John T. Haggerty Paul J. Delligatti Thomas J. LaFond Goodwin Procter LLP 100 Northern Avenue Boston, MA 02118 Telephone: (617) 570-1000 Fax: (617) 523-1231 | | | David M. Leahy William J. Curry John L. Chilton Sullivan & Worcester LLP 1666 K Street, NW Washington, D.C. 20006-1264 Telephone: (202) 775-1200 Fax: (202) 775-6875 |
Title of Securities Being Registered | | | Amount Being Registered(1) | | | Proposed Maximum Offering Price per Share of Common Stock | | | Proposed Maximum Aggregate Offering Price(2) | | | Amount of Registration Fee(3) |
Common Stock, par value $0.001 per share | | | 102,276,889.12 shares | | | N/A | | | $555,363,507.92 | | | $51,482.20(4) |
(1) | The number of shares to be registered represents the maximum number of shares of the registrant’s common stock estimated to be issuable in connection with the merger agreement described in the enclosed document. Pursuant to Rule 416, this registration statement also covers additional securities that may be issued as a result of stock splits, stock dividends or similar transactions. |
(2) | Estimated solely for the purpose of calculating the registration fee and calculated pursuant to Rule 457(f)(2) under the Securities Act of 1933, as amended, the proposed maximum aggregate offering price is equal to: (i) 102,276,889.12, the estimated number of shares of common stock of Sierra Income Corporation to be exchanged for shares of the registrant’s common stock in accordance with the terms of the merger agreement, multiplied by (ii) $5.43, the book value per share of such shares to be exchanged as of the latest practicable date prior to the filing date. |
(3) | Based on a rate of $92.70 per $1,000,000 of the proposed maximum aggregate offering price. |
(4) | Previously paid. |
Dear Stockholder: | | | [•], 2021 |
(1) | approve the issuance of shares of Barings BDC common stock, $0.001 par value per share (“Barings BDC Common Stock”), pursuant to the Agreement and Plan of Merger, dated as of September 21, 2021 (as may be amended from time to time, the “Merger Agreement”), by and among Barings BDC, Mercury Acquisition Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of Barings BDC (“Acquisition Sub”), Sierra Income Corporation, a Maryland corporation (“Sierra”), and Barings LLC, a Delaware limited liability company and the external investment adviser to Barings BDC (“Barings”) (such proposal, the “Merger Stock Issuance Proposal”); |
(2) | approve the issuance of shares of Barings BDC Common Stock pursuant to the Merger Agreement at a price below its then-current net asset value (“NAV”) per share, if applicable (such proposal, the “Barings BDC Below NAV Issuance Proposal”); and |
(3) | approve the adjournment of the Barings BDC Special Meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes at the time of the Barings BDC Special Meeting to approve the Merger Stock Issuance Proposal or the Barings BDC Below NAV Issuance Proposal (such proposal, the “Barings BDC Adjournment Proposal” and, together with the Merger Stock Issuance Proposal and the Barings BDC Below NAV Issuance Proposal, the “Barings BDC Proposals”). |
| | Barings BDC Common Stock | |
Closing Sales Price at September 20, 2021 | | | $10.63 |
Closing Sales Price at [•], 2021 | | | $[•] |
Barings BDC, Inc. 300 South Tryon Street, Suite 2500 Charlotte, North Carolina 28202 (704) 805-7200 | | | Sierra Income Corporation 100 Park Avenue, 16th Floor New York, New York 10017 (212) 759-0777 |
(1) | to consider and vote upon a proposal to approve the issuance of shares of Barings BDC common stock, $0.001 par value per share (“Barings BDC Common Stock”), pursuant to the Agreement and Plan of Merger, dated as of September 21, 2021 (as may be amended from time to time, the “Merger Agreement”), by and among Barings BDC, Mercury Acquisition Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of Barings BDC (“Acquisition Sub”), Sierra Income Corporation, a Maryland corporation (“Sierra”), and Barings LLC, a Delaware limited liability company and the external investment adviser to Barings BDC (“Barings”) (such proposal, the “Merger Stock Issuance Proposal”); |
(2) | to consider and vote upon a proposal to approve the issuance of shares of Barings BDC Common Stock pursuant to the Merger Agreement at a price below its then-current net asset value (“NAV”) per share, if applicable (such proposal, the “Barings BDC Below NAV Issuance Proposal”); and |
(3) | to consider and vote upon a proposal to approve the adjournment of the Barings BDC Special Meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes at the time of the Barings BDC Special Meeting to approve the Merger Stock Issuance Proposal or the Barings BDC Below NAV Issuance Proposal (such proposal, the “Barings BDC Adjournment Proposal” and, together with the Merger Stock Issuance Proposal and the Barings BDC Below NAV Issuance Proposal, the “Barings BDC Proposals”). |
| | By Order of the Board of Directors, | |
| | ||
| | Ashlee Steinnerd | |
| | Secretary of Barings BDC, Inc. |
(1) | approve the merger of Mercury Acquisition Sub, Inc. (“Acquisition Sub”), a Maryland corporation and a direct wholly-owned subsidiary of Barings BDC, Inc. (“Barings BDC”), a Maryland corporation, with and into Sierra (the “First Merger”), with Sierra continuing as the surviving corporation and as a wholly-owned subsidiary of Barings BDC, pursuant to the Agreement and Plan of Merger, dated as of September 21, 2021 (as may be amended from time to time, the “Merger Agreement”), by and among Barings BDC, Acquisition Sub, Sierra and Barings LLC, a Delaware limited liability company and the external investment adviser to Barings BDC (“Barings”) (such proposal, the “Merger Proposal”); and |
(2) | approve the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes at the time of the Sierra Special Meeting to approve the Merger Proposal (such proposal, the “Sierra Adjournment Proposal” and, together with the Merger Proposal, the “Sierra Proposals”). |
| | Barings BDC Common Stock | |
Closing Sales Price at September 20, 2021 | | | $10.63 |
Closing Sales Price at [•], 2021 | | | $[•] |
Sierra Income Corporation 100 Park Avenue, 16th Floor New York, New York 10017 (212) 759-0777 | | | Barings BDC, Inc. 300 South Tryon Street, Suite 2500 Charlotte, North Carolina 28202 (704) 805-7200 |
(1) | to consider and vote upon a proposal to approve the merger of Mercury Acquisition Sub, Inc. (“Acquisition Sub”), a Maryland corporation and a direct wholly-owned subsidiary of Barings BDC, Inc. (“Barings BDC”), a Maryland corporation, with and into Sierra (the “First Merger”), with Sierra continuing as the surviving corporation and as a wholly-owned subsidiary of Barings BDC, pursuant to the Agreement and Plan of Merger, dated as of September 21, 2021 (as may be amended from time to time, the “Merger Agreement”), by and among Barings BDC, Acquisition Sub, Sierra and Barings LLC, a Delaware limited liability company and the external investment adviser to Barings BDC (“Barings”) (such proposal, the “Merger Proposal”); and |
(2) | to consider and vote upon a proposal to approve the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies, in the event there are insufficient votes at the time of the Sierra Special Meeting to approve the Merger Proposal (such proposal, the “Sierra Adjournment Proposal” and, together with the Merger Proposal, the “Sierra Proposals”). |
| | By Order of the Board of Directors, | |
| | ||
| | Stephen R. Byers | |
| | Independent Chairman of Sierra |
Q: | Why am I receiving these materials? |
A: | Barings BDC is furnishing these materials to Barings BDC stockholders in connection with the solicitation of proxies by the board of directors of Barings BDC (the “Barings BDC Board”) for use at the Barings BDC Special Meeting to be held virtually at 1:00 p.m., Eastern Time, on February 24, 2022 at the following website: www.virtualshareholdermeeing.com/BBDC2022SM, and any adjournments or postponements thereof. |
Q: | What items will be considered and voted on at the Barings BDC Special Meeting? |
A: | At the Barings BDC Special Meeting, Barings BDC stockholders will be asked to approve: (1) the issuance of shares of Barings BDC Common Stock pursuant to the Merger Agreement (such proposal, the “Merger Stock Issuance Proposal”), (2) the issuance of shares of Barings BDC Common Stock pursuant to the Merger Agreement at a price below its then-current net asset value (“NAV”) per share, if applicable (such proposal, the “Barings BDC Below NAV Issuance Proposal”) and (3) if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes at the time of the Barings BDC Special Meeting to approve the Merger Stock Issuance Proposal or the Barings BDC Below NAV Issuance Proposal (such proposal, the “Barings BDC Adjournment Proposal” and, together with the Merger Stock Issuance Proposal and the Barings BDC Below NAV Issuance Proposal, the “Barings BDC Proposals”). No other matters will be acted upon at the Barings BDC Special Meeting without further notice. |
Q: | What items will be considered and voted on at the Sierra Special Meeting? |
A: | At the Sierra Special Meeting, Sierra stockholders will be asked to: (1) approve the First Merger on the terms and conditions set forth in the Merger Agreement (such proposal, the “Merger Proposal”) and (2) approve the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes at the time of the Sierra Special Meeting to approve the Merger Proposal (such proposal, the “Sierra Adjournment Proposal” and, together with the Merger Proposal, the “Sierra Proposals”). No other matters will be acted upon at the Sierra Special Meeting without further notice. |
Q: | How does the Barings BDC Board recommend voting on the Barings BDC Proposals at the Barings BDC Special Meeting? |
A: | The Barings BDC Board believes that the transactions contemplated by the Merger Agreement are in the best interests of the Barings BDC stockholders and unanimously approved the Merger Agreement and the transactions contemplated thereby. Therefore, the Barings BDC Board unanimously recommends that Barings BDC stockholders vote “FOR” the Merger Stock Issuance Proposal, “FOR” the Barings Below NAV Issuance Proposal and, if necessary or appropriate, “FOR” the Barings BDC Adjournment Proposal. |
• | the combined company’s increased scale and liquidity; |
• | the expected accretion to Barings BDC stockholders; |
• | the alignment of Barings and Barings BDC stockholders as a result of Barings agreeing to (1) fund the cash portion of the purchase price of $0.9783641 per share, or approximately $100.0 million, (2) amend the Existing Barings BDC Advisory Agreement (as defined below) to increase the incentive fee hurdle rate from 8.0% to 8.25% (annualized) and (3) provide up to $100.0 million of credit support pursuant to a credit support agreement (the “Credit Support Agreement”) designed to limit downside to Barings BDC stockholders from net cumulative realized and unrealized losses on the acquired Sierra portfolio relative to purchase price while also allowing Barings BDC stockholders to benefit from long-term Sierra portfolio appreciation; and |
• | the combined company’s economies of scale. |
Q: | How does the Sierra Board recommend voting on the Sierra Proposals at the Sierra Special Meeting? |
A: | The Sierra Board, acting on the recommendation of a special committee of the Sierra Board (the “Sierra Special Committee”), consisting of Stephen R. Byers, Valerie Lancaster-Beal, Oliver T. Kane and Matthew E. Forstenhausler, believes the Merger Agreement and the transactions contemplated thereby are in the best interests of Sierra stockholders, and unanimously approved the First Merger on the terms and conditions set forth in the Merger Agreement, and therefore unanimously recommends that Sierra stockholders vote “FOR” the Merger Proposal and, if necessary or appropriate, “FOR” the Sierra Adjournment Proposal. |
• | the consideration to be received by Sierra stockholders represents a premium to Sierra’s NAV as of June 30, 2021; |
• | the First Merger will provide the Sierra stockholders with the opportunity for immediate liquidity upon the close of the Merger; |
• | the Sierra stockholders will have the option of selling the shares of Barings BDC they receive in the First Merger or remaining stockholders of Barings BDC; and |
• | the Merger is expected to qualify as a tax-free transaction for federal income tax purposes and the other factors described under “The Merger—Reasons for the Merger—Sierra.” |
Q: | If I am a Barings BDC stockholder, what is the “Record Date” and what does it mean? |
A: | The record date for the Barings BDC Special Meeting is December 27, 2021 (the “Barings BDC Record Date”). The Barings BDC Record Date was established by the Barings BDC Board, and only holders of record of shares of Barings BDC Common Stock at the close of business on the Barings BDC Record Date are entitled to receive notice of the Barings BDC Special Meeting and vote at the Barings BDC Special Meeting. As of the Barings BDC Record Date, there were [•] shares of Barings BDC Common Stock outstanding. |
Q: | If I am a Sierra stockholder, what is the “Record Date” and what does it mean? |
A: | The record date for the Sierra Special Meeting is December 27, 2021 (the “Sierra Record Date”). The Sierra Record Date was established by the Sierra Board, and only holders of record of shares of Sierra Common Stock at the close of business on the Sierra Record Date are entitled to receive notice of, and vote at, the Sierra Special Meeting. As of the Sierra Record Date, there were [•] shares of Sierra Common Stock outstanding. |
Q: | If I am a Barings BDC stockholder, how many votes do I have? |
A: | Each share of Barings BDC Common Stock held by a holder of record as of the Barings BDC Record Date has one vote on each matter to be considered at the Barings BDC Special Meeting. |
Q: | If I am a Sierra stockholder, how many votes do I have? |
A: | Each share of Sierra Common Stock held by a holder of record as of the Sierra Record Date has one vote on each matter to be considered at the Sierra Special Meeting. |
Q: | If I am a Barings BDC stockholder, how do I vote? |
A: | The Barings BDC Special Meeting will be hosted live via Internet audio webcast. Any Barings BDC stockholder can attend the Barings BDC Special Meeting live at www.virtualshareholdermeeing.com/BBDC2022SM. A Barings BDC stockholder should follow the instructions on the accompanying proxy card and authorize a proxy via the Internet or telephone to vote in accordance with the instructions provided below. Authorizing a proxy by telephone or through the Internet requires you to input the control number located on your proxy card. After inputting the control number, you will be prompted to direct your proxy to vote on each proposal. You will have an opportunity to review your directions and make any necessary changes before submitting your directions and terminating the telephone call or Internet link. If you are the beneficial owner of your shares, you will need to follow the instructions provided by your broker, bank, trustee or nominee regarding how to instruct your broker, bank, trustee or nominee to vote your shares at the Barings BDC Special Meeting. |
• | By Internet: www.proxyvote.com |
• | By telephone: (800) 690-6903 to reach a toll-free, automated touchtone voting line, or (877) 777-4652 Monday through Friday 9:00 a.m. until 10:00 p.m. Eastern Time to reach a toll-free, live operator line. |
• | By mail: You may vote by proxy, after you request the hard copy materials, by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to 11:59 p.m., Eastern Time, on February 23, 2022. |
Q: | If I am a Sierra stockholder, how do I vote? |
A: | The Sierra Special Meeting will be hosted live via Internet audio webcast. Any Sierra stockholder can attend the Sierra Special Meeting live at https://viewproxy.com/sicSM/2022. A Sierra stockholder should follow the instructions on the accompanying proxy card and authorize a proxy via the Internet or telephone to vote in accordance with the instructions provided below. Authorizing a proxy by telephone or through the Internet requires you to input the control number located on your proxy card. After inputting the control number, you will be prompted to direct your proxy to vote on each proposal. You will have an opportunity to review your directions and make any necessary changes before submitting your directions and terminating the telephone call or Internet link. If you are the beneficial owner of your shares, you will need to follow the instructions provided by your broker, bank, trustee or nominee regarding how to instruct your broker, bank, trustee or nominee to vote your shares at the Sierra Special Meeting. |
• | By Internet: https://viewproxy.com/sicSM/2022 |
• | By telephone: (844) 885-0180 Monday through Friday between 9 a.m. and 10 p.m. Eastern Time and Saturday and Sunday between 10 a.m. and 6 p.m. Eastern Time. |
• | By mail: You may vote by proxy, after you request the hard copy materials, by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to 11:59 p.m., Eastern Time, on February 23, 2022. |
Q: | What if a Barings BDC stockholder does not specify a choice for a matter when authorizing a proxy? |
A: | All properly executed proxies representing shares of Barings BDC Common Stock at the Barings BDC Special Meeting will be voted in accordance with the directions given. If the enclosed proxy card is signed and returned without any directions given, the shares of Barings BDC Common Stock will be voted “FOR” the Barings BDC Proposals. |
Q: | What if a Sierra stockholder does not specify a choice for a matter when authorizing a proxy? |
A: | All properly executed proxies representing shares of Sierra Common Stock at the Sierra Special Meeting will be voted in accordance with the directions given. If the enclosed proxy card is signed and returned without any directions given, the shares of Sierra Common Stock will be voted “FOR” the Sierra Proposals. |
Q: | If I am a Barings BDC stockholder, how can I change my vote or revoke a proxy? |
A: | You may revoke your proxy and change your vote by giving notice at any time before your proxy is exercised. A revocation may be effected by submitting new voting instructions via the Internet voting site, by telephone, by obtaining and properly completing another proxy card that is dated later than the original proxy card and returning it, by mail, in time to be received before the Barings BDC Special Meeting, by attending the Barings BDC Special Meeting and voting virtually or by a notice, provided in writing and signed by you, delivered to Barings BDC’s Secretary on any business day before the date of the Barings BDC Special Meeting. |
Q: | If I am a Sierra stockholder, how can I change my vote or revoke a proxy? |
A: | You may change your vote or revoke a proxy by giving notice at any time before your proxy is exercised. A revocation may be effected by submitting new voting instructions via the Internet voting site, by telephone, by obtaining and properly completing another proxy card that is dated later than the original proxy card and returning it, by mail, in time to be received before the Sierra Special Meeting, by attending the Sierra Special Meeting and voting virtually or by a notice, provided in writing and signed by you, delivered to Sierra’s Secretary on any business day before the date of the Sierra Special Meeting. |
Q: | If my shares of Barings BDC Common Stock or Sierra Common Stock, as applicable, are held in a broker-controlled account or in “street name,” will my broker vote my shares for me? |
A: | No. You should follow the instructions provided by your broker on your voting instruction form. It is important to note that your broker will vote your shares only if you provide instructions on how you would like your shares to be voted at the applicable Special Meeting. |
Q: | What constitutes a “quorum” for the Barings BDC Special Meeting? |
A: | The presence at the Barings BDC Special Meeting, virtually or represented by proxy, of the holders of a majority of the shares of Barings BDC Common Stock, issued and outstanding and entitled to vote at the Barings BDC Special Meeting, will constitute a quorum. Shares held by a broker, bank, trustee or nominee for which the broker, bank, trustee or nominee has not received voting instructions from the record holder as to how to vote such shares and does not have discretionary authority to vote the shares on non-routine proposals (which are considered “broker non-votes” with respect to such proposals) will not be treated as shares present for quorum purposes. |
Q: | What constitutes a “quorum” for the Sierra Special Meeting? |
A: | The presence at the Sierra Special Meeting, virtually or represented by proxy, of the holders of one-third of the shares of Sierra Common Stock entitled to be cast at the Sierra Special Meeting will constitute a quorum. |
Q: | What vote is required to approve each of the proposals being considered at the Barings BDC Special Meeting? |
A: | The Merger Stock Issuance Proposal requires the affirmative vote of the holders of at least a majority of the votes cast by holders of shares of Barings BDC Common Stock present at the Barings BDC Special Meeting, virtually or represented by proxy, entitled to vote thereat. Abstentions and broker non-votes (if any) will not be counted as votes cast and will have no effect on the result of the vote of the Merger Stock Issuance Proposal. |
Q: | What vote is required to approve each of the proposals being considered at the Sierra Special Meeting? |
A: | The affirmative vote of the holders of Sierra Common Stock constituting a majority of all the votes entitled to be cast on the matter at the Sierra Special Meeting is required to approve the Merger Proposal. The affirmative vote of the holders of at least a majority of the votes cast by holders of the shares of Sierra Common Stock present at the Sierra Special Meeting, virtually or represented by proxy, is required to approve the Sierra Adjournment Proposal. |
Q: | How does the bankruptcy of Medley LLC affect the Merger Agreement and/or the Merger? |
A: | The bankruptcy of Medley LLC is not expected to affect the Merger Agreement or the Merger. On March 7, 2021, Medley commenced a voluntary case (the “Medley LLC Bankruptcy Case”) under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). Medley LLC is the sole member of Sierra’s investment adviser, SIC Advisors LLC (“SIC Advisors”), and Sierra’s administrator, Medley Capital LLC (“Medley Capital”). Medley LLC, Medley Capital and the Official Committee of Unsecured Creditors appointed in the Medley LLC Bankruptcy Case reached agreement on the terms of a chapter 11 plan, which was filed with the Bankruptcy Court on August 13, 2021, and ultimately confirmed by the Bankruptcy Court on October 14, 2021 (as supplemented and modified, the Modified Third Amended Combined Disclosure Statement Chapter 11 Plan of Medley LLC, the “Final Plan”). The Final Plan became effective on October 18, 2021. |
Q: | What will happen if the Barings BDC Proposals being considered at the Barings BDC Special Meeting and/or the Sierra Proposals being considered at the Sierra Special Meeting are not approved by the required vote? |
A: | The Merger Stock Issuance Proposal and the Barings BDC Below NAV Proposals with respect to Barings BDC, and the Merger Proposal with respect to Sierra, are conditions precedent to the closing of the Merger. If the Merger does not close because Barings BDC stockholders do not approve the Merger Stock Issuance Proposal or the Barings BDC Below NAV Proposal (the “Barings BDC Stockholder Approval”) and Sierra stockholders do not approve the Merger Proposal (the “Sierra Stockholder Approval”) or any of the other conditions to closing of the Merger are not satisfied or, if legally permissible, waived, Barings BDC and Sierra will continue to operate independently under the management of their respective investment advisers, and Barings BDC’s and Sierra’s respective directors and officers will continue to serve in such roles until their respective successors are duly elected and qualify or their resignation. Furthermore, neither Barings BDC nor Sierra will benefit from the expenses incurred in their pursuit of the Merger and, under certain circumstances, Sierra may be required to pay Barings BDC’s and Barings’ expenses incurred in connection with the Merger, subject to a cap of $2.0 million. See “Description of the Merger Agreement—Termination of the Merger Agreement” below for a more detailed discussion. The Sierra Board would also expect to consider alternatives, including the replacement of SIC Advisors as its investment adviser, another merger transaction or Sierra’s liquidation, based on, among other things, then-current market circumstances, the performance of the Sierra portfolio and the financial position of Sierra. Sierra also might seek a modification to the Final Plan that would extend the Run-Off End Date so that SIC Advisors may continue to serve as Sierra’s investment adviser beyond March 31, 2022. |
Q: | How will the final voting results be announced? |
A: | Preliminary voting results may be announced at each Special Meeting. Final voting results will be published by Barings BDC and Sierra in a current report on Form 8-K within four business days after the date of the Barings BDC Special Meeting and the Sierra Special Meeting, respectively. |
Q: | Are the proxy materials available electronically? |
A: | Barings BDC and Sierra have made the registration statement (of which this joint proxy statement/prospectus forms a part), the applicable notice of special meeting of stockholders and the applicable proxy card available to stockholders of Barings BDC and Sierra on the Internet. Stockholders may (i) access and review the proxy materials of Barings BDC and Sierra, as applicable, (ii) authorize their proxies, as described in “The Barings BDC Special Meeting—Voting of Proxies” and “The Sierra Special Meeting—Voting of Proxies” and/or (iii) elect to receive future proxy materials by electronic delivery via the Internet address provided below. |
Q: | Will my vote make a difference? |
A: | Yes. Your vote is needed to ensure that the proposals can be acted upon. Your vote is very important. Your immediate response will help avoid potential delays and may save significant additional expenses associated with soliciting stockholder votes, and potentially adjourning the Special Meetings. |
Q: | Whom can I contact with any additional questions? |
A: | If you are a Barings BDC stockholder, you can contact Barings BDC by calling Barings BDC collect at (888) 401-1088, by sending an e-mail to Barings BDC at BDCinvestorrelations@barings.com, or by writing to Barings BDC at 300 South Tryon Street, Suite 2500, Charlotte, North Carolina 28202, Attention: Investor Relations, or by visiting Barings BDC’s website at www.baringsbdc.com or you may contact Broadridge Inc., Barings BDC’s proxy solicitor, toll-free at 1-877-777-4652. |
Q: | Where can I find more information about Barings BDC and Sierra? |
A: | You can find more information about Barings BDC and Sierra in the documents described under the section entitled “Where You Can Find More Information.” |
Q: | What do I need to do now? |
A: | Barings BDC and Sierra urge you to carefully read this entire document, including its annexes. You should also review the documents referenced under “Where You Can Find More Information” and consult with your accounting, legal and tax advisors. |
Q: | What will happen in the Merger? |
A: | As of the Effective Time, the separate corporate existence of Acquisition Sub will cease. Sierra will be the surviving corporation of the First Merger and will continue its existence as a corporation under the laws of the State of Maryland until the Second Merger (as defined below). Immediately after the Effective Time, Sierra, as the surviving corporation in the First Merger, will merge with and into Barings BDC (the “Second Merger” and, together with the First Merger, the “Merger”), with Barings BDC as the surviving corporation in the Second Merger. |
Q: | What will Sierra stockholders receive in the Merger? |
A: | Subject to the terms and conditions of the Merger Agreement, at the Effective Time, each share of Sierra Common Stock issued and outstanding immediately prior to the Effective Time (excluding Canceled Shares (as defined below)) will be converted into the right to receive (1) $0.9783641 per share in cash, without interest, from Barings (such amount of cash, the “Cash Consideration”) and (2) 0.44973 (as may be adjusted pursuant to the Merger Agreement) of a validly issued, fully paid and non-assessable share of Barings BDC Common Stock (and, if applicable, cash in lieu of fractional shares of Barings BDC Common Stock payable in accordance with the Merger Agreement) (the “Share Consideration” and, together with the Cash Consideration, the “Merger Consideration”). For purposes of the Merger Agreement, “Canceled Shares” means all treasury shares and all shares of Sierra Common Stock issued and outstanding immediately prior to the Effective Time that are owned by Barings BDC, Sierra or any subsidiary thereof. |
Q: | How will the Exchange Ratio be determined? |
A: | The Exchange Ratio was fixed at the signing of the Merger Agreement at 0.44973. Because the Exchange Ratio is fixed, other than customary anti-dilution adjustments in the event of certain changes in the number of outstanding shares of Barings BDC Common Stock and Sierra Common Stock, the value of the consideration to be received by Sierra stockholders in the First Merger will depend on the market price of shares of Barings BDC Common Stock at the time of the First Merger. |
Q: | Who is responsible for paying the expenses relating to completing the Merger? |
A: | In general, all fees and expenses incurred in connection with the Merger will be paid by the party incurring such fees and expenses, whether or not the Merger or any of the transactions contemplated in the Merger Agreement are consummated, provided that each of Barings BDC and Sierra agreed to be responsible for one-half of all filing fees incurred in connection with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). It is expected that Barings BDC will incur approximately $7.3 million, or $0.11 per share of Barings BDC Common Stock, and Sierra will incur approximately $9.1 million, of which approximately $3.8 million had been paid as of September 30, 2021, or $0.09 per share of Sierra Common Stock, of fees and expenses in connection with completing the Merger. While Barings BDC does not anticipate material portfolio repositioning following the Merger, these costs described above do not reflect commissions or other transaction fees that may be incurred by Barings BDC as a result of any such portfolio repositioning. |
Q: | Will I receive distributions after the Merger? |
A: | Each Sierra stockholder will become a stockholder of Barings BDC in the First Merger and, as such, will receive any future distributions paid to Barings BDC stockholders with respect to shares of Barings BDC Common Stock received in the First Merger. |
Q: | What happened to the Sierra Distribution Reinvestment Plan as a result of the Merger Agreement? |
A: | Sierra agreed to suspend its distribution reinvestment plan in connection with the Merger Agreement. As a result, beginning with Sierra’s first distribution following its September 2021 distribution, any distributions declared by Sierra will be paid in cash to all Sierra stockholders unless and until the distribution reinvestment plan is reinstated. See “Sierra Distribution Reinvestment Plan.” |
Q: | Is the Merger subject to any third-party consents? |
A: | Under the Merger Agreement, Sierra and Barings BDC have agreed to cooperate with each other and use their reasonable best efforts to take promptly, or cause to be taken promptly, all actions to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by the Merger Agreement, including the Merger, in the most expeditious manner practicable. There can be no assurance that any permits, consents, approvals, confirmations or authorizations will be obtained or that such permits, consents, approvals, confirmations or authorizations will not impose conditions or requirements that, individually or in the aggregate, would or could reasonably be expected to have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following the Merger. |
Q: |
A: | Barings BDC’s primary investment objective is to generate income by investing directly in privately-held middle-market companies to help these companies fund acquisitions, growth or refinancing. Barings BDC seeks to achieve its investment objective by investing in senior secured private debt investments in well-established middle-market businesses that operate across a wide range of industries. Sierra’s investment objective is to generate current income, and to a lesser extent, long-term capital appreciation. Sierra seeks to achieve its investment objective by primarily lending to and investing in the debt of privately owned U.S. middle-market companies. |
| | Barings BDC | | | Sierra | |
Primary Investment Objective | | | To generate income by investing directly in privately-held middle-market companies to help these companies fund acquisitions, growth or refinancing. | | | To generate current income, and to a lesser extent, long-term capital appreciation by primarily lending to and investing in the debt of privately-owned U.S. middle-market companies. |
Investment Focus | | | Senior secured private debt investments in well-established middle-market businesses that operate across a wide range of industries. | | | First lien senior secured debt, second lien secured debt and, to a lesser extent, subordinated debt. |
| | | | |||
Target Borrower | | | Middle market companies, which tend to be privately owned, often by a private equity sponsor, and are companies that typically generate annual earnings before interest, taxes, depreciation and amortization, as adjusted (“Adjusted EBITDA”) of $10.0 million to $75.0 million. | | | U.S. companies operating in a broad range of industries with annual revenue between $50.0 million and $1.0 billion. |
| | | | |||
Equity Investments | | | On a limited basis, Barings BDC may acquire equity interests in portfolio companies. In such cases, Barings BDC generally seeks to structure its equity investments as non-control investments that provide Barings BDC with minority rights. | | | Sierra may make equity investments in companies that Sierra believes will generate appropriate risk adjusted returns, although Sierra does not expect such investments to be a substantial portion of its portfolio. |
Q: | How will the combined company be managed following the Merger? |
A: | The directors of Barings BDC immediately prior to the Merger will remain the directors of Barings BDC and will hold office until their respective successors are duly elected and qualify, or their earlier death, resignation or removal. In addition, pursuant to the Merger Agreement, two current independent members of the Sierra Board selected by Barings BDC will be added to the Barings BDC Board as Class II directors effective as of the Closing. Barings BDC has not yet determined which Sierra independent directors will be appointed. The officers of Barings BDC immediately prior to the Merger will remain the officers of Barings BDC and will hold office until their respective successors are duly appointed and qualify, or their earlier death, resignation or removal. Following the Merger, Barings BDC will continue to be managed by Barings, and there are not expected to be any material changes in Barings BDC’s investment objective or strategy. |
Q: | Are Barings BDC stockholders or Sierra stockholders able to exercise appraisal rights in connection with the Merger? |
A: | No. Neither Barings BDC stockholders nor Sierra stockholders will be entitled to exercise appraisal rights with respect to any matter to be voted upon at the Barings BDC Special Meeting or the Sierra Special Meeting, respectively. |
Q: | When do the parties expect to complete the Merger? |
A: | While there can be no assurance as to the exact timing, or that the Merger will be completed at all, Barings BDC and Sierra are working to complete the Merger in the first quarter of 2022. It is currently expected that the Merger will be completed promptly following receipt of the Barings BDC Stockholder Approval at the Barings BDC Special Meeting and the Sierra Stockholder Approval at the Sierra Special Meeting, along with the satisfaction or (to the extent legally permissible) waiver of the other closing conditions set forth in the Merger Agreement. |
Q: | Is the Merger expected to be taxable to Sierra stockholders? |
A: | The Merger is intended to qualify as a “reorganization,” within the meaning of Section 368(a) of the Code. If the Merger qualifies as a reorganization, then generally, for U.S. federal income tax purposes, U.S. stockholders (as defined herein under the heading “Certain Material U.S. Federal Income Tax Consequences of the Merger”) of Sierra Common Stock who receive a combination of shares of Barings BDC Common Stock and cash, other than cash in lieu of a fractional share of Barings BDC Common Stock, in exchange for their Sierra Common Stock, will recognize gains, but will not recognize any losses, equal to the lesser of (1) the amount of cash received in exchange for Sierra Common Stock (excluding cash received in lieu of a fractional share of Barings BDC Common Stock) and (2) the excess, if any, of (a) the sum of the amount of cash received in exchange for Sierra Common Stock (including cash received in lieu of a fractional share of Barings BDC Common Stock) and the fair market value of the Barings BDC Common Stock received in the Merger (determined at the Effective Time) over (b) the U.S. stockholder’s tax basis in the shares of Sierra Common Stock surrendered in the Merger. A U.S. stockholder also will recognize gain or loss attributable to cash received in lieu of a fractional share of Barings BDC Common Stock in an amount equal to the difference between the amount of cash received and the portion of the basis of the Sierra Common Stock surrendered that is allocable to the fractional share. Any gains recognized generally will be capital gains, and any such capital gains generally will be long-term capital gains, provided certain holding period and other requirements are met. Sierra Tax Dividends (as defined in “Description of the Merger Agreement—Additional Covenants—Coordination of Dividends”) paid by Sierra should not be treated for U.S. federal income tax purposes as part of the consideration paid for shares of Sierra Common Stock in the Merger but instead should be treated for U.S. federal income tax purposes as a distribution with respect to the Sierra Common Stock. The U.S. federal income tax treatment of the Cash Consideration is uncertain in many respects. Sierra believes that its U.S. stockholders have a reasonable basis upon which to take a position that the Cash Consideration should be treated as additional merger consideration, and, assuming such position is respected, any gain realized by a U.S. stockholder on the receipt of the Cash Consideration would be a capital gain if the shares of Sierra Common Stock were held by such U.S. stockholder as a capital asset. No assurances can be given, however, that the IRS will not assert, or that a court would not sustain, a contrary position under which the Cash Consideration could be subject to taxation as ordinary income. Barings BDC and Barings do not express any position on how the U.S. stockholders of Sierra should treat the Cash Consideration. |
Q: | What happens if the Merger is not consummated? |
A: | If the Merger is not completed for any reason, Sierra stockholders will not receive any payment for their shares of Sierra Common Stock in connection with the Merger. Instead, Sierra will remain an independent company. In addition, Sierra may, under certain circumstances specified in the Merger Agreement, be required to pay Barings BDC a termination fee of $11.0 million and reimburse Barings BDC and Barings for their out-of-pocket expenses incurred in connection with the transactions, subject to a maximum reimbursement amount of $2.0 million. See “Description of the Merger Agreement—Termination of the Merger Agreement” for a more detailed discussion. The Sierra Board would also expect to consider other alternatives, including the replacement of SIC Advisors as its investment adviser, another merger transaction or Sierra’s liquidation, based on, among other things, then-current market circumstances, the performance of the Sierra portfolio and the financial position of Sierra. Sierra also might seek a modification to the Final Plan that would extend the Run-Off End Date so that SIC Advisors may continue to serve as Sierra’s investment adviser beyond March 31, 2022. |
Q: | Will stockholders of Barings BDC following the Merger pay a higher base management fee than stockholders of Barings BDC and Sierra prior to the Merger? |
A: | No. Currently, Barings BDC stockholders pay a base management fee equal to 1.250% of Barings BDC’s average gross assets under the amended and restated investment advisory agreement, dated as of December 23, 2020, by and between Barings BDC and Barings (the “Existing Barings BDC Advisory Agreement”). On September 21, 2021, the Barings BDC Board, including a majority of the Barings BDC Board Independent Directors, approved a second amended and restated investment advisory agreement between Barings BDC and Barings (the “New Barings BDC Advisory Agreement”), which will be entered into in connection with and effective upon the closing of the Merger. The New Barings BDC Advisory Agreement does not result in any change to the base management fee currently payable to Barings under the Existing Barings BDC Advisory Agreement; the sole change is to increase the rate of return at which Barings would be entitled to an incentive payment from 2.0% to 2.0625% per quarter (or from 8.0% to 8.25% annualized) (the “Hurdle Rate Increase”). The Hurdle Rate Increase has the effect of reducing the likelihood that Barings will be eligible to receive an income incentive fee from Barings BDC, thus reducing the likelihood that Barings BDC will pay an income incentive fee to Barings. |
Q: | How will the proposed Merger affect the costs and expenses that Sierra stockholders will pay as stockholders of Barings BDC following the Merger? |
A: | Estimated annual expenses expected to be borne, directly or indirectly, by stockholders of Barings BDC following the Merger will be higher than the annual expenses borne, directly or indirectly, by stockholders of Sierra prior to the Merger. As of September 30, 2021, Sierra stockholders bore, directly or indirectly, costs and expenses equal to 5.3% of net assets and, on a pro forma basis taking into account the completion of the Merger and the effectiveness of the New Barings BDC Advisory Agreement, stockholders of Barings BDC following the Merger are expected to bear, directly or indirectly, costs and expenses equal to 6.1% of net assets. The increase in costs and expenses for Barings BDC stockholders after the Merger are due, in part, to Barings BDC having significantly higher borrowings and, as a result, higher interest expense, than Sierra currently has. Additionally, following the Merger, Barings BDC expects to pay incentive fees to Barings, based on performance, while SIC Advisors is not currently entitled to receive incentive fees from Sierra. |
| | Barings BDC Common Stock | |
Closing Sales Price at September 20, 2021 | | | $10.63 |
Closing Sales Price at [•], 2021 | | | $[•] |
• | Because the market price of Barings BDC Common Stock will fluctuate, Sierra stockholders cannot be sure of the market value of the Merger Consideration they will receive until the closing date of the Merger (the “Closing Date”). |
• | Sales of shares of Barings BDC Common Stock after the completion of the Merger may cause the market price of Barings BDC Common Stock to decline. |
• | Sierra stockholders and Barings BDC stockholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Merger. |
• | The NAV per share of Barings BDC Common Stock will be diluted if Barings BDC issues shares of Barings BDC Common Stock at a price below the then-current NAV per share in connection with the First Merger. |
• | Barings BDC may be unable to realize the benefits anticipated by the Merger, including estimated cost savings, or it may take longer than anticipated to realize such benefits. |
• | The announcement and pendency of the proposed Merger could adversely affect both Barings BDC’s and Sierra’s business, financial results and operations. |
• | If the Merger does not close, neither Barings BDC nor Sierra will benefit from the expenses incurred in their pursuit of the Merger. |
• | The termination of the Merger Agreement could negatively impact Sierra and Barings BDC. |
• | Under certain circumstances, Sierra may be obligated to pay a termination fee upon termination of the Merger Agreement. |
• | Except in specified circumstances, if the Merger is not completed by March 31, 2022, either Sierra or Barings BDC may choose not to proceed with the Merger. |
• | The Merger is subject to closing conditions, including stockholder approvals, that, if not satisfied or waived, will result in the Merger not being completed, which may result in material adverse consequences to Sierra’s and Barings BDC’s business and operations. |
• | Sierra and Barings BDC will be subject to contractual restrictions while the Merger is pending, including restrictions on pursuing alternatives to the Merger. |
• | The Merger Agreement contains provisions that could discourage or make it difficult for a third party to acquire Sierra prior to the completion of the Merger. |
• | If the Merger is not completed or Sierra is not otherwise acquired, Sierra may consider other strategic alternatives, which are subject to risks and uncertainties. |
• | Subject to applicable law, each party may waive one or more conditions to the Merger without resoliciting approval from its respective stockholders. |
• | The shares of Barings BDC Common Stock to be received by Sierra stockholders as a result of the First Merger will have different rights associated with them than shares of Sierra Common Stock currently held by them. For a more detailed discussion comparing the rights of Barings BDC stockholders and Sierra stockholders, see section entitled “Comparison of Barings BDC and Sierra Stockholder Rights.” |
• | The market price of Barings BDC Common Stock after the Merger may be affected by factors different from those affecting Barings BDC Common Stock or Sierra Common Stock currently. |
• | The Merger may trigger certain “change of control” provisions and other restrictions in certain of Barings BDC’s and Sierra’s contracts and the failure to obtain any required consents or waivers could adversely impact the combined company. |
• | The opinion delivered to the Barings BDC Board by its financial advisor and the opinion delivered to the Sierra Board and the Sierra Special Committee by Sierra’s financial advisor will not reflect any changes in circumstances that may occur since the opinions were delivered prior to signing the Merger Agreement. |
• | Certain persons related to Sierra and Barings BDC have interests in the Merger that differ from the interests of Sierra and Barings BDC stockholders. For example, Sierra directors and officers are entitled to post-closing indemnification by Barings BDC under the Merger Agreement, Barings BDC has agreed to maintain a directors and officers’ liability insurance policy covering current and former Sierra directors and officers for six years following the closing of the Merger and two independent members of the Sierra Board will be appointed to the Barings BDC Board following the Merger. In addition, Barings, the investment adviser of Barings BDC, has indirect financial interests in the transactions contemplated by the Merger Agreement that are different from, and/or in addition to, the interests of Barings BDC stockholders. For more information, see “The Merger—Interests of Certain Persons Related to Barings BDC in the Merger” and “The Merger—Interests of Certain Persons Related to Sierra in the Merger.” |
• | The combined company may not be able to obtain financing for additional capital requirements. |
• | Sierra and Barings BDC have incurred and expect to incur substantial transaction fees and costs in connection with the Merger, whether or not the Merger is completed. |
• | Any litigation which may be filed against Sierra and Barings BDC in connection with the Merger, regardless of its merits, could result in substantial costs and could delay or prevent the Merger from being completed. |
• | The Merger may not be treated as a tax-free reorganization under Section 368(a) of the Code. |
• | The U.S. federal income tax treatment of the Cash Consideration is not entirely clear. Sierra believes that its U.S. stockholders have a reasonable basis upon which to take a position that the Cash Consideration should be treated as additional merger consideration, and, assuming such position is respected, any gain realized by a U.S. stockholder on the receipt of the Cash Consideration would be a capital gain if the shares of Sierra Common Stock were held by such U.S. stockholder as a capital asset. No assurances can be given, however, that the IRS will not assert, or that a court would not sustain, a contrary position under which the Cash Consideration could be subject to taxation as ordinary income. Barings BDC and Barings do not express any position on how the U.S. stockholders of Sierra should treat the Cash Consideration. |
• | The investment objectives and investment strategy of Barings BDC differ from the investment objectives and investment strategy of Sierra and, therefore, an equity investment in Barings BDC has different risks than an equity investment in Sierra. |
• | the combined company’s increased scale and liquidity; |
• | the expected accretion to Barings BDC stockholders; |
• | the alignment of Barings and Barings BDC stockholders as a result of Barings agreeing to (1) fund the cash portion of the purchase price of $0.9783641 per share, or approximately $100.0 million and (2) provide up to $100.0 million of credit support pursuant to the Credit Support Agreement designed to limit downside to Barings BDC stockholders from net cumulative realized and unrealized losses on the acquired Sierra portfolio relative to purchase price while also allowing Barings BDC stockholders to benefit from long-term Sierra portfolio appreciation; |
• | the combined company’s economies of scale; |
• | the combined company’s quality of holdings and diversification of assets and liabilities; |
• | the combined company’s increased market capitalization and commensurate increased trading volume; |
• | the structure and tax consequences of the Merger; |
• | the opinion of Barings BDC’s financial advisor; and |
• | the terms of the Merger Agreement, including (1) the interim operating covenants applicable to Sierra’s portfolio, (2) the non-solicitation covenants and (3) the provisions relating to Sierra’s payment of the termination fee and reimbursement of Barings BDC’s and Barings’ expenses up to a cap under certain circumstances. |
• | the consideration to be received by Sierra stockholders represents a premium to Sierra’s NAV as of June 30, 2021; |
• | the First Merger will provide the Sierra stockholders with the opportunity for immediate liquidity upon the close of the Merger; |
• | the Sierra stockholders will have the option of selling the shares of Barings BDC they receive in the First Merger or remaining stockholders of Barings BDC; |
• | Barings BDC will increase the hurdle rate on the income incentive fee payable to Barings; |
• | The opportunity for Sierra stockholders to receive a higher dividend rate as holders of Barings BDC Common Stock; |
• | The combined company will be significantly larger and also more highly diversified than a standalone Sierra; |
• | With approximately $2.5 billion in assets (on a pro forma basis as of June 30, 2021), Barings BDC will have greater scale and thus is expected to be better able to successfully compete for investment opportunities and have access to lower cost financing sources than Sierra; |
• | the Credit Support Agreement is expected to give stockholders of the combined company downside protection on the Sierra portfolio and insulate the combined company’s stockholders from certain losses in the Sierra portfolio for the ten years following the completion of the Merger; |
• | the Merger Agreement provides that Barings BDC will repurchase up to $30 million of its shares over a twelve-month period in the event the combined company’s shares trade below a specified level of NAV following the completion of the first quarterly period ended after the closing of the Merger, subject to Barings BDC’s compliance with certain contractual covenants and regulatory requirements; |
• | the Merger is expected to qualify as a tax-free transaction for federal income tax purposes; |
• | the terms of the Merger Agreement, including: (1) a provision that permits Sierra, under specified circumstances, to respond to and engage in discussions with, and provide information to, third parties regarding unsolicited proposals to acquire Sierra; (2) a provision that permits the Sierra Board and the Sierra Special Committee, under specified circumstances in connection with an intervening event, to change their recommendation that Sierra stockholders vote in favor of the First Merger; (3) a provision whereby two Sierra Independent Directors will be appointed to the Barings BDC Board following the closing of the Merger; and (4) Barings BDC’s obligation to complete the First Merger is not conditioned on Barings BDC receiving any third-party financing; and |
• | the opinion of the Sierra Special Committee’s financial advisor. |
• | changes in the business, operations or prospects of Barings BDC; |
• | the financial condition of current or prospective portfolio companies of Barings BDC; |
• | interest rates or general market or economic conditions; |
• | market assessments of the likelihood that the Merger will be completed and the timing of completion of the Merger; |
• | market perception of the future profitability of the combined company; |
• | the duration and effects of the COVID-19 pandemic on Barings BDC’s portfolio companies; and |
• | the duration and effects of the COVID-19 pandemic on equity trading prices generally, and specifically on the trading price of Barings BDC Common Stock and the common stock of the surviving corporation following the Merger. |
• | Sierra’s and Barings BDC’s businesses may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the anticipated benefits of completing the Merger; |
• | the market price of Barings BDC Common Stock might decline to the extent that the market price prior to termination reflects a market assumption that the Merger will be completed; |
• | the Sierra Board would expect to consider alternatives, including the replacement of SIC Advisors as its investment adviser, another merger transaction (though Sierra may not be able to find a party willing to pay an equivalent or more attractive price than the price Barings BDC agreed to pay in the Merger) or Sierra’s liquidation, based on, among other things, then-current market circumstances, the performance of the Sierra portfolio and the financial position of Sierra; |
• | Sierra also might seek a modification to the Final Plan to extend the Run-Off End Date so that SIC Advisors may continue to serve as Sierra’s investment adviser beyond March 31, 2022; and |
• | the payment of any termination fee and reimbursement of expenses, if required under the circumstances, could adversely affect the financial condition and liquidity of Sierra. |
• | a larger stockholder base; |
• | a different portfolio composition; and |
• | a different capital structure. |
| | Actual | | | Pro Forma | ||||
Stockholder transaction expenses | | | Barings BDC (acquiring fund) | | | Sierra (target fund) | | | |
Sales load (as a percentage of offering price) | | | None(1) | | | None(1) | | | None(1) |
Offering expenses (as a percentage of offering price) | | | None(1) | | | None(1) | | | None(1) |
Dividend reinvestment plan expenses | | | None(2) | | | None(2) | | | None(2) |
Total stockholder transaction expenses (as a percentage of offering price) | | | None | | | None | | | None |
| | Actual | | | Pro Forma (Under Existing Barings BDC Advisory Agreement) | | | Pro Forma (Under New Barings BDC Advisory Agreement) | ||||
Estimated annual expenses (as a percentage of consolidated net assets attributable to common stock):(3) | | | Barings BDC (acquiring fund) | | | Sierra (target fund) | | | | | ||
Base management fees | | | 2.8%(4) | | | 2.0%(5) | | | 2.1%(4) | | | 2.1%(9) |
Incentive fees | | | 2.3%(6) | | | 0.0%(7) | | | 1.0%(6) | | | 0.7%(10) |
Interest payments on borrowed funds | | | 4.2% | | | 0.6% | | | 2.4% | | | 2.4% |
Other expenses(8) | | | 1.2% | | | 2.7%(11) | | | 0.9% | | | 0.9% |
Acquired fund fees and expenses | | | 0.0% | | | 0.0% | | | 0.0% | | | 0.0% |
Total annual expenses | | | 10.5% | | | 5.3%(11) | | | 6.4% | | | 6.1% |
(1) | Purchases of shares of common stock of Barings BDC or Sierra on the secondary market are not subject to sales charges, but may be subject to brokerage commissions or other charges. The table does not include any sales load (underwriting discount or commission) that stockholders may have paid in connection with their purchase of shares of Barings BDC Common Stock or Sierra Common Stock in a prior underwritten offering or otherwise. |
(2) | The estimated expenses associated with the respective distribution reinvestment plans are included in “Other expenses.” |
(3) | “Consolidated net assets attributable to common stock” equals total assets less indebtedness before taking into account any incentive fees payable at September 30, 2021. For the pro forma columns, the combined net assets of Barings BDC and Sierra on a pro forma basis as of September 30, 2021 were used. |
(4) | For Barings BDC, pursuant to the Existing Barings BDC Advisory Agreement, the base management fee is 1.25% of Barings BDC’s average gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. The fee table above shows the base management fee as a percentage of net assets as required by the SEC. |
(5) | For Sierra, the amount shown reflects a base management fee that is calculated at an annual rate of 1.75% of Sierra’s gross assets at the end of each completed calendar quarter and is payable quarterly in arrears. For purposes of calculating the base management fee, the term “gross assets” includes any assets acquired with the proceeds of leverage. |
(6) | Barings BDC’s incentive fee consists of two parts: (1) a portion based on Barings BDC’s pre-incentive fee net investment income (the “Income-Based Fee”) and (2) a portion based on the net capital gains received on Barings BDC’s portfolio of securities on a cumulative basis for each calendar year, net of all realized capital losses and all unrealized capital depreciation for that same calendar year (the “Capital Gains Fee”). Pursuant to the Existing Barings BDC Advisory Agreement, Barings BDC pays an Income-Based Fee to Barings which is 100% of Barings BDC’s pre-incentive fee net investment income, if any, that exceeds the hurdle rate of 2.00% per quarter (8.00% annualized) but is less than 2.50% (10.00% annualized) (the “Catch-Up Amount”) and 20.00% of Barings BDC’s |
(7) | “Incentive fees” for Sierra represent the annualized incentive fees based on actual incentive fees incurred during the three months ended September 30, 2021. The incentive fees, if any, are divided into two parts: |
i. | a subordinated incentive fee on income, which, at a maximum, for any quarter in which Sierra’s pre-incentive fee net investment income exceeds 2.1875% of its net assets at the end of the immediately preceding quarter, will equal 20% of the amount of its pre-incentive fee net investment income; and |
ii. | an incentive fee on capital gains that will equal 20% of Sierra’s capital gains, if any, less the aggregate amount of any previously paid incentive fee on capital gains; and the incentive fees are based on Sierra’s performance and will not be paid unless Sierra achieves certain goals. Sierra will record an expense accrual relating to the capital gains incentive fee payable by it to its investment adviser (but not paid) when the unrealized gains on its investments exceed all realized capital losses on its investments given the fact that a capital gains incentive fee would be owed to its investment adviser if Sierra were to sell its investment portfolio at such time. The amount in the table assumes that no incentive fees on capital gains will be paid for the following 12-month period which is based on the actual realized capital gains (losses) for the three months ended September 30, 2021 and the unrealized appreciation (depreciation) of Sierra’s investments as of such date and assumes that all such unrealized appreciation (depreciation) is converted to realized capital gains (losses) on such date. See “Business of Sierra — Investment Advisory Agreement and Fees” in Part I, Item 1 of Sierra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 19, 2021 for more information concerning the incentive fees. |
(8) | In the case of Barings BDC, other expenses include expenses incurred under the administration agreement, by and between Barings BDC and Barings, as the administrator, Barings BDC Board fees, directors and officers insurance costs, as well as legal and accounting expenses. The percentage presented in the table reflects actual amounts incurred during the three months ended September 30, 2021 on an annualized basis. |
(9) | If the Merger closes, and the New Barings BDC Advisory Agreement becomes effective upon the Closing, Barings BDC’s base management fee under the New Barings BDC Advisory Agreement will remain the same as the base management fee under the Existing Barings BDC Advisory Agreement, which is 1.250% of Barings BDC’s average gross assets. |
(10) | If the Merger closes, and the New Barings BDC Advisory Agreement becomes effective upon the Closing, the New Barings BDC Advisory Agreement will modify the Income-Based Fee solely to increase the hurdle rate of 2.00% per quarter (8.00% annualized) to 2.0625% per quarter (8.25% annualized) and therefore will increase the catch-up amount that is used in calculating the income incentive fee to correspond to the hurdle rate increase, as described under the caption “The Merger—Terms of Second Amended and Restated Investment Advisory Agreement” on page 88. |
(11) | “Other expenses” and “Total annual expenses” shown do not include transaction expenses paid by Sierra. If such expenses had been included, “Other expenses” and “Total annual expenses” would have been 5.4% and 8.0%, respectively. |
| | 1 year | | | 3 years | | | 5 years | | | 10 years | |
You would pay the following expenses on a $1,000 investment: | | | | | | | | | ||||
Barings BDC, assuming a 5% annual return (assumes no return from net realized capital gains or net unrealized capital appreciation) | | | $82 | | | $257 | | | $451 | | | $1,027 |
Sierra, assuming a 5% annual return (assumes no return from net realized capital gains or net unrealized capital appreciation) | | | $53 | | | $166 | | | $292 | | | $664 |
| | | | | | | | |||||
Barings BDC, assuming a 5% annual return (assumes return entirely from realized capital gains and thus subject to the capital gains incentive fee) | | | $92 | | | $286 | | | $496 | | | $1,100 |
Sierra, assuming a 5% annual return (assumes return entirely from realized capital gains and thus subject to the capital gains incentive fee) | | | $63 | | | $196 | | | $340 | | | $754 |
| | | | | | | | |||||
Pro forma combined company following the Merger (Under Existing Barings BDC Advisory Agreement) | | | | | | | | | ||||
You would pay the following expenses on a $1,000 investment: | | | | | | | | | ||||
Assuming a 5% annual return (assumes no return from net realized capital gains or net unrealized capital appreciation) | | | $54 | | | $169 | | | $297 | | | $676 |
Assuming a 5% annual return (assumes return entirely from realized capital gains and thus subject to the capital gains incentive fee) | | | $64 | | | $199 | | | $345 | | | $765 |
| | | | | | | | |||||
Pro forma combined company following the Merger (Under New Barings BDC Advisory Agreement) | | | | | | | | | ||||
You would pay the following expenses on a $1,000 investment: | | | | | | | | | ||||
Assuming a 5% annual return (assumes no return from net realized capital gains or net unrealized capital appreciation) | | | $54 | | | $169 | | | $297 | | | $676 |
Assuming a 5% annual return (assumes return entirely from realized capital gains and thus subject to the capital gains incentive fee) | | | $64 | | | $199 | | | $345 | | | $765 |
• | the timing or likelihood of the Merger closing; |
• | the combined company’s plans, expectations, objectives and intentions; |
• | the ability to realize the anticipated benefits for the Merger; |
• | the expected synergies and savings associated with the Merger; |
• | the expected elimination of certain expenses and costs due to the Merger; |
• | the percentage of Sierra stockholders voting in favor of the First Merger; |
• | the percentage of Barings BDC stockholders voting in favor of the relevant proposals; |
• | the possibility that competing offers or acquisition proposals for Sierra will be made; |
• | the possibility that any or all of the various conditions to the consummation of the First Merger may not be satisfied or waived; |
• | risks related to diverting the attention of Barings BDC’s management or Sierra’s management from ongoing business operations; |
• | the risk that stockholder litigation in connection with the transactions contemplated by the Merger Agreement may result in significant costs of defense and liability; |
• | the future operating results of the combined company or Barings BDC’s, Sierra’s or the combined company’s portfolio companies; |
• | regulatory approvals and other factors; |
• | changes in regional or national economic conditions, including but not limited to the impact of the COVID-19 pandemic, and their impact on the industries in which Barings BDC and Sierra operate and invest; |
• | general economic and political trends and other external factors; |
• | the effect that the announcement or consummation of the Merger may have on the trading price of Barings BDC Common Stock; |
• | fluctuations in the market price of Barings BDC Common Stock; |
• | changes in Sierra’s and/or Barings BDC’s NAV; |
• | potential litigation arising from the Merger Agreement and/or the Merger; |
• | the transaction’s effect on the relationships of Barings BDC or Sierra with their respective investors, portfolio companies, lenders and service providers, whether or not the Merger is completed; |
• | the reduction in Barings BDC stockholders’ and Sierra stockholders’ percentage ownership and voting power in the combined company; |
• | the challenges and costs presented by the integration of Barings BDC and Sierra; |
• | the uncertainty of third-party approvals; |
• | the significant transaction costs; |
• | the effect of changes to tax legislation and Sierra’s and Barings BDC’s respective tax positions; |
• | any potential termination of the Merger Agreement; |
• | the restrictions on Barings BDC’s and Sierra’s conduct of business set forth in the Merger Agreement; |
• | Sierra’s and/or Barings BDC’s ability to qualify and maintain their respective qualifications as a RIC and as a BDC; and |
• | other changes in the conditions of the industries in which Barings BDC and Sierra invest and other factors enumerated in Barings BDC’s and Sierra’s filings with the SEC. |
• | By Internet: www.proxyvote.com |
• | By telephone: (800) 690-6903 to reach a toll-free, automated touchtone voting line, or (877) 777-4652 Monday through Friday 9:00 a.m. until 10:00 p.m. Eastern Time to reach a toll-free, live operator line. |
• | By mail: You may vote by proxy, after you request the hard copy materials, by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to 11:59 p.m., Eastern Time, on February 23, 2022. |
• | By Internet: https://viewproxy.com/sicSM/2022 |
• | By telephone: (844) 855-0180 Monday through Friday between 9 a.m. and 10 p.m. Eastern Time and Saturday and Sunday between 10 a.m. and 6 p.m. Eastern Time. |
• | By mail: You may vote by proxy, after you request the hard copy materials, by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to 11:59 p.m., Eastern Time, on February 23, 2022. |
| | As of September 30, 2021 (unaudited, dollar amounts in thousands, except share and per share data) | ||||||||||
| | Actual | | | Actual | | | Pro forma Adjustments | | | Pro forma | |
| | Barings BDC | | | Sierra | | | Barings BDC | ||||
Cash, cash equivalents and restricted cash | | | $91,386(1) | | | $74,931 | | | $(91,626)(2) | | | $74,690 |
Debt less unamortized debt issuance costs | | | $1,036,930 | | | $79,000 | | | $(79,000)(2) | | | $1,036,930 |
Net Assets | | | $744,822 | | | $544,042 | | | $21,046 (3) | | | $1,309,909 |
Total Capitalization | | | $1,781,751 | | | $623,042 | | | $(57,954) | | | $2,346,839 |
Number of common shares outstanding | | | 65,316,085 | | | 102,276,889 | | | (56,279,904)(4) | | | 111,313,070(5) |
NAV per common share | | | $11.40 | | | $5.32 | | | | | $11.77 |
(1) | Includes $30.2 million of cash, $11.1 million of foreign currencies and $50.0 million of money market investments. |
(2) | Assumes all Sierra cash is used to repay the Existing Sierra Loan Agreement (as defined under “Description of the Merger Agreement—Additional Covenants—Repayment of Existing Sierra Loan Agreement”) and a portion of Barings BDC’s cash is used to pay the remainder of the Existing Sierra Loan Agreement, the associated transaction expenses of approximately $7.3 million for Barings BDC and the associated remaining transaction expenses of approximately $5.3 million for Sierra. Does not include any adjustment for the Cash Consideration as the Cash Consideration is being paid by Barings and not Barings BDC. |
(3) | Includes estimated $16.3 million reduction in fair value of investments; transaction expenses of Barings BDC of approximately $7.3 million; remaining transaction expenses of Sierra of approximately $5.3 million; and estimated initial value of the Credit Support Agreement of $50.0 million. |
(4) | Represents the difference between the number of shares of Sierra Common Stock issued and outstanding prior to the First Merger and the number of shares of Barings BDC Common Stock that Barings BDC expects to issue to Sierra stockholders in connection with the First Merger (as described in footnote 5 below). |
(5) | Represents 65,316,085 shares of Barings BDC Common Stock outstanding prior to the First Merger plus 45,996,985 shares of Barings BDC Common Stock to be issued to Sierra stockholders in connection with the First Merger. The number of shares of Barings BDC Common Stock to be issued to Sierra stockholders in the First Merger was determined by multiplying 102,276,889.12 shares of Sierra Common Stock outstanding prior to the First Merger by the Exchange Ratio of 0.44973. |
• | The Merger Agreement imposes customary restrictions on Sierra’s ability to operate outside the ordinary course of business between the date of the Merger Agreement and the Effective Time (or until the earlier termination of the Merger Agreement), including certain restrictions regarding Sierra’s ability to transact with existing and future portfolio companies, issue equity securities, incur indebtedness and pay dividends. |
• | The Merger Agreement contains customary non-solicitation covenants. In particular, the Merger Agreement: |
○ | requires Sierra to immediately cease and cause to be terminated immediately any existing solicitation of, or discussions with, any third party relating to any competing proposal or any inquiry, discussion, offer or request that could reasonably be expected to lead to a competing proposal; and |
○ | prohibits Sierra from directly or indirectly initiating, soliciting or knowingly encouraging or facilitating (including by way of furnishing or disclosing information) any inquiries or the making, submission or implementation of any competing proposal, or entering into any agreement, arrangement, discussions or understanding with respect to any competing proposal or enter into any contract or understanding requiring it to abandon, terminate or fail to consummate the Merger, or initiating or engaging in negotiations or discussions with, or furnish any information to, any third party relating to a competing proposal. |
• | The Merger Agreement provides that Sierra will be required to pay a customary termination fee to Barings BDC under certain circumstances if the transactions contemplated by the Merger Agreement are not consummated, along with Barings’ and Barings BDC’s expenses, subject to a cap of $2.0 million, in specific circumstances. |
• | that it would be possible that the Merger may not be completed or may be delayed; |
• | shares issued by Barings BDC in connection with the First Merger may be issued below the then-current Barings BDC NAV and thus may result in a dilution of NAV to existing Barings BDC stockholders; |
• | certain restrictions are imposed on the conduct of Barings BDC’s business prior to completion of the Merger, requiring Barings BDC to conduct its business only in the ordinary course of business in accordance with the Merger Agreement, subject to specific limitations, which could delay or prevent Barings BDC from taking advantage of business opportunities that may arise pending completion of the Merger; |
• | under most circumstances, Barings BDC will be responsible for the expenses incurred by Barings BDC in connection with the Merger and the completion of the transactions contemplated by the Merger Agreement, whether or not the Merger is consummated, including the costs and expenses of any filing and other fees payable by Barings BDC to the SEC in connection with the Merger; |
• | it is possible that the attention of management may be diverted toward finalizing the Merger during the period prior to completion of the Merger, which may adversely affect Barings BDC’s business; and |
• |
• | The consideration to be received by Sierra stockholders represents a premium to Sierra’s NAV as of June 30, 2021. |
• | Every Sierra stockholder will receive a cash distribution of approximately $0.98 with respect to every share of Sierra Common Stock they own. |
• | The First Merger will provide the Sierra stockholders with the opportunity for immediate liquidity upon close of the Merger. |
• | The Sierra stockholders will have the option of selling the shares of Barings BDC they receive in the First Merger or remain stockholders of Barings BDC. |
• | The opportunity for Sierra stockholders to receive a higher dividend rate as holders of Barings BDC Common Stock. |
• | Barings BDC has a higher dividend rate than Sierra, which will begin accruing to Sierra stockholders immediately following the closing of the Merger, assuming the Sierra stockholders decide to retain their pro rata Barings BDC Common Stock exchanged for their shares of Sierra Common Stock. |
• | Barings BDC will increase the hurdle rate on the incentive fee payable to Barings. |
• | Barings BDC's base management fee was lower than Sierra’s base management fee and its proposed incentive fee hurdle rate of 8.25% was higher than Sierra’s hurdle rate. |
• | The Credit Support Agreement is expected to give stockholders of the combined company downside protection on the Sierra portfolio and insulate the combined company’s stockholders from certain losses in the Sierra portfolio for the ten years following the completion of the Merger. |
• | The Merger Agreement provides that Barings BDC will repurchase up to $30 million of its shares over a twelve-month period in the event the combined company’s shares trade below a specified level of NAV following the completion of the first quarterly period ended after the closing of the Merger, subject to Barings BDC’s compliance with certain contractual covenants and regulatory requirements. |
• | The Merger is expected to qualify as tax-free transactions for federal income tax purposes, and Sierra believes that U.S. stockholders have a reasonable basis upon which to take the position that the Cash Consideration should be treated as additional merger consideration. |
• | The Sierra Board and Sierra Special Committee believe the First Merger is more favorable to Sierra stockholders than remaining a stand-alone company or other alternative transactions available to Sierra. |
• | The financial analyses and presentations prepared by Broadhaven and its oral opinion delivered to the Sierra Special Committee on September 20, 2021, which was subsequently confirmed in writing by delivery of Broadhaven’s written opinion dated September 21, 2021, to the effect that, as of that date and based upon and subject to various assumptions, limitations and qualifications described in its opinion, the Merger Consideration to be received by Sierra stockholders in the First Merger is fair, from a financial point of view, to such Stockholders. |
• | There are inherent uncertainties with regard to Sierra’s ability to continue as a stand-alone BDC. |
• | There are inherent uncertainties with regard to the impact of the Medley LLC Bankruptcy Case on SIC Advisors. |
• | The fact that Barings, which represented approximately 21% of the outstanding shares of Barings BDC Common Stock as of October 15, 2021, agreed to vote all shares of Barings BDC Common Stock over which it has voting power (other than in a fiduciary capacity) in favor of the Barings BDC Proposals. |
• | Although a liquidation of Sierra could have been an alternative to a business combination, there are inherent uncertainties and a protracted timeline associated with the liquidation of a portfolio of private loans as well as risks that per share liquidation values would be below the implied per share Merger Consideration value. |
• | The combined company will maintain a large concentration of senior secured first and second lien assets, which are expected to provide Sierra stockholders with an attractive risk-adjusted return. |
• | The combined company will be significantly larger and also more highly diversified than a standalone Sierra, and Barings BDC has had substantially more favorable experience of non-accrual loans. |
• | Barings BDC has steadily paid dividends to its stockholders and those dividends have been steadily increasing. |
• | Barings BDC Common Stock has been trading above 90% of NAV in the last six months. |
• | Barings BDC has strong dividend coverage. |
• | Barings BDC has an investment grade rating. |
• | Barings BDC has successfully completed other BDC mergers. |
• | Barings BDC's base management fee of 1.25% of assets under management and its proposed incentive fee hurdle rate of 8.25%, along with its high watermark, is highly competitive. |
• | Barings BDC has meaningful management ownership of its shares, reflecting potentially greater alignment of management’s and stockholders’ interests. |
• | With approximately $2.5 billion in assets (on a pro forma basis as of June 30, 2021), Barings BDC will have greater scale and thus is expected to be better able to successfully compete for investment opportunities and have access to lower cost financing sources than Sierra. |
• | Barings BDC is managed by a large global asset manager, which has access to the resources of a large parent company. |
• | Barings BDC has strong institutional ownership relative to other BDCs and has broad analyst coverage. |
• | The exchange ratio at which the First Merger will be effected has been adjusted for a 3% credit-related markdown, $9.1 million in transaction costs and a $2.1 million contribution by Sierra to a retention program for Medley Capital personnel. |
• | As a result of the First Merger, Sierra stockholders will own approximately 41% of Barings BDC’s common stock following the consummation of the First Merger. |
• | The Merger Consideration is based on a fixed exchange ratio and therefore Sierra stockholders will benefit in the event that the market price of Barings BDC Common Stock increases relative to the value of Sierra Common Stock prior to the consummation of the First Merger. |
• | The Sierra Special Committee successfully negotiated, among other things, a significantly increased cash payment by Barings to Sierra stockholders in exchange for a reduced Credit Support Agreement commitment. |
• | The financial and other terms and conditions of the Merger Agreement and the First Merger were the product of arm’s length negotiations between the parties. |
• | The Merger Agreement is required to be adopted by the affirmative vote of a majority of the votes entitled to be cast on the matter at a special meeting of Sierra stockholders. |
• | There is a closing condition that a material adverse effect with respect to Barings BDC must not have occurred prior to the closing date of the First Merger, and that certain other representations and warranties regarding Barings BDC’s and Barings’ conduct of business be true and correct in all material respects at the closing of the First Merger. |
• | There is a provision that permits Sierra, under specified circumstances, to respond to and engage in discussions with, and provide information to, third parties regarding unsolicited proposals to acquire Sierra. |
• | There is a provision that permits the Sierra Board and the Sierra Special Committee, under specified circumstances in connection with an intervening event, to change their recommendation that Sierra stockholders vote in favor of the First Merger. |
• | Two Sierra Independent Directors will be appointed to the Barings BDC Board following the closing of the Merger. |
• | Barings BDC’s obligation to complete the First Merger is not conditioned on Barings BDC receiving any third-party financing. |
• | After consulting financial and legal advisors, the Sierra Board and the Sierra Special Committee considered the other terms and conditions of the Merger Agreement to be reasonable and consistent with precedents they deemed relevant. |
• | There are risks and costs to Sierra if the First Merger is not completed, including uncertainty about the effect of the proposed First Merger on Sierra’s portfolio investments, investors, service providers and other parties, which could cause portfolio companies, investors, service providers and other parties to seek to change or not enter into business relationships with Sierra. |
• | The Merger Agreement contains a fixed exchange ratio and therefore Sierra stockholders will not be compensated for a decline in the price of Barings BDC Common Stock relative to the value of Sierra Common Stock prior to the consummation of the First Merger. |
• | The Merger Agreement contains provisions that restrict the conduct of Sierra’s business prior to the completion of the First Merger (including suspension of the distribution reinvestment plan), generally |
• | As a result of their smaller percentage of equity ownership in the combined company, Sierra stockholders may have reduced influence over the board of directors, management and policies of the combined company as compared to the influence Sierra stockholders presently have over the Sierra Board, management and policies of Sierra. |
• | There is the possibility that, under specified circumstances under the Merger Agreement, Sierra may be required to pay a termination fee and reimburse certain expenses incurred by Barings BDC and Barings in connection with the Merger. |
• | There is the risk of incurring expenses in connection with the First Merger, including in connection with any litigation that may result from the announcement or pendency of the Merger. |
• | There is the risk of diverting management attention and resources from the operation of Sierra’s business and toward completion of the First Merger. |
• | Barings BDC’s obligation to complete the First Merger is conditioned on obtaining Barings BDC stockholders’ approval. |
• | reviewed a draft, dated September 20, 2021, of the Merger Agreement; |
• | reviewed certain publicly available business and financial information relating to Barings BDC and Sierra and the industries in which they operate; |
• | compared the financial and operating performance of Barings BDC and Sierra with publicly available information concerning certain other companies Wells Fargo Securities deemed relevant, and compared current and historic market prices of Barings BDC Common Stock with similar data for such other companies; |
• | compared the proposed financial terms of the proposed Merger with the publicly available financial terms of certain other business combinations that Wells Fargo Securities deemed relevant; |
• | reviewed the Barings BDC Projections and the Pro Forma Projections (each as defined below under “—Financial Forecasts and Estimates”), in each case prepared by the management of Barings BDC and Barings; |
• | reviewed certain estimates prepared by the management of Barings BDC as to the potential cost savings expected by such management to be achieved as a result of the proposed Merger (the “Synergies”); |
• | discussed with the managements of Barings BDC, Barings, Sierra and SIC Advisors regarding certain aspects of the proposed Merger, the business, financial condition and prospects of Barings BDC and Sierra, respectively, the effect of the proposed Merger on the business, financial condition and prospects of Barings BDC and Sierra, respectively, and certain other matters that Wells Fargo Securities deemed relevant; and |
• | considered such other financial analyses and investigations and such other information that Wells Fargo Securities deemed relevant. |
• | Golub Capital BDC, Inc. |
• | Goldman Sachs BDC, Inc. |
• | New Mountain Finance Corporation |
• | Bain Capital Specialty Finance, Inc. |
• | Apollo Investment Corporation |
• | BlackRock TCP Capital Corporation |
• | TCG BDC, Inc. |
• | Barings BDC, Inc. |
• | Crescent Capital BDC, Inc. |
• | BlackRock Capital Investment Corporation |
• | Stellus Capital Investment Corporation |
| | Median | | | Mean | |
Price / NAV | | | 0.92x | | | 0.93x |
| | Implied Equity per Share | ||||
| | Low | | | High | |
Price / NAV After Write-down | | | $4.45 | | | $4.98 |
Announce Date | | | Target | | | Acquiror |
August 10, 2020 | | | MVC Capital Inc. | | | Barings BDC, Inc. |
June 24, 2020 | | | Garrison Capital Inc. | | | Portman Ridge Finance Corporation |
August 13, 2019 | | | Alcentra Capital Corporation | | | Crescent Capital BDC, Inc. |
July 23, 2018 | | | Corporate Capital Trust, Inc. | | | FS Investment Corporation |
April 4, 2018 | | | Triangle Capital Corporation | | | Benefit Street Partners L.L.C. |
May 23, 2016 | | | American Capital, Ltd. | | | Ares Capital Corporation |
| | Median | | | Mean | |
Price / NAV | | | 0.83x | | | 0.79x |
| | Implied Equity per Share | ||||
| | Low | | | High | |
Price / NAV After Asset Write-down | | | $3.93 | | | $4.72 |
• | Golub Capital BDC, Inc. |
• | Goldman Sachs BDC, Inc. |
• | New Mountain Finance Corporation |
• | Bain Capital Specialty Finance, Inc. |
• | Apollo Investment Corporation |
• | BlackRock TCP Capital Corporation |
• | TCG BDC, Inc. |
• | Crescent Capital BDC, Inc. |
| | Median | | | Mean | |
Price / NAV | | | 0.92x | | | 0.94x |
Dividend Yield (Price) | | | 9.2% | | | 9.1% |
| | Implied Equity per Share | ||||
| | Low | | | High | |
Price / NAV | | | $10.25 | | | $11.39 |
Dividend Yield (Price) | | | $9.33 | | | $10.50 |
• | a September 20, 2021 valuation date; |
• | a range for cost of equity of 8.25% to 10.25%; and |
• | a range of terminal values based on 2024 estimated NAV per share and calculated by applying a Price / NAV multiple range of 0.90x to 1.00x. |
| | Implied Exchange Ratios | ||||
| | Low | | | High | |
Price / NAV per Share | | | 0.39094x | | | 0.48548x |
NAV | | | 0.45993x | | | 0.45993x |
• | a September 20, 2021 valuation date; |
• | a range for cost of equity of 8.25% to 10.25%; |
• | an Exchange Ratio of 0.44973x; |
• | estimates of Synergies and transaction-related expenses provided by Barings BDC’s management; and |
• | a range of terminal values based on 2024 estimated NAV per share and calculated by applying a Price / NAV multiple range of 0.90x to 1.00x. |
• | Reviewed certain business and audited and unaudited financial information, and other operating data, regarding Barings BDC, Barings and Sierra; |
• | Reviewed the recent stock price performance and trading activity of the Barings BDC Common Stock, the financial performance of Barings BDC, and a comparison with that of certain other comparable companies the securities of which are publicly traded, and that were, in its judgment, comparable in certain respects to Barings BDC; |
• | Reviewed the Barings BDC Projections (as defined below under “—Financial Forecasts and Estimates”) prepared by or at the direction of the management of Barings BDC and Barings and discussed the Barings BDC Projections with the management of Barings BDC and Barings; |
• | Reviewed the Pro Forma Projections (as defined below under “—Financial Forecasts and Estimates”) prepared by the management of Barings BDC and Barings and discussed the Pro Forma Projections with the management of Barings BDC and Barings; |
• | Discussed the past and current business, operations, financial condition and prospects of Sierra with members of the management of Sierra and SIC Advisors, and discussed the past and current business, operations, financial condition and prospects of the Barings BDC, including after giving effect to the proposed Merger and the strategic benefits anticipated by the management of Barings BDC and Barings to result therefrom, with members of the management of Barings BDC and Barings; |
• | Reviewed the anticipated pro forma impact of the proposed Merger on Barings BDC’s earnings per share, net asset value per share, capitalization and financial ratios; |
• | Reviewed the financial terms, to the extent publicly available, of certain acquisition transactions that were, in its judgment, comparable to the proposed Merger; |
• | Reviewed a draft of the Merger Agreement dated September 21, 2021 (the “Draft Agreement”) and certain related documents; |
• | Participated in certain discussions among representatives of Sierra, SIC Advisors, Barings BDC and Barings, their legal advisors and their financial advisors; and |
• | Performed such other analyses and considered such other factors as it deemed appropriate. |
• | | | Apollo Investment Corporation | | | • | | | New Mountain Finance Corporation |
• | | | Ares Capital Corporation | | | • | | | Oaktree Specialty Lending Corporation |
• | | | Bain Capital Specialty Finance, Inc. | | | • | | | OFS Capital Corporation |
• | | | Barings BDC | | | • | | | Owl Rock Capital Corporation |
• | | | BlackRock Capital Investment Corporation | | | • | | | Oxford Square Capital Corp. |
• | | | BlackRock TCP Capital Corp. | | | • | | | PennantPark Floating Rate Capital Ltd. |
• | | | Crescent Capital BDC, Inc. | | | • | | | PennantPark Investment Corporation |
• | | | Fidus Investment Corporation | | | • | | | Portman Ridge Finance Corporation |
• | | | First Eagle Alternative Capital BDC, Inc. | | | • | | | Prospect Capital Corporation |
• | | | FS KKR Capital Corp. | | | • | | | Saratoga Investment Corp. |
• | | | Gladstone Capital Corporation | | | • | | | Sixth Street Specialty Lending, Inc. |
• | | | Gladstone Investment Corporation | | | • | | | SLR Investment Corp. |
• | | | Goldman Sachs BDC | | | • | | | SLR Senior Investment Corp. |
• | | | Golub Capital BDC, Inc. | | | • | | | Stellus Capital Investment Corporation |
• | | | Horizon Technology Finance Corporation | | | • | | | TCG BDC, Inc. |
• | | | Investcorp Credit Management BDC, Inc. | | | • | | | TriplePoint Venture Growth BDC Corp. |
• | | | Logan Ridge Finance Corporation | | | • | | | WhiteHorse Finance, Inc. |
• | | | Monroe Capital Corporation | | | | |
| | Selected Companies | |||||||||||||
| | Sierra Metric | | | Multiple Range | | | Implied Share Price | |||||||
| | 25th Percentile | | | 75th Percentile | | | Low | | | High | ||||
P / NAV (as of 6/30/2021) | | | $5.43 | | | 82% | | | 99% | | | $4.47 | | | $5.38 |
2021E P / NII (Q2 21 Ann.)(1) | | | 0.20 | | | 6.1x | | | 9.4x | | | 1.21 | | | 1.88 |
Annualized MRQ Dividend Yield(2) | | | 0.12 | | | 7.8% | | | 9.8% | | | 1.23 | | | 1.54 |
ROE Regression Analysis(3) | | | 5.43 | | | 77% | | | 77% | | | 4.18 | | | 4.20 |
(1) | Based on 2021E forward earnings estimated for selected companies; Sierra 2021E estimate represents Q2 2021E annualized NII per share. |
(2) | Based on Sierra’s dividend yield and implied valuation of selected companies; $0.12 MRQ annualized dividend represents 2.2% yield on 6/30/2021 Sierra NAV. |
(3) | Multiple range reflects implied P / NAV based on BDC regression analysis using Normalized Leverage Run Rate ROE of 6.6% and 2018 ROE of 6.7%. |
Target | | | Acquirer |
Harvest Capital Credit Corporation | | | Portman Ridge Finance Corporation |
FS KKR Capital Corp. II | | | FS KKR Capital Corp. |
Oaktree Strategic Income Corporation | | | Oaktree Specialty Lending Corporation |
MVC Capital, Inc. | | | Barings BDC, Inc. |
Garrison Capital Inc. | | | Portman Ridge Finance Corporation |
Goldman Sachs Middle Market Lending LLC | | | Goldman Sachs BDC, Inc. |
Alcentra Capital Corporation | | | Crescent Capital BDC, Inc. |
OHA Investment Corporation | | | Portman Ridge Finance Corporation |
Golub Capital Investment Corporation | | | Golub Capital BDC, Inc. |
Corporate Capital Trust, Inc. | | | FS Investment Corporation |
NF Investment Corp. | | | TCG BDC, Inc. |
| | Selected BDC Transactions | |||||||||||||
| | Sierra Metric | | | Multiple Range | | | Implied Share Price | |||||||
| | 25th Percentile | | | 75th Percentile | | | Low | | | High | ||||
P / NAV (based on Barings BDC market price) | | | $5.43 | | | 72% | | | 100% | | | $3.93 | | | $5.42 |
P / NAV (based on Barings BDC NAV) | | | 5.43 | | | 100% | | | 102% | | | 5.41 | | | 5.53 |
P / LTM NII | | | 0.19 | | | 10.5x | | | 13.1x | | | 2.00 | | | 2.48 |
| | Sierra as a % of Total | | | Barings BDC as a % of Total | |
Contribution | | | | | ||
Based on NAV as of 6/30/2021 | | | 42.7% | | | 57.3% |
Based on Investments at Fair Value as of 6/30/2021 (1) | | | 28.8% | | | 71.2% |
| | | | |||
2020 Net Investment Income | | | — | | | 100.0% |
LTM Q2 2021 Net Investment Income | | | 29.8% | | | 70.2% |
Q2 2021 Net Investment Income (Annualized) | | | 26.0% | | | 74.0% |
2020 Net Increase / (Decrease) in Net Assets Resulting From Operations | | | — | | | 100.0% |
LTM Q2 2021 Net Increase / (Decrease) in Net Assets Resulting From Operations | | | 44.6% | | | 55.4% |
Q2 2021 Net Increase / (Decrease) in Net Assets Resulting From Operations (Annualized) | | | 38.6% | | | 61.4% |
Pro Forma Ownership | | | 41.3% | | | 58.7% |
(1) | Barings BDC investments at fair value excludes short-term investments. |
• | the performance of investment assets; |
• | the amount of income; |
• | the amount of dividend payments; |
• | the degree and methods of portfolio leverage; |
• | industry performance and competition; |
• | general business, economic, market and financial conditions; and |
• | additional matters specific to Barings BDC’s or Sierra’s business, as applicable. |
| | For the Fiscal Quarter Ended | | | For the Fiscal Year Ended | ||||||||||
| | 9/30/21 | | | 12/31/21 | | | 12/31/22 | | | 12/31/23 | | | 12/31/24 | |
Core Net Investment Income per Share | | | $0.23 | | | $0.23 | | | $0.91 | | | $0.92 | | | $0.92 |
Dividend per Share | | | $0.21 | | | $0.22 | | | $0.88 | | | $0.88 | | | $0.88 |
NAV per Share | | | $11.41 | | | $11.42 | | | $11.45 | | | $11.49 | | | $11.53 |
• | Management fee assumptions including (1) a base management fee projected at 1.25% throughout the projections, (2) net operating income incentive compensation low hurdle rate set at 8% with a 100% catch up between 8% and 10%, and 20% above 10% (consistent with Barings BDC’s current net operating income incentive fee formula). |
• | Operating assumptions including, but not limited to: |
○ | The assumption of no changes in portfolio value and as a result there are no unrealized gains nor losses during the periods presented. |
○ | Investment income is calculated using a 3-year discount margin, which assumes investments have a 3-year average life. |
○ | The highest net debt-to-equity leverage ratio during the projection period is 1.16x. |
○ | Non-accrual rates of 2.5% per quarter. |
• | Barings BDC sometimes obtains equity co-investments, warrants, or other similar forms of investments with debt originations. Although it is generally expected that these provide a positive return to offset potential loan losses, such potential upside is not factored into the projections. |
• | No additional outside equity raised and no share repurchases by Barings BDC through the projection period. |
| | For the Fiscal Quarter Ended | | | For the Fiscal Year Ended | ||||||||||
| | 9/30/21 | | | 12/31/21 | | | 12/31/22 | | | 12/31/23 | | | 12/31/24 | |
Core Net Investment Income per Share | | | $0.23 | | | $0.23 | | | $0.97 | | | $0.98 | | | $0.98 |
Dividend per Share | | | $0.21 | | | $0.22 | | | $0.95 | | | $0.96 | | | $0.96 |
NAV per Share | | | $11.41 | | | $11.42 | | | $11.82 | | | $11.84 | | | $11.85 |
• | The Merger is consummated on February 15, 2022. |
• | Management fee assumptions including (1) a base management fee projected at 1.25% throughout the projections, (2) net operating income incentive compensation low hurdle rate set at 8.25% with a 100% catch up between 8.25% and 10.31%, and 20% above 10.31% (consistent with Barings BDC’s current net operating income incentive fee formula). |
• | Operating assumptions including, but not limited to: |
○ | The assumption of no changes in portfolio value and as a result there are no unrealized gains nor losses during the periods presented. |
○ | Investment income is calculated using a 3-year discount margin, which assumes investments have a 3-year average life. |
○ | The highest net debt-to-equity leverage ratio during the projection period is 1.42x. |
○ | Non-accrual rates of 2.5% per quarter. |
• | Barings BDC sometimes obtains equity co-investments, warrants, or other similar forms of investments with debt originations. Although it is generally expected that these provide a positive return to offset potential loan losses, such potential upside is not factored into the projections. |
• | Other than shares of Barings BDC Common Stock issued in the First Merger, no additional outside equity raised and no share repurchases by Barings BDC through the projection period. |
• | The Credit Support Agreement has an initial fair value of $50.0 million. |
• | 5% of the investment portfolio acquired from Sierra either matures or is repaid per quarter through the projection period. |
• | There will be no fee or other payment by Barings BDC to Barings or any of its affiliates in connection with the Credit Support Agreement. |
• | The effective date of the Credit Support Agreement will be the Closing Date. |
• | The Credit Support Agreement will cover all of the investments acquired by Barings BDC in the Merger and any investments received by Barings BDC in connection with the restructuring, amendment, extension or other modification (including the issuance of new securities) of any of the investments acquired by Barings BDC in the Merger (collectively, the “Reference Portfolio”). |
• | Barings will have an obligation to provide credit support to Barings BDC in an amount equal to the excess of (1) the aggregate realized and unrealized losses on the Reference Portfolio over (2) the aggregate realized and unrealized gains on the Reference Portfolio, in each case from the Closing Date through the Designated Settlement Date (up to a $100.0 million cap) (such amount, the “Covered Losses”). For purposes of the Credit Support Agreement, “Designated Settlement Date” means the earlier of (1) the date which is ten years from the closing of the Merger and (2) the date on which the entire Reference Portfolio has been realized or written off. No credit support will be required to be made by Barings to Barings BDC under the Credit Support Agreement if the aggregate realized and unrealized gains on the Reference Portfolio exceed realized and unrealized losses of the Reference Portfolio on the Designated Settlement Date. |
• | Barings will settle any credit support obligation under the Credit Support Agreement as follows. If the Covered Losses are greater than $0.00, then, in satisfaction of Barings’ obligation set forth in the Credit Support Agreement, Barings will irrevocably waive during the Waiver Period (as defined below) (1) the incentive fees payable under the then current investment advisory agreement between Barings BDC and Barings (including any incentive fee calculated on an annual basis during the Waiver Period), and (2) in the event that Covered Losses exceed such incentive fees, the base management fees payable under the then current investment advisory agreement between Barings BDC and Barings. The “Waiver Period” means the four quarterly measurement periods immediately following the quarter in which the Designated Settlement Date occurs. If the Covered Losses exceed the aggregate amount of incentive fees and base management fees waived by Barings during the Waiver Period, then, on the date on which the last incentive fee or base management fee payment would otherwise be due during the Waiver Period, Barings shall make a cash payment to Barings BDC equal to the positive difference between the Covered Losses and the aggregate amount of incentive fees and base managements fee previously waived by Barings during the Waiver Period. |
• | The Credit Support Agreement and the rights of Barings BDC thereunder shall automatically terminate if Barings (or an affiliate of Barings) ceases to serve as the investment adviser to Barings BDC or any successor thereto, other than as a result of the voluntary termination by Barings of the then current investment advisory agreement between Barings BDC and Barings. In the event of such a voluntary termination by Barings of the then current investment advisory agreement with Barings BDC, Barings will remain obligated to provide the credit support contemplated by the Credit Support Agreement. In the event of a non-voluntary termination of the advisory agreement or its expiration (due to non-renewal by the Barings BDC Board), Barings will have no obligations under the Credit Support Agreement. |
• | It is expected that the Credit Support Agreement will initially be recorded as an asset on Barings BDC’s financial statements in an amount equal to the value thereof and thereafter such value will fluctuate each quarter based on the change in the payment obligation owed under the Credit Support Agreement. The Credit Support Agreement will be accounted for by Barings BDC as a derivative under ASC 815 and a credit to contributed (paid-in) capital from Barings. |
• | organization and qualification, including with respect to subsidiaries; |
• | capitalization and subsidiaries; |
• | power and authority to execute, deliver and perform obligations under the Merger Agreement and absence of conflicts; |
• | required government filings and consents; |
• | compliance with applicable law and permits; |
• | SEC reports, books and records, financial statements and enforcement actions; |
• | the accuracy and completeness of information supplied for inclusion in this joint proxy statement/prospectus; |
• | disclosure controls and procedures; |
• | absence of certain changes and actions since December 31, 2020; |
• | absence of undisclosed liabilities; |
• | absence of certain litigation, orders or investigations; |
• | employee matters; |
• | intellectual property and data privacy matters; |
• | tax matters; |
• | material contracts; |
• | real property matters; |
• | environmental matters; |
• | state takeover laws; |
• | the applicable stockholder votes required to effect, with respect to Sierra, the First Merger, and with respect to Barings BDC, the Barings BDC Stock Issuance including, if applicable, at a price below NAV; |
• | brokers’ fees; |
• | opinion of financial advisor; |
• | insurance coverage; |
• | investment assets; |
• | in the case of Sierra, appraisal rights of holders of Sierra Common Stock; |
• | in the case of Sierra, the Sierra Investment Advisory Agreement; |
• | in the case of Sierra, its investment documents for debt and equity investments; |
• | in the case of Sierra, tax matters relating to its investments; |
• | in the case of Barings BDC and Acquisition Sub, sufficiency of funds to consummate the transactions contemplated by the Merger Agreement, including the payment of the Merger Consideration (other than the Cash Consideration); |
• | in the case of Barings BDC and Acquisition Sub, solvency matters; and |
• | in the case of Barings BDC, the approval by the Barings BDC Board of the increase in the incentive fee hurdle rate in the New Barings BDC Advisory Agreement. |
• | organization and qualification; |
• | power and authority to execute, deliver and perform obligations under the Merger Agreement and absence of conflicts; |
• | required government filings and consents; |
• | compliance with applicable law and permits; |
• | absence of certain litigation, orders or investigations; |
• | the accuracy and completeness of information supplied for inclusion in this joint proxy statement/prospectus; and |
• | sufficiency of funds to make the payment of the Cash Consideration. |
• | changes in general economic, financial market, business or geopolitical conditions; |
• | general changes or developments in any of the industries or markets in which such party, any of its subsidiaries, or any of the portfolio companies operate (or applicable portions or segments of such industries or markets); |
• | changes in any applicable law or applicable accounting regulations or principles or interpretations thereof; |
• | any change in the price or trading volume of such party’s securities (or, with respect to Sierra’s, any of Sierra’s portfolio companies’ securities or other financial instruments), in and of itself (provided that the facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of “material adverse effect” shall be taken into account in determining whether there has been a material adverse effect); |
• | any failure by such party (or, with respect to Sierra, any of its portfolio companies) to meet published analyst estimates or expectations of such party’s (or, with respect to Sierra, any of its portfolio companies’) revenue, earnings or other financial performance or results of operations for any period, in and of itself (provided that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “material adverse effect” shall be taken into account in determining whether there has been a material adverse effect); |
• | any failure by such party (or, with respect to Sierra, any of its portfolio companies) to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (provided that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “material adverse effect” shall be taken into account in determining whether there has been a material adverse effect); |
• | any outbreak or escalation of hostilities or war or any act of terrorism, any acts of God or natural disasters or any epidemic, pandemic or disease outbreak (including COVID-19); |
• | the negotiation, existence, announcement, or the performance of the Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement, including the initiation of any stockholder litigation with respect to the Merger Agreement or the transactions contemplated thereby or any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any portfolio companies of Sierra or Barings BDC, as applicable, or any loss or diminution of rights or privileges, or any creation of, increase in or acceleration of obligations, pursuant to any contract or otherwise, on the part of Sierra or Barings BDC or their respective subsidiaries or portfolio companies; |
• | any action taken by such party or any of its subsidiaries (or, with respect to Sierra, any of its portfolio companies), in each case which is required or expressly permitted by the Merger Agreement; |
• | any actions taken (or omitted to be taken) at the written request of Sierra or Barings, as applicable, to the extent taken in accordance with such request; |
• | any termination, expiration or non-renewal of any Sierra or Barings BDC material contract, as applicable, or any financing arrangement, or any notice of such termination or non-renewal, other than as a result of any material breach by Sierra or Barings BDC, as applicable, or any of their respective subsidiaries of the terms of any such material contract; and |
• | in the case of Sierra, the termination of the employment of any person employed by a portfolio company; |
• | amend or otherwise change Sierra’s charter or bylaws (or, in any material respect, such equivalent organizational or governing documents of any of its subsidiaries); |
• | except for transactions solely among Sierra and its wholly owned subsidiaries, split, combine, reclassify, redeem, purchase, repurchase or otherwise acquire or amend the terms of any capital stock or other equity interests of Sierra or its subsidiaries (other than any wholly owned subsidiaries) or any options, warrants, or rights to acquire any such shares or other equity interests; |
• | except for transactions solely among Sierra and its wholly owned subsidiaries, issue, sell, pledge, dispose, encumber or grant any (1) shares of its or its subsidiaries’ capital stock, (2) options, warrants, convertible securities or other rights of any kind to acquire any shares of Sierra’s or its subsidiaries’ capital stock or (3) appreciation rights, phantom equity or similar rights with respect to, or valued in whole or in part in reference to, Sierra or any of its subsidiaries; |
• | declare, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to Sierra’s or any of its subsidiaries’ capital stock or other equity interests, other than (1) dividends and distributions paid by any subsidiary of Sierra to Sierra or any of its subsidiaries, (2) regular cash distributions payable by Sierra in an aggregate amount not to exceed $0.03 per share of Sierra Common Stock per quarter or (3) a Sierra Tax Dividend; |
• | acquire or dispose of (including by merger, consolidation or acquisition of stock or assets), or lease or license or otherwise sell, transfer or encumber, any material assets other than equity interests and loans to be acquired by Barings BDC in the Merger (“acquired investments”), except (1) acquisitions among Sierra and its wholly owned subsidiaries or (2) acquisitions of assets with aggregate purchase prices not exceeding $5.0 million, provided that this does not apply with respect to acquired investments; |
• | incur any indebtedness or guarantee any indebtedness of any person; |
• | amend in any material respect any Sierra material contract which cannot be terminated without material penalty upon notice of 30 days or less; provided that this does not apply to acquired investments; |
• | make any investments (including a loan, guarantee, equity investment, cash contribution or otherwise) (1) with respect to any portfolio company in which an investment specified in Sierra’s disclosure letter to the Merger Agreement (a “specified investment”) has been made, (2) with respect to an existing portfolio company other than one in which a specified investment has been made, that are greater in the aggregate than the lesser of (x) 10% of the fair market value of such existing investment in such portfolio company as of June 30, 2021 as reflected in the schedule of investments included in Sierra’s Quarterly Report on Form 10-Q filed with the SEC on August 13, 2021 (“Sierra’s Second Quarter 10-Q”) and (y) $500,000 or (3) in any portfolio company in which Sierra does not own an investment as of the date of the Merger Agreement; |
• | dispose of (including by merger, consolidation or acquisition or disposition of stock or assets), forgive any amount under or lease or license or otherwise sell, transfer or encumber, all or any portion of an acquired investment, other than (1) the sale of an acquired investment listed in Sierra’s disclosure letter to the Merger Agreement for cash consideration not less than 98% of the value of such investment as set forth in such disclosure letter or (2) sales of assets with an aggregate fair market value as of June 30, 2021 as reflected in the schedule of investments included in Sierra’s Second Quarter 10-Q not exceeding $5.0 million for cash consideration not less than 98% of the value set forth in such schedule of investments; provided, that Sierra and its subsidiaries shall be permitted to encumber assets, including acquired investments, to the extent required to take such action under the Existing Sierra Loan Agreement (as defined below); |
• | make any material change to its methods of accounting, except (1) as required by United States generally accepted accounting principles, consistently applied in accordance with past practice (“GAAP”) (or any interpretation thereof), Regulation S-X of the Exchange Act or a governmental authority or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization), (2) to permit the audit of Sierra’s financial statements in compliance with GAAP, (3) as required by a change in applicable law or (4) as disclosed in Sierra’s public filings with the SEC prior to the date of the Merger Agreement; |
• | (1) make, change or revoke any material tax election, (2) change any material method of tax accounting other than in the ordinary course of business, (3) file any material amended tax return other than in the ordinary course of business, (4) settle or compromise any audit or proceeding relating to a material amount of taxes, (5) agree to an extension or waiver of the statute of limitations with respect to a material amount of taxes, (6) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign law) with respect to any material tax or (7) surrender any right to claim a material tax refund; |
• | change Sierra’s investment objectives, or enter into a new line of business outside Sierra’s investment objectives, in each case as described in Sierra’s SEC reports (provided, that this prohibition does not apply to any Sierra portfolio company); |
• | (1) modify, amend or waive any of the material terms, covenants or conditions of any investment document relating to (w) any acquired investment with a fair market value equal to or greater than $3.5 million as of June 30, 2021 as reflected in the schedule of investments included in Sierra’s Second Quarter 10-Q, (x) any acquired investment that was a control investment of Sierra as of the date of the Merger Agreement, (y) any acquired investment set forth in Sierra’s disclosure letter to the Merger Agreement or (z) any acquired investment in a portfolio company that is in default under the applicable investment documents, or (2) authorize the acceleration or prepayment (partial or in full, other than a prepayment at the option of the borrower) of (w) any acquired investment with a fair market value equal to or greater than $3.5 million as of June 30, 2021 as reported in the schedule of investments included in Sierra’s Second Quarter 10-Q, (x) any acquired investment that was a control investment of Sierra as of the date of the Merger Agreement, (y) any acquired investment set forth in Sierra’s disclosure letter to the Merger Agreement or (z) any acquired investment in a portfolio company that is in default under the applicable investment documents; |
• | adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Sierra; |
• | (1) increase the compensation or benefits payable or that may become payable to any of its directors, (2) enter into, adopt, or establish any employee benefit plan, program, agreement, arrangement or policy, including without limitation any employment, severance, change of control or retention agreement or “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or (3) hire any employee or individual consultant; |
• | modify any provision of the acquired loan documents that (i) alters the order of application of proceeds or the pro rata sharing of payments required thereby, (ii) alters the provisions relating to maturity, lender commitments, mandatory prepayments, scheduled amortization, interest rates (including the composition thereof), subordination and/or intercreditor arrangements, lender consent requirements or amendments or (iii) releases any security or collateral for any acquired loan (other than releases required under the applicable investment documents or the ordinary course release of funds from escrow or reserve accounts required by the applicable investment documents); provided, however, that it will not be a violation of this prohibition if any such modification was not proposed, approved or consented to by Sierra; or |
• | enter into any agreement to do any of the foregoing. |
• | amend or otherwise change the organizational documents of Barings BDC (or, in any material respect, such equivalent organizational or governing documents of any of its subsidiaries); |
• | except for transactions solely among Barings BDC and its wholly owned subsidiaries, split, combine, reclassify, redeem, purchase, repurchase or otherwise acquire or amend the terms of any capital stock or other equity interests of Barings BDC or its subsidiaries (other than any wholly owned subsidiaries) or any options, warrants, or rights to acquire any such shares or other equity interests; |
• | except for transactions solely among Barings BDC and its wholly owned subsidiaries or in connection with Barings BDC’s dividend reinvestment plan, issue, sell or grant any (1) shares of its or its subsidiaries’ capital stock, (2) options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its subsidiaries’ capital stock or (3) appreciation rights, phantom equity or similar rights with respect to, or valued in whole or in part in reference to, Barings BDC or any of its subsidiaries; |
• | declare, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to Barings BDC’s or any of its subsidiaries’ capital stock or other equity interests, other than (1) dividends and distributions paid by any subsidiary of Barings BDC to Barings BDC or any of its subsidiaries, (2) regular quarterly cash distributions payable by Barings BDC on a quarterly basis consistent with past practices and Barings BDC’s investment objectives and policies as publicly disclosed on or prior to the date of the Merger Agreement or (3) the authorization and payment of any dividend or distribution necessary for Barings BDC to maintain its qualification as a RIC, as reasonably determined by Barings BDC; |
• | acquire or dispose of (including by merger, consolidation or acquisition or sale of stock or assets) or lease or license or otherwise sell or transfer, any corporation, partnership, limited liability company, |
• | make any material change to Barings BDC’s method of accounting, except (1) as required by GAAP (or any interpretation thereof), Regulation S-X of the Exchange Act or a governmental authority or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization), (2) to permit the audit of Barings BDC’s financial statements in compliance with GAAP, (3) as required by a change in applicable law or (4) as disclosed in Barings BDC’s SEC filings prior to the date of the Merger Agreement; |
• | (1) make, change or revoke any material tax election, (2) change any material method of tax accounting other than in the ordinary course of business, (3) file any material amended tax return other than in the ordinary course of business, (4) settle or compromise any audit or proceeding relating to a material amount of taxes, (5) agree to an extension or waiver of the statute of limitations with respect to a material amount of taxes, (6) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign law) with respect to any material tax or (7) surrender any right to claim a material tax refund; |
• | change Barings BDC’s investment objectives or enter into a new line of business outside Barings BDC’s investment objectives, in each case as described in Barings BDC’s SEC reports, provided that this prohibition does not apply in any way to any Barings BDC portfolio company; |
• | adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Barings BDC; |
• | amend, terminate, modify or waive any material rights under the Existing Barings BDC Advisory Agreement in a manner adverse to Barings BDC; |
• | (1) increase in any material respect the compensation or benefits payable or that may become payable to any of its directors or (2) enter into, adopt, or establish any employee benefit plan, program, agreement, arrangement or policy, including without limitation any employment, severance, change of control or retention agreement or “employee benefit plan” within the meaning of Section 3(3) of ERISA; or |
• | enter into any agreement to do any of the foregoing. |
• | initiate, solicit or knowingly encourage or facilitate (including by way of furnishing or disclosing non-public information) any Inquiries or the making, submission or implementation of any Competing Proposal; |
• | enter into any agreement, arrangement or discussions with respect to any Competing Proposal or enter into any contract requiring it to abandon, terminate or fail to consummate the Merger, including, in the case of an agreement or contract, any letter of intent, agreement in principle, memorandum of understanding or confidentiality agreement (collectively, a “Competing Agreement”); or |
• | initiate or engage in negotiations or discussions with respect to, or that could reasonably be expected to lead to, a Competing Proposal. |
• | such Competing Proposal either constitutes a Superior Proposal or could reasonably be expected to lead to a Superior Proposal and a failure to do so would be inconsistent with the Sierra directors’ duties under applicable law; |
• | prior to furnishing any material non-public information concerning Sierra and its subsidiaries, Sierra receives from such person, to the extent such person is not already subject to a confidentiality agreement with Sierra, a confidentiality agreement containing confidentiality terms that are not materially less favorable in the aggregate to Sierra than those contained in the confidentiality agreement between Sierra and Barings BDC (an “Acceptable Confidentiality Agreement”); and |
• | Sierra shall (subject to the terms of any confidentiality agreement existing prior to the date of the Merger Agreement) promptly (and in any event within 24 hours) provide or make available to Barings BDC any non-public information concerning it or its subsidiaries that it provides to any third party given such access was not previously made available to Barings BDC and its representatives. |
• | Sierra shall have provided prior written notice to Barings BDC, at least three business days in advance, that it intends to effect a Sierra Adverse Recommendation Change and/or terminate the Merger Agreement, which notice shall specify in reasonable detail the basis for the Sierra Adverse Recommendation Change and/or termination and, in the case of a Superior Proposal, the identity of the person or group of persons making such Superior Proposal and the material terms and conditions thereof and copies of the proposed transaction documents, or (B) in the case of an Intervening Event, reasonable detail regarding the Intervening Event; |
• | after providing such notice and prior to effecting such Sierra Adverse Recommendation Change and/or terminating the Merger Agreement, Sierra shall have negotiated, and shall have caused its representatives to be available to negotiate, with Barings BDC and Acquisition Sub in good faith (to the extent Barings BDC and Acquisition Sub desire to negotiate) during such three business day period to make such adjustments to the terms and conditions of the Merger Agreement as would obviate the |
• | following the end of such negotiation period, the Sierra Board shall have determined in good faith, after consultation with its outside legal counsel and, with respect to clause (A) below, its financial advisor, taking into account any changes to the Merger Agreement proposed in writing by Barings BDC in response to the notice of the Sierra Adverse Recommendation and/or notice of a Superior Proposal, that (A) the Superior Proposal giving rise to the notice of Superior Proposal continues to be a Superior Proposal or (B) in the case of an Intervening Event, the failure of the Sierra Board to effect a Sierra Adverse Recommendation Change would continue to be inconsistent with Sierra’s directors’ duties under applicable law. |
• | “Competing Proposal” means any inquiry, proposal, discussions, negotiations or offer from any person or group (as defined in Section 13(d) of the Exchange Act) of persons (other than Barings BDC, Acquisition Sub or any affiliate thereof) (1) with respect to a merger, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, share exchange, business combination, recapitalization, liquidation, dissolution, joint venture or similar transaction involving Sierra or any of its subsidiaries, (2) relating to any direct or indirect acquisition, in one transaction or a series of transactions, of (a) assets or businesses (including any mortgage, pledge or similar disposition thereof but excluding any bona fide financing transaction) that constitute or represent, or would constitute or represent if such transaction is consummated, 20% or more of the total assets, net revenue or net income of Sierra and its subsidiaries, taken as a whole, for the 12 month period ending on the last day of Sierra’s then most recently completed fiscal quarter, or (b) 20% or more of the outstanding shares of capital stock of, or other equity or voting interests in, Sierra or in any of its subsidiaries, in each case other than the Merger, or (3) to replace SIC Advisors as Sierra’s investment adviser and become the primary investment adviser to Sierra (other than in connection with a transaction covered in the foregoing clause (1) or (2)), whether or not such change is coupled with a capital infusion into Sierra, a purchase of shares of Sierra or a commitment to provide credit support to Sierra (or an undertaking to make such a capital infusion, purchase of shares or to provide credit support). |
• | “Superior Proposal” means an unsolicited Competing Proposal (with all percentages in the definition of Competing Proposal increased to 50%) made by a third party that did not result from a breach of the no solicitation provisions of the Merger Agreement that the Sierra Board determines in good faith, after consultation with its financial advisor and outside legal advisors, and considering such factors as the Sierra Board considers to be appropriate, (1) is more favorable from a financial point of view to Sierra stockholders than the transactions contemplated by the Merger Agreement (including any revisions to the terms of the Merger Agreement committed to by Barings BDC to Sierra in writing in response to such Competing Proposal made to Sierra under the Merger Agreement), (2) is reasonably likely to be consummated (taking into account, among other things, legal, financial, regulatory and other aspects of such proposal, including any conditions and the identity of the offeror) on a timely basis, and (3) in respect of which any financing required has been determined by the Sierra Board to be reasonably likely to be obtained as evidenced by a written commitment of a reputable financing source. |
• | “Intervening Event” means a material event, occurrence, development or change in circumstances with respect to Sierra and its subsidiaries, taken as a whole, that occurred or arose after the date of the Merger Agreement, which was unknown to, nor reasonably foreseeable by, the Sierra Board as of the date of the Merger Agreement and becomes known to or by the Sierra Board prior to the time the Sierra Stockholder Approval is obtained; provided, however, that the receipt, existence of or terms of an Inquiry or Competing Proposal or any matter relating thereto or consequence thereof will not constitute or be considered in determining whether there has been, an Intervening Event. |
• | indemnify and hold harmless each D&O Indemnified Party against and from any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any claim, proceeding or investigation, whether civil, criminal, administrative or investigative, to the extent such claim, proceeding or investigation arises out of or pertains to: (1) any alleged action or omission in such D&O Indemnified Party’s capacity as a director, officer or employee of Sierra, its investment adviser or any of its subsidiaries prior to the closing of the Merger, or (2) the Merger Agreement or the transactions contemplated thereby; and |
• | pay in advance of the final disposition of any such claim, proceeding or investigation the expenses (including attorneys’ fees) of such D&O Indemnified Party upon receipt of an undertaking by or on behalf of such D&O Indemnified Party to repay such amount if it shall ultimately be determined that such D&O Indemnified Party is not entitled to be indemnified by applicable law. |
• | Sierra shall have obtained the Sierra Stockholder Approval and Barings BDC shall have obtained the Barings BDC Stockholder Approval; |
• | the issuance of Barings BDC Common Stock in connection with the First Merger and the issuance of shares of Barings BDC Common Stock upon the conversion of any instruments exchangeable therefor or convertible thereto shall have been approved for listing on the NYSE, subject to official notice of issuance; |
• | the Form N-14 (of which this joint proxy statement/prospectus is a part) shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order; |
• | any applicable waiting period (and any extension thereof) under the HSR Act, the EU Merger Regulation or any other antitrust laws relating to the consummation of the First Merger shall have expired or early termination thereof shall have been granted; and |
• | no governmental authority of competent jurisdiction shall have promulgated, issued or entered any law or order which is then in effect and has the effect of restraining, enjoining or otherwise prohibiting the consummation of the First Merger. |
• | the representations and warranties of Sierra shall be true and correct in all respects (subject to the materiality thresholds set forth in the Merger Agreement) as of the date of the Merger Agreement and as of the Closing Date as though made on and as of such date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only); |
• | Sierra shall have performed or complied in all material respects with its obligations required under the Merger Agreement (other than the obligations described under “—Additional Covenants—Notification of Certain Matters”) to be performed or complied with on or prior to the Closing Date; |
• | Barings BDC shall have received a certificate signed by an executive officer of Sierra certifying as to the satisfaction of certain of the conditions to the obligations of Barings BDC and Acquisition Sub to effect the First Merger; |
• | since the date of the Merger Agreement, there shall not have occurred and be continuing any material adverse effect with respect to Sierra; and |
• | the administration agreement by and between Sierra and its administrator, as then in effect, and the Sierra Investment Advisory Agreement shall have been terminated. |
• | the representations and warranties of Barings BDC, Acquisition Sub and Barings shall be true and correct in all respects (subject to the materiality thresholds set forth in the Merger Agreement) as of the date of the Merger Agreement and as of the Closing Date as though made on and as of such date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only); |
• | Barings BDC, Acquisition Sub and Barings shall have performed or complied in all material respects with their respective obligations required under the Merger Agreement to be performed or complied with on or prior to the Closing Date; |
• | Sierra shall have received a certificate signed by an executive officer of Barings BDC certifying as to the satisfaction of each of certain conditions to the obligations of Sierra to effect the First Merger; |
• | Sierra shall have received the written opinion of S&W (or, if S&W is unable to deliver such an opinion, of such other nationally recognized tax counsel reasonably satisfactory to Sierra and Barings BDC) to the effect that the Merger will qualify for the intended tax treatment; |
• | the Existing Barings BDC Investment Advisory Agreement shall have been duly amended and restated in the form agreed under the Merger Agreement; |
• | since the date of the Merger Agreement, there shall not have occurred and be continuing any material adverse effect with respect to Barings BDC; and |
• | since the date of the Merger Agreement, there shall not have occurred and be continuing any material adverse effect with respect to Barings. |
(1) | by mutual written consent of Barings BDC and Sierra; |
(2) | by either Barings BDC or Sierra, if: |
(a) | the First Merger shall not have been consummated on or before 5:00 p.m. (New York time) on March 31, 2022 (the “Termination Date”); |
(b) | prior to the closing of the Merger, any governmental authority of competent jurisdiction shall have promulgated, issued or entered any law or order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement, and such law or order or other action shall have become final and non-appealable; provided, that the party seeking to terminate the Merger Agreement shall have used its reasonable best efforts to remove such law or order or other action; or |
(c) | (i) the Sierra Special Meeting (including any adjournments or postponements thereof) shall have been duly held and completed and the Sierra Stockholder Approval shall not have been obtained at such special meeting (or at any adjournment or postponement thereof) at which a vote on the approval of the First Merger is taken and (ii) the Barings BDC Special Meeting (including any adjournments or postponements thereof) shall have been duly held and completed and the Barings BDC Stockholder Approval shall not have been obtained at such special meeting (or at any adjournment or postponement thereof) at which a vote on the Merger Stock Issuance Proposal and the Barings BDC Below NAV Issuance Proposal is taken. |
(3) | by Sierra, if: |
(a) | Barings BDC, Acquisition Sub or Barings breaches or fails to perform any of their respective representations, warranties and covenants under the Merger Agreement, which breach or failure to perform would result in the failure to be satisfied of a condition of each party to the Merger Agreement or a condition to the obligations of Sierra, and such breach is not curable prior to the Termination Date or if curable on or before the earlier of (x) the Termination Date and (y) the date that is 30 days following Sierra’s delivery of written notice to Barings BDC of such breach or failure to perform; provided, however, that the right to terminate the Merger Agreement pursuant to this clause will not be available to Sierra if it is then in material breach of any of its representations, warranties or covenants under the Merger Agreement so as to cause any of the conditions of each party or conditions of the obligations of Barings BDC and Acquisition Sub to effect the First Merger to be satisfied or if Barings BDC’s breach of the Merger Agreement has been primarily cause by a breach of the Merger Agreement by Sierra; or |
(b) | prior to obtaining the Sierra Stockholder Approval, in order to substantially concurrently enter into an Alternative Acquisition Agreement providing for the consummation of a Superior Proposal to the extent permitted by, and subject to the applicable terms and conditions of the Merger Agreement (provided that such right to terminate shall only apply if (x) the proposal did not result from Sierra’s breach of any of the non-solicitation provisions of the Merger Agreement and |
(4) | by Barings BDC, if: |
(a) | Sierra breaches or fails to perform its representations, warranties and covenants under the Merger Agreement, which breach or failure to perform would result in the failure to be satisfied of a condition of each party to the Merger Agreement or a condition to the obligations of Barings BDC and Acquisition Sub, and such breach is not curable prior to the Termination Date or if curable on or before the earlier of (x) the Termination Date and (y) the date that is 30 days following the Barings BDC’s delivery of written notice to Sierra of such breach or failure to perform; provided, however, that the right to terminate the Merger Agreement pursuant to this clause will not be available to Barings BDC if Barings BDC, Acquisition Sub or Barings is then in material breach of any of its respective representations, warranties or covenants under the Merger Agreement so as to cause any of the conditions of each party or conditions of the obligations of Sierra to effect the Merger to be satisfied or if Barings BDC’s breach of the Merger Agreement has been primarily cause by a breach of the Merger Agreement by Sierra; or |
(b) | at any time prior to the receipt of Sierra Stockholder Approval, if (w) the Sierra Board (or any committee thereof) shall have made a Sierra Adverse Recommendation Change, (x) Sierra or any of its subsidiaries has entered into an Alternative Acquisition Agreement or a Competing Agreement (other than an acceptable confidentiality agreement), (y) Sierra shall have willfully breached its obligations under the non-solicitation provisions of the Merger Agreement, and such breach remains uncured for five business days following the written notice thereof by Barings BDC to Sierra or (z) a Competing Proposal structured as a tender offer for Sierra Common Stock is commenced and, within 10 business days after the public announcement thereof, Sierra has not issued a public statement (and filed a Schedule 14D-9) reaffirming the Sierra Board Recommendation and recommending that the stockholders of Sierra reject such Competing Proposal, provided that Barings BDC’s right to terminate the Merger Agreement pursuant to this clause will expire at 5:00 p.m., New York City time, on the 10th business day following the date on which Barings BDC became aware of such right to terminate. |
• | Barings BDC terminates the Merger Agreement because of Sierra’s willful breach of the Merger Agreement or either Barings BDC or Sierra terminates the Merger Agreement because the Sierra Stockholder Vote was not obtained, and, in either case, (x) prior to such termination (or the Sierra Special Meeting in the case of termination due to a failure to achieve the Sierra Stockholder Vote), a Competing Proposal that has been made after the date of the Merger Agreement shall have been publicly disclosed or otherwise communicated to the Sierra Board and not withdrawn prior to such date and (y) within 12 months after such termination, Sierra enters into a definitive acquisition agreement with respect to any Competing Proposal with a third party, and such Competing Proposal is subsequently consummated (regardless of whether such consummation happens prior to or following such 12-month period) (provided, however, that for this purpose only, the references to “20%” in the definition of Competing Proposal shall be deemed to be references to “50%”); |
• | Sierra terminates the Merger Agreement to enter into an Alternative Acquisition Agreement in respect of a Superior Proposal; or |
• | Barings BDC terminates the Merger Agreement under the circumstances described in (4)(b) above under “—Termination of the Merger Agreement.” |
• | U.S. expatriates and former citizens or long-term residents of the United States; |
• | persons subject to the alternative minimum tax; |
• | persons holding Sierra Common Stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
• | banks, insurance companies, and other financial institutions; |
• | brokers, dealers or traders in securities; |
• | “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; |
• | partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); |
• | tax-exempt organizations or governmental organizations; |
• | persons subject to the three-year holding period rule in Section 1061 of the Code; |
• | persons deemed to sell Sierra Common Stock under the constructive sale provisions of the Code; |
• | persons who hold or receive Sierra Common Stock pursuant to the exercise of any employee stock option or otherwise as compensation; and |
• | tax-qualified retirement plans. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
• | a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes. |
• | Each U.S. stockholder will recognize gains, but not losses, in the Merger, equal to the lesser of (1) the amount of cash received in exchange for Sierra Common Stock (and excluding cash received in lieu of a fractional share of Barings BDC Common Stock) and (2) the excess, if any, of (a) the sum of the amount of cash received in exchange for Sierra Common Stock (including cash received in lieu of a fractional share of Barings BDC Common Stock ) and the fair market value of the Barings BDC |
• | A U.S. stockholder’s aggregate tax basis in the shares of Barings BDC Common Stock received in the Merger (including any fractional share of Barings BDC Common Stock for which cash is received) will be the same as his, her or its aggregate tax basis in the Sierra Common Stock surrendered in the Merger, increased by the amount of gains recognized (excluding any gains attributable to the receipt of cash in lieu of a fractional share of Barings BDC Common Stock) and decreased by the amount of cash received in exchange for Sierra Common Stock (other than cash received in lieu of a fractional share of Barings BDC Common Stock); and |
• | The holding period of the shares of Barings BDC Common Stock received in the Merger (including any fractional share of Barings BDC Common Stock for which cash is received) by a U.S. stockholder will include the holding period of the shares of Sierra Common Stock that he, she or it surrendered. |
• | the gains are effectively connected with a U.S. trade or business of such non-U.S. stockholder (and, if required by an applicable income tax treaty, the non-U.S. stockholder maintains a permanent establishment in the United States to which such gains are attributable), in which case the non-U.S. stockholder generally would be subject to tax on such gains in the same manner as a U.S. stockholder and, if the non-U.S. stockholder is a foreign corporation, such corporation may be subject to a branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty); |
• | the non-U.S. stockholder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of the Merger and certain other requirements are met, in which case the non-U.S. stockholder generally would be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of the non-U.S. stockholder, if any, provided the non-U.S. stockholder has timely filed U.S. federal income tax returns with respect to such losses; or |
• | Sierra is or has been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of (1) the five-year period ending on the date of the Merger and (2) the non-U.S. stockholder’s holding period in the Sierra Common Stock, and the non-U.S. stockholder owned (directly, indirectly or constructively) more than 5% of Sierra’s outstanding common stock at any time during the applicable period. |
• | qualifies as a RIC; and |
• | satisfies the Annual Distribution Requirement; |
• | qualify to be treated as a BDC at all times during each taxable year; |
• | derive in each taxable year at least 90% of its gross income from (a) dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other securities or other income derived with respect to its business of investing in such stock or securities or (b) net income derived from an interest in a “qualified publicly traded partnership,” or “QPTP” (collectively, the “90% Income Test”); and |
• | diversify its holdings so that at the end of each quarter of the taxable year: |
○ | at least 50% of the value of its assets consists of cash, cash equivalents, U.S. Government securities, securities of other RICs and other securities that, with respect to any issuer, do not represent more than 5% of the value of its assets or more than 10% of the outstanding voting securities of that issuer; and |
○ | no more than 25% of the value of its assets is invested in the securities, other than U.S. Government securities or securities of other RICs, of (i) one issuer, (ii) two or more issuers that are controlled, as determined under applicable tax rules, by Barings BDC and that are engaged in the same or similar or related trades or businesses or (iii) securities of one or more QPTPs (collectively, the “Diversification Tests”). |
| | Prior to Issuance Below NAV | | | Example 1 Dilutive Offering at 5% Discount | | | Example 2 Dilutive Offering at 10% Discount | | | Example 3 Dilutive Offering at 20% Discount | ||||||||||
| | Following Issuance | | | % Change | | | Following Issuance | | | % Change | | | Following Issuance | | | % Change | ||||
Offering Price | | | | | | | | | | | | | | | |||||||
Price per Share to Sierra Stockholders(1) | | | — | | | $10.83 | | | — | | | $10.26 | | | — | | | $9.12 | | | — |
Proceeds per Share to Barings BDC(1) | | | — | | | $10.83 | | | — | | | $10.26 | | | — | | | $9.12 | | | — |
Decrease to NAV | | | | | | | | | | | | | | | |||||||
Total Shares Outstanding | | | 65,316,085 | | | 111,313,070 | | | 70.42% | | | 111,313,070 | | | 70.42% | | | 111,313,070 | | | 70.42% |
NAV per Share | | | $11.40 | | | $11.17 | | | (2.07)% | | | $10.93 | | | (4.13)% | | | $10.46 | | | (8.26)% |
Dilution to Barings BDC Stockholder | | | | | | | | | | | | | | | |||||||
Shares Held by Barings BDC Stockholder | | | 10,000 | | | 10,000 | | | — | | | 10,000 | | | — | | | 10,000 | | | — |
Percentage Held by Barings BDC Stockholder | | | 0.01531% | | | 0.00898% | | | (0.00633)% | | | 0.00898% | | | (0.00633)% | | | 0.00898% | | | (0.00633)% |
| | Prior to Issuance Below NAV | | | Example 1 Dilutive Offering at 5% Discount | | | Example 2 Dilutive Offering at 10% Discount | | | Example 3 Dilutive Offering at 20% Discount | ||||||||||
| | Following Issuance | | | % Change | | | Following Issuance | | | % Change | | | Following Issuance | | | % Change | ||||
Total Asset Values | | | | | | | | | | | | | | | |||||||
Total NAV Held by Barings BDC Stockholder | | | $114,000 | | | $111,700 | | | (2.02)% | | | $109,300 | | | (4.12)% | | | $104,600 | | | (8.25)% |
Total Investment by Barings BDC Stockholder (Assumed to Be $11.39 per Share) | | | $114,000 | | | $114,000 | | | — | | | $114,000 | | | — | | | $114,000 | | | — |
Total Dilution to Barings BDC Stockholder (Total NAV Less Total Investment) | | | — | | | $(2,300) | | | — | | | $(4,700) | | | — | | | $(9,400) | | | — |
Per Share Amounts | | | | | | | | | | | | | | | |||||||
NAV per Share Held by Barings BDC Stockholder | | | — | | | $11.17 | | | — | | | $10.93 | | | — | | | $10.46 | | | — |
Investment per Share Held by Barings BDC Stockholder (Assumed to be $11.39 per Share on Shares Held Prior to Offering) | | | $11.40 | | | $11.40 | | | — | | | $11.40 | | | — | | | $11.40 | | | — |
Dilution per Share Held by Barings BDC Stockholder (NAV per Share Less Investment per Share) | | | — | | | $(0.23) | | | — | | | $(0.47) | | | — | | | $(0.94) | | | — |
Percentage Dilution to Barings BDC Stockholder (Dilution per Share Divided by Investment per Share) | | | — | | | — | | | (2.02)% | | | — | | | (4.12)% | | | — | | | (8.25)% |
(1) | Represents the hypothetical net asset value received by Barings BDC at Closing divided by 45,996,985 shares of Barings BDC Common Stock expected to be issued to Sierra stockholders in connection with the First Merger at the Exchange Ratio of 0.44973. |
| | NAV per share(1) | | | Closing Sales Price | | | Premium/ (Discount) of High Sales Price to NAV(2) | | | Premium/ (Discount) of Low Sales Price to NAV(2) | | | Dividends and Distributions Declared | ||||
Period | | | High | | | Low | | |||||||||||
Fiscal Year Ending December 31, 2021 | | | | | | | | | | | | | ||||||
Third quarter | | | $11.40 | | | $11.07 | | | $10.36 | | | (2.9)% | | | (9.1)% | | | $0.21 |
Second quarter | | | $11.39 | | | $10.77 | | | $10.16 | | | (5.4)% | | | (10.8)% | | | $0.20 |
First quarter | | | $11.14 | | | $10.20 | | | $8.83 | | | (8.4)% | | | (20.7)% | | | $0.19 |
Fiscal Year Ended December 31, 2020 | | | | | | | | | | | | | ||||||
Fourth quarter | | | $10.99 | | | $9.28 | | | $7.51 | | | (15.6)% | | | (31.7)% | | | $0.17 |
Third quarter | | | $10.97 | | | $8.44 | | | $7.36 | | | (23.1)% | | | (32.9)% | | | $0.16 |
Second quarter | | | $10.23 | | | $8.41 | | | $6.22 | | | (17.8)% | | | (39.2)% | | | $0.16 |
First quarter | | | $9.23 | | | $10.54 | | | $5.34 | | | 14.2% | | | (42.1)% | | | $0.16 |
Fiscal Year Ended December 31, 2019 | | | | | | | | | | | | | ||||||
Fourth quarter | | | $11.66 | | | $10.49 | | | $9.94 | | | (10.0)% | | | (14.8)% | | | $0.15 |
Third quarter | | | $11.58 | | | $10.24 | | | $9.65 | | | (11.6)% | | | (16.7)% | | | $0.14 |
Second quarter | | | $11.59 | | | $10.33 | | | $9.81 | | | (10.9)% | | | (15.4)% | | | $0.13 |
First quarter | | | $11.52 | | | $10.00 | | | $9.28 | | | (13.2)% | | | (19.4)% | | | $0.12 |
(1) | NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low closing sales prices. The NAVs shown are based on outstanding shares at the end of each period. |
(2) | Calculated as of the respective high or low closing sales price divided by the quarter-end NAV. |
Record Date | | | Payment Date | | | Amount Per Share |
Fiscal Year Ending December 31, 2021 | | | | | ||
December 30, 2021 | | | December 31, 2021 | | | $0.01000 |
November 29, 2021 | | | November 30, 2021 | | | $0.01000 |
November 15, 2021 | | | November 16, 2021 | | | $0.01000 |
September 29, 2021 | | | September 30, 2021 | | | $0.01000 |
August 30, 2021 | | | August 31, 2021 | | | $0.01000 |
July 29, 2021 | | | July 30, 2021 | | | $0.01000 |
June 29, 2021 | | | June 30, 2021 | | | $0.01000 |
May 28, 2021 | | | May 31, 2021 | | | $0.01000 |
April 29, 2021 | | | April 30, 2021 | | | $0.01000 |
March 30, 2021 | | | March 31, 2021 | | | $0.01000 |
February 25, 2021 | | | February 26, 2021 | | | $0.01000 |
January 28, 2021 | | | January 29, 2021 | | | $0.01000 |
Fiscal Year Ending December 31, 2020 | | | | | ||
December 30, 2020 | | | December 31, 2020 | | | $0.01000 |
November 27, 2020 | | | November 30, 2020 | | | $0.01000 |
October 29, 2020 | | | October 30, 2020 | | | $0.01000 |
March 30, 2020 | | | March 31, 2020 | | | $0.03500 |
February 27, 2020 | | | February 28, 2020 | | | $0.03500 |
January 30, 2020 | | | January 31, 2020 | | | $0.03500 |
Fiscal Year Ending December 31, 2019 | | | | | ||
December 30, 2019 | | | December 31, 2019 | | | $0.05334 |
November 28, 2019 | | | November 29, 2019 | | | $0.05334 |
October 30, 2019 | | | October 31, 2019 | | | $0.05334 |
September 27, 2019 | | | September 30, 2019 | | | $0.05334 |
August 29, 2019 | | | August 30, 2019 | | | $0.05334 |
July 30, 2019 | | | July 31, 2019 | | | $0.05334 |
June 27, 2019 | | | June 28, 2019 | | | $0.05334 |
May 30, 2019 | | | May 31, 2019 | | | $0.05334 |
April 29, 2019 | | | April 30, 2019 | | | $0.05334 |
March 11, 2019 | | | March 29, 2019 | | | $0.05334 |
February 11, 2019 | | | February 28, 2019 | | | $0.05334 |
January 25, 2019 | | | January 31, 2019 | | | $0.05334 |
Class and Year(1) | | | Total Amount Outstanding Exclusive of Treasury Securities(2)(3) | | | Asset Coverage per Unit(4) | | | Involuntary Liquidating Preference per Unit(5) | | | Average Market Value per Unit(6) |
| | ($’s in thousands) | ||||||||||
2019 Notes | | | | | | | | | ||||
2012 | | | $69,000 | | | $1,580 | | | $ — | | | $ 25.92 |
2013 | | | 69,000 | | | 2,259 | | | — | | | 25.99 |
2014 | | | 69,000 | | | 2,215 | | | — | | | 25.74 |
December 2022 Notes | | | | | | | | | ||||
2012 | | | 80,500 | | | 1,580 | | | — | | | 25.03 |
2013 | | | 80,500 | | | 2,259 | | | — | | | 24.94 |
2014 | | | 80,500 | | | 2,215 | | | — | | | 25.05 |
2015 | | | 80,500 | | | 1,972 | | | — | | | 25.23 |
2016 | | | 80,500 | | | 2,124 | | | — | | | 25.15 |
2017 | | | 80,500 | | | 2,120 | | | — | | | 25.51 |
March 2022 Notes | | | | | | | | | ||||
2015 | | | 86,250 | | | 1,972 | | | — | | | 25.46 |
2016 | | | 86,250 | | | 2,124 | | | — | | | 25.58 |
2017 | | | 86,250 | | | 2,120 | | | — | | | 25.85 |
SBA-guaranteed debentures payable(7) | | | | | | | | | ||||
2011 | | | 224,238 | | | 2,397 | | | — | | | N/A |
2012 | | | 213,605 | | | 1,580 | | | — | | | N/A |
2013 | | | 193,285 | | | 2,259 | | | — | | | N/A |
2014 | | | 224,780 | | | 2,215 | | | — | | | N/A |
2015 | | | 224,968 | | | 1,972 | | | — | | | N/A |
2016 | | | 250,000 | | | 2,124 | | | — | | | N/A |
2017 | | | 250,000 | | | 2,120 | | | — | | | N/A |
May 2011 Credit Facility | | | | | | | | | ||||
2011 | | | 15,000 | | | 2,397 | | | — | | | N/A |
2012 | | | — | | | 1,580 | | | — | | | N/A |
2013 | | | 11,221 | | | 2,259 | | | — | | | N/A |
2014 | | | 62,620 | | | 2,215 | | | — | | | N/A |
2015 | | | 131,257 | | | 1,972 | | | — | | | N/A |
2016 | | | 127,011 | | | 2,124 | | | — | | | N/A |
2017 | | | 156,070 | | | 2,120 | | | — | | | N/A |
August 2018 Credit Facility | | | | | | | | | ||||
2018 | | | 570,000 | | | 1,988 | | | — | | | N/A |
2019 | | | 107,200 | | | 1,851 | | | — | | | N/A |
February 2019 Credit Facility | | | | | | | | | ||||
2019 | | | 245,288 | | | 1,851 | | | — | | | N/A |
2020 | | | 719,661 | | | 1,760 | | | — | | | N/A |
September 30, 2021 (unaudited) | | | 662,664 | | | 1,718 | | | — | | | N/A |
Debt Securitization | | | | | | | | | ||||
2019 | | | 318,210 | | | 1,851 | | | — | | | N/A |
August 2025 Notes | | | | | | | | | ||||
2020 | | | 50,000 | | | 1,760 | | | — | | | N/A |
September 30, 2021 (unaudited) | | | 50,000 | | | 1,718 | | | — | | | N/A |
Class and Year(1) | | | Total Amount Outstanding Exclusive of Treasury Securities(2)(3) | | | Asset Coverage per Unit(4) | | | Involuntary Liquidating Preference per Unit(5) | | | Average Market Value per Unit(6) |
| | ($’s in thousands) | ||||||||||
Series B Notes | | | | | | | | | ||||
2020 | | | 62,500 | | | 1,760 | | | — | | | N/A |
September 30, 2021 (unaudited) | | | 62,500 | | | 1,718 | | | — | | | N/A |
Series C Notes | | | | | | | | | ||||
2020 | | | 112,500 | | | 1,760 | | | — | | | N/A |
September 30, 2021 (unaudited) | | | 112,500 | | | 1,718 | | | — | | | N/A |
Series D Notes | | | | | | | | | ||||
September 30, 2021 (unaudited) | | | 80,000 | | | 1,718 | | | — | | | N/A |
Series E Notes | | | | | | | | | ||||
September 30, 2021 (unaudited) | | | 70,000 | | | 1,718 | | | — | | | N/A |
Total Senior Securities | | | | | | | | | ||||
2011 | | | 239,238 | | | 2,397 | | | — | | | N/A |
2012 | | | 363,105 | | | 1,580 | | | — | | | N/A |
2013 | | | 354,006 | | | 2,259 | | | — | | | N/A |
2014 | | | 436,900 | | | 2,215 | | | — | | | N/A |
2015 | | | 522,975 | | | 1,972 | | | — | | | N/A |
2016 | | | 543,761 | | | 2,124 | | | — | | | N/A |
2017 | | | 572,820 | | | 2,120 | | | — | | | N/A |
2018 | | | 570,000 | | | 1,988 | | | — | | | N/A |
2019 | | | 670,698 | | | 1,851 | | | — | | | N/A |
2020 | | | 944,661 | | | 1,760 | | | — | | | N/A |
September 30, 2021 (unaudited) | | | 1,037,664 | | | 1,718 | | | — | | | N/A |
(1) | The information in the senior securities tables for 2017 - 2019 and for years prior to 2016 is unaudited. An independent registered public accounting firm has performed agreed-upon procedures related to the accuracy of the total amount outstanding exclusive of treasury securities as of December 31, 2017, 2018 and 2019 and the asset coverage per unit as of December 31, 2017, 2018 and 2019. The information in the senior securities table for 2016 was audited by Ernst & Young LLP and their report thereon is incorporated by reference herein. The information in the senior securities table for 2020 was audited by KPMG LLP and their report thereon is incorporated by reference herein. |
(2) | Total amount of each class of senior securities outstanding for 2017-2020 were derived from and should be read in conjunction with Barings BDC’s audited consolidated financial statements. |
(3) | Total amount of each class of senior securities outstanding at the end of the period presented. |
(4) | Asset coverage per unit is the ratio of the carrying value of Barings BDC’s total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. All prior period ratios have been conformed with this current presentation. |
(5) | The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The “—” indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities. |
(6) | Average market value per unit for Barings BDC’s unsecured notes issued in March 2012 due 2019 (referred to in the table above as the “2019 Notes”), Barings BDC’s unsecured notes issued in October 2012 and November 2012 due 2022 (referred to in the table above as the “December 2022 Notes”) and Barings BDC’s unsecured notes issued in February 2015 due 2022 (referred to in the table above as the “March 2022 Notes”) represent the average of the daily closing prices as reported on the NYSE for each security during 2012, 2013, 2014, 2015, 2016 and 2017, as applicable. Average market value per unit for Barings BDC’s SBA-guaranteed debentures payable, Barings BDC’s credit facility entered into in May 2011 (which has been terminated and is referred to in the table above as the “May 2011 Credit Facility”), Barings BDC Senior Funding I, LLC’s credit facility entered into in August 2018 with Bank of America, N.A. (which has been terminated and is referred to in the table above as the “August 2018 Credit Facility”), Barings BDC’s $800.0 million senior secured credit facility with ING Capital LLC entered into in February 2019 (as amended, restated and otherwise modified from time to time, and which is referred in the table above as the “February 2019 Credit Facility”), Barings BDC’s $449.3 million term debt securitization in May 2019 (referred to in the table above as the “Debt Securitization”), Barings BDC’s unsecured notes issued in September 2020 due 2025 (referred to in the table above as the “August 2025 Notes”) and the Series B, C, D and E Notes are not applicable because these senior securities are not registered for public trading. |
(7) | We have obtained exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures payable from the 200% asset coverage test under the Investment Company Act. |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Non–Control / Non–Affiliate Investments: | |||||||||||||||
1A Smart Start LLC (7) (8) (11) 500 East Dallas Road Suite 100 Grapevine, TX 76051 | | | Technology Distributors | | | Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 9.5% Cash, Acquired 06/21, Due 05/28) | | | $3,001,138 | | | $2,957,652 | | | $2,961,043 |
| | | | | | 3,001,138 | | | 2,957,652 | | | 2,961,043 | |||
| | | | | | | | | | ||||||
1WorldSync, Inc. (7) (8) (12) 300 South Riverside Plaza, Suite 1400 Chicago, IL 60606 | | | IT Consulting & Other Services | | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 07/19, Due 07/25) | | | 21,475,851 | | | 21,142,710 | | | 21,475,851 |
| | | | | | 21,475,851 | | | 21,142,710 | | | 21,475,851 | |||
| | | | | | | | | | ||||||
Accelerate Learning, Inc. (7) (8) (11) 5177 Richmond Avenue, Suite 1025 Houston, TX 77056 | | | Education Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/18, Due 12/24) | | | 7,567,965 | | | 7,479,458 | | | 7,416,606 |
| | | | | | 7,567,965 | | | 7,479,458 | | | 7,416,606 | |||
| | | | | | | | | | ||||||
Acclime Holdings HK Limited (3) (7) (8) (11) 17/F, United Centre 95 Queensway Admiralty, Hong Kong | | | Business Services | | | First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.0% Cash, Acquired 08/21, Due 07/27) | | | 3,750,000 | | | 3,537,413 | | | 3,532,500 |
| | | 3,750,000 | | | 3,537,413 | | | 3,532,500 | ||||||
| | | | | | | | | | ||||||
Accurus Aerospace Corporation (7) (8) (11) 12716 East Pine Street Tulsa, OK 74116 | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, 1.50% PIK, Acquired 10/18, Due 10/24) | | | 24,779,746 | | | 24,574,939 | | | 20,889,326 |
| | | | | | 24,779,746 | | | 24,574,939 | | | 20,889,326 | |||
| | | | | | | | | | ||||||
ADB Safegate (3) (8) (11) 977 Gahanna Pkwy Gahanna, OH 43230 | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (LIBOR + 7.75%, 8.8% Cash, Acquired 08/21, Due 10/25) | | | 5,500,000 | | | 5,069,046 | | | 5,180,340 |
| | | | | | 5,500,000 | | | 5,069,046 | | | 5,180,340 | |||
| | | | | | | | | | ||||||
Advantage Software Company (The), LLC (7) 19 Backstretch Lane Mooresville, NC 28117 | | | Advertising, Printing & Publishing | | | First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 01/21, Due 01/27)(8) (9) | | | 18,256,407 | | | 17,821,678 | | | 18,219,894 |
| | | | Class A Partnership Units (7,054.59 units, Acquired 01/21) | | | | | 705,459 | | | 728,880 | |||
| | | | Class B Partnership Units (3,496.31 units, Acquired 01/21) | | | | | 22,656 | | | 1,279,300 | |||
| | | | | | 18,256,407 | | | 18,549,793 | | | 20,228,074 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Aftermath Bidco Corporation (7) (8) (11) 75 Executive Dr #200 Aurora, IL 60504 | | | Professional Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 04/19, Due 04/25) | | | $9,425,284 | | | $9,289,989 | | | $9,279,485 |
| | | | | | 9,425,284 | | | 9,289,989 | | | 9,279,485 | |||
| | | | | | | | | | ||||||
Air Canada 2020-2 Class B Pass Through Trust 7373 Boulevard de la Côte-Vertu Ouest, Montreal, QC H4S 1Z3 | | | Airlines | | | Structured Secured Note - Class B (9.0% Cash, Acquired 09/20, Due 10/25) | | | 6,835,161 | | | 6,835,161 | | | 7,646,572 |
| | | | | 6,835,161 | | | 6,835,161 | | | 7,646,572 | ||||
| | | | | | | | | | ||||||
Air Comm Corporation, LLC (7) (8) (11) 1575 W 124th Ave #210 Westminster, CO 80234 | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.3% Cash, Acquired 06/21, Due 07/27) | | | 593,486 | | | 574,264 | | | 573,515 |
| | | | | | 593,486 | | | 574,264 | | | 573,515 | |||
| | | | | | | | | | ||||||
AIT Worldwide Logistics Holdings, Inc. (7) 701 N. Rohlwing Road Itasca, IL 60143 | | | Transportation Services | | | Second Lien Senior Secured Term Loan (LIBOR + 7.75%, 8.5% Cash, Acquired 04/21, Due 04/28)(8) (11) | | | 6,460,345 | | | 6,321,255 | | | 6,434,504 |
| | | | Partnership Units (348.68 units, Acquired 04/21) | | | | | 348,678 | | | 509,477 | |||
| | | | | | 6,460,345 | | | 6,669,933 | | | 6,943,981 | |||
| | | | | | | | | | ||||||
Alpine US Bidco LLC (7) (8) (12) 350 N Orleans St Chicago, Illinois | | | Agricultural Products | | | Second Lien Senior Secured Term Loan (LIBOR + 9.0%, 9.8% Cash, Acquired 05/21, Due 05/29) | | | 18,156,509 | | | 17,630,157 | | | 18,247,292 |
| | | | | | 18,156,509 | | | 17,630,157 | | | 18,247,292 | |||
| | | | | | | | | | ||||||
Anagram Holdings, LLC (3) Anagram Drive Eden Prairie, MN 55344 | | | Chemicals, Plastics, & Rubber | | | First Lien Senior Secured Note (10.0% Cash, 5.0% PIK, Acquired 08/20, Due 08/25) | | | 14,395,213 | | | 13,413,417 | | | 16,266,591 |
| | | | | | 14,395,213 | | | 13,413,417 | | | 16,266,591 | |||
| | | | | | | | | | ||||||
Anju Software, Inc. (7) (8) (9) 4500 S Lakeshore Drive #620 Tempe, AZ 85282 | | | Application Software | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 5.6% Cash, Acquired 02/19, Due 02/25) | | | 13,562,486 | | | 13,377,003 | | | 13,264,112 |
| | | | | | 13,562,486 | | | 13,377,003 | | | 13,264,112 | |||
| | | | | | | | | | ||||||
Apex Bidco Limited (3) (7) 75 Executive Dr #200 Aurora, IL 60504 | | | Business Equipment & Services | | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.25%, 6.8% Cash, Acquired 01/20, Due 01/27)(8) (14) | | | 1,964,929 | | | 1,866,874 | | | 1,939,057 |
| | | | Subordinated Senior Unsecured Term Loan (8.0% PIK, Acquired 01/20, Due 07/27) | | | 271,022 | | | 258,329 | | | 267,454 | ||
| | | | | | 2,235,951 | | | 2,125,203 | | | 2,206,511 | |||
| | | | | | | | | | ||||||
Aptus 1829. GmbH (3) (7) Wagner-Régeny-Straße 8, 12489 Berlin, Germany | | | Chemicals, Plastics, & Rubber | | | First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 09/21, Due 09/27)(8) (16) | | | 4,745,043 | | | 4,713,323 | | | 4,626,417 |
| | | | Preferred Stock (13 shares, Acquired 09/21) | | | | | 119,828 | | | 113,509 | |||
| | | | Common Stock (48 shares, Acquired 09/21) | | | | | 11,983 | | | 11,653 | |||
| | | | | | 4,745,043 | | | 4,845,134 | | | 4,751,579 | |||
| | | | | | | | | | ||||||
Apus Bidco Limited (3) (7) (8) (15) Hamilton House, Church Street, Altrincham, Greater Manchester, WA14 4DR, United Kingdom | | | Banking, Finance, Insurance & Real Estate | | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.5% Cash, Acquired 02/21, Due 03/28) | | | 3,884,134 | | | 3,870,272 | | | 3,796,407 |
| | | 3,884,134 | | | 3,870,272 | | | 3,796,407 | ||||||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
AQA Acquisition Holding, Inc. (7) (8) (11) 450 Artisan Way 4th floor Somerville, MA 02145 | | | High Tech Industries | | | Second Lien Senior Secured Term Loan (LIBOR + 7.5%, 8.0% Cash, Acquired 03/21, Due 03/29) | | | $20,000,000 | | | $19,497,248 | | | $19,562,960 |
| | | | | | 20,000,000 | | | 19,497,248 | | | 19,562,960 | |||
| | | | | | | | | | ||||||
Arch Global Precision LLC (7) (8) (9) 2600 S Telegraph Rd Suite 180 Bloomfield Hills, MI 48302 | | | Industrial Machinery | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.8% Cash, Acquired 04/19, Due 04/26) | | | 9,271,049 | | | 9,266,657 | | | 9,271,049 |
| | | | | | 9,271,049 | | | 9,266,657 | | | 9,271,049 | |||
| | | | | | | | | | ||||||
Archimede (3) (7) (8) (17) 39, rue Bouret, 75019 Paris, France | | | Consumer Services | | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 10/20, Due 10/27) | | | 13,791,505 | | | 14,031,635 | | | 13,681,173 |
| | | | | | 13,791,505 | | | 14,031,635 | | | 13,681,173 | |||
| | | | | | | | | | ||||||
Argus Bidco Limited (3) (7) (8) 9 Millars Brook, Molly Millars Lane, Wokingham, Berkshire, RG41 2AD, United Kingdom | | | High Tech Industries | | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.8% Cash, Acquired 12/20, Due 12/27)(14) | | | 2,670,143 | | | 2,557,057 | | | 2,670,143 |
| | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 5.8% Cash, Acquired 05/21, Due 12/27)(11) | | | 671,922 | | | 652,746 | | | 671,922 | |||
| | | | | | 3,342,065 | | | 3,209,803 | | | 3,342,065 | |||
| | | | | | | | | | ||||||
Armstrong Transport Group (Pele Buyer, LLC) (7) (8) 8615 Cliff Cameron Dr #200 Charlotte, NC 28269 | | | Air Freight & Logistics | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24)(11) | | | 5,276,562 | | | 5,216,040 | | | 5,171,031 |
| | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 07/20, Due 06/24)(12) | | | 1,985,278 | | | 1,956,677 | | | 1,945,572 | |||
| | | | | | 7,261,840 | | | 7,172,717 | | | 7,116,603 | |||
| | | | | | | | | | ||||||
ASPEQ Heating Group LLC (7) (8) (9) 425 Hanley Industrial Ct. St. Louis, MO 63144 | | | Building Products, Air & Heating | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 11/19, Due 11/25) | | | 8,631,440 | | | 8,537,756 | | | 8,631,440 |
| | | | | | 8,631,440 | | | 8,537,756 | | | 8,631,440 | |||
| | | | | | | | | | ||||||
Auxi International (3) (7) (8) 738 rue Yves Kermen 92100 Boulogne Billancourt, France | | | Commercial Finance | | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 12/19, Due 12/26)(17) | | | 1,622,530 | | | 1,519,223 | | | 1,534,913 |
| | | | First Lien Senior Secured Term Loan (SONIA + 6.25%, 6.3% Cash, Acquired 04/21, Due 12/26)(22) | | | 903,395 | | | 896,358 | | | 854,611 | ||
| | | | | | 2,525,925 | | | 2,415,581 | | | 2,389,524 | |||
| | | | | | | | | | ||||||
AVSC Holding Corp. 5100 North River Road, Suite 300 Schiller Park, IL 60176 | | | Advertising | | | First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, 0.25% PIK, Acquired 08/18, Due 10/26)(8) (11) | | | 4,876,168 | | | 4,381,092 | | | 4,336,132 |
| | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, 1.0% PIK, Acquired 08/18, Due 03/25)(8) (11) | | | 748,251 | | | 690,105 | | | 689,191 | ||
| | | | First Lien Senior Secured Term Loan (5.0% Cash, 10.0% PIK, Acquired 11/20, Due 10/26) | | | 5,376,135 | | | 5,256,382 | | | 6,464,802 | ||
| | | | | | 11,000,554 | | | 10,327,579 | | | 11,490,125 | |||
| | | | | | | | | | ||||||
BDP International, Inc. (f/k/a BDP Buyer, LLC) (7) (8) (9) 510 Walnut St. Philadelphia, PA 19106 | | | Air Freight & Logistics | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/18, Due 12/24) | | | 14,913,061 | | | 14,689,930 | | | 14,913,061 |
| | | | | 14,913,061 | | | 14,689,930 | | | 14,913,061 | ||||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Beacon Pointe Advisors, LLC (7) (8) (11) 24 Corporate Plaza Dr, Suite 150 Newport Beach, CA 92660 | | | Asset Manager & Custody Bank | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 03/20, Due 03/26) | | | $989,250 | | | $971,944 | | | $968,847 |
| | | | | | 989,250 | | | 971,944 | | | 968,847 | |||
| | | | | | | | | | ||||||
Benify (Bennevis AB) (3) (7) (8) (18) Banérgatan 16 Box 24101 104 51 Stockholm, Sweden | | | High Tech Industries | | | First Lien Senior Secured Term Loan (STIBOR + 5.25%, 5.3% Cash, Acquired 07/19, Due 07/26) | | | 1,330,990 | | | 1,221,376 | | | 1,330,990 |
| | | | | | 1,330,990 | | | 1,221,376 | | | 1,330,990 | |||
| | | | | | | | | | ||||||
Bidwax (3) (7) (8) (16) 16 rue Harald Stammbach, 59290 Wasquehal, France | | | Non-durable Consumer Goods | | | First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 02/21, Due 02/28) | | | 6,142,435 | | | 6,141,227 | | | 6,010,836 |
| | | | | | 6,142,435 | | | 6,141,227 | | | 6,010,836 | |||
| | | | | | | | | | ||||||
BigHand UK Bidco Limited (3) (7) (8) (15) 27 Union St, London SE1 1SD | | | High Tech Industries | | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.6% Cash, Acquired 01/21, Due 01/28) | | | 904,698 | | | 878,496 | | | 879,072 |
| | | | | | 904,698 | | | 878,496 | | | 879,072 | |||
| | | | | | | | | | ||||||
Black Diamond Equipment Rentals LLC (7) (25) 6220 Stoneridge Mall Road Pleasanton, CA 94588 | | | Equipment Rental | | | Second Lien Loan (12.5% Cash, Acquired 12/20, Due 06/22) | | | 10,000,000 | | | 10,000,000 | | | 10,000,000 |
| | | Warrant (4.17 units, Acquired 12/20) | | | | | 1,010,000 | | | 623,862 | ||||
| | | | | | 10,000,000 | | | 11,010,000 | | | 10,623,862 | |||
| | | | | | | | | | ||||||
Bounteous, Inc. (7) (8) (11) 4115 N. Ravenswood Avenue Chicago, IL 60613 | | | Technology | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 08/21, Due 08/27) | | | 6,886,364 | | | 6,740,007 | | | 6,736,364 |
| | | | | | 6,886,364 | | | 6,740,007 | | | 6,736,364 | |||
| | | | | | | | | | ||||||
Brightline Trains Florida LLC 161 NW 6th St STE 900 Miami, FL 33136 | | | Transportation | | | Senior Secured Note (8.0% Cash, Acquired 08/21, Due 01/28) | | | 5,000,000 | | | 5,000,000 | | | 4,941,125 |
| | | | | 5,000,000 | | | 5,000,000 | | | 4,941,125 | ||||
| | | | | | | | | | ||||||
British Airways 2020-1 Class B Pass Through Trust British Airways Plc. Waterside PO Box 365 Harmondsworth, UB7 0GB United Kingdom | | | Airlines | | | Structured Secured Note - Class B (8.4% Cash, Acquired 11/20, Due 11/28) | | | 836,486 | | | 836,486 | | | 979,265 |
| | | | | 836,486 | | | 836,486 | | | 979,265 | ||||
| | | | | | | | | | ||||||
British Engineering Services Holdco Limited (3) (7) (8) (15) Unit 718, Eddington Way, Birchwood Park, Warrington WA3 6BA, United Kingdom | | | Commercial Services & Supplies | | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 7.0% Cash, Acquired 12/20, Due 12/27) | | | 15,460,203 | | | 15,064,588 | | | 15,270,266 |
| | | | | 15,460,203 | | | 15,064,588 | | | 15,270,266 | ||||
| | | | | | | | | | ||||||
Brown Machine Group Holdings, LLC (7) (8) (10) 330 North Ross Street Beaverton, MI 48612 | | | Industrial Equipment | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 10/24) | | | 6,633,915 | | | 6,583,092 | | | 6,633,915 |
| | | | | 6,633,915 | | | 6,583,092 | | | 6,633,915 | ||||
| | | | | | | | | | ||||||
Cadent, LLC (f/k/a Cross MediaWorks) (7) (8) (9) 1675 Broadway, 22nd Floor New York, NY 10019 | | | Media & Entertainment | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 09/18, Due 09/23) | | | 6,913,258 | | | 6,884,704 | | | 6,913,258 |
| | | | | 6,913,258 | | | 6,884,704 | | | 6,913,258 | ||||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Canadian Orthodontic Partners Corp. (3) (7) (8) (21) 401 The West Mall Suite 301 Etobicoke, ON M9C 5J5, Canada | | | Healthcare | | | First Lien Senior Secured Term Loan (CDOR + 6.5%, 7.5% Cash, Acquired 06/21, Due 03/26) | | | $1,639,329 | | | $1,694,919 | | | $1,623,146 |
| | | | | 1,639,329 | | | 1,694,919 | | | 1,623,146 | ||||
| | | | | | | | | | ||||||
Carlson Travel, Inc 701 Carlson Parkway Minnetonka, MN 55305 | | | Business Travel Management | | | First Lien Senior Secured Note (6.8% Cash, Acquired 09/20, Due 12/25) | | | 3,000,000 | | | 2,362,500 | | | 2,670,000 |
| Super Senior Secured Term Loan (10.5% Cash, Acquired 12/20, Due 3/25) | | | 5,915,060 | | | 5,838,792 | | | 6,210,813 | |||||
| Common Stock (1,962 shares, Acquired 11/20)(7) | | | | | 88,290 | | | 1,962 | ||||||
| | | | | | 8,915,060 | | | 8,289,582 | | | 8,882,775 | |||
| | | | | | | | | | ||||||
Centralis Finco S.a.r.l. (3) (7) (8) (16) 8-10 Avenue de la Gare, 1610 Luxembourg | | | Diversified Financial Services | | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 05/20, Due 05/27) | | | 822,090 | | | 737,261 | | | 822,090 |
| | | | | | 822,090 | | | 737,261 | | | 822,090 | |||
| | | | | | | | | | ||||||
Cineworld Group PLC (3) 770 Township Line Road Yardly, PA 19067 | | | Leisure Products | | | First Lien Senior Secured Term Loan (LIBOR + 2.5%, 3.5% Cash, 2.5% PIK, Acquired 04/20, Due 02/25)(8) (12) | | | 9,049,339 | | | 6,354,276 | | | 7,438,013 |
| | Super Senior Secured Term Loan (7.0% Cash, 8.3% PIK, Acquired 11/20, Due 05/24) | | | 1,749,570 | | | 1,544,114 | | | 2,157,079 | ||||
| | Super Senior Secured Term Loan (8.25% Cash, 9.3% Cash, Acquired 07/21, Due 05/24) | | | 993,503 | | | 957,944 | | | 1,060,565 | ||||
| | Warrants (553,375 units, Acquired 12/20) | | | | | 101,602 | | | 274,581 | |||||
| | | | 11,792,412 | | | 8,957,936 | | | 10,930,238 | |||||
| | | | | | | | | | ||||||
Classic Collision (Summit Buyer, LLC) (7) (8) (11) 2329 John Glenn Dr Chamblee, Georgia, 30341 | | | Auto Collision Repair Centers | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/20, Due 01/26) | | | 17,484,670 | | | 17,197,300 | | | 17,125,253 |
| | | 17,484,670 | | | 17,197,300 | | | 17,125,253 | ||||||
| | | | | | | | | | ||||||
CM Acquisitions Holdings Inc. (7) (8) (9) 9 Lea Ave Nashville, TN 37210 | | | Internet & Direct Marketing | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 05/19, Due 05/25) | | | 19,154,411 | | | 18,913,478 | | | 19,154,412 |
| | | | | | 19,154,411 | | | 18,913,478 | | | 19,154,412 | |||
| | | | | | | | | | ||||||
CMT Opco Holding, LLC (Concept Machine) (7) (8) 15625 Medina Rd Minneapolis, MN 55447 | | | Distributors | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 01/20, Due 01/25)(11) | | | 4,144,368 | | | 4,086,284 | | | 4,044,903 |
| | | LLC Units (8,782 units, Acquired 01/20) | | | | | 351,709 | | | 276,457 | ||||
| | | | | | 4,144,368 | | | 4,437,993 | | | 4,321,360 | |||
| | | | | | | | | | ||||||
Command Alkon (Project Potter Buyer, LLC) (7) (8) 1800 International Park Drive Suite 400 Birmingham, AL 35243 | | | Software | | | First Lien Senior Secured Term Loan (LIBOR + 8.25%, 9.3% Cash, Acquired 04/20, Due 04/27)(9) | | | 20,795,747 | | | 20,250,117 | | | 20,400,377 |
| | | Class A Units (90.384 units, Acquired 04/20) | | | | | 90,384 | | | 100,961 | ||||
| | | | Class B Units (33,324.69 units, Acquired 04/20) | | | | | — | | | 8,260 | |||
| | | | | | 20,795,747 | | | 20,340,501 | | | 20,509,598 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Contabo Finco S.À R.L (3) (7) (8) (16) Aschauer Straße 32a 81549 Munich Germany | | | Internet Software & Services | | | First Lien Senior Secured Term Loan (EURIBOR + 4.75%, 4.8% Cash, Acquired 10/19, Due 10/26) | | | $1,405,059 | | | $1,314,934 | | | $1,405,059 |
| | | | | | 1,405,059 | | | 1,314,934 | | | 1,405,059 | |||
| | | | | | | | | | ||||||
Coyo Uprising GmbH (3) (7) Gasstr 6a 22761 Hamburg, Germany | | | Technology | | | First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 09/21, Due 09/28)(8) (16) | | | 8,195,509 | | | 8,050,115 | | | 7,956,473 |
| | | | Class A Units (440.0 units, Acquired 09/21) | | | | | 205,333 | | | 202,537 | |||
| | | | Class B Units (191.0 units, Acquired 09/21) | | | | | 445,883 | | | 439,388 | |||
| | | | | | 8,195,509 | | | 8,701,331 | | | 8,598,398 | |||
| | | | | | | | | | ||||||
Crash Champions (7) (8) (11) 601 Oakmont Lane Westmont, IL 60559 | | | Automotive | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 05/21, Due 08/25) | | | 5,000,000 | | | 4,908,699 | | | 4,900,000 |
| | | | | | 5,000,000 | | | 4,908,699 | | | 4,900,000 | |||
| | | | | | | | | | ||||||
CSL DualCom (3) (7) (8) (15) Salamander Quay West Park Lane Harefield, UB9 6NZ United Kingdom | | | Tele- communications | | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.5% Cash, Acquired 09/20, Due 09/27) | | | 1,335,409 | | | 1,200,892 | | | 1,289,220 |
| | | | | | 1,335,409 | | | 1,200,892 | | | 1,289,220 | |||
| | | | | | | | | | ||||||
Custom Alloy Corporation (7) (25) 3 Washington Avenue High Bridge, NJ 08829 | | | Manufacturer of Pipe Fittings & Forgings | | | Second Lien Loan (15.0% PIK, Acquired 12/20, Due 04/22) | | | 45,000,185 | | | 37,043,142 | | | 32,850,135 |
| Revolver (15.0% PIK, Acquired 12/20, Due 04/22) | | | 4,255,152 | | | 3,737,652 | | | 3,106,261 | |||||
| | | | | | 49,255,337 | | | 40,780,794 | | | 35,956,396 | |||
| | | | | | | | | | ||||||
CW Group Holdings, LLC (7) 888 Boylston Street Boston, MA 02199 | | | High Tech Industries | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 01/21, Due 01/27)(8) (11) | | | 2,826,882 | | | 2,769,209 | | | 2,826,882 |
| | | | LLC Units (161,290.32 units, Acquired 01/21) | | | | | 161,290 | | | 142,742 | |||
| | | | | | 2,826,882 | | | 2,930,499 | | | 2,969,624 | |||
| | | | | | | | | | ||||||
Dart Buyer, Inc. (3) (7) (8) (11) 9900 Cavendish, Suite 310 Saint-Laurent, QC H4M 2V2 | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 04/19, Due 04/25) | | | 12,217,301 | | | 12,035,364 | | | 12,012,230 |
| | | | | | 12,217,301 | | | 12,035,364 | | | 12,012,230 | |||
| | | | | | | | | | ||||||
Discovery Education, Inc. (7) (8) (11) 4350 Congress St UNIT 700 Charlotte, NC 28209 | | | Publishing | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 10/20, Due 10/26) | | | 18,845,063 | | | 18,558,807 | | | 18,845,063 |
| | | | | | 18,845,063 | | | 18,558,807 | | | 18,845,063 | |||
| | | | | | | | | | ||||||
Distinct Holdings, Inc. (7) (8) (9) 37 Market St Kenilworth, NJ 07033 | | | Systems Software | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 04/19, Due 12/23) | | | 6,880,088 | | | 6,835,922 | | | 6,756,247 |
| | | | | | 6,880,088 | | | 6,835,922 | | | 6,756,247 | |||
| | | | | | | | | | ||||||
Dragon Bidco (3) (7) (8) (17) Spaces Le Belvedere, 1-7 Cours Valmy, 92800 Puteaux, France | | | Technology | | | First Lien Senior Secured Term Loan (EURIBOR + 6.75%, 6.8% Cash, Acquired 04/21, Due 04/28) | | | 2,781,480 | | | 2,806,726 | | | 2,721,795 |
| | | | | | 2,781,480 | | | 2,806,726 | | | 2,721,795 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
DreamStart Bidco SAS (d/b/a SmartTrade) (3) (7) (8) (17) Immeuble Apogée, 13530, 500 Avenue Galilée 13290 Aix-en-Provence, France | | | Diversified Financial Services | | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 03/20, Due 03/27) | | | $2,150,323 | | | $1,984,101 | | | $2,109,444 |
| | | | | 2,150,323 | | | 1,984,101 | | | 2,109,444 | ||||
| | | | | | | | | | ||||||
Dune Group (3) (7) (8) 158 Rue de l'Église - BP 15F-62180 Rang-du-Fliers, France | | | Health Care Equipment | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 5.8% Cash, Acquired 09/21, Due 09/28)(11) | | | 3,530,280 | | | 3,468,520 | | | 3,468,500 |
| | | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 09/21, Due 09/28)(16) | | | | | (35,248) | | | (34,769) | |||
| | | | | | 3,530,280 | | | 3,433,272 | | | 3,433,731 | |||
| | | | | | | | | | ||||||
Dwyer Instruments, Inc. (7) (8) (11) 102 Indiana Hwy. 212 Michigan City, IN 46360 | | | Electric | | | First Lien Senior Secured Term Loan (LIBOR + 5.50%, 6.3% Cash, Acquired 07/21, Due 07/27) | | | 8,036,902 | | | 7,858,620 | | | 7,851,810 |
| | | | | 8,036,902 | | | 7,858,620 | | | 7,851,810 | ||||
| | | | | | | | | | ||||||
Ellkay, LLC (7) (8) (11) 200 Riverfront Blvd Elmwood Park, NJ 07407 | | | Healthcare & Pharmaceuticals | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 09/21, Due 09/27) | | | 5,000,000 | | | 4,900,303 | | | 4,900,000 |
| | | | | | 5,000,000 | | | 4,900,303 | | | 4,900,000 | |||
| | | | | | | | | | ||||||
Entact Environmental Services, Inc. (7) (8) (11) 1 E. Oak Hill Drive, Suite 102 Westmont, IL 60559 | | | Environmental Industries | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 02/21, Due 12/25) | | | 5,719,232 | | | 5,668,597 | | | 5,679,198 |
| | | | | | 5,719,232 | | | 5,668,597 | | | 5,679,198 | |||
| | | | | | | | | | ||||||
EPS NASS Parent, Inc. (7) (8) (11) 15 Millpark Ct. Maryland Heights, MO 63043 | | | Electrical Components & Equipment | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 04/21, Due 04/28) | | | 5,827,510 | | | 5,687,300 | | | 5,718,409 |
| | | | | | 5,827,510 | | | 5,687,300 | | | 5,718,409 | |||
| | | | | | | | | | ||||||
F24 (Stairway BidCo Gmbh) (3) (7) (8) (16) Hackenstrasse 7b Munich, 80331 Germany | | | Software Services | | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 08/20, Due 08/27) | | | 1,651,516 | | | 1,645,146 | | | 1,651,516 |
| | | | | | 1,651,516 | | | 1,645,146 | | | 1,651,516 | |||
| | | | | | | | | | ||||||
Ferrellgas L.P. (3) (7) One Liberty Plaza Liberty, MO 64068 | | | Oil & Gas Equipment & Services | | | OpCo Preferred Units (2,886 units, Acquired 03/21) | | | | | | 2,799,420 | | | 2,972,580 |
| | | | | 2,799,420 | | | 2,972,580 | |||||||
| | | | | | | | | | ||||||
Fineline Technologies, Inc. (7) (8) (11) 3145 Medlock Bridge Road Norcross, GA 30071 | | | Consumer Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 02/21, Due 02/28) | | | 1,309,000 | | | 1,285,229 | | | 1,309,000 |
| | | | | | 1,309,000 | | | 1,285,229 | | | 1,309,000 | |||
| | | | | | | | | | ||||||
FitzMark Buyer, LLC (7) (8) (11) 950 Dorman St Indianapolis, IN 46202 | | | Cargo & Transportation | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.5% Cash, Acquired 12/20, Due 12/26) | | | 4,269,265 | | | 4,193,607 | | | 4,260,727 |
| | | | | | 4,269,265 | | | 4,193,607 | | | 4,260,727 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Foundation Risk Partners, Corp. (7) (8) (11) 1540 Cornerstone Blvd. Suite 230 Daytona Beach, Florida 32117 | | | Financial Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 11/23) | | | $10,255,784 | | | $10,095,792 | | | $10,255,784 |
| | | Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 9.5% Cash, Acquired 09/20, Due 11/24) | | | 1,722,221 | | | 1,612,762 | | | 1,722,221 | |||
| | | | | | 11,978,005 | | | 11,708,554 | | | 11,978,005 | |||
| | | | | | | | | | ||||||
FragilePak LLC (7) 2270 Corporate Circle, Ste. 220 Henderson, NV 89074 | | | Transportation Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 05/21, Due 05/27)(8) (11) | | | 4,696,562 | | | 4,512,234 | | | 4,524,567 |
| | | | Partnership Units (937.5 units, Acquired 05/21) | | | | | 937,500 | | | 925,895 | |||
| | | | | | 4,696,562 | | | 5,449,734 | | | 5,450,462 | |||
| | | | | | | | | | ||||||
FSS Buyer LLC (7) 1340 Ridgeview Drive McHenry, IL 60050 | | | Technology | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.5% Cash, Acquired 08/21, Due 08/28)(8) (11) | | | 9,937,347 | | | 9,740,595 | | | 9,738,600 |
| | | | LP Interest (1,160.9 units, Acquired 08/21) | | | | | 11,609 | | | 11,609 | |||
| | | | LP Units (460,652.6 units, Acquired 08/21) | | | | | 51,043 | | | 51,043 | |||
| | | | | | 9,937,347 | | | 9,803,247 | | | 9,801,252 | |||
| | | | | | | | | | ||||||
GTM Intermediate Holdings, Inc. (7) (25) 724 West Lancaster Avenue Suite 120 Wayne, PA 19087 | | | Medical Equipment Manufacturer | | | Second Lien Loan (11.0% Cash, 1.0% PIK, Acquired 12/20, Due 12/24) | | | 11,470,743 | | | 11,419,586 | | | 11,470,743 |
| Series A Preferred Units (923,347.4 units, Acquired 05/21) | | | | | 1,446,615 | | | 1,652,792 | ||||||
| Series C Preferred Units (460,652.6 units, Acquired 05/21) | | | | | 721,708 | | | 815,355 | ||||||
| Common Stock (2 shares, Acquired 12/20) | | | | | 1,078,778 | | | 1,367,408 | ||||||
| | | 11,470,743 | | | 14,666,687 | | | 15,306,298 | ||||||
| | | | | | | | | | ||||||
Gulf Finance, LLC (8) (9) 200 Clarendon Street, 55th floor Boston, MA 02117 | | | Oil & Gas Exploration & Production | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 08/23) | | | 1,040,300 | | | 963,345 | | | 998,251 |
| | | | | | 1,040,300 | | | 963,345 | | | 998,251 | |||
| | | | | | | | | | ||||||
Halo Technology Bidco, Inc. (7) (8) (11) 191 Post Road West Westport, CT 06880 | | | Technology | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 06/21, Due 06/27) | | | 3,491,250 | | | 3,440,704 | | | 3,443,245 |
| | | | | | 3,491,250 | | | 3,440,704 | | | 3,443,245 | |||
| | | | | | | | | | ||||||
Hawaiian Airlines 2020-1 Class B Pass Through Certificates 3375 Koapaka Street, G-350 Honolulu, HI 96819 | | | Airlines | | | Structured Secured Note - Class B (11.3% Cash, Acquired 08/20, Due 09/25) | | | 6,092,593 | | | 6,092,593 | | | 6,969,067 |
| | | | | 6,092,593 | | | 6,092,593 | | | 6,969,067 | ||||
| | | | | | | | | | ||||||
Heartland, LLC (7) (8) (11) 1200 Main St, 42nd Floor Kansas City, MO 64105 | | | Business Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 08/19, Due 08/25) | | | 14,110,797 | | | 14,004,910 | | | 13,828,581 |
| | | | | | 14,110,797 | | | 14,004,910 | | | 13,828,581 | |||
| | | | | | | | | | ||||||
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.)) (3) (7) (8) (17) Edisonstraat 92 7006 RE Doetinchem, Netherlands | | | Insurance | | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 09/19, Due 09/26) | | | 19,213,820 | | | 18,820,387 | | | 18,785,948 |
| | | | | 19,213,820 | | | 18,820,387 | | | 18,785,948 | ||||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Highpoint Global LLC (7) (25) 8520 Allison Pointe Boulevard Suite 310 Indianapolis, IN 46250 | | | Government Services | | | Second Lien Note (12.0% Cash, 2.0% PIK, Acquired 12/20, Due 09/22) | | | $5,388,708 | | | $5,367,477 | | | $5,388,708 |
| | | | | 5,388,708 | | | 5,367,477 | | | 5,388,708 | ||||
| | | | | | | | | | ||||||
Holley Performance Products (Holley Purchaser, Inc.) (7) (8) (11) 1801 Russellville Road Bowling Green, KY 42101 | | | Automotive Parts & Equipment | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 5.1% Cash, Acquired 10/18, Due 10/25) | | | 16,826,972 | | | 16,671,230 | | | 16,826,972 |
| | | | | 16,826,972 | | | 16,671,230 | | | 16,826,972 | ||||
| | | | | | | | | | ||||||
Home Care Assistance, LLC (7) (8) (11) 2001 Van Ness Ave San Francisco, CA 94109 | | | Healthcare & Pharmaceuticals | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 03/21, Due 03/27) | | | 3,657,138 | | | 3,586,189 | | | 3,593,290 |
| | | | | | 3,657,138 | | | 3,586,189 | | | 3,593,290 | |||
| | | | | | | | | | ||||||
HTI Technology & Industries (7) (25) 315 Tech Park Drive, Suite 100 LaVergne, TN 37086 | | | Electronic Component Manufacturing | | | Second Lien Note (12.0% Cash, 4.8% PIK, Acquired 12/20, Due 09/24) | | | 15,080,025 | | | 14,575,226 | | | 14,739,945 |
| | | 15,080,025 | | | 14,575,226 | | | 14,739,945 | ||||||
| | | | | | | | | | ||||||
HW Holdco, LLC (Hanley Wood LLC) (7) (8) (10) 1152 15th St. NW, Suite 750 Washington, DC 20005 | | | Advertising | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/18, Due 12/24) | | | 7,450,605 | | | 7,343,894 | | | 7,450,605 |
| | | | | 7,343,894 | | | 7,450,605 | | | 7,450,605 | ||||
| | | | | | | | | | ||||||
IGL Holdings III Corp. (7) (8) (11) 10470 Miller Rd Dallas, TX 75238 | | | Commercial Printing | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/26) | | | 10,179,318 | | | 9,933,240 | | | 9,907,568 |
| | | | | | 10,179,318 | | | 9,933,240 | | | 9,907,568 | |||
| | | | | | | | | | ||||||
IM Analytics Holding, LLC (d/b/a NVT) (7) (8) 17 Mandeville Court Monterey, CA 93940 | | | Electronic Instruments & Components | | | First Lien Senior Secured Term Loan (LIBOR + 7.0%, 8.0% Cash, Acquired 11/19, Due 11/23)(11) | | | 8,147,000 | | | 8,100,534 | | | 6,256,896 |
| | | Warrant (68,950 units, Acquired 11/19) | | | | | — | | | — | ||||
| | | | | | 8,147,000 | | | 8,100,534 | | | 6,256,896 | |||
| | | | | | | | | | ||||||
IM Square (3) (7) (8) (16) 5 rue Royale 75008 Paris France | | | Banking, Finance, Insurance & Real Estate | | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 05/21, Due 05/28) | | | 7,185,490 | | | 7,214,070 | | | 7,023,198 |
| | | 7,185,490 | | | 7,214,070 | | | 7,023,198 | ||||||
| | | | | | | | | | ||||||
IMIA Holdings, Inc. (7) (8) (11) 7884 Spanish Fort Blvd Spanish Fort, AL 36527 | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 04/21, Due 04/27) | | | 14,925,000 | | | 14,645,916 | | | 14,835,450 |
| | | | | | 14,925,000 | | | 14,645,916 | | | 14,835,450 | |||
| | | | | | | | | | ||||||
Innovad Group II BV (3) (7) (8) (16) Postbaan 69, 2910 Essen, Belgium | | | Beverage, Food & Tobacco | | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 04/21, Due 04/28) | | | 6,375,256 | | | 6,314,463 | | | 6,203,703 |
| | | | | | 6,375,256 | | | 6,314,463 | | | 6,203,703 | |||
| | | | | | | | | | ||||||
INOS 19-090 GmbH (3) (7) (8) (16) Edelzeller Strasse 51, 36043 Fulda, Germany | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (EURIBOR + 6.13%, 6.1% Cash, Acquired 12/20, Due 12/27) | | | 5,371,919 | | | 5,490,210 | | | 5,356,008 |
| | | | | | 5,371,919 | | | 5,490,210 | | | 5,356,008 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
ISS#2, LLC (d/b/a Industrial Services Solutions) (7) (8) (11) 10070 Daniels Interstate Court Suite 140 Fort Myers, FL 33913 | | | Commercial Services & Supplies | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 02/20, Due 02/26) | | | $6,736,785 | | | $6,634,234 | | | $6,346,052 |
| | | | | 6,736,785 | | | 6,634,234 | | | 6,346,052 | ||||
| | | | | | | | | | ||||||
Jade Bidco Limited (Jane's) (3) (7) (8) Sentinel House, 163 Brighton Road Coulsdon, Surrey, CR5 2YH, United Kingdom | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 6.0% Cash, Acquired 11/19, Due 12/26)(12) | | | 7,241,738 | | | 7,093,269 | | | 7,167,612 |
| | | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 11/19, Due 12/26)(17) | | | 1,338,894 | | | 1,252,089 | | | 1,325,189 | ||
| | | | | | 8,580,632 | | | 8,345,358 | | | 8,492,801 | |||
| | | | | | | | | | ||||||
Jedson Engineering, Inc. (7) (25) One Centennial Plaza 705 Central Avenue Cincinnati, OH 45202 | | | Engineering & Construction Management | | | First Lien Loan (12.0% Cash, Acquired 12/20, Due 06/24) | | | 2,650,000 | | | 2,650,000 | | | 2,650,000 |
| | | 2,650,000 | | | 2,650,000 | | | 2,650,000 | ||||||
| | | | | | | | | | ||||||
JetBlue 2019-1 Class B Pass Through Trust 27-01 Queens Plaza North Long Island City, NY 11101 | | | Airlines | | | Structured Secured Note - Class B (8.0% Cash, Acquired 08/20, Due 11/27) | | | 4,443,386 | | | 4,443,386 | | | 5,199,273 |
| | | | | 4,443,386 | | | 4,443,386 | | | 5,199,273 | ||||
| | | | | | | | | | ||||||
JF Acquisition, LLC (7) (8) (11) 100 Perimeter Park Drive Suite H Morrisville, NC 27560 | | | Automotive | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 05/21, Due 07/24) | | | 3,875,565 | | | 3,746,453 | | | 3,808,533 |
| | | | | | 3,875,565 | | | 3,746,453 | | | 3,808,533 | |||
| | | | | | | | | | ||||||
Kano Laboratories LLC (7) 1000 E Thompson Ln Nashville, TN 37211 | | | Chemicals, Plastics & Rubber | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 11/20, Due 09/26)(8) (11) | | | 8,779,520 | | | 8,548,054 | | | 8,779,520 |
| | | | Partnership Equity (203.2 units, Acquired 11/20) | | | | | 203,198 | | | 230,306 | |||
| | | | | | 8,779,520 | | | 8,751,252 | | | 9,009,826 | |||
| | | | | | | | | | ||||||
Kene Acquisition, Inc. (En Engineering) (7) (8) (9) 28100 Torch Parkway, Suite 400 Warrenville, Illinois 60555 | | | Oil & Gas Equipment & Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 08/19, Due 08/26) | | | 7,243,172 | | | 7,138,286 | | | 7,243,172 |
| | | | | 7,243,172 | | | 7,138,286 | | | 7,243,172 | ||||
| | | | | | | | | | ||||||
Kona Buyer, LLC (7) (8) (11) 201 W. Saint John St. Spartanburg, SC 29306 | | | High Tech Industries | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.3% Cash, Acquired 12/20, Due 12/27) | | | 24,244,318 | | | 23,708,135 | | | 24,244,318 |
| | | | | | 24,244,318 | | | 23,708,135 | | | 24,244,318 | |||
| | | | | | | | | | ||||||
LAF International (3) (7) (8) (17) 4 rue Brindejonc des Moulinais, 31500 Toulouse France | | | Healthcare & Pharmaceuticals | | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 03/21, Due 03/28) | | | 1,506,635 | | | 1,542,469 | | | 1,470,291 |
| | | | | | 1,506,635 | | | 1,542,469 | | | 1,470,291 | |||
| | | | | | | | | | ||||||
Learfield Communications, LLC 2400 Dallas Parkway, Suite 500 Plano, TX 75093 | | | Broadcasting | | | First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 08/20, Due 12/23)(8) (9) | | | 135,734 | | | 95,692 | | | 130,068 |
| | | | First Lien Senior Secured Term Loan (LIBOR + 3.0%, 3.0% Cash, 10.2% PIK, Acquired 08/20, Due 12/23)(11) | | | 7,754,000 | | | 7,704,071 | | | 7,783,077 | ||
| | | | | | 7,889,734 | | | 7,799,763 | | | 7,913,145 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Legal Solutions Holdings (7) (24) (25) 955 Overland Ct Ste 200 San Dimas, CA, 91773-1747 | | | Business Services | | | Senior Subordinated Loan (16.0% PIK, Acquired 12/20, Due 03/22) | | | $11,371,442 | | | $10,129,207 | | | $11,030,298 |
| | | | | 11,371,442 | | | 10,129,207 | | | 11,030,298 | ||||
| | | | | | | | | | ||||||
LivTech Purchaser, Inc. (7) (8) (11) 2035 Lakeside Centre Way, Suite 200 Knoxville, TN 37922 | | | Business Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 01/21, Due 12/25) | | | 918,023 | | | 907,182 | | | 905,523 |
| | | | | | 918,023 | | | 907,182 | | | 905,523 | |||
| | | | | | | | | | ||||||
MC Group Ventures Corporation (7) 8959 Tyler Boulevard Mentor, OH 44060 | | | Business Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 07/21, Due 06/27)(8) (11) | | | 3,703,504 | | | 3,595,340 | | | 3,613,089 |
| | | | Partnership Units (746.66 Units, Acquired 06/21) | | | | | 746,662 | | | 746,660 | |||
| | | | | | 3,703,504 | | | 4,342,002 | | | 4,359,749 | |||
| | | | | | | | | | ||||||
Media Recovery, Inc. (SpotSee) (7) (8) 5501 Lyndon B Johnson Freeway, Suite 350 Dallas, TX 75240 | | | Containers, Packaging & Glass | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 11/25)(11) | | | 2,947,860 | | | 2,904,822 | | | 2,947,860 |
| | | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.0%, 7.0% Cash, Acquired 12/20, Due 12/26)(14) | | | 4,436,853 | | | 4,314,118 | | | 4,436,853 | ||
| | | | | | 7,384,713 | | | 7,218,940 | | | 7,384,713 | |||
| | | | | | | | | | ||||||
MNS Buyer, Inc. (7) 201 N. Calle Cesar Chavez, Suite 300 Santa Barbara, CA 93103 | | | Construction & Building | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 08/21, Due 08/27)(8) (9) | | | 923,077 | | | 904,955 | | | 904,615 |
| | | | Partnership Units (76.92 Units, Acquired 08/21) | | | | | 76,923 | | | 76,920 | |||
| | | | | | 923,077 | | | 981,878 | | | 981,535 | |||
| | | | | | | | | | ||||||
Modern Star Holdings Bidco Pty Limited. (3) (7) (8) (19) 122-126 Old Pittwater Road Level 1 Brookvale, NSW 2100 Australia | | | Non-durable Consumer Goods | | | First Lien Senior Secured Term Loan (BBSY + 6.25%, 6.8% Cash, Acquired 12/20, Due 12/26) | | | 4,431,728 | | | 4,467,468 | | | 4,431,728 |
| | | | | 4,431,728 | | | 4,467,468 | | | 4,431,728 | ||||
| | | | | | | | | | ||||||
MSG National Properties (3) (7) (8) (11) 2 Penn Plaza NY, NY 10121 | | | Hotel, Gaming, & Leisure | | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.0% Cash, Acquired 11/20, Due 11/25) | | | 2,443,296 | | | 2,380,896 | | | 2,498,270 |
| | | | | | 2,443,296 | | | 2,380,896 | | | 2,498,270 | |||
| | | | | | | | | | ||||||
Murphy Midco Limited (3) (7) (8) (14) 38-42 Brunswick Street West, Hove, England, BN3 1EL | | | Media, Diversified & Production | | | First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.6% Cash, Acquired 11/20, Due 11/27) | | | 4,577,225 | | | 4,296,504 | | | 4,467,552 |
| | | | | | 4,577,225 | | | 4,296,504 | | | 4,467,552 | |||
| | | | | | | | | | ||||||
Music Reports, Inc. (7) (8) (11) 21122 Erwin Street Woodland Hills, CA 91367 | | | Media & Entertainment | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 08/20, Due 08/26) | | | 5,537,042 | | | 5,419,770 | | | 5,537,042 |
| | | | | | 5,537,042 | | | 5,419,770 | | | 5,537,042 | |||
| | | | | | | | | | ||||||
Navia Benefit Solutions, Inc. (7) (8) (11) Navia Benefit Solutions PO Box 53250 Bellevue, WA 98015 | | | Healthcare & Pharmaceuticals | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 02/21, Due 02/27) | | | 2,388,000 | | | 2,325,788 | | | 2,333,009 |
| | | | | 2,388,000 | | | 2,325,788 | | | 2,333,009 | ||||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
NGS US Finco, LLC (f/k/a Dresser Natural Gas Solutions) (7) (8) (9) 16240 Port NW Dr #100 Houston, TX 77041 | | | Energy Equipment & Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 10/18, Due 10/25) | | | $11,795,227 | | | $11,758,918 | | | $11,571,118 |
| | | | | 11,795,227 | | | 11,758,918 | | | 11,571,118 | ||||
| | | | | | | | | | ||||||
Odeon Cinemas Group Limited (3) (7) 100 Avebury Blvd Milton Keynes, MK9 1FH United Kingdom | | | Hotel, Gaming, & Leisure | | | First Lien Senior Secured Term Loan (10.8% Cash, Acquired 02/21, Due 08/23) | | | 3,995,750 | | | 4,042,293 | | | 4,075,665 |
| | | 3,995,750 | | | 4,042,293 | | | 4,075,665 | ||||||
| | | | | | | | | | ||||||
OG III B.V. (3) (7) (8) (16) Toermalijnstraat 12c, 1812 RL Alkmaar, The Netherlands | | | Containers & Glass Products | | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 06/21, Due 06/28) | | | 2,765,751 | | | 2,775,634 | | | 2,690,690 |
| | | | | | 2,765,751 | | | 2,775,634 | | | 2,690,690 | |||
| | | | | | | | | | ||||||
Omni Intermediate Holdings, LLC (7) (8) (9) 3100 Olympus Blvd Suite 420 Coppell, TX 75019 | | | Transportation | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) | | | 13,930,000 | | | 13,594,798 | | | 13,930,000 |
| | | | | | 13,930,000 | | | 13,594,798 | | | 13,930,000 | |||
| | | | | | | | | | ||||||
Options Technology Ltd. (3) (7) (8) (11) 5th Floor, 50 Pall Mall St. James, London, SW1Y 5JH, United Kingdom | | | Computer Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/19, Due 12/25) | | | 12,319,906 | | | 12,138,737 | | | 12,319,906 |
| | | | | | 12,319,906 | | | 12,138,737 | | | 12,319,906 | |||
| | | | | | | | | | ||||||
Oracle Vision Bidco Limited (3) (7) (8) (22) 1-6 Star Building, Broughton Business Park, Fulwood, Preston, PR2 9WT | | | Healthcare | | | First Lien Senior Secured Term Loan (SONIA + 5.25%, 5.3% Cash, Acquired 06/21, Due 05/28) | | | 3,086,103 | | | 3,138,014 | | | 3,006,380 |
| | | | | 3,086,103 | | | 3,138,014 | | | 3,006,380 | ||||
| | | | | | | | | | ||||||
Origin Bidco Limited (3) (7) (8) 250 Fowler Avenue, Farnborough, Hampshire, GU14 7JP, United Kingdom | | | Technology | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 06/21, Due 06/28)(11) | | | 597,094 | | | 581,261 | | | 582,346 |
| | | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 06/21, Due 06/28)(16) | | | 384,446 | | | 393,487 | | | 374,950 | ||
| | | | | | 981,540 | | | 974,748 | | | 957,296 | |||
| | | | | | | | | | ||||||
Pacific Health Supplies Bidco Pty Limited (3) (7) (8) (20) L 8 15 Talavera Rd North Ryde, NEW SOUTH WALES, 2113 Australia | | | Healthcare & Pharmaceuticals | | | First Lien Senior Secured Term Loan (BBSY + 6.0%, 6.5% Cash, Acquired 12/20, Due 12/25) | | | 8,722,219 | | | 8,716,566 | | | 8,582,268 |
| | | | | 8,722,219 | | | 8,716,566 | | | 8,582,268 | ||||
| | | | | | | | | | ||||||
Pare SAS (SAS Maurice MARLE) (3) (7) (8) (16) BP 46, ZI rue Lavoisier F-52800 Nogent, France | | | Health Care Equipment | | | First Lien Senior Secured Term Loan (EURIBOR + 6.75%, 6.8% Cash, Acquired 12/19, Due 12/26) | | | 4,726,198 | | | 4,474,717 | | | 4,693,115 |
| | | | | | 4,726,198 | | | 4,474,717 | | | 4,693,115 | |||
| | | | | | | | | | ||||||
Patriot New Midco 1 Limited (Forensic Risk Alliance) (3) (7) (8) Audrey House, 16-20 Ely Pl, Holborn, London EC1N 6SN, United Kingdom | | | Diversified Financial Services | | | First Lien Senior Secured Term Loan (LIBOR + 6.75%, 7.8% Cash, Acquired 02/20, Due 02/27)(11) | | | 4,006,241 | | | 3,917,757 | | | 3,870,029 |
| | | First Lien Senior Secured Term Loan (EURIBOR + 6.75%, 6.8% Cash, Acquired 02/20, Due 02/27)(16) | | | 3,488,293 | | | 3,206,723 | | | 3,369,691 | |||
| | | | | | 7,494,534 | | | 7,124,480 | | | 7,239,720 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
PDQ.Com Corporation (7) 2200 South Main STE 200 South Salt Lake, UT 84115 | | | Business Equipment & Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 08/21, Due 08/28)(8) (11) | | | $4,694,533 | | | $4,608,355 | | | $4,607,315 |
| | | | Class A-2 Partnership Units (26.32 units, Acquired 08/21) | | | | | 26,316 | | | 26,320 | |||
| | | | | | 4,694,533 | | | 4,634,671 | | | 4,633,635 | |||
| | | | | | | | | | ||||||
PerTronix, LLC (7) (8) (9) 440 East Arrow Highway San Dimas, CA 91773 | | | Automotive | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/20, Due 10/26) | | | 6,525,965 | | | 6,440,766 | | | 6,525,965 |
| | | | | | 6,525,965 | | | 6,440,766 | | | 6,525,965 | |||
| | | | | | | | | | ||||||
Premium Franchise Brands, LLC (7) (8) (11) Flemming Court, 11-14 Whistler Dr, Castleford WF10 5HW United Kingdom | | | Research & Consulting Services | | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 12/26) | | | 14,852,588 | | | 14,586,908 | | | 14,555,536 |
| | | | | 14,852,588 | | | 14,586,908 | | | 14,555,536 | ||||
| | | | | | | | | | ||||||
Premium Invest (3) (7) (8) (16) 2520 Northwinds Parkway, Suite 375 Alpharetta, GA 30009 | | | Brokerage, Asset Managers & Exchanges | | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 06/21, Due 06/28) | | | 2,732,804 | | | 2,674,511 | | | 2,583,119 |
| | | 2,732,804 | | | 2,674,511 | | | 2,583,119 | ||||||
| | | | | | | | | | ||||||
Preqin MC Limited (3) (7) (8) (23) 1st Floor, Verde, 10 Bressenden Place, London, United Kingdom, SW1E 5DH | | | Banking, Finance, Insurance & Real Estate | | | First Lien Senior Secured Term Loan (SOFR + 5.5%, 5.5% Cash, Acquired 08/21, Due 07/28) | | | 6,789,005 | | | 6,589,000 | | | 6,585,335 |
| | | 6,789,005 | | | 6,589,000 | | | 6,585,335 | ||||||
| | | | | | | | | | ||||||
Process Equipment, Inc. (ProcessBarron) (7) (8) (11) 2770 Welborn St Pelham, AL 35124 | | | Industrial Air & Material Handling Equipment | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 03/19, Due 03/25) | | | 6,173,594 | | | 6,108,998 | | | 5,642,665 |
| | | 6,173,594 | | | 6,108,998 | | | 5,642,665 | ||||||
| | | | | | | | | | ||||||
Professional Datasolutions, Inc. (PDI) (7) (8) (12) 11675 Rainwater Drive, Suite 350 Alpharetta, GA 30009-8693 | | | Application Software | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 03/19, Due 10/24) | | | 10,869,004 | | | 10,858,773 | | | 10,782,052 |
| | | | | | 10,869,004 | | | 10,858,773 | | | 10,782,052 | |||
| | | | | | | | | | ||||||
Protego Bidco B.V. (3) (7) (8) (16) G. van der Muelenweg 3, 7443 RE Nijverdal, Netherlands | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 03/21, Due 03/27) | | | 2,270,096 | | | 2,308,328 | | | 2,270,096 |
| | | | First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 03/21, Due 03/28) | | | 1,577,424 | | | 1,558,533 | | | 1,517,358 | ||
| | | | | | 3,847,520 | | | 3,866,861 | | | 3,787,454 | |||
| | | | | | | | | | ||||||
PSC UK Pty Ltd. (3) (7) (8) (13) 96 Wellington Parade, East Melbourne, Victoria 3002, Australia | | | Insurance Services | | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.0%, 6.5% Cash, Acquired 11/19, Due 10/24) | | | 2,648,286 | | | 2,453,899 | | | 2,648,286 |
| | | | | | 2,648,286 | | | 2,453,899 | | | 2,648,286 | |||
| | | | | | | | | | ||||||
QPE7 SPV1 BidCo Pty Ltd (3) (7) (8) (20) 14/100 Creek St, Brisbane City QLD 4000, Australia | | | Consumer Cyclical | | | First Lien Senior Secured Term Loan (BBSY + 5.5%, 6.0% Cash, Acquired 09/21, Due 09/26) | | | 4,149,193 | | | 4,022,028 | | | 4,075,972 |
| | | | | | 4,149,193 | | | 4,022,028 | | | 4,075,972 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Questel Unite (3) (7) (8) 1 boulevard de la Madeleine, 75001 Paris, France | | | Business Services | | | First Lien Senior Secured Term Loan (EURIBOR + 6.25%, 6.3% Cash, Acquired 12/20, Due 12/27)(16) | | | $18,333,313 | | | $18,730,984 | | | $18,259,980 |
| | | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 6.8% Cash, Acquired 12/20, Due 12/27)(11) | | | 6,892,270 | | | 6,799,020 | | | 6,864,701 | ||
| | | | | | 25,225,583 | | | 25,530,004 | | | 25,124,681 | |||
| | | | | | | | | | ||||||
Recovery Point Systems, Inc. (7) 75 W Watkins Mill Rd Gaithersburg, MD 20878 | | | Technology | | | First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 08/20, Due 07/26)(8) (11) | | | 11,677,818 | | | 11,480,879 | | | 11,677,818 |
| | | | Partnership Equity (187,235 units, Acquired 03/21) | | | | | 187,235 | | | 160,086 | |||
| | | | | | 11,677,818 | | | 11,668,114 | | | 11,837,904 | |||
| | | | | | | | | | ||||||
REP SEKO MERGER SUB LLC (7) (8) (11) 1100 Arlington Heights Road STE 600 Itasca, IL 60143 | | | Air Freight & Logistics | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) | | | 7,633,228 | | | 7,426,430 | | | 7,542,350 |
| | | | | | 7,633,228 | | | 7,426,430 | | | 7,542,350 | |||
| | | | | | | | | | ||||||
Resonetics, LLC (7) (8) (11) 26 Whipple St. Nashua, NH 03060 | | | Health Care Equipment | | | Second Lien Senior Secured Term Loan (LIBOR + 7.0%, 7.8% Cash, Acquired 04/21, Due 04/29) | | | 2,088,364 | | | 2,048,222 | | | 2,052,475 |
| | | | | | 2,088,364 | | | 2,048,222 | | | 2,052,475 | |||
| | | | | | | | | | ||||||
Reward Gateway (UK) Ltd (3) (7) (8) (22) 265 Tottenham Court Rd, London | | | Precious Metals & Minerals | | | First Lien Senior Secured Term Loan (SONIA + 6.75%, 6.8% Cash, Acquired 08/21, Due 06/28) | | | 16,885,629 | | | 16,872,272 | | | 16,359,475 |
| | | | | | 16,885,629 | | | 16,872,272 | | | 16,359,475 | |||
| | | | | | | | | | ||||||
RPX Corporation (7) (8) (11) 4 Embarcadero Center Suite 4000 San Francisco, CA 94111 | | | Research & Consulting Services | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 10/20, Due 10/25) | | | 22,693,750 | | | 22,241,517 | | | 22,183,141 |
| | | | | | 22,693,750 | | | 22,241,517 | | | 22,183,141 | |||
| | | | | | | | | | ||||||
Ruffalo Noel Levitz, LLC (7) (8) (11) 1025 Kirkwood Pkwy SW Cedar Rapids, IA 52404 | | | Media Services | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 01/19, Due 05/22) | | | 9,543,326 | | | 9,512,741 | | | 9,543,326 |
| | | | | | 9,543,326 | | | 9,512,741 | | | 9,543,326 | |||
| | | | | | | | | | ||||||
Safety Products Holdings, LLC (7) 1897 Vanderhorn Dr. Memphis, TN 38134 | | | Non-durable Consumer Goods | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 12/20, Due 12/26)(8) (9) | | | 22,042,019 | | | 21,602,682 | | | 21,546,073 |
| | | | Preferred Stock (372.1 shares, Acquired 12/20) | | | | | 372,088 | | | 481,550 | |||
| | | | | | 22,042,019 | | | 21,974,770 | | | 22,027,623 | |||
| | | | | | | | | | ||||||
Scaled Agile, Inc. (7) (8) (9) 5400 Airport Blvd, Suite 300 Boulder, CO 8030 | | | Research & Consulting Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 06/19, Due 06/24) | | | 3,913,793 | | | 3,887,783 | | | 3,913,793 |
| | | | | | 3,913,793 | | | 3,887,783 | | | 3,913,793 | |||
| | | | | | | | | | ||||||
Serta Simmons Bedding LLC (8) (9) 1 Concourse Parkway, ste. 800 Atlanta, GA 30328 | | | Home Furnishings | | | Super Priority First Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) | | | 7,368,676 | | | 7,229,543 | | | 7,418,930 |
| | | Super Priority Second Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) | | | 3,616,420 | | | 3,375,529 | | | 3,431,874 | |||
| | | | | | 10,985,096 | | | 10,605,072 | | | 10,850,804 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Sigmatek Systems, LLC (7) (8) (11) 1445 Kemper Meadow Drive Cincinnati, OH 45240 | | | High Tech Industries | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 01/21, Due 01/27) | | | $3,955,075 | | | $3,884,464 | | | $3,939,255 |
| | | | | | 3,955,075 | | | 3,884,464 | | | 3,939,255 | |||
| | | | | | | | | | ||||||
SISU ACQUISITIONCO., INC. (7) (8) (11) 3060 SW 2nd Avenue Fort Lauderdale, FL 33315 | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 12/20, Due 12/26) | | | 14,026,839 | | | 13,776,673 | | | 13,606,034 |
| | | | | | 14,026,839 | | | 13,776,673 | | | 13,606,034 | |||
| | | | | | | | | | ||||||
Smile Brands Group Inc. (7) (8) (11) 100 Spectrum Center Drive Suite 1500 Irvine, CA 92618 | | | Health Care Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.17%, 5.4% Cash, Acquired 10/18, Due 10/24) | | | 4,593,488 | | | 4,544,784 | | | 4,541,006 |
| | | | | | 4,593,488 | | | 4,544,784 | | | 4,541,006 | |||
| | | | | | | | | | ||||||
SN BUYER, LLC (7) (8) (10) 600 Superior Avenue East, Suite 1500 Cleveland, OH 44114 | | | Health Care Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/20, Due 12/26) | | | 18,791,130 | | | 18,456,094 | | | 18,791,130 |
| | | | | | 18,791,130 | | | 18,456,094 | | | 18,791,130 | |||
| | | | | | | | | | ||||||
Springbrook Software (SBRK Intermediate, Inc.) (7) (8) (11) 1000 SW Broadway Suite 1900 Portland, OR 97205 | | | Enterprise Software & Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 12/19, Due 12/26) | | | 10,372,004 | | | 10,197,959 | | | 10,372,004 |
| | | | | 10,372,004 | | | 10,197,959 | | | 10,372,004 | ||||
| | | | | | | | | | ||||||
SPT Acquico Limited (3) (7) (8) (11) Melbourn Science Park, Melbourn, Hertfordshire, SG8 6HB, United Kingdom | | | High Tech Industries | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 01/21, Due 12/27) | | | 658,312 | | | 643,248 | | | 658,312 |
| | | | | 658,312 | | | 643,248 | | | 658,312 | ||||
| | | | | | | | | | ||||||
SSCP Pegasus Midco Limited (3) (7) (8) (14) 654 The Crescent, Colchester, Essex, England, CO4 9YQ | | | Healthcare & Pharmaceuticals | | | First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 12/20, Due 11/27) | | | 6,927,047 | | | 6,383,318 | | | 6,806,240 |
| | | | | | 6,927,047 | | | 6,383,318 | | | 6,806,240 | |||
| | | | | | | | | | ||||||
Syniverse Holdings, Inc. (8) (11) 8125 Highwoods Palm Way Tampa, FL 33647 | | | Technology Distributors | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 08/18, Due 03/23) | | | 17,390,580 | | | 16,402,204 | | | 17,377,190 |
| | | | | | 17,390,580 | | | 16,402,204 | | | 17,377,190 | |||
| | | | | | | | | | ||||||
TA SL Cayman Aggregator Corp. (7) 1730 Minor Avenue Suite 1400 Seattle, WA 98101 | | | Technology | | | Unsecured HoldCo Note (8.8% PIK, Acquired 07/21, Due 07/28)(8) | | | 1,994,681 | | | 1,955,723 | | | 1,954,788 |
| | | Common Stock (1,227.79 shares, Acquired 07/21) | | | | | 49,876 | | | 49,873 | ||||
| | | | | | 1,994,681 | | | 2,005,599 | | | 2,004,661 | |||
The Hilb Group, LLC (7) (8) (11) 6802 Paragon Place, Suite 200 Richmond, Virginia 23230 | | | Insurance Brokerage | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26) | | | 11,577,874 | | | 11,351,908 | | | 11,323,160 |
| | | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/19, Due 12/26) | | | 4,661,299 | | | 4,469,559 | | | 4,652,567 | ||
| | | | | | 16,239,173 | | | 15,821,467 | | | 15,975,727 | |||
| | | | | | | | | | ||||||
Total Safety U.S. Inc. (8) (12) 11111 Wilcrest Green Drive, ste. 300 Houston, TX 77042 | | | Diversified Support Services | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 08/25) | | | 6,583,183 | | | 6,381,802 | | | 6,492,664 |
| | | | | | 6,583,183 | | | 6,381,802 | | | 6,492,664 | |||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Transit Technologies LLC (7) (8) (11) 2035 Lakeside Centre Way Suite 125 Knoxville, TN 37922 | | | Software | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 02/20, Due 02/25) | | | $6,035,305 | | | $5,939,227 | | | $5,830,105 |
| | | | | | 6,035,305 | | | 5,939,227 | | | 5,830,105 | |||
| | | | | | | | | | ||||||
Transportation Insight, LLC (7) (8) (9) 310 Main Avenue Way SE Hickory, NC 28602 | | | Air Freight & Logistics | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.6% Cash, Acquired 08/18, Due 12/24) | | | 19,358,809 | | | 19,254,043 | | | 19,107,144 |
| | | | | | 19,358,809 | | | 19,254,043 | | | 19,107,144 | |||
| | | | | | | | | | ||||||
Trident Maritime Systems, Inc. (7) (8) (11) 2011 Crystal Drive, Suite 1102 Arlington, VA 22202 | | | Aerospace & Defense | | | First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 02/21, Due 02/27) | | | 14,925,000 | | | 14,690,761 | | | 14,715,572 |
| | | | | | 14,925,000 | | | 14,690,761 | | | 14,715,572 | |||
| | | | | | | | | | ||||||
Truck-Lite Co., LLC (7) (8) (11) 310 East Elmwood Ave Falconer, NY 14733 | | | Automotive Parts & Equipment | | | First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/19, Due 12/26) | | | 22,127,885 | | | 21,779,394 | | | 22,127,885 |
| | | | | | 22,127,885 | | | 21,779,394 | | | 22,127,885 | |||
| | | | | | | | | | ||||||
Trystar, LLC (7) 15765 Acorn Trail Faribault, MN 55021 | | | Power Distribution Solutions | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 09/18, Due 09/23)(8) (11) | | | 11,185,659 | | | 11,076,678 | | | 11,118,545 |
| | | | Class A LLC Units (384.5 units, Acquired 09/18) | | | 395,995 | | | 341,244 | | | |||
| | | | | | 11,185,659 | | | 11,472,673 | | | 11,459,789 | |||
| | | | | | | | | | ||||||
Turf Products, LLC (7) (25) 157 Moody Road Enfield, CT 06083 | | | Landscaping & Irrigation Equipment Distributor | | | Senior Subordinated Debt (10.0% Cash, Acquired 12/20, Due 10/23) | | | 8,697,056 | | | 8,383,961 | | | 8,618,783 |
| | | 8,697,056 | | | 8,383,961 | | | 8,618,783 | ||||||
| | | | | | | | | | ||||||
Turnberry Solutions, Inc. (7) (8) (11) 1777 Sentry Pkwy West Veva 14, Suite 401 Blue Bell, PA 19422 | | | Consumer Cyclical | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 07/21, Due 09/26) | | | 7,500,000 | | | 7,354,973 | | | 7,350,000 |
| | | | | | 7,500,000 | | | 7,354,973 | | | 7,350,000 | |||
| | | | | | | | | | ||||||
U.S. Gas & Electric, Inc. (7) (25) P.O. Box 660403 Dallas, TX 75266-0433 | | | Energy Services | | | Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25) | | | 2,285,250 | | | 1,785,250 | | | 1,785,250 |
| | | Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25)(26) | | | 2,485,469 | | | — | | | — | |||
| | | | | | 4,770,719 | | | 1,785,250 | | | 1,785,250 | |||
| | | | | | | | | | ||||||
U.S. Silica Company (3) (8) (9) 24275 Katy Freeway Katy, TX 77494 | | | Metal & Glass Containers | | | First Lien Senior Secured Term Loan (LIBOR + 4.0%, 5.0% Cash, Acquired 08/18, Due 05/25) | | | 1,475,961 | | | 1,478,281 | | | 1,443,681 |
| | | | | | 1,475,961 | | | 1,478,281 | | | 1,443,681 | |||
| | | | | | | | | | ||||||
UKFast Leaders Limited (3) (7) (8) (14) UKFast Campus, Birley Fields, Manchester, England, M15 5QJ | | | Technology | | | First Lien Senior Secured Term Loan (GBP LIBOR + 7.0%, 7.1% Cash, Acquired 09/20, Due 9/27) | | | 12,256,215 | | | 11,387,846 | | | 12,018,579 |
| | | | | | 12,256,215 | | | 11,387,846 | | | 12,018,579 | |||
| | | | | | | | | | ||||||
USLS Acquisition, Inc. (f/k/a US Legal Support, Inc.) (7) (8) (11) 16825 Northchase Dr Ste 900 Houston, TX 77060 | | | Legal Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/18, Due 11/24) | | | 16,221,755 | | | 16,053,098 | | | 16,203,733 |
| | | | | 16,221,755 | | | 16,053,098 | | | 16,203,733 | ||||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Utac Ceram (3) (7) (8) Autodrome de Linas-Montlhéry Avenue Georges Boillot 91310 Linas, France | | | Business Services | | | First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 09/20, Due 09/27)(16) | | | $1,738,425 | | | $1,704,583 | | | $1,701,198 |
| | | | First Lien Senior Secured Term Loan (LIBOR + 5.75%, 5.8% Cash, Acquired 02/21, Due 09/27)(11) | | | 3,517,700 | | | 3,453,425 | | | 3,442,372 | ||
| | | | | | 5,256,125 | | | 5,158,008 | | | 5,143,570 | |||
| | | | | | | | | | ||||||
Validity, Inc. (7) (8) (9) 200 Clarendon Street, 22nd floor Boston, MA 02116 | | | IT Consulting & Other Services | | | First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.8% Cash, Acquired 07/19, Due 05/25) | | | 4,783,146 | | | 4,680,384 | | | 4,720,965 |
| | | | | | 4,783,146 | | | 4,680,384 | | | 4,720,965 | |||
| | | | | | | | | | ||||||
Vital Buyer, LLC (7) 227 Fayetteville Street Suite 400 Raleigh, NC 27601 | | | Technology | | | First Lien Senior Secured Term Loan (LIBOR + 6.0%, 6.8% Cash, Acquired 06/21, Due 06/28)(8) (11) | | | 7,841,548 | | | 7,690,607 | | | 7,701,999 |
| | | | Partnership Units (16,442.9 units, Acquired 06/21) | | | | | | 164,429 | | | 178,156 | ||
| | | | | | 7,841,548 | | | 7,855,036 | | | 7,880,155 | |||
| | | | | | | | | | ||||||
W2O Holdings, Inc. (7) (8) (11) 50 Francisco Street, Suite 400 San Francisco, CA 94133 | | | Healthcare Technology | | | First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 10/20, Due 06/25) | | | 2,152,276 | | | 2,087,324 | | | 2,152,276 |
| | | | | | 2,152,276 | | | 2,087,324 | | | 2,152,276 | |||
| | | | | | | | | | ||||||
World 50, Inc. (7) (8) (9) 3525 Piedmont Rd NE Atlanta, GA 30305 | | | Professional Services | | | First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/20, Due 01/26) | | | 3,288,280 | | | 3,206,092 | | | 3,288,280 |
| | | | First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 09/20, Due 01/26) | | | 9,031,837 | | | 8,863,090 | | | 8,851,200 | ||
| | | | | | 12,320,117 | | | 12,069,182 | | | 12,139,480 | |||
Subtotal Non–Control / Non–Affiliate Investments | | | $1,373,918,059 | | | $1,346,611,782 | | | $1,355,088,125 | ||||||
Affiliate Investments: (4) | |||||||||||||||
Eclipse Business Capital, LLC (7) 123 North Wacker Drive, Suite 2400 Chicago, IL 60606 | | | Banking, Finance, Insurance, & Real Estate | | | Second Lien Senior Secured Term Loan (7.5% Cash, Acquired 07/21, Due 07/28) | | | 4,545,455 | | | 4,501,161 | | | 4,545,455 |
| | | | | |||||||||||
| | | | Revolver (LIBOR + 7.25%, Acquired 07/21. Due 07/28)(11) | | | | | (131,956) | | | — | |||
| | | | LLC Units (89,849,519 units, Acquired 07/21) | | | | | 89,849,519 | | | 89,849,519 | |||
| | | | | | 4,545,455 | | | 94,218,724 | | | 94,394,974 | |||
| | | | | | | | | | ||||||
Jocassee Partners LLC (3) 300 South Tryon Street, Suite 2500 Charlotte, NC 28202 | | | Investment Funds & Vehicles | | | 9.1% Member Interest, Acquired 06/19 | | | | | | 30,158,270 | | | 36,133,440 |
| | | | | | | | 30,158,270 | | | 36,133,440 | ||||
| | | | | | | | | | ||||||
JSC Tekers Holdings (3) (7) (25) Jauniela Street 15-3, Riga, Riga City 1050 | | | Real Estate Management | | | Preferred Stock (9,159,085 shares, Acquired 12/20) | | | | | 4,753,000 | | | 5,953,405 | |
| | | | | |||||||||||
| | | | Common Stock (3,201 shares, Acquired 12/20) | | | | | | — | | | — | ||
| | | | | | | | 4,753,000 | | | 5,953,405 | ||||
| | | | | | | | | |
Portfolio Company(6) | | | Industry | | | Type of Investment(1) (2) | | | Principal Amount | | | Cost | | | Fair Value |
Security Holdings B.V. (3) (7) (25) Strawinskylaan 411 Toren A, 4hg, Amsterdam, Noord-Holland, Netherlands | | | Electrical Engineering | | | Bridge Loan (5.0% PIK, Acquired 12/20, Due 05/22) | | | $5,451,205 | | | $5,451,207 | | | $5,451,205 |
| | | Senior Subordinated Loan (3.1% PIK, Acquired 12/20, Due 05/22) | | | 8,953,684 | | | 8,953,685 | | | 8,953,684 | |||
| | | Senior Unsecured Term Loan (6.0% Cash, 9.0% PIK, Acquired 04/21, Due 04/25) | | | 6,953,700 | | | 7,155,302 | | | 6,953,700 | |||
| | | Common Stock (900 shares, Acquired 12/20) | | | | | 21,264,000 | | | 23,159,294 | ||||
| | | | | 21,358,589 | | | 42,824,194 | | | 44,517,883 | ||||
| | | | | | | | | | ||||||
Thompson Rivers LLC (3) 300 South Tryon Street, Suite 2500 Charlotte, NC 28202 | | | Investment Funds & Vehicles | | | 7.75% Member Interest, Acquired 06/20 | | | | | | 30,000,000 | | | 32,684,880 |
| | | | | | | | 30,000,000 | | | 32,684,880 | ||||
| | | | | | | | | | ||||||
Waccamaw River LLC (3) 300 South Tryon Street, Suite 2500 Charlotte, NC 28202 | | | Investment Funds & Vehicles | | | 20% Member Interest, Acquired 02/21 | | | | | | 9,320,000.00 | | | 9,315,405.00 |
| | | | | | | | 9,320,000.00 | | | 9,315,405.00 | ||||
Subtotal Affiliate Investments | | | $25,904,044.00 | | | $211,274,188.00 | | | $222,999,987.00 | ||||||
Control Investments:(5) | |||||||||||||||
MVC Automotive Group Gmbh (3) (7) (25) Bruennerstrasse 66 Vienna, 1210 Austria | | | Automotive | | | Bridge Loan (6.0% Cash, Acquired 12/20, Due 12/21) | | | 7,149,166 | | | 7,149,166 | | | 7,149,166 |
| | | | Common Equity Interest (18,000 shares, Acquired 12/20) | | | | | 9,553,000 | | | 9,080,420 | |||
| | | | | | 7,149,166 | | | 16,702,166 | | | 16,229,586 | |||
| | | | | | | | | | ||||||
MVC Private Equity Fund LP (1.1%)*(3) (25) 287 Bowman Ave, 2nd Floor Purchase, NY 10577 | | | Investment Funds & Vehicles | | | General Partnership Interest | | | | | 224,978 | | | 201,948 | |
| Limited Partnership Interest | | | | | | 8,899,284 | | | 7,963,274 | |||||
| | | | | | | | 9,124,262 | | | 8,165,222 | ||||
Subtotal Control Investments | | | $7,149,166 | | | $25,826,428 | | | $24,394,808 | ||||||
Short-Term Investments: | | | | | | | | | | | |||||
BlackRock, Inc. 40 East 52nd Street New York, NY, USA 10022 | | | Money Market Fund | | | BlackRock Liquidity Temporary Fund (0.04% yield) | | | | | | 25,000,000 | | | 25,000,000 |
| | | | | | | 25,000,000 | | | 25,000,000 | |||||
| | | | | | | | | | ||||||
JPMorgan Chase & Co. 270 Park Avenue New York, New York 10017-2070 | | | Money Market Fund | | | JPMorgan Prime Money Market Fund (0.05% yield) | | | | | | 25,000,000 | | | 25,000,000 |
| | | | | | | | | 25,000,000 | | | 25,000,000 | |||
Subtotal Short-Term Investment | | | | | | 50,000,000 | | | 50,000,000 | ||||||
Total Investments, September 30, 2021* | | | $1,406,971,269 | | | $1,633,712,398 | | | $1,652,482,920 |
* | Fair value as a percentage of net assets. |
(1) | All debt investments are income producing, unless otherwise noted. Eclipse Business Capital, LLC, Thompson Rivers LLC and Waccamaw River equity investments are income producing. All other equity and any equity-linked investments are non-income producing. The Barings BDC Board determined in good faith that all investments were valued at fair value in accordance with Barings BDC’s valuation policies and procedures and the Investment Company Act, based on, among other things, the input of Barings, as external investment adviser to Barings BDC, the Audit Committee of the Barings BDC Board and independent valuation firms that have been engaged to assist in the valuation of Barings BDC’s middle-market investments. In addition, all debt investments are variable rate investments unless otherwise noted. Index-based floating interest rates are generally subject to a contractual minimum interest rate. A majority of the variable rate loans in Barings BDC’s investment portfolio bear interest at a rate that may be determined by reference to LIBOR, EURIBOR, GBP LIBOR, BBSY, STIBOR, CDOR, SOFR, SONIA or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically reset semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. |
(2) | All of Barings BDC’s portfolio company investments (including joint venture and short-term investments), which as of September 30, 2021 represented 221.9% of Barings BDC’s net assets, are subject to legal restrictions on sales. The acquisition date represents the date of Barings BDC’s initial investment in the relevant portfolio company. |
(3) | Investment is not a qualifying investment as defined under Section 55(a) of the Investment Company Act. Non-qualifying assets represent 26.4% of total investments at fair value as of September 30, 2021. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of Barings BDC’s total assets, Barings BDC will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a). |
(4) | As defined in the Investment Company Act, Barings BDC is deemed to be an “affiliated person” of the portfolio company as Barings BDC owns between 5% or more, up to 25% (inclusive), of the portfolio company’s voting securities (“non-controlled affiliate”). |
(5) | As defined in the Investment Company Act, Barings BDC is deemed to be both an “affiliated person” and to “control” the portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). |
(6) | Some or all of the investment is or will be encumbered as security for Barings BDC’s $800.0 million senior secured credit facility with ING Capital LLC initially entered into in February 2019 (as amended, restated and otherwise modified from time to time). |
(7) | The fair value of the investment was determined using significant unobservable inputs. |
(8) | Debt investment includes interest rate floor feature. |
(9) | The interest rate on these loans is subject to 1 Month LIBOR, which as of September 30, 2021 was 0.08025%. |
(10) | The interest rate on these loans is subject to 2 Month LIBOR, which as of September 30, 2021 was 0.11138%. |
(11) | The interest rate on these loans is subject to 3 Month LIBOR, which as of September 30, 2021 was 0.13013%. |
(12) | The interest rate on these loans is subject to 6 Month LIBOR, which as of September 30, 2021 was 0.15850%. |
(13) | The interest rate on these loans is subject to 1 Month GBP LIBOR, which as of September 30, 2021 was 0.04750%. |
(14) | The interest rate on these loans is subject to 3 Month GBP LIBOR, which as of September 30, 2021 was 0.08188%. |
(15) | The interest rate on these loans is subject to 6 Month GBP LIBOR, which as of September 30, 2021 was 0.17463%. |
(16) | The interest rate on these loans is subject to 3 Month EURIBOR, which as of September 30, 2021 was -0.54500%. |
(17) | The interest rate on these loans is subject to 6 Month EURIBOR, which as of September 30, 2021 was -0.52800%. |
(18) | The interest rate on these loans is subject to 3 Month STIBOR, which as of September 30, 2021 was -0.09900%. |
(19) | The interest rate on these loans is subject to 1 Month BBSY, which as of September 30, 2021 was 0.01000%. |
(20) | The interest rate on these loans is subject to 3 Month BBSY, which as of September 30, 2021 was 0.01960%. |
(21) | The interest rate on these loans is subject to 3 Month CDOR, which as of September 30, 2021 was 0.44468%. |
(22) | The interest rate on these loans is subject to 6 Month SONIA, which as of September 30, 2021 was 0.16350%. |
(23) | The interest rate on these loans is subject to 6 Month SOFR, which as of September 30, 2021 was 0.05628%. |
(24) | Non-accrual investment. |
(25) | Investment was purchased as part of the acquisition of MVC Capital, Inc. (“MVC”) and is part of the reference portfolio for purposes of the credit support agreement entered into in connection with the MVC acquisition. |
(26) | In 2017, MVC received $5.7 million of 9.5% second lien callable notes due in 2025, in lieu of an escrow to satisfy any indemnification claims associated with MVC’s sale of its equity investment in U.S. Gas & Electric (“U.S. Gas”). Effective January 1, 2018, the cost basis of the U.S. Gas second lien loan was decreased by approximately $3.0 million due to a working capital adjustment. This loan is still subject to indemnification adjustments. |
(27) | Percentage of class held for equity investments are as follows: |
a. | Advantage Software Class A Partnership Units – 0.1% |
b. | Advantage Software Class B Partnership Units – 0.1% |
c. | AIT Worldwide Logistics Holdings, Inc. – 0.05% |
d. | Aptus 1829. GmbH Preferred Stock – 0.3% |
e. | Aptus 1829. GmbH Common Stock – 0.3% |
f. | Black Diamond Equipment Rentals Warrants – 4.0% |
g. | Carlson Travels Common Stock – 0.2% |
h. | Cineworld Group PLC Warrants – 0.0% |
i. | CMT Opco Holding, LLC, LLC Units – 0.8% |
j. | Command Alkon (Project Potter Buyer, LLC) Class A Units – 0.05% |
k. | Command Alkon (Project Potter Buyer, LLC) Class B Units – 0.05% |
l. | Coyo Uprising GmbH Class A Units – 0.4% |
m. | Coyo Uprising GmbH Class A Units – 0.4% |
n. | CW Group Holdings LLC Units – 0.3% |
o. | Ferrellgas L.P. OpCo Preferred Units – 0.8% |
p. | FragilePak LLC Partnership Units – 0.8% |
q. | FSS Buyer LLC LP Interest – 0.03% |
r. | FSS Buyer LLC LP Units – 0.03% |
s. | GTM Intermediate Holdings, Inc. Series A Preferred units – 4.0% |
t. | GTM Intermediate Holdings, Inc. Series C Preferred units – 5.5% |
u. | GTM Intermediate Holdings, Inc. Common Stock – 1.9% |
v. | IM Analytics Holding, LLC, Warrants – 22.9% |
w. | Kano Laboratories LLC, Partnership Equity – 1.5% |
x. | MC Group Ventures Corporation Partnership Units – 0.1% |
y. | MNS Buyer, Inc. LLC Units – 0.4% |
z. | PDQ.Com Corporation LP Units – 0.05% |
aa. | Recovery Point Systems, Inc. Partnership Equity – 0.2% |
bb. | Safety Products Holdings, LLC Preferred Stock – 0.2% |
cc. | SMA Holdings, Inc. Warrants – 3.0% |
dd. | TA SL Cayman Aggregator Corp. Common Stock – 0.01% |
ee. | Trystar, LLC, LLC Units – 0.6% |
ff. | Vital Buyer, LLC – 0.1% |
gg. | Eclipse Business Capital, LLC – 40.09% |
hh. | Jocassee Partners LLC, Member Interest – 9.1% |
ii. | JSC Tekers Holdings Preferred Stock – 100% |
jj. | JSC Tekers Holdings Common Stock – 9.1% |
kk. | Security Holdings B.V Common Stock – 98.5% (5% voting) |
ll. | Thompson Rivers LLC, Member Interest – 7.5% |
mm. | Waccamaw River LLC – 20% |
nn. | MVC Automotive Group Gmbh Common Equity Interest – 100% |
oo. | MVC Private Equity Fund LP General Partnership Interest – 100% |
pp. | MVC Private Equity Fund LP Limited Partnership Interest – 19.4% |
Name | | | Dollar Range of Equity Securities in Barings BDC(1) |
Eric Lloyd | | | Over $100,000 |
Ian Fowler | | | — |
Adam Wheeler | | | — |
Terry Harris | | | — |
Mark Flessner | | | — |
Brian Baldwin | | | $50,001 - $100,000 |
(1) | Dollar ranges are as follows: $1—$10,000; $10,001—$50,000; $50,001—$100,000; or over $100,000. |
• | each person known to Barings BDC to beneficially own more than 5% of the outstanding shares of Barings BDC Common Stock; |
• | each of Barings BDC’s directors and each named executive officer; and |
• | all of Barings BDC’s directors and executive officers as a group. |
Name and Address | | | Number of Shares Beneficially Owned(1) | | | Percentage of Class(2) | | | Pro forma percentage of outstanding common stock of Barings BDC |
Directors and Executive Officers: | | | | | | | |||
Interested Directors | | | | | | | |||
Eric Lloyd | | | 31,241 | | | * | | | * |
David Mihalick | | | 15,000 | | | * | | | * |
Independent Directors | | | | | | | |||
Dr. Bernard A. Harris Jr. | | | — | | | * | | | * |
Robert Knapp | | | 361,034 | | | * | | | * |
Mark F. Mulhern | | | 14,855 | | | * | | | * |
Thomas W. Okel | | | 10,037 | | | * | | | * |
Jill Olmstead | | | 4,000 | | | * | | | * |
John A. Switzer | | | 6,000 | | | * | | | * |
Executive Officers Who are Not Directors | | | | | | | |||
Ian Fowler | | | — | | | — | | | — |
Jonathan Bock | | | 22,075 | | | * | | | * |
Michael Cowart | | | — | | | — | | | — |
Jill Dinerman | | | — | | | — | | | — |
Elizabeth Murray | | | 12,034 | | | * | | | * |
Directors and Executive Officers as a Group (13 persons) | | | 476,276 | | | * | | | * |
Five Percent Stockholders: | | | | | | | |||
Barings LLC | | | 13,639,681 | | | 20.8% | | | 13.3% |
* | Less than 1%. |
(1) | Beneficial ownership has been determined in accordance with Rule 13d-3 of the Exchange Act. Except as otherwise noted, each beneficial owner of more than five percent of Barings BDC Common Stock and each director and officer has sole voting and/ or investment power over the shares reported. |
(2) | Based on a total of 65,316,085 shares issued and outstanding as of November 30, 2021. |
Directors | | | Dollar Range of Common Stock Beneficially Owned(1) |
Independent Directors | | | |
Dr. Bernard A. Harris Jr. | | | None |
Robert Knapp | | | Over $100,000 |
Mark F. Mulhern | | | Over $100,000 |
Thomas W. Okel | | | Over $100,000 |
Jill Olmstead | | | $10,001-$50,000 |
John A. Switzer | | | $50,001-$100,000 |
Interested Directors | | | |
Eric Lloyd | | | Over $100,000 |
David Mihalick | | | Over $100,000 |
(1) | Dollar ranges are as follows: none, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, or over $100,000. |
Class and Year | | | Total Amount Outstanding Exclusive of Treasury Securities(1) | | | Asset Coverage per Unit(2) | | | Involuntary Liquidating Preference per Unit(3)(4) | | | Average Market Value per Unit(5) |
Prime Brokerage Facility | | | | | | | | | ||||
2012 | | | $17,345,794 | | | $2,189 | | | N/A | | | N/A |
2013 | | | — | | | — | | | — | | | — |
2014 | | | — | | | — | | | — | | | — |
2015 | | | — | | | — | | | — | | | — |
2016 | | | — | | | — | | | — | | | — |
2017 | | | — | | | — | | | — | | | — |
2018 | | | — | | | — | | | — | | | — |
2019 | | | — | | | — | | | — | | | — |
2020 | | | — | | | — | | | — | | | — |
September 30, 2021 (unaudited) | | | — | | | — | | | — | | | — |
ING Credit Facility | | | | | | | | | ||||
2012 | | | — | | | — | | | — | | | — |
2013 | | | 16,000,000 | | | 5,480 | | | N/A | | | N/A |
2014 | | | 115,000,000 | | | 2,211 | | | N/A | | | N/A |
2015 | | | 145,000,000 | | | 2,386 | | | N/A | | | N/A |
2016 | | | 150,000,000 | | | 2,476 | | | N/A | | | N/A |
2017 | | | 195,000,000 | | | 2,330 | | | N/A | | | N/A |
2018 | | | 115,000,000 | | | 2,656 | | | N/A | | | N/A |
2019 | | | 88,100,000 | | | 2,801 | | | N/A | | | N/A |
2020 | | | — | | | — | | | — | | | — |
September 30, 2021 (unaudited) | | | — | | | — | | | — | | | — |
Alpine Credit Facility | | | | | | | | | ||||
2012 | | | — | | | — | | | — | | | — |
2013 | | | — | | | — | | | — | | | — |
2014 | | | 121,500,000 | | | 2,211 | | | N/A | | | N/A |
2015 | | | 240,000,000 | | | 2,386 | | | N/A | | | N/A |
2016 | | | 240,000,000 | | | 2,476 | | | N/A | | | N/A |
2017 | | | 240,000,000 | | | 2,330 | | | N/A | | | N/A |
2018 | | | 240,000,000 | | | 2,656 | | | N/A | | | N/A |
2019 | | | 240,000,000 | | | 2,801 | | | N/A | | | N/A |
2020 | | | 145,000,000 | | | 4,626 | | | N/A | | | N/A |
September 30, 2021 (unaudited) | | | 79,000,000 | | | 7,887 | | | N/A | | | N/A |
Total Return Swaps | | | | | | | | | ||||
2012 | | | — | | | — | | | — | | | — |
2013 | | | 18,149,541 | | | 5,480 | | | N/A | | | N/A |
2014 | | | 152,645,906 | | | 2,211 | | | N/A | | | N/A |
2015 | | | 129,426,020 | | | 2,386 | | | N/A | | | N/A |
2016 | | | 147,892,739 | | | 2,476 | | | N/A | | | N/A |
Class and Year | | | Total Amount Outstanding Exclusive of Treasury Securities(1) | | | Asset Coverage per Unit(2) | | | Involuntary Liquidating Preference per Unit(3)(4) | | | Average Market Value per Unit(5) |
2017 | | | 127,519,693 | | | 2,330 | | | N/A | | | N/A |
2018 | | | 51,776,760 | | | 2,656 | | | N/A | | | N/A |
2019 | | | — | | | — | | | N/A | | | N/A |
2020 | | | — | | | — | | | N/A | | | N/A |
September 30, 2021 (unaudited) | | | — | | | — | | | N/A | | | N/A |
(1) | Total amount of each class of senior securities outstanding at the end of the period presented. The Total Return Swap (“TRS”) amount is comprised of the outstanding notional amount of the TRS, less the initial amount of any cash collateral required to be posted by Arbor Funding LLC under the TRS. |
(2) | The asset coverage per unit is the ratio of the carrying value of Sierra’s total consolidated assets for regulatory purposes, which includes the underlying fair value of net TRS, less all liabilities and indebtedness not represented by senior securities to the aggregate amount of senior securities representing indebtedness and the implied leverage on the TRS. Asset coverage per unit is expressed in terms of dollars per $1,000 of indebtedness. For the years ended December 31, 2020, 2019, 2018, 2017, 2016, 2015, 2014, and 2013, Sierra’s Asset Coverage Per Unit including unfunded commitments was $4,130, $2,547, $2,363, $2,054, $2,355, $2,318, $2,141, and $5,480, respectively. For the nine months ended September 30, 2021, Sierra’s Asset Coverage Per Unit including unfunded commitments was $6,261. |
(3) | The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. |
(4) | Information that the SEC expressly does not require to be disclosed for certain types of senior securities. |
(5) | Not applicable as these classes of securities are not registered for public trading. |
Company(1)(2) | | | Industry | | | Type of Investment(18)(19) | | | Maturity | | | Par Amount | | | Cost | | | Fair Value | | | % of Net Assets(3) |
Non-controlled/non-affiliated investments – | |||||||||||||||||||||
AAAHI Acquisition Corporation | | | Transportation: Consumer | | | Senior Secured First Lien Term Loan LIBOR + 8.250%, 1.000% Floor(4)(6) | | | 12/10/2023 | | | $7,251,893 | | | $7,251,893 | | | $6,309,147 | | | 1.2% |
| | | | | | | | 7,251,893 | | | 7,251,893 | | | 6,309,147 | | | |||||
Alpine SG, LLC | | | High Tech Industries | | | Senior Secured First Lien Term Loan LIBOR + 8.500%, 1.000% Floor(4)(6)(14) | | | 11/16/2022 | | | 1,262,051 | | | 1,242,468 | | | 1,263,691 | | | 0.2% |
| | | | Senior Secured First Lien Delayed Draw Term Loan LIBOR + 5.750%, 1.000% Floor(4)(6) | | | 6/1/2028 | | | 2,410,036 | | | 2,361,836 | | | 2,361,836 | | | 0.4% | ||
| | | | Senior Secured First Lien Delayed Draw Term Loan LIBOR + 5.750%, 1.000% Floor(4)(6) | | | 11/16/2022 | | | 6,165,725 | | | 6,165,664 | | | 5,993,084 | | | 1.1% | ||
| | | | Senior Secured First Lien Term Loan LIBOR + 5.750%, 1.000% Floor(4)(6) | | | 11/16/2022 | | | 15,801,509 | | | 15,728,506 | | | 15,385,245 | | | 2.8% | ||
| | | | | | | | 25,639,321 | | | 25,498,474 | | | 25,003,856 | | | |||||
AMMC CLO 22, Limited Series 2018-22A | | | Multi-Sector Holdings | | | Subordinated Notes 13.917% effective yield(7)(8)(9) | | | 4/25/2031 | | | 7,222,000 | | | 5,090,521 | | | 4,857,517 | | | 0.9% |
| | | | | | | | 7,222,000 | | | 5,090,521 | | | 4,857,517 | | | |||||
AMMC CLO 23, Ltd. Series 2020-23A | | | Multi-Sector Holdings | | | Subordinated Notes 15.361% effective yield(7)(8)(9) | | | 10/17/2031 | | | 2,000,000 | | | 1,622,187 | | | 1,646,600 | | | 0.3% |
| | | | | | | | 2,000,000 | | | 1,622,187 | | | 1,646,600 | | | |||||
Apidos CLO XXIV, Series 2016-24A | | | Multi-Sector Holdings | | | Subordinated Notes 14.550% effective yield(4)(7)(8)(9) | | | 7/20/2027 | | | 18,357,647 | | | 9,330,856 | | | 9,252,254 | | | 1.7% |
| | | | | | | | 18,357,647 | | | 9,330,856 | | | 9,252,254 | | | |||||
Arrow International Inc. | | | Hotel, Gaming & Leisure | | | Senior Secured First Lien Term Loan LIBOR + 7.250%, 1.250% Floor(6) | | | 12/21/2025 | | | 10,000,000 | | | 10,000,000 | | | 10,000,000 | | | 1.8% |
| | | | Senior Secured First Lien Term Loan LIBOR + 7.250%, 1.250% Floor(10) | | | 12/21/2025 | | | 5,000,000 | | | 5,000,000 | | | 5,000,000 | | | 0.9% | ||
| | | | | | | | 15,000,000 | | | 15,000,000 | | | 15,000,000 | | | |||||
Aviation Technical Services, Inc. | | | Aerospace & Defense | | | Senior Secured Second Lien Term Loan LIBOR + 8.500%, 1.000% Floor(4)(6) | | | 3/31/2022 | | | 26,259,760 | | | 26,259,760 | | | 24,902,131 | | | 4.6% |
| | | | | | | | 26,259,760 | | | 26,259,760 | | | 24,902,131 | | | |||||
Brook & Whittle Holding Corp. | | | Containers, Packaging & Glass | | | Senior Secured First Lien Delayed Draw Term Loan LIBOR + 5.250%, 1.000% Floor(4)(6) | | | 10/17/2024 | | | — | | | — | | | — | | | —% |
| | | | Senior Secured First Lien Delayed Draw Term Loan LIBOR + 5.250%, 1.000% Floor(4)(6) | | | 10/17/2024 | | | 3,664,919 | | | 3,653,930 | | | 3,664,919 | | | 0.7% | ||
| | | | Senior Secured First Lien Term Loan LIBOR + 5.750%, 1.000% Floor(4)(6) | | | 10/17/2024 | | | 2,081,164 | | | 2,081,164 | | | 2,081,164 | | | 0.4% | ||
| | | | | | | | 5,746,083 | | | 5,735,094 | | | 5,746,083 | | | |||||
Cardenas Markets, LLC | | | Retail | | | Senior Secured First Lien Term Loan LIBOR + 6.250%, 1.000% Floor(6) | | | 6/3/2027 | | | 2,000,000 | | | 1,980,000 | | | 1,971,000 | | | 0.4% |
| | | | | | | | 2,000,000 | | | 1,980,000 | | | 1,971,000 | | | |||||
CM Finance SPV LLC | | | Banking, Finance, Insurance & Real Estate | | | Subordinated Notes 3.000%(4)(5)(11) | | | 6/24/2021 | | | 35,600 | | | 35,600 | | | — | | | —% |
| | | | | | | | 35,600 | | | 35,600 | | | — | | |
Company(1)(2) | | | Industry | | | Type of Investment(18)(19) | | | Maturity | | | Par Amount | | | Cost | | | Fair Value | | | % of Net Assets(3) |
CPI International, Inc. | | | Aerospace & Defense | | | Senior Secured Second Lien Term Loan LIBOR + 7.250%, 1.000% Floor(4)(12) | | | 7/28/2025 | | | $8,575,302 | | | $8,561,483 | | | $8,022,195 | | | 1.5% |
| | | | | | | | 8,575,302 | | | 8,561,483 | | | 8,022,195 | | | |||||
CT Technologies Intermediate Holdings, Inc. | | | Healthcare & Pharmaceuticals | | | Senior Secured First Lien Term Loan LIBOR + 5.000%, 1.000% Floor(4)(12) | | | 12/16/2025 | | | 4,999,937 | | | 4,983,144 | | | 5,007,937 | | | 0.9% |
| | | | | | | | 4,999,937 | | | 4,983,144 | | | 5,007,937 | | | |||||
DataOnline Corp. | | | High Tech Industries | | | Revolving Credit Facility LIBOR + 6.250%, 1.000% Floor (4)(6) | | | 11/13/2025 | | | 2,142,857 | | | 2,142,857 | | | 2,105,571 | | | 0.4% |
| | | | Senior Secured First Lien Term Loan LIBOR + 6.250%, 1.000% Floor(4)(6) | | | 11/13/2025 | | | 14,737,500 | | | 14,737,500 | | | 14,529,701 | | | 2.7% | ||
| | | | | | | | 16,880,357 | | | 16,880,357 | | | 16,635,272 | | | |||||
Dryden 43 Senior Loan Fund, Series 2016-43A | | | Multi-Sector Holdings | | | Subordinated Notes 14.561% effective yield(4)(7)(8)(9) | | | 7/20/2029 | | | 3,620,000 | | | 2,415,714 | | | 2,300,872 | | | 0.4% |
| | | | | | | | 3,620,000 | | | 2,415,714 | | | 2,300,872 | | | |||||
Dryden 49 Senior Loan Fund, Series 2017-49A | | | Multi-Sector Holdings | | | Subordinated Notes 15.468% effective yield(4)(7)(8)(9) | | | 7/18/2030 | | | 17,233,288 | | | 11,434,494 | | | 11,103,407 | | | 2.0% |
| | | | | | | | 17,233,288 | | | 11,434,494 | | | 11,103,407 | | | |||||
Envision Healthcare Corporation | | | Healthcare & Pharmaceuticals | | | Senior Secured First Lien Term Loan LIBOR + 3.750% (4) (12) | | | 10/10/2025 | | | 48,625 | | | 34,949 | | | 43,184 | | | —% |
| | | | | | | | 48,625 | | | 34,949 | | | 43,184 | | | |||||
GC EOS Buyer, Inc. | | | Automotive | | | Senior Secured First Lien Term Loan LIBOR + 4.500%(4)(12) | | | 8/1/2025 | | | 2,493,573 | | | 2,481,723 | | | 2,465,895 | | | 0.5% |
| | | | | | | | 2,493,573 | | | 2,481,723 | | | 2,465,895 | | | |||||
Glass Mountain Pipeline Holdings, LLC | | | Energy: Oil & Gas | | | Senior Secured First Lien Term Loan LIBOR + 4.500%, 1.000% Floor(4)(5)(12) | | | 12/23/2024 | | | 48,375 | | | 25,468 | | | 16,448 | | | —% |
| | | | | | | | 48,375 | | | 25,468 | | | 16,448 | | | |||||
Golden West Packaging Group LLC | | | Forest Products & Paper | | | Senior Secured First Lien Term Loan LIBOR + 5.250%, 1.000% Floor(4)(12) | | | 6/20/2023 | | | 1,323,073 | | | 1,323,073 | | | 1,302,698 | | | 0.2% |
| | | | | | | | 1,323,073 | | | 1,323,073 | | | 1,302,698 | | | |||||
Holland Acquisition Corp. | | | Energy: Oil & Gas | | | Senior Secured First Lien Term Loan LIBOR + 9.000%, 1.000% Floor(5)(6)(11) | | | 5/29/2020 | | | 3,754,497 | | | 3,634,434 | | | — | | | —% |
| | | | | | | | 3,754,497 | | | 3,634,434 | | | — | | | |||||
Hylan Datacom & Electrical LLC | | | Construction & Building | | | Senior Secured First Lien Term Loan LIBOR + 10.000%, 1.000% Floor(4)(5)(6) | | | 7/25/2022 | | | 15,603,165 | | | 15,427,675 | | | 8,581,741 | | | 1.6% |
| | | | Senior Secured First Lien Term Loan LIBOR + 10.000%, 1.000% Floor(4)(6) | | | 7/25/2021 | | | 354,887 | | | 342,466 | | | 354,887 | | | 0.1% | ||
| | | | | | | | 15,958,052 | | | 15,770,141 | | | 8,936,628 | | | |||||
Innovative XCessories & Services, LLC | | | Automotive | | | Senior Secured First Lien Term Loan LIBOR + 5.200%, 1.000% Floor(4)(10) | | | 3/5/2027 | | | 2,953,865 | | | 2,930,793 | | | 2,942,050 | | | 0.5% |
| | | | | | | | 2,953,865 | | | 2,930,793 | | | 2,942,050 | | | |||||
Iqor US Inc. | | | Services: Business | | | Senior Secured First Lien Term Loan LIBOR + 7.500%, 1.000% Floor(4)(12) | | | 11/19/2024 | | | 2,716,876 | | | 2,673,564 | | | 2,778,006 | | | 0.5% |
| | | | | | | | 2,716,876 | | | 2,673,564 | | | 2,778,006 | | |
Company(1)(2) | | | Industry | | | Type of Investment(18)(19) | | | Maturity | | | Par Amount | | | Cost | | | Fair Value | | | % of Net Assets(3) |
Isagenix International, LLC | | | Wholesale | | | Senior Secured First Lien Term Loan LIBOR + 5.750%, 1.000% Floor(4)(6) | | | 6/16/2025 | | | $1,677,804 | | | $1,650,966 | | | $1,392,578 | | | 0.3% |
| | | | | | | | 1,677,804 | | | 1,650,966 | | | 1,392,578 | | | |||||
Isola USA Corp. | | | High Tech Industries | | | Senior Secured Second Lien Term Loan LIBOR + 9.500%, 1.000% Floor, PIK(5)(6)(14) | | | 1/2/2023 | | | 12,167,739 | | | 6,958,657 | | | 8,517,417 | | | 1.6% |
| | | | Common Units - 10,283,782 units(13) | | | | | — | | | — | | | — | | | —% | |||
| | | | | | | | 12,167,739 | | | 6,958,657 | | | 8,517,417 | | | |||||
Ivanti Software, Inc. | | | High Tech Industries | | | Senior Secured Second Lien Term Loan LIBOR + 8.500%, 1.000% Floor(4)(6) | | | 12/1/2028 | | | 6,000,000 | | | 6,000,000 | | | 6,051,000 | | | 1.1% |
| | | | | | | | 6,000,000 | | | 6,000,000 | | | 6,051,000 | | | |||||
JFL-WCS Partners, LLC | | | Environmental Industries | | | Common Units - 70,412 units(4)(13) | | | | | — | | | 88,159 | | | 4,661,274 | | | 0.9% | |
| | | | | | | | — | | | 88,159 | | | 4,661,274 | | | |||||
JFL-NGS Partners, LLC | | | Environmental Industries | | | Preferred units - 6,375,000 units 12.500% | | | | | — | | | 6,556,485 | | | 9,243,750 | | | 1.7% | |
| | | | Common Units - 3,252.95 units(13) | | | | | — | | | 1,125,000 | | | 2,503,178 | | | 0.5% | |||
| | | | | | | | — | | | 7,681,485 | | | 11,746,928 | | | |||||
K&N Parent, Inc. | | | Automotive | | | Senior Secured First Lien Term Loan LIBOR + 4.750%, 1.000% Floor(12) | | | 10/20/2023 | | | 7,964,693 | | | 7,646,105 | | | 7,543,360 | | | 1.4% |
| | | | Senior Secured Second Lien Term Loan LIBOR + 8.750%, 1.000% Floor(12) | | | 10/21/2024 | | | 2,000,000 | | | 1,751,355 | | | 1,675,000 | | | 0.3% | ||
| | | | | | | | 9,964,693 | | | 9,397,460 | | | 9,218,360 | | | |||||
Keystone Acquisition Corp. | | | Healthcare & Pharmaceuticals | | | Senior Secured First Lien Term Loan LIBOR + 5.250%, 1.000% Floor(4)(6) | | | 5/1/2024 | | | 1,770,300 | | | 1,733,312 | | | 1,744,808 | | | 0.3% |
| | | | Senior Secured Second Lien Term Loan LIBOR + 9.250%, 1.000% Floor(4)(6) | | | 5/1/2025 | | | 7,000,000 | | | 6,934,869 | | | 6,932,100 | | | 1.3% | ||
| | | | | | | | 8,770,300 | | | 8,668,181 | | | 8,676,908 | | | |||||
KNB Holdings Corporation | | | Consumer Goods: Durable | | | Senior Secured First Lien Term Loan LIBOR + 5.500%, 1.000% Floor(12) | | | 4/26/2024 | | | 1,945,946 | | | 1,500,712 | | | 1,655,611 | | | 0.3% |
| | | | | | | | 1,945,946 | | | 1,500,712 | | | 1,655,611 | | | |||||
Lifestyle Intermediate II, LLC | | | Consumer Goods: Durable | | | Senior Secured First Lien Term Loan LIBOR + 7.000%, 1.000% Floor(4) | | | 1/26/2026 | | | 3,214,295 | | | 3,214,295 | | | 3,214,295 | | | 0.6% |
| | | | Senior Secured First Lien Term Loan LIBOR + 7.000%, 1.000% Floor(4)(14) | | | 1/26/2026 | | | 1,166,667 | | | 1,166,667 | | | 1,166,667 | | | 0.2% | ||
| | | | | | | | 4,380,962 | | | 4,380,962 | | | 4,380,962 | | | |||||
LogMeIn, Inc. | | | High Tech Industries | | | Senior Secured First Lien Term Loan LIBOR + 4.750%, 1.000% Floor(4)(12) | | | 8/31/2027 | | | 1,985,000 | | | 1,961,373 | | | 1,984,206 | | | 0.4% |
| | | | | | | | 1,985,000 | | | 1,961,373 | | | 1,984,206 | | | |||||
Magnetite XIX, Limited | | | Multi-Sector Holdings | | | Subordinated Notes LIBOR + 8.770%(6)(7)(8)(9) | | | 4/17/2034 | | | 5,250,000 | | | 5,092,500 | | | 5,250,000 | | | 1.0% |
| | | | Subordinated Notes 16.339% effective yield(4)(7)(8)(9) | | | 7/17/2030 | | | 13,730,209 | | | 8,359,988 | | | 8,569,023 | | | 1.6% | ||
| | | | | | | | 18,980,209 | | | 13,452,488 | | | 13,819,023 | | | |||||
Offen Inc. | | | Transportation: Cargo | | | Senior Secured First Lien Term Loan LIBOR + 5.000%(4)(12) | | | 6/21/2026 | | | 3,926,361 | | | 3,899,642 | | | 3,902,018 | | | 0.7% |
| | | | | | | | 3,926,361 | | | 3,899,642 | | | 3,902,018 | | |
Company(1)(2) | | | Industry | | | Type of Investment(18)(19) | | | Maturity | | | Par Amount | | | Cost | | | Fair Value | | | % of Net Assets(3) |
Path Medical, LLC | | | Healthcare & Pharmaceuticals | | | Senior Secured First Lien Term Loan LIBOR + 13.000%, 1.000% Floor, PIK(4)(5)(12) | | | 10/11/2021 | | | $11,763,979 | | | $8,703,195 | | | $— | | | —% |
| | | | Senior Secured First Lien Term Loan LIBOR + 9.500%, 1.000% Floor, PIK(4)(5)(12) | | | 10/11/2021 | | | 8,464,916 | | | 8,021,285 | | | 4,655,704 | | | 0.9% | ||
| | | | Warrants - 36,716 warrants(4)(13) | | | 1/9/2027 | | | — | | | 669,709 | | | — | | | —% | ||
| | | | | | | | 20,228,895 | | | 17,394,189 | | | 4,655,704 | | | |||||
PetroChoice Holdings, Inc. | | | Chemicals, Plastics & Rubber | | | Senior Secured Second Lien Term Loan LIBOR + 8.750%, 1.000% Floor(4)(6) | | | 8/21/2023 | | | 9,000,000 | | | 9,000,000 | | | 8,364,600 | | | 1.5% |
| | | | | | | | 9,000,000 | | | 9,000,000 | | | 8,364,600 | | | |||||
Polymer Solutions Group Holdings, LLC | | | Chemicals, Plastics & Rubber | | | Senior Secured First Lien Term Loan LIBOR + 7.000%, 1.000% Floor(4)(12) | | | 1/1/2023 | | | 1,039,254 | | | 1,039,254 | | | 1,023,873 | | | 0.2% |
| | | | | | | | 1,039,254 | | | 1,039,254 | | | 1,023,873 | | | |||||
Proppants Holdings, LLC | | | Energy: Oil & Gas | | | Common Units - 1,506,254 units(13) | | | | | — | | | 890,481 | | | 18,828 | | | —% | |
| | | | Common Units - 161,852 units(13) | | | | | — | | | 8,832 | | | — | | | —% | |||
| | | | | | | | — | | | 899,313 | | | 18,828 | | | |||||
PT Network, LLC | | | Healthcare & Pharmaceuticals | | | Senior Secured First Lien Term Loan LIBOR + 5.500%, 1.000% Floor, 2.00% PIK(4)(10) | | | 11/30/2023 | | | 8,136,436 | | | 7,879,566 | | | 8,049,376 | | | 1.5% |
| | | | Membership Units - 1.441 units(4)(13) | | | | | — | | | — | | | — | | | —% | |||
| | | | | | | | 8,136,436 | | | 7,879,566 | | | 8,049,376 | | | |||||
RA Outdoors, LLC | | | High Tech Industries | | | Senior Secured First Lien Term Loan LIBOR + 6.750%, 1.000% Floor(4)(12)(14) | | | 4/8/2026 | | | 18,765,432 | | | 18,765,432 | | | 18,577,778 | | | 3.4% |
| | | | | | | | 18,765,432 | | | 18,765,432 | | | 18,577,778 | | | |||||
RateGain Technologies, Inc. | | | Hotel, Gaming & Leisure | | | Subordinated Notes(4)(11)(13) | | | 7/31/2020 | | | 386,854 | | | 363,936 | | | 386,854 | | | 0.1% |
| | | | Subordinated Notes(4)(11)(13) | | | 7/31/2021 | | | 476,190 | | | 476,190 | | | 476,190 | | | 0.1% | ||
| | | | | | | | 863,044 | | | 840,126 | | | 863,044 | | | |||||
Redwood Services Group, LLC | | | Services: Business | | | Senior Secured First Lien Term Loan LIBOR + 8.500%, 1.000% Floor(4)(6) | | | 6/6/2023 | | | 3,970,000 | | | 3,970,000 | | | 3,981,910 | | | 0.7% |
| | | | Senior Secured First Lien Term Loan LIBOR + 6.000%, 1.000% Floor(4)(12) | | | 6/6/2023 | | | 22,436,105 | | | 22,436,105 | | | 22,021,037 | | | 4.0% | ||
| | | | Senior Secured First Lien Term Loan LIBOR + 8.500%, 1.000% Floor(4)(12) | | | 6/6/2023 | | | 728,511 | | | 716,354 | | | 728,511 | | | 0.1% | ||
| | | | | | | | 27,134,616 | | | 27,122,459 | | | 26,731,458 | | | |||||
Resolute Investment Managers, Inc. | | | Banking, Finance, Insurance & Real Estate | | | Senior Secured Second Lien Term Loan LIBOR + 8.000%, 1.000% Floor(4)(6) | | | 4/30/2025 | | | 5,081,120 | | | 5,060,559 | | | 5,093,823 | | | 0.9% |
| | | | | | | | 5,081,120 | | | 5,060,559 | | | 5,093,823 | | | |||||
Rhombus Cinema Holdings, LP | | | Media: Diversified & Production | | | Preferred Equity - 7,449 shares 10.000% PIK(4)(5)(13) | | | | | — | | | 4,584,207 | | | — | | | —% | |
| | | | Common Units - 3,163 units(4)(13) | | | | | — | | | 2,864,831 | | | — | | | —% | |||
| | | | Common Units - 3,163 units (4)(13) | | | | | — | | | 297,962 | | | — | | | —% | |||
| | | | | | | | | | — | | | 7,747,000 | | | — |
Company(1)(2) | | | Industry | | | Type of Investment(18)(19) | | | Maturity | | | Par Amount | | | Cost | | | Fair Value | | | % of Net Assets(3) |
RTIC Subsidiary Holdings, LLC | | | Consumer Goods: Durable | | | Senior Secured First Lien Term Loan LIBOR + 7.750%, 1.250% Floor(4)(6) | | | 9/1/2025 | | | $9,812,891 | | | $9,812,891 | | | $9,887,469 | | | 1.8% |
| | | | Revolving Credit Facility LIBOR + 7.750%, 1.250% Floor(4)(6)(14) | | | 9/1/2025 | | | 793,651 | | | 793,651 | | | 793,651 | | | 0.1% | ||
| | | | Senior Secured First Lien Term Loan LIBOR + 7.750%, 1.250% Floor(4)(12) | | | 9/1/2025 | | | 788,690 | | | 788,691 | | | 780,804 | | | 0.1% | ||
| | | | Preferred Class A units - 145.347 units(13) | | | | | — | | | 145,347 | | | 145,347 | | | —% | |||
| | | | Preferred Class B units - 145.347 units(13) | | | | | — | | | 145,347 | | | 145,347 | | | —% | |||
| | | | Common units - 153 units(13) | | | | | — | | | 15,300 | | | 28,610 | | | —% | |||
| | | | | | | | 11,395,232 | | | 11,701,227 | | | 11,781,228 | | | |||||
SavATree, LLC | | | Environmental Industries | | | Senior Secured First Lien Term Loan LIBOR + 5.000%, 1.000% Floor(4)(6) | | | 6/2/2022 | | | 4,250,921 | | | 4,250,921 | | | 4,250,921 | | | 0.8% |
| | | | | | | | 4,250,921 | | | 4,250,921 | | | 4,250,921 | | | |||||
Simplified Logistics, LLC | | | Services: Business | | | Senior Secured First Lien Term Loan LIBOR + 6.500%, 1.000% Floor(4)(6)(14) | | | 2/28/2022 | | | 18,155,679 | | | 18,155,679 | | | 18,030,404 | | | 3.3% |
| | | | | | | | 18,155,679 | | | 18,155,679 | | | 18,030,404 | | | |||||
SMART Financial Operations, LLC | | | Retail | | | Preferred Equity - 1,000,000 units(4)(13) | | | | | — | | | 1,000,000 | | | 490,000 | | | 0.1% | |
| | | | | | | | — | | | 1,000,000 | | | 490,000 | | | |||||
Smile Doctors, LLC | | | Healthcare & Pharmaceuticals | | | Senior Secured First Lien Term Loan LIBOR + 6.000%, 1.000% Floor(4)(6) | | | 10/6/2022 | | | 13,701,350 | | | 13,689,162 | | | 13,546,525 | | | 2.5% |
| | | | | | | | 13,701,350 | | | 13,689,162 | | | 13,546,525 | | | |||||
Sound Point CLO XX, Ltd. | | | Multi-Sector Holdings | | | Subordinated Notes 9.402% effective yield(4)(7)(8)(9) | | | 7/26/2031 | | | 4,489,000 | | | 3,174,273 | | | 2,718,987 | | | 0.5% |
| | | | | | | | 4,489,000 | | | 3,174,273 | | | 2,718,987 | | | |||||
Team Car Care, LLC | | | Automotive | | | Senior Secured First Lien Term Loan LIBOR + 8.000%, 1.000% Floor(4)(6) | | | 2/23/2023 | | | 13,075,430 | | | 13,075,430 | | | 12,996,978 | | | 2.4% |
| | | | | | | | 13,075,430 | | | 13,075,430 | | | 12,996,978 | | | |||||
Team Services Group | | | Services: Consumer | | | Senior Secured First Lien Term Loan LIBOR + 5.000%, 1.000% Floor(4)(12) | | | 12/20/2027 | | | 9,962,469 | | | 9,765,817 | | | 9,925,608 | | | 1.8% |
| | | | Senior Secured Second Lien Term Loan LIBOR + 9.000%, 1.000% Floor(4)(12) | | | 12/18/2028 | | | 5,000,000 | | | 4,862,313 | | | 5,041,000 | | | 0.9% | ||
| | | | | | | | 14,962,469 | | | 14,628,130 | | | 14,966,608 | | ||||||
The Octave Music Group, Inc. | | | Media: Diversified & Production | | | Senior Secured First Lien Term Loan LIBOR + 5.250%, 1.000% Floor, 0.75% PIK(4)(12) | | | 5/29/2025 | | | 7,655,172 | | | 7,601,135 | | | 7,578,621 | | | 1.4% |
| | | | | | | | 7,655,172 | | | 7,601,135 | | | 7,578,621 | | | |||||
Thermacell Repellents, Inc. | | | Consumer Goods: Durable | | | Revolving Credit Facility LIBOR + 6.250%, 1.000% Floor(4)(12) | | | 12/4/2026 | | | — | | | — | | | — | | | —% |
| | | | Senior Secured First Lien Term Loan LIBOR + 6.250%, 1.000% Floor(4)(12)(14) | | | 12/4/2026 | | | 2,787,150 | | | 2,742,830 | | | 2,737,279 | | | 0.5% | ||
| | | | | | | | 2,787,150 | | | 2,742,830 | | | 2,737,279 | | | |||||
Time Manufacturing Acquisition, LLC | | | Capital Equipment | | | Senior Secured First Lien Term Loan LIBOR + 5.000%, 1.000% Floor(4) | | | 2/3/2023 | | | 2,452,942 | | | 2,452,771 | | | 2,438,224 | | | 0.4% |
| | | | | | | | 2,452,942 | | | 2,452,771 | | | 2,438,224 | | | |||||
True Religion Apparel, Inc. | | | Retail | | | Common units - 2.713 units(13) | | | | | — | | | — | | | — | | | —% | |
| | | | Preferred Equity - 2.818 units(13) | | | | | — | | | 12,094 | | | — | | | —% | |||
| | | | | | | | — | | | 12,094 | | | — | | | — |
Company(1)(2) | | | Industry | | | Type of Investment(18)(19) | | | Maturity | | | Par Amount | | | Cost | | | Fair Value | | | % of Net Assets(3) |
Velocity Pooling Vehicle, LLC | | | Automotive | | | Common Units - 4,676 units(4) (13) | | | | | $— | | | $259,938 | | | $34,649 | | | —% | |
| | | | Warrants - 5,591 warrants(4)(13) | | | 3/30/2028 | | | — | | | 310,802 | | | 41,429 | | | —% | ||
| | | | | | | | — | | | 570,740 | | | 76,078 | | | |||||
Vision Solutions, Inc. | | | High Tech Industries | | | Senior Secured Second Lien Term Loan LIBOR + 7.250%, 1.000% Floor, 0.75%(6) | | | 4/23/2029 | | | 6,500,000 | | | 6,438,973 | | | 6,502,600 | | | 1.2% |
| | | | | | | | 6,500,000 | | | 6,438,973 | | | 6,502,600 | | | |||||
VOYA CLO 2015-2, LTD. | | | Multi-Sector Holdings | | | Subordinated Notes 0.026% effective yield(4)(7)(8)(9) | | | 7/19/2028 | | | 10,735,659 | | | 4,846,889 | | | 3,674,816 | | | 0.7% |
| | | | | | | | 10,735,659 | | | 4,846,889 | | | 3,674,816 | | | |||||
VOYA CLO 2016-2, LTD. | | | Multi-Sector Holdings | | | Subordinated Notes 7.618% effective yield(4)(7)(8)(9) | | | 7/19/2028 | | | 11,088,290 | | | 6,341,789 | | | 4,996,383 | | | 0.9% |
| | | | | | | | 11,088,290 | | | 6,341,789 | | | 4,996,383 | | | |||||
Walker Edison Furniture Company LLC | | | Consumer Goods: Durable | | | Common Units - 2,000 units(4)(13) | | | | | — | | | — | | | 3,148,399 | | | 0.6% | |
| | | | | | | | — | | | — | | | 3,148,399 | | | |||||
Watermill-QMC Midco, Inc. | | | Automotive | | | Equity - 1.62% partnership interest(4)(13) | | | | | — | | | 902,277 | | | — | | | —% | |
| | | | | | | | — | | | 902,277 | | | — | | | |||||
Wawona Delaware Holdings, LLC | | | Beverage & Food | | | Senior Secured First Lien Term Loan LIBOR + 4.750%(4)(6) | | | 9/11/2026 | | | 45,050 | | | 43,055 | | | 42,122 | | | —% |
| | | | | | | | 45,050 | | | 43,055 | | | 42,122 | | | |||||
West Dermatology, LLC | | | Healthcare & Pharmaceuticals | | | Senior Secured First Lien Term Loan LIBOR + 7.500%, 1.000% Floor(4)(6) | | | 2/11/2025 | | | 1,667,425 | | | 1,667,425 | | | 1,667,425 | | | 0.3% |
| | | | Senior Secured First Lien Delayed Draw Term Loan LIBOR + 7.500%, 1.000% Floor (4)(6)(14) | | | 2/11/2025 | | | 866,447 | | | 874,331 | | | 886,663 | | | 0.2% | ||
| | | | Revolving Credit Facility LIBOR + 6.000%, 1.000% Floor, 0.75% PIK(4)(6)(14) | | | 2/11/2025 | | | 220,994 | | | 220,994 | | | 220,994 | | | —% | ||
| | | | Senior Secured First Lien Term Loan LIBOR + 6.000%, 1.000% Floor, 0.750% PIK(4)(6)(14) | | | 2/11/2025 | | | 4,727,338 | | | 4,724,870 | | | 4,727,338 | | | 0.9% | ||
| | | | | | | | 7,482,204 | | | 7,487,620 | | | 7,502,420 | | | |||||
Wok Holdings Inc. | | | Retail | | | Senior Secured First Lien Term Loan LIBOR + 6.250%(4)(12) | | | 3/1/2026 | | | 48,750 | | | 34,735 | | | 48,038 | | | —% |
| | | | | | | | 48,750 | | | 34,735 | | | 48,038 | | | |||||
Total non-controlled/non-affiliated investments | | | $ 451,491,435 | | | $ 423,154,580 | | | 77.8% | ||||||||||||
Non-controlled/affiliated investments – | | | | | | | | | | | | | |||||||||
1888 Industrial Services, LLC | | | Energy: Oil & Gas | | | Revolving Credit Facility LIBOR + 5.000%, 1.000% Floor (4)(6)(14) | | | 9/30/2021 | | | 1,243,924 | | | 1,243,924 | | | 1,081,846 | | | 0.2% |
| | | | Senior Secured First Lien Term Loan LIBOR + 5.000%, 1.000% Floor(4)(5)(12) | | | 9/30/2021 | | | 431,176 | | | 431,176 | | | — | | | —% | ||
| | | | Senior Secured First Lien Term Loan LIBOR + 5.000%, 1.000% Floor, PIK(4)(5)(6) | | | 9/30/2021 | | | 3,698,023 | | | 3,315,574 | | | — | | | —% | ||
| | | | Senior Secured First Lien Term Loan LIBOR + 8.000%, 1.000% Floor, PIK(4)(5)(6) | | | 9/30/2021 | | | 9,935,291 | | | 6,816,029 | | | — | | | —% | ||
| | | | Units - 6,122.765 units(4)(7)(13) | | | | | — | | | — | | | — | | | —% | |||
| | | | | | | | 15,308,414 | | | 11,806,703 | | | 1,081,846 | | | |||||
Caddo Investors Holdings 1 LLC | | | Forest Products & Paper | | | Equity - 12.250% LLC Interest(4)(16) | | | | | — | | | 5,072,149 | | | 6,986,351 | | | 1.3% | |
| | | | | | | | — | | | 5,072,149 | | | 6,986,351 | | |
Company(1)(2) | | | Industry | | | Type of Investment(18)(19) | | | Maturity | | | Par Amount | | | Cost | | | Fair Value | | | % of Net Assets(3) |
Charming Charlie LLC | | | Retail | | | Senior Secured First Lien Delayed Draw Term Loan 20.000%(5) | | | 5/28/2022 | | | $769,967 | | | $769,967 | | | $396,225 | | | 0.1% |
| | | | Senior Secured First Lien Term Loan LIBOR + 10.000%, 1.000% Floor(5)(6) | | | 4/24/2023 | | | 7,590,773 | | | 5,859,128 | | | — | | | —% | ||
| | | | Senior Secured First Lien Term Loan 20.000%(5) | | | 5/15/2022 | | | 138,517 | | | 138,517 | | | 71,281 | | | —% | ||
| | | | Common Stock - 34,923,249 shares(7)(13) | | | | | — | | | — | | | — | | | —% | |||
| | | | | | | | 8,499,257 | | | 6,767,612 | | | 467,506 | | | |||||
Dynamic Energy Services International LLC | | | Energy: Oil & Gas | | | Senior Secured First Lien Term Loan 13.500% PIK(4)(5)(6) | | | 12/31/2021 | | | 7,378,116 | | | 3,810,060 | | | — | | | —% |
| | | | Common Units - 6,500,000 shares(5)(13) | | | | | — | | | — | | | — | | | —% | |||
| | | | | | | | 7,378,116 | | | 3,810,060 | | | — | | | |||||
Kemmerer Operations, LLC | | | Metals & Mining | | | Senior Secured First Lien Term Loan 15.000% PIK(4) | | | 6/21/2023 | | | 2,381,985 | | | 2,381,985 | | | 2,381,985 | | | 0.4% |
| | | | Senior Secured First Lien Delayed Draw Term Loan 15.000% PIK(4)(14) | | | 6/21/2023 | | | 163,915 | | | 163,915 | | | 163,915 | | | —% | ||
| | | | Common Units - 6.7797 units(4)(13) | | | | | — | | | 962,718 | | | 1,411,308 | | | 0.3% | |||
| | | | | | | | 2,545,900 | | | 3,508,618 | | | 3,957,208 | | | |||||
MCM 500 East Pratt Holdings, LLC | | | Banking, Finance, Insurance & Real Estate | | | Equity - 5,000,000 units(7) | | | | | — | | | 5,000,000 | | | 6,350,000 | | | 1.2% | |
| | | | | | | | — | | | 5,000,000 | | | 6,350,000 | | | |||||
Total non-controlled/affiliated investments(15) | | | $35,965,142 | | | $18,842,911 | | | 3.5 % | ||||||||||||
Controlled/affiliated investments – | | | | | | | | | | | |||||||||||
| | | | | | | | | | | | | | ||||||||
Black Angus Steakhouses, LLC | | | Hotel, Gaming & Leisure | | | Senior Secured First Lien Term Loan LIBOR + 9.000%, 1.000% Floor, PIK(4)(5)(6) | | | 6/30/2022 | | | 23,265,757 | | | 20,457,589 | | | 10,751,106 | | | 2.0% |
| | | | Senior Secured First Lien Term Loan LIBOR + 9.000%, 1.000% Floor(4)(6) | | | 6/30/2022 | | | 1,897,321 | | | 1,897,321 | | | 1,897,321 | | | 0.3% | ||
| | | | Senior Secured First Lien Term Loan LIBOR + 9.000%, 1.000% Floor(4)(12)(14) | | | 6/30/2022 | | | 3,750,000 | | | 3,750,000 | | | 3,750,000 | | | 0.7% | ||
| | | | Equity - 44.60% of outstanding equity(4)(7)(13) | | | | | — | | | — | | | — | | | —% | |||
| | | | | | | | 28,913,078 | | | 26,104,910 | | | 16,398,427 | | | |||||
Sierra Senior Loan Strategy JV I LLC | | | Multi-Sector Holdings | | | Equity - 89.01% ownership of SIC Senior Loan Strategy JV I LLC(7)(16) | | | | | — | | | 110,050,000 | | | 85,872,235 | | | 15.8% | |
| | | | | | | | — | | | 110,050,000 | | | 85,872,235 | | | |||||
Total controlled/affiliated investments(15) | | | | | | | $136,154,910 | | | $102,270,662 | | | 18.8 % | ||||||||
Total investments | | | | | | | $623,611,487 | | | $ 544,268,153 | | | 100.0 % | ||||||||
Money Market Fund | | | | | | | | | | | |||||||||||
| | | | | | | | | | | | | | ||||||||
Federated Institutional Prime Obligations Fund | | | | | Money Market 0.010%(17) | | | | | 18,473,764 | | | 18,473,764 | | | 18,473,764 | | | 3.4% | ||
State Street Institutional Liquid Reserves Fund | | | | | Money Market 0.050%(17) | | | | | 28,572,714 | | | 28,578,428 | | | 28,575,571 | | | 5.3% | ||
Total money market fund | | | | | | | $47,046,478 | | | $47,052,192 | | | $47,049,335 | | | 8.6% |
(1) | All of Sierra’s investments are domiciled in the United States except for AMMC CLO 22, Limited Series 2018-22A, AMMC CLO 23, Ltd. Series 2020-23A, Apidos CLO XXIV, Series 2016-24A, Dryden 43 Senior Loan Fund, Series 2016-43A, Dryden 49 Senior Loan Fund, 2017-49A, Magnetite XIX, Limited, Sound Point CLO XX, Ltd., VOYA CLO 2016-2, LTD., and VOYA CLO 2015-2, LTD., which are all domiciled in the Cayman Islands. All foreign investments were denominated in US Dollars. |
(2) | Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy. |
(3) | Percentage is based on net assets of $544,041,783 as of September 30, 2021. |
(4) | An affiliated fund that is managed by an affiliate of SIC Advisors also holds an investment in this security. |
(5) | The investment was on non-accrual status as of September 30, 2021. |
(6) | The interest rate on these loans is subject to a base rate plus 3 Month “3M” LIBOR, which at September 30, 2021 was 0.13%. The interest rate is subject to a minimum LIBOR floor. |
(7) | The investment is not a qualifying asset under Section 55 of the Investment Company Act. Non-qualifying assets represent 26.9% of Sierra’s portfolio at fair value. |
(8) | Securities are exempt from registration under Rule 144A of the Securities Act. These securities represent a fair value of $54,369,859 or 10.0% of net assets, and a combined cost of $57,709,211 as of September 30, 2021 and are considered restricted securities. The acquisition date and fair value of each restricted security are as follows: |
Company | | | Type of Investment | | | Acquisition Date | | | Fair Value ($) |
AMMC CLO 22, Limited Series 2018-22A | | | Subordinated Notes | | | 03/08/18 | | | 4,857,517 |
AMMC CLO 23, Ltd. Series 2020-23A | | | Subordinated Notes | | | 11/12/20 | | | 1,646,600 |
Apidos CLO XXIV, Series 2016-24A | | | Subordinated Notes | | | 07/22/16 | | | 9,252,254 |
Dryden 43 Senior Loan Fund, Series 2016-43A | | | Subordinated Notes | | | 07/15/16 | | | 2,300,872 |
Dryden 49 Senior Loan Fund, Series 2017-49A | | | Subordinated Notes | | | 06/19/17 | | | 11,103,407 |
Magnetite XIX, Limited | | | Subordinated Notes | | | 03/24/21 | | | 5,250,000 |
Magnetite XIX, Limited | | | Subordinated Notes | | | 06/29/17 | | | 8,569,023 |
Sound Point CLO XX, Ltd. | | | Subordinated Notes | | | 06/27/18 | | | 2,718,987 |
VOYA CLO 2015-2, LTD. | | | Subordinated Notes | | | 03/22/19 | | | 3,674,816 |
VOYA CLO 2016-2, LTD. | | | Subordinated Notes | | | 06/07/16 | | | 4,996,383 |
(9) | This investment is in the equity class of a collateralized loan obligation (“CLO”). The CLO equity investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual payments to debt holders and fund expenses. The current estimated yield is based on the current projections of this excess cash flow taking into account assumptions that have been made regarding expected prepayments, losses and future reinvestment rates. These assumptions are periodically reviewed and adjusted. Ultimately, the actual yield may be higher or lower than the estimated yield if actual results differ from those used for the assumptions. |
(10) | The interest rate on these loans is subject to a base rate plus 6 month “6M” LIBOR, which at September 30, 2021 was 0.16%. The interest rate is subject to a minimum LIBOR floor. |
(11) | The investment is past due as of September 30, 2021. |
(12) | The interest rate on these loans is subject to a base rate plus 1 Month “1M” LIBOR, which at September 30, 2021 was 0.08%. The interest rate is subject to a minimum LIBOR floor. |
(13) | Security is non-income producing. |
(14) | The investment has an unfunded commitment as of September 30, 2021. For further details see Note 10 in Sierra’s Form 10-Q for the fiscal-quarter ended September 30, 2021. Fair value includes an analysis of the unfunded commitment. |
(15) | Non-controlled/affiliated investments are defined by the Investment Company Act as investments in companies in which Sierra owns at least 5% but no more than 25% of the voting securities or is under common control with such portfolio company. Controlled investments are defined by the Investment Company Act as investments in companies in which Sierra owns more than 25% of the voting securities or maintains greater than 50% of the board representation. |
(16) | As a practical expedient, Sierra uses NAV to determine the fair value of this investment. |
(17) | Represents securities in Level 1 of the valuation hierarchical levels. Money Market investments are deemed to be cash equivalents and are not included in the ASC 820 table (see Note 4 in Sierra’s Form 10-Q for the fiscal-quarter ended September 30, 2021). |
(18) | Percentage of class held for equity investments are as follows: |
a. | 1888 Industrial Services, LLC Common Units – 10.20% |
b. | Black Angus Steakhouses, LLC LLC Interests – 44.60% |
c. | Caddo Investors Holdings 1 LLC LLC Interests – 12.25% |
d. | Charming Charlie LLC Common Units – 11.64% |
e. | Dynamic Energy Services International LLC Common Units – 6.50% |
f. | Isola USA Corp. Common Units – 4.06% |
g. | JFL-WCS Partners, LLC Class B Common Shares – 3.36% |
h. | JFL-NGS Partners, LLC Class B Common Shares – 6.82% |
i. | JFL-NGS Partners, LLC Class A Preferred Shares – 6.82% |
j. | Kemmerer Operations, LLC Common Units – 6.78% |
k. | MCM 500 East Pratt Holdings, LLC LLC Interests – 22.24% |
l. | Path Medical, LLC Warrants – 26.97% |
m. | Proppants Holdings, LLC Common Units – 1.61% |
n. | Proppants Holdings, LLC Common Units – 1.83% |
o. | PT Network, LLC Class C Interests – 5.76% (Sierra owns 1.441 of 25 Class C Interests; there are a total of 1,000 units of Classes A, B, C and D units) |
p. | Rhombus Cinema Holdings, LP Preferred Shares – 4.81% |
q. | Rhombus Cinema Holdings, LP Common Shares – 1.54% |
r. | RTIC Subsidiary Holdings, LLC Class A Preferred – 0.23% |
s. | RTIC Subsidiary Holdings, LLC Class B Preferred – 0.23% |
t. | RTIC Subsidiary Holdings, LLC Common Units – 0.23% |
u. | Sierra Senior Loan Strategy JV I LLC LLC Interests – 89.01% |
v. | SMART Financial Operations, LLC Class A Preferred – 1.51% |
w. | True Religion Apparel, Inc. Common Units – 0.27% |
x. | True Religion Apparel, Inc. Preferred Units – 0.28% |
y. | Velocity Pooling Vehicle, LLC Common Units – 0.10% |
z. | Watermill-QMC Midco, Inc. LLC Interests – 1.64% |
aa. | Walker Edison Furniture Company LLC – 1.31% (position is held through JWC WE Holdings, LP; via its position in JWC WE Holdings, LP, Sierra owned 13,658.85 shares of 1,043,750 fully diluted shares of Walker Edison) |
(19) | Percentage of class held for CLO equity investments are as follows: |
a. | AMMC CLO 22, Limited Series 2018-22A Subordinated Notes – 13.89% |
b. | AMMC CLO 23, Ltd. Series 2020-23A Subordinated Notes – 6.42% |
c. | Apidos CLO XXIV, Series 2016-24A Subordinated Notes – 44.77% |
d. | Dryden 43 Senior Loan Fund, Series 2016-43A Subordinated Notes – 4.57% |
e. | Dryden 49 Senior Loan Fund, Series 2017-49A Subordinated Notes – 33.79% |
f. | Magnetite XIX, Limited Subordinated Notes – 31.21% |
g. | Sound Point CLO XX, Ltd. Subordinated Notes – 6.05% |
h. | VOYA CLO 2015-2, LTD. Subordinated Notes – 17.89% |
i. | VOYA CLO 2016-2, LTD Subordinated Notes – 28.32% |
Name | | | Dollar Range of Equity Securities in Sierra(1)(2) |
Dean Crowe | | | None |
Howard Liao | | | None |
David Richards | | | None |
(1) | Dollar ranges are as follows: None, $1—$10,000; $10,001—$50,000; $50,001—$100,000; $100,001—$500,000, $500,001—$1,000,000 or over $1,000,000. |
(2) | The dollar range of equity securities beneficially owned by Sierra’s portfolio managers is based on an assumed offering price of $10.00 per share. |
Name and Address | | | Number of Shares Beneficially Owned(1) | | | Percentage of Class(2) | | | Pro forma percentage of outstanding Barings BDC Common Stock |
Directors and Executive Officers: | | | | | | | |||
Interested Directors | | | | | | | |||
Dean Crowe | | | — | | | — | | | — |
Independent Directors | | | | | | | |||
Stephen R. Byers | | | — | | | — | | | — |
Valerie Lancaster-Beal | | | — | | | — | | | — |
Oliver T. Kane | | | — | | | — | | | — |
Matthew E. Forstenhausler | | | — | | | — | | | — |
Executive Officer Who is Not a Director | | | | | | | |||
Richard T. Allorto Jr. | | | — | | | — | | | — |
Directors and Executive Officers as a Group (6 persons) | | | — | | | — | | | — |
(1) | Beneficial ownership has been determined in accordance with Rule 13d-3 of the Exchange Act. Except as otherwise noted, each beneficial owner of more than five percent of Sierra Common Stock and each director and officer has sole voting and/ or investment power over the shares reported. |
(2) | Based on a total of 102,276,889.12 shares issued and outstanding as of November 30, 2021. |
• | one-tenth or more but less than one-third; |
• | one-third or more but less than a majority; or |
• | a majority or more of all voting power. |
• | any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock; or |
• | an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding stock of the corporation. |
• | 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and |
• | two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. |
• | amending the Sierra Charter; |
• | amending the Sierra Investment Advisory Agreement; |
• | amending the Sierra Administration Agreement; |
• | approving or disapproving the sale of all or substantially all of Sierra’s assets when such sale is to be made other than in the ordinary course of Sierra’s business; |
• | causing a merger or other reorganization of Sierra; |
• | dissolving Sierra; and |
• | removing SIC Advisors and electing a new investment adviser. |
• | amend the Sierra Investment Advisory Agreement except for amendments that would not adversely affect the interests of Sierra stockholders; |
• | voluntarily withdraw as Sierra’s investment adviser unless such withdrawal would not affect Sierra’s tax status and would not materially adversely affect Sierra’s stockholders; |
• | appoint a new investment adviser; |
• | sell all or substantially all of Sierra’s assets other than in the ordinary course of business; and |
• | cause the merger or any other reorganization of Sierra. |
• | one-tenth or more but less than one-third; |
• | one-third or more but less than a majority; or |
• | a majority or more of all voting power. |
• | any person who beneficially owns 10% or more of the voting power of the corporation’s shares; or |
• | an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation. |
• | 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and |
• | two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. |
• | reserve for itself the right to fix the number of directors; |
• | provide that a director may be removed only by the vote of the holders of two-thirds of the stock entitled to vote; |
• | retain for itself sole authority to fill vacancies created by the death, removal or resignation of a director; and |
• | provide that all vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors, in office, even if the remaining directors do not constitute a quorum. |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
Authorized Stock | | | Sierra is authorized to issue 250,000,000 shares of common stock, $0.001 par value per share. | | | Barings BDC is authorized to issue 150,000,000 shares of common stock, $0.001 par value per share. |
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| | Pursuant to the Sierra Charter, a majority of the Sierra Board may amend the Sierra Charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series without stockholder approval. | | | Pursuant to the Barings BDC Charter, a majority of the Barings BDC Board, acting without stockholder approval, may amend the Barings BDC Charter from time to time to increase or decrease the aggregate number of shares of capital stock or the number of shares of capital stock of any class or series. | |
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| | The Sierra Charter authorizes the Sierra Board to classify and reclassify any unissued shares of stock into other classes or series of stock, including preferred stock. | | | The Barings BDC Charter authorizes the Barings BDC Board to classify and reclassify any unissued shares of capital stock into other classes or series of capital stock, including preferred stock. | |
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| | On November 30, 2021, there were 102,276,889.12 shares of Sierra Common Stock outstanding. | | | On November 30, 2021, there were 65,316,085 shares of Barings BDC Common Stock issued and outstanding. | |
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Voting Rights | | | Each holder of Sierra Common Stock is entitled to one vote per share on all matters upon which stockholders are entitled to vote. | | | Each holder of Barings BDC Common Stock is entitled to one vote per share on all matters upon which stockholders are entitled to vote. |
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| | Except as described below with regard to the election of directors, the Sierra Bylaws provide that, unless a greater or lesser vote is required by law (including the Invesment Company Act) or by the Sierra Charter, a majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any matter which may properly come before such meeting. | | | The Barings BDC Bylaws generally provide that, unless a greater vote is required by statute or by the Barings BDC Charter, a majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any matter which may properly come before such meeting. | |
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Quorum | | | The Sierra Bylaws provide that a quorum for a stockholder meeting consists of the presence, in person or by proxy, of the holders of shares entitled to cast one-third of votes entitled to be cast, except with respect to any matter that, under applicable statutes | | | The Barings BDC Charter and Barings BDC Bylaws require that the presence of the stockholders entitled to cast a majority of the votes entitled to be cast (without regard to class) constitutes a quorum at any meeting of the stockholders, except with |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | or regulatory requirements, requires approval by a separate vote of one or more classes of stock, in which case the presence, in person or by proxy, of the holders of shares entitled to cast one-third of the votes entitled to be cast by each such class on such a matter will constitute a quorum. | | | respect to any such matter that requires approval by a separate vote of one or more classes of stock, in which case the presence, in person or by proxy, of stockholders entitled to cast a majority of the votes entitled to be cast by each such class on such matter will constitute a quorum. | |
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Number of Directors | | | A majority of the entire Sierra Board may establish, increase or decrease the number of directors, provided that the number of directors will never be less than three nor more than twelve. The Sierra Board is currently comprised of five members. | | | A majority of the entire Barings BDC Board may establish, increase or decrease the number of directors; provided that the number of directors will never be less than the minimum number required by the MGCL or the Investment Company Act. The Barings BDC Board is currently comprised of eight members. |
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Classification of Directors | | | The MGCL provides that a Maryland corporation may divide the directors into classes and may provide for a term of office which may not be more than five years, provided that the term of at least one class of directors must expire each year. Sierra’s directors are classified, with respect to the terms for which they severally hold office, into three classes, as nearly equal in number as possible as determined by the Sierra Board. At each annual meeting of stockholders, the successors to the class of directors whose term expires at such meeting are elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify. | | | Pursuant to Section 3-803 of the MGCL, by resolutions duly adopted by the Barings BDC Board, Barings BDC caused the Barings BDC Board to be classified, with respect to the terms for which they severally hold office, into three classes, as nearly equal in number as possible as determined by the Barings BDC Board. The Barings BDC Bylaws provide that, at each annual meeting of stockholders, the successors to the class of directors whose term expires at such meeting are elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify. |
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Vote Required for Director Election | | | The Sierra Bylaws provide that directors are elected by a plurality of all of the votes cast at a meeting of stockholders duly called at which a quorum is present. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. | | | The Barings BDC Bylaws provide that a nominee for director shall be elected to the Barings BDC Board if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Pursuant to the Barings BDC Charter, the Barings BDC Board may amend the Barings BDC Bylaws to alter the vote required to elect directors. |
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Removal of Directors | | | Pursuant to the MGCL, any director or the entire board of directors of a classified board of directors may be removed from office, but only for cause and by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast generally in the election of directors. | | | As permitted by the MGCL, the Barings BDC Charter provides that, subject to the rights of holders of one or more classes or series of subsequently established stock to elect or remove directors, any director or the entire board of directors may be removed from office, but only for cause and by the affirmative vote of stockholders entitled to |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | | | cast not less than two-thirds of the votes entitled to be cast generally in the election of directors. “Cause” is defined in the Barings BDC Charter as, with respect to any particular director, the conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to Barings BDC through bad faith or active and deliberate dishonesty. | ||
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Transactions with Directors | | | The Sierra Charter prohibits certain affiliated transactions or conflicts of interest between Sierra and its investment adviser or any affiliate thereof. In general, these provisions require that such transactions be approved either by a majority of Sierra’s directors (including a majority of the disinterested directors) or a majority of votes entitled to be cast by the stockholders of Sierra. These provisions address a number of transactions, including joint ventures, sales and leases to and from Sierra, loans to and from Sierra, as well as general restrictions on affiliated transactions with Sierra’s investment advisers and their respective affiliates. | | | The Barings BDC Charter does not contain any analogous provisions. |
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Amendment of Charter | | | Except as set forth in the following sentence, the Sierra Charter may be amended only if the amendment is declared advisable by the Sierra Board and approved by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast on the matter. Certain amendments relating to (i) making the Sierra Common Stock a “redeemable security” or converting Sierra, whether by merger or otherwise, from a “closed-end company” to an “open-end company,” (ii) extraordinary actions, (iii) determinations by the Sierra Board, and (iv) charter amendments require the approval of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. Additionally, as permitted by the MGCL, the Sierra Charter provides that a majority of the Sierra Board may amend the Sierra Charter from time to time without stockholder approval to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series. | | | Except for those amendments permitted to be made without stockholder approval under Maryland law or by specific provision in the Barings BDC Charter or as set forth in the following sentence, the Barings BDC Charter may be amended only if the amendment is declared advisable by the Barings BDC Board and approved by the affirmative vote of Barings BDC stockholders entitled to cast a majority of the votes entitled to be cast on the matter at a special or annual meeting. Amendments relating to (1) liquidation or dissolution and any amendment to the Barings BDC Charter to effect such liquidation or dissolution, (2) converting Barings BDC from a “closed-end company” to an “open-end company,” and (3) amendments to Sections 4.1 (Number, Classification and Election of Directors), 4.2 (Extraordinary Actions), 4.7 (Appraisal Rights), 6.1 (Amendments Generally) or 6.2 (Approval of Certain Extraordinary Actions and Charter Amendments) of the Barings BDC Charter require the approval of stockholders entitled to cast at least 75% of the votes entitled to be cast on the matter, each voting as a |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | | | separate class, provided, that if the Continuing Directors (as defined in the Barings BDC Charter), by a vote of at least 75% of such Continuing Directors, in addition to approval by the Barings BDC Board, approve such proposal or amendment, the affirmative vote of the holders of a majority of the votes entitled to be cast shall be sufficient to approve such matter. | ||
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| | | | Additionally, as permitted by the MGCL and set forth above, the Barings BDC Charter provides that a majority of the Barings BDC Board may amend the Barings BDC Charter from time to time without stockholder approval to increase or decrease the aggregate number of shares of stock or the number of shares of capital stock of any class or series. | ||
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Mergers, Consolidations and Sale of Assets | | | Subject to certain exceptions, Sierra may merge, consolidate, convert, sell, lease, exchange or otherwise transfer all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business only if such transaction is declared advisable by the Sierra Board and approved by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast on the matter. In addition, the Sierra Charter provides that, subject to and in addition to the provisions of any class or series of shares then outstanding and the mandatory provisions of any applicable laws or regulations, including the MGCL, upon a vote by the holders of a majority of the shares entitled to vote on a matter, stockholders may, without the necessity for concurrence by the investment advisers, direct that the Sierra Board cause Sierra to: (i) amend the Sierra Charter, the Sierra Investment Advisory Agreement, or the Sierra Administration Agreement; (ii) remove SIC Advisors; (iii) dissolve Sierra; (iv) approve or disapprove the sale of all or substantially all of the assets of Sierra when such sale is to be made other than in the ordinary course of Sierra’s business; or (v) cause the merger or other reorganization of Sierra. | | | Subject to certain exceptions, Barings BDC may merge, consolidate, convert, sell, lease, exchange or otherwise transfer all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business only if such transaction is declared advisable by the Barings BDC Board and approved by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast on the matter. The Barings BDC Charter does not contain any analogous rights that would permit stockholders to direct any action of the Barings BDC Board, other than through a non-binding shareholder proposal. |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
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Dissolution; Liquidation | | | Except as set forth in the following sentence, Sierra may dissolve only if the dissolution is declared advisable by a majority of the entire Sierra Board and approved by the affirmative vote of stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter. | | | Except as set forth in the following sentence, Barings BDC may dissolve only if the dissolution is declared advisable by a majority of the entire Barings BDC Board and approved by the affirmative vote of stockholders entitled to cast at least 75% of the votes entitled to be cast on the matter. If the dissolution is approved by at least 75% of Continuing Directors (in addition to approval by the Barings BDC Board), the dissolution will require the approval of stockholders entitled to cast only a majority of the votes entitled to be cast on the matter. |
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Subtitle 8 of Title 3 of the MGCL | | | Under Subtitle 8 of Title 3 of the MGCL, or “Subtitle 8,” a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors may elect to be subject, by resolution of its board of directors and a provision in its charter and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions: (1) a classified board; (2) a two-thirds vote requirement for removing a director; (3) a requirement that the number of directors be fixed only by vote of the directors; (4) that any and all vacancies on the board of directors may be filled only by the remaining directors, even if the remaining directors do not constitute a quorum, and for the remainder of the full term of the class of directors in which the vacancy occurred; and (5) a majority requirement for the calling of a stockholder- requested special meeting of stockholders. | | | Under Subtitle 8 of Title 3 of the MGCL, or “Subtitle 8,” a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors may elect to be subject, by resolution of its board of directors and a provision in its charter and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions: (1) a classified board; (2) a two-thirds vote requirement for removing a director; (3) a requirement that the number of directors be fixed only by vote of the directors; (4) that any and all vacancies on the board of directors may be filled only by the remaining directors, even if the remaining directors do not constitute a quorum, and for the remainder of the full term of the class of directors in which the vacancy occurred; and (5) a majority requirement for the calling of a stockholder- requested special meeting of stockholders. |
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| | Pursuant to Subtitle 8, Sierra has elected to require that vacancies on the Sierra Board may be filled only by a majority of the remaining directors and any director elected to fill a vacancy will serve for the remainder of the full term of the class in which the vacancy occurred. | | | Pursuant to Subtitle 8, Barings BDC has elected to classify the Barings BDC Board and that vacancies on the Barings BDC Board may be filled only by a majority of the remaining directors and any director elected to fill a vacancy will serve for the remainder of the full term of the class in which the vacancy occurred. Through provisions in the Barings BDC Charter and Barings BDC Bylaws unrelated to Subtitle 8, Barings BDC already requires a two-thirds vote for director removal, vests in the Barings BDC Board the exclusive power to fix the number of directorships and requires the written request of stockholders entitled to cast a majority of the votes entitled to be |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | | | cast on any matter that may properly be considered at a meeting of stockholders to call a special meeting to act on such matter. | ||
Call and Notice of Stockholders’ Meetings | | | Annual Meetings. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of Sierra is held on the date and at the time set by the Sierra Board. | | | Annual Meetings. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of Barings BDC is held on the date and at the time set by the Barings BDC Board. |
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| | Special Meetings. Any chairman of the Sierra Board, the chief executive officer, the president or a majority of the directors then in office may call a special meeting of the stockholders. Subject to certain conditions, a special meeting of stockholders shall also be called by the secretary of Sierra to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than 10% of all the votes entitled to be cast at such meeting. Only the business specified in the notice of the meeting may be brought before such meeting. | | | Special Meetings. The chairperson of the Barings BDC Board, the executive chairperson, the president or the Barings BDC Board may call a special meeting of the stockholders. Subject to certain conditions, a special meeting of stockholders must also be called by the secretary of Barings BDC to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting. Only the business specified in the notice of the meeting may be brought before such meeting. | |
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| | Record Date. The Sierra Bylaws provide that the Sierra Board may fix a record date not more than 90 days and not less than 10 days before the date of any such meeting. | | | Record Date. The MGCL and the Barings BDC Bylaws provide that the Barings BDC Board may fix a record date not more than 90 days and not less than 10 days before the date of any such meeting. | |
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| | Notice. Not less than 15 nor more than 60 days before each meeting of stockholders, the secretary of Sierra will give to each stockholder entitled to vote at such meeting or entitled to notice thereof, written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any law, the purpose for which the meeting is called, by (i) overnight mail, or (ii) electronic transmission. | | | Notice. Not less than 10 nor more than 90 days before each meeting of stockholders, the secretary of Barings BDC will give to each stockholder entitled to vote at such meeting or entitled to notice thereof, notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any law, the purpose for which the meeting is called, by (1) mail, (2) presenting it to such stockholder personally, (3) leaving it at the stockholder’s residence or usual place of business or (4) any other means permitted by Maryland law, including electronic transmission. | |
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Stockholder Inspection Rights | | | Pursuant to the MGCL, a Sierra stockholder may make a request during usual business hours to inspect and copy any of the following corporate documents: (i) the Sierra Bylaws; (ii) minutes of the proceedings of the stockholders; (iii) annual statements of affairs; | | | Any stockholder of a Maryland corporation may make a request during usual business hours to inspect and copy any of the following corporate documents: (1) bylaws; (2) minutes of the proceedings of the stockholders; (3) annual statements of affairs; and (4) voting |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | and (iv) voting trust agreements deposited at Sierra’s principal office. Any Sierra stockholder may also request a statement showing all stock and securities issued during a specified period of not more than 12 months before the date of the request. In addition, one or more persons who together are and for at least six months have been stockholders of record of at least 5% of the outstanding stock of any class may (i) inspect and copy during usual business hours Sierra’s books of account and stock ledger, (ii) present to any officer or resident agent of Sierra a written request for a statement of Sierra’s affairs and (iii) if Sierra does not maintain the original or a duplicate stock ledger at its principal office, present to any officer or resident agent of Sierra a written request for a list of stockholders, setting forth the name and address of each stockholder and the number of shares of each class which the stockholder holds. Within 20 days after such request is made, Sierra must prepare such information and have it available on file at its principal office. | | | trust agreements deposited at Barings BDC’s principal office. Any stockholder may also request a statement showing all stock and securities issued during a specified period of not more than 12 months before the date of the request. In addition, one or more persons who together are and for at least six months have been stockholders of record of at least 5% of the outstanding stock of any class may (1) inspect and copy during usual business hours Barings BDC’s books of account and stock ledger, (2) present to any officer or resident agent of Barings BDC a written request for a statement of Barings BDC’s affairs and (3) if Barings BDC does not maintain the original or a duplicate stock ledger at its principal office, present to any officer or resident agent of Barings BDC a written request for a list of stockholders, setting forth the name and address of each stockholder and the number of shares of each class which the stockholder holds. Within 20 days after such request is made, Barings BDC must prepare such information and have it available on file at its principal office. | |
| | The Sierra Charter provides that Sierra stockholders may access Sierra’s records upon reasonable notice and during business hours pursuant to the MGCL and in accordance with the Sierra Bylaws. The Sierra Bylaws provide that an alphabetical list of the names, addresses and telephone numbers of Sierra stockholders, along with the number of shares of stock owned by each of them, will be available for inspection by any stockholder or the stockholder’s designated agent upon request. A Sierra stockholder may request a copy of the stockholder list in connection with matters relating to stockholder voting rights and the exercise of stockholder rights under federal proxy laws. Sierra may require the stockholder requesting the stockholder list to represent that the stockholder list is not requested for a commercial purpose unrelated to the stockholder’s interest in Sierra. | | | ||
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| | The Sierra Charter also provides that within 120 days of the end of each fiscal year, the Sierra Board shall distribute reports to Sierra stockholders which include (i) Sierra’s audited financial statements, (ii) a report of Sierra’s activities, (iii) a comparison of current forecasts with any prior forecasts provided to stockholders, (iv) a report of stockholder | |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | distributions, and (v) any other financial information contained in Sierra’s annual report on Form 10-K. The Sierra Charter states that Sierra stockholders will also be entitled to quarterly reports within 60 days of the end of each fiscal quarter. | | |||
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Dividends and Stock Repurchases | | | Pursuant to the MGCL, no distribution may be made by Sierra if, after giving effect to the distribution, (i) Sierra would not be able to pay its indebtedness as the indebtedness becomes due in the usual course of business or (ii) Sierra’s total assets would be less than the sum of its total liabilities plus, unless the Sierra Charter permits otherwise, the amount that would be needed, if Sierra were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution. For purposes of determining compliance with the insolvency tests in clauses (i) and (ii), the MGCL permits assets to be valued on the basis of a “fair valuation” of the assets or upon any other “reasonable” method rather than limiting application of the tests to the financial statements. Notwithstanding the foregoing, under the MGCL, Sierra may make a distribution from (i) its net earnings for the fiscal year in which the distribution is made; (ii) its net earnings for the preceding fiscal year; or (iii) the sum of its net earnings for the preceding eight fiscal quarters, in each case even if Sierra’s total assets would be less than the sum of its total liabilities plus, unless the Sierra Charter permits otherwise, the amount that would be needed, if Sierra were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution. | | | Pursuant to the MGCL, no distribution may be made by Barings BDC if, after giving effect to the distribution, (1) Barings BDC would not be able to pay its indebtedness as the indebtedness becomes due in the usual course of business or (2) Barings BDC’s total assets would be less than the sum of its total liabilities plus, unless the Barings BDC Charter permits otherwise, the amount that would be needed, if Barings BDC were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution. For purposes of determining compliance with the insolvency tests in clauses (1) and (2), the MGCL permits assets to be valued on the basis of a “fair valuation” of the assets or upon any other “reasonable” method rather than limiting application of the tests to the financial statements. |
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| | Pursuant to the Barings BDC Bylaws, dividends and other distributions to Barings BDC stockholders may be authorized by the Barings BDC Board, subject to the provisions of law and the Barings BDC Charter. Dividends and other distributions may be paid in cash, property or stock of Barings BDC, subject to the provisions of applicable law and the Barings BDC Charter. | ||||
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| | Pursuant to the Sierra Bylaws, dividends and other distributions to Sierra stockholders may be authorized by the Sierra Board, subject to the provisions of law and the Sierra Charter. | | | ||
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| | The Sierra Charter provides that Sierra’s investment adviser must review Sierra’s accounts at least quarterly to determine whether cash distributions are appropriate. The Sierra Board may authorize the declaration and payment of dividends or distributions to the | | |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | Sierra stockholders in cash, other assets or securities of Sierra, or from any other source as the Sierra Board may determine in its discretion. The Sierra Board may also authorize the pro rata distribution to the Sierra stockholders of funds which the Sierra investment adviser deems unnecessary for Sierra to retain. | | | ||
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| | Subject to the power of the Sierra Board to suspend or terminate any repurchase obligations, the Sierra Charter provides that Sierra will offer to repurchase up to 2.5% of the weighted average number of shares of Sierra Common Stock outstanding in the prior four calendar quarters from the holders thereof. This repurchase obligation terminates, among other times, on the date that the Sierra Common Stock is listed on a national securities exchange. Upon an event of death or disability of a holder of Sierra Common Stock, the Sierra Charter obligates Sierra to repurchase from such holder all of the holder’s shares of Sierra Common Stock for an amount equal to the NAV per share of the common stock as disclosed in Sierra’s most recently filed annual report on Form 10-K or quarterly report on Form 10-Q following the date of death or disability of such holder. This repurchase obligation terminates, among other times, on the date that the Sierra Common Stock is listed on a national securities exchange. | | | ||
| | | | |||
Distributions In-Kind | | | Pursuant to the Sierra Charter, distributions in kind are not permitted, except for (a) distributions of readily marketable securities, (b) distributions of beneficial interests in a liquidating trust established for Sierra’s dissolution and the liquidation of its assets in accordance with the Sierra Charter or (c) distributions in which (1) the Sierra Board advises each stockholder of the risks associated with direct ownership of the property, (2) the Sierra Board offers each stockholder the election of receiving such in-kind distributions and (3) in-kind distributions are made only to those stockholders that accept such offer. | | | The Barings BDC Charter contains no restrictions on distributions in-kind. |
| | | | |||
Roll-Up Transactions | | | Under the Sierra Charter, a “Roll-up Transaction” is a transaction involving the acquisition, merger, conversion or consolidation, directly or indirectly, of Sierra and the issuance of securities of an entity (a | | | The Barings BDC Charter contains no restrictions on roll-up transactions. |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | “Roll-up Entity”) that is created or would survive after the successful completion of a Roll-up Transaction. This term does not include (a) a transaction involving securities of a company that have been listed on a national securities exchange for at least 12 months; or (b) a transaction involving Sierra’s conversion to corporate, trust or association form if, as a consequence of the transaction, there will be no significant adverse change in stockholder voting rights, the term of Sierra’s existence, compensation to Sierra’s investment adviser or Sierra’s investment objectives. | | | ||
| | | | |||
| | In connection with any Roll-up Transaction involving the issuance of securities of a Roll-up Entity, an appraisal of all of Sierra’s assets must be obtained from a competent independent appraiser. The assets must be appraised on a consistent basis, and the appraisal will be based on the evaluation of all relevant information and will indicate the value of the assets as of a date immediately prior to the announcement of the proposed Roll-up Transaction. The appraisal must assume an orderly liquidation of assets over a 12-month period. The terms of the engagement of the independent appraiser must clearly state that the engagement is for the benefit of Sierra and its stockholders. A summary of the appraisal, indicating all material assumptions underlying the appraisal, must be included in a report to stockholders in connection with any proposed Roll-up Transaction. | | | ||
| | | | |||
| | In connection with a proposed Roll-up Transaction, the sponsor of the Roll-up Transaction must offer to common stockholders who vote “no” on the proposal the choice of: (a) accepting the securities of the Roll-up Entity offered in the proposed Roll-up Transaction; or (b) one of the following: (i) remaining as holders of Sierra’s stock and preserving their interests therein on the same terms and conditions as existed previously or (ii) receiving cash in an amount equal to the stockholder’s pro rata share of the appraised value of Sierra’s net assets. | | | ||
| | | | |||
| | Sierra is prohibited from participating in any Roll-up Transaction: (a) that would result in the common stockholders having voting rights in a Roll-up Entity that are less than those provided in the Sierra Charter and the Sierra | |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | Bylaws; (b) that includes provisions that would operate to materially impede or frustrate the accumulation of shares by any purchaser of the securities of the Roll-up Entity, except to the minimum extent necessary to preserve the tax status of the Roll-up Entity, or which would limit the ability of an investor to exercise the voting rights of its securities of the Roll-up Entity on the basis of the number of shares held by that investor; (c) in which investor’s rights to access of records of the Roll-up Entity will be less than those provided in the Sierra Charter; or (d) in which any of the costs of the Roll-up Transaction would be borne by Sierra if the Roll-up Transaction is rejected by the common stockholders. | | |||
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Indemnification of Officers and Directors | | | Maryland law requires a corporation (unless its charter provides otherwise, which the Sierra Charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity against reasonable expenses incurred in the proceeding in which the director or officer was successful. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of (a) a | | | The MGCL requires a Maryland corporation (unless its charter provides otherwise, which the Barings BDC Charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. Maryland law permits a Maryland corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that: (1) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty; (2) the director or officer actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by the corporation or in its right, or for a judgment of liability on the basis that personal benefit was improperly |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met. | | | received, is limited to expenses. In addition, Maryland law permits a Maryland corporation to advance reasonable expenses to a director or officer upon receipt of (1) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification and (2) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed if it is ultimately determined that the standard of conduct was not met. | |
| | | | |||
| | The Sierra Charter provides that Sierra shall indemnify, to the fullest extent of Maryland law, (i) any individual who is a present or former director or officer of Sierra and who is made or threatened to be made a party to a proceeding by reason or his or her service in that capacity, and (ii) any individual who, while serving as a director or officer of Sierra and at the request of Sierra, services or has served as a director, officer, partner or director of any corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity or (ii) SIC Advisors or any of its affiliates acting as an agent of Sierra. Notwithstanding the foregoing, the Sierra Charter provides that (i) any present or former director or officer; (ii) any individual who, while a director or officer and at Sierra’s request, serves or has served another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, or partner; or (iii) SIC Advisors or any of its affiliates acting as an agent for Sierra (each such person, a “Sierra Indemnitee”) shall not be entitled to indemnification (including reasonable attorneys’ fees and amounts reasonably paid in settlement) for any liability or loss suffered by Sierra, nor shall a Sierra Indemnitee be held harmless for any loss or liability suffered by Sierra, unless each of the following conditions are met: (1) the Sierra Indemnitee has determined, in good faith, that the course of conduct which caused the loss or liability was in Sierra’s best interests, (2) the Sierra Indemnitee was acting on behalf of or performing services for Sierra, (3) the liability or loss suffered was not the result of (A) negligence or misconduct, in the case that the Sierra Indemnitee is SIC Advisors or an | | | To the maximum extent permitted by Maryland law and the Investment Company Act, the Barings BDC Charter authorizes Barings BDC to obligate itself to indemnify and pay or reimburse reasonable expenses in advance of final disposition of a proceeding, and the Barings BDC Bylaws require Barings BDC to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding, to (1) any present or former director or officer or (2) any individual who, while a director or officer and at Barings BDC’s request, serves or has served another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, in each case who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity. The Barings BDC Charter and Barings BDC Bylaws permit Barings BDC, with the approval of the Barings BDC Board, to provide indemnification and advance of expenses to a person who served a predecessor of Barings BDC in any of the capacities described above and to any employee or agent of Barings BDC or such predecessor. Barings BDC has indemnification agreements in place with certain of its directors. |
| | Rights of Sierra Stockholders | | | Rights of Barings BDC Stockholders | |
| | affiliate thereof acting as Sierra’s agent, or an officer of Sierra, or (B) gross negligence or willful misconduct, in the case that the Sierra Indemnitee is a director of Sierra (and is not also an officer of Sierra, SIC Advisors or an affiliate thereof) and (4) the indemnification or agreement to hold harmless is only recoverable out of Sierra’s net assets and not from Sierra stockholders. The Sierra Charter further limits any indemnification, as required by the Investment Company Act, to prohibit indemnification for any liability resulting from willful misconduct, bad faith, gross negligence or reckless disregard of the duties involved in the conduct. | | | ||
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| | Additionally, Sierra has indemnification agreements in place with its directors and officers. | | | ||
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| | | |
Barings BDC’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 23, 2021; |
• | Barings BDC’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2021, June 30, 2021 and September 30, 2021 filed with the SEC on May 6, 2021, August 5, 2021 and November 9, 2021, respectively; |
• | Barings BDC’s Current Reports on Form 8-K (other than information furnished rather than filed) filed with the SEC on February 25, 2021, May 20, 2021, August 5, 2021 (only with respect to Item 5.02), September 22, 2021, November 18, 2021, November 18, 2021 (only with respect to Item 8.01) and November 24, 2021; |
• | Barings BDC’s Definitive Proxy Statement on Schedule 14A with respect to the Annual Meeting of Barings BDC Stockholders filed with the SEC on March 26, 2021 (to the extent explicitly incorporated by reference into Barings BDC’s Annual Report on Form 10-K); and |
• | the description of Barings BDC Common Stock referenced in Barings BDC’s Registration Statement on Form 8-A (No. 001-33130), as filed with the SEC on November 3, 2006, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering of the common stock registered hereby. |
• | Sierra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 19, 2021; |
• | Sierra’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, filed with the SEC on May 14, 2021, August 13, 2021 and November 15, 2021, respectively; |
• | Sierra’s Current Reports on Form 8-K (other than information furnished rather than filed) filed with the SEC on February 24, 2021, April 23, 2021, April 29, 2021, May 21, 2021, May 27, 2021, June 23, 2021 July 27, 2021, September 1, 2021, September 22, 2021, September 29, 2021 and October 22, 2021; |
• | Sierra’s Definitive Proxy Statement on Schedule 14A with respect to the Annual Meeting of Sierra Stockholders filed with the SEC on April 28, 2021 (to the extent explicitly incorporated by reference into Sierra’s Annual Report on Form 10-K); and |
• | the description of Sierra Common Stock referenced in Sierra’s Registration Statement on Form 8-A (No. 000-54650), as filed with the SEC on April 12, 2012, including any amendment or report filed for the purpose of updating such description. |
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Appendix A | | | Definitions |
Exhibit A | | | Articles of Incorporation of the Surviving Corporation |
Exhibit B | | | Terms of Credit Support Agreement |
Exhibit C | | | Second Amended and Restated Parent Advisory Agreement |
| | if to Parent, Acquisition Sub or the Parent External Adviser: | |||||||
| | | | Barings BDC, Inc. | |||||
| | | | 300 South Tryon Street, Suite 2500 | |||||
| | | | Charlotte, North Carolina 28202 | |||||
| | | | Email: | | | |||
| | | | Attention: | | | Jonathan Bock | ||
| | | | | | Jonathan Landsberg | |||
| | | | | |||||
| | with a copy (which shall not constitute notice) to: | |||||||
| | | | | |||||
| | | | Goodwin Procter, LLP | |||||
| | | | 100 Northern Avenue | |||||
| | | | Boston, Massachusetts 02210 | |||||
| | | | Email: | | | tlafond@goodwinlaw.com | ||
| | | | | | pdelligatti@goodwinlaw.com | |||
| | | | Attention: | | | Thomas LaFond | ||
| | | | | | Paul Delligatti | |||
| | | | | |||||
| | if to the Company: | |||||||
| | | | Sierra Income Corporation | |||||
| | | | 100 Park Avenue | |||||
| | | | New York, NY 10017 | |||||
| | | | Email: | | | |||
| | | | Attention: | | | Dean Crowe, Chief Executive Officer and President | ||
| | | | |
| | with a copy (which shall not constitute notice) to: | |||||||
| | | | Sullivan & Worcester LLP | |||||
| | | | 1666 K Street, NW | |||||
| | | | Washington, DC 20006 | |||||
| | | | Email: | | | dmahaffey@sullivanlaw.com | ||
| | | | | | wcurry@sullivanlaw.com | |||
| | | | Attention: | | | David C. Mahaffey | ||
| | | | | | William J. Curry |
| | BARINGS BDC, INC. | |||||||
| | | | | | ||||
| | By: | | | /s/ Jonathan Bock | ||||
| | | | Name: | | | Jonathan Bock | ||
| | | | Title: | | | Chief Financial Officer | ||
| | | | | | ||||
| | SIERRA INCOME CORPORATION | |||||||
| | | | | | ||||
| | By: | | | /s/ Dean Crowe | ||||
| | | | Name: | | | Dean Crowe | ||
| | | | Title: | | | Chief Executive Officer and President | ||
| | | | | | ||||
| | BARINGS LLC | |||||||
| | | | | | ||||
| | By: | | | /s/ Eric Lloyd | ||||
| | | | Name: | | | Eric Lloyd | ||
| | | | Title: | | | Managing Director | ||
| | | | | | ||||
| | MERCURY ACQUISITION SUB, INC. | |||||||
| | | | | | ||||
| | By: | | | /s/ Jonathan Landsberg | ||||
| | | | Name: | | | Jonathan Landsberg | ||
| | | | Title: | | | President |
ATTEST: | | | SIERRA INCOME CORPORATION | |||
| | By: | | | ||
[___________], Secretary | | | | | [__________], President |
| | BARINGS BDC, INC., a Maryland corporation | ||||
| | | | |||
| | By: | | | ||
| | | | Name: Eric Lloyd Title: Chief Executive Officer | ||
| | | | |||
| | BARINGS LLC, a Delaware limited liability company | ||||
| | | | |||
| | By: | | | ||
| | | | Name: Eric Lloyd Title: Managing Director |
Issuer | | | Barings LLC | |||
Policy holder | | | Barings BDC, Inc. | |||
Maximum obligation | | | $100,000,000 | |||
Upfront fee | | | None | |||
Effective date | | | Date of transaction close between Barings BDC, Inc. and Sierra Income Corporation (the “Transaction”) | |||
Designated Settlement / Payment Date | | | The earlier of [ , 203[2]]1 or the time at which the entire Reference Portfolio has been realized or written off | |||
Reference portfolio | | | • Investments acquired by Barings BDC, Inc. in the Transaction (“Reference Portfolio”) | |||
| | | ○ [#] of Non-control/Non-affiliated investments | |||
| | | ○ [#] of Affiliate investments | |||
| | | ○ [#] of Control investments | |||
| | | ○ See schedule in [Appendix]2 | |||
| | • Investments that are restructured, amended, extended or otherwise modified (including to new securities) will continue to be included in the Reference Portfolio until such time as these investments are realized or written off | ||||
Reference portfolio value | | | Aggregate purchase price of Reference Portfolio of $[ ] | |||
Obligation basis | | | Change in the market value of the Reference Portfolio | |||
Calculation of obligation | | | • Aggregate realized and unrealized losses on the Reference Portfolio less the aggregate realized and unrealized gains on the Reference Portfolio, in each case from the Effective Date to the Designated Settlement/Payment Date (“Covered Losses”) | |||
| • In the event the Covered Losses are $0.00 or less, no obligation will exist | |||||
| • As defined above, the maximum obligation shall be $100,000,000 | |||||
| | | ○ For the avoidance of doubt, if the Covered Losses are greater than $100,000,000, any losses in excess of this amount shall be borne by the Policy Holder | |||
Settlement mechanics | | | On the Designated Settlement/Payment Date, following the final calculation of the Covered Losses, the Issuer will (1) waive the Incentive Fee (as defined in Barings BDC, Inc.’s then-current investment advisory agreement) and, in the event that Covered Losses exceed such Incentive Fee, the Base Management Fee (as defined in Barings BDC, Inc.’s then-current investment advisory agreement) during the four quarterly measurement periods immediately following the quarter in which the Designated Settlement/Payment Date occurs (such period, the “Waiver Period”) until an aggregate amount of the Incentive Fee (including any Incentive Fee calculated on an annual basis during the Waiver Period) and Base Management Fee has been waived equal to the Covered Losses. If the Covered Losses exceed the aggregate amount of Base Management Fee and Incentive Fee waived by Barings LLC during the Waiver Period, then, on the date on which the last Incentive Fee or Base Management Fee payment would otherwise be due during the Waiver Period, Barings LLC shall make a cash payment to Barings BDC, Inc. equal to the positive difference between the Covered Losses and the aggregate amount of Incentive Fee and Base Management Fee previously waived by Barings LLC during the Waiver Period. |
1 | NTD: 10 years from the date of closing of the merger. |
2 | NTD: To include a detailed list of the loan/equity details for each portfolio company. |
• | reviewed a draft, dated September 20, 2021, of the Agreement; |
• | reviewed certain publicly available business and financial information relating to the Company and the Merger Partner and the industries in which they operate; |
• | compared the financial and operating performance of the Company and the Merger Partner with publicly available information concerning certain other companies we deemed relevant, and compared current and historic market prices of the Company Common Stock with similar data for such other companies; |
• | compared the proposed financial terms of the Transaction with the publicly available financial terms of certain other business combinations that we deemed relevant; |
• | reviewed certain internal financial analyses and forecasts for the Company (the “Company Projections”) prepared by the managements of the Company and the Company External Adviser; |
• | reviewed certain estimates prepared by the management of the Company as to the potential cost savings expected by such management to be achieved as a result of the Transaction (the “Synergies”); |
• | discussed with the managements of the Company, the Company External Adviser, the Merger Partner and SIC Advisors LLC (the “Merger Partner External Adviser”) regarding certain aspects of the Transaction, the business, financial condition and prospects of the Company, and the Merger Partner, respectively, the effect of the Transaction on the business, financial condition and prospects of the Company and the Merger Partner, respectively, and certain other matters that we deemed relevant; and |
• | considered such other financial analyses and investigations and such other information that we deemed relevant. |
| | Very truly yours, | |
| | ||
| | /s/ WELLS FARGO SECURITIES, LLC | |
| | ||
| | WELLS FARGO SECURITIES, LLC |
| | Very truly yours, | |
| | /s/ Broadhaven Capital Partners | |
| | Broadhaven Capital Partners |
Item 15. | Indemnification. |
Item 16. | Exhibits. |
| | Form of Articles of Amendment and Restatement of the Registrant (Filed as Exhibit (a)(3) to the Registrant’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-138418) filed with the Securities and Exchange Commission on December 29, 2006 and incorporated herein by reference). | |
| | Articles of Amendment of the Registrant (Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2018 and incorporated herein by reference). | |
| | Articles Supplementary (Filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2018 and incorporated herein by reference). | |
| | Seventh Amended and Restated Bylaws of the Registrant (Filed as Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2018 and incorporated herein by reference). | |
(3) | | | Not applicable. |
| | Agreement and Plan of Merger, by and among Barings BDC, Inc., Sierra Income Corporation, Mercury Acquisition Sub, Inc., and Barings LLC, dated as of September 21, 2021 (Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 22, 2021 and incorporated herein by reference). | |
| | Form of Common Stock Certificate (Filed as Exhibit (d) to the Registrant’s Post-Effective Amendment No. 1 on Form N-2/N-5 (File No. 333-138418) filed with the Securities and Exchange Commission on February 15, 2007 and incorporated herein by reference). | |
| | Barings BDC, Inc. Dividend Reinvestment Plan (Filed as Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission on March 12, 2008 and incorporated herein by reference). | |
| | Agreement to Furnish Certain Instruments (Filed as Exhibit 4.19 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission on February 25, 2009 and incorporated herein by reference). | |
| | Description of Registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Filed as Exhibit 4.4 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on February 27, 2020 and incorporated herein by reference). | |
| | Amended and Restated Investment Advisory Agreement, dated December 23, 2020 by and between Registrant and Barings LLC (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2020 and incorporated herein by reference). | |
| | Administration Agreement, dated August 2, 2018 by and between Triangle Capital Corporation and Barings LLC (Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2018 and incorporated herein by reference). | |
(7) | | | Not applicable. |
(8) | | | Not applicable. |
| | Master Custodian Agreement, dated August 2, 2018, between Registrant and State Street Bank and Trust Company (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 8, 2018 and incorporated herein by reference). | |
(10) | | | Not applicable. |
| | Opinion and Consent of Goodwin Procter LLP with respect to the legality of shares (Filed as Exhibit 11 to the Registrant’s Registration Statement on Form N-14 filed with the Securities and Exchange Commission on October 29, 2021 and incorporated herein by reference). |
| | Opinion and Consent of Goodwin Procter LLP as to certain tax matters (Filed as Exhibit 12 to the Registrant’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-14 filed with the Securities and Exchange Commission on December 13, 2021 and incorporated herein by reference). | |
| | Registration Rights Agreement, dated August 2, 2018 by and between Triangle Capital Corporation and Barings LLC (Filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2018 and incorporated herein by reference). | |
| | Investment Management Agreement, dated August 3, 2018, between Barings BDC Senior Funding I, LLC and Barings LLC (Filed as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2018 and incorporated herein by reference). | |
| | Stock Transfer Agency Agreement between the Registrant and Computershare, Inc. (as successor to The Bank of New York) (Filed as Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission on March 12, 2008 and incorporated herein by reference). | |
| | Form of Indemnification Agreement (Filed as Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission on February 28, 2018 and incorporated herein by reference). | |
| | Senior Secured Revolving Credit Facility, dated as of February 21, 2019, by and among the Registrant, as borrower, the lenders party thereto, ING Capital LLC, as administrative agent, and the other parties signatory thereto (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed with the Securities and Exchange Commission on May 9, 2019 and incorporated herein by reference). | |
| | Guarantee, Pledge and Security Agreement, dated as of February 21, 2019, by and among the Registrant, as borrower, the subsidiary guarantors party thereto, ING Capital LLC, as revolving administrative agent for the revolving lenders and collateral agent, and the other parties signatory thereto (Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed with the Securities and Exchange Commission on May 9, 2019 and incorporated herein by reference). | |
| | Amendment No. 1 to Senior Secured Revolving Credit Agreement, dated as of December 3, 2019, by and among the Registrant, as borrower, the lenders party thereto, ING Capital LLC, as administrative agent, and the other parties signatory thereto (Filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on February 27, 2020 and incorporated herein by reference). | |
| | Credit Support Agreement, dated December 23, 2020, by and between the Registrant and Barings LLC (Filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2020 and incorporated herein by reference). | |
| | Note Purchase Agreement, dated August 3, 2020, by and between the Registrant and the purchasers party thereto (Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 filed with the Securities and Exchange Commission on August 5, 2020 and incorporated herein by reference). | |
| | Amendment No. 1 to August 3, 2020 Note Purchase Agreement, dated November 4, 2020, by and between the Registrant and the purchasers party thereto (Filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 4, 2020 and incorporated herein by reference). | |
| | Note Purchase Agreement, dated November 4, 2020, by and between the Registrant and the purchasers party thereto (Filed as Exhibit 10.1 to the Registrant’s Current Report in Form 8-K filed with the Securities and Exchange Commission on November 4, 2020 and incorporated herein by reference). |
| | Note Purchase Agreement, dated February 25, 2021, by and between the Registrant and the purchasers party thereto (Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 25, 2021 and incorporated herein by reference). | |
| | Registration Rights Agreement, dated November 23, 2021, by and among the Registrant, J.P. Morgan Securities LLC, ING Financial Markets LLC, MUFG Securities Americas Inc. and Wells Fargo Securities, LLC (Filed as Exhibit 4.4 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 24, 2021 and incorporated herein by reference). | |
| | Consent of KPMG LLP (Barings BDC, Inc.) (Filed as Exhibit 14(a) to the Registrant’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-14 filed with the Securities and Exchange Commission on December 13, 2021 and incorporated herein by reference). | |
| | Consent of Ernst & Young LLP (Barings BDC, Inc.) (Filed as Exhibit 14(b) to the Registrant’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-14 filed with the Securities and Exchange Commission on December 13, 2021 and incorporated herein by reference). | |
| | Report of KPMG LLP regarding the senior securities table contained herein (Barings BDC, Inc.) (Filed as Exhibit 99.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 23, 2021 and incorporated herein by reference). | |
| | Report of Ernst & Young LLP regarding the senior securities table contained herein (Barings BDC, Inc.) (Filed as Exhibit 99.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 23, 2021 and incorporated herein by reference). | |
| | Consent of Ernst & Young LLP (Sierra Income Corporation) (Filed as Exhibit 14(e) to the Registrant’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-14 filed with the Securities and Exchange Commission on December 13, 2021 and incorporated herein by reference). | |
(15) | | | Not applicable. |
(16) | | | Not applicable. |
| | Form of Proxy Card of Barings BDC, Inc.* | |
| | Form of Proxy Card of Sierra Income Corporation* | |
| | Consent of Wells Fargo Securities, LLC (Filed as Exhibit 17(c) to the Registrant’s Registration Statement on Form N-14 filed with the Securities and Exchange Commission on October 29, 2021 and incorporated herein by reference). | |
| | Consent of Broadhaven Capital Partners (Filed as Exhibit 17(d) to the Registrant’s Registration Statement on Form N-14 filed with the Securities and Exchange Commission on October 29, 2021 and incorporated herein by reference). |
* | Filed herewith. |
Item 17. | Undertakings. |
(1) | The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for the reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
(2) | The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. |
BARINGS BDC, INC. | | | ||||
| | | | |||
By: | | | /s/ Eric Lloyd | | | |
| | Eric Lloyd | | | ||
| | Chief Executive Officer | | |
SIGNATURE | | | TITLE | | | DATE |
| | | | |||
/s/ Eric Lloyd | | | Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | | | December 23, 2021 |
Eric Lloyd | | |||||
| | | | |||
/s/ Jonathan Bock | | | Chief Financial Officer (Principal Financial Officer) | | | December 23, 2021 |
Jonathan Bock | | |||||
| | | | |||
* | | | Principal Accounting Officer | | | December 23, 2021 |
Elizabeth A. Murray | | |||||
| | | | |||
* | | | Director | | | December 23, 2021 |
Bernard A. Harris, Jr. | | |||||
| | | | |||
* | | | Director | | | December 23, 2021 |
Robert Knapp | | |||||
| | | | |||
* | | | Director | | | December 23, 2021 |
David Mihalick | | |||||
| | | | |||
* | | | Director | | | December 23, 2021 |
Mark F. Mulhern | | |||||
| | | | |||
* | | | Director | | | December 23, 2021 |
Thomas W. Okel | | |||||
| | | | |||
* | | | Director | | | December 23, 2021 |
Jill Olmstead | | |||||
| | | | |||
* | | | Director | | | December 23, 2021 |
John A. Switzer | |
By: | | | /s/ Jill Dinerman | | | | | ||
| | Attorney-in-fact | | | | |