Franklin BSP Capital Corp.

11/12/2025 | Press release | Distributed by Public on 11/12/2025 14:18

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Franklin BSP Capital Corporation (including, for periods prior to the Conversion, Franklin BSP Capital L.L.C., a Delaware limited liability company, the "Company," "FBCC," "we," "us," or "our") and the notes thereto and other financial information included elsewhere in this Quarterly Report on Form 10-Q. We are externally managed by our adviser, Franklin BSP Capital Adviser L.L.C. (the "Adviser").
Forward Looking Statements
This report, and other statements that we may make, may contain forward-looking statements with respect to future financial or business performance, strategies, or expectations. Forward-looking statements are typically identified by words or phrases such as "trend," "opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate," "current," "intention," "estimate," "position," "assume," "potential," "outlook," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future conditional verbs such as "will," "would," "should," "could," "may," or similar expressions.
Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and we assume no duty to and do not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
In addition to factors previously disclosed in our U.S. Securities and Exchange Commission ("SEC") reports and those identified elsewhere in this report, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:
•our future operating results;
•changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including the effect of elevated interest rates, trade tensions, uncertainties regarding actual and potential shifts in U.S. and foreign trade, economic and other policies with other countries, and a potential global recession;
•the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflicts in the Middle East and Eastern Europe;
•the impact of the investments that we expect to make;
•the ability of our portfolio companies to achieve their objectives;
•our contractual arrangements and relationships with third parties;
•our expected financings and investments;
•the adequacy of our cash resources and working capital;
•the timing of cash flows, if any, from the operations of our portfolio companies;
•our repurchase of shares;
•actual and potential conflicts of interest with our Adviser (as defined below) and its affiliates;
•the dependence of our future success on the general economy and its effect on the industries in which we invest;
•the ability to qualify and maintain our qualifications as a regulated investment company ("RIC") and a business development company ("BDC");
•the timing, form, and amount of any distributions;
•the impact of fluctuations in interest rates on our business;
•the valuation of any investments in portfolio companies, particularly those having no liquid trading market;
•the impact of changes to generally accepted accounting principles;
•the impact of changes to tax legislation and, generally, our tax position;
•the ability of our Adviser to locate suitable investments for us and to monitor and administer our investments;
•the ability of our Adviser and its affiliates to attract and retain highly talented professionals;
•the ability to realize the anticipated benefits of the Mergers (as defined below);
•the effects of disruption on our business from the Mergers; and
•the combined company's plans, expectations, objectives and intentions as a result of the Mergers.
You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligations to update any forward-looking statement to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.
Overview
We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC, and has elected to be treated for U.S. federal income tax purposes, as a RIC under the Code. We are managed by the Adviser. The Adviser is an affiliate of Benefit Street Partners. Our Adviser is a Delaware limited liability company that is registered as an investment adviser under the Advisers Act. Our Adviser oversees the management of our activities and is responsible for making investment decisions with respect to our portfolio.
Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We intend to invest primarily in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S. middle market companies. We define middle market companies as those with EBITDA of between $25 million and $100 million annually, although we may invest in larger or smaller companies. We also may purchase interests in loans or corporate bonds through secondary market transactions. We expect that each investment generally will range between approximately 0.5% and 3.0% of our total assets. As of September 30, 2025, 80.2% of our portfolio was invested in senior secured loans.
Senior secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in priority of payments and are generally secured by liens on the operating assets of a borrower which may include inventory, receivables, plant, property and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured.
On December 18, 2020, we completed our Initial Closing of Capital Commitments to purchase shares of our Common Stock to investors in a private placement in reliance on exemptions from the registration requirements of the Securities Act. Since our Initial Closing, we held additional closings and received aggregate Capital Commitments to purchase Common Stock. As of September 30, 2025, investors had made aggregate Capital Commitments to purchase Common Stock of $375.5 million. At each closing of the private placement, each investor will make a Capital Commitment to purchase shares of Common Stock pursuant to a Subscription Agreement entered into with us. Investors will be required to fund drawdowns to purchase shares of Common Stock up to the amount of their respective Capital Commitments on an as-needed basis each time we deliver a notice to the investors. Closings of the private placement of our Common Stock occurred, from time to time, during the Initial Closing Period which our Board of Directors extended such that it ended December 18, 2023. After the Initial Closing Period, we may permit one or more additional closings of the private placement of our Common Stock with the approval of our Board of Directors.
On August 25, 2021, we filed the Certificate of Designation for the Series A Preferred Stock. On the same day, we entered into the Preferred Subscription Agreements with certain investors, pursuant to which investors made new Preferred Capital Commitments to purchase shares of our Series A Preferred Stock. As of September 30, 2025, total Preferred Capital Commitments of Series A Preferred Stock were $77.5 million.
On January 24, 2024, we consummated the transactions contemplated by the Agreement and Plan of Merger (the "Merger Agreement") with Franklin BSP Lending Corporation, a Maryland corporation ("FBLC"), Franklin BSP Merger Sub, Inc., a Maryland corporation and our direct wholly-owned subsidiary ("Merger Sub"), and, solely for the limited purposes set forth therein, the Adviser. In connection therewith, Merger Sub merged with and into FBLC (the "Merger"), with FBLC continuing as the surviving company and as our wholly-owned subsidiary, followed by FBLC merging with and into us (together with the Merger, the "Mergers"), and with us continuing as the surviving company. See Note 19 - Merger with FBLCfor further information regarding the Mergers.
Financial and Operating Highlights
(Dollars in thousands, except per share amounts)
At September 30, 2025:
Investment Portfolio $ 4,081,496
Net assets attributable to common stock 1,843,547
Debt (net of deferred financing costs) 2,303,720
Net asset value per share attributable to common stock 13.67
Portfolio Activity for the Nine Months Ended September 30, 2025:
Purchases during the period 842,524
Sales, repayments, and other exits during the period
703,449
Number of portfolio companies at end of period 151
Operating Results for the Nine Months Ended September 30, 2025:
Net investment income (loss) per share 0.92
Net increase (decrease) in net assets per share resulting from operations attributable to common stockholders and participating securities 0.56
Net investment income (loss) 124,582
Net realized and unrealized gain (loss) (49,283)
Net increase (decrease) in net assets resulting from operations attributable to common stockholders 70,430
Portfolio and Investment Activity
We invest primarily in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S. middle market companies. We define middle market companies as those with EBITDA of between $25 million and $100 million annually, although we may invest in larger or smaller companies. We also may purchase interests in loans or corporate bonds through secondary market transactions.
During the nine months ended September 30, 2025, we made $842.5 million of investments in portfolio companies and had $703.4 million in aggregate amount of sales and repayments, resulting in net investments of $139.1 million for the period, excluding any impact from the Mergers. The total portfolio of debt investments at fair value consisted of 94.2% bearing variable interest rates and 5.8% bearing fixed interest rates.
Our portfolio composition, based on fair value at September 30, 2025 was as follows:
September 30, 2025
Percentage of
Total Portfolio(1)
Weighted Average Current Yield for Total Portfolio (2)
Senior Secured First Lien Debt 76.8 % 9.8 %
Senior Secured Second Lien Debt 3.4 13.6
Subordinated Debt 5.6 12.8
Debt Subtotal 85.8 % 10.1 %
Collateralized Securities (3)
0.1 15.0
Equity/Other(4)
6.6 9.7
FBLC Senior Loan Fund LLC (4)
7.5 9.0
Total 100.0 % 10.0 %
(1)As of September 30, 2025, FBLC Senior Loan Fund, LLC's holdings consisted of 93.8% senior secured debt, of which 91.4% represented senior secured first lien debt. As of September 30, 2025, we held investments in Siena Capital Finance, LLC ("Siena") consisting of subordinated debt and equity, which represented 1.3% and 1.9% of our total portfolio, respectively. As of September 30, 2025, we held investments in Post Road Equipment Finance, LLC ("Post Road") consisting of subordinated debt and equity, which represented 2.4% and 3.1% of our total portfolio, respectively. The respective businesses of Siena and Post Road primarily involve making senior secured asset-based loans to middle market companies and equipment finance transactions secured by mission-critical equipment of middle market companies, respectively. If the underlying investments of FBLC Senior Loan Fund described above were held by us and we were to treat the investments in Siena and Post Road as senior secured first lien investments, given the underlying businesses of those portfolio companies, then our portfolio composition as of September 30, 2025 would be as follows:
September 30, 2025
Percentage of
Total Portfolio
Senior Secured First Lien Debt 92.3 %
Senior Secured Second Lien Debt 3.4
Senior Secured - Subtotal 95.7 %
Subordinated Debt 1.9
Collateralized Securities 0.6
Equity/Other 1.8
Total 100.0 %
(2)Includes the effect of the amortization or accretion of loan premiums or discounts.
(3)Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with Accounting Standards Codification ("ASC") Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).
(4)Weighted average current yield for Equity/Other may be based on actual or annualized income, where applicable.
During the year ended December 31, 2024, we made $1.1 billion of investments in portfolio companies and had $651.2 million in aggregate amount of sales and repayments, resulting in net investments of $450.9 million for the period, excluding any impact from the Mergers. The total portfolio of debt investments at fair value consisted of 94.9% bearing variable interest rates and 5.1% bearing fixed interest rates.
Our portfolio composition, based on fair value at December 31, 2024 was as follows:
December 31, 2024
Percentage of
Total Portfolio(1)
Weighted Average Current Yield for Total Portfolio (2)
Senior Secured First Lien Debt 74.7 % 10.5 %
Senior Secured Second Lien Debt 3.1 15.3
Subordinated Debt 5.0 11.9
Debt Subtotal 82.8 % 10.8 %
Collateralized Securities (3)
0.3 14.6
Equity/Other(4)
6.7 8.9
FBLC Senior Loan Fund LLC (4)
10.2 9.0
Total 100.0 % 10.5 %
(1)As of December 31, 2024, FBLC Senior Loan Fund, LLC's holdings consisted of 93.0% senior secured debt, of which 91.4% represented senior secured first lien debt. As of December 31, 2024, we held investments in Siena Capital Finance, LLC ("Siena") consisting of subordinated debt and equity, which represented 1.2% and 1.9% of our total portfolio, respectively. As of December 31, 2024, we held investments in Post Road Equipment Finance, LLC ("Post Road") consisting of subordinated debt and equity, which represented 2.5% and 3.0% of our total portfolio, respectively. The respective businesses of Siena and Post Road primarily involve making senior secured asset-based loans to middle market companies and equipment finance transactions secured by mission-critical equipment of middle market companies, respectively. If the underlying investments of FBLC Senior Loan Fund described above were held by us and we were to treat the investments in Siena and Post Road as senior secured first lien investments, given the underlying businesses of those portfolio companies, then our portfolio composition as of December 31, 2024 would be as follows:
December 31, 2024
Percentage of
Total Portfolio
Senior Secured First Lien Debt 92.7 %
Senior Secured Second Lien Debt 3.1
Senior Secured - Subtotal 95.8 %
Subordinated Debt 1.0
Collateralized Securities 1.4
Equity/Other 1.8
Total 100.0 %
(2)Includes the effect of the amortization or accretion of loan premiums or discounts.
(3)Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with Accounting Standards Codification ("ASC") Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (seeNote 2 - Summary of Significant Accounting Policies).
(4)Weighted average current yield for Equity/Other may be based on actual or annualized income, where applicable.
Portfolio Asset Quality
Our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser grades the credit risk of all debt investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio debt investment relative to the inherent risk at the time the original debt investment was made (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors.
Loan Rating Summary Description
1
Debt investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since the time of investment are favorable.
2 Performing consistent with expectations or slightly below, no near-term covenant breaches or losses expected. Trends and risk factors are neutral to favorable. All investments are initially rated a "2".
3 Performing below expectations with potential for covenant breach or loss. Trends and risk factors show some deterioration.
4 Performing materially below expectations with risk of covenant breach and interest loss.
5 Performing materially below expectations with risk of covenant breach, interest loss and principal loss/default.
The weighted average risk rating of our investments based on fair value was 2.2 as of both September 30, 2025 and December 31, 2024. As of September 30, 2025, we had nine portfolio companies on non-accrual status with a total amortized cost of $144.5million and fair value of $76.3 million, which represented 3.4% and 1.9% of the investment portfolio's total amortized cost and fair value, respectively. As of December 31, 2024, we had eight portfolio companies on non-accrual status with a total amortized cost of $105.1 million and fair value of $65.5 million, which represented 2.6% and 1.7% of the investment portfolio's total amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policiesfor additional details regarding our non-accrual policy.
FBLC Senior Loan Fund, LLC
On January 24, 2024, as a result of the consummation of the Mergers, we became party to the joint venture formed on January 20, 2021, between FBLC and Cliffwater Corporate Lending Fund ("CCLF"), FBLC Senior Loan Fund, LLC ("SLF"). SLF invests primarily in senior secured loans and, to a lesser extent, may invest in mezzanine loans, unsecured loans and equity of predominantly private U.S. middle market companies. SLF was formed as a Delaware limited liability company and is not consolidated by us for financial reporting purposes. We provide capital to SLF in the form of LLC equity interests. At formation, FBLC and CCLF owned 87.5% and 12.5%, respectively, of the LLC equity interests of SLF. On July 2, 2024, the Company contributed $100.0 million of additional capital into SLF. On February 28, 2025, SLF distributed $100.0 million to the Company as a return of capital. As of September 30, 2025, we and CCLF owned 80.0% and 20.0%, respectively, of the LLC equity interests of SLF. Profit and loss are allocated based on each members' ownership percentage of the joint venture's net asset value. SLF has an Administrative and Loan Services Agreement with BSP, our affiliate, pursuant to which BSP provides certain operational and valuation services for SLF's investments; as well as certain agreements with third-party service providers. We and CCLF each appoint two members to SLF's four-person board of members. All material decisions with respect to SLF, including those involving its investment portfolio, require unanimous approval of a quorum of the board of members. Quorum is defined as (i) the presence of two members of the board of members; provided that at least one individual is present that was elected, designated or appointed by each member; (ii) the presence of three members of the board of members; provided that the individual that was elected, designated or appointed by the member with only one individual present shall be entitled to cast two votes on each matter; and (iii) the presence of four members of the board of members; provided that two individuals are present that were elected, designated or appointed by each member.
As of September 30, 2025, our investment in SLF consisted of equity contributions of $304.9 million. Our investment in SLF is classified as "Equity/Other" on the consolidated schedules of investments, and other disclosures unless otherwise indicated.
Below is a summary of SLF's portfolio as of September 30, 2025 and December 31, 2024. A listing of the individual investments in SLF's portfolio as of such dates can be found in Note 3 - Fair Value of Financial Instrumentsin the notes to the accompanying consolidated financial statements (dollars in thousands):
September 30, 2025 December 31, 2024
Total assets $ 949,486 $ 1,151,336
Total investments (1)
$ 920,991 $ 1,103,160
Weighted Average Current Yield for Total Portfolio (2)
8.4% 9.1%
Number of Portfolio companies in SLF 175 210
Largest portfolio company investment (1)
$ 17,244 $ 17,223
Total of five largest portfolio company investments (1)
$ 70,571 $ 72,582
(1) At fair value.
(2)Includes the effect of the amortization or accretion of loan premiums or discounts.
Below is certain summarized financial information for SLF as of September 30, 2025and December 31, 2024and for the three and nine months ended September 30, 2025 and September 30, 2024 (dollars in thousands):
Selected Statements of Assets and Liabilities Information September 30, December 31,
2025 2024
ASSETS
Investments, at fair value (amortized cost of $951,993 and $1,116,992, respectively)
$ 920,991 $ 1,103,160
Cash and other assets 28,495 48,176
Total assets $ 949,486 $ 1,151,336
LIABILITIES
Revolving credit facilities (net of deferred financing costs of $1,425 and $1,469, respectively)
$ 519,575 $ 588,531
Secured borrowings 633 4,599
Other liabilities 41,269 57,568
Total Liabilities $ 561,477 $ 650,698
MEMBERS' CAPITAL
Total members' capital $ 388,009 $ 500,638
Total liabilities and members' capital $ 949,486 $ 1,151,336
Selected Statements of Operations Information For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
Investment income:
Total investment income $ 19,848 $ 26,304 $ 63,432 $ 77,193
Operating expenses:
Interest and credit facility financing expenses 8,677 10,715 26,724 31,919
Other expenses 634 617 1,848 1,836
Total expenses 9,311 11,332 28,572 33,755
Net investment income 10,537 14,971 34,860 43,438
Realized and unrealized gain (loss) on investments:
Net realized and unrealized gain (loss) on investments (7,209) (2,178) (20,220) (1,521)
Net increase (decrease) in members' capital resulting from operations $ 3,328 $ 12,794 $ 14,640 $ 41,917
RESULTS OF OPERATIONS
Investments
Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment, the amount of capital we have available to us and the competitive environment for the type of investments we make.
Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S. middle market companies. We define middle market companies as those with EBITDA of between $25 million and $100 million annually, although we may invest in larger or smaller companies. We also may purchase interests in loans or corporate bonds through secondary market transactions, which refers to acquisitions from secondary market participants rather than from the portfolio company directly.
As a BDC, we are generally required to invest at least 70% of our total assets primarily in securities of private and certain U.S. public companies (other than certain financial institutions), cash, cash equivalents and U.S. government securities and other limited float high quality debt investments that mature in one year or less.
Revenues
We generate revenues primarily in the form of interest income on debt investments we hold, and to a lesser extent, capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments or PIK income.
In addition, we may generate revenue in the form of fee income such as structuring fees, origination, closing, amendment fees, commitment, termination, and other upfront fees. We do not expect to receive material fee income as it is not our principal investment strategy. Upon the re-payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment, and other upfront fees are recorded as income.
Expenses
We will bear all out-of-pocket costs and expenses of our operations and transactions, including, but not limited to:
•expenses incurred by the Adviser and payable to third parties, including agents, consultants and other advisors, in monitoring our financial and legal affairs, news and quotation subscriptions, and market or industry research expenses;
•the cost of calculating our NAV; the cost of effecting sales and repurchases of shares of our Common Stock and other securities;
•management and incentive fees payable pursuant to the Amended and Restated Investment Advisory Agreement; fees payable to third parties, including agents, consultants and other advisors, relating to, or associated with, making investments, and, if necessary, enforcing its rights, and valuing investments (including third-party valuation firms);
•expenses related to consummated or unconsummated investments, including dead deal or broken deal expenses; rating agency expenses; fees to arrange our debt financings;
•distributions on our shares; administration fees payable under the Administration Agreement;
•the allocated costs incurred by our Administrator in providing managerial assistance to those portfolio companies that request it; transfer agent and custodial fees; fees and expenses associated with marketing efforts (including attendance at investment conferences and similar events); accounting, audit and tax preparation expenses;
•federal and state registration fees; any exchange listing fees; federal, state, local, and other taxes;
•costs and expenses incurred in relation to compliance with applicable laws and regulations and our operation and administration generally;
•independent directors' fees and expenses;
•brokerage commissions; costs of proxy statements, stockholders' reports and notices; costs of preparing government filings, including periodic and current reports with the SEC; our fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; indemnification payments;
•expenses relating to the development and maintenance of our website, if any; other operations and technology costs;
•direct costs and expenses of administration, including printing, mailing, copying, telephone, fees of independent accountants and outside legal costs; and
•all other expenses incurred by us or our Administrator in connection with administering our business, including, but not limited to, payments under the Administration Agreement based upon our allocable portion of our Administrator's overhead in performing its obligations under the Administration Agreement, including rent, travel and the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs, including operations and tax professionals and administrative staff who provide support services in respect of us.
Our operating results for the three and nine months ended September 30, 2025, and 2024 were as follows (dollars in thousands):
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
Total investment income $ 103,933 $ 106,184 $ 314,865 $ 307,359
Total expenses 62,843 60,910 187,821 162,456
Income tax expense, including excise tax 1,012 869 2,462 2,084
Net investment income (loss) $ 40,078 $ 44,405 $ 124,582 $ 142,819
Investment Income
Investment income decreased from $106.2 million for the three months ended September 30, 2024 to $103.9 million for the three months ended September 30, 2025 due to lower SOFR rates. Investment income increased from $307.4 million for the nine months ended September 30, 2024, to $314.9 million for the nine months ended September 30, 2025, which was primarily driven by the Mergers with FBLC, which resulted in the acquisition of $2.8 billion of FBLC's investments at fair value on January 24, 2024. The nine months ended September 30, 2025, reflects a full quarter of total investment income post-Mergers, whereas the nine months ended September 30, 2024, excludes 24 days of investment income prior to the Mergers (i.e., January 1, 2024 to January 24, 2024). PIK income from investments increased from $4.4 million for the three months ended September 30, 2024 to $5.5 million for the three months ended September 30, 2025. PIK income from investments increased from $14.4 million for the nine months ended September 30, 2024 to $15.7 million for the nine months ended September 30, 2025. Fee and other income, included within total investment income, increased from $0.1 million for the three months ended September 30, 2024 to $0.9 million for the three months ended September 30, 2025. Fee and other income, included within total investment income, increased from $0.9 million for the nine months ended September 30, 2024 to $2.5 million for the nine months ended September 30, 2025. The increase in the Fee and other income was primarily due to an increase in one-time fees earned on certain investments, including commitment, prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns for the three and nine months ended September 30, 2025.
Operating Expenses
The composition of our operating expenses for the three and nine months ended September 30, 2025, and 2024 were as follows (dollars in thousands):
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
Management fees $ 15,493 $ 14,613 $ 45,709 $ 38,931
Incentive fee on income 8,122 8,820 25,052 26,843
Interest and debt fees 35,704 33,166 104,445 84,377
Professional fees 1,490 2,079 5,408 5,887
Other general and administrative 1,561 1,755 5,802 4,872
Administrative services 217 222 648 692
Directors' fees 256 255 757 854
Total expenses $ 62,843 $ 60,910 $ 187,821 $ 162,456
Management Fees
Management Fees increased from $14.6 million for the three months ended September 30, 2024 to $15.5 million for the three months ended September 30, 2025. Management Fees increased from $38.9 million for the nine months ended September 30, 2024 to $45.7 million for the nine months ended September 30, 2025. The increase in Management Fees for the
three and nine months ended September 30, 2024 to the three and nine months ended September 30, 2025 was driven by an increase in the average asset size due to the Mergers.
Incentive Fees
Incentive Fees decreased from $8.8 million for the three months ended September 30, 2024 to $8.1 million for the three months ended September 30, 2025. Incentive Fees decreased from $26.8 million for the nine months ended September 30, 2024 to $25.1 million for the nine months ended September 30, 2025. The decrease in Incentive Fees from the three and nine months ended September 30, 2024 to the three and nine months ended September 30, 2025 was driven by a decrease in pre-incentive fee net investment income.
Interest and Debt Fees
Interest and Debt Fees increased from $33.2 million for the three months ended September 30, 2024 to $35.7 million for the three months ended September 30, 2025. Interest and Debt Fees increased from $84.4 million for the nine months ended September 30, 2024 to $104.4 million for the nine months ended September 30, 2025. The increase for the three and nine months ended September 30, 2024 to the three and nine months ended September 30, 2025 was primarily driven by the average daily debt outstanding for facility borrowings and unsecured notes. The average daily debt outstanding for the nine months ended September 30, 2024 was $1.5 billion compared to $2.1 billion for the nine months ended September 30, 2025. The weighted average annualized interest cost of the facility borrowings and unsecured notes for the nine months ended September 30, 2025 and 2024 were 6.18% and 6.88%, respectively.
Professional Fees and Other General and Administrative Expenses
Professional fees and other general and administrative expenses decreased from $3.8 million for the three months ended September 30, 2024 to $3.1 million for the three months ended September 30, 2025. Professional fees and other general and administrative expenses increased from $10.8 million for the nine months ended September 30, 2024 to $11.2 million for the nine months ended September 30, 2025.
Net Realized Gain (Loss) and Net Change in Unrealized Appreciation (Depreciation) on Investments
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments for the three and nine months ended September 30, 2025, and 2024 were as follows (dollars in thousands):
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
Net realized gain (loss)
Control Investments $ - $ (3) $ (164) $ (6)
Affiliate Investments - 195 137 557
Non-Affiliated Investments 970 (22,859) (7,049) (21,685)
Net realized gain (loss) on derivatives 17 - 23 -
Total net realized gain (loss) $ 987 $ (22,667) $ (7,053) $ (21,134)
Net change in unrealized appreciation (depreciation) on investments
Control Investments $ (7,183) $ (3,588) $ (18,575) $ (14,604)
Affiliate Investments (1,688) 839 (4,199) (1,477)
Non-Affiliated Investments (6,776) 12,197 (14,240) (14,257)
Net change in deferred taxes (1,132) (638) (4,863) (1,667)
Net change in unrealized appreciation (depreciation) on derivatives (4) - (353) -
Total net change in unrealized appreciation (depreciation) on investments $ (16,783) $ 8,810 $ (42,230) $ (32,005)
Net realized and unrealized gain (loss) $ (15,796) $ (13,857) $ (49,283) $ (53,139)
Net Realized Gain (Loss) on Investments
Realized gains or losses are measured using the specific identification method whereby we measure the gain or loss by the difference between the net proceeds from repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized.
For the three months ended September 30, 2025, we recorded a net realized gain of $1.0 million. The net realized gain was primarily driven by one portfolio company. For the nine months ended September 30, 2025, we recorded a net realized loss of $7.1 million. In June 2025, we restructured our first lien debt position of Coronis Health LLC which resulted in a net realized loss of $14.0 million offset by an unrealized gain of $14.8 million.
For the three months ended September 30, 2024, we recorded a net realized loss of $22.7 million. For the nine months ended September 30, 2024, we recorded a net realized loss of $21.1 million. The net realized loss for the three months ended September 30, 2024 was primarily driven by the restructuring of the first lien debt investments of Pluralsight, LLC in August 2024 which resulted in a realized loss of $19.1 million offset by an unrealized gain of $18.5 million.
Net Change in Unrealized Appreciation (Depreciation) on Investments
Net change in unrealized appreciation or depreciation is the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
For the three months ended September 30, 2025, we recorded unrealized depreciation of $24.4 million on 83 portfolio company investments, which was offset by $8.7 million of unrealized appreciation on 56 portfolio company investments. The unrealized depreciation primarily resulted from deteriorating credit performance of certain portfolio companies. MGTF Radio Company, LLC had its valuation lowered, which resulted in an unrealized loss of $7.8 million. The unrealized appreciation was primarily due to isolated valuation increases for a small number of portfolio companies. $1.1 million of the net unrealized loss was driven by a change in deferred taxes.
For the three months ended September 30, 2024, we recorded unrealized appreciation of $35.6 million on 133 portfolio company investments, which was offset by $26.2 million of unrealized depreciation on 180 portfolio company investments. The unrealized appreciation primarily resulted from improved performance of certain portfolio companies, the reversal of previously recorded unrealized depreciation, and the Pluralsight, LLC restructure. The unrealized depreciation was primarily due to isolated deterioration in the credit performance of a small number of portfolio companies, and the reversal of previously recorded unrealized appreciation. Additionally, $0.6 million of the net unrealized loss was driven by a change in deferred taxes. The overall net unrealized appreciation on our portfolio was primarily driven by the reversal of previously recorded unrealized depreciation.
For the nine months ended September 30, 2025, we recorded unrealized appreciation of $35.4 million on 57 portfolio company investments which was offset by $72.4 million of unrealized depreciation on 98 portfolio company investments. The unrealized appreciation primarily resulted from improved performance of certain portfolio companies and the reversal of previously recorded unrealized depreciation. The unrealized depreciation was primarily due to isolated deterioration in the credit performance of a small number of portfolio companies. $4.9 million of the net unrealized loss was driven by a change in deferred taxes. Additionally, $0.4 million of the net unrealized loss was driven by a change in unrealized depreciation on derivatives. The overall net unrealized depreciation on our portfolio was primarily driven by deterioration in the credit performance of certain portfolio companies.
For the nine months ended September 30, 2024, we recorded unrealized appreciation of $28.2 million on 145 portfolio company investments, which was offset by $58.5 million of unrealized depreciation on 184 portfolio company investments. The unrealized appreciation primarily resulted from improved performance of certain portfolio companies and the reversal of previously recorded unrealized depreciation. The unrealized depreciation was primarily due to isolated deterioration in the credit performance of a small number of portfolio companies. Additionally, $1.7 million of the net unrealized loss was driven by a change in deferred taxes. The overall net unrealized depreciation on our portfolio was primarily driven by deterioration in the credit performance of certain portfolio companies.
Supplemental Information
On January 24, 2024, we completed our previously announced acquisition of FBLC. Pursuant to the Merger Agreement, Merger Sub was first merged with and into FBLC, with FBLC continuing as the surviving company, and, immediately following the Merger, FBLC was then merged with and into us, with us continuing as the surviving company. In accordance with the terms of the Merger Agreement, at the effective time, each outstanding share of FBLC's common stock was converted into the right to receive 0.4647 shares of our common stock. As a result of the Mergers, we issued an aggregate of 110.0 million shares of our common stock to FBLC stockholders.
The Merger was accounted for as an asset acquisition of FBLC by us in accordance with the asset acquisition method of accounting as detailed in ASC 805, Business Combinations, with the fair value of total consideration paid, including transaction costs, in conjunction with the Mergers allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of the Mergers. The consideration paid to FBLC stockholders was more than the aggregate fair value of the assets acquired and liabilities assumed, which resulted in a purchase price premium. The purchase premium was allocated to the cost basis of the FBLC investments acquired by us on a pro-rata basis based on their relative fair values as of the effective time of the Merger. The purchase premium allocated to the debt investments acquired will amortize over the life of each respective debt investment through interest income, with a corresponding adjustment recorded to unrealized depreciation on such investment acquired through its ultimate disposition. The purchase premium allocated to equity investments acquired will not amortize over the life of such investments through interest income and, assuming no subsequent change to the fair value of the equity investments acquired and disposition of such equity investments at fair value, we will recognize a realized loss with a corresponding reversal of the unrealized depreciation on disposition of such equity investments acquired. Any adjustments to the cost basis of the acquired FBLC investments derived from the accounting treatment of the Mergers will be excluded from the incentive fee calculation.
As a supplement to our financial results reported in accordance with U.S. GAAP, we have provided, as detailed below, certain non-GAAP financial measures to our operating results that exclude the aforementioned purchase premium and the ongoing amortization thereof, as determined in accordance with U.S. GAAP. The non-GAAP financial measures include (i) adjusted net investment income after taxes; and (ii) adjusted net realized and unrealized gains (losses). We believe that the adjustment to exclude the full effect of the purchase premium is meaningful because it is a measure that we and investors use to assess our financial condition and results of operations. Although these non-GAAP financial measures are intended to enhance investors' understanding of our business and performance, these non-GAAP financial measures should not be considered as an alternative to U.S. GAAP. The aforementioned non-GAAP financial measures may not be comparable to similar non-GAAP financial measures used by other companies.
Non-GAAP Supplemental Disclosure: For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
Net investment income (loss) $ 40,078 $ 44,405 $ 124,582 $ 142,819
Less: purchase premium and other cost adjustments (1)
(300) (1,131) (1,612) (11,746)
Adjusted net investment income after taxes $ 39,778 $ 43,274 $ 122,970 $ 131,073
Net realized and unrealized gains (losses) $ (15,796) $ (13,857) $ (49,283) $ (53,139)
Less: Net change in unrealized appreciation (depreciation) due to the purchase premium and other cost adjustments (1)
1,508 15,940 4,097 30,029
Less: Realized gain (loss) due to the purchase premium and other cost adjustments (1)
(1,208) (14,809) (2,485) (18,283)
Adjusted net realized and unrealized gains (losses) $ (15,496) $ (12,726) $ (47,671) $ (41,393)
(1) Represents amortization of purchase premium and incremental amortization of acquired FBLC investments as a result of the accounting treatment of the Mergers under ASC 805for the periods January 1, 2025 to September 30, 2025 and January 24, 2024 to September 30, 2024, respectively.
Recent Developments
Distribution Declarations
On November 6, 2025, the Board of Directors declared a regular quarterly distribution of $0.29 per share of Common Stock, which will be paid on or around December 18, 2025 to stockholders of record as of November 6, 2025.
On November 6, 2025, the Board of Directors declared a distribution of $19.12 per share of Series A Preferred Stock, which will be paid on or around December 18, 2025 to stockholders of record as of November 6, 2025.
Issuance of 6.000% Notes due 2030
On October 2, 2025, the Company and U.S. Bank Trust Company, National Association entered into a Fourth
Supplemental Indenture (the "Fourth Supplemental Indenture") to the 2021 Indenture, relating to the Company's issuance of
$300,000,000 aggregate principal amount of its 6.000% notes due 2030 (the "2030 Notes").
The 2030 Notes will mature on October 2, 2030, and may be redeemed in whole or in part at the Company's option at
any time or from time to time at the redemption prices set forth in the Fourth Supplemental Indenture. The 2030 Notes bear
interest at a rate of 6.000% per year payable semi-annually on April 2 and October 2 of each year, commencing on April 2,
2026. The 2030 Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the
Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2030 Notes, rank pari
passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any
of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the
value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including
trade payables) incurred by the Company's consolidated and unconsolidated subsidiaries, financing vehicles or similar facilities.
The 2021 Indenture, as supplemented by the Fourth Supplemental Indenture, contains certain covenants, including
covenants requiring the Company to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by
Section 61(a) of the 1940 Act, whether or not it is subject to those requirements, and to provide financial information to the
holders of the 2030 Notes and U.S. Bank Trust Company, National Association if the Company is no longer subject to the
reporting requirements under the Exchange Act. These covenants are subject to important limitations and exceptions that are
described in the Indenture.
In addition, on the occurrence of a "Change of Control Repurchase Event," as defined in the Fourth Supplemental
Indenture, the Company will generally be required to make an offer to purchase the outstanding 2030 Notes at a price equal to
100% of the principal amount of such 2030 Notes plus any accrued and unpaid interest on the 2030 Notes repurchased to, but
not including, the date of purchase.
In connection with the issuance of the 2030 Notes, the Company entered into a Registration Rights Agreement, dated
as of October 2, 2025 (the "Registration Rights Agreement"), with J.P. Morgan Securities LLC, BofA Securities, Inc., SMBC
Nikko Securities America, Inc. and Wells Fargo Securities, LLC, as the representatives of the initial purchasers of the 2030
Notes, pursuant to which, the Company is obligated to file with the Securities and Exchange Commission a registration
statement relating to an offer to exchange the 2030 Notes for new notes issued by the Company that are registered under the Securities Act and otherwise have terms substantially identical to those of the 2030 Notes, and to use its commercially reasonable efforts to cause such registration statement to be declared effective. If the Company is not able to effect the exchange offer, the Company will be obligated to file a shelf registration statement covering the resale of the 2030 Notes and use its commercially reasonable efforts to cause such registration statement to be declared effective. If the Company fails to satisfy its registration obligations by certain dates specified in the Registration Rights Agreement, it will be required to pay additional interest to the holders of the 2030 Notes.
Liquidity and Capital Resources
We generate cash primarily from the net proceeds of the purchase of shares of our Common Stock and Series A Preferred Stock via drawdowns on our investors' capital commitments, cash flows from interest and fees earned from our investments and principal repayments and proceeds from sales of our investments. As of September 30, 2025, we had issued 134.9 million shares of our Common Stock for net proceeds of $2.0 billion, including shares issued pursuant to the DRIP. We had also issued 77,500 shares of Series A Preferred Stock for gross proceeds of $77.4 million. As of September 30, 2024, we had issued 134.8 million shares of our Common Stock for net proceeds of $2.0 billion, including shares issued pursuant to the DRIP. We had also issued 77,500 shares of Series A Preferred Stock for gross proceeds of $77.4 million.
As of September 30, 2025, we had $125.6 million of cash. For the nine months ended September 30, 2025, net cash used in operating activities was $80.7 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions, and sales of portfolio investments. The cash flows used in operating activities for the nine months ended September 30, 2025 was primarily a result of purchases of investments of $842.5 million, offset by sales and repayments of investments of $703.4 million. As of September 30, 2024, we had $153.7 million of cash. For the nine months ended September 30, 2024, net cash used in operating activities was $64.8 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions, and sales of portfolio investments. The cash flows used in operating activities for the nine months ended September 30, 2024 was primarily a result of purchases of investments of $785.8 million, offset by sales and repayments of investments of $532.5 million as well as cash received in the Mergers of $58.5 million.
Net cash provided by financing activities of $75.5 million during the nine months ended September 30, 2025 primarily related to repayments of secured borrowings of $29.1 million, payments on debt of $702.3 million, payments of financing costs of $5.3 million, common stockholder distributions of $101.1 million, and preferred stockholder distributions of $4.9 million partially offset by proceeds from debt of $954.3 million. Net cash provided by financing activities of $160.6 million during the nine months ended September 30, 2024 primarily related to payments on debt of $509.0 million, payments of financing costs of $4.4 million, common stockholder distributions of $77.4 million, preferred stockholder distributions of $5.6 million, and repurchases of common stock of $43.0 million partially offset by proceeds from debt of $801.7 million and proceeds from issuance of shares of common stock of $0.9 million.
We also fund a portion of our investments through borrowings from banks. Our primary use of cash will be investments in portfolio companies, payments of our expenses and payment of cash distributions to our stockholders. As of September 30, 2025, we are party to the JPM and Wells Fargo Credit Facilities, which are defined in and described in more detail in Note 5 - Borrowings. We are only allowed to borrow money such that our asset coverage, which, as defined in the 1940 Act, measures the ratio of total assets less total liabilities not represented by senior securities to total borrowings, equals at least 150% after such borrowing, with certain limited exceptions. As of September 30, 2025, our asset coverage ratio was 177%.
As of September 30, 2025, we had $513.1 million of availability under the JPM Credit Facility, JPM Revolver Facility, and Wells Fargo Credit Facility (subject to borrowing base availability). As of September 30, 2024, we had $400.8 million of availability under the JPM Credit Facility, Wells Fargo Credit Facility, FBLC JPM Credit Facility, and JPM Revolver (subject to borrowing base availability). We expect to have sufficient liquidity for our investing activities and to conduct our operations for the next 12 months.
Taxation as a RIC
We have elected to be treated as a RIC under Subchapter M of the Code. As a RIC, we generally will not be subject to corporate-level U.S. federal income taxes on any income that we distribute as dividends for U.S. federal income tax purposes to our stockholders. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our stockholders, for each tax year, an amount equal to at least 90% of our "investment company taxable income," which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss and determined without regard to any deduction for dividends paid, or the annual distribution requirement. Even if we qualify as a RIC, we generally will be subject to corporate-level U.S. federal income tax on our undistributed taxable income and could be subject to state, local, and foreign taxes.
Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our stockholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on December 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to U.S. federal income corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders. In addition, we could be required to recognize unrealized gains, incur substantial taxes and interest and make substantial distributions in order to re-qualify as a RIC. We cannot assure stockholders that they will receive any distributions.
Distributions
The amount of each distribution is subject to the discretion of our Board of Directors and applicable legal restrictions related to the payment of distributions. We calculate each stockholder's specific distribution amount for the quarter using record and declaration dates.
The table shows the components of the distributions we have declared and/or paid to common stockholders for the nine months ended September 30, 2025 and 2024 (dollars in thousands):
For the nine months ended September 30,
2025 2024
Distributions declared $ 128,603 $ 100,499
Distributions paid $ 128,603 $ 100,512
Portion of distributions paid in cash $ 101,120 $ 77,434
Portion of distributions paid in DRIP shares $ 27,483 $ 23,078
The table shows the components of the distributions we have declared and/or paid to preferred stockholders during the nine months ended September 30, 2025 and 2024 (dollars in thousands):
For the nine months ended September 30,
2025 2024
Distributions declared $ 4,855 $ 5,570
Distributions paid $ 4,855 $ 5,570
Portion of distributions paid in cash $ 4,855 $ 5,570
Portion of distributions paid in DRIP shares $ - $ -
We may fund our cash distributions to stockholders from any sources of funds available to us, including advances from the Adviser that are subject to reimbursement, as well as offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. We have not established limits on the amount of funds we may use from available sources to make distributions. We may have distributions which could be characterized as a return of capital for tax purposes. During the nine months ended September 30, 2025 and 2024, no portion of our distributions was characterized as return of capital for tax purposes. The specific tax characteristics of our distributions made in respect of our fiscal year ending December 31, 2025 are reported to stockholders shortly after the end of the calendar year 2025 as well as in our periodic reports with the SEC. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gain. Moreover, you should understand that any such distributions were not based on our investment performance and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser continues to make such reimbursements. There can be no assurance that we will achieve the performance necessary to sustain our distributions or that we will be able to pay distributions at all.
Related Party Transactions and Agreements
Investment Advisory Agreement
We entered into an amendment and restatement of the Investment Advisory Agreement (the "Amended and Restated Investment Advisory Agreement"), dated as of January 24, 2024, which was approved by our Board of Directors and our stockholders in connection with the consummation of the Mergers and reapproved by our Board of Directors on August 7, 2025, under which the Adviser, subject to the overall supervision of our Board of Directors manages the day-to-day operations of, and provides investment advisory services to us. Affiliates of the Adviser also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours. Affiliates of the Adviser also serve as investment adviser or sub-adviser to private funds and registered open-end funds, and as an investment adviser to a public real estate investment trust. The Adviser has adopted policies designed to manage and mitigate the conflicts of interest associated with the allocation of investment opportunities. In addition, any affiliated fund currently formed or formed in the future and managed by the Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Adviser or its affiliates.
Administration Agreement
On September 23, 2020, we entered into the Administration Agreement with BSP, pursuant to which BSP provides us with office facilities and administrative services. We reimburse BSP quarterly for all administrative costs and expenses incurred by our Adviser in performing our obligations under the Administration Agreement and annually for overhead expenses incurred in the course of performing our obligations under the Administration Agreement, including rent, travel and the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs, including operations and tax professionals, and administrative staff providing support services in respect of us. The Administration Agreement may be terminated by either party without penalty upon not less than 60 days' written notice to the other. For the three and nine months ended September 30, 2025, we incurred $0.9 million and $2.3 million, respectively, in administrative service fees under the administrative agreement, which are included in other general and administrative on the consolidated statements of operations in the accompanying consolidated financial statements. For the three and nine months ended September 30, 2024, we incurred $0.8 million and $2.4 million, respectively, in administrative service fees under the administrative agreement, which are included in other general and administrative on the consolidated statements of operations in the accompanying consolidated financial statements.
Co-Investment Relief
The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC. The SEC staff has granted relief sought in an exemptive application that expands the Company's ability to co-invest in portfolio companies with other funds managed by the Adviser or its affiliates ("Affiliated Entities"), subject to compliance with certain conditions (the "Order"), including, among others, that the Company and each Affiliated Entity participating in a transaction acquires, or disposes of, the same class of securities, at the same time, for the same price and with the same conversion, financial reporting and registration rights, and with substantially the same other terms.
Borrowings
We are only allowed to borrow money such that our asset coverage, which, as defined in the 1940 Act, measures the ratio of total assets less total liabilities not represented by senior securities to total borrowings, equals at least 150% after such borrowing, with certain limited exceptions. As of September 30, 2025, the aggregate principal amount outstanding of the senior securities issued by us was $2.4 billion and our asset coverage was 177%. We are continually exploring forms of debt financing which could include new or expanded credit facilities or the issuance of senior securities that are debt or stock. We may use borrowed funds, known as "leverage," to make investments and to attempt to increase returns to our stockholders by reducing our overall cost of capital. We currently have credit facilities with JPMorgan and Wells Fargo.
JPM Credit Facility
On October 4, 2023, we refinanced the MS Credit Facility with a $400.0 million credit facility with FBCC Jupiter Funding, LLC, a wholly-owned, consolidated special purpose financing subsidiary of us, as borrower ("Jupiter Funding"), the Adviser, as portfolio manager, the lenders party thereto, U.S. Bank National Association, as securities intermediary, U.S. Bank Trust Company, National Association as collateral administrator and collateral agent, and JPMorgan Chase Bank, National Association, as administrative agent (the "JPM Credit Facility"). The JPM Credit Facility provides for borrowings through October 4, 2026, and any amounts borrowed under the JPM Credit Facility will mature on October 4, 2027. Borrowings under the JPM Credit Facility bore interest at a benchmark rate, currently SOFR, plus a margin of 2.75% per annum, which was inclusive of an administrative agent fee. Interest is payable quarterly in arrears. Jupiter Funding was subject to a non-usage fee of 0.75%, which was inclusive of the administrative agent fee, to the extent the commitments available under the JPM Credit Facility have not been borrowed. Jupiter Funding paid an upfront fee and incurred other customary costs and expenses in connection with the JPM Credit Facility.
On December 27, 2024, Jupiter Funding entered into the First Amendment to Loan and Security Agreement (the "First Amendment"), which amends the JPM Credit Facility, by and among Jupiter Funding, as borrower, the Company, as portfolio manager, the lenders party thereto, U.S. Bank Trust Company, National Association, as collateral agent and collateral administrator, U.S. Bank National Association, as securities intermediary, and JPMorgan Chase Bank, National Association, as administrative agent.
The First Amendment, among other things, (i) extends the Reinvestment Period from October 2026 to October 2028, (ii) increases the commitment increase option from total Financing Commitments of up to $800.0 million to total Financing Commitments of up to $1,050.0 million, (iii) increases the Facility Commitments from $400.0 million to $800.0 million, (iv) extends the Scheduled Termination Date from October 2027 to October 2029, (v) reduces the Applicable Margin from 2.55% to 2.25%, and (vi) removes the administrative agent fee.
On December 27, 2024, concurrent with the closing of the First Amendment, FBLC 57th Street Funding LLC (formerly known as BDCA 57th Street Funding, LLC, "57th Street"), a wholly-owned subsidiary of the Company, merged with and into Jupiter Funding (the "Credit Facility Merger") pursuant to an Agreement and Plan of Merger, dated as of December 27, 2024 (the "Merger Agreement"), by and between FBCC Jupiter and 57th Street, with Jupiter Funding surviving the Credit Facility Merger.
Upon consummation of the Credit Facility Merger, the Amended and Restated Loan and Security Agreement, dated as of April 21, 2021, as amended, among 57th Street, as borrower, the Company, as portfolio manager, the lenders party thereto, U.S. Bank Trust Company, National Association, as collateral agent and collateral administrator, U.S. Bank National Association, as securities intermediary, and JPMorgan Chase Bank, National Association, as administrative agent, was terminated and all outstanding obligations were assumed into Jupiter Funding.
On June 30, 2025, Jupiter Funding entered into the Second Amendment to Loan and Security Agreement (the "Second Amendment"), which amends the JPM Credit Facility, by and among Jupiter Funding, as borrower, the Company, as portfolio manager, the lenders party thereto, U.S. Bank Trust Company, National Association, as collateral agent and collateral administrator, U.S. Bank National Association, as securities intermediary, and JPMorgan Chase Bank, National Association, as administrative agent.
The Second Amendment, among other things, (i) increases the Facility Commitments from $800.0 million to $1,050.0 million and (ii) reduces the Applicable Margin from 2.25% to 2.15%.
On September 9, 2025, Jupiter Funding entered into the Third Amendment to Loan and Security Agreement (the "Third Amendment"), which amends the JPM Credit Facility, by and among Jupiter Funding, as borrower, the Company, as
portfolio manager, the lenders party thereto, U.S. Bank Trust Company, National Association, as collateral agent and collateral administrator, U.S. Bank National Association, as securities intermediary, and JPMorgan Chase Bank, National Association, as administrative agent. The Third Amendment allows for asset-based financing investments within Jupiter Funding.
JPM Revolver Facility
On January 24, 2024, as a result of the consummation of the Mergers, we became party to a $505.0 million revolving credit facility with JPMorgan, as administrative agent and as collateral agent, N.A., Sumitomo Mitsui Banking Corporation, and Wells Fargo Bank, National Association as syndication agents, as well as other Lender parties (the "JPM Revolver Facility").
The JPM Revolver Facility provides for borrowings through December 8, 2027, and any amounts borrowed under the JPM Revolver Facility will mature on December 8, 2028. The JPM Revolver Facility is priced at three-month Term SOFR, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 1.98% per annum. Interest is payable quarterly in arrears. We will be subject to a non-usage fee of 0.38% to the extent the commitments available under the JPM Revolver Facility have not been borrowed.
On January 16, 2025, we amended and restated the JPM Revolver Facility (the "Second A&R Credit Facility"), with the lenders parties thereto, JPMorgan, as administrative agent and collateral agent, Sumitomo Mitsui Banking Corporation ("Sumitomo") and Wells Fargo Bank, National Association, as syndication agents, and JPMorgan, Sumitomo and Wells Fargo Securities, LLC as joint bookrunners and joint lead arrangers (such second amended and restated agreement, the "Second A&R Credit Facility").
The Second A&R Credit Facility, among other things, increases the aggregate amount of the lenders' commitments to $780.0 million and includes an accordion provision to permit increases to the aggregate amount to an amount of up to $1.17 billion, extends the period for borrowings under the Second A&R Credit Facility through January 16, 2029 and extends the maturity date for any amounts borrowed under the Second A&R Credit Facility to January 16, 2030. The other material terms were unchanged. We agreed to pay administrative agent fees and other customary costs and expenses incurred in connection with the Second A&R Credit Facility.
In connection with the JPM Revolver Facility, FBCC has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolver Facility contains customary events of default for similar financing transactions. Upon the occurrence and during the continuation of an event of default, JPM may declare the outstanding advances and all other obligations under the JPM Revolver Facility immediately due and payable.
Wells Fargo Credit Facility
On January 24, 2024, as a result of the consummation of the Mergers we became party to a $300.0 million revolving credit facility with us as collateral manager, Funding I, a wholly owned, consolidated special purpose financing subsidiary, as borrower, the lenders party thereto, Wells Fargo, as administrative agent, and U.S. Bank Trust Company, National Association, as collateral agent and collateral custodian (the "Wells Fargo Credit Facility").
The Wells Fargo Credit Facility provides for borrowings through August 25, 2026, and any amounts borrowed under the Wells Fargo Credit Facility will mature on August 25, 2028. The Wells Fargo Credit Facility has an interest rate of daily simple SOFR (with a daily simple SOFR floor of zero), plus a spread of 2.75% per annum. Pursuant to an amendment to the loan and servicing agreement entered into on August 30, 2024 ("Wells Fargo Credit Facility Amendment"), the spread was reduced to 2.15% per annum from 2.75% per annum. Interest is payable quarterly in arrears. Funding I will be subject to a non-usage fee to the extent the commitments available under the Wells Fargo Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 25% of the unused balance and increases to 2.00% for any remaining unused balance. Pursuant to the Wells Fargo Credit Facility Amendment, the non-usage fee per annum is now 0.50% for the first 70% of the unused balance and increases to 2.00% for any remaining unused balance.
Funding I's obligations under the Wells Fargo Credit Facility are secured by a first priority security interest in substantially all of the assets of Funding I, including its portfolio of investments and FBCC's equity interest in Funding I. The obligations of Funding I under the Wells Fargo Credit Facility are non-recourse to FBCC.
In connection with the Wells Fargo Credit Facility, FBCC and Funding I have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The Wells Fargo Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the Wells Fargo Credit Facility may terminate FBCC in its capacity as collateral manager/portfolio manager under the Wells Fargo Credit Facility. Upon the occurrence of an event of default under the Wells Fargo Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the Wells Fargo Credit Facility immediately due and payable.
2026 Notes
On January 24, 2024, as a result of the consummation of the Mergers, we became party to a Purchase Agreement relating to the sale of $300.0 million aggregate principal amount of 3.25% fixed rate notes due March 30, 2026 (the "Restricted 2026 Notes"). The net proceeds from the sale of the Restricted 2026 Notes were approximately $296.0 million. Pursuant to a Registration Statement on Form N-14 (File No. 333-257321), on September 22, 2021, holders of the Restricted 2026 Notes were offered the opportunity to exchange their Restricted 2026 Notes for new registered notes with substantially identical terms (the "Unrestricted 2026 Notes" and, together with the Restricted 2026 Notes, the 2026 Notes), through which holders representing 99.88% of the outstanding principal of the then Restricted 2026 Notes obtained Unrestricted 2026 Notes. The 2026 Notes are subject to customary indemnification provisions and representations, warranties and covenants. The 2026 Notes bear interest at a rate of 3.25% per year payable semi-annually.
2029 Notes
On April 29, 2024, we entered into a purchase agreement in connection with the issuance and sale of $300.0 million aggregate principal amount of our 7.20% Notes due 2029 (the "2029 Notes"). The net proceeds from the sale of the 2029 Notes were approximately $293.0 million. The 2029 Notes were issued on May 6, 2024, pursuant to a third supplemental indenture. The 2029 Notes will mature on June 15, 2029, and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the indenture governing the 2029 Notes. The 2029 Notes bear interest at a rate of 7.20% per year payable semi-annually on June 15 and December 15 of each year, commencing on December 15, 2024. The 2029 Notes are subject to customary indemnification provisions and representations, warranties and covenants. In connection with the offer and sale of the 2029 Notes, we entered into a Registration Rights Agreement, dated as of May 6, 2024. Pursuant to the Registration Rights Agreement, we are obligated to file with the SEC a registration statement relating to an offer to exchange the 2029 Notes for new notes issued by us that are registered under the Securities Act and otherwise have terms substantially identical to those of the 2029 Notes, and to use its commercially reasonable efforts to cause such registration statement to be declared effective. If we are not able to effect the exchange offer, we will be obligated to file a shelf registration statement covering the resale of the 2029 Notes and use its commercially reasonable efforts to cause such registration statement to be declared effective. If we fail to satisfy its registration obligations by certain dates specified in the Registration Rights Agreement, it will be required to pay additional interest to the holders of the 2029 Notes.
On October 22, 2024, we priced an offering of an additional $100.0 million aggregate principal amount of our 2029 Notes in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to certain non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The 2029 Notes are an additional issuance of, and form a single series with, the previously issued $300.0 million aggregate principal amount of 2029 Notes on May 6, 2024, increasing the outstanding aggregate principal amount of the series to $400.0 million. The 2029 Notes will mature on June 15, 2029, and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the Third Supplemental Indenture. The offering closed on October 29, 2024.
See Note 5 - Borrowingsto our consolidated financial statements contained in this Quarterly Report on Form 10-Q for a more detailed discussion of our borrowings.
Contractual Obligations
The following table shows our payment obligations for repayment of debt and other contractual obligations as of September 30, 2025 (dollars in thousands):
Payment Due by Period
Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years
JPM Credit Facility (1)
$ 1,016,969 $ - $ - $ 1,016,969 $ -
JPM Revolver Facility (2)
299,917 - - 299,917 -
Wells Fargo Credit Facility (3)
300,000 - 300,000 - -
2026 Notes 300,000 300,000 - - -
2029 Notes 398,669 - - 398,669 -
Total $ 2,315,555 $ 300,000 $ 300,000 $ 1,715,555 $ -
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(1)As of September 30, 2025, we had $33.0 million in unused borrowing capacity under the JPM Credit Facility, subject to borrowing base limits.
(2)As of September 30, 2025, we had $480.1 million in unused borrowing capacity under the JPM Revolver Facility, subject to borrowing base limits.
(3)As of September 30, 2025, we had no unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Commitments
In the ordinary course of business, we may enter into future funding commitments. As of September 30, 2025, we had unfunded commitments on delayed draw term loans of $426.4 million, unfunded commitments on revolver term loans of $268.0 million, and unfunded commitments on term loans of $0.0 million. As of December 31, 2024, we had unfunded commitments on delayed draw term loans of $241.0 million, unfunded commitments on revolver term loans of $207.9 million, and unfunded commitments on term loans of $0.6 million. We maintain sufficient cash on hand, and available borrowings to fund such unfunded commitments. Please refer to Note 7 - Commitments and Contingenciesin the notes to our consolidated financial statements for further detail of these unfunded commitments.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we will evaluate our estimates, including those related to the matters described below. Actual results could differ from those estimates. Our critical accounting estimates should be read in connection with our risk factors described in Part I., Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024.
While our significant accounting policies are also described in Note 2 - Summary of Significant Accounting Policiesof our notes to our consolidated financial statements appearing elsewhere in this report, we believe the following accounting policies require the most significant judgment in the preparation of our consolidated financial statements.
Valuation of Portfolio Investments
We are required to report our investments, including those for which current market values are not readily available, at fair value in accordance with ASC 820, Fair Value Measurements("ASC 820"), which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the applicable measurement date, and Rule 2a-5 under the 1940 Act.
Investments for which market quotations are readily available are typically valued at those market quotations. All investments that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of our investments, are valued at fair value as determined in good faith by our Valuation Designee, subject to oversight from our Board of Directors.
As part of the valuation process, our Valuation Designee takes into account relevant factors in determining the fair value of our investments, including and in combination of:
•the estimated enterprise value of a portfolio company;
•indicative dealer quotes;
•the nature and realizable value of any collateral;
•the portfolio company's ability to make payments based on its earnings and cash flow;
•the markets in which the portfolio company does business;
•a comparison of the portfolio company's securities to any similar publicly traded securities; and
•overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future.
Our Valuation Designee, subject to oversight from our Board of Directors, undertakes a multi-step valuation process each quarter in connection with determining the fair value of our investments for which reliable market quotations are not readily available, or are available but deemed not reflective of the fair value of an investment, which includes, among other procedures, the following:
•Each portfolio company or investment will be valued by our Valuation Designee, with assistance from one or more independent valuation firms engaged by our Board of Directors;
•The independent valuation firm(s) conduct independent appraisals and make an independent assessment of the value of each investment; and
•Our Valuation Designee, under the supervision of our Board of Directors determines the fair value of each investment, in good faith, based on the input of independent valuation firms (to the extent applicable) and our Valuation Designee's own analysis. Our Valuation Designee also has established the Valuation Committee to assist our Valuation Designee in carrying out its designated responsibilities, subject to oversight of our Board of Directors.
Our Valuation Designee, subject to oversight from our Board of Directors, has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of our portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and our Valuation Designee may reasonably rely on that assistance. However, our Valuation Designee, subject to oversight from our Board of Directors, is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to our valuation policy and a consistently applied valuation process.
Our accounting policy on the fair value of our investments is critical because the determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of these valuations, and any change in these valuations, on the consolidated financial statements.
See Note 2 - Summary of Significant Accounting Policiesfor a description of other accounting policies and recently issued accounting pronouncements.
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