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Borrowings | 3 Months Ended
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Dec. 31, 2024
Borrowings [Abstract] |
Borrowings | Note 5. Borrowings As a BDC, we are generally only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200% after giving effect to such leverage. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing. However, in March 2018, the Small Business Credit Availability Act modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from 200% to 150% of asset coverage, if certain requirements under the 1940 Act are met. Under the 1940 Act, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is present, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the 1940 Act allows the majority of our independent directors to approve an increase in our leverage capacity, and such approval would become effective after the one-year anniversary of such approval. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. No approval was requested or obtained and the Company is still subject to the 200% requirement. As of December 31, 2024 and September 30, 2024, the Company’s asset coverage was 213.7% and 216.8%, respectively, after giving effect to leverage and therefore the Company’s asset coverage was greater than 200%, the minimum asset coverage requirement applicable presently to the Company under the 1940 Act. The Company’s outstanding debt excluding debt issuance costs as of December 31, 2024 and September 30, 2024 were as follows (dollars in thousands):
|  | December 31, 2024 |  |  | September 30, 2024 |
|  | Aggregate Principal Available (1) |  |  | Principal Amount Outstanding |  |  | Carrying Value |  |  | Fair Value |  |  | Aggregate Principal Available (1) |  |  | Principal Amount Outstanding |  |  | Carrying Value |  |  | Fair Value |
2028 Notes |  | $ | 57,500 |  |  | $ | 57,500 |  |  | $ | 56,228 |  |  | $ | 52,440 |  |  | $ | 57,500 |  |  | $ | 57,500 |  |  | $ | 56,143 |  |  | $ | 51,980 |
2028 Promissory Note |  |  | 1,661 |  |  |  | 1,661 |  |  |  | 1,516 |  |  |  | 1,661 |  |  |  | 1,661 |  |  |  | 1,661 |  |  |  | 1,508 |  |  |  | 1,661 |
Revolving Credit Facility |  |  | 3,500 |  |  |  | 84,000 |  |  |  | 84,000 |  |  |  | 84,000 |  |  |  | 9,427 |  |  |  | 78,073 |  |  |  | 78,073 |  |  |  | 78,073 |
Total debt |  | $ | 62,661 |  |  | $ | 143,161 |  |  | $ | 141,744 |  |  | $ | 138,101 |  |  | $ | 68,588 |  |  | $ | 137,234 |  |  | $ | 135,724 |  |  | $ | 131,714 |
(1) | For the 2028 Notes and 2028 Promissory Note, this represents the total principal amount and for the Revolving Credit Facility, this represents the undrawn principal amount.
Credit Facility On December 15, 2022, the Company entered into a 3 year $50.0 million revolving credit facility (the “Credit Facility”) with Woodforest National Bank (“Woodforest’). Woodforest is the administrative agent, sole bookrunner and sole lead arranger. The Credit Facility has a maturity date of December 15, 2025. On January 17, 2023, the Company borrowed $23.2 million under the Credit Facility and used these proceeds to redeem $22.6 million in aggregate principal amount of the issued and outstanding 2023 Notes, comprising all issued and outstanding 2023 Notes. The 2023 Notes were redeemed at 100% of their principal amount, plus accrued and unpaid interest thereon from September 30, 2022 through, but excluding January 17, 2023 (the “Redemption Date”). On February 21, 2024 (the “First Amendment Effective Date”), in order to increase the size of the Credit Facility, the parties to the Credit Facility amended the terms of the Credit Facility, effective as of the First Amendment Effective Date (the “First Amendment”). The First Amendment increased the principal amount of loan available under the Credit Facility by $12.5 million to $62.5 million. All other material terms of the Credit Facility remain unchanged. On August 5, 2024 (the “Second Amendment Effective Date”), in order to increase the size of the Credit Facility, the parties to the Credit Facility amended the Credit Facility, effective as of the Second Amendment Effective Date (the “Second Amendment”). The Second Amendment increased the principal amount of loan available under the Credit Facility by $25 million to $87.5 million. All other material terms of the Credit Facility remain unchanged. Under the Credit Facility, the Company is required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to: (a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’ equity, (e) maintaining a ratio of total assets to total indebtedness of the Company and its consolidated subsidiaries (subject to certain exceptions) of not less than 2.0:1.0, (f) limitations on pledging certain unencumbered assets, and (g) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Company and certain of its subsidiaries. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. Amounts available to borrow under the Credit Facility (and the incurrence of certain other permitted debt) are also subject to compliance with a borrowing base that applies different advance rates to different types of assets (based on their value as determined pursuant to the Credit Facility) that are pledged as collateral. As of December 31, 2024, the Company was in compliance in all respects with the terms of the Credit Facility. As of December 31, 2024 and September 30, 2024, there was $84.0 million and $78.1 million outstanding, respectively, under the Credit Facility. Outstanding loans under the Credit Facility bear a monthly interest rate at Term SOFR + 2.90%. The Company is also subject to a commitment fee of 0.25%, which shall accrue on the actual daily amount of the undrawn portion of the revolving credit. Unsecured Notes 2028 Notes On November 9, 2021, the Company entered into an underwriting agreement, by and between the Company and Oppenheimer & Co. Inc., as representative of the several underwriters, in connection with the issuance and sale (the “Offering”) of $57,500,000 (including the underwriters’ option to purchase up to $7,500,000 aggregate principal amount) in aggregate principal amount of its 5.25% Notes that mature on November 1, 2028 (the “2028 Notes” or the “Notes”). The Offering occurred on November 15, 2021, pursuant to the Company’s effective shelf registration statement on Form N-2 previously filed with the SEC. Effective November 16, 2021, the 2028 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNZ.” On November 15, 2021, the Company and U.S. Bank National Association, as trustee, entered into a Fourth Supplemental Indenture to its base Indenture, dated February 7, 2012, between the Company and the Trustee. The Fourth Supplemental Indenture relates to the Offering of the 2028 Notes. 2028 Promissory Note On May 2, 2024, the Company issued a 5.25% note due November 1, 2028 in the principal amount of $1,661,498 to National Security Insurance Company (the “2028 Promissory Note”). The financial terms of the note are substantially the same as the 2028 Notes. Fair Value of Debt Obligations The fair values of our debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the 2028 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date. As of December 31, 2024 and September 30, 2024, the Notes are deemed to be Level 1 in the fair value hierarchy, as defined in Note 4. As of December 31, 2024 and September 30, 2024, the 2028 Promissory Note is deemed to be Level 3 in the fair value hierarchy, as defined in Note 4. As of December 31, 2024 and September 30, 2024, the Credit Facility is deemed to be Level 3 in the fair value hierarchy, as defined in Note 4. Debt issuance costs related to the 2028 Notes are reported on the Consolidated Statements of Assets and Liabilities as a direct deduction from the face amount of the 2028 Notes. As of December 31, 2024 and September 30, 2024, debt issuance costs related to the 2023 Notes and the 2028 Notes were as follows (dollars in thousands):
|  | For the three months ended |  |  | For the year ended |
|  | December 31, 2024 |  |  | September 30, 2024 |
|  | 2028 Notes |  |  | 2028 Promissory Note |  |  | Total |  |  | 2028 Notes |  |  | 2028 Promissory Note |  |  | Total |
Total debt issuance costs at beginning of period |  | $ | 1,357 |  |  | $ | 154 |  |  | $ | 1,511 |  |  | $ | 1,689 |  |  | $ | - |  |  | $ | 1,689 |
Debt issuance costs during the period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 169 |  |  |  | 169 |
Amortized debt issuance costs |  |  | 85 |  |  |  | 8 |  |  |  | 93 |  |  |  | 332 |  |  |  | 15 |  |  |  | 347 |
Unamortized debt issuance costs |  | $ | 1,272 |  |  | $ | 146 |  |  | $ | 1,418 |  |  | $ | 1,357 |  |  | $ | 154 |  |  | $ | 1,511 |
For the three months ended December 31, 2024 and 2023, the components of interest expense, amortized debt issuance costs, amortized deferred financing costs, weighted average stated interest rate and weighted average outstanding debt balance for the 2028 Notes, 2028 Promissory Note and the Credit Facility were as follows (dollars in thousands):
|  | For the Three Months Ended December 31, |
|  | 2024 |  |  | 2023 |
2028 Notes Interest |  | $ | 747 |  |  | $ | 754 |
2028 Promissory Note |  |  | 22 |  |  |  | - |
Credit Facility Interest |  |  | 1,501 |  |  |  | 598 |
Commitment fees |  |  | 7 |  |  |  | 14 |
Amortization of deferred financing costs |  |  | 177 |  |  |  | 92 |
Amortization of debt issuance costs |  |  | 92 |  |  |  | 84 |
Total |  | $ | 2,546 |  |  | $ | 1,542 |
Weighted average stated interest rate |  |  | 6.6 | % |  |  | 6.2 | %
Weighted average debt outstanding |  | $ | 136,250 |  |  | $ | 85,942 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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