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CoverageForm 410-K10-Q8-K13D13G13F

First Eagle Alternative Capital Bdc, Inc.

FCRDCIK 0001464963 · Every Form 4 filed by insiders at this issuer. See financials →

Annual report (10-K)

Latest 10-K filed Mar 4, 2022. Sentiment + YoY language diff vs prior year. Read sections →

Signal:Neutral

Risk Factors:tone -0.0207

MD&A:tone -0.0088

Sentiment via Loughran-McDonald lexicon · YoY diff via Jaccard similarity + paragraph set difference.

YoY shift: Unscored

Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K.

Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.

Per-snippet highlights

Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.

Top insiders

Most active reporters at First Eagle Alternative Capital Bdc, Inc.

Name	Roles	Filings
Krull Steven F.	10% Owner	1
McAneny Deborah H	Director	1
Mahmud Mehdi	Officer	1
Murphy Brian J.	10% Owner	1
Nelson Jane Musser	Director	1

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17 Form 4 / 4-A filings, newest first

Filed	Insider	Top transaction	Shares	Price	Value
Mar 16, 2023	Wu Howard Hsung 10% Owner	DDisposition	9,554	-	-
Mar 15, 2023	Kovanda Jeffrey Robert 10% Owner	DDisposition	1,399	-	-
Mar 15, 2023	Herzig Michael Arthur 10% Owner	DDisposition	40,154	-	-
Mar 13, 2023	Fellows James R CIO of Adviser	DDisposition	144,229	-	-
Mar 13, 2023	Flynn Christopher J. CEO · Director	DDisposition	166,478	-	-

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Filed		Top transaction	Shares	Price	Value

Our investment adviser, its senior management and employees serve or may serve as investment advisers, officers, directors or principals of entities that operate in the same or a related line of business. For example, FEAC serves as investment adviser to one or more private funds and registered closed-end funds. In addition, our officers may serve in similar capacities for one or more registered closed-end funds. Accordingly, these individuals may have obligations to investors in those entities or funds, the fulfillment of which might not be in our best interests or the best interests of our stockholders. In addition, certain of the personnel employed by our investment adviser or focused on our business may change in ways that are detrimental to our business. Any affiliated investment vehicle formed in the future and managed by FEAC or its affiliates may invest in asset classes similar to those targeted by us. As a result, FEAC may face conflicts in allocating investment opportunities between us and such other entities. Although FEAC will endeavor to allocate investment opportunities in a fair and equitable manner, it is possible that we may not be given the opportunity to participate in such investments. In certain circumstances, negotiated co-investments may be made only if we receive an order from the SEC permitting us to do so. The SEC has granted us the Order we sought in an exemptive application that expands our ability to co-invest in portfolio companies with Affiliated Funds and, subject to certain conditions, FEAC Proprietary Accounts in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with the conditions to the Order. Pursuant to the Order, we are permitted to co-invest with Affiliated Funds and/or FEAC Proprietary Accounts if, among other things, a “required majority” (as defined in Section 57 (o) of the 1940 Act) or our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

Investment in private and middle market companies involves a number of significant risks. Generally, little public information exists about these companies, and we are required to rely on the ability of the Advisors’ investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we may lose money on our investments. Middle market companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees we may have obtained in connection with our investment. In addition, they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns. Additionally, middle market companies are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us. Middle market companies also generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition, our executive officers, directors and our investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies.

On July 27, 2017, the United Kingdom Financial Conduct Authority (“FCA”) announced that it would phase out the London Interbank Offered Rate (“ LIBOR”) as a benchmark by the end of 2021. On November 30, 2020, the FCA announced that subject to confirmation following its consultation with the administrator of LIBOR, it would cease publication of the one-week and two-month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023. Additionally, the Federal Reserve Board has advised banks to stop entering into new USD LIBOR based contracts. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021 and has indicated that market participants should not rely on LIBOR being available after 2023. As an alternative to LIBOR, for example, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S.- dollar LIBOR with the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements, backed by Treasury securities. Abandonment of or modifications to LIBOR could have adverse impacts on newly issued financial instruments and our existing financial instruments which reference LIBOR. While some instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate setting methodology, not all instruments may have such provisions and there is significant uncertainty regarding the effectiveness of any such alternative methodologies. Abandonment of or modifications to LIBOR could lead to significant short-term and long-term uncertainty and market instability. If LIBOR ceases to exist, we and our portfolio companies may need to amend or restructure our existing LIBOR-based debt instruments and any related hedging arrangements that extend beyond 2023, which may be difficult, costly and time consuming. In addition, from time to time we invest in floating rate loans and investment securities whose interest rates are indexed to LIBOR. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR, or any changes announced with respect to such reforms, may result in a sudden or prolonged increase or decrease in the reported LIBOR rates and the value of LIBOR-based loans and securities, including those of other

The 1940 Act was modified by allowing a BDC to increase the maximum amount of leverage it may incur under the 1940 Act from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. Under the legislation, we are permitted to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so. At our Annual Meeting of Stockholders on June 14, 2019, stockholders approved a proposal to reduce our asset coverage ratio to 150%. Such asset coverage ratio became effective on June 15, 2019. We are 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. See “Regulation” for a discussion of BDC regulation and other regulatory considerations. Leverage magnifies the potential for loss on investments in our indebtedness and on invested equity capital. We are also subject to asset coverage requirements for total borrowings under our Revolving Facility. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities. Leverage is generally considered a speculative investment technique. Because we borrow money, the potential for loss on amounts invested in us is magnified and may increase the risk of investing in us.

Because we have elected to be treated as a BDC under the 1940 Act, we are prohibited under the 1940 Act from participating in certain transactions with certain of our affiliates without the prior approval of our independent directors and, in some cases, of the SEC. Any person that owns, directly or indirectly, 5% or more of our outstanding voting securities will be our affiliate for purposes of the 1940 Act and we are generally prohibited from buying or selling any security from or to such affiliate, absent the prior approval of our independent directors. The 1940 Act also prohibits certain “joint” transactions with certain of our affiliates, which could include investments in the same portfolio company (whether at the same or different times), without prior approval of our independent directors and, in some cases, of the SEC. The Staff has granted us relief pursuant to the Order. Pursuant to the Order, we are permitted to co-invest with Affiliated Funds and/or First Eagle Proprietary Accounts if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned, (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objectives and strategies. We intend to co-invest, subject to the conditions included in the Order. We believe that such co-investments may afford us additional investment opportunities and an ability to achieve greater diversification. We are prohibited from buying or selling any security from or to any person who owns more than 25% of our voting securities or certain of that person’s affiliates, entering into prohibited joint transactions with such persons, absent the prior approval of the SEC. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates.

MD&A (Item 7)

26,840 words

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.

Overview

First Eagle Alternative Capital BDC, Inc., or we, us, our or the Company, was organized as a Delaware corporation on May 26, 2009 and initially funded on July 23, 2009. We commenced principal operations on April 21, 2010. Our investment objective is to generate both current income and capital appreciation, primarily through investments in privately negotiated investments in debt and equity securities of middle market companies.

As of December 31, 2021, we, together with our credit-focused affiliates, collectively had $21.3 billion of assets under management. This amount included our assets, assets of the managed funds and a separate account managed by us, and assets of the collateralized loan obligations (CLOs), separate accounts and various fund formats, including any uncalled commitments of private funds, as managed by the investment professionals of the Advisor or its consolidated subsidiary.

We are a direct lender to middle market companies and invest primarily in directly originated first lien senior secured loans, including unitranche investments. In certain instances, we also make second lien, subordinated, or mezzanine, debt investments, which may include an associated equity component such as warrants, preferred stock or other similar securities and direct equity investments. Our first lien senior secured loans may be structured as traditional first lien senior secured loans or as unitranche loans. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans, and our unitranche loans will expose us to the risks associated with second lien and subordinated loans to the extent we invest in the “last-out” tranche or subordinated tranche (or piece) of the unitranche loan. We may also provide advisory services to managed funds.

We are an externally managed, non-diversified, closed-end investment company that has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 Act, as amended, or the 1940 Act. As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private or thinly traded public U.S. companies, cash, cash equivalents, U.S. Government securities and high-quality debt investments that mature in one year or less.

As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the relevant U.S. Securities and Exchange Commission, or SEC, rules the term “eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million, in each case organized in the United States.

Since April 2010, after we completed our initial public offering and commenced principal operations, through December 31, 2021, we have been responsible for making, on behalf of ourselves, our managed funds and separately managed account, over $2.5 billion in aggregate commitments into 180 separate portfolio companies through a combination of both initial and follow-on investments. Since April 2010 through December 31, 2021, we, along with our managed funds and separately managed account, have received $2.0 billion of gross proceeds from the realization of investments. We alone have received $1.7 billion of gross proceeds from the realization of our investments during this same time period. As of December 31, 2021, our managed fund, First Eagle Greenway II, LLC, or Greenway II, and its separately managed account, collectively Greenway II, have received $220.9 million, or 118.1% of the committed capital.

We have elected to be treated for tax purposes as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. To qualify as a RIC, we must, among other things, meet certain source of income and asset diversification requirements. As a RIC, we generally will not have to pay corporate-level income taxes on any income we distribute to our stockholders

COVID-19 Developments

There is an ongoing global outbreak of COVID-19, which has spread to over 200 countries and territories, including the United States, and has spread to every state in the United States. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19, including new variants, have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses. Such actions are creating disruption in global supply chains and adversely impacting many industries. The pandemic has had a continued adverse impact on economic and market conditions and has triggered a period of global economic slowdown.

Although vaccines have been widely distributed in the U.S., certain U.S. states have reopened, and the economy is beginning to rebound in certain respects, the uncertainty surrounding the COVID-19 pandemic, including the continued emergence of new variants of COVID-19 and uncertainty around acceptance of vaccines, among other factors, may continue to contribute to significant volatility in the markets. We have enhanced our portfolio monitoring practices to include a potential threat assessment of the impact of COVID-19 on our portfolio companies, and we are maintaining frequent contact with our borrowers, sponsors and co-lenders. We have continued to fund our existing debt commitments. We will continue to monitor the rapidly evolving situation in relation to COVID-19, and the resulting impacts on our portfolio companies’ operations. Given the dynamic nature, coupled with the significant uncertainties of the situation, we cannot reasonably estimate the impact of COVID-19 on our financial condition, results of operations or cash flows in the future. However, to the extent our portfolio companies are adversely impacted by the effects of COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas, it may have a material adverse impact on our performance, financial condition, results of operations and ability to pay distributions.

Portfolio Composition and Investment Activity

Portfolio Composition

As of December 31, 2021, we had $392.1 million of portfolio investments (at fair value), which represents a $54.4 million, or 16.1% increase from the $337.7 million (at fair value) as of December 31, 2020. Our portfolio consisted of 76 investments, including Greenway II as of December 31, 2021, compared to 51 portfolio investments, including Greenway and Greenway II, as of December 31, 2020. The increase in fair value of our portfolio is largely attributed to portfolio expansion (as measured by total dollars invested) and an increase in the valuation of certain portfolio assets, including First Eagle Logan JV LLC (the “Logan JV”). As of December 31, 2021, we had $97.3 million of controlled portfolio investments (at fair value) in three portfolio companies, which represents a $3.5 million, or 3.7% increase from $93.8 million (at fair value) as of December 31, 2020 in three portfolio companies. The increase in controlled portfolio companies was largely the result of an increase to the fair value of Logan JV. Our average controlling equity position at December 31, 2021 was approximately $28.9 million and $13.6 million at cost and fair value, respectively. Our average controlling equity position at December 31, 2020 was approximately $28.1 million and $12.8 million at cost and fair value, respectively. Our investment in Logan JV represented 18.6% and 20.2% of our portfolio investments as of December 31, 2021 and December 31, 2020, respectively. We are continuing to limit new investments in new portfolio companies to 2.5% of our investment portfolio based upon the most recent market value.

The following table shows certain portfolio highlights based on cost and fair value (in millions).

December 31, 2021

December 31, 2020

Cost

Fair Value

Cost

Fair Value

Largest portfolio company investment - Logan JV

Largest portfolio company investment - excluding Logan JV, Greenway II, investments where we hold controlling equity position and investments where we hold equity only

Average portfolio company investment

Average portfolio company investment - excluding Logan JV, Greenway II, investments where we hold controlling equity position and investments where we hold equity only

Total investments where we hold controlling equity position and investments where we hold equity only, including Greenway II

As of December 31, 2021 and December 31, 2020, based upon fair value, 96.0% and 96.8%, respectively, of our income-producing debt investments bore interest based on floating rates, which may be subject to interest rate floors, such as LIBOR.

The following table shows the weighted average yield by investment category at their current cost.

Description:

December 31, 2021

December 31, 2020

First lien senior secured debt (1)(4)(5)

Second lien debt (1)(4)

Subordinated debt

Debt and income-producing investments (1)(2)(4)

Logan JV (3)

All investments including Logan JV (1)(3)(4)

Includes all loans on non-accrual status and restructured loans for which income is not being recognized as of December 31, 2021 and December 31, 2020.

Includes yields on controlled investments, but excludes the yield on the Logan JV.

As of December 31, 2021 and December 31, 2020, the dividends declared and earned of $6.6 million and $7.1 million for the years ended December 31, 2021 and December 31, 2020, respectively, represented a yield to us of 7.1% and 7.6%, respectively, based on average capital invested. We expect the dividend yield to fluctuate as a result of the timing of additional capital invested, the changes in asset yields in the underlying portfolio and the overall performance of the Logan JV investment portfolio.

Excluding restructured loans for which income is not being recognized as of December 31, 2021, the weighted average yield would be 6.9% on first lien senior secured debt, 11.9% on second lien debt, 6.9% on debt and income-producing investments and 7.0% on all investments including Logan JV. Excluding restructured loans for which income is not being recognized as of December 31, 2020, the weighted average yield would be 7.6% on first lien senior secured debt, 11.8% on second lien debt, 7.8% on debt and income-producing investments and 7.7% on all investments including Logan JV.

The broadly syndicated loans are included as first lien senior secured debt. As of December 31, 2021, the weighted average yield of only the broadly syndicated loans is 6.2%.

The weighted average yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of our fees and expenses. The weighted average yield was computed using the effective interest rates as of December 31, 2021 and 2020, including accretion of original issue discount and loan origination fees. This weighted average yield reflects the impact of loans on non-accrual status and restructured loans for which income is not being recognized as of December 31, 2021. There can be no assurance that the weighted average yield will remain at its current level. As of December 31, 2021 and 2020, 0.8% and 1.5% of our investment portfolio at fair value was comprised of non-income producing equity and warrant investments. We intend to continue to reduce

our non-income producing investments in 20 2 2 and beyond. No assurance can be given that we will be successful in achieving this target.

In evaluating our portfolio performance, among other factors, we consider portfolio companies’ adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, and leverage as an investment metric. As of December 31, 2021 and 2020, portfolio investments, in which we have debt investments, had a median EBITDA of approximately $17.3 million and $18.5 million, respectively, based on the latest available financial information provided by the portfolio companies for each of these periods. As of December 31, 2021 and 2020, our median attachment point in the capital structure of our debt investments in portfolio companies is approximately 4.3 times and 4.3 times the portfolio company’s EBITDA, respectively, based on our latest available financial information for each of these periods.

We expect the percent of our portfolio investments in the companies not owned by a private equity sponsor, or unsponsored investments to decrease over time as we work through restructurings, which may include providing additional liquidity through revolving loans, and ultimately exit our unsponsored investments. However, these portfolio investments may require follow-on capital as we work through restructurings, which will increase our exposure to these investments. Going forward, we expect unsponsored investments we make, if any, would only be in first lien senior secured investments. As of December 31, 2021, our portfolio of unsponsored debt investments included three investments, excluding our investment in Wheels Up Partners, LLC, which is a non-income producing equity security. Two are performing at or above our expectations and have an Investment Score of 2. The other unsponsored investment has an Investment Score of 5. As of December 31, 2020, our portfolio of unsponsored debt investments included two investments, excluding our investment in Wheels Up Partners, LLC. One was performing at or above our expectations and had an Investment Score of 2. The other unsponsored investment had an Investment Score of 5.

As of December 31, 2021, we have closed portfolio investments with 105 different sponsors since inception. As of December 31, 2020, we had closed portfolio investments with 86 different sponsors since inception.

The following table summarizes sponsored and unsponsored investments based on amortized cost and fair value (in millions).

As of December 31, 2021

As of December 31, 2020

Amortized

Cost

Fair

Value

Fair

Value

Total

Amortized

Cost

Fair

Value

Fair

Value

Total

Sponsored Investments (1)

Unsponsored Investments (1)

Total

Excludes Greenway II and the Logan JV.

The following table summarizes the amortized cost and fair value of investments by type as of December 31, 2021 (in millions).

Description

Amortized

Cost

Percentage of

Total

Fair Value (1)

Percentage of

Total

First lien senior secured debt

Investment in Logan JV

Second lien debt

Investments in funds

Equity investments

Total investments

All investments are categorized as Level 3 in the fair value hierarchy, except for i) our equity investment in Wheels Up Experience Inc. which is categorized as Level 1 in the fair value hierarchy and noted as such on the Consolidated

Schedule of Investments as of December 3 1 , 2021, ii) certain broadly syndicated loans which are categorized as Level 2 in the fair value hierarchy and noted as such on the Consolidated Schedule of Investments as of December 3 1 , 2021 and iii) investments in funds and the Logan JV, which are excluded from the fair value hierarchy in accordance with ASU 2015-07. These assets are valued at net asset value.

The following table summarizes the amortized cost and fair value of investments by type as of December 31, 2020 (in millions).

Description

Amortized

Cost

Percentage of

Total

Fair Value (1)

Percentage of

Total

First lien senior secured debt

Investment in Logan JV

Second lien debt

Subordinated debt

Equity investments

Investments in funds

Total investments

All investments are categorized as Level 3 in the fair value hierarchy, except for investments in funds and the Logan JV, which are excluded from the fair value hierarchy in accordance with ASU 2015-07. These assets are valued at net asset value.

We expect the percent of our core assets, which we define as first lien senior secured loans and the Logan JV, to continue to increase as a percent of total investments as we exit non-qualifying BDC assets as defined under the 1940 Act and our controlled equity investments, through sales or repayments, and redeploy these proceeds. We intend to continue our efforts to reposition the portfolio towards these core assets, which we believe will reduce our exposure to portfolio company risks and potential changes in interest rates.

As required by the 1940 Act, we classify our investments by level of control. “Control investments” are defined in the 1940 Act as investments in those companies that we are deemed to “control”, which, in general, includes a company in which we own 25% or more of the voting securities of such company or have greater than 50% representation on its board. “Affiliate investments” are investments in those companies that are “affiliated companies” of ours, as defined in the 1940 Act, which are not control investments. We are deemed to be an “affiliate” of a company in which we have invested if we own 5% or more, but less than 25%, of the voting securities of such company. “Non-control/non-affiliate investments” are investments that are neither control investments nor affiliate investments.

The following table summarizes our realized gains (losses) and changes in our unrealized appreciation and depreciation on control and affiliate investments for the years ended December 31, 2021 and December 31, 2020 (in millions)

Year Ended December 31, 2021

Type of Investment/Portfolio company (1)

Fair Value at December 31, 2021

Investment

Income (2)

Change in Unrealized Appreciation/ (Depreciation)

Reversal of Change in Unrealized Appreciation/ (Depreciation)

Realized

Gains/ (Losses)

Control Investments

Loadmaster Derrick & Equipment, Inc. (3)

First lien senior secured term loan 11.3% (LIBOR + 10.3% PIK)

due 12/31/2022

First lien senior secured term loan 13.0% PIK (LIBOR + 12.0% PIK) due 12/31/2022

First lien senior secured revolving term loan 11.3%

(LIBOR+ 10.3%) due 12/31/2022

12,131 shares of common stock

2,956 shares of preferred stock

OEM Group, LLC (4)

Senior secured term loan 8.5% (LIBOR+7.5%) due 9/30/2025

Second lien revolver 10.0% PIK due 9/30/2025

20,000 shares of common stock

First Eagle Logan JV LLC (5)

80% economic interest

Total Control Investments

Affiliate Investments

First Eagle Greenway II Fund LLC (6)

Investment in fund

Total Affiliate Investments

Total Controlled and Affiliated Investments

The principal amount and ownership detail is shown in the Consolidated Schedule of Investments as of December 31, 2021. Common stock and preferred stock, in some cases, are generally non-income producing.

Represents the total amount of interest, fees, and dividends credited to income for the portion of the year an investment was included in the Control and Affiliate categories.

In December 2016, we exercised our warrants in connection with an acquisition of common stock from the sponsor and company management to take a controlling interest in Loadmaster Derrick Equipment, Inc.

In September 2020, we restructured our non-accruing first lien senior secured term loan and revolvers in OEM Group, LLC (“OEM”) into a $7.5 million first lien senior secured term loan and a $44.1 million second lien term loan, at par. We are not recognizing interest income on the restructured second lien term loan as of December 31, 2021.

Together with Perspecta Trident LLC, or Perspecta, an affiliate of Perspecta Trust LLC, we invest in Logan JV. Logan JV is capitalized through equity contributions from its members and investment decisions must be unanimously approved by the Logan JV investment committee consisting of one representative from both Perspecta and us.

Income includes certain fees related to investment management services provided by the Company, including a base management fee, a performance fee and a portion of the closing fees on each investment transaction.

Year Ended December 31, 2020

Type of Investment/Portfolio company (1)

Fair Value at December 31, 2020

Investment

Income (2)

Change in Unrealized Appreciation/ (Depreciation)

Reversal of Change in Unrealized Appreciation/ (Depreciation)

Realized

Gains/ (Losses)

Control Investments

C&K Market, Inc.

Shares of common stock

Shares of preferred stock

Loadmaster Derrick & Equipment, Inc. (3)

First lien senior secured term loan 11.9% (LIBOR + 10.3% PIK)

due 12/31/2020

First lien senior secured term loan 13.7% PIK (LIBOR + 12.0% PIK)

due 12/31/2020

First lien senior secured revolving term loan 13.1%

(LIBOR+ 10.3%) due 12/31/2020

12,131 shares of common stock

2,956 shares of preferred stock

OEM Group, LLC (4)

First lien senior secured term loan 12.0% (LIBOR+9.5%) cash

due 2/15/2019

First lien senior secured revolving term loan 12.0% (LIBOR+

9.5%) cash due 6/30/2017

Senior secured revolving term loan 12.0% (LIBOR+

Senior secured term loan 8.5% (LIBOR+7.5%) due 9/30/2025

Second lien term loan 10.0% PIK due 9/30/2026

20,000 shares of common stock

First Eagle Logan JV LLC (5)

80% economic interest

Total Control Investments

Affiliate Investments

First Eagle Greenway Fund LLC (6)

Investment in fund

First Eagle Greenway II Fund LLC (6)

Investment in fund

Total Affiliate Investments

Total Controlled and Affiliated Investments

The principal amount and ownership detail is shown in the Consolidated Schedule of Investments as of December 31, 2020. Common stock and preferred stock, in some cases, are generally non-income producing.

Represents the total amount of interest, fees, and dividends credited to income for the portion of the year an investment was included in the Control and Affiliate categories

On September 30, 2020, we restructured our non-accruing first lien senior secured term loan and revolvers in OEM Group, LLC (“OEM”) into a $7.5 million first lien senior secured term loan and a $44.1 million second lien term loan, at par. We are not recognizing interest income on the restructured second lien term loan as of December 31, 2020. This transaction resulted in a $17.5 million realized loss, which was fully offset by a reversal of unrealized depreciation.

Investment Activity

The following is a summary of our investment activity, presented on a cost basis, for the years ended December 31, 2021 and 2020 (in millions).

Year ended December 31,

New portfolio investments

Existing portfolio investments:

Follow-on investments (1)

Delayed draw and revolver investments (1)

Total existing portfolio investments

Total portfolio investment activity

Number of new portfolio investments

Number of follow-on investments

First lien senior secured debt

Equity investments

Total portfolio investments

Weighted average yield of new debt investments

Weighted average yield, including all new income-producing investments

Includes follow-on investments in controlled investments. Refer to Schedule 12-14 for additional detail.

For the years ended December 31, 2021 and 2020, we recognized proceeds from prepayments and sales of our investments, including any prepayment premiums, totaling $125.4 million and $82.9 million, respectively. Please refer to “Results of Operations - Net Realized Gains and Losses, net of income tax provision” for additional details surrounding certain investments that were sold.

The following are proceeds received from notable prepayments, sales and other activity related to our investments (in millions):

For the year ended December 31, 2021

Repayment of a first lien senior secured term loan in Igloo Products Corp., which resulted in proceeds of $21.6 million;

Repayment of a first lien senior secured term loan and revolving loan in Women’s Health USA, Inc., which resulted in proceeds of $8.6 million, including a prepayment premium;

Repayment of a first lien senior secured term loan and revolving loan in Communication Technology Intermediate, which resulted in proceeds of $8.6 million, including a prepayment premium;

Repayment of first lien senior secured term loans in Urology Management Associates, LLC, which resulted in proceeds of $8.1 million, and sale of common equity with proceeds of $2.0 million, resulting in a $1.2 million realized gain;

Repayment of a first lien senior secured term loan in Whitney, Bradley & Brown, Inc., which resulted in proceeds of $7.5 million, including a prepayment premium;

Repayment of first lien senior secured term loans, a revolving loan, and delayed draw loans in PDFTron Systems Inc., which resulted in proceeds of $7.5 million, including a prepayment premium;

Repayment of a first lien senior secured term loan in ABC Legal Services, LLC, which resulted in proceeds of $6.7 million;

Repayment of a first lien senior secured term loan in Finxera Intermediate, LLC, which resulted in proceeds of $6.5 million;

Repayment of first lien senior secured term loans and delayed draw loans in Alpine SG, LLC, which resulted in proceeds of $ 6 .5 million ;

Repayment of a subordinated promissory note in C&K Market, Inc., which resulted in proceeds of $6.0 million, and redemption of warrants in C&K Market, Inc., which resulted in proceeds of $0.1 million and a nominal realized gain;

Repayment of a first lien senior secured term loan A in Xcel Brands, Inc., which resulted in proceeds of $5.5 million;

Repayment of a first lien senior secured term loan and delayed draw loans in AppFire Technologies, LLC at par, which resulted in proceeds of $3.2 million, including a prepayment premium;

Repayment of a first lien senior secured term loan in Trace3, LLC, which resulted in proceeds of $3.0 million;

Repayment of a first lien senior secured term loan in Neiman Marcus Group LTD LLC, which resulted in proceeds of $3.0 million, including a prepayment premium; and

Sale of series A preferred equity in Sciens Building Solutions, LLC with proceeds of $2.3 million, resulting in a $2.1 million realized gain.

For the year ended December 31, 2020

Proceeds of $23.3 million from the sale of eight senior secured syndicated investments made in December 2019 resulting in a $0.1 million net realized gain;

Repayment of a first lien senior secured loan in It’s Just Lunch International at par, which resulted in proceeds of $5.5 million;

Repayment of a first lien senior secured term loan on Holland Intermediate Acquisition Corp. with proceeds received of $2.6 million and additional receivable accrual of $1.3 million. A realized loss of $17.4 million was recorded which was offset by a corresponding reversal of unrealized depreciation;

Sale of a first lien senior secured term loan in MB Medical Operations LLC with proceeds received of $2.6 million, resulting in a nominal gain.

Repayment of a first lien senior secured term loan in SynteractHCR Holdings Corporation at par, which resulted in proceeds of $6.1 million;

Repayment of a first lien senior secured term loan and a first lien delayed draw term loan in Simplicity Financial Marketing Holdings Inc at par, which resulted in proceeds of $3.4 million and $1.1 million, respectively;

Repayment of a first lien senior secured term loan and a first lien revolving facility in NCP Investor Inc at par, which resulted in proceeds of $6.9 million and $0.7 million, respectively;

Sale of series A preferred equity and commons shares in C&K Market, Inc, which resulted in cash proceeds of $10.7 million, a subordinated sellers note of $5.8 million at par value, and warrants valued at $0; and

A bankruptcy resolution resulting in the restructuring of the senior secured term loan in smarTours, LLC which had a pre-petition value of $5.4 million. A first lien term loan of $2.1 million and a second lien term loan of $0.5 million was received in consideration, and a $2.3 million loss was recognized on the proceeds, which includes recognizing capitalized PIK interest of $0.3 million as a realized loss.

Our level of investment activity can vary substantially from year to year depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity, the general economic environment and the competitive environment for the types of investments we make. The frequency and volume of any prepayments may fluctuate significantly from period to

period. The future adverse impact of COVID-19 on the broader markets in which we invest cannot currently be accurately predicted and future investment activity of the Company will be subject to these effects and related uncertainties.

Aggregate Cash Flow Realized Gross Internal Rate of Return

Since April 2010, after we completed our initial public offering and commenced principal operations, through December 31, 2021, our fully exited investments have resulted in an aggregate cash flow realized gross internal rate of return to us of 11.0% (based on cash invested of $1.7 billion and total proceeds from these exited investments of $2.1 billion). 76.8% of these exited investments resulted in an aggregate cash flow realized gross internal rate of return to us of 10% or greater. Internal rate of return, or IRR, is a measure of our discounted cash flows (inflows and outflows). Specifically, IRR is the discount rate at which the net present value of all cash flows is equal to zero. That is, IRR is the discount rate at which the present value of total cash invested in our investments is equal to the present value of all realized returns from the investments. Our IRR calculations are unaudited.

Investment Risk

The value of our investments will generally fluctuate with, among other things, changes in prevailing interest rates, federal tax rates, counterparty risk, general economic conditions, the condition of certain financial markets, developments or trends in any particular industry and the financial condition of the issuer. During periods of limited liquidity and higher price volatility, our ability to dispose of investments at a price and time that we deem advantageous may be impaired.

Lower-quality debt securities involve greater risk of default or price changes due to changes in the credit quality of the issuer. The value of lower-quality debt securities often fluctuates in response to company, political, or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. Lower-quality debt securities can be thinly traded or have restrictions on resale, making them difficult to sell at an acceptable price. The default rate for lower-quality debt securities is likely to be higher during economic recessions or periods of high interest rates.

Logan JV

On December 3, 2014, we entered into an agreement with Perspecta, an affiliate of Perspecta Trust LLC to create Logan JV, a joint venture, which invests primarily in senior secured first lien term loans. All Logan JV investment decisions must be unanimously approved by the Logan JV investment committee consisting of one representative from each of us and Perspecta.

We have determined that Logan JV is an investment company under ASC 946, however, in accordance with such guidance, we will generally not consolidate our investment in a company other than a substantially owned investment company subsidiary or a controlled operating company whose business consists of providing services to us. Accordingly, we do not consolidate our non-controlling interest in Logan JV.

Logan JV is capitalized with equity contributions which are generally called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by the Logan JV to call down on capital commitments requires the explicit authorization of us, coupled with that of Perspecta, and we may withhold such authorization for any reason in our sole discretion.

As of December 31, 2021 and December 31, 2020, Logan JV had the following commitments, contributions and unfunded commitments from its members (in millions).

As of December 31, 2021

Member

Total

Commitments

Contributed

Capital

Return of Capital (not recallable)

Unfunded

Commitments

First Eagle Alternative Capital BDC, Inc.

Perspecta Trident LLC

Total Investments

As of December 31, 2020

Member

Total

Commitments

Contributed

Capital

Return of Capital (not recallable)

Unfunded

Commitments

First Eagle Alternative Capital BDC, Inc.

Perspecta Trident LLC

Total Investments

Logan JV has a senior credit facility, or the Logan JV Credit Facility, with Deutsche Bank AG and other banks, which was amended on January 9, 2021 to reduce commitments, extend the maturity date, and amend the pricing. As of December 31, 2021, the Logan JV Credit Facility had $225.0 million of commitments subject to leverage and borrowing base restrictions with an interest rate of three month LIBOR (with no LIBOR floor) plus 2.50%. As of December 31, 2020, the Logan JV Credit Facility had $275.0 million of commitments subject to leverage and borrowing base restrictions with an interest rate of three month LIBOR (with no LIBOR floor) plus 2.20%. The final maturity date of the Logan JV Credit Facility is July 12, 2025. As of December 31, 2021 and December 31, 2020, Logan JV had $147.0 million and $166.5 million of outstanding borrowings under the credit facility, respectively. At December 31, 2021, the effective interest rate on the Logan JV Credit Facility was 2.88% per annum.

As of December 31, 2021 and December 31, 2020, Logan JV had total investments at fair value of $224.4 million and $221.4 million, respectively. As of December 31, 2021 and December 31, 2020, Logan JV’s portfolio was comprised of senior secured first lien and second lien loans to 95 and 92 different borrowers, respectively. As of December 31, 2021, there was one loan on non-accrual status with an amortized cost and fair value of $1.7 million and $0.1 million, respectively. As of December 31, 2020, there was one loan on non-accrual status with an amortized cost and fair value of $2.2 million and $1.1 million, respectively. As of December 31, 2021 and December 31, 2020, Logan JV had unfunded commitments to fund revolver and delayed draw loans to its portfolio companies totaling $2.5 million and $6.2 million, respectively. The portfolio companies in Logan JV are in industries similar to those in which we may invest directly.

Below is a summary of Logan JV’s portfolio, followed by a listing of the individual loans in Logan JV’s portfolio as of December 31, 2021 and 2020 (dollar amounts in thousands):

As of December 31,

First lien secured debt, at par

Second lien debt, at par

Total debt investments, at par

Weighted average yield on first lien secured loans (1)

Weighted average yield on second lien loans (1)

Weighted average yield on all loans (1)

Number of borrowers in Logan JV

Largest loan to a single borrower (2)

Total of five largest loans to borrowers (2)

Weighted average yield at their current cost.

At current principal amount.

The weighted average yield of Logan JV’s debt investments is not the same as a return on Logan JV investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of our expenses. The weighted average yield was computed using the effective interest rates as of December 31, 2021 and December 31, 2020, respectively, but excluding the effective rates on investments on non-accrual status, if any. There can be no assurance that the weighted average yield will remain at its current level.

For the years ended December 31, 2021, 2020 and 2019 our share of income from distributions declared related to our Logan JV equity interest was $6.6 million, $7.1 million and $9.8 million, respectively, which amounts are included in dividend income from controlled investments in the Consolidated Statements of Operations and reduction of cost basis in the Consolidated Statements of Assets and Liabilities, as applicable. As of December 31, 2021 and December 31, 2020, $2.3 million and $1.6 million, respectively, of income related to the Logan JV was included in interest, dividends and fees receivable on the Consolidated Statements of Assets and Liabilities. As of December 31, 2021 and December 31, 2020, $0.1 million and $0.1 million of return of capital associated with distributions declared was included in prepaid expenses and other assets on the Consolidated Statements of Assets and Liabilities, respectively. Distributions declared and earned for the years ended December 31, 2021, 2020 and 2019 represented dividend yields to the Company of 7.1%, 7.6% and 10.5%, respectively, based upon average capital invested. We expect the dividend yield to fluctuate as a result of the timing of additional capital invested, the changes in asset yields in the underlying portfolio and the overall performance of the Logan JV investment portfolio.

Logan JV Loan Portfolio as of December 31, 2021

(dollar amounts in thousands)

Type of Investment/

Portfolio company (12)

Industry

Interest Rate (1)

Initial

Acquisition

Date

Maturity

Date

Principal

Amortized

Cost

Fair

Value (2)

Senior Secured First Lien Term Loans

Australia

Ticketek Pty Ltd

Services: Consumer

5% (LIBOR +4.25%)

Total Australia

Canada

Avison Young Canada Inc.

Services: Business

5.97% (LIBOR +5.75%)

PNI Canada Acquireco Corp

High Tech Industries

4.6% (LIBOR +4.5%)

WildBrain Ltd.

Media: Diversified & Production

5% (LIBOR +4.25%)

Total Canada

Germany

Rhodia Acetow

Consumer goods: Non-Durable

6.5% (LIBOR +5.5%)

VAC Germany Holding GmbH

Metals & Mining

5% (LIBOR +4%)

Total Germany

Luxembourg

Travelport Finance (Luxembourg) S.a r.l.

Services: Consumer

2.5% (LIBOR +1.5%)

Travelport Finance (Luxembourg) S.a r.l.

Services: Consumer

5.22% (LIBOR +5%)

Total Luxembourg

United Kingdom

Auxey Bidco Ltd.

Services: Consumer

5.16% (LIBOR +5%)

EG Group

Retail

4.22% (LIBOR +4%)

Total United Kingdom

United States of America

A Place for Mom Inc

Media: Advertising, Printing & Publishing

4.75% (LIBOR +3.75%)

Advanced Integration Technology LP

Aerospace & Defense

5.75% (LIBOR +4.75%)

Advisor Group Holdings Inc

Fire: Finance

4.6% (LIBOR +4.5%)

AG Parent Holdings LLC

High Tech Industries

5.1% (LIBOR +5%)

AgroFresh Inc.

Chemicals, Plastics & Rubber

7.25% (LIBOR +6.25%)

Alcami Carolinas Corp

Healthcare & Pharmaceuticals

4.39% (LIBOR +4.25%)

Alchemy US Holdco 1 LLC

Chemicals, Plastics & Rubber

5.6% (LIBOR +5.5%)

Allen Media, LLC

Media: Broadcasting & Subscription

5.72% (LIBOR +5.5%)

Alpine US Bidco LLC

Beverage, Food & Tobacco

6% (LIBOR +5.25%)

Alvogen Pharma US, Inc.

Healthcare & Pharmaceuticals

6.25% (LIBOR +5.25%)

AMCP Clean Acquisition Co LLC

Wholesale

4.35% (LIBOR +4.25%)

AMCP Clean Acquisition Co LLC

Wholesale

4.35% (LIBOR +4.25%)

American Achievement Corporation (3) (15)

Retail

7.25% (LIBOR +6.25%)

American Public Education

Services: Consumer

6.25% (LIBOR +5.5%)

ANI Pharmaceuticals, Inc.

Healthcare & Pharmaceuticals

6.75% (LIBOR +6%)

Anne Arundel Dermatology Management, LLC (4)

Healthcare & Pharmaceuticals

7% (LIBOR +6%)

Logan JV Loan Portfolio as of December 31, 2021 —(Continued)

(dollar amounts in thousands)

Type of Investment/

Portfolio company (12)

Industry

Interest Rate (1)

Initial

Acquisition

Date

Maturity

Date

Principal

Amortized

Cost

Fair

Value (2)

Anne Arundel Dermatology Management, LLC (5) (15)

Healthcare & Pharmaceuticals

8.75% (LIBOR +6.5%)

Anne Arundel Dermatology Management, LLC

Healthcare & Pharmaceuticals

7.5% (LIBOR +6.5%)

Ansira Holdings, Inc.

Media: Diversified & Production

7.5% (LIBOR +6.5%)

Ansira Holdings, Inc.

Media: Diversified & Production

7.5% (LIBOR +6.5%)

Anthology / Blackboard

High Tech Industries

5.75% (LIBOR +5.25%)

Arcline FM Holding, LLC

Aerospace & Defense

5.5% (LIBOR +4.75%)

Ascend Performance Materials Operations LLC

Chemicals, Plastics & Rubber

5.5% (LIBOR +4.75%)

Axiom Global Inc.

Services: Business

5.5% (LIBOR +4.75%)

BCP Qualtek Merger Sub LLC

Telecommunications

7.25% (LIBOR +6.25%)

Brand Energy & Infrastructure Services, Inc.

Energy: Oil & Gas

5.25% (LIBOR +4.25%)

Canister International Group Inc

Forest Products & Paper

4.85% (LIBOR +4.75%)

Cano Health, LLC

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.5%)

Clear Balance Holdings, LLC

Fire: Finance

6.75% (LIBOR +5.75%)

Cloudera, Inc.

High Tech Industries

4.25% (LIBOR +3.75%)

CMI Marketing, Inc

Media: Advertising, Printing & Publishing

4.75% (LIBOR +4.25%)

Confluence Technologies, Inc.

High Tech Industries

4.25% (LIBOR +3.75%)

Conyers Park Parent Merger Sub Inc

Beverage, Food & Tobacco

4.75% (LIBOR +3.75%)

Drilling Info Inc.

High Tech Industries

4.35% (LIBOR +4.25%)

Eisner Advisory Group LLC

Banking, Finance, Insurance & Real Estate

7.5% (LIBOR +6.75%)

Eisner Advisory Group LLC

Banking, Finance, Insurance & Real Estate

6% (LIBOR +5.25%)

Eliassen Group, LLC

Services: Business

4.35% (LIBOR +4.25%)

Empower Payments Acquisition

Services: Business

4.47% (LIBOR +4.25%)

EyeSouth (6) (15)

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.5%)

EyeSouth

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.5%)

Gastro Health Holdco, LLC (7)

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.5%)

Gastro Health Holdco, LLC

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.5%)

Gold Standard Baking, Inc. (17)

Wholesale

7.5% (LIBOR +6.5%)

Golden West Packaging Group LLC

Containers, Packaging & Glass

6% (LIBOR +5.25%)

HDT Holdco, Inc.

Aerospace & Defense

6.5% (LIBOR +5.75%)

Hoffman Southwest Corporation

Environmental Industries

6% (LIBOR +5%)

Hornblower Sub LLC

Hotel, Gaming & Leisure

5.5% (LIBOR +4.5%)

International Textile Group Inc

Consumer goods: Durable

5.13% (LIBOR +5%)

Isagenix International LLC

Services: Consumer

6.75% (LIBOR +5.75%)

LaserShip, Inc.

Transportation: Cargo

5.25% (LIBOR +4.5%)

Lereta, LLC

Fire: Real Estate

6% (LIBOR +5.25%)

Lids Holdings, Inc

Retail

5.55% (LIBOR +0%)

Lifescan Global Corporation

Healthcare & Pharmaceuticals

6.13% (LIBOR +6%)

Liquid Tech Solutions Holdings, LLC

Transportation: Cargo

5.5% (LIBOR +4.75%)

LRS Holdings LLC

Environmental Industries

4.75% (LIBOR +4.25%)

MAG DS Corp.

Aerospace & Defense

6.5% (LIBOR +5.5%)

McAfee Enterprise

High Tech Industries

5.75% (LIBOR +5%)

Miller's Ale House Inc

Hotel, Gaming & Leisure

4.85% (LIBOR +4.75%)

MRI Software LLC

Construction & Building

6.5% (LIBOR +5.5%)

Logan JV Loan Portfolio as of December 31, 2021 —(Continued)

(dollar amounts in thousands)

Type of Investment/

Portfolio company (12)

Industry

Interest Rate (1)

Initial

Acquisition

Date

Maturity

Date

Principal

Amortized

Cost

Fair

Value (2)

NAC Holding Corporation

Fire: Insurance

6% (LIBOR +5%)

New Constellis Borrower LLC

Aerospace & Defense

8.5% (LIBOR +7.5%)

New Insight Holdings Inc

Services: Business

6.5% (LIBOR +5.5%)

NextCare, Inc. (8)

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.25%)

NextCare, Inc.

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.25%)

Northern Star Holdings Inc.

Utilities: Electric

5.75% (LIBOR +4.75%)

Oak Point Partners, LLC

Banking, Finance, Insurance & Real Estate

6.5% (LIBOR +5.5%)

Odyssey Logistics & Technology Corporation

Transportation: Cargo

5% (LIBOR +4%)

Omni Logistics

Transportation: Cargo

6% (LIBOR +5%)

Omni Logistics (9)

Transportation: Cargo

6% (LIBOR +5%)

Omni Logistics

Transportation: Cargo

6% (LIBOR +5%)

Options Technology (10) (15)

Services: Business

4.8% (LIBOR +4.75%)

Options Technology

Services: Business

5.75% (LIBOR +4.75%)

Orion Business Innovations

High Tech Industries

5.5% (LIBOR +4.5%)

Orion Business Innovations

High Tech Industries

5.5% (LIBOR +4.5%)

Orion Business Innovations

High Tech Industries

5.5% (LIBOR +4.5%)

Output Services Group Inc

Services: Business

5.5% (LIBOR +4.5%)

OVG Business Services, LLC

Services: Business

7.25% (LIBOR +6.25%)

Patriot Rail Co LLC

Transportation: Cargo

4.25% (LIBOR +4%)

PH Beauty Holdings III, Inc.

Containers, Packaging & Glass

5.18% (LIBOR +5%)

PLH Group Inc

Energy: Oil & Gas

6.15% (LIBOR +6%)

Portfolio Holding, Inc.

Banking, Finance, Insurance & Real Estate

7% (LIBOR +6%)

Portfolio Holding, Inc. (11)

Banking, Finance, Insurance & Real Estate

7% (LIBOR +6%)

Portfolio Holding, Inc.

Banking, Finance, Insurance & Real Estate

7% (LIBOR +6%)

Portillo's Holdings, LLC

Beverage, Food & Tobacco

6.5% (LIBOR +5.5%)

Precisely

High Tech Industries

4.75% (LIBOR +4%)

Premier Dental Services, Inc. (12)

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.5%)

Premier Dental Services, Inc.

Healthcare & Pharmaceuticals

5.25% (LIBOR +4.5%)

Pure Fishing Inc

Consumer goods: Non-Durable

4.6% (LIBOR +4.5%)

Quidditch Acquisition Inc

Beverage, Food & Tobacco

8% (LIBOR +7%)

Red Ventures, LLC

Media: Advertising, Printing & Publishing

2.6% (LIBOR +2.5%)

Reedy Industries Inc. (13) (15)

Services: Consumer

5.25% (LIBOR +4.5%)

Reedy Industries Inc.

Services: Consumer

5.25% (LIBOR +4.5%)

R-Pac International Corp (14)

Containers, Packaging & Glass

6.75% (LIBOR +6%)

R-Pac International Corp

Containers, Packaging & Glass

6.75% (LIBOR +6%)

RSA Security LLC

High Tech Industries

5.5% (LIBOR +4.75%)

RXB Holdings, Inc.

Services: Business

5.25% (LIBOR +4.5%)

StubHub

High Tech Industries

4.75% (LIBOR +4.25%)

Teneo Holdings LLC

Services: Business

6.25% (LIBOR +5.25%)

Titan Sub LLC

Aerospace & Defense

5.1% (LIBOR +5%)

Upstream Newco, Inc.

Healthcare & Pharmaceuticals

4.35% (LIBOR +4.25%)

W3 Topco LLC

Energy: Oil & Gas

7% (LIBOR +6%)

Yak Access LLC

Energy: Oil & Gas

5.18% (LIBOR +5%)

Zenith American Holding, Inc.

Services: Business

6.25% (LIBOR +5.25%)

Logan JV Loan Portfolio as of December 31, 2021 —(Continued)

(dollar amounts in thousands)

Type of Investment/

Portfolio company (12)

Industry

Interest Rate (1)

Initial

Acquisition

Date

Maturity

Date

Principal

Amortized

Cost

Fair

Value (2)

Zenith American Holding, Inc.

Services: Business

6.25% (LIBOR +5.25%)

Total United States of America

Total Senior Secured First Lien Term Loans

Second Lien Term Loans

United States of America

ASP MSG Acquisition Co Inc

Beverage, Food & Tobacco

8.25% (LIBOR +7.5%)

New Constellis Borrower LLC

Aerospace & Defense

12% (LIBOR +11%)

Total United States of America

Total Second Lien Term Loans

Total Investments

Cash equivalents

Dreyfus Government Cash Management Fund

Other cash accounts

Total Cash equivalents

Variable interest rates indexed to 30-day, 60-day, 90-day or 180-day LIBOR rates, at the borrower’s option. LIBOR rates may be subject to interest rate floors.

Represents fair value in accordance with ASC Topic 820.

Represents a revolver commitment of $1,470, which was unfunded as of December 31, 2021. Issuer pays 0.75% unfunded commitment fee on revolver term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $1,358, of which $104 was unfunded as of December 31, 2021. Unfunded amounts of a delayed draw position have a lower rate than the contractual

fully funded rate. Issuer pays 1.00% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a revolver commitment of $451, which was unfunded as of December 31, 2021. Issuer pays 0.5% unfunded commitment fee on revolver term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $295, which was unfunded as of December 31, 2021. Issuer pays 4.5% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $333, of which $63 was unfunded as of December 31, 2021. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 4.00% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $629, of which $512 was unfunded as of December 31, 2021. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 1.00% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $203, of which $193 was unfunded as of December 31, 2021. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 1.00% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $606, which was unfunded as of December 31, 2021. Issuer pays 1.0% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $417, of which $197 was unfunded as of December 31, 2021. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 1.00% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Logan JV Loan Portfolio as of December 31, 2021 —(Continued)

(dollar amounts in thousands)

Represents a delayed draw commitment of $185, of which $107 was unfunded as of December 31, 2021. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate.

Issuer pays 4.50% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a revolver commitment of $299, which was unfunded as of December 31, 2021. Issuer pays 4.5% unfunded commitment fee on revolver term loan and/or revolving loan facilities.

Represents a revolver commitment of $373, of which $299 was unfunded as of December 31, 2021. Issuer pays 0.5% unfunded commitment fee on revolver term loan and/or revolving loan facilities.

Unfunded amount will start to accrue interest when the position is funded. 3 month LIBOR as of December 31, 2021 or LIBOR floor is shown to reflect possible projected interest rate.

All investments are pledged as collateral for loans payable unless otherwise noted.

Loan was on non-accrual as of December 31, 2021.

Logan JV Loan Portfolio as of December 31, 2020

(dollar amounts in thousands)

Type of Investment/

Portfolio company (13)

Industry

Interest Rate (1)

Initial

Acquisition

Date

Maturity

Date

Principal

Amortized

Cost

Fair

Value (2)

Senior Secured First Lien Term Loans

Australia

Ticketek Pty Ltd

Services: Consumer

5% (LIBOR +4.25%)

Total Australia

Canada

Avison Young Canada Inc.

Services: Business

5.25% (LIBOR +5%)

PNI Canada Acquireco Corp

High Tech Industries

4.65% (LIBOR +4.5%)

Total Canada

Germany

Rhodia Acetow

Consumer goods: Non-Durable

6.5% (LIBOR +5.5%)

VAC Germany Holding GmbH

Metals & Mining

5% (LIBOR +4%)

Total Germany

Luxembourg

Connect Finco SARL

Telecommunications

5.5% (LIBOR +4.5%)

Travelport Finance (Luxembourg) S.à r.l.

Services: Consumer

2.5% (LIBOR +1.5%)

Travelport Finance (Luxembourg) S.à r.l.

Services: Consumer

5.25% (LIBOR +5%)

Total Luxembourg

United Kingdom

Auxey Bidco Ltd.

Services: Consumer

5.52% (LIBOR +5.25%)

EG Group

Retail

4.25% (LIBOR +4%)

Total United Kingdom

United States of America

1A Smart Start LLC

Services: Consumer

5.75% (LIBOR +4.75%)

A Place for Mom Inc

Media: Advertising, Printing & Publishing

4.75% (LIBOR +3.75%)

A10 Capital, LLC

Banking, Finance, Insurance & Real Estate

7.5% (LIBOR +6.5%)

Acproducts Inc

Construction & Building

7.5% (LIBOR +6.5%)

Advanced Integration Technology LP

Aerospace & Defense

5.75% (LIBOR +4.75%)

Advisor Group Holdings Inc

Banking, Finance, Insurance & Real Estate

5.15% (LIBOR +5%)

AG Parent Holdings LLC

High Tech Industries

5.15% (LIBOR +5%)

AgroFresh Inc.

Chemicals, Plastics & Rubber

7.25% (LIBOR +6.25%)

Alcami Carolinas Corp

Healthcare & Pharmaceuticals

4.4% (LIBOR +4.25%)

Alchemy US Holdco 1 LLC

Chemicals, Plastics & Rubber

5.65% (LIBOR +5.5%)

Allen Media LLC

Media: Broadcasting & Subscription

5.75% (LIBOR +5.5%)

AMCP Clean Acquisition Co LLC

Wholesale

4.47% (LIBOR +4.25%)

AMCP Clean Acquisition Co LLC

Wholesale

4.49% (LIBOR +4.25%)

Logan JV Loan Portfolio as of December 31, 2020 —(Continued)

(dollar amounts in thousands)

Type of Investment/

Portfolio company (13)

Industry

Interest Rate (1)

Initial

Acquisition

Date

Maturity

Date

Principal

Amortized

Cost

Fair

Value (2)

Anne Arundel Dermatology Management, LLC (3)

Healthcare & Pharmaceuticals

7% (LIBOR +6%)

Anne Arundel Dermatology Management, LLC (4) (12)

Healthcare & Pharmaceuticals

7% (LIBOR +6%)

Anne Arundel Dermatology Management, LLC

Healthcare & Pharmaceuticals

7% (LIBOR +6%)

Ansira Holdings, Inc.

Media: Diversified & Production

7.5% (LIBOR +6.5%)

Ansira Holdings, Inc.

Media: Diversified & Production

7.5% (LIBOR +6.5%)

AP Gaming I LLC

Hotel, Gaming & Leisure

4.5% (LIBOR +3.5%)

APFS Staffing Holdings Inc

Services: Consumer

4.9% (LIBOR +4.75%)

AQA Acquisition Holding, Inc.

High Tech Industries

5.25% (LIBOR +4.25%)

Ascend Performance Materials Operations LLC

Chemicals, Plastics & Rubber

6.25% (LIBOR +5.25%)

BCP Qualtek Merger Sub LLC

Telecommunications

7.25% (LIBOR +6.25%)

Brand Energy & Infrastructure Services, Inc.

Energy: Oil & Gas

5.25% (LIBOR +4.25%)

California Cryobank LLC

Healthcare & Pharmaceuticals

4.25% (LIBOR +4%)

Cambium Learning Group, Inc.

Services: Consumer

4.75% (LIBOR +4.5%)

Canister International Group Inc

Forest Products & Paper

4.9% (LIBOR +4.75%)

CC Amulet Intermediate, LLC

Healthcare & Pharmaceuticals

5.75% (LIBOR +4.75%)

CC Amulet Intermediate, LLC (5)

Healthcare & Pharmaceuticals

5.75% (LIBOR +4.75%)

CC Amulet Intermediate, LLC

Healthcare & Pharmaceuticals

5.75% (LIBOR +4.75%)

Clear Balance Holdings, LLC

Banking, Finance, Insurance & Real Estate

6.75% (LIBOR +5.75%)

Conyers Park Parent Merger Sub Inc

Beverage, Food & Tobacco

4.75% (LIBOR +3.75%)

Discovery Practice Management, Inc.

Healthcare & Pharmaceuticals

5.5% (LIBOR +4.5%)

Drilling Info Inc.

High Tech Industries

4.4% (LIBOR +4.25%)

E2open, LLC

Services: Business

6.75% (LIBOR +5.75%)

Eliassen Group, LLC

Services: Business

4.4% (LIBOR +4.25%)

Empower Payments Acquisition

Services: Business

4.47% (LIBOR +4.25%)

Gold Standard Baking, Inc. (14)

Wholesale

7.5% (LIBOR +6.5%)

Golden West Packaging Group LLC

Containers, Packaging & Glass

6.25% (LIBOR +5.25%)

Granite Holdings US Acquisition Co

Capital Equipment

5.5% (LIBOR +5.25%)

Gruden Acquisition Inc.

Transportation: Cargo

6.5% (LIBOR +5.5%)

Hertz Corporation (6)

Services: Business

8.25% (LIBOR +7.25%)

High Street Insurance Partners, Inc. (7)

Banking, Finance, Insurance & Real Estate

7.5% (LIBOR +6.5%)

High Street Insurance Partners, Inc.

Banking, Finance, Insurance & Real Estate

7.5% (LIBOR +6.5%)

Hoffman Southwest Corporation

Environmental Industries

6% (LIBOR +5%)

Hornblower Sub LLC

Hotel, Gaming & Leisure

5.5% (LIBOR +4.5%)

Institutional Shareholder Services, Inc.

Services: Business

4.75% (LIBOR +4.5%)

International Textile Group Inc

Consumer goods: Durable

5.37% (LIBOR +5%)

Isagenix International LLC

Services: Consumer

6.75% (LIBOR +5.75%)

Lifescan Global Corporation

Healthcare & Pharmaceuticals

6.23% (LIBOR +6%)

LSCS Holdings Inc.

Healthcare & Pharmaceuticals

4.51% (LIBOR +4.25%)

LSCS Holdings Inc.

Healthcare & Pharmaceuticals

4.51% (LIBOR +4.25%)

MAG DS Corp.

Aerospace & Defense

6.5% (LIBOR +5.5%)

Miller's Ale House Inc

Hotel, Gaming & Leisure

4.9% (LIBOR +4.75%)

MRI Software LLC (8)

Construction & Building

6.5% (LIBOR +5.5%)

MRI Software LLC

Construction & Building

6.5% (LIBOR +5.5%)

Logan JV Loan Portfolio as of December 31, 2020 —(Continued)

(dollar amounts in thousands)

Type of Investment/

Portfolio company (13)

Industry

Interest Rate (1)

Initial

Acquisition

Date

Maturity

Date

Principal

Amortized

Cost

Fair

Value (2)

NAC Holding Corporation

Banking, Finance, Insurance & Real Estate

6.75% (LIBOR +5.75%)

New Constellis Borrower LLC

Aerospace & Defense

8.5% (LIBOR +7.5%)

New Insight Holdings Inc

Services: Business

6.5% (LIBOR +5.5%)

NextCare, Inc. (9)

Healthcare & Pharmaceuticals

5.5% (LIBOR +4.5%)

NextCare, Inc.

Healthcare & Pharmaceuticals

5.5% (LIBOR +4.5%)

Northern Star Holdings Inc.

Utilities: Electric

5.75% (LIBOR +4.75%)

Oak Point Partners, LLC

Banking, Finance, Insurance & Real Estate

6.25% (LIBOR +5.25%)

OB Hospitalist Group Inc

Healthcare & Pharmaceuticals

5% (LIBOR +4%)

Odyssey Logistics & Technology Corporation

Transportation: Cargo

5% (LIBOR +4%)

Orion Business Innovations

High Tech Industries

5.5% (LIBOR +4.5%)

Orion Business Innovations

High Tech Industries

5.5% (LIBOR +4.5%)

Orion Business Innovations

High Tech Industries

5.5% (LIBOR +4.5%)

OSM MSO, LLC

Healthcare & Pharmaceuticals

5.25% (LIBOR +5%)

Output Services Group Inc

Services: Business

5.5% (LIBOR +4.5%)

Parts Town

Beverage, Food & Tobacco

6.5% (LIBOR +5.5%)

Patriot Rail Co LLC

Transportation: Cargo

5.49% (LIBOR +5.25%)

PH Beauty Holdings III, Inc.

Containers, Packaging & Glass

5.23% (LIBOR +5%)

PLH Group Inc

Energy: Oil & Gas

6.21% (LIBOR +6%)

Portillo's Holdings, LLC

Beverage, Food & Tobacco

6.5% (LIBOR +5.5%)

Premise Health Holding Corp

Healthcare & Pharmaceuticals

3.75% (LIBOR +3.5%)

PSC Industrial Outsourcing, LP

Chemicals, Plastics & Rubber

4.75% (LIBOR +3.75%)

Pure Fishing Inc

Consumer goods: Non-Durable

4.65% (LIBOR +4.5%)

Quidditch Acquisition Inc

Beverage, Food & Tobacco

8% (LIBOR +7%)

Red Ventures, LLC

Media: Advertising, Printing & Publishing

2.65% (LIBOR +2.5%)

Sentry Data Systems, Inc.

High Tech Industries

7.75% (LIBOR +6.75%)

Sentry Data Systems, Inc. (10) (12)

High Tech Industries

8% (LIBOR +6.75%)

Silverback Merger Sub Inc

High Tech Industries

4.5% (LIBOR +3.5%)

Starfish- V Merger Sub Inc

High Tech Industries

7% (LIBOR +6%)

Starfish- V Merger Sub Inc

High Tech Industries

6.48% (LIBOR +6.25%)

Teneo Holdings LLC

Services: Business

6.25% (LIBOR +5.25%)

Titan Sub LLC

Aerospace & Defense

5.15% (LIBOR +5%)

Tupelo Buyer Inc

Transportation: Cargo

4.75% (LIBOR +3.75%)

Upstream Newco, Inc.

Healthcare & Pharmaceuticals

4.65% (LIBOR +4.5%)

US Shipping Corp

Utilities: Oil & Gas

5.25% (LIBOR +4.25%)

W3 Topco LLC

Energy: Oil & Gas

7% (LIBOR +6%)

Yak Access LLC

Energy: Oil & Gas

5.25% (LIBOR +5%)

Zenith American Holding, Inc.

Services: Business

6.25% (LIBOR +5.25%)

Zenith American Holding, Inc. (11)

Services: Business

6.25% (LIBOR +5.25%)

Total United States of America

Total Senior Secured First Lien Term Loans

Logan JV Loan Portfolio as of December 31, 2020 —(Continued)

(dollar amounts in thousands)

Type of Investment/

Portfolio company (13)

Industry

Interest Rate (1)

Initial

Acquisition

Date

Maturity

Date

Principal

Amortized

Cost

Fair

Value (2)

Second Lien Term Loans

United States of America

AQA Acquisition Holding, Inc.

High Tech Industries

9% (LIBOR +8%)

DiversiTech Holdings Inc

Consumer goods: Durable

8.5% (LIBOR +7.5%)

Gruden Acquisition Inc.

Transportation: Cargo

9.5% (LIBOR +8.5%)

Midwest Physician Administrative Services, LLC

Healthcare & Pharmaceuticals

7.75% (LIBOR +7%)

New Constellis Borrower LLC

Aerospace & Defense

12% (LIBOR +11%)

TKC Holdings Inc

Services: Business

9% (LIBOR +8%)

Wash Multifamily Acquisition Inc.

Services: Consumer

8% (LIBOR +7%)

Wash Multifamily Acquisition Inc.

Services: Consumer

8% (LIBOR +7%)

Total United States of America

Total Second Lien Term Loans

Equity Investments

United States of America

New Constellis Borrower LLC

Aerospace & Defense

Total United States of America

Total Equity Investments

Total Investments

Cash equivalents

Dreyfus Government Cash Management Fund

Other cash accounts

Total Cash equivalents

Logan JV Loan Portfolio as of December 31, 2020 —(Continued)

(dollar amounts in thousands)

Variable interest rates indexed to 30-day, 60-day, 90-day or 180-day LIBOR rates, at the borrower’s option. LIBOR rates are subject to interest rate floors.

Represents fair value in accordance with ASC Topic 820.

Represents a delayed draw commitment of $1,363 of which $957 was unfunded as of December 31, 2020. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate. Issuer pays 1.0% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $451, which was unfunded as of December 31, 2020. Issuer pays a 0.5% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $1,251, which $700 was unfunded as of December 31, 2020. Issuer pays a 1.0% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $3,000, which $2,434 was unfunded as of December 31, 2020. Issuer pays a 3.75% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $1,000, which $308 was unfunded as of December 31, 2020. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate. Issuer pays a 1.0% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $42, which was unfunded as of December 31, 2020. Issuer pays a 1.0% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $630, which $554 was unfunded as of December 31, 2020. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate. Issuer pays a 1.0% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $318, which was unfunded as of December 31, 2020. Issuer pays a 0.5% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Represents a delayed draw commitment of $495, which $300 was unfunded as of December 31, 2020. Unfunded amounts of a delayed draw position have a lower rate than the contractual fully funded rate. Issuer pays 1.0% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

Unfunded amount will start to accrue interest when the position is funded. 90-Day LIBOR as of December 31, 2020 is shown to reflect possible projected interest rate.

All investments are pledged as collateral for loans payable unless otherwise noted.

Loan was on non-accrual as of December 31, 2020.

Logan JV Summarized Financial Information:

Below is certain summarized financial information for Logan JV as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019 (in thousands):

Selected Balance Sheet Information

As of December 31,

As of December 31, 2020

(Dollars in

thousands)

(Dollars in

thousands)

Assets:

Investments at fair value (cost of $228,559

and $231,535, respectively)

Cash

Other assets

Total assets

Liabilities:

Loans payable reported net of unamortized debt issuance costs (1)

Distribution payable

Other liabilities

Total liabilities

Members' capital

Total liabilities and members' capital

Selected Statement of Operations Information

For the year ended December 31,

(Dollars in

thousands)

(Dollars in

thousands)

(Dollars in

thousands)

Interest income

Fee income

Total revenues

Credit facility expenses (1)

Other fees and expenses

Total expenses

Net investment income

Net realized gain (loss)

Net change in unrealized (depreciation) appreciation

on investments

Net increase in members' capital from operations

As of December 31, 2021, Logan JV had $147,041 of outstanding debt under its credit facility with an effective interest rate of 2.88% per annum. As of December 31, 2020, Logan JV had $166,541 of outstanding debt under its credit facility with an effective interest rate of 2.46% per annum. As of December 31, 2019, Logan JV had $236,141 of outstanding debt under the credit facility with an effective interest rate of 4.25% per annum

OEM Group LLC

In December 2020, OEM completed the sale of all of its principal business operations via two transactions. On December 2, 2020, OEM closed on the sale of certain assets and liabilities of its Arizona based division to Plasma Therm LLC. Plasma Therm will be responsible for developing, commercializing, and marketing the newly developed Endeavor M series PVD platform with no further investment required by OEM. OEM is entitled to a series of deferred royalty payments over seven years associated with the sale of its business operations, which are based on the future revenues associated with Plasma Therm’s product and other systems and services sales. OEM will receive minimum annual payments for the first four years that will be used to cover certain residual operating costs and service the outstanding debt. These future royalty streams will be used to cover principal and interest on OEM’s outstanding debt. We made an additional $1.0 million investment in the first lien loan to facilitate the completion of the sale and cover near-term costs associated with the transition of certain assets and settlement of certain liabilities. During the year ended December 31, 2021, we made an incremental $0.9 million investment in the first lien loan continue to cover near-term operating costs of OEM.

OEM also consummated the sale of certain assets and liabilities of the Pennsylvania based division to a minority shareholder of the company on December 18, 2020. There was no cash consideration exchanged in connection with the transaction.

As of December 31, 2021 and December 31, 2020, we hold all outstanding debt and equity of OEM. The fair value of our investments in OEM are described in Footnote 3 of the consolidated financial statements.

Asset Quality

We employ the use of board observation and information rights, regular dialogue with company management and sponsors, and detailed internally generated monitoring reports to actively monitor performance. Additionally, First Eagle has developed a monitoring template that promotes compliance with these standards and that is used as a tool to assess investment performance relative to plan.

As part of the monitoring process, the Advisor assesses the risk profile of each of our investments and assigns each portfolio investment a score of a 1, 2, 3, 4 or 5.

The investment performance scores are as follows:

1 – The portfolio investment is performing above our underwriting expectations.

2 – The portfolio investment is performing as expected at the time of underwriting. All new investments are initially scored a 2.

3 – The portfolio investment is operating below our underwriting expectations and requires closer monitoring. The company may be out of compliance with financial covenants, however, principal or interest payments are generally not past due.

4 – The portfolio investment is performing materially below our underwriting expectations and returns on our investment are likely to be impaired. Principal or interest payments may be past due, however, full recovery of principal and interest payments are expected.

5 – The portfolio investment is performing substantially below expectations and the risk of the investment has increased substantially. The company is in payment default and the principal and interest payments are not expected to be repaid in full.

For purposes of clarity, underwriting as referenced herein may be redetermined after the initial investment as a result of a transformative credit event or other material event whereby such initial underwriting is deemed by the Advisor to be no longer appropriate for the purpose of assessing investment performance relative to plan. For any investment receiving a score of a 3 or lower the Advisor will increase their level of focus and prepare regular

updates for the investment committee summarizing current operating results, material impending events and recommended actions.

The Advisor monitors and, when appropriate, changes the investment scores assigned to each investment in our portfolio. In connection with our investment valuation process, the Advisor and board of directors review these investment scores on a quarterly basis. Our average portfolio company investment score was 2.11 and 2.24 at December 31, 2021 and December 31, 2020, respectively. The following is a distribution of the investment scores of our portfolio companies at December 31, 2021 and 2020 (in millions):

December 31, 2021

December 31, 2020

Investment Score

Amortized

Cost

Total

Portfolio

based on

Amortized Cost

Fair Value

Total

Portfolio

based on

Amortized

Cost

Total

Portfolio

based on

Amortized Cost

Fair Value

Total

Portfolio

based on

Total

As of December 31, 2021 and December 31, 2020, Investment Score “1”, based upon fair value, included $0.0 million and $0.0 million, respectively, of loans to companies in which we also hold equity securities.

As of December 31, 2021 and December 31, 2020, Investment Score “2”, based upon fair value, included $13.3 million and $45.4 million, respectively, of loans to companies in which we also hold equity securities.

As of December 31, 2021 and December 31, 2020, Investment Score “3”, based upon fair value, included $14.2 million and $0.0 million, respectively, of loans to companies in which we also hold equity securities.

As of December 31, 2021 and December 31, 2020, Investment Score “4”, based upon fair value, included $3.9 million and $13.3 million, respectively, of loans to companies in which we also hold equity securities.

As of December 31, 2021 and December 31, 2020, Investment Score “5”, based upon fair value, included $24.5 million and $25.7, respectively, of loans to companies in which we also hold equity securities.

Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or when it is no longer probable that principal or interest will be collected. However, we may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. As of December 31, 2021, we had loans on non-accrual status with an amortized cost basis of $19.7 million and fair value of $9.1 million. As of December 31, 2020, we had loans on non-accrual status with an amortized cost basis of $15.5 million and fair value of $7.4 million. For additional information, please refer to the Consolidated Schedules of Investments as of December 31, 2021 and 2020. We record the reversal of any previously accrued income against the same income category reflected in the Consolidated Statements of Operations.

In certain instances, we may enter into an agreement to restructure a loan where we determined the full balance of principal or interest may not be collectible at the date of origination. As a result of this determination, we do not recognize interest income on these balances. As of December 31, 2021, we have two loans with an amortized cost basis of $27.2 million and fair value of $12.1 million, which meet the above criteria. As of December 31, 2020, we have two loans with an amortized cost basis of $27.2 million and fair value of $13.8 million, which meet the above criteria. For additional information, please refer to the Consolidated Schedules of Investments as of as of December 31, 2021 and 2020.

Results of Operations

Comparison of the years ended December 31, 2021, 2020 and 2019

Investment Income

We generate revenues primarily in the form of interest on the debt and other income-producing securities we hold. Other income-producing securities include investments in funds. Our investments in fixed income instruments generally have an expected maturity of five to seven years, and typically bear interest at a fixed or floating rate. Interest on our debt securities is generally payable quarterly. Payments of principal of our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt instruments and preferred stock investments may defer payments of dividends or pay interest in-kind, or PIK. Any outstanding principal amount of our debt securities and any accrued but unpaid interest will generally become due at the maturity date. The level of interest income we receive is directly related to the balance of interest-bearing investments multiplied by the weighted average yield of our investments. In addition to interest income, we may receive dividends and other distributions related to our equity investments. We may also generate revenue in the form of fees from the management of Greenway II, prepayment premiums, commitment, loan origination, structuring or due diligence fees, exit fees, amendment fees, portfolio company administration fees, fees for providing significant managerial assistance and consulting fees. These fees may or may not be recurring in nature as part of our normal business operations. We disclose below what amounts, if any, are material non-recurring fees that have been recorded as income during each respective period.

The following shows the breakdown of investment income for the years ended December 31, 2021, 2020 and 2019 (in millions):

For the years ended December 31,

Interest income on debt securities

Cash interest

PIK interest

Prepayment premiums

Net accretion of discounts and other fees

Total interest on debt securities

Dividend income (1)

Interest income on other income-producing securities

Fees related to non-controlled, affiliated investments

Other income (2)

Total investment income

Includes dividend income from preferred and common equity interests in C&K Market, Inc., Copperweld Bimetallics, LLC, and Logan JV.

For the years ended December 31, 2021, 2020 and 2019, we recognized $0.0 million, $0.0 million and $1.5 million, respectively, of non-recurring fees from portfolio companies.

The increase in investment income from 2020 to 2021 was primarily due to an increase in interest income due to the expansion of our investment portfolio, as well as higher other income related to one-time fees. This increase was partially offset by a reduction in dividend income due to the sale of C&K Markets in December 2020.

The decrease in investment income from 2019 to 2020 was primarily due to the contraction in our overall investment portfolio (based on dollars invested) since December 31, 2019, coupled with declining LIBOR rates, which led to lower interest income. Additionally, dividend income decreased due to a smaller Logan JV portfolio and the sale of Copperweld Bimetallics LLC in September 2019. Other income declined during the period due to lower one-time fees.

The following shows a rollforward of PIK income activity for the years ended December 31, 2021, 2020 and 2019 (in millions):

Years ended December 31,

Accumulated PIK balance, beginning of period

PIK income capitalized/receivable

PIK reduction due to sale

PIK received in cash from repayments

PIK reduced through restructurings/sales

Accumulated PIK balance, end of period

In certain investment transactions, we may provide advisory services. For services that are separately identifiable and external evidence exists to substantiate fair value, income is recognized as earned. We earned no income from advisory services related to portfolio companies for the years ended December 31, 2021, 2020 and 2019.

Expenses

Our primary operating expenses include the payment of base management fees, borrowing expenses related to our credit facilities and Notes, and expenses reimbursable under the investment management agreement and the allocable portion of overhead under the administration and investment management agreements (“administrator expenses”). The base management fee compensates the Advisor for work in identifying, evaluating, negotiating, closing and monitoring our investments. Our investment management agreement and administration agreement provides that we will reimburse the Advisor for costs and expenses incurred by the Advisor for facilities, office equipment and utilities allocable to the performance by the Advisor of its duties under the agreements, as well as any costs and expenses incurred by the Advisor relating to any administrative or operating services provided by the Advisor to us. We bear all other costs and expenses of our operations and transactions.

The following shows the breakdown of expenses for the years ended December 31, 2021, 2020 and 2019 (in millions):

For the years ended December 31,

Expenses

Interest and fees on Borrowings (1)

Base management fees

Incentive fees

Other expenses

Administrator expenses

Total expenses

Management fee waiver

Total expenses, net of fee waiver

Income tax provision, excise and other taxes (2)

Total expenses after taxes

Interest, fees and amortization of deferred financing costs related to our Revolving Facility and Notes.

Amounts include the income taxes related to earnings by our consolidated corporate subsidiaries established to hold equity or equity-like investments in portfolio companies organized as pass-through entities and excise taxes related to our undistributed earnings and other taxes.

The increase in expenses (net of fee waivers) from 2020 to 2021 was primarily due to a reduction in management fee waiver during the year ended December 31, 2021, and the reversal of incentive fees during the prior year. This increase was partially offset by lower interest and fees on our borrowings in 2021 primarily

driven by one-time accelerated amortization expense incurred in the prior year and a reduction in borrowing costs in the current year , as well as lower administrator and other expenses during the year ended December 31, 2021.

The decrease in expenses from 2019 to 2020 was due primarily to lower net base management fees due to portfolio contraction, as well as the effect of the Advisor’s waiver of base management fees beginning in the third quarter of 2020. Additionally, interest and fees on our Credit Facility decreased due to a reduction in borrowings outstanding, a decrease in LIBOR and lower fees resulting from a reduction in credit facility size, offset marginally by an increase in the contractual spread on the Credit Facility.

We expect certain of our operating expenses, including administrator expenses, professional fees and other general and administrative expenses to decline as a percentage of our total assets during periods of growth and increase as a percentage of our total assets during periods of asset declines.

Net Investment Income

Net investment income was $12.0 million, or $0.40 per common share based on a weighted average of 30,108,671 common shares outstanding for the year ended December 31, 2021, as compared to $10.8 million, or $0.35 per common share based on a weighted average of 31,341,857 common shares outstanding for the year ended December 31, 2020, and as compared to $27.4 million, or $0.87 per common share based on a weighted average of 31,312,987 common shares outstanding for the year ended December 31, 2019.

The increase in net investment income from 2020 to 2021 is primarily attributable to an increase in interest income earned on the debt securities in the portfolio due to expansion of the portfolio and higher other income related to one-time fees, as well as lower interest and fees on our borrowings. The increase was partially offset by reduced dividend income due to the sale of C&K Markets in December 2020, as well as a reduction in management fee waiver during the year ended December 31, 2021.

The decrease in net investment income from 2019 to 2020 is primarily attributable to a decrease in interest income on debt and other income-producing investments due to portfolio contraction and a declining LIBOR, as well as additional positions placed on non-accrual, partially offset by lower borrowing costs, incentive and net base management fees (net of waivers).

Net Realized Gains and Losses, net of income tax provision

The following shows the breakdown of net realized gains and losses for the years ended December 31, 2021, 2020 and 2019 (in millions):

For the years ended December 31,

Aerogroup International Inc. (1)

Alex Toys, LLC (2)

Allied Wireless Services, LLC (3)

Charming Charlie LLC (4)

Copperweld Bimetallics, LLC (5)

Constructive Media, LLC

C&K Market, Inc. (6)

Fairstone Financial Inc.

Gryphon Partners 3.5, L.P.

Holland Intermediate Acquisition Corp. (7)

LAI International, Inc. (8)

Martex Fiber Southern Corp. (9)

New Host Holdings, LLC (10)

OEM Group, LLC (11)

Sciens Building Solutions, LLC (12)

smarTours, LLC (13)

Specialty Brands Holdings, LLC

Tri Starr Management Services, Inc. (14)

Urology Management Associates, LLC (15)

Virtus Pharmaceuticals, LLC (16)

Other investments

Loss on extinguishment of debt (17)

Net realized losses

In March 2018, Aerogroup International Inc. was sold through bankruptcy proceedings and we received $2.5 million in proceeds with an additional $6.3 million reflected as escrow and other receivables. Subsequently, we collected the outstanding escrow proceeds in cash through June 2019, realizing additional losses to reflect amounts collected and associated expenses. In 2020, we reversed a portion of the realized losses recorded in 2019 to true up expected accrued expenses related to the bankruptcy proceedings.

On January 11, 2019, we sold our first lien senior secured term loan in Alex Toys, LLC for total proceeds of $7.7 million. The realized loss of $1.5 million was offset by a corresponding change in unrealized appreciation in the same amount. On March 31, 2021, we wrote off our equity investment and recorded a realized loss of $1.9 million, which was offset by a corresponding change in unrealized appreciation in the same amount.

In June 2020, we restructured our first lien senior secured term loan, common equity, and warrants in Allied Wireline Services, LLC into a Class A Note, Class B common equity and Class C common equity. This cashless restructuring resulted in a $5.3 million realized loss, which was fully offset by a $5.8 million reversal of unrealized depreciation.

On July 11, 2019, Charming Charlie LLC filed for Chapter 11 bankruptcy protection in Delaware with plans to liquidate the company and any of its remaining assets. In connection with the liquidation, we removed Charming Charlie from Investments, at fair value and reflected the expected liquidation proceeds as escrow and other receivables on the Consolidated Statements of Assets and Liabilities. Charming Charlie has ceased its operations and has been actively liquidating its assets. In 2020 and 2021, we recorded realized losses to reflect the collectability of the remaining receivable balance.

On September 28, 2019, we were repaid on our second lien term loan in connection with the sale of our controlling common and preferred equity positions in Copperweld Bimetallics LLC with proceeds received of $32.5 million with an additional $2.1 million in escrow proceeds that were reflected as escrow and other receivables. Subsequently, we collected $1.7 million in escrow proceeds in cash through September 2021 with the final release of our escrow proceeds and realized additional gains and losses in 2020 and 2021 to reflect expected and final collectability of the remaining receivable.

On December 29, 2020, we sold our Series A preferred equity for $10.7 million and sold our common shares for a $5.8 million subordinated sellers note and $0.5 million in cash and warrants valued at $0. We recognized a realized gain of $3.8 million on the transaction. Subsequently, in the fourth quarter of 2021, we were repaid on our subordinated sellers note and our warrants were redeemed, resulting in a $0.1 million realized gain.

During the second quarter of 2020, we received proceeds of $2.6 million from the partial repayment of our first lien senior secured term loan in Holland Intermediate Acquisition Corp. An additional $1.3 million in expected proceeds were reflected as Escrow and other receivables on the Consolidated Statements of Assets and Liabilities at December 31, 2020, resulting in a realized loss of $17.4 million. This realized loss was largely offset by a corresponding reversal of unrealized depreciation. Subsequently, in 2021, we received cash of $0.5 million and recorded additional realized losses to reflect the expected collectability of the remaining receivable balance.

In May 2019, we received $16.8 million in proceeds from a sale of certain business segments of LAI International Inc. The realized loss of $22.7 million was largely offset by a corresponding change in unrealized appreciation. In 2021, we recorded realized losses to reflect collectability of the remaining receivable balance.

On December 31, 2019, we sold our subordinated debt investment in Martex Fiber Southern Corp., resulting in a receivable of $4.3 million. The proceeds were subsequently received in January 2020. The realized loss of $5.5 million was partially offset by a corresponding change in unrealized appreciation.

In April 2020, New Host Holdings, LLC was dissolved and we wrote off our common and preferred equity investments resulting in a $2.0 million realized loss. This realized loss was equally offset by a corresponding reversal of unrealized depreciation.

On September 30, 2020, we restructured our first lien senior secured term loan and revolvers in OEM Group, LLC into a $7.5 million first lien senior secured term loan and a $44.1 million second lien term loan, at par. This cashless restructuring resulted in a $17.5 million realized loss, which was fully offset by a reversal of unrealized depreciation. We are not recognizing interest income on the restructured second lien term loan as of December 31, 2021.

On December 15, 2021, we sold our Series A convertible preferred stock in Sciens Building Solutions, LLC resulting in total proceeds of $2.3 million and a $2.1 million realized gain.

On December 21, 2020 as part of a bankruptcy resolution relating to an investment we restructured our term loan which consisted of a par balance of $5.1 million and capitalized interest of $0.3 million into a first-out term loan of $2.2 million and a last-out term loan of $0.5 million. In connection with the bankruptcy, we reduced the value of our investments and recognized a $2.4 million loss as part of the cashless restructuring.

On February 5, 2019, we received an additional $0.4 million in cash proceeds related to the final purchase price true-up in connection with the sale of its investment in Tri-Starr Management Services, Inc. in October 2018. In 2021, the Company recorded realized losses to reflect collectability of the remaining receivable balance.

On December 30, 2021, we were repaid on our first lien senior secured term loan in Urology Management Associates, LLC, and we sold our common equity for total sales proceeds of $2.0 million, which resulted in a realized gain of $1.2 million during the year ended December 31, 2021.

On May 7, 2020, we agreed to contribute our preferred and common equity interests in Virtus Pharmaceuticals, LLC to Virtus Aggregator, LLC, in exchange for member units in Virtus Aggregator, LLC. This cashless restructuring resulted in a $0.9 million realized loss, which was partially offset by a corresponding reversal of unrealized depreciation.

In June 2021 and December 2021, we redeemed our 2022 Notes and 2023 Notes, respectively. In connection with the redemptions, we realized losses on the extinguishment of debt equal to the difference between the amounts paid to redeem the Notes and the Notes’ carrying value.

Net Change in Unrealized Appreciation (Depreciation) of Investments

Net change in unrealized appreciation (depreciation) primarily reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded appreciation or depreciation when gains or losses are realized.

The following shows the breakdown in the changes in unrealized appreciation (depreciation) of investments for the years ended December 31, 2021, 2020 and 2019 (in millions):

Years ended December 31,

Gross unrealized appreciation on investments

Gross unrealized depreciation on investments

Reversal of prior period net unrealized depreciation upon a realization

Total

During 2021, our largest increase in value for the investments still held as of the reporting date was related to a market driven increase of Logan JV (an investment where we hold a controlling interest) and Matilda Jane Holdings, Inc. This was partially offset by a reduction in value of our investment in Loadmaster Derrick & Equipment, Inc., OEM Group LLC, and Aurotech, LLC.

During 2020, the largest reductions in value for the investments still held as of the reporting date were related to OEM Group, LLC, smarTours LLC, and a market driven reduction of Logan JV (an investment where we hold a controlling interest). This was partially offset by a net increase of approximately $23.1 million due to the reversal of prior period unrealized depreciation upon the realizations of OEM Group, LLC, Holland Intermediate Acquisition Corp., and Hostway Corporation and a reversal of unrealized appreciation to realized gains for C&K Market, Inc. (see “Net Realized Gains and Losses on Investments” above).

During 2019, the largest reductions in value for the investments still held as of the reporting date were related to OEM Group, LLC, Holland Intermediate Acquisition Corp. and a market driven reduction of Logan JV (an investment where we hold a controlling interest). This was partially offset by a net increase of approximately $13.3 million due to the reversal of prior period unrealized depreciation upon the realizations of Charming Charlie, LLC and LAI International Inc and a reversal of unrealized appreciation to realized gains for Copperweld Bimetallics LLC (See “Net Realized Gains and Losses on Investments” above).

Many of our portfolio companies operate in industries that are materially impacted by COVID-19, including but not limited to healthcare, travel, entertainment and hospitality. Many of these companies have faced operational and financial hardships resulting from the spread of COVID-19 in 2020 and 2021 and related governmental measures, such as the closure of stores, restrictions on travel, vaccine mandates, quarantines or stay-at-home orders. Many of our portfolio companies are facing increased credit and liquidity risk due to volatility in financial markets, reduced revenue streams, and limited or higher cost of access to preferred sources of funding. Although vaccines have been widely distributed in the U.S., certain U.S. states are planning on reopening, and we believe the economy is beginning to rebound in certain respects, the uncertainty surrounding the COVID-19 pandemic, including uncertainty regarding new variants of COVID-19 and acceptance of vaccines and other factors may continue to contribute to significant volatility in the global markets, and the businesses of these portfolio companies could suffer materially or become insolvent, which would decrease the value of our investments.

Benefit for Taxes on Unrealized Gains on Investments

Certain consolidated subsidiaries of ours are subject to U.S. federal and state income taxes. These taxable entities are not consolidated with the Company for income tax purposes and may generate income tax liabilities or assets from temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries. For the years ended December 31, 2021, 2020 and 2019, we recognized a benefit for tax on unrealized gains on investments of $0.2 million, $0.2 million and $0.3 million for consolidated subsidiaries, respectively. As of December 31, 2021 and December 31, 2020, $1.6 million and $1.7 million, respectively, were included in deferred tax liability on the Consolidated Statements of Assets and Liabilities relating to deferred tax on unrealized gain on investments. The change in provision for tax on unrealized gains on investments relates primarily to changes to the unrealized appreciation (depreciation) of the investments held in these taxable

consolidated subsidiaries, other temporary differences and a change in the prior year estimates received from certain portfolio companies.

Net Increase (Decrease) in Net Assets Resulting from Operations

Net increase (decrease) in net assets resulting from operations totaled $17.7 million, or $0.59 per common share based on a weighted average of 30,108,671 common shares for the year ended December 31, 2021, as compared to $(36.7) million, or $(1.17) per common share based on a weighted average of 31,341,857 common shares for the year ended December 31, 2020, and as compared to $(24.6) million, or $(0.79) per common share based on a weighted average of 32,312,987 common shares for the year ended December 31, 2019.

The increase in net assets from operations from 2020 to 2021 is primarily due to higher interest income, significant unrealized gains recognized during the current year, and a significant reduction in realized losses during the year ended December 31, 2021. The decrease in net assets from operations from 2019 to 2020 is primarily due to lower interest income as a result of portfolio contraction, as well as an increase in realized losses in the portfolio, partially offset by lower interest and fees on borrowings, management and incentive fees.

Financial condition, liquidity and capital resources

Cash Flows from Operating and Financing Activities

Our liquidity and capital resources are derived from our borrowings, equity raises and cash flows from operations, including investment sales and repayments, and investment income earned. Our primary use of funds from operations includes investments in portfolio companies, payment of distributions to the holders of our common stock and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our borrowings and the proceeds from the turnover in our portfolio and from public and private offerings of securities to finance our investment objectives, to the extent permitted by the 1940 Act. We are continuously and critically reviewing our liquidity and anticipated capital requirements in light of the uncertainty created by the COVID-19 global pandemic. We expect that the significant disruption in business activity and the financial markets could impact several sources of our liquidity. For example, limited opportunities to successfully exit investments due to, among other things, lower valuations, a lack of potential buyers with the financial resources to pursue acquisitions, and our portfolio companies limited ability to repay their obligations to us, will impact cash flows from operating activities. For more information on the potential impact of the COVID-19 pandemic on our business, see “Item 1A. Risk Factors – Risks in the Current Environment – Major public health issues, and specifically the novel coronavirus COVID-19, could have an impact on our financial condition and results of operations and other aspects of our business”.

We may raise additional equity or debt capital through both registered offerings off our shelf registration statement and private offerings of securities, by securitizing a portion of our investments or borrowings from credit facilities. To the extent we determine to raise additional equity through an offering of our common stock at a price below net asset value, existing investors will experience dilution.

In June 2021 and November 2021 , we completed a public debt offering of $69.0 million and $4 2 . 6 million , respectively, in aggregate principal amount of 5.00% notes due 2026 , including the exercise of the overallotment option, through a group of underwriters, resulting in net proceeds received of $ 67.3 million and $42.3 million, respectively . The proceeds received from the June issuance were primarily used to repay our 6.75% n otes due 2022 and partially pay down our Revolving Facility , and the proceeds received from the November 2021 issuance were primarily used to repay our 6.125% notes due 2023 .

We borrowed $260.6 million under our Revolving Facility for the year ended December 31, 2021 and repaid $204.2 million on our Revolving Facility from proceeds received from the 2026 Note issuance, prepayments and sales, and investment income. We borrowed $25.5 under our Revolving Facility for the year ended December 31, 2020 and repaid $34.0 million on our Revolving Facility from proceeds received from prepayments and sales and investment income.

Our operating activities (used) provided cash of $(32.4) million, $19.5 million and $83.3 million for the years ended December 31, 2021, 2020 and 2019, respectively, primarily in connection with the purchase and sale of portfolio investments. For the year ended December 31, 2021, our financing activities included net borrowings of $56.4 million on our Revolving Facility, net proceeds of $0.4 million from the issuance of the 2026 Notes and redemption of 2022 and 2023 Notes, and used $12.0 million for distributions to stockholders, $0.2 million to repurchase common stock and $3.5 million for the payment of financing and offering costs. For the year ended December 31, 2020, our financing activities included net repayments of $8.5 million on our Revolving Facility and used $15.8 million for distributions to stockholders, $21.8 million to repurchase common stock, $30.0 million from the issuance of common stock, and $1.6 million for the payment of financing and offering costs. For the year ended December 31, 2019, our financing activities included net repayments of $42.0 million on our Revolving Facility and used $26.2 million for distributions to stockholders, $15.4 million to repurchase common stock and $0.5 million for payment of financing and offering costs.

As of December 31, 2021 and 2020, we had cash of $16.3 million and $7.6 million, respectively. We had no cash equivalents as of December 31, 2021 and 2020.

We believe cash balances, our Revolving Facility capacity and any proceeds generated from the sale or pay down of investments provides us with the liquidity necessary to fulfill our pipeline in the near future.

Although we were able to issue debt securities and increase our Revolving Facility commitment during the year ended December 31, 2021, and the financial markets have recovered from 2020 levels, another disruption in the financial markets like that caused by the COVID-19 pandemic or any other negative economic development would restrict our access to financing in the future. We may not be able to find new financing for future investments or liquidity needs and even if we are able to obtain such financing, it may not be on as favorable terms as we could have obtained prior to the pandemic. These factors may limit our ability to make new investments and adversely impact our results of operations.

Borrowings

The following shows a summary of our Borrowings as of December 31, 2021 and 2020 (in millions):

December 31, 2021

December 31, 2020

Facility

Commitments

Borrowings Outstanding (1)

Weighted Average Borrowings Outstanding (2)

Weighted Average Interest Rate (5)

Commitments

Borrowings Outstanding (3)

Weighted Average Borrowings Outstanding (4)

Weighted Average Interest Rate (5)

Revolving Facility

2022 Notes

2023 Notes

2026 Notes

Total

As of December 31, 2021, borrowings outstanding excludes deferred financing costs of $3.2 million and includes an issuance premium of $0.4 million for the 2026 Notes, which are netted and presented as a reduction to the balance outstanding in the Consolidated Statements of Assets and Liabilities.

Represents the weighted average borrowings outstanding for the year ended December 31, 2021.

As of December 31, 2020, borrowing outstanding excludes deferred financing costs of $0.7 million for the 2022 Notes and $1.2 million for the 2023 Notes presented as a reduction to the respective balances outstanding in the Consolidated Statements of Assets and Liabilities.

Represents the weighted average borrowings outstanding for the year ended December 31, 2020.

Represents the weighted average interest rate as of December 31, 2021 and December 31, 2020. The weighted average interest rate as of December 31, 2021 incorporates the amortization of the $0.4 million premium received on the issuance of the 2026 Notes.

Credit Facility

On December 15, 2017, we entered into an amendment, or the Revolving Amendment, to our existing revolving credit agreement, or Revolving Facility. The Revolving Amendment revised the Revolving Facility dated August 19, 2015 to, among other things, extend the maturity date from August 2019 to December 2022 (with a one year term out period beginning in December 2021). The one year term out period is the one year anniversary between the revolver termination date, or the end of the availability period, and the maturity date. During this time, we are required to make mandatory prepayments on our loans from the proceeds we receive from the sale of assets, extraordinary receipts, returns of capital or the issuances of equity or debt. The Revolving Amendment also reduced the size of the revolver commitments from $303.5 million to $275.0 million and terminated the $75.0 million term loan facility.

On March 26, 2019, we entered into Amendment No. 1 which amended our Revolving Facility to, among other things, (i) reduce the size of the commitments thereunder to $190.0 million; (ii) provide a $20.0 million letter of credit subfacility; and (iii) lower the testing levels of certain financial covenants.

On March 13, 2020, we entered into Amendment No. 4 which further amended the Revolving Facility to, among other things, reduce the size of commitments from $190.0 million to $150.0 million.

On April 14, 2020, we entered into Amendment No. 5 which, among other things, (i) permanently reduced the asset coverage test from a minimum of 200% to a minimum of 165%; (ii) permanently reduced shareholder's equity and obligor's net worth test from a minimum of $175.0 million each to a minimum of $140.0 million each; (iii) permanently reduced the size of the lender's commitments under the Revolving Facility from $150.0 million to $120.0 million; and (iv) permanently increased the interest rate by 25 basis points with a mechanism for an additional 25 basis points increase dependent on certain testing levels, as well as added a 50 basis point LIBOR floor.

On October 16, 2020, we entered into the Third Amended and Restated Senior Secured Revolving Credit Agreement, which among other things, (i) reduced the size of the revolver commitment from $120.0 million to $100.0 million ; (ii) increased the applicable margin on LIBOR borrowings from 2.75% to 3.0% ; (iii) permanently reduced the asset coverage test from a minimum of 165% to a minimum of 150% ; and (iv) extended the maturity date from December 2022 to October 16, 2024 (with a one year term out period beginning in October 2023).

The Revolving Facility includes an accordion feature permitting us to expand the Revolving Facility, if certain conditions are satisfied; provided, however, that the aggregate amount of the Revolving Facility, collectively, is capped. The Third Amended and Restated Senior Secured Revolving Credit Agreement revised the cap from $300.0 million to $200.0 million. On March 31, 2021, we entered into an Incremental Commitment Agreement which increased the size of the revolver commitment from $100.0 million to $125.0 million. On September 15, 2021, we entered into an Incremental Commitment and Assumption Agreement which further increased the size of the revolver commitment from $125.0 million to $150.0 million.

The Revolving Facility, denominated in US dollars, has an interest rate of LIBOR plus 3.00% (with a 0.5% LIBOR floor). We elect the LIBOR rates on the loans outstanding on our Revolving Facility, which can have a LIBOR period that is one, two, three or six months. The LIBOR rate on the USD borrowings outstanding on our Revolving Facility had a one month LIBOR period as of December 31, 2021.

The non-use fee is 1.00% annually if we use 35% or less of the Revolving Facility and 0.50% annually if we use more than 35% of the Revolving Facility.

As of December 31, 2021, we had USD borrowings of $114.1 million outstanding under the Revolving Facility with a year-end interest rate of 3.50%.

The Revolving Facility, denominated in Canadian dollars, had an interest rate of CDOR plus 2.5% (with no CDOR floor). This Facility was repaid in 2019, and there were no Canadian borrowings outstanding on the Revolving Facility as of December 31, 2021.

The Revolving Facility generally requires payment of interest on a quarterly basis for ABR loans (commonly based on the Prime Rate or the Federal Funds Rate), and at the end of the applicable interest period for Eurocurrency loans bearing interest at LIBOR or CDOR, the interest rate benchmarks used to determine the variable rates paid on the Revolving Facility. All outstanding principal is due upon each maturity date. The Revolving Facility also requires a mandatory prepayment of interest and principal upon certain customary triggering events (including, without limitation, the disposition of assets or the issuance of certain securities).

Borrowings under the Revolving Facility are subject to, among other things, a minimum borrowing/collateral base. The facilities have certain collateral requirements and/or covenants, including, but not limited to, 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) limitations on the creation or existence of agreements that prohibit liens on certain properties of ours and our subsidiaries, and (e) compliance with certain financial maintenance standards including (i) minimum stockholders’ equity, (ii) a ratio of total assets (less total liabilities not represented by senior securities) to the aggregate amount of senior securities representing indebtedness, of us and our consolidated subsidiaries, of not less than 1.50:1.00, (iii) minimum liquidity, and (iv) minimum net worth. In addition to the financial maintenance standards, described in the preceding sentence, borrowings under the facilities (and the incurrence of certain other permitted debt) are subject to compliance with a borrowing base that applies different advance rates to different types of assets in our portfolio.

We cannot be assured that we will be able to borrow funds under the Revolving Facility at any particular time or at all. We are currently in compliance with all financial covenants under the Revolving Facility.

As of December 31, 2021 and 2020, the carrying amount of our outstanding Revolving Facility approximated fair value. The fair values of the Company’s Revolving Facility 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 our Revolving Facility is estimated based upon market interest rates and entities with similar credit risk. As of December 31, 2021 and 2020, the Revolving Facility would be deemed to be Level 3 of the fair value hierarchy.

Interest expense and related fees, excluding amortization of deferred financing costs, of $ 2.9 million, $ 2.9 million and $ 5.2 million were incurred in connection with the Revolving Facility during the years ended December 31, 2021, 2020 and 2019 , respectively.

Amortization of deferred financing costs of $0.5 million, $1.3 million (including one-time accelerated amortization of $0.8 million in connection with a reduction in the revolver commitment size) and $0.9 million (including one-time accelerated amortization of $0.4 million in connection with a reduction in the revolver commitment size), respectively, were incurred in connection with the Facilities for the years ended December 31, 2021, 2020 and 2019. As of December 31, 2021 and 2020, we had $1.5 million and $1.8 million, respectively, of deferred financing costs related to the Revolving Facility, which is presented as an asset on the Consolidated Statements of Assets and Liabilities.

The 1940 Act was modified by allowing a BDC to increase the maximum amount of leverage it may incur under the 1940 Act from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. At our Annual Meeting of Stockholders on June 14, 2019, stockholders approved a proposal to reduce our asset coverage ratio to 150%. Such asset coverage ratio became effective on June 15, 2019. On April 14, 2020, we received lender consent to reduce our asset coverage ratio to 165% and on October 16, 2020, we received lender consent to reduce our asset coverage ratio to 150%. Our asset coverage ratio as of December 31, 2021 was 184%.

Notes

2022 Notes

In December 2015 and November 2016, we completed a public offering of $35.0 million and $25.0 million, respectively, in aggregate principal amount of 6.75% notes due 2022 (“2022 Notes”). The 2022 Notes bore interest at a rate of 6.75% per year payable quarterly on March 30, June 30, September 30 and December 30, of each year, beginning March 30, 2016 and traded on the New York Stock Exchange under the trading symbol “FCRZ”. On June 21, 2021, we redeemed the 2022 Notes at par with proceeds from the issuance of the 2026 Notes (see below). As a result of this redemption, we recognized a loss on extinguishment of debt of $0.5 million during the year ended December 31, 2021 on the Consolidated Statements of Operations.

2023 Notes

On October 16, 2018, we completed a public offering of $51.6 million in aggregate principal amount of 6.125% notes due 2023 (“2023 Notes”), including the underwriters exercise of their option to purchase an additional $1.6 million to cover overallotments. The 2023 Notes bore interest at a rate of 6.125% per year payable quarterly on March 30, June 30, September 30 and December 30, of each year, beginning December 30, 2018 and traded on the New York Stock Exchange under the trading symbol “FCRW”. On December 22, 2021, we redeemed the 2023 Notes at par with proceeds from the issuance of the 2026 Notes (see below). As a result of this redemption, we recognized a realized loss on extinguishment of debt of $0.8 million during the year ended December 31, 2021 on the Consolidated Statements of Operations.

2026 Notes

On June 2, 2021, we completed a public offering of $69.0 million in aggregate principal amount of 5.00% notes due 2026 (“2026 Notes”), including the underwriters exercise of their option to purchase an additional $9.0 million to cover overallotments. The 2026 Notes mature on May 25, 2026, and may be redeemed in whole or in part at any time or from time to time at our option on or after May 25, 2023. The 2026 Notes bear interest at a rate of 5.00% per year payable quarterly on March 30, June 30, September 30, and December 30, of each year, beginning September 30, 2021 and trade on the New York Stock Exchange under the trading symbol “FCRX”. We used the net proceeds from the issuance of the 2026 Notes to redeem the 2022 Notes and partially repay the Revolving Credit Facility.

On November 17 , 2021 , we completed a public offering of an additional $ 42.6 million in aggregate principal amount of 2026 Notes , including the underwriters exercise of their option to purchase an additional $2.6 million to cover overallotments . The Notes were issued at a price of 101% of the aggregate principal amount of the 2026 Notes. The additional 2026 Notes are a further issuance of, fungible with, and rank equally in right of payment with and have the same terms (other than the issue date and public offering price) as the initial issuance of the 2026 Notes in June 2021 . The Company used the net proceeds from the subsequent offering of the 2026 Notes to redeem the 2023 Notes.

The 2022 Notes, 2023 Notes, and 2026 Notes are collectively referred to as the Notes, except that the 2022 and 2023 Notes are not included with respect to dates subsequent to their redemption, and the 2026 Notes are not included with respect to dates prior to their issuance.

The Notes are our direct unsecured obligations and rank: (i) pari passu with our other outstanding and future senior unsecured indebtedness; (ii) senior to any of our future indebtedness that expressly provides it is subordinated to the Notes; (iii) effectively subordinated to all our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness, including without limitation, borrowings under our Revolving Facility; (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries.

The Base Indenture, as supplemented by the First, Second and Third Supplemental Indentures (the “Indenture”), contains certain covenants including covenants requiring us to comply with (regardless of whether it is subject to) the Section 18 (a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to us by the SEC. Currently these provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 150% after such borrowings. These covenants are subject to important limitations and exceptions that are described in the Indenture. The Indenture provides for customary events of default and further provides that the Trustee or the holders of 25% in aggregate principal amount of the outstanding Notes in a series may declare such Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period. As of December 31, 2021, we were in compliance with the terms of the Base Indenture and the First, Second and Third Supplemental Indentures governing the Notes. See Note 7 to our consolidated financial statements for more detail on the Notes.

As of December 31, 2021, the carrying amount and fair value of our Notes was $111.6 million and $114.1 million, respectively. As of December 31, 2020, the carrying value and fair value of our Notes was $111.6 million and $113.0 million, respectively. The fair value of our Notes is 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 Notes is based on the closing price of the security, which is a Level 2 input under ASC 820 due to the trading volume.

In connection with the issuance of the 2022 Notes, 2023 Notes and 2026 Notes, we incurred $2.6 million, $2.2 million, and $3.5 million of fees and expenses, respectively. These deferred financing costs are presented as a reduction to the notes payable balance and are being amortized using the effective yield method over the term of the Notes. For the years ended December 31, 2021, 2020 and 2019, we amortized approximately $1.1 million, $0.8 million and $0.8 million of deferred financing costs, respectively, which is reflected in amortization of deferred financing costs on the Consolidated Statements of Operations. As of December 31, 2021, we had $3.2 million of remaining deferred financing costs on the Notes, which was netted with the $0.4 million of unamortized premium on the 2026 Notes and presented as a reduction to the notes payable balance on our Consolidated Statements of Assets and Liabilities. As of December 31, 2020, we had $1.9 million of remaining deferred financing costs on the Notes, which was presented as a reduction to the notes payable balance on our Consolidated Statements of Assets and Liabilities.

For the years ended December 31, 2021, 2020 and 2019 , we incurred interest expense on the Notes of approximately $ 7.3 million, $7. 2 million and $ 7. 2 million, respectively.

Commitments and Contingencies and Off-Balance Sheet Arrangements

From time to time, we, or the Advisor, may become party to legal proceedings in the ordinary course of business, including proceedings related to the enforcement of our rights under contracts with our portfolio companies. Neither we, nor the Advisor, are currently subject to any material legal proceedings.

Unfunded commitments to provide funds to portfolio companies are not reflected in our Consolidated Statements of Assets and Liabilities. Our unfunded commitments may be significant from time to time. These commitments will be subject to the same underwriting and ongoing portfolio maintenance as are the on-balance sheet financial instruments that we hold. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We intend to use cash flow from normal and early principal repayments and proceeds from borrowings and offerings to fund these commitments.

As of December 31, 2021 and 2020 , we have the following unfunded commitments to portfolio companies (in millions):

December 31, 2021

December 31, 2020

Unfunded delayed draw facilities

Advanced Web Technologies

Alcanza Clinical Research

Alpine X

AppFire Technologies, LLC

BCDI Rodeo Dental Buyer, LLC

CC Amulet Management, LLC

Cedar Services Group, LLC

ConvenientMD

Doxa Insurance Holdings, LLC

Endo1 Partners

Groundworks Operations, LLC

HealthDrive Corporation

Integrated Pain Management Medical Group, Inc.

Lighthouse Lab Services

MarkLogic Corporation

Multi Specialty Healthcare LLC

Newcleus, LLC

PDFTron Systems Inc.

Socius Insurance Services, Inc.

SuperHero Fire Protection, LLC

Technology Partners, LLC

TMA Buyer, LLC

Tricor Borrower, LLC

TriStrux, LLC

Unfunded revolving commitments

1-800 Hansons, LLC (1)

A&A Global Imports, LLC

ABC Legal Services, LLC

Action Point, Inc

Advanced Web Technologies

Alcanza Clinical Research

Alpine SG, LLC

Alpine X

AppFire Technologies, LLC

Aurotech, LLC

Automated Control Concepts, Inc.

BCDI Rodeo Dental Buyer, LLC

CC Amulet Management, LLC

Cedar Services Group, LLC

Certify, Inc.

Communication Technology Intermediate

ConvenientMD

Danforth Advisors

Doxa Insurance Holdings, LLC

EBS Intermediate LLC

Gener8, LLC

Groundworks Operations, LLC

December 31, 2021

December 31, 2020

HealthDrive Corporation (2)

iLending LLC

Integrated Pain Management Medical Group, Inc.

IRC Opco LLC

Lash Opco LLC

Lighthouse Lab Services

Loadmaster Derrick & Equipment, Inc. (3)

MarkLogic Corporation

Marlin DTC-LS Midco 2, LLC

Matilda Jane Holdings, Inc.

Multi Specialty Healthcare LLC

Newcleus, LLC

NWN Parent Holdings LLC

PDFTron Systems Inc.

QuarterMaster Newco, LLC

Quorum Health Resources

Sequoia Consulting Group, LLC

smarTours, LLC

Socius Insurance Services, Inc.

SolutionReach, Inc.

SuperHero Fire Protection, LLC

Technology Partners, LLC

The Mulch & Soil Company, LLC

TMA Buyer, LLC

Tricor Borrower, LLC

TriStrux, LLC

Women's Health USA, Inc.

Unfunded commitments to investments in funds

Freeport Financial SBIC Fund LP

Gryphon Partners 3.5, L.P.

Total unfunded commitments

We have sole discretion as to whether to lend under this revolving commitment.

Includes amounts set aside for issued standby letters of credit.

As of December 31, 2020, we had issued a standby letter of credit of $3.1 million which expired on January 19, 2021.

The changes in fair value of our unfunded commitments are considered to be immaterial as the yield determined at the time of underwriting is expected to be materially consistent with the yield upon funding. We will fund our unfunded commitments from the same sources we use to fund our investment commitments that are funded at the time they are made (which are typically existing cash and cash equivalents and borrowings under our Revolving Facility). We manage our liquidity to ensure that we have available capital to fund our unfunded commitments as necessary.

Distributions

We have elected to be taxed as a RIC under Subchapter M of the Code. In order to maintain our status as a RIC, we are required to distribute, for each taxable year, at least 90% of our investment company taxable income. To avoid a 4% excise tax on undistributed earnings, we are required to distribute each calendar year the sum of (i) 98% of our ordinary income for such calendar year, (ii) 98.2% of our capital gain net income for the one-year

period ending October 31 of that calendar year and (iii) any income recognized, but not distributed, in preceding years and on which we paid no federal income tax.

Our quarterly distributions, if any, will be determined by our board of directors. We intend to make distributions to stockholders on a quarterly basis of substantially all of our net investment income. Although we intend to make distributions of net realized capital gains, if any, at least annually, out of assets legally available for such distributions, we may in the future decide to retain such capital gains for investment. In addition, the extent and timing of special dividends, if any, will be determined by our board of directors and will largely be driven by portfolio specific events and tax considerations at the time.

In addition, we may be limited in our ability to make distributions due to the BDC asset coverage test for borrowings applicable to us as a BDC under the 1940 Act.

The following table summarizes our recent distributions declared and paid or to be paid on all shares including distributions reinvested, if any:

Date Declared

Record Date

Payment Date

Amount Per Share

March 5, 2019

March 20, 2019

March 29, 2019

May 7, 2019

June 14, 2019

June 28, 2019

August 6, 2019

September 16, 2019

September 30, 2019

October 31, 2019

December 16, 2019

December 31, 2019

March 3, 2020

March 20, 2020

March 31, 2020

May 5, 2020

June 15, 2020

June 30, 2020

August 4, 2020

September 15, 2020

September 30, 2020

October 30, 2020

December 15, 2020

December 31, 2020

March 2, 2021

March 15, 2021

March 31, 2021

May 4, 2021

June 15, 2021

June 30, 2021

August 3, 2021

September 15, 2021

September 30, 2021

November 2, 2021

December 15, 2021

December 31, 2021

March 1, 2022

March 15, 2022

March 31, 2022

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of our status as a regulated investment company. We cannot assure stockholders that they will receive any distributions at a particular level.

We maintain an “opt in” dividend reinvestment plan for our common stockholders. As a result, unless stockholders specifically elect to have their dividends automatically reinvested in additional shares of common stock, stockholders will receive all such dividends in cash. There were no dividends reinvested for the years ended December 31, 2021, 2020 and 2019.

Under the terms of our dividend reinvestment plan, dividends will primarily be paid in newly issued shares of common stock. However, we reserve the right to purchase shares in the open market in connection with the implementation of the plan. This feature of the plan means that, under certain circumstances, we may issue shares of our common stock at a price below net asset value per share, which could cause our stockholders to experience dilution.

Distributions in excess of our current and accumulated earnings and profits would generally be treated as a return of capital to the extent of the stockholder’s adjusted tax basis in our shares. If a stockholder’s tax basis is reduced to zero, the stockholder would generally treat any remaining distributions in excess of our current and accumulated earnings and profits as a capital gain. The determination of the tax attributes of our distributions will be made annually as of the end of our fiscal year based upon our taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of our distributions for a full year. Each year, a statement on Form 1099-DIV identifying the source of the distributions will be sent to our U.S. stockholders of record (other than certain exempt recipients). Our board of directors presently intends to declare and pay quarterly distributions. Our ability to pay distributions could be affected by future business performance, liquidity, capital needs, alternative investment opportunities and loan covenants.

The tax character of distributions declared and paid in 2021 represented $12.0 million from ordinary income, $0 from capital gains and $0 from tax return of capital. The tax character of distributions declared and paid in 2020 represented $15.8 million from ordinary income, $0 from capital gains and $0 from tax return of capital. The tax character of distributions declared and paid in 2019 represented $26.2 million from ordinary income, $0 from capital gains and $0 from tax return of capital. Generally accepted accounting principles require adjustments to certain components of net assets to reflect permanent differences between financial and tax reporting. These adjustments have no effect on net asset value per share. Permanent differences between financial and tax reporting at December 31, 2021 and 2020 were $0.2 million and $5.4 million, respectively.

We may generate qualified interest income and short-term capital gains that may be exempt from United States withholding tax when distributed to foreign accounts. A RIC is permitted to designate distributions in the form of dividends that represent interest income from U.S. sources (commonly referred to as qualified interest income) and short-term capital gains as exempt from U.S. withholding tax when paid to non-U.S. stockholders with proper documentation. As of December 31, 2021, the percentage of income estimated as qualified interest income for tax purposes was 90.1%.

Contractual obligations

We have entered into a contract with the Advisor to provide investment advisory services. Payments for investment advisory services under the investment management agreement in future periods will be equal to (a) an annual base management fee of 1.0% of our gross assets and (b) an incentive fee based on our performance. In addition, under our administration agreement, the Advisor will be reimbursed for administrative services incurred on our behalf. Please refer to Note 4 – “Related Party Transactions” in our consolidated financial statements.

The following table shows our contractual obligations as of December 31, 2021 (in millions):

Payments due by period

Contractual Obligations (1)

Total

Less than

1 year

years

After 5

years

Revolving Facility

Notes Payable

Excludes $42.5 million in commitments to extend credit to our portfolio companies.

The following table shows our contractual obligations as of December 31, 2020 (in millions):

Payments due by period

Contractual Obligations (1)

Total

Less than

1 year

years

After 5

years

Revolving Facility

Notes Payable

Excludes $22.0 million in commitments to extend credit to our portfolio companies.

Stock Repurchase Program and Tender Offer

Stock Repurchase Program

On March 2, 2018 our board of directors authorized a $20.0 million stock repurchase program, which was amended and extended on March 5, 2019 to authorize the repurchase of outstanding shares in an aggregate amount of up to $15.0 million. Effective March 14, 2019, we adopted a stock trading plan in accordance with Rule 10b5-1 of the Exchange Act. This plan was completed in November of 2019. On December 16, 2019, our board of directors authorized a new $10.0 million stock repurchase program, which expired on December 16, 2020. Effective December 17, 2019, we adopted a stock trading plan in accordance with Rule 10b5-1 of the Exchange Act, which was terminated on March 10, 2020. On May 4, 2021, our board of directors authorized a new $10.0 million stock repurchase program, which, unless extended by our board of directors, will expire on May 5, 2022 and may be modified or terminated at any time for any reason without prior notice. We provided our stockholders with notice of our ability to repurchase shares of our common stock in accordance with 1940 Act requirements. Effective December 16, 2021, we adopted a stock trading plan in accordance with Rule 10b5-1 of the Exchange Act, which, unless extended, expires on March 8, 2022. We retired all shares of common stock purchased in connection with the stock repurchase program and plan to retire all shares of common stock that we purchase in the future in connection with the program.

The following table summarizes our share repurchases under our stock repurchase program for the years ended December 31, 2021, 2020 and 2019 (in millions):

For the years ended

December 31,

Dollar amount repurchased (1)(2)

Shares repurchased

Average price per share (including commission)

Weighted average discount to net asset value

Effective December 17, 2019, we adopted a stock trading plan in accordance with Rule 10b5-1 of the Exchange Act. All shares repurchased during the year ended December 31, 2020 were under the Plan which terminated on March 10, 2020.

Effective December 16, 2021, we adopted a stock trading plan in accordance with Rule 10b5-1 of the Exchange Act. All shares repurchased during the year ended December 31, 2021 were under the Plan.

Tender Offer

On June 23, 2020, we announced the commencement of a modified “Dutch Auction” tender offer (the “Tender Offer”) to repurchase up to $20 million of our common stock. Pursuant to the Tender Offer, we purchased 5.2 million shares of our common stock at a purchase price of approximately $3.75 per share. The purchase of shares was settled on July 23, 2020 for a total purchase price of approximately $19.5 million, excluding fees and expenses related to the Tender Offer, at a discount to net asset value of 32.31%. The shares of common stock purchased in the Tender Offer represented approximately 14.7% of our issued and outstanding shares as of July 23, 2020. We retired all shares of common stock purchased in connection with the Tender Offer.

Related Party Transactions

Refer to Note 4 – “Related Party Transactions” in our consolidated financial statements.

Critical accounting policies

For further description of our critical accounting policies, refer to Note 2 – “Significant Accounting Policies and Recent Accounting Updates” in our consolidated financial statements. We consider our most significant accounting policies to be those related to its Valuation of Portfolio Investments, Revenue Recognition, Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation and U.S. Federal Income Taxes, including excise tax.

Valuation of Portfolio Investments

As a BDC, we generally invest in illiquid securities including debt and equity investments of lower middle market companies. Investments for which market quotations are readily available are valued using market quotations, which are generally obtained from an independent pricing service or one or more broker-dealers or market makers. Debt and equity securities for which market quotations are not readily available or are determined to be unreliable are valued at fair value as determined in good faith by our board of directors. Because we expect that there will not be a readily available market value for many of the investments in our portfolio, it is expected that many of our portfolio investments’ values will be determined in good faith by our board of directors in accordance with a documented valuation policy that has been reviewed and approved by our board of directors and in accordance with GAAP. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below:

our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investment;

preliminary valuation conclusions are then documented and discussed with senior management of the Advisor;

to the extent determined by the audit committee of our board of directors, independent valuation firms are used to conduct independent appraisals and review the Advisor’s preliminary valuations in light of their own independent assessment;

the audit committee of our board of directors reviews the preliminary valuations of the Advisor and independent valuation firms and, if necessary, responds and supplements the valuation recommendation of the independent valuation firms to reflect any comments; and

our board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Advisor, the respective independent valuation firms and the audit committee.

The types of factors that we may take into account in fair value pricing our investments include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. We generally utilize an income approach to value our debt investments and a combination of income and market approaches to value our equity investments. With respect to unquoted securities, the Advisor and our board of directors, in consultation with our independent third party valuation firms, values each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors, which valuation is then approved by our board of directors.

Debt Investments

For debt investments, we generally determine the fair value primarily using an income, or yield, approach that analyzes the discounted cash flows of interest and principal for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of each portfolio investments. Our estimate of the expected repayment date is generally the legal maturity date of the instrument. The yield analysis considers changes in leverage levels, credit quality, portfolio company performance and other factors. The enterprise value, a market approach, is used to determine the value of equity and debt investments that are credit impaired, close to maturity or where we also hold a controlling equity interest. The method for determining enterprise value uses a multiple analysis, whereby appropriate multiples are applied to the portfolio company’s net income before net interest expense, income tax expense, depreciation and amortization, or EBITDA. The collateral valuation analysis is utilized when repayment is based on the sale of the underlying collateral.

Equity

We use a combination of the income and market approaches to value our equity investments. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future cash flows or earnings to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, the current investment performance rating, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, transaction comparables, our principal market as the reporting entity, and enterprise values, among other factors.

Investment in Funds

In circumstances in which net asset value per share of an investment is determinative of fair value, we estimate the fair value of an investment in an investment company using the net asset value per share of the investment (or its equivalent) without further adjustment if the net asset value per share of the investment is determined in accordance with the specialized accounting guidance for investment companies as of the reporting entity’s measurement date.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, we disclose the fair value of our investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

Level l—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2—Quoted prices in markets that are not considered to be active or financial instruments for which significant inputs are observable, either directly or indirectly;

Level 3—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by management. For more information about our fair value measurements, see Note 3 to our consolidated financial statements.

We consider whether the volume and level of activity for the asset or liability have significantly decreased and identify transactions that are not orderly in determining fair value. Accordingly, if we determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value. Valuation techniques such as an income approach might be appropriate to supplement or replace a market approach in those circumstances.

We have adopted the authoritative guidance under GAAP for estimating the fair value of investments in investment companies that have calculated net asset value per share in accordance with the specialized accounting guidance for Investment Companies. Accordingly, in circumstances in which net asset value per share of an investment is determinative of fair value, we estimate the fair value of an investment in an investment company using the net asset value per share of the investment (or its equivalent) without further adjustment if the net asset value per share of the investment is determined in accordance with the specialized accounting guidance for investment companies as of the reporting entity’s measurement date. Redemptions are not generally permitted in our investments in funds. The remaining term of our investments in funds is expected to be two to six years.

Revenue Recognition

We record interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis to the extent that we expect to collect such amounts. Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Distributions received from a limited liability company or limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Original issue discount, principally representing the estimated fair value of detachable equity or warrants obtained in conjunction with the acquisition of debt securities, and market discount or premium are capitalized and accreted or amortized into interest income over the life of the respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion/amortization of discounts and premiums and upfront loan origination fees.

Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or when it is no longer probable that principal or interest will be collected. However, we may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. We record the reversal of any previously accrued income against the same income category reflected in the Consolidated Statements of Operations. As of December 31, 2021, we had loans on non-accrual status with an amortized cost basis of $19.7 million and a fair value of $9.1 million. As of December 31, 2020, we had loans on non-accrual status with an amortized cost basis of $15.5 million and fair value of $7.4 million.

We have investments in our portfolio which contain a contractual paid-in-kind, or PIK, interest provision. PIK interest is computed at the contractual rate specified in each investment agreement, is added to the principal balance of the investment, and is recorded as income. We will cease accruing PIK interest if there is insufficient value to support the accrual or if we do not expect amounts to be collectible and will generally only begin to recognize PIK income again when all principal and interest have been paid or upon a restructuring of the investment where the interest is deemed collectable. To maintain our status as a RIC, PIK interest income, which is considered investment company taxable income, must be paid out to stockholders in the form of dividends even though we have not yet collected the cash. Amounts necessary to pay these dividends may come from available cash.

We capitalize and amortize upfront loan origination fees received in connection with the closing of investments. The unearned income from such fees is accreted into interest income over the contractual life of the loan based on the effective interest method. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees, and unamortized discounts are recorded as interest income.

Other income includes commitment fees, fees related to the management of Greenway and Greenway II, fees related to the management of certain controlled equity investments, structuring fees, amendment fees and unused commitment fees associated with investments in portfolio companies. These fees are recognized as

income when earned by us in accordance with the terms of the applicable management or credit agreement and may or may not be recurring in nature as part of our normal business operations.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized. We measure realized gains or losses on the interest rate derivative based upon the difference between the proceeds received or the amounts paid on the interest rate derivative. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values or value of the interest rate derivative during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

U.S. Federal Income Taxes, Including Excise Tax

We have elected to be taxed as a RIC under Subchapter M of the Code and currently qualify, and intends to continue to qualify each year, as a RIC under the Code. Accordingly, we are not subject to federal income tax on the portion of our taxable income and gains distributed to stockholders.

In order to qualify for favorable tax treatment as a RIC, we are required to distribute annually to our stockholders at least 90% of our investment company taxable income, as defined by the Code. To avoid a 4% U.S. federal excise tax on undistributed earnings, we are required to distribute each calendar year the sum of (i) 98% of our ordinary income for such calendar year, (ii) 98.2% of our capital gain net income for the one-year period ending October 31 of that calendar year and (iii) any income recognized, but not distributed, in preceding years and on which we paid no U.S. federal income tax. We, at our discretion, may choose not to distribute all of our taxable income for the calendar year and pay a non-deductible 4% excise tax on this undistributed income. If we choose to do so, all other things being equal, this would increase expenses and reduce the amount available to be distributed to stockholders. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue excise taxes on estimated excess taxable income as taxable income is earned using an annual effective excise tax rate.

The annual effective excise tax rate is determined by dividing the estimated annual excise tax by the estimated annual taxable income. See also the disclosure in Note 10, Distributions, for a summary of the recent dividends paid. For the years ended December 31, 2021, 2020 and 2019, we incurred U.S. federal excise tax and other tax expenses of $0.1 million, $0.1 million and $0.4 million, respectively.

Certain consolidated subsidiaries are subject to U.S. federal and state income taxes. These taxable entities are not consolidated for income tax purposes and may generate income tax liabilities or assets from temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries.

The following shows the breakdown of current and deferred income tax benefits for the years ended December 31, 2021, 2020 and 2019 :

For the years ended December 31,

Benefit for taxes on unrealized gain on investments

These current and deferred income taxes are determined from taxable income estimates provided by portfolio companies organized as pass-through entities where we hold equity or equity-like investments through our corporate subsidiaries. These tax estimates may be subject to further change once tax information is finalized for the year. As of December 31, 2021 and 2020, $1.6 million and $1.7 million, respectively, were included in deferred tax liability on the Consolidated Statements of Assets and Liabilities primarily relating to deferred taxes on unrealized gains on investments held in our corporate subsidiaries and other temporary book to tax differences of the corporate subsidiaries. As of December 31, 2021 and 2020, $2.3 million (net of $12.1 million allowance) and $2.2 million (net of $8.4 million allowance), respectively, of deferred tax assets were included in deferred tax assets on the Consolidated Statements of Assets and Liabilities relating to net operating loss carryforwards and

unrealized losses on investments and other temporary book to tax differences that are expected to be used in future periods.

Under the RIC Modernization Act (the “RIC Act”), we are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010, for an unlimited period. However, any losses incurred during post-enactment taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under the rules applicable to pre-enactment capital losses.

Because U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

We follow the provisions under the authoritative guidance on accounting for and disclosure of uncertainty in tax positions. The provisions require us to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions not meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. There are no unrecognized tax benefits or obligations in the accompanying consolidated financial statements. Although we file U.S. federal and state tax returns, our major tax jurisdiction is U.S. federal. Our inception-to-date U.S. federal tax years remain subject to examination by taxing authorities.

Recent Developments

From January 1, 2022 through March 3, 2022, we made follow-on investments, including revolver and delayed draw fundings, totaling $3.7 million at a combined weighted average yield based upon cost at time of investment of 6.5%.

On March 1, 2022, our Board declared a dividend of $0.10 per share payable on March 31, 2022 to stockholders of record at the close of business on March 15, 2022.

Item 7A.

Quantitative and Qualitat ive Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. As of December 31, 2021, 96.0% of the income-producing debt investments in our portfolio are floating rate loans, based upon fair market value. We expect future debt investments in our portfolio will have floating rates. These floating rate loans typically bear interest in reference to LIBOR, which are indexed to 30-day, 60-day, 90-day or 180-day LIBOR rates subject to an interest rate floor. As of December 31, 2021, the weighted average interest rate floor on our floating rate loans was 1.02%. Our Revolving Facility is also subject to a floating interest rate, subject to an interest rate floor of 0.50%.

Based on our December 31, 2021, Consolidated Statement of Assets and Liabilities, the following table shows the annual impact on net income of changes in interest rates, which assumes no changes in our investments and borrowings (in millions):

Change in Basis Points

Interest

Income

Interest

Expense

Net

Income (1)

Up 300 basis points

Up 200 basis points

Up 100 basis points

Down 300 basis points

Down 200 basis points

Down 100 basis points

Excludes the impact of incentive fees based on pre-incentive fee net investment income. See Note 4 “Related Party Transaction” to our consolidated financial statements for the year ended December 31, 2021 for more information on the incentive fee.

Although we believe that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in credit quality, size and composition of the assets on the balance sheet and other business developments, including borrowings under our Revolving Facility, that could affect net increase in net assets resulting from operations, or net income

In the future, we may use other standard hedging instruments such as futures, options and forward contacts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio of investments.

From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at each balance sheet date, exposing us to movements in foreign exchange rates. We have the ability to borrow in certain foreign currencies under our Revolving Credit Facility. Instead of entering into a foreign exchange forward contract in connection with loans or other investments we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment.

First Eagle Alternative Capital Bdc, Inc.

Annual report (10-K)

Risk Factors (Item 1A)

Top insiders

All filings

Risk Factors (Item 1A)

MD&A (Item 7)

External resources

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