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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________________________________________________________________________________
Form 10-K
______________________________________________________________________________________________________
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2019
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
______________________________________________________________________________________________________
Commission file number: 814-00794
GOLUB CAPITAL BDC, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation
or Organization)
666 Fifth Avenue, 18th Floor, New York, NY
(Address of Principal Executive Offices)
27-2326940
(I.R.S. Employer Identification No.)
10103
(Zip Code)
(212) 750-6060
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.001 per share
Trading Symbol
GBDC
Name of each exchange on which registered
The Nasdaq Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No ☒
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ☒ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes o No ☒
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☑
Non-accelerated filer o
Emerging growth company o
Accelerated filer o
Smaller reporting company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).Yes o No ☒
The aggregate market value of common stock held by non-affiliates of the registrant on March 31, 2019 based on the closing price on March 29, 2019 of
$17.88 on the Nasdaq Global Select Market was approximately $1,075.4 million. For the purposes of calculating this amount only, all directors and executive
officers of the registrant have been treated as affiliates. There were 132,658,200 shares of the registrant’s common stock outstanding as of November 25,
2019.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the
registrant’s 2020 Annual Meeting of Stockholders, which will be filed subsequent to the date hereof, are incorporated by reference into Part III of this Form
10-K. Such proxy statement will be filed with the Securities and Exchange Commission not later than 120 days following the end of the registrant’s fiscal
year ended September 30, 2019.
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Part I.
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Part III.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV.
Item 15.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Consolidated Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Signatures
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In this annual report on Form 10-K, except as otherwise indicated, the terms:
PART I
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“we,” “us,” “our” and “Golub Capital BDC” refer to Golub Capital BDC, Inc., a Delaware corporation, and its consolidated subsidiaries;
“Holdings” refers to Golub Capital BDC 2010-1 Holdings LLC, a Delaware limited liability company, or LLC, our direct subsidiary;
“GCIC Holdings” refers to GCIC Holdings LLC, a Delaware limited liability company, or LLC, our direct subsidiary;
“2010 Issuer” refers to Golub Capital BDC 2010-1 LLC, a Delaware LLC, our indirect subsidiary;
“2014 Issuer” refers to Golub Capital BDC CLO 2014 LLC, a Delaware LLC, our direct subsidiary;
“GCIC 2016 Issuer” refers to Golub Capital Investment Corporation CLO 2016(M) LLC, a Delaware LLC, our direct subsidiary;
“2018 Issuer” refers to Golub Capital BDC CLO III LLC, a Delaware LLC, our indirect subsidiary;
“GCIC 2018 Issuer" refers to Golub Capital Investment Corporation CLO II LLC, a Delaware LLC, our indirect subsidiary;
“CLO Depositor” refers to Golub Capital BDC CLO III Depositor LLC, a Delaware LLC, our direct subsidiary;
“GCIC CLO Depositor” refers to Golub Capital Investment Corporation CLO II Depositor LLC, a Delaware LLC, our direct subsidiary;
“Controlling Class” refers to the most senior class of notes then outstanding of the 2014 Issuer, 2018 Issuer or the GCIC 2018 Issuer, as applicable;
“Funding” refers to Golub Capital BDC Funding, LLC, a Delaware LLC, our direct subsidiary;
“Funding II” refers to Golub Capital BDC Funding II, LLC, a Delaware LLC, our direct subsidiary;
“GCIC Funding” refers to GCIC Funding LLC, a Delaware LLC, our direct subsidiary;
“GCIC Funding II” refers to GCIC Funding II LLC, a Delaware LLC, our direct subsidiary;
“Merger Sub” refers to Fifth Ave Subsidiary Inc., our wholly owned subsidiary;
“GCIC” refers to Golub Capital Investment Corporation; a Maryland corporation and an externally managed, closed-end, non-diversified
management investment company that elected to be regulated as a business development company under the Investment Company Act of 1940, as
amended, or the 1940 Act and whose investment adviser was GC Advisors;
"2010 Debt Securitization" refers to the $350.0 million term debt securitization that we completed on July 16, 2010, amended on October 20, 2016
and redeemed on July 20, 2018, in which the 2010 Issuer issued an aggregate of $350.0 million of notes, or the “2010 Notes,” including $205.0
million of Class A-Refi 2010 Notes, which bore interest at a rate of three-month London Interbank Offered Rate, or LIBOR, plus 1.90%, $10.0
million of Class B-Refi 2010 Notes, which bore interest at a rate of three-month LIBOR plus 2.40% and $135.0 million face amount of Subordinated
2010 Notes that did not bear interest;
“2014 Debt Securitization” refers to the $402.6 million term debt securitization that we completed on June 5, 2014, as most recently amended on
March 23, 2018, in which the 2014 Issuer issued an aggregate of $402.6 million of notes, or the “2014 Notes,” including $191.0 million of Class A-
1-R 2014 Notes, which bear interest at a rate of three-month LIBOR, plus 0.95%, $20.0 million of Class A-2-R 2014 Notes, which bear interest at a
rate of three-month LIBOR plus 0.95%, $35.0 million of Class B-R 2014 Notes, which bear interest at a rate of three-month LIBOR plus 1.40%,
$37.5 million of Class C-R 2014 Notes, which bear interest at a rate of three-month LIBOR plus 1.55%, and $119.1 million of membership interests
that do not bear interest;
“2018 Debt Securitization” refers to the $602.4 million term debt securitization that we completed on November 16, 2018, in which the 2018 Issuer
issued an aggregate of $602.4 million of notes, or the “2018
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Notes,” including $327.0 million of Class A 2018 Notes, which bear interest at a rate of three-month LIBOR, plus 1.48%, $61.2 million of Class B
2018 Notes, which bear interest at a rate of three-month LIBOR plus 2.10%, $20.0 million of Class C-1 2018 Notes, which bear interest at a rate of
three-month LIBOR plus 2.80%, $38.8 million of Class C-2 2018 Notes, which bear interest at a rate of three-month LIBOR plus 2.65%, $42.0
million of Class D 2018 Notes, which bear interest at a rate of three-month LIBOR plus 2.95%, and $113.4 million of Subordinated 2018 Notes that
do not bear interest;
“GCIC 2018 Debt Securitization” refers to the $908.2 million term debt securitization that we acquired as part of the Merger. On December 13,
2018, the GCIC 2018 Issuer issued an aggregate of $908.2 million of notes, or the "GCIC 2018 Notes", including $490.0 million of AAA/AAA Class
A-1 GCIC 2018 Notes, which bear interest at a rate of three-month LIBOR plus 1.48%, $38.5 million of AAA Class A-2 GCIC 2018 Notes, which
bear interest at a fixed rate of 4.67%, $18.0 million of AA Class B-1 GCIC 2018 Notes, which bear interest at a rate of three-month LIBOR plus
2.25%, $27.0 million of the Class B-2 GCIC 2018 Notes, which bear interest at a rate of three-month LIBOR plus 1.75%, $95.0 million of Class C
GCIC 2018 Notes, which bear interest at a rate of three-month LIBOR plus 2.30%, $60.0 million of Class D GCIC 2018 Notes, which bear interest
at a rate of three-month LIBOR plus 2.75% and $179.7 million of Subordinated GCIC 2018 Notes that do not bear interest;
“SLF” refers to Senior Loan Fund LLC, an unconsolidated Delaware LLC, in which we co-invest with RGA Reinsurance Company, or RGA,
primarily in senior secured loans. SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect of SLF must
be approved by representatives of each of the members (with unanimous approval required from either (i) one representative of each of us and RGA
or (ii) both representatives of each of us and RGA). As of September 30, 2019, we owned 87.5% of the LLC equity interests of SLF. As of September
30, 2019, SLF had LLC equity interest subscriptions from its members totaling $200.0 million of which we have committed to fund $175.0 million;
“GCIC SLF” refers to GCIC Senior Loan Fund LLC, an unconsolidated Delaware LLC, that we acquired as part of the Merger, in which we co-
invest with Aurora National Life Assurance Company, a wholly-owned subsidiary of RGA, or Aurora, primarily in senior secured loans of middle-
market companies. GCIC SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect of GCIC SLF must
be approved by the GCIC SLF investment committee, which consists of two representatives of each of the members (with unanimous approval
required from either (i) one representative of each of us and Aurora or (ii) both representatives of each of us and Aurora). As of September 30, 2019,
we owned 87.5% of the LLC equity interests of GCIC SLF. As of September 30, 2019, GCIC SLF had LLC equity interest subscriptions from its
members totaling $125.0 million, of which we have committed to fund $109.4 million;
"Senior Loan Funds" refers collectively to SLF and GCIC SLF, and each a "Senior Loan Fund";
“Credit Facility” refers to the amended and restated senior secured revolving credit facility that Funding, originally entered into on July 21, 2011
and terminated on February 4, 2019, with Wells Fargo Securities, LLC, as administrative agent, and Wells Fargo Bank, N.A., as lender and
collateral agent, that, as of the date of its termination, allowed for borrowing up to $170 million and bore interest at a rate of one-month LIBOR plus
2.15% per annum through the reinvestment period, which would have ended on September 20, 2019, and that would have matured on September 21,
2023;
“WF Credit Facility” refers to the senior secured revolving credit facility that GCIC Funding originally entered into on October 10, 2014 with Wells
Fargo Securities, LLC as administrative agent, and Wells Fargo Bank, N.A., as lender, as most recently amended on May 29, 2019, that allowed for
borrowing up to $300.0 million as of September 30, 2019 and that bears interest at a rate of one-month LIBOR plus 2.00% per annum through the
maturity date, March 21, 2024;
“MS Credit Facility” refers to the amended senior secured credit facility that the 2010 Issuer originally entered into on July 20, 2018 and
terminated on November 16, 2018, with Morgan Stanley Bank, N.A., as lender, Morgan Stanley Senior Funding, Inc. as administrative agent, and
U.S. Bank National Association, as collateral agent for the administrative agent and the lenders, that, as of the date of its termination, allowed for
borrowing up to $450.0 million and bore interest at a rate of one-month LIBOR plus 1.90% per annum through the reinvestment period, which would
have ended on January 18, 2019, and that would have matured on March 20, 2019;
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“DB Credit Facility” refers to the senior secured revolving credit facility that GCIC Funding II entered into on December 31, 2018, with GCIC, as
equityholder and as servicer, Deutsche Bank AG, New York Branch, as facility agent, the other agents parties thereto, each of the entities from time
to time party thereto as securitization subsidiaries and Wells Fargo Bank, National Association, as collateral agent and as collateral custodian, that
as of September 30, 2019, allowed for borrowing up to $250.0 million and that bears interest at a rate of the applicable base rate plus 1.90% per
annum through the reinvestment period, which continues through December 31, 2021. Following expiration of the reinvestment period, the interest
rate on outstanding borrowings under the DB Credit Facility will reset to the applicable base rate plus 2.00% for the remaining term of the DB
Credit Facility, which is scheduled to mature on December 31, 2024. The base rate under the DB Credit Facility is (i) the three-month Canadian
Dollar Offered Rate with respect to any advances denominated in Canadian dollars, (ii) the three-month EURIBOR with respect to any advances
denominated in euros, (iii) the three-month Bank Bill Swap Rate with respect to any advances denominated in Australian dollars and (iv) the three-
month LIBOR with respect to any other advances;
“MS Credit Facility II” refers to our senior secured revolving credit facility that Funding II entered into on February 1, 2019, with Morgan Stanley
Senior Funding, Inc., as the administrative agent, each of the lenders from time to time party thereto, each of the securitization subsidiaries from
time to time party thereto, and Wells Fargo Bank, N.A., as collateral agent, account bank and collateral custodian, as most recently amended on
October 11, 2019, that allowed for borrowing up to $500.0 million as of September 30, 2019 and bears interest at a rate of one-month LIBOR plus
2.05% per annum through the revolving period, which ends February 1, 2021, and bears interest at a rate of one-month LIBOR plus 2.55%
following the revolving period through the stated maturity date of February 1, 2024;
“Revolving Credit Facilities” refers collectively to, prior to its termination on November 16, 2018, the MS Credit Facility, prior to its termination on
February 4, 2019, the Credit Facility, together with the WF Credit Facility, DB Credit Facility and the MS Credit Facility II, and each a “Revolving
Credit Facility”;
“Initial Merger” refers to the merger, on September 16, 2019, of Merger Sub with and into GCIC, with GCIC as the surviving company;
“Subsequent Merger” refers to the merger that occurred immediately after the Initial Merger on September 16, 2019 of GCIC, as the surviving
company of the Initial Merger, with and into, with Golub Capital BDC, Inc., as the surviving company;
“Merger” refers to the Initial Merger, together with, unless the context otherwise requires, the Subsequent Merger;
“Merger Agreement” refers to the Agreement and Plan of Merger, dated November 27, 2018, by and among us, Merger Sub, GCIC, GC Advisors,
and, for certain limited purposes, the Administrator, as amended by the First Amendment to the Agreement and Plan of Merger, dated December 21,
2018, by and among us, Merger Sub, GCIC, GC Advisors, and the Administrator and the Second Amendment to the Agreement and Plan of Merger,
dated July 11, 2019, by and among us, Merger Sub, GCIC, GC Advisors, and the Administrator;
“Adviser Revolver” refers to the line of credit with GC Advisors, which, as of September 30, 2019, allowed for borrowing up to $40.0 million and
which was amended on October 28, 2019 to allow for borrowing up to $100.0 million;
“GCIC Adviser Revolver” refers to the line of credit originally entered into by GCIC with GC Advisors, which allowed for borrowing up to $40.0
million and was terminated on October 31, 2019;
“SBIC Funds” refers collectively to our consolidated subsidiaries, GC SBIC IV, L.P.,GC SBIC V, L.P. and GC SBIC VI, L.P.;
“GC Advisors” refers to GC Advisors LLC, a Delaware LLC, our investment adviser;
“Administrator” refers to Golub Capital LLC, a Delaware LLC, an affiliate of GC Advisors and our administrator;
“Investment Advisory Agreement” refers to the Third Amended and Restated Investment Advisory Agreement by and between us and GC Advisors,
dated as of September 16, 2019;
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“Prior Investment Advisory Agreement” refers to the Second Amended and Restated Investment Advisory Agreement by and between us and GC
Advisors, dated as of August 4, 2014; and
“Golub Capital” refers, collectively, to the activities and operations of Golub Capital LLC (formerly Golub Capital Management LLC), which entity
employs all of Golub Capital’s investment professionals, GC Advisors and associated investment funds and their respective affiliates.
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Item 1. Business
GENERAL
We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development
company under the 1940 Act. In addition, for U.S. federal income tax purposes, we have elected to be treated as a regulated investment company, or RIC,
under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. We were formed in November 2009 to continue and expand the
business of our predecessor, Golub Capital Master Funding LLC, which commenced operations in July 2007. We make investments primarily in one stop (a
loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans) and other senior secured loans of middle-
market companies that are, in most cases, sponsored by private equity firms. GC Advisors structures our one stop loans as senior secured loans, and we obtain
security interests in the assets of the portfolio company that serve as collateral in support of the repayment of these loans. This collateral may take the form of
first-priority liens on the assets of the portfolio company. In many cases, we together with our affiliates are the sole lenders of one stop loans, which can
afford us additional influence over the borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
In this annual report on Form 10-K, the term “middle-market” generally refers to companies having earnings before interest, taxes, depreciation and
amortization, or EBITDA, of less than $100.0 million annually.
Our investment objective is to generate current income and capital appreciation by investing primarily in one stop and other senior secured loans of U.S.
middle-market companies. We may also selectively invest in second lien and subordinated loans of, and warrants and minority equity securities in, U.S.
middle-market companies. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub
Capital, a leading lender to middle-market companies with over $30.0 billion in capital under management as of September 30, 2019, (2) selecting
investments within our core middle-market company focus, (3) partnering with experienced private equity firms, or sponsors, in many cases with whom
Golub Capital has invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub Capital and (5) drawing upon the
aggregate experience and resources of Golub Capital.
We seek to create a portfolio that includes primarily one stop and other senior secured loans by primarily investing approximately $10.0 million to $75.0
million of capital, on average, in the securities of U.S. middle-market companies. We may also selectively invest more than $75.0 million in some of our
portfolio companies and generally expect that the size of our individual investments will vary proportionately with the size of our capital base.
We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if
they were rated. These securities, which may be referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to
pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully
pay down principal prior to maturity, which may increase our risk of losing part or all of our investment.
GCIC Acquisition
On September 16, 2019, we completed our acquisition of GCIC, pursuant to the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub was first
merged with and into GCIC, with GCIC as the surviving company, and, immediately following the Initial Merger, GCIC was then merged with and into us,
with us as the surviving company. As a result of, and as of the effective time of, the Merger, GCIC’s separate existence ceased.
In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of GCIC’s common stock was converted
into the right to receive 0.865 shares of our common stock (with GCIC’s stockholders receiving cash in lieu of fractional shares of our common stock). As a
result of the Merger, we issued an aggregate of 71,779,964 shares of our common stock to former stockholders of GCIC.
Upon the consummation of the Merger, we entered into the Investment Advisory Agreement, with GC Advisors, which replaced the Prior Investment
Advisory Agreement.
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Information Available
Our address is 666 Fifth Avenue, 18th Floor, New York, NY 10103. Our phone number is (212) 750-6060, and our internet address is
www.golubcapitalbdc.com. We make available, free of charge, on our website our proxy statement, annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or
furnish it to, the U.S. Securities and Exchange Commission, or SEC. Information contained on our website is not incorporated by reference into this annual
report on Form 10-K and you should not consider information contained on our website to be part of this annual report on Form 10-K or any other report we
file with the SEC.
The SEC also maintains a website that contains reports, proxy and information statements and other information we file with the SEC at www.sec.gov. Copies
of these reports, proxy and information statements and other information may also be obtained, after paying a duplicating fee, by electronic request at
publicinfo@sec.gov.
Our Adviser
Our investment activities are managed by our investment adviser, GC Advisors. GC Advisors is responsible for sourcing potential investments, conducting
research and due diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring
our investments and portfolio companies on an ongoing basis. GC Advisors was organized in September 2008 and is a registered investment adviser under the
Investment Advisers Act of 1940, as amended, or the Advisers Act. Under our amended and restated investment advisory agreement, or the Investment
Advisory Agreement, with GC Advisors, we pay GC Advisors a base management fee and an incentive fee for its services. See “Business — Management
Agreements — Management Fee” for a discussion of the base management fee and incentive fee, including the cumulative income incentive fee and the
income and capital gains incentive fee, payable by us to GC Advisors. Unlike most closed-end funds whose fees are based on assets net of leverage, our base
management fee is based on our average-adjusted gross assets (including leverage but adjusted to exclude cash and cash equivalents so that investors do not
pay the base management fee on such assets) and, therefore, GC Advisors benefits when we incur debt or use leverage. For purposes of the Investment
Advisory Agreement, cash equivalents means U.S. government securities and commercial paper instruments maturing within 270 days of purchase.
Additionally, under the incentive fee structure, GC Advisors benefits when capital gains are recognized and, because it determines when a holding is sold, GC
Advisors controls the timing of the recognition of capital gains. Our board of directors is charged with protecting our interests by monitoring how GC
Advisors addresses these and other conflicts of interest associated with its management services and compensation. While not expected to review or approve
each borrowing, our independent directors periodically review GC Advisors’ services and fees as well as its portfolio management decisions and portfolio
performance. In connection with these reviews, our independent directors consider whether our fees and expenses (including those related to leverage) remain
appropriate. See “Business — Management Agreements — Board Approval of the Investment Advisory Agreement.”
GC Advisors is an affiliate of Golub Capital and pursuant to a staffing agreement, or the Staffing Agreement, Golub Capital LLC makes experienced
investment professionals available to GC Advisors and provides access to the senior investment personnel of Golub Capital LLC and its affiliates. The
Staffing Agreement provides GC Advisors with access to investment opportunities, which we refer to in the aggregate as deal flow, generated by Golub
Capital LLC and its affiliates in the ordinary course of their businesses and commits the members of GC Advisors’ investment committee to serve in that
capacity. As our investment adviser, GC Advisors is obligated to allocate investment opportunities among us and its other clients fairly and equitably over
time in accordance with its allocation policy. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Related Party
Transactions.” However, there can be no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time. GC
Advisors seeks to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management
and monitoring experience of Golub Capital LLC’s investment professionals.
An affiliate of GC Advisors, the Administrator, provides the administrative services necessary for us to operate. See “Business — Management
Agreements — Administration Agreement” for a discussion of the fees and expenses (subject to the review and approval of our independent directors) we are
required to reimburse to the Administrator.
About Golub Capital
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Golub Capital, founded in 1994, is a leading lender to middle-market companies, with a long track record of investing in senior secured, one stop, second lien
and subordinated loans. As of September 30, 2019, Golub Capital had over $30.0 billion of capital under management. Since its inception, Golub Capital has
closed deals with over 260 middle-market sponsors and repeat transactions with over 180 sponsors.
Golub Capital’s middle-market lending group is managed by a four-member senior management team consisting of Lawrence E. Golub, David B. Golub,
Andrew H. Steuerman and Gregory W. Cashman. As of September 30, 2019, Golub Capital’s more than 100 investment professionals had an average of over
12 years of investment experience and were supported by more than 250 administrative and back office personnel that focus on operations, finance, legal and
compliance, accounting and reporting, marketing, information technology and office management.
Investment Criteria/Guidelines
Our investment objective is to generate current income and capital appreciation by investing primarily in one stop and other senior secured loans of U.S.
middle market companies. We seek to generate strong risk-adjusted net returns by assembling a portfolio of investments across a broad range of industries and
private equity investors.
We primarily target U.S. middle-market companies controlled by private equity investors that require capital for growth, acquisitions, recapitalizations,
refinancings and leveraged buyouts. We may also make opportunistic loans to independently owned and publicly held middle-market companies. We seek to
partner with strong management teams executing long-term growth strategies. Target businesses will typically exhibit some or all of the following
characteristics:
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annual EBITDA of less than $100.0 million annually;
sustainable leading positions in their respective markets;
scalable revenues and operating cash flow;
experienced management teams with successful track records;
stable, predictable cash flows with low technology and market risks;
a substantial equity cushion in the form of capital ranking junior to our investment;
low capital expenditures requirements;
a North American base of operations;
strong customer relationships;
products, services or distribution channels having distinctive competitive advantages;
defensible niche strategy or other barriers to entry; and
demonstrated growth strategies.
While we believe that the criteria listed above are important in identifying and investing in prospective portfolio companies, not all of these criteria will be
met by each prospective portfolio company.
Investment Process Overview
We view our investment process as consisting of four distinct phases described below:
Origination. GC Advisors sources investment opportunities through access to a network of over 10,000 individual contacts developed in the financial
services and related industries by Golub Capital and managed through a proprietary customer relationship database. Among these contacts is an extensive
network of private equity firms and relationships with leading middle-market senior lenders. The senior deal professionals of Golub Capital supplement these
leads through personal visits and marketing campaigns. It is their responsibility to identify specific opportunities, to refine opportunities through candid
exploration of the underlying facts and circumstances and to apply creative and flexible thinking to solve clients’ financing needs. Golub Capital’s origination
personnel are located in offices in Chicago, New York and San Francisco. Each originator maintains long-standing customer relationships and is responsible
for covering a specified target market. We believe those originators’ strength and breadth of relationships across a wide range of markets generate numerous
financing opportunities, which we believe enables GC Advisors to be highly selective in recommending investments to us.
Underwriting. We utilize the systematic, consistent approach to underwriting developed by Golub Capital, with a particular focus on determining the value of
a business in a downside scenario. The key criteria that we consider include (1) strong and resilient underlying business fundamentals, (2) a substantial equity
cushion in the form of capital ranking junior in right of payment to our investment and (3) a conclusion that overall “downside” risk is
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manageable. While the size of our equity cushion will vary over time and across industries, the equity cushion generally sought by GC Advisors today is
between 35% and 50% of total portfolio capitalization. We generally focus on the criteria developed by Golub Capital for evaluating prospective portfolio
companies, and we put more emphasis on credit considerations (such as (1) loan-to-value ratio (which is the amount of our loan divided by the enterprise
value of the company in which we are investing), (2) the ability of the company to maintain a liquidity cushion through economic cycles and in downside
scenarios, (3) the ability of the company to service its fixed charge obligations under a variety of scenarios and (4) its anticipated strategic value in a
downturn) than on profit potential and loan pricing. Our due diligence process for middle-market credits will typically entail:
•
•
•
•
•
•
•
a thorough review of historical and pro forma financial information;
on-site visits;
interviews with management and employees;
a review of loan documents and material contracts;
third-party “quality of earnings” accounting due diligence;
when appropriate, background checks on key managers and research relating to the company’s business, industry, markets, customers, suppliers,
products and services and competitors; and
the commission of third-party market studies when appropriate.
The following chart illustrates the stages of Golub Capital’s evaluation and underwriting process:
ILLUSTRATIVE DEAL EVALUATION PROCESS
Execution. In executing transactions for us, GC Advisors utilizes the due diligence process developed by Golub Capital. Through a consistent approach to
underwriting and careful attention to the details of execution, it seeks to close deals as fast or faster than competitive financing providers while maintaining
discipline with respect to credit, pricing and structure to ensure the ultimate success of the financing. Upon completion of due diligence, the investment team
working on an investment delivers a memorandum to GC Advisors’ investment committee. Once an investment has been approved by the investment
committee, it moves through a series of steps towards negotiation of final documentation. Upon completion of final documentation, a loan is funded upon the
execution of an investment committee memorandum by members of GC Advisors’ investment committee.
Monitoring. We view active portfolio monitoring as a vital part of our investment process. We consider board observation rights, where appropriate, regular
dialogue with company management and sponsors and detailed, internally generated monitoring reports to be critical to our performance. Golub Capital has
developed a monitoring template that is designed to reasonably ensure compliance with these standards. This template is used by GC Advisors as a tool to
assess investment performance relative to our investment plan.
As part of the monitoring process, GC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal
system developed by Golub Capital and its affiliates. This system is not generally accepted in our industry or used by our competitors. It is based on the
following categories, which we refer to as GC Advisors’ internal performance ratings:
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Internal Performance Ratings
Rating
Definition
5
4
3
2
1
Involves the least amount of risk in our portfolio. The borrower is performing above expectations, and the trends and risk factors are
generally favorable.
Involves an acceptable level of risk that is similar to the risk at the time of origination. The borrower is generally performing as expected, and
the risk factors are neutral to favorable.
Involves a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination. The borrower
may be out of compliance with debt covenants; however, loan payments are generally not past due.
Involves a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination. In
addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than
180 days past due).
Involves a borrower performing substantially below expectations and indicates that the loan’s risk has substantially increased since
origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 1 are not
anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.
Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent
or reflect any third-party assessment of any of our investments.
For any investment rated 1, 2 or 3, GC Advisors will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing
current operating results and material impending events and suggesting recommended actions.
GC Advisors monitors and, when appropriate, changes the internal performance ratings assigned to each investment in our portfolio. In connection with our
valuation process, GC Advisors and our board of directors review these internal performance ratings on a quarterly basis.
The following table shows the distribution of our investments on the 1 to 5 internal performance rating scale at fair value as of September 30, 2019 and 2018:
Internal
Performance
Rating
Investments
at Fair Value
(In thousands)
Percentage of
Total
Investments
Investments
at Fair Value
(In thousands)
Percentage of
Total
Investments
September 30, 2019
September 30, 2018
5
4
3
2
1
Total
$
$
115,318
3,787,809
337,358
52,434
13
4,292,932
2.7% $
88.2
7.9
1.2
0.0*
100.0% $
113,873
1,455,754
195,414
17,250
550
1,782,841
6.4%
81.6
11.0
1.0
0.0*
100.0%
*
Represents an amount less than 0.1%.
Investment Committee
GC Advisors’ investment committee, which is comprised of officers of GC Advisors, evaluates and approves all of our investments, subject to the oversight
of our board of directors. The investment committee process is intended to bring the diverse experience and perspectives of the committee’s members to the
analysis and consideration of each investment. The investment committee currently consists of Lawrence E. Golub, David B. Golub, Andrew H. Steuerman
and Gregory W. Cashman. The investment committee serves to provide investment consistency and adherence to our core investment philosophy and policies.
The investment committee also determines appropriate investment sizing and suggests ongoing monitoring requirements.
In addition to reviewing investments, investment committee meetings serve as a forum to discuss credit views and outlooks. Potential transactions and deal
flow are reviewed on a regular basis. Members of the investment team are
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encouraged to share information and credit views with the investment committee early in their analysis. We believe this process improves the quality of the
analysis and assists the deal team members to work more efficiently.
Each transaction is presented to the investment committee in a formal written report. All of our new investments must be approved by a consensus of the
investment committee. Each member of the investment committee performs a similar role for other investment funds, accounts or other investment vehicles,
collectively referred to as accounts, sponsored or managed by Golub Capital and its affiliates.
Investment Structure
Once we have determined that a prospective portfolio company is suitable for investment, we work with the management of that company and its other capital
providers to structure an investment. We negotiate among these parties to agree on how our investment is expected to perform relative to the other capital in
the portfolio company’s capital structure.
We structure our investments, which typically have maturities of three to seven years as described below. Our loans typically provide for moderate loan
amortization in the early years of the loan, with the majority of the amortization deferred until loan maturity, and there is a risk of loss if the borrower is
unable to pay the lump sum or refinance the amount at maturity.
Senior Secured Loans. When we structure investments in senior secured loans, we obtain security interests in the assets of the portfolio company that serve as
collateral in support of the repayment of such loans. This collateral may take the form of first-priority liens on the assets of the portfolio company borrower.
One Stop Loans. We structure our one stop loans as senior secured loans. We obtain security interests in the assets of the portfolio company that serve as
collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of the portfolio company. In many
cases, we are the sole lender, or we together with our affiliates are the sole lenders, of one stop loans, which can afford us additional influence over the
borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
One stop loans include loans to technology companies undergoing strong growth due to new services, increased adoption and/or entry into new markets. We
refer to loans to these companies as late stage lending loans. Other targeted characteristics of late stage lending businesses include strong customer revenue
retention rates, a diversified customer base and backing from growth equity or venture capital firms. In some cases, the borrower’s high revenue growth is
supported by a high level of discretionary spending. As part of the underwriting of such loans and consistent with industry practice, we may adjust our
characterization of the earnings of such borrowers for a reduction or elimination of such discretionary expenses, if appropriate.
Second Lien Loans. We structure these investments as junior, secured loans. We obtain security interests in the assets of the portfolio company that serve as
collateral in support of the repayment of such loans. This collateral may take the form of second priority liens on the assets of a portfolio company.
Subordinated Loans. We structure these investments as unsecured, subordinated loans that provide for relatively high, fixed interest rates that provide us with
significant current interest income. Subordinated loans rank senior only to a borrower’s equity securities and rank junior to all of such borrower’s other
indebtedness in priority of payment. These loans typically have interest-only payments (often representing a combination of cash pay and payment-in-kind, or
PIK, interest) in the early years. Subordinated loan investments are generally more volatile than secured loans and may involve a greater risk of loss of
principal. In addition, the PIK feature of many subordinated loans, which effectively operates as negative amortization of loan principal, increases credit risk
exposure over the life of the loan.
Warrants and Minority Equity Securities. In some cases, we may purchase minority equity interests or receive nominally priced warrants or options to buy a
minority equity interest in the portfolio company in connection with a loan, which can allow us to achieve additional investment return from this equity
interest. We may structure such warrants to include provisions protecting our rights as a minority-interest holder, as well as a “put,” or right to sell such
securities back to the issuer, upon the occurrence of specified events.
Senior Loan Funds. We have invested in the Senior Loan Funds, which as of September 30, 2019, each consisted of a portfolio of loans to different
borrowers in industries similar to the companies in our portfolio. The Senior Loan Funds invest primarily in senior secured loans of middle market
companies, which debt securities are expected to be secured by a first lien on some or all of the issuer’s assets, including traditional senior debt and any
related revolving
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or similar credit facility, in generally the same manner as our senior secured and one stop loans. The Senior Loan Funds may also invest in more liquid senior
secured loans.
We tailor the terms of each investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that
protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its operating results. We
seek to limit the downside potential of our investments by:
•
•
•
selecting investments that we believe have a very low probability of loss;
requiring a total return on our investments that we believe will compensate us appropriately for credit risk; and
negotiating covenants in connection with our investments that afford our portfolio companies as much flexibility in managing their businesses as
possible, consistent with the preservation of our capital. Such restrictions may include affirmative and negative covenants, default penalties, lien
protection, change of control provisions and board rights.
We expect to hold most of our investments to maturity or repayment, but we may sell some of our investments earlier if a liquidity event occurs, such as a
sale, recapitalization or worsening of the credit quality of the portfolio company.
Investments
We seek to create a portfolio that includes primarily one stop and other senior secured loans by investing approximately $10.0 million to $75.0 million of
capital, on average, in the securities of middle-market companies. Set forth below is a list of our ten largest portfolio company investments as of September
30, 2019, as well as the top ten industries in which we were invested as of September 30, 2019, in each case excluding the Senior Loan Funds, calculated as a
percentage of our total investments at fair value as of such date.
Portfolio Company
MRI Software LLC
Diligent Corporation
E2open, LLC
Transaction Data Systems, Inc.
DCA Investment Holding, LLC
GS Acquisitionco, Inc.
eSolutions, Inc.
Integration Appliance, Inc.
Clarkson Eyecare LLC
Saba Software, Inc.
Investments at
Fair Value
(In thousands)
Percentage of
Total
Investments
$
99,429
89,025
86,772
84,461
81,772
75,235
70,556
68,822
61,578
60,200
2.3%
2.1
2.0
2.0
1.9
1.8
1.6
1.6
1.4
1.4
$
777,850
18.1%
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Industry
Diversified/Conglomerate Service
Healthcare, Education and Childcare
Retail Stores
Beverage, Food and Tobacco
Electronics
Personal, Food and Miscellaneous Services
Leisure, Amusement, Motion Pictures, Entertainment
Buildings and Real Estate
Diversified/Conglomerate Manufacturing
Insurance
Managerial Assistance
Investments at
Fair Value
(In thousands)
$
1,442,750
746,484
294,463
252,588
249,678
208,728
183,836
133,053
124,040
104,086
Percentage of
Total Investments
33.6%
17.4
6.9
5.9
5.8
4.9
4.3
3.1
2.9
2.4
$
3,739,706
87.2%
As a business development company, we offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance would
involve an arrangement to provide significant guidance and counsel concerning the management, operations or business objectives and policies of the
portfolio company. The Administrator or an affiliate of the Administrator provides such managerial assistance on our behalf to portfolio companies that
request this assistance. We may receive fees for these services and reimburse the Administrator or an affiliate of the Administrator, as applicable, for its
allocated costs in providing such assistance, subject to the review and approval by our board of directors, including our independent directors.
Competition
Our primary competitors in providing financing to middle-market companies include public and private funds, other business development companies,
commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity and hedge
funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example,
we believe some competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk
tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us.
Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a business development company or to
the source-of-income, asset diversification and distribution requirements we must satisfy to maintain our qualification as a RIC.
We use the expertise of the investment professionals of Golub Capital and its affiliates to which we have access to assess investment risks and determine
appropriate pricing for our investments in portfolio companies. In addition, the relationships of the senior members of Golub Capital and its affiliates enable
us to learn about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we invest. See
“Risk Factors — Risks Relating to our Business and Structure — We operate in a highly competitive market for investment opportunities, which could reduce
returns and result in losses.”
Administration
We do not have any direct employees, and our day-to-day investment operations are managed by GC Advisors. We have a chief executive officer, chief
financial officer, chief compliance officer, managing director and director of corporate strategy, and to the extent necessary, our board of directors may elect
to hire additional personnel going forward. Our officers are officers and/or employees of Golub Capital LLC, an affiliate of GC Advisors, and our allocable
portion of the cost of our chief financial officer and chief compliance officer and their respective staffs is paid by us pursuant to the administration agreement,
or the Administration Agreement, with the Administrator. See “Business - Management Agreements - Administration Agreement.”
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MANAGEMENT AGREEMENTS
GC Advisors is located at 666 Fifth Avenue, 18th Floor, New York, NY 10103. GC Advisors is registered as an investment adviser under the Advisers Act.
The beneficial interests in GC Advisors are majority owned, indirectly, by two affiliated trusts. The trustees of those trusts are Stephen A. Kepniss and David
L. Finegold. Subject to the overall supervision of our board of directors and in accordance with the 1940 Act, GC Advisors manages our day-to-day
operations and provides investment advisory services to us. Under the terms of the Investment Advisory Agreement, GC Advisors:
•
•
•
•
•
•
determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such
changes;
identifies, evaluates and negotiates the structure of the investments we make;
executes, closes, services and monitors the investments we make;
determines the securities and other assets that we purchase, retain or sell;
performs due diligence on prospective portfolio companies; and
provides us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the
investment of our funds.
GC Advisors’ services under the Investment Advisory Agreement are not exclusive. Subject to the requirements of the 1940 Act, GC Advisors may enter into
one or more sub-advisory agreements under which GC Advisors may obtain assistance in fulfilling its responsibilities under the Investment Advisory
Agreement.
Management Fee
Pursuant to the Investment Advisory Agreement, we pay GC Advisors a fee for investment advisory and management services consisting of two
components — a base management fee and an incentive fee. The cost of both the base management fee and the incentive fee is ultimately borne by our
stockholders.
Under each of the Investment Advisory Agreement and the Prior Investment Advisory Agreement, the base management fee is calculated at an annual rate
equal to 1.375% of our average adjusted gross assets at the end of the two most recently completed calendar quarters (excluding cash and cash equivalents but
including assets purchased with borrowed funds and securitization-related assets and cash collateral on deposit with custodian). Additionally, GC Advisors is
voluntarily excluding assets funded with secured borrowing proceeds from the management fee. For services rendered under the Investment Advisory
Agreement, or the Prior Investment Advisory Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated
based on the average value of our gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share
issuances or repurchases during a current calendar quarter. Base management fees for any partial month or quarter are appropriately pro-rated. For purposes
of the Investment Advisory Agreement, cash equivalents means U.S. government securities and commercial paper instruments maturing within 270 days of
purchase. To the extent that GC Advisors or any of its affiliates provides investment advisory, collateral management or other similar services to a subsidiary
of ours, the base management fee shall be reduced by an amount equal to the product of (1) the total fees paid to GC Advisors by such subsidiary for such
services and (2) the percentage of such subsidiary’s total equity, including membership interests and any class of notes not exclusively held by one or more
third parties, that is owned, directly or indirectly, by us.
Incentive Fee
We pay GC Advisors an incentive fee. Incentive fees are calculated as described below and payable quarterly in arrears or at the end of each calendar year (or,
upon termination of the Investment Advisory Agreement, as of the termination date).
Cap on Fees. We have structured the calculation of the incentive fee to include a fee limitation such that, under the Investment Advisory Agreement, an
incentive fee for any quarter can only be paid to GC Advisors if, after such payment, the cumulative incentive fees paid to GC Advisors, calculated on a per
share basis as described below, since April 13, 2010, the effective date of our election to become a business development company, would be less than or
equal to 20.0% of our Cumulative Pre-Incentive Fee Net Income (as defined below).
We accomplish this limitation by subjecting each quarterly incentive fee payable under the Income and Capital Gains Incentive Fee Calculation (as defined
below) to a cap, or the Incentive Fee Cap. The Incentive Fee Cap in any
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quarter is equal to the difference between (a) 20.0% of Cumulative Pre-Incentive Fee Net Income Per Share (as defined below) and (b) Cumulative Incentive
Fees Paid Per Share (as defined below). To the extent the Incentive Fee Cap is zero or a negative value in any quarter, no incentive fee would be payable in
that quarter. “Cumulative Pre-Incentive Fee Net Income Per Share” under the Investment Advisory Agreement is equal to the sum of Pre-Incentive Fee Net
Income Per Share (as defined below) for each quarter since April 13, 2010. “Pre-Incentive Fee Net Income Per Share” for any quarter is equal to (a) the sum
of (i) Pre-Incentive Fee Net Investment Income (as defined below) and (ii) Adjusted Capital Returns (as defined below) for the quarter divided by (b) the
weighted average number of shares of our common stock outstanding during such quarter. “Adjusted Capital Returns” for any quarter shall be the sum of the
realized aggregate capital gains, realized aggregate capital losses, aggregate unrealized capital depreciation and aggregate unrealized capital appreciation for
such quarter; provided that the calculation of realized aggregate capital gains, realized aggregate capital losses, aggregate unrealized capital depreciation and
aggregate unrealized capital appreciation shall not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation
resulting solely from the purchase accounting for any premium or discount paid for the acquisition of assets in a merger. “Cumulative Incentive Fees Paid Per
Share” is equal to the sum of Incentive Fees Paid Per Share for each quarter (or portion thereof) since April 13, 2010. “Incentive Fees Paid Per Share” for any
quarter is equal to the incentive fees accrued and/or payable by us for such period divided by the weighted average number of shares of our common stock
outstanding during such period.
“Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees such as commitment,
origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies but excluding fees for providing managerial
assistance) accrued during the calendar quarter, minus operating expenses for the calendar quarter (including the base management fee, taxes, any expenses
payable under the Investment Advisory Agreement and the Administration Agreement, any expenses of securitizations and any interest expense and
dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of
investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends, and zero coupon
securities, accrued income that we have not yet received in cash. GC Advisors does not return to us amounts paid to it on accrued income that we have not yet
received in cash if such income is not ultimately received by us in cash. If we do not ultimately receive income, a loss would be recognized, reducing future
fees. The Investment Advisory Agreement, as compared to the Prior Investment Advisory Agreement, excludes the impact of purchase accounting resulting
from a merger, including the Merger, from the calculation of income subject to the income incentive fee payable and the calculation of the Incentive Fee Cap.
As a result, under the Investment Advisory Agreement, Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital
losses or unrealized capital appreciation or depreciation or any amortization or accretion of any purchase premium or purchase discount to interest income
resulting solely from the purchase accounting for any premium or discount paid for the acquisition of assets in a merger, such as the premium to net asset
value paid for the shares of GCIC common stock in the Merger.
The Investment Advisory Agreement, as compared to the Prior Investment Advisory Agreement, converts the cumulative incentive fee cap from an aggregate
basis calculation to a per share calculation. Under the Prior Investment Advisory Agreement, the Incentive Fee would not be paid at any time if, after such
payment, the cumulative Incentive Fees paid to date would be greater than 20.0% of our Cumulative Pre-Incentive Fee Net Income, which was defined under
the Prior Investment Advisory Agreement to equal the sum of Pre-Incentive Fee Net Investment Income for each period since April 13, 2010. Under the
Investment Advisory Agreement, the Incentive Fee will not be paid at any time if, after such payment, the Cumulative Incentive Fees Paid Per Share to date
would be greater than 20.0% of Cumulative Pre-Incentive Fee Net Income Per Share.
If, for any relevant period, the Incentive Fee Cap calculation results in our paying less than the amount of the Incentive Fee calculated above, then the
difference between (a) the Incentive Fees accrued and/or payable by us for such relevant period and (b) the Incentive Fee Cap multiplied by the weighted
average number of shares of our common stock outstanding during such relevant period will not be paid by us, and will not be received by GC Advisors, as
an incentive fee, either at the end of such relevant period or at the end of any future relevant period.
Income and Capital Gains Incentive Fee Calculation
The income and capital gains incentive fee calculation, or the Income and Capital Gains Incentive Fee Calculation, has two parts: the income component and
the capital gains component. The income component is calculated quarterly in arrears based on our Pre-Incentive Fee Net Investment Income for the
immediately preceding calendar quarter. With the exception of the change to the calculation of “Pre-Incentive Fee Net Investment Income”
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described above, the income component of the incentive fee is calculated the same under the Investment Advisory Agreement as under the Prior Investment
Advisory Agreement.
Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of our net assets (defined as total assets less indebtedness and before
taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle
rate” of 2.0% quarterly. If market interest rates rise, we may be able to invest our funds in debt instruments that provide for a higher return, which would
increase our Pre-Incentive Fee Net Investment Income and make it easier for GC Advisors to surpass the fixed hurdle rate and receive an incentive fee based
on such net investment income. Our Pre-Incentive Fee Net Investment Income used to calculate this part of the incentive fee is also included in the amount of
our total assets (excluding cash and cash equivalents but including assets purchased with borrowed funds and securitization-related assets) used to calculate
the 1.375% base management fee, which fee is payable on all of our assets managed by GC Advisors.
We calculate the income component of the Income and Capital Gains Incentive Fee Calculation with respect to our Pre-Incentive Fee Net Investment Income
quarterly, in arrears, as follows:
•
•
zero in any calendar quarter in which the Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate;
100.0% of our Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that
exceeds the hurdle rate but is less than 2.5% in any calendar quarter. We refer to this portion of our Pre-Incentive Fee Net Investment Income (which
exceeds the hurdle rate but is less than 2.5%) as the “catch-up” provision. The catch-up is meant to provide GC Advisors with 20.0% of the Pre-
Incentive Fee Net Investment Income as if a hurdle rate did not apply if this net investment income exceeds 2.5% in any calendar quarter; and
•
20.0% of the amount of our Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.5% in any calendar quarter.
The sum of these calculations yields the “Income Incentive Fee”. This amount is appropriately adjusted for any share issuances or repurchases during the
quarter.
The following is a graphical representation of the Income Incentive Fee calculation:
Quarterly Income Component of Income and Capital Gains Incentive Fee Calculation Based on Net Income
Pre-Incentive Fee Net Investment Income
(Expressed as a Percentage of the Value of Net Assets)
Percentage of Pre-Incentive Fee Net Investment Income Allocated to Income Component of Income and Capital Gains Incentive Fee Calculation
The second part of the Income and Capital Gains Incentive Fee Calculation, or the Capital Gain Incentive Fee, equals (a) 20.0% of our Capital Gain Incentive
Fee Base (as defined below), if any, calculated in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as
of the termination date), commencing with the calendar year ending December 31, 2010, less (b) the aggregate amount of any previously paid Capital Gain
Incentive Fees. The Capital Gain Incentive Fee is calculated in the same manner under the Investment Advisory Agreement as under the Prior Investment
Advisory Agreement. Our “Capital Gain Incentive Fee Base” equals (1) the sum of (i) our realized capital gains, if any, on a cumulative positive basis from
April 13, 2010 through the end of each calendar year, (ii) all realized capital losses on a cumulative basis and (iii) all unrealized capital depreciation on a
cumulative basis less (2) all unamortized deferred financing costs, if and to the extent such costs exceed all unrealized capital appreciation on a cumulative
basis.
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•
•
•
The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in
our portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.
The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each
investment in our portfolio when sold and (b) the accreted or amortized cost basis of such investment.
The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each
investment in our portfolio as of the applicable Capital Gain Incentive Fee calculation date and (b) the accreted or amortized cost basis of
such investment.
The Capital Gain Incentive Fee payable as calculated under the Prior Investment Advisory Agreement or the Investment Advisory Agreement, as applicable
(as described above) for each of the years ended September 30, 2019, 2018 and 2017 was $0, $2.3 million and $0.4 million. However, in accordance with
U.S. generally accepted accounting principles, or GAAP, we are required to accrue for the Capital Gain Incentive Fee on a quarterly basis and are further
required to include the aggregate unrealized capital appreciation on investments when calculating the capital gain incentive fee accrual, as if such unrealized
capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable
under either the Prior Investment Advisory Agreement or the Investment Advisory Agreement. If the Capital Gain Incentive Fee Base, adjusted as required by
GAAP to include unrealized appreciation, is positive at the end of a period, then GAAP requires us to accrue a capital gain incentive fee equal to 20% of such
amount, less the aggregate amount of the actual capital gain incentive fees paid or capital gain incentive fees accrued under GAAP in all prior periods. If such
amount is negative, then there is no accrual for such period. The resulting accrual under GAAP for any capital gain incentive fee payable in a given period
may result in additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative
amount is less than in the prior period. There can be no assurance that such unrealized capital appreciation will be realized in the future. Any payment due
under the terms of the Prior Investment Advisory Agreement or the Investment Advisory Agreement is calculated in arrears at the end of each calendar year,
and we paid a $1.2 million and $1.6 million Capital Gain Incentive Fee calculated in accordance with the Prior Investment Advisory Agreement as of
December 31, 2018 and December 31, 2017, respectively. We did not pay any capital gain incentive fee under the Prior Investment Advisory Agreement for
any period ended prior to December 31, 2017. For the years ended September 30, 2019, 2018 and 2017, we accrued (reversed) a Capital Gain Incentive Fee
under GAAP of $(5.6) million, $1.5 million, and $2.8 million, respectively.
The sum of the Income Incentive Fee and the Capital Gain Incentive Fee is the “Incentive Fee”.
Examples of Quarterly Incentive Fee Calculation
Example 1 — Income Related Portion of Incentive Fee(1):
Assumptions
Hurdle rate(2) = 2.00%
Management fee(3) = 0.344%
Other expenses (legal, accounting, custodian, transfer agent, etc.)(4) = 0.35%
(1) The hypothetical amount of Pre-Incentive Fee Net Investment Income shown is based on a percentage of total net assets. In addition, the example
assumes that during the most recent four full calendar quarter period ending on or prior to the date the payment set forth in the example is to be made, the
sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less indebtedness and before taking into
account any incentive fees payable during the period) is at least 8.0% of our net assets at the beginning of such period (as adjusted for any share issuances
or repurchases).
(2) Represents a quarter of the 8.0% annualized hurdle rate.
(3) Represents a quarter of the 1.375% annualized management fee.
(4) Excludes offering expenses.
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Alternative 1
Additional Assumptions
Investment income (including interest, dividends, fees, etc.) = 1.25%
Pre-Incentive Fee Net Investment Income (investment income adjusted to exclude amortization of purchase premium – (management fee + other expenses)) =
0.556%
Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate, therefore there is no Incentive Fee.
Alternative 2
Additional Assumptions
Investment income (including interest, dividends, fees, etc.) = 2.80%
Pre-Incentive Fee Net Investment Income (investment income adjusted to exclude amortization of purchase premium – (management fee + other expenses)) =
2.106%
Pre-Incentive Fee Net Investment Income exceeds hurdle rate, therefore there is an Incentive Fee.
100% × “catch-up” + the greater of 0% AND (20% × (Pre-Incentive Fee Net Investment Income – 2.50%))
(100% × (2.106% – 2.00%)) + 0%
100% × 0.106%
0.106%
Incentive Fee
=
=
=
=
Alternative 3
Additional Assumptions
Investment income (including interest, dividends, fees, etc.) = 3.50%
Pre-Incentive Fee Net Investment Income (investment income – (management fee + other expenses)) = 2.806%
Pre-Incentive Fee Net Investment Income exceeds hurdle rate, therefore there is an Incentive Fee.
Incentive Fee
=
=
=
=
=
100% × “catch-up” + the greater of 0% AND (20% × (Pre-Incentive Fee Net Investment Income – 2.50%))
(100% × (2.50% – 2.00%)) + (20% × (2.806% – 2.50%))
0.50% + (20% × 0.306%)
0.50% + 0.061%
0.561%
Example 2 — Capital Gain Incentive Fee:
Alternative 1
Assumptions
Year 1:
Year 2:
Year 3:
Year 4:
$20 million investment made in Company A (“Investment A”) and an investment in Company B acquired in a merger (“Investment B”);
Investment B is allocated consideration paid, or a cost basis in accordance with GAAP, of $31.5 million.
Investment A is sold for $15 million and fair market value (“FMV”) of Investment B determined to be $29 million
FMV of Investment B determined to be $27 million
Investment B sold for $25 million
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The Capital Gain Incentive Fee, if any, would be:
Year 1:
Year 2:
Year 3:
Year 4:
None (No sales transactions)
None (Sales transaction resulted in a realized capital loss on Investment A)
None (No sales transactions)
None (Sales transaction resulted in a realized capital loss on Investment B)
Each quarterly incentive fee payable on the Income and Capital Gains Incentive Fee Calculation is subject to the Incentive Fee Cap. Below are the necessary
adjustments to the Incentive Fee payable to adhere to the Incentive Fee Cap.
Additional Assumptions
Year 1:
Year 2:
Year 3:
Year 4:
Year 1:
Year 2:
Year 3:
Year 4:
Alternative 2
Assumption
Year 1:
Year 2:
Year 3:
Year 4:
Year 5:
Investment B has a FMV of $30.0 million at the time of the closing of the merger, resulting in a cost basis for purposes of calculating the
Incentive Fee Cap of $30 million (excluding the $1.5 million purchase premium paid for the acquisition of Investment B in a merger and
corresponding $1.5 million unrealized loss); we have 10,000,000 shares of common stock issued and outstanding
We have 10,000,000 shares of common stock issued and outstanding
We issued 1,000,000 shares of common stock and has 11,000,000 shares of common stock issued and outstanding
We have 11,000,000 shares of common stock issued and outstanding
No adjustment; no realized capital losses or unrealized capital depreciation
Investment A sold at a $5 million loss. Investment B has unrealized capital depreciation of $1 million for purposes of calculating the
Incentive Fee Cap. Therefore, GC Advisors would not be paid on the $0.60 per share realized/unrealized loss which would result in a
lower Incentive Fee by $0.12 per share.
Investment B has unrealized capital depreciation of $2 million for purposes of calculating the Incentive Fee Cap. Therefore, GC Advisors
would not be paid on the $0.18 per share unrealized capital depreciation, which would result in a lower Incentive Fee by $0.04 per share.
Investment B sold resulting in a $5 million realized loss for purposes of calculating the Incentive Fee Cap. Investment B was previously
marked down by $3 million for purposes of calculating the New Incentive Fee Cap; therefore, for purposes of calculating the New
Incentive Fee Cap we would realize a $5 million loss on Investment B and reverse the previous $3 million in unrealized capital
depreciation. The net effect would be a loss for purposes of calculating the Incentive Fee Cap of $2 million. GC Advisors would not be
paid on the $0.18 per share loss which would result in a lower Incentive Fee by $0.04 per share.
$20 million investment made in Company A (“Investment A”), an investment in Company B acquired in a merger (“Investment B”);
Investment B is allocated consideration paid, or a cost basis in accordance with GAAP, of $31.5 million, and $25 million investment made
in Company C (“Investment C”)
FMV of Investment A determined to be $18 million, FMV of Investment B determined to be $25 million and FMV of Investment C
determined to be $25 million
Investment A sold for $18 million. FMV of Investment B determined to be $24 million and FMV of Investment C determined to be $25
million.
FMV of Investment B determined to be $22 million. Investment C sold for $24 million.
Investment B sold for $20 million
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The Capital Gain Incentive Fee, if any, would be:
Year 1:
Year 2:
Year 3:
Year 4:
Year 5:
None (No sales transactions)
None (No sales transactions)
None (Sales transaction resulted in a realized capital loss on Investment A)
None (Sales transaction resulted in a realized capital loss on Investment C)
None (Sales transaction resulted in a realized capital loss on Investment B)
Each quarterly Incentive Fee payable on the Income and Capital Gains Incentive Fee Calculation is subject to the Incentive Fee Cap. Below are the necessary
adjustments to the Incentive Fee payable to adhere to the Incentive Fee Cap.
Additional Assumptions
Year 1:
Year 2:
Year 3:
Year 4:
Year 5:
Year 1:
Year 2:
Year 3:
Year 4:
Year 5:
Investment B has an FMV of $30.0 million at the time of the closing of the merger, resulting in a cost basis for purposes of calculating the
Incentive Fee Cap of $30 million (excluding the $1.5 million purchase premium paid for the acquisition of Investment B in a merger and
corresponding $1.5 million unrealized loss); we have 10,000,000 shares of common stock issued and outstanding
We have 10,000,000 shares of common stock issued and outstanding
We issue 1,000,000 shares of common stock and have 11,000,000 shares of common stock issued and outstanding
We have 11,000,000 shares of common stock issued and outstanding
We have 11,000,000 shares of common stock issued and outstanding
No adjustment; no realized capital losses or unrealized capital depreciation.
Investment A has unrealized capital depreciation of $2 million. Investment B has unrealized capital depreciation of $5 million for
purposes of calculating the Incentive Fee Cap. Therefore, GC Advisors would not be paid on the $0.70 per share unrealized capital
depreciation which would result in a lower Incentive Fee by $0.14 per share.
Investment A sold at a $2 million loss. Investment A was previously marked down by $2 million; therefore, we would realize a $2 million
loss on Investment A and reverse the previous $2 million in unrealized capital depreciation. Investment B has additional unrealized capital
depreciation of$1 million for purposes of calculating the Incentive Fee Cap. The net effect would be a loss of$1 million for purposes of
calculating the Incentive Fee Cap. GC Advisors would not be paid on the $0.09 per share loss, which would result in a lower Incentive
Fee by $0.02 per share.
Investment B has additional unrealized capital depreciation of $2 million for purposes of calculating the Incentive Fee Cap. Investment C
sold at a $1 million realized loss. The net effect would be a loss of $3 million for purposes of calculating the Incentive Fee Cap. GC
Advisors would not be paid on the $0.27 per share loss, which would result in a lower Incentive Fee by $0.05 per share.
Investment B sold resulting in a $10 million realized loss for purposes of calculating the Incentive Fee Cap. Investment B was previously
marked down by $8 million; therefore, we would realize a $10 million loss on Investment B and reverse the previous $8 million in
unrealized capital depreciation. The net effect would be a loss for purposes of calculating the Incentive Fee Cap of $2 million. GC
Advisors would not be paid on the $0.18 per share loss, which would result in a lower Incentive Fee by $0.04 per share.
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Alternative 3
Assumptions
Year 1:
Year 2:
Year 3:
Year 4:
$25 million investment made in Company A (“Investment A”) and an investment in Company B acquired in a merger (“Investment B”);
Investment B is allocated consideration paid, or a cost basis in accordance with GAAP, of $31.5 million
Investment A is sold for $30 million, FMV of Investment B determined to be $31 million and $2 million of unamortized deferred
financing costs
FMV of Investment B determined to be $33 million and $1 million of unamortized deferred financing costs
Investment B sold for $33 million and $0 of unamortized deferred financing costs
The Capital Gain Incentive Fee, if any, would be:
Year 1:
Year 2:
Year 3:
Year 4:
None (No sales transactions)
$900,000 (20% multiplied by (i) $5 million realized capital gain on sale of Investment A less (ii) $0.5 million of unrealized loss).
$100,000 (20% multiplied by $5 million realized capital gains on sale of Investment A less $900,000 Capital Gain Incentive Fee paid in
year 2).
$600,000 (20% multiplied by $8 million realized capital gains on sale of Investment A and Investment B less Capital Gain Incentive Fee
paid in years 2 and 3).
Each quarterly Incentive Fee payable on the Income and Capital Gains Incentive Fee Calculation is subject to the Incentive Fee Cap. Below are the necessary
adjustments to the Incentive Fee payable to adhere to the Incentive Fee Cap
Additional Assumptions
Year 1:
Year 2:
Year 3:
Year 4:
Year 1:
Year 2:
Year 3:
Year 4:
Investment B has a FMV of $30.0 million at the time of the closing of the merger, resulting in a cost basis for purposes of calculating the
Incentive Fee Cap of $30 million (excluding the $1.5 million purchase premium paid for the acquisition of Investment B in a merger and
corresponding $1.5 million unrealized loss); we have 10,000,000 shares of common stock issued and outstanding
We have 10,000,000 shares of common stock issued and outstanding
We issue 1,000,000 shares of common stock and have 11,000,000 shares of common stock issued and outstanding
We have 11,000,000 shares of common stock issued and outstanding
No adjustment necessary
No adjustment necessary. GC Advisors would not be paid on the $1 million unrealized gain on Investment B.
No adjustment necessary. GC Advisors would not be paid on the $3 million unrealized gain on Investment B.
No adjustment necessary
Payment of Our Expenses
All investment professionals of GC Advisors and/or its affiliates, when and to the extent engaged in providing investment advisory and management services
to us, and the compensation and routine overhead expenses of personnel allocable to these services to us, are provided and paid for by GC Advisors and/or its
affiliates and not by us. We bear all other out-of-pocket costs and expenses of our operations and transactions. See “Management’s Discussion and Analysis
of Financial Condition and Results of Operations — Overview — Expenses.”
Duration and Termination
Unless terminated earlier as described below, the Investment Advisory Agreement will continue in effect for an initial two-year term and thereafter shall
continue in effect from year to year if approved annually by our board of directors or by the affirmative vote of the holders of a majority of our outstanding
voting securities, and, in either
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case, if also approved by a majority of our directors who are not “interested persons,” as that term is defined in the 1940 Act, of us or GC Advisors. The
Investment Advisory Agreement automatically terminates in the event of its assignment, as defined in the 1940 Act, by GC Advisors and may be terminated
by either party without penalty upon not less than 60 days’ written notice to the other. The holders of a majority of our outstanding voting securities, by vote,
may also terminate the Investment Advisory Agreement without penalty. See “Risk Factors — Risks Relating to our Business and Structure — We are
dependent upon GC Advisors for our future success and upon their access to the investment professionals and partners of Golub Capital and its affiliates.”
Indemnification
The Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of
the reckless disregard of its duties and obligations, GC Advisors and its officers, managers, partners, agents, employees, controlling persons, members and
any other person or entity affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable
attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of GC Advisors’ services under the Investment Advisory Agreement or
otherwise as our investment adviser.
Approval of the Investment Advisory Agreement
At a meeting of our board of directors held on November 27, 2018, our board of directors, including all of the directors who are not “interested persons,” as
that term is defined in the 1940 Act, of us or GC Advisors, or the independent directors, voted unanimously to approve a prior version of the Investment
Advisory Agreement. The board of directors then approved the submission of the Investment Advisory Agreement to our stockholders for approval with the
recommendation that the stockholders vote to approve the Investment Advisory Agreement. Following certain regulatory discussions, our board of directors
considered a revised version of the Investment Advisory Agreement that did not include any changes to the calculation of the Capital Gain Incentive Fee as
compared to the calculation under the Prior Investment Advisory Agreement. At a meeting of our board of directors held on May 7, 2019, our board of
directors, including all of our independent directors, fully discussed and considered all material matters related to the approval of the Investment Advisory
Agreement, and the board of directors, including all of our independent directors subsequently approved the Investment Advisory Agreement at a meeting on
July 11, 2019 to take effect upon closing of the Merger. In addition, the board of directors, including all of our independent directors, unanimously
recommended that the Investment Advisory Agreement be submitted to our stockholders for approval.
In reaching a decision to approve the Investment Advisory Agreement, our board of directors reviewed a significant amount of information and considered,
among other things:
•
•
•
•
•
•
the nature, extent and quality of services provided to us by GC Advisors;
the relative investment performance of us since inception;
the effect of the Merger on the calculation of incentive fees and the incentive fee cap;
the effect of purchase accounting for the premium paid for the shares of GCIC’s common stock in the Merger on our financial statements after the
Merger and the resulting effects on the calculation of incentive fees payable and the incentive fee cap;
the fees paid by other comparable business development companies; and
various other matters.
Our board of directors noted that the terms of the Investment Advisory Agreement did not change the calculation of the Capital Gain Incentive Fee, or the
management or incentive fee rates and that the changes, as compared to the Prior Investment Advisory Agreement, consisted of revisions to (i) exclude the
impact of purchase accounting resulting from a merger, including the Merger, from the calculation of income subject to the income incentive fee payable and
the calculation of the cumulative incentive fee cap under the Investment Advisory Agreement and (ii) convert the cumulative incentive fee cap into a per
share calculation.
At a meeting of our stockholders held on September 4, 2019, our stockholders voted to approve the Investment Advisory Agreement, which was entered into
effective as of the closing of the Merger and will continue for an initial two-year term.
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Administration Agreement
Pursuant to the Administration Agreement, the Administrator furnishes us with office facilities and equipment and provides clerical, bookkeeping,
recordkeeping and other administrative services at such facilities. Under the Administration Agreement, the Administrator performs, or oversees the
performance of, our required administrative services, which include being responsible for the financial records that we are required to maintain and preparing
reports to our stockholders and reports filed with the SEC. In addition, the Administrator assists us in determining and publishing our net asset value, oversees
the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our
expenses and the performance of administrative and professional services rendered to us by others. The Administrator may retain third parties to assist in
providing administrative services to us. To the extent that the Administrator outsources any of its functions, we pay the fees associated with such functions on
a direct basis without profit to the Administrator. We reimburse the Administrator for the allocable portion (subject to review and approval of our board of
directors) of the Administrator’s overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent,
the fees and expenses associated with performing compliance functions and our allocable portion of the cost of our chief financial officer and chief
compliance officer and their respective staffs. Our board of directors reviews the expenses reimbursed to the Administrator, including any allocation of
expenses among us and other entities for which the Administrator provides similar services, to determine that these expenses are reasonable and comparable
to administrative services charged by unaffiliated third-party asset managers. In addition, if requested to provide managerial assistance to our portfolio
companies, the Administrator is paid an additional amount based on the cost of the services provided, which shall not exceed the amount we receive from
such portfolio companies for providing this assistance. In May 2019, the Administration Agreement was renewed for a one-year term with the unanimous
approval of our board of directors. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other
party.
Indemnification
The Administration Agreement provides that, absent willful misfeasance, bad faith or negligence in the performance of its duties or by reason of the reckless
disregard of its duties and obligations, the Administrator and its officers, managers, partners, agents, employees, controlling persons, members and any other
person or entity affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees
and amounts reasonably paid in settlement) arising from the rendering of the Administrator’s services under the Administration Agreement or otherwise as
our administrator.
License Agreement
We have entered into a license agreement with Golub Capital LLC under which Golub Capital LLC has granted us a non-exclusive, royalty-free license to use
the name “Golub Capital”. Under this agreement, we will have a right to use the “Golub Capital” name and the agreement will remain in effect for so long as
GC Advisors or one of its affiliates remains our investment adviser. Other than with respect to this limited license, we will have no legal right to the “Golub
Capital” name.
Staffing Agreement
We do not have any internal management capacity or employees. We depend on the diligence, skill and network of business contacts of the senior investment
professionals of GC Advisors to achieve our investment objective. GC Advisors is an affiliate of Golub Capital LLC and depends upon access to the
investment professionals and other resources of Golub Capital LLC and its affiliates to fulfill its obligations to us under the Investment Advisory Agreement.
GC Advisors also depends upon Golub Capital LLC to obtain access to deal flow generated by the professionals of Golub Capital LLC and its affiliates.
Under the Staffing Agreement, Golub Capital LLC provides GC Advisors with the resources necessary to fulfill these obligations. The Staffing Agreement
provides that Golub Capital LLC will make available to GC Advisors experienced investment professionals and access to the senior investment personnel of
Golub Capital LLC for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. The Staffing Agreement also includes a
commitment that the members of GC Advisors’ investment committee serve in such capacity. The Staffing Agreement remains in effect until terminated and
may be terminated by either party without penalty upon 60 days’ written notice to the other party. Services under the Staffing Agreement are provided to GC
Advisors on a direct cost reimbursement basis, and such fees are not our obligation.
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REGULATION
General
We are a business development company under the 1940 Act and have elected to be treated as a RIC under the Code. The 1940 Act contains prohibitions and
restrictions relating to transactions between business development companies and their affiliates (including any investment advisers), principal underwriters
and affiliates of those affiliates or underwriters and requires that a majority of the directors of a business development company be persons other than
“interested persons,” as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to
cease to be, or withdraw our election as, a business development company without the approval of a majority of our outstanding voting securities.
We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions. With respect to such securities, we
may, for the purpose of public resale, be deemed an “underwriter,” as that term is defined in the Securities Act of 1933, as amended, or the Securities Act. Our
intention is to not write (sell) or buy put or call options to manage risks associated with the publicly traded securities of our portfolio companies, except that
we may enter into hedging transactions to manage the risks associated with interest rate fluctuations. However, we may purchase or otherwise receive
warrants to purchase the common stock of our portfolio companies in connection with acquisition financing or other investments. Similarly, in connection
with an acquisition, we may acquire rights to require the issuers of acquired securities or their affiliates to repurchase them under certain circumstances. We
also do not intend to acquire securities issued by any investment company in excess of the limits imposed by the 1940 Act. With regard to that portion of our
portfolio invested in securities issued by investment companies, it should be noted that such investments might subject our stockholders to additional
expenses. None of these policies, or any of our other policies, is fundamental and each may be changed without stockholder approval. To the extent we adopt
any fundamental policies; no person from whom we borrow will have, in his or her capacity as lender or debt holder, either a veto power or a vote in
approving or changing any of our fundamental policies.
Qualifying Assets
Under the 1940 Act, a business development company may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which
are referred to as “qualifying assets,” unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. The
principal categories of qualifying assets relevant to our business are the following:
(1)
Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited
exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an
eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is
defined in the 1940 Act as any issuer that:
◦
◦
◦
is organized under the laws of, and has its principal place of business in, the United States;
is not an investment company (other than a small business investment company, or SBIC, wholly owned by the business development company) or
a company that would be an investment company but for certain exclusions under the 1940 Act; and
satisfies either of the following:
▪ does not have any class of securities listed on a national securities exchange or has any class of securities listed on a national securities
exchange subject to a $250.0 million market capitalization maximum; or
▪ is controlled by a business development company or a group of companies including a business development company, the business
development company actually exercises a controlling influence over the management or policies of the eligible
portfolio company, and, as a result, the business development company has an affiliated person who is a director of the
eligible portfolio company.
(2)
(3)
Securities of any eligible portfolio company which we control.
Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in
transactions incident to such a private transaction, if the issuer is in
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bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they
came due without material assistance other than conventional lending or financing arrangements.
(4)
Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we
already own 60% of the outstanding equity of the eligible portfolio company.
(5)
Securities received in exchange for or distributed on or with respect to securities described above, or pursuant to the exercise of warrants or rights
relating to such securities.
(6)
Cash, cash equivalents, U.S. government securities or high-quality debt securities that mature in one year or less from the date of investment.
The regulations defining and interpreting qualifying assets may change over time. We may adjust our investment focus as needed to comply with and/or take
advantage of any regulatory, legislative, administrative or judicial actions in this area.
We look through our consolidated subsidiaries to the underlying holdings (considered together with portfolio assets held outside of our consolidated
subsidiaries) for purposes of determining compliance with the 70% qualifying assets requirement of the 1940 Act. At least 70% of our assets will be eligible
assets.
Managerial Assistance to Portfolio Companies
A business development company must have been organized and have its principal place of business in the United States and must be operated for the
purpose of making investments in the types of securities described in (1), (2) or (3) above. However, in order to count portfolio securities as qualifying assets
for the purpose of the 70% test, the business development company must either control the issuer of the securities or must offer to make available to the issuer
of the securities significant managerial assistance; except that, when the business development company purchases such securities in conjunction with one or
more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making available significant
managerial assistance means any arrangement whereby the business development company, through its directors, officers or employees, offers to provide,
and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio
company. The Administrator or an affiliate of the Administrator provides such managerial assistance on our behalf to portfolio companies that request this
assistance.
Temporary Investments
Pending investment in other types of qualifying assets, as described above, our investments may consist of cash, cash equivalents, U.S. government securities,
repurchase agreements and high-quality debt investments that mature in one year or less from the date of investment, which we refer to, collectively, as
temporary investments, so that 70% of our assets are qualifying assets or temporary investments. Typically, we will invest in U.S. Treasury bills or in
repurchase agreements, so long as the agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase
agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-
upon future date and at a price that is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction
on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets constitute repurchase
agreements from a single counterparty, we would generally not meet the diversification tests described in section 851(b)(3) of the Code in order to qualify as
a RIC for U.S. federal income tax purposes. Accordingly, we do not intend to enter into repurchase agreements with a single counterparty in excess of this
limit. GC Advisors will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.
Senior Securities
We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset
coverage, as that term is defined in the 1940 Act, immediately after each such issuance is at least equal to the percentage set forth in Section 61 of the 1940
Act that is applicable to us at such time. Prior to the enactment of the Small Business Credit Availability Act, or SBCAA, in March 2018, the asset coverage
requirement applicable to business development companies was 200%. The SBCAA permits a business development company to be subject to an asset
coverage requirement of 150% so long as it meets certain disclosure requirements and obtains certain approvals. The reduced asset coverage requirement
permits a business development
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company to have a ratio of total consolidated assets to outstanding indebtedness of 2:1 as compared to a maximum of 1:1 under the 200% asset coverage
requirement. On February 5, 2019, our stockholders voted to approve the application of the reduced asset coverage requirements in Section 61(a)(2) to us
effective as of February 6, 2019. As a result of the stockholder approval, effective February 6, 2019, the asset coverage ratio under the 1940 Act applicable to
us decreased to 150% from 200%. In other words, under the 1940 Act, we are now able to borrow $2 for investment purposes for every $1 of investor equity,
as opposed to borrowing $1 for investment purposes for every $1 of investor equity. In addition, while any senior securities remain outstanding, we must
make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage
ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency
purposes without regard to asset coverage, provided that any such borrowings in excess of 5% of the value of our total assets would be subject to the asset
coverage ratio requirements of the 1940 Act, even if for temporary or emergency purposes. We consolidate our financial results with all of our wholly-owned
subsidiaries, including Holdings, GCIC Holdings, the 2010 Issuer, the 2014 Issuer, the GCIC 2016 Issuer, the 2018 Issuer, the GCIC 2018 Issuer, the CLO
Depositor, the GCIC CLO Depositor, Funding, Funding II, GCIC Funding, GCIC Funding II, and the SBIC Funds for financial reporting purposes and
measure our compliance with the leverage test applicable to business development companies under the 1940 Act on a consolidated basis. On September 13,
2011, we received exemptive relief from the SEC to permit us to exclude the debt of our SBIC Funds from our asset coverage test under the 1940 Act. As
such, our ratio of total consolidated assets to outstanding indebtedness may be less than 150%. This provides us with increased investment flexibility but also
increases our risks related to leverage.
For a discussion of the risks associated with leverage, see “Risk Factors — Risks Relating to our Business and Structure — Regulations governing our
operation as a business development company affect our ability to, and the way in which we, raise additional capital. As a business development company, the
necessity of raising additional capital exposes us to risks, including the typical risks associated with leverage.”
Codes of Ethics
We and GC Advisors have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and
restricts certain personal securities transactions. Personnel subject to each code may invest in securities for their personal investment accounts, including
securities that may be purchased or held by us, so long as such investments are made in accordance with the code’s requirements. You may read and copy the
code of ethics from our website at www.golubcapitalbdc.com, from the SEC’s website at www.sec.gov. See “Business — General — Information Available.”
In addition, each code of ethics is attached as an exhibit to this annual report on Form 10-K.
Proxy Voting Policies and Procedures
We have delegated our proxy voting responsibility to GC Advisors. The proxy voting policies and procedures of GC Advisors are set out below. The
guidelines are reviewed periodically by GC Advisors and our directors who are not “interested persons” and, accordingly, are subject to change.
Introduction
As an investment adviser registered under the Advisers Act, GC Advisors has a fiduciary duty to act solely in our best interests. As part of this duty, GC
Advisors recognizes that it must vote our securities in a timely manner free of conflicts of interest and in our best interests.
GC Advisors’ policies and procedures for voting proxies for its investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6
under, the Advisers Act.
Proxy Policies
GC Advisors votes proxies relating to our portfolio securities in what it perceives to be the best interest of our stockholders. GC Advisors reviews on a case-
by-case basis each proposal submitted to a stockholder vote to determine its effect on the portfolio securities we hold. In most cases GC Advisors will vote in
favor of proposals that GC Advisors believes are likely to increase the value of the portfolio securities we hold. Although GC Advisors will generally vote
against proposals that may have a negative effect on our portfolio securities, GC Advisors may vote for such a proposal if there exist compelling long-term
reasons to do so.
Our proxy voting decisions are made by GC Advisors’ chief executive officer and president. To ensure that GC Advisors’ vote is not the product of a conflict
of interest, GC Advisors requires that (1) anyone involved in the
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decision-making process disclose to its chief compliance officer any potential conflict that he or she is aware of and any contact that he or she has had with
any interested party regarding a proxy vote and (2) employees involved in the decision-making process or vote administration are prohibited from revealing
how GC Advisors intends to vote on a proposal in order to reduce any attempted influence from interested parties. Where conflicts of interest may be present,
GC Advisors will disclose such conflicts to us, including our independent directors, and may request guidance from us on how to vote such proxies.
Proxy Voting Records
You may obtain information without charge about how GC Advisors voted proxies during the most recent 12-month period ended September 30, 2019 by
making a written request for proxy voting information to: Golub Capital BDC, Inc., Attention: Investor Relations, 666 Fifth Avenue, 18th Floor, New York,
NY 10103, or by calling Golub Capital BDC, Inc. collect at (212) 750-6060.
Privacy Principles
We are committed to maintaining the privacy of our stockholders and to safeguarding their nonpublic personal information. The following information is
provided to help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information
with select other parties.
Generally, we do not receive any nonpublic personal information relating to our stockholders, although certain nonpublic personal information of our
stockholders may become available to us. We do not disclose any nonpublic personal information about our stockholders or former stockholders to anyone,
except as permitted by law or as is necessary in order to service stockholder accounts (for example, to a transfer agent or third-party administrator).
We restrict access to nonpublic personal information about our stockholders to employees of GC Advisors and its affiliates with a legitimate business need for
the information. We will maintain physical, electronic and procedural safeguards designed to protect the nonpublic personal information of our stockholders.
Other
Under the 1940 Act, we are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and
embezzlement. Furthermore, as a business development company, we are prohibited from protecting any director or officer against any liability to us or our
stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.
We and GC Advisors are required to adopt and implement written policies and procedures reasonably designed to prevent violation of relevant federal
securities laws, review these policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a chief
compliance officer to be responsible for administering these policies and procedures.
We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our board
of directors who are not interested persons and, in some cases, prior approval by the SEC. The SEC has interpreted the business development company
prohibition on transactions with affiliates to prohibit “joint transactions” among entities that share a common investment adviser. The staff of the SEC has
granted no-action relief pursuant to which purchases by us and other accounts sponsored or managed by GC Advisors or its affiliates of a single class of
privately placed securities are permitted provided that the adviser negotiates no term other than price and certain other conditions are met. Any co-investment
would be made subject to compliance with existing regulatory guidance, applicable regulations and our allocation procedures. If opportunities arise that
would otherwise be appropriate for us and for another account sponsored or managed by GC Advisors to make different investments in the same issuer, GC
Advisors will need to decide which account will proceed with the investment. Moreover, in certain circumstances, we may be unable to invest in an issuer in
which another account sponsored or managed by GC Advisors has previously invested.
On February 27, 2017, GC Advisors and certain other funds and accounts sponsored or managed by GC Advisors and its affiliates, received exemptive relief
from the SEC that permits us greater flexibility to negotiate the terms of co-investments if our board of directors determines that it would be advantageous for
us to co-invest with other accounts sponsored or managed by GC Advisors or its affiliates in a manner consistent with our investment objectives, positions,
policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. We believe that co-investment by us and accounts sponsored
or managed by GC Advisors and its affiliates may afford us additional investment opportunities and the ability to achieve greater diversification. Under the
terms
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of this exemptive relief, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors is required to make certain
conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to us and our
stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned and (2) the transaction is consistent with the
interests of our stockholders and is consistent with our investment strategies and policies.
Sarbanes-Oxley Act
The Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, imposes a variety of regulatory requirements on companies with a class of
securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and their insiders. Many of these requirements affect us.
For example:
•
•
•
•
our principal executive officer and principal financial officer must certify the accuracy of the financial statements contained in our periodic
reports;
our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;
our management must prepare an annual report regarding its assessment of our internal control over financial reporting, which must be audited
by our independent registered public accounting firm; and
our periodic reports must disclose whether there were significant changes in our internal controls over financial reporting or in other factors that
could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the
regulations promulgated under such act. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and
will take actions necessary to ensure that we comply with that act.
Small Business Investment Company Regulations
We operate the SBIC Funds as wholly-owned subsidiaries of the Company. The SBIC Funds each may rely on an exclusion from the definition of
“investment company” under the 1940 Act. As such, none of these subsidiaries will elect to be regulated as a business development company under the 1940
Act.
The SBIC Funds each have investment objectives substantially similar to ours and make similar types of investments in accordance with SBIC regulations.
The licenses approved by the U.S. Small Business Administration, or SBA, for the SBIC Funds allow the SBIC Funds to incur leverage by issuing SBA-
guaranteed debentures, subject to the issuance of a capital commitment and certain approvals by the SBA and customary procedures. SBA-guaranteed
debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt, have a maturity of ten years, require semi-
annual payments of interest and do not require any principal prior to maturity. Under the regulations applicable to SBICs, an SBIC may have outstanding
debentures guaranteed by the SBA generally in an amount of up to twice its regulatory capital, which generally equates to the amount of its equity capital.
SBIC regulations currently limit the amount that a single SBIC subsidiary may borrow to a maximum of $175.0 million, assuming that it has at least $87.5
million of equity capital. The SBICs are subject to regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum
financial ratios and other covenants.
Under present SBIC regulations, the maximum amount of SBA-guaranteed debentures that may be issued by multiple licensees under common management
is $350.0 million and the maximum amount that may be issued by a single SBIC licensee is $175.0 million. As of September 30, 2019, GC SBIC IV, L.P., or
SBIC IV, GC SBIC V, L.P., or SBIC V, and GC SBIC VI, L.P., or SBIC VI, had $90.0 million, $165.0 million, and $50.0 million of SBA guaranteed
debenture commitments, respectively. The original amount committed to SBIC IV and SBIC V by the SBA was $150.0 million and $175.0 million,
respectively. Through September 30, 2019, SBIC IV and SBIC V have repaid $60.0 million and $10.0 million of outstanding debentures, respectively, and
these commitments have effectively been terminated. As of September 30, 2019, SBIC VI had $18.0 million of undrawn debenture commitments which were
available to be drawn, subject to SBA regulatory requirements.
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SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBIC regulations, SBICs may make loans to eligible
small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services.
Under present SBIC regulations, eligible small businesses generally include businesses that (together with their affiliates) have a tangible net worth not
exceeding $19.5 million and have average annual net income after U.S. federal income taxes not exceeding $6.5 million (average net income to be computed
without benefit of any carryover loss) for the two most recent fiscal years. In addition, an SBIC must devote 25% of its investment activity to “smaller”
concerns, as defined by the SBA. A smaller concern generally includes businesses that have a tangible net worth not exceeding $6.0 million and have average
annual net income after U.S. federal income taxes not exceeding $2.0 million (average net income to be computed without benefit of any net carryover loss)
for the two most recent fiscal years. SBIC regulations also provide alternative size standard criteria to determine eligibility for designation as an eligible small
business or smaller concern, which criteria depend on the primary industry in which the business is engaged and are based on such factors as the number of
employees and gross revenue. However, once an SBIC has invested in a company, it may continue to make follow on investments in the company, regardless
of the size of the company at the time of the follow on investment, up to the time of the company’s initial public offering, if any.
The SBA prohibits an SBIC from providing funds to small businesses for certain purposes, such as relending or investing outside the United States, to
businesses engaged in a few prohibited industries and to certain “passive” (i.e., non-operating) companies. In addition, without prior SBA approval, an SBIC
may not invest an amount equal to more than approximately 30% of the SBIC’s regulatory capital in any one company and its affiliates.
The SBA places certain limitations on the financing terms of investments by SBICs in portfolio companies (such as limiting the permissible interest rate on
debt securities held by an SBIC in a portfolio company). An SBIC may exercise control over a small business for a period of up to seven years from the date
on which the SBIC initially acquires its control position. This control period may be extended for an additional period of time with the SBA’s prior written
approval.
The SBA restricts the ability of an SBIC to lend money to any of its officers, directors and employees or to invest in affiliates thereof. The SBA also
prohibits, without prior SBA approval, a “change of control” of an SBIC or transfers that would result in any person (or a group of persons acting in concert)
owning 10% or more of a class of capital stock of a licensed SBIC. A “change of control” is any event which would result in the transfer of the power, direct
or indirect, to direct the management and policies of a SBIC, whether through ownership, contractual arrangements or otherwise.
SBICs must invest idle funds that are not being used to make loans in investments permitted under SBIC regulations in certain types of securities including
direct obligations of, or obligations guaranteed as to principal and interest by, the U.S. government, which mature within 15 months from the date of the
investment.
SBICs are periodically examined and audited by the SBA’s staff to determine their compliance with SBIC regulations and are periodically required to file
certain forms with the SBA.
Neither the SBA nor the U.S. government or any of its agencies or officers has approved any ownership interest to be issued by us or any obligation that we
or any of our subsidiaries may incur.
Election to Be Taxed as a RIC
As a business development company, 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 net ordinary income or capital gains that we timely distribute as dividends for U.S. federal income tax
purposes to our stockholders. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as
described below). In addition, we must distribute to our stockholders, for each taxable year, dividends for U.S. federal income tax purposes of an amount at
least equal to 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess of realized net short-term capital
gains over realized net long-term capital losses and determined without regard to any deduction for dividends paid, or the Annual Distribution Requirement.
Although not required for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible federal excise tax imposed on RICs,
we must distribute dividends for U.S. federal income tax purposes to our stockholders in respect of each calendar year of an amount at least equal to the sum
of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of the
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excess (if any) of our realized capital gains over our realized capital losses, or capital gain net income (adjusted for certain ordinary losses), generally for the
one-year period ending on October 31 of the calendar year and (3) the sum of any net ordinary income plus capital gains net income for preceding years that
were not distributed during such years and on which we did not incur any liability to pay federal income tax, or the Excise Tax Avoidance Requirement.
Taxation as a RIC
If we:
•
•
qualify as a RIC; and
satisfy the Annual Distribution Requirement;
then we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain, defined as net long-term
capital gains in excess of net short-term capital losses, we distribute as dividends for U.S. federal income tax purposes to our stockholders. We will be subject
to U.S. federal income tax at regular corporate rates on any net income or net capital gain not distributed as dividends to our stockholders.
In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:
•
•
•
•
•
qualify to be treated as a business development company under the 1940 Act at all times during each taxable year;
derive in each taxable year at least 90% of our gross income from 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 our business of investing in such stock or securities, and net income
derived from interests in “qualified publicly traded partnerships” (partnerships that are traded on an established securities market or tradable on
a secondary market, other than partnerships that derive 90% of their income from interest, dividends and other permitted RIC income), or the
90% Income Test; and
diversify our holdings, or the Diversification Tests, so that at the end of each quarter of the taxable year:
at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if
such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting
securities of the issuer; and
no more than 25% of the value of our assets is invested in the securities, other than U.S. government securities or securities of other RICs, of one
issuer or of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or
related trades or businesses or in the securities of one or more qualified publicly traded partnerships.
We may invest in partnerships, including qualified publicly traded partnerships, which may result in our being subject to state, local or foreign income,
franchise or other tax liabilities.
In addition, we are subject to ordinary income and capital gain distribution requirements under U.S. federal excise tax rules for each calendar year. If we do
not meet the required distributions we will be subject to a 4% nondeductible federal excise tax on the undistributed amount. The failure to meet U.S. federal
excise tax distribution requirements will not cause us to lose our RIC status.
A RIC is limited in its ability to deduct expenses in excess of its investment company taxable income. If our deductible expenses in a given taxable year
exceed our investment company taxable income, we may incur a net operating loss for that taxable year. However, a RIC is not permitted to carry forward net
operating losses to subsequent taxable years and such net operating losses do not pass through to its stockholders. In addition, deductible expenses can be
used only to offset investment company taxable income, not net capital gain. A RIC may not use any net capital losses (that is, the excess of realized capital
losses over realized capital gains) to offset its investment company taxable income, but may carry forward such net capital losses, and use them to offset
future capital gains, indefinitely. Due to these limits on deductibility of expenses and net capital losses, we may for tax purposes have aggregate taxable
income for several taxable years that we are required to distribute and that is taxable to our stockholders even if such taxable income is greater than the net
income we actually earn during those taxable years. Furthermore, a portfolio company in which we hold equity or debt instruments may face financial
difficulty that requires us to work out, modify, or otherwise restructure such equity or debt instruments. Any such restructuring could, depending upon the
terms of the restructuring, cause us to incur unusable or nondeductible
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losses or recognize future non-cash taxable income. Any underwriting fees paid by us are not deductible in computing our investment company taxable
income. We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt instruments that are
treated under applicable tax rules as having original issue discount (such as debt instruments with PIK interest or, in certain cases, with increasing interest
rates or issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation,
regardless of whether cash representing such income is received by us in the same taxable year. Because any original issue discount accrued will be included
in our investment company taxable income for the taxable year of accrual, we may be required to make a distribution to our stockholders in order to satisfy
the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.
Certain of our investment practices may be subject to special and complex U.S. federal income tax provisions that may, among other things, (1) treat
dividends that would otherwise constitute qualified dividend income as non-qualified dividend income, (2) treat dividends that would otherwise be eligible for
the corporate dividends received deduction as ineligible for such treatment, (3) disallow, suspend or otherwise limit the allowance of certain losses or
deductions, (4) convert lower-taxed long-term capital gain into higher-taxed short-term capital gain or ordinary income, (5) convert an ordinary loss or a
deduction into a capital loss (the deductibility of which is more limited), (6) cause us to recognize income or gain without a corresponding receipt of cash, (7)
adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur, (8) adversely alter the characterization of certain complex
financial transactions and (9) produce income that will not be qualifying income for purposes of the 90% Income Test. We intend to monitor our transactions
and may make certain tax elections to mitigate the effect of these provisions and prevent our ability to be subject to tax as a RIC.
Gain or loss realized by us from warrants acquired by us as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain
or loss. Such gain or loss generally will be long term or short term, depending on how long we held a particular warrant.
Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements. However,
under the 1940 Act, we are not permitted to make distributions to our stockholders while our debt obligations and other senior securities are outstanding
unless certain “asset coverage” tests are met. See “Business — Regulation — Senior Securities.” Moreover, our ability to dispose of assets to meet our
distribution requirements may be limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our qualification as a RIC,
including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement,
we may make such dispositions at times that, from an investment standpoint, are not advantageous.
Some of the income and fees that we may recognize, such as fees for providing managerial assistance, certain fees earned with respect to our investments,
income recognized in a work-out or restructuring of a portfolio investment, or income recognized from an equity investment in an operating partnership, will
not satisfy the 90% Income Test. In order to manage the risk that such income and fees might disqualify us as a RIC for a failure to satisfy the 90% Income
Test, we may be required to recognize such income and fees indirectly through one or more entities treated as corporations for U.S. federal income tax
purposes. Such corporations will be subject to U.S. corporate income tax as well as state and local tax on their earnings, which ultimately will reduce our
return on such income and fees.
Failure to Qualify as a RIC
If we were unable to qualify for treatment as a RIC and are unable to cure the failure, for example, by disposing of certain investments quickly or raising
additional capital to prevent the loss of RIC status, we generally would be subject to tax on all of our taxable income at regular corporate rates. The Code
provides some relief from RIC disqualification due to failures to comply with the 90% Income Test and the Diversification Tests, although there may be
additional taxes due in such cases. We cannot assure you that we would qualify for any such relief should we fail the 90% Income Test or the Diversification
Tests.
Should failure occur, not only would all our taxable income be subject to tax at regular corporate rates, we would not be able to deduct dividend distributions
to stockholders, nor would they be required to be made. Distributions, including distributions of net long-term capital gain, would generally be taxable to our
stockholders as ordinary dividend income to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code,
certain corporate stockholders would be eligible to claim dividends received deduction with respect to such dividends and non-corporate stockholders would
generally be able to treat such dividends as “qualified
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dividend income,” which is subject to reduced rates of U.S. federal income tax. Distributions in excess of our current and accumulated earnings and profits
would be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. If we
fail to qualify as a RIC, we may be subject to regular corporate tax on any net built-in gains with respect to certain of our assets (i.e., the excess of the
aggregate gains, including items of income, over aggregate losses that would have been realized with respect to such assets if we had been liquidated) that we
elect to recognize on requalification or when recognized over the next five taxable years.
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Item 1A. Risk Factors
You should carefully consider these risk factors, together with all of the other information included in this annual report on Form 10-K and the other reports
and documents filed by us with the SEC. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or
not presently deemed material by us may also impair our operations and performance. If any of the following events occur, our business, financial condition,
results of operations and cash flows could be materially and adversely affected. In such case, our net asset value and the trading price of our common stock
could decline, and you may lose all or part of your investment. The risk factors described below are the principal risk factors associated with an investment in
us as well as those factors generally associated with an investment company with investment objectives, investment policies, capital structure or trading
markets similar to ours.
Risks Relating to Our Business and Structure
We are subject to risks associated with the current interest rate environment and to the extent we use debt to finance our investments, changes in interest
rates will affect our cost of capital and net investment income.
To the extent we borrow money or issue debt securities or preferred stock to make investments, our net investment income will depend, in part, upon the
difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest
these funds. In addition, many of our debt investments and borrowings have floating interest rates that reset on a periodic basis, and many of our investments
are subject to interest rate floors. As a result, a change in market interest rates could have a material adverse effect on our net investment income, in particular
with respect to any decreases from current levels to the level of the interest rate floors on certain investments. In periods of rising interest rates, our cost of
funds will increase because the interest rates on the majority of amounts we have borrowed are floating, which could reduce our net investment income to the
extent any debt investments have fixed interest rates, and the interest rate on investments with an interest rate floor above current levels will not increase until
interest rates exceed the applicable floor. In periods of decreasing interest rates, while our cost of funds will decrease because the interest rates on the majority
of amounts we have borrowed are floating, because a significant portion of the loans in our portfolio also have floating interest rates, our net investment
income may also decrease considering that the interest rate floors on our loans may not have been reached.
We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include various
interest rate hedging activities to the extent permitted by the 1940 Act and applicable commodities laws. These activities may limit our ability to participate in
the benefits of lower interest rates with respect to the hedged borrowings. Adverse developments resulting from changes in interest rates or hedging
transactions could have a material adverse effect on our business, financial condition and results of operations.
You should also be aware that a rise in the general level of interest rates typically will lead to higher interest rates applicable to our debt investments, which
may result in an increase of the amount of incentive fees payable to GC Advisors. Also, an increase in interest rates available to investors could make an
investment in our common stock less attractive if we are not able to increase our distribution rate, which could reduce the value of our common stock.
We are subject to risks associated with the discontinuation of LIBOR
In July 2017, the head of the United Kingdom Financial Conduct Authority announced the phase out of the use of LIBOR by the end of 2021. To identify a
successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee or ARRC, a U.S. based group convened by the Federal Reserve Board and
the Federal Reserve Bank of New York, was formed. Similarly, financial regulators in the UK, the European Union, Japan, and Switzerland formed working
groups with the aim of recommending alternatives to LIBOR denominated in their local currencies. The ARRC is comprised of a diverse set of private-sector
entities and a wide array of official-sector entities, banking regulators, and other financial sector regulators. The ARRC has identified the Secured Overnight
Financing Rate or SOFR as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S.
Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. Although SOFR appears to be the preferred
replacement rate for U.S. dollar LIBOR, it is unclear if other benchmarks may emerge or if other rates will be adopted outside of the U.S.
The expected discontinuation of LIBOR could have a significant impact on on our business. The dollar amount of our outstanding debt investments and
borrowings that are linked to LIBOR with maturity dates after the anticipated
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discontinuation date of 2021 is material. We anticipate significant operational challenges for the transition away from LIBOR including, but not limited to,
amending existing loan agreements with borrowers on investments that may have not been modified with fallback language and adding effective fallback
language to new agreements in the event that LIBOR is discontinued before maturity. Beyond these challenges, we anticipate there may be additional risks to
our current processes and information systems that will need to be identified and evaluated by us. Due to the uncertainty of the replacement for LIBOR, the
potential effect of any such event on our cost of capital and net investment income cannot yet be determined. In addition, any further changes or reforms to
the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact
on the market value for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us and could
have a material adverse effect on our business, financial condition and results of operations.
Global capital markets could enter a period of severe disruption and instability. These conditions have historically affected and could again materially
and adversely affect debt and equity capital markets in the United States and around the world and our business.
The U.S. and global capital markets have in the past and may in the future experience periods of extreme volatility and disruption during economic downturns
and recessions. Increases to budget deficits or direct and contingent sovereign debt, may create concerns about the ability of certain nations to service their
sovereign debt obligations, and risks resulting from any such debt crisis in Europe, the United States or elsewhere could have a detrimental impact on the
global economy, sovereign and non-sovereign debt in certain countries and the financial condition of financial institutions generally. Austerity measures that
certain countries may agree to as part of any debt crisis or disruptions to major financial trading markets may adversely affect world economic conditions and
have an adverse impact on our business and that of our portfolio companies. In June 2016, the United Kingdom held a referendum in which voters approved
an exit from the European Union, and the implications of the United Kingdom’s pending withdrawal from the European Union are unclear at present. Market
and economic disruptions, which may be caused by political trends and government actions in the United States or elsewhere, have in the past and may in the
future affect, the U.S. capital markets, which could adversely affect our business and that of our portfolio companies and the broader financial and credit
markets and reduce the availability of debt and equity capital for the market as a whole and to financial firms, in particular. At various times, such disruptions
have resulted in, and may in the future result, a lack of liquidity in parts of the debt capital markets, significant write-offs in the financial services sector and
the repricing of credit risk. Such conditions may occur for a prolonged period of time again and may materially worsen in the future, including as a result of
U.S. government shutdowns or further downgrades to the U.S. government’s sovereign credit rating or the perceived credit worthiness of the United States or
other large global economies. Unfavorable economic conditions, including future recessions, also could increase our funding costs, limit our access to the
capital markets or result in a decision by lenders not to extend credit to us. We may in the future have difficulty accessing debt and equity capital on attractive
terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may cause us to
reduce the volume of loans we originate and/or fund, adversely affect the value of our portfolio investments or otherwise have a material adverse effect on our
business, financial condition, results of operations and cash flows.
We are dependent upon GC Advisors for our success and upon their access to the investment professionals and partners of Golub Capital and its
affiliates.
We do not have any internal management capacity or employees. We depend on the diligence, skill and network of business contacts of the senior investment
professionals of GC Advisors to achieve our investment objective. GC Advisors’ investment committee, which consists of two members of our board of
directors and two additional employees of Golub Capital LLC, provides oversight over our investment activities. We also cannot assure you that we will
replicate the historical results achieved for other Golub Capital funds by members of the investment committee, and we caution you that our investment
returns could be substantially lower than the returns achieved by them in prior periods. We expect that GC Advisors will evaluate, negotiate, structure, close
and monitor our investments in accordance with the terms of the Investment Advisory Agreement. We can offer no assurance, however, that the senior
investment professionals of GC Advisors will continue to provide investment advice to us. If these individuals do not maintain their existing relationships
with Golub Capital LLC and its affiliates and do not develop new relationships with other sources of investment opportunities, we may not be able to identify
appropriate replacements or grow our investment portfolio. The loss of any member of GC Advisors’ investment committee or of other senior investment
professionals of GC Advisors and its affiliates would limit our ability to achieve our
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investment objective and operate as we anticipate. This could have a material adverse effect on our financial condition, results of operations and cash flows.
The Staffing Agreement provides that Golub Capital LLC makes available to GC Advisors experienced investment professionals and provides access to the
senior investment personnel of Golub Capital LLC for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. We are not a
party to the Staffing Agreement and cannot assure you that Golub Capital LLC will fulfill its obligations under the agreement. If Golub Capital LLC fails to
perform, we cannot assure you that GC Advisors will enforce the Staffing Agreement, that such agreement will not be terminated by either party or that we
will continue to have access to the investment professionals of Golub Capital LLC and its affiliates or their information and deal flow.
Our business model depends to a significant extent upon strong referral relationships with sponsors. Any inability of GC Advisors to maintain or develop
these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.
We depend upon Golub Capital LLC’s relationships with sponsors, and we intend to rely to a significant extent upon these relationships to provide us with
potential investment opportunities. If Golub Capital LLC fails to maintain such relationships, or to develop new relationships with other sponsors or sources
of investment opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom the principals of Golub Capital LLC
have relationships are not obligated to provide us with investment opportunities, and, therefore, we can offer no assurance that these relationships will
generate investment opportunities for us in the future.
Our financial condition, results of operations and cash flows depend on our ability to manage our business effectively.
Our ability to achieve our investment objective depends on our ability to manage our business and to grow. This depends, in turn, on GC Advisors’ ability to
identify, invest in and monitor companies that meet our investment criteria. The achievement of our investment objectives on a cost-effective basis depends
upon GC Advisors’ execution of our investment process, its ability to provide competent, attentive and efficient services to us and, to a lesser extent, our
access to financing on acceptable terms. GC Advisors has substantial responsibilities under the Investment Advisory Agreement, as well as responsibilities in
connection with the management of other accounts sponsored or managed by GC Advisors, members of GC Advisors’ investment committee or Golub
Capital LLC and its affiliates. The personnel of the Administrator and its affiliates may be called upon to provide managerial assistance to our portfolio
companies. These activities may distract them or slow our rate of investment. Any failure to manage our business and our future growth effectively could
have a material adverse effect on our business, financial condition, results of operations and cash flows.
There are significant potential conflicts of interest that could affect our investment returns.
As a result of our arrangements with GC Advisors and its affiliates and GC Advisors’ investment committee, there may be times when GC Advisors or such
persons have interests that differ from those of our securityholders, giving rise to a conflict of interest.
Conflicts related to obligations GC Advisors’ investment committee, GC Advisors or its affiliates have to other clients and conflicts related to fees and
expenses of such other clients.
The members of GC Advisors’ investment committee serve or may serve as officers, directors or principals of entities that operate in the same or a related line
of business as we do or of accounts sponsored or managed by GC Advisors or its affiliates. Currently, our officers and directors also serve as officers and
directors of Golub Capital BDC 3, Inc., or GBDC 3, a closed-end, non-diversified management investment company that has elected to be regulated as a
business development company under the 1940 Act. Similarly, GC Advisors or its affiliates currently manage and may have other clients with similar or
competing investment objectives. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the
fulfillment of which may not be in the best interests of us or our stockholders. For example, Lawrence E. Golub and David B. Golub have management
responsibilities for other accounts managed or sponsored by GC Advisors or its affiliates, including GBDC 3. Our investment objective may overlap with the
investment objectives of such affiliated accounts. For example, GC Advisors currently manages GBDC 3 and several private funds, some of which may seek
additional capital from time to time, that are pursuing an investment strategy similar to ours, and we may compete with these and other accounts sponsored or
managed by GC Advisors and its affiliates for capital and investment opportunities. As a result, those individuals may face conflicts in the allocation of
investment opportunities among us and other accounts advised by or affiliated with GC Advisors. Certain of these accounts may provide for higher
management
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or incentive fees, greater expense reimbursements or overhead allocations, or permit GC Advisors and its affiliates to receive higher origination and other
transaction fees, all of which may contribute to this conflict of interest and create an incentive for GC Advisors to favor such other accounts. For example, the
1940 Act restricts GC Advisors from receiving more than a 1% fee in connection with loans that we acquire, or originate, a limitation that does not exist for
certain other accounts. GC Advisors seeks to allocate investment opportunities among eligible accounts in a manner that is fair and equitable over time and
consistent with its allocation policy. However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or
over time, and there can be no assurance that we will be able to participate in all investment opportunities that are suitable to us.
GC Advisors’ investment committee, GC Advisors or its affiliates may, from time to time, possess material non-public information, limiting our investment
discretion.
Principals of GC Advisors and its affiliates and members of GC Advisors’ investment committee may serve as directors of, or in a similar capacity with,
companies in which we invest, the securities of which are purchased or sold on our behalf. In the event that material nonpublic information is obtained with
respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law
or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an
adverse effect on us.
Our management and incentive fee structure may create incentives for GC Advisors that are not fully aligned with the interests of our stockholders and
may induce GC Advisors to make certain investments, including speculative investments.
In the course of our investing activities, we pay management and incentive fees to GC Advisors. The management fee is based on our average adjusted gross
assets and the incentive fee is computed and paid on income, both of which include leverage. As a result, investors in our common stock will invest on a
“gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than one might achieve through direct investments.
Because these fees are based on our average adjusted gross assets, GC Advisors benefits when we incur debt or use leverage. Under certain circumstances, the
use of leverage may increase the likelihood of default, which would negatively impact our securityholders.
Additionally, the incentive fee payable by us to GC Advisors may create an incentive for GC Advisors to cause us to realize capital gains or losses that may
not be in the best interests of us or our stockholders. Under the incentive fee structure, GC Advisors benefits when we recognize capital gains and, because
GC Advisors determines when an investment is sold, GC Advisors controls the timing of the recognition of such capital gains. Our board of directors is
charged with protecting our stockholders’ interests by monitoring how GC Advisors addresses these and other conflicts of interest associated with its
management services and compensation.
The part of the management and incentive fees payable to GC Advisors that relates to our net investment income is computed and paid on income that may
include interest income that has been accrued but not yet received in cash, such as market discount, debt instruments with PIK interest, preferred stock with
PIK dividends, zero coupon securities, and other deferred interest instruments and may create an incentive for GC Advisors to make investments on our
behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangement. This fee structure may be considered to
give rise to a conflict of interest for GC Advisors to the extent that it may encourage GC Advisors to favor debt financings that provide for deferred interest,
rather than current cash payments of interest. Under these investments, we accrue the interest over the life of the investment but do not receive the cash
income from the investment until the end of the term. Our net investment income used to calculate the income portion of our investment fee, however,
includes accrued interest. GC Advisors may have an incentive to invest in deferred interest securities in circumstances where it would not have done so but
for the opportunity to continue to earn the fees even when the issuers of the deferred interest securities would not be able to make actual cash payments to us
on such securities. This risk could be increased because GC Advisors is not obligated to reimburse us for any fees received even if we subsequently incur
losses or never receive in cash the deferred income that was previously accrued.
The valuation process for certain of our portfolio holdings creates a conflict of interest.
The majority of our portfolio investments are expected to be made in the form of securities that are not publicly traded. As a result, our board of directors will
determine the fair value of these securities in good faith. In connection with that determination, investment professionals from GC Advisors may provide our
board of directors with portfolio company valuations based upon the most recent portfolio company financial statements available and
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projected financial results of each portfolio company. In addition, Lawrence E. Golub and David B. Golub have an indirect pecuniary interest in GC Advisors.
The participation of GC Advisors’ investment professionals in our valuation process, and the indirect pecuniary interest in GC Advisors by Lawrence E.
Golub and David B. Golub, could result in a conflict of interest as GC Advisors’ management fee is based, in part, on our average adjusted gross assets and
our incentive fees will be based, in part, on unrealized gains and losses.
Conflicts related to other arrangements with GC Advisors or its affiliates.
We have entered into a license agreement with Golub Capital LLC under which Golub Capital LLC has granted us a non-exclusive, royalty-free license to use
the name “Golub Capital”. In addition, we pay to the Administrator our allocable portion of overhead and other expenses incurred by the Administrator in
performing its obligations under the Administration Agreement, such as rent and our allocable portion of the cost of our chief financial officer and chief
compliance officer and their respective staffs. These arrangements create conflicts of interest that our board of directors must monitor.
Our ability to enter into transactions with our affiliates will be restricted, which may limit the scope of investments available to us.
We are prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our independent directors and,
in some cases, the SEC. Any person that owns, directly or indirectly, five percent or more of our outstanding voting securities is our affiliate for purposes of
the 1940 Act, and we are generally prohibited from buying or selling any security from or to such affiliate, absent the prior approval of our independent
directors. We consider GC Advisors and its affiliates to be our affiliates for such purposes. The 1940 Act also prohibits certain “joint” transactions with
certain of our affiliates, which could include investments in the same portfolio company, without prior approval of our independent directors and, in some
cases, the SEC. We are prohibited from buying or selling any security from or to, among others, any person who owns more than 25% of our voting securities
or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC.
We may, however, invest alongside GC Advisors’ and its affiliates’ other clients in certain circumstances where doing so is consistent with applicable law and
SEC staff interpretations. For example, we may invest alongside such accounts consistent with guidance promulgated by the SEC staff permitting us and such
other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that GC Advisors, acting on
our behalf and on behalf of its other clients, negotiates no term other than price. We may also invest alongside GC Advisors’ other clients as otherwise
permissible under regulatory guidance, applicable regulations and GC Advisors’ allocation policy. Under this allocation policy, if an investment opportunity
is appropriate for us and another similar eligible account, the opportunity will be allocated pro rata based on the relative capital available for investment of
each of us and such other eligible accounts, subject to minimum and maximum investment size limits. However, we can offer no assurance that investment
opportunities will be allocated to us fairly or equitably in the short-term or over time.
In situations in which co-investment with other accounts sponsored or managed by GC Advisors or its affiliates is not permitted or appropriate, such as when,
in the absence of exemptive relief described below, we and such other entities may make investments in the same issuer or where the different investments
could be expected to result in a conflict between our interests and those of other GC Advisors clients, GC Advisors needs to decide whether we or such other
entity or entities will proceed with such investments. GC Advisors makes these determinations based on its policies and procedures, which generally require
that such investment opportunities be offered to eligible accounts on a basis that is fair and equitable over time, including, for example, through random or
rotational methods. Moreover, in certain circumstances, we may be unable to invest in an issuer in which an account sponsored or managed by GC Advisors
or its affiliates has previously invested. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates. These
restrictions may limit the scope of investment opportunities that would otherwise be available to us.
On February 27, 2017, GC Advisors and certain other funds and accounts sponsored or managed by GC Advisors and its affiliates, received exemptive relief
from the SEC that permits us greater flexibility to negotiate the terms of co-investments if our Board determines that it would be advantageous for us to co-
invest with other accounts sponsored or managed by GC Advisors or its affiliates in a manner consistent with our investment objectives, positions, policies,
strategies and restrictions as well as regulatory requirements and other pertinent factors. Under the terms of this exemptive relief, a “required majority” (as
defined in Section 57(o) of the 1940 Act) of our independent directors is required to make certain conclusions in connection with a co-investment transaction,
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including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching of us or our
stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of our stockholders and is consistent with our
investment strategies and policies.
We may be the target of litigation.
We may be the target of securities litigation in the future, particularly if the trading price of our common stock fluctuates significantly. We could also
generally be subject to litigation, including derivative actions by our stockholders. Any litigation could result in substantial costs and divert management’s
attention and resources from our business and cause a material adverse effect on our business, financial condition and results of operations.
We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.
A number of entities compete with us to make the types of investments that we plan to make. We compete with public and private funds, commercial and
investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity and hedge funds. Many of
our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, we believe some
of our competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or
different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of
our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a business development company or the source of income,
asset diversification and distribution requirements we must satisfy to maintain our qualification as a RIC. The competitive pressures we face may have a
material adverse effect on our business, financial condition, results of operations and cash flows. As a result of this competition, we may not be able to take
advantage of attractive investment opportunities from time to time, and we may not be able to identify and make investments that are consistent with our
investment objective.
With respect to the investments we make, we do not seek to compete based primarily on the interest rates we offer, and we believe that some of our
competitors may make loans with interest rates that will be lower than the rates we offer. In the secondary market for acquiring existing loans, we compete
generally on the basis of pricing terms. With respect to all investments, we may lose some investment opportunities if we do not match our competitors’
pricing, terms and structure. However, if we match our competitors’ pricing, terms and structure, we may experience decreased net interest income, lower
yields and increased risk of credit loss. We may also compete for investment opportunities with accounts managed or sponsored by GC Advisors or its
affiliates. Although GC Advisors allocates opportunities in accordance with its allocation policy, allocations to such other accounts will reduce the amount
and frequency of opportunities available to us and may not be in the best interests of us and our securityholders. Moreover, the performance of investments
will not be known at the time of allocation.
We will be subject to corporate-level income tax if we are unable to qualify as a RIC.
In order to be subject to tax as a RIC under the Code, we must meet certain source-of-income, asset diversification and distribution requirements. The
distribution requirement for a RIC is satisfied if we distribute to our stockholders dividends for U.S. federal income tax purposes of an amount generally at
least equal to 90% of our investment company taxable income, which is generally our net ordinary income plus the excess of our net short-term capital gains
in excess of our net long-term capital losses, determined without regard to any deduction for dividends paid, to our stockholders on an annual basis. We are
subject, to the extent we use debt financing, to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit
agreements that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from
other sources, we may fail to be subject to tax as a RIC and, thus, may be subject to corporate-level income tax. To qualify as a RIC, we must also meet
certain asset diversification requirements at the end of each quarter of our taxable year. Failure to meet these requirements may result in our having to dispose
of certain investments quickly in order to prevent the loss of our qualification as a RIC. Because most of our investments are in private or thinly traded public
companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses. If we fail to qualify as a RIC for any reason
and become subject to corporate-level income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for
distributions to stockholders and the amount of our distributions and the amount of funds available for new investments. Such a failure would have a material
adverse effect on us and our securityholders. See “Business — Taxation as a RIC.”
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We may need to raise additional capital to grow because we must distribute most of our income.
We may need additional capital to fund new investments and grow our portfolio of investments. We intend to access the capital markets periodically to issue
debt or equity securities or borrow from financial institutions in order to obtain such additional capital. Unfavorable economic conditions could increase our
funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. A reduction in the availability of new capital
could limit our ability to grow. In addition, we are required to distribute each taxable year an amount at least equal to 90% of our investment company taxable
income, determined without regard to any deduction for dividends paid as dividends for U.S. federal income tax purposes, to our stockholders to maintain our
ability to be subject to tax as a RIC. As a result, these earnings are not available to fund new investments. An inability to access the capital markets
successfully could limit our ability to grow our business and execute our business strategy fully and could decrease our earnings, if any, which may have an
adverse effect on the value of our securities. Furthermore, to the extent we are not able to raise capital and are at or near our targeted leverage ratios, we may
receive smaller allocations, if any, on new investment opportunities under GC Advisors’ allocation policy and have, in the past, received such smaller
allocations under similar circumstances.
We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income.
For U.S. federal income tax purposes, we include in income certain amounts that we have not yet received in cash, such as the accretion of original issue
discount. This may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through contracted PIK interest, which
represents contractual interest added to the loan balance and due at the end of the loan term. Such original issue discount, which could be significant relative
to our overall investment activities, or increases in loan balances as a result of contracted PIK arrangements, is included in income before we receive any
corresponding cash payments. We also may be required to include in income certain other amounts that we do not receive in cash.
That part of the incentive fee payable by us that relates to our net investment income is computed and paid on income that may include interest that has been
accrued but not yet received in cash, such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon
securities. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the
calculation of the incentive fee will become uncollectible, and GC Advisors will have no obligation to refund any fees it received in respect of such accrued
income.
Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the Annual
Distribution Requirement. In such a case, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or
equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain such cash from other sources, we
may fail to qualify as a RIC and thus be subject to corporate-level income tax. See “Business — Taxation as a RIC.”
Regulations governing our operation as a business development company affect our ability to, and the way in which we, raise additional capital. As a
business development company, the necessity of raising additional capital exposes us to risks, including the typical risks associated with leverage.
We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior
securities,” up to the maximum amount permitted by the 1940 Act. Following the approval of our stockholders of the reduced asset coverage requirements in
Section 61(a)(2) of the 1940 Act and subject to our compliance with certain disclosure requirements, effective as of February 6, 2019, under the provisions of
the 1940 Act, we are permitted as a business development company to issue senior securities in amounts such that its asset coverage, as defined in the 1940
Act, equals at least 150% of gross assets (other than the SBA debentures of a SBIC subsidiary, as permitted by exemptive relief we have been granted by the
SEC) less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities (other than the SBA debentures of an
SBIC subsidiary, as permitted by exemptive relief we have been granted by the SEC). If the value of our assets declines, we may be unable to satisfy this
ratio. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our
indebtedness at a time when such sales may be disadvantageous. This could have a material adverse effect on our operations and we may not be able to make
distributions in an amount sufficient to be subject to tax as a RIC, or at all. Also, any amounts that we use to service our indebtedness are not available for
distributions to our stockholders. If we issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss.
As
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of September 30, 2019, we had $2,124.4 million of outstanding borrowings, including $126.3 million, $408.2 million, and $541.0 million outstanding under
the 2014 Debt Securitization, the 2018 Debt Securitization and the GCIC 2018 Debt Securitization, respectively.
In the absence of an event of default, no person or entity from which we borrow money has a veto right or voting power over our ability to set policy, make
investment decisions or adopt investment strategies. If we issue preferred stock, which is another form of leverage, the preferred stock would rank “senior” to
common stock in our capital structure, preferred stockholders would have separate voting rights on certain matters and might have other rights, preferences or
privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or
preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in the best interest of our
common stockholders. Holders of our common stock will directly or indirectly bear all of the costs associated with offering and servicing any preferred stock
that we issue. In addition, any interests of preferred stockholders may not necessarily align with the interests of holders of our common stock and the rights of
holders of shares of preferred stock to receive distributions would be senior to those of holders of shares of our common stock. We do not, however, anticipate
issuing preferred stock in the next 12 months.
We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or
warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our board of
directors determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale. In any such case, the price at
which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market
value of such securities (less any distributing commission or discount). If we raise additional funds by issuing common stock or senior securities convertible
into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and holders of our common stock
might experience dilution.
We intend to finance our investments with borrowed money, which will accelerate and increase the potential for gain or loss on amounts invested and
may increase the risk of investing in us.
The use of leverage accelerates and increases the potential for gain or loss on amounts invested. The use of leverage is generally considered a speculative
investment technique and increases the risks associated with investing in our securities. The amount of leverage that we employ will depend on GC Advisors’
and our board of directors’ assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain
credit at all or on terms acceptable to us. We may issue senior debt securities to banks, insurance companies and other lenders. Lenders of these senior
securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek
recovery against our assets in the event of a default. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the
terms of any debt instruments we may enter into with lenders. The terms of our existing indebtedness require us to comply with certain financial and
operational covenants, and we expect similar covenants in future debt instruments. Failure to comply with such covenants could result in a default under the
applicable credit facility or debt instrument if we are unable to obtain a waiver from the applicable lender or holder, and such lender or holder could
accelerate repayment under such indebtedness and negatively affect our business, financial condition, results of operations and cash flows. In addition, under
the terms of any credit facility or other debt instrument we enter into, we are likely to be required by its terms to use the net proceeds of any investments that
we sell to repay a portion of the amount borrowed under such facility or instrument before applying such net proceeds to any other uses. If the value of our
assets decreases, leveraging would cause our net asset value to decline more sharply than it otherwise would have had we not leveraged, thereby magnifying
losses or eliminating our equity stake in a leveraged investment. Similarly, any decrease in our net investment income will cause our net income to decline
more sharply than it would have had we not borrowed. Such a decline would also negatively affect our ability to make distributions on our common stock or
any outstanding preferred stock. Our ability to service our debt depends largely on our financial performance and is subject to prevailing economic conditions
and competitive pressures. Our common stockholders bear the burden of any increase in our expenses as a result of our use of leverage, including interest
expenses and any increase in the base management fee payable to GC Advisors.
On September 13, 2011, we received exemptive relief from the SEC allowing us to modify the asset coverage requirement to exclude the SBA debentures
from this calculation. As such, our ratio of total consolidated assets to outstanding indebtedness may be less than 150% minimum asset coverage requirement
permitted by Section 61(a)
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(2) of the 1940 Act. This exemptive relief provides us with increased investment flexibility but also increases our risks related to leverage.
Following the approval of our stockholders of the reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act and subject to our compliance with
certain disclosure requirements, effective as of February 6, 2019, the reduced asset coverage requirement permits us to double the maximum amount of
leverage that we are permitted to incur, which provides us with increased investment flexibility, but also increases our risks related to leverage.
The following table illustrates the effect of leverage on returns from an investment in our common stock as of September 30, 2019, assuming various annual
returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table
below.
Corresponding return to common stockholder(1)
Assumed Return on Our Portfolio (Net of Expenses)
-10%
-23.45%
-5%
-13.57%
0%
-3.68%
5%
6.20%
10%
16.09%
Assumes $4,394.9 million in total assets, $2,124.4 million in debt and secured borrowings outstanding and $2,222.9 million in net assets as of
(1)
September 30, 2019 and an effective annual interest rate of 3.85% as of September 30, 2019.
Based on our outstanding indebtedness of $2,124.4 million as of September 30, 2019 and the effective annual interest rate of 3.85% as of that date, our
investment portfolio would have been required to experience an annual return of at least 1.90% to cover annual interest payments on the outstanding debt.
New legislation permits us to incur additional leverage.
Business development companies are generally able to issue senior securities such that their asset coverage, as defined in the 1940 Act, equals at least 200%
of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. In March 2018, SBCAA
amended Section 61(a) of the 1940 Act to add a new Section 61(a)(2) that reduces the asset coverage requirement applicable to business development
companies from 200% to 150% so long as the business development company meets certain disclosure requirements and obtains certain approvals. On
February 5, 2019, our stockholders voted to approve the application of the reduced asset coverage requirements in Section 61(a)(2) to us effective as of
February 6, 2019. As a result of the stockholder approval, effective February 6, 2019, the asset coverage ratio under the 1940 Act applicable to us decreased
to 150% from 200%. In other words, under the 1940 Act, we are now able to borrow $2 for investment purposes for every $1 of investor equity, as opposed to
borrowing $1 for investment purposes for every $1 of investor equity. As a result, we are able to incur additional indebtedness in the future and our investors
may face increased investment risk. In addition, our management fee is based on its average adjusted gross assets, which includes leverage and, as a result, if
we were to incur additional leverage, management fees paid to GC Advisors would increase.
We are subject to risks associated with the Debt Securitizations.
As a result of the 2014 Debt Securitization, the 2018 Debt Securitization, and the GCIC 2018 Debt Securitization (each a "Debt Securitization" and,
collectively, the "Debt Securitizations"), we are subject to a variety of risks, including those set forth below. We use the term “debt securitization” in this
annual report on Form 10-K to describe a form of secured borrowing under which an operating company (sometimes referred to as an “originator” or
“sponsor”) acquires or originates mortgages, receivables, loans or other assets that earn income, whether on a one-time or recurring basis (collectively,
“income producing assets”), and borrows money on a non-recourse basis against a legally separate pool of loans or other income producing assets. In a typical
debt securitization, the originator transfers the loans or income producing assets to a single-purpose, bankruptcy-remote subsidiary (also referred to as a
“special purpose entity”), which is established solely for the purpose of holding loans and income producing assets and issuing debt secured by these income
producing assets. The special purpose entity completes the borrowing through the issuance of notes secured by the loans or other assets. The special purpose
entity may issue the notes in the capital markets to a variety of investors, including banks, non-bank financial institutions and other investors. The special
purpose entities that issued the notes in the 2014 Debt Securitization, the 2018 Debt Securitization, and the GCIC 2018 Debt Securitization were the 2014
Issuer, the 2018 Issuer and the GCIC 2018 Issuer, respectively (each such special purpose entity, a “Securitization Issuer”). The 2018 Issuer and GCIC 2018
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Issuer are wholly-owned subsidiaries of Golub Capital BDC CLO III Depositor LLC and GCIC CLO II Depositor LLC, respectively, each a wholly-owned
subsidiary of the Company (each a “CLO Depositor”). In each of the Debt Securitizations, institutional investors purchased certain notes issued by the
applicable Securitization Issuer in private placements.
We are subject to certain risks as a result of our direct or indirect interests in the junior notes and membership interests of each Securitization Issuer.
Under the terms of the respective loan sale agreement or loan sale agreements governing each Debt Securitization, we sold and/or contributed to the
applicable Securitization Issuer all of our ownership interest in our portfolio loans and participations for the purchase price and other consideration set forth in
such loan sale agreement. Following this transfer, the applicable Securitization Issuer held all of the ownership interest in such portfolio loans and
participations.
Under the terms of the respective loan sale agreements entered into upon closing of each of the 2018 Debt Securitization and the GCIC 2018 Debt
Securitization (each, a “Closing Date Loan Sale Agreement”), which provided for the sale of assets on the applicable closing date to satisfy risk retention
requirements, (1) we transferred to GC Advisors a portion of our ownership interest in the portfolio company investments securing such Debt Securitization
for the purchase price and other consideration set forth in the applicable Closing Date Loan Sale Agreement and (2) immediately thereafter, GC Advisors sold
to the respective Securitization Issuer all of its ownership interest in such portfolio loans for the purchase price and other consideration set forth in the
applicable Closing Date Loan Sale Agreement. Under the terms of the other loan sale agreement governing each such Debt Securitization (each, a “Depositor
Loan Sale Agreement”), which provides for the sale of assets on the applicable closing date as well as future sales from us to the applicable Securitization
Issuer through the applicable CLO Depositor, (1) we sold and/or contributed to the applicable CLO Depositor the remainder of our ownership interest in the
portfolio company investments securing the applicable Debt Securitization and participations for the purchase price and other consideration set forth in the
applicable Depositor Loan Sale Agreement and (2) the applicable CLO Depositor, in turn, sold to the applicable Securitization Issuer all of its ownership
interest in such portfolio loans and participations for the purchase price and other consideration set forth in one of the loan sale agreements. Following these
transfers, the applicable Securitization Issuer, and not GC Advisors, the applicable CLO Depositor or us, held all of the ownership interest in such portfolio
company investments and participations.
As of September 30, 2019, we directly held the Class C-R 2014 Notes as well as all of the membership interests of the 2014 Issuer, and we held indirectly
through the applicable CLO Depositor, the Class C-2 2018 Notes, the Class D 2018 Notes, the Subordinated 2018 Notes, and 100% of the membership
interests in the 2018 Issuer, the Class C GCIC 2018 Notes, the Class D GCIC 2018 Notes, the Subordinated GCIC 2018 Notes and 100% of the membership
interests in the GCIC 2018 Issuer. As a result, we consolidate the financial statements of the 2014 Issuer, the 2018 Issuer and the GCIC 2018 Issuer, as well as
our other subsidiaries, in our consolidated financial statements.
Because each of the Securitization Issuers and CLO Depositors is disregarded as an entity separate from its owner for U.S. federal income tax purposes, the
sale or contribution by us or a CLO Depositor to a Securitization Issuer or by us to a CLO Depositor did not constitute a taxable event for U.S. federal income
tax purposes. If the U.S. Internal Revenue Service were to take a contrary position, there could be a material adverse effect on our business, financial
condition, results of operations or cash flows. We may, from time to time, hold asset-backed securities, or the economic equivalent thereof, issued by a
securitization vehicle sponsored by another business development company to the extent permitted under the 1940 Act.
The Notes and membership interests that we hold that are issued by the Securitization Issuers are subordinated obligations of the applicable
Securitization Issuer and we may not receive cash from such Securitization Issuer.
The notes issued by the Securitization Issuers and retained by us are the most junior class of notes issued by the applicable Securitization Issuer, are
subordinated in priority of payment to the other notes issued by such Securitization Issuer and are subject to certain payment restrictions set forth in the
indenture governing the notes issued by such Securitization Issuer. Therefore, we only receive cash distributions on such Notes if the applicable Securitization
Issuer has made all cash interest payments to all other notes it has issued. Consequently, to the extent that the value of the portfolio of loan investments held
by a Securitization Issuer has been reduced as a result of conditions in the credit markets, or as a result of defaulted loans or individual fund assets, the value
of any notes that we have retained at their redemption could be reduced. If a Securitization Issuer does not meet the asset coverage tests or the interest
coverage test set forth in the documents governing the applicable Debt Securitization, cash
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would be diverted from the notes that we hold to first pay the more senior notes issued by such Securitization Issuer in amounts sufficient to cause such tests
to be satisfied.
Each Securitization Issuer is the residual claimant on funds, if any, remaining after holders of all classes of notes issued by such Securitization Issuer have
been paid in full on each payment date or upon maturity of such notes under the applicable Debt Securitization documents. As the holder of the membership
interests in each Securitization Issuer, we may receive distributions, if any, only to the extent that the applicable Securitization Issuer makes distributions out
of funds remaining after holders of all classes of notes issued by such Securitization Issuer have been paid in full on each payment date any amounts due and
owing on such payment date or upon maturity of such notes. In the event that we fail to receive cash directly from a Securitization Issuer, we could be unable
to make distributions in amounts sufficient to maintain our ability to be subject to tax as a RIC, or at all.
The interests of holders of the senior classes of securities issued by the the Securitization Issuers may not be aligned with our interests.
The notes issued by each Securitization Issuer that are held by third parties (the “Senior Securitization Notes”) are debt obligations ranking senior in right of
payment to other securities issued by the respective Securitization Issuer in the applicable Debt Securitization. As such, there are circumstances in which the
interests of holders of the Senior Securitization Notes may not be aligned with the interests of holders of the other classes of notes issued by, and membership
interests of, the applicable Securitization Issuer. For example, under the terms of the Class A-R 2014 Notes, holders of the Class A-R 2014 Notes have the
right to receive payments of principal and interest prior to holders of the Class B-R 2014 Notes, the Class C-R 2014 Notes and the 2014 Issuer.
As used herein, “Controlling Class” refers to the most senior class of notes then outstanding with respect to a Securitization Issuer. If the most senior class of
outstanding notes are paid in full, then the next most senior class of notes would comprise the Controlling Class under the documents governing the
applicable Debt Securitization. For as long as the Class A-R 2014 Notes, the Class A 2018 Notes, and the Class A GCIC 2018 Notes remain outstanding,
holders of the such class of notes comprise the Controlling Class under the 2014 Debt Securitization, the 2018 Debt Securitization and the GCIC 2018 Debt
Securitization, respectively. If such notes are paid in full, then the Class B-R 2014 Notes, the Class B 2018 Notes and the Class B GCIC 2018 Notes would
comprise the Controlling Class under the 2014 Debt Securitization, the 2018 Debt Securitization and the GCIC 2018 Debt Securitization, respectively.
Holders of the Controlling Class under the applicable Debt Securitization have the right to act in certain circumstances with respect to the portfolio loans in
ways that may benefit their interests but not the interests of holders of more junior classes of notes and membership interests, including by exercising
remedies under the indenture in the applicable Debt Securitization.
If an event of default has occurred and acceleration occurs in accordance with the terms of the indenture for a Debt Securitization, the Controlling Class of
such debt securitization, as the most senior class of notes then outstanding in such debt securitization will be paid in full before any further payment or
distribution on the more junior classes of notes and membership interests. In addition, if an event of default under a Debt Securitization, holders of a majority
of the Controlling Class of the applicable debt securitization may be entitled to determine the remedies to be exercised under the applicable indenture, subject
to the terms of such indenture. For example, upon the occurrence of an event of default with respect to the notes issued by the 2014 Issuer, the trustee or
holders of a majority of the Controlling Class may declare the principal, together with any accrued interest, of all the notes of such class and any junior
classes to be immediately due and payable. This would have the effect of accelerating the principal on such notes, triggering a repayment obligation on the
part of the 2014 Issuer. If at such time the portfolio loans were not performing well, the Securitization Issuer may not have sufficient proceeds available to
enable the trustee under the indenture to repay the obligations of holders of the notes we hold, or to pay a dividend to holders of the membership interests.
Remedies pursued by the Controlling Class could be adverse to the interests of the holders of the notes that are subordinated to the Controlling Class (which
would include the Class C-R 2014 Notes to the extent the Class A-R 2014 Notes or Class B-R 2014 Notes constitute the Controlling Class, the Class C‑2
2018 Notes, Class D 2018 Notes and Subordinated 2018 Notes to the extent the Class A 2018 Notes, Class B 2018 Notes, Class C-1 2018 Notes and Class C-
2 2018 Notes, or Class D 2018 Notes constitute the Controlling Class, and the Class B‑2 GCIC 2018 Notes, Class C GCIC 2018 Notes, Class D GCIC 2018
Notes and Subordinated GCIC 2018 Notes to the extent the Class A-1 GCIC 2018 Notes, Class A-2 GCIC 2018 Notes, Class B GCIC 2018 Notes, Class C
GCIC 2018 Notes or Class D GCIC 2018 Notes constitute the Controlling Class), and the Controlling Class will have no obligation to consider any possible
adverse effect on such other interests. Thus, we cannot assure you that any
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remedies pursued by the Controlling Class will be in the best interests of the applicable CLO Depositor or us or that the applicable CLO Depositor or we will
receive any payments or distributions upon an acceleration of the notes. In a liquidation under any of the Debt Securitizations, the notes that we have directly
or indirectly retained will be subordinated to payment of the other classes notes issued by the applicable Securitization Issuer and may not be paid in full to
the extent funds remaining after payment of more senior notes not held by us are insufficient. In addition, after certain senior classes of notes are paid in full,
the remaining noteholder may amend the applicable indenture to, among other things, direct the assignment of any remaining assets to other wholly-owned
subsidiaries for a price less than the fair market value of such assets with the difference in price to be considered an equity contribution to such subsidiaries.
Any failure of a Securitization Issuer to make distributions on the notes we indirectly or directly hold, whether as a result of an event of default, liquidation or
otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows and may result in an inability of us to
make distributions sufficient to maintain our ability to be subject to tax as a RIC, or at all.
A Securitization Issuer may fail to meet certain asset coverage tests.
Under the documents governing each Debt Securitization, there are two asset coverage tests applicable to the Class A-R 2014 Notes, the Class B-R 2014
Notes and the Class C-R 2014 Notes, with respect to the 2014 Issuer; the Class A 2018 Notes, the Class B 2018 Notes, the Class C-1 2018 Notes, the Class C-
2 2018 Notes and the Class D 2018 Notes, with respect to the 2018 Issuer; the Class A GCIC 2018 Notes, Class B GCIC 2018 Notes, Class C GCIC 2018
Notes and Class D GCIC 2018, with respect to the GCIC 2018 Issuer.
The first such test compares the amount of interest received on the portfolio loans held by the applicable Securitization Issuer to the amount of interest
payable in respect of the the applicable class of notes. To meet this first test, in the case of the 2014 Debt Securitization, interest received on the portfolio
loans must equal at least 120% of the interest payable in respect of the Class A-R 2014 Notes and Class B-R 2014 Notes, taken together, and at least 110% of
the interest payable in respect of the Class C-R 2014 Notes; in the case of the 2018 Debt Securitization, interest received on the portfolio loans must equal at
least 120% of the interest payable in respect of the Class A 2018 Notes and Class B 2018 Notes, taken together, at least 110% of the interest payable in
respect of the Class C-1 2018 Notes and the Class C-2 2018 Notes, taken together, and at least 105% of the interest payable in respect of the Class D 2018
Notes; and, in the case of the GCIC 2018 Debt Securitization, interest received on the portfolio loans must equal at least 120% of the interest payable in
respect of the Class A GCIC 2018 Notes and Class B GCIC 2018 Notes, taken together, and at least 110% of the interest payable in respect of the Class C
GCIC 2016 Notes and at least 105% of the interest payable in respect of the Class D GCIC 2018 Notes.
The second such test compares the principal amount of the portfolio loans of the applicable Debt Securitization to the aggregate outstanding principal amount
of the applicable class of notes. To meet this second test at any time in the case of the 2014 Debt Securitization, the aggregate principal amount of the
portfolio loans must equal at least 153.6% of the Class A-R 2014 Notes and the Class B-R 2014 Notes, taken together, and 136.1% of the Class C-R 2014
Notes. To meet this second test at any time in the case of the 2018 Debt Securitization, the aggregate principal amount of the portfolio loans must equal at
least 145.6% of the Class A 2018 Notes and Class B 2018 Notes, taken together, at least 126.7% of the Class C-1 2018 Notes and Class C-2 2018 Notes,
taken together, and at least 116.7% of the Class D 2018 Notes. To meet this second test at any time in the case of the GCIC 2018 Debt Securitization, the
aggregate principal amount of the portfolio loans must equal at least 147.9% of the Class A GCIC 2018 Notes and Class B GCIC 2018 Notes, taken together,
at least 127.1% of the Class C GCIC 2018 Notes and at least 117.5% of the Class D GCIC 2018 Notes.
If any asset coverage test with respect to a class of notes is not met, proceeds from the portfolio of loan investments that otherwise would have been
distributed to the holders of the notes and membership interests that we hold will instead be used to redeem first the most senior class of notes in such Debt
Securitization and then each next most senior class of notes, to the extent necessary to satisfy the applicable asset coverage tests on a pro forma basis after
giving effect to all payments made in respect of the notes, which we refer to as a mandatory redemption, or to obtain the necessary ratings confirmation.
The value of the Class B-R 2014 Notes, Class C-2 2018 Notes, Class D 2018 Notes, Subordinated 2018 Notes, Class B-2 GCIC 2018 Notes, Class C GCIC
2018 Notes, Class D GCIC 2018 Notes or Subordinated GCIC 2018 Notes could be adversely affected by a mandatory redemption because such redemption
could result in the applicable notes being redeemed at par at a time when they are trading in the secondary market at a premium to their stated principal
amount and when other investments bearing the same rate of interest may be difficult or expensive to acquire. A mandatory redemption could also result in a
shorter investment duration than a holder of such notes may have
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wanted or anticipated, which could, in turn, result in such a holder incurring breakage costs on related hedging transactions. In addition, the reinvestment
period under the 2018 Debt Securitization and the 2018 GCIC Debt Securitization may extend through as late as January 15, 2023 and January 20, 2023,
respectively. During the respective reinvestment period, market conditions and restrictions on investment under the indenture governing the applicable Debt
Securitization could result in periods of time in which the applicable Securitization Issuer is not able to fully invest its available collateral or during which
collateral available is not of comparable quality or yield, which could affect the value of the collateral securing the notes issued by such Securitization Issuer
that we hold.
We may be required to assume liabilities of a Securitization Issuer and are indirectly liable for certain representations and warranties in connection with
each Debt Securitization.
The structure of each Debt Securitization is intended to prevent, in the event of our bankruptcy or the bankruptcy of a CLO Depositor, if applicable, the
consolidation of the applicable Securitization Issuer with our operations or with the applicable CLO Depositor. If the true sale of the assets in each Debt
Securitization were not respected in the event of our insolvency, a trustee or debtor-in-possession might reclaim the assets of the applicable Securitization
Issuer for our estate. However, in doing so, we would become directly liable for all of the indebtedness then outstanding under the applicable Debt
Securitization, which would equal the full amount of debt of the applicable Securitization Issuer reflected on our consolidated balance sheet. In addition, we
cannot assure you that the recovery in the event we were consolidated with a Securitization Issuer for purposes of any bankruptcy proceeding would exceed
the amount to which we would otherwise be entitled as the holder of the notes issued by such Securitization Issuer and retained by us had we not been
consolidated with the applicable Securitization Issuer.
In addition, in connection with each of the Debt Securitizations, we indirectly gave the lenders certain customary representations with respect to the legal
structure of the respective Securitization Issuer, and the quality of the assets transferred to each entity. We remain indirectly liable for any breach of such
representations for the life of the applicable Debt Securitization.
Certain Securitization Issuers may issue additional Notes.
Under the terms of the documents governing the 2018 Debt Securitization and the GCIC 2018 Debt Securitization, the applicable Securitization Issuer could
issue additional notes and use the net proceeds of such issuance to purchase additional portfolio loans. Any such additional issuance, however, would require
the consent of the collateral manager to the applicable Debt Securitization and, in the case of each of the 2018 Debt Securitization and the GCIC 2018 Debt
Securitization, the applicable CLO Depositor and a supermajority of the Subordinated 2018 Notes or Subordinated GCIC 2018 Notes, as applicable. Among
the other conditions that must be satisfied in connection with an additional issuance of notes, the aggregate principal amount of all additional issuances of
notes may not exceed 100% of the respective original outstanding principal amount of such class of notes; the applicable Securitization Issuer must notify
each rating agency of such issuance prior to the issuance date; and the terms of the notes to be issued must be identical to the terms of previously issued notes
of the same class (except that all monies due on such additional notes will accrue from the issue date of such notes and that the spread over LIBOR and prices
of such notes do not have to be identical to those of the initial notes, provided that the interest rate on such additional notes must not exceed the interest rate
applicable to the initial class of such notes). We do not expect to cause the 2018 Issuer or the GCIC 2018 Issuer to issue any additional notes at this time. We
may amend the documents governing each Debt Securitization from time to time, and without amendment, the 2018 Debt Securitization documents do not
provide for additional issuances of Class A 2018 Notes. The total purchase price for any additional notes that may be issued may not always equal 100% of
the par value of such notes, depending on several factors, including fees and closing expenses.
We are subject to risks associated with the Revolving Credit Facilities.
As a result of our Revolving Credit Facilities, we are subject to a variety of risks, including those set forth below.
Our interests in Funding II, GCIC Funding and GCIC Funding II are subordinated and we may not receive cash on our equity interests from Funding
II, GCIC Funding and GCIC Funding II.
We own directly or indirectly 100% of the equity interests in Funding II, GCIC Funding and GCIC Funding II. We consolidate the financial statements of
Funding II, GCIC Funding and GCIC Funding II in our consolidated financial statements and treat the indebtedness under the Revolving Credit Facilities as
our leverage. Our interests in Funding II, GCIC Funding and GCIC Funding II are subordinated in priority of payment to every other obligation of Funding II,
GCIC Funding and GCIC Funding II and are subject to certain payment restrictions set forth in each Revolving Credit Facility. We receive cash distributions
on our equity interests in Funding II, GCIC Funding and
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GCIC Funding II only if Funding II, GCIC Funding and GCIC Funding II have made all required cash interest payments to the respective lenders and no
default exists under the respective Revolving Credit Facility. We cannot assure you that distributions on the assets held by Funding II, GCIC Funding or
GCIC Funding II will be sufficient to make any distributions to us or that such distributions will meet our expectations.
We receive cash from Funding II, GCIC Funding or GCIC Funding II only to the extent that we receive distributions on our equity interests in Funding II,
GCIC Funding and GCIC Funding II. Funding II, GCIC Funding and GCIC Funding II each may make distributions on their equity interests only to the
extent permitted by the payment priority provisions of the applicable Revolving Credit Facility. Each of the Revolving Credit Facilities generally provides
that payments on the respective interests may not be made on any payment date unless all amounts owing to the lenders and other secured parties are paid in
full. In addition, if Funding II, GCIC Funding or GCIC Funding II do not meet the asset coverage tests or the interest coverage test set forth in the documents
of the applicable Revolving Credit Facility, a default would occur. In the event of a default under a Revolving Credit Facility document, cash would be
diverted from us to pay the applicable lender and other secured parties in amounts sufficient to cause such tests to be satisfied. In the event that we fail to
receive cash from Funding II, GCIC Funding and/or GCIC Funding II, we could be unable to make distributions to our stockholders in amounts sufficient to
maintain our status as a RIC, or at all. We also could be forced to sell investments in portfolio companies at less than their fair value in order to continue
making such distributions.
Our equity interests in Funding II, GCIC Funding and GCIC Funding II rank behind all of the secured and unsecured creditors, known or unknown, of
Funding II, GCIC Funding and GCIC Funding II as applicable, including the lenders in the respective Revolving Credit Facility. Consequently, to the extent
that the value of Funding II’s, GCIC Funding's, or GCIC Funding II's portfolio of loan investments has been reduced as a result of conditions in the credit
markets, defaulted loans, capital gains and losses on the underlying assets, prepayment or changes in interest rates, the returns on our investments in Funding
II, GCIC Funding or GCIC Funding II could be reduced. Accordingly, our investments in each of Funding II, GCIC Funding and GCIC Funding II may be
subject to up to 100% loss.
The ability to sell investments held by Funding II, GCIC Funding and GCIC Funding II is limited.
Each of the Revolving Credit Facilities place significant restrictions on our ability, as servicer, to sell investments. As a result, there may be times or
circumstances during which we are unable to sell investments or take other actions that might be in our best interests.
We are subject to risks associated with our SBIC Funds.
As a result of our SBIC Funds, we are subject to a variety of risks, including those set forth below.
Our interests in the SBIC Funds are subordinated and we may not receive cash on our equity interests from either of the SBIC Funds.
We own 100% of the equity interests in SBIC IV, SBIC V and SBIC VI. We consolidate the financial statements of each of the SBIC Funds in our
consolidated financial statements. Our interests in the SBIC Funds are subordinated in priority of payment to the SBA-guaranteed debentures issued by the
respective SBIC Fund. We receive cash from SBIC IV, SBIC V and SBIC VI only to the extent that we receive distributions on our equity interests in each
such SBIC Fund. Our SBIC Funds may be limited by SBA regulations governing SBICs from making certain distributions to us unless we request a waiver of
the SBA restrictions. We cannot assure you that the SBA would grant any such waiver. In the event that we fail to receive cash from our SBIC Funds, we
could be unable to make distributions to our stockholders in amounts sufficient to maintain our status as a RIC, or at all. We also could be forced to sell
investments in portfolio companies at less than their fair value in order to continue making such distributions.
Our SBIC Funds are licensed by the SBA and are subject to SBA regulations which limit the scope of investments available to the SBIC Funds.
Our wholly-owned subsidiaries, SBIC IV, SBIC V and SBIC VI, received licenses to operate as SBICs under the Small Business Act of 1958, as amended, or
the 1958 Act, and are regulated by the SBA. The SBA places certain limitations on the financing terms of investments by SBICs in portfolio companies and
regulates the types of financings and prohibits investing in certain industries. Compliance with SBIC requirements may cause our SBIC Funds to invest at less
competitive rates in order to qualify investments under the SBA regulations.
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Further, SBA regulations require that a licensed SBIC be periodically examined and audited by the SBA to determine its compliance with the relevant
regulations. If our SBIC Funds fail to comply with applicable regulations, the SBA could, depending on the severity of the violation, limit or prohibit their
use of debentures, declare outstanding debentures immediately due and payable, and/or limit them from making new investments. In addition, the SBA could
revoke or suspend our SBIC Funds’ licenses for willful or repeated violation of, or willful or repeated failure to observe, any provision of the 1958 Act or any
rule or regulation promulgated thereunder. These actions by the SBA could have a material adverse effect on our business, financial condition and results of
operations.
Our ability to invest in public companies may be limited in certain circumstances.
To maintain our status as a business development company, we are not permitted to acquire any assets other than “qualifying assets” specified in the 1940 Act
unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Subject to certain exceptions
for follow-on investments and investments in distressed companies, an investment in an issuer that has outstanding securities listed on a national securities
exchange may be treated as qualifying assets only if such issuer has a common equity market capitalization that is less than $250.0 million at the time of such
investment.
We may enter into repurchase agreements, which are another form of leverage.
We may, and have in the past, enter into repurchase agreements as part of our management of our temporary investment portfolio. Under a repurchase
agreement, we will effectively pledge our assets as collateral to secure a short-term loan. Generally, the other party to the agreement makes the loan in an
amount equal to a percentage of the fair value of the pledged collateral. At the maturity of the repurchase agreement, we will be required to repay the loan and
correspondingly receive back our collateral. While used as collateral, the assets continue to pay principal and interest which are for the benefit of us.
Our use of repurchase agreements, if any, involves many of the same risks involved in our use of leverage, as the proceeds from repurchase agreements
generally will be invested in additional securities. There is a risk that the market value of the securities acquired in the repurchase agreement may decline
below the price of the securities that we have pledged but remain obligated to purchase. In addition, there is a risk that the market value of the securities
retained by us may decline. If a buyer of securities under a repurchase agreement were to file for bankruptcy or experience insolvency, we may be adversely
affected. Also, in entering into repurchase agreements, we would bear the risk of loss to the extent that the proceeds of such agreements at settlement are less
than the fair value of the underlying securities being pledged. In addition, due to the interest costs associated with repurchase agreements, our net asset value
would decline, and, in some cases, we may be worse off than if we had not used such agreements.
Adverse developments in the credit markets may impair our ability to enter into new debt financing arrangements.
During the economic downturn in the United States that began in mid-2007, many commercial banks and other financial institutions stopped lending or
significantly curtailed their lending activity. In addition, in an effort to stem losses and reduce their exposure to segments of the economy deemed to be high
risk, some financial institutions limited routine refinancing and loan modification transactions and even reviewed the terms of existing facilities to identify
bases for accelerating the maturity of existing lending facilities. To the extent these circumstances arise again in the future, it may be difficult for us to finance
the growth of our investments on acceptable economic terms, or at all and one or more of our leverage facilities could be accelerated by the lenders.
If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a business development company or be precluded from
investing according to our current business strategy.
As a business development company, we may not acquire any assets other than “qualifying assets” unless, at the time of and after giving effect to such
acquisition, at least 70% of our total assets are qualifying assets. See “Business — Regulation — Qualifying Assets.”
In the future, we believe that most of our investments will constitute qualifying assets. However, we may be precluded from investing in what we believe are
attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in
qualifying assets, we could violate the 1940 Act provisions applicable to business development companies. As a result of such violation, specific rules under
the 1940 Act could prevent us, for example, from making follow-on investments in existing portfolio
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companies (which could result in the dilution of our position) or could require us to dispose of investments at inappropriate times in order to come into
compliance with the 1940 Act. If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms. We
may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss. Any such
outcomes would have a material adverse effect on our business, financial condition, results of operations and cash flows.
Failure to qualify as a business development company would decrease our operating flexibility
If we do not maintain our status as a business development company, we would be subject to regulation as a registered closed-end investment company under
the 1940 Act. As a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940 Act which
would significantly decrease our operating flexibility.
The majority of our portfolio investments are recorded at fair value as determined in good faith by our board of directors and, as a result, there may be
uncertainty as to the value of our portfolio investments.
The majority of our portfolio investments take the form of securities that are not publicly traded. The fair value of securities and other investments that are not
publicly traded may not be readily determinable, and we value these securities at fair value as determined in good faith by our board of directors, including to
reflect significant events affecting the value of our securities. As discussed in more detail under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Critical Accounting Policies,” most, if not all, of our investments (other than cash and cash equivalents) are classified
as Level 3 under Accounting Standards Codification, or ASC, Topic 820, Fair Value Measurement and Disclosure, as amended, or ASC Topic 820. This
means that our portfolio valuations are based on unobservable inputs and our own assumptions about how market participants would price the asset or
liability in question. Inputs into the determination of fair value of our portfolio investments require significant management judgment or estimation. Even if
observable market data are available, such information may be the result of consensus pricing information or broker quotes, which may include a disclaimer
that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by
disclaimers materially reduces the reliability of such information.
We have retained the services of several independent service providers to review the valuation of these securities. At least once annually, the valuation for
each portfolio investment for which a market quote is not readily available is reviewed by an independent valuation firm. The types of factors that the board
of directors may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly traded securities,
including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any
collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does
business and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain,
may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would
have been used if a ready market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of
our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.
We adjust quarterly the valuation of our portfolio to reflect our board of directors’ determination of the fair value of each investment in our portfolio. Any
changes in fair value are recorded in our consolidated statement of operations as net change in unrealized appreciation or depreciation.
We may experience fluctuations in our quarterly operating results.
We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on borrowings, the interest
rate payable on the debt securities we acquire, the default rate on such securities, the number and size of investments we originate or acquire, the level of our
expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our
markets and general economic conditions. In light of these factors, results for any period should not be relied upon as being indicative of our performance in
future periods.
New or modified laws or regulations governing our operations may adversely affect our business.
We and our portfolio companies are subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their
interpretation, may change from time to time, including as the result of
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interpretive guidance or other directives from the U.S. President and others in the executive branch, and new laws, regulations and interpretations may also
come into effect. Any such new or changed laws or regulations could have a material adverse effect on our business.
In particular the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank, impacts many aspects of the financial services industry, and it
requires the development and adoption of many implementing regulations over the next several years. The effects of Dodd-Frank on the financial services
industry will depend, in large part, upon the extent to which regulators exercise the authority granted to them and the approaches taken in implementing
regulations. President Trump and certain members of Congress have indicated that they will seek to amend or repeal portions of Dodd-Frank and to overhaul
the Code, among other federal laws, which may create regulatory uncertainty in the near term, and in March 2018 the U.S. Senate passed a bill that eased
financial regulations and reduced oversight for certain entities. While the impact of Dodd-Frank and any federal tax reform legislation on us and our portfolio
companies may not be known for an extended period of time, Dodd-Frank and any tax reform enacted as law, including future rules implementing its
provisions and the interpretation of those rules, along with other legislative and regulatory proposals directed at the financial services industry or affecting
taxation that are proposed or pending in the U.S. Congress, may negatively impact the operations, cash flows or financial condition of us or our portfolio
companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise
adversely affect our business or the business of our portfolio companies. In addition, if we do not comply with applicable laws and regulations, we could lose
any licenses that we then hold for the conduct of our business and may be subject to civil fines and criminal penalties.
Additionally, changes to the laws and regulations governing our operations, including those associated with RICs, may cause us to alter our investment
strategy in order to avail ourselves of new or different opportunities or result in the imposition of corporate-level taxes on us. Such changes could result in
material differences to our strategies and plans and may shift our investment focus from the areas of expertise of GC Advisors to other types of investments in
which GC Advisors may have little or no expertise or experience. Any such changes, if they occur, could have a material adverse effect on our results of
operations and the value of your investment. If we invest in commodity interests in the future, GC Advisors may determine not to use investment strategies
that trigger additional regulation by the U.S. Commodity Futures Trading Commission, or CFTC, or may determine to operate subject to CFTC regulation, if
applicable. If we or GC Advisors were to operate subject to CFTC regulation, we may incur additional expenses and would be subject to additional
regulation.
On October 21, 2014, U.S. risk retention rules adopted pursuant to Section 941 of Dodd-Frank (the "U.S. Risk Retention Rules") were issued and became
effective with respect to collateralized loan obligation ("CLOs") on December 24, 2016. The U.S. Risk Retention Rules require the sponsor (directly or
through a majority-owned affiliate) of a debt securitization subject to such rules, such as CLOs, in the absence of an exemption, to retain an economic
interest, or the Retention Interest, in the credit risk of the assets being securitized in the form of an eligible horizontal residual interest, an eligible vertical
interest, or a combination thereof, in accordance with the requirements of the U.S. Risk Retention Rules. Due to the interplay of the 1940 Act restrictions on
principal and joint transactions and the U.S. Risk Retention Rules, we sought no-action relief to ensure that we could engage in CLO financing under the
1940 Act and the risk retention rules mandated by Section 941 of Dodd-Frank. On September 7, 2018 we received a no-action letter from the staff (the
“Staff”) of the Division of Investment Management of the SEC that states that the Staff would not recommend that the SEC take any enforcement action
under Section 57(a) of the1940 Act, or Rule 17d-1 under the 1940 Act against us or GC Advisors if we were to acquire CLO equity as a Retention Interest in
the manner described in a letter submitted to the Staff on behalf of us.
However, the no-action relief we received did not address whether or not the CLO transactions described therein would satisfy the requirements of the U.S.
Risk Retention Rules. As a general matter, available interpretive authority to date addressing the U.S. Risk Retention Rules applicable to CLOs is limited, and
there is limited judicial decisional authority or applicable agency interpretation that has directly addressed any of the risk retention approaches taken with
respect to CLOs. Accordingly, there can be no assurance that the applicable federal agencies will agree that any CLO transaction we undertake, or the
manner in which we hold any retention interests, complies with the U.S. Risk Retention Rules. If we ever determined that undertaking CLO transactions
would subject us or any of our affiliates to unacceptable regulatory risk, our ability to execute CLOs may be limited or otherwise curtailed. Given the more
attractive financing costs associated with these types of debt securitization as opposed to other types of financing available (such as traditional senior secured
facilities), this would, in turn, increase our financing costs. Any associated increase in financing costs would ultimately be borne by our common
stockholders.
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On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. The Tax Cuts and Jobs Act makes significant changes to the U.S. income tax rules
applicable to both individuals and entities, including corporations. The Tax Cuts and Jobs Act includes provisions that, among other things, reduce the U.S.
corporate tax rate from 35 percent to 21 percent, introduce a capital investment deduction, limit the interest deduction, limit the use of net operating losses to
offset future taxable income, repeal the corporate alternative minimum tax and make extensive changes to the U.S. international tax system. The Tax Cuts and
Jobs Act is complex and far-reaching, and we cannot predict the long-term impact its enactment will have on us, our subsidiaries, our portfolio companies and
the holders of our securities.
On May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act, which increased from
$50 billion to $250 billion the asset threshold for designation of "systemically important financial institutions" or "SIFIs" subject to enhanced prudential
standards set by the Federal Reserve Board, staggering application of this change based on the size and risk of the covered bank holding company. On
May 30, 2018, the Federal Reserve Board voted to consider changes to the Volcker Rule that would loosen compliance requirements for all banks. The effect
of this change and any further rules or regulations are and could be complex and far-reaching, and the change and any future laws or regulations or changes
thereto could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or
otherwise adversely affect our business, financial condition and results of operations.
Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising
the possibility that some portion of the non-bank financial sector will be subject to new regulation. While it cannot be known at this time whether any
regulation will be implemented or what form it will take, increased regulation of non-bank credit extension could negatively impact our operations, cash
flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial
condition and results of operations.
Changes to U.S. tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us.
There has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. The current U.S.
presidential administration, along with the U.S. Congress, has created significant uncertainty about the future relationship between the United States and other
countries with respect to trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse
effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between
the impacted nations and the United States. Any of these factors could depress economic activity and restrict our portfolio companies' access to suppliers or
customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us.
Our board of directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval.
Our board of directors has the authority, except as otherwise provided in the 1940 Act, to modify or waive our investment objective and certain of our
operating policies and strategies without prior notice and without stockholder approval. However, absent stockholder approval, we may not change the nature
of our business so as to cease to be, or withdraw our election as, a business development company. Under Delaware law, we also cannot be dissolved without
prior stockholder approval. We cannot predict the effect any changes to our current investment objective, operating policies and strategies would have on our
business, operating results and the price of our common stock. Nevertheless, any such changes could adversely affect our business and impair our ability to
make distributions.
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Provisions of the General Corporation Law of the State of Delaware and our certificate of incorporation and bylaws could deter takeover attempts and
have an adverse effect on the price of our common stock.
The General Corporation Law of the State of Delaware, or the DGCL, contains provisions that may discourage, delay or make more difficult a change in
control of us or the removal of our directors. Our certificate of incorporation and bylaws contain provisions that limit liability and provide for indemnification
of our directors and officers. These provisions and others also may have the effect of deterring hostile takeovers or delaying changes in control or
management. We are subject to Section 203 of the DGCL, the application of which is subject to any applicable requirements of the 1940 Act. This section
generally prohibits us from engaging in mergers and other business combinations with stockholders that beneficially own 15% or more of our voting stock, or
with their affiliates, unless our directors or stockholders approve the business combination in the prescribed manner. If our board of directors does not
approve a business combination, Section 203 of the DGCL may discourage third parties from trying to acquire control of us and increase the difficulty of
consummating such an offer.
We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our certificate of incorporation
classifying our board of directors in three classes serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our board
of directors to classify or reclassify shares of our preferred stock in one or more classes or series, to cause the issuance of additional shares of our stock, and
to amend our certificate of incorporation, without stockholder approval, in certain instances. These provisions, as well as other provisions of our certificate of
incorporation and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our securityholders.
GC Advisors can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our
operations that could adversely affect our financial condition, business and results of operations.
GC Advisors has the right to resign under the Investment Advisory Agreement at any time upon not less than 60 days’ written notice, whether we have found
a replacement or not. If GC Advisors resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and
ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to
experience a disruption, our business, financial condition, results of operations and cash flows as well as our ability to pay distributions are likely to be
adversely affected and the market price of our shares may decline. In addition, the coordination of our internal management and investment activities is likely
to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by GC Advisors
and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of
familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of
operations and cash flows.
The Administrator can resign on 60 days’ notice, and we may not be able to find a suitable replacement, resulting in a disruption in our operations that
could adversely affect our financial condition, business and results of operations.
The Administrator has the right to resign under the Administration Agreement at any time upon not less than 60 days’ written notice, whether we have found
a replacement or not. If the Administrator resigns, we may not be able to find a new administrator or hire internal management with similar expertise and
ability to provide the same or equivalent services on acceptable terms, or at all. If we are unable to do so quickly, our operations are likely to experience a
disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the
market price of our shares may decline. In addition, the coordination of our internal management and administrative activities is likely to suffer if we are
unable to identify and reach an agreement with a service provider or individuals with the expertise possessed by the Administrator. Even if we are able to
retain a comparable service provider or individuals to perform such services, whether internal or external, their integration into our business and lack of
familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of
operations and cash flows.
We incur significant costs as a result of being a publicly traded company.
As a publicly traded company, we incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable
to a company whose securities are registered under the Exchange Act, as
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well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act and other rules implemented by the SEC.
Our compliance with Section 404 of the Sarbanes-Oxley Act involves significant expenditures, and non-compliance with Section 404 of the Sarbanes-
Oxley Act would adversely affect us and the market price of our common stock.
We are required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and related rules and regulations
of the SEC. As a result, we incur expenses that may negatively impact our financial performance and our ability to make distributions. This process also
results in a diversion of management’s time and attention. We cannot ensure that our evaluation, testing and remediation process is effective or that our
internal control over financial reporting will be effective. In the event that we are unable to maintain compliance with Section 404 of the Sarbanes-Oxley Act
and related rules, we and the market price of our securities would be adversely affected.
We are highly dependent on information systems and systems failures or cyberattacks could significantly disrupt our business, which may, in turn,
negatively affect the market price of our common stock and our ability to pay dividends and other distributions.
Our business depends on the communications and information systems of GC Advisors and its affiliates. These systems are subject to potential attacks,
including through adverse events that threaten the confidentiality, integrity or availability of our information resources (i.e., cyber incidents). These attacks
could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting
data or causing operational disruption and result in disrupted operations, misstated or unreliable financial data, liability for stolen assets or information,
increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, any of which could, in turn, have a material
adverse effect on our operating results and negatively affect the market price of our securities and our ability to pay dividends and other distributions to our
securityholders. As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by GC
Advisors and third-party service providers.
Our business and operations could be negatively affected if we become subject to stockholder activism, which could cause us to incur significant expense,
hinder the execution of our investment strategy or impact our stock price.
Stockholder activism, which could take many forms, including making public demands that we consider certain strategic alternatives, engaging in public
campaigns to attempt to influence our corporate governance and/or our management, and commencing proxy contests to attempt to elect the activists’
representatives or others to our board of directors, or arise in a variety of situations, has been increasing in the business development company space recently.
While we are currently not subject to any stockholder activism, due to the potential volatility of our stock price and for a variety of other reasons, we may in
the future become the target of stockholder activism. Stockholder activism could result in substantial costs and divert management’s and our board of
directors’ attention and resources from our business. Additionally, such stockholder activism could give rise to perceived uncertainties as to our future and
adversely affect our relationships with service providers and our portfolio companies. Also, we may be required to incur significant legal and other expenses
related to any activist stockholder matters. Further, our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events,
risks and uncertainties of any stockholder activism.
Our business may be unable to realize the benefits anticipated by the Merger, including estimated cost savings, or it may take longer than anticipated to
achieve such benefits.
The realization of certain benefits anticipated as a result of the Merger will depend in part on the integration of GCIC’s investment portfolio with ours and the
integration of GCIC’s business with our business. There can be no assurance that GCIC’s investment portfolio can be integrated successfully into our
operations in a timely fashion or at all. The dedication of management resources to such integration may detract attention from the day-to-day business of the
combined company, and there can be no assurance that there will not be substantial costs associated with the transition process or that there will not be other
material adverse effects as a result of these integration efforts. Such effects, including incurring unexpected costs or delays in connection with such
integration and failure of GCIC’s investment portfolio to perform as expected, could have a material adverse effect on the financial results of the combined
company.
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We also expect to achieve certain cost savings from the Merger when the two companies have fully integrated their portfolios. It is possible that the estimates
of the potential cost savings could ultimately be incorrect. The cost savings estimates also assume that we will be able to combine the operations of the our
business and GCIC in a manner that permits those cost savings to be fully realized. If the estimates turn out to be incorrect or if we are not able to combine
GCIC’s investment portfolio or business with the operations of our business successfully, the anticipated cost savings may not be fully realized or realized at
all or may take longer to realize than expected.
Risks Relating to Our Investments
Economic recessions or downturns could impair our portfolio companies and defaults by our portfolio companies will harm our operating results.
Many of our portfolio companies are susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods. Therefore,
our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods. Adverse economic conditions may
decrease the value of collateral securing some of our loans and the value of our equity investments. Economic slowdowns or recessions could lead to financial
losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our
access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing our investments and
harm our operating results.
A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of
its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its
obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms
with a defaulting portfolio company. In addition, lenders in certain cases can be subject to lender liability claims for actions taken by them when they become
too involved in the borrower’s business or exercise control over a borrower. It is possible that we could become subject to a lender’s liability claim, including
as a result of actions taken if we render managerial assistance to the borrower.
Our debt investments may be risky and we could lose all or part of our investments.
The debt that we invest in is typically not initially rated by any rating agency, but we believe that if such investments were rated, they would be below
investment grade (rated lower than “Baa3” by Moody’s Investors Service, lower than “BBB-” by Fitch Ratings or lower than “BBB-” by Standard & Poor’s
Ratings Services), which under the guidelines established by these entities is an indication of having predominantly speculative characteristics with respect to
the issuer’s capacity to pay interest and repay principal. Bonds that are rated below investment grade are sometimes referred to as “high yield bonds” or “junk
bonds.” Therefore, our investments may result in an above average amount of risk and volatility or loss of principal.
Our investments in leveraged portfolio companies may be risky, and you could lose all or part of your investment.
Investment in leveraged companies involves a number of significant risks. Leveraged companies in which we invest may have limited financial resources and
may be unable to meet their obligations under their debt securities that we hold. Such developments may be accompanied by a deterioration in the value of
any collateral and a reduction in the likelihood of our realizing any guarantees that we may have obtained in connection with our investment. Smaller
leveraged companies also may have less predictable operating results and may require substantial additional capital to support their operations, finance their
expansion or maintain their competitive position.
Our investments in private and middle-market portfolio companies are risky, and you could lose all or part of your investment.
Investment in private and middle-market companies involves a number of significant risks. Generally, little public information exists about these companies,
and we rely on the ability of GC Advisors’ investment professionals to obtain adequate information to evaluate the potential returns from investing in these
companies. If GC Advisors is unable to uncover all material information about these companies, it may not make a fully informed investment decision, and
we may lose money on our investments. Middle-market companies generally have less predictable operating results and may require substantial additional
capital to support their operations, finance expansion or maintain their competitive position. Middle-market companies may have limited financial resources,
may have difficulty accessing the capital markets to meet future capital needs and may be unable to meet their obligations under their debt securities that we
hold, which may be accompanied by a deterioration in the value of any collateral
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and a reduction in the likelihood of our realizing any guarantees we may have obtained in connection with our investment. In addition, such companies
typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable
to competitors’ actions and market conditions, as well as general economic downturns. Additionally, middle-market companies are more likely to depend on
the management talents and efforts of a small group of persons. Therefore, the death, disability, resignation or termination of one or more of these persons
could have a material adverse impact on our portfolio company and, in turn, on us. Middle-market companies also may be parties to litigation and may be
engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence. In addition, our executive officers, directors and GC
Advisors may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies.
The lack of liquidity in our investments may adversely affect our business.
We may invest all of our assets in illiquid securities, and a substantial portion of our investments in leveraged companies are and will be subject to legal and
other restrictions on resale or will otherwise be less liquid than more broadly traded public securities. The illiquidity of these investments may make it
difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize
significantly less than the value at which we have previously recorded our investments. We may also face other restrictions on our ability to liquidate an
investment in a portfolio company to the extent that we, GC Advisors, Golub Capital or any of its affiliates have material nonpublic information regarding
such portfolio company.
Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing our net asset value
through increased net unrealized depreciation.
As a business development company, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as
determined in good faith by our board of directors. As part of the valuation process, we may take into account the following types of factors, if relevant, in
determining the fair value of our investments:
• a comparison of the portfolio company’s securities to publicly traded securities;
• the enterprise value of the portfolio company;
• the nature and realizable value of any collateral;
• the portfolio company’s ability to make payments and its earnings and discounted cash flow;
• the markets in which the portfolio company does business; and
• changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made in the
future and other relevant factors.
When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to
corroborate our valuation. We record decreases in the market values or fair values of our investments as unrealized depreciation. Declines in prices and
liquidity in the corporate debt markets may result in significant net unrealized depreciation in our portfolio. The effect of all of these factors on our portfolio
may reduce our net asset value by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized
losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results of
operations and cash flows.
Our portfolio companies may prepay loans, which may reduce our yields if capital returned cannot be invested in transactions with equal or greater
expected yields.
The loans in our investment portfolio may be prepaid at any time, generally with little advance notice. Whether a loan is prepaid will depend both on the
continued positive performance of the portfolio company and the existence of favorable financing market conditions that allow such company the ability to
replace existing financing with less expensive capital. As market conditions change, we do not know when, and if, prepayment may be possible for each
portfolio company. In some cases, the prepayment of a loan may reduce our achievable yield if the capital returned cannot be invested in transactions with
equal or greater expected yields, which could have a material adverse effect on our business, financial condition and results of operations.
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Our portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity, and rising interests rates may
make it more difficult for portfolio companies to make periodic payments on their loans.
Our portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity. This risk and the risk of default is
increased to the extent that the loan documents do not require the portfolio companies to pay down the outstanding principal of such debt prior to maturity. In
addition, if general interest rates rise, there is a risk that our portfolio companies will be unable to pay escalating interest amounts, which could result in a
default under their loan documents with us. Rising interest rates could also cause portfolio companies to shift cash from other productive uses to the payment
of interest, which may have a material adverse effect on their business and operations and could, over time, lead to increased defaults. Any failure of one or
more portfolio companies to repay or refinance its debt at or prior to maturity or the inability of one or more portfolio companies to make ongoing payments
following an increase in contractual interest rates could have a material adverse effect on our business, financial condition, results of operations and cash
flows.
We have not yet identified the portfolio company investments we will acquire.
While we currently hold a portfolio of investments, we have not yet identified additional potential investments for our portfolio that we will acquire with the
proceeds of any offering of securities or repayments of investments currently in our portfolio. Privately negotiated investments in illiquid securities or private
middle-market companies require substantial due diligence and structuring, and we cannot assure you that we will achieve our anticipated investment pace.
As a result, you will be unable to evaluate any future portfolio company investments prior to purchasing our shares of common stock. Additionally, GC
Advisors selects all of our investments, and our stockholders will have no input with respect to such investment decisions. These factors increase the
uncertainty, and thus the risk, of investing in our securities. We anticipate that we will use substantially all of the net proceeds of any offering of our securities
within approximately six months following the completion of any offering of our securities, depending on the availability of appropriate investment
opportunities consistent with our investment objectives and market conditions. Until such appropriate investment opportunities can be found, we may also
invest the net proceeds in cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less from the date of
investment. We expect these temporary investments to earn yields substantially lower than the income that we expect to receive in respect of our targeted
investment types. As a result, any distributions we make during this period may be substantially smaller than the distributions that we expect to pay when our
portfolio is fully invested.
We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our
assets that may be invested in securities of a single issuer.
We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with
respect to the proportion of our assets that we may invest in securities of a single issuer. To the extent that we assume large positions in the securities of a
small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the
financial condition or the market’s assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a
diversified investment company. Beyond our asset diversification requirements as a RIC under the Code, we do not have fixed guidelines for diversification,
and our investments could be concentrated in relatively few portfolio companies. Although we are classified as a non-diversified investment company within
the meaning of the 1940 Act, we maintain the flexibility to operate as a diversified investment company and have done so for an extended period of time. To
the extent that we operate as a non-diversified investment company in the future, we may be subject to greater risk.
Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of
these companies defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.
Our portfolio may be concentrated in a limited number of portfolio companies and industries. As a result, the aggregate returns we realize may be
significantly and adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment.
Additionally, while we are not targeting any specific industries, our investments may be concentrated in relatively few industries. For example, although we
classify the industries of our portfolio companies by end-market (such as healthcare or business services) and not by the products or services (such as
software) directed to those end-markets, many of our portfolio companies principally provide software products or services, which exposes us to downturns in
that sector. As a result, a
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downturn in any particular industry in which we are invested could also significantly impact the aggregate returns we realize.
We may hold the debt securities of leveraged companies that may, due to the significant volatility of such companies, enter into bankruptcy proceedings.
Leveraged companies may experience bankruptcy or similar financial distress. The bankruptcy process has a number of significant inherent risks. Many
events in a bankruptcy proceeding are the product of contested matters and adversary proceedings and are beyond the control of the creditors. A bankruptcy
filing by an issuer may adversely and permanently affect the issuer. If the proceeding is converted to a liquidation, the value of the issuer may not equal the
liquidation value that was believed to exist at the time of the investment. The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s
return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective. The administrative costs
of a bankruptcy proceeding are frequently high and would be paid out of the debtor’s estate prior to any return to creditors. Because the standards for
classification of claims under bankruptcy law are vague, our influence with respect to the class of securities or other obligations we own may be lost by
increases in the number and amount of claims in the same class or by different classification and treatment. In the early stages of the bankruptcy process, it is
often difficult to estimate the extent of, or even to identify, any contingent claims that might be made. In addition, certain claims that have priority by law (for
example, claims for taxes) may be substantial.
Depending on the facts and circumstances of our investments and the extent of our involvement in the management of a portfolio company, upon the
bankruptcy of a portfolio company, a bankruptcy court may recharacterize our debt investments as equity interests and subordinate all or a portion of our
claim to that of other creditors. This could occur even though we may have structured our investment as senior debt.
Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in seeking
to:
•
•
•
increase or maintain in whole or in part our position as a creditor or equity ownership percentage in a portfolio company;
exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or
preserve or enhance the value of our investment.
We have discretion to make follow-on investments, subject to the availability of capital resources. Failure on our part to make follow-on investments may, in
some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to
increase our participation in a successful portfolio company. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to
make a follow-on investment because we may not want to increase our level of risk, because we prefer other opportunities or because of regulatory or other
considerations. Our ability to make follow-on investments may also be limited by GC Advisors’ allocation policy.
Because we generally do not hold controlling equity interests in our portfolio companies, we may not be able to exercise control over our portfolio
companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.
To the extent we do not hold controlling equity positions in our portfolio companies, we are subject to the risk that a portfolio company may make business
decisions with which we disagree, and that the management and/or stockholders of a portfolio company may take risks or otherwise act in ways that are
adverse to our interests. Due to the lack of liquidity of the debt and equity investments that we typically hold in our portfolio companies, we may not be able
to dispose of our investments in the event we disagree with the actions of a portfolio company and may therefore suffer a decrease in the value of our
investments.
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Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies and such portfolio companies may not
generate sufficient cash flow to service their debt obligations to us.
We have invested a portion of our capital in second lien and subordinated loans issued by our portfolio companies and intend to continue to do so in the
future. Our portfolio companies may have, or be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest.
Such subordinated investments are subject to greater risk of default than senior obligations as a result of adverse changes in the financial condition of the
obligor or in general economic conditions. If we make a subordinated investment in a portfolio company, the portfolio company may be highly leveraged, and
its relatively high debt-to-equity ratio may create increased risks that its operations might not generate sufficient cash flow to service all of its debt
obligations. By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates
on which we are entitled to receive payments in respect of the securities in which we invest. These debt instruments would usually prohibit the portfolio
companies from paying interest on or repaying our investments in the event of and during the continuance of a default under such debt. Also, in the event of
insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of securities ranking senior to our investment in that
portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying senior
creditors, the portfolio company may not have any remaining assets to use for repaying its obligation to us where we are junior creditor. In the case of debt
ranking equally with debt securities in which we invest, we would have to share any distributions on an equal and ratable basis with other creditors holding
such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.
Additionally, certain loans that we make to portfolio companies may be secured on a second priority basis by the same collateral securing senior secured debt
of such companies. The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure
certain other future debt that may be permitted to be incurred by the portfolio company under the agreements governing the loans. The holders of obligations
secured by first priority liens on the collateral will generally control the liquidation of, and be entitled to receive proceeds from, any realization of the
collateral to repay their obligations in full before us. In addition, the value of the collateral in the event of liquidation will depend on market and economic
conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of all of the collateral would be
sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the
collateral. If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the
extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company’s remaining assets, if any.
We have made in the past, and may make in the future, unsecured loans to portfolio companies, meaning that such loans will not benefit from any interest in
collateral of such companies. Liens on a portfolio company’s collateral, if any, will secure the portfolio company’s obligations under its outstanding secured
debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements. The holders of
obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay
their obligations in full before us. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the
availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our
unsecured loan obligations after payment in full of all loans secured by collateral. If such proceeds were not sufficient to repay the outstanding secured loan
obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s
remaining assets, if any.
The rights we may have with respect to the collateral securing any junior priority loans we make to our portfolio companies may also be limited pursuant to
the terms of one or more intercreditor agreements that we enter into with the holders of senior debt. Under a typical intercreditor agreement, at any time that
obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at
the direction of the holders of the obligations secured by the first priority liens:
•
•
•
the ability to cause the commencement of enforcement proceedings against the collateral;
the ability to control the conduct of such proceedings;
the approval of amendments to collateral documents;
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•
•
releases of liens on the collateral; and
waivers of past defaults under collateral documents.
We may not have the ability to control or direct such actions, even if our rights as junior lenders are adversely affected.
The disposition of our investments may result in contingent liabilities.
A significant portion of our investments involve private securities. In connection with the disposition of an investment in private securities, we may be
required to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a
business. We may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate or with
respect to potential liabilities. These arrangements may result in contingent liabilities that ultimately result in funding obligations that we must satisfy through
our return of distributions previously made to us.
GC Advisors’ liability is limited, and we have agreed to indemnify GC Advisors against certain liabilities, which may lead GC Advisors to act in a riskier
manner on our behalf than it would when acting for its own account.
Under the Investment Advisory Agreement, the Prior Investment Advisory Agreement, and the collateral management agreements for each of the 2014 Debt
Securitization, 2018 Debt Securitization and GCIC 2018 Debt Securitization, GC Advisors does not assume any responsibility to us other than to render the
services called for under those agreements, and it is not responsible for any action of our board of directors in following or declining to follow GC Advisors’
advice or recommendations. Under the terms of the Investment Advisory Agreement, the Prior Investment Advisory Agreement, and each of the collateral
management agreements GC Advisors, its officers, members, personnel, and any person controlling or controlled by GC Advisors are not liable to us, any
subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and
pursuant to the Investment Advisory Agreement, the Prior Investment Advisory Agreement, and the collateral management agreements, except those resulting
from acts constituting gross negligence, willful misconduct, bad faith or reckless disregard of GC Advisors’ duties under the Investment Advisory
Agreement, the Prior Investment Advisory Agreement, and the collateral management agreements. In addition, we have agreed to indemnify GC Advisors
and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other
expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to
authority granted by the Investment Advisory Agreement, the Prior Investment Advisory Agreement, and the collateral management agreements, except
where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person’s duties under the Investment Advisory Agreement,
the Prior Investment Advisory Agreement, and the collateral management agreements. These protections may lead GC Advisors to act in a riskier manner
when acting on our behalf than it would when acting for its own account.
Our investments in foreign companies may involve significant risks in addition to the risks inherent in U.S. investments.
Our investment strategy contemplates potential investments in foreign companies. Investing in foreign companies may expose us to additional risks not
typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability,
expropriation, imposition of foreign taxes (potentially at confiscatory levels), less liquid markets, less available information than is generally the case in the
United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing
contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. Although we expect most of our investments will be
U.S. dollar denominated, our investments that are denominated in a foreign currency will be subject to the risk that the value of a particular currency will
change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates,
differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political
developments. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to
us. As of September 30, 2019, we were invested in securities of nine non-U.S. companies. Securities issued by non-U.S. companies are not “qualifying
assets” under the 1940 Act, and we may invest in non-U.S. companies, including emerging market issuers, to the limited extent such investments are
permitted under the 1940 Act.
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We may expose ourselves to risks if we engage in hedging transactions.
We have and may in the future enter into hedging transactions, which may expose us to risks associated with such transactions. We may utilize instruments
such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our
portfolio positions from changes in currency exchange rates and market interest rates. Use of these hedging instruments may include counter-party credit risk.
Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent
losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same developments, thereby
offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the underlying
portfolio positions should increase. Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally
anticipated that we are not able to enter into a hedging transaction at an acceptable price.
The success of our hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates. Therefore, while we may
enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates
may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation
between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for
a variety of reasons, we may not seek to (or be able to) establish a perfect correlation between such hedging instruments and the portfolio holdings being
hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to
hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those
securities is likely to fluctuate as a result of factors not related to currency fluctuations. Our ability to engage in hedging transactions may also be adversely
affected by rules adopted by the CFTC.
We may not realize gains from our equity investments.
When we invest in one stop, second lien and subordinated loans, we may acquire warrants or other equity securities of portfolio companies as well. We may
also invest in equity securities directly. To the extent we hold equity investments, we will attempt to dispose of them and realize gains upon our disposition of
them. However, the equity interests we receive may not appreciate in value and may decline in value. As a result, we may not be able to realize gains from
our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.
Risks Relating to Our Common Stock
Investing in our common stock may involve an above average degree of risk.
The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and a higher
risk of volatility or loss of principal. Our investments in portfolio companies involve higher levels of risk, and therefore, an investment in our shares may not
be suitable for someone with lower risk tolerance.
Shares of closed-end investment companies, including business development companies, often trade at a discount to their net asset value.
Shares of closed-end investment companies, including business development companies, may trade at a discount from net asset value. This characteristic of
closed-end investment companies and business development companies is separate and distinct from the risk that our net asset value per share may decline.
We cannot predict whether our common stock will trade at, above or below net asset value.
There is a risk that investors in our equity securities may not receive distributions or that our distributions may not grow over time and a portion of our
distributions may be a return of capital.
We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will
achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Our ability to pay
distributions might be adversely affected by the impact of one or more of the risk factors described in this annual report on Form 10-K. Due to the asset
coverage test applicable to us under the 1940 Act as a business development company, we may be
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limited in our ability to make distributions. If we declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our
dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments. To the extent we make
distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholder’s investment.
Although such return of capital may not be taxable, such distributions would generally decrease a stockholder’s basis in our common stock and may therefore
increase such stockholder’s tax liability for capital gains upon the future sale of such stock. A return of capital distribution may cause a stockholder to
recognize a capital gain from the sale of our common stock even if the stockholder sells its shares for less than the original purchase price.
The market price of our common stock after the Merger may be affected by factors different from those affecting our common stock before the Merger.
Our business and GCIC's differ in some respects and, accordingly, the results of operations of the combined company and the market price of our common
stock may be affected by factors different from those before the Merger occurred. These factors include a larger stockholder base and a different capital
structure. Accordingly, the historical trading prices and financial results of our business may not be indicative of these matters for the combined company.
The market price of our common stock may fluctuate significantly.
The market price and liquidity of the market for our securities may be significantly affected by numerous factors, some of which are beyond our control and
may not be directly related to our operating performance. These factors include:
•
•
•
•
•
•
•
•
•
•
•
•
significant volatility in the market price and trading volume of securities of business development companies or other companies in our sector, which
are not necessarily related to the operating performance of the companies;
changes in regulatory policies, accounting pronouncements or tax guidelines, particularly with respect to RICs and business development companies;
loss of our qualification as a RIC or business development company;
changes in market interest rates and decline in the prices of debt,
changes in earnings or variations in operating results;
changes in the value of our portfolio investments;
changes in accounting guidelines governing valuation of our investments;
any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;
departure of GC Advisors’ or any of its affiliates’ key personnel;
operating performance of companies comparable to us;
general economic trends and other external factors; and
loss of a major funding source.
Our stockholders will experience dilution in their ownership percentage if they do not participate in our dividend reinvestment plan.
All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are automatically reinvested in shares of our
common stock. As a result, our stockholders that do not participate in our dividend reinvestment plan will experience dilution in their ownership percentage
of our common stock over time.
Our stockholders may receive shares of our common stock as dividends, which could result in adverse tax consequences to them.
In order to satisfy the annual distribution requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common
stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend) and certain
requirements are met, the entire
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distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder generally would be subject to tax on 100% of the fair
market value of the dividend on the date the dividend is received by the stockholder in the same manner as a cash dividend, even though most of the dividend
was paid in shares of our common stock. We currently do not intend to pay dividends in shares of our common stock.
Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.
Sales of substantial amounts of our common stock, or the availability of such common stock for sale, could adversely affect the prevailing market prices for
our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities should we desire to do so.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Properties
We do not own any real estate or other physical properties materially important to our operation. Our headquarters are located at 666 Fifth Avenue, 18th Floor,
New York, NY 10103 and are provided by Golub Capital LLC pursuant to the Administration Agreement. We believe that our office facilities are suitable and
adequate to our business.
Item 3. Legal Proceedings
We, GC Advisors and Golub Capital LLC may, from time to time, be involved in legal and regulatory proceedings arising out of their respective operations in
the normal course of business or otherwise. While there can be no assurance of the ultimate disposition of any such proceedings, each of us, GC Advisors and
Golub Capital LLC do not believe it is currently subject to any material legal proceedings.
Item 4: Mine Safety Disclosures
None.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Price Range of Common Stock
Our common stock began trading on April 15, 2010 and is currently traded on The Nasdaq Global Select Market under the symbol “GBDC”. The following
table lists the high and low closing sale price for our common stock, the closing sale price as a percentage of net asset value, or NAV, and quarterly
distributions per share.
Period
NAV(1)
High
Low
Fiscal year ended September 30, 2019
Closing Sales Price
Premium of
High Sales
Price to
NAV(2)
Premium
(Discount) of
Low Sales
Price to
NAV(2)
Distributions
Declared
Fourth quarter
Third quarter
Second quarter
First quarter
Fiscal year ended September 30, 2018
Fourth quarter
Third quarter
Second quarter
First quarter
$
$
16.76 $
15.95
15.95
15.97
16.10 $
16.15
16.11
16.04
18.97 $
18.43
18.65
19.01
19.14 $
18.67
18.44
19.41
17.72
17.34
16.62
16.38
18.40
17.83
17.62
18.20
13.2%
15.5
16.9
19.0
5.7% $
8.7
4.2
2.6
18.9%
14.3% $
15.6
14.5
21.0
10.4
9.4
13.5
0.32
0.32
0.32
0.44 (3)
0.32
0.32
0.32
0.40 (4)
(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 the each period.
(2) Calculated as of the respective high or low closing sales price divided by the quarter-end NAV.
(3) Includes a special distribution of $0.12 per share.
(4) Includes a special distribution of $0.08 per share.
The last reported price for our common stock on November 22, 2019 was $18.12 per share. As of November 22, 2019, we had 475 stockholders of record.
Distributions
Our distributions, if any, are determined by the board of directors. We elected to be treated as a RIC under Subchapter M of the Code. In order to be subject to
tax as a RIC, we must distribute to our stockholders dividends for U.S. federal income tax purposes each tax year of an amount at least equal to 90% of our
net ordinary income and net short-term capital gains in excess of our net long-term capital losses, or investment company taxable income, determined without
regard to any deduction for dividends paid. In addition, we are subject to ordinary income and capital gain distribution requirements under U.S. federal excise
tax rules for each calendar year. If we do not meet the required distributions we will be subject to a 4% nondeductible federal excise tax on the undistributed
amount.
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The following table reflects the cash distributions, including dividends and returns of capital per share that we have declared on our common stock.
Record Dates
Fiscal year ended September 30, 2019
August 19, 2019
June 7, 2019
March 7, 2019
December 12, 2018(1)
Total
Fiscal year ended September 30, 2018
September 6, 2018
June 8, 2018
March 8, 2018
December 12, 2017 (2)
Total
Payment Date
Distributions
Declared
September 27, 2019
June 28, 2019
March 28, 2019
December 28, 2018
September 28, 2018
June 28, 2018
March 30, 2018
December 28, 2017
$
$
$
$
0.32
0.32
0.32
0.44
1.40
0.32
0.32
0.32
0.40
1.36
(1) Includes a special distribution of $0.12 per share.
(2) Includes a special distribution of $0.08 per share.
On November 22, 2019, our board of directors declared a quarterly distribution of $0.33 per share and a special distribution of $0.13 per share, each of which
are payable on December 30, 2019 to holders of record as of December 12, 2019.
We have adopted a dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our stockholders. As a
result, if our board of directors authorizes, and we declare, a cash dividend or other distribution, then our stockholders who participate in our dividend
reinvestment plan will have their cash distribution reinvested in additional shares of our common stock, rather than receiving the cash distribution.
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Stock Performance Graph
This graph compares the stockholder return on our common stock from September 30, 2012 to September 30, 2019 with that of the NASDAQ Financial 100
Stock Index and the Standard & Poor’s 500 Stock Index. This graph assumes that on September 30, 2012, $100 was invested in our common stock, the
NASDAQ Financial 100 Stock Index, and the Standard & Poor’s 500 Stock Index. The graph also assumes the reinvestment of all cash distributions prior to
any tax effect. The graph and other information furnished under this Part II Item 5 of this annual report on Form 10-K shall not be deemed to be “soliciting
material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under, or to the liabilities of Section 18 of, the Exchange Act. The stock price
performance included in the below graph is not necessarily indicative of future stock performance.
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Item 6. Selected Consolidated Financial Data
The following selected consolidated financial data of Golub Capital BDC, Inc. as of and for the years ended September 30, 2019, 2018, 2017, and 2016 is
derived from the consolidated financial statements that have been audited by Ernst & Young LLP, independent registered public accounting firm. The
following selected consolidated financial data of Golub Capital BDC, Inc. as of and for the year ended September 30, 2015 is derived from the consolidated
financial statements that have been audited by RSM US LLP (formerly McGladrey LLP through October 25, 2015), independent registered public accounting
firm. The financial data should be read in conjunction with our consolidated financial statements and related notes thereto and “Management’s Discussion of
Financial Condition and Results of Operations” included elsewhere in this annual report on Form 10-K.
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Statement of Operations Data:
Total investment income
Base management fee
Incentive fee
Interest and other debt financing expenses
All other expenses
Net investment income(1)
Net realized gain (loss) on investment transactions
Net change in unrealized appreciation (depreciation) on investment transactions
(2)
Net increase (decrease) in net assets resulting from operations
Per share data:
Net asset value
Net investment income(1)
$
Net realized gain (loss) on investment transactions
Net change in unrealized appreciation (depreciation) on investment transactions
Net increase (decrease) in net assets resulting from operations
Per share distributions declared
From net investment income
From capital gains
Dollar amount of distributions declared
From net investment income
From capital gains
Balance Sheet data at period end:
Golub Capital BDC, Inc.
As of and for the years ended September 30,
2019
2018
2017
2016
2015
(In thousands, except per share data)
$
172,298
$
152,171
$
137,764
$
127,871
$
119,968
27,872
8,902
43,531
5,921
86,072
(4,442)
(100,209)
(18,579)
16.76
1.36
(0.07)
(2.41)
(1.12)
1.40
1.27
0.13
84,625
77,065
7,560
24,214
13,110
33,174
5,652
76,021
17,536
(11,587)
81,970
23,815
7,560
31,534
5,309
69,546
9,402
3,340
82,288
22,020
7,266
27,724
5,881
64,980
6,254
(2,030)
69,204
20,330
10,226
24,510
5,905
58,997
9,354
2,440
70,791
$
16.10
$
16.08
$
15.96
$
15.80
1.27
0.29
(0.19)
1.37
1.36
1.31
0.05
81,307
78,328
2,979
1.23
0.16
0.06
1.45
1.53
1.51
0.02
86,443
85,304
1,139
1.25
0.12
(0.04)
1.33
1.28
1.04
0.24
66,879
54,461
12,418
1.20
0.19
0.05
1.44
1.28
1.18
0.10
62,969
58,152
4,817
Investments, at fair value
Cash and cash equivalents, foreign currencies, restricted cash and cash
equivalents and restricted foreign currencies
Interest receivable and other assets
Total assets
Total debt
Total liabilities
Total net assets
Other data:
Weighted average yield on income producing
investments at fair value(3)
Number of portfolio companies at period end
$
4,292,932
$
1,782,841
$
1,685,015
$
1,660,612
$
1,529,784
84,208
17,723
4,394,863
2,124,392
2,172,009
2,222,854
45,705
7,006
62,558
6,603
89,540
6,357
97,484
6,158
1,835,552
1,754,176
1,756,509
1,633,426
845,683
866,698
968,854
781,100
796,230
957,946
865,175
877,684
878,825
813,605
822,556
810,870
8.6%
241
8.3%
199
7.8%
185
7.6%
183
7.8%
164
(1) Net investment income for the years ended September 30, 2017 and 2016 is shown after a net expense of $17 and $333, respectively, for U.S. federal excise tax.
(2) Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information on the net change in unrealized depreciation on investment
transactions due to purchase premium write-down.
(3) Weighted average yield on income producing investments is computed by dividing (a) income from interest, including subordinated notes in SLF, and fees excluding amortization of capitalized
fees and discounts on accruing loans and debt securities by (b) total income producing investments at fair value.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information contained in this section should be read in conjunction with our consolidated financial statements and related notes thereto appearing
elsewhere in this annual report on Form 10-K. In this report, “we,” “us,” “our” and “Golub Capital BDC” refer to Golub Capital BDC, Inc. and its
consolidated subsidiaries.
Forward-Looking Statements
Some of the statements in this annual report on Form 10-K constitute forward-looking statements, which relate to future events or our future performance or
financial condition. The forward-looking statements contained in this annual report on Form 10-K involve risks and uncertainties, including statements as to:
•
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our future operating results;
our business prospects and the prospects of our portfolio companies;
the effect of investments that we expect to make and the competition for those investments;
our contractual arrangements and relationships with third parties;
actual and potential conflicts of interest with GC Advisors and other affiliates of Golub Capital;
the dependence of our future success on the general economy and its effect on the industries in which we invest;
the ability of our portfolio companies to achieve their objectives;
the use of borrowed money to finance a portion of our investments;
the adequacy of our financing sources and working capital;
the timing of cash flows, if any, from the operations of our portfolio companies;
general economic and political trends and other external factors;
the ability of GC Advisors to locate suitable investments for us and to monitor and administer our investments;
the ability of GC Advisors or its affiliates to attract and retain highly talented professionals;
our ability to qualify and maintain our qualification as a regulated investment company, or RIC, and as a business development company;
general price and volume fluctuations in the stock markets;
the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations issued thereunder and
any actions toward repeal thereof; and
the effect of changes to tax legislation and our tax position.
Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,”
“should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words. The forward looking
statements contained in this annual report on Form 10-K involve risks and uncertainties. Our actual results could differ materially from those implied or
expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in this annual report on Form 10-K.
We have based the forward-looking statements included in this report on information available to us on the date of this report. Actual results could differ
materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance. You are advised to
consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including
annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K. This annual report on
Form 10-K contains statistics and other data that have been obtained from or compiled from information made available by third-party service providers. We
have not independently verified such statistics or data.
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Overview
We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development
company under the 1940 Act. In addition, for U.S. federal income tax purposes, we have elected to be treated as a RIC under Subchapter M of the Code. As a
business development company and a RIC, we are also subject to certain constraints, including limitations imposed by the 1940 Act and the Code.
Our shares are currently listed on The Nasdaq Global Select Market under the symbol “GBDC”.
Our investment objective is to generate current income and capital appreciation by investing primarily in one stop (a loan that combines characteristics of
traditional first lien senior secured loans and second lien or subordinated loans and that are often referred to by other middle-market lenders as unitranche
loans) and other senior secured loans of U.S. middle-market companies. We may also selectively invest in second lien and subordinated loans of, and warrants
and minority equity securities in U.S. middle-market companies. We intend to achieve our investment objective by (1) accessing the established loan
origination channels developed by Golub Capital, a leading lender to U.S. middle-market companies with over $30.0 billion in capital under management as
of September 30, 2019, (2) selecting investments within our core middle-market company focus, (3) partnering with experienced private equity firms, or
sponsors, in many cases with whom Golub Capital has invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub
Capital and (5) drawing upon the aggregate experience and resources of Golub Capital.
Our investment activities are managed by GC Advisors and supervised by our board of directors of which a majority of the members are independent of us,
GC Advisors and its affiliates.
Under the Investment Advisory Agreement, which was approved by our board of directors on July 11, 2019, we have agreed to pay GC Advisors an annual
base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. At a meeting of our
stockholders held on September 4, 2019, our stockholders voted to approve the Investment Advisory Agreement, which was entered into effective as of the
closing of the Merger and will continue for an initial two-year term. The changes to the Investment Advisory Agreement, as compared to the Prior Investment
Advisory Agreement, consisted of revisions to (i) exclude the impact of purchase accounting resulting from a merger, including the Merger, from the
calculation of income subject to the income incentive fee payable and the calculation of the cumulative incentive fee cap under the Investment Advisory
Agreement and (ii) convert the cumulative incentive fee cap into a per share calculation. Under the Administration Agreement, we are provided with certain
administrative services by an administrator, or the Administrator, which is currently Golub Capital LLC. Under the Administration Agreement, we have
agreed to reimburse the Administrator for our allocable portion (subject to the review and approval of our independent directors) of overhead and other
expenses incurred by the Administrator in performing its obligations under the Administration Agreement.
We seek to create a portfolio that includes primarily one stop and other senior secured loans by primarily investing approximately $10.0 million to $75.0
million of capital, on average, in the securities of U.S. middle-market companies. We may also selectively invest more than $75.0 million in some of our
portfolio companies and generally expect that the size of our individual investments will vary proportionately with the size of our capital base.
We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if
they were rated. These securities, which may be referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to
pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully
pay down principal prior to maturity, which may increase our risk of losing part or all of our investment.
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As of September 30, 2019 and 2018, our portfolio at fair value was comprised of the following:
Investment Type
Senior secured
One stop
Second lien
Subordinated debt
LLC equity interests in SLF and GCIC SLF(1)
Equity
Total
As of September 30, 2019
As of September 30, 2018
Investments at
Fair Value
(In thousands)
Percentage of
Total
Investments
Investments at
Fair Value
(In thousands)
Percentage of
Total
Investments
$
$
589,340
3,474,116
19,473
369
123,644
85,990
4,292,932
13.7% $
80.9
0.5
0.0*
2.9
2.0
100.0% $
231,169
1,430,196
9,435
251
71,084
40,706
1,782,841
13.0%
80.2
0.5
0.0*
4.0
2.3
100.0%
*
(1)
Represents an amount less than 0.1%.
Proceeds from LLC equity interests invested in SLF and GCIC SLF were utilized by SLF and GCIC SLF, respectively, to invest in senior secured loans.
One stop loans include loans to technology companies undergoing strong growth due to new services, increased adoption and/or entry into new markets. We
refer to loans to these companies as late stage lending loans. Other targeted characteristics of late stage lending businesses include strong customer revenue
retention rates, a diversified customer base and backing from growth equity or venture capital firms. In some cases, the borrower’s high revenue growth is
supported by a high level of discretionary spending. As part of the underwriting of such loans and consistent with industry practice, we may adjust our
characterization of the earnings of such borrowers for a reduction or elimination of such discretionary expenses, if appropriate. As of September 30, 2019 and
September 30, 2018, one stop loans included $414.7 million and $169.4 million, respectively, of late stage lending loans at fair value.
As of September 30, 2019 and 2018, we had debt and equity investments in 241 and 199 portfolio companies, respectively, in addition to an investment in
SLF as of each such date and an investment in GCIC SLF as of September 30, 2019.
The following table shows the weighted average income yield and weighted average investment income yield of our earning portfolio company investments,
which represented nearly 100% of our debt investments, as well as the total return based on our average net asset value, and the total return based on the
change in the quoted market price of our stock and assuming distributions were reinvested in accordance with our dividend reinvestment plan, or DRIP, in
each case for the years ended September 30, 2019 and 2018:
Weighted average income yield (1)
Weighted average investment income yield (2)
Total return based on average net asset value (3)
Total return based on market value (4)
Year ended September 30,
2019
8.6%
9.0%
(1.8)%
8.8%
2018
8.3%
8.9%
8.5%
7.7%
(1) Represents income from interest and fees, excluding amortization of capitalized fees and discounts, divided by the average fair value of earning portfolio company investments, and does not
represent a return to any investor in us.
(2) Represents income from interest, fees and amortization of capitalized fees and discounts divided by the average fair value of earning portfolio investments, and does not represent a return to
any investor in us.
(3)
Total return based on average net asset value is calculated as (a) the net increase in net assets resulting from operations divided by (b) the daily average of total net assets. Total return does not
include sales load.
(4)
Total return based on market value assumes distributions are reinvested in accordance with the DRIP. Total return does not include sales load.
Revenues: We generate revenue in the form of interest and fee income on debt investments and capital gains and distributions, if any, on portfolio company
investments that we originate or acquire. Our debt investments, whether
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in the form of senior secured, one stop, second lien or subordinated loans, typically have a term of three to seven years and bear interest at a fixed or floating
rate. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive
repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments fluctuates significantly from
period to period. Our portfolio activity also reflects the proceeds of sales of securities. In some cases, our investments provide for deferred interest payments
or PIK, interest. The principal amount of loans and any accrued but unpaid interest generally become due at the maturity date. In addition, we may generate
revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees.
Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income.
We record prepayment premiums on loans as fee income. For additional details on revenues, see “Critical Accounting Policies—Revenue Recognition.”
We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the amortized cost basis of
the investment or derivative instrument, without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of
investments and derivative instruments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on
investment transactions in the Consolidated Statements of Operations.
Expenses: Our primary operating expenses include the payment of fees to GC Advisors under the Investment Advisory Agreement and interest expense on
our outstanding debt. We bear all other out-of-pocket costs and expenses of our operations and transactions, including:
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•
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•
•
•
•
•
•
•
•
•
calculating our NAV (including the cost and expenses of any independent valuation firm);
fees and expenses incurred by GC Advisors payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal
affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or
associated with, evaluating and making investments, which fees and expenses may include, among other items, due diligence reports, appraisal
reports, any studies that may be commissioned by GC Advisors and travel and lodging expenses;
expenses related to unsuccessful portfolio acquisition efforts;
offerings of our common stock and other securities;
administration fees and expenses, if any, payable under the Administration Agreement (including payments based upon our allocable portion of the
Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of
our chief compliance officer, chief financial officer and their respective staffs);
fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments in
portfolio companies, including costs associated with meeting financial sponsors;
transfer agent, dividend agent and custodial fees and expenses;
U.S. federal and state registration and franchise fees;
all costs of registration and listing our shares on any securities exchange;
U.S. federal, state and local taxes;
independent directors’ fees and expenses;
costs of preparing and filing reports or other documents required by the SEC or other regulators;
costs of any reports, proxy statements or other notices to stockholders, including printing costs;
costs associated with individual or group stockholders;
costs associated with compliance under the Sarbanes-Oxley Act;
our allocable portion of any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent
auditors and outside legal costs;
proxy voting expenses; and
all other expenses incurred by us or the Administrator in connection with administering our business.
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We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during periods of asset growth and to
increase during periods of asset declines.
Prior to the redemption of the 2010 Notes and termination of the documents governing the 2010 Debt Securitization on July 20, 2018, GC Advisors served as
collateral manager for the 2010 Issuer, under a collateral management agreement, or the 2010 Collateral Management Agreement, and was entitled to receive
an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the 2010 Issuer at the beginning of the collection period
relating to each payment date, which was payable in arrears on each payment date. Under the 2010 Collateral Management Agreement, the term ‘‘collection
period’’ referred to a quarterly period running from the day after the end of the prior collection period to the fifth business day of the calendar month in which
a payment date occurs. Following the redemption of the 2010 Notes on July 20, 2018, the 2010 Collateral Management Agreement was terminated.
GC Advisors, as collateral manager for the 2014 Issuer, our wholly-owned subsidiary, under a collateral management agreement, or the 2014 Collateral
Management Agreement, is entitled to receive an annual fee in an amount equal to 0.25% of the principal balance of the portfolio loans held by the 2014
Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the 2014 Collateral
Management Agreement, the term ‘‘collection period’’ refers to a quarterly period running from the day after the end of the prior collection period to the tenth
business day prior to the payment date.
GC Advisors, as collateral manager for the 2018 Issuer, our indirect, wholly-owned subsidiary, under a collateral management agreement, or the 2018
Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.25% of the principal balance of the portfolio loans held by the
2018 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the 2018
Collateral Management Agreement, the term "collection period" refers to the period commencing on the third business day prior to the preceding payment
date and ending on (but excluding) the third business day prior to such payment date.
GC Advisors, as collateral manager for the GCIC 2018 Issuer, our indirect, wholly-owned subsidiary, under a collateral management agreement, or the GCIC
2018 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held
by the GCIC 2018 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. Under the
2018 GCIC Collateral Management Agreement, the term “collection period” generally refers to a quarterly period commencing on the day after the end of the
prior collection period to the tenth business day prior to the payment date.
Collateral management fees were paid directly by the 2010 Issuer and are paid directly by the 2014 Issuer, 2018 Issuer, and GCIC 2018 Issuer to GC Advisors
and are offset against the management fees payable under the Investment Advisory Agreement. In addition, the 2010 Issuer and 2014 Issuer paid Wells Fargo
Securities, LLC structuring and placement fees for its services in connection with the initial structuring and subsequent amendments to the 2010 Debt
Securitization, and the initial structuring of the 2014 Debt Securitization. The 2018 Issuer paid Morgan Stanley & Co. LLC structuring and placement fees for
its services in connection with the structuring of the 2018 Debt Securitization. Before we acquired the GCIC 2018 Issuer as part of the Merger, the GCIC
2018 Issuer paid Wells Fargo Securities, LLC structuring and placement fees for its services in connection with the initial structuring the GCIC 2018 Debt
Securitization. Term debt securitizations are also known as collateralized loan obligations, or CLOs, and are a form of secured financing incurred by us,
which is consolidated by us and subject to our overall asset coverage requirement. The 2010 Issuer, the 2014 Issuer, the 2018 Issuer, and GCIC 2018 Issuer
also agreed to pay ongoing administrative expenses to the trustee, collateral manager, independent accountants, legal counsel, rating agencies and independent
managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2010 Debt
Securitization, the 2014 Debt Securitization, the 2018 Debt Securitization and GCIC 2018 Debt Securitization, and collectively the Debt Securitizations, as
applicable.
We believe that these administrative expenses approximate the amount of ongoing fees and expenses that we would be required to pay in connection with a
traditional secured credit facility. Our common stockholders indirectly bear all of these expenses.
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GCIC Acquisition
On September 16, 2019, we completed our acquisition of GCIC, pursuant to the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub was first
merged with and into GCIC, with GCIC as the surviving company, and, immediately following the Initial Merger, GCIC was then merged with and into us,
with us as the surviving company. As a result of, and as of the effective time of, the Merger, GCIC’s separate existence ceased.
In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of GCIC’s common stock was converted
into the right to receive 0.865 shares of our common stock (with GCIC’s stockholders receiving cash in lieu of fractional shares of our common stock). As a
result of the Merger, we issued issue an aggregate of 71,779,964 shares of our common stock to former stockholders of GCIC.
Upon the consummation of the Merger, we entered into the Investment Advisory Agreement, with GC Advisors, which replaced the Prior Investment
Advisory Agreement.
Recent Developments
On October 11, 2019, we entered into an amendment to the MS Credit Facility II, to and among other things, increase the borrowing capacity from $300.0
million to $500.0 million until the earlier of (i) the closing date of a debt securitization transaction mutually agreed to by us and Morgan Stanley Senior
Funding, Inc. or (ii) March 31, 2020, after which the borrowing capacity under the MS Credit Facility II shall be $200.0 million. The other material terms of
the MS Credit Facility II were unchanged.
On October 28, 2019, we entered into an amendment to the Adviser Revolver to, among other things, increase the borrowing capacity under the Adviser
Revolver from $40.0 million to $100.0 million. In connection with the amendment to the Adviser Revolver on October 28, 2019, we terminated the GCIC
Adviser Revolver.
On November 22, 2019, our board of directors declared a quarterly distribution of $0.33 per share and a special distribution of $0.13 per share, each of which
are payable on December 30, 2019 to holders of record as of December 12, 2019.
Market Trends
We have identified the following trends that may affect our business:
Target Market. We believe that small and middle-market companies in the United States with annual revenues between $10.0 million and $2.5 billion
represent a significant growth segment of the U.S. economy and often require substantial capital investments to grow. Middle-market companies have
generated a significant number of investment opportunities for investment funds managed or advised by Golub Capital, and we believe that this market
segment will continue to produce significant investment opportunities for us.
Specialized Lending Requirements. We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market companies.
For example, based on the experience of our management team, lending to U.S. middle-market companies (1) is generally more labor intensive than lending
to larger companies due to the smaller size of each investment and the fragmented nature of information for such companies, (2) requires due diligence and
underwriting practices consistent with the demands and economic limitations of the middle-market and (3) may also require more extensive ongoing
monitoring by the lender.
Demand for Debt Capital. We believe there is a large pool of uninvested private equity capital for middle-market companies. We expect private equity firms
will seek to leverage their investments by combining equity capital with senior secured loans and subordinated debt from other sources, such as us.
Competition from Bank Lenders. We believe that many commercial and investment banks have, in recent years, de-emphasized their service and product
offerings to middle-market businesses in favor of lending to large corporate clients and managing capital markets transactions. In addition, these lenders may
be constrained in their ability to underwrite and hold bank loans for middle-market issuers as they seek to meet existing and future regulatory capital
requirements. We believe these factors may result in opportunities for alternative funding sources to middle-market companies and therefore more market
opportunities for us.
Market Environment: We believe that as part of the path of economic recovery following the credit crisis, there has been increased competition for new
middle-market investments due to some new non-bank finance companies that have entered the market and due to improving financial performance of
middle-market companies. Increased competition for direct lending to middle market businesses may result in less favorable pricing terms for our
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investments. If we match our competitor's pricing, terms and structure, we may experience decreased net interest income, lower yields, and increased risk of
credit loss. However, we believe that our scale and strong market position will continue to allow us to find investment opportunities with attractive risk-
adjusted returns.
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Consolidated Results of Operations
The comparison of the fiscal years ended September 30, 2018 and 2017 can be found in our Form 10-K for the fiscal year ended September 30, 2018 located
within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Consolidated operating results for years ended September 30, 2019 and 2018 are as follows:
Interest income
Income from accretion of discounts and origination fees
GCIC acquisition purchase premium amortization
Dividend income from LLC equity interests in SLF and GCIC SLF
Dividend income
Fee income
Total investment income
Total expenses
Net investment income
Net realized gain (loss) on investment transactions
Net change in unrealized appreciation (depreciation) on investment transactions excluding purchase premium
write-down
Net change in unrealized depreciation on investment transactions due to purchase premium write-down
Net gain (loss) on investment transactions
Net increase (decrease) in net assets resulting from operations
Average earning debt investments, at fair value(1)
Year ended September 30,
2019
2018
(In thousands)
162,249
$
131,274
$
8,572
(1,381)
1,219
349
1,290
172,298
86,226
86,072
(4,442)
2,480
(102,689)
(104,651)
(18,579)
1,904,121
$
$
9,660
—
8,099
624
2,514
152,171
76,150
76,021
17,536
(11,587)
—
5,949
81,970
1,602,119
$
$
Variances
2019 vs. 2018
30,975
(1,088)
(1,381)
(6,880)
(275)
(1,224)
20,127
10,076
10,051
(21,978)
14,067
(102,689)
(110,600)
(100,549)
302,002
$
$
$
(1)
Does not include our investments in LLC equity interests in SLF and GCIC SLF.
Net income can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized appreciation
and depreciation. As a result, annual comparisons of net income may not be meaningful.
On September 16, 2019, we completed our acquisition of GCIC. The acquisition was accounted for under the asset acquisition method of accounting in
accordance with ASC 805-50, Business Combinations — Related Issues. Under asset acquisition accounting, where the consideration paid to GCIC’s
stockholders exceeded the relative fair values of the assets acquired and liabilities assumed, the premium paid by us was allocated to the cost of the GCIC
assets acquired by us pro-rata based on their relative fair value. Immediately following the acquisition of GCIC, we recorded its assets at their respective fair
values and, as a result, the purchase premium allocated to the cost basis of the GCIC assets acquired was immediately recognized as unrealized depreciation
on our Consolidated Statement of Operations. The purchase premium allocated to investments in loan securities will amortize over the life of the loans
through interest income with a corresponding reversal of the unrealized depreciation on such loans acquired through their ultimate disposition. The purchase
premium allocated to investments in equity securities will not amortize over the life of the equity securities through interest income and, assuming no
subsequent change to the fair value of the GCIC equity securities acquired and disposition of such equity securities at fair value, we will recognize a realized
loss with a corresponding reversal of the unrealized depreciation upon disposition of the GCIC equity securities acquired.
As a supplement to GAAP financial measures, we have provided the following non-GAAP financial measures that we believe are useful for the reasons
described below:
•
•
“Adjusted Net Investment Income” - excludes the amortization of the purchase price premium and the accrual for the capital gain incentive fee
(including the portion of such accrual that is not payable under the Investment Advisory Agreement or Prior Investment Advisory Agreement) from
net investment income calculated in accordance with GAAP;
“Adjusted Net Realized and Unrealized Gain/(Loss)” - excludes the unrealized loss resulting from the purchase premium write-down and the
corresponding reversal of the unrealized loss from the amortization
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of the premium from the determination of realized and unrealized gain/(loss) determined in accordance with GAAP; and
•
“Adjusted Net Income” – calculates net income and earnings per share based on Adjusted Net Investment Income and Adjusted Net Realized and
Unrealized Gain/(Loss).
Net investment income
Add: GCIC acquisition purchase premium amortization
Less: Accrual (reversal) for capital gain incentive fee
Adjusted net investment income
Net gain (loss) on investment transactions
Add: Net change in unrealized depreciation on investment transactions due to purchase premium write-down
Adjusted net realized and unrealized gain (loss)
Net increase (decrease) in net assets resulting from operations
Add: GCIC acquisition purchase premium amortization
Less: Accrual (reversal) for capital gain incentive fee
Add: Net change in unrealized depreciation on investment transactions due to purchase premium write-down
Adjusted net income
For the year ended September 30,
2019
(In thousands)
$
$
$
$
$
$
86,072
1,381
(5,580)
81,873
(104,651)
102,689
(1,962)
(18,579)
1,381
(5,580)
102,689
79,911
We believe that excluding the financial impact of the purchase premium in the above non-GAAP financial measures is useful for investors as this is a non-
cash expense/loss and is one method we use to measure our financial condition and results of operations. In addition, we believe excluding the accrual of the
capital gain incentive fee in the above non-GAAP financial measures is useful as it includes the portion of such accrual that is not contractually payable under
the terms of either the Investment Advisory Agreement or the Prior Investment Advisory Agreement.
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 an alternative to GAAP.
Investment Income
Investment income increased from the year ended September 30, 2018 to the year ended September 30, 2019 by $20.1 million primarily as a result of an
increase in the average earning debt investments balance, which is the average balance of accruing loans in our investment portfolio, of $302.0 million. This
increase in our investment income was partially offset by a decline in accretion of discounts resulting from decreased debt investment payoffs, amortization of
the GCIC acquisition purchase premium and a decline in dividend income from our LLC equity interests in SLF and GCIC SLF.
The income yield by debt security type for years ended September 30, 2019 and 2018 was as follows:
Senior secured
One stop
Second lien
Subordinated debt
Year ended September 30,
2019
7.4%
8.8%
11.1%
8.8%
2018
7.1%
8.5%
10.1%
15.0%
Income yields on one stop and senior secured loans increased for the year ended September 30, 2019 primarily due to an increase in the average LIBOR rate
during the year ended September 30, 2019 as compared to the year ended September 30, 2018. As of September 30, 2019, we have three second lien
investments and three subordinated debt investments as shown in the Consolidated Schedule of Investments. Due to the limited number of second lien and
subordinated debt investments, income yields on second lien and subordinated debt investments can be significantly impacted by the addition, subtraction or
refinancing of one investment.
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For additional details on investment yields and asset mix, refer to the “Liquidity and Capital Resources - Portfolio Composition, Investment Activity and
Yield” section below.
Expenses
The following table summarizes our expenses for the years ended September 30, 2019 and 2018:
Interest and other debt financing expenses
Amortization of debt issuance costs
Base management fee
Income incentive fee
Capital gain incentive fee
Professional fees
Administrative service fee
General and administrative expenses
Total expenses
Average debt outstanding
Interest Expense
Year ended September 30,
Variance
2019
2018
2019 vs. 2018
(In thousands)
41,435
$
29,859
$
2,096
27,872
14,482
(5,580)
2,636
2,682
603
86,226
1,050,155
3,315
24,214
11,652
1,458
2,721
2,456
475
$
$
76,150
822,823
$
$
11,576
(1,219)
3,658
2,830
(7,038)
(85)
226
128
10,076
227,332
$
$
$
Interest and other debt financing expenses increased by $11.6 million from the year ended September 30, 2018 to the year ended September 30, 2019
primarily due to an increase in the weighted average of outstanding borrowings from $822.8 million for the year ended September 30, 2018 to $1.1 billion for
the year ended September 30, 2019. For more information about our outstanding borrowings for years ended September 30, 2019 and 2018, including the
terms thereof, see Note 7. Borrowings in the notes to our consolidated financial statements and the “Liquidity and Capital Resources” section below.
The effective average interest rate on our outstanding debt increased to 4.2% for the year ended September 30, 2019 from 4.0% for the year ended September
30, 2018 primarily due to a higher average LIBOR during the year ended September 30, 2019 as compared to the year ended September 30, 2018.
Management Fee
The base management fee increased as a result of a sequential increase in average adjusted gross assets from 2018 to 2019.
Incentive Fees
The incentive fee payable under the Investment Advisory Agreement and the Prior Investment Advisory Agreement, as applicable, consists of two parts: (1)
the Income Incentive Fee and (2) the Capital Gain Incentive Fee. The Income Incentive Fee increased by $2.8 million from the year ended September 30,
2018 to the year ended September 30, 2019, primarily as a result of an increase in Pre-Incentive Fee Net Investment Income. As we remain in the "catch-up"
provision of the calculation of the Income Incentive Fee, the increase in net investment income causes a corresponding increase in the Income Incentive Fee
until we are fully through the catch-up. For the year ended September 30, 2019, while still not fully through the “catch-up” provision of the Income Incentive
Fee calculation, the Income Incentive Fee as a percentage of Pre-Incentive Fee Net Investment Income increased to 15.2% for the year ended September 30,
2019 compared to 13.1% for the year ended September 30, 2018.
The Capital Gain Incentive Fee payable as calculated under the Investment Advisory Agreement or the Prior Investment Advisory Agreement, as applicable,
for the year ended September 30, 2019 and 2018 was $0 and $2.3 million, respectively. However, in accordance with generally accepted accounting principles
in the United States of America, or GAAP, we are required to include the aggregate unrealized capital appreciation on investments in the calculation and
accrue a capital gain incentive fee as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to
be considered in calculating the fee actually payable under the Investment Advisory Agreement or Prior Investment Advisory Agreement. The capital gain
incentive fee
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accrual calculated in accordance with GAAP as of September 30, 2019 and 2018 was $0 and $7.2 million, respectively. Any payment due under the terms of
the Investment Advisory Agreement or Prior Investment Advisory Agreement, as applicable, is calculated in arrears at the end of each calendar year, and we
paid a $1.6 million and $1.2 million Capital Gain Incentive Fee calculated in accordance with the Prior Investment Advisory Agreement as of December 31,
2018 and 2017, respectively. We did not pay any Capital Gain Incentive Fee calculated under the Prior Investment Advisory Agreement as of any date prior to
December 31, 2017.
There was a reversal in the accrual for the capital gain incentive fee under GAAP of $5.6 million, or $0.09 per share for the year ended September 30, 2019.
The accrual for the capital gain incentive fee under GAAP was $1.5 million, or $0.02 per share for the year ended September 30, 2018. The reversal in the in
accrual for a capital gain incentive fee under GAAP for the year ended September 30, 2019 from the year ended September 30, 2018, was primarily due to the
GCIC purchase premium write-down as a result of the Merger. For additional details on unrealized appreciation and depreciation of investments, refer to the
“Net Realized and Unrealized Gains and Losses” section below.
Professional Fees, Administrative Service Fee, and General and Administrative Expenses
In total, professional fees, the administrative service fee, and general and administrative expenses increased by $0.2 million from the year ended September
30, 2018 to the year ended September 30, 2019. In general, we expect certain of our operating expenses, including professional fees, the administrative
service fee, and other general and administrative expenses to decline as a percentage of our total assets during periods of growth and increase as a percentage
of our total assets during periods of asset declines.
The Administrator pays for certain expenses incurred by us. These expenses are subsequently reimbursed in cash. Total expenses reimbursed by us to the
Administrator for the year ended September 30, 2019 and the year ended September 30, 2018 ended were $2.8 million and $2.4 million, respectively.
As of September 30, 2019 and 2018, included in accounts payable and other liabilities were $0.9 million and $0.4 million, respectively, for expenses paid on
behalf of us by the Administrator. As of September 30, 2019, also included in accounts payable and other liabilities was $0.8 million of expenses paid on
behalf of GCIC by the Administrator which were assumed in the Merger.
Excise Tax Expense
We have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. In
order to be subject to tax as a RIC, we are required to meet certain source of income and asset diversification requirements, as well as timely distribute to our
stockholders dividends for U.S. federal income tax purposes of an amount generally at least equal to 90% of investment company taxable income, as defined
by the Code, and determined without regard to any deduction for dividends paid for each tax year. We have made and intend to continue to make the requisite
distributions to our stockholders that will generally relieve us from U.S. federal income taxes.
Depending on the level of taxable income earned in a tax year, we may choose to retain taxable income in excess of current year distributions into the next tax
year in an amount less than what would trigger payments of U.S. federal income tax under Subchapter M of the Code. We may then be required to incur a 4%
excise tax on such income. To the extent that we determine that our estimated current year annual taxable income may exceed estimated current year
distributions, we accrue excise tax, if any, on estimated excess taxable income as taxable income is earned. For the years ended September 30, 2019 and 2018,
we did not incur any expense for U.S. federal excise tax.
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Net Realized and Unrealized Gains and Losses
The following table summarizes our net realized and unrealized gains (losses) for the periods presented:
Net realized gain (loss) on investments
Foreign currency transactions
Net realized gain (loss) on investment transactions
Unrealized appreciation on investments
Unrealized (depreciation) on investments
Unrealized appreciation (depreciation) on investments in SLF and GCIC SLF(1)
Unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies
Unrealized appreciation (depreciation) on forward currency contracts
Net change in unrealized appreciation (depreciation) on investment transactions
Year ended September 30,
Variance
2019
2018
2019 vs. 2018
(In thousands)
(4,616)
$
17,454
$
174
82
(4,442)
$
17,536
$
$
$
33,448
(134,955)
480
685
133
25,126
(34,832)
(1,881)
—
—
(22,070)
92
(21,978)
8,322
(100,123)
2,361
685
133
$
(100,209)
$
(11,587)
$
(88,622)
(1)
Unrealized appreciation (depreciation) on investments in SLF and GCIC SLF includes our investments in LLC equity interests in SLF and GCIC SLF. The investment in GCIC SLF was acquired by us in the Merger and
was not held during the year ended September 30, 2018.
During the year ended September 30, 2019, we had a net realized loss of $4.4 million primarily due to realized losses recognized on the restructure, sale or
write-off of a few portfolio company investments. These realized losses were partially offset by the realized gains from the sale of a few portfolio company
equity investments.
For the year ended September 30, 2019, we had $33.4 million in unrealized appreciation on 202 portfolio company investments, which was offset by $135.0
million in unrealized depreciation, which included $102.7 million recognized due to the purchase premium write-down as a result of the Merger, on 267
portfolio company investments. Unrealized appreciation during the year ended September 30, 2019 resulted from an increase in fair value primarily due to the
rise in market prices of portfolio company investments and the reversal of the net unrealized depreciation associated with the sale or restructure of a few
portfolio company investments. Besides the unrealized depreciation recognized due to the purchase premium write-down, unrealized depreciation resulted
from the amortization of discounts, negative credit related adjustments that caused a reduction in fair value and the reversal of the net unrealized appreciation
associated with the sale of portfolio company investments during the year ended September 30, 2019.
For the year ended September 30, 2018, we had $25.1 million in unrealized appreciation on 158 portfolio company investments, which was offset by $34.8
million in unrealized depreciation on 169 portfolio company investments. Unrealized appreciation during the year ended September 30, 2018 resulted from an
increase in fair value primarily due to the rise in market prices of portfolio company investments and the reversal of the net unrealized depreciation associated
with the sale or restructure of a few portfolio company investments. Unrealized depreciation resulted from the amortization of discounts, negative credit
related adjustments that caused a reduction in fair value and the reversal of the net unrealized appreciation associated with the sale of portfolio company
investments during the year ended September 30, 2018.
For the year ended September 30, 2019, we had $0.5 million in unrealized appreciation on our investments in SLF and GCIC SLF LLC equity interests. The
unrealized appreciation on our investment in SLF of $3.8 million was primarily driven by net investment income earned by SLF netted against negative credit
adjustments at SLF. The unrealized depreciation on our investment in GCIC SLF of $3.3 million was primarily driven by net investment income earned by
GCIC SLF netted against the net unrealized depreciation recognized due to the purchase premium write-down of $2.1 million and dividends GCIC SLF paid
to us of $1.2 million during the year ended September 30, 2019. SLF did not pay us any dividends during the year ended September 30, 2019.
For the year ended September 30, 2018, we had $1.9 million in unrealized depreciation on our investment in SLF LLC equity interests, which was primarily
driven by net investment income associated with SLF's investment portfolio netted against net negative credit related adjustments at SLF. We received
dividends totaling $8.1 million from SLF during the year ended September 30, 2018.
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Liquidity and Capital Resources
For the year ended September 30, 2019, we experienced a net increase in cash and cash equivalents, foreign currencies, restricted cash and cash equivalents
and restricted foreign currencies of $38.5 million. During the period, cash used in operating activities was $118.7 million, primarily as a result of fundings of
portfolio investments of $597.6 million, partially offset by the proceeds from principal payments and sales of portfolio investments of $367.0 million and net
investment income of $86.1 million. Lastly, cash provided by financing activities was $157.2 million, primarily driven by borrowings on debt of $1.4 billion
that were partially offset by repayments of debt of $1.1 billion and distributions paid of $75.3 million.
For the year ended September 30, 2018, we experienced a net decrease in cash, cash equivalents, foreign currencies and restricted cash and cash equivalents
of $16.9 million. During the period, cash used in operating activities was $8.6 million, primarily as a result of fundings of portfolio investments of $646.6
million, partially offset by the proceeds from principal payments and sales of portfolio investments of $558.7 million and net investment income of $76.0
million. Lastly, cash used in financing activities was $8.3 million, primarily driven by borrowings on debt of $760.5 million that were partially offset by
repayments of debt of $695.9 million and distributions paid of $71.1 million.
As of September 30, 2019 and September 30, 2018, we had cash and cash equivalents of $6.5 million and $5.9 million, respectively. In addition, we had
foreign currencies of $0.1 million and $0.2 million as of September 30, 2019 and September 30, 2018, respectively, restricted cash and cash equivalents of
$76.4 million and $39.7 million as of September 30, 2019 and September 30, 2018, respectively, and restricted foreign currencies of $1.3 million as of
September 30, 2019. We held no restricted foreign currencies as of September 30, 2018.
Cash and cash equivalents and foreign currencies are available to fund new investments, pay operating expenses and pay distributions. As of September 30,
2019, $46.9 million of our restricted cash and cash equivalents and restricted foreign currencies could be used to fund new investments that meet the
investment guidelines established in the Debt Securitizations, which are described in further detail in Note 7 to our consolidated financial statements, and for
the payment of principal and interest expense on the notes issued in the Debt Securitizations. As of September 30, 2019, $9.2 million of our restricted cash
and cash equivalents and restricted foreign currencies could be used to fund new investments that meet the guidelines under the MS Credit Facility II, as well
as for the payment of interest expense and revolving debt of the MS Credit Facility II. As of September 30, 2019, $6.9 million of our restricted cash and cash
equivalents and restricted foreign currencies could be used to fund investments that meet the guidelines under the WF Credit Facility as well as for the
payment of interest expense and revolving debt of the WF Credit Facility. The WF Credit Facility was assumed by us from GCIC in the Merger. As of
September 30, 2019, $9.1 million of our restricted cash and cash equivalents and restricted foreign currencies could be used to fund investments that meet the
guidelines under the DB Credit Facility as well as for the payment of interest expense and revolving debt of the DB Credit Facility The DB Credit Facility
was assumed by us from GCIC in the Merger. As of September 30, 2019, $5.5 million of our restricted cash, cash equivalents and restricted foreign currencies
could be used to fund new investments that meet the regulatory and investment guidelines established by the SBA, for our SBIC Funds subsidiaries which are
described in further detail in Note 7 to our consolidated financial statements, and for interest expense and fees on our outstanding SBA debentures.
As of September 30, 2019, the MS Credit Facility II allowed Funding II to borrow up to $300.0 million at any one time outstanding, subject to leverage and
borrowing base restrictions. As of September 30, 2019, we had $259.9 million outstanding under the MS Credit Facility II. As of September 30, 2019, subject
to leverage and borrowing base restrictions, we had approximately $40.1 million of remaining commitments and less than $1.0 million of availability on the
MS Credit Facility II.
In connection with entry into the MS Credit Facility II, on February 4, 2019, Funding repaid all $97.1 million of the debt outstanding at the Credit Facility.
Following such repayment, the agreements governing the Credit Facility were terminated. Prior to termination, the Credit Facility allowed Funding to borrow
up to $170.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. As of September 30, 2018, we had $136.0 million
outstanding under the Credit Facility. As of September 30, 2018, subject to leverage and borrowing base restrictions, we had approximately $34.0 million of
remaining commitments and $34.0 million of availability on the Credit Facility.
Effective September 16, 2019, we assumed, as a result of the Merger, the WF Credit Facility, which as of September 30, 2019, allowed GCIC Funding to
borrow up to $300.0 million at any one time outstanding, subject to leverage
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and borrowing base restrictions. As of September 30, 2019, we had outstanding debt under the WF Credit Facility of $253.8 million. As of September 30,
2019, subject to leverage and borrowing base restrictions, we had approximately $46.2 million of remaining commitments and $0.5 million of availability on
the WF Credit Facility.
Effective September 16, 2019, we assumed, as a result of the Merger, the DB Credit Facility which as of September 30, 2019, allowed GCIC Funding II to
borrow up to $250.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. As of September 30, 2019, we had outstanding
debt under the DB Credit Facility of $248.0 million. As of September 30, 2019, subject to leverage and borrowing base restrictions, we had approximately
$2.0 million of remaining commitments and $0.1 million of availability on the DB Credit Facility.
Prior to its termination on November 16, 2018, the MS Credit Facility allowed the 2010 issuer to to borrow up to $450.0 million at any one time outstanding,
subject to leverage and borrowing base restrictions. The MS Credit Facility was terminated in connection with and as part of the private placement of the
notes issued in the 2018 Debt Securitization, where a portion of the proceeds, net of expenses, were used to repay all amounts outstanding under the MS
Credit Facility. As of September 30, 2018, the MS Credit Facility allowed the 2010 Issuer to borrow up to $300.0 million at any one time outstanding, subject
to leverage and borrowing base restrictions. As of September 30, 2018, we had $234.7 million outstanding under the MS Credit Facility. As of September 30,
2018, subject to leverage and borrowing base restrictions, we had approximately $65.3 million, of remaining commitments and $6.7 million of availability on
the MS Credit Facility.
On June 22, 2016, we entered into the Adviser Revolver, which, as amended, permitted us to borrow up to $40.0 million at any one time outstanding as of
September 30, 2019. On October 28, 2019, we increased the borrowing capacity from $40.0 million to $100.0 million. We entered into the Adviser Revolver
in order to have the ability to borrow funds on a short-term basis and have in the past repaid, and generally intend in the future to repay, borrowings under the
Adviser Revolver within the same quarter in which they are drawn. As of September 30, 2019 and September 30, 2018, we had no amounts outstanding on
the Adviser Revolver.
Effective September 16, 2019, we assumed as a result of the Merger, the GCIC Adviser Revolver, which permitted us to borrow up to $40.0 million at any
one time outstanding as of September 30, 2019. As of September 30, 2019 we had no amounts outstanding on the GCIC Adviser Revolver. On October 28,
2019, we terminated the GCIC Adviser Revolver.
On July 16, 2010, we completed the 2010 Debt Securitization, which was subsequently increased to $350.0 million. On July 20, 2018, the 2010 Notes were
redeemed and, following such redemption, the agreements governing the 2010 Debt Securitization were terminated.
On June 5, 2014, we completed the 2014 Debt Securitization in which the 2014 Issuer issued an aggregate of $402.6 million of notes, or the 2014 Notes,
including, prior to their redemption on March 23, 2018, $191.0 million of Class A-1 2014 Notes, which bore interest at a rate of three-month LIBOR plus
1.75%, $20.0 million of Class A-2 2014 Notes, which bore interest at a rate of three-month LIBOR plus 1.95%, $35.0 million of Class B 2014 Notes, which
bore interest at a rate of three-month LIBOR plus 2.50%, $37.5 million of Class C 2014 Notes, which bore interest at a rate of three-month LIBOR plus
3.50%, and $119.1 million of LLC equity interests in the 2014 Issuer that do not bear interest. We retained all of the Class C 2014 Notes and LLC equity
interests in the 2014 Issuer totaling $37.5 million and $119.1 million, respectively. On March 23, 2018, we amended the 2014 Debt Securitization to, among
other things, (a) refinance the issued Class A-1 notes issued by the 2014 Issuer by redeeming in full the $191.0 million of Class A-1 2014 Notes and issuing
new Class A-1-R 2014 Notes in an aggregate principal amount of $191.0 million that bear interest at a rate of three-month LIBOR plus 0.95%, which is a
decrease from the rate of three-month LIBOR plus 1.75% of the previously outstanding Class A-1 2014 Notes, (b) refinance the Class A-2 2014 Notes by
redeeming in full the $20.0 million of Class A-2 2014 Notes and issuing new Class A-2-R 2014 Notes in an aggregate principal amount of $20.0 million that
bear interest at a rate of three-month LIBOR plus 0.95%, which is a decrease from the rate of three-month LIBOR plus 1.95% of the previously outstanding
Class A-2 2014 Notes, (c) refinance the Class B 2014 Notes by redeeming in full the $35.0 million of Class B 2014 Notes and issuing new Class B-R 2014
Notes in an aggregate principal amount of $35.0 million that bear interest at a rate of three-month LIBOR plus 1.40%, which is a decrease from the rate of
three-month LIBOR plus 2.50% of the previously outstanding Class B 2014 Notes, (d) refinance the Class C 2014 Notes by redeeming in full the $37.5
million of Class C 2014 Notes and issuing new Class C-R 2014 Notes in an aggregate principal amount of $37.5 million that bear interest at a rate of three-
month LIBOR plus 1.55%, which is a decrease from the rate of three-
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month LIBOR plus 3.50% of the previously outstanding Class C 2014 Notes. The Class C-R 2014 Notes were retained by us, and we remain the sole owner
of the equity of the 2014 Issuer.
The Class A-1-R, Class A-2-R and Class B-R 2014 Notes are included in the September 30, 2019 and 2018 Consolidated Statements of Financial Condition
as our debt and the Class C-R 2014 Notes and LLC equity interests in the 2014 Issuer were eliminated in consolidation. As of September 30, 2019 and 2018,
we had outstanding debt under the 2014 Debt Securitization of $126.3 million and $197.5 million, respectively.
On November 16, 2018, we completed the 2018 Debt Securitization in which the 2018 Issuer issued an aggregate of $602.4 million of notes, or the 2018
Notes, including $327.0 million of AAA/AAA Class A 2018 Notes, which bear interest at the three-month LIBOR plus 1.48%; $61.2 million of AA Class B
2018 Notes, which bear interest at the three-month LIBOR plus 2.10%; $20.0 million of A Class C-1 2018 Notes, which bear interest at the three-month
LIBOR plus 2.80%; $38.8 million of A Class C-2 2018 Notes, which bear interest at the three-month LIBOR plus 2.65%; $42.0 million of BBB- Class D
2018 Notes, which bear interest at the three-month LIBOR plus 2.95%; and $113.4 million of Subordinated 2018 Notes which do not bear interest. We
indirectly retained all of the Class C-2, Class D and Subordinated 2018 Notes.
The Class A, Class B and Class C-1 2018 Notes are included in the September 30, 2019 Consolidated Statements of Financial Condition as our debt and the
Class C-2, Class D and Subordinated 2018 Notes were eliminated in consolidation. As of September 30, 2019, we had outstanding debt under the 2018 Debt
Securitization of $408.2 million.
Effective September 16, 2019, we assumed as a result of the Merger, the GCIC 2018 Debt Securitization in which the GCIC 2018 Issuer issued an aggregate
of $908.2 million of notes, or the GCIC 2018 Notes, including $490.0 million of AAA/AAA Class A-1 GCIC 2018 Notes, $38.5 million of AAA Class A-2
GCIC 2018 Notes, and $18.0 million of AA Class B-1 GCIC 2018 Notes. In partial consideration for the loans transferred to the GCIC 2018 Issuer as part of
the GCIC 2018 Debt Securitization, GCIC indirectly retained, and we assumed in the Merger, all of the Class B-2, C and D GCIC 2018 Notes and the
Subordinated GCIC 2018 Notes totaling $27.0 million, $95.0 million, $60.0 million, and $179.7 million, respectively. The Class A-1, Class A-2 and Class B-
1 GCIC 2018 Notes are included in the September 30, 2019, Consolidated Statement of Financial Condition as our debt. As of September 30, 2019 the Class
B-2, Class C and Class D GCIC 2018 Notes and the Subordinated GCIC 2018 Notes were eliminated in consolidation. As of September 30, 2019, we had
outstanding debt under the GCIC 2018 Debt Securitization of $541.0 million.
Under present SBIC regulations, the maximum amount of SBA-guaranteed debentures that may be issued by multiple licensees under common management
is $350.0 million and the maximum amount that a single SBIC licensee may issue is $175.0 million. As of September 30, 2019, SBIC IV, SBIC V, and SBIC
VI, had $90.0 million, $165.0 million, and $32.0 million, respectively, of outstanding SBA-guaranteed debentures that mature between September 2021 and
September 2029. As of September 30, 2018, SBIC IV, SBIC V and SBIC VI, had $115.0 million, $150.0 million and $12.5 million, respectively, of
outstanding SBA-guaranteed debentures that mature between September 2021 and March 2028. The reinvestment period for SBIC IV expired on September
30, 2018. The original amount of debentures committed to SBIC IV and SBIC V by the SBA were $150.0 million and $175.0 million, respectively. Through
September 30, 2019, SBIC IV and SBIC V have repaid $60.0 million and $10.0 million of outstanding debentures, respectively, and these commitments have
effectively been terminated. As of September 30, 2019, SBIC VI had $18.0 million of undrawn debenture commitments which were available to be drawn,
subject to SBA regulatory requirements. As of September 30, 2018, SBIC V and SBIC VI had $0 and $37.5 million of undrawn debenture commitments,
respectively, of which $0 and $9.5 million, respectively, was available to be drawn, subject to SBA regulatory requirements.
In August 2019, our board of directors reapproved a share repurchase program, or the Program, which allows us
to repurchase up to $150.0 million of our outstanding common stock on the open market at prices below the NAV per share as reported in our then most
recently published consolidated financial statements. The Program may be
implemented at the discretion of management. The shares may be purchased from time to time at prevailing market
prices, through open market transactions, including block transactions. We did not make any repurchases of our
common stock during the years ended September 30, 2019 and 2018.
As of September 30, 2019, in accordance with the 1940 Act, with certain limited exceptions, we were allowed to borrow amounts such that our asset
coverage, as defined in the 1940 Act, is at least 150% after such borrowing.
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Prior to February 6, 2019, in accordance with the 1940 Act, with certain limited exceptions, we were allowed to borrow amounts such that our asset coverage,
as defined in the 1940 Act, was at least 200% after such borrowing. We currently intend to continue to target a GAAP debt-to-equity ratio of about 1.0x.
On September 13, 2011, we received exemptive relief from the SEC allowing us to modify the asset coverage requirement to exclude the SBA debentures
from our asset coverage calculation. As such, our ratio of total consolidated assets to outstanding indebtedness may be less than 150%. This provides us with
increased investment flexibility but also increases our risks related to leverage. As of September 30, 2019, our asset coverage for borrowed amounts was
220.3% (excluding the SBA debentures).
As of September 30, 2019 and September 30, 2018, we had outstanding commitments to fund investments, excluding our investments in SLF and GCIC SLF,
totaling $261.6 million and $57.7 million, respectively. These amounts may or may not be funded to the borrowing party now or in the future. The unfunded
commitments relate to loans with various maturity dates, but the entire amount was eligible for funding to the borrowers, subject to the terms of each loan’s
respective credit agreement. As of September 30, 2019, we believe that we had sufficient assets and liquidity to adequately cover future obligations under our
unfunded commitments based on historical rates of drawings upon unfunded commitments, cash and restricted cash balances that we maintain, availability
under our Revolving Credit Facility and Adviser Revolvers and ongoing principal repayments on debt investments. In addition, we generally hold some
syndicated loans in larger portfolio companies that are saleable over a relatively short period to generate cash.
Due to the interplay of the 1940 Act restrictions on principal and joint transactions and the U.S. risk retention rules adopted pursuant to Section 941 of Dodd-
Frank, as a business development company, we sought and received no action relief from the SEC to ensure we could engage in CLO financings in which
assets are transferred through GC Advisors.
Although we expect to fund the growth of our investment portfolio through the net proceeds from future securities offerings and through our DRIP as well as
future borrowings, to the extent permitted by the 1940 Act, we cannot assure you that our efforts to raise capital will be successful. In addition, we may, from
time to time, amend or refinance our leverage facilities and securitization financings, to the extent permitted by applicable law. In addition to capital not being
available, it also may not be available on favorable terms. To the extent we are not able to raise capital on what we believe are favorable terms, we will focus
on optimizing returns by investing capital generated from repayments into new investments we believe are attractive from a risk/reward perspective.
Furthermore, to the extent we are not able to raise capital and are at or near our targeted leverage ratios, we may receive smaller allocations, if any, on new
investment opportunities under GC Advisors’ allocation policy and have, in the past, received such smaller allocations under similar circumstances.
Portfolio Composition, Investment Activity and Yield
As of September 30, 2019 and September 30, 2018, we had investments in 241 and 199 portfolio companies, respectively, with a total fair value of $4.2
billion and $1.7 billion, respectively, and had investments in SLF and GCIC SLF with a total fair value of $123.6 million and $71.1 million, respectively. We
acquired GCIC SLF from GCIC in the Merger and had no investments in GCIC SLF as of September 30, 2018.
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The following table shows the asset mix of our new investment commitments, excluding assets acquired due in the Merger, for the years ended September 30,
2019 and 2018:
Senior secured
One stop
Second lien
Subordinated debt
LLC equity interests in SLF(1)
Equity
Total new investment commitments
Year ended September 30,
2019
2018
(In thousands)
Percentage of
Commitments
(In thousands)
Percentage of
Commitments
$
$
87,314
505,334
1,513
23
1,750
10,663
606,597
14.4% $
83.3
0.2
0.0*
0.3
1.8
100.0% $
114,840
534,906
—
184
12,162
5,824
667,916
17.2%
80.1
—
0.0*
1.8
0.9
100.0%
Represents an amount less than 0.1%.
*
(1) SLF's proceeds from LLC equity interests were utilized by SLF to invest in senior secured loans. As of September 30, 2019, SLF had investments in senior secured loans to 27 different
borrowers.
For the years ended September 30, 2019 and 2018, we had approximately $357.5 million and $495.5 million, respectively, in proceeds from principal
payments and return of capital distributions of portfolio companies. For the years ended September 30, 2019 and 2018, we had sales of investments in 18 and
21 portfolio companies, respectively, aggregating approximately $9.5 million and $37.6 million, respectively, in net proceeds.
The following table summarizes portfolio composition and investment activity as of and for the years ended September 30, 2019 and 2018:
Investments, at fair value
Number of portfolio companies (at period end)(1)
Investments in SLF and GCIC SLF, at fair value
New investment fundings
Principal payments and sales of portfolio investments
(1)
Excludes our investments in SLF and GCIC SLF.
82
As of and for the years ended September 30,
2019
2018
(Dollars in thousands)
$
4,169,288
241
123,644
597,601
366,957
$
$
$
1,711,757
199
71,084
646,595
558,664
$
$
$
$
TABLE OF CONTENTS
The following table shows the principal, amortized cost and fair value of our portfolio of investments by asset class:
As of September 30, 2019(1)
As of September 30, 2018(1)
Principal
Amortized
Cost
(In thousands)
Fair
Value
Principal
Amortized
Cost
(In thousands)
Fair
Value
Senior secured:
Performing
Non-accrual(2)
One stop:
Performing
Non-accrual(2)
Second lien:
Performing
Non-accrual(2)
Subordinated debt:
Performing
Non-accrual(2)
LLC equity interests in SLF and
GCIC SLF(3)
Equity
Total
$
586,039
$
597,033
$
583,483
$
15,749
8,573
5,857
230,230 $
2,834
228,028 $
2,818
3,502,213
12,053
3,548,330
10,700
3,466,310
7,806
1,435,004
8,976
1,417,730
8,910
19,473
—
369
—
N/A
N/A
19,745
—
375
—
127,487
79,527
19,473
—
369
—
123,644
85,990
$
4,135,896
$
4,391,770
$
4,292,932
$
9,435
—
251
—
9,338
—
251
—
N/A
N/A
1,686,730 $
75,407
38,170
1,780,652 $
229,886
1,283
1,425,854
4,342
9,435
—
251
—
71,084
40,706
1,782,841
(1)
47 and 27 of our loans included a feature permitting a portion of the interest due on such loan to be PIK interest as of September 30, 2019 and September 30, 2018, respectively.
(2) We refer to a loan as non-accrual when we cease recognizing interest income on the loan because we have stopped pursuing repayment of the loan or, in certain circumstances, it is past due 90
days or more on principal and interest or our management has reasonable doubt that principal or interest will be collected. See “— Critical Accounting Policies — Revenue Recognition.”
(3)
Proceeds from the LLC equity interests invested in SLF and GCIC SLF were utilized by SLF and GCIC SLF to invest in senior secured loans.
As of September 30, 2019, we had five debt investments on non-accrual status and non-accrual investments as a percentage of total debt investments at cost
and fair value were 0.5% and 0.3%, respectively. As of September 30, 2018, we had three debt investments on non-accrual status and non-accrual
investments as a percentage of total investments at cost and fair value were 0.7% and 0.3%, respectively. As of September 30, 2019 and September 30, 2018,
the fair value of our debt investments as a percentage of the outstanding principal value was 98.7% and 99.1%, respectively.
The following table shows the weighted average rate, spread over LIBOR of floating rate and fees of investments originated and the weighted average rate of
sales and payoffs of portfolio companies during years ended September 30, 2019 and 2018, respectively:
Weighted average rate of new investment fundings
Weighted average spread over LIBOR of new floating rate investment fundings
Weighted average fees of new investment fundings
Weighted average rate of sales and payoffs of portfolio investments(1)
(1)
Excludes exits on investments on non-accrual status.
Year ended September 30,
2019
8.0%
5.7%
1.3%
8.5%
2018
8.0%
6.0%
1.3%
8.3%
As of September 30, 2019, 92.3% and 92.3% of our debt portfolio at fair value and at amortized cost, respectively, had interest rate floors that limit the
minimum applicable interest rates on such loans. As of September 30, 2018, 99.1% and 98.6% of our debt portfolio at fair value and at amortized cost,
respectively, had interest rate floors that limit the minimum applicable interest rates on such loans.
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TABLE OF CONTENTS
As of September 30, 2019 and September 30, 2018, the portfolio median earnings before interest, taxes, depreciation and amortization, or EBITDA, for our
portfolio companies (excluding SLF and GCIC SLF) was $28.6 million and $26.2 million, respectively. The portfolio median EBITDA is based on the most
recently reported trailing twelve-month EBITDA received from the portfolio company.
As part of the monitoring process, GC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal
system developed by Golub Capital and its affiliates. This system is not generally accepted in our industry or used by our competitors. It is based on the
following categories, which we refer to as GC Advisors’ internal performance ratings:
Internal Performance Ratings
Rating
Definition
5
4
3
2
1
Involves the least amount of risk in our portfolio. The borrower is performing above expectations, and the trends and risk factors are
generally favorable.
Involves an acceptable level of risk that is similar to the risk at the time of origination. The borrower is generally performing as expected, and
the risk factors are neutral to favorable.
Involves a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination. The borrower
may be out of compliance with debt covenants; however, loan payments are generally not past due.
Involves a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination. In
addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than
180 days past due).
Involves a borrower performing substantially below expectations and indicates that the loan’s risk has substantially increased since
origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 1 are not
anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.
Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect
any third-party assessment of any of our investments.
For any investment rated 1, 2 or 3, GC Advisors will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing
current operating results and material impending events and suggesting recommended actions.
GC Advisors monitors and, when appropriate, changes the internal performance ratings assigned to each investment in our portfolio. In connection with our
valuation process, GC Advisors and our board of directors review these internal performance ratings on a quarterly basis.
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TABLE OF CONTENTS
The following table shows the distribution of our investments on the 1 to 5 internal performance rating scale at fair value as of September 30, 2019 and
September 30, 2018:
Internal
Performance
Rating
5
4
3
2
1
Total
As of September 30, 2019
As of September 30, 2018
Investments
at Fair Value
(In thousands)
Percentage of
Total
Investments
Investments
at Fair Value
(In thousands)
Percentage of
Total
Investments
$
$
115,318
3,787,809
337,358
52,434
13
4,292,932
2.7% $
88.2
7.9
1.2
0.0*
100.0% $
113,873
1,455,754
195,414
17,250
550
1,782,841
6.4%
81.6
11.0
1.0
0.0*
100.0%
*
Represents an amount less than 0.1%.
Senior Loan Fund LLC
We co-invest with RGA Reinsurance Company, or RGA, in senior secured loans through SLF, an unconsolidated Delaware LLC. SLF is capitalized as
transactions are completed and all portfolio and investment decisions in respect to SLF must be approved by the SLF investment committee consisting of two
representatives of each of us and RGA (with unanimous approval required from (i) one representative of each of us and RGA or (ii) both representatives of
each of us and RGA). SLF may cease making new investments upon notification of either member but operations will continue until all investments have
been sold or paid-off in the normal course of business.
As of September 30, 2019, SLF is capitalized by LLC equity interest subscriptions from its members. As of September 30, 2019 and 2018, we and RGA
owned 87.5% and 12.5%, respectively, of the LLC equity interests. SLF’s profits and losses are allocated to us and RGA in accordance with our respective
ownership interests.
As of September 30, 2019 and 2018, SLF had the following commitments from its members (in the aggregate):
As of September 30, 2019
As of September 30, 2018
Committed
Funded(1)
Committed
Funded(1)
LLC equity commitments
Total
$
$
(In thousands)
$
$
200,000
200,000
85,580
85,580
$
$
(In thousands)
200,000 $
200,000 $
86,180
86,180
(1)
Funded LLC equity commitments are presented net of return of capital distributions subject to recall.
As of September 30, 2019, the senior secured revolving credit facility, or, as amended, the SLF Credit Facility, that Senior Loan Fund II LLC, a wholly-
owned subsidiary of SLF, or SLF II, entered into with Wells Fargo Securities, LLC, as administrative agent, and Wells Fargo Bank, N.A., as lender, allowed
SLF II to borrow up to $75.6 million subject to leverage and borrowing base restrictions. The reinvestment period of the SLF Credit Facility ended August
29, 2018, and after such date, the maximum commitment is equal to advances outstanding. The stated maturity date is August 30, 2022. As of September 30,
2019 and September 30, 2018, SLF II had outstanding debt under the SLF Credit Facility of $75.6 million and $104.6 million, respectively. As of
September 30, 2019, the SLF Credit Facility bears interest at one-month LIBOR plus 2.05% per annum.
As of September 30, 2019 and 2018, SLF had total assets at fair value of $161.0 million and $186.3 million, respectively. As of September 30, 2019, SLF had
six portfolio company investments in two portfolio companies on non-accrual status with a fair value of $5.0 million. As of September 30, 2018, SLF had one
investment in one portfolio company on non-accrual status with a fair value of $3.9 million. The portfolio companies in SLF are in industries and geographies
similar to those in which we may invest directly. Additionally, as of September 30, 2019 and 2018, SLF had commitments to fund various undrawn revolving
credit and delayed draw loans to its portfolio companies totaling $3.4 million and $5.9 million, respectively.
85
TABLE OF CONTENTS
Below is a summary of SLF’s portfolio, followed by a listing of the individual investments in SLF’s portfolio as of September 30, 2019 and 2018:
Senior secured loans(1)
Weighted average current interest rate on senior secured loans(2)
Number of borrowers in SLF
Largest portfolio company investment(1)
Total of five largest portfolio company investments(1)
(1) At principal amount.
As of September 30, 2019
As of September 30, 2018
(Dollars in thousands)
$
154,254
7.4%
27
12,654
54,268
$
$
183,668
7.5%
32
13,716
57,330
$
$
$
(2) Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at principal amount.
86
TABLE OF CONTENTS
Portfolio Company
Business Description
1A Smart Start LLC(4)
Home and Office Furnishings, Housewares, and Durable
Consumer
Security Type
Maturity
Date
Senior loan
02/2022
SLF Investment Portfolio as of September 30, 2019
Advanced Pain Management Holdings, Inc.(4)(5)
Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc.(4)(5)
Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc.(4)(5)(7)
Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc.(4)(5)
Healthcare, Education and Childcare
Boot Barn, Inc.(4)
Brandmuscle, Inc.
Brandmuscle, Inc.
Captain D's, LLC(4)
Captain D's, LLC(4)
Retail Stores
Printing and Publishing
Printing and Publishing
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
CLP Healthcare Services, Inc.
Healthcare, Education and Childcare
CLP Healthcare Services, Inc.
Healthcare, Education and Childcare
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
DISA Holdings Acquisition Subsidiary Corp.(4)
Diversified/Conglomerate Service
DISA Holdings Acquisition Subsidiary Corp.(4)
Diversified/Conglomerate Service
Flexan, LLC
Flexan, LLC
Flexan, LLC(4)
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Gamma Technologies, LLC(4)
Electronics
III US Holdings, LLC
Diversified/Conglomerate Service
Jensen Hughes, Inc.
Jensen Hughes, Inc.
Jensen Hughes, Inc.
Buildings and Real Estate
Buildings and Real Estate
Buildings and Real Estate
Joerns Healthcare, LLC(4)
Healthcare, Education and Childcare
Joerns Healthcare, LLC(4)
Healthcare, Education and Childcare
Mediaocean LLC
Diversified/Conglomerate Service
Paradigm DKD Group, LLC(4)(5)
Buildings and Real Estate
Paradigm DKD Group, LLC(4)(5)(7)
Buildings and Real Estate
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
12/2019
12/2019
12/2019
12/2019
06/2023
12/2021
12/2021
12/2023
12/2023
12/2020
12/2020
10/2021
10/2021
10/2021
10/2021
10/2021
06/2022
06/2022
02/2020
02/2020
02/2020
06/2024
09/2022
03/2024
03/2024
03/2024
08/2024
08/2024
08/2020
05/2022
05/2022
Pasternack Enterprises, Inc. and Fairview
Microwave, Inc(4)
Polk Acquisition Corp.(4)
Polk Acquisition Corp.(4)
Polk Acquisition Corp.
Diversified/Conglomerate Manufacturing
Senior loan
07/2025
Automobile
Automobile
Automobile
Senior loan
Senior loan
Senior loan
06/2022
06/2022
06/2022
87
Current
Interest
Rate(1)
Principal ($) /
Shares(2)
Fair
Value(3)
6.5
7.1
7.1
7.1
10.6
6.6
6.9
N/A(6)
6.5
7.5
7.4
7.4
7.5
7.5
7.5
7.5
% $
2,961
$
6,172
422
193
2,139
6,022
4,418
—
2,433
17
8,415
4,239
2,392
1,203
58
40
N/A(6)
—
7.1
6.0
7.9
7.9
9.5
7.3
8.1
6.6
6.6
6.6
8.2
8.2
10,084
10,084
4,773
53
5,905
1,640
431
4,288
2,276
118
63
1,286
1,338
N/A(6)
—
8.4
8.4
6.0
7.3
7.3
7.3
1,480
(16)
5,264
4,465
60
52
2,961
3,703
253
(8)
4
6,022
4,415
—
2,433
17
8,415
4,239
2,392
1,203
58
40
—
4,773
53
5,905
1,640
431
4,288
2,276
118
63
1,286
1,338
—
1,094
(59)
5,264
4,376
58
51
TABLE OF CONTENTS
SLF Investment Portfolio as of September 30, 2019 - (continued)
Portfolio Company
Business Description
Pyramid Healthcare, Inc.(4)
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.
Healthcare, Education and Childcare
RSC Acquisition, Inc.(4)
RSC Acquisition, Inc.(4)
Insurance
Insurance
Rubio's Restaurants, Inc(4)
Beverage, Food and Tobacco
Security Type
Maturity
Date
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
08/2020
08/2020
08/2020
08/2020
11/2022
11/2021
10/2019
Sage Dental Management, LLC
Healthcare, Education and Childcare
Senior loan
12/2020
Sage Dental Management, LLC
Healthcare, Education and Childcare
Sage Dental Management, LLC
Healthcare, Education and Childcare
Sage Dental Management, LLC
Healthcare, Education and Childcare
SEI, Inc.(4)
SEI, Inc.
Electronics
Electronics
Self Esteem Brands, LLC(4)
Leisure, Amusement, Motion Pictures, Entertainment
Self Esteem Brands, LLC(4)
Leisure, Amusement, Motion Pictures, Entertainment
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.(4)
Teasdale Quality Foods, Inc.
Grocery
Grocery
Grocery
Grocery
Grocery
Upstream Intermediate, LLC
Healthcare, Education and Childcare
WHCG Management, LLC(4)
Healthcare, Education and Childcare
WIRB-Copernicus Group, Inc.(4)
Healthcare, Education and Childcare
Total senior loan investments
Paradigm DKD Group, LLC(4)(8)(9)
Buildings and Real Estate
Paradigm DKD Group, LLC(4)(8)(9)
Buildings and Real Estate
Paradigm DKD Group, LLC(4)(8)(9)
Buildings and Real Estate
Joerns Healthcare, LLC(4)(8)(9)
Healthcare, Education and Childcare
W3 Co. (8)(9)
W3 Co. (8)(9)
Total equity investments
Total investments
Oil and Gas
Oil and Gas
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
12/2020
12/2020
12/2020
07/2023
07/2023
02/2022
02/2022
10/2020
10/2020
10/2020
10/2020
10/2020
01/2024
03/2023
08/2022
LLC units
LLC units
LLC units
Common Stock
LLC units
Preferred stock
N/A
N/A
N/A
N/A
N/A
N/A
Current
Interest
Rate(1)
8.8
9.2
8.8
8.8
6.4
N/A(6)
9.1
7.35%
cash/1.00%
PIK
8.4
8.4
8.4
6.8
N/A(6)
6.3
8.3
7.9
7.9
7.9
7.9
7.9
6.0
8.1
6.4
N/A
N/A
N/A
N/A
N/A
N/A
Principal ($) /
Shares(2)
Fair
Value(3)
% $
10,047
$
10,047
257
147
99
3,785
—
4,890
4,341
70
63
45
257
147
99
3,785
—
4,890
3,907
62
57
40
11,004
11,004
—
9,561
415
4,190
3,285
567
424
210
2,796
7,820
5,554
—
9,561
415
3,771
2,956
511
382
189
2,796
7,820
5,554
$
154,254
$
147,436
$
170
963
34
309
3
—
$
154,254
$
$
62
—
—
3,017
1,526
218
4,823
152,259
(1)
(2)
(3)
Represents the weighted average annual current interest rate as of September 30, 2019. All interest rates are payable in cash, except where PIK is shown.
The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
Represents the fair value in accordance with ASC Topic 820 - Fair Value Measurements, or ASC Topic 820. The determination of such fair value is not included in our board of directors' valuation process described
elsewhere herein.
88
TABLE OF CONTENTS
(4) We also hold a portion of the first lien senior secured loan in this portfolio company.
(5)
(6)
(7)
(8)
(9)
Loan was on non-accrual status as of September 30, 2019. As such, no interest is being earned on this investment.
The entire commitment was unfunded as of September 30, 2019. As such, no interest is being earned on this investment. The investment may be subject to an unused facility fee.
The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par.
Equity investment received as a result of the portfolio company's debt restructuring.
Non-income producing.
89
SLF Investment Portfolio as of September 30, 2018
Business Description
Security Type
Maturity
Date
Current
Interest
Rate(1)
Principal ($) /
Shares(2)
Fair
Value(3)
7.0 % $
2,073
$
TABLE OF CONTENTS
Portfolio Company
1A Smart Start LLC
1A Smart Start LLC(4)
Home and Office Furnishings, Housewares, and
Durable Consumer
Home and Office Furnishings, Housewares, and
Durable Consumer
Advanced Pain Management Holdings, Inc.
(5)
Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc.
(5)
Healthcare, Education and Childcare
Boot Barn, Inc.
Brandmuscle, Inc.
Captain D's, LLC(4)
Captain D's, LLC(4)
CLP Healthcare Services, Inc.
CLP Healthcare Services, Inc.
Retail Stores
Printing and Publishing
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
DISA Holdings Acquisition Subsidiary
Corp.(4)
DISA Holdings Acquisition Subsidiary
Corp.(4)
Encore GC Acquisition, LLC
Flexan, LLC(4)
Flexan, LLC
Flexan, LLC
Diversified/Conglomerate Service
Diversified/Conglomerate Service
Healthcare, Education and Childcare
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Gamma Technologies, LLC(4)
Electronics
III US Holdings, LLC
Jensen Hughes, Inc.
Jensen Hughes, Inc.
Jensen Hughes, Inc.
Joerns Healthcare, LLC(4)
Paradigm DKD Group, LLC
Paradigm DKD Group, LLC
Diversified/Conglomerate Service
Buildings and Real Estate
Buildings and Real Estate
Buildings and Real Estate
Healthcare, Education and Childcare
Buildings and Real Estate
Buildings and Real Estate
Pasternack Enterprises, Inc. and Fairview
Microwave, Inc (4)
Diversified/Conglomerate Manufacturing
Payless ShoeSource, Inc.
Polk Acquisition Corp.
Polk Acquisition Corp.
Polk Acquisition Corp.
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
RSC Acquisition, Inc.(4)
RSC Acquisition, Inc.(4)
Retail Stores
Automobile
Automobile
Automobile
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Insurance
Insurance
Rubio's Restaurants, Inc.(4)
Beverage, Food and Tobacco
Rug Doctor LLC
Personal and Non Durable Consumer Products (Mfg.
Only)
02/2022
02/2022
11/2018
11/2018
06/2021
12/2021
12/2023
12/2023
12/2020
12/2020
10/2021
10/2021
10/2021
10/2021
06/2022
06/2022
01/2020
02/2020
02/2020
02/2020
06/2024
09/2022
03/2024
03/2024
03/2024
05/2020
05/2020
05/2020
07/2025
08/2022
06/2022
06/2022
06/2022
08/2019
08/2019
08/2019
08/2019
11/2021
11/2022
10/2019
04/2019
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
90
6.7
7.2
7.2
6.9
7.1
7.9
6.7
7.9
7.9
7.9
7.9
7.9
7.9
6.1
6.1
7.5
9.8
8.1
8.1
7.7
9.0
6.7
6.7
6.7
8.3
8.5
8.5
6.2
11.3
7.5
7.2
7.2
8.8
8.8
8.8
8.8
6.8
6.7
7.6
7.6
922
6,561
449
9,533
4,678
13
2,499
8,502
4,284
2,417
1,215
40
58
71
4,821
4,540
304
5,967
1,657
10,186
4,927
2,293
119
64
8,745
702
1,957
5,318
762
93
4,513
53
411
2,084
924
3,609
247
9,533
4,674
13
2,499
8,332
4,198
2,417
1,215
40
58
71
4,821
4,540
304
5,967
1,657
10,186
4,927
2,293
119
64
8,133
524
1,369
5,291
528
93
4,513
53
411
10,152
10,152
45
148
17
3,824
4,941
991
45
148
17
3,815
4,941
991
SLF Investment Portfolio as of September 30, 2018 - (continued)
Business Description
Security Type
Maturity
Date
Current
Interest
Rate(1)
Principal ($) / Shares
(2)
Fair
Value(3)
7.6 % $
5,061
$
TABLE OF CONTENTS
Portfolio Company
Rug Doctor LLC
Sage Dental Management, LLC
Sage Dental Management, LLC
Sage Dental Management, LLC
Sage Dental Management, LLC
Saldon Holdings, Inc. (4)
SEI, Inc.(4)
Self Esteem Brands, LLC(4)
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Upstream Intermediate, LLC
W3 Co.
WHCG Management, LLC(4)
WIRB-Copernicus Group, Inc.(4)
Total senior loan investments
Personal and Non Durable Consumer Products (Mfg.
Only)
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Diversified/Conglomerate Service
Electronics
Leisure, Amusement, Motion Pictures,
Entertainment
Grocery
Grocery
Grocery
Grocery
Grocery
Healthcare, Education and Childcare
Oil and Gas
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
04/2019
12/2020
12/2020
12/2020
12/2020
09/2022
07/2023
02/2020
10/2020
10/2020
10/2020
10/2020
10/2020
01/2024
03/2022
03/2023
08/2022
8.4
8.4
8.4
8.4
6.4
7.5
7.0
6.9
6.9
7.1
7.1
6.9
6.6
8.2
7.4
6.5
N/A
N/A
70
4,345
45
64
2,354
13,716
10,142
4,507
486
650
239
3,532
2,830
1,253
7,900
5,609
5,061
64
3,997
42
59
2,342
13,716
10,142
4,416
476
637
235
3,460
2,830
1,251
7,900
5,609
$
183,668
$
178,053
35
3
$
$
54
1,073
1,127
Payless ShoeSource, Inc. (6)(7)
W3 Co. (6)(7)
Total equity investments
Retail Stores
Oil and Gas
LLC interest
LLC units
N/A
N/A
Total investments
$
183,668
$
179,180
(1)
(2)
(3)
Represents the weighted average annual current interest rate as of September 30, 2018. All interest rates are payable in cash, except where PIK is shown.
The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in our board of directors' valuation process described elsewhere herein.
(4) We also hold a portion of the senior secured loan in this portfolio company.
(5)
(6)
(7)
Loan was on non-accrual status as of September 30, 2018. As such, no interest is being earned on this investment.
Equity investment received as a result of the portfolio company's debt restructuring.
Non-income producing.
As of September 30, 2019, we have committed to fund $175.0 million of LLC equity interests to SLF. As of September 30, 2019 and 2018, $74.9 million and
$75.4 million, respectively, of our LLC equity interest commitment to SLF had been called and contributed, net of return of capital distributions subject to
recall. For the year ended September 30, 2019, we did not receive dividend income from the SLF LLC equity interests. For the year ended September 30,
2018, we received $8.1 million in dividend income from the SLF LLC equity interests.
For the years ended September 30, 2019 and 2018, we earned a total return on our weighted average capital invested in SLF of 5.4% and 6.6%, respectively.
The total return on weighted average capital invested is calculated by dividing total income earned on our investments in SLF by the combined daily average
of our investments in the NAV of the SLF LLC equity interests.
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Below is certain summarized financial information for SLF as of and for the years ended September 30, 2019 and 2018:
As of September 30, 2019
As of September 30, 2018
(In thousands)
Selected Balance Sheet Information, at fair value
Investments, at fair value
Cash and other assets
Total assets
Senior credit facility
Unamortized debt issuance costs
Other liabilities
Total liabilities
Members’ equity
Total liabilities and members' equity
Selected Statement of Operations Information:
Interest income
Fee income
Total investment income
Interest and other debt financing expenses
Administrative service fee
Other expenses
Total expenses
Net investment income
Net realized gains (losses) on investments
Net change in unrealized appreciation (depreciation) on investments
Net increase (decrease) in members' equity
GCIC Senior Loan Fund LLC:
$
$
$
$
$
$
152,259 $
8,759
161,018 $
75,581 $
—
424
76,005
85,013
161,018 $
Years ended September 30,
2019
2018
(In thousands)
13,402
$
9
13,411
4,132
268
95
4,495
8,916
(2,343)
(2,199)
4,374
$
179,180
7,146
186,326
104,622
(18)
484
105,088
81,238
186,326
18,285
202
18,487
6,687
404
93
7,184
11,303
—
(4,197)
7,106
Following the acquisition of GCIC SLF in the Merger, we co-invest with Aurora, a wholly-owned
subsidiary of RGA, in senior secured loans through GCIC SLF. We acquired the investment in GCIC SLF through our acquisition of GCIC on September 16,
2019. GCIC SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect of GCIC SLF must be approved by the
GCIC SLF investment committee consisting of two representatives of each of us and Aurora (with unanimous approval required from (i) one representative of
each of the us and Aurora or (ii) both representatives of each of us and Aurora). GCIC SLF may cease making new investments upon notification of either
member but operations will continue until all investments have been sold or paid-off in the normal course of business.
As of September 30, 2019, GCIC SLF is capitalized by LLC equity interest subscriptions from its members. GCIC SLF’s profits and losses are allocated to us
and Aurora in accordance with our respective ownership interests. As of September 30, 2019, we and Aurora owned 87.5% and 12.5%, respectively, of the
LLC equity interests. GCIC SLF’s profits and losses are allocated to us and Aurora in accordance with our respective ownership interests.
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TABLE OF CONTENTS
As of September 30, 2019, GCIC SLF had the following commitments from its members (in the aggregate):
As of September 30, 2019
Committed
Funded (1)
LLC equity commitments
Total
$
$
(In thousands)
$
$
125,000
125,000
55,264
55,264
(1) Funded LLC equity commitments are presented net of return of capital distributions subject to recall.
GCIC SLF entered into a senior secured revolving credit facility, or, as amended, the GCIC SLF Credit Facility, with Wells Fargo Bank, N.A. through its
wholly-owned subsidiary GCIC Senior Loan Fund II LLC, or GCIC SLF II, which as of September 30, 2019 allowed GCIC SLF II to borrow up to $59.6
million at any one time outstanding, subject to leverage and borrowing base restrictions, and which bears interest at one-month LIBOR plus 2.05%. The stated
maturity date of this credit facility is September 28, 2022 and the maximum commitment under the facility is equal to advances outstanding.
As of September 30, 2019, GCIC SLF had total assets at fair value of $116.2 million. As of September 30, 2019, GCIC SLF did not have any investments on
non-accrual status. The portfolio companies in GCIC SLF are in industries and geographies similar to those in which we may invest directly. Additionally, as
of September 30, 2019, GCIC SLF had commitments to fund various undrawn revolvers and delayed draw investments to its portfolio companies totaling
$7.0 million.
Below is a summary of GCIC SLF’s portfolio, followed by a listing of the individual investments in GCIC SLF’s portfolio as of September 30, 2019:
Senior secured loans (1)
Weighted average current interest rate on senior secured loans (2)
Number of borrowers in GCIC SLF
Largest portfolio company investment (1)
Total of five largest portfolio company investments (1)
(1) At principal amount.
(2) Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at principal amount.
September 30, 2019
(Dollars in thousands)
112,864
7.2%
28
8,464
34,273
$
$
$
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TABLE OF CONTENTS
Portfolio Company
Business Description
Security Type
1A Smart Start LLC(3)
Home and Office Furnishings, Housewares, and Durable Consumer
Senior loan
GCIC SLF Investment Portfolio as of September 30, 2019
Boot Barn, Inc.(3)
Brandmuscle, Inc.(3)
Brandmuscle, Inc.(3)
Captain D's, LLC(3)
Captain D's, LLC(3)
Retail Stores
Printing and Publishing
Printing and Publishing
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
CLP Healthcare Services, Inc.(3)
Healthcare, Education and Childcare
CLP Healthcare Services, Inc.(3)
Healthcare, Education and Childcare
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Flexan, LLC(3)
Flexan, LLC(3)
Flexan, LLC(3)
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
G & H Wire Company, Inc(3)
Healthcare, Education and Childcare
Gamma Technologies, LLC(3)
Electronics
III US Holdings, LLC(3)
Diversified/Conglomerate Service
Jensen Hughes, Inc.(3)
Jensen Hughes, Inc.(3)
Jensen Hughes, Inc.(3)
Mediaocean LLC(3)
Buildings and Real Estate
Buildings and Real Estate
Buildings and Real Estate
Diversified/Conglomerate Service
Mills Fleet Farm Group LLC(3)
Retail Stores
NBC Intermediate, LLC(3)
Beverage, Food and Tobacco
NBC Intermediate, LLC(3)
Beverage, Food and Tobacco
Pasternack Enterprises, Inc. and Fairview
Microwave, Inc(3)
Diversified/Conglomerate Manufacturing
Polk Acquisition Corp.(3)
Polk Acquisition Corp.(3)
Polk Acquisition Corp.(3)
Automobile
Automobile
Automobile
Pyramid Healthcare, Inc.(3)
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.(3)
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.(3)
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.(3)
Healthcare, Education and Childcare
Reladyne, Inc.(3)
Reladyne, Inc.(3)
Reladyne, Inc.(3)
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Manufacturing
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
94
02/2022
06/2023
12/2021
12/2021
12/2023
12/2023
12/2020
12/2020
10/2021
10/2021
10/2021
10/2021
10/2021
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
02/2020
02/2020
02/2020
09/2023
06/2024
09/2022
03/2024
03/2024
03/2024
08/2020
10/2024
09/2023
09/2023
07/2025
06/2022
06/2022
06/2022
08/2020
08/2020
08/2020
08/2020
07/2022
07/2022
07/2022
Maturity
Date
Current
Interest
Rate(1)
Principal ($)
Fair
Value(2)
6.5 % $
1,910
$
6.6
3,159
N/A(4)
—
6.9
7.5
6.5
7.4
7.4
3,800
33
5,792
2,007
1,011
N/A(4)
—
1,910
3,159
—
3,797
33
5,792
2,007
1,011
—
2,053
1,032
40
58
99
6
79
186
192
2,635
732
5,284
4,334
4,253
1,958
102
54
—
5,657
—
2,565
4,913
7,962
58
51
68
1,128
1,061
581
88
546
83
2,806
2,638
2,053
1,032
40
58
121
7
84
198
192
2,635
732
5,284
4,334
4,253
1,958
102
54
2,565
4,913
8,125
60
52
68
2,426
2,426
147
367
5,909
621
1,152
147
367
5,909
621
1,152
7.5
7.5
7.5
7.5
8.5
8.4
8.4
8.4
8.4
8.5
8.4
8.4
9.5
7.9
7.9
7.8
7.3
8.1
6.6
6.6
6.6
6.5
6.0
7.3
7.3
7.3
9.2
8.8
8.8
8.8
7.3
7.3
7.3
N/A(4)
—
8.3
5,955
N/A(4)
—
TABLE OF CONTENTS
Portfolio Company
Business Description
Security Type
Maturity
Date
Current
Interest
Rate(1)
Principal ($)
Fair
Value(2)
GCIC SLF Investment Portfolio as of September 30, 2019 - (continued)
Reladyne, Inc.(3)
Reladyne, Inc.(3)
RSC Acquisition, Inc.(3)
RSC Acquisition, Inc.(3)
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Manufacturing
Insurance
Insurance
Rubio's Restaurants, Inc(3)
Beverage, Food and Tobacco
SEI, Inc.(3)
SEI, Inc.(3)
Electronics
Electronics
Self Esteem Brands, LLC(3)
Leisure, Amusement, Motion Pictures, Entertainment
Self Esteem Brands, LLC(3)
Leisure, Amusement, Motion Pictures, Entertainment
Summit Behavioral Healthcare, LLC(3)
Healthcare, Education and Childcare
Summit Behavioral Healthcare, LLC(3)
Healthcare, Education and Childcare
Summit Behavioral Healthcare, LLC(3)
Healthcare, Education and Childcare
Teasdale Quality Foods, Inc.(3)
Teasdale Quality Foods, Inc.(3)
Teasdale Quality Foods, Inc.(3)
Teasdale Quality Foods, Inc.(3)
Grocery
Grocery
Grocery
Grocery
Upstream Intermediate, LLC(3)
Healthcare, Education and Childcare
WHCG Management, LLC(3)
Healthcare, Education and Childcare
WHCG Management, LLC(3)
Healthcare, Education and Childcare
WIRB-Copernicus Group, Inc.(3)
Healthcare, Education and Childcare
Total investments
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
07/2022
07/2022
11/2021
11/2022
10/2019
07/2023
07/2023
02/2022
02/2022
10/2023
10/2023
10/2023
10/2020
10/2020
10/2020
10/2020
01/2024
03/2023
03/2023
08/2022
7.3 % $
7.3
N/A(4)
6.4
9.1
6.8
$
537
245
—
3,255
1,641
4,154
N/A(4)
—
6.3
8.3
6.9
6.9
6.9
7.9
7.9
7.9
7.9
6.0
8.1
5,445
498
100
5,895
290
1,009
137
51
791
3,532
2,158
N/A(4)
—
6.4
5,314
537
245
—
3,255
1,641
4,154
—
5,445
498
94
5,600
276
908
123
46
712
3,532
2,158
—
5,314
$
112,864
$
111,568
(1)
(2)
Represents the weighted average annual current interest rate as of September 30, 2019. All interest rates are payable in cash.
Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in our board of directors' valuation process described elsewhere herein.
(3) We also hold a portion of the first lien senior secured loan in this portfolio company.
(4)
The entire commitment was unfunded as of September 30, 2019. As such, no interest is being earned on this investment. The investment may be subject to an unused facility fee.
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As of September 30, 2019, we have committed to fund $109.4 million of LLC equity interest subscriptions to GCIC SLF. As of September 30, 2019, $48.4
million of our LLC equity interest subscriptions to GCIC SLF had been called and contributed, net of return of capital distributions subject to recall. For the
year ended September 30, 2019, we received $1.2 million in dividend income from the GCIC SLF LLC equity interests.
The annualized total return on our weighted average capital invested in GCIC SLF was not meaningful for the year ended September 30, 2019.
See below for certain summarized financial information for GCIC SLF as of September 30, 2019 and for the period subsequent to the Merger from September
16, 2019 to September 30, 2019:
Selected Balance Sheet Information:
Investments, at fair value
Cash and other assets
Total assets
Senior credit facility
Other liabilities
Total liabilities
Members’ equity
Total liabilities and members' equity
Selected Statement of Operations Information:
Interest income
Total investment income
Interest and other debt financing expense
Administrative service fee
Other expenses
Total expenses
Net investment income
Net change in unrealized appreciation (depreciation) on investments
Net increase in members' equity
96
As of September 30, 2019
(In thousands)
111,568
4,627
116,195
59,559
341
59,900
56,295
116,195
For the period September 16,
2019 to September 30, 2019
(In thousands)
360
360
141
6
4
151
209
(18)
191
$
$
$
$
$
$
TABLE OF CONTENTS
Contractual Obligations and Off-Balance Sheet Arrangements
A summary of our significant contractual payment obligations as of September 30, 2019 is as follows:
2014 Debt Securitization
2018 Debt Securitization
2018 GCIC Debt Securitization
SBA debentures
WF Credit Facility
MS Credit Facility II
DB Credit Facility
Unfunded commitments(1)
Total contractual obligations
Total
Less Than
1 Year
1 – 3 Years
3 – 5 Years
More Than
5 Years
Payments Due by Period (In millions)
$
$
$
126.3
408.2
541.0
287.0
253.8
259.9
248.0
261.6
2,385.9
$
— $
—
—
—
—
—
—
261.6
261.6
$
— $
—
—
78.5
—
—
—
—
78.5
$
— $
—
—
60.3
253.8
259.9
248.0
—
822.0 $
126.3
408.2
541.0
148.3
—
—
—
—
1,223.8
(1) Unfunded commitments represent unfunded commitments to fund investments, excluding our investments in SLF and GCIC SLF, as of September 30, 2019. These amounts may or may not be
funded to the borrowing party now or in the future. The unfunded commitments relate to loans with various maturity dates, but we are showing this amount in the less than one year category as
this entire amount was eligible for funding to the borrowers as of September 30, 2019, subject to the terms of each loan’s respective credit agreement.
We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio
companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of
the amount recognized in the balance sheet. As of September 30, 2019, we had outstanding commitments to fund investments, excluding our investments in
SLF and GCIC SLF, totaling $261.6 million. We have commitments of up to $100.1 million to SLF and commitments of up to $61.0 million to GCIC SLF as
of September 30, 2019 that may be contributed primarily for the purpose of funding new investments approved by the respective SLFs' investment committee.
We have certain contracts under which we have material future commitments. We have entered into the Investment Advisory Agreement with GC Advisors in
accordance with the 1940 Act. Under the Investment Advisory Agreement, GC Advisors provides us with investment advisory and management services.
Under the Administration Agreement, the Administrator furnishes us with office facilities and equipment, provides us with clerical, bookkeeping and record
keeping services at such facilities and provides us with other administrative services necessary to conduct our day-to-day operations. The Administrator also
provides on our behalf managerial assistance to those portfolio companies to which we are required to offer to provide such assistance.
If any of the contractual obligations discussed above are terminated, our costs under any new agreements that we enter into may increase. In addition, we
would likely incur significant time and expense in locating alternative parties to provide the services we receive under our Investment Advisory Agreement
and our Administration Agreement. Any new investment advisory agreement would also be subject to approval by our stockholders.
Distributions
We intend to make quarterly distributions to our stockholders as determined by our board of directors. For additional details on distributions, see “Income
taxes” in Note 2 to our consolidated financial statements.
We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from
time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business
development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse U.S. federal income tax
consequences, including the possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions.
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Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and
realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified within capital
accounts in the financial statements to reflect their tax character. For example, permanent differences in classification may result from the treatment of
distributions paid from short-term gains as ordinary income dividends for tax purposes. Temporary differences arise when certain items of income, expense,
gain or loss are recognized at some time in the future.
To the extent our taxable earnings fall below the total amount of our distributions for any tax year, a portion of those distributions may be deemed a return of
capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by
the stockholder rather than our income or gains. 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 gains.
We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, our stockholders’ cash
distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our dividend
reinvestment plan. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of
our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders participating in our
dividend reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes.
Related Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following:
• We entered into the Investment Advisory Agreement with GC Advisors. Mr. Lawrence Golub, our chairman, is a manager of GC Advisors, and Mr.
David Golub, our chief executive officer, is a manager of GC Advisors, and each of Messrs. Lawrence Golub and David Golub owns an indirect
pecuniary interest in GC Advisors.
•
Golub Capital LLC provides, and other affiliates of Golub Capital have historically provided, us with the office facilities and administrative services
necessary to conduct day-to-day operations pursuant to our Administration Agreement.
• We have entered into a license agreement with Golub Capital LLC, pursuant to which Golub Capital LLC has granted us a non-exclusive, royalty-
free license to use the name “Golub Capital.”
•
•
Under the Staffing Agreement, Golub Capital LLC has agreed to provide GC Advisors with the resources necessary to fulfill its obligations under
the Investment Advisory Agreement. The Staffing Agreement provides that Golub Capital LLC will make available to GC Advisors experienced
investment professionals and provide access to the senior investment personnel of Golub Capital LLC for purposes of evaluating, negotiating,
structuring, closing and monitoring our investments. The Staffing Agreement also includes a commitment that the members of GC Advisors’
investment committee will serve in such capacity. Services under the Staffing Agreement are provided on a direct cost reimbursement basis. We are
not a party to the Staffing Agreement.
GC Advisors serves as collateral manager to the 2014 Issuer, the 2018 Issuer, and the GCIC 2018 Issuer under the 2014 Collateral Management
Agreement, the 2018 Collateral Management Agreement, and the GCIC 2018 Collateral Management Agreement, respectively, and prior to the
redemption of the 2010 Notes on July 20, 2018, served as the collateral manager to the 2010 Issuer under the 2010 Collateral Management
Agreement. Fees payable to GC Advisors for providing these services offset against the base management fee payable by us under the Investment
Advisory Agreement.
• We have entered into the Adviser Revolver with GC Advisors in order to have the ability to borrow funds on a short-term basis.
• We assumed the GCIC Adviser Revolver with GC Advisors in the Merger with GCIC.
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•
•
During the first ten months of calendar year 2019 and for calendar year 2018, the Golub Capital Employee Grant Program Rabbi Trust, or the Trust,
purchased approximately $10.3 million of shares, or 571,180 shares, and $7.2 million, or 396,099 shares, of our common stock, respectively, for the
purpose of awarding incentive compensation to employees of Golub Capital.
On September 16, 2019, we completed our acquisition of GCIC, pursuant to the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub
was first merged with and into GCIC, with GCIC as the surviving company, and, immediately following the Initial Merger, GCIC was then merged
with and into us, with us as the surviving company. As a result of, and as of the effective time of, the Merger, GCIC’s separate existence ceased.
GC Advisors also sponsors or manages, and may in the future sponsor or manage, other investment funds, accounts or investment vehicles (together referred
to as “accounts”) that have investment mandates that are similar, in whole and in part, with ours. For example, GC Advisors presently serves as the
investment adviser to Golub Capital BDC 3, Inc., an unlisted business development company that primarily focuses on investing in one stop and other senior
secured loans. In addition, our officers and directors serve in similar capacity for Golub Capital BDC 3, Inc. GC Advisors and its affiliates may determine that
an investment is appropriate for us and for Golub Capital BDC 3, Inc. In such event, depending on the availability of such investment and other appropriate
factors, and pursuant to GC Advisors’ allocation policy, GC Advisors or its affiliates may determine that we should invest side-by-side with one or more other
accounts. We do not intend to make any investments if they are not permitted by applicable law and interpretive positions of the SEC and its staff, or if they
are inconsistent with GC Advisors’ allocation procedures.
In addition, we have adopted a formal code of ethics that governs the conduct of our and GC Advisors’ officers, directors and employees. Our officers and
directors also remain subject to the duties imposed by both the 1940 Act and the General Corporation Law of the State of Delaware.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses
during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.
Fair Value Measurements
We value investments for which market quotations are readily available at their market quotations. However, a readily available market value is not expected
to exist for many of the investments in our portfolio, and we value these portfolio investments at fair value as determined in good faith by our board of
directors under our valuation policy and process.
Valuation methods may include comparisons of the portfolio companies to peer companies that are public, determination of the enterprise value of a portfolio
company, discounted cash flow analysis and a market interest rate approach. The factors that are taken into account in fair value pricing investments include:
available current market data, including relevant and applicable market trading and transaction comparables; applicable market yields and multiples; security
covenants; call protection provisions; information rights; the nature and realizable value of any collateral; the portfolio company’s ability to make payments,
its earnings and discounted cash flows and the markets in which it does business; comparisons of financial ratios of peer companies that are public;
comparable merger and acquisition transactions; and the principal market and enterprise values. When an external event such as a purchase transaction, public
offering or subsequent equity sale occurs, we will consider the pricing indicated by the external event to corroborate the private equity valuation. Due to the
inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments may differ
significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from
values that may ultimately be received or settled.
Our board of directors is ultimately and solely responsible for determining, in good faith, the fair value of investments that are not publicly traded, whose
market prices are not readily available on a quarterly basis or any other situation where portfolio investments require a fair value determination.
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With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each
quarter, as described below:
Our quarterly valuation process begins with each portfolio company investment being initially valued by the investment professionals of GC Advisors
responsible for credit monitoring. Preliminary valuation conclusions are then documented and discussed with our senior management and GC Advisors. The
audit committee of our board of directors reviews these preliminary valuations. At least once annually the valuation for each portfolio investment, subject to a
de minimis threshold, is reviewed by an independent valuation firm. The board of directors discusses valuations and determines the fair value of each
investment in our portfolio in good faith.
Determination of fair values involves subjective judgments and estimates. Under current accounting standards, the notes to our consolidated financial
statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial
statements.
We follow ASC Topic 820 for measuring fair value. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or
derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve
some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the
assets’ or liabilities’ complexity. Our fair value analysis includes an analysis of the value of any unfunded loan commitments. Assets and liabilities are
categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels
are based upon the transparency of the inputs to the valuation of the asset or liability as of the measurement date. The three levels are defined as follows:
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2: Inputs include quoted prices for similar assets or liabilities in active markets and inputs that are observable for the assets or liabilities, either
directly or indirectly, for substantially the full term of the assets or liabilities.
Level 3: Inputs include significant unobservable inputs for the assets or liabilities and include situations where there is little, if any, market activity for the
assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management
judgment or estimation.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or a liability’s
categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the
significance of a particular input to the fair value measurement in its entirety requires judgment, and we consider factors specific to the asset or liability. We
assess the levels of assets and liabilities at each measurement date, and transfers between levels are recognized on the actual date of the event or change in
circumstances that caused the transfers. There were no transfers among Level 1, 2 and 3 of the fair value hierarchy for assets and liabilities during the years
ended September 30, 2019, 2018 and 2017. The following section describes the valuation techniques used by us to measure different assets and liabilities at
fair value and includes the level within the fair value hierarchy in which the assets and liabilities are categorized.
Valuation of Investments
Level 1 investments are valued using quoted market prices. Level 2 investments are valued using market consensus prices that are corroborated by observable
market data and quoted market prices for similar assets and liabilities. Level 3 investments are valued at fair value as determined in good faith by our board of
directors, based on input of management, the audit committee and independent valuation firms that have been engaged at the direction of our board of
directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing twelve-month period
under a valuation policy and a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with approximately
25% (based on the number of portfolio companies) of our valuations of debt and equity investments without readily available market
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quotations subject to review by an independent valuation firm. As of September 30, 2019 and September 30, 2018, with the exception of money market funds
included in cash and cash equivalents and restricted cash and cash equivalents (Level 1 investments), forward currency contracts (Level 2 investments) and
investments measured at fair value using the NAV, all investments were valued using Level 3 inputs of the fair value hierarchy.
When determining fair value of Level 3 debt and equity investments, we may take into account the following factors, where relevant: the enterprise value of a
portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash
flows, the markets in which the portfolio company does business, comparisons to publicly traded securities, and changes in the interest rate environment and
the credit markets generally that may affect the price at which similar investments may be made and other relevant factors. The primary method for
determining enterprise value uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s EBITDA. A portfolio company’s
EBITDA may include pro-forma adjustments for items such as acquisitions, divestitures, or expense reductions. The enterprise value analysis is performed to
determine the value of equity investments and to determine if debt investments are credit impaired. If debt investments are credit impaired, we will use the
enterprise value analysis or a liquidation basis analysis to determine fair value. For debt investments that are not determined to be credit impaired, we use a
market interest rate yield analysis to determine fair value.
In addition, for certain debt investments, we may base our valuation on indicative bid and ask prices provided by an independent third party pricing service.
Bid prices reflect the highest price that we and others may be willing to pay. Ask prices represent the lowest price that we and others may be willing to accept.
We generally use the midpoint of the bid/ask range as our best estimate of fair value of such investment.
Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of the
investments may differ significantly from the values that would have been used had a market existed for such investments and may differ materially from the
values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid
than publicly traded instruments. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize significantly less than
the value at which such investment had previously been recorded.
Our investments are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the
volatility and liquidity in the markets in which the investments are traded.
Valuation of Other Financial Assets and Liabilities
Fair value of our debt is estimated using Level 3 inputs by discounting remaining payments using comparable market rates or market quotes for similar
instruments at the measurement date, if available.
Revenue Recognition:
Our revenue recognition policies are as follows:
Investments and Related Investment Income: Interest income is accrued based upon the outstanding principal amount and contractual interest terms of debt
investments. Premiums, discounts, and origination fees are amortized or accreted into interest income over the life of the respective debt investment. For
investments with contractual PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at
maturity, we do not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not likely to be collectible. In addition, we may
generate revenue in the form of amendment, structuring or due diligence fees, fees for providing managerial assistance, consulting fees and prepayment
premiums on loans and record these fees as fee income when received. Loan origination fees, original issue discount and market discount or premium are
capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans as fee income. Dividend income on
preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are
expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-
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dividend date for publicly traded portfolio companies. Distributions received from LLC and limited partnership, or LP, investments are evaluated to determine
if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs
and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that
are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
We account for investment transactions on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net
proceeds from the disposition and the cost basis of investment, without regard to unrealized gains or losses previously recognized. We report changes in fair
value of investments from the prior period that is measured at fair value as a component of the net change in unrealized appreciation (depreciation) on
investments in our Consolidated Statements of Operations.
Non-accrual: Loans may be left on accrual status during the period we are pursuing repayment of the loan. Management reviews all loans that become past
due 90 days or more on principal and interest or when there is reasonable doubt that principal or interest will be collected for possible placement on non-
accrual status. We generally reverse accrued interest when a loan is placed on non-accrual. Additionally, any original issue discount and market discount are
no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be
recognized as income or applied to principal depending upon management’s judgment. We restore non-accrual loans to accrual status when past due principal
and interest is paid and, in our management’s judgment, are likely to remain current. The total fair value of our non-accrual loans was $13.7 million as of
September 30, 2019 and $5.6 million as of September 30, 2018.
Partial loan sales: We follow the guidance in ASC Topic 860, when accounting for loan participations and other partial loan sales. Such guidance requires a
participation or other partial loan sale to meet the definition of a “participating interest”, as defined in the guidance, in order for sale treatment to be allowed.
Participations or other partial loan sales that do not meet the definition of a participating interest remain on our statements of assets and liabilities and the
proceeds are recorded as a secured borrowing until the definition is met. Secured borrowings are carried at fair value to correspond with the related
investments, which are carried at fair value.
Income taxes: See “Consolidated Results of Operations - Expenses - Excise Tax Expense.”
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Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are subject to financial market risks, including changes in interest rates. Many of the loans in our portfolio have floating interest rates, and we expect that
our loans in the future may also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate reset
provisions that adjust applicable interest rates under such loans to current market rates on a quarterly basis. The loans that are subject to the floating LIBOR
are also subject to a minimum base rate, or floor, that we charge on our loans if the current market rates are below the respective floors. As of September 30,
2019 and 2018, the weighted average LIBOR floor on the loans subject to floating interest rates was 1.01% and 1.01%, respectively. Prior to their redemption
on March 23, 2018, the Class A-1, A-2 and B 2014 Notes issued as part of the 2014 Debt Securitization had floating interest rate provisions based on three-
month LIBOR that reset quarterly. The Class A-1-R, A-2-R and B-R 2014 Notes issued in connection with the refinancing of the 2014 Debt Securitization
have floating rate interest provisions based on the three-month LIBOR that reset quarterly, as do the Class A, B and C-1 2018 Notes issued as part of the 2018
Debt Securitization and Class A-1 and B-1 GCIC 2018 Notes as issued as part of the GCIC 2018 Debt Securitization. The DB Credit Facility has an interest
rate equal to three-month LIBOR. Finally, the MS Credit Facility II and the WF Credit Facility have a floating interest rate provision primarily based on one-
month LIBOR. We expect that other credit facilities into which we enter in the future may have floating interest rate provisions.
Assuming that the Consolidated Statement of Financial Condition as of September 30, 2019 were to remain constant and that we took no actions to alter
interest rate sensitivity as of such date, the following table shows the annualized impact of hypothetical base rate changes in interest rates.
Change in interest rates
Down 25 basis points
Up 50 basis points
Up 100 basis points
Up 150 basis points
Up 200 basis points
Increase (decrease) in
interest income
Increase (decrease) in
interest expense
(In thousands)
Net increase
(decrease) in
investment income
$
(10,083)
$
20,291
40,584
60,875
81,168
(4,497) $
8,994
17,989
26,983
35,978
(5,586)
11,297
22,595
33,892
45,190
Although we believe that this analysis is indicative of our sensitivity to interest rate changes as of September 30, 2019, it does not adjust for changes in the
credit market, credit quality, the size and composition of the assets in our portfolio and other business developments, including borrowings under the Debt
Securitizations, the MS Credit Facility II, the DB Credit Facility, the WF Credit Facility or other borrowings, that could affect net increase in net assets
resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.
We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as interest rate swaps, futures, options and forward
contracts to the limited extent permitted under the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse
changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio
with fixed interest rates.
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Item 8. Consolidated Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Management’s Report on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Financial Condition as of September 30, 2019 and 2018
Consolidated Statements of Operations for the Years Ended September 30, 2019, 2018 and 2017
Consolidated Statements of Changes in Net Assets for the Years Ended September 30, 2019, 2018 and 2017
Consolidated Statements of Cash Flows for the Years Ended September 30, 2019, 2018 and 2017
Consolidated Schedules of Investments as of September 30, 2019 and 2018
Notes to the Consolidated Financial Statements
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105
106
110
111
112
113
115
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Management’s Report on Internal Control over Financial Reporting
The management of Golub Capital BDC, Inc. (“GBDC,” and collectively with its subsidiaries, the “Company,” “we,” “us,” “our” and “Golub Capital BDC”)
is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is a process designed to provide
reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.
Golub Capital BDC’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect transactions recorded necessary to permit the preparation of financial statements in accordance with U.S. generally
accepted accounting principles. Our policies and procedures also provide reasonable assurance that receipts and expenditures are being made only in
accordance with authorizations of management and the directors of Golub Capital BDC, and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide
only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness as to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Management assessed the effectiveness of Golub Capital BDC’s internal control over financial reporting as of September 30, 2019. In making this
assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated
Framework issued in 2013. Based on the assessment, management believes that, as of September 30, 2019, our internal control over financial reporting is
effective based on those criteria.
Golub Capital BDC’s independent registered public accounting firm that audited the financial statements has issued an audit report on the effectiveness of
our internal control over financial reporting as of September 30, 2019. This report appears on page 106.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Golub Capital BDC, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Golub Capital BDC, Inc. and Subsidiaries (the Company), including the
consolidated schedules of investments, as of September 30, 2019 and 2018, the related consolidated statements of operations, changes in net assets and cash
flows for each of the three years in the period ended September 30, 2019, and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September
30, 2019 and 2018, and the results of its operations, changes in its net assets, and its cash flows for each of the three years in the period ended September 30,
2019, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s
internal control over financial reporting as of September 30, 2019, based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 25, 2019 expressed an unqualified
opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included
confirmation of investments owned as of September 30, 2019 and 2018, by correspondence with the trustees or the underlying investee. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
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Valuation of investments using significant unobservable inputs and assumptions
Description of the
Matter
At September 30, 2019, the fair value of the Company’s investments categorized as Level 3 investments within the fair value
hierarchy (Level 3 investments) totaled $4,169,288 thousand. Management determines the fair value of the Company’s Level 3
investments by applying the methodologies outlined in Notes 2 and 6 to the consolidated financial statements and using significant
unobservable inputs and assumptions. Determining the fair value of the Level 3 investments requires management to make
judgments about the valuation methodologies (i.e., market approach or income approach) and significant unobservable inputs and
assumptions including, among others, EBITDA multiples, revenue multiples, and market interest rates for similar loans with
similar credit profiles, used in determining the fair value measurements.
Auditing the fair value of the Company’s Level 3 investments was complex, as the unobservable inputs and assumptions used by
the Company are highly judgmental and could have a significant effect on the fair value measurements of such investments.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s
investment valuation process. This included controls over management's assessment of the valuation methodologies and significant
unobservable inputs and assumptions used in determining the fair value measurements of the Level 3 investments.
Our audit procedures included, among others, evaluating the Company’s valuation methodologies, testing the significant
unobservable inputs and assumptions used by the Company in determining the fair value of the Company’s Level 3 investments,
and testing the mathematical accuracy of the Company’s valuation calculations. For each Level 3 investment, we reviewed the
information considered by the Board of Directors relating to the Company’s determination of fair value. For a sample of the
Company’s Level 3 investments, with the involvement of our valuation specialists, we independently developed fair value estimates
and compared them to the Company’s estimates. We developed our independent fair value estimates by using borrower financial
information, which we compared to agreements or underlying source documents provided to the Company by the borrowers, and
available market information from third-party sources, such as market spreads, market multiples, and leverage. We also evaluated
subsequent events and other available information and considered whether they corroborated or contradicted the Company’s year-
end valuations.
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Accounting for the Company’s acquisition of Golub Capital Investment Corporation
Description of the Matter On September 16, 2019, the Company completed its acquisition of Golub Capital Investment Corporation (GCIC), as disclosed
in Notes 2 and 14 to the consolidated financial statements. The transaction was accounted for as an asset acquisition with the
Company as the acquiring entity. The consideration paid to GCIC’s stockholders exceeded the fair value of GCIC’s net assets,
and the premium paid by the Company was allocated to the cost basis of GCIC’s assets acquired by the Company based on their
relative fair values. Because the Company is required to record its assets at their respective fair values, the purchase premium
allocated to the cost basis of the assets acquired from GCIC was immediately recognized as unrealized depreciation by the
Company.
Auditing the Company's accounting for its acquisition of GCIC was complex due to the nature of it being a significant unusual
transaction with a related party and the factors considered by the Company in determining that the transaction should be
accounted for as an asset acquisition with the Company being the acquiring entity. Auditing the fair value of the assets acquired
from GCIC was complex, as the unobservable inputs and assumptions used by the Company are highly judgmental and could
have a significant effect on the fair value measurements of such assets.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its
assessment of the accounting for the acquisition as an asset acquisition, as well as controls over management’s assessment of the
valuation methodologies and significant unobservable inputs and assumptions used in determining the fair value measurements
of the assets acquired from GCIC.
To test the Company’s accounting for its acquisition of GCIC, we performed audit procedures that included, among others,
assessing management’s conclusion that the transaction be treated as an asset acquisition with the Company as the acquiring
entity. We also inspected minutes of board of directors’ meetings, executed transaction agreements, and transfer agent
documentation to test the authorization and execution of the transaction and the related issuance of the Company’s shares to
GCIC’s stockholders. Additionally, we evaluated the Company’s measurement of the acquired assets, at fair value, at the
acquisition date and the related purchase premium, including the measurement of the unrealized depreciation on the acquired
assets. To test the fair value of the acquired assets, among other procedures, on a sample basis, with the involvement of our
valuation specialists, we independently developed fair value estimates and compared them to the Company’s estimates. We
developed our independent fair value estimates by using borrower financial information, which we compared to agreements or
underlying source documents provided to the Company by the borrowers, and available market information from third-party
sources, such as market spreads, market multiples, and leverage.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2015.
Chicago, Illinois
November 25, 2019
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Golub Capital BDC, Inc. and Subsidiaries
Opinion on Internal Control Over Financial Reporting
We have audited Golub Capital BDC, Inc. and Subsidiaries’ internal control over financial reporting as of September 30, 2019, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO
criteria). In our opinion, Golub Capital BDC, Inc. and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial
reporting as of September 30, 2019, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
statements of financial condition, including the consolidated schedules of investments, of the Company as of September 30, 2019 and 2018, the related
consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended September 30, 2019, and the related
notes and our report dated November 25, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chicago, Illinois
November 25, 2019
109
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(In thousands, except share and per share data)
Assets
Investments, at fair value
Non-controlled/non-affiliate company investments
Non-controlled affiliate company investments
Controlled affiliate company investments
Total investments, at fair value (amortized cost of $4,391,770 and $1,780,652, respectively)
Cash and cash equivalents
Foreign currencies (cost of $54 and $159, respectively)
Restricted cash and cash equivalents
Restricted foreign currencies (cost of $1,321 and $0, respectively)
Cash collateral held at broker for forward currency contracts
Interest receivable
Other assets
Total Assets
Liabilities
Debt
Less unamortized debt issuance costs
Debt less unamortized debt issuance costs
Unrealized depreciation on forward currency contracts
Interest payable
Management and incentive fees payable
Accounts payable and other liabilities
Accrued trustee fees
Total Liabilities
Commitments and Contingencies (Note 9)
Net Assets
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of
September 30, 2019 and September 30, 2018
Common stock, par value $0.001 per share, 200,000,000 shares authorized, 132,658,200 shares issued and
outstanding as of September 30, 2019; 100,000,000 shares authorized, 60,165,454 issued and outstanding as of
September 30, 2018
Paid in capital in excess of par
Distributable earnings
Total Net Assets
Total Liabilities and Total Net Assets
Number of common shares outstanding
Net asset value per common share
September 30, 2019
September 30, 2018
4,156,713 $
12,575
123,644
4,292,932
6,463
54
76,370
1,321
600
16,790
333
1,704,473
7,284
71,084
1,782,841
5,878
159
39,668
—
—
6,664
342
4,394,863 $
1,835,552
2,124,392 $
4,939
2,119,453
115
13,380
12,884
25,970
207
2,172,009
—
133
2,310,610
(87,889)
2,222,854
4,394,863 $
132,658,200
16.76 $
845,683
2,934
842,749
—
4,135
17,671
2,069
74
866,698
—
60
949,547
19,247
968,854
1,835,552
60,165,454
16.10
$
$
$
$
$
See Notes to Consolidated Financial Statements.
110
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share data)
Investment income
From non-controlled/non-affiliate company investments:
Interest income
Dividend income
Fee income
Total investment income from non-controlled/non-affiliate company investments
From non-controlled affiliate company investments:
Interest income
Fee income
Total investment income from non-controlled affiliate company investments
From controlled affiliate company investments:
Interest income
Dividend income
Total investment income from controlled affiliate company investments
Total investment income
Expenses
Interest and other debt financing expenses
Base management fee
Incentive fee
Professional fees
Administrative service fee
General and administrative expenses
Total expenses
Net investment income - before excise tax
Excise tax
Net investment income - after excise tax
Net gain (loss) on investment transactions
Net realized gain (loss) from:
Non-controlled/non-affiliate company investments
Non-controlled affiliate company investments
Foreign currency transactions
Net realized gain (loss) on investment transactions
Net change in unrealized appreciation (depreciation) from:
Non-controlled/non-affiliate company investments
Non-controlled affiliate company investments
Controlled affiliate company investments
Translation of assets and liabilities in foreign currencies
Forward currency contracts
Net change in unrealized appreciation (depreciation) on investment transactions
Net change in unrealized appreciation (depreciation) on secured borrowings
Net gain (loss) on investment transactions and secured borrowings
Net increase (decrease) in net assets resulting from operations
Per Common Share Data
Basic and diluted earnings (deficit) per common share
Dividends and distributions declared per common share
Basic and diluted weighted average common shares outstanding
Years ended September 30,
2019
2018
2017
$
168,689 $
140,267 $
127,674
349
1,279
624
2,514
629
1,757
170,317
143,405
130,060
751
11
762
—
1,219
1,219
667
—
667
—
8,099
8,099
1,136
—
1,136
1,639
4,929
6,568
172,298
152,171
137,764
43,531
27,872
8,902
2,636
2,682
603
86,226
86,072
—
86,072
33,174
24,214
13,110
2,721
2,456
475
76,150
76,021
—
76,021
(4,616)
17,454
—
174
—
82
(4,442)
17,536
(100,297)
(1,210)
480
685
133
(100,209)
—
(104,651)
(11,212)
1,506
(1,881)
—
—
(11,587)
—
5,949
$
$
$
(18,579) $
81,970 $
(0.29) $
1.40 $
1.37 $
1.36 $
31,534
23,815
7,560
2,396
2,340
556
68,201
69,563
17
69,546
15,844
(6,442)
—
9,402
(3,878)
5,246
1,969
—
—
3,337
3
12,742
82,288
1.45
1.53
63,430,034
59,803,208
56,913,064
See Notes to Consolidated Financial Statements.
111
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Statements of Changes in Net Assets
(In thousands, except share data)
Common Stock
Shares
Par Amount
Paid in Capital in
Excess of Par
Distributable
Earnings
Total Net Assets
Balance at September 30, 2016
Issuance of common stock, net of offering and underwriting costs
Net increase in net assets resulting from operations:
Net investment income - after excise tax
Net realized gain (loss) on investment transactions
Net change in unrealized appreciation (depreciation) on investment transactions
Distributions to stockholders:
Stock issued in connection with dividend reinvestment plan
Distributions from distributable earnings
Tax reclassification of stockholders' equity in accordance with generally accepted accounting
principles
Total increase (decrease) for the period ended September 30, 2017
Balance at September 30, 2017
Net increase in net assets resulting from operations:
Net investment income - after excise tax
Net realized gain (loss) on investment transactions
Net change in unrealized appreciation (depreciation) on investment transactions
Distributions to stockholders:
Stock issued in connection with dividend reinvestment plan
Distributions from distributable earnings
Tax reclassification of stockholders' equity in accordance with generally accepted accounting
principles
Total increase (decrease) for the period ended September 30, 2018
Balance at September 30, 2018
Issuance of common stock, net of offering and underwriting costs
Net increase (decrease) in net assets resulting from operations:
Net investment income - after excise tax
Net realized gain (loss) on investment transactions
Net change in unrealized appreciation (depreciation) on investment transactions
Distributions to stockholders:
Stock issued in connection with dividend reinvestment plan
Distributions from distributable earnings
Tax reclassification of stockholders' equity in accordance with generally accepted accounting
principles
878,825
73,614
69,546
9,402
3,340
9,662
(86,443)
—
79,121
957,946
76,021
17,536
55,059,067
$
3,982,721
55
4
$
855,998
$
22,772
$
73,610
—
—
—
—
535,505
—
—
—
—
—
1
—
—
4,518,226
59,577,293
$
5
60
$
—
—
—
9,661
—
38
83,309
69,546
9,402
3,340
—
(86,443)
(38)
(4,193)
939,307
$
18,579
$
—
—
—
588,161
—
—
588,161
60,165,454
$
71,779,964
—
—
—
712,782
—
—
—
—
—
—
—
—
—
$
60
72
—
—
—
1
—
—
—
—
—
10,245
—
(5)
10,240
949,547
$
1,345,085
—
—
—
12,046
—
3,932
1,361,063
76,021
17,536
(11,587)
(11,587)
—
(81,307)
5
668
19,247
$
—
86,072
(4,442)
10,245
(81,307)
—
10,908
968,854
1,345,157
86,072
(4,442)
(100,209)
(100,209)
—
(84,625)
(3,932)
(107,136)
12,047
(84,625)
—
1,254,000
2,222,854
$
2,310,610
$
(87,889)
$
Total increase (decrease) for the period ended September 30, 2019
Balance at September 30, 2019
72,492,746
132,658,200
$
73
133
See Notes to Consolidated Financial Statements.
112
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations
Adjustments to reconcile net increase (decrease) in net assets resulting from operations
to net cash (used in) provided by operating activities:
Amortization of deferred debt issuance costs
Accretion of discounts and amortization of premiums
Net realized (gain) loss on investments
Net realized (gain) loss on other short-term borrowings
Net realized (gain) loss on foreign currency and other transactions
Net change in unrealized (appreciation) depreciation on investments
Net change in unrealized (appreciation) depreciation on secured borrowings
Net change in unrealized (appreciation) depreciation on translation of assets and liabilities in foreign currencies
Net change in unrealized (appreciation) depreciation on forward currency contracts
Proceeds from (fundings of) revolving loans, net
Fundings of investments
Proceeds from principal payments and sales of portfolio investments
PIK interest
Cash acquired in merger
Changes in operating assets and liabilities:
Interest receivable
Other assets
Interest payable
Management and incentive fees payable
Accounts payable and other liabilities
Accrued trustee fees
Net cash (used in) provided by operating activities
Cash flows from financing activities
Borrowings on debt
Repayments of debt
Capitalized debt issuance costs
Proceeds from other short-term borrowings
Repayments on other short-term borrowings
Repayments on secured borrowings
Proceeds from shares sold, net of underwriting costs
Offering costs paid
Distributions paid(1)
Net cash provided by (used in) financing activities
Net change in cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign
currencies
Cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies,
beginning of period
Cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies,
end of period
Supplemental disclosure of cash flow information:
Cash paid during the period for interest
Taxes, including excise tax, paid during the period
Years ended September 30,
2019
2018
2017
$
(18,579)
$
81,970 $
82,288
2,096
(7,191)
4,616
(353)
(22)
101,027
—
(679)
(133)
(2,578)
(597,601)
366,957
(2,951)
27,153
13,770
(1,427)
1,762
(4,787)
292
(29)
(118,657)
1,358,608
(1,122,398)
(4,101)
25,325
(24,972)
—
—
—
(75,302)
157,160
38,503
45,705
3,315
(9,641)
(17,454)
(152)
—
11,587
—
—
—
7,235
(646,595)
558,664
(1,622)
—
(393)
(10)
335
4,456
(243)
(2)
(8,550)
760,450
(695,867)
(1,976)
9,511
(9,359)
—
—
—
(71,062)
(8,303)
(16,853)
62,558
$
$
84,208
$
45,705 $
39,653
$
29,523 $
—
—
3,289
(9,495)
(9,402)
—
—
(3,337)
(3)
—
—
(331)
(588,169)
588,173
(1,839)
—
(336)
90
571
452
240
4
62,195
545,000
(628,600)
(1,935)
—
—
(475)
74,014
(400)
(76,781)
(89,177)
(26,982)
89,540
62,558
27,662
17
See Notes to Consolidated Financial Statements.
113
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Statements of Cash Flows - (continued)
(In thousands)
Distributions declared during the period
Supplemental disclosure of non-cash operating and financing activities:
84,625
81,307
86,443
Funding of limited liability company (“LLC”) equity interests in Senior Loan Fund LLC (“SLF”)
$
— $
Proceeds from subordinated notes in SLF principal payment
Proceeds from issuance of Class A-1-R, Class A-2-R, and Class B-R 2014 Notes
Redemptions of Class A-1, Class A-2, and Class B 2014 Notes
Proceeds from issuance of Class A-Refi 2010 Notes
Redemption of Class A and Class B 2010 Notes
Stock issued in connection with dividend reinvestment plan
Acquisition of subsidiaries(2)
Noncash assets acquired:
Investments, at cost
Cash collateral held at broker for forward currency contracts
Interest receivable
Other assets
Total noncash assets purchased
Liabilities assumed:
Debt
Interest payable
Unrealized depreciation on forward currency contracts
Distributions payable
Accounts payable and other liabilities
Accrued trustee fees
Total liabilities assumed
Issuance of common stock
Merger costs capitalized into purchase price
—
—
—
—
—
12,047
— $
—
246,000
(246,000)
—
—
10,245
(78,689)
78,689
—
—
205,000
(205,000)
9,662
$
2,372,370
$
— $
600
23,896
158
2,397,024
1,043,200
7,483
248
2,722
22,254
162
1,076,069
$
1,345,157
$
2,950
—
—
—
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The following table provides a reconciliation of cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies reported within the Consolidated
Statements of Financial Condition that sum to the total of the same such amounts in the Consolidated Statements of Cash Flows:
Cash and cash equivalents
Foreign currencies (cost of $54 and $159, respectively)
Restricted cash and cash equivalents
Restricted foreign currencies (cost of $1,321 and $0, respectively)
Total cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies shown
in the Consolidated Statements of Cash Flows (3)
As of September 30,
2019
2018
6,463
$
54
76,370
1,321
84,208
$
5,878
159
39,668
—
45,705
$
$
(1)
Includes payment of $2,722 distribution payable to GCIC shareholders that was assumed in the Merger (defined in Note 1). Also includes payment of $2 to GCIC shareholders in lieu of
fractional shares of our common stock as a result of the Merger.
(2) Refer to Note 14 for more information related to our acquisition of GCIC.
(3) See Note 2. Significant Accounting Policies and Recent Accounting Updates for a description of cash and cash equivalents, foreign currencies, restricted cash and cash equivalents and restricted
foreign currencies.
See Notes to Consolidated Financial Statements.
114
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Investments
Non-controlled/non-affiliate company investments
Debt investments
Aerospace and Defense
ILC Dover, LP#+!~
NTS Technical Systems^*#+!~
NTS Technical Systems#+!~
NTS Technical Systems(5)
Tronair Parent, Inc.^+
Tronair Parent, Inc.
Whitcraft LLC^*+
Whitcraft LLC
Whitcraft LLC(5)
Automobile
Dent Wizard International Corporation#+!~
Grease Monkey International, LLC^*
Grease Monkey International, LLC#!~
Grease Monkey International, LLC#!~
Grease Monkey International, LLC#+!~
Grease Monkey International, LLC
Grease Monkey International, LLC
JHCC Holdings LLC
JHCC Holdings LLC
JHCC Holdings LLC(5)
Polk Acquisition Corp.*
Polk Acquisition Corp.
Power Stop, LLC#+!~
Quick Quack Car Wash Holdings, LLC*
Quick Quack Car Wash Holdings, LLC*
Quick Quack Car Wash Holdings, LLC
Quick Quack Car Wash Holdings, LLC*
Quick Quack Car Wash Holdings, LLC
Beverage, Food and Tobacco
Abita Brewing Co., L.L.C.+
Abita Brewing Co., L.L.C.(5)
BJH Holdings III Corp.#+!~
BJH Holdings III Corp.
C. J. Foods, Inc.^*
C. J. Foods, Inc.^
C. J. Foods, Inc.
Cafe Rio Holding, Inc.^
Cafe Rio Holding, Inc.
Cafe Rio Holding, Inc.*
Cafe Rio Holding, Inc.
Senior loan
One stop
One stop
One stop
Senior loan
Senior loan
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 4.75% (a)(c)(d)
L + 6.25% (a)(c)
L + 6.25% (a)(c)
L + 6.25%
L + 4.75% (c)
L + 4.50% (c)(f)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50%
L + 4.00% (a)
L + 5.00% (a)
L + 5.00% (a)
L + 5.00% (a)
L + 5.00% (a)
L + 5.00% (a)
L + 5.00% (a)
L + 5.50% (c)
L + 5.50% (a)
L + 5.50%
L + 5.25% (a)
L + 5.25% (a)
L + 4.75% (c)
L + 6.50% (a)
L + 6.50% (a)
L + 6.50% (a)(c)
L + 6.50% (a)
L + 6.50% (a)
L + 5.75% (c)
L + 5.75%
L + 5.75% (a)
L + 5.75% (a)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (a)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75% (c)
6.94%
8.35%
8.35%
N/A(6)
6.93%
6.96%
7.60%
7.60%
N/A(6)
6.05%
7.04%
7.04%
7.04%
7.04%
7.04%
7.04%
7.60%
7.54%
N/A(6)
7.29%
7.29%
6.85%
8.54%
8.54%
8.55%
8.54%
8.55%
7.87%
N/A(6)
7.79%
7.79%
8.35%
8.35%
8.30%
7.95%
7.95%
7.95%
7.95%
12/2023
$
6,617
$
06/2021
06/2021
06/2021
09/2023
09/2021
04/2023
04/2023
04/2023
04/2022
11/2022
11/2022
11/2022
11/2022
11/2022
11/2022
09/2025
09/2025
09/2025
06/2022
06/2022
10/2025
04/2023
04/2023
04/2023
04/2023
04/2023
04/2021
04/2021
08/2025
08/2025
05/2020
05/2020
05/2020
09/2023
09/2023
09/2023
09/2023
25,650
4,210
—
726
160
42,099
8,300
—
6,583
25,611
4,201
(40)
717
157
43,102
8,292
(1)
87,762
88,622
12,338
12,498
7,834
2,394
1,215
1,100
126
110
7,934
2,494
1,267
1,144
130
111
15,788
15,475
10
—
5,185
30
2,871
9
(3)
5,307
31
2,935
13,218
13,345
2,084
1,822
1,392
80
2,169
1,897
1,450
82
67,597
68,275
9,983
10,051
—
(1)
46,400
48,003
160
151
29,179
30,052
2,207
592
2,275
636
18,801
19,065
2,270
1,442
1,273
2,367
1,503
1,327
0.3 % $
6,617
1.2
0.2
—
—
—
1.9
0.4
—
4.0
0.6
0.4
0.1
0.1
0.1
—
—
0.7
—
—
0.2
—
0.1
0.6
0.1
0.1
0.1
—
3.2
0.5
—
2.1
—
1.3
0.1
—
0.9
0.1
0.1
0.1
25,650
4,210
—
682
148
42,099
8,300
—
87,706
12,338
7,834
2,394
1,215
1,100
126
110
15,630
9
(3)
5,081
30
2,871
13,218
2,084
1,822
1,392
80
67,331
9,882
(2)
45,936
152
29,179
2,207
592
18,801
2,270
1,442
1,273
See Notes to Consolidated Financial Statements.
115
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Beverage, Food and Tobacco - (continued)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Cafe Rio Holding, Inc.
Cafe Rio Holding, Inc.
Cafe Rio Holding, Inc.
Fintech Midco, LLC*
Fintech Midco, LLC
Fintech Midco, LLC(5)
Fintech Midco, LLC(5)
Flavor Producers, LLC#!~
Flavor Producers, LLC(5)
FWR Holding Corporation^
FWR Holding Corporation
FWR Holding Corporation
FWR Holding Corporation
FWR Holding Corporation
FWR Holding Corporation
FWR Holding Corporation
Global ID Corporation*#+!~
Global ID Corporation*
Global ID Corporation
Global ID Corporation
Global ID Corporation
Global ID Corporation
Mendocino Farms, LLC
Mendocino Farms, LLC
Mendocino Farms, LLC(5)
Mid-America Pet Food, L.L.C.^*
Mid-America Pet Food, L.L.C.
NBC Intermediate, LLC#+!~
NBC Intermediate, LLC*
NBC Intermediate, LLC^
NBC Intermediate, LLC
Purfoods, LLC
Purfoods, LLC
Purfoods, LLC^
Purfoods, LLC#!~
Purfoods, LLC#!~
Purfoods, LLC*
Purfoods, LLC
Purfoods, LLC
Purfoods, LLC
Purfoods, LLC^
Purfoods, LLC
Purfoods, LLC^
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 5.75% (c)
L + 5.75% (c)
P + 4.75% (f)
L + 5.25% (a)
L + 5.25% (a)
L + 5.25%
L + 5.25%
L + 4.75% (c)
L + 4.75%
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50%
L + 6.50% (c)
L + 6.50% (c)
L + 6.50% (c)
L + 6.50% (c)
L + 6.50%
L + 6.50%
L + 8.50% (a)
L + 8.50% (a)
L + 1.00%
L + 6.00% (c)
L + 6.00%
L + 4.25% (a)(c)
L + 4.25% (c)
L + 4.25% (c)
L + 4.25%
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
N/A
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (a)(c)
L + 5.50% (c)
7.85%
0.0785
0.0975
7.30%
7.30%
N/A(6)
N/A(6)
6.85%
N/A(6)
7.55%
7.55%
7.55%
7.55%
7.55%
7.55%
N/A(6)
8.60%
8.60%
8.60%
8.60%
N/A(6)
N/A(6)
09/2023
$
09/2023
09/2023
08/2024
08/2024
08/2024
08/2024
12/2023
12/2022
08/2023
08/2023
08/2023
08/2023
08/2023
08/2023
08/2023
11/2021
11/2021
11/2021
11/2021
11/2021
11/2021
3.04% cash/7.50% PIK
06/2023
3.04% cash/7.50% PIK
06/2023
N/A(6)
8.10%
N/A(6)
6.40%
6.45%
6.45%
N/A(6)
7.62%
7.60%
7.60%
7.60%
7.60%
7.60%
7.59%
7.00% PIK
7.60%
7.60%
7.57%
7.60%
06/2023
12/2021
12/2021
09/2023
09/2023
09/2023
09/2023
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2026
05/2021
05/2021
05/2021
05/2021
$
335
183
60
24,661
1,142
—
—
5,031
—
9,203
1,839
1,163
368
275
332
183
61
25,093
1,190
(1)
(1)
4,903
(6)
9,334
1,916
1,211
381
285
34
—
33
—
11,798
12,028
821
719
494
—
—
767
604
—
854
749
513
—
—
799
628
(1)
22,514
22,992
—
—
2,365
2,309
2,024
2,402
2,346
2,010
—
—
16,176
16,457
543
391
296
296
295
253
241
149
48
40
30
564
407
307
307
307
257
246
155
48
41
30
See Notes to Consolidated Financial Statements.
116
— % $
—
—
1.1
0.1
—
—
0.2
—
0.4
0.1
0.1
—
—
—
—
0.5
—
—
—
—
—
—
—
—
1.0
—
0.1
0.1
0.1
—
0.7
—
—
—
—
—
—
—
—
—
—
—
335
183
60
24,661
1,142
—
—
4,630
(10)
9,203
1,839
1,163
368
275
34
—
11,798
821
719
494
—
—
767
604
—
22,514
—
2,365
2,309
2,024
—
16,176
543
391
296
296
295
253
241
149
48
40
30
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Beverage, Food and Tobacco - (continued)
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC^
Rubio's Restaurants, Inc.^*
Rubio's Restaurants, Inc.
Wood Fired Holding Corp.*
Wood Fired Holding Corp.
Wood Fired Holding Corp.
Broadcasting and Entertainment
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
One stop
One stop
One stop
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 7.00% (c)
L + 7.00% (a)(f)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75%
7.60%
7.60%
7.60%
7.60%
7.60%
9.1%
9.62%
8.06%
7.85%
N/A(6)
05/2021
$
05/2021
05/2021
05/2021
05/2021
10/2019
10/2019
12/2023
12/2023
12/2023
$
30
28
22
22
20
30
28
22
22
20
11,349
11,330
90
91
14,180
14,451
40
—
39
—
$
—
—
—
—
—
0.5
—
0.6
—
—
30
28
22
22
20
11,349
90
14,180
40
—
245,555
250,822
10.8
244,569
TouchTunes Interactive Networks, Inc.^+
Senior loan
L + 4.75% (a)
6.79%
05/2021
2,108
2,136
0.1
2,108
Buildings and Real Estate
Brooks Equipment Company, LLC^*
Brooks Equipment Company, LLC*
Brooks Equipment Company, LLC(5)
Jensen Hughes, Inc.
Jensen Hughes, Inc.+
Jensen Hughes, Inc.
Jensen Hughes, Inc.+
MRI Software LLC^
MRI Software LLC^*+
MRI Software LLC#+!~
MRI Software LLC
MRI Software LLC
MRI Software LLC^
MRI Software LLC#+!~
MRI Software LLC
MRI Software LLC^
MRI Software LLC#!~
MRI Software LLC*
MRI Software LLC*
MRI Software LLC#!~
MRI Software LLC(5)
MRI Software LLC(5)
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Paradigm DKD Group, LLC+(7)
Paradigm DKD Group, LLC(5)(7)
Senior loan
Senior loan
L + 5.00% (c)
L + 5.00% (b)(c)
L + 5.00%
L + 4.50% (a)(f)
L + 4.50% (a)(f)
L + 4.50% (a)(f)
L + 4.50% (a)(c)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75%
L + 5.75%
L + 6.25% (c)
L + 6.25% (c)
Chemicals, Plastics and Rubber
Flexan, LLC*
Flexan, LLC^
Flexan, LLC
Inhance Technologies Holdings LLC
Inhance Technologies Holdings LLC
One stop
One stop
One stop
One stop
One stop
L + 5.75% (c)
L + 5.75% (c)
P + 4.50% (f)
L + 5.25% (c)
L + 5.25% (c)
7.12%
7.13%
N/A(6)
6.55%
6.55%
6.55%
6.54%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
N/A(6)
N/A(6)
8.35%
N/A(6)
7.85%
7.85%
9.50%
7.57%
7.57%
08/2020
08/2020
08/2020
03/2024
03/2024
03/2024
03/2024
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
05/2022
05/2022
02/2020
02/2020
02/2020
07/2024
07/2024
26,730
26,930
668
—
671
(3)
1,015
1,058
923
443
283
41,896
30,692
7,601
6,561
4,604
3,231
2,068
1,207
696
292
292
192
97
—
—
1,654
—
940
462
287
42,320
31,364
7,834
6,841
4,793
3,369
2,157
1,256
708
289
290
191
96
(2)
(2)
1,207
(64)
131,145
132,992
3,306
1,556
30
3,345
1,575
31
12,832
12,982
855
890
1.2
—
—
0.1
—
—
—
1.9
1.4
0.3
0.3
0.2
0.1
0.1
0.1
—
—
—
—
—
—
—
0.1
—
5.8
0.1
0.1
—
0.6
—
26,730
668
—
1,015
923
443
283
41,896
30,692
7,601
6,561
4,604
3,231
2,068
1,207
696
292
292
192
97
—
—
1,183
(64)
130,610
3,306
1,556
30
12,832
855
See Notes to Consolidated Financial Statements.
117
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Chemicals, Plastics and Rubber - (continued)
Inhance Technologies Holdings LLC
One stop
P + 4.25% (f)
9.25%
07/2024
$
100
$
100
— % $
100
18,679
18,923
0.8
18,679
04/2026
04/2026
04/2024
05/2025
05/2025
05/2023
04/2020
04/2020
13,149
13,494
598
70
620
68
12,120
12,267
991
306
1,030
311
15,885
15,399
610
581
07/2025
13,702
13,973
07/2023
08/2022
07/2022
07/2022
07/2022
07/2022
07/2022
07/2022
07/2022
03/2025
03/2025
03/2025
03/2025
03/2025
03/2025
03/2025
03/2025
03/2025
03/2025
03/2025
03/2024
8
3,309
27,295
2,366
1,732
1,561
1,283
1,104
503
8
3,320
27,634
2,457
1,805
1,627
1,333
1,147
523
15,724
15,898
1,822
1,768
1,724
1,664
1,605
1,496
1,225
675
66
60
—
1,897
1,837
1,795
1,704
1,671
1,556
1,247
701
67
62
(2)
0.6
—
—
0.5
0.1
—
0.6
—
0.6
—
0.1
1.2
0.1
0.1
0.1
0.1
0.1
—
0.7
0.1
0.1
0.1
0.1
0.1
0.1
0.1
—
—
—
—
13,149
598
70
12,120
991
306
14,295
530
13,702
8
3,211
27,295
2,366
1,732
1,561
1,283
1,104
503
15,724
1,822
1,768
1,724
1,664
1,605
1,496
1,225
675
66
60
—
124,421
126,030
5.6
122,653
6.6%
6.60%
6.6%
6.1%
6.1%
6.10%
8.54%
8.55%
6.04%
6.09%
7.26%
7.32%
7.32%
7.10%
7.32%
7.32%
7.32%
7.32%
8.29%
8.29%
8.29%
8.29%
8.29%
8.29%
8.29%
8.29%
8.29%
8.29%
8.29%
N/A(6)
7.81%
N/A(6)
Diversified/Conglomerate Manufacturing
Blackbird Purchaser, Inc.#+!~
Blackbird Purchaser, Inc.
Blackbird Purchaser, Inc.
Chase Industries, Inc.#+!~
Chase Industries, Inc.
Chase Industries, Inc.
Inventus Power, Inc.^*+
Inventus Power, Inc.
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
L + 4.50% (c)(f)
L + 4.50% (c)(f)
L + 4.50% (c)
L + 4.00% (c)(f)
L + 4.00% (c)
L + 4.00% (c)(f)
L + 6.50% (a)
L + 6.50% (a)
Pasternack Enterprises, Inc. and Fairview Microwave,
Inc#+!~
Senior loan
L + 4.00% (a)(f)
Pasternack Enterprises, Inc. and Fairview Microwave,
Inc
PetroChoice Holdings, Inc.^
Reladyne, Inc.^*
Reladyne, Inc.
Reladyne, Inc.
Reladyne, Inc.
Reladyne, Inc.^
Reladyne, Inc.#!~
Reladyne, Inc.#!~
Togetherwork Holdings, LLC*
Togetherwork Holdings, LLC#+!~
Togetherwork Holdings, LLC
Togetherwork Holdings, LLC*
Togetherwork Holdings, LLC#+!~
Togetherwork Holdings, LLC*+
Togetherwork Holdings, LLC
Togetherwork Holdings, LLC*
Togetherwork Holdings, LLC
Togetherwork Holdings, LLC
Togetherwork Holdings, LLC#!~
Togetherwork Holdings, LLC(5)
Diversified/Conglomerate Service
3ES Innovation, Inc.#+!~(8)(12)
3ES Innovation, Inc.(5)(8)(12)
Accela, Inc.*
Accela, Inc.
Accela, Inc.
Agility Recovery Solutions Inc.^*
Agility Recovery Solutions Inc.
Apptio, Inc.#!~
Apptio, Inc.(5)
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Arch Global CCT Holdings Corp.#+!~
Senior loan
L + 4.00% (b)
L + 5.00% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25% (a)
L + 6.25%
L + 5.75% (c)(d)
L + 5.75%
L + 8.75% (a)
L + 8.75% (a)
L + 8.75% (a)
L + 6.00% (e)
L + 6.00% (a)(c)
L + 7.25% (c)
L + 7.25%
L + 4.75% (a)(f)
05/2025
05/2025
13,900
14,196
—
(2)
5.29% cash/5.50% PIK
09/2023
11,933
11,983
5.29% cash/5.50% PIK
09/2023
5.29% cash/5.50% PIK
09/2023
8.02%
8.10%
9.56%
N/A(6)
6.79%
03/2023
03/2023
01/2025
01/2025
04/2026
996
104
1,003
104
22,708
22,869
201
196
57,009
57,889
—
3,853
(2)
3,896
0.6
—
0.5
—
—
1.0
—
2.6
—
0.2
13,900
—
11,695
976
102
22,708
201
57,009
—
3,853
See Notes to Consolidated Financial Statements.
118
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
Arch Global CCT Holdings Corp.
Arch Global CCT Holdings Corp.
Astute Holdings, Inc.
Astute Holdings, Inc.
Astute Holdings, Inc.(5)
AutoQuotes, LLC
AutoQuotes, LLC
Axiom Merger Sub Inc.#!~
Axiom Merger Sub Inc.#+!~(8)(9)
Axiom Merger Sub Inc.(5)
Axiom Merger Sub Inc.(5)
Bazaarvoice, Inc.*#+!~
Bazaarvoice, Inc.(5)
Bearcat Buyer, Inc.#+!~
Bearcat Buyer, Inc.#!~
Bearcat Buyer, Inc.
Bearcat Buyer, Inc.
Bullhorn, Inc.#!~
Bullhorn, Inc.#!~
Calabrio, Inc.#!~
Calabrio, Inc.
Caliper Software, Inc.#!~
Caliper Software, Inc.
Centrify Corporation*
Centrify Corporation
Clearwater Analytics, LLC^*
Clearwater Analytics, LLC+
Clearwater Analytics, LLC(5)
Cloudbees, Inc.
Cloudbees, Inc.
Cloudbees, Inc.
Confluence Technologies, Inc.
Confluence Technologies, Inc.(5)
Connexin Software, Inc.#!~
Connexin Software, Inc.
Conservice, LLC#+!~
Conservice, LLC
Daxko Acquisition Corporation^*
Daxko Acquisition Corporation(5)
Digital Guardian, Inc.
Digital Guardian, Inc.
Digital Guardian, Inc.
Digital Guardian, Inc.
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 4.75%
L + 4.75%
L + 6.00% (a)
L + 6.00% (a)
L + 6.00%
L + 5.75% (c)
L + 5.75%
L + 5.50% (b)(c)
E + 5.75% (g)
L + 5.50%
L + 5.50%
L + 5.75% (a)
L + 5.75%
L + 4.25% (c)
L + 4.25% (c)
L + 4.25% (c)
L + 4.25%
L + 6.75% (b)
L + 6.75% (b)
L + 6.50% (c)
L + 6.50% (a)(c)
L + 6.00% (c)(f)
L + 6.00% (c)
L + 6.25% (c)
P + 5.25% (f)
L + 7.00% (c)
L + 7.00% (c)
L + 7.00%
L + 9.00% (a)(c)
L + 9.00% (a)
L + 8.50%
L + 5.50% (a)
L + 5.50%
L + 8.50% (a)
L + 8.50%
L + 5.25% (a)
L + 5.25%
L + 4.75% (a)
L + 4.75%
L + 9.50% (c)
Subordinated debt
One stop
One stop
N/A
L + 6.50%
L + 5.00%
DISA Holdings Acquisition Subsidiary Corp.#+!~
Senior loan
DISA Holdings Acquisition Subsidiary Corp.
Senior loan
P + 3.00% (c)(f)
L + 4.00% (a)(c)(f)
N/A(6)
N/A(6)
8.04%
8.04%
N/A(6)
7.88%
N/A(6)
7.85%
5.75%
N/A(6)
N/A(6)
7.79%
N/A(6)
6.35%
6.35%
6.35%
N/A(6)
8.91%
8.91%
8.60%
8.54%
8.10%
8.10%
8.36%
10.25%
9.20%
9.22%
N/A(6)
04/2025
$
04/2026
04/2025
04/2025
04/2025
11/2024
11/2024
04/2026
04/2026
04/2026
04/2026
02/2024
02/2024
07/2026
07/2026
07/2026
07/2024
11/2022
11/2022
06/2025
06/2025
11/2025
11/2023
08/2024
08/2024
09/2022
07/2025
09/2022
10.60% cash/0.50% PIK
05/2023
10.54% cash/0.50% PIK
08/2021
N/A(6)
7.55%
N/A(6)
10.54%
N/A(6)
7.29%
N/A(6)
6.79%
N/A(6)
05/2023
03/2024
03/2024
02/2024
02/2024
12/2024
12/2024
09/2023
09/2023
— $
—
—
—
— % $
—
10,935
11,132
40
—
39
(2)
9,888
10,056
—
—
5,906
2,442
—
—
5,969
2,467
(1)
(3)
48,613
49,581
—
2,957
312
166
—
5,082
1,217
9,880
84
(3)
2,983
309
167
—
5,094
1,220
10,058
84
26,137
26,698
284
287
23,375
23,422
300
16,458
6,102
—
4,193
1,462
300
16,452
6,134
(4)
4,240
1,482
—
—
15,470
15,741
—
7,550
—
(1)
7,637
—
3,794
3,870
—
—
22,173
22,490
—
(1)
8,855
6
18
—
5,228
19
—
—
10,935
40
—
9,888
—
5,906
2,378
—
—
48,613
—
2,928
309
162
—
5,132
1,229
9,880
84
26,137
284
22,674
292
16,458
6,102
—
4,172
1,421
—
15,470
—
7,475
—
3,794
—
22,173
—
8,896
8
19
—
5,107
20
0.5
—
—
0.4
—
0.3
0.1
—
—
2.2
—
0.1
—
—
—
0.2
0.1
0.4
—
1.2
—
1.0
—
0.7
0.3
—
0.2
0.1
—
0.7
—
0.3
—
0.2
—
1.0
—
0.4
—
—
—
0.2
—
8.82% cash/3.00% PIK
06/2023
8,470
8.00% PIK
N/A(6)
N/A(6)
7.09%
6.04%
06/2023
06/2023
06/2023
06/2022
06/2022
8
—
—
5,107
20
See Notes to Consolidated Financial Statements.
119
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
06/2022
$
— $
4
— % $
—
Diversified/Conglomerate Service - (continued)
DISA Holdings Acquisition Subsidiary Corp.
Senior loan
E2open, LLC*#+!~
E2open, LLC(5)
EGD Security Systems, LLC^*
EGD Security Systems, LLC
EGD Security Systems, LLC(5)
EGD Security Systems, LLC(5)
GS Acquisitionco, Inc.*#+!~
GS Acquisitionco, Inc.*
GS Acquisitionco, Inc.
GS Acquisitionco, Inc.#+!~
GS Acquisitionco, Inc.
GS Acquisitionco, Inc.
GS Acquisitionco, Inc.
HealthcareSource HR, Inc.*
HealthcareSource HR, Inc.(5)
HSI Halo Acquisition, Inc.#+!~
HSI Halo Acquisition, Inc.
HSI Halo Acquisition, Inc.(5)
Hydraulic Authority III Limited#!~(8)(9)(10)
Hydraulic Authority III Limited(8)(9)(10)
Hydraulic Authority III Limited(8)(9)(10)
ICIMS, Inc.#!~
ICIMS, Inc.#!~
ICIMS, Inc.(5)
III US Holdings, LLC
Imprivata, Inc.*#+!~
Imprivata, Inc.(5)
Infogix, Inc.*
Infogix, Inc.*+
Infogix, Inc.
Integral Ad Science, Inc.#!~
Integral Ad Science, Inc.(5)
Integration Appliance, Inc.^*#!~
Integration Appliance, Inc.
Internet Truckstop Group LLC*
Internet Truckstop Group LLC(5)
Invoice Cloud, Inc.
Invoice Cloud, Inc.
Invoice Cloud, Inc.(5)
JAMF Holdings, Inc.#!~
JAMF Holdings, Inc.
Kareo, Inc.
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 4.00%
L + 5.75% (c)
L + 5.75%
L + 5.75% (c)
L + 5.75% (b)(c)
L + 5.75%
L + 5.75%
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.25% (c)
L + 5.25%
L + 5.75% (c)
L + 5.75%
L + 5.75%
L + 6.00% (i)(j)
N/A
L + 6.00% (i)
L + 6.50% (a)
L + 6.50% (a)
L + 6.50%
L + 6.00%
L + 4.00% (c)
L + 4.00%
L + 6.50% (c)
L + 6.50% (c)
L + 6.50% (c)
L + 7.25% (a)
L + 6.00%
L + 7.25% (c)
L + 7.25% (a)
L + 5.50% (c)
L + 5.50%
L + 6.50% (c)
L + 6.00%
L + 6.00%
L + 7.00% (c)
L + 7.00% (a)
L + 9.00% (a)
N/A(6)
7.87%
N/A(6)
8.06%
8.06%
N/A(6)
N/A(6)
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.80%
7.35%
N/A(6)
7.87%
N/A(6)
N/A(6)
7.00%
11.00% PIK
8.10%
8.56%
8.56%
N/A(6)
N/A(6)
6.10%
N/A(6)
8.60%
8.60%
8.60%
11/2024
11/2024
06/2023
06/2023
06/2023
06/2023
05/2024
05/2024
05/2024
05/2024
05/2024
05/2024
05/2024
05/2023
05/2023
08/2026
09/2025
08/2026
11/2025
11/2028
11/2025
09/2024
09/2024
09/2024
09/2022
10/2023
10/2023
04/2024
04/2024
04/2024
86,772
87,841
—
(6)
30,092
30,588
644
—
—
54,564
12,886
3,320
3,064
1,918
52
11
669
(2)
(2)
55,059
13,268
3,419
3,155
1,976
50
10
34,095
34,208
—
4,133
—
—
(2)
4,187
—
(6)
12,439
12,686
179
24
14,355
4,501
184
24
14,597
4,595
—
—
(1)
—
13,185
13,427
—
7,252
1,119
28
(1)
7,419
1,140
27
8.05% cash/1.25% PIK
07/2024
14,751
15,006
5.43% cash/3.25% PIK
02/2024
6,309
N/A(6)
9.43%
9.29%
7.61%
N/A(6)
07/2023
08/2023
08/2023
04/2025
04/2025
N/A(6)
N/A(6)
9.18%
9.05%
11.04%
02/2024
02/2024
11/2022
11/2022
06/2022
—
(3)
68,335
69,389
487
482
22,816
23,521
—
—
—
(3)
6,360
—
(1)
13,559
13,806
36
36
10,273
10,453
See Notes to Consolidated Financial Statements.
120
3.9
—
1.4
—
—
—
2.4
0.6
0.1
0.1
0.1
—
—
1.5
—
0.2
—
—
0.5
—
—
0.7
0.2
—
—
0.6
—
0.3
0.1
—
0.7
—
3.1
—
1.0
—
0.3
—
—
0.6
—
0.5
86,772
—
30,092
644
—
—
53,881
12,725
3,279
3,025
1,895
50
9
34,095
—
4,092
—
(7)
12,102
175
24
14,355
4,501
—
—
13,185
—
7,107
1,096
26
14,751
(4)
68,335
487
22,816
—
6,309
—
—
13,559
36
10,350
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Diversified/Conglomerate Service - (continued)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Kareo, Inc.
Kareo, Inc.
Kareo, Inc.
Kaseya Traverse Inc*
Kaseya Traverse Inc
Kaseya Traverse Inc
Keais Records Service, LLC
Keais Records Service, LLC(5)
Keais Records Service, LLC
Learn-it Systems, LLC
Learn-it Systems, LLC
Learn-it Systems, LLC
Litera Bidco LLC#+!~
Litera Bidco LLC
Litera Bidco LLC
Litera Bidco LLC
Maverick Bidco Inc.*#!~
Maverick Bidco Inc.*
Maverick Bidco Inc.
MetricStream, Inc.
MetricStream, Inc.
MetricStream, Inc.
Mindbody, Inc.#!~
Mindbody, Inc.(5)
Ministry Brands, LLC+
Ministry Brands, LLC+
Ministry Brands, LLC
MMan Acquisition Co.^*+
Namely, Inc.#!~
Namely, Inc.
Namely, Inc.(5)
Net Health Acquisition Corp.*
Net Health Acquisition Corp.#+!~
Net Health Acquisition Corp.*
Net Health Acquisition Corp.(5)
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Netsmart Technologies, Inc.(5)
Senior loan
Nextech Holdings, LLC#+!~
Nextech Holdings, LLC
Nextech Holdings, LLC(5)
Nexus Brands Group, Inc.*
Nexus Brands Group, Inc.#+!~(8)(9)
Nexus Brands Group, Inc.
Nexus Brands Group, Inc.#!~
Nexus Brands Group, Inc.
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 9.00% (a)
L + 9.00% (a)
L + 9.00%
L + 6.50% (c)(d)
L + 6.50% (c)(d)
L + 6.50% (c)
L + 4.50% (a)
L + 4.50%
L + 4.50%
L + 4.50% (c)
L + 4.50% (c)
L + 4.50% (a)(c)(f)
L + 5.75% (c)(d)
L + 5.75% (c)(d)
L + 5.75% (c)(d)
L + 5.75%
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 7.00% (a)
L + 7.00%
L + 7.00%
L + 7.00% (a)
L + 7.00%
L + 4.00% (a)
L + 4.00% (a)
L + 4.00% (a)
L + 3.50% (c)
L + 7.50% (a)
L + 6.25%
L + 6.25%
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50%
L + 4.75%
L + 5.50% (a)
L + 5.50% (a)
L + 5.50%
L + 6.00% (c)
N/A
L + 6.00% (c)
L + 6.00% (c)
L + 6.00% (a)(c)
11.04%
11.04%
N/A(6)
06/2022
$
06/2022
06/2022
940
$
753
—
963
772
—
— % $
—
—
7.72% cash/1.00% PIK
05/2025
33,149
34,346
7.69% cash/1.00% PIK
05/2025
8.60%
6.54%
N/A(6)
N/A(6)
6.65%
6.61%
7.04%
7.95%
7.96%
7.96%
N/A(6)
8.35%
8.35%
8.55%
9.04%
N/A(6)
N/A(6)
9.06%
N/A(6)
6.04%
6.04%
6.04%
05/2025
10/2024
10/2024
10/2024
03/2025
03/2025
03/2025
05/2026
05/2026
05/2026
05/2025
04/2023
04/2023
04/2023
05/2024
05/2024
04/2024
02/2025
02/2025
12/2022
12/2022
12/2022
3.26% cash/2.50% PIK
08/2023
6.25% cash/1.25% PIK
06/2024
N/A(6)
N/A(6)
7.60%
7.60%
7.60%
N/A(6)
N/A(6)
7.54%
7.54%
N/A(6)
8.12%
7.00%
8.10%
8.10%
8.13%
06/2024
06/2024
12/2023
12/2023
12/2023
12/2023
04/2021
06/2025
06/2025
06/2025
11/2023
11/2023
11/2023
11/2023
11/2023
498
52
519
51
18,076
18,388
—
—
(1)
—
2,567
2,631
33
26
3,379
705
32
26
3,411
735
705
—
734
—
39,870
40,173
3,215
68
9,131
—
—
3,289
65
9,232
1
12
48,351
49,317
—
1,460
836
381
22,428
3,546
—
—
8,642
6,914
1,207
—
—
(1)
1,484
849
397
19,646
3,589
—
(16)
8,775
7,069
1,227
(2)
(4)
4,052
4,132
100
—
9,474
7,240
2,007
1,452
160
96
(23)
9,597
7,396
2,091
1,513
162
1.5
—
—
0.8
—
—
0.1
—
—
0.2
—
—
—
1.8
0.1
—
0.4
—
—
2.2
—
0.1
—
—
0.8
0.2
—
—
0.4
0.3
0.1
—
—
0.2
—
—
0.4
0.3
0.1
0.1
—
948
759
—
33,149
498
52
18,076
—
—
2,567
33
26
3,379
705
705
—
39,073
3,151
62
9,192
2
14
48,351
—
1,460
836
381
16,798
3,546
—
—
8,555
6,845
1,195
(2)
(2)
4,052
100
—
9,474
7,060
2,007
1,452
160
See Notes to Consolidated Financial Statements.
121
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Diversified/Conglomerate Service - (continued)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
— $
—
—
—
(1)
(1)
— % $
—
—
Nexus Brands Group, Inc.(8)(9)
Nexus Brands Group, Inc.(5)(8)(9)
Nexus Brands Group, Inc.(5)
Personify, Inc.*+
Personify, Inc.
PlanSource Holdings, Inc.#!~
PlanSource Holdings, Inc.(5)
Project Power Buyer, LLC#+!~
Project Power Buyer, LLC(5)
Property Brands, Inc.
Property Brands, Inc.*
Property Brands, Inc.^
Property Brands, Inc.
Property Brands, Inc.
Property Brands, Inc.
Property Brands, Inc.
Property Brands, Inc.(5)
Property Brands, Inc.(5)
Qgenda Intermediate Holdings, LLC+
Qgenda Intermediate Holdings, LLC(5)
RegEd Aquireco, LLC+
RegEd Aquireco, LLC
RegEd Aquireco, LLC(5)
Saba Software, Inc.^*#+!~
Saba Software, Inc.#+!~
Saba Software, Inc.(5)
SnapLogic, Inc.
SnapLogic, Inc.
SnapLogic, Inc.
Telesoft, LLC*
Telesoft, LLC
TI Intermediate Holdings, LLC+
TI Intermediate Holdings, LLC
Transact Holdings, Inc.#+!~
Transaction Data Systems, Inc.*#+!~
Transaction Data Systems, Inc.
Trintech, Inc.^*
Trintech, Inc.^
Trintech, Inc.
True Commerce, Inc.^#+!~
True Commerce, Inc.+(8)(9)
True Commerce, Inc.(8)
True Commerce, Inc.(5)
Upserve, Inc.#!~
Upserve, Inc.
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
N/A
N/A
L + 6.00%
L + 5.75% (c)
L + 5.75% (c)
L + 6.25% (c)
L + 6.25%
L + 5.75% (c)
L + 5.75%
L + 6.00% (a)
L + 6.00% (a)
L + 6.00% (a)
L + 6.00% (a)
L + 6.00% (a)
L + 6.00% (a)
L + 6.00% (a)
L + 6.00%
L + 6.00%
L + 4.75% (a)
L + 4.75%
L + 4.25% (a)
P + 3.25% (f)
L + 4.25%
L + 4.50% (b)
L + 4.50% (b)
L + 4.50%
L + 8.75% (a)
L + 3.25%
L + 3.25%
L + 5.00% (c)
L + 5.00%
L + 4.50% (a)
L + 4.50%
L + 4.75% (c)
L + 5.25% (a)
L + 5.25% (a)
L + 6.50% (c)
L + 6.50% (c)
L + 6.50% (c)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75%
L + 5.50% (a)
L + 5.50% (a)
N/A(6)
N/A(6)
N/A(6)
7.85%
7.85%
8.81%
N/A(6)
7.86%
N/A(6)
8.04%
8.04%
8.04%
8.04%
8.04%
8.04%
8.04%
N/A(6)
N/A(6)
6.79%
N/A(6)
6.29%
8.25%
N/A(6)
6.59%
6.59%
N/A(6)
11/2023
$
11/2023
11/2023
09/2024
09/2024
04/2025
04/2025
05/2026
05/2025
01/2024
01/2024
01/2024
01/2024
01/2024
01/2024
01/2024
01/2024
01/2024
06/2025
06/2025
12/2024
12/2024
12/2024
05/2023
05/2023
05/2023
15,614
15,933
40
9,330
—
40
9,516
(1)
11,613
11,860
—
(1)
20,049
20,296
6,720
3,276
1,438
1,218
1,200
507
—
—
6,861
3,413
1,496
1,267
1,251
527
(1)
(4)
15,432
15,453
—
(2)
11,532
11,527
58
—
49,189
11,011
—
58
(5)
50,222
11,140
(2)
5,650
5.29% cash/5.50% PIK
09/2024
5,734
N/A(6)
N/A(6)
7.32%
N/A(6)
6.54%
N/A(6)
7.01%
7.30%
7.30%
8.76%
8.76%
8.69%
7.85%
7.85%
7.85%
N/A(6)
7.54%
7.54%
09/2024
09/2024
07/2022
07/2022
12/2024
12/2024
04/2026
06/2021
06/2021
12/2023
12/2023
12/2023
11/2023
11/2023
11/2023
11/2023
07/2023
07/2023
—
—
—
—
7,276
7,437
—
—
3,553
3,624
—
—
3,110
84,331
130
3,160
86,275
133
22,629
23,071
9,383
120
15,428
2,616
919
—
5,141
1,451
9,625
122
15,776
2,735
960
(1)
5,222
1,511
See Notes to Consolidated Financial Statements.
122
—
—
—
15,614
40
9,330
—
11,613
—
20,049
6,720
3,276
1,438
1,218
1,200
507
—
—
15,432
—
11,532
58
—
49,189
11,011
—
5,671
—
—
7,276
—
3,553
—
3,094
84,331
130
22,629
9,383
120
15,428
2,572
919
—
5,141
1,451
0.7
—
0.4
—
0.5
—
0.9
0.3
0.2
0.1
0.1
0.1
—
—
—
0.7
—
0.5
—
—
2.2
0.5
—
0.3
—
—
0.3
—
0.2
—
0.1
3.8
—
1.0
0.4
—
0.7
0.1
—
—
0.2
0.1
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Diversified Conglomerate/Service - (continued)
Upserve, Inc.
Vector CS Midco Limited & Cloudsense Ltd.#!~(8)(9)
(10)
Vector CS Midco Limited & Cloudsense Ltd.(5)(8)(9)
(10)
Velocity Technology Solutions, Inc.*
Velocity Technology Solutions, Inc.(5)
Vendavo, Inc.*#!~
Vendavo, Inc.
Verisys Corporation*
Verisys Corporation(5)
Workforce Software, LLC#!~
Workforce Software, LLC(5)
Ecological
Pace Analytical Services, LLC
Pace Analytical Services, LLC^
Pace Analytical Services, LLC
Pace Analytical Services, LLC*
Pace Analytical Services, LLC^
Pace Analytical Services, LLC
Pace Analytical Services, LLC*
Pace Analytical Services, LLC
Pace Analytical Services, LLC
Pace Analytical Services, LLC
WRE Holding Corp.*
WRE Holding Corp.#!~
WRE Holding Corp.
WRE Holding Corp.
Electronics
Appriss Holdings, Inc.#+!~
Appriss Holdings, Inc.(5)
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
Compusearch Software Holdings, Inc.^#+!~
Senior loan
Diligent Corporation*+
Diligent Corporation*#!~
Diligent Corporation#!~
Diligent Corporation^*
Diligent Corporation
Diligent Corporation
Diligent Corporation
Diligent Corporation#!~
Diligent Corporation#!~
Diligent Corporation
Diligent Corporation#!~
Episerver, Inc.#~!(8)(9)
Episerver, Inc.*
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 5.50%
L + 7.25% (c)
L + 4.50%
L + 6.00% (c)
L + 6.00%
L + 8.50% (c)
P + 7.25% (f)
L + 6.50% (c)
L + 6.50%
L + 6.50% (c)
L + 6.50%
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.00% (a)(c)
L + 5.00% (a)(c)
L + 5.00% (a)(c)
L + 5.00% (a)(c)(f)
L + 5.50% (c)
L + 5.50%
L + 4.25% (c)
L + 5.50% (c)(d)
L + 5.50% (c)(d)
L + 5.50% (c)(d)
L + 5.50% (c)(d)
L + 5.50% (c)(d)
L + 5.50% (c)
L + 5.50% (c)(d)
L + 5.50% (c)(d)
L + 5.50% (c)(d)
L + 5.50% (c)
L + 5.50% (c)(d)
L + 6.00% (a)
L + 5.75% (a)
N/A(6)
07/2023
$
— $
— $
— % $
—
4.50% cash/2.75% PIK
05/2024
7,608
7,758
N/A(6)
8.10%
N/A(6)
10.62%
12.50%
8.60%
N/A(6)
05/2024
12/2023
12/2023
10/2022
10/2022
01/2023
01/2023
—
(1)
18,464
18,832
—
(1)
35,726
35,670
332
8,555
—
328
8,736
(1)
7.76% cash/1.00% PIK
07/2025
27,059
27,903
N/A(6)
07/2025
—
(3)
0.3
—
0.8
—
1.6
—
0.4
—
1.2
—
7,322
—
18,464
—
35,726
332
8,555
—
26,787
(2)
1,419,537
1,439,750
63.2
1,409,960
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.25%
7.25%
7.25%
7.23%
7.60%
N/A(6)
6.35%
7.56%
7.56%
7.56%
7.56%
7.73%
7.81%
7.64%
7.56%
7.56%
7.81%
7.56%
6.00%
7.79%
09/2022
09/2022
09/2022
09/2022
09/2022
09/2022
09/2022
09/2022
09/2022
09/2022
01/2023
01/2023
01/2023
01/2023
06/2026
06/2025
05/2021
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
10/2024
10/2024
29,947
30,387
2,785
1,668
1,534
1,235
836
684
566
190
40
2,833
1,735
1,565
1,284
851
696
588
197
39
2,300
2,352
949
314
28
990
327
29
43,076
43,873
25,221
26,050
—
2,979
35,807
25,868
12,538
11,308
697
489
285
101
80
39
36
(4)
3,020
37,168
25,670
12,841
11,675
723
508
287
100
79
38
35
20,821
12,310
21,208
12,545
1.3
0.1
0.1
0.1
0.1
—
—
—
—
—
0.1
—
—
—
1.8
1.1
—
0.1
1.6
1.2
0.6
0.5
—
—
—
—
—
—
—
0.9
0.6
29,947
2,785
1,668
1,534
1,235
836
684
566
190
40
2,300
949
314
28
43,076
25,221
—
2,979
35,807
25,868
12,538
11,308
697
489
285
101
80
39
36
20,139
12,310
See Notes to Consolidated Financial Statements.
123
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Electronics - (continued)
Episerver, Inc.(5)
Gamma Technologies, LLC^*#!~
Gamma Technologies, LLC(5)
SEI, Inc.*
Silver Peak Systems, Inc.
Silver Peak Systems, Inc.
Sloan Company, Inc., The+(7)
Sloan Company, Inc., The(7)
Sloan Company, Inc., The(7)
Sloan Company, Inc., The(7)
Sovos Compliance*+
Sovos Compliance
Sovos Compliance
Sovos Compliance
Sovos Compliance
Sovos Compliance(5)
Watchfire Enterprises, Inc.
Finance
Institutional Shareholder Services#!~
Institutional Shareholder Services
Grocery
Teasdale Quality Foods, Inc.+
Teasdale Quality Foods, Inc.
Healthcare, Education and Childcare
Active Day, Inc.
Active Day, Inc.^
Active Day, Inc.*
Active Day, Inc.
Active Day, Inc.*
Active Day, Inc.
Active Day, Inc.(5)
Acuity Eyecare Holdings, LLC
Acuity Eyecare Holdings, LLC
Acuity Eyecare Holdings, LLC^
Acuity Eyecare Holdings, LLC
Acuity Eyecare Holdings, LLC
Acuity Eyecare Holdings, LLC
ADCS Clinics Intermediate Holdings, LLC+
ADCS Clinics Intermediate Holdings, LLC*
ADCS Clinics Intermediate Holdings, LLC*
ADCS Clinics Intermediate Holdings, LLC*
ADCS Clinics Intermediate Holdings, LLC
One stop
One stop
One stop
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Second lien
One stop
Second lien
One stop
One stop
Second lien
L + 5.75%
L + 5.25% (a)
L + 5.25%
L + 4.75% (a)
L + 7.00% (a)
L + 7.00%
L + 8.50% (c)
L + 8.50% (c)
L + 8.50% (c)
L + 8.50% (c)
L + 4.75% (a)
N/A
L + 4.75% (a)
N/A
L + 4.75% (a)
L + 4.75%
L + 8.00% (c)
Senior loan
Senior loan
L + 4.50% (c)
L + 4.50% (c)
Senior loan
Senior loan
L + 5.75% (c)
L + 5.75% (c)
One stop
One stop
One stop
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 6.50% (c)
L + 6.50% (c)
L + 6.50% (c)
L + 6.50% (c)
L + 6.50% (c)
L + 6.50% (c)(f)
L + 6.50%
L + 6.25% (c)
L + 6.25% (b)(c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25%
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.00% (c)
N/A(6)
7.29%
N/A(6)
6.79%
9.03%
N/A(6)
10.60%
10.60%
10.60%
10.60%
6.79%
12.00% PIK
6.79%
12.00% PIK
6.79%
N/A(6)
10.10%
6.60%
6.60%
7.85%
7.85%
8.60%
8.60%
8.60%
8.60%
8.60%
8.60%
N/A(6)
8.37%
8.43%
8.35%
8.39%
8.42%
N/A(6)
7.79%
7.79%
7.85%
7.79%
7.79%
7.10%
10/2024
$
— $
(2)
— % $
—
06/2024
06/2024
07/2023
04/2024
04/2024
04/2020
04/2020
04/2020
04/2020
04/2024
04/2025
04/2024
04/2025
04/2024
04/2024
10/2021
03/2026
03/2024
10/2020
10/2020
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
03/2023
03/2023
03/2023
03/2023
03/2023
03/2023
05/2022
05/2022
05/2022
05/2022
05/2022
12/2019
33,411
33,814
—
9,575
5,998
(1)
9,805
6,018
—
—
9,839
8,623
659
297
104
578
298
85
19,614
20,308
8,843
1,903
1,195
768
—
9,133
1,972
1,242
797
(2)
9,435
9,370
250,220
253,981
18,965
19,421
116
111
19,081
19,532
354
102
456
348
96
444
24,420
24,768
1,884
1,215
967
839
70
—
5,990
5,643
3,293
1,593
1,915
1,235
1,006
852
70
(1)
6,108
5,799
3,434
1,656
796
—
830
—
42,312
42,976
212
164
62
30
216
167
64
30
5,261
3,281
1.5
—
0.4
0.3
—
0.3
—
—
—
0.9
0.4
0.1
0.1
—
—
0.4
11.0
0.8
—
0.8
—
—
—
1.1
0.1
0.1
—
—
—
—
0.3
0.3
0.1
0.1
—
—
1.9
—
—
—
—
0.1
33,411
—
9,575
6,004
—
6,070
406
303
64
19,614
8,843
1,903
1,195
768
—
9,435
245,488
18,775
108
18,883
319
92
411
24,420
1,884
1,215
967
839
70
—
5,990
5,643
3,293
1,593
796
—
42,312
212
164
62
30
3,157
Advanced Pain Management Holdings, Inc.+(7)
Senior loan
See Notes to Consolidated Financial Statements.
124
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Healthcare, Education and Childcare - (continued)
Advanced Pain Management Holdings, Inc.(7)
Senior loan
Advanced Pain Management Holdings, Inc.+(7)
Senior loan
Advanced Pain Management Holdings, Inc.(5)(7)
Senior loan
Agilitas USA, Inc.*
Agilitas USA, Inc.
Apothecary Products, LLC+
Apothecary Products, LLC
Aris Teleradiology Company, LLC+(7)
Aris Teleradiology Company, LLC(7)
Aspen Medical Products, LLC#+!~
Aspen Medical Products, LLC
BIO18 Borrower, LLC
BIO18 Borrower, LLC
BIO18 Borrower, LLC(5)
BIOVT, LLC^*
BIOVT, LLC#!~
BIOVT, LLC
BIOVT, LLC
BIOVT, LLC
Blades Buyer, Inc.#+!~
Blades Buyer, Inc.
Blades Buyer, Inc.(5)
CLP Healthcare Services, Inc.^
CMI Parent Inc.#+!~
CMI Parent Inc.(5)
CRH Healthcare Purchaser, Inc.#+!~
CRH Healthcare Purchaser, Inc.(5)
CRH Healthcare Purchaser, Inc.(5)
DCA Investment Holding, LLC^*+
DCA Investment Holding, LLC^*#+!~
DCA Investment Holding, LLC*
DCA Investment Holding, LLC
DCA Investment Holding, LLC
DCA Investment Holding, LLC*
DCA Investment Holding, LLC
DCA Investment Holding, LLC
DCA Investment Holding, LLC*
DCA Investment Holding, LLC*
Deca Dental Management LLC^*
Deca Dental Management LLC#!~
Deca Dental Management LLC#+!~
Deca Dental Management LLC
Deca Dental Management LLC
Deca Dental Management LLC
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 8.50% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 4.50% (c)
L + 4.50%
L + 5.50% (c)
L + 5.50% (b)(c)(d)
L + 5.25% (a)(c)
L + 5.25%
L + 5.25% (a)
L + 5.25% (a)
L + 5.25%
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75%
L + 5.75%
L + 4.50% (b)(c)
L + 4.50%
L + 4.50%
L + 5.25% (c)
L + 4.25% (a)
L + 4.25%
L + 4.50% (c)
L + 4.50%
L + 4.50%
L + 5.25% (c)
L + 5.25% (c)
L + 5.25% (c)
L + 5.25% (c)
L + 5.25% (c)
L + 5.25% (c)
L + 5.25% (c)
P + 4.25% (f)
L + 5.25% (c)
L + 5.25% (c)
L + 6.00% (c)
L + 6.00% (a)(c)
L + 6.00% (c)
L + 6.00% (a)(c)
L + 6.00% (a)(c)
L + 6.00%
10.60%
7.10%
7.10%
7.32%
7.32%
6.70%
N/A(6)
7.60%
7.66%
7.30%
N/A(6)
7.30%
7.30%
N/A(6)
7.79%
7.79%
7.79%
N/A(6)
N/A(6)
6.75%
N/A(6)
N/A(6)
7.37%
6.29%
N/A(6)
6.60%
N/A(6)
N/A(6)
7.35%
7.35%
7.35%
7.35%
7.35%
7.35%
7.35%
9.25%
7.35%
7.35%
8.10%
8.11%
8.10%
8.21%
8.12%
N/A(6)
12/2019
12/2019
12/2019
04/2022
04/2022
07/2023
07/2023
03/2021
03/2021
06/2025
06/2025
11/2024
11/2024
11/2024
01/2021
01/2021
01/2021
01/2021
01/2021
08/2025
08/2025
08/2025
12/2020
08/2025
08/2025
12/2024
12/2024
12/2024
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
$
1,823
$
360
164
3
225
(7)
— % $
—
—
10,206
10,252
20
3,086
20
3,228
—
—
5,403
1,084
4,303
3,244
684
4,389
—
—
11,188
11,231
66
—
66
(4)
34,487
35,136
2,094
1,966
—
—
2,179
2,045
—
—
2,848
2,879
—
—
4,762
6,700
—
—
(8)
4,788
6,852
(2)
14,011
14,203
—
—
31,737
27,496
8,405
4,074
3,706
2,537
678
309
300
94
11,386
1,385
999
741
(1)
(3)
32,216
28,087
8,655
4,244
3,860
2,643
706
303
306
95
11,690
1,423
1,026
771
32
—
31
—
0.5
—
0.1
—
0.1
—
0.2
—
0.5
—
—
1.6
0.1
0.1
—
—
0.1
—
—
0.2
0.3
—
0.6
—
—
1.4
1.2
0.4
0.2
0.2
0.1
—
—
—
—
0.5
0.1
0.1
—
—
—
3
216
(7)
10,206
20
3,086
—
1,149
220
4,303
—
11,188
66
—
34,487
2,094
1,966
—
—
2,827
—
(8)
4,762
6,634
(4)
14,011
—
—
31,737
27,496
8,405
4,074
3,706
2,537
678
309
300
94
11,386
1,385
999
741
32
—
See Notes to Consolidated Financial Statements.
125
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Healthcare, Education, and Childcare - (continued)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
02/2020
$
10,226
$
Dental Holdings Corporation
Dental Holdings Corporation*
Dental Holdings Corporation
Elite Dental Partners LLC*
Elite Dental Partners LLC
Elite Dental Partners LLC
Elite Dental Partners LLC#+!~
Elite Dental Partners LLC#!~
Elite Dental Partners LLC
Elite Dental Partners LLC(5)
ERG Buyer, LLC*
ERG Buyer, LLC
ERG Buyer, LLC(5)
eSolutions, Inc.^*+
eSolutions, Inc.
Excelligence Learning Corporation^
Eyecare Services Partners Holdings LLC+
Eyecare Services Partners Holdings LLC*
Eyecare Services Partners Holdings LLC*
Eyecare Services Partners Holdings LLC*+
Eyecare Services Partners Holdings LLC
Eyecare Services Partners Holdings LLC*
Eyecare Services Partners Holdings LLC*
Eyecare Services Partners Holdings LLC*
Eyecare Services Partners Holdings LLC*+
Eyecare Services Partners Holdings LLC
G & H Wire Company, Inc.^
G & H Wire Company, Inc.(5)
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Immucor, Inc.+
Senior loan
Joerns Healthcare, LLC^*
Joerns Healthcare, LLC^*
Katena Holdings, Inc.^
Katena Holdings, Inc.^
Katena Holdings, Inc.
Katena Holdings, Inc.
Krueger-Gilbert Health Physics, LLC#!~
Krueger-Gilbert Health Physics, LLC
Krueger-Gilbert Health Physics, LLC
Krueger-Gilbert Health Physics, LLC(5)
Lombart Brothers, Inc.^*#+!~(8)
Lombart Brothers, Inc.^(8)(9)
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 6.00% (c)
L + 6.00% (c)
L + 6.00% (c)
L + 5.25% (a)
L + 5.25% (a)
L + 5.25% (a)
L + 5.25% (a)
L + 5.25% (a)
L + 5.25% (a)
L + 5.25%
L + 5.50% (c)
P + 4.50% (f)
L + 5.50%
L + 6.50% (a)
L + 6.50% (d)
L + 6.00% (a)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 5.75% (a)
L + 5.75%
L + 5.00% (c)
L + 6.00% (c)
L + 6.00% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
P + 4.50% (f)
L + 4.75% (c)
L + 4.75% (b)(c)
L + 4.75%
L + 4.75%
L + 6.25% (c)
L + 6.25% (c)
Lombart Brothers, Inc.
One stop
P + 5.00% (f)
Lombart Brothers, Inc.(8)(9)
MD Now Holdings, Inc.+
MD Now Holdings, Inc.(5)
MD Now Holdings, Inc.(5)
One stop
One stop
One stop
One stop
MWD Management, LLC & MWD Services, Inc.*
One stop
MWD Management, LLC & MWD Services, Inc.^
One stop
P + 5.00% (f)
L + 5.00% (c)
L + 5.00%
L + 5.00%
L + 5.25% (c)
L + 5.25% (c)
8.12%
8.12%
8.12%
7.29%
7.29%
7.29%
7.29%
7.29%
7.29%
N/A(6)
7.60%
9.50%
N/A(6)
8.54%
8.56%
8.04%
8.35%
8.35%
8.35%
8.35%
8.55%
8.35%
8.35%
8.35%
8.35%
8.51%
7.79%
N/A(6)
7.10%
8.16%
8.16%
7.60%
7.60%
7.60%
9.50%
6.85%
7.02%
N/A(6)
N/A(6)
8.35%
8.35%
10.00%
10.00%
7.10%
N/A(6)
N/A(6)
7.35%
7.35%
02/2020
02/2020
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
05/2024
05/2024
05/2024
03/2022
03/2022
04/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
09/2023
09/2022
06/2021
08/2024
08/2024
06/2021
06/2021
06/2021
06/2021
05/2025
05/2025
05/2025
05/2025
04/2023
04/2023
04/2023
04/2023
08/2024
08/2024
08/2024
06/2023
06/2023
10,340
1,651
837
1,632
828
14,145
13,994
1,874
1,757
1,676
1,607
200
—
1,862
1,746
1,665
1,596
198
(6)
19,330
19,265
20
—
14
(9)
70,456
71,662
100
10,171
18,129
7,951
6,964
2,377
2,027
1,526
1,128
994
641
200
5,980
—
3,594
535
514
12,863
1,256
860
80
2,383
1,125
100
9,808
18,252
8,126
7,125
2,432
2,064
1,561
1,155
1,017
654
198
5,980
(1)
3,672
506
506
13,026
1,273
869
82
2,368
1,171
—
—
—
(2)
29,259
3,150
98
14
29,693
3,196
99
15
14,690
14,885
—
—
7,088
4,564
(1)
(1)
7,074
4,670
0.5 % $
10,226
0.1
—
0.6
0.1
0.1
0.1
0.1
—
—
0.8
—
—
3.2
—
0.4
0.8
0.4
0.3
0.1
0.1
0.1
0.1
—
—
—
0.3
—
0.2
—
—
0.6
0.1
—
—
0.1
0.1
—
—
1.3
0.1
—
—
0.7
—
—
0.3
0.2
1,632
828
13,437
1,781
1,669
1,592
1,527
190
—
18,749
12
—
70,456
100
9,154
17,766
7,792
6,825
2,330
1,986
1,495
1,106
974
629
192
5,980
—
3,598
535
514
12,863
1,256
860
80
2,383
1,125
—
—
29,259
3,150
98
14
14,690
—
—
6,946
4,472
See Notes to Consolidated Financial Statements.
126
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Healthcare, Education, and Childcare - (continued)
MWD Management, LLC & MWD Services, Inc.(5)
One stop
N/A(6)
06/2022
$
— $
(3)
— % $
(4)
Oliver Street Dermatology Holdings, LLC
Oliver Street Dermatology Holdings, LLC*
Oliver Street Dermatology Holdings, LLC
Oliver Street Dermatology Holdings, LLC^+
Oliver Street Dermatology Holdings, LLC*+
Oliver Street Dermatology Holdings, LLC*+
Oliver Street Dermatology Holdings, LLC^+
Oliver Street Dermatology Holdings, LLC*+
Oliver Street Dermatology Holdings, LLC#+!~
Oliver Street Dermatology Holdings, LLC
Oliver Street Dermatology Holdings, LLC^
Oliver Street Dermatology Holdings, LLC*
Oliver Street Dermatology Holdings, LLC^
Oliver Street Dermatology Holdings, LLC^
ONsite Mammography, LLC
ONsite Mammography, LLC
ONsite Mammography, LLC
Pinnacle Treatment Centers, Inc.
Pinnacle Treatment Centers, Inc.#+!~
Pinnacle Treatment Centers, Inc.
Pinnacle Treatment Centers, Inc.
Pinnacle Treatment Centers, Inc.^
Pinnacle Treatment Centers, Inc.
PPT Management Holdings, LLC+
PPT Management Holdings, LLC
PPT Management Holdings, LLC
PPT Management Holdings, LLC
PPT Management Holdings, LLC(5)
Pyramid Healthcare, Inc.*+
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
Riverchase MSO, LLC*
Riverchase MSO, LLC
RXH Buyer Corporation^*
RXH Buyer Corporation*
RXH Buyer Corporation
SLMP, LLC^
SLMP, LLC^
SLMP, LLC
SLMP, LLC(5)
L + 5.25%
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)(f)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 7.25% (c)
L + 6.75% (a)
L + 6.75% (a)
L + 6.75% (a)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75% (c)(f)
L + 6.75% (a)(c)
L + 6.75% (a)(c)
L + 6.75% (a)(c)
L + 6.75% (a)(c)
L + 6.75% (a)(c)
L + 6.50% (c)
L + 6.50% (c)(f)
L + 6.50% (c)
L + 5.75% (c)
P + 4.75% (f)
L + 5.75% (c)
L + 5.75% (c)
L + 5.75% (c)(f)
L + 6.00% (a)
L + 6.00% (a)
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
8.35% cash/1.00% PIK
05/2022
19,200
17,574
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.35% cash/1.00% PIK
05/2022
8.79%
8.79%
8.79%
8.01%
8.01%
8.01%
8.01%
8.01%
8.53%
11/2023
11/2023
11/2023
08/2021
08/2021
08/2021
08/2021
08/2021
08/2021
2,241
2,099
1,577
1,393
1,213
944
819
505
289
98
88
70
64
5,842
1,031
100
1,916
1,912
1,344
1,188
1,034
805
698
430
263
89
81
63
59
5,920
1,075
102
19,329
19,650
716
347
188
108
102
730
360
193
111
103
8.10% cash/0.75% PIK
12/2022
24,533
22,536
8.10% cash/0.75% PIK
12/2022
8.10% cash/0.75% PIK
12/2022
8.10% cash/0.75% PIK
12/2022
8.10% cash/0.75% PIK
12/2022
302
178
86
16
285
168
76
(17)
1,459
1,467
337
113
9,720
26
347
117
9,901
26
27,814
28,193
3,147
158
12,073
5,813
223
—
3,192
159
12,176
6,060
229
(1)
8.78%
8.78%
8.62%
7.85%
9.75%
7.85%
7.85%
8.78%
8.04%
8.04%
08/2020
08/2020
08/2020
10/2022
10/2022
09/2021
09/2021
09/2021
05/2023
05/2023
05/2027
05/2023
Subordinated debt
One stop
N/A
L + 6.00%
7.50% PIK
N/A(6)
See Notes to Consolidated Financial Statements.
127
0.6
0.1
0.1
0.1
0.1
—
—
—
—
—
—
—
—
—
0.3
0.1
—
0.9
—
—
—
—
—
0.9
—
—
—
—
0.1
—
—
0.4
—
1.3
0.1
—
0.5
0.3
—
—
14,400
1,680
1,575
1,183
1,045
910
708
614
379
215
74
66
52
48
5,842
1,031
100
19,329
716
347
188
108
102
20,846
256
152
74
(46)
1,459
337
113
9,720
26
27,814
3,147
158
12,073
5,813
223
—
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
05/2023
$
— $
Healthcare, Education, and Childcare - (continued)
SLMP, LLC(5)
Spear Education, LLC^
Spear Education, LLC*
Spear Education, LLC
Summit Behavioral Healthcare, LLC^
Summit Behavioral Healthcare, LLC
Summit Behavioral Healthcare, LLC
WHCG Management, LLC*
WHCG Management, LLC
WHCG Management, LLC(5)
WIRB-Copernicus Group, Inc.^*#!~
WIRB-Copernicus Group, Inc.(5)
WIRB-Copernicus Group, Inc.(5)
One stop
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
L + 6.00%
L + 5.75% (c)
L + 5.75% (c)
L + 5.75%
L + 4.75% (c)
L + 4.75% (c)
L + 4.75% (c)
L + 6.00% (c)
L + 6.00% (c)
L + 6.00%
L + 4.25% (c)
L + 4.25%
L + 4.25%
Home and Office Furnishings, Housewares, and Durable Consumer
1A Smart Start LLC#+!~
CST Buyer Company^
CST Buyer Company
Plano Molding Company, LLC^+
Hotels, Motels, Inns, and Gaming
Davidson Hotel Company, LLC+
Davidson Hotel Company, LLC(5)
Davidson Hotel Company, LLC(5)
Davidson Hotel Company, LLC(5)
Insurance
Captive Resources Midco, LLC^*#+!~
Captive Resources Midco, LLC(5)
Captive Resources Midco, LLC(5)
Integrity Marketing Acquisition, LLC#+!~
Integrity Marketing Acquisition, LLC
Integrity Marketing Acquisition, LLC(5)
Integrity Marketing Acquisition, LLC(5)
J.S. Held Holdings, LLC#+!~
J.S. Held Holdings, LLC
J.S. Held Holdings, LLC(5)
Orchid Underwriters Agency, LLC#+!~
Orchid Underwriters Agency, LLC
Orchid Underwriters Agency, LLC(5)
RSC Acquisition, Inc.#+!~
RSC Acquisition, Inc.*
RSC Acquisition, Inc.
RSC Acquisition, Inc.(5)
Senior loan
One stop
One stop
One stop
L + 4.50% (a)
L + 5.00% (a)
L + 5.00%
L + 7.00% (a)
One stop
One stop
One stop
One stop
L + 5.25% (a)(c)
L + 5.25%
L + 5.25%
L + 5.25%
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
L + 6.00% (c)
L + 6.00%
L + 6.00%
L + 5.75% (c)
L + 5.75%
L + 5.75%
L + 5.75%
L + 6.00% (c)
P + 5.00% (f)
L + 6.00%
L + 4.50% (c)
L + 4.50%
L + 4.50%
(a)(b)(c)
L + 4.25%
(f)
L + 4.25% (b)
L + 4.25%
L + 4.25%
N/A(6)
8.07%
8.07%
N/A(6)
6.87%
6.87%
6.87%
8.10%
8.11%
N/A(6)
6.35%
N/A(6)
N/A(6)
6.54%
7.04%
N/A(6)
9.04%
7.29%
N/A(6)
N/A(6)
N/A(6)
8.20%
N/A(6)
N/A(6)
7.88%
N/A(6)
N/A(6)
N/A(6)
8.10%
10.00%
N/A(6)
6.70%
N/A(6)
N/A(6)
6.40%
6.40%
N/A(6)
N/A(6)
752,215
750,240
32.8
726,960
12/2019
12/2019
12/2019
10/2023
10/2023
10/2023
03/2023
03/2023
03/2023
08/2022
08/2022
08/2022
02/2022
03/2023
03/2023
05/2021
07/2024
07/2024
07/2024
07/2024
05/2025
05/2025
05/2025
08/2025
08/2025
08/2025
08/2025
07/2025
07/2025
07/2025
12/2024
12/2024
12/2024
11/2022
11/2022
11/2021
11/2022
7,964
249
—
(1)
8,098
256
—
11,065
10,961
180
144
178
141
6,256
6,405
200
—
204
(4)
24,583
25,145
—
—
(1)
(1)
1,389
5,347
1,412
5,441
—
—
14,748
21,484
14,698
21,551
8,544
8,476
—
—
—
(13)
—
—
8,544
8,463
54,907
55,075
—
—
(28)
(27)
2,489
2,490
—
—
—
—
(5)
(3)
2,930
2,944
28
—
21
(38)
4,231
4,295
—
—
36,746
2,280
—
—
—
(1)
38,166
2,261
—
(2)
103,611
105,148
— % $
—
0.4
—
—
0.5
—
—
0.3
—
—
1.1
—
—
7,964
249
—
10,512
171
136
6,256
200
—
24,583
—
—
0.1
0.2
—
0.6
0.9
0.4
—
—
—
0.4
2.5
—
—
0.1
—
—
—
0.1
—
—
0.2
—
—
1.7
0.1
—
—
4.7
0.1
1,389
5,347
—
14,158
20,894
8,459
(27)
(11)
(2)
8,419
54,907
—
—
2,452
—
(12)
(8)
2,930
28
—
4,231
—
—
36,746
2,280
—
—
103,554
2,019
Leisure, Amusement, Motion Pictures, Entertainment
CR Fitness Holdings, LLC#+!~
Senior loan
L + 4.25% (a)
6.29%
07/2025
2,019
2,033
See Notes to Consolidated Financial Statements.
128
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Leisure, Amusement, Motion Pictures, Entertainment - (continued)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
CR Fitness Holdings, LLC
CR Fitness Holdings, LLC
EOS Fitness Opco Holdings, LLC*
EOS Fitness Opco Holdings, LLC
EOS Fitness Opco Holdings, LLC
PADI Holdco, Inc.*
PADI Holdco, Inc.#+!~(8)(9)
PADI Holdco, Inc.
Planet Fit Indy 10 LLC+
Planet Fit Indy 10 LLC
Planet Fit Indy 10 LLC
Planet Fit Indy 10 LLC(5)
Self Esteem Brands, LLC^*
Self Esteem Brands, LLC
Sunshine Sub, LLC#!~
Sunshine Sub, LLC
Sunshine Sub, LLC(5)
Teaching Company, The*
Teaching Company, The
Titan Fitness, LLC*
Titan Fitness, LLC(5)
Titan Fitness, LLC(5)
WBZ Investment LLC
WBZ Investment LLC
WBZ Investment LLC
WBZ Investment LLC
Oil and Gas
Drilling Info Holdings, Inc.*#+!~
Drilling Info Holdings, Inc.(5)
Drilling Info Holdings, Inc.(5)
Personal and Non Durable Consumer Products (Mfg. Only)
Georgica Pine Clothiers, LLC
Georgica Pine Clothiers, LLC*
Georgica Pine Clothiers, LLC^
Georgica Pine Clothiers, LLC*
Georgica Pine Clothiers, LLC
IMPLUS Footwear, LLC#+!~
IMPLUS Footwear, LLC#+!~
IMPLUS Footwear, LLC
Orthotics Holdings, Inc.*(8)
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 4.25% (c)
L + 4.25%
L + 4.75% (c)
L + 4.75% (c)
P + 3.75% (f)
L + 5.75% (c)
E + 5.75% (g)
L + 5.75% (c)
L + 5.25% (c)
L + 5.25% (c)
L + 5.25% (c)
L + 5.25%
L + 4.25% (a)
P + 3.25% (f)
L + 4.75% (a)
L + 4.75% (a)
L + 4.75%
L + 4.75% (c)
L + 4.75% (a)(f)
L + 4.75% (a)(c)
L + 4.75%
L + 4.75%
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
One stop
P + 4.50% (f)
Senior loan
Senior loan
Senior loan
L + 4.25% (a)
L + 4.25%
L + 4.25%
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.00% (a)
6.55%
N/A(6)
6.85%
6.86%
8.75%
7.86%
5.75%
7.96%
7.35%
7.46%
7.35%
N/A(6)
6.29%
8.25%
6.79%
6.79%
N/A(6)
6.93%
6.77%
6.88%
N/A(6)
N/A(6)
7.54%
7.54%
7.54%
9.50%
6.29%
N/A(6)
N/A(6)
7.60%
7.60%
7.60%
7.60%
7.73%
8.35%
8.41%
8.35%
8.04%
07/2025
$
07/2025
01/2025
01/2025
01/2025
04/2023
04/2023
04/2022
07/2025
07/2025
07/2025
07/2025
02/2022
02/2022
05/2024
05/2024
05/2024
07/2023
07/2023
02/2025
02/2025
02/2025
09/2024
09/2024
09/2024
09/2024
07/2025
07/2023
07/2025
11/2022
11/2022
11/2022
11/2022
11/2022
04/2024
04/2024
04/2024
05/2020
$
67
—
61
—
— % $
—
8,763
8,904
334
12
21,989
20,870
182
16,828
2,337
30
—
347
11
22,385
21,387
185
16,721
2,396
29
(8)
30,835
31,428
490
13,057
5,711
—
485
13,184
5,946
(1)
17,878
18,119
24
24
30,625
31,165
—
—
(2)
(2)
8,525
8,597
849
457
10
884
475
10
0.4
—
—
1.0
0.9
—
0.8
0.1
—
—
1.4
—
0.6
0.3
—
0.8
—
1.4
—
—
0.4
—
—
—
67
—
8,763
334
12
21,989
19,859
182
16,828
2,337
30
—
30,835
490
13,057
5,711
—
17,878
24
30,625
—
—
8,525
849
457
10
181,892
184,763
8.2
180,881
35,612
36,252
—
—
(2)
(13)
35,612
36,237
10,337
6,479
902
633
50
10,503
6,587
918
645
50
30,462
30,970
5,202
750
5,288
781
11,738
11,799
1.6
—
—
1.6
0.5
0.3
—
—
—
1.4
0.2
—
0.5
35,612
—
—
35,612
10,337
6,479
902
633
50
30,462
5,202
750
11,504
See Notes to Consolidated Financial Statements.
129
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Personal and Non Durable Consumer Products (Mfg. Only) - (continued)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Orthotics Holdings, Inc.*(8)(9)
Orthotics Holdings, Inc.(5)
WU Holdco, Inc. #!~
WU Holdco, Inc.
WU Holdco, Inc.
Personal, Food and Miscellaneous Services
Blue River Pet Care, LLC+
Blue River Pet Care, LLC(5)
Blue River Pet Care, LLC(5)
Captain D's, LLC^
Captain D's, LLC
Clarkson Eyecare LLC*+
Clarkson Eyecare LLC#+!~
Clarkson Eyecare LLC
Clarkson Eyecare LLC
Clarkson Eyecare LLC#!~
Clarkson Eyecare LLC
Clarkson Eyecare LLC
Clarkson Eyecare LLC
Clarkson Eyecare LLC(5)
Community Veterinary Partners, LLC^
Community Veterinary Partners, LLC
Community Veterinary Partners, LLC#!~
Community Veterinary Partners, LLC
Community Veterinary Partners, LLC#!~
Community Veterinary Partners, LLC#!~
Community Veterinary Partners, LLC
Community Veterinary Partners, LLC*
Community Veterinary Partners, LLC
Imperial Optical Midco Inc.
Imperial Optical Midco Inc.*
Imperial Optical Midco Inc.
Imperial Optical Midco Inc.
Imperial Optical Midco Inc.
Imperial Optical Midco Inc.
Imperial Optical Midco Inc.
Midwest Veterinary Partners, LLC+
Midwest Veterinary Partners, LLC
Midwest Veterinary Partners, LLC(5)
PPV Intermediate Holdings II, LLC
PPV Intermediate Holdings II, LLC
PPV Intermediate Holdings II, LLC
Ruby Slipper Cafe LLC, The*
Ruby Slipper Cafe LLC, The
Ruby Slipper Cafe LLC, The
8.04%
N/A(6)
7.60%
7.62%
N/A(6)
7.04%
N/A(6)
N/A(6)
6.54%
7.48%
8.35%
8.37%
8.38%
8.35%
8.39%
8.35%
8.35%
8.38%
N/A(6)
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
6.87%
6.84%
6.86%
6.84%
6.90%
6.84%
N/A(6)
6.79%
6.81%
N/A(6)
7.56%
One stop
One stop
One stop
One stop
One stop
L + 6.00% (a)
L + 6.00%
L + 5.50% (c)
L + 5.50% (c)
L + 5.50%
L + 5.00% (c)(d)
L + 5.00%
L + 5.00%
L + 4.50% (a)(c)
L + 4.50% (a)(c)(f)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)(f)
L + 6.25%
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 4.75% (b)(c)
L + 4.75% (b)
L + 4.75% (b)(c)
L + 4.75% (b)
L + 4.75% (b)(c)
L + 4.75% (b)
L + 4.75%
L + 4.75% (a)
L + 4.75% (a)(b)(c)
L + 4.75%
L + 5.00% (c)
One stop
One stop
One stop
Senior loan
Senior loan
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
05/2020
05/2020
03/2026
03/2026
03/2025
07/2026
07/2026
08/2025
12/2023
12/2023
04/2021
04/2021
04/2021
04/2021
04/2021
04/2021
04/2021
04/2021
04/2021
10/2021
10/2021
10/2021
10/2021
10/2021
10/2021
10/2021
10/2021
10/2021
08/2023
08/2023
08/2023
08/2023
08/2023
08/2023
08/2023
07/2025
07/2025
07/2025
05/2020
05/2023
05/2023
01/2023
01/2023
01/2023
$
1,924
$
—
3,016
58
—
1,934
(1)
3,110
61
—
71,551
72,645
25,636
25,716
—
—
6,021
40
(129)
(4)
6,078
40
52,934
54,106
6,703
1,512
1,236
150
37
32
32
—
2,205
1,101
873
741
657
585
315
196
50
3,650
2,846
1,934
1,260
1,147
6,778
1,496
1,266
147
36
31
32
(14)
2,290
1,143
906
770
683
608
310
200
49
3,710
2,820
1,996
1,300
1,183
125
—
118
—
4,317
4,238
136
—
135
(51)
2,309
2,398
22
18
23
17
1,084
1,080
602
10
620
10
0.1 % $
—
0.1
—
—
3.1
1.1
—
—
0.3
—
2.3
0.3
0.1
0.1
—
—
—
—
—
0.1
0.1
—
—
—
—
—
—
—
0.2
0.1
0.1
0.1
0.1
—
—
0.2
—
—
0.1
—
—
0.1
—
—
1,886
—
3,016
58
—
71,279
25,379
(129)
(4)
6,021
40
51,875
6,569
1,430
1,211
147
36
31
31
(15)
2,205
1,101
873
741
657
585
315
196
50
3,614
2,817
1,915
1,247
1,135
118
—
4,274
134
(52)
2,309
22
18
1,084
602
10
N/A
7.90% PIK
P + 4.00% (f)
L + 7.50% (c)
L + 7.50% (c)
L + 7.50% (c)
9.00%
9.60%
9.60%
9.60%
See Notes to Consolidated Financial Statements.
130
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Personal, Food and Miscellaneous Services - (continued)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
05/2025
$
5,388
$
Southern Veterinary Partners, LLC*
Southern Veterinary Partners, LLC*
Southern Veterinary Partners, LLC#!~
Southern Veterinary Partners, LLC
Southern Veterinary Partners, LLC*
Southern Veterinary Partners, LLC
Southern Veterinary Partners, LLC
Southern Veterinary Partners, LLC
Southern Veterinary Partners, LLC#!~
Southern Veterinary Partners, LLC*
Southern Veterinary Partners, LLC*
Southern Veterinary Partners, LLC*
Southern Veterinary Partners, LLC*
Southern Veterinary Partners, LLC(5)
Southern Veterinary Partners, LLC(5)
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Veterinary Specialists of North America, LLC*
Senior loan
Veterinary Specialists of North America, LLC
Senior loan
Veterinary Specialists of North America, LLC(5)
Senior loan
Veterinary Specialists of North America, LLC(5)
Senior loan
One stop
One stop
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (c)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50% (a)
L + 5.50%
L + 5.50%
L + 4.25% (a)
L + 4.25% (a)
L + 4.25%
L + 4.25%
L + 6.75% (a)
L + 6.75% (a)
Wetzel's Pretzels, LLC*
Wetzel's Pretzels, LLC
Printing and Publishing
Brandmuscle, Inc.^
Messenger, LLC#+!~
Messenger, LLC
Messenger, LLC(5)
Retail Stores
2nd Ave. LLC
2nd Ave. LLC(5)
Batteries Plus Holding Corporation
Batteries Plus Holding Corporation(5)
Boot Barn, Inc.#+!~
Cycle Gear, Inc.^+
Cycle Gear, Inc.^
DTLR, Inc.^*+
Elite Sportswear, L.P.
Elite Sportswear, L.P.
Elite Sportswear, L.P.
Elite Sportswear, L.P.*
Elite Sportswear, L.P.
Elite Sportswear, L.P.
Senior loan
One stop
One stop
One stop
L + 5.00% (c)
L + 6.00% (a)(f)
P + 5.00% (f)
L + 6.00%
One stop
One stop
One stop
One stop
Senior loan
One stop
One stop
One stop
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
L + 5.50% (c)
L + 5.50%
L + 6.75% (a)
L + 6.75%
L + 4.50% (c)
L + 5.00% (c)
L + 5.00% (c)
L + 6.50% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
L + 6.25% (c)
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
7.54%
N/A(6)
N/A(6)
6.29%
6.29%
N/A(6)
N/A(6)
8.79%
8.79%
7.10%
8.05%
10.00%
N/A(6)
7.65%
N/A(6)
8.79%
N/A(6)
6.60%
7.32%
7.32%
8.77%
8.35%
8.35%
8.35%
8.35%
8.49%
8.35%
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2023
05/2025
04/2025
04/2025
04/2025
04/2025
09/2021
09/2021
12/2021
08/2023
08/2023
08/2023
09/2025
09/2025
07/2022
07/2022
06/2023
01/2021
01/2021
08/2022
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
3,799
2,358
2,207
2,068
1,626
1,518
1,514
1,291
1,198
1,094
920
818
—
—
42,076
1,459
—
—
5,410
3,959
2,454
2,205
2,152
1,693
1,581
1,576
1,344
1,246
1,140
958
853
(1)
(1)
43,803
1,522
(3)
(7)
17,023
17,316
60
61
206,933
211,396
1,139
9,145
36
—
1,163
9,255
37
(3)
10,320
10,452
5,959
5,856
—
—
22,424
22,782
—
(1)
7,596
17,784
1,295
41,813
6,297
2,532
1,303
427
252
198
7,770
18,023
1,325
42,484
6,179
2,485
1,280
421
241
194
0.2 % $
5,388
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
—
—
—
—
1.9
0.1
—
—
0.8
—
9.5
0.1
0.4
—
—
0.5
0.3
—
1.0
—
0.3
0.8
0.1
1.9
0.3
0.1
0.1
—
—
—
3,799
2,358
2,207
2,068
1,626
1,518
1,514
1,291
1,198
1,094
920
818
—
—
42,076
1,459
—
—
17,023
60
205,009
1,145
9,053
36
(3)
10,231
5,900
(1)
22,424
—
7,596
17,784
1,295
41,813
5,919
2,380
1,225
402
205
186
See Notes to Consolidated Financial Statements.
131
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Retail stores - (continued)
Elite Sportswear, L.P.*
Elite Sportswear, L.P.
Feeders Supply Company, LLC
Senior loan
Senior loan
One stop
Feeders Supply Company, LLC
Subordinated debt
Feeders Supply Company, LLC
Jet Equipment & Tools Ltd.#+!~(8)(9)(12)
Jet Equipment & Tools Ltd.*(8)(12)
Jet Equipment & Tools Ltd.#+!~(8)(12)
Jet Equipment & Tools Ltd.(5)(8)(9)(12)
Marshall Retail Group LLC, The^*
Marshall Retail Group LLC, The
Mills Fleet Farm Group LLC^*#+!~
Pet Holdings ULC^*+(8)(12)
Pet Holdings ULC^*(8)(12)
Pet Holdings ULC(5)(8)(12)
Pet Supplies Plus, LLC*+
Pet Supplies Plus, LLC(5)
PetPeople Enterprises, LLC^
PetPeople Enterprises, LLC
PetPeople Enterprises, LLC
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
One stop
Senior loan
Senior loan
One stop
One stop
One stop
Sola Franchise, LLC and Sola Salon Studios, LLC
One stop
Sola Franchise, LLC and Sola Salon Studios, LLC
One stop
Sola Franchise, LLC and Sola Salon Studios, LLC
One stop
Sola Franchise, LLC and Sola Salon Studios, LLC(5)
One stop
Vermont Aus Pty Ltd#!~(8)(9)(11)
Vermont Aus Pty Ltd(8)(9)(11)
One stop
One stop
L + 6.25% (c)
L + 6.25% (c)
L + 5.75% (a)
N/A
L + 5.75%
L + 5.75% (a)
L + 5.75% (a)
L + 5.75% (a)
L + 5.75%
L + 6.00% (c)
L + 6.00% (c)(f)
L + 6.25% (c)
L + 5.50% (c)
L + 5.50% (c)
L + 5.50%
L + 4.50% (a)
L + 4.50%
L + 5.00% (a)
L + 5.00% (a)
L + 5.00% (a)
L + 5.25% (c)
L + 5.25% (c)
L + 5.25%
L + 5.25%
L + 5.75% (c)
L + 5.75% (c)
Telecommunications
NetMotion Wireless Holdings, Inc.^*
NetMotion Wireless Holdings, Inc.
Textiles and Leather
SHO Holding I Corporation#!~
SHO Holding I Corporation
Utilities
Arcos, LLC#!~
Arcos, LLC
One stop
One stop
L + 6.25% (c)
L + 6.25%
Senior loan
Senior loan
L + 5.00% (c)
L + 4.00% (c)
One stop
One stop
L + 5.75% (c)
L + 5.75%
8.35%
8.49%
7.79%
12/2021
$
12/2021
04/2021
$
189
7
186
7
8,723
8,880
12.50% cash/7.00% PIK
04/2021
04/2021
11/2024
11/2024
11/2024
11/2024
08/2020
08/2020
10/2024
07/2022
07/2022
07/2022
12/2024
12/2023
09/2023
09/2023
09/2023
10/2024
10/2024
10/2024
10/2024
12/2024
12/2024
138
—
18,139
12,490
4,349
—
140
—
18,485
12,787
4,437
(1)
14,935
15,047
830
43,924
46,974
228
—
834
44,154
48,263
231
(2)
14,326
14,615
—
5,407
1,098
90
7,034
1,725
—
—
2,201
26
(1)
5,488
1,145
91
7,054
1,797
—
(1)
2,226
27
— % $
—
0.4
—
—
0.8
0.6
0.2
—
0.7
—
1.9
2.1
—
—
0.6
—
0.2
0.1
—
0.3
0.1
—
—
0.1
—
177
6
8,723
138
—
18,072
12,490
4,349
—
14,935
830
41,729
46,974
228
—
14,326
—
5,407
1,098
90
7,034
1,725
—
—
2,151
26
290,713
294,928
13.0
287,636
10/2021
10/2021
11,627
11,832
—
—
11,627
11,832
10/2022
10/2021
4,066
30
4,096
4,052
28
4,080
02/2021
02/2021
15,833
16,126
—
—
15,833
16,126
0.5
—
0.5
0.2
—
0.2
0.7
—
0.7
11,627
—
11,627
3,903
24
3,927
15,833
—
15,833
N/A(6)
7.70%
7.79%
7.79%
N/A(6)
8.32%
8.15%
8.29%
7.82%
7.82%
N/A(6)
6.54%
N/A(6)
7.33%
7.33%
7.33%
7.35%
7.35%
N/A(6)
N/A(6)
6.75%
6.75%
8.35%
N/A(6)
7.26%
6.31%
7.85%
N/A(6)
Total non-controlled/non-affiliate company debt investments
$
4,124,068
$
4,173,241
183.2 % $
4,073,336
See Notes to Consolidated Financial Statements.
132
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Equity Investments (13)(14)
Aerospace and Defense
NTS Technical Systems
NTS Technical Systems
NTS Technical Systems
Whitcraft LLC
Automobile
Grease Monkey International, LLC
Polk Acquisition Corp.
Quick Quack Car Wash Holdings, LLC
Beverage, Food and Tobacco
Benihana, Inc.
C. J. Foods, Inc.
Cafe Rio Holding, Inc.
Global ID Corporation
Hopdoddy Holdings, LLC
Hopdoddy Holdings, LLC
Mendocino Farms, LLC
Purfoods, LLC
Rubio's Restaurants, Inc.
Wood Fired Holding Corp.
Wood Fired Holding Corp.
Buildings and Real Estate
Common Stock
Preferred stock
Preferred stock
Common Stock
LLC units
LP interest
LLC units
LLC units
Preferred stock
Common Stock
LLC interest
LLC units
LLC units
Common Stock
LLC units
Preferred stock
LLC units
LLC units
Brooks Equipment Company, LLC
Common Stock
Paradigm DKD Group, LLC+
Paradigm DKD Group, LLC+
Paradigm DKD Group, LLC+
Chemicals, Plastics and Rubber
Flexan, LLC
Flexan, LLC
LLC units
LLC units
LLC units
Common Stock
Preferred stock
Inhance Technologies Holdings LLC
LLC units
Diversified/Conglomerate Manufacturing
Inventus Power, Inc.
Inventus Power, Inc.
Inventus Power, Inc.
Inventus Power, Inc.
Reladyne, Inc.
Diversified/Conglomerate Service
Preferred stock
Common Stock
LLC units
Preferred stock
LP interest
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$
2
—
—
11
1,506
256
128
2,285
4,175
803
1,304
5
—
43
—
5
5
44
20
169
736
2
437
437
10
1,041
184
37
1
—
—
1
1
—
—
1
314
508
2,126
699
75
603
603
217
61
770
1,222
945
444
—
5,639
1,021
—
70
—
1,091
—
137
124
261
372
—
88
20
931
1,411
Accela, Inc.
LLC units
N/A
N/A
N/A
670
418
See Notes to Consolidated Financial Statements.
133
— % $
—
—
0.1
0.1
0.1
—
—
0.1
0.1
—
—
—
—
—
0.1
0.1
0.1
—
—
0.4
0.1
—
—
—
0.1
—
—
—
—
—
—
—
—
0.1
0.1
—
509
378
213
2,845
3,945
1,741
220
528
2,489
960
577
650
694
211
60
739
1,667
985
431
—
6,974
2,376
—
67
—
2,443
—
146
97
243
5
—
80
23
1,279
1,387
208
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
Agility Recovery Solutions Inc.
Astute Holdings, Inc.
Calabrio, Inc.
Caliper Software, Inc.
Caliper Software, Inc.
Caliper Software, Inc.
Centrify Corporation
Centrify Corporation
Cloudbees, Inc.
Cloudbees, Inc.
Confluence Technologies, Inc.
Connexin Software, Inc.
Digital Guardian, Inc.
Digital Guardian, Inc.
Digital Guardian, Inc.
Digital Guardian, Inc.
Preferred stock
LP interest
Common Stock
Common Stock
Preferred stock
Preferred stock
LP interest
LP interest
Warrant
Preferred stock
LLC interest
LLC interest
Preferred stock
Warrant
Preferred stock
Warrant
DISA Holdings Acquisition Subsidiary Corp.
Common Stock
GS Acquisitionco, Inc.(15)
HealthcareSource HR, Inc.
LP interest
LLC interest
Hydraulic Authority III Limited(8)(9)(10)
Preferred stock
Hydraulic Authority III Limited(8)(9)(10)
Common Stock
Internet Truckstop Group LLC
Kareo, Inc.
Kareo, Inc.
Kareo, Inc.
Maverick Bidco Inc.
MetricStream, Inc.
LP interest
Warrant
Warrant
Preferred stock
LLC units
Warrant
MMan Acquisition Co.
Common Stock
Namely, Inc.
Net Health Acquisition Corp.
Nexus Brands Group, Inc.
Personify, Inc.
Pride Midco, Inc.
Warrant
LP interest
LP interest
LLC units
Preferred stock
Project Alpha Intermediate Holding, Inc.
Common Stock
Project Alpha Intermediate Holding, Inc.
Common Stock
Property Brands, Inc.
RegEd Aquireco, LLC
RegEd Aquireco, LLC
SnapLogic, Inc.
SnapLogic, Inc.
Vendavo, Inc.
Verisys Corporation
LLC units
LP interest
LP interest
Preferred stock
Warrant
Preferred stock
Common Stock
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$
97
—
26
221
3
—
263
1
93
71
2
154
3,562
1,218
738
124
—
2
—
284
6
408
53
5
1
2
168
—
17
1
—
639
2
202
1
63
3
—
184
69
1,017
579
604
294
205
283
2,734
36
—
691
181
466
286
192
434
225
142
33
154
291
621
386
43
447
162
6
8
723
263
927
28
1,440
444
828
2,594
329
964
766
21
316
458
27
1,017
712
0.1 % $
—
—
—
0.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.1
—
0.1
—
0.1
0.1
—
0.1
0.1
—
—
—
—
0.1
—
815
348
200
322
2,862
38
—
613
239
455
347
217
419
227
142
40
426
371
810
382
77
438
4
11
7
464
256
1,306
28
1,437
439
950
2,676
636
1,069
839
24
320
458
27
1,646
786
See Notes to Consolidated Financial Statements.
134
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
Vitalyst, LLC
Vitalyst, LLC
Workforce Software, LLC
Xmatters, Inc. and Alarmpoint, Inc.
Investment Type
Equity
Preferred stock
Common Stock
Preferred stock
Xmatters, Inc. and Alarmpoint, Inc.
Warrant
Xmatters, Inc. and Alarmpoint, Inc.
Preferred stock
N/A
N/A
N/A
N/A
N/A
N/A
Ecological
Pace Analytical Services, LLC
Common Stock
N/A
Electronics
Appriss Holdings, Inc.
Diligent Corporation
Episerver, Inc.
Project Silverback Holdings Corp.
SEI, Inc.
Silver Peak Systems, Inc.
Sloan Company, Inc., The
Sloan Company, Inc., The
Healthcare, Education and Childcare
Active Day, Inc.
Acuity Eyecare Holdings, LLC
Preferred stock
Preferred stock
Common Stock
Preferred stock
LLC units
Warrant
LLC units
LLC units
LLC interest
LLC units
ADCS Clinics Intermediate Holdings, LLC
Preferred stock
ADCS Clinics Intermediate Holdings, LLC
Common Stock
Aris Teleradiology Company, LLC
Aris Teleradiology Company, LLC
Aris Teleradiology Company, LLC
Aspen Medical Products, LLC
BIO18 Borrower, LLC
BIOVT, LLC
CMI Parent Inc.
CMI Parent Inc.
CRH Healthcare Purchaser, Inc.
DCA Investment Holding, LLC
DCA Investment Holding, LLC
Deca Dental Management LLC
Dental Holdings Corporation
Preferred stock
Common Stock
Preferred stock
Common Stock
LLC interest
LLC units
LLC units
LLC units
LP interest
LLC units
LLC units
LLC units
LLC units
Elite Dental Partners LLC
Common Stock
Encore GC Acquisition, LLC(15)
Encore GC Acquisition, LLC
ERG Buyer, LLC
ERG Buyer, LLC
LLC units
LLC units
LLC units
LLC units
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$
1
—
—
474
84
20
7
61
973
494
64
26
22,824
6
700
—
414
76
3
547
67
2
—
1
1,158
1
—
5
2
—
—
591
—
2
—
429
13,890
140
1,008
1,277
—
26
26
8
1
173
1,609
807
6
819
27
13
152
3,606
1,021
1,334
1,119
6
—
—
—
77
1,190
1,223
3
240
469
1,619
218
1,278
891
737
272
52
4
661
—
—
0.1
—
—
—
1.0
0.1
—
0.1
0.1
—
0.1
—
—
—
0.3
0.1
0.1
0.1
—
—
—
—
—
0.1
0.1
—
—
—
0.1
—
0.1
—
—
—
—
—
—
$
—
65
939
534
59
31
25,007
781
172
1,777
813
—
1,402
26
—
—
4,190
774
1,212
1,018
—
—
—
—
75
1,272
1,663
3
232
482
1,908
528
1,358
185
666
278
160
—
510
See Notes to Consolidated Financial Statements.
135
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Healthcare, Education, and Childcare - (continued)
Eyecare Services Partners Holdings LLC
Eyecare Services Partners Holdings LLC
G & H Wire Company, Inc.
IntegraMed America, Inc.
Joerns Healthcare, LLC^*
Katena Holdings, Inc.
Krueger-Gilbert Health Physics, LLC
Lombart Brothers, Inc.
MD Now Holdings, Inc.
LLC units
LLC units
LLC interest
LLC interest
Common Stock
LLC units
LLC interest
Common Stock
LLC units
MWD Management, LLC & MWD Services, Inc.
LLC interest
Oliver Street Dermatology Holdings, LLC
LLC units
Pentec Acquisition Sub, Inc.
Pinnacle Treatment Centers, Inc.
Pinnacle Treatment Centers, Inc.
Radiology Partners, Inc.
Radiology Partners, Inc.
RXH Buyer Corporation
Sage Dental Management, LLC
Sage Dental Management, LLC
SLMP, LLC
Spear Education, LLC
Spear Education, LLC
SSH Corpration
Summit Behavioral Healthcare, LLC(15)
Summit Behavioral Healthcare, LLC
Preferred stock
Common Stock
Preferred stock
LLC units
LLC units
LP interest
LLC units
LLC units
LLC units
LLC units
LLC units
Common Stock
LLC interest
LLC interest
Surgical Information Systems, LLC(15)
Common Stock
WHCG Management, LLC
LLC units
Insurance
Captive Resources Midco, LLC(15)
Orchid Underwriters Agency, LLC
Leisure, Amusement, Motion Pictures, Entertainment
LMP TR Holdings, LLC
PADI Holdco, Inc.
WBZ Investment LLC
WBZ Investment LLC
WBZ Investment LLC
WBZ Investment LLC
WBZ Investment LLC
WBZ Investment LLC
LLC units
LP interest
LLC units
LLC units
LLC interest
LLC interest
LLC interest
LLC interest
LLC interest
LLC interest
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
— $
—
336
—
123
1
136
1
15
412
452
1
5
—
43
11
11
3
—
668
1
—
—
2
2
4
1
388
78
712
1
68
46
38
33
14
1
$
262
1
269
417
2,852
573
152
440
153
335
234
116
74
528
55
68
973
3
249
789
1
62
40
98
—
414
414
21,986
—
90
90
712
1,073
117
80
65
58
24
2
2,131
Personal and Non Durable Consumer Products (Mfg. Only)
Georgica Pine Clothiers, LLC(15)
LLC units
N/A
N/A
N/A
20
291
See Notes to Consolidated Financial Statements.
136
— % $
—
—
—
0.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.1
—
—
—
—
—
—
—
0.9
—
—
—
0.1
0.1
—
—
—
—
—
—
0.2
—
171
—
207
64
1,207
514
156
559
152
282
—
106
140
574
327
83
705
—
5
843
38
82
143
50
—
505
287
19,524
436
96
532
1,478
1,114
122
84
69
60
26
2
2,955
389
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Personal and Non Durable Consumer Products (Mfg. Only) - (continued)
Massage Envy, LLC
LLC interest
N/A
N/A
N/A
Personal, Food and Miscellaneous Services
Blue River Pet Care, LLC
Captain D's, LLC
Clarkson Eyecare LLC
LLC units
LLC interest
LLC units
Community Veterinary Partners, LLC
Common Stock
Midwest Veterinary Partners, LLC
Midwest Veterinary Partners, LLC
PPV Intermediate Holdings II, LLC
LLC units
LLC units
LLC units
R.G. Barry Corporation
Preferred stock
Ruby Slipper Cafe LLC, The
Southern Veterinary Partners, LLC
Southern Veterinary Partners, LLC
LLC units
LLC units
LLC units
Wetzel's Pretzels, LLC
Common Stock
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Printing and Publishing
Brandmuscle, Inc.
LLC interest
N/A
Retail Stores
2nd Ave. LLC
Batteries Plus Holding Corporation
Cycle Gear, Inc.
DTLR, Inc.
Elite Sportswear, L.P.
Feeders Supply Company, LLC
Feeders Supply Company, LLC
Jet Equipment & Tools Ltd.(8)(9)(12)
Marshall Retail Group LLC, The
Paper Source, Inc.
Pet Holdings ULC(8)(12)
Pet Supplies Plus, LLC
LP interest
LP interest
LLC units
LLC interest
LLC interest
Preferred stock
Common Stock
LLC units
LLC units
Common Stock
LP interest
LLC units
Sola Franchise, LLC and Sola Salon Studios, LLC
LLC units
Sola Franchise, LLC and Sola Salon Studios, LLC
LLC units
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
749
$
—
158
—
4
6
—
208
—
31
147
1
—
210
501
76
156
275
597
—
29
198
161
373
188
717
416
3,186
—
335
653
10
27
4
—
4
—
1
15
8
677
144
4
1
653
1,287
462
411
165
400
—
946
154
1,387
483
181
496
101
7,126
$
0.1 % $
1,776
0.1
2,165
—
—
—
—
—
—
—
—
—
—
0.1
—
0.1
—
—
0.1
—
0.1
—
—
—
0.1
—
—
—
—
—
—
0.3
74
147
263
730
—
29
197
120
398
409
845
507
3,719
196
653
1,483
662
835
—
413
—
1,097
149
363
282
205
567
118
6,827
Total non-controlled/affiliate company equity investments
$
77,188
3.8 % $
83,377
Total non-controlled/non-affiliate company investments
$
4,124,068
$
4,250,429
187.0 % $
4,156,713
See Notes to Consolidated Financial Statements.
137
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Non-controlled affiliate company investments(16)
Debt investments
Beverage, Food and Tobacco
Uinta Brewing Company^+(7)(8)
One stop
L + 4.00% (a)
Uinta Brewing Company(7)(8)
One stop
L + 4.00% (a)(c)
Diversified/Conglomerate Service
Switchfly LLC(8)
Switchfly LLC(8)
Switchfly LLC(8)
Switchfly LLC(8)
One stop
L + 3.00% (c)
One stop
L + 3.00% (c)
One stop
One stop
L + 3.00% (c)
L + 8.50%
6.04%
6.04%
5.32%
5.32%
5.32%
N/A(6)
Mining, Steel, Iron and Non-Precious Metals
Benetech, Inc.+(8)
Benetech, Inc.(8)
One stop
L + 11.00% (a)
One stop
P + 9.75% (a)(f)
11.04% cash/2.00% PIK
12.61% cash/2.00% PIK
05/2020
05/2020
$
08/2021
08/2021
$
962
192
928
188
1,154
1,116
— % $
—
—
10/2023
10/2023
10/2023
10/2023
5,363
447
34
—
5,142
430
33
—
5,844
5,605
4,249
581
4,830
4,222
572
4,794
0.2
—
—
—
0.2
0.2
—
0.2
793
170
963
4,827
403
30
—
5,260
3,398
341
3,739
Total non-controlled affiliate company debt investments
$
11,828
$
11,515
0.4 % $
9,962
Equity Investments (13)(14)
Beverage, Food and Tobacco
Uinta Brewing Company(8)
Common Stock
N/A
N/A
N/A
153
$
17
—
$
82
Diversified/Conglomerate Service
Switchfly LLC(8)
LLC units
N/A
N/A
N/A
3,418
2,322
0.1
2,523
Mining, Steel, Iron and Non-Precious Metals
Benetech, Inc.(8)
Benetech, Inc.(8)
LLC interest
LLC interest
N/A
N/A
N/A
N/A
N/A
N/A
59
59
—
—
—
—
—
—
8
—
8
Total non-controlled affiliate company equity investments
$
2,339
0.1 % $
2,613
Total non-controlled affiliate company investments
$
11,828
$
13,854
0.5 % $
12,575
Controlled affiliate company investments(17)
Equity Investments
Investment Funds and Vehicles
GCIC Senior Loan Fund LLC(8)(18)
Senior Loan Fund LLC(8)(18)
LLC interest
LLC interest
N/A
N/A
N/A
N/A
N/A
N/A
48,356
74,882
Total controlled affiliate equity investments
Total investments
$
4,135,896
$
$
$
52,605
74,882
127,487
4,391,770
2.2 % $
49,258
3.4
74,386
5.6 % $
123,644
193.1 % $
4,292,932
See Notes to Consolidated Financial Statements.
138
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
Investment Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized Cost
Percentage
of Net
Assets
Fair
Value (4)
Cash and cash equivalents, foreign currencies, restricted cash and cash equivalents, and restricted foreign currencies
Cash, foreign currencies, restricted cash and cash equivalents and restricted foreign currencies
BlackRock Liquidity Funds T-Fund Institutional Shares (CUSIP 09248U718)
1.81% (19)
Total cash and cash equivalents, foreign currencies, restricted cash and cash equivalents, and restricted foreign currencies
Total investments and cash, cash equivalents, and restricted cash and cash equivalents
$
$
$
84,278
9,963
94,241
3.8 % $
84,208
0.4
9,963
4.2 % $
94,171
4,486,011
197.3 % $
4,387,103
^
*
#
+
!
~
Denotes that all or a portion of the loan secures the notes offered in the 2014 Debt Securitization (as defined in Note 7).
Denotes that all or a portion of the loan secures the notes offered in the 2018 Debt Securitization (as defined in Note 7).
Denotes that all or a portion of the loan secures the notes offered in the GCIC 2018 Debt Securitization (as defined in Note 7).
Denotes that all or a portion of the loan collateralizes the WF Credit Facility (as defined in Note 7).
Denotes that all or a portion of the loan collateralizes the DB Credit Facility (as defined in Note 7).
Denotes that all or a portion of the loan collateralizes the MS Credit Facility II (as defined in Note 7).
(1) The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L") denominated in U.S. dollars or U.K. pound sterling ("GBP"), Euro Interbank
Offered Rate ("EURIBOR" or "E") or Prime ("P") and which reset daily, monthly, quarterly, semiannually, or annually. For each, the Company has provided the spread over LIBOR, EURIBOR or Prime and the weighted
average current interest rate in effect as of September 30, 2019. Certain investments are subject to a LIBOR, EURIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.
Listed below are the index rates as of September 30, 2019, which was the last business day of the period on which LIBOR or EURIBOR was determined. The actual index rate for each loan listed may not be the applicable
index rate outstanding as of September 30, 2019, as the loan may have priced or repriced based on an index rate prior to September 30, 2019.
(a) Denotes that all or a portion of the loan was indexed to the 30-day LIBOR, which was 2.02% as of September 30, 2019.
(b) Denotes that all or a portion of the loan was indexed to the 60-day LIBOR, which was 2.07% as of September 30, 2019.
(c) Denotes that all or a portion of the loan was indexed to the 90-day LIBOR, which was 2.09% as of September 30, 2019.
(d) Denotes that all or a portion of the loan was indexed to the 180-day LIBOR, which was 2.06% as of September 30, 2019.
(e) Denotes that all or a portion of the loan was indexed to the 360-day LIBOR, which was 2.03% as of September 30, 2019.
(f) Denotes that all or a portion of the loan was indexed to the Prime rate, which was 5.00% as of September 30, 2019.
(g) Denotes that all or a portion of the loan was indexed to the 90-day EURIBOR, which was -0.44% as of September 30, 2019.
(h) Denotes that all or a portion of the loan was indexed to the 30-day GBP LIBOR, which was 0.72% as of September 30, 2019.
(i) Denotes that all or a portion of the loan was indexed to the 90-day GBP LIBOR, which was 0.76% as of September 30, 2019.
(j) Denotes that all or a portion of the loan was indexed to the 180-day GBP LIBOR, which was 0.83% as of September 30, 2019.
(2) For portfolio companies with multiple interest rate contracts, the interest rate shown is a weighted average current interest rate in effect as of September 30, 2019.
(3) The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
(4) The fair value of the investment was valued using significant unobservable inputs. See Note 6. Fair Value Measurements.
(5) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost is the result of the capitalized discount being greater than the
principal amount outstanding on the loan.
(6) The entire commitment was unfunded as of September 30, 2019. As such, no interest is being earned on this investment. The investment may be subject to an unused facility fee.
(7) Loan was on non-accrual status as of September 30, 2019, meaning that the Company has ceased recognizing interest income on the loan.
(8) The investment is treated as a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, the Company may not acquire any non-qualifying asset
unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of September 30, 2019, total non-qualifying assets at fair value represented 7.8% of the Company's total
assets calculated in accordance with the 1940 Act.
(9) Investment is denominated in foreign currency and is translated into U.S. dollars as of the valuation date or the date of the transaction. See Note 2. Significant Accounting Policies and Recent Accounting Updates - Foreign
Currency Transactions.
(10) The headquarters of this portfolio company is located in the United Kingdom.
(11) The headquarters of this portfolio company is located in Australia.
(12) The headquarters of this portfolio company is located in Canada.
See Notes to Consolidated Financial Statements.
139
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2019
(In thousands)
(13) Equity investments are non-income producing securities unless otherwise noted.
(14) Ownership of certain equity investments may occur through a holding company or partnership.
(15) The Company holds an equity investment that entitles it to receive preferential dividends.
(16)As defined in the 1940 Act, the Company is deemed to be an "affiliated person" of the portfolio company as the Company owns five percent or more of the portfolio company's voting securities ("non-controlled affiliate").
Transactions related to investments in non-controlled affiliates for the year ended September 30, 2019 were as follows:
Fair value as of
September 30,
2018
Purchases
(cost)(l)
Redemptions
(cost)
Transfer
in/out (cost)
Discount
accretion
Net change in
unrealized
gain/(loss)
Fair value as of
September 30, 2019 Net realized
gain/(loss)
Interest and
fee income
Dividend
income
Portfolio Company
Benetech, Inc.
Switchfly LLC
Uinta Brewing Company(m)
$
$
4,496
2,788
—
$
535
408
155
$
(385)
—
—
(385)
$
4,983
1,023
6,211
205
$
(40)
$
(1,064)
$
(339)
(44)
(57)
(89)
$
3,747
7,783
1,045
— $
—
—
— $
623
$
139
—
762
$
—
—
—
—
Total Non-Controlled Affiliates
$
7,284
$
1,098
$
$
(423)
$
(1,210)
$
12,575
$
(l)
(m)
Purchases at cost includes amounts related to payment-in-kind ("PIK") interest capitalized and added to the principal balance of the respective loans.
During the three months ended March 31, 2019, the Company's ownership increased to over five percent of the portfolio company's voting securities.
(17)As defined in the 1940 Act, the Company is deemed to be both an "affiliated person" of and "control" this portfolio company as the Company owns more than 25% of the portfolio company's outstanding voting securities or
has the power to exercise control over management or policies of such portfolio company (including through a management agreement) ("controlled affiliate"). Transactions related to investments in controlled affiliates for
the year ended September 30, 2019 were as follows:
Portfolio Company
Senior Loan Fund LLC(n)
GCIC Senior Loan Fund LLC(o)
Total Controlled Affiliates
Fair value as of
September 30,
2018
Purchases
(cost)
Redemptions
(cost)
Transfer
in/out (cost)
Discount
accretion
Net change in
unrealized
gain/(loss)
Fair value as of
September 30, 2019 Net realized
gain/(loss)
Interest and
fee income
Dividend
income
$
$
71,084
$
1,750
$
(2,275)
$
— $
—
—
—
71,084
$
1,750
$
(2,275)
$
52,605
52,605
$
— $
—
— $
3,827
$
(3,347)
74,386
49,258
480
$
123,644
$
$
— $
—
— $
— $
—
— $
—
1,219
1,219
(n)
(o)
Together with RGA Reinsurance Company ("RGA"), the Company co-invests through SLF. SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF must be
approved by the SLF investment committee consisting of two representatives of the Company and RGA (with unanimous approval required from (i) one representative of each of the Company and RGA or (ii) both
representatives of each of the Company and RGA). Therefore, although the Company owns more than 25% of the voting securities of SLF, the Company does not have sole control over significant actions of SLF for
purposes of the 1940 Act or otherwise.
Together with Aurora National Life Assurance Company ("Aurora"), the Company co-invests through GCIC Senior Loan Fund ("GCIC SLF"), following the acquisition of GCIC SLF in the merger with GCIC
(described in Note 1). GCIC SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect to GCIC SLF must be approved by the GCIC SLF investment committee consisting
of two representatives of the Company and Aurora (with unanimous approval required from (i) one representative of each of the Company and Aurora or (ii) both representatives of each of the Company and
Aurora). Therefore, although the Company owns more than 25% of the voting securities of GCIC SLF, the Company does not have sole control over significant actions of GCIC SLF for purposes of the 1940 Act or
otherwise.
(18) The Company generally receives quarterly profit distributions from its equity investments in SLF and GCIC SLF. For the year ended September 30, 2019, the Company did not receive a profit distribution from its equity
investments in SLF. For its equity investment in GCIC SLF, the Company received $1,219 for the year ended September 30, 2019. See Note 4. Investments.
(19) The rate shown is the annualized seven-day yield as of September 30, 2019.
See Notes to Consolidated Financial Statements.
140
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2018
(In thousands)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
Investments
Non-controlled/non-affiliate company investments
Debt investments
Aerospace and Defense
ILC Dover, LP
NTS Technical Systems*^
NTS Technical Systems(5)
Senior loan
L + 4.75% (c)
One stop
L + 6.25% (a)
One stop
L + 6.25%
Tresys Technology Holdings, Inc.(7)
One stop
L + 6.75% (a)
Tresys Technology Holdings, Inc.(7)
One stop
L + 6.75% (a)
Tronair Parent, Inc.^
Tronair Parent, Inc.
Whitcraft LLC*^
Whitcraft LLC^
Whitcraft LLC(5)
Whitcraft LLC(5)
Automobile
Senior loan
L + 4.75% (c)
Senior loan
L + 4.50%
(a)(b)(c)
(f)
One stop
L + 6.25% (c)
One stop
L + 6.25% (c)
One stop
One stop
L + 6.25%
L + 6.25%
Dent Wizard International Corporation*
Senior loan
L + 4.00% (a)
Grease Monkey International, LLC*^
Senior loan
L + 5.00% (a)
Grease Monkey International, LLC
Senior loan
L + 5.00% (a)
Grease Monkey International, LLC
Senior loan
L + 5.00% (a)
Grease Monkey International, LLC
Senior loan
L + 5.00% (a)
Grease Monkey International, LLC(5)
Senior loan
L + 5.00%
Quick Quack Car Wash Holdings, LLC
One stop
L + 6.50% (a)
Quick Quack Car Wash Holdings, LLC
One stop
L + 6.50% (a)
Quick Quack Car Wash Holdings, LLC
One stop
L + 6.50% (a)
Quick Quack Car Wash Holdings, LLC(5)
One stop
L + 6.50%
Beverage, Food and Tobacco
Abita Brewing Co., L.L.C.
Abita Brewing Co., L.L.C.
C. J. Foods, Inc.*^
C. J. Foods, Inc.^
C. J. Foods, Inc.
One stop
L + 5.75% (a)
One stop
L + 5.75%
One stop
L + 6.25% (c)
One stop
L + 6.25% (c)
One stop
L + 6.25% (c)
Cafe Rio Holding, Inc.*^
One stop
L + 5.75% (a)
Cafe Rio Holding, Inc.
Cafe Rio Holding, Inc.
Cafe Rio Holding, Inc.
Fintech Midco, LLC
Fintech Midco, LLC(5)
Fintech Midco, LLC(5)
One stop
P + 4.75% (f)
10.00%
One stop
L + 5.75% (a)
One stop
L + 5.75% (a)
One stop
L + 6.00% (a)
One stop
One stop
L + 6.00%
L + 6.00%
Firebirds International, LLC*
One stop
L + 5.75% (a)
Firebirds International, LLC*
One stop
L + 5.75% (a)
Firebirds International, LLC^
One stop
L + 5.75% (a)
Firebirds International, LLC
Firebirds International, LLC
Flavor Producers, LLC
Flavor Producers, LLC(5)
One stop
L + 5.75% (c)
One stop
L + 5.75%
Senior loan
L + 4.75% (c)
Senior loan
L + 4.75%
See Notes to Consolidated Financial Statements.
141
7.14%
8.36%
N/A(6)
8.99%
8.99%
7.56%
7.03%
8.64%
8.64%
N/A(6)
N/A(6)
6.23%
7.24%
7.24%
7.24%
7.24%
N/A(6)
8.74%
8.67%
8.70%
N/A(6)
7.99%
N/A(6)
8.64%
8.64%
8.58%
7.99%
7.99%
7.99%
8.25%
N/A(6)
N/A(6)
7.89%
7.89%
7.89%
7.99%
N/A(6)
7.13%
N/A(6)
12/2023
$
9,928
$
9,841
1.0 % $
9,928
06/2021
06/2021
12/2018
12/2018
09/2023
09/2021
04/2023
04/2023
04/2023
04/2023
04/2020
11/2022
11/2022
11/2022
11/2022
11/2022
04/2023
04/2023
04/2023
04/2023
04/2021
04/2021
05/2020
05/2020
05/2020
09/2023
09/2023
09/2023
09/2023
08/2024
08/2024
08/2024
12/2018
12/2018
12/2018
12/2018
12/2018
12/2023
12/2022
21,718
21,508
—
(53)
3,899
3,845
659
366
80
658
363
79
12,439
12,298
194
—
—
192
(1)
(2)
49,283
48,728
4,477
4,863
76
27
21
—
8,751
150
40
—
4,463
4,813
75
25
20
(2)
8,652
148
39
(4)
18,405
18,229
6,998
6,926
2.2
—
0.1
0.1
0.1
—
1.3
—
—
—
4.8
0.5
0.5
—
—
—
—
0.9
—
—
—
1.9
0.7
—
—
—
8,582
8,528
649
517
647
514
10,370
10,220
80
40
10
79
37
8
12,995
12,868
—
—
(1)
(2)
1,049
1,048
295
95
41
295
95
41
—
—
2,155
2,127
—
(1)
0.9
0.1
0.1
1.1
—
—
—
1.3
—
—
0.1
—
—
—
—
0.2
—
21,718
—
780
659
366
80
12,439
194
—
—
46,164
4,477
4,808
75
25
20
(2)
8,751
150
40
—
18,344
6,998
—
8,582
649
517
10,370
80
40
10
12,865
(1)
(3)
1,049
295
95
41
—
2,155
—
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
Beverage, Food and Tobacco - (continued)
FWR Holding Corporation^
One stop
L + 5.75% (a)
FWR Holding Corporation
FWR Holding Corporation
FWR Holding Corporation(5)
One stop
L + 5.75% (a)
One stop
L + 5.75% (a)(f)
One stop
L + 5.75%
Global Franchise Group, LLC*
Senior loan
L + 5.75% (a)
08/2023
$
5,259
$
5,194
0.6 % $
5,259
08/2023
08/2023
08/2023
12/2019
12/2019
11/2021
11/2021
11/2021
11/2021
65
42
—
64
41
(1)
3,220
3,203
—
—
5,144
72
—
—
5,104
71
—
(1)
One stop
L + 9.50% (c)
10.31% cash/1.50% PIK
08/2020
1,307
1,301
One stop
L + 9.50% (c)
10.34% cash/1.50% PIK
08/2020
One stop
L + 9.50% (c)
10.32% cash/1.50% PIK
08/2020
Mid-America Pet Food, L.L.C.*^
One stop
L + 6.00% (c)
7.99%
7.99%
8.80%
N/A(6)
7.99%
N/A(6)
8.84%
8.84%
N/A(6)
N/A(6)
N/A(6)
8.39%
N/A(6)
6.50%
6.50%
8.50%
8.31%
Senior loan
L + 5.75%
One stop
L + 6.50% (c)
One stop
L + 6.50% (c)
One stop
One stop
L + 6.50%
L + 6.50%
One stop
L + 8.50%
One stop
L + 6.00%
Senior loan
L + 4.25% (a)
Senior loan
L + 4.25% (a)
Senior loan
P + 3.25% (f)
One stop
L + 6.00% (c)
One stop
N/A
7.00% PIK
One stop
L + 6.00% (a)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00%
Senior loan
L + 5.25% (c)
One stop
L + 8.50% (a)
One stop
L + 8.50% (a)
8.15%
8.39%
8.39%
8.39%
8.33%
8.39%
8.39%
8.39%
8.39%
8.39%
8.39%
8.39%
N/A(6)
7.64%
10.74%
10.74%
06/2023
12/2021
12/2021
09/2023
09/2023
09/2023
05/2021
05/2026
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
05/2021
10/2019
08/2019
08/2019
47
3
—
47
2
(2)
10,752
10,664
—
(1)
2,079
1,097
5
8,379
116
65
39
30
30
30
24
15
15
14
11
11
10
2,061
1,086
4
8,270
116
64
39
30
30
30
23
15
15
14
11
11
10
—
(1)
11,173
11,000
3,725
693
3,716
691
97,348
96,350
Global Franchise Group, LLC
Global ID Corporation*
Global ID Corporation
Global ID Corporation
Global ID Corporation(5)
Hopdoddy Holdings, LLC
Hopdoddy Holdings, LLC
Hopdoddy Holdings, LLC
Mendocino Farms, LLC(5)
Mid-America Pet Food, L.L.C.(5)
NBC Intermediate, LLC^
NBC Intermediate, LLC *
NBC Intermediate, LLC
Purfoods, LLC
Purfoods, LLC
Purfoods, LLC
Purfoods, LLC^
Purfoods, LLC
Purfoods, LLC
Purfoods, LLC
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC^
Purfoods, LLC(5)
Rubio's Restaurants, Inc.*^
Uinta Brewing Company^(7)
Uinta Brewing Company(7)
Broadcasting and Entertainment
TouchTunes Interactive Networks, Inc.^
Senior loan
L + 4.75% (a)
6.99%
05/2021
1,447
1,444
Buildings and Real Estate
Brooks Equipment Company, LLC*^
One stop
L + 5.00% (c)
Brooks Equipment Company, LLC*
One stop
L + 5.00% (b)(c)
Brooks Equipment Company, LLC(5)
Jensen Hughes, Inc.
Jensen Hughes, Inc.
One stop
L + 5.00%
Senior loan
L + 4.50% (a)
Senior loan
L + 4.50% (a)
7.31%
7.28%
N/A(6)
6.71%
6.74%
08/2020
08/2020
08/2020
03/2024
03/2024
21,096
20,996
2,634
2,623
—
500
153
(6)
498
151
See Notes to Consolidated Financial Statements.
142
—
—
—
0.3
—
0.5
—
—
—
0.1
—
—
—
1.1
—
0.2
0.1
—
0.9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1.2
0.3
0.1
9.9
0.1
2.2
0.3
—
0.1
—
65
42
—
3,220
—
5,144
72
—
—
1,307
47
3
—
10,752
—
2,058
1,086
4
8,379
116
65
39
30
30
30
24
15
15
14
11
11
10
—
11,173
2,459
444
95,666
1,447
21,096
2,634
—
500
153
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
03/2024
$
29
$
Buildings and Real Estate - (continued)
Jensen Hughes, Inc.
MRI Software LLC^
MRI Software LLC*^
MRI Software LLC^
MRI Software LLC
MRI Software LLC
MRI Software LLC^
MRI Software LLC
MRI Software LLC(5)
Chemicals, Plastics and Rubber
Flexan, LLC*
Flexan, LLC^
Flexan, LLC
Senior loan
L + 4.50% (a)
One stop
L + 5.50% (c)
One stop
L + 5.50% (c)
One stop
L + 5.50% (c)
One stop
L + 5.50% (c)
One stop
L + 5.50% (c)
One stop
L + 5.50% (a)
One stop
L + 5.50% (a)
One stop
L + 5.50%
One stop
L + 5.75% (c)
One stop
L + 5.75% (c)
One stop
P + 4.50% (f)
Inhance Technologies Holdings LLC
One stop
L + 5.25% (b)
Inhance Technologies Holdings LLC(5)
Inhance Technologies Holdings LLC(5)
One stop
One stop
L + 5.25%
L + 5.25%
Diversified/Conglomerate Manufacturing
Chase Industries, Inc.
Chase Industries, Inc.
Chase Industries, Inc.
Inventus Power, Inc.*^
Inventus Power, Inc.
Onicon Incorporated*^
Onicon Incorporated(5)
Senior loan
L + 4.00% (c)
Senior loan
L + 4.00% (c)
Senior loan
L + 4.00% (c)
One stop
L + 6.50% (a)
One stop
L + 6.50% (a)(c)
One stop
L + 5.50% (a)(c)
One stop
L + 5.50%
Pasternack Enterprises, Inc. and Fairview Microwave, Inc
Senior loan
L + 4.00% (a)(f)
Pasternack Enterprises, Inc. and Fairview Microwave, Inc
Senior loan
L + 4.00%
PetroChoice Holdings, Inc.^
Senior loan
L + 5.00% (b)
Plex Systems, Inc.*^
Plex Systems, Inc.(5)
Reladyne, Inc.*^
Reladyne, Inc.^
Reladyne, Inc.
Reladyne, Inc.(5)
One stop
L + 7.50% (a)
One stop
L + 7.50%
Senior loan
L + 5.00% (c)
Senior loan
L + 5.00% (c)
Senior loan
L + 5.00% (c)
Senior loan
L + 5.00%
Source Refrigeration & HVAC, Inc.*
Senior loan
L + 4.75% (c)
Source Refrigeration & HVAC, Inc.
Senior loan
L + 4.75% (c)
Source Refrigeration & HVAC, Inc.
Senior loan
P + 3.75% (f)
Source Refrigeration & HVAC, Inc.
Senior loan
L + 4.75% (c)
Source Refrigeration & HVAC, Inc.(5)
Sunless Merger Sub, Inc.
Sunless Merger Sub, Inc.
Senior loan
L + 4.75%
Senior loan
L + 5.00% (a)(f)
Senior loan
P + 3.75% (f)
Togetherwork Holdings, LLC
One stop
L + 6.50% (a)
Togetherwork Holdings, LLC
One stop
L + 6.50% (a)
Togetherwork Holdings, LLC
One stop
L + 6.50% (a)
Togetherwork Holdings, LLC
One stop
L + 6.50% (a)
6.65%
7.89%
7.89%
7.89%
7.89%
7.89%
7.65%
7.67%
N/A(6)
8.14%
8.14%
9.75%
7.43%
N/A(6)
N/A(6)
6.34%
6.34%
6.38%
8.74%
8.78%
7.88%
N/A(6)
6.24%
N/A(6)
7.20%
9.82%
N/A(6)
7.34%
7.34%
7.34%
N/A(6)
7.14%
7.10%
9.00%
7.09%
N/A(6)
7.28%
8.75%
8.74%
8.74%
8.74%
8.74%
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
06/2023
02/2020
02/2020
02/2020
07/2024
07/2024
07/2024
05/2025
05/2023
05/2025
04/2020
04/2020
04/2022
04/2022
07/2025
07/2023
08/2022
06/2020
06/2020
07/2022
07/2022
07/2022
07/2022
04/2023
04/2023
04/2023
04/2023
04/2023
07/2019
07/2019
03/2025
03/2025
03/2025
03/2025
29
23,156
13,614
354
292
192
163
32
(6)
23,684
13,744
357
295
194
165
35
—
62,886
62,088
2,310
1,086
11
6,880
—
—
2,296
1,081
11
6,731
(1)
(1)
10,287
10,117
6,870
6,756
16
12
7,285
271
14
8
7,266
270
17,916
17,784
—
(3)
5,634
5,607
—
—
1,732
1,700
18,797
18,635
—
(14)
16,878
16,691
173
142
—
9,453
111
89
57
—
1,381
256
9,158
557
116
108
171
141
(3)
9,352
110
86
56
(2)
1,384
256
9,031
549
114
106
— % $
29
2.4
1.4
0.1
—
—
—
—
—
6.5
0.3
0.1
—
0.7
—
—
1.1
0.7
—
—
0.7
—
1.9
—
0.6
—
0.2
1.9
—
1.7
—
—
—
1.0
—
—
—
—
0.2
—
0.9
0.1
—
—
23,684
13,744
357
295
194
165
35
—
62,886
2,310
1,086
11
6,811
(1)
(2)
10,215
6,870
16
12
6,557
236
17,916
—
5,606
—
1,732
18,797
—
16,878
173
142
—
9,453
111
89
57
—
1,381
256
9,066
552
114
107
See Notes to Consolidated Financial Statements.
143
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Diversified/Conglomerate Manufacturing - (continued)
Togetherwork Holdings, LLC(5)
Togetherwork Holdings, LLC(5)
Togetherwork Holdings, LLC(5)
Diversified/Conglomerate Service
Accela, Inc.
Accela, Inc.(5)
Investment
Type
One stop
One stop
One stop
Spread
Above
Index(1)
L + 6.50%
L + 6.50%
L + 6.50%
One stop
L + 6.00% (c)
One stop
L + 6.00%
Agility Recovery Solutions Inc.*^
One stop
L + 6.50% (a)
Agility Recovery Solutions Inc.(5)
Anaqua, Inc.*^
Anaqua, Inc.(5)
Apttus Corporation
Bazaarvoice, Inc.
Bazaarvoice, Inc.
Browz LLC
Browz LLC
Centrify Corporation*
Centrify Corporation(5)
One stop
L + 6.50%
One stop
L + 6.50% (c)
One stop
L + 6.50%
One stop
L + 7.85% (e)
One stop
L + 8.00% (a)
One stop
P + 7.00% (f)
One stop
L + 9.50%
One stop
L + 6.25% (c)
One stop
L + 6.25%
Clearwater Analytics, LLC*^
One stop
L + 5.00% (a)
Clearwater Analytics, LLC(5)
One stop
L + 5.00%
Cloudbees, Inc.
Cloudbees, Inc.
One stop
L + 9.00%
Confluence Technologies, Inc.
One stop
L + 7.50% (a)
Confluence Technologies, Inc.
One stop
P + 6.50% (a)(f)
Connexin Software, Inc.
Connexin Software, Inc.
Datto, Inc.*
Datto, Inc.(5)
One stop
L + 8.50% (a)
One stop
L + 8.50%
One stop
L + 8.00% (a)
One stop
L + 8.00%
Daxko Acquisition Corporation*^
One stop
L + 5.25% (b)
Daxko Acquisition Corporation(5)
One stop
L + 5.25%
DISA Holdings Acquisition Subsidiary Corp.*
Senior loan
L + 4.00% (a)(f)
DISA Holdings Acquisition Subsidiary Corp.
Senior loan
L + 4.00% (a)
DISA Holdings Acquisition Subsidiary Corp.(5)
Senior loan
L + 4.00%
EGD Security Systems, LLC
One stop
L + 6.25% (c)
EGD Security Systems, LLC^
One stop
L + 6.25% (c)
EGD Security Systems, LLC
One stop
L + 6.25% (c)
EGD Security Systems, LLC^
One stop
L + 6.25% (c)
GS Acquisitionco, Inc.
GS Acquisitionco, Inc.
GS Acquisitionco, Inc.(5)
GS Acquisitionco, Inc.(5)
One stop
L + 5.00% (a)
One stop
L + 5.00% (a)
One stop
One stop
L + 4.75%
L + 4.75%
HealthcareSource HR, Inc.*
One stop
L + 6.75% (c)
HealthcareSource HR, Inc.(5)
One stop
L + 6.75%
One stop
L + 9.50% (b)
10.17% cash/1.50% PIK
03/2023
One stop
L + 9.00% (a)
10.61% cash/0.50% PIK
05/2023
1,898
1,841
N/A(6)
8.59%
N/A(6)
7.24%
N/A(6)
03/2023
08/2024
08/2024
09/2022
09/2022
N/A(6)
9.65%
10.96%
10.74%
N/A(6)
10.15%
N/A(6)
7.54%
N/A(6)
05/2023
03/2024
03/2024
02/2024
02/2024
12/2022
12/2022
09/2023
09/2023
Interest
Rate(2)
N/A(6)
N/A(6)
N/A(6)
8.39%
N/A(6)
8.74%
N/A(6)
8.85%
N/A(6)
10.06%
10.24%
12.25%
N/A(6)
N/A(6)
6.10%
6.10%
N/A(6)
8.58%
8.56%
8.58%
8.59%
7.25%
7.25%
N/A(6)
N/A(6)
9.14%
N/A(6)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
03/2024
$
03/2025
03/2025
09/2023
09/2023
03/2020
03/2020
07/2022
07/2022
01/2023
02/2024
02/2024
01/2019
06/2023
06/2023
06/2022
06/2022
06/2022
06/2022
06/2022
06/2022
06/2022
05/2024
05/2024
05/2024
05/2024
05/2020
05/2020
— $
—
—
(1)
(2)
(3)
97,012
96,059
5,261
5,193
—
(1)
13,809
13,750
—
(3)
6,948
6,867
—
4,127
8,958
30
1,503
(1)
3,969
8,799
28
1,473
—
—
10,974
10,813
—
(2)
8,532
8,319
—
(2)
—
—
7,033
16
2,401
6,889
15
2,348
—
—
11,156
10,969
—
(1)
11,246
11,014
—
3,999
184
—
—
(1)
3,952
184
—
—
2,006
1,997
2
—
2
(1)
11,114
10,960
98
75
52
97
74
52
22,840
22,620
878
—
—
870
(1)
(5)
23,389
23,203
—
(1)
— % $
—
—
9.9
0.5
—
1.4
—
0.7
—
0.4
0.9
—
0.2
—
1.1
—
0.9
—
0.2
—
0.7
—
0.3
—
1.2
—
1.2
—
0.4
—
—
—
0.2
—
—
1.1
—
—
—
2.3
0.1
—
—
2.4
—
(1)
(1)
(2)
96,117
5,261
—
13,809
—
6,948
—
4,312
8,958
30
1,503
—
10,864
(2)
8,532
—
1,870
—
7,033
16
2,401
—
11,156
—
11,246
—
3,999
184
(2)
—
2,006
2
—
11,114
98
75
52
22,611
869
(1)
(5)
23,389
—
Digital Guardian, Inc.
Digital Guardian, Inc.
Digital Guardian, Inc.(5)
Digital Guardian, Inc.
One stop
L + 9.00% (c)
10.33% cash/1.00% PIK
06/2023
Subordinated debt
N/A
8.00% PIK
One stop
One stop
L + 6.00%
L + 9.00%
See Notes to Consolidated Financial Statements.
144
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
One stop
P + 5.00% (f)
10.25%
One stop
L + 7.25% (a)
8.25% cash/1.25% PIK
07/2024
5,000
4,904
Investment
Type
One stop
One stop
One stop
One stop
N/A
N/A
N/A
N/A
One stop
L + 6.50% (c)
One stop
One stop
L + 6.50%
L + 6.50%
Senior loan
L + 4.00% (c)
Senior loan
L + 4.00%
One stop
L + 6.00% (c)
Diversified/Conglomerate Service - (continued)
Host Analytics, Inc.
Host Analytics, Inc.
Host Analytics, Inc.
Host Analytics, Inc.(5)
ICIMS, Inc.
ICIMS, Inc.(5)
III US Holdings, LLC
Imprivata, Inc.
Imprivata, Inc.(5)
Infogix, Inc.
Infogix, Inc.
Integral Ad Science, Inc.
Integral Ad Science, Inc.(5)
One stop
L + 6.00%
Integration Appliance, Inc.*^
One stop
L + 7.25% (a)
Integration Appliance, Inc.(5)
JAMF Holdings, Inc.
JAMF Holdings, Inc.(5)
Jobvite, Inc.
Jobvite, Inc.
Jobvite, Inc.(5)
Kareo, Inc.
Kareo, Inc.
Kareo, Inc.
Maverick Bidco Inc.*
Maverick Bidco Inc.
Maverick Bidco Inc.
Maverick Bidco Inc.(5)
Ministry Brands, LLC
Ministry Brands, LLC
Ministry Brands, LLC
MMan Acquisition Co.^
MMan Acquisition Co.
One stop
L + 7.25%
One stop
L + 8.00% (c)
One stop
L + 8.00%
One stop
L + 8.00% (a)
One stop
One stop
L + 8.00%
L + 8.00%
One stop
L + 9.00% (a)
One stop
L + 9.00% (a)
One stop
L + 9.00%
One stop
L + 6.25% (c)
One stop
L + 6.25% (c)
One stop
L + 6.25% (c)
One stop
L + 6.25%
Senior loan
L + 4.00% (a)
Senior loan
L + 4.00% (a)
Senior loan
L + 4.00% (a)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
Net Health Acquisition Corp.
One stop
L + 5.50% (a)
Net Health Acquisition Corp.
One stop
L + 5.50% (a)
Net Health Acquisition Corp.(5)
One stop
L + 5.50%
Netsmart Technologies, Inc.
Senior loan
L + 3.75% (a)
Netsmart Technologies, Inc.(5)
Nextech Systems, LLC
Nextech Systems, LLC
Nexus Brands Group, Inc.
Nexus Brands Group, Inc.
Nexus Brands Group, Inc.(5)
Nexus Brands Group, Inc.(5)
Personify, Inc.
Personify, Inc.(5)
Property Brands, Inc.
Property Brands, Inc.^
Senior loan
L + 4.75%
One stop
L + 6.00% (a)
One stop
L + 6.00%
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
One stop
L + 6.00%
L + 6.00%
One stop
L + 5.75% (c)
One stop
L + 5.75%
One stop
L + 6.00% (a)
One stop
L + 6.00% (a)
8.50% cash/2.25% PIK
08/2021
$
3,169
$
8.50% cash/2.25% PIK
08/2021
8.50% cash/2.25% PIK
08/2021
3,131
2,557
733
(6)
2,656
741
—
5,412
5,305
—
—
(1)
—
13,045
12,907
—
(2)
3,330
3,315
9
9
N/A(6)
8.64%
N/A(6)
N/A(6)
6.39%
N/A(6)
8.39%
08/2021
09/2024
09/2024
09/2022
10/2023
10/2023
04/2024
04/2024
N/A(6)
9.36%
N/A(6)
10.32%
N/A(6)
10.15%
N/A(6)
N/A(6)
11.24%
11.24%
N/A(6)
8.64%
8.59%
8.60%
N/A(6)
6.24%
6.24%
6.24%
8.34%
8.34%
7.74%
7.74%
N/A(6)
5.99%
N/A(6)
8.24%
N/A(6)
8.33%
8.39%
N/A(6)
N/A(6)
8.14%
N/A(6)
8.24%
8.24%
07/2023
08/2023
08/2023
11/2022
11/2022
07/2023
07/2023
07/2023
06/2022
06/2022
06/2022
04/2023
04/2023
04/2023
04/2023
12/2022
12/2022
12/2022
08/2023
08/2023
12/2023
12/2023
12/2023
06/2025
04/2023
03/2024
03/2024
11/2023
11/2023
11/2023
11/2023
09/2024
09/2024
01/2024
01/2024
—
(1)
34,762
34,381
—
(7)
4,550
4,475
—
(1)
2,048
1,979
—
—
4,518
332
—
—
4,348
327
—
—
17,468
17,195
167
34
—
866
496
9
9,726
100
3,857
540
—
166
32
(3)
862
493
9
9,608
99
3,823
536
(1)
1,737
1,725
—
(6)
10,357
10,322
—
—
5,750
91
—
—
5,689
90
(1)
(1)
5,349
5,296
—
(1)
10,872
10,655
219
216
0.3 % $
3,169
0.3
0.1
—
0.5
—
—
1.3
—
0.3
—
0.5
—
3.6
—
0.5
—
0.2
—
—
0.5
—
—
1.8
—
—
—
0.1
0.1
—
1.0
—
0.4
0.1
—
0.2
—
1.1
—
0.6
—
—
—
0.5
—
1.1
—
2,656
741
—
5,304
(1)
—
13,045
—
3,330
9
4,900
(1)
34,415
(9)
4,550
—
1,968
—
(1)
4,518
332
—
17,468
167
34
—
866
496
9
9,531
98
3,857
540
—
1,750
—
10,357
—
5,750
91
—
—
5,295
(1)
10,872
219
See Notes to Consolidated Financial Statements.
145
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
Property Brands, Inc.(5)
Property Brands, Inc.(5)
Saba Software, Inc.*^
Saba Software, Inc.(5)
Saldon Holdings, Inc.*
Saldon Holdings, Inc. *
Telesoft, LLC*
Telesoft, LLC(5)
Investment
Type
One stop
One stop
Spread
Above
Index(1)
L + 6.00%
L + 6.00%
Senior loan
L + 4.50% (a)
Senior loan
L + 4.50%
Senior loan
L + 4.25% (a)
Senior loan
L + 4.25% (a)
One stop
L + 5.00% (c)
One stop
L + 5.00%
Transaction Data Systems, Inc.*
One stop
L + 5.25% (a)
Transaction Data Systems, Inc.
One stop
L + 5.25% (c)
Trintech, Inc.*^
Trintech, Inc.^
Trintech, Inc.
True Commerce, Inc.^
True Commerce, Inc.(5)
Upserve, Inc.
Upserve, Inc.
Upserve, Inc.(5)
One stop
L + 6.00% (b)
One stop
L + 6.00% (b)
One stop
L + 6.00% (b)
One stop
L + 5.75% (c)
One stop
L + 5.75%
One stop
L + 5.50% (a)
One stop
One stop
L + 5.50%
L + 5.50%
N/A(6)
N/A(6)
6.74%
N/A(6)
6.41%
6.41%
7.34%
N/A(6)
7.50%
7.64%
8.20%
8.20%
8.20%
8.14%
N/A(6)
7.65%
N/A(6)
N/A(6)
01/2024
$
01/2024
05/2023
05/2023
09/2022
09/2022
07/2022
07/2022
06/2021
06/2021
12/2023
12/2023
12/2023
11/2023
11/2023
07/2023
07/2023
07/2023
Valant Medical Solutions, Inc.
One stop
L + 11.00% (a)
10.88% cash/2.25% PIK
10/2020
Valant Medical Solutions, Inc.
One stop
N/A
6.00% PIK
02/2020
Valant Medical Solutions, Inc.
One stop
L + 11.00% (a)
10.88% cash/2.25% PIK
10/2020
Velocity Technology Solutions, Inc.
One stop
L + 6.00% (c)
Velocity Technology Solutions, Inc.(5)
Vendavo, Inc.*
Vendavo, Inc.(5)
One stop
L + 6.00%
One stop
L + 8.50% (c)
One stop
L + 8.50%
Vendor Credentialing Service LLC^
One stop
L + 5.75% (a)
Vendor Credentialing Service LLC
Verisys Corporation*
Verisys Corporation(5)
Workforce Software, LLC^
Workforce Software, LLC
Workforce Software, LLC(5)
Ecological
One stop
L + 5.75%
One stop
L + 7.75% (c)
One stop
L + 7.75%
One stop
L + 6.50% (c)
One stop
L + 6.50% (c)
One stop
L + 6.50%
Pace Analytical Services, LLC
One stop
L + 6.25% (a)
Pace Analytical Services, LLC^
One stop
L + 6.25% (a)
Pace Analytical Services, LLC
One stop
L + 6.25% (a)
Pace Analytical Services, LLC*
One stop
L + 6.25% (a)
Pace Analytical Services, LLC^
One stop
L + 6.25% (a)
Pace Analytical Services, LLC
One stop
L + 6.25% (a)
Pace Analytical Services, LLC(5)
WRE Holding Corp.*
WRE Holding Corp.
WRE Holding Corp.
WRE Holding Corp.
One stop
L + 6.25%
Senior loan
L + 4.75% (a)
Senior loan
L + 4.75% (a)
Senior loan
L + 4.75% (a)
Senior loan
L + 4.75% (a)
8.39%
N/A(6)
10.81%
N/A(6)
7.99%
N/A(6)
10.14%
N/A(6)
8.83%
8.81%
N/A(6)
8.49%
8.49%
8.48%
8.49%
8.47%
8.49%
N/A(6)
6.99%
6.99%
6.99%
6.99%
12/2023
12/2023
10/2022
10/2022
11/2021
11/2021
01/2023
01/2023
06/2021
06/2021
06/2021
09/2022
09/2022
09/2022
09/2022
09/2022
09/2022
09/2022
01/2023
01/2023
01/2023
01/2023
See Notes to Consolidated Financial Statements.
146
— $
—
(1)
(1)
22,515
22,217
—
750
716
(2)
741
713
4,160
4,129
—
(1)
39,051
38,889
15
14
10,875
10,756
3,412
30
5,610
—
3,375
28
5,550
(1)
2,969
2,948
—
—
828
149
10
—
(1)
775
149
10
8,228
8,103
—
(1)
28,936
28,441
—
(9)
12,115
11,949
—
—
3,886
3,844
—
5,790
577
—
(1)
5,756
571
(1)
— % $
—
2.3
—
0.1
0.1
0.4
—
4.0
—
1.1
0.4
—
0.6
—
0.3
—
—
0.1
—
—
0.9
—
3.0
—
1.3
—
0.4
—
0.6
0.1
—
—
—
22,515
—
746
713
4,160
—
39,051
15
10,875
3,412
30
5,610
—
2,947
—
(1)
828
184
10
8,228
—
28,936
—
12,115
—
3,886
—
5,790
577
—
456,361
450,374
47.0
455,279
15,190
14,912
1,412
1,396
716
346
118
10
—
1,008
42
21
5
709
342
117
8
(3)
999
42
21
5
1.6
0.1
0.1
—
—
—
—
0.1
—
—
—
15,190
1,412
716
346
118
10
—
1,008
42
21
5
18,868
18,548
1.9
18,868
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
05/2022
$
36,397
$
36,016
3.7 % $
36,034
Electronics
Appriss Holdings, Inc.*^
Appriss Holdings, Inc.(5)
One stop
L + 6.25% (c)
One stop
L + 6.25%
Compusearch Software Holdings, Inc.*^
Senior loan
L + 4.25% (c)
Diligent Corporation*
Diligent Corporation
Diligent Corporation*
Diligent Corporation*^
Diligent Corporation
Diligent Corporation
Diligent Corporation
Diligent Corporation(5)
Diligent Corporation(5)
One stop
L + 5.50% (d)
One stop
L + 5.50% (d)
One stop
L + 5.50% (d)
One stop
L + 5.50% (d)
One stop
L + 5.50% (c)
One stop
L + 5.50% (c)
One stop
L + 5.50% (c)(d)
One stop
One stop
L + 5.50%
L + 5.50%
Gamma Technologies, LLC*^
One stop
L + 5.50% (a)
8.64%
N/A(6)
6.64%
8.09%
8.09%
8.09%
8.09%
7.98%
8.03%
8.03%
N/A(6)
N/A(6)
7.74%
N/A(6)
7.49%
Gamma Technologies, LLC(5)
SEI, Inc.*
Sloan Company, Inc., The
Sloan Company, Inc., The
Sloan Company, Inc., The
Sovos Compliance*^
Sovos Compliance^
Sovos Compliance
Sovos Compliance(5)
Sovos Compliance(5)
One stop
L + 5.50%
Senior loan
L + 5.25% (a)
One stop
L + 13.00% (c)
10.89% cash/4.50% PIK
04/2020
One stop
L + 13.00% (c)
10.89% cash/4.50% PIK
04/2020
One stop
L + 13.00% (c)
10.89% cash/4.50% PIK
04/2020
One stop
L + 6.00% (a)
One stop
L + 6.00% (a)
One stop
L + 6.00% (a)
One stop
One stop
L + 6.00%
L + 6.00%
8.24%
8.24%
8.24%
N/A(6)
N/A(6)
Watchfire Enterprises, Inc.
Second lien
L + 8.00% (c)
10.39%
Grocery
MyWebGrocer, Inc.*
One stop
L + 5.00% (d)
Teasdale Quality Foods, Inc.
Senior loan
L + 4.75% (c)
Healthcare, Education and Childcare
Active Day, Inc.
Active Day, Inc.^
Active Day, Inc.*
Active Day, Inc.*
Active Day, Inc.
One stop
L + 6.00% (a)
One stop
L + 6.00% (a)
One stop
L + 6.00% (a)
One stop
L + 6.00% (a)
One stop
P + 5.00% (f)
Acuity Eyecare Holdings, LLC
One stop
L + 6.75% (b)
Acuity Eyecare Holdings, LLC
One stop
L + 6.75% (b)
Acuity Eyecare Holdings, LLC^
One stop
L + 6.75% (b)
Acuity Eyecare Holdings, LLC
One stop
P + 5.75% (f)
ADCS Clinics Intermediate Holdings, LLC
One stop
L + 5.75% (b)
ADCS Clinics Intermediate Holdings, LLC*
One stop
L + 5.75% (b)
ADCS Clinics Intermediate Holdings, LLC
One stop
L + 5.75% (b)
ADCS Clinics Intermediate Holdings, LLC
One stop
L + 5.75% (b)
ADCS Clinics Intermediate Holdings, LLC*
One stop
L + 5.75% (b)
Agilitas USA, Inc.
Agilitas USA, Inc.
Agilitas USA, Inc.(5)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00%
7.52%
6.92%
8.24%
8.24%
8.24%
8.24%
10.25%
9.01%
9.04%
9.02%
11.00%
8.04%
8.04%
8.04%
8.04%
8.04%
8.34%
8.34%
N/A(6)
05/2022
05/2021
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
04/2022
06/2024
06/2024
07/2023
03/2022
03/2022
03/2022
03/2022
03/2022
10/2021
09/2018
10/2020
12/2021
12/2021
12/2021
12/2021
12/2021
03/2022
03/2022
03/2022
03/2022
05/2022
05/2022
05/2022
05/2022
05/2022
04/2022
04/2022
04/2022
—
(33)
—
2,067
2,065
26,132
25,856
4,879
4,790
2,622
102
81
36
—
—
4,816
4,700
2,586
101
80
35
(1)
(2)
21,478
21,297
—
(1)
5,477
6,467
432
50
9,234
1,553
173
—
—
5,428
6,426
432
50
9,125
1,536
172
(1)
(2)
0.2
2.7
0.5
0.5
0.3
—
—
—
—
—
2.2
—
0.6
0.5
—
—
1.0
0.2
—
—
—
9,435
9,338
131,405
130,019
1.0
13.4
14,271
14,271
324
321
14,595
14,592
13,265
13,071
1,024
1,014
660
456
22
655
451
21
2,564
2,519
203
149
10
180
148
10
21,065
20,641
107
83
50
31
8,354
10
—
106
82
49
31
8,295
9
(1)
1.5
—
1.5
1.3
0.1
0.1
0.1
—
0.3
—
—
—
2.1
—
—
—
—
0.9
—
—
(29)
2,067
26,132
4,879
4,790
2,622
102
81
36
—
—
21,478
—
5,477
5,173
346
40
9,234
1,553
173
—
—
9,435
129,623
14,271
317
14,588
13,000
1,003
646
447
20
2,538
185
148
9
20,644
105
81
48
31
8,187
8
—
See Notes to Consolidated Financial Statements.
147
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Investment
Type
Spread
Above
Index(1)
Healthcare, Education and Childcare - (continued)
Aris Teleradiology Company, LLC*(7)
Senior loan
L + 5.50% (c)
Aris Teleradiology Company, LLC(7)
Senior loan
L + 5.50% (c)(d)
Avalign Technologies, Inc.^
Senior loan
L + 4.50% (a)
BIORECLAMATIONIVT, LLC*^
One stop
L + 6.25% (a)
BIORECLAMATIONIVT, LLC
One stop
P + 5.25% (f)
CLP Healthcare Services, Inc.^
Senior loan
L + 5.50% (c)
DCA Investment Holding, LLC*^
One stop
L + 5.25% (c)
DCA Investment Holding, LLC*^
One stop
L + 5.25% (c)
DCA Investment Holding, LLC
One stop
L + 5.25% (c)
DCA Investment Holding, LLC
One stop
L + 5.25% (c)
DCA Investment Holding, LLC
One stop
L + 5.25% (c)
DCA Investment Holding, LLC
One stop
L + 5.25% (c)
DCA Investment Holding, LLC(5)
DCA Investment Holding, LLC(5)
One stop
One stop
L + 5.25%
L + 5.25%
Deca Dental Management LLC*^
One stop
L + 6.25% (c)
Deca Dental Management LLC
One stop
L + 6.25% (a)(c)
Deca Dental Management LLC
One stop
L + 6.25% (a)
Deca Dental Management LLC(5)
Dental Holdings Corporation
Dental Holdings Corporation
Dental Holdings Corporation
Elite Dental Partners LLC*
Elite Dental Partners LLC
Elite Dental Partners LLC(5)
ERG Buyer, LLC
ERG Buyer, LLC(5)
ERG Buyer, LLC(5)
eSolutions, Inc.*^
eSolutions, Inc.(5)
One stop
L + 6.25%
One stop
L + 5.50% (d)
One stop
L + 5.50% (d)
One stop
L + 5.50% (b)
One stop
L + 5.25% (a)
One stop
L + 5.25% (a)
One stop
L + 5.25%
One stop
L + 5.50% (c)
One stop
One stop
L + 5.50%
L + 5.50%
One stop
L + 6.50% (a)
One stop
L + 6.50%
Excelligence Learning Corporation^
One stop
L + 6.00% (a)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
Eyecare Services Partners Holdings LLC
One stop
L + 6.25% (c)
G & H Wire Company, Inc.^
One stop
L + 5.75% (a)
G & H Wire Company, Inc.(5)
Immucor, Inc.
One stop
L + 5.75%
Senior loan
L + 5.00% (c)
Joerns Healthcare, LLC*^
One stop
L + 6.00% (c)
Katena Holdings, Inc.^
Katena Holdings, Inc.^
Katena Holdings, Inc.
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
One stop
L + 6.00% (c)
Interest
Rate(2)
8.00%
8.01%
6.75%
8.49%
10.50%
7.89%
7.64%
7.64%
7.64%
7.64%
7.64%
7.64%
N/A(6)
N/A(6)
8.64%
8.57%
8.49%
N/A(6)
8.02%
8.02%
7.67%
7.49%
7.49%
N/A(6)
7.89%
N/A(6)
N/A(6)
8.74%
N/A(6)
8.24%
8.64%
8.64%
8.64%
8.64%
8.59%
8.64%
8.64%
8.64%
8.64%
8.63%
7.99%
N/A(6)
7.39%
8.31%
8.39%
8.39%
8.39%
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
03/2021
$
2,693
$
03/2021
07/2021
01/2021
01/2021
12/2020
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2020
07/2020
07/2020
07/2020
02/2020
02/2020
02/2020
06/2023
06/2023
06/2023
05/2024
05/2024
05/2024
03/2022
03/2022
04/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
05/2023
09/2023
09/2022
06/2021
05/2020
06/2021
06/2021
06/2021
2,678
140
1,340
141
1,343
16,852
16,718
100
3,884
18,584
13,329
2,450
151
149
47
—
—
4,062
494
50
—
7,142
1,133
220
99
3,858
18,393
13,249
2,422
150
147
47
(7)
(9)
4,040
492
50
(1)
7,081
1,126
214
12,274
12,101
115
—
101
(1)
13,183
12,996
—
—
(2)
(11)
31,722
31,340
—
4,805
7,926
(1)
4,768
7,758
576
355
172
100
58
51
33
32
25
566
353
171
100
57
50
28
25
22
5,425
5,367
—
(1)
1,597
3,497
8,523
833
568
1,597
3,476
8,466
827
562
0.1 % $
1,236
—
0.1
1.7
—
0.4
1.9
1.4
0.3
—
—
—
—
—
0.4
0.1
—
—
0.7
0.1
—
1.3
—
—
1.4
—
—
3.3
—
0.5
0.8
0.1
0.1
—
—
—
—
—
—
—
0.6
—
0.2
0.3
0.9
0.1
0.1
47
1,343
16,852
100
3,807
18,584
13,329
2,450
151
149
47
—
—
4,062
494
50
—
7,142
1,133
220
12,274
115
—
13,183
—
—
31,484
(1)
4,517
7,926
576
355
172
100
58
51
33
32
25
5,425
—
1,626
3,253
8,352
816
557
See Notes to Consolidated Financial Statements.
148
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Healthcare, Education and Childcare - (continued)
Katena Holdings, Inc.(5)
Lombart Brothers, Inc.^
Lombart Brothers, Inc.^(8)
Lombart Brothers, Inc.
Lombart Brothers, Inc.(8)
Investment
Type
Spread
Above
Index(1)
One stop
L + 6.00%
One stop
L + 6.75% (c)
One stop
L + 6.75% (c)
One stop
P + 5.50% (f)
One stop
P + 5.50% (f)
Interest
Rate(2)
N/A(6)
9.14%
9.14%
10.75%
10.75%
Maverick Healthcare Group, LLC*
Senior loan
L + 7.50% (a)
7.89% cash/2.00% PIK
04/2017
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
06/2021
$
— $
(1)
— % $
(2)
04/2022
04/2022
04/2022
04/2022
08/2024
08/2024
08/2024
06/2023
06/2023
06/2022
06/2023
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
05/2022
11/2023
11/2023
11/2023
08/2021
08/2021
08/2021
08/2021
12/2022
12/2022
12/2022
12/2022
12/2022
10/2022
10/2022
09/2021
09/2021
09/2021
05/2023
05/2023
05/2027
5,041
1,648
29
8
1,316
7,770
—
—
5,866
229
—
—
4,938
1,620
28
8
1,316
7,619
(1)
(1)
5,808
228
(1)
(3)
9,338
9,156
942
210
151
133
116
90
81
78
46
41
32
30
929
208
149
132
115
89
80
78
45
41
32
29
—
3,064
22
—
(1)
3,005
21
(1)
9,879
9,724
58
55
43
57
54
42
10,713
10,443
139
84
40
7
4,930
54
140
84
31
4
4,880
53
17,083
16,914
1,933
92
7,544
298
90
1,915
90
7,406
294
90
0.5
0.2
—
—
0.1
0.8
—
—
0.6
—
—
—
1.0
0.1
—
—
—
—
—
—
—
—
—
—
—
—
0.3
—
—
1.0
—
—
—
0.9
—
—
—
—
0.5
—
1.8
0.2
—
0.8
—
—
4,966
1,623
28
8
1,316
7,692
(2)
(2)
5,866
229
—
—
9,338
942
210
151
133
116
90
81
78
46
41
32
30
—
3,064
22
—
9,879
58
55
43
8,758
114
68
32
(30)
4,930
54
17,083
1,933
92
7,544
298
90
7.64%
N/A(6)
N/A(6)
7.64%
7.64%
N/A(6)
N/A(6)
8.39%
8.39%
8.39%
8.39%
8.39%
8.39%
8.39%
8.85%
8.39%
8.39%
8.39%
8.39%
8.39%
N/A(6)
8.99%
9.15%
N/A(6)
8.59%
8.52%
8.59%
8.46%
9.69%
9.69%
9.69%
9.69%
9.69%
7.64%
7.63%
8.14%
8.14%
9.19%
8.24%
8.24%
MD Now Holdings, Inc.
MD Now Holdings, Inc.(5)
MD Now Holdings, Inc.(5)
One stop
L + 5.25% (c)
One stop
One stop
L + 5.25%
L + 5.25%
MWD Management, LLC & MWD Services, Inc.
One stop
L + 5.25% (c)
MWD Management, LLC & MWD Services, Inc.^
One stop
L + 5.25% (c)
MWD Management, LLC & MWD Services, Inc.(5)
MWD Management, LLC & MWD Services, Inc.(5)
One stop
One stop
L + 5.25%
L + 5.25%
Oliver Street Dermatology Holdings, LLC
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC*
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC^
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC^
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC
One stop
L + 6.00% (c)(f)
Oliver Street Dermatology Holdings, LLC
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC^
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC*
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC^
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC^
One stop
L + 6.00% (c)
Oliver Street Dermatology Holdings, LLC(5)
ONsite Mammography, LLC
ONsite Mammography, LLC
ONsite Mammography, LLC(5)
One stop
L + 6.00%
One stop
L + 6.75% (a)
One stop
L + 6.75% (c)(d)
One stop
L + 6.75%
Pinnacle Treatment Centers, Inc.
One stop
L + 6.25% (c)
Pinnacle Treatment Centers, Inc.
One stop
L + 6.25% (b)(c)
Pinnacle Treatment Centers, Inc.^
One stop
L + 6.25% (c)
Pinnacle Treatment Centers, Inc.
One stop
L + 6.25% (a)
PPT Management Holdings, LLC^
One stop
L + 7.50% (b)(f)
PPT Management Holdings, LLC*
One stop
L + 7.50% (b)(c)(f)
PPT Management Holdings, LLC
One stop
L + 7.50% (b)(f)
PPT Management Holdings, LLC
One stop
L + 7.50% (b)(f)
PPT Management Holdings, LLC(5)
One stop
L + 7.50% (b)(f)
Riverchase MSO, LLC
Riverchase MSO, LLC
RXH Buyer Corporation*^
RXH Buyer Corporation*
RXH Buyer Corporation
SLMP, LLC^
SLMP, LLC^
SLMP, LLC
Senior loan
L + 5.25% (c)
Senior loan
L + 5.25% (c)
One stop
L + 5.75% (c)
One stop
L + 5.75% (c)
One stop
P + 4.75% (c)(f)
One stop
L + 6.00% (a)
One stop
L + 6.00% (a)
One stop
N/A
7.50% PIK
See Notes to Consolidated Financial Statements.
149
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Healthcare, Education and Childcare - (continued)
SLMP, LLC(5)
SLMP, LLC(5)
Spear Education, LLC^
Spear Education, LLC
Spear Education, LLC
Investment
Type
One stop
One stop
Spread
Above
Index(1)
L + 6.00%
L + 6.00%
One stop
L + 6.25% (c)
One stop
L + 6.25% (c)
One stop
L + 6.25% (c)
Summit Behavioral Healthcare, LLC^
Senior loan
L + 4.75% (c)
Summit Behavioral Healthcare, LLC
Senior loan
L + 4.75% (c)
Summit Behavioral Healthcare, LLC
Senior loan
L + 4.75% (c)
WHCG Management, LLC*
Senior loan
L + 5.00% (c)
WHCG Management, LLC
Senior loan
L + 5.00% (c)
WHCG Management, LLC(5)
Senior loan
L + 5.00%
WIRB-Copernicus Group, Inc.*^
Senior loan
L + 4.25% (a)
WIRB-Copernicus Group, Inc.(5)
WIRB-Copernicus Group, Inc.(5)
Senior loan
Senior loan
L + 4.25%
L + 4.25%
Home and Office Furnishings, Housewares, and Durable Consumer
1A Smart Start LLC*
CST Buyer Company^
CST Buyer Company(5)
Senior loan
L + 4.50% (a)
One stop
L + 5.00% (a)
One stop
L + 5.00%
Plano Molding Company, LLC*^
One stop
L + 7.50% (a)
Hotels, Motels, Inns, and Gaming
Aimbridge Hospitality, LLC*^
One stop
L + 5.00% (a)
Aimbridge Hospitality, LLC*
One stop
L + 5.00% (a)
Aimbridge Hospitality, LLC
Aimbridge Hospitality, LLC
Aimbridge Hospitality, LLC(5)
Insurance
One stop
L + 5.00% (a)
One stop
L + 5.00% (a)
One stop
L + 5.00%
Captive Resources Midco, LLC*^
One stop
L + 5.75% (a)
Captive Resources Midco, LLC(5)
Captive Resources Midco, LLC(5)
Internet Pipeline, Inc.
Internet Pipeline, Inc.*
Internet Pipeline, Inc.*
Internet Pipeline, Inc.(5)
RSC Acquisition, Inc.
RSC Acquisition, Inc.
RSC Acquisition, Inc.(5)
Leisure, Amusement, Motion Pictures, Entertainment
NFD Operating, LLC
NFD Operating, LLC
PADI Holdco, Inc.(8)(9)
PADI Holdco, Inc.*^
PADI Holdco, Inc.
One stop
One stop
L + 5.75%
L + 5.75%
One stop
L + 4.75% (a)
One stop
L + 4.75% (a)
One stop
L + 4.75% (a)
One stop
L + 4.75%
Senior loan
L + 4.25% (c)(d)(f)
Senior loan
L + 4.25% (d)(e)
Senior loan
L + 4.25%
One stop
L + 7.00% (a)
One stop
L + 7.00%
One stop
E + 5.75% (g)
One stop
L + 5.75% (c)
One stop
L + 5.75% (c)
Self Esteem Brands, LLC*^
Senior loan
L + 4.75% (a)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
N/A(6)
N/A(6)
8.75%
8.59%
8.56%
7.06%
7.07%
7.07%
7.39%
7.35%
N/A(6)
6.49%
N/A(6)
N/A(6)
6.74%
7.24%
N/A(6)
9.67%
7.24%
7.24%
7.24%
7.24%
N/A(6)
7.99%
N/A(6)
N/A(6)
7.00%
7.00%
7.00%
N/A(6)
6.72%
6.76%
N/A(6)
9.11%
N/A(6)
5.75%
8.14%
8.14%
6.99%
05/2023
$
05/2023
08/2019
08/2019
08/2019
10/2023
10/2023
10/2023
03/2023
03/2023
03/2023
08/2022
08/2022
08/2022
02/2022
03/2023
03/2023
05/2021
06/2022
06/2022
06/2022
06/2022
06/2022
12/2021
12/2021
12/2021
08/2022
08/2022
08/2022
08/2021
11/2022
11/2021
11/2022
06/2021
06/2021
04/2023
04/2023
04/2022
02/2020
— $
—
(1)
(1)
4,597
4,586
74
26
74
26
8,777
8,666
65
27
2,370
100
—
63
24
2,348
99
(2)
10,901
10,834
—
—
(1)
(2)
— % $
—
0.5
—
—
0.9
—
—
0.3
—
—
1.1
—
—
—
—
4,597
74
26
8,777
65
27
2,370
100
—
10,901
—
—
329,007
324,822
33.4
323,259
548
2,433
—
547
2,378
(1)
10,048
9,937
13,029
12,861
9,941
4,830
805
16
—
9,811
4,764
794
15
(1)
15,592
15,383
34,313
33,908
—
—
4,809
2,077
786
—
4,380
21
—
(18)
(23)
4,715
2,056
778
(1)
4,358
21
(2)
46,386
45,792
2,302
2,283
0.1
0.2
—
1.0
1.3
1.0
0.5
0.1
—
—
1.6
3.5
—
—
0.5
0.2
0.1
—
0.5
—
—
4.8
0.2
—
—
—
9,591
9,677
125
9,591
9,465
123
16,120
16,069
1.0
1.0
—
1.7
550
2,433
—
9,848
12,831
9,941
4,830
805
16
—
15,592
34,313
—
—
4,809
2,077
786
—
4,369
21
(1)
46,374
2,302
—
9,313
9,677
125
16,120
See Notes to Consolidated Financial Statements.
150
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Leisure, Amusement, Motion Pictures, Entertainment - (continued)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
Self Esteem Brands, LLC(5)
Sunshine Sub, LLC
Sunshine Sub, LLC(5)
Sunshine Sub, LLC(5)
Teaching Company, The
Teaching Company, The(5)
Titan Fitness, LLC*
Titan Fitness, LLC*
Titan Fitness, LLC*
Titan Fitness, LLC^
Titan Fitness, LLC(5)
WBZ Investment LLC
WBZ Investment LLC(5)
WBZ Investment LLC(5)
Oil and Gas
Senior loan
L + 4.75%
One stop
L + 4.75% (a)
One stop
One stop
L + 4.75%
L + 4.75%
One stop
L + 4.75% (c)
One stop
L + 4.75%
One stop
L + 6.50% (a)
One stop
L + 6.50% (a)
One stop
L + 6.50% (a)
One stop
L + 6.50% (a)
One stop
L + 6.50%
One stop
L + 5.50% (a)
One stop
One stop
L + 5.50%
L + 5.50%
Drilling Info Holdings, Inc.
Senior loan
L + 4.25% (b)
Drilling Info Holdings, Inc.(5)
Drilling Info Holdings, Inc.(5)
Senior loan
Senior loan
L + 4.25%
L + 4.25%
Personal and Non Durable Consumer Products (Mfg. Only)
Georgica Pine Clothiers, LLC
One stop
L + 5.50% (c)
Georgica Pine Clothiers, LLC^
One stop
L + 5.50% (c)
Georgica Pine Clothiers, LLC*
One stop
L + 5.50% (c)
Georgica Pine Clothiers, LLC
One stop
L + 5.50% (c)(f)
IMPLUS Footwear, LLC
IMPLUS Footwear, LLC
IMPLUS Footcare, LLC
Massage Envy, LLC*^
Massage Envy, LLC^
Massage Envy, LLC
Massage Envy, LLC^
Massage Envy, LLC
Massage Envy, LLC^
Massage Envy, LLC^
Massage Envy, LLC^
Massage Envy, LLC^
Massage Envy, LLC^
Massage Envy, LLC
Massage Envy, LLC(5)
Orthotics Holdings, Inc.*
Orthotics Holdings, Inc.*(8)
Orthotics Holdings, Inc.(5)(8)
Orthotics Holdings, Inc.(5)
One stop
L + 6.75% (c)
One stop
L + 6.75% (c)
One stop
L + 6.75% (c)
One stop
L + 6.75% (c)(f)
One stop
L + 6.75% (c)
One stop
L + 6.75% (c)
One stop
L + 6.75% (c)(f)
One stop
L + 6.75% (c)(f)
One stop
L + 6.75% (c)(f)
One stop
L + 6.75% (c)(f)
One stop
L + 6.75% (c)(f)
One stop
L + 6.75% (c)(f)
One stop
L + 6.75% (c)(f)
One stop
L + 6.75% (c)
One stop
L + 6.75%
One stop
L + 5.50% (a)
One stop
L + 5.50% (a)
One stop
One stop
L + 5.50%
L + 5.50%
Team Technologies Acquisition Company^
Senior loan
L + 5.00% (c)(f)
Team Technologies Acquisition Company*
Senior loan
L + 5.50% (c)(f)
Team Technologies Acquisition Company(5)
Senior loan
L + 5.00%
N/A(6)
6.99%
N/A(6)
N/A(6)
7.09%
N/A(6)
8.61%
8.61%
8.61%
8.61%
N/A(6)
7.64%
N/A(6)
N/A(6)
6.54%
N/A(6)
N/A(6)
7.89%
7.89%
7.89%
8.42%
9.14%
9.09%
9.14%
9.06%
9.06%
9.09%
9.07%
9.09%
9.08%
9.12%
9.07%
9.08%
9.13%
9.09%
N/A(6)
7.74%
7.74%
N/A(6)
N/A(6)
7.35%
7.85%
N/A(6)
02/2020
$
— $
(3)
— % $
—
05/2024
05/2024
05/2024
07/2023
07/2023
06/2021
06/2021
06/2021
06/2021
06/2021
09/2020
09/2024
09/2024
07/2025
07/2023
07/2025
11/2021
11/2021
11/2021
11/2021
04/2021
04/2021
04/2021
09/2020
09/2020
09/2020
09/2020
09/2020
09/2020
09/2020
09/2020
09/2020
09/2020
09/2020
09/2020
02/2020
02/2020
02/2020
02/2020
12/2018
12/2018
12/2018
7,720
7,575
—
—
(1)
(3)
10,855
10,757
—
(1)
12,952
12,846
1,954
1,716
927
—
1,949
1,712
920
(9)
5,149
5,049
—
—
—
(2)
79,088
78,320
14,413
14,217
—
—
(2)
(4)
14,413
14,211
5,620
5,562
490
344
46
10,013
1,763
57
487
341
45
9,913
1,745
57
34,835
34,631
99
64
48
42
40
38
35
19
15
10
—
8,204
1,345
—
—
4,242
782
98
64
48
41
40
38
34
19
15
9
(7)
8,166
1,338
(1)
(6)
4,241
781
—
—
68,151
67,699
0.8
—
—
1.1
—
1.3
0.2
0.2
0.1
—
0.5
—
—
8.1
1.5
—
—
1.5
0.6
0.1
—
—
1.0
0.2
—
3.6
—
—
—
—
—
—
—
—
—
—
—
0.8
0.1
—
—
0.5
0.1
—
7.0
7,720
—
—
10,855
—
12,952
1,954
1,716
927
—
5,097
(1)
(2)
78,755
14,341
—
(1)
14,340
5,620
490
344
46
10,013
1,763
57
34,835
99
64
48
42
40
38
35
19
15
10
—
8,040
1,318
—
(4)
4,231
792
(1)
67,954
See Notes to Consolidated Financial Statements.
151
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
Personal, Food and Miscellaneous Services
Captain D's, LLC*^
Captain D's, LLC
Senior loan
L + 4.50% (b)
Senior loan
P + 3.50% (a)(f)
Community Veterinary Partners, LLC^
One stop
L + 5.50% (c)
Community Veterinary Partners, LLC*
One stop
L + 5.50% (c)
Community Veterinary Partners, LLC
One stop
L + 5.50% (c)
Community Veterinary Partners, LLC(5)
Imperial Optical Midco Inc.
Imperial Optical Midco Inc.
Imperial Optical Midco Inc.
PPV Intermediate Holdings II, LLC
PPV Intermediate Holdings II, LLC(5)
PPV Intermediate Holdings II, LLC(5)
Ruby Slipper Cafe LLC, The
Ruby Slipper Cafe LLC, The
Ruby Slipper Cafe LLC, The
One stop
L + 5.50%
One stop
L + 4.75% (b)
One stop
L + 4.75% (b)
One stop
One stop
One stop
One stop
L + 4.75%
N/A
L + 5.00%
L + 5.00%
One stop
L + 7.50% (c)
One stop
L + 7.50% (c)
One stop
L + 7.50% (c)
Southern Veterinary Partners, LLC
One stop
L + 5.50% (a)
Southern Veterinary Partners, LLC
One stop
L + 5.50% (a)
Southern Veterinary Partners, LLC
One stop
L + 5.50% (a)
Southern Veterinary Partners, LLC
One stop
L + 5.50% (a)
Southern Veterinary Partners, LLC
One stop
L + 5.50% (a)
Southern Veterinary Partners, LLC
One stop
L + 5.50% (a)
Southern Veterinary Partners, LLC
One stop
L + 5.50% (a)
Southern Veterinary Partners, LLC
One stop
L + 5.50% (a)
Southern Veterinary Partners, LLC(5)
Southern Veterinary Partners, LLC(5)
One stop
One stop
L + 5.50%
L + 5.50%
Veterinary Specialists of North America, LLC^
One stop
L + 5.50% (a)
Veterinary Specialists of North America, LLC^
One stop
L + 5.50% (a)
Veterinary Specialists of North America, LLC*
One stop
L + 5.50% (a)
Veterinary Specialists of North America, LLC*
One stop
L + 5.50% (a)
Veterinary Specialists of North America, LLC^
One stop
L + 5.50% (a)
Veterinary Specialists of North America, LLC*
One stop
L + 5.50% (a)
Veterinary Specialists of North America, LLC
One stop
L + 5.50% (a)
Veterinary Specialists of North America, LLC(5)
One stop
L + 5.50%
Wetzel's Pretzels, LLC*
Wetzel's Pretzels, LLC
Printing and Publishing
Brandmuscle, Inc.^
Messenger, LLC
Messenger, LLC
Retail Stores
One stop
L + 6.75% (a)
One stop
L + 6.75% (a)
Senior loan
L + 5.00% (c)
One stop
L + 6.00% (a)(f)
One stop
P + 5.00% (f)
Batteries Plus Holding Corporation
One stop
L + 6.75% (a)
Batteries Plus Holding Corporation(5)
Cycle Gear, Inc.^
Cycle Gear, Inc.^
Cycle Gear, Inc.(5)
One stop
L + 6.75%
One stop
L + 6.50% (c)
One stop
L + 6.50% (c)
One stop
L + 6.50%
6.71%
7.86%
7.89%
7.89%
7.89%
N/A(6)
7.04%
6.96%
N/A(6)
7.90% PIK
N/A(6)
N/A(6)
9.85%
9.82%
9.84%
7.74%
7.74%
7.74%
7.74%
7.74%
7.74%
7.74%
7.74%
N/A(6)
N/A(6)
7.69%
7.74%
7.74%
7.74%
7.74%
7.74%
7.74%
N/A(6)
8.99%
8.86%
7.39%
8.23%
10.25%
8.99%
N/A(6)
8.84%
8.84%
N/A(6)
12/2023
$
3,965
$
3,913
0.4 % $
3,965
12/2023
10/2021
10/2021
10/2021
10/2021
08/2023
08/2023
08/2023
05/2023
05/2023
05/2020
01/2023
01/2023
01/2023
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2025
05/2023
05/2025
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
07/2021
09/2021
09/2021
12/2021
08/2023
08/2023
07/2022
07/2022
01/2020
01/2020
01/2020
20
282
99
75
—
2,725
44
—
2
—
—
19
280
97
75
(3)
2,685
39
—
2
(1)
(6)
1,035
1,026
5
5
5
4
3,870
3,812
231
205
173
100
77
67
50
—
—
228
203
170
97
76
66
48
(2)
(7)
7,331
7,278
764
415
160
123
62
12
—
755
413
160
122
62
10
(2)
8,922
8,805
3
2
30,822
30,431
618
3,410
3
614
3,343
3
4,031
3,960
11,933
11,739
—
(1)
10,321
10,263
603
—
600
(7)
—
—
—
—
—
0.3
—
—
—
—
—
0.1
—
—
0.4
—
—
—
—
—
—
—
—
—
0.8
0.1
0.1
—
—
—
—
—
0.9
—
3.1
0.1
0.3
—
0.4
1.2
—
1.1
0.1
—
20
282
99
75
—
2,684
39
—
2
—
—
1,035
5
5
3,870
231
205
173
100
77
67
50
—
—
7,331
764
415
160
123
62
12
—
8,922
3
30,776
622
3,376
3
4,001
11,933
—
10,321
603
—
See Notes to Consolidated Financial Statements.
152
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
08/2022
$
22,732
$
22,466
2.3 % $
22,732
Retail Stores - (continued)
DTLR, Inc.*^
Elite Sportswear, L.P.
Elite Sportswear, L.P.
Elite Sportswear, L.P.
Elite Sportswear, L.P.*
Elite Sportswear, L.P.
Elite Sportswear, L.P.*
Elite Sportswear, L.P.
Elite Sportswear, L.P.(5)
One stop
L + 6.50% (b)
Senior loan
L + 5.75% (c)
Senior loan
L + 5.75% (c)
Senior loan
L + 5.75% (c)
Senior loan
L + 5.75% (c)
Senior loan
L + 5.75% (c)
Senior loan
L + 5.75% (c)
Senior loan
Senior loan
L + 5.75%
L + 5.75%
Feeders Supply Company, LLC
One stop
L + 5.75% (a)
8.68%
8.14%
8.14%
8.14%
8.14%
8.14%
8.14%
N/A(6)
N/A(6)
8.01%
06/2020
06/2020
06/2020
06/2020
06/2020
06/2020
06/2020
06/2020
04/2021
Feeders Supply Company, LLC
Subordinated debt
N/A
12.50% cash/7.00% PIK
04/2021
Feeders Supply Company, LLC
One stop
L + 5.75%
Marshall Retail Group LLC, The^
One stop
L + 6.00% (c)
Marshall Retail Group LLC, The(5)
One stop
L + 6.00%
Mills Fleet Farm Group LLC*^
One stop
L + 5.50% (a)
Paper Source, Inc.^
Paper Source, Inc.*
Paper Source, Inc.
Pet Holdings ULC*^(8)(10)
Pet Holdings ULC*^(8)(10)
Pet Holdings ULC(5)(8)(10)
One stop
L + 6.25% (c)
One stop
L + 6.25% (c)
One stop
P + 5.00% (f)
One stop
L + 5.50% (c)
One stop
L + 5.50% (c)
One stop
L + 5.50%
PetPeople Enterprises, LLC^
One stop
L + 5.00% (a)
PetPeople Enterprises, LLC
PetPeople Enterprises, LLC
PetPeople Enterprises, LLC(5)
Telecommunications
One stop
One stop
One stop
N/A
L + 5.00%
L + 5.00%
NetMotion Wireless Holdings, Inc.*^
One stop
L + 6.25% (c)
NetMotion Wireless Holdings, Inc.(5)
One stop
L + 6.25%
Textiles and Leather
SHO Holding I Corporation*
Senior loan
L + 5.00% (c)
SHO Holding I Corporation
Senior loan
L + 4.00% (a)(c)
Utilities
Arcos, LLC
Arcos, LLC
One stop
L + 6.00% (c)
One stop
L + 6.00%
Total non-controlled/non-affiliate company debt investments
Equity investments (11)(12)
Aerospace and Defense
NTS Technical Systems
NTS Technical Systems
NTS Technical Systems
Tresys Technology Holdings, Inc.
Common stock
Preferred stock
Preferred stock
Common stock
N/A
N/A
N/A
N/A
N/A(6)
8.34%
N/A(6)
7.74%
8.64%
8.64%
10.25%
7.84%
7.84%
N/A(6)
7.25%
8.25% PIK
N/A(6)
N/A(6)
8.64%
N/A(6)
7.34%
6.14%
8.39%
N/A(6)
N/A
N/A
N/A
N/A
04/2021
08/2020
08/2019
02/2022
09/2019
09/2019
09/2019
07/2022
07/2022
07/2022
09/2023
01/2019
09/2023
09/2023
10/2021
10/2021
10/2022
10/2021
02/2021
02/2021
N/A
N/A
N/A
N/A
See Notes to Consolidated Financial Statements.
153
6,872
2,763
1,422
466
216
206
—
—
4,826
67
6,815
2,740
1,413
464
214
205
—
(3)
4,769
67
—
—
11,922
11,874
—
(9)
1,815
1,743
12,255
12,224
1,628
965
1,621
960
14,764
14,575
100
—
3,114
168
—
—
99
(2)
3,082
168
—
(1)
0.7
0.3
0.2
0.1
—
—
—
—
0.5
—
—
1.2
—
0.2
1.3
0.2
0.1
1.5
—
—
0.3
—
—
—
6,872
2,763
1,422
466
216
206
—
—
4,826
67
—
11,922
—
1,815
12,255
1,628
965
14,764
100
—
3,114
168
—
—
109,158
108,078
11.3
109,158
6,393
6,311
—
(1)
6,393
6,310
2,211
15
2,226
2,181
15
2,196
3,553
3,519
—
—
3,553
3,519
0.7
—
0.7
0.2
—
0.2
0.4
—
0.4
6,393
—
6,393
2,122
12
2,134
3,553
—
3,553
$
1,679,746
$ 1,660,130
171.8 % $
1,664,317
2
$
1,506
0.1 % $
—
—
295
256
128
295
—
—
—
616
323
177
—
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
Aerospace and Defense - (continued)
Whitcraft LLC
Common stock
N/A
N/A
N/A
Automobile
Grease Monkey International, LLC
Polk Acquisition Corp.
Quick Quack Car Wash Holdings, LLC
Beverage, Food and Tobacco
Benihana, Inc.
C. J. Foods, Inc.
Cafe Rio Holding, Inc.
Global ID Corporation
Hopdoddy Holdings, LLC
Hopdoddy Holdings, LLC
Mendocino Farms, LLC
Purfoods, LLC
Rubio's Restaurants, Inc.
Uinta Brewing Company
Buildings and Real Estate
LLC units
LP interest
LLC units
LLC units
Preferred stock
Common stock
LLC interest
LLC units
LLC units
Common stock
LLC interest
Preferred stock
LP interest
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4
$
375
2,560
354
1
—
43
—
2
2
27
12
11
381
2
462
354
144
207
705
699
75
224
242
130
36
50
381
945
462
3,244
Brooks Equipment Company, LLC
Common stock
N/A
N/A
N/A
10
1,021
Chemicals, Plastics and Rubber
Flexan, LLC
Flexan, LLC
Inhance Technologies Holdings LLC
Diversified/Conglomerate Manufacturing
Inventus Power, Inc.
Inventus Power, Inc.
Inventus Power, Inc.
Reladyne, Inc.
Sunless Merger Sub, Inc.
Diversified/Conglomerate Service
Accela, Inc.
Agility Recovery Solutions Inc.
Apttus Corporation
Apttus Corporation
Centrify Corporation
Centrify Corporation
Cloudbees, Inc.
Cloudbees, Inc.
Confluence Technologies, Inc.
Connexin Software, Inc.
Digital Guardian, Inc.
Preferred stock
Common stock
LLC units
Preferred stock
LLC units
Common stock
LP interest
LP interest
LLC units
Preferred stock
Preferred stock
Warrant
LP interest
LP interest
Preferred stock
Warrant
LLC interest
LLC interest
Warrant
DISA Holdings Acquisition Subsidiary Corp.
Common stock
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
—
1
—
—
—
—
—
160
296
67
18
34
—
123
33
29
1
69
57
—
90
—
70
160
370
54
—
249
160
833
296
341
263
194
348
—
207
39
87
69
10
154
See Notes to Consolidated Financial Statements.
0.1 % $
0.2
0.1
—
—
0.1
0.1
0.1
—
—
—
—
—
0.1
0.1
—
0.4
0.3
—
—
—
—
—
—
—
0.1
—
0.1
—
0.1
—
—
—
—
—
—
—
—
—
—
611
1,727
512
95
207
814
856
505
265
346
122
35
50
527
1,236
—
3,942
2,369
71
—
70
141
—
48
—
498
—
546
325
424
354
185
348
—
207
39
100
91
10
248
154
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
GS Acquisitionco, Inc.
HealthcareSource HR, Inc.
Host Analytics, Inc.
Jobvite, Inc.
Kareo, Inc.
Kareo, Inc.
Maverick Bidco Inc.
MMan Acquisition Co.
Net Health Acquisition Corp.
Nexus Brands Group, Inc.
Personify, Inc.
Project Alpha Intermediate Holding, Inc.
Project Alpha Intermediate Holding, Inc.
Property Brands, Inc.
Valant Medical Solutions, Inc.
Vendavo, Inc.
Verisys Corporation
Vitalyst, LLC
Vitalyst, LLC
Workforce Software, LLC
Xmatters, Inc. and Alarmpoint, Inc.
Xmatters, Inc. and Alarmpoint, Inc.
Xmatters, Inc. and Alarmpoint, Inc.
Ecological
Investment
Type
LP interest
LLC interest
Warrant
Warrant
Warrant
Preferred stock
LLC units
LP interest
LP interest
LP interest
LLC units
Common stock
Common stock
Preferred stock
Warrant
Preferred stock
LLC interest
Preferred stock
Common stock
LLC units
Preferred stock
Warrant
Preferred stock
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1
$
—
368
72
23
1
1
263
—
—
297
—
103
28
5
1,017
261
—
1
323
242
43
10
98
348
134
47
160
4
369
263
346
136
297
417
4
284
68
1,017
261
61
7
323
221
34
10
6,917
Pace Analytical Services, LLC
Common stock
N/A
N/A
N/A
3
304
Electronics
Diligent Corporation(13)
Project Silverback Holdings Corp.
SEI, Inc.
Sloan Company, Inc., The
Sloan Company, Inc., The
Grocery
MyWebGrocer, Inc.
MyWebGrocer, Inc.
Healthcare, Education and Childcare
Active Day, Inc.
Acuity Eyecare Holdings, LLC
ADCS Clinics Intermediate Holdings, LLC
ADCS Clinics Intermediate Holdings, LLC
Advanced Pain Management Holdings, Inc.(7)
Advanced Pain Management Holdings, Inc.(7)
Advanced Pain Management Holdings, Inc.(7)
BIORECLAMATIONIVT, LLC
Preferred stock
Preferred stock
LLC units
LLC units
LLC units
LLC units
Preferred stock
LLC interest
LLC interest
Preferred stock
Common stock
Preferred stock
Common stock
Preferred stock
LLC units
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
56
3
340
—
2
1,418
71
1
198
1
—
8
67
1
—
1
6
265
152
14
438
1,446
165
1,611
614
198
579
6
829
67
64
407
See Notes to Consolidated Financial Statements.
155
— % $
0.1
0.1
—
—
—
0.1
—
0.1
—
—
0.1
—
—
—
0.1
—
—
—
0.1
—
—
—
0.8
—
—
—
0.1
—
—
0.1
—
—
—
0.1
—
0.1
—
—
—
—
0.1
127
413
384
47
2
5
437
206
388
155
297
500
51
307
51
1,332
239
88
—
371
211
16
12
7,970
280
206
—
643
—
—
849
—
41
41
446
196
363
—
—
—
—
666
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Healthcare, Education and Childcare - (continued)
DCA Investment Holding, LLC
DCA Investment Holding, LLC
Deca Dental Management LLC
Dental Holdings Corporation
Investment
Type
LLC units
LLC units
LLC units
LLC units
Elite Dental Partners LLC
Common stock
Encore GC Acquisition, LLC
Encore GC Acquisition, LLC
ERG Buyer, LLC
ERG Buyer, LLC
Eyecare Services Partners Holdings LLC
Eyecare Services Partners Holdings LLC
G & H Wire Company, Inc.
IntegraMed America, Inc.
Katena Holdings, Inc.
Lombart Brothers, Inc.
MD Now Holdings, Inc.
LLC units
LLC units
LLC units
LLC units
LLC units
LLC units
LLC interest
LLC interest
LLC units
Common stock
LLC units
MWD Management, LLC & MWD Services, Inc.
LLC interest
Oliver Street Dermatology Holdings, LLC
Pentec Acquisition Sub, Inc.
Pinnacle Treatment Centers, Inc.
Pinnacle Treatment Centers, Inc.
Radiology Partners, Inc.
Radiology Partners, Inc.
RXH Buyer Corporation
Sage Dental Management, LLC
Sage Dental Management, LLC
SLMP, LLC
Spear Education, LLC
Spear Education, LLC
SSH Corporation
Summit Behavioral Healthcare, LLC
Summit Behavioral Healthcare, LLC
Surgical Information Systems, LLC
U.S. Renal Care, Inc.
WHCG Management, LLC
Insurance
Captive Resources Midco, LLC
Internet Pipeline, Inc.
Internet Pipeline, Inc.
Leisure, Amusement, Motion Pictures, Entertainment
LMP TR Holdings, LLC
PADI Holdco, Inc.
Titan Fitness, LLC
WBZ Investment LLC
WBZ Investment LLC
WBZ Investment LLC
LLC units
Preferred stock
Preferred stock
Common stock
LLC units
LLC units
LP interest
LLC units
LLC units
LLC interest
LLC units
LLC units
Common stock
LLC interest
LLC interest
Common stock
LP interest
LLC interest
LLC units
Preferred stock
Common stock
LLC units
LLC units
LLC units
LLC interest
LLC interest
LLC interest
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
8,637
$
87
357
883
—
18
18
—
4
—
—
148
—
—
1
7
182
234
1
—
2
43
11
7
—
3
289
—
1
—
1
1
4
1
—
1
—
44
712
—
7
31
21
18
864
9
357
831
360
182
—
349
4
133
1
148
417
387
157
68
182
234
116
231
2
85
76
683
249
3
289
62
1
40
68
—
414
2,665
246
12,677
—
72
1
73
712
414
712
49
33
27
0.1 % $
1,073
—
0.1
0.1
0.1
—
—
0.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.1
0.2
—
1.1
0.1
—
—
0.1
0.1
—
0.2
—
—
—
—
428
733
360
239
19
349
4
147
5
122
172
293
177
68
122
346
178
268
6
191
48
290
28
—
308
75
28
187
73
3
535
1,796
135
10,477
393
100
174
667
1,151
454
1,403
49
33
27
See Notes to Consolidated Financial Statements.
156
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Leisure, Amusement, Motion Pictures, Entertainment - (continued)
WBZ Investment LLC
WBZ Investment LLC
WBZ Investment LLC
Personal and Non Durable Consumer Products (Mfg. Only)
Georgica Pine Clothiers, LLC
Massage Envy, LLC
Investment
Type
LLC interest
LLC interest
LLC interest
LLC units
LLC interest
Team Technologies Acquisition Company
Common stock
Personal, Food and Miscellaneous Services
Captain D's, LLC
Community Veterinary Partners, LLC
PPV Intermediate Holdings II, LLC
R.G. Barry Corporation
Ruby Slipper Cafe LLC, The
Southern Veterinary Partners, LLC
Southern Veterinary Partners, LLC
Veterinary Specialists of North America, LLC
LLC interest
Common stock
LLC interest
Preferred stock
LLC units
LLC units
LLC units
LLC units
Wetzel's Pretzels, LLC
Common stock
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
15
$
7
1
24
10
1
— % $
—
—
24
10
1
1,982
0.3
3,152
11
749
—
70
2
13
—
12
—
64
—
—
106
210
114
430
70
244
13
161
123
216
2
106
160
—
0.2
—
0.2
—
—
—
—
—
0.1
—
—
—
176
1,490
292
1,958
64
310
13
176
151
333
24
185
221
1,095
0.1
1,477
Printing and Publishing
Brandmuscle, Inc.
Retail Stores
Batteries Plus Holding Corporation
Cycle Gear, Inc.
DTLR, Inc.
Elite Sportswear, L.P.
Feeders Supply Company, LLC
Feeders Supply Company, LLC
Marshall Retail Group LLC, The
Paper Source, Inc.
Pet Holdings ULC(8)(10)
LLC interest
N/A
N/A
N/A
—
240
—
LP interest
LLC units
LLC interest
LLC interest
Preferred stock
Common stock
LLC units
Common stock
LP interest
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
5
19
4
—
2
—
15
8
455
529
248
411
165
192
—
154
1,387
386
3,472
0.1
—
0.1
—
—
—
—
0.1
0.1
0.4
166
816
463
734
36
241
52
95
606
537
3,580
Total non-controlled/non-affiliate company equity investments
$
37,762
4.2 % $
40,156
Total non-controlled/non-affiliate company investments
$
1,679,746
$ 1,697,892
176.0 % $
1,704,473
Non-controlled affiliate company investments(14)
Debt investments
Diversified/Conglomerate Service
Switchfly, LLC(8)
Switchfly, LLC(8)
Switchfly, LLC(8)
One stop
P + 2.00% (c)(f)
One stop
P + 2.00% (f)
One stop
P + 2.00% (f)
7.25%
7.25%
7.25%
04/2020
$
2,295
$
2,258
06/2018
04/2020
192
17
192
17
0.2 % $
—
—
2,504
2,467
0.2
2,066
173
15
2,254
See Notes to Consolidated Financial Statements.
157
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
Mining, Steel, Iron and Non-Precious Metals
Benetech, Inc.*(8)
Benetech, Inc.(8)
Investment
Type
Spread
Above
Index(1)
Interest
Rate(2)
Maturity
Date
Principal ($) /
Shares(3)
Amortized
Cost
Percentage
of Net
Assets
Fair
Value (4)
One stop
L + 10.00% (a)
10.24% cash/2.00% PIK
05/2019
$
4,257
One stop
P + 8.75% (a)(f)
11.77% cash/2.00% PIK
05/2019
223
4,480
$
4,255
223
4,478
0.4 % $
4,257
—
0.4
223
4,480
Total non-controlled affiliate company debt investments
6,984
6,945
0.6 %
6,734
Equity Investments (11)(12)
Diversified/Conglomerate Service
Switchfly LLC(8)
LLC units
N/A
N/A
N/A
Mining, Steel, Iron and Non-Precious Metals
Benetech, Inc.(8)
Benetech, Inc.(8)
LLC interest
LLC interest
N/A
N/A
N/A
N/A
N/A
N/A
408
$
408
408
0.1 % $
0.1
$
56
56
—
—
—
—
$
—
—
534
534
16
—
16
Total non-controlled affiliate company equity investments
$
408
0.1 % $
550
Total non-controlled affiliate company investments
$
6,984
$
7,353
0.7 % $
7,284
Controlled affiliate company investments(15)
Equity investments
Investment Funds and Vehicles
Senior Loan Fund LLC(8)(16)
LLC interest
N/A
N/A
N/A
75,407
$
75,407
7.3 % $
71,084
Total controlled affiliate company equity investments
$
75,407
7.3 % $
71,084
Total investments
$
1,686,730
$ 1,780,652
184.0 % $
1,782,841
Cash and cash equivalents, foreign currencies and restricted cash and cash equivalents
Cash, foreign currencies and restricted cash
BlackRock Liquidity Funds T-Fund Institutional Shares (CUSIP 09248U718)
2.00% (17)
Total cash and cash equivalents, foreign currencies and restricted cash and cash equivalents
Total investments and cash and cash equivalents, foreign currencies and restricted cash and cash equivalents
$
$
35,173
10,532
45,705
3.6 % $
35,173
1.1
10,532
4.7 % $
45,705
$ 1,826,357
188.7 % $
1,828,546
*
^
#
Denotes that all or a portion of the investment collateralizes the MS Credit Facility (as defined in Note 7).
Denotes that all or a portion of the investment secures the notes offered in the 2014 Debt Securitization (as defined in Note 7).
Denotes that all or a portion of the investment collateralizes the Credit Facility (as defined in Note 7).
(1) The majority of the investments bear interest at a rate that may be determined by reference to LIBOR, EURIBOR or Prime and which reset daily, monthly, quarterly, semiannually, or annually. For each, the Company has
provided the spread over LIBOR, EURIBOR or Prime and the weighted average current interest rate in effect as of September 30, 2018. Certain investments are subject to a LIBOR, EURIBOR or Prime interest rate floor.
For fixed rate loans, a spread above a reference rate is not applicable. Listed below are the index rates as of September 28, 2018, which was the last business day of the period on which LIBOR or EURIBOR was
determined. The actual index rate for each loan listed may not be the applicable index rate outstanding as of September 28, 2018, as the loan may have priced or repriced based on an index rate prior to September 28, 2018.
(a) Denotes that all or a portion of the loan was indexed to the 30-day LIBOR, which was 2.26% as of September 28, 2018.
(b) Denotes that all or a portion of the loan was indexed to the 60-day LIBOR, which was 2.31% as of September 28, 2018.
See Notes to Consolidated Financial Statements.
158
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
September 30, 2018
(In thousands)
(c) Denotes that all or a portion of the loan was indexed to the 90-day LIBOR, which was 2.40% as of September 28, 2018.
(d) Denotes that all or a portion of the loan was indexed to the 180-day LIBOR, which was 2.60% as of September 28, 2018.
(e) Denotes that all or a portion of the loan was indexed to the 360-day LIBOR, which was 2.92% as of September 28, 2018.
(f) Denotes that all or a portion of the loan was indexed to the Prime rate, which was 5.25% as of September 28, 2018.
(g) Denotes that all or a portion of the loan was indexed to the 90-day EURIBOR, which was -0.32% as of September 28, 2018.
(2) For portfolio companies with multiple interest rate contracts, the interest rate shown is a weighted average current interest rate in effect as of September 30, 2018.
(3) The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
(4) The fair value of the investment was valued using significant unobservable inputs. See Note 6. Fair Value Measurements.
(5) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost is the result of the capitalized discount being greater than the
principal amount outstanding on the loan.
(6) The entire commitment was unfunded as of September 30, 2018. As such, no interest is being earned on this investment. The investment may be subject to an unused facility fee.
(7) Loan was on non-accrual status as of September 30, 2018, meaning that the Company has ceased recognizing interest income on the loan.
(8) The investment is treated as a non-qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying
assets represent at least 70% of the Company's total assets. As of September 30, 2018, total non-qualifying assets at fair value represented 5.8% of the Company's total assets calculated in accordance with the 1940 Act.
(9) Loan is denominated in foreign currency and is translated into U.S. dollars as of the valuation date or the date of the transaction. See Note 2. Significant Accounting Policies and Recent Accounting Updates - Foreign
Currency Transactions.
(10) The headquarters of this portfolio company is located in Canada.
(11) Equity investments are non-income producing securities unless otherwise noted.
(12) Ownership of certain equity investments may occur through a holding company or partnership.
(13) The Company holds an equity investment that entitles it to receive preferential dividends.
(14)As defined in the 1940 Act, the Company is deemed to be an "affiliated person" of the portfolio company as the Company owns five percent or more of the portfolio company's voting securities ("non-controlled affiliate").
Transactions related to investments in non-controlled affiliates for the year ended September 30, 2018 were as follows:
Fair value as of
September 30, 2017
Purchases
(cost)(h)
Redemptions
(cost)
Portfolio Company
Benetech, Inc.
$
Switchfly LLC(i)
Total Non-Controlled Affiliates $
3,707
$
—
3,707
$
222
254
476
$
$
(out)
Transfer in
$
— $
(551)
—
(551)
$
2,120
2,120
$
Discount
accretion
Net change in
unrealized
gain/(loss)
Fair value as of
September 30,
2018
$
$
1
25
26
1,117
$
389
1,506
$
4,496
2,788
7,284
gain/(loss)
Net realized
$
Interest and
fee income
Dividend
income
— $
—
— $
638
29
667
$
$
—
—
—
$
(h)
(i)
Purchases at cost includes amounts related to PIK interest capitalized and added to the principal balance of the respective loans.
During the three months ended September 30, 2018, the Company's ownership increased to over five percent of the portfolio company's voting securities.
(15)As defined in the 1940 Act, the Company is deemed to be both an "affiliated person" of and "control" this portfolio company as the Company owns more than 25% of the portfolio company's outstanding voting securities or
has the power to exercise control over management or policies of such portfolio company (including through a management agreement) ("controlled affiliate"). Transactions related to investments in controlled affiliates for
the year ended September 30, 2018 were as follows:
Portfolio Company
Senior Loan Fund LLC(j)
Total Controlled Affiliates
Fair value as of
September 30, 2017
Purchases
(cost)
Redemptions
(cost)
$
$
95,015
95,015
$
$
12,163
12,163
$
$
(34,213)
(34,213)
(out)
Transfer in
$
$
— $
— $
Discount
accretion
Net change in
unrealized
gain/(loss)
Fair value as of
September 30,
2018
— $
— $
(1,881)
(1,881)
$
$
71,084
71,084
gain/(loss)
Net realized
$
$
— $
— $
Interest and
fee income
Dividend
income
— $
— $
8,099
8,099
(j)
Together with RGA, the Company co-invests through SLF. SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF must be approved by the SLF
investment committee consisting of two representatives of the Company and RGA (with unanimous approval required from (i) one representative of each of the Company and RGA or (ii) both
representatives of each of the Company and RGA). Therefore, although the Company owns more than 25% of the voting securities of SLF, the Company does not have sole control over significant actions
of SLF for purposes of the 1940 Act or otherwise.
(16) The Company generally receives quarterly profit distributions from its equity investment in SLF. See Note 4. Investments.
(17) The rate shown is the annualized seven-day yield as of September 30, 2018.
See Notes to Consolidated Financial Statements.
159
TABLE OF CONTENTS
Note 1. Organization
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Golub Capital BDC, Inc. (“GBDC” and, collectively with its subsidiaries, the “Company”) is an externally managed, closed-end, non-diversified management
investment company. GBDC has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as
amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, GBDC has elected to be treated as a regulated investment company (“RIC”)
under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
The Company’s investment strategy is to invest primarily in one stop (a loan that combines characteristics of traditional first lien senior secured loans and
second lien or subordinated loans and that are often referred to by other middle-market lenders as unitranche loans) and other senior secured loans of U.S.
middle-market companies. The Company may also selectively invest in second lien and subordinated (a loan that ranks senior only to a borrower’s equity
securities and ranks junior to all of such borrower’s other indebtedness in priority of payment) loans of, and warrants and minority equity securities in, U.S.
middle-market companies. The Company has entered into the Investment Advisory Agreement (defined below) with GC Advisors LLC (the “Investment
Adviser”), under which the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. Under an
administration agreement (the “Administration Agreement”) the Company is provided with certain services by an administrator (the “Administrator”), which
is currently Golub Capital LLC.
On September 16, 2019, the Company completed its acquisition of Golub Capital Investment Corporation (“GCIC”), a Maryland corporation, pursuant to that
certain Agreement and Plan of Merger (as amended, the “Merger Agreement”), dated as of November 27, 2018, by and among the Company, GCIC, Fifth
Ave Subsidiary Inc., a Maryland corporation and wholly owned subsidiary of the Company (“Merger Sub”), the Investment Adviser, and, for certain limited
purposes, the Administrator. Pursuant to the Merger Agreement, Merger Sub was first merged with and into GCIC, with GCIC as the surviving company (the
“Initial Merger”), and, immediately following the Initial Merger, GCIC was then merged with and into the Company, with the Company as the surviving
company (the Initial Merger and the subsequent merger, collectively, the “Merger”). Upon consummation of the Merger, the Company entered into the Third
Amended and Restated Investment Advisory Agreement dated as of September 16, 2019 with the Investment Adviser (the “Investment Advisory
Agreement”). The Investment Advisory Agreement replaced the Second Amended and Restated Investment Advisory Agreement by and between the
Company and the Investment Adviser dated as of August 4, 2014 (the “Prior Investment Advisory Agreement”). Refer to Note 3 for more information on the
Investment Advisory Agreement and the Prior Investment Advisory Agreement and refer to Note 14 for more information regarding the Merger.
Note 2. Significant Accounting Policies and Recent Accounting Updates
Basis of presentation: The Company is an investment company as defined in the accounting and reporting guidance under Accounting Standards
Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC Topic 946”).
The accompanying consolidated financial statements of the Company and related financial information have been prepared in accordance with generally
accepted accounting principles in the United States of America (“GAAP”) for financial information and pursuant to the requirements for reporting on Form
10-K and Regulation S-X. In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications consisting solely
of normal accruals that are necessary for the fair presentation of financial results as of and for the periods presented. All intercompany balances and
transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation.
Fair value of financial instruments: The Company applies fair value to all of its financial instruments in accordance with ASC Topic 820 — Fair Value
Measurement (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair
value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of
the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant
who holds the financial instrument rather than an entity-specific measure. Therefore, when market assumptions are not readily available, the Company’s own
160
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.
The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the
type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market
conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value
requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments
classified as Level 3.
Any changes to the valuation methodology are reviewed by management and the Company’s board of directors (the “Board”) to confirm that the changes are
appropriate. As markets change, new products develop and the pricing for products becomes more or less transparent, the Company will continue to refine its
valuation methodologies. See further description of fair value methodology in Note 6. Fair Value Measurements.
Use of estimates: The preparation of the consolidated financial statements in conformity with 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 consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Consolidation: As provided under Regulation S-X and ASC Topic 946, the Company will generally not consolidate its investment in a company other than
an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the
Company consolidated the results of the Company’s wholly-owned subsidiaries Golub Capital BDC 2010-1 Holdings LLC (“Holdings”), Golub Capital BDC
2010-1 LLC (“2010 Issuer”), Golub Capital BDC CLO 2014 LLC (“2014 Issuer”), Golub Capital BDC CLO III Depositor LLC (“2018 CLO Depositor”),
Golub Capital BDC CLO III LLC (“2018 Issuer”), Golub Capital BDC Funding LLC (“Funding”), Golub Capital BDC Funding II LLC (“Funding II”),
Golub Capital BDC Holdings, LLC (“BDC Holdings”), GC SBIC IV, L.P. (“SBIC IV”), GC SBIC V, L.P. (“SBIC V”), GC SBIC VI, L.P. (“SBIC VI”), GCIC
Holdings LLC (“GCIC Holdings”), GCIC Funding LLC (“GCIC Funding”), GCIC CLO II Depositor LLC (“GCIC 2018 CLO Depositor”), GCIC CLO II
LLC (“GCIC 2018 Issuer”) and GCIC Funding II LLC (“GCIC Funding II”). The Company does not consolidate its non-controlling interests in SLF or GCIC
SLF (collectively, the “Senior Loan Funds” or “SLFs”). See further description of the Company’s investments in the SLFs in Note 4. Investments.
Assets related to transactions that do not meet ASC Topic 860 requirements for accounting sale treatment are reflected in the Company’s Consolidated
Statements of Financial Condition as investments. Those assets are owned by special purpose entities, including BDC Holdings, 2010 Issuer, 2014 Issuer,
2018 Issuer, Funding, Funding II, GCIC Funding, GCIC Holdings, GCIC 2018 Issuer and GCIC Funding II that are consolidated in the Company’s
consolidated financial statements. The creditors of the special purpose entities have received security interests in such assets and such assets are not intended
to be available to the creditors of GBDC (or any affiliate of GBDC).
Cash, cash equivalents and foreign currencies: Cash, cash equivalents and foreign currencies are highly liquid investments with an original maturity of
three months or less at the date of acquisition. The Company deposits its cash in financial institutions and, at times, such balances may be in excess of the
Federal Deposit Insurance Corporation insurance limits.
Restricted cash and cash equivalents and restricted foreign currencies: Restricted cash and cash equivalents and restricted foreign currencies include
amounts that are collected and are held by trustees who have been appointed as custodians of the assets securing certain of the Company’s financing
transactions. Restricted cash and cash equivalents and restricted foreign currencies are held by the trustees for payment of interest expense and principal on
the outstanding borrowings or reinvestment into new assets. In addition, restricted cash, cash equivalents and restricted foreign currencies include amounts
held within the Company’s small business investment company (“SBIC”) subsidiaries. The amounts held within the SBICs are generally restricted to the
originations of new loans by the SBICs and the payment of U.S. Small Business Administration (“SBA”) debentures and related interest expense.
161
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Foreign currency translation: The Company’s books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S.
dollars on the following basis:
(1) cash and cash equivalents, restricted cash and cash equivalents, fair value of investments, interest receivable, and other assets and liabilities—at the
spot exchange rate on the last business day of the period; and
(2) purchases and sales of investments, income and expenses—at the exchange rates prevailing on the respective dates of such transactions.
Although net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of
investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Fluctuations arising from the translation
of assets other than investments and liabilities are included with the net change in unrealized appreciation (depreciation) on translation of assets and liabilities
in foreign currencies on the Consolidated Statements of Operations.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies. These risks
include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause
investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.
Forward currency contracts: A forward currency contract is an obligation between two parties to purchase or sell a specific currency for an agreed-upon
price at a future date. The Company utilized forward currency contracts to economically hedge the currency exposure associated with certain foreign-
denominated investments. The use of forward currency contracts does not eliminate fluctuations in the price of the underlying securities the Company owns
or intends to acquire, but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the exchange
rates on the contract date and reporting date and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are
closed, realized gains (losses) are recorded. Realized gains (losses) and unrealized appreciation (depreciation) on the contracts are included in the
Consolidated Statements of Operations. Unrealized appreciation (depreciation) on forward currency contracts is recorded on the Consolidated Statements of
Financial Condition by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable.
The primary risks associated with forward currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign
currency changing unfavorably. These risks may be in excess of the amounts reflected in the Consolidated Statements of Financial Condition.
Refer to Note 5 for more information regarding the forward currency contracts.
Revenue recognition:
Investments and related investment income: Interest income is accrued based upon the outstanding principal amount and contractual interest terms of debt
investments.
Loan origination fees, original issue discount and market discount or premium are capitalized, and the Company accretes or amortizes such amounts over the
life of the loan as interest income. For the years ended September 30, 2019, 2018, and 2017, interest income included $8,572, $9,660, and $9,498,
respectively, of accretion of discounts. For the years ended September 30, 2019, 2018, and 2017, interest income included ($1,381), $0, and $0, respectively,
of purchase premium amortization. For the years ended September 30, 2019, 2018, and 2017, the Company received loan origination fees of $10,833, $8,327,
and $8,593, respectively.
For investments with contractual PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at
maturity, the Company will not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not collectible. For the years ended
September 30, 2019, 2018,
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(In thousands, except shares and per share data)
and 2017, the Company recorded PIK income of $1,095, $941, and $2,401, respectively, and received PIK payments in cash of $41, $2, and $481,
respectively.
In addition, the Company may generate revenue in the form of amendment, structuring or due diligence fees, fees for providing managerial assistance,
consulting fees and prepayment premiums on loans. The Company records these fees as fee income when earned. All other income is recorded into income
when earned. For the years ended September 30, 2019, 2018, and 2017, fee income included $681, $2,082, and $1,441, respectively, of prepayment
premiums, which fees are non-recurring.
For the years ended September 30, 2019, 2018, and 2017, the Company received interest and fee income in cash, which excludes capitalized loan origination
fees, in the amounts of $152,359, $132,456, and $120,429, respectively.
Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio
company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on
the ex-dividend date for publicly traded portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership
(“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not
record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the
LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
For the years ended September 30, 2019, 2018, and 2017, excluding the Company's investments in LLC equity interests in the SLFs, the Company recorded
dividend income of $349, $624, and $629, respectively, and return of capital distributions of $124, $373, and $999, respectively. For the years ended
September 30, 2019, 2018, and 2017, the Company recorded dividend income of $1,219, $8,099, and $4,929, respectively, and return of capital distributions
of $2,275, $34,213, and $25,112, respectively, from the Company's investments in LLC equity interests in the SLFs.
Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net
proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. The Company
reports current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation
(depreciation) on investments and foreign currency translation in the Consolidated Statements of Operations.
Non-accrual loans: A loan may be left on accrual status during the period the Company is pursuing repayment of the loan. Management reviews all loans that
become 90 days or more past due on principal and interest, or when there is reasonable doubt that principal or interest will be collected, for possible
placement on non-accrual status. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed. Additionally, any original issue
discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on
non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual
status when past due principal and interest is paid and, in management’s judgment, payments are likely to remain current. The total fair value of non-accrual
loans was $13,663 and $5,625 as of September 30, 2019 and 2018, respectively.
Partial loan sales: The Company follows the guidance in ASC Topic 860 when accounting for loan participations and other partial loan sales. Such guidance
requires a participation or other partial loan sale to meet the definition of a “participating interest”, as defined in the guidance, in order for sale treatment to be
allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain on the Company’s Consolidated
Statements of Financial Condition and the proceeds are recorded as a secured borrowing until the definition is met. Secured borrowings are carried at fair
value to correspond with the related investments, which are carried at fair value. See Note 6. Fair Value Measurements for additional information.
Purchase accounting: The Merger was accounted for under the asset acquisition method of accounting in accordance with ASC 805 — Business
Combinations — Related Issues ("ASC Topic 805"), also referred to as
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Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
“purchase accounting.” Under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but
also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. Per ASC Topic 805, assets are recognized based
on their cost to the acquiring entity, which generally includes transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value
of noncash assets given as consideration differs from the assets carrying amounts on the acquiring entity’s books.
The cost of the group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on the relative fair
values of net identifiable assets acquired other than “non-qualifying” assets (for example cash) and does not give rise to goodwill. To the extent that the
consideration paid to GCIC’s stockholders exceeded the relative fair values of the net identifiable assets of GCIC acquired other than “non-qualifying” assets,
any such premium paid by the Company was further allocated to the cost of the GCIC assets acquired by the Company pro-rata to their relative fair value,
other than “non-qualifying” assets. As GCIC did not have any “qualifying” assets at the time of acquisition, the premium was allocated to “non-qualifying”
assets, which are GCIC’s investments in loans and equity securities, including its investment in GCIC SLF. Immediately following the acquisition of GCIC,
the Company recorded its assets at their respective fair values and, as a result, the purchase premium allocated to the cost basis of the GCIC assets acquired
was immediately recognized as unrealized depreciation on the Company's Consolidated Statement of Operations. The purchase premium allocated to
investments in loan securities will amortize over the life of the loans through interest income, with a corresponding reversal of the unrealized depreciation on
the loans acquired from GCIC through their ultimate disposition. For the year ended September 30, 2019, the Company recognized $1,381 of amortization of
purchase premium. The purchase premium allocated to investments in equity securities will not amortize over the life of the equity securities through interest
income and, assuming no subsequent change to the fair value of the equity securities acquired from GCIC and disposition of such equity securities at fair
value, the Company will recognize a realized loss with a corresponding reversal of the unrealized depreciation upon disposition of the equity securities
acquired from GCIC.
Refer to Note 14 for more information related to purchase accounting and the acquisition of GCIC.
Income taxes: The Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax
treatment applicable to RICs. In order to qualify and be subject to tax as a RIC, among other things, the Company is required to meet certain source of income
and asset diversification requirements and timely distribute dividends for U.S. federal income tax purposes to its stockholders of an amount generally at least
equal to 90% of investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax
year. The Company has made, and intends to continue to make, the requisite distributions to its stockholders, which will generally relieve the Company from
U.S. federal income taxes with respect to all income distributed to its stockholders.
Depending on the level of taxable income earned in a tax year, the Company may choose to retain taxable income in excess of current year dividend
distributions and would distribute such taxable income in the next tax year. The Company may then be required to incur a 4% excise tax on such income. To
the extent that the Company determines that its estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated
current calendar year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the
years ended September 30, 2019, 2018, and 2017, $0, $0, and $17, respectively, was incurred for U.S. federal excise tax.
The Company accounts for income taxes in conformity with ASC Topic 740 — Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for
how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements. ASC Topic 740 requires the evaluation of tax
positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the
applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense or tax benefit in
the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no
material unrecognized tax benefits or unrecognized tax liabilities related to uncertain income tax positions through September 30, 2019. The Company's tax
returns for the 2016 through 2018 tax years remain subject to examination by U.S. federal and most state tax authorities.
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Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Dividends and distributions: Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a
dividend or distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital
gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.
The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf
of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and the Company declares a cash distribution, then
stockholders who participate in the DRIP will have their cash distribution reinvested in additional shares of the Company’s common stock, rather than
receiving the cash distribution. The Company may use newly issued shares under the guidelines of the DRIP (if the Company’s shares are trading at a
premium to net asset value), or the Company may purchase shares in the open market in connection with the obligations under the plan. In particular, if the
Company’s shares are trading at a significant discount to net asset value (“NAV”) and the Company is otherwise permitted under applicable law to purchase
such shares, the Company intends to purchase shares in the open market in connection with any obligations under the DRIP.
In the event the market price per share of the Company’s common stock on the date of a distribution exceeds the most recently computed NAV per share of
the common stock, the Company will issue shares of common stock to participants in the DRIP at the greater of the most recently computed NAV per share of
common stock or 95% of the current market price per share of common stock (or such lesser discount to the current market price per share that still exceeds
the most recently computed NAV per share of common stock).
Share repurchase plan: The Company has a share repurchase program (the “Program”) which allows the Company to repurchase the Company’s
outstanding common stock on the open market at prices below the Company’s NAV as reported in its most recently published consolidated financial
statements. The Board most recently reapproved the Program in August 2019 and the Program may be implemented at the discretion of management. The
shares may be purchased from time to time at prevailing market prices, through open market transactions, including block transactions. Effective as of August
6, 2019, the Company may repurchase up to $150,000 of the Company's common stock pursuant to the Program. Prior to such date, the Program permitted up
to $75,000 of repurchases. The Company did not make any repurchases of its common stock during each of the years ended September 30, 2019, 2018, and
2017.
Deferred debt issuance costs: Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s
borrowings. As of September 30, 2019 and 2018, the Company had deferred debt issuance costs of $4,939 and $2,934, respectively. These amounts are
amortized and included in interest expense in the Consolidated Statements of Operations over the estimated average life of the borrowings. Amortization
expense for deferred debt issuance costs for the years ended September 30, 2019, 2018, and 2017, was $2,096, $3,315, and $3,289, respectively.
Note 3. Related Party Transactions
Investment Advisory Agreement: Under the Investment Advisory Agreement, the Investment Adviser manages the day-to-day operations of, and provides
investment advisory services to, GBDC. The Board approved the Investment Advisory Agreement on July 11, 2019. The Board noted that the terms of the
Investment Advisory Agreement did not change the calculation of the Capital Gain Incentive Fee, or the management or incentive fee rates and that the
changes, as compared to the Prior Investment Advisory Agreement, consisted of revisions to (i) exclude the impact of purchase accounting resulting from a
merger, including the Merger, from the calculation of income subject to the income incentive fee payable and the calculation of the cumulative incentive fee
cap under the Investment Advisory Agreement and (ii) convert the cumulative incentive fee cap into a per share calculation. At a meeting of the Company's
stockholders held on September 4, 2019, the Company's stockholders voted to the approve the Investment Advisory Agreement, which was entered into and
effective as of September 16, 2019, the closing of the Merger, and will continue for an initial two-year term. The Investment Adviser is a registered
investment adviser with the SEC. The Investment Adviser receives fees for providing services, consisting of two components, a base management fee and an
Incentive Fee (as defined below).
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(In thousands, except shares and per share data)
The base management fee is calculated at an annual rate equal to 1.375% of average adjusted gross assets at the end of the two most recently completed
calendar quarters (including assets purchased with borrowed funds and securitization-related assets, leverage, unrealized depreciation or appreciation on
derivative instruments and cash collateral on deposit with custodian but adjusted to exclude cash and cash equivalents so that investors do not pay the base
management fee on such assets) and is payable quarterly in arrears. Additionally, the Investment Adviser voluntarily excludes any assets funded with secured
borrowing proceeds from the base management fee calculation. The base management fee is adjusted, based on the actual number of days elapsed relative to
the total number of days in such calendar quarter, for any share issuances or repurchases during such calendar quarter. For purposes of the Investment
Advisory Agreement, cash equivalents means U.S. government securities and commercial paper instruments maturing within 270 days of purchase (which is
different than the GAAP definition, which defines cash equivalents as U.S. government securities and commercial paper instruments maturing within 90 days
of purchase). To the extent that the Investment Adviser or any of its affiliates provides investment advisory, collateral management or other similar services to
a subsidiary of the Company, the base management fee will be reduced by an amount equal to the product of (1) the total fees paid to the Investment Adviser
by such subsidiary for such services and (2) the percentage of such subsidiary’s total equity, including membership interests and any class of notes not
exclusively held by one or more third parties, that is owned, directly or indirectly, by the Company.
The Company has structured the calculation of the Incentive Fee to include a fee limitation such that an Incentive Fee for any quarter can only be paid to the
Investment Adviser if, after such payment, the cumulative Incentive Fees paid to the Investment Adviser, calculated on a per share basis, since April 13, 2010,
the effective date of the Company’s election to become a BDC, would be less than or equal to 20.0% of the Company’s Cumulative Pre-Incentive Fee Net
Income (as defined below).
The Company accomplishes this limitation by subjecting each quarterly Incentive Fee payable under the Income and Capital Gain Incentive Fee Calculation
(as defined below) to a cap (the “Incentive Fee Cap”). The Investment Advisory Agreement, as compared to the Prior Investment Advisory Agreement,
converts the cumulative incentive fee cap from an aggregate basis calculation to a per share calculation. Under the Prior Investment Advisory Agreement, the
Incentive Fee would not be paid at any time if, after such payment, the cumulative incentive fees paid to date would be greater than 20.0% of the Company's
Cumulative Pre-Incentive Fee Net Income since April 13, 2010. Under the Investment Advisory Agreement, the Incentive Fee Cap in any quarter is equal to
the difference between (a) 20.0% of Cumulative Pre-Incentive Fee Net Income Per Share (as defined below) and (b) Cumulative Incentive Fees Paid Per
Share (as defined below). To the extent the Incentive Fee Cap is zero or a negative value in any quarter, no Incentive Fee would be payable in that quarter. If,
for any relevant period, the Incentive Fee Cap calculation results in the Company paying less than the amount of the Incentive Fee calculated above, then the
difference between the Incentive Fee and the Incentive Fee Cap will not be paid by GBDC and will not be received by the Investment Adviser as an Incentive
Fee either at the end of such relevant period or at the end of any future period. “Cumulative Pre-Incentive Fee Net Income Per Share” equals the sum of “Pre-
Incentive Fee Net Income Per Share” (as defined below) for each quarterly period since April 13, 2010. “Pre-Incentive Fee Net Income Per Share” equals the
sum of (i) Pre-Incentive Fee Net Investment Income (as defined below) and (ii) Adjusted Capital Returns for the applicable period, divided by (b) the
weighted average number of shares of GBDC common stock outstanding during such period. “Adjusted Capital Returns” for any period is the sum of the
realized aggregate capital gains, realized aggregate capital losses, aggregate unrealized capital depreciation and aggregate unrealized capital appreciation for
such period; provided that the calculation of realized aggregate capital gains, realized aggregate capital losses, aggregate unrealized capital depreciation and
aggregate unrealized capital appreciation shall not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation
resulting solely from the purchase accounting for any premium or discount paid for the acquisition of assets in a merger. “Cumulative Incentive Fees Paid Per
Share” is equal to the sum of Incentive Fees Paid Per Share since April 13, 2010. “Incentive Fees Paid Per Share” for any period is equal to the Incentive Fees
accrued and/or payable to the Company for such period, divided by the weighted average number of shares of common stock of GBDC during such period.
“Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees such as commitment,
origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing
managerial assistance) accrued during the calendar quarter, minus operating expenses for the calendar quarter (including the base management fee, taxes, any
expenses payable under the Investment Advisory Agreement and the Administration
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(In thousands, except shares and per share data)
Agreement, any expenses of securitizations and any interest expense and dividends paid on any outstanding preferred stock, but excluding the Incentive Fee).
Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature such as market discount, debt instruments with
PIK interest, preferred stock with PIK dividends and zero coupon securities, accrued income that the Company has not yet received in cash.
Incentive Fees are calculated and payable quarterly in arrears (or, upon termination of the Investment Advisory Agreement, as of the termination date).
The income and capital gains incentive fee calculation (the “Income and Capital Gain Incentive Fee Calculation”) has two parts, the income component (the
“Income Incentive Fee”) and the capital gains component (the “Capital Gain Incentive Fee” and, together with the Income Incentive Fee, the “Incentive
Fee”). The Income Incentive Fee is calculated quarterly in arrears based on the Company’s Pre-Incentive Fee Net Investment Income for the immediately
preceding calendar quarter.
For the years ended September 30, 2019, 2018, and 2017, the Income Incentive Fee incurred was $14,482, $11,652, and $4,741, respectively.
The Investment Advisory Agreement, as compared to the Prior Investment Advisory Agreement, excludes the impact of purchase accounting resulting from a
merger, including the Merger, from the calculation of income subject to the Income Incentive Fee and the calculation of the Incentive Fee Cap. As a result,
under the Investment Advisory Agreement, Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or
unrealized capital appreciation or depreciation or any amortization or accretion of any purchase premium or discount to interest income solely from the
purchase accounting for any premium or discount paid for the acquisition of assets in a merger, such as the premium to net asset value paid for the shares of
GCIC common stock in the Merger. Because of the structure of the Income Incentive Fee, it is possible that an Incentive Fee may be calculated under this
formula with respect to a period in which the Company has incurred a loss. For example, if the Company receives Pre-Incentive Fee Net Investment Income
in excess of the hurdle rate (as defined below) for a calendar quarter, the Income Incentive Fee will result in a positive value and an Incentive Fee will be paid
even if the Company has incurred a loss in such period due to realized and/or unrealized capital losses unless the payment of such Incentive Fee would cause
the Company to pay Incentive Fees on a cumulative basis that exceed the Incentive Fee Cap.
Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and
before taking into account any Incentive Fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed
“hurdle rate” of 2.0% quarterly. If market interest rates rise, the Company may be able to invest funds in debt instruments that provide for a higher return,
which would increase Pre-Incentive Fee Net Investment Income and make it easier for the Investment Adviser to surpass the fixed hurdle rate and receive an
Incentive Fee based on such net investment income.
The Company’s Pre-Incentive Fee Net Investment Income used to calculate this part of the Incentive Fee is also included in the amount of its total assets
(excluding cash and cash equivalents but including assets purchased with borrowed funds and securitization-related assets, unrealized depreciation or
appreciation on derivative instruments and cash collateral on deposit with custodian) used to calculate the 1.375% base management fee annual rate.
The Company calculates the Income Incentive Fee with respect to its Pre-Incentive Fee Net Investment Income quarterly, in arrears, as follows:
•
•
Zero in any calendar quarter in which the Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate;
100% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if
any, that exceeds the hurdle rate but is less than 2.5% in any calendar quarter. This portion of the Company’s Pre-Incentive Fee Net Investment
Income (which exceeds the hurdle rate but is less than 2.5%) is referred to as the “catch-up” provision. The catch-up is meant to provide the
Investment Adviser with 20.0% of the Pre-Incentive Fee Net Investment Income as if a hurdle rate did not apply if the Company’s Pre-Incentive Fee
Net Investment Income exceeds 2.5% in any calendar quarter; and
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(In thousands, except shares and per share data)
•
20.0% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.5% in any calendar quarter.
The Capital Gain Incentive Fee equals (a) 20.0% of the Company’s Capital Gain Incentive Fee Base (as defined below), if any, calculated in arrears as of the
end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), which commenced with the calendar year
ending December 31, 2010, less (b) the aggregate amount of any previously paid Capital Gain Incentive Fees. The Capital Gain Incentive Fee is calculated in
the same manner under the Investment Advisory Agreement as under the Prior Investment Advisory Agreement. The Company’s “Capital Gain Incentive Fee
Base” equals (1) the sum of (i) realized capital gains, if any, on a cumulative positive basis from the date the Company elected to become a BDC through the
end of each calendar year, (ii) all realized capital losses on a cumulative basis and (iii) all unrealized capital depreciation on a cumulative basis less (2) all
unamortized deferred debt issuance costs, if and to the extent such costs exceed all unrealized capital appreciation on a cumulative basis.
•
•
•
The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in the
Company’s portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.
The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each
investment in the Company’s portfolio when sold and (b) the accreted or amortized cost basis of such investment.
The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in
the Company’s portfolio as of the applicable Capital Gain Incentive Fee calculation date and (b) the accreted or amortized cost basis of such
investment.
In accordance with GAAP, the Company also is required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue
a capital gain incentive fee on a quarterly basis as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not
permitted to be considered in calculating the fee actually payable under either the Prior Investment Advisory Agreement or Investment Advisory Agreement,
as applicable. If the Capital Gain Incentive Fee Base, adjusted as required by GAAP to include unrealized capital appreciation, is positive at the end of a
period, then GAAP requires the Company to accrue a capital gain incentive fee equal to 20% of such amount, less the aggregate amount of the actual Capital
Gain Incentive Fees paid and capital gain incentive fees accrued under GAAP in all prior periods. If such amount is negative, then there is no accrual for such
period. The resulting accrual under GAAP in a given period may result in additional expense if such cumulative amount is greater than in the prior period or a
reversal of previously recorded expense if such cumulative amount is less than in the prior period. There can be no assurance that such unrealized capital
appreciation will be realized in the future. For the year ended September 30, 2019, the Company had a reversal of the accrual of the capital gain incentive fee
of $5,580, and for the years ended September 30, 2018 and 2017, the Company accrued a capital gain incentive fee of $1,458 and $2,819, respectively, in
accordance with GAAP. Changes in the accrual for the capital gain incentive fee are included in incentive fee in the Consolidated Statements of Operations.
As of September 30, 2019 and 2018, included in management and incentive fees payable on the Consolidated Statements of Financial Condition were $0 and
$7,158, respectively, for cumulative accruals for capital gain incentive fees under GAAP, including the amounts payable pursuant to either the Prior
Investment Advisory Agreement or the Investment Advisory Agreement, as applicable, described above.
As of September 30, 2019 and 2018 the Capital Gain Incentive Fee payable as calculated under the Investment Advisory Agreement or the Prior Investment
Advisory Agreement, as applicable (as described above), was $0 and $2,303, respectively. Any payment due under the terms of the Investment Advisory
Agreement or the Prior Investment Advisory Agreement, as applicable, is calculated in arrears at the end of each calendar year. The Company paid $1,578
and $1,196 of Capital Gain Incentive Fee calculated in accordance with the Prior Investment Advisory Agreement as of December 31, 2018 and
December 31, 2017, respectively. The Company did not pay any capital gain incentive fee for any period ended prior to December 31, 2017.
Administration Agreement: Under the Administration Agreement, the Administrator furnishes the Company with office facilities and equipment, provides
the Company with clerical, bookkeeping and record keeping services at such facilities and provides the Company with other administrative services as the
Administrator, subject to review by the Board, determines necessary to conduct the Company’s day-to-day operations. The Company reimburses the
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(In thousands, except shares and per share data)
Administrator the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement,
including rent, fees and expenses associated with performing compliance functions and the Company's allocable portion of the cost of its chief financial
officer and chief compliance officer and their respective staffs. The Board reviews such expenses to determine that these expenses, including any allocation of
expenses among the Company and other entities for which the Administrator provides similar services, are reasonable and comparable to administrative
services charged by unaffiliated third party asset managers. Under the Administration Agreement, the Administrator also provides, on the Company’s behalf,
managerial assistance to those portfolio companies to which the Company is required to provide such assistance and will be paid an additional amount based
on the cost of the services provided, which amount shall not exceed the amount the Company receives from such portfolio companies.
Included in accounts payable and other liabilities is $639 and $616 as of September 30, 2019 and 2018, respectively, for accrued allocated shared services
under the Administration Agreement. As of September 30, 2019, also included in accounts payable and other liabilities, is $763 of accrued allocated shared
service fees payable to the Administrator that was assumed from GCIC in the Merger.
Other related party transactions: The Administrator pays for certain unaffiliated third-party expenses incurred by the Company. Such expenses include
postage, printing, office supplies, rating agency fees and professional fees. These expenses are not marked-up and represent the same amount the Company
would have paid had the Company paid the expenses directly. These expenses are subsequently reimbursed in cash.
Total expenses reimbursed to the Administrator during the years ended September 30, 2019, 2018, and 2017, were $2,812, $2,412, and $2,255, respectively.
As of September 30, 2019 and 2018, included in accounts payable and other liabilities were $922 and $364, respectively, for expenses paid on behalf of the
Company by the Administrator. As of September 30, 2019, also included in accounts payable and other liabilities was $763 of expenses paid on behalf of
GCIC by the Administrator which were assumed in the Merger.
As of September 30, 2019, included in accounts payable and other liabilities were $3,394 for an income incentive fee, $1,377 for a capital gain incentive fee,
$4,464 for base management fees and $10,071 for a subordinated liquidation fee, each of which were payable by GCIC pursuant to its investment advisory
agreement with the Investment Adviser and which were assumed in the Merger. The investment advisory agreement between the Investment Adviser and
GCIC was terminated in connection with the closing of the Merger.
On June 22, 2016, the Company entered into an unsecured revolving credit facility with the Investment Adviser (as amended, the "Adviser Revolver"), with a
maximum credit limit of $20,000 and expiration date of June 22, 2019. On June 21, 2019, the Company entered into an amendment to the Adviser Revolver
to, among other things, (a) extend the maturity date from June 22, 2019 to June 21, 2022 and (b) increase the borrowing capacity from $20,000 to $40,000.
Refer to Note 7. Borrowings for discussion of the Adviser Revolver.
Effective September 16, 2019, the Company assumed, as a result of the Merger, an unsecured revolving credit facility with the Investment Adviser ("Adviser
Revolver II") that had a credit limit of $40,000.
During the years ended September 30, 2019, 2018, and 2017, the Company sold $0, $6,191, and $119,982, respectively, of investments and unfunded
commitments to SLF at fair value and recognized $0, $20, and $776, respectively, of net realized gains. Effective September 16, 2019, the Company acquired
its investment in GCIC SLF as a result of the Merger. During the year ended September 30, 2019, the Company did not sell investments or unfunded
commitments to GCIC SLF.
During the year ended September 30, 2019, 2018, and 2017, SLF incurred an administrative service fee of $268, $404, and $477, respectively. During the
year ended September 30, 2019, GCIC SLF incurred an administrative service fee of $6.
On September 16, 2019, the Company completed its acquisition of GCIC. Refer to Note 14 for more information regarding the Merger.
169
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Note 4. Investments
Investments as of September 30, 2019 and 2018 consisted of the following:
As of September 30, 2019
As of September 30, 2018
Principal
Amortized
Cost
Fair
Value
Principal
Amortized
Cost
Fair
Value
Senior secured
One stop
Second lien
Subordinated debt
LLC equity interests in the
SLFs(1)
Equity
Total
$
601,788 $
605,606 $
589,340 $
233,064 $
230,846 $
3,514,266
3,559,030
3,474,116
1,443,980
1,426,640
19,473
369
N/A
N/A
19,745
375
127,487
79,527
19,473
369
123,644
85,990
9,435
251
N/A
N/A
9,338
251
75,407
38,170
231,169
1,430,196
9,435
251
71,084
40,706
$
4,135,896 $
4,391,770 $
4,292,932 $
1,686,730 $
1,780,652 $
1,782,841
(1)
SLF’s and GCIC SLF's proceeds from the LLC equity interests invested in SLF and GCIC SLF, respectively, were utilized to invest in senior secured loans.
The following tables show the portfolio composition by geographic region at amortized cost and fair value as a percentage of total investments in portfolio
companies. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of
the primary source of the portfolio company’s business.
As of September 30, 2019
As of September 30, 2018
Amortized Cost:
United States
Mid-Atlantic
Midwest
West
Southeast
Southwest
Northeast
Canada
United Kingdom
Australia
Total
Fair Value:
United States
Mid-Atlantic
Midwest
West
Southeast
Southwest
Northeast
Canada
United Kingdom
Australia
Total
$
$
$
919,868
985,471
748,104
944,794
453,239
217,138
99,823
21,080
2,253
21.0% $
22.4
17.0
21.5
10.3
4.9
2.3
0.5
0.1
354,662
370,239
306,052
422,844
186,468
125,329
15,058
—
—
19.9%
20.8
17.2
23.7
10.5
7.0
0.9
—
—
4,391,770
100.0% $
1,780,652
100.0%
896,202
959,894
732,599
929,922
442,744
211,920
97,392
20,082
2,177
20.9% $
22.4
17.1
21.6
10.3
4.9
2.3
0.5
—
347,560
371,141
306,074
428,235
189,379
125,051
15,401
—
—
19.5%
20.8
17.2
24.0
10.6
7.0
0.9
—
—
$
4,292,932
100.0% $
1,782,841
100.0%
170
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The industry compositions of the portfolio at amortized cost and fair value as of September 30, 2019 and 2018 were as follows:
As of September 30, 2019
As of September 30, 2018
Amortized Cost:
Aerospace and Defense
Automobile
Beverage, Food and Tobacco
Broadcasting and Entertainment
Buildings and Real Estate
Chemicals, Plastics and Rubber
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Service
Ecological
Electronics
Finance
Grocery
Healthcare, Education and Childcare
Home and Office Furnishings, Housewares, and Durable Consumer
Hotels, Motels, Inns, and Gaming
Insurance
Investment Funds and Vehicles
Leisure, Amusement, Motion Pictures, Entertainment
Mining, Steel, Iron and Non-Precious Metals
Oil and Gas
Personal and Non Durable Consumer Products (Mfg. Only)
Personal, Food and Miscellaneous Services
Printing and Publishing
Retail Stores
Telecommunications
Textiles and Leather
Utilities
Total
* Represents an amount less than 0.1%.
2.1%
$
1.6
5.9
—
3.0
0.4
2.9
33.5
1.0
5.9
0.4
0.0*
17.6
0.5
0.2
2.4
2.9
4.3
0.1
0.8
1.7
4.9
0.2
6.9
0.3
0.1
0.4
100.0%
$
51,288
18,934
99,594
1,444
63,109
10,277
96,892
460,166
18,852
130,457
—
16,203
337,499
12,861
15,383
45,865
75,407
80,302
4,478
14,211
68,129
31,526
4,200
111,550
6,310
2,196
3,519
2.9%
1.1
5.6
0.1
3.5
0.6
5.4
25.8
1.1
7.3
—
0.9
19.0
0.7
0.9
2.6
4.2
4.5
0.3
0.8
3.8
1.8
0.2
6.3
0.3
0.1
0.2
1,780,652
100.0%
$
92,797
70,401
257,594
2,136
134,083
19,184
127,441
1,470,501
44,573
257,587
19,532
444
772,226
21,551
8,463
105,238
127,487
186,894
4,794
36,237
73,146
214,582
10,787
302,054
11,832
4,080
16,126
$
4,391,770
171
TABLE OF CONTENTS
Fair Value:
Aerospace and Defense
Automobile
Beverage, Food and Tobacco
Broadcasting and Entertainment
Buildings and Real Estate
Chemicals, Plastics and Rubber
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Service
Ecological
Electronics
Finance
Grocery
Healthcare, Education and Childcare
Home and Office Furnishings, Housewares, and Durable Consumer
Hotels, Motels, Inns, and Gaming
Insurance
Investment Funds and Vehicles
Leisure, Amusement, Motion Pictures, Entertainment
Mining, Steel, Iron and Non-Precious Metals
Oil and Gas
Personal and Non Durable Consumer Products (Mfg. Only)
Personal, Food and Miscellaneous Services
Printing and Publishing
Retail Stores
Telecommunications
Textiles and Leather
Utilities
Total
* Represents an amount less than 0.1%.
Senior Loan Fund LLC:
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
As of September 30, 2019
As of September 30, 2018
$
91,651
69,820
252,588
2,108
133,053
18,922
124,040
1,442,750
43,857
249,678
18,883
411
746,484
20,894
8,419
104,086
123,644
183,836
3,747
35,612
73,444
208,728
10,427
294,463
11,627
3,927
15,833
$
4,292,932
2.1%
$
1.6
5.9
0.1
3.1
0.4
2.9
33.6
1.0
5.8
0.4
0.0*
17.4
0.5
0.2
2.4
2.9
4.3
0.1
0.8
1.7
4.9
0.2
6.9
0.3
0.1
0.4
100.0%
$
47,891
19,158
99,608
1,447
65,255
10,356
96,663
466,037
19,148
130,472
—
14,629
333,736
12,831
15,592
47,041
71,084
81,907
4,496
14,340
69,912
32,253
4,167
112,738
6,393
2,134
3,553
2.7%
1.1
5.6
0.1
3.7
0.6
5.4
26.1
1.1
7.3
—
0.8
18.7
0.7
0.9
2.6
4.0
4.6
0.3
0.8
3.9
1.8
0.2
6.3
0.4
0.1
0.2
1,782,841
100.0%
The Company co-invests with RGA in senior secured loans through SLF, an unconsolidated Delaware LLC. SLF is capitalized as transactions are completed
and all portfolio and investment decisions in respect of SLF must be approved by the SLF investment committee consisting of two representatives of each of
the Company and RGA (with unanimous approval required from (i) one representative of each of the Company and RGA or (ii) both representatives of each
of the Company and RGA). SLF may cease making new investments upon notification of either member but operations will continue until all investments
have been sold or paid-off in the normal course of business. Investments held by SLF are measured at fair value using the same valuation methodologies as
described in Note 6.
As of September 30, 2019 and 2018, SLF was capitalized by LLC equity interest subscriptions from its members. As of September 30, 2019 and 2018, the
Company and RGA owned 87.5% and 12.5%, respectively, of the LLC equity interests of SLF. SLF’s profits and losses are allocated to the Company and
RGA in accordance with their respective ownership interests.
SLF has entered into a senior secured revolving credit facility (as amended, the “SLF Credit Facility”) with Wells Fargo Bank, N.A., through its wholly-
owned subsidiary Senior Loan Fund II LLC (“SLF II”), which as of September 30, 2019 allowed SLF II to borrow up to $75,581 at any one time outstanding,
subject to leverage and borrowing base restrictions. The reinvestment period of the SLF Credit Facility ended August 29, 2018, and after such date, the
maximum commitment is equal to advances outstanding. The stated maturity date is August 30, 2022. As of September 30, 2019 and September 30, 2018,
SLF II had outstanding debt under the SLF Credit Facility of
172
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
$75,581 and $104,622, respectively. As of September 30, 2019, the SLF Credit Facility bears interest at one-month LIBOR plus 2.05% per annum.
As of September 30, 2019 and 2018, SLF had the following commitments from its members (in the aggregate):
LLC equity commitments
Total
As of September 30, 2019
As of September 30, 2018
Committed
Funded(1)
Committed
Funded(1)
$
$
200,000
200,000
$
$
85,580
85,580
$
$
200,000 $
200,000 $
86,180
86,180
(1)
Funded LLC equity commitments are presented net of return of capital distributions subject to recall.
As of September 30, 2019 and 2018, SLF had total assets at fair value of $161,018 and $186,326, respectively. As of September 30, 2019, SLF had six
portfolio company investments in two portfolio companies on non-accrual status with a fair value of $4,987. As of September 30, 2018, SLF had one
portfolio company investment in one portfolio company on non-accrual status with a fair value of $3,856. The portfolio companies in SLF are in industries
and geographies similar to those in which the Company may invest directly. Additionally, as of September 30, 2019 and 2018, SLF had commitments to fund
various undrawn revolvers and delayed draw investments to its portfolio companies totaling $3,377 and $5,920, respectively.
Below is a summary of SLF’s senior secured loan portfolio, followed by a listing of the individual investments in SLF’s portfolio as of September 30, 2019
and 2018:
Senior secured loans(1)
Weighted average current interest rate on senior secured loans(2)
Number of borrowers in SLF
Largest portfolio company investment(1)
Total of five largest portfolio company investments(1)
(1) At principal amount.
As of September 30, 2019
As of September 30, 2018
$
$
$
154,254
$
7.4%
27
12,654
54,268
$
$
183,668
7.5%
32
13,716
57,330
(2) Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at principal amount.
173
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Portfolio Company
Business Description
1A Smart Start LLC(4)
Home and Office Furnishings, Housewares, and Durable
Consumer
Security Type
Maturity
Date
Senior loan
02/2022
SLF Investment Portfolio as of September 30, 2019
Advanced Pain Management Holdings, Inc.(4)(5)
Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc.(4)(5)
Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc.(4)(5)(7)
Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc.(4)(5)
Healthcare, Education and Childcare
Boot Barn, Inc.(4)
Brandmuscle, Inc.
Brandmuscle, Inc.
Captain D's, LLC(4)
Captain D's, LLC(4)
Retail Stores
Printing and Publishing
Printing and Publishing
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
CLP Healthcare Services, Inc.
Healthcare, Education and Childcare
CLP Healthcare Services, Inc.
Healthcare, Education and Childcare
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC
Personal, Food and Miscellaneous Services
DISA Holdings Acquisition Subsidiary Corp.(4)
Diversified/Conglomerate Service
DISA Holdings Acquisition Subsidiary Corp.(4)
Diversified/Conglomerate Service
Flexan, LLC
Flexan, LLC
Flexan, LLC(4)
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Gamma Technologies, LLC(4)
Electronics
III US Holdings, LLC
Jensen Hughes, Inc.
Jensen Hughes, Inc.
Jensen Hughes, Inc.
Joerns Healthcare, LLC(4)
Joerns Healthcare, LLC(4)
Mediaocean LLC
Diversified/Conglomerate Service
Buildings and Real Estate
Buildings and Real Estate
Buildings and Real Estate
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Diversified/Conglomerate Service
Paradigm DKD Group, LLC(4)(5)
Buildings and Real Estate
Paradigm DKD Group, LLC(4)(5)(7)
Buildings and Real Estate
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
12/2019
12/2019
12/2019
12/2019
06/2023
12/2021
12/2021
12/2023
12/2023
12/2020
12/2020
10/2021
10/2021
10/2021
10/2021
10/2021
06/2022
06/2022
02/2020
02/2020
02/2020
06/2024
09/2022
03/2024
03/2024
03/2024
08/2024
08/2024
08/2020
05/2022
05/2022
Pasternack Enterprises, Inc. and Fairview Microwave,
Inc(4)
Diversified/Conglomerate Manufacturing
Senior loan
07/2025
Polk Acquisition Corp.(4)
Polk Acquisition Corp.(4)
Polk Acquisition Corp.
Automobile
Automobile
Automobile
Senior loan
Senior loan
Senior loan
06/2022
06/2022
06/2022
174
Current
Interest
Rate(1)
Principal ($) /
Shares(2)
Fair
Value(3)
6.5
7.1
7.1
7.1
10.6
6.6
6.9
N/A(6)
6.5
7.5
7.4
7.4
7.5
7.5
7.5
7.5
% $
2,961
$
6,172
422
193
2,139
6,022
4,418
—
2,433
17
8,415
4,239
2,392
1,203
58
40
N/A(6)
—
7.1
6.0
7.9
7.9
9.5
7.3
8.1
6.6
6.6
6.6
8.2
8.2
10,084
10,084
4,773
53
5,905
1,640
431
4,288
2,276
118
63
1,286
1,338
N/A(6)
—
8.4
8.4
6.0
7.3
7.3
7.3
1,480
(16)
5,264
4,465
60
52
2,961
3,703
253
(8)
4
6,022
4,415
—
2,433
17
8,415
4,239
2,392
1,203
58
40
—
4,773
53
5,905
1,640
431
4,288
2,276
118
63
1,286
1,338
—
1,094
(59)
5,264
4,376
58
51
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
SLF Investment Portfolio as of September 30, 2019 - (continued)
Portfolio Company
Business Description
Pyramid Healthcare, Inc.(4)
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
RSC Acquisition, Inc.(4)
RSC Acquisition, Inc.(4)
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Insurance
Insurance
Rubio's Restaurants, Inc(4)
Beverage, Food and Tobacco
Security Type
Maturity
Date
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
08/2020
08/2020
08/2020
08/2020
11/2022
11/2021
10/2019
Sage Dental Management, LLC
Healthcare, Education and Childcare
Senior loan
12/2020
Sage Dental Management, LLC
Healthcare, Education and Childcare
Sage Dental Management, LLC
Healthcare, Education and Childcare
Sage Dental Management, LLC
Healthcare, Education and Childcare
SEI, Inc.(4)
SEI, Inc.
Electronics
Electronics
Self Esteem Brands, LLC(4)
Leisure, Amusement, Motion Pictures, Entertainment
Self Esteem Brands, LLC(4)
Leisure, Amusement, Motion Pictures, Entertainment
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.(4)
Teasdale Quality Foods, Inc.
Grocery
Grocery
Grocery
Grocery
Grocery
Upstream Intermediate, LLC
Healthcare, Education and Childcare
WHCG Management, LLC(4)
Healthcare, Education and Childcare
WIRB-Copernicus Group, Inc.(4)
Healthcare, Education and Childcare
Total senior loan investments
Paradigm DKD Group, LLC(4)(8)(9)
Buildings and Real Estate
Paradigm DKD Group, LLC(4)(8)(9)
Buildings and Real Estate
Paradigm DKD Group, LLC(4)(8)(9)
Buildings and Real Estate
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
LLC units
LLC units
LLC units
Joerns Healthcare, LLC(4)(8)(9)
Healthcare, Education and Childcare
Common Stock
W3 Co. (8)(9)
W3 Co. (8)(9)
Total equity investments
Total investments
Oil and Gas
Oil and Gas
LLC units
Preferred stock
12/2020
12/2020
12/2020
07/2023
07/2023
02/2022
02/2022
10/2020
10/2020
10/2020
10/2020
10/2020
01/2024
03/2023
08/2022
N/A
N/A
N/A
N/A
N/A
N/A
Current
Interest
Rate(1)
8.8
9.2
8.8
8.8
6.4
N/A(6)
9.1
7.35%
cash/1.00%
PIK
8.4
8.4
8.4
6.8
N/A(6)
6.3
8.3
7.9
7.9
7.9
7.9
7.9
6.0
8.1
6.4
N/A
N/A
N/A
N/A
N/A
N/A
Principal ($) /
Shares(2)
Fair
Value(3)
% $
10,047
$
10,047
257
147
99
3,785
—
4,890
4,341
70
63
45
257
147
99
3,785
—
4,890
3,907
62
57
40
11,004
11,004
—
9,561
415
4,190
3,285
567
424
210
2,796
7,820
5,554
—
9,561
415
3,771
2,956
511
382
189
2,796
7,820
5,554
$
154,254
$
147,436
$
170
963
34
309
3
—
$
154,254
$
$
62
—
—
3,017
1,526
218
4,823
152,259
(1)
Represents the weighted average annual current interest rate as of September 30, 2019. All interest rates are payable in cash, except where PIK is shown.
175
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board's valuation process described elsewhere herein.
The Company also holds a portion of the first lien senior secured loan in this portfolio company.
Loan was on non-accrual status as of September 30, 2019. As such, no interest is being earned on this investment.
The entire commitment was unfunded as of September 30, 2019. As such, no interest is being earned on this investment. The investment may be subject to an unused facility fee.
The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par.
Equity investment received as a result of the portfolio company's debt restructuring.
Non-income producing.
176
Security Type
Maturity
Date
Current
Interest
Rate(1)
Principal ($) /
Shares(2)
Fair
Value(3)
Senior Loan
02/2022
7.0 % $
2,073
$
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
SLF Investment Portfolio as of September 30, 2018
Portfolio Company
1A Smart Start LLC
1A Smart Start LLC(4)
Business Description
Home and Office Furnishings, Housewares, and Durable
Consumer
Home and Office Furnishings, Housewares, and Durable
Consumer
Advanced Pain Management Holdings, Inc.(5)
Advanced Pain Management Holdings, Inc.(5)
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Boot Barn, Inc.
Brandmuscle, Inc.
Captain D's, LLC(4)
Captain D's, LLC(4)
CLP Healthcare Services, Inc.
CLP Healthcare Services, Inc.
Community Veterinary Partners, LLC
Community Veterinary Partners, LLC
Community Veterinary Partners, LLC
Community Veterinary Partners, LLC
DISA Holdings Acquisition Subsidiary Corp.(4)
DISA Holdings Acquisition Subsidiary Corp.(4)
Encore GC Acquisition, LLC
Flexan, LLC(4)
Flexan, LLC
Flexan, LLC
Retail Stores
Printing and Publishing
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
Diversified/Conglomerate Service
Diversified/Conglomerate Service
Healthcare, Education and Childcare
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Gamma Technologies, LLC(4)
Electronics
III US Holdings, LLC
Jensen Hughes, Inc.
Jensen Hughes, Inc.
Jensen Hughes, Inc.
Joerns Healthcare, LLC(4)
Paradigm DKD Group, LLC
Paradigm DKD Group, LLC
Diversified/Conglomerate Service
Buildings and Real Estate
Buildings and Real Estate
Buildings and Real Estate
Healthcare, Education and Childcare
Buildings and Real Estate
Buildings and Real Estate
Pasternack Enterprises, Inc. and Fairview Microwave,
Inc (4)
Diversified/Conglomerate Manufacturing
Payless ShoeSource, Inc.
Polk Acquisition Corp.
Polk Acquisition Corp.
Polk Acquisition Corp.
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
Pyramid Healthcare, Inc.
RSC Acquisition, Inc.(4)
RSC Acquisition, Inc.(4)
Retail Stores
Automobile
Automobile
Automobile
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Insurance
Insurance
177
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
02/2022
11/2018
11/2018
06/2021
12/2021
12/2023
12/2023
12/2020
12/2020
10/2021
10/2021
10/2021
10/2021
06/2022
06/2022
01/2020
02/2020
02/2020
02/2020
06/2024
09/2022
03/2024
03/2024
03/2024
05/2020
05/2020
05/2020
07/2025
08/2022
06/2022
06/2022
06/2022
08/2019
08/2019
08/2019
08/2019
11/2021
11/2022
6.7
7.2
7.2
6.9
7.1
7.9
6.7
7.9
7.9
7.9
7.9
7.9
7.9
6.1
6.1
7.5
9.8
8.1
8.1
7.7
9.0
6.7
6.7
6.7
8.3
8.5
8.5
6.2
11.3
7.5
7.2
7.2
8.8
8.8
8.8
8.8
6.8
6.7
2,084
924
3,609
247
9,533
4,674
13
2,499
8,332
4,198
2,417
1,215
40
58
71
4,821
4,540
304
5,967
1,657
922
6,561
449
9,533
4,678
13
2,499
8,502
4,284
2,417
1,215
40
58
71
4,821
4,540
304
5,967
1,657
10,186
10,186
4,927
2,293
119
64
8,745
702
1,957
5,318
762
93
4,927
2,293
119
64
8,133
524
1,369
5,291
528
93
4,513
4,513
53
411
53
411
10,152
10,152
45
148
17
45
148
17
3,824
3,815
Security Type
Maturity
Date
Current
Interest
Rate(1)
Principal ($) /
Shares(2)
Fair
Value(3)
7.6 % $
4,941
$
TABLE OF CONTENTS
Portfolio Company
Rubio's Restaurants, Inc.(4)
Rug Doctor LLC
Rug Doctor LLC
Sage Dental Management, LLC
Sage Dental Management, LLC
Sage Dental Management, LLC
Sage Dental Management, LLC
Saldon Holdings, Inc. (4)
SEI, Inc.(4)
Self Esteem Brands, LLC(4)
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Teasdale Quality Foods, Inc.
Upstream Intermediate, LLC
W3 Co.
WHCG Management, LLC(4)
WIRB-Copernicus Group, Inc.(4)
Total senior loan investments
Payless ShoeSource, Inc. (6)(7)
W3 Co. (6)(7)
Total equity investments
Total investments
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
SLF Investment Portfolio as of September 30, 2018 - (continued)
Business Description
Beverage, Food and Tobacco
Personal and Non Durable Consumer Products (Mfg.
Only)
Personal and Non Durable Consumer Products (Mfg.
Only)
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Diversified/Conglomerate Service
Electronics
Leisure, Amusement, Motion Pictures, Entertainment
Grocery
Grocery
Grocery
Grocery
Grocery
Healthcare, Education and Childcare
Oil and Gas
Healthcare, Education and Childcare
Healthcare, Education and Childcare
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
Senior Loan
10/2019
04/2019
04/2019
12/2020
12/2020
12/2020
12/2020
09/2022
07/2023
02/2020
10/2020
10/2020
10/2020
10/2020
10/2020
01/2024
03/2022
03/2023
08/2022
Retail Stores
Oil and Gas
LLC interest
LLC units
N/A
N/A
7.6
7.6
8.4
8.4
8.4
8.4
6.4
7.5
7.0
6.9
6.9
7.1
7.1
6.9
6.6
8.2
7.4
6.5
N/A
N/A
991
5,061
70
4,345
45
64
2,354
13,716
10,142
4,507
486
650
239
3,532
2,830
1,253
7,900
5,609
4,941
991
5,061
64
3,997
42
59
2,342
13,716
10,142
4,416
476
637
235
3,460
2,830
1,251
7,900
5,609
$
$
183,668
$
178,053
35
3
$
$
54
1,073
1,127
183,668
$
179,180
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Represents the weighted average annual current interest rate as of September 30, 2018. All interest rates are payable in cash, except where PIK is shown.
The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board's valuation process described elsewhere herein.
The Company also holds a portion of the first lien senior secured loan in this portfolio company.
Loan was on non-accrual status as of September 30, 2018. As such, no interest is being earned on this investment.
Equity investment received as a result of the portfolio company's debt restructuring.
Non-income producing.
As of September 30, 2019, the Company has committed to fund $175,000 of LLC equity interest subscriptions to SLF. As of September 30, 2019 and 2018,
$74,883 and $75,407, respectively, of the Company’s LLC equity interest subscriptions to SLF had been called and contributed, net of return of capital
distributions subject to recall. For the years ended September 30, 2019, 2018, and 2017, the Company received $0, $8,099, and $4,929, respectively, in
dividend income from the LLC equity interests in SLF.
178
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
See below for certain summarized financial information for SLF as of September 30, 2019 and 2018 and for the years ended September 30, 2019, 2018 and
2017:
As of September 30, 2019
As of September 30, 2018
Selected Balance Sheet Information:
Investments, at fair value
Cash and other assets
Total assets
Senior credit facility
Unamortized debt issuance costs
Other liabilities
Total liabilities
Members’ equity
Total liabilities and members' equity
$
$
$
$
152,259 $
8,759
161,018 $
75,581 $
—
424
76,005
85,013
161,018 $
Selected Statement of Operations Information:
Interest income
Fee income
Total investment income
Interest and other debt financing expense
Administrative service fee
Other expenses
Total expenses
Net investment income
Net realized gain (loss) on investments
Net change in unrealized appreciation (depreciation) on investments
Years ended September 30,
2019
2018
2017
$
13,402 $
18,285 $
9
13,411
4,132
268
95
4,495
8,916
(2,343)
(2,199)
202
18,487
6,687
404
93
7,184
11,303
—
(4,197)
Net increase (decrease) in members' equity
$
4,374 $
7,106 $
GCIC Senior Loan Fund LLC:
179,180
7,146
186,326
104,622
(18)
484
105,088
81,238
186,326
21,455
5
21,460
10,236
477
131
10,844
10,616
(7,379)
4,647
7,884
Following the acquisition of GCIC SLF in the Merger, the Company co-invests with Aurora, a wholly-owned subsidiary of RGA Reinsurance Company, in
senior secured loans through GCIC SLF, an unconsolidated Delaware LLC. The Company acquired the investment in GCIC SLF through its acquisition of
GCIC on September 16, 2019. GCIC SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect of GCIC SLF must
be approved by the GCIC SLF investment committee consisting of two representatives of each of the Company and Aurora (with unanimous approval
required from (i) one representative of each of the Company and Aurora or (ii) both representatives of each of the Company and Aurora). GCIC SLF may
cease making new investments upon notification of either member but operations will continue until all investments have been sold or paid-off in the normal
course of business. Investments held by GCIC SLF are measured at fair value by GCIC SLF using the same valuation methodologies as described in Note 6.
As of September 30, 2019, GCIC SLF was capitalized by LLC equity interest subscriptions from its members. As of September 30, 2019, the Company and
Aurora owned 87.5% and 12.5%, respectively, of the LLC equity interests of GCIC SLF. GCIC SLF’s profits and losses are allocated to its members in
accordance with their respective ownership interests.
179
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
As of September 30, 2019, GCIC SLF had the following commitments from its members (in the aggregate):
LLC equity commitments
Total
As of September 30, 2019
Committed
Funded(1)
$
$
125,000
125,000
$
$
55,264
55,264
(1) Funded LLC equity commitments are presented net of return of capital distributions subject to recall.
GCIC SLF entered into a senior secured revolving credit facility (as amended, the “GCIC SLF Credit Facility”) with Wells Fargo Bank, N.A. through its
wholly-owned subsidiary GCIC Senior Loan Fund II LLC (“GCIC SLF II”), which as of September 30, 2019 allowed GCIC SLF II to borrow up to $59,559
at any one time outstanding, subject to leverage and borrowing base restrictions, and which bears interest at one-month LIBOR plus 2.05%.
As of September 30, 2019, GCIC SLF had total assets at fair value of $116,195. As of September 30, 2019, GCIC SLF did not have any investments on non-
accrual status. The portfolio companies in GCIC SLF are in industries and geographies similar to those in which the Company may invest directly.
Additionally, as of September 30, 2019, GCIC SLF had commitments to fund various undrawn revolvers and delayed draw investments to its portfolio
companies totaling $7,011.
Below is a summary of GCIC SLF’s portfolio, followed by a listing of the individual investments in GCIC SLF’s portfolio as of September 30, 2019:
Senior secured loans (1)
Weighted average current interest rate on senior secured loans (2)
Number of borrowers in GCIC SLF
Largest portfolio company investment (1)
Total of five largest portfolio company investments (1)
(1) At principal amount.
As of
September 30, 2019
112,864
7.2%
28
8,464
34,273
$
$
$
(2) Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at principal amount.
180
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Portfolio Company
Business Description
Security Type
Maturity
Date
Current
Interest
Rate(1)
Principal ($)
Fair
Value(2)
GCIC SLF Investment Portfolio as of September 30, 2019
1A Smart Start LLC(3)
Boot Barn, Inc.(3)
Brandmuscle, Inc.(3)
Brandmuscle, Inc.(3)
Captain D's, LLC(3)
Captain D's, LLC(3)
Home and Office Furnishings, Housewares, and Durable
Consumer
Retail Stores
Printing and Publishing
Printing and Publishing
Personal, Food and Miscellaneous Services
Personal, Food and Miscellaneous Services
CLP Healthcare Services, Inc.(3)
Healthcare, Education and Childcare
CLP Healthcare Services, Inc.(3)
Healthcare, Education and Childcare
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC(3)
Personal, Food and Miscellaneous Services
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Elite Sportswear, L.P.(3)
Flexan, LLC(3)
Flexan, LLC(3)
Flexan, LLC(3)
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Retail Stores
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
Chemicals, Plastics and Rubber
G & H Wire Company, Inc(3)
Healthcare, Education and Childcare
Gamma Technologies, LLC(3)
Electronics
III US Holdings, LLC(3)
Diversified/Conglomerate Service
Jensen Hughes, Inc.(3)
Jensen Hughes, Inc.(3)
Jensen Hughes, Inc.(3)
Mediaocean LLC(3)
Buildings and Real Estate
Buildings and Real Estate
Buildings and Real Estate
Diversified/Conglomerate Service
Mills Fleet Farm Group LLC(3)
Retail Stores
NBC Intermediate, LLC(3)
Beverage, Food and Tobacco
NBC Intermediate, LLC(3)
Beverage, Food and Tobacco
Pasternack Enterprises, Inc. and Fairview
Microwave, Inc(3)
Diversified/Conglomerate Manufacturing
Polk Acquisition Corp.(3)
Polk Acquisition Corp.(3)
Polk Acquisition Corp.(3)
Automobile
Automobile
Automobile
Pyramid Healthcare, Inc.(3)
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.(3)
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.(3)
Healthcare, Education and Childcare
Pyramid Healthcare, Inc.(3)
Healthcare, Education and Childcare
Reladyne, Inc.(3)
Reladyne, Inc.(3)
Reladyne, Inc.(3)
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Manufacturing
181
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
02/2022
06/2023
12/2021
12/2021
12/2023
12/2023
12/2020
12/2020
10/2021
10/2021
10/2021
10/2021
10/2021
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
12/2021
02/2020
02/2020
02/2020
09/2023
06/2024
09/2022
03/2024
03/2024
03/2024
08/2020
10/2024
09/2023
09/2023
07/2025
06/2022
06/2022
06/2022
08/2020
08/2020
08/2020
08/2020
07/2022
07/2022
07/2022
7.5
7.5
7.5
7.5
8.5
8.4
8.4
8.4
8.4
8.5
8.4
8.4
9.5
7.9
7.9
7.8
7.3
8.1
6.6
6.6
6.6
N/A(4)
8.3
N/A(4)
6.5
6.0
7.3
7.3
7.3
9.2
8.8
8.8
8.8
7.3
7.3
7.3
6.5 %
$
6.6
N/A(4)
6.9
7.5
6.5
7.4
7.4
1,910
$
3,159
—
3,800
33
5,792
2,007
1,011
N/A(4)
—
1,910
3,159
—
3,797
33
5,792
2,007
1,011
—
2,053
1,032
40
58
99
2,053
1,032
40
58
121
1,128
1,061
581
88
546
83
2,806
2,638
7
84
198
192
2,635
732
5,284
4,334
4,253
1,958
102
54
—
5,955
—
2,565
4,913
8,125
60
52
68
6
79
186
192
2,635
732
5,284
4,334
4,253
1,958
102
54
—
5,657
—
2,565
4,913
7,962
58
51
68
2,426
2,426
147
367
5,909
621
1,152
147
367
5,909
621
1,152
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Portfolio Company
Business Description
Security Type
Maturity
Date
Current
Interest
Rate(1)
Principal ($)
Fair
Value(2)
GCIC SLF Investment Portfolio as of September 30, 2019 - (continued)
Reladyne, Inc.(3)
Reladyne, Inc.(3)
RSC Acquisition, Inc.(3)
RSC Acquisition, Inc.(3)
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Manufacturing
Insurance
Insurance
Rubio's Restaurants, Inc(3)
Beverage, Food and Tobacco
SEI, Inc.(3)
SEI, Inc.(3)
Electronics
Electronics
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Self Esteem Brands, LLC(3)
Leisure, Amusement, Motion Pictures, Entertainment
Senior loan
Self Esteem Brands, LLC(3)
Leisure, Amusement, Motion Pictures, Entertainment
Senior loan
Summit Behavioral Healthcare, LLC(3)
Healthcare, Education and Childcare
Summit Behavioral Healthcare, LLC(3)
Healthcare, Education and Childcare
Summit Behavioral Healthcare, LLC(3)
Healthcare, Education and Childcare
Teasdale Quality Foods, Inc.(3)
Teasdale Quality Foods, Inc.(3)
Teasdale Quality Foods, Inc.(3)
Teasdale Quality Foods, Inc.(3)
Grocery
Grocery
Grocery
Grocery
Upstream Intermediate, LLC(3)
Healthcare, Education and Childcare
WHCG Management, LLC(3)
Healthcare, Education and Childcare
WHCG Management, LLC(3)
Healthcare, Education and Childcare
WIRB-Copernicus Group, Inc.(3)
Healthcare, Education and Childcare
Total investments
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
Senior loan
07/2022
07/2022
11/2021
11/2022
10/2019
07/2023
07/2023
02/2022
02/2022
10/2023
10/2023
10/2023
10/2020
10/2020
10/2020
10/2020
01/2024
03/2023
03/2023
08/2022
7.3 % $
7.3
N/A(4)
6.4
9.1
6.8
N/A(4)
6.3
8.3
6.9
6.9
6.9
7.9
7.9
7.9
7.9
6.0
8.1
$
537
245
—
3,255
1,641
4,154
—
5,445
498
100
5,895
290
1,009
137
51
791
3,532
2,158
N/A(4)
6.4
—
5,314
537
245
—
3,255
1,641
4,154
—
5,445
498
94
5,600
276
908
123
46
712
3,532
2,158
—
5,314
$
112,864
$
111,568
(1)
(2)
(3)
(4)
Represents the weighted average annual current interest rate as of September 30, 2019. All interest rates are payable in cash.
Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board's valuation process described elsewhere herein.
The Company also holds a portion of the first lien senior secured loan in this portfolio company.
The entire commitment was unfunded as of September 30, 2019. As such, no interest is being earned on this investment. The investment may be subject to an unused facility fee.
182
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
As of September 30, 2019, the Company has committed to fund $109,375 of LLC equity interest subscriptions to GCIC SLF. As of September 30, 2019,
$48,356 of the Company's LLC equity interest subscriptions to GCIC SLF had been called and contributed, net of return of capital distributions subject to
recall. For the year ended September 30, 2019, the Company earned $1,219 in dividend income from the LLC equity interest in GCIC SLF.
See below for certain summarized financial information for GCIC SLF as of September 30, 2019 and for the period ended September 30, 2019:
As of September 30, 2019
Selected Balance Sheet Information:
Investments, at fair value
Cash and other assets
Total assets
Senior credit facility
Other liabilities
Total liabilities
Members’ equity
Total liabilities and members' equity
Selected Statement of Operations Information:
Interest income
Total investment income
Interest and other debt financing expenses
Administrative service fee
Other expenses
Total expenses
Net investment income
Net change in unrealized appreciation (depreciation) on investments
Net increase in members' equity
Note 5. Forward Currency Contracts
$
$
$
$
$
$
111,568
4,627
116,195
59,559
341
59,900
56,295
116,195
For the period September 16, 2019 to
September 30, 2019
360
360
141
6
4
151
209
(18)
191
The Company enters into forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would
have on the value of the Company's investments denominated in foreign currencies.
183
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
As of September 30, 2018, the Company had no forward currency contracts outstanding. The outstanding forward currency contracts as of September 30,
2019 were as follows:
Counterparty
Currency to be sold
Currency to be purchased
Settlement date
Macquarie Bank Limited
Macquarie Bank Limited
£
£
8,925 GBP
3,780 GBP
$
$
11,219 USD
4,804 USD
3/2/2023
3/27/2023
Unrealized appreciation
($)
Unrealized
depreciation ($)
$
$
— $
—
— $
(114)
(1)
(115)
In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company has entered into an
International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) with its derivative counterparty, Macquarie Bank
Limited (“Macquarie”). The ISDA Master Agreement is a bilateral agreement between the Company and Macquarie that governs over the counter (“OTC”)
derivatives, including forward currency contracts, and contains, among other things, collateral posting terms and netting provisions in the event of a default
and/or termination event. The provisions of the ISDA Master Agreement permit a single net payment in the event of a default (close-out netting) or similar
event, including the bankruptcy or insolvency of the counterparty.
For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Company and cash collateral received from Macquarie, if
any, is included in the Consolidated Statements of Financial Condition as cash collateral held at broker for forward currency contracts or cash collateral
received from broker for forward currency contracts. The Company minimizes counterparty credit risk by only entering into agreements with counterparties
that it believes to be of good standing and by monitoring the financial stability of those counterparties.
The following table is intended to provide additional information about the effect of the forward currency contracts on the financial statements of the
Company including: the fair value of derivatives by risk category, the location of those fair values on the Consolidated Statement of Financial Condition, and
the Company’s gross and net amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or
pledged by the Company as of September 30, 2019.
Counterparty
Macquarie Bank Limited
Risk exposure category
Foreign exchange
$
Unrealized
appreciation on
forward currency
contracts
Unrealized
depreciation on
forward currency
contracts
Net amounts presented
in the Consolidated
Statement of Financial
Condition
Collateral
(Received) Pledged
(1)
Net Amount (2)
— $
(115)
$
(115)
$
115
$
—
(1)
In some instances, the actual collateral pledged may be more than the amount shown due to over collateralization.
(2) Represents the net amount due from/(to) counterparties in the event of default.
The impact of derivative transactions for the year ended September 30, 2019 on the Consolidated Statement of Operations, including realized and unrealized
gains (losses) is summarized in the table below:
Realized gain (loss) on forward currency contracts recognized in income
Risk exposure category
Foreign exchange
Change in unrealized appreciation (depreciation) on forward currency contracts recognized in income
Risk exposure category
Foreign exchange
184
Year ended September 30,
2019
—
Year ended September 30,
2019
133
$
$
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The following table is a summary of the average outstanding volume for forward currency contracts for the year ended September 30, 2019:
Average notional outstanding (1)
Forward currency contracts
Year ended September 30,
2019
$
13,140
(1) Based on ending daily U.S. Dollar notional exposure outstanding for the period from September 16, 2019 to September 30, 2019. The Company did not hold any forward currency contracts
prior to September 16, 2019.
Note 6. Fair Value Measurements
The Company follows ASC Topic 820 for measuring fair value. Fair value is the price that would be received in the sale of an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or
parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation
models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or
market and the assets’ or liabilities’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments.
Assets and liabilities are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The
valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the asset or liability as of the measurement date. The three levels
are defined as follows:
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2: Inputs include quoted prices for similar assets or liabilities in active markets and inputs that are observable for the assets or liabilities,
either directly or indirectly, for substantially the full term of the assets or liabilities.
Level 3: Inputs include significant unobservable inputs for the assets or liabilities and include situations where there is little, if any, market activity
for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant
management judgment or estimation.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or a liability’s
categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s
assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or
liability. The Company assesses the levels of assets and liabilities at each measurement date, and transfers between levels are recognized on the actual date of
the event or change in circumstances that caused the transfers. There were no transfers among Level 1, 2 and 3 of the fair value hierarchy for assets and
liabilities during years ended September 30, 2019, 2018 and 2017. The following section describes the valuation techniques used by the Company to measure
different assets and liabilities at fair value and includes the level within the fair value hierarchy in which the assets and liabilities are categorized.
Investments
Level 1 investments are valued using quoted market prices. Level 2 investments are valued using market consensus prices that are corroborated by observable
market data and quoted market prices for similar assets and liabilities. Level 3 investments are valued at fair value as determined in good faith by the Board,
based on input of management, the audit committee and independent valuation firms that have been engaged at the direction of the Board to assist in the
valuation of each portfolio investment without a readily available market quotation at least once during a trailing twelve-month period under a valuation
policy and a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with approximately 25% (based on
the number of portfolio companies) of the Company’s valuations of debt and equity investments without readily available
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
market quotations subject to review by an independent valuation firm. All investments as of September 30, 2019 and 2018, with the exception of money
market funds included in cash, cash equivalents and restricted cash and cash equivalents (Level 1 investments), forward currency contracts (Level 2
investments) and investments measured at fair value using the NAV, were valued using Level 3 inputs.
When determining fair value of Level 3 debt and equity investments, the Company may take into account the following factors, where relevant: the enterprise
value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and
discounted cash flows, the markets in which the portfolio company does business, comparisons to publicly traded securities, and changes in the interest rate
environment and the credit markets generally that may affect the price at which similar investments may be made and other relevant factors. The primary
method for determining enterprise value uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s net income before net
interest expense, income tax expense, depreciation and amortization (“EBITDA”). A portfolio company’s EBITDA may include pro forma adjustments for
items such as acquisitions, divestitures, or expense reductions. The enterprise value analysis is performed to determine the value of equity investments and to
determine if debt investments are credit impaired. If debt investments are credit impaired, the Company will use the enterprise value analysis or a liquidation
basis analysis to determine fair value. For debt investments that are not determined to be credit impaired, the Company uses a market interest rate yield
analysis to determine fair value.
In addition, for certain debt investments, the Company may base its valuation on indicative bid and ask prices provided by an independent third party pricing
service. Bid prices reflect the highest price that the Company and others may be willing to pay. Ask prices represent the lowest price that the Company and
others may be willing to accept. The Company generally uses the midpoint of the bid/ask range as its best estimate of fair value of such investment.
Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of the
investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially
from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less
liquid than publicly traded instruments. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company may
realize significantly less than the value at which such investment had previously been recorded. The Company’s investments are subject to market risk.
Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in
which the investments are traded.
Secured Borrowings
The Company has elected the fair value option under ASC Topic 825 - Financial Instruments, relating to accounting for debt obligations at their fair value for
its secured borrowings which arose due to partial loan sales which did not meet the criteria for sale treatment under ASC Topic 860. The Company reports
changes in the fair value of its secured borrowings as a component of the net change in unrealized (appreciation) depreciation on secured borrowings in the
Consolidated Statements of Operations. The net gain or loss reflects the difference between the fair value and the principal amount due on maturity.
As of September 30, 2019 and 2018, there were no secured borrowings outstanding. Previous secured borrowings were valued using Level 3 inputs under the
fair value hierarchy, and the Company’s approach to determining fair value of Level 3 secured borrowings is consistent with its approach to determining fair
value of the Level 3 investments that are associated with these secured borrowings as previously described.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The following tables present fair value measurements of the Company’s investments and indicate the fair value hierarchy of the valuation techniques utilized
by the Company to determine such fair value as of September 30, 2019 and 2018:
As of September 30, 2019
Description
Assets, at fair value:
Debt investments(1)
Equity investments(1)
Money market funds(1)(2)
Investments measured at NAV(3)(4)
Total assets, at fair value:
Liabilities at fair value:
Forward currency contracts
Total liabilities, at fair value:
As of September 30, 2018
Description
Assets, at fair value:
Debt investments(1)
Equity investments(1)
Money market funds(1)(2)
Investment measured at NAV(3)(4)
Total assets, at fair value:
Fair Value Measurements Using
Level 1
Level 2
Level 3
Total
$
$
$
$
$
— $
—
9,963
—
9,963 $
— $
— $
— $
4,083,298 $
4,083,298
—
—
—
85,990
—
—
— $
4,169,288 $
(115) $
(115) $
— $
— $
85,990
9,963
123,644
4,302,895
(115)
(115)
Fair Value Measurements Using
Level 1
Level 2
Level 3
Total
— $
—
10,532
—
10,532
— $
1,671,051 $
1,671,051
—
—
—
—
40,706
—
—
40,706
10,532
71,084
1,711,757
1,793,373
(1) Refer to the Consolidated Schedules of Investments for further details.
(2)
Included in cash and cash equivalents, restricted cash and cash equivalents, foreign currencies and restricted foreign currencies on the Consolidated Statements of Financial Condition.
(3) Certain investments that are measured at fair value using the NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit
reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Financial Condition.
(4) Represents the Company's investments in LLC equity interests in the SLFs. The fair value of these investments have been determined using the NAV of the Company’s ownership interest in
members’ capital.
The net change in unrealized appreciation (depreciation) for the years ended September 30, 2019, 2018, and 2017, reported within the net change in
unrealized appreciation (depreciation) on investments in the Company's Consolidated Statements of Operations attributable to the Company's Level 3 assets
held at the end of each year was ($102,079), $3,600, and $4,846, respectively.
The following tables present the changes in investments measured at fair value using Level 3 inputs for the years ended September 30, 2019 and 2018:
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Fair value, beginning of period
Net change in unrealized appreciation (depreciation) on investments
Realized gain (loss) on investments
Funding of (proceeds from) revolving loans, net
Fundings of investments
PIK interest
Proceeds from principal payments and sales of portfolio investments
Accretion of discounts and amortization of premiums
Transfers in (1)
Fair value, end of period
Fair value, beginning of period
Net change in unrealized appreciation (depreciation) on investments
Realized gain (loss) on investments
Funding of (proceeds from) revolving loans, net
Fundings of investments
PIK interest
Proceeds from principal payments and sales of portfolio investments
Accretion of discounts and amortization of premiums
Fair value, end of period
Year ended September 30, 2019
Debt
Investments
Equity
Investments
Total
Investments
1,671,051
$
(105,434)
(2,646)
2,578
584,580
2,951
(357,729)
7,191
2,280,756
4,083,298
$
40,706 $
3,927
(1,970)
—
11,271
—
(6,953)
—
39,009
85,990 $
1,711,757
(101,507)
(4,616)
2,578
595,851
2,951
(364,682)
7,191
2,319,765
4,169,288
Year ended September 30, 2018
Debt
Investments
Equity
Investments
Total
Investments
1,538,606
$
1,533
(4,516)
(7,235)
628,608
1,622
(497,208)
9,641
1,671,051
$
51,394 $
(11,239)
21,970
—
5,824
—
(27,243)
—
40,706 $
1,590,000
(9,706)
17,454
(7,235)
634,432
1,622
(524,451)
9,641
1,711,757
$
$
$
$
(1) Transfers in represents debt and equity investments acquired by the Company from GCIC in the Merger.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of September 30,
2019 and 2018.
Quantitative information about Level 3 Fair Value Measurements
Fair value as of
September 30, 2019
Valuation Techniques
Unobservable Input
Range (Weighted Average) (1)
573,582
Market rate approach
Market comparable companies
Market interest rate
EBITDA multiples
4.3% - 11.3% (6.7%)
7.0x - 24.0x (12.9x)
9,901
Market comparable
Broker/dealer bids or quotes
N/A
Assets:
Senior secured loans(2)(3)
One stop loans(2)(4)(5)
$
$
Subordinated debt and second lien
loans(2)(6)
$
3,466,310
Market rate approach
Market comparable companies
19,842
Market rate approach
Market comparable companies
Market interest rate
EBITDA multiples
Revenue multiples
Market interest rate
EBITDA multiples
Revenue multiples
5.3% - 30.8% (8.2%)
5.0x - 28.5x (14.3x)
2.0x - 11.0x (5.9x)
7.5% - 19.5% (11.1%)
8.5x - 17.5x (13.3x)
3.0x - 3.0x (3.0x)
5.0x - 28.5x (14.1x)
2.0x - 6.5x (4.0x)
Equity(7)(8)
$
85,990
Market comparable companies
EBITDA multiples
Revenue multiples
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Unobservable inputs were weighted by the relative fair value of the instruments.
The fair value of this asset class was determined using the market rate and market comparable approaches, as applicable, as the investments in this asset class were determined not to be credit impaired using the market
comparable companies approach. The unobservable inputs for both valuation techniques have been presented, but the fair value as of September 30, 2019 was determined using the market rate and market comparable
approaches, as applicable.
Excludes $5,857 of non-accrual loans at fair value, which the Company valued using the market comparable companies approach.
Excludes $7,806 of non-accrual loans at fair value, which the Company valued using the market comparable companies approach.
The Company valued $3,051,629 and $414,681 of one stop loans using EBITDA and revenue multiples, respectively. All one stop loans were also valued using the market rate approach.
The Company valued $19,834 and $8 of subordinated debt and second lien loans using EBITDA and revenue multiples, respectively. All subordinated debt and second lien loans were also valued using the market rate
approach.
Excludes $123,644 of LLC equity interests in the SLFs at fair value, which the Company valued using the NAV.
The Company valued $74,958 and $11,032 of equity investments using EBITDA and revenue multiples, respectively.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Quantitative information about Level 3 Fair Value Measurements
Fair value as of
September 30, 2018
Valuation Techniques
Unobservable Input
Range
(Weighted Average)(1)
225,960
Market rate approach
Market comparable companies
Market interest rate
EBITDA multiples
4.3% - 9.9% (7.2%)
5.0x - 15.0x (11.1x)
3,926
Market comparable
Broker/dealer bids or quotes
N/A
1,422,601
Market rate approach
Market comparable companies
Market interest rate
EBITDA multiples
Revenue multiples
2.0% - 13.8% (8.8%)
4.5x - 35.0x (13.6x)
1.3x - 10.2x (4.1x)
3,253
Market comparable
Broker/dealer bids or quotes
N/A
Assets:
Senior secured loans(2)(3)
One stop loans(2)(4)(5)
$
$
Subordinated debt and second lien
loans(2)(6)
$
9,686
Market rate approach
Market comparable companies
Market interest rate
EBITDA multiples
Revenue multiples
Equity(7)(8)
$
40,706
Market comparable companies
EBITDA multiples
Revenue multiples
8.0% - 19.5% (10.4%)
10.5x - 11.0x (10.5x)
5.1x
4.5x - 28.5x (12.2x)
1.3x - 10.2x (4.0x)
(1) Unobservable inputs were weighted by the relative fair value of the instruments.
(2) The fair value of this asset class was determined using the market rate and market comparable approaches, as applicable, as the investments in this asset class were determined not to be credit impaired using the market
comparable companies approach. The unobservable inputs for both valuation techniques have been presented, but the fair value as of September 30, 2018 was determined using the market rate and market comparable
approaches, as applicable.
(3) Excludes $1,283 of non-accrual loans at fair value, which the Company valued using the market comparable companies approach.
(4) Excludes $4,342 of non-accrual loans at fair value, which the Company valued using the market comparable companies approach.
(5) The Company valued $1,253,179 and $169,422 of one stop loans using EBITDA and revenue multiples, respectively. All one stop loans were also valued using the market rate approach.
(6) The Company valued $9,502 and $184 of subordinated debt and second lien loans using EBITDA and revenue multiples, respectively. All subordinated debt and second lien loans were also valued using the market rate
approach.
(7) Excludes $71,084 of LLC equity interests in SLF at fair value, which the Company valued using the NAV.
(8) The Company valued $36,714 and $3,992 of equity investments using EBITDA and revenue multiples, respectively.
The above tables are not intended to be all-inclusive but rather to provide information on significant unobservable inputs and valuation techniques used by the
Company.
The significant unobservable inputs used in the fair value measurement of the Company’s debt and equity investments are EBITDA multiples, revenue
multiples and market interest rates. The Company uses EBITDA multiples and, to a lesser extent, revenue multiples on its debt and equity investments to
determine any credit gains or losses. Increases or decreases in either of these inputs in isolation would have resulted in a significantly lower or higher fair
value measurement. The Company uses market interest rates for loans to determine if the effective yield on a loan is commensurate with the market yields for
that type of loan. If a loan’s effective yield was significantly less than the market yield for a similar loan with a similar credit profile, then the resulting fair
value of the loan may have been lower.
Other Financial Assets and Liabilities
ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. As a result, with the exception of
the line item titled “debt” which is reported at cost, all assets and liabilities approximate fair value on the Consolidated Statements of Financial Condition due
to their short maturity. Fair value of the Company’s debt is estimated using Level 3 inputs by discounting remaining payments using comparable market rates
or market quotes for similar instruments at the measurement date, if available.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The following are the carrying values and fair values of the Company’s debt as of September 30, 2019 and 2018.
Debt
$
2,124,392 $
2,125,683 $
845,683 $
837,578
As of September 30, 2019
As of September 30, 2018
Carrying Value
Fair Value
Carrying Value
Fair Value
Note 7. Borrowings
In accordance with the 1940 Act, with certain limited exceptions, prior to February 6, 2019, the Company was allowed to borrow amounts such that its asset
coverage, as defined in the 1940 Act, was at least 200% after such borrowing. The Small Business Credit Availability Act (“SBCAA”), which was signed into
law on March 23, 2018, among other things, amended Section 61(a) of the 1940 Act to add a new Section 61(a)(2) that reduces the asset coverage
requirement applicable to business development companies from 200% to 150% so long as the business development company meets certain disclosure
requirements and obtains certain approvals. On February 5, 2019, the Company’s stockholders voted to approve the asset coverage requirement decrease to
150% from 200% in accordance with Section 61(a)(2) of the 1940 Act. Effective February 6, 2019, the reduced asset coverage requirement permits the
Company to have a ratio of total consolidated assets to outstanding indebtedness of 2:1 as compared to a maximum of 1:1 under the 200% asset coverage
requirement. The Company currently intends to target a GAAP debt-to-equity ratio of about 1.0x. On September 13, 2011, the Company received exemptive
relief from the SEC allowing it to modify the asset coverage requirement to exclude the SBA debentures from the asset coverage calculation. As such, the
Company’s ratio of total consolidated assets to outstanding indebtedness may be less than the applicable asset coverage requirement under the 1940 Act. This
provides the Company with increased investment flexibility but also increases its risks related to leverage. As of September 30, 2019, the Company’s asset
coverage for borrowed amounts was 220.3% (excluding the SBA debentures).
Debt Securitizations: On July 16, 2010, the Company completed a $300,000 term debt securitization, which was subsequently increased to $350,000 (as
amended, “2010 Debt Securitization”). Term debt securitizations are also known as collateralized loan obligations (“CLOs”) and are a form of secured
financing incurred by the Company, which is consolidated by the Company and subject to the Company's overall asset coverage requirements. The notes
(“2010 Notes”) offered in the 2010 Debt Securitization were issued by the 2010 Issuer, a subsidiary of Holdings. Through October 19, 2016, the 2010 Debt
Securitization consisted of $203,000 of Aaa/AAA Class A 2010 Notes that bore interest at a rate of three-month LIBOR plus 1.74%, $12,000 of Class B 2010
Notes that bore interest at a rate of three-month LIBOR plus 2.40% and $135,000 of Subordinated 2010 Notes that do not bear interest. On October 20, 2016,
the Company and the 2010 Issuer further amended the 2010 Debt Securitization to, among other things, (a) refinance the issued Class A 2010 Notes by
redeeming in full the Class A 2010 Notes and issuing new Class A-Refi 2010 Notes in an aggregate principal amount of $205,000 that bore interest at a rate
of three-month LIBOR plus 1.90%, (b) refinance the Class B 2010 Notes by redeeming in full the Class B 2010 Notes and issuing new Class B-Refi 2010
Notes in an aggregate principal amount of $10,000 that bore interest at a rate of three-month LIBOR plus 2.40%, and (c) extend the reinvestment period
applicable to the 2010 Issuer to July 20, 2018. Following the refinancing, Holdings retained the Class B-Refi 2010 Notes. Through July 20, 2018, all principal
collections received on the underlying collateral could have been used by the 2010 Issuer to purchase new collateral under the direction of the Investment
Adviser in its capacity as collateral manager of the 2010 Issuer and in accordance with the Company’s investment strategy, allowing the Company to maintain
the leverage in the 2010 Debt Securitization. The 2010 Notes were scheduled to mature on July 20, 2023.
On July 20, 2018, in connection with a new revolving credit facility, the 2010 Issuer redeemed the outstanding 2010 Notes pursuant to the terms of the
indenture governing such 2010 Notes. Following such redemption, the agreements governing the 2010 Debt Securitization were terminated.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The interest charged under the 2010 Debt Securitization was based on three-month LIBOR. For years ended September 30, 2019, 2018 and 2017, the
components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the 2010 Debt Securitization were as
follows:
Stated interest expense
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
— $
—
— $
— $
N/A
— $
6,127
$
189
6,316
7,460
$
$
3.7%
6,156
256
6,412
5,901
3.0%
164,000
$
205,520
$
$
$
$
On June 5, 2014, the Company completed a $402,569 term debt securitization (“2014 Debt Securitization”). The notes (“2014 Notes”) offered in the 2014
Debt Securitization were issued by the 2014 Issuer and are secured by a diversified portfolio of senior secured and second lien loans held by the 2014 Issuer.
The 2014 Debt Securitization initially consisted of $191,000 of Aaa/AAA Class A-1 2014 Notes, $20,000 of Aaa/AAA Class A-2 2014 Notes and $35,000 of
Aa2/AA Class B 2014 Notes. In partial consideration for the loans transferred to the 2014 Issuer as part of the 2014 Debt Securitization, the Company
received and retained $37,500 of Class C 2014 Notes and $119,069 of LLC equity interests in the 2014 Issuer. On March 23, 2018, the Company and the
2014 Issuer amended the 2014 Debt Securitization to, among other things, (a) refinance the issued Class A-1 2014 Notes by redeeming in full the $191,000 of
Class A-1 2014 Notes and issuing new Class A-1-R 2014 Notes in an aggregate principal amount of $191,000 that bear interest at a rate of three-month
LIBOR plus 0.95%, which is a decrease from the rate of three-month LIBOR plus 1.75% of the previously outstanding Class A-1 2014 Notes, (b) refinance
the Class A-2 2014 Notes by redeeming in full the $20,000 of Class A-2 2014 Notes and issuing new Class A-2-R 2014 Notes in an aggregate principal
amount of $20,000 that bear interest at a rate of three-month LIBOR plus 0.95%, which is a decrease from the rate of three-month LIBOR plus 1.95% of the
previously outstanding Class A-2 2014 Notes, (c) refinance the Class B 2014 Notes by redeeming in full the $35,000 of Class B 2014 Notes and issuing new
Class B-R 2014 Notes in an aggregate principal amount of $35,000 that bear interest at a rate of three-month LIBOR plus 1.40%, which is a decrease from the
rate of three-month LIBOR plus 2.50% of the previously outstanding Class B 2014 Notes, (d) refinance the Class C 2014 Notes by redeeming in full the
$37,500 of Class C 2014 Notes and issuing new Class C-R 2014 Notes in an aggregate principal amount of $37,500 that bear interest at a rate of three-month
LIBOR plus 1.55%, which is a decrease from the rate of three-month LIBOR plus 3.50% of the previously outstanding Class C 2014 Notes. The Class C-R
2014 Notes were retained by the Company, and the Company remains the sole owner of the equity of the 2014 Issuer. The Class A-1-R, Class A-2-R and
Class B-R 2014 Notes are included in the September 30, 2019 and 2018 Consolidated Statements of Financial Condition as debt of the Company and the
Class C-R 2014 Notes and LLC equity interests were eliminated in consolidation.
Through April 28, 2018, all principal collections received on the underlying collateral could have been used by the 2014 Issuer to purchase new collateral
under the direction of the Investment Adviser in its capacity as collateral manager of the 2014 Issuer and in accordance with the Company’s investment
strategy, allowing the Company to maintain the initial leverage in the 2014 Debt Securitization. For the years ended September 30, 2019, 2018, and 2017, the
Company had repayments on the 2014 Notes of $71,150, $48,517, and $0, respectively. The 2014 Notes are scheduled to mature on April 25, 2026.
As of September 30, 2019 and 2018, there were 68 and 83 portfolio companies with a total fair value of $275,727 and $346,130, respectively, securing the
2014 Notes. The pool of loans in the 2014 Debt Securitization must meet certain requirements, including asset mix and concentration, collateral coverage,
term, agency rating, minimum coupon, minimum spread and sector diversity requirements.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The interest charged under the 2014 Debt Securitization is based on three-month LIBOR. The three-month LIBOR in effect as of September 30, 2019 based
on the last interest rate reset was 2.3%. For years ended September 30, 2019, 2018 and 2017, the components of interest expense, cash paid for interest,
average interest rates and average outstanding balances for the 2014 Debt Securitization were as follows:
Stated interest expense
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
$
$
$
$
6,073
$
110
6,183
6,530
$
$
3.6%
166,981
$
8,063
1,085
9,148
8,289
$
$
$
3.4%
236,961
$
7,311
639
7,950
7,032
3.0%
246,000
As of September 30, 2019, the classes, amounts, ratings and interest rates (expressed as a spread to three-month LIBOR) of the Class A-1-R, A-2-R and B-R
2014 Notes are as follows:
Description
Type
Amount Outstanding
Moody’s Rating
S&P Rating
Interest Rate
Class A-1-R 2014 Notes
Class A-2-R 2014 Notes
Class B-R 2014 Notes
Senior Secured Floating Rate
Senior Secured Floating Rate
Senior Secured Floating Rate
$82,676
"Aaa"
"AAA"
$8,658
"Aaa"
"AAA"
$35,000
"Aa1"
"AA+"
LIBOR + 0.95%
LIBOR + 0.95%
LIBOR + 1.40%
On November 16, 2018, the Company completed a $602.4 million term debt securitization (the “2018 Debt Securitization”). The notes offered in the 2018
Debt Securitization (the “2018 Notes”) were issued by the 2018 Issuer, a subsidiary of 2018 CLO Depositor, and are backed by a diversified portfolio of
senior secured and second lien loans. The transaction was executed through a private placement of approximately $327.0 million of AAA/AAA Class A 2018
Notes, which bear interest at the three-month LIBOR plus 1.48%; $61.2 million of AA Class B 2018 Notes, which bear interest at the three-month LIBOR
plus 2.10%; $20.0 million of A Class C-1 2018 Notes, which bear interest at the three-month LIBOR plus 2.80%; $38.8 million of A Class C-2 2018 Notes,
which bear interest at the three-month LIBOR plus 2.65%; $42.0 million of BBB- Class D 2018 Notes, which bear interest at the three-month LIBOR plus
2.95%; and $113.4 million of Subordinated 2018 Notes which do not bear interest. The Company indirectly retained all of the Class C-2, Class D and
Subordinated 2018 Notes. Through January 20, 2023, all principal collections received on the underlying collateral may be used by the 2018 Issuer to
purchase new collateral under the direction of the Investment Adviser, in its capacity as collateral manager of the 2018 Issuer and in accordance with the
Company’s investment strategy, allowing the Company to maintain the initial leverage in the 2018 Debt Securitization. The 2018 Notes are scheduled to
mature on January 20, 2031. The Class A, Class B and Class C-1 2018 Notes are included in the September 30, 2019 Consolidated Statements of Financial
Condition as debt of the Company. As of September 30, 2019 the Class C-2, Class D and Subordinated 2018 Notes were eliminated in consolidation.
As of September 30, 2019, there were 101 portfolio companies with a total fair value of $592,462 securing the 2018 Notes. The pool of loans in the 2018
Debt Securitization must meet certain requirements, including asset mix and concentration, collateral coverage, term, agency rating, minimum coupon,
minimum spread and sector diversity requirements.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The interest charged under the 2018 Debt Securitization is based on three-month LIBOR. The three-month LIBOR in effect as of September 30, 2019 based
on the last interest rate reset was 2.3%. For years ended September 30, 2019, 2018 and 2017, the components of interest expense, cash paid for interest,
average interest rates and average outstanding balances for the 2018 Debt Securitization were as follows:
Stated interest expense
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
$
$
$
$
15,145
$
367
15,512
11,992
$
$
4.2%
356,756
$
— $
—
— $
— $
N/A
— $
—
—
—
—
N/A
—
As of September 30, 2019, the classes, amounts, ratings and interest rates (expressed as a spread to three-month LIBOR) of the Class A, B and C-1 2018
Notes are as follows:
Description
Type
Amount Outstanding
Fitch Rating
S&P Rating
Interest Rate
Class A 2018 Notes
Class B 2018 Notes
Class C-1 2018 Notes
Senior Secured Floating Rate
Senior Secured Floating Rate
Senior Secured Floating Rate
$327,000
"AAA"
"AAA"
$61,200
"NR"
"AA"
$20,000
"NR"
"A"
LIBOR + 1.48%
LIBOR + 2.10%
LIBOR + 2.80%
Effective September 16, 2019, the Company assumed, as a result of the Merger, a $908,195 term debt securitization (the “GCIC 2018 Debt Securitization”).
The GCIC 2018 Debt Securitization was originally completed on December 13, 2018. The notes offered in the GCIC 2018 Debt Securitization (the “GCIC
2018 Notes”) were issued by the GCIC 2018 Issuer, a subsidiary of GCIC 2018 CLO Depositor, and are secured by a diversified portfolio of senior secured
and second lien loans. The GCIC 2018 Debt Securitization consists of $490,000 of AAA/AAA Class A-1 GCIC 2018 Notes, $38,500 of AAA Class A-2
GCIC 2018 Notes, and $18,000 of AA Class B-1 GCIC 2018 Notes. In partial consideration for the loans transferred to the GCIC 2018 Issuer as part of the
GCIC 2018 Debt Securitization, the GCIC 2018 CLO Depositor received and retained $27,000 of Class B-2 GCIC 2018 Notes, $95,000 of Class C GCIC
2018 Notes and $60,000 of Class D GCIC 2018 Notes and $179,695 of Subordinated GCIC 2018 Notes. The Class A-1, Class A-2 and Class B-1 GCIC 2018
Notes are included in the September 30, 2019 Consolidated Statement of Financial Condition as debt of the Company. As of September 30, 2019, the Class B-
2, Class C and Class D GCIC 2018 Notes and the Subordinated GCIC 2018 Notes were eliminated in consolidation.
Through January 20, 2023, all principal collections received on the underlying collateral may be used by the GCIC 2018 Issuer to purchase new collateral
under the direction of the Investment Adviser in its capacity as collateral manager of the GCIC 2018 Issuer and in accordance with the Company’s investment
strategy, allowing the Company to maintain the initial leverage in the GCIC 2018 Debt Securitization. The GCIC 2018 Notes are scheduled to mature on
January 20, 2031, and the Subordinated GCIC 2018 Notes are scheduled to mature on December 13, 2118.
Two loan sale agreements govern the GCIC 2018 Debt Securitization. One of the loan sale agreements provided for the sale of assets upon the closing of the
GCIC 2018 Debt Securitization to satisfy risk retention requirements. Under the terms of the other loan sale agreement governing the GCIC 2018 Debt
Securitization, the Company agreed to directly or indirectly through the GCIC 2018 CLO Depositor sell or contribute certain senior secured and second lien
loans (or participation interests therein) to the GCIC 2018 Issuer.
As of September 30, 2019, there were 115 portfolio companies with a total fair value of $893,003 securing the GCIC 2018 Notes. The pool of loans in the
GCIC 2018 Debt Securitization must meet certain requirements, including asset
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements.
The interest charged under the GCIC 2018 Debt Securitization is based on three-month LIBOR. The three-month LIBOR in effect as of September 30, 2019
based on the last interest rate reset was 2.3%. For the years ended September 30, 2019, 2018 and 2017, the components of interest expense, cash paid for
interest, annualized average interest rates and average outstanding balances for the GCIC 2018 Debt Securitization were as follows:
Stated interest expense
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
$
$
$
$
896
$
—
896
$
— $
4.0%
22,459
$
— $
—
— $
— $
N/A
— $
—
—
—
—
N/A
—
As of September 30, 2019, the classes, amounts, ratings and interest rates (expressed as a spread to three-month LIBOR, as applicable) of the Class A-1 GCIC
2018 Notes, Class A-2 GCIC 2018 Notes, and Class B-1 GCIC 2018 Notes were as follows:
Description
Class A-1 GCIC 2018 Notes
Class A-2 GCIC 2018 Notes
Class B-1 GCIC 2018 Notes
Type
Amount Outstanding
Fitch’s Rating
S&P Rating
Interest Rate
Senior Secured Floating Rate
Senior Secured Fixed Rate
Senior Secured Floating Rate
$490,000
"AAA"
"AAA"
LIBOR + 1.48%
$38,500
"NR"
"AAA"
4.67%
$18,000
"NR"
"AA"
LIBOR + 2.25%
The Investment Adviser served as collateral manager to the 2010 Issuer and serves as collateral manager to the 2014 Issuer, 2018 Issuer and GCIC 2018
Issuer under separate collateral management agreements and receives a fee for providing these services. The total fees payable by the Company under the
Investment Advisory Agreement and Prior Investment Advisory Agreement, as applicable, are reduced by an amount equal to the total aggregate fees paid to
the Investment Adviser by the 2010 Issuer, the 2014 Issuer, the 2018 Issuer and the GCIC 2018 Issuer for rendering such collateral management services.
As part of each of the 2010 Debt Securitization, the 2014 Debt Securitization, the 2018 Debt Securitization and the GCIC 2018 Debt Securitization, GBDC
entered into, or assumed in the Merger, master loan sale agreements under which GBDC agreed to directly or indirectly sell or contribute certain senior
secured and second lien loans (or participation interests therein) to the 2010 Issuer, the 2014 Issuer, the 2018 Issuer and the GCIC 2018 Issuer, as applicable,
and to purchase or otherwise acquire the Subordinated 2010 Notes, the LLC equity interests in the 2014 Issuer, the Subordinated 2018 Notes and the GCIC
Subordinated 2018 Notes, as applicable. As of September 30, 2019, the 2014 Notes, the 2018 Notes and GCIC 2018 Notes (other than the Subordinated 2018
Notes and the GCIC Subordinated 2018 Notes) were the secured obligations of the 2014 Issuer, 2018 Issuer, and GCIC 2018 Issuer, respectively, and
indentures governing each of the 2014 Notes, the 2018 Notes, and GCIC 2018 Notes include customary covenants and events of default.
SBA Debentures: On August 24, 2010, SBIC IV received approval for a license from the SBA to operate as an SBIC. On December 5, 2012, SBIC V
received a license from the SBA to operate as an SBIC. On January 10, 2017, SBIC VI received a license from the SBA to operate as an SBIC. SBICs are
subject to a variety of regulations and oversight by the SBA concerning the size and nature of the companies in which they may invest as well as the
structures of those investments.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The licenses allow the SBICs to obtain leverage by issuing SBA-guaranteed debentures, subject to issuance of a capital commitment by the SBA and
customary procedures. These debentures are non-recourse to GBDC, have interest payable semiannually and a ten-year maturity. The interest rate is fixed at
the time of issuance at a market-driven spread over U.S. Treasury Notes with ten-year maturities.
Under present SBIC regulations, the maximum amount of SBA-guaranteed debentures that may be issued by multiple licensees under common management
is $350,000 and the maximum amount that a single SBIC licensee may issue is $175,000. As of September 30, 2019, SBIC IV, SBIC V and SBIC VI had
$90,000, $165,000 and $32,000, respectively, of outstanding SBA-guaranteed debentures that mature between September 2021 and September 2029. As of
September 30, 2018, SBIC IV, SBIC V and SBIC VI had $115,000, $150,000 and $12,500, respectively, of outstanding SBA-guaranteed debentures that
mature between September 2021 and March 2028. The original amount of debentures committed to SBIC IV and SBIC V by the SBA were $150,000 and
$175,000, respectively. Through September 30, 2019, SBIC IV and SBIC V have repaid $60,000 and $10,000 of outstanding debentures, respectively, and
these commitments have effectively been terminated. As of September 30, 2019, SBIC VI had $18,000 of undrawn debenture commitments which were
available to be drawn, subject to SBA regulatory requirements. The reinvestment period for SBIC IV expired on September 30, 2018. As of September 30,
2018, SBIC V and SBIC VI had $0 and $37,500 of undrawn debenture commitments, respectively, of which $0 and $9,500, respectively, was available to be
drawn, subject to SBA regulatory requirements.
The interest rate on the outstanding debentures as of September 30, 2019 is fixed at an average annualized interest rate of 3.3%. For years ended September
30, 2019, 2018 and 2017, the components of interest expense, cash paid for interest, annualized average interest rates and average outstanding balances for
the SBA debentures were as follows:
Stated interest expense
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
$
$
$
$
9,674
$
893
10,567
9,737
$
$
3.4%
287,651
$
9,239
1,072
10,311
9,196
$
$
$
3.4%
273,970
$
9,782
1,357
11,139
9,777
3.5%
282,675
Revolving Credit Facilities: On July 21, 2011, Funding entered into a senior secured revolving credit facility (as amended, the “Credit Facility”) with Wells
Fargo Bank, N.A., as administrative agent and lender. On February 4, 2019, the Credit Facility was repaid in full and subsequently terminated. Prior to
termination, the Credit Facility allowed Funding to borrow up to $170,000 at any one time outstanding, subject to leverage and borrowing base restrictions.
Through a series of amendments, most recently on September 21, 2018, the Company and Funding amended the Credit Facility to, among other things,
extend the expiration of the reinvestment period to September 20, 2019, extend the stated maturity date to September 21, 2023, and permit borrowings in
foreign currencies. On December 14, 2017, the Company and Funding amended the Credit Facility to, among other things, decrease the size of the Credit
Facility from $225,000 to $170,000 and decrease the interest the Credit Facility bears from one-month LIBOR plus 2.25% to one-month LIBOR plus 2.15%.
In addition to the stated interest rate on the Credit Facility, the Company was required to pay a non-usage fee at a rate between 0.50% and 1.75% per annum
depending on the size of the unused portion of the Credit Facility. The Credit Facility was collateralized by all of the assets held by Funding, and GBDC had
pledged its interests in Funding as collateral to Wells Fargo Bank, N.A., as the collateral agent, under an ancillary agreement to secure the obligations of
GBDC as the transferor and servicer under the Credit Facility. Both GBDC and Funding made customary representations and warranties and were required to
comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Borrowing under the Credit Facility was
subject to the 200% asset coverage requirements contained in the 1940 Act.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The Company transferred certain loans and debt securities it originated or acquired from time to time to Funding through a purchase and sale agreement and
caused Funding to originate or acquire loans, consistent with the Company’s investment objectives.
As of September 30, 2019 and 2018, the Company had outstanding debt under the Credit Facility of $0 and $136,000, respectively. For the years ended
September 30, 2019 and 2018, the Company had borrowings on the Credit Facility of $274,522 and $491,500, respectively, and repayments on the Credit
Facility of $410,547 and $218,750, respectively.
For years ended September 30, 2019, 2018 and 2017, the components of interest expense, cash paid for interest and facility fees, annualized average interest
rates and average outstanding balances for the Credit Facility were as follows:
Stated interest expense
Facility fees
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense and facility fees
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
1,455
$
4,014
$
189
156
1,800
2,033
$
$
4.5%
31,997
$
566
668
5,248
4,450
$
$
3.9%
102,985
$
4,445
539
1,037
6,021
4,952
3.2%
138,786
$
$
$
$
On July 20, 2018, the 2010 Issuer entered into a credit facility (as amended, the “MS Credit Facility”) with Morgan Stanley Bank, N.A., as lender, Morgan
Stanley Senior Funding, Inc. (“Morgan Stanley”), as administrative agent, and U.S. Bank National Association, as collateral agent for the administrative agent
and the lenders. On November 1, 2018, the 2010 Issuer amended the MS Credit Facility to, among other things, increase the size of the MS Credit Facility
from $300,000 to $450,000. The other material terms of the MS Credit Facility were unchanged. On November 16, 2018, a portion of the proceeds from the
private placement of the 2018 Notes, net of expenses, was used to repay all amounts outstanding under the MS Credit Facility, following which the
agreements governing the MS Credit Facility were terminated.
The period from the closing date until January 18, 2019 was referred to as the revolving period and during such revolving period, the 2010 Issuer could
request drawdowns under the MS Credit Facility. The MS Credit Facility bore interest at a rate equal to one-month LIBOR plus 1.90% during the revolving
period and was scheduled to mature on March 20, 2019.
The MS Credit Facility was secured by all of the assets held by the 2010 Issuer. Pursuant to a collateral management agreement, the Investment Adviser had
agreed to perform certain duties with respect to the purchase and management of the assets securing the MS Credit Facility. The Investment Adviser was not
paid a fee for such services under the collateral management agreement, but was reimbursed for expenses incurred in the performance of such obligations
other than any ordinary overhead expenses, which shall not be reimbursed. The 2010 Issuer made customary representations and warranties and was required
to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Borrowing under the MS Credit
Facility was subject to the leverage restrictions contained in 1940 Act.
As of September 30, 2019 and 2018, the Company had outstanding debt under the MS Credit Facility of $0 and $234,700, respectively. For the years ended
September 30, 2019 and 2018, the Company had borrowings on the MS Credit Facility of $147,100 and $248,450, respectively, and repayments on the MS
Credit Facility of $381,800 and $13,750, respectively.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
For years ended September 30, 2019, 2018 and 2017, the components of interest expense, cash paid for interest and facility fees, average interest rates and
average outstanding balances for the MS Credit Facility were as follows:
Stated interest expense
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense and facility fees
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
$
$
$
$
1,453
$
190
1,643
3,174
$
$
4.3%
34,194
$
1,721
$
301
2,022
$
— $
4.1%
42,239
—
—
—
—
—%
N/A
On February 1, 2019, Funding II entered into a credit facility as amended, (the "MS Credit Facility II") with Morgan Stanley, as the administrative agent, each
of the lenders from time to time party thereto, each of the securitization subsidiaries from time to time party thereto, and Wells Fargo Bank, N.A., as collateral
agent, account bank and collateral custodian. On September 6, 2019, the Company entered into an amendment to the MS Credit Facility II to increase
borrowing capacity to $300,000. As of September 30, 2019, the MS Credit Facility II allows Funding II to borrow up to $300,000 at any one time
outstanding, subject to leverage and borrowing base restrictions. On October 11, 2019, the Company entered into an amendment to increase the borrowing
capacity under the MS Credit Facility II from $300,000 to $500,000.
The period from February 1, 2019 until February 1, 2021 is referred to as the revolving period and during such revolving period, Funding II may request
drawdowns under the MS Credit Facility II. During the revolving period, borrowings under the MS Credit Facility II bear interest at the applicable base rate
plus 2.05%. Following expiration of the revolving period, the interest rate on borrowings under the MS Credit Facility II will reset to the applicable base rate
plus 2.55% for the remaining term of the MS Credit Facility II. The revolving period will continue through February 1, 2021 unless there is an earlier
termination or event of default. The base rate under the MS Credit Facility II is (i) the one-month LIBOR with respect to any advances denominated in U.S.
dollars or U.K. pound sterling, (ii) the one-month EURIBOR with respect to any advances denominated in euros, and (iii) the one-month Canadian Dollar
Offered Rate with respect to any advances denominated in Canadian dollars. The scheduled maturity date of the MS Credit Facility II is February 1, 2024.
The MS Credit Facility II is secured by all of the assets held by Funding II. Both the Company and Funding II have made customary representations and
warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. The
borrowings under the MS Credit Facility II will be subject to the leverage restrictions contained in the 1940 Act.
As of September 30, 2019 and 2018, the Company had outstanding debt under the MS Credit Facility II of $259,946 and $0, respectively. For the years ended
September 30, 2019 and 2018, the Company had borrowings on the MS Credit Facility II of $465,834 and $0, respectively, and repayments on the MS Credit
Facility II of $205,478 and $0, respectively.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
For the years ended September 30, 2019, 2018 and 2017, the components of interest expense, cash paid for interest and facility fees, average interest rates and
average outstanding balances for the MS Credit Facility II were as follows:
Stated interest expense
Facility fees
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense and facility fees
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
$
$
$
$
5,275
$
104
380
5,759
3,421
$
$
4.3%
122,860
$
— $
—
—
— $
— $
N/A
— $
—
—
—
—
—
N/A
—
Effective September 16, 2019, the Company assumed, as a result of the Merger, a senior secured revolving credit facility (as amended, the “WF Credit
Facility”) with GCIC Funding as the borrower and with Wells Fargo Bank, N.A. as the swingline lender, collateral agent, account bank, collateral custodian
and administrative agent which, as of September 30, 2019, allowed GCIC Funding to borrow up to $300,000 at any one time outstanding, subject to leverage
and borrowing base restrictions. The WF Credit Facility bears interest at one-month LIBOR plus 2.00%. The reinvestment period of the WF Credit Facility
expires on March 20, 2021 and the WF Credit Facility matures on March 21, 2024. The Company is required to pay a non-usage fee rate between 0.50% and
1.75% per annum depending on the size of the unused portion of the WF Credit Facility.
The WF Credit Facility is collateralized by all of the assets held by GCIC Funding, and GBDC has pledged its interests in GCIC Funding as collateral to
Wells Fargo Bank, N.A., as the collateral agent, to secure the obligations of GBDC as the transferor and servicer under the WF Credit Facility. Both GBDC
and GCIC Funding have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other
customary requirements for similar credit facilities. Borrowing under the WF Credit Facility is subject to the asset coverage requirements contained in the
1940 Act.
The Company may transfer certain loans and debt securities it originated or acquired from time to time to GCIC Funding through a purchase and sale
agreement and caused GCIC Funding to originate or acquire loans, consistent with the Company’s investment objectives.
As of September 30, 2019, the Company had outstanding debt under the WF Credit Facility of $253,847. As a result of the Merger, the Company assumed
$255,861 of debt under the WF Credit Facility. For the years ended September 30, 2019 and 2018, the Company had borrowings on the WF Credit Facility of
$0, and $0, respectively, and repayments on the WF Credit Facility of $1,924 and $0, respectively.
For the years ended September 30, 2019, 2018 and 2017, the components of interest expense, cash paid for interest and facility fees, annualized average
interest rates and average outstanding balances for the WF Credit Facility were as follows:
Stated interest expense
Facility fees
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense(1)
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
$
$
$
$
199
421
$
12
—
433
2,471
$
$
4.0%
10,436
$
— $
—
—
— $
— $
N/A
— $
—
—
—
—
—
N/A
—
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
(1) Includes interest payable assumed as a result of the merger.
Effective September 16, 2019, the Company assumed as a result of the Merger a senior secured revolving credit facility (as amended, the “DB Credit
Facility”) with GCIC Funding II as the borrower and with Deutsche Bank AG, New York branch, as facility agent, the other agents parties thereto, each of the
entities from time to time party thereto as securitization subsidiaries and Wells Fargo Bank, National Association, as collateral agent and as collateral
custodian, which as of September 30, 2019 allowed GCIC Funding II to borrow up to $250,000 at any one time outstanding, subject to leverage and
borrowing base restrictions.
As of September 30, 2019, the DB Credit Facility bears interest at the applicable base rate plus 1.90% per annum. The base rate under the DB Credit Facility
is (i) the three-month Canadian Dollar Offered Rate with respect to any advances denominated in Canadian dollars, (ii) the three-month EURIBOR Interbank
Offered Rate with respect to any advances denominated in Euros, (iii) the three-month Bank Bill Swap Rate with respect to any advances denominated in
Australian dollars and (iv) the three-month LIBOR with respect to any other advances. A non-usage fee of 0.25% per annum is payable on the undrawn
amount under the DB Credit Facility, and an additional fee based on unfunded commitments of the lenders may be payable if borrowings under the DB Credit
Facility do not exceed a minimum utilization percentage threshold. In addition, a syndication/agent fee is payable to the facility agent each quarter and is
calculated based on the aggregate commitments outstanding each day during the preceding collection period at a rate of 1/360 of 0.25% of the aggregate
commitments on each day. The reinvestment period of the DB Credit Facility expires on December 31, 2021 and the DB Credit Facility matures on December
31, 2024.
The DB Credit Facility is secured by all of the assets held by GCIC Funding II. GCIC Funding II has made customary representations and warranties and is
required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. The borrowings of the
Company, including under the DB Credit Facility, are subject to the leverage restrictions contained in the 1940 Act.
The Company may transfer certain loans and debt securities it has originated or acquired from time to time to GCIC Funding II through a purchase and sale
agreement and may cause GCIC Funding II to originate or acquire loans in the future, consistent with the Company’s investment objectives.
As of September 30, 2019, the Company had outstanding debt under the DB Credit Facility of $248,042. As a result of the Merger, the Company assumed
$248,042 of debt under the DB Credit Facility. For the years ended September 30, 2019 and 2018, the Company had borrowings on the DB Credit Facility II
of $117 and $0, respectively, and repayments on the DB Credit Facility II of $0 and $0, respectively.
For the years ended September 30, 2019, 2018 and 2017, the components of interest expense, cash paid for interest and facility fees, annualized average
interest rates and average outstanding balances for the DB Credit Facility were as follows:
Stated interest expense
Facility fees
Amortization of debt issuance costs
Total interest and other debt financing expenses
Cash paid for interest expense
Annualized average stated interest rate
Average outstanding balance
For the years ended September 30,
2019
2018
2017
$
$
$
$
433
$
1
—
434
$
— $
4.2%
10,198
$
— $
—
— $
— $
N/A
— $
—
—
—
—
N/A
—
Revolver: On June 22, 2016, the Company entered into the Adviser Revolver with the Investment Adviser with a maximum credit limit of $20,000 and
expiration date of June 22, 2019. On June 21, 2019, the Company and the Investment Adviser amended the Adviser Revolver to and among other things, (a)
increase the maximum credit limit
200
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
to $40,000, and (b) change the expiration date to June 21, 2022. The Adviser Revolver bears an interest rate equal to the short-term Applicable Federal Rate,
which was 1.8% as of September 30, 2019.
As of September 30, 2019 and September 30, 2018, the Company had $0 and $0 of outstanding debt under the Adviser Revolver, respectively. For years
ended September 30, 2019, 2018 and 2017, the Company had $16,500, $0, and $0 borrowings and $16,500, $0, and $0 repayments, respectively, on the
Adviser Revolver. For the years ended September 30, 2019, 2018 and 2017, the Company incurred interest expense of $9, $0, and $0, respectively, and no
cash was paid for interest on the Adviser Revolver.
Effective September 16, 2019, the Company assumed, as a result of the Merger, the Adviser Revolver II with a maximum credit line of $40,000. As of
September 30, 2019, the Company had $0 of outstanding debt under the Adviser Revolver II. The Adviser Revolver II bore interest at a rate equal to the
short-term Applicable Federal Rate, which was 1.8% as of September 30, 2019. For the year ended September 30, 2019, the Company had no borrowings and
repayments and did not incur any interest expense and no cash was paid for interest on the Advisor Revolver II. On October 28, 2019, the Adviser Revolver II
was terminated.
Other Short-Term Borrowings: Borrowings with original maturities of less than one year are classified as short-term. The Company’s short-term
borrowings are the result of investments that were sold under repurchase agreements. Investments sold under repurchase agreements are accounted for as
collateralized borrowings as the sale of the investment does not qualify for sale accounting under ASC Topic 860 and remains as an investment on the
Consolidated Statements of Financial Condition.
As of September 30, 2019 and 2018, the Company had no short-term borrowings. For the years ended September 30, 2019, 2018, and 2017, the annualized
effective interest rate on short-term borrowings was 4.8%, 4.8% and 0.0%, respectively, and interest expense was $295, $129 and $0, respectively. The net
change in unrealized appreciation (depreciation) for the years ended September 30, 2019, 2018, and 2017, reported within the net change in unrealized
appreciation (depreciation) on translation of assets and liabilities in foreign currencies was $0, $0, and $0, respectively.
For the years ended September 30, 2019, 2018, and 2017, the average total debt outstanding (including the debt under the 2010 Debt Securitization, the 2014
Debt Securitization, the 2018 Debt Securitization, the GCIC 2018 Debt Securitization, SBA Debentures, Credit Facility, MS Credit Facility, MS Credit
Facility II, WF Credit Facility, DB Credit Facility, Adviser Revolver, Adviser Revolver II and Other Short-Term Borrowings) was $1,050,155, $822,823 and
$872,980, respectively.
For the years ended September 30, 2019, 2018, and 2017, the effective annualized average interest rate, which includes amortization of debt financing costs
and non-usage facility fees, on the Company's total debt was 4.2%, 4.0% and 3.6%, respectively.
A summary of the Company’s maturity requirements for borrowings as of September 30, 2019 is as follows:
Total
Less Than
1 Year
1 – 3 Years
3 – 5 Years
More Than
5 Years
Payments Due by Period
2014 Debt Securitization
$
126,334 $
— $
2018 Debt Securitization
2018 GCIC Debt Securitization (1)
SBA Debentures
WF Credit Facility
MS Credit Facility II
DB Credit Facility
Total borrowings
408,200
541,023
287,000
253,847
259,946
248,042
—
—
—
—
—
—
— $
—
—
78,500
—
—
—
— $
—
—
60,250
253,847
259,946
248,042
126,334
408,200
541,023
148,250
—
—
—
$
2,124,392 $
— $
78,500 $
822,085 $
1,223,807
201
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
(1) Includes $5,477 of discount recognized on the assumption of the 2018 GCIC Debt Securitization in the Merger.
Note 8. Federal Income Tax Matters
The Company has elected to be treated and intends to be subject to tax as a RIC under Subchapter M of the Code. As a result, the Company must distribute
substantially all of its net taxable income each tax year as dividends to its stockholders. Accordingly, no provision for federal income tax has been made in the
financial statements.
Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal tax regulations, which
may differ from amounts determined in accordance with GAAP and those differences could be material. These book-to-tax differences are either temporary or
permanent in nature. Reclassifications due to permanent book-tax differences, including distributions representing a return of capital, have no impact on net
assets.
The following differences were reclassified for tax purposes for the years ended September 30, 2019, 2018 and 2017:
Years ended September 30,
2019
2018
2017
Increase/(decrease) in Paid in Capital in Excess of Par
$
3,932 $
(5) $
Increase/(decrease) in Capital Distributions in Excess of and Undistributed Net Investment Income
Increase/(decrease) in Net Realized Gain (Loss) on Investments
(17,366)
13,434
10,325
(10,320)
38
(1,120)
1,082
Taxable income generally differs from net increase (decrease) in net assets resulting from operations for financial reporting purposes due to temporary and
permanent differences in the recognition of income and expenses and generally excludes unrealized appreciation (depreciation) on investments as investment
gains and losses are not included in taxable income until they are realized. Capital losses in excess of capital gains earned in a tax year may generally be
carried forward and used to offset capital gains, subject to certain limitations. Capital losses incurred by the Company in tax years beginning after September
30, 2011 are not subject to expiration and retain their character as either short-term or long-term capital losses. As of September 30, 2019, the Company
estimates that it will not have any capital loss carry forward available for use in subsequent tax years. The following table reconciles net increase (decrease) in
net assets resulting from operations to taxable income for the years ended September 30, 2019, 2018 and 2017:
Net increase (decrease) in net assets resulting from operations
Net change in unrealized (appreciation) depreciation on investment transactions
Net change in unrealized (appreciation) depreciation on secured borrowings
Other income not currently taxable
Expenses not currently deductible
Other income for tax but not book
Other deductions/losses for tax not book
Other realized gain/loss differences
Taxable income before deductions for distributions
Years ended September 30,
2019
2018
2017
$
$
(18,579)
$
100,209
—
(10,626)
1,385
7,422
(113)
16,506
96,204
$
81,970 $
11,587
—
(11,004)
324
9,730
(2)
(6,249)
86,356 $
82,288
(3,337)
(3)
(7,509)
2,911
9,346
(36)
(5,575)
78,085
The tax character of distributions paid during the years ended September 30, 2019, 2018 and 2017 was as follows:
Ordinary Income
Long-Term Capital Gains
Years ended September 30,
2019
2018
2017
$
77,065
$
7,560
78,349 $
2,959
85,304
1,139
202
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The tax basis components of distributable earnings/(accumulated losses) and reconciliation to accumulated earnings/(deficit) on a book basis for the years
ended September 30, 2019, 2018 and 2017 were as follows:
Undistributed ordinary income – tax basis
Undistributed realized gains – tax basis
Net unrealized appreciation (depreciation) on investments
Other temporary differences
Total accumulated earnings (deficit) – book basis
As of September 30,
2019
2018
2017
$
$
$
10,013
10,970
(107,839)
(1,033)
(87,889)
$
1,844 $
10,539
14,468
(7,604)
19,247 $
4,374
2,958
18,532
(7,285)
18,579
For the tax year ended September 30, 2019, the Company estimates taxable income in excess of the distributions made from such taxable income during the
tax year, and therefore, the Company has elected to carry forward the excess for distribution to stockholders in 2020. The amount carried forward to 2020 is
estimated to be approximately $20,983, although this amount will not be finalized until the 2019 tax returns are filed in 2020.
As of September 30, 2019, the Federal tax cost of investments was $4,404,254 resulting in estimated gross unrealized gains and losses of $34,602 and
$145,924, respectively.
Note 9. Commitments and Contingencies
Commitments: The Company had outstanding commitments to fund investments totaling $261,642 and $57,650 under various undrawn revolvers and other
credit facilities as of September 30, 2019 and 2018, respectively. As described in Note 4, the Company had commitments of up to $100,117 and $99,593 to
SLF as of September 30, 2019 and 2018, respectively, and commitments of up to $61,019 as of September 30, 2019 to GCIC SLF, that may be contributed
primarily for the purpose of funding new investments approved by the investment committees of the SLF and GCIC SLF, as applicable.
Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and
warranties that provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as these involve future claims
that may be made against the Company but that have not occurred. The Company expects the risk of any future obligations under these indemnifications to be
remote.
Off-balance sheet risk: Off-balance sheet risk refers to an unrecorded potential liability that may result in a future obligation or loss, even though it does not
appear on the Consolidated Statements of Financial Condition. The Company has entered and, in the future, may again enter into derivative instruments that
contain elements of off-balance sheet market and credit risk. Refer to Note 5 for outstanding forward currency contracts as of September 30, 2019. There
were no commitments outstanding for derivative contracts as of September 30, 2018. Derivative instruments can be affected by market conditions, such as
interest rate volatility, which could impact the fair value of the derivative instruments. If market conditions move against the Company, it may not achieve the
anticipated benefits of the derivative instruments and may realize a loss. The Company minimizes market risk through monitoring its investments and
borrowings.
Concentration of credit and counterparty risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the
terms of the contract. The Company has engaged and, in the future, may engage again in derivative transactions with counterparties. In the event that the
counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties
or issuers of the instruments. The Company’s maximum loss that it could incur related to counterparty risk on its derivative instruments is the value of the
collateral for that respective derivative instrument. It is the Company’s policy to review, as necessary, the credit standing of each counterparty.
Legal proceedings: In the normal course of business, the Company may be subject to legal and regulatory proceedings that are generally incidental to its
ongoing operations. While there can be no assurance of the ultimate
203
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
disposition of any such proceedings, the Company does not believe any disposition will have a material adverse effect on the Company’s consolidated
financial statements.
Note 10. Financial Highlights
The financial highlights for the Company are as follows:
Per share data:(1)
Net asset value at beginning of period
Net increase in net assets as a result of issuance of DRIP shares(2)
Net increase in net assets as a result of issuance of shares(3)
Net increase in net assets as a result of public offering
Distributions declared:
From net investment income
From capital gains
From return of capital
Net investment income
Net realized gain (loss) on investments and foreign currency transactions
Net change in unrealized appreciation (depreciation) on investments and
foreign currency translation
Net asset value at end of period
Per share market value at end of period
Total return based on market value(4)
Number of common shares outstanding
$
$
2019
2018
2017
2016
2015
Years ended September 30,
$
16.10
$
0.01
3.17
—
(1.27)
(0.13)
—
$
16.08
0.01
—
—
(1.31)
(0.05)
—
$
15.96
0.01
—
0.19
(1.51)
(0.02)
—
$
15.80
0.06
—
0.05
(1.04)
(0.24)
—
1.36
(0.07)
(2.41)
16.76
$
$
18.84
8.80%
132,658,200
204
1.27
0.29
(0.19)
16.10
$
$
18.75
7.65%
60,165,454
1.23
0.16
0.06
16.08
$
$
18.82
10.23%
1.25
0.12
(0.04)
15.96
$
$
18.57
25.36%
59,577,293
55,059,067
51,300,193
15.55
—
—
0.09
(1.18)
(0.10)
—
1.20
0.19
0.05
15.80
15.98
8.21%
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Listed below are supplemental data and ratios to the financial highlights:
2019
2018
2017
2016
2015
Years ended September 30,
Ratio of net investment income to average net assets
Ratio of total expenses to average net assets(4)
Ratio of incentive fees to average net assets
Ratio of expenses (without incentive fees) to average net assets
Total return based on average net asset value(5)
8.41 %
8.42 %
0.87 %
7.55 %
(1.81)%
7.88%
7.89%
1.36%
6.53%
8.50%
7.67%
7.52%
0.83%
6.69%
9.08%
7.88%
7.58%
0.88%
6.70%
8.39%
$
$
$
$
Net assets at end of period
Average debt outstanding
Average debt outstanding per share
Portfolio turnover
Asset coverage ratio(6)
Asset coverage ratio per unit(7)
Average market value per unit:(8)
2010 Debt Securitization
2014 Debt Securitization
2018 Debt Securitization
2018 GCIC Debt Securitization
SBA Debentures
GCIC Credit Facility
MS Credit Facility
MS Credit Facility II
Revolver
WF Credit Facility
DB Credit Facility
Adviser Revolver
Adviser Revolver II
$
$
$
2,222,854
1,050,155
7.92
17.47 %
220.31 %
$
$
$
968,854
822,823
13.68
31.91%
269.51%
$
$
$
957,946
872,980
14.65
34.06%
285.23%
$
$
$
878,825
826,366
15.01
33.73%
248.78%
2,203
$
2,695
$
2,852
$
2,488
$
2,373
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
7.66%
7.92%
1.33%
6.59%
9.19%
810,870
752,657
14.67
47.69%
237.28%
(1) Based on actual number of shares outstanding at the end of the corresponding period or the weighted average shares outstanding for the period, unless otherwise noted, as appropriate.
(2) Net increase in net assets as a result of issuance of shares related to DRIP.
(3) Net increase in net assets as a result of issuance of shares pursuant to the Merger.
(4)
(5)
(6)
Total return based on market value assumes distributions are reinvested in accordance with the DRIP. Total return does not include sales load.
Total return based on average net asset value is calculated as (a) the net increase/(decrease) in net assets resulting from operations divided by (b) the daily average of total net assets. Total
return does not include sales load.
Effective February 6, 2019, in accordance with Section 61(a)(2) of the 1940 Act, with certain limited exceptions, the Company is allowed to borrow amounts such that its asset coverage, as
defined in the 1940 ACT, is at least 150% after such borrowing (excluding the Company's SBA debentures pursuant to exemptive relief received by the Company from the SEC). Prior to
February 6, 2019, in accordance with the 1940 Act, with certain limited exceptions, the Company was allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, was
at least 200% after such borrowing (excluding the Company's SBA debentures pursuant to exemptive relief received by the Company from the SEC).
(7) Asset coverage ratio per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of
senior securities representing indebtedness. Asset coverage ratio per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. These amounts exclude the SBA debentures
pursuant to exemptive relief the Company received from the SEC on September 13, 2011.
(8) Not applicable because such senior securities are not registered for public trading.
205
TABLE OF CONTENTS
Note 11. Earnings Per Share
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The following information sets forth the computation of the net increase (decrease) in net assets per share resulting from operations for the years ended
September 30, 2019, 2018 and 2017:
Earnings available to stockholders
Basic and diluted weighted average shares outstanding
Basic and diluted earnings (deficit) per share
Note 12. Common Stock Issuances and Merger Shares Issuance
Years ended September 30,
2019
2018
2017
$
$
(18,579)
$
63,430,034
(0.29)
$
81,970 $
59,803,208
1.37 $
82,288
56,913,064
1.45
On March 21, 2017, GBDC priced a public offering of 1,750,000 shares of its common stock at a public offering price of $19.03 per share. On April 6, 2017,
GBDC sold an additional 262,500 shares of its common stock at a public offering price of $19.03 per share pursuant to the underwriters’ partial exercise of
the option to purchase additional shares granted in connection with the public offering in March 2017.
On June 6, 2017, GBDC priced a public offering of 1,750,000 shares of its common stock at a public offering price of $19.30 per share. On July 5, 2017,
GBDC sold an additional 220,221 shares of its common stock at a public offering price of $19.30 per share pursuant to the underwriters’ partial exercise of
the option to purchase additional shares granted in connection with the public offering in June 2017.
On September 16, 2019, the Merger closed and GBDC issued an aggregate of 71,779,964 shares of GBDC common stock to GCIC shareholders based on an
exchange ratio of 0.865 shares of GBDC common stock to GCIC stockholders for each share of GCIC common stock, with cash payments in lieu of fractional
shares. The Company issued 71,779,964 shares of GBDC common stock at Merger closing which were valued based on the market price of GBDC common
stock at closing of $18.74.
See Note 13 for shares of common stock issued in accordance with the Company's DRIP.
206
TABLE OF CONTENTS
Note 13. Dividends and Distributions
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
The Company’s dividends and distributions are recorded on the ex-dividend date. The following table summarizes the Company’s dividend declarations and
distributions during the years ended September 30, 2019, 2018 and 2017:
Date Declared
Record Date
Payment Date
Amount
Per Share
Cash
Distribution
DRIP Shares
Issued
DRIP Shares
Value
Year ended September 30, 2019
11/27/2018
02/05/2019
05/07/2019
08/06/2019
Year ended September 30, 2018
11/17/2017
02/06/2018
05/04/2018
08/07/2018
Year ended September 30, 2017
11/14/2016
02/07/2017
05/04/2017
08/02/2017
12/12/2018
03/07/2019
06/07/2019
08/19/2019
12/12/2017
03/08/2018
06/08/2018
09/07/2018
12/12/2016
03/07/2017
06/06/2017
09/06/2017
12/28/2018 $
03/28/2019 $
06/28/2019 $
09/27/2019 $
12/28/2017 $
03/30/2018 $
06/28/2018 $
09/28/2018 $
12/29/2016 $
03/30/2017 $
06/29/2017 $
09/29/2017 $
0.44
(1)
0.32
0.32
0.32
0.40
(2)
0.32
0.32
0.32
0.57
(3)
0.32
0.32
0.32
$
$
$
$
$
$
$
$
$
$
$
$
22,339
16,507
17,215
16,517
20,959
16,978
16,754
16,371
28,239
15,509
16,186
16,847
256,785 $
165,164 $
128,505 $
162,328 $
163,955 $
126,283 $
138,993 $
158,930 $
177,970 $
116,386 $
119,251 $
121,898 $
4,134
2,828
2,173
2,912
2,872
2,139
2,404
2,830
3,145
2,167
2,171
2,179
(1)
Includes a special distribution of $0.12 per share.
(2)
(3)
Includes a special distribution of $0.08 per share.
Includes a special distribution of $0.25 per share.
Note 14. Acquisition of GCIC
On September 16, 2019, the Company completed its previously announced acquisition of GCIC. In accordance with the terms of the Merger Agreement, at
the effective time of the Merger, each outstanding share of GCIC common stock was converted into the right to receive 0.865 shares of common stock, par
value $0.001 per share of the Company (with GCIC stockholders receiving cash in lieu of fractional shares of the Company’s common stock). As a result of
the Merger, the Company issued an aggregate of 71,779,964 shares of its common stock to former GCIC stockholders.
The Merger was accounted for in accordance with the asset acquisition method of accounting as detailed in ASC Topic 805. The fair value of the merger
consideration paid and transaction costs incurred to complete the Merger by the Company was allocated to the assets acquired and liabilities assumed, based
on their relative fair values as of the date of acquisition and did not give rise to goodwill. The excess of merger consideration paid over the fair value of net
assets acquired is considered the purchase premium. Immediately following the acquisition of GCIC, the Company recorded its assets at their respective fair
values and, as a result, the purchase premium allocated to the cost basis of the GCIC assets acquired was immediately recognized as unrealized depreciation
on the Company's Consolidated Statement of Operations. The purchase premium allocated to investments in loan securities will amortize over the life of the
loans through interest income with a corresponding reversal of the unrealized depreciation on the GCIC loans acquired through their ultimate disposition. The
purchase premium allocated to investments in equity securities, including GCIC SLF, will not amortize over the life of the equity securities through interest
income and, assuming no subsequent change to the fair value of the GCIC equity securities acquired and
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TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
disposition of such equity securities at fair value, the Company will recognize a realized loss or a reduction in realized gains with a corresponding reversal of
the unrealized depreciation upon disposition of the GCIC equity securities acquired.
The Merger was considered a tax-free reorganization and the Company has elected to carry forward the historical cost basis of the GCIC investments for tax
purposes.
The following table summarizes the allocation of the purchase price to the assets acquired and liabilities assumed as a result of the Merger:
Common stock issued by the Company (1)
Transaction costs
Total purchase price
Assets acquired:
Investments, at fair value (amortized cost of $2,372,370)
Cash and cash equivalents (2)
Interest receivable
Other assets
Total assets acquired
Liabilities assumed:
Debt
Other liabilities (3)
Total liabilities assumed
Net assets acquired
Total purchase premium
$
$
$
$
1,345,159
2,950
1,348,109
2,268,301
27,153
23,896
758
2,320,108
1,043,200
32,869
1,076,069
1,244,039
104,070
(1) Based on the most recent market price at closing of $18.74 and the 71,779,964 shares of common stock issued by the Company in conjunction with the Merger. Includes $2 of cash paid for fractional shares to GCIC
stockholders.
(2) Includes $21,606 of restricted cash and cash equivalents, $759 of foreign restricted cash and cash equivalents and $4 of foreign cash and cash equivalents.
(3) Includes $4,464 of management fees, $4,771 of incentive fees, and $10,071 of subordinated liquidation fees accrued by GCIC through the closing date of the Merger pursuant to an investment advisory agreement between
GCIC and Investment Adviser, which was terminated upon the closing of the Merger. The payable for these fees was assumed by the Company and paid by the Company to the Investment Adviser in October 2019.
Note 15. Subsequent Events
In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through November 25,
2019, the date the financial statements were available to be issued. There are no subsequent events to disclose except for the following:
On October 11, 2019, the Company entered into an amendment to the MS Credit Facility II to, among other things, increase the borrowing capacity from
$300,000 to $500,000 until the earlier of (i) the closing date of a debt securitization transaction mutually agreed to by the Company and Morgan Stanley or
(ii) March 31, 2020, after which the borrowing capacity under the MS Credit Facility II shall be $200,000. The other material terms of the MS Credit Facility
II were unchanged.
On October 28, 2019, the Company entered into an amendment to the Adviser Revolver to, among other things, increase the borrowing capacity under the
Adviser Revolver from $40,000 to $100,000. In connection with the amendment to the Adviser Revolver on October 28, 2019, the Company terminated the
Adviser Revolver II.
On November 22, 2019, the Board declared a quarterly distribution of $0.33 per share and a special distribution of $0.13 per share, each of which is payable
on December 30, 2019 to holders of record as of December 12, 2019.
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Note 16. Selected Quarterly Financial Data (Unaudited)
Total investment income
Net investment income
Net gain (loss) on investment transactions
Net increase (decrease) in net assets resulting from operations
Earnings per share
Net asset value per common share at period end
Total investment income
Net investment income
Net gain (loss) on investment transactions
Net increase in net assets resulting from operations
Earnings per share
Net asset value per common share at period end
Total investment income
Net investment income(1)
Net gain (loss) on investment transactions
Net increase in net assets resulting from operations
Earnings per share
Net asset value per common share at period end
September 30, 2019
June 30, 2019
March 31, 2019
December 31, 2018
$
48,977
26,793
(100,799)
(74,006)
(1.02)
16.76
$
42,105 $
19,406
(206)
19,200
0.32
15.95 $
41,805 $
20,056
(2,268)
17,788
0.29
15.95 $
39,411
19,817
(1,378)
18,439
0.31
15.97
September 30, 2018
June 30, 2018
March 31, 2018
December 31, 2017
$
40,428
20,266
(4,363)
15,903
0.26
16.10
$
38,396 $
18,716
3,004
21,720
0.36
16.15 $
36,897 $
18,528
4,504
23,032
0.39
16.11 $
36,450
18,511
2,804
21,315
0.36
16.04
September 30, 2017
June 30, 2017
March 31, 2017
December 31, 2016
$
34,950
18,238
4,215
22,453
0.38
16.08
$
35,408 $
17,808
2,303
20,111
0.35
16.01 $
33,557 $
16,547
4,193
20,740
0.38
15.88 $
33,849
16,953
2,031
18,984
0.34
15.74
$
$
$
$
$
$
(1) Net investment income for the three months ended March 31, 2017 and December 31, 2016 is shown after a net expense of $7 and $10, respectively, for U.S. federal excise tax.
209
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Note 17. Summarized Financial Information for SLF and GCIC SLF (Unaudited)
Provided in the table below are the Statements of Financial Condition for SLF as of September 30, 2019 and 2018:
Senior Loan Fund LLC
Statements of Financial Condition
Assets
Investments, at fair value
Cash and cash equivalents
Restricted cash and cash equivalents
Interest receivable and other assets
Total Assets
Liabilities
Senior credit facility
Less unamortized debt issuance costs
Senior credit facility less unamortized debt issuance costs
Interest payable
Accounts payable and accrued expenses
Total Liabilities
Members' equity
Total Liabilities and members' equity
September 30, 2019
September 30, 2018
$
$
$
$
152,259 $
4,653
3,620
486
161,018 $
75,581 $
—
75,581
182
242
76,005
85,013
161,018 $
179,180
4,719
1,910
517
186,326
104,622
18
104,604
213
271
105,088
81,238
186,326
210
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Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Note 17. Summarized Financial Information for SLF and GCIC SLF (Unaudited) - (continued)
Provided in the table below are the Statements of Operations for SLF for the years ended September 30, 2019, 2018 and 2017:
Senior Loan Fund LLC
Statements of Operations
Investment income
Interest income
Fee income
Total investment income
Expenses
Interest and other debt financing expenses
Administrative service fee
Professional fees
General and administrative expenses
Total expenses
Net investment income
Net gain (loss) on investments
Net realized gain (loss):
Non-controlled/non-affiliate company investments
Net realized gain (loss)
Net unrealized appreciation (depreciation):
Net change in unrealized appreciation (depreciation) on
investments
Net change in unrealized appreciation (depreciation)
Net gain (loss) on investments
Net increase (decrease) in members' equity
Years ended September 30,
2019
2018
2017
$
13,402 $
18,285 $
9
13,411
4,132
268
94
1
4,495
8,916
(2,343)
(2,343)
(2,199)
(2,199)
(4,542)
202
18,487
6,687
404
92
1
7,184
11,303
—
—
(4,197)
(4,197)
(4,197)
$
4,374 $
7,106 $
211
21,455
5
21,460
10,236
477
128
3
10,844
10,616
(7,379)
(7,379)
4,647
4,647
(2,732)
7,884
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Note 17. Summarized Financial Information for SLF and GCIC SLF (Unaudited) - (continued)
Provided in the table below is the Statement of Financial Condition for GCIC SLF as of September 30, 2019:
GCIC Senior Loan Fund LLC
Statement of Financial Condition
Assets
Investments, at fair value
Cash and cash equivalents
Restricted cash and cash equivalents
Interest receivable
Total Assets
Liabilities
Senior credit facility
Interest payable
Accounts payable and accrued expenses
Total Liabilities
Members' equity
Total Liabilities and members' equity
September 30, 2019
111,568
2,020
2,185
422
116,195
59,559
142
199
59,900
56,295
116,195
$
$
$
$
212
TABLE OF CONTENTS
Golub Capital BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except shares and per share data)
Note 17. Summarized Financial Information for SLF and GCIC SLF (Unaudited) - (continued)
Provided in the table below is the Statement of Operations for GCIC SLF for the period from September 16, 2019 to September 30, 2019:
GCIC Senior Loan Fund LLC
Statement of Operations
Investment income
Interest income
Total investment income
Expenses
Interest and other debt financing expenses
Administrative service fee
Professional fees
Total expenses
Net investment income
Net gain (loss) on investments
Net unrealized appreciation (depreciation):
Net change in unrealized appreciation (depreciation) on
investments
Net change in unrealized appreciation (depreciation)
Net gain (loss) on investments
Net increase (decrease) in members' equity
213
For the period from
September 16, 2019 to
September 30, 2019
360
360
141
6
4
151
209
(18)
(18)
(18)
191
$
$
TABLE OF CONTENTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As of September 30, 2019 (the end of the period covered by this report), management, with the participation of our chief executive officer and chief financial
officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the
Exchange Act). Based on that evaluation, our management, including the chief executive officer and chief financial officer, concluded that, at the end of such
period, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC
filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is
accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions
regarding required disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the
Company’s periodic reports.
(b) Management’s Report on Internal Control Over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting and Ernst & Young LLP's Report of Independent Registered Public Accounting Firm are
included in “Item 8. Consolidated Financial Statements and Supplementary Data” of this annual report on Form 10-K.
(c) Changes in Internal Controls Over Financial Reporting
Management has not identified any change in our internal control over financial reporting that occurred during the fourth fiscal quarter of 2019 that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except with respect to the Merger, which was
completed on September 16, 2019, which had a material impact on our financial position and resulted in incremental internal controls over financial reporting.
Item 9B. Other Information
None.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2020 Annual Meeting of
Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.
Item 11. Executive Compensation
The information required by Item 11 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2020 Annual Meeting of
Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 12 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2020 Annual Meeting of
Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by Item 13 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2020 Annual Meeting of
Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.
Item 14. Principal Accountant Fees and Services
The information required by Item 14 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2020 Annual Meeting of
Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this annual report on Form 10-K:
(1)
(2)
(3)
Financial Statements — Refer to Item 8 starting on page 104
Financial Statement Schedules — None
Exhibits
2.1
2.2
2.3
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
Agreement and Plan of Merger by and among Golub Capital BDC, Inc., Golub Capital Investment
Corporation, Fifth Ave Subsidiary Inc., GC Advisors, LLC, and solely for purposes of Section 1.9,
Golub Capital LLC, dated as of November 27, 2018 (Incorporated by reference to Exhibit 2.1 to the
Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on November 28, 2018).
Amendment No. 1 to Agreement and Plan of Merger by and among Golub Capital BDC, Inc., Golub
Capital Investment Corporation, Fifth Ave Subsidiary Inc., GC Advisors, LLC, and solely for purposes
of Section 1.9, Golub Capital LLC, dated as of December 21, 2018 (Incorporated by reference to
Exhibit (4)(b) to the Registrant’s Registration Statement on Form N-14 (File No. 333-228998), filed on
December 21, 2018).
Amendment No. 2 to Agreement and Plan of Merger by and among Golub Capital BDC, Inc., Golub
Capital Investment Corporation, Fifth Ave Subsidiary Inc., GC Advisors, LLC, and solely for purposes
of Section 1.9, Golub Capital LLC, dated as of July 11, 2019 (Incorporated by reference to Exhibit (4)
(c) to Amendment No. 1 to the Registrant’s Registration Statement on Form N-14 (File No. 333-
228998), filed on July 11, 2019).
Form of Certificate of Incorporation (Incorporated by reference to Exhibit (a)(2) to the Registrant’s
Pre-effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-163279),
filed on March 25, 2010).
Form of Bylaws (Incorporated by reference to Exhibit (b)(2) to the Registrant’s Pre-effective
Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-163279), filed on March
25, 2010).
Form of Stock Certificate (Incorporated by reference to Exhibit (d) to the Registrant’s Pre-effective
Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-163279), filed on March
25, 2010).
Form of Subscription Certificate (Incorporated by reference to Exhibit (d)(2) to the Registrant’s
Registration Statement on Form N-2 (File No. 333-174756), filed on June 7, 2011).
Form of Indenture (Incorporated by reference to Exhibit (d)(3) to the Registrant’s Registration
Statement on Form N-2 (File No. 333-174756), filed on June 7, 2011).
Form of Subscription Agent Agreement (Incorporated by reference to Exhibit (d)(4) to the Registrant’s
Registration Statement on Form N-2 (File No. 333-174756), filed on June 7, 2011).
Form of Warrant Agreement (Incorporated by reference to Exhibit (d)(5) to the Registrant’s
Registration Statement on Form N-2 (File No. 333-174756), filed on June 7, 2011).
Form of Certificate of Designation for Preferred Stock (Incorporated by reference to Exhibit (d)(6) to
the Registrant’s Pre-effective Amendment No. 1 to the Registration Statement on Form N-2 (File No.
333-174756), filed on August 25, 2011).
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4.7
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
Form T-1 Statement of Eligibility of U.S. Bank National Association, as Trustee, with respect to the
Form of Indenture (Incorporated by reference to Exhibit (d)(7) to the Registrant’s Pre-effective
Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-174756), filed on
August 25, 2011).
Third Amended and Restated Investment Advisory Agreement, dated as of September 16, 2019, by and
between Golub Capital BDC, Inc. and GC Advisors, LLC.(Incorporated by reference to Exhibit 10.1 to
the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on September 16, 2019).
Form of Custody Agreement (Incorporated by reference to Exhibit (j) to the Registrant’s Pre-effective
Amendment No. 5 to the Registration Statement on Form N-2 (File No. 333-163279), filed on April
12, 2010).
Form of Administration Agreement between Registrant and GC Service Company LLC (Incorporated
by reference to Exhibit (k)(2) to the Registrant’s Pre-effective Amendment No. 3 to the Registration
Statement on Form N-2 (File No. 333-163279), filed on March 24, 2010).
Form of Trademark License Agreement between the Registrant and Golub Capital LLC (Incorporated
by reference to Exhibit (k)(3) to the Registrant’s Pre-effective Amendment No. 3 to the Registration
Statement on Form N-2 (File No. 333-163279), filed on March 24, 2010).
Amended and Restated Dividend Reinvestment Plan (Incorporated by reference to Exhibit 10.1 to
Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on May 5, 2011).
Senior Loan Fund LLC Limited Liability Company Agreement dated May 31, 2013, by and between
the Registrant and United Insurance Company of America (Incorporated by reference to Exhibit 10.1 to
the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on June 7, 2013).
Purchase Agreement, dated June 5, 2014, by and among the Registrant, Golub Capital BDC CLO 2014
LLC and Wells Fargo Securities, LLC (Incorporated by reference to Exhibit 10.2 to the Registrant’s
Current Report on Form 8-K (File No. 814-00794), filed on June 6, 2014).
Loan Sale Agreement, dated June 5, 2014, by and between the Registrant and Golub Capital BDC CLO
2014 LLC (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K
(File No. 814-00794), filed on June 6, 2014).
Indenture, dated June 5, 2014, by and between Golub Capital BDC CLO 2014 LLC and Wells Fargo
Bank, National Association (Incorporated by reference to Exhibit 10.4 to the Registrant’s Current
Report on Form 8-K (File No. 814-00794), filed on June 6, 2014).
Collateral Management Agreement, dated June 5, 2014, by and between Golub Capital BDC CLO
2014 LLC and GC Advisors LLC (Incorporated by reference to Exhibit 10.5 to the Registrant’s Current
Report on Form 8-K (File No. 814-00794), filed on June 6, 2014).
First Amendment to Senior Loan Fund LLC Limited Liability Company Agreement, dated July 31,
2014, by and between the Registrant and RGA Insurance Company (Incorporated by reference to
Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K (File No. 814-00794), filed on
November 18, 2014).
Supplemental Indenture No. 1, dated March 23, 2018, by and between Golub Capital BDC 2014 LLC
and Wells Fargo Bank, National Association, as trustee. (Incorporated by reference to Exhibit (k)(28)
to the Registrant’s Post-effective Amendment No. 4 to the Registration Statement on Form N-2 (File
No. 333-215285), filed on April 27, 2018)
Purchase Agreement, dated as of November 1, 2018, by and among Golub Capital BDC CLO III LLC,
Golub Capital BDC CLO III Depositor LLC and Morgan Stanley & Co. LLC. (Incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed
on November 2, 2018).
Indenture, dated as of November 16, 2018, by and between Golub Capital BDC CLO III LLC and US
Bank National Association (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K (File No. 814-00794), filed on November 21, 2018).
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10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
Collateral Management Agreement, dated as of November 16, 2018, by and between Golub Capital
BDC CLO III LLC and GC Advisors LLC (Incorporated by reference to Exhibit 10.2 to the
Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on November 21, 2018).
Master Loan Sale Agreement, dated as of November 16, 2018, by and among Golub Capital BDC, Inc.,
as the seller, GC Advisors LLC, as the closing date seller, Golub Capital BDC CLO III LLC, as the
buyer, and Golub Capital BDC 2010-1 LLC, as the warehouse borrower (Incorporated by reference to
Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on
November 21, 2018).
Master Loan Sale Agreement, dated as of November 16, 2018, by and among Golub Capital BDC, Inc.,
as the seller, Golub Capital BDC CLO III Depositor LLC, as the intermediate seller, and Golub Capital
BDC CLO III LLC, as the buyer (Incorporated by reference to Exhibit 10.4 to the Registrant’s Current
Report on Form 8-K (File No. 814-00794), filed on November 21, 2018).
Loan and Servicing Agreement, dated as of February 1, 2019, among Golub Capital BDC Funding II
LLC, as the borrower; Golub Capital BDC, Inc., as the originator and as the servicer; Morgan Stanley
Senior Funding, Inc., as the administrative agent; each of the lenders from time to time party thereto;
each of the securitization subsidiaries from time to time party thereto; and Wells Fargo Bank, N.A., as
the collateral agent, account bank and collateral custodian (Incorporated by reference to Exhibit 10.1 to
the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on February 7, 2019).
Purchase and Sale Agreement, dated as of February 1, 2019, by and between Golub Capital BDC
Funding II LLC, as the purchaser, and Golub Capital BDC, Inc., as the transferor (Incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed
on February 7, 2019).
Amended and Restated Revolving Loan Agreement, dated as of June 21, 2019, by and among the
Registrant, as the borrower, and GC Advisors LLC, as the lender (Incorporated by reference to Exhibit
10.1 to Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on June 25, 2019).
GCIC Senior Loan Fund LLC Limited Liability Company Agreement, dated as of December 31, 2014,
by and between the Golub Capital Investment Corporation and RGA Reinsurance Company
(Incorporated by reference to Exhibit 10.11 to Golub Capital Investment Corporation’s Registration
Statement on Form 10 (File No. 000-55696), filed on September 15, 2016).
Amendment No. 2 to GCIC Senior Loan Fund LLC Limited Liability Company Agreement, dated as of
December 30, 2015, by and between Golub Capital Investment Corporation and RGA Reinsurance
Company (Incorporated by reference to Exhibit 10.12 to Golub Capital Investment Corporation’s
Registration Statement on Form 10 (File No. 000-55696), filed on September 15, 2016).
Revolving Loan Agreement, dated as of February 3, 2015, by and between Golub Capital Investment
Corporation, as the borrower, and GC Advisors LLC, as the lender (Incorporated by reference to
Exhibit 10.13 to Golub Capital Investment Corporation’s Registration Statement on Form 10 (File No.
000-55696), filed on September 15, 2016).
First Amendment to Revolving Loan Agreement, dated as of February 6, 2018, by and between Golub
Capital Investment Corporation and GC Advisors LLC (Incorporated by reference to Exhibit 10.1 to
Golub Capital Investment Corporation’s Quarterly Report on Form 10-Q (File No.814-01128), filed on
May 10, 2018).
Amended and Restated Loan and Servicing Agreement, dated as of May 13, 2015, by and among
GCIC Funding LLC, as the borrower; GC Advisors LLC , as the servicer; Golub Capital Investment
Corporation, as the transferor, the institutional lenders identified on the signature pages thereto, Wells
Fargo Bank, N.A., as the swingline lender, collateral agent, account bank, collateral custodian and
administrative agent (Incorporated by reference to Exhibit 10.4 to Golub Capital Investment
Corporation’s Registration Statement on Form 10 (File No. 000-55696), filed on September 15, 2016).
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10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
Second Amendment to Amended and Restated Loan and Servicing Agreement, dated as of March 9,
2016, by and among GCIC Funding LLC, as the borrower; GC Advisors LLC, as the servicer; Golub
Capital Investment Corporation, as the transferor; the institutional lenders identified on the signature
pages thereto; and Wells Fargo Bank, N.A., as the swingline lender, collateral agent, account bank,
collateral custodian and administrative agent (Incorporated by reference to Exhibit 10.6 to Golub
Capital Investment Corporation’s Registration Statement on Form 10 (File No. 000-55696), filed on
September 15, 2016).
Third Amendment to Amended and Restated Loan and Servicing Agreement, dated as of May 11,
2017, by and among GCIC Funding LLC, as the borrower; GC Advisors LLC, as the servicer Golub
Capital Investment Corporation, as the transferor, the institutional lenders identified on the signature
pages thereto, Wells Fargo Bank, N.A., as the swingline lender, collateral agent, account bank,
collateral custodian and administrative agent. (Incorporated by reference to Exhibit 10.1 to Golub
Capital Investment Corporation’s Quarterly Report on Form 10-Q (File No. 814-01128), filed on
August 9, 2017).
Fourth Amendment to Amended and Restated Loan and Servicing Agreement, dated as of August 8,
2017, by and among GCIC Funding LLC, as the borrower; GC Advisors LLC, as the servicer; Golub
Capital Investment Corporation, as the transferor, the institutional lenders identified on the signature
pages thereto, Wells Fargo Bank, N.A., as the swingline lender, collateral agent, account bank,
collateral custodian and administrative agent (Incorporated by reference to Exhibit 10.22 to Golub
Capital Investment Corporation’s Annual Report on Form 10-K (File No. 814-01128), filed on
November 28, 2017).
Fifth Amendment to Amended and Restated Loan and Servicing Agreement, dated as of August 30,
2017, by and among GCIC Funding LLC, as the borrower; GC Advisors LLC, as the servicer; Golub
Capital Investment Corporation, as the transferor, the institutional lenders identified on the signature
pages thereto, Wells Fargo Bank, N.A., as the swingline lender, collateral agent, account bank,
collateral custodian and administrative agent (Incorporated by reference to Exhibit 10.1 to the Golub
Capital Investment Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on August
30, 2017).
Sixth Amendment to Amended and Restated Loan and Servicing Agreement, First Amendment to
Collection Account Agreement and First Amendment to Unfunded Exposure Account Agreement,
dated as of May 25, 2018, by and among GCIC Funding LLC, as the borrower; Golub Capital
Investment Corporation, as the transferor; GC Advisors LLC, as the servicer; the institutional lenders
identified on the signature pages thereto; Wells Fargo Bank, N.A., as the swingline lender, collateral
agent, account bank, collateral custodian, and administrative agent (Incorporated by reference to
Exhibit 10.1 to Golub Capital Investment Corporation’s Current Report on Form 8-K (File No. 814-
01128), filed on May 31, 2018).
Joinder Supplement, dated as of November 2, 2018, by and among GCIC Funding LLC, as the
Borrower, Wells Fargo Bank, N.A., as an Institutional Lender and Wells Fargo Bank, N.A., as the
Administrative Agent (Incorporated by reference to Exhibit 10.1 to Golub Capital Investment
Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on November 7, 2018).
Seventh Amendment to Amended and Restated Loan and Servicing Agreement, dated as of March 21,
2019, by and among GCIC Funding LLC, as the borrower; GC Advisors LLC, as the servicer; Golub
Capital Investment Corporation, as the transferor; the institutional lenders identified on the signature
pages thereto; Wells Fargo Bank, N.A., as the swingline lender, collateral agent, account bank,
collateral custodian, and administrative agent (Incorporated by reference to Exhibit 10.1 to Golub
Capital Investment Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on March
26, 2019).
Eighth Amendment to Amended and Restated Loan and Servicing Agreement, dated as of May 29,
2019, by and among GCIC Funding LLC, as the borrower; GC Advisors LLC, as the servicer; Golub
Capital Investment Corporation, as the transferor; the institutional lenders identified on the signature
pages thereto; Wells Fargo Bank, N.A., as the swingline lender, collateral agent, account bank,
collateral custodian, and administrative agent (Incorporated by reference to Exhibit 10.1 to Golub
Capital Investment Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on June 3,
2019).
219
TABLE OF CONTENTS
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
14.1
14.2
21.1
Loan Financing and Servicing Agreement, dated as of December 31, 2018, by and among GCIC
Funding II LLC, as borrower, Golub Capital Investment Corporation, as equityholder and as servicer,
the lenders from time to time party thereto, Deutsche Bank AG, New York Branch, as facility agent,
the other agents parties thereto, each of the entities from time to time party thereto as securitization
subsidiaries, and Wells Fargo Bank, National Association, as collateral agent and as collateral
custodian (Incorporated by reference to Exhibit 10.1 to Golub Capital Investment Corporation's
Current Report on Form 8-K (File No. 814-01128), filed on January 7, 2019).
Sale and Contribution Agreement, dated as of December 31, 2018, between Golub Capital Investment
Corporation, as seller, and GCIC Funding II LLC, as purchaser (Incorporated by reference to Exhibit
10.2 to Golub Capital Investment Corporation’s Current Report on Form 8-K (File No. 814-01128),
filed on January 7, 2019).
Note Purchase Agreement, dated December 13, 2018, by and among GCIC CLO II LLC and Wells
Fargo Securities, LLC (Incorporated by reference to Exhibit 10.1 to Golub Capital Investment
Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on December 19, 2018).
Indenture, dated December 13, 2018, by and between GCIC CLO II LLC and The Bank of New York
Mellon Trust Company, N.A. (Incorporated by reference to Exhibit 10.2 to Golub Capital Investment
Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on December 19, 2018).
Collateral Management Agreement, dated December 13, 2018, by and between GCIC CLO II LLC and
GC Advisors LLC (Incorporated by reference to Exhibit 10.1 to Golub Capital Investment
Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on December 19, 2018).
Master Loan Sale Agreement by and among Golub Capital Investment Corporation, as the seller, GC
Advisors LLC, as the closing date seller, GCIC CLO II LLC, as the buyer, and GCIC Funding LLC, as
the warehouse borrower, dated as of December 13, 2018 (Incorporated by reference to Exhibit 10.4 to
Golub Capital Investment Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on
December 19, 2018).
Master Loan Sale Agreement by and among Golub Capital Investment Corporation, as the seller, GCIC
CLO II Depositor LLC, as the intermediate seller, and GCIC CLO II LLC, as the buyer, dated as of
December 13, 2018 (Incorporated by reference to Exhibit 10.5 to Golub Capital Investment
Corporation’s Current Report on Form 8-K (File No. 814-01128), filed on December 19, 2018).
First Amendment to the Amended and Restated Revolving Loan Agreement, dated as of October 28,
2019, by and between Golub Capital BDC, Inc. as the borrower and GC Advisors LLC as the lender
(Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No. 814-
00794), filed on October 31, 2019).
Second Amendment to Loan and Servicing Agreement, dated as of September 6, 2019, among Golub
Capital BDC Funding II LLC, as the borrower; Golub Capital BDC, Inc., as the originator and as the
servicer; Morgan Stanley Senior Funding, Inc., as the administrative agent; and Morgan Stanley Bank
N.A., as lender (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K (File No. 814-00794), filed on September 12, 2019).
Third Amendment to Loan and Servicing Agreement, dated as of October 11, 2019, among Golub
Capital BDC Funding II LLC, as the borrower; Golub Capital BDC, Inc., as the originator and as the
servicer; Morgan Stanley Senior Funding, Inc., as the administrative agent; and Morgan Stanley Bank
N.A., as lender (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K (File No. 814-00794), filed on October 16, 2019).
Code of Ethics of the Registrant and GC Advisors.*
Code of Ethics of GC Advisors LLC (Filed as Exhibit 14.2 to Golub Capital BDC Inc.’s Quarterly
Report on Form 10-Q (File No. 814-00794), filed on February 5, 2016).
List of Subsidiaries.*
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TABLE OF CONTENTS
24.1
31.1
31.2
32.1
32.2
99.1
Power of attorney (included on the signature page hereto).
Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of
1934, as amended.*
Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of
1934, as amended.*
Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.*
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*
Privacy Policy of the Registrant.*
_________________
* Filed herewith
221
TABLE OF CONTENTS
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K
to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 25, 2019
By:
Golub Capital BDC, Inc.
A Delaware Corporation
/s/ David B. Golub
Name: David B. Golub
Title: Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Lawrence E. Golub, David B. Golub
and Ross A. Teune as his or her true and lawful attorneys-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any
amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities
and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
/s/ David B. Golub
Chief Executive Officer and Director
David B. Golub
(Principal Executive Officer)
Date
November 25, 2019
/s/ Ross A. Teune
Chief Financial Officer
November 25, 2019
Ross A. Teune
(Principal Accounting and Financial Officer)
/s/ Lawrence E. Golub
Chairman of the Board of Directors
November 25, 2019
Lawrence E. Golub
/s/ John T. Baily
Director
John T. Baily
/s/ Kenneth F. Bernstein
Director
Kenneth F. Bernstein
/s/ Anita R. Rosenberg
Director
Anita R. Rosenberg
/s/ William M. Webster IV
Director
William M. Webster IV
November 25, 2019
November 25, 2019
November 25, 2019
November 25, 2019
222
Exhibit 14.1
CODE OF ETHICS
FOR
GOLUB CAPITAL BDC, INC.
GOLUB CAPITAL BDC 3, INC.
GC ADVISORS LLC
Section I Statement of General Fiduciary Principles
This Code of Ethics (the “Code”) has been adopted by each of Golub Capital BDC, Inc., Golub Capital BDC 3, Inc.
(collectively, the “Corporation”), and GC Advisors LLC, the Corporation’s investment adviser (the “Adviser”), in compliance with Rule 17j-1
under the Investment Company Act of 1940 (the “Act”). The purpose of the Code is to establish standards and procedures for the detection and
prevention of activities by which persons having knowledge of the investments and investment intentions of the Corporation may abuse their
fiduciary duty to the Corporation, and otherwise to deal with the types of conflict of interest situations to which Rule 17j-1 is addressed.
The Code is based on the principle that the directors and officers of the Corporation, and the managers, partners, officers and
employees of the Adviser, who provide services to the Corporation, owe a fiduciary duty to the Corporation to conduct their personal securities
transactions in a manner that does not interfere with the Corporation’s transactions or otherwise take unfair advantage of their relationship with
the Corporation. All Access Persons are expected to adhere to this general principle as well as to comply with all of the specific provisions of
this Code that are applicable to them. Any Access Persons who are affiliated with the Adviser or another entity that is a registered investment
adviser is, in addition, expected to comply with the provisions of the code of ethics that has been adopted by the Adviser or such other
investment adviser. The Adviser has adopted a separate code of ethics pursuant to the Investment Advisers Act of 1940, and the rules
thereunder (the “Adviser’s Code of Ethics”). The Adviser will provide a written report, at least annually, to the Corporation’s board of directors
describing any issues arising under the Adviser’s Code of Ethics or procedures since the last report to the board, including, but not limited to,
information about material violations of the Adviser’s Code of Ethics or procedures and sanctions imposed in response to material violations
and certifying that the Adviser has adopted procedures reasonably necessary to prevent violations of the Adviser’s Code of Ethics.
Technical compliance with the Code will not automatically insulate any Access Persons from scrutiny of transactions that show
a pattern of compromise or abuse of the individual’s fiduciary duty to the Corporation. Accordingly, all Access Persons must seek to avoid any
actual or potential conflicts between their personal interests and the interests of the Corporation and its stockholders. In sum, all Access Persons
shall place the interests of the Corporation before their own personal interests.
All Access Persons must read this Code of Ethics.
Section II Definitions
(A)
“Access Person” means any director, officer, general partner or Advisory Person (as defined below) of the Corporation or the Adviser.
(B)
An “Advisory Person” of the Corporation or the Adviser means: (i) any director, officer general partner or employee of the Corporation
or the Adviser, or any company in a Control (as defined below) relationship to the Corporation or the Adviser, who in connection with
his or her regular functions or duties makes, participates in, or obtains information regarding the purchase or sale of any Covered
Security (as defined below) by the Corporation, or whose functions relate to the making of any recommendation with respect to such
purchases or sales; (ii) any natural person in a Control relationship to the Corporation or the Adviser, who obtains
information concerning recommendations made to the Corporation with regard to the purchase or sale of any Covered Security by the
Corporation and (iii) any other person deemed to be an Advisory Person by the Chief Compliance Officer.
(C)
“Beneficial Ownership” is interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the Securities Exchange Act of
1934 (the “1934 Act”) in determining whether a person is a beneficial owner of a security for purposes of Section 16 of the 1934 Act
and the rules and regulations thereunder.
(D)
“Chief Compliance Officer” means the Chief Compliance Officer of the Corporation (who also may serve as the compliance officer of
the Adviser and/or one or more affiliates of the Adviser).
(E)
“Control” shall have the same meaning as that set forth in Section 2(a)(9) of the Act.
(F)
“Covered Security” means a security as defined in Section 2(a)(36) of the Act, which includes: any note, stock, treasury stock, security
future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust
certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any
security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in
general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
Except that “Covered Security” does not include: (i) direct obligations of the Government of the United States; (ii) bankers’
acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase
agreements; and (iii) shares issued by open-end investment companies registered under the Act. References to a Covered Security in this
Code (e.g., a prohibition or requirement applicable to the purchase or sale of a Covered Security) shall be deemed to refer to and to
include any warrant for, option in, or security immediately convertible into that Covered Security, and shall also include any instrument
that has an investment return or value that is based, in whole or in part, on that Covered Security (collectively, “Derivatives”).
Therefore, except as otherwise specifically provided by this Code: (i) any prohibition or requirement of this Code applicable to the
purchase or sale of a Covered Security shall also be applicable to the purchase or sale of a Derivative relating to that Covered Security;
and (ii) any prohibition or requirement of this Code applicable to the purchase or sale of a Derivative shall also be applicable to the
purchase or sale of a Covered Security relating to that Derivative.
(G)
(H)
(I)
“Independent Director” means a director of the Corporation who is not an “interested person” of the Corporation within the meaning of
Section 2(a)(19) of the Act.
“Initial Public Offering” means an offering of securities registered under the Securities Act of 1933 (the “1933 Act”), the issuer of
which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the 1934 Act.
“Investment Personnel” of the Corporation or the Adviser means: (i) any employee of the Corporation or the Adviser (or of any
company in a Control relationship to the Corporation or the Adviser) who, in connection with his or her regular functions or duties,
makes or participates in making recommendations regarding the purchase or sale of securities by the Corporation; and (ii) any natural
person who controls the Corporation or the Adviser and who obtains information concerning recommendations made to the Corporation
regarding the purchase or sale of securities by the Corporation.
(J)
“Limited Offering” means an offering that is exempt from registration under the 1933 Act pursuant to Section 4(2) or Section 4(5)
thereof or pursuant to Rule 504, Rule 505, or Rule 506 thereunder.
(K)
“Security Held or to be Acquired” by the Corporation means: (i) any Covered Security which, within the most recent 15 days: (A) is or
has been held by the Corporation; or (B) is being or has been considered by the Corporation or the Adviser for purchase by the
Corporation; and (ii) any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security described
in Section II (K)(i).
(L) “17j-1 Organization” means the Corporation or the Adviser, as the context requires
Section III Objective and General Prohibitions
Access Persons may not engage in any investment transaction under circumstances in which such Access Persons benefits from or
interferes with the purchase or sale of investments by the Corporation. In addition, Access Persons may not use information concerning the
investments or investment intentions of the Corporation, or their ability to influence such investment intentions, for personal gain or in a
manner detrimental to the interests of the Corporation.
Access Persons may not engage in conduct that is deceitful, fraudulent or manipulative, or that involves false or misleading statements,
in connection with the purchase or sale of investments by the Corporation. In this regard, Access Persons should recognize that Rule 17j-1
makes it unlawful for any affiliated person of the Corporation, or any affiliated person of the Adviser, in connection with the purchase or sale,
directly or indirectly, by the person of a Security Held or to be Acquired by the Corporation to:
(i)
(ii)
(iii)
(iv)
employ any device, scheme or artifice to defraud the Corporation;
make any untrue statement of a material fact to the Corporation or omit to state to the Corporation a material fact necessary in
order to make the statements made, in light of the circumstances under which they are made, not misleading;
engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the Corporation; or
engage in any manipulative practice with respect to the Corporation.
Access Persons should also recognize that a violation of this Code or of Rule 17j-1 may result in the imposition of: (1) sanctions as
provided by Section VIII below; or (2) administrative, civil and, in certain cases, criminal fines, sanctions or penalties.
Section IV Prohibited Transactions
(A) Other than securities purchased or acquired by a fund affiliated with the Corporation and pursuant to an exemptive order under Section
57(i) of the Act permitting certain types of co-investments, an Access Person may not purchase or otherwise acquire direct or indirect
Beneficial Ownership of any Covered Security, and may not sell or otherwise dispose of any Covered Security in which he or she has direct or
indirect Beneficial Ownership, if he or she knows or should know at the time of entering into the transaction that: (1) the Corporation has
purchased or sold the Covered Security within the last 15 calendar days, or is purchasing or selling or intends to purchase or sell the Covered
Security in the next 15 calendar days; or (2) the Adviser has within the last 15 calendar days considered purchasing or selling the Covered
Security for the Corporation or within the next 15 calendar days intends to consider purchasing or selling the Covered Security for the
Corporation.
(B) No Access Person may purchase a Covered Security without first obtaining preapproval from the Chief Compliance Officer of the
Corporation. From time to time, the Chief Compliance Officer of the Corporation may exempt individual Covered Securities or categories of
Covered Securities from this requirement.
(C) Investment Personnel of the Corporation or the Adviser must obtain approval from the Corporation or the Adviser, as the case may be,
before directly or indirectly acquiring Beneficial Ownership in any securities in an Initial Public Offering or in a Limited Offering, except when
such securities are acquired by a fund affiliated with the Corporation and pursuant to an exemptive order under Section 57(i) of the Act
permitting certain types of co-
investments. Such approval must be obtained from the Chief Compliance Officer, unless he or she is the person seeking such approval, in
which case it must be obtained from the President of the 17j-1 Organization.
(D) No Access Person shall recommend any transaction in any Covered Securities by the Corporation without having disclosed to the Chief
Compliance Officer his or her interest, if any, in such Covered Securities or the issuer thereof, including: the Access Person’s Beneficial
Ownership of any Covered Securities of such issuer, except when such securities transactions are to be made by a fund affiliated with the
Corporation and pursuant to an exemptive order under Section 57(i) of the Act permitting certain types of co-investments; any contemplated
transaction by the Access Person in such Covered Securities; any position the Access Person has with such issuer; and any present or proposed
business relationship between such issuer and the Access Person (or a party which the Access Person has a significant interest).
Section V Reports by Access Persons
(A) Personal Securities Holdings Reports.
All Access Persons shall within 10 days of the date on which they become Access Persons, and thereafter, within 30 days after the end
of each calendar year, disclose the title, number of shares and principal amount of all Covered Securities in which they have a direct or indirect
Beneficial Ownership as of the date the person became an Access Person, in the case of such person’s initial report, and as of the last day of the
year, as to annual reports. Such report is hereinafter called a “Personal Securities Holdings Report.” Each Personal Securities Holdings Report
must also disclose the name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were
held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person or as of the last day of the year, as
the case may be. Each Personal Securities Holdings Report shall state the date it is being submitted.
(B) Quarterly Transaction Reports.
Within 30 days after the end of each calendar quarter, each Access Person shall make a written report to the Chief Compliance Officer
of all transactions occurring in the quarter in a Covered Security in which he or she had any direct or indirect Beneficial Ownership. Such
report is hereinafter called a “Quarterly Securities Transaction Report.”
A Quarterly Securities Transaction Report shall be in the form approved by the Chief Compliance Officer:
(C) Independent Directors.
Notwithstanding the reporting requirements set forth in this Section V, an Independent Director who would be required to make a
report under this Section V solely by reason of being a director of the Corporation is not required to file a Personal Securities Holding Report
upon becoming a director of the Corporation or annually thereafter. Such an Independent Director also need not file a Quarterly Securities
Transaction Report unless such director knew or, in the ordinary course of fulfilling his or her official duties as a director of the Corporation,
should have known that during the 15-day period immediately preceding or after the date of the transaction in a Covered Security by the
director such Covered Security is or was purchased or sold by the Corporation or the Corporation or the Adviser considered purchasing or
selling such Covered Security.
(D) Access Persons of the Adviser.
An Access Person of the Adviser need not make a Personal Securities Holding Report or Quarterly Securities Transaction Report if the
information in such reports would duplicate information required to be recorded pursuant to the Adviser’s Code of Ethics.
(E) Brokerage Accounts and Statements.
Access Persons, except Independent Directors, shall:
(1)
instruct the brokers, dealers or banks with whom they maintain such an account to provide duplicate account statements to the
Chief Compliance Officer.
(2)
on an annual basis, certify that they have complied with the requirements of (1) above.
(F) Form of Reports.
A Quarterly Securities Transaction Report may consist of broker statements or other statements that provide a list of all personal
Covered Securities holdings and transactions in the time period covered by the report and contain the information required in a Quarterly
Securities Transaction Report.
(G) Responsibility to Report.
Access Persons will be informed of their obligations to report, however, it is the responsibility of each Access Person to take the
initiative to comply with the requirements of this Section V. Any effort by the Corporation, or by the Adviser and its affiliates, to facilitate the
reporting process does not change or alter that responsibility. A person need not make a report hereunder with respect to transactions effected
for, and Covered Securities held in, any account over which the person has no direct or indirect influence or control.
(H) Where to File Reports and Forms.
(1)
(2)
All Quarterly Securities Transaction Reports and Personal Securities Holdings Reports, as well as Private Company Securities
and IPO Request and Reporting Forms, must be filed with the Chief Compliance Officer.
The Chief Compliance Officer may, from time to time, adopt new methods to submit all Quarterly Securities Transaction
Reports and Personal Securities Holdings Reports, as well as Private Company Securities and IPO Request and Reporting
Forms. These new methods, which could include electronic submission of information equivalent to the information currently
required under this Code, will be deemed to satisfy the reporting obligations under this Code.
(I) Disclaimers.
Any report required by this Section V may contain a statement that the report will not be construed as an admission that the
person making the report has any direct or indirect Beneficial Ownership in the Covered Security to which the report relates.
Section VI Additional Prohibitions
(A) Confidentiality of the Corporation’s Transactions.
Until disclosed in a public report to stockholders or to the Securities and Exchange Commission in the normal course, all
information concerning the securities “being considered for purchase or sale” by the Corporation shall be kept confidential by all Access
Persons and disclosed by them only on a “need to know” basis. It shall be the responsibility of the Chief Compliance Officer to report any
inadequacy found in this regard to the directors of the Corporation.
(B) Insider Trading
(1)
(2)
(3)
(4)
Clearance of Transactions. The Corporation requires that all purchases and sales of Corporation securities by Access Persons
(and their respective immediate family members) be cleared by the Chief Compliance Officer or his or her designee prior to
placing any order related to such transactions. Currently, the only Corporation securities available for purchase is the common
stock traded of Golub Capital BDC, Inc. on the NASDAQ under the ticker symbol GBDC (“Shares”).
Window Period. After receiving clearance from the Chief Compliance Officer of the Corporation, Access Persons may
purchase or sell Shares only during a designated “window period.” Should the end of the “window period” fall on a weekend,
such window will be extended through close of business on the following business day. Significantly, however, even during a
“window period,” Access Persons may not engage in transactions involving Shares if he or she is in possession of material,
nonpublic information on the trade date.
Avoidance of Speculative Transactions. Certain types of transactions as well as the timing of trading may raise an inference of
the improper use of inside information. In order to avoid even the appearance of impropriety, the Corporation discourages
trades by Access Persons that are of a short-term, speculative nature rather than for investment purposes.
Limited Disclosure. Access Persons who have access to material information regarding the Corporation or its operations should
exercise the utmost caution in preserving the confidentiality of that information. If anyone becomes aware of a leak of material
information, whether inadvertent or otherwise, he or she should report such leak immediately to the Chief Compliance Officer.
Any insider who “leaks” inside information to a “tippee” may be equally liable with the tippee to third parties for any profit of
the tippee. Of course, it will be necessary from time to time, for legitimate business reasons, to disclose material information to
persons outside of the Corporation. Such persons might include commercial bankers, investment bankers or other companies
with whom the Corporation may be pursuing a joint project. In such situations, material nonpublic information should not be
conveyed until an express understanding, typically in the form of the Corporation’s standard nondisclosure agreement, or
“NDA,” has been reached that such information may not be used for trading purposes and may not be further disclosed other
than for legitimate business reasons. Please contact the Chief Compliance Officer before disclosing any material non-public
information regarding the Corporation to a third party or entering into an NDA.
Section VII Annual Certification
(A) Access Persons.
Access Persons who are directors, managers, partners, officers or employees of the Corporation or the Adviser shall be required to
certify annually that they have read this Code and/or the Adviser’s Code of Ethics, and that they understand the applicable code and recognize
that they are subject to it. Further, such Access Persons shall be required to certify annually that they have complied with the requirements of
this Code and/or the Adviser’s Code of Ethics.
(B) Board Review.
No less frequently than annually, the Corporation and the Adviser must furnish to the Corporation’s board of directors, and the board
must consider, a written report that: (A) describes any material issues arising under this Code or procedures since the last report to the board,
including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to violations;
and (B) certifies that the Corporation or the Adviser, as applicable, has adopted procedures reasonably necessary to prevent Access Persons
from violating the Code.
Section VIII Sanctions
Any violation of this Code shall be subject to the imposition of such sanctions by the 17j-1 Organization as may be deemed
appropriate under the circumstances to achieve the purposes of Rule 17j-1 and this Code. The sanctions to be imposed shall be determined by
the board of directors, including a majority of the Independent Directors, provided, however, that with respect to violations by persons who are
directors, managers, partners, officers or employees of the Adviser (or of a company that controls the Adviser), the sanctions to be imposed
shall be determined by the Adviser (or the controlling person thereof). Sanctions may include, but are not limited to, suspension or termination
of employment, a letter of censure and/or restitution of an amount equal to the difference between the price paid or received by the Corporation
and the more advantageous price paid or received by the offending person.
Section IX Administration and Construction
(A) The administration of this Code shall be the responsibility of the Chief Compliance Officer.
(B) The duties of the Chief Compliance Officer and his or her department are as follows:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
On an annual basis, providing all Access Persons a copy of this Code and informing such persons of their duties and
obligations hereunder including any supplemental training that may be required from time to time;
Maintaining or supervising the maintenance of all records and reports required by this Code;
Reviewing all Personal Securities Holdings Reports and Quarterly Securities Transaction Reports;
Preparing listings of all transactions effected by Access Persons who are subject to the requirement to file Quarterly Securities
Transaction Reports and reviewing such transactions against a listing of all transactions effected by the Corporation;
Issuance either personally or with the assistance of counsel as may be appropriate, of any interpretation of this Code that may
appear consistent with the objectives of Rule 17j-1 and this Code;
Conduct such inspections or investigations as shall reasonably be required to detect and report, with recommendations, any
apparent violations of this Code to the board of directors of the Corporation; and
Submission of a written report to the board of directors of the Corporation, no less frequently than annually, that describes any
issues arising under the Code since the last such report, including but not limited to the information described in Section VII
(B).
(C) The Chief Financial Officer shall maintain and cause to be maintained in an easily accessible place at the principal place of business of
the 17j-1 Organization, the following records and must make these records available to the Securities and Exchange Commission at any time
and from time to time for reasonable periodic, special or other examinations:
(1)
(2)
(3)
A copy of all codes of ethics adopted by the Corporation or the Adviser and its affiliates, as the case may be, pursuant to Rule
17j-1 that have been in effect at any time during the past five (5) years;
A record of each violation of such codes of ethics and of any action taken as a result of such violation for at least five (5) years
after the end of the fiscal year in which the violation occurs;
A copy of each report made by an Access Person for at least two (2) years after the end of the fiscal year in which the report is
made, and for an additional three (3) years in a place that need not be easily accessible;
(4)
(5)
(6)
(7)
A copy of each report made by the Chief Compliance Officer to the board of directors for two (2) years from the end of the
fiscal year of the Corporation in which such report is made or issued and for an additional three (3) years in a place that need
not be easily accessible;
A list of all persons who are, or within the past five (5) years have been, required to make reports pursuant to the Rule 17j-1
and this Code of Ethics, or who are or were responsible for reviewing such reports;
A copy of each report required by Section VII (B) for at least two (2) years after the end of the fiscal year in which it is made,
and for an additional three (3) years in a place that need not be easily accessible; and
A record of any decision, and the reasons supporting the decision, to approve the acquisition by Investment Personnel of
securities in an Initial Public Offering or Limited Offering for at least five (5) years after the end of the fiscal year in which the
approval is granted.
(D) This Code may not be amended or modified except in a written form that is specifically approved by majority vote of the Independent
Directors.
Adopted: November 17, 2017
SUBSIDIARIES OF GOLUB CAPITAL BDC, INC.
EXHIBIT 21.1
Name
Golub Capital BDC 2010-1 Holdings LLC
Golub Capital BDC 2010-1 LLC
Golub Capital BDC CLO 2014 LLC
Golub Capital BDC CLO III LLC
Golub Capital BDC CLO III Depositor LLC
GBDC Quick Quack Coinvest LLC
Golub Capital BDC Funding LLC
Golub Capital BDC Funding II LLC
Golub Capital BDC Holdings LLC
Golub Capital Investment Corporation CLO 2016(M) LLC
GCIC Quick Quack Coinvest LLC
GCIC CLO II LLC
GCIC CLO II Depositor LLC
GCIC Funding LLC
GCIC Funding II LLC
GCIC Holdings LLC
GC SBIC IV-GP, LLC
GC SBIC IV, L.P.
GC SBIC V-GP, LLC
GC SBIC V, L.P.
GC SBIC VI-GP, LLC
GC SBIC VI, L.P.
Mountain Open LLC
Mountain Open 2 LLC
Jurisdiction
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
CERTIFICATION PURSUANT TO SECTION 302
CHIEF EXECUTIVE OFFICER CERTIFICATION
Exhibit 31.1
I, David B. Golub, Chief Executive Officer, certify that:
1) I have reviewed this Annual Report on Form 10-K of Golub Capital BDC, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: November 25, 2019
/s/ David B. Golub
David B. Golub
Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO SECTION 302
CHIEF FINANCIAL OFFICER CERTIFICATION
Exhibit 31.2
I, Ross A. Teune, Chief Financial Officer, certify that:
1) I have reviewed this Annual Report on Form 10-K of Golub Capital BDC, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: November 25, 2019
/s/ Ross A. Teune
Ross A. Teune
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350)
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Golub Capital BDC, Inc. (the “Company”), for the annual period ended September 30, 2019, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), we, David B. Golub and Ross A. Teune, Chief Executive Officer and Chief
Financial Officer, respectively, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that to our knowledge:
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
Date: November 25, 2019
/s/ David B. Golub
David B. Golub
Chief Executive Officer
/s/ Ross A. Teune
Ross A. Teune
Chief Financial Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
EXHIBIT 32.2
In connection with the Annual Report on Form 10-K of Golub Capital BDC, Inc. and Subsidiaries (the “Registrant”) for the annual period ended
September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ross A. Teune, as Chief Financial Officer of
the Registrant hereby certify, to the best of my knowledge that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/ Ross A. Teune
Name: Ross A. Teune
Title: Chief Financial Officer
Date: November 25, 2019
GOLUB CAPITAL BDC, INC.
PRIVACY POLICY
Exhibit 99.1
To Golub Capital BDC, Inc. Investors:
We take precautions to maintain the privacy of personal information concerning our investors. These precautions include the adoption of certain
procedures designed to maintain and secure your nonpublic personal information from inappropriate disclosure to unaffiliated third parties. We are sending
this notice in accordance with applicable federal regulations. This notice applies to investors in Golub Capital BDC, Inc. (the “Company”).
What kind of personal information do we have about you and where did we get it?
We collect nonpublic personal information about you from the following sources:
•
•
Information we may receive from you in subscription agreements or other related documents or forms; and
Information about your transactions with our affiliates and us.
How do we protect your personal information?
We do not disclose any nonpublic personal information about our investors or former investors to anyone, except as permitted by law.
We restrict access to nonpublic personal information about you to those employees and agents of GC Advisors LLC, its affiliates and unaffiliated
third party service providers (which may include a custodian, transfer agent or financial printer) who need to know that information in order to provide
services to you or to the Company. In that regard, we note that we maintain physical, electronic, and procedural safeguards that comply with federal standards
to safeguard your nonpublic personal information and which we believe is adequate to prevent unauthorized disclosure of such information.
What do we do with personal information about our former investors?
If an investor decides to no longer do business with us, we will continue to follow this privacy policy with respect to the information we have in our
possession about such investor and his/her account.
If you have any questions concerning our privacy policies, please contact our Chief Financial Officer, Ross Teune, at (312) 284-0111.