasing the total investment returns and are not held for hedging purposes. At March 31, 2023 and September 30, 2022, the total fair value of warrants was $210.1 thousand and $62.6 thousand, respectively, and were included in investments at fair value on the Consolidated Statements of Assets and Liabilities. During the three and six months ended March 31, 2023, the Company acquired warrants in one existing portfolio company. During the three and six months ended March 31, 2022, the Company did not acquire any additional warrants in an existing portfolio company.

 

For the three and six months ended March 31, 2023, there was $210,153 and $147,584, respectively, in unrealized appreciation related to warrants. For each of the three and six months ended March 31, 2022, there was $4,250 of unrealized depreciation related to warrants, which was recorded on the Consolidated Statements of Operations as net unrealized appreciation/(depreciation) on investments. The warrants are received in connection with individual investments and are not subject to master netting arrangements. 

 

The following table shows the portfolio composition by industry grouping at fair value at March 31, 2023 (dollars in thousands):

 

   Fair Value   Percentage 
         
Services: Business  $43,204    21.6%
Banking, Finance, Insurance & Real Estate   35,202    17.6 
Hotel, Gaming & Leisure   33,308    16.6 
Services: Consumer   18,300    9.1 
Construction & Building   18,438    9.2 
Metals & Mining   12,107    6.1 
Media: Broadcasting & Subscription   9,762    4.9 
Automotive   9,402    4.7 
High Tech Industries   5,385    2.7 
Energy: Oil & Gas   5,199    2.6 
Consumer Discretionary   3,655    1.8 
Packaging   3,344    1.7 
Aerospace & Defense   2,596    1.3 
Retail   187    0.1 
Total  $200,089    100.0%

 

The following table shows the portfolio composition by industry grouping at fair value at September 30, 2022 (dollars in thousands):

 

   Fair Value   Percentage 
         
Services: Business  $52,851    27.4%
Hotel, Gaming & Leisure   31,947    16.6 
Banking, Finance, Insurance & Real Estate   31,910    16.5 
Services: Consumer   21,243    11.0 
Construction & Building   17,724    9.1 
Automotive   8,075    4.2 
Consumer Discretionary   6,208    3.2 
High Tech Industries   5,465    2.8 
Media: Broadcasting & Subscription   4,220    2.2 
Energy: Oil & Gas   4,152    2.2 
Packaging   3,361    1.7 
Metals & Mining   3,073    1.6 
Aerospace & Defense   2,607    1.4 
Retail   121    0.1 
Total  $192,957    100.0%

 

The Company invests in portfolio companies principally located in North America. 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.

 

The following table shows the portfolio composition by geographic location at fair value at March 31, 2023 (dollars in thousands):

 

   Fair Value   Percentage 
Northeast  $90,284    45.1%
Southeast   51,269    25.6 
Midwest   28,856    14.4 
West   18,936    9.5 
Southwest   5,591    2.8 
Mid-Atlantic   193    0.1 
International   4,960    2.5 
Total  $200,089    100.0%

 

The following table shows the portfolio composition by geographic location at fair value at September 30, 2022 (dollars in thousands):

 

   Fair Value   Percentage 
Northeast  $92,939    48.2%
Southeast   51,797    26.8 
West   20,196    10.5 
Midwest   16,023    8.3 
Southwest   6,288    3.3 
Mid-Atlantic   265    0.1 
International   5,449    2.8 
Total  $192,957    100.0%

 

Transactions With Affiliated/Controlled Companies

 

The Company had investments in portfolio companies designated as Affiliated Investments and Controlled Investments under the 1940 Act. Transactions with Affiliated Investments and Controlled Investments during the six months ended March 31, 2023 and 2022 were as follows:

 

Name of Investment(1)(2)  Type of Investment  Fair Value at
September 30,
2022		   Purchases/
(Sales)
of or Advances/
(Distributions)		   Transfers
In/(Out)
of Affiliates		   Unrealized
Gain/(Loss)		   Realized
Gain/(Loss)		   Fair Value at
March 31,
2023		   Earned
Income		 
Affiliated Investments                                      
1888 Industrial Services, LLC  Senior Secured First Lien Term Loan C  $ -   $ -   $-   $566,689   $ -   $566,689   $(96,875)
   Revolving Credit Facility   4,151,562    215,622    -    264,993    -    4,632,177    406,160 
Black Angus Steakhouses, LLC  Senior Secured First Lien Delayed Draw Term Loan   758,929    -    -    -    -    758,929    50,500 
   Senior Secured First Lien Term Loan   1,547,918    -    -    117,776    -    1,665,694    - 
   Senior Secured First Lien Super Priority DDTL   1,500,000    -    -    -    -    1,500,000    99,696 
Kemmerer Operations, LLC  Senior Secured First Lien Term Loan   2,378,510    -    (2,378,510)   -    -    -    - 
   Equity   694,702    -    (962,717)   268,015    -    -    - 
US Multifamily, LLC  Equity   1,282,571    (131,465)   -    (227,873)   -    923,233    - 
Total Affiliated Investments     $12,314,192   $84,157   $(3,341,227)  $989,600   $-   $10,046,722   $459,481 

 

Name of Investment(1)(2)  Type of Investment  Fair Value at
September 30,
2022		   Purchases/
(Sales)
of or Advances/
(Distributions)		   Transfers
In/(Out)
of Affiliates		   Unrealized
Gain/(Loss)		   Realized
Gain/(Loss)		   Fair Value at
March 31,
2023		   Earned
Income		 
Controlled Investments                            
FlexFIN, LLC  Equity Interest  $47,136,146   $(9,085,316)  $-   $-    -   $38,050,830   $1,927,203 
Kemmerer Operations, LLC  Senior Secured First Lien Term Loan   -    3,630,773    2,378,510    182    23,273    6,032,738    245,738 
   Equity   -    873,440    962,717    4,237,819    -    6,073,976    - 
NVTN LLC  Senior Secured First Lien Delayed Draw Term Loan   7,192,927    -    -    14,620    -    7,207,547    251,814 
   Senior Secured First Lien Term Loan B   3,697,109    -    -    469,476    -    4,166,585    - 
Total Controlled Investments     $58,026,182   $(4,581,103)  $3,341,227   $4,722,097   $23,273   $61,531,676   $2,424,755 

 

Name of Investment(1)(2)  Type of Investment  Fair Value at
September 30,
2021		   Purchases/
(Sales)
of or Advances/
(Distributions)		   Transfers
In/(Out)
of Affiliates		  

Unrealized

Gain/(Loss)

   Realized
Gain/(Loss)		   Fair Value at
March 31,
2022		   Earned
Income		 
Affiliated Investments                            
1888 Industrial Services, LLC  Senior Secured First Lien Term Loan B  $-   $-   $         -   $19,468,870   $(19,468,870)  $-   $- 
   Senior Secured First Lien Term Loan C   24,639    -    -    714,520    -    739,159    37,574 
   Revolving Credit Facility   3,554,069    179,685    -    (4)   -    3,733,750    112,567 
Black Angus Steakhouses, LLC  Senior Secured First Lien Delayed Draw Term Loan   758,929    -    -    -    -    758,929    38,368 
   Senior Secured First Lien Term Loan   2,279,814    -    -    (395,393)   -    1,884,421    - 
   Senior Secured First Lien Super Priority DDTL   1,500,000    -    -    -    -    1,500,000    75,833 
Caddo Investors Holdings 1 LLC  Equity   3,454,786    (3,448,219)   -    (925,960)   919,393    -    - 
Dynamic Energy Services International LLC  Senior Secured First Lien Term Loan   -    (4,910,671)   -    7,328,568    (2,417,897)   -    12 
JFL-NGS Partners, LLC  Equity   26,862,813    (26,807,520)   -    (26,805,513)   26,750,220    -    - 
JFL-WCS Partners, LLC  Equity   8,099,949    (8,084,639)   -    (7,970,361)   7,955,051    -    - 
Kemmerer Operations, LLC  Senior Secured First Lien Term Loan   2,360,547    82,491    -    6,651    -    2,449,689    183,128 
   Senior Secured First Lien Delayed Draw Term Loan   162,441    (163,915)   -    1,474    -    -    6,601 
   Equity   553,746    -    -    146,647    -    700,393    - 
Path Medical, LLC  Senior Secured First Lien Term Loan A   2,249,835    -    -    281,535    -    2,531,370    152,405 
URT Acquisition Holdings Corporation  Warrants   920,000    (1,000,000)   -    (920,000)   1,000,000    -    - 
US Multifamily, LLC  Senior Secured First Lien Term Loan   2,577,416    (2,577,417)   -    1    -    -    93,338 
   Equity   2,236,261    -    -    134,101    -    2,370,362    - 
Total Affiliated Investments     $57,595,245   $(46,730,205)  $-   $(8,934,864)  $14,737,897   $16,668,073   $699,826 

 

Name of Investment(1)(2)  Type of Investment  Fair Value at
September 30,
2021		   Purchases/
(Sales)
of or Advances/
(Distributions)		   Transfers
In/(Out)
of Affiliates		  

Unrealized

Gain/(Loss)

   Realized
Gain/(Loss)		   Fair Value at
March 31,
2022		   Earned
Income		 
Controlled Investments                            
FlexFIN, LLC  Equity Interest  $2,500,000   $22,805,000   $         -   $-   $ -   $25,305,000   $1,191,213 
NVTN LLC  Senior Secured First Lien Delayed Draw Term Loan   6,414,860    -    -    39,396    -    6,454,256    - 
   Super Priority Senior Secured First Lien Term Loan   977,000    (500,000)   -    13,575    925    491,500    169,447 
   Senior Secured First Lien Term Loan B   -    -    -    1,933,474    -    1,933,474    - 
Total Controlled Investments     $9,891,860   $22,305,000   $-   $1,986,445   $925   $34,184,230   $1,360,660 

 

(1) The par amount and additional detail are shown in the Consolidated Schedule of Investments.
(2) Securities with a zero value at the beginning and end of the period, and those that had no transaction activity were excluded from the roll forward.

 

Purchases/(sales) of or advances to/(distributions) from Affiliated Investments and Controlled Investments represent the proceeds from sales and settlements of investments, purchases, originations and participations, investment increases due to PIK interest as well as net amortization of premium/(discount) on investments and are included in the purchases and sales presented on the Consolidated Statements of Cash Flows for the six months ended March 31, 2023 and 2022. Transfers in/(out) of Affiliated Investments and Controlled Investments represent the fair value for the month an investment became or was removed as an Affiliated Investment or a Controlled Investment. Income received from Affiliated Investments and Controlled Investments is included in total investment income on the Consolidated Statements of Operations for the six months ended March 31, 2023 and 2022.

 

Unconsolidated Significant Subsidiaries

 

In accordance with the SEC’s Regulation S-X and GAAP, the Company evaluated and determined that it had one subsidiary, FlexFIN, LLC, that is deemed to be a “significant subsidiary” as of March 31, 2023 for which summarized financial information is presented below (dollars in thousands):

 

Balance Sheet  March 31,
2023 (Unaudited)		   September 30,
2022
(Audited)		 
Total Assets  $38,050   $47,168 
Total Liabilities   161    12 

 

Income Statement  For the Six
Months Ended
March 31,
2023
(Unaudited)		   For the Year
Ended September 30,
2022
(Audited)		 
Total Income  $ 2,221   $3,855 
Total Expenses   549    202 
Net Income  $1,672   $3,653