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Investments
 9 Months Ended
Jun. 30, 2023
Investments [Abstract]  
Investments

Note 3. Investments

 

The composition of our investments as of June 30, 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  $148,558    54.5%  $104,961    48.0%
Senior Secured Notes   2,616    1.0    2,138    1.0 
Unsecured Debt   154    0.1    161    0.1 
Fund Investment   1,027    0.4    962    0.4 
Equity/Warrants   119,743    44.0    110,465    50.5 
Total Investments  $272,098    100.0%  $218,687    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 June 30, 2023 and September 30, 2022, the total fair value of warrants was $404.6 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 nine months ended June 30, 2023, the Company acquired and/or added on one and two, respectively, of additional warrants in an existing portfolio company. During the three and nine months ended June 30, 2022, the Company did not acquire any additional warrants in an existing portfolio company.

 

For the three and nine months ended June 30, 2023, there was $194,428 and $404,581, respectively, in unrealized appreciation related to warrants. For the three and nine months ended June 30, 2022, there was $9,908 and $934,158 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 June 30, 2023 (dollars in thousands):

 

   Fair Value   Percentage 
         
Services: Business  $42,081    19.2%
Banking, Finance, Insurance & Real Estate   40,303    18.4 
Hotel, Gaming & Leisure   32,980    15.1 
Services: Consumer   18,225    8.3 
Construction & Building   20,030    9.2 
Metals & Mining   13,887    6.4 
Media: Broadcasting & Subscription   10,438    4.8 
Automotive   9,603    4.4 
High Tech Industries   13,429    6.1 
Energy: Oil & Gas   5,557    2.5 
Consumer Discretionary   6,035    2.8 
Packaging   3,405    1.6 
Aerospace & Defense   2,651    1.2 
Retail   63    
-
 
Total  $218,687    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 the United States. 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 June 30, 2023 (dollars in thousands):

 

   Fair Value   Percentage 
Northeast  $87,435    39.9%
Southeast   55,729    25.5 
Midwest   34,240    15.7 
West   26,830    12.3 
Southwest   6,498    3.0 
Mid-Atlantic   204    0.1 
International   7,751    3.5 
Total  $218,687    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 nine months ended June 30, 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
June 30,
2023		   Earned
Income		 
Affiliated Investments                                      
1888 Industrial Services, LLC  Senior Secured First Lien Term Loan C  $
        -
   $
        -
   $
-
   $763,798   $
          -
   $763,798   $25,765 
   Revolving Credit Facility   4,151,562    215,622    
-
    264,993    
-
    4,632,177    336,502 
Black Angus Steakhouses, LLC  Senior Secured First Lien Delayed Draw Term Loan   758,929    9,915    
-
    75,893    
-
    844,737    94,376 
   Senior Secured First Lien Term Loan   1,547,918    
-
    
-
    (100,951)   
-
    1,446,967    
-
 
   Senior Secured First Lien Super Priority DDTL   1,500,000    19,796    
-
    166,667    
-
    1,686,463    224,616 
FST Holdings Parent, LLC  Equity  $
-
   $8,000,000   $
-
   $
-
   $
-
   $8,000,000   $
-
 
Kemmerer Operations, LLC  Senior Secured First Lien Term Loan   2,378,510    
-
    (2,378,510)   
-
    
-
    
-
    
-
 
   Equity   694,702    
-
    (962,717)   268,015    
-
    
-
    
-
 
Maritime Wireless Holdings LLC  Senior Secured First Lien Term Loan A  $
-
   $(1,500,703)  $4,900,000   $61,742   $30,211   $3,491,250   $163,403 
   Senior Secured First Lien Term Loan B  $
-
   $(1,055)  $7,350,000   $132,305   $
-
   $7,481,250   $267,124 
   Convertible Promissory Note  $
-
   $
-
   $5,000,000   $1,925,000   $
-
   $6,925,000   $
-
 
US Multifamily, LLC  Equity   1,282,571    (972,483)   
-
    (244,952)   
-
    65,136    
-
 
Total Affiliated Investments     $12,314,192   $5,771,092   $13,908,773   $3,312,510   $30,211   $35,336,778   $1,111,786 

 

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
June 30,
2023		    Earned Income 
Controlled Investments                                      
FlexFIN, LLC  Equity Interest  $47,136,146   $(13,012,069)  $
-
   $
-
    
-
   $34,124,077   $2,637,115 
Kemmerer Operations, LLC  Senior Secured First Lien Term Loan   
-
    2,329,641    2,378,510    (1)   24,131    4,732,281    245,738 
   Equity   
-
    873,440    962,717    7,319,045    
-
    9,155,202    
-
 
NVTN LLC  Senior Secured First Lien Delayed Draw Term Loan   7,192,927    
-
    
-
    14,620    
-
    7,207,547    416,974 
   Senior Secured First Lien Term Loan B   3,697,109    
-
    
-
    199,532    
-
    3,896,641    
-
 
   Senior Secured First Lien Term Loan C   
-
    
-
    
-
    
-
    
-
    
-
    
-
 
Total Controlled Investments     $58,026,182   $(9,808,988)  $3,341,227   $7,533,196   $24,131   $59,115,748   $3,299,827 

 

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
June 30, 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    
-
    
-
    677,562    
-
    702,202    56,258 
   Revolving Credit Facility   3,554,069    539,054    
-
    (3,000)   
-
    4,090,123    170,298 
Black Angus Steakhouses, LLC  Senior Secured First Lien Delayed Draw Term Loan   758,929    
-
    
-
    
-
    
-
    758,929    57,552 
   Senior Secured First Lien Term Loan   2,279,814    
-
    
-
    (513,169)   
-
    1,766,645    
-
 
   Senior Secured First Lien Super Priority DDTL   1,500,000    
-
    
-
    
-
    
-
    1,500,000    113,827 
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    40,173    
-
    21,438    
-
    2,422,158    276,386 
   Senior Secured First Lien Delayed Draw Term Loan   162,441    (163,915)   
-
    1,474    
-
    
-
    6,601 
   Equity   553,746    
-
    
-
    241,309    
-
    795,055    
-
 
Path Medical, LLC  Senior Secured First Lien Term Loan A   2,249,835    
-
    
-
    8,658    
-
    2,258,493    (1,693)
   Senior Secured First Lien Term Loan B   
-
    
-
    
-
    
-
    
-
    
-
    (2,974)
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    (2,577,418)   
-
    2    
-
    
-
    93,338 
   Equity   2,236,261    
-
    
-
    860,639    
-
    3,096,900    
-
 
Total Affiliated Investments     $57,595,245   $(46,413,155)  $
-
   $(8,529,483)  $14,737,897   $17,390,505   $769,605 

 

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
June 30,
2022		   Earned
Income		 
Controlled Investments                            
FlexFIN, LLC  Equity Interest  $2,500,000   $38,606,667   $
         -
   $
-
   $
        -
   $41,106,667   $1,191,213 
NVTN LLC  Senior Secured First Lien Delayed Draw Term Loan   6,414,860    
-
    
-
    45,961    
-
    6,460,821    
-
 
   Super Priority Senior Secured First Lien Term Loan   977,000    (1,000,000)   
-
    21,150    1,850    
-
    173,822 
   Senior Secured First Lien Term Loan B   
-
    
-
    
-
    1,887,801    
-
    1,887,801    
-
 
Total Controlled Investments     $9,891,860   $37,606,667   $
-
   $1,954,912   $1,850   $49,455,289   $1,365,035 

 

(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 nine months ended June 30, 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 nine months ended June 30, 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 June 30, 2023 for which summarized financial information is presented below (dollars in thousands):

 

Balance Sheet  June 30,
2023
(Unaudited)		   September 30,
2022
(Audited)		 
Total Assets  $34,122   $47,168 
Total Liabilities   128    12 

 

Income Statement  For the
Nine Months Ended
June 30,
2023
(Unaudited)		   For the Year
Ended
September 30,
2022
(Audited)		 
Total Income  $3,223   $3,855 
Total Expenses   554    202 
Net Income  $2,669   $3,653