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What changed in Investcorp Credit Management BDC, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Investcorp Credit Management BDC, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+260 added−272 removedSource: 10-K (2024-09-25) vs 10-K (2023-09-21)

Top changes in Investcorp Credit Management BDC, Inc.'s 2024 10-K

260 paragraphs added · 272 removed · 219 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

47 edited+5 added−5 removed293 unchanged
Biggest changeThere can be no assurance that the weighted average total yield will remain at its current level. 2 The industry composition of our portfolio at fair value at June 30, 2023 was as follows: Percentage of Total Portfolio at June 30, 2023 Trading Companies & Distributors 15.98 % Professional Services 12.83 IT Services 10.71 Commercial Services & Supplies 6.51 Software 6.26 Containers & Packaging 5.89 Machinery 4.36 Internet & Direct Marketing Retail 4.08 Entertainment 3.47 Household Durables 3.46 Chemicals 3.44 Diversified Consumer Services 3.30 Automobile Components 3.30 Hotels, Restaurants and Leisure 2.85 Consumer Staples Distribution & Retail 2.75 Specialty Retail 2.34 Building Products 2.05 Food Products 1.95 Automotive Retail 1.76 Electronic Equipment, Instruments & Components 1.48 Energy Equipment & Services 1.23 100.00 % The Adviser and Administrator – CM Investment Partners LLC CM Investment Partners, our external investment adviser, was formed in July 2013 and is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Biggest changeThere can be no assurance that the weighted average total yield will remain at its current level. 2 The industry composition of our portfolio at fair value at June 30, 2024 was as follows: Percentage of Total Portfolio at June 30, 2024 Commercial Services & Supplies 13.50 % Professional Services 11.22 Trading Companies & Distributors 9.11 Containers & Packaging 7.34 Food Products 4.79 Entertainment 4.77 IT Services 4.70 Household Durables 4.13 Insurance 4.01 Chemicals 3.90 Diversified Consumer Services 3.90 Specialty Retail 3.61 Automotive Retail 3.08 Health Care Providers & Services 2.93 Consumer Staples Distribution & Retail 2.89 Software 2.73 Consumer Services 2.67 Paper Packaging 2.66 Construction & Engineering 1.99 Human Resources & Employment Services 1.62 Hotels, Restaurants, and Leisure 1.60 Electronic Equipment, Instruments & Components 1.43 Automobile Components 1.42 100.00 % The Adviser and Administrator – CM Investment Partners LLC CM Investment Partners, our external investment adviser, was formed in July 2013 and is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Mauer also serves as the Chairman of our board of directors and our Chief Executive Officer, and Mr. Shaikh also serves as our President and a member of our board of directors. Mr.
Mauer also serves as the Chairman of our board of directors, and Mr. Shaikh also serves as our Chief Executive Officer, President and a member of our board of directors. Mr.
(1) Represents 8.0% annualized hurdle rate. (2) Represents 1.75% annualized base management fee. (3) Excludes organizational and offering expenses.
(1) Represents 8.0% annualized hurdle rate. (2) Represents 1.75% annualized base management fee. (3) Excludes organizational and offering expenses.
The Adviser seeks investments in portfolio companies where it believes that the aggregate enterprise value significantly exceeds aggregate indebtedness, after consideration of our investment. The Adviser believes that the existence of significant underlying equity value (i.e., the amount by which the aggregate enterprise value exceeds the aggregate indebtedness) provides important support to our debt investments. • Investment Partnerships .
The Adviser seeks investments in portfolio companies where it believes that the aggregate enterprise value significantly exceeds aggregate indebtedness, after consideration of our investment. The Adviser believes that the existence of significant underlying equity value (i.e., the amount by which the aggregate enterprise value exceeds the aggregate indebtedness) provides important support to our debt investments. 6 • Investment Partnerships .
The Adviser 6 believes that private equity sponsors and specialty lenders can serve as committed partners and advisors that will actively work with the Adviser, the company and its management team to meet company goals and create value. • Ability to exert meaningful influence.
The Adviser believes that private equity sponsors and specialty lenders can serve as committed partners and advisors that will actively work with the Adviser, the company and its management team to meet company goals and create value. • Ability to exert meaningful influence.
We 5 believe that the Adviser’s investment and monitoring process and the depth and experience of the Investment Team gives us a competitive advantage in identifying investments and evaluating risks and opportunities throughout the life cycle of an investment. • Ability to Structure Investments Creatively.
We believe that the Adviser’s investment and monitoring process and the depth and experience of the Investment Team gives us a competitive advantage in identifying investments and evaluating risks and opportunities throughout the life cycle of an investment. • Ability to Structure Investments Creatively.
Under U.S. generally accepted accounting principles, we calculate the Capital Gains Fee as if we had realized all assets at their fair values as of the reporting date. Accordingly, we accrue a provisional Capital Gains Fee taking into account any unrealized gains or losses. As of June 30, 2023 and June 30, 2022 there were no Capital Gains Fees.
Under U.S. generally accepted accounting principles, we calculate the Capital Gains Fee as if we had realized all assets at their fair values as of the reporting date. Accordingly, we accrue a provisional Capital Gains Fee taking into account any unrealized gains or losses. As of June 30, 2024 and June 30, 2023 there were no Capital Gains Fees.
Competitive Strengths We believe that the Adviser’s disciplined approach to origination, portfolio construction and risk management should allow us to achieve favorable risk-adjusted returns while preserving our capital. We believe that the following competitive strengths provide positive returns for our investors: • Experienced Team with Substantial Resources. The Adviser and its Investment Team is led by Messrs.
Competitive Strengths We believe that the Adviser’s disciplined approach to origination, portfolio construction and risk management should allow us to achieve favorable risk-adjusted returns while preserving our capital. We believe that the following competitive strengths provide positive returns for our investors: • Experienced Team with Substantial Resources. The Adviser and its Investment Team is led by Mr.
The “Lookback Period” means (1) through June 30, 2023, the period that commences on the last day of the fiscal quarter in which the Commencement Date occurs and ends on the last day of the fiscal quarter immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated, and (2) after June 30, 2023, the eleven fiscal quarters immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated.
The “Lookback Period” means (1) through June 30, 2024, the period that commences on the last day of the fiscal quarter in which the Commencement Date occurs and ends on the last day of the fiscal quarter immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated, and (2) after June 30, 2024, the eleven fiscal quarters immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated.
If too many stockholders elect to receive cash, each stockholder electing to receive cash must receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20% (or 10%, if applicable) of his or her entire distribution in cash.
If too many stockholders elect to receive cash, each stockholder electing to receive cash must receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20% of his or her entire distribution in cash.
Mauer and Shaikh, the Investment Team’s senior investment professionals monitor the portfolio for developments on a daily basis, perform credit updates on each investment, review financial performance on at least a quarterly basis, and have regular discussions with the management of portfolio companies.
Shaikh, the 5 Investment Team’s senior investment professionals monitor the portfolio for developments on a daily basis, perform credit updates on each investment, review financial performance on at least a quarterly basis, and have regular discussions with the management of portfolio companies.
On November 19, 2021, the Company repaid the Term Financing in full in accordance with the terms of the Term Financing and the agreement was terminated. As of June 30, 2023 and June 30, 2022, there were no borrowings outstanding under the Term Financing, respectively.
On November 19, 2021, the Company repaid the Term Financing in full in accordance with the terms of the Term Financing and the agreement was terminated. As of June 30, 2024 and June 30, 2023, there were no borrowings outstanding under the Term Financing, respectively.
We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the “Excise Tax Avoidance Requirement”).
We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years for which we paid no U.S. federal income taxes (the “Excise Tax Avoidance Requirement”).
Mauer and Shaikh have developed an 3 investment process for reviewing lending opportunities, structuring transactions and monitoring investments throughout multiple credit cycles. The members of the Investment Team have extensive networks for sourcing investment opportunities through direct corporate relationships and relationships with private equity firms, investment banks, restructuring advisors, law firms, boutique advisory firms and distressed/specialty lenders.
Shaikh has developed an investment process for reviewing lending opportunities, structuring transactions and monitoring investments throughout multiple credit cycles. The members of the Investment Team have extensive networks for sourcing investment opportunities through direct corporate relationships and relationships with private equity firms, investment banks, restructuring advisors, law firms, boutique advisory firms and distressed/specialty lenders.
On November 19, 2021, we satisfied all obligations under the Revolving Financing and the agreement was terminated. 1 As of June 30, 2023 and June 30, 2022, there were no borrowings outstanding under the Revolving Financing.
On November 19, 2021, we satisfied all obligations under the Revolving Financing and the agreement was terminated. 1 As of June 30, 2024 and June 30, 2023, there were no borrowings outstanding under the Revolving Financing.
We believe the members of the Investment Team share a common investment philosophy built on a framework of rigorous business assessment, extensive due diligence and disciplined risk valuation methodology. Every initial investment by us requires the approval by a majority of the Adviser’s investment committee (the “Investment Committee”) and such majority must include both Messrs. Mauer and Shaikh.
We believe the members of the Investment Team share a common investment philosophy built on a framework of rigorous business assessment, extensive due diligence and disciplined risk valuation methodology. Every initial investment by us requires the approval by a majority of the Adviser’s investment committee (the “Investment Committee”) and such majority must include Mr. Shaikh.
We also have adopted Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements and Disclosures , or “ASC 820.” This accounting statement requires us to assume that the portfolio investment is assumed to be sold in the principal market to market participants, or in the absence of a principal market, the most advantageous market, which may be a hypothetical market.
We also have adopted Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements and Disclosures , or “ASC 820.” This accounting standard requires that the portfolio investment is assumed to be sold in the principal market to market participants, or in the absence of a principal market, the most advantageous market, which may be a hypothetical market.
We focus on capital preservation by extending loans to portfolio companies with assets that we believe will retain sufficient value to repay us even in depressed markets or under liquidation scenarios. Each investment is analyzed from its initial stages by either Mr. Mauer or Mr. Shaikh, as the Adviser’s Co-Chief Investment Officers, and a senior member of the Investment Team.
We focus on capital preservation by extending loans to portfolio companies with assets that we believe will retain sufficient value to repay us even in depressed markets or under liquidation scenarios. Each investment is analyzed from its initial stages by Mr. Shaikh, as the Adviser’s Chief Investment Officer, and a senior member of the Investment Team.
The origination process is designed to thoroughly evaluate potential financings and to identify the most attractive of these opportunities on the basis of risk-adjusted returns. Each investment is analyzed from its initial stages through our investment by one of the Co-Chief Investment Officers of the Adviser and an additional investment professional.
The origination process is designed to thoroughly evaluate potential financings and to identify the most attractive of these opportunities on the basis of risk-adjusted returns. Each investment is analyzed from its initial stages through our investment by the Chief Investment Officer of the Adviser and an additional investment professional.
The weighted average total yield was computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, the spot London Interbank Offered Rate (“LIBOR”), SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate as of June 30, 2023 of all of our debt investments.
The weighted average total yield was computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate as of June 30, 2024 of all of our debt investments.
Every initial investment by the Company requires approval by a majority of the Investment Committee and such majority must include both Messrs. Mauer and Shaikh. Follow-on investment decisions in existing portfolio companies and any investment dispositions require approval by a majority of the Investment Committee. Under the supervision of Messrs.
Every initial investment by the Company requires approval by a majority of the Investment Committee and such majority must include Mr. Shaikh. Follow-on investment decisions in existing portfolio companies and any investment dispositions require approval by a majority of the Investment Committee. Under the supervision of Mr.
Prior to funding, every initial investment requires the approval of a majority of the Investment Committee and such majority must include both Messrs. Mauer and Shaikh. Follow-on investment decisions in existing portfolio companies and investment dispositions require the approval of a majority of the Investment Committee.
Prior to funding, every initial investment requires the approval of a majority of the Investment Committee and such majority must include Mr. Shaikh. Follow-on investment decisions in existing portfolio companies and investment dispositions require the approval of a majority of the Investment Committee.
As of June 30, 2023, Investcorp Group had $48.0 billion in total assets under management, including assets managed by third party managers and assets subject to a non-discretionary advisory mandate where Investcorp Group receives fees calculated on the basis of assets under management.
As of June 30, 2024, Investcorp Group had $52.8 billion in total assets under management, including assets managed by third party managers and assets subject to a non-discretionary advisory mandate where Investcorp Group receives fees calculated on the basis of assets under management.
Investcorp Group employs approximately 500 people across its offices in New York, London, Switzerland, Bahrain, Abu Dhabi, Riyadh, Doha, Mumbai, Beijing, Singapore and Tokyo. Investcorp Group has been engaged in the investment management and related services business since 1982, and brings enhanced capabilities to the Adviser. The Adviser’s investment team, led by Messrs.
Investcorp Group employs approximately 500 people across its offices in Los Angeles, New York, London, Bahrain, Abu Dhabi, Riyadh, Doha, Mumbai, Delhi, Beijing, Singapore, Luxembourg and Tokyo. Investcorp Group has been engaged in the investment management and related services business since 1982, and brings enhanced capabilities to the Adviser. 3 The Adviser’s investment team, led by Mr.
We believe that, as a result of that downturn: • many financing providers have chosen to focus on large, liquid corporate loans and syndicated capital markets transactions rather than lending to middle-market businesses; • regulatory changes have caused decreased capacity to hold non-investment grade leveraged loans, causing banks to curtail lending to middle-market companies; • hedge funds and collateralized loan obligation managers are less likely to pursue investment opportunities in our target market as a result of reduced availability of funding for new investments; and • consolidation of regional banks into money center banks has reduced their focus on middle-market lending. 4 As a result, we believe that less competition facilitates higher quality deal flow and allows for greater selectivity throughout the investment process. • Robust Demand for Debt Capital.
We believe that, as a result of that downturn: • many financing providers have chosen to focus on large, liquid corporate loans and syndicated capital markets transactions rather than lending to middle-market businesses; • regulatory changes have caused decreased capacity to hold non-investment grade leveraged loans, causing banks to curtail lending to middle-market companies; 4 • hedge funds and collateralized loan obligation managers are less likely to pursue investment opportunities in our target market as a result of reduced availability of funding for new investments; and • consolidation of regional banks into money center banks has reduced their focus on middle-market lending.
Distributions would not be required, and any distributions would be taxable to our stockholders as ordinary dividend income that, subject to certain limitations, may be eligible for the 20% maximum rate to the extent of our current and accumulated earnings and profits provided certain holding period and other requirements were met.
Distributions would not be required, and any distributions would be taxable to our stockholders as ordinary dividend income to the extent of our current and accumulated earnings and profits that may be eligible for the 20% maximum rate when received by non-corporate distributees provided certain holding period and other requirements were met.
Mauer and Shaikh, each with over 40 years of experience investing in, providing corporate finance services to, restructuring and consulting with middle-market companies. Messrs. Mauer and Shaikh are supported by eight additional investment professionals, who collectively with Messrs.
Shaikh, who has over 40 years of experience investing in, providing corporate finance services to, restructuring and consulting with middle-market companies. Mr. Shaikh is supported by eight additional investment professionals, who collectively with Mr.
If we invest in securities issued by investment companies, if any, it should be noted that such investments might subject our stockholders to additional expenses as they will be indirectly responsible for the costs and expenses of such companies.
In addition, we are permitted to invest in money market funds in excess of these limits. If we invest in securities issued by investment companies, if any, it should be noted that such investments might subject our stockholders to additional expenses as they will be indirectly responsible for the costs and expenses of such companies.
Mauer and Shaikh, we refer to as the “Investment Team.” The members of the Investment Team have over 100 combined years of structuring customized debt solutions for middle-market companies, which we believe will enable us to generate favorable returns across credit cycles with an emphasis on preserving capital. Messrs.
Shaikh, is supported by eight additional investment professionals, who, together with Mr. Shaikh, we refer to as the “Investment Team.” The members of the Investment Team have over 100 combined years of structuring customized debt solutions for middle-market companies, which we believe will enable us to generate favorable returns across credit cycles with an emphasis on preserving capital. Mr.
As of June 30, 2023 and June 30, 2022, there were $71.9 million and $84.0 million in borrowings outstanding under the Capital One Revolving Financing, respectively. Portfolio Composition As of June 30, 2023, our portfolio consisted of debt and equity investments in 36 portfolio companies with a fair value of $220.1 million.
As of June 30, 2024 and June 30, 2023, there were $43.0 million and $71.9 million in borrowings outstanding under the Capital One Revolving Financing, respectively. Portfolio Composition As of June 30, 2024, our portfolio consisted of debt and equity investments in 41 portfolio companies with a fair value of $184.6 million.
Our officers are all employees of the Adviser and our allocable portion of the cost of Rocco DelGuercio, as our Chief Financial Officer and Chief Compliance Officer, and his staff, is paid by us pursuant to the Administration Agreement with the Adviser.
Our officers are all employees of the Adviser and our allocable portion of the cost of Walter Tsin, as our Chief Financial Officer, Paolo Cloma, our Chief Compliance Officer, and their staff, is paid by us pursuant to the Administration Agreement with the Adviser.
Board Approval of the Advisory Agreement On August 29, 2023, our board of directors, including all of the Independent Directors, held a meeting to consider and approve the continuation of the Advisory Agreement.
Board Approval of the Advisory Agreement On July 23, 2024, our board of directors, including all of the Independent Directors, held a meeting to consider and approve the continuation of the Advisory Agreement.
The Adviser is responsible for sourcing investment opportunities, conducting industry research, performing diligence on potential investments, structuring our investments and monitoring our portfolio companies on an ongoing basis. The Adviser is led by its Co-Chief Investment Officers, Michael C. Mauer and Suhail A. Shaikh. Mr.
The Adviser is responsible for sourcing investment opportunities, conducting industry research, performing diligence on potential investments, structuring our investments and monitoring our portfolio companies on an ongoing basis. The Adviser is led by Mr. Shaikh, the Chief Investment Officer of the Adviser, and Mr. Mauer as a member of the Adviser’s Investment Committee . Mr.
As of June 30, 2023, our portfolio at fair value consisted of 89.21% first lien investments and 10.79% equity, warrant or other positions. At June 30, 2023, the weighted average total yield of debt and income producing securities at amortized cost (which includes income and amortization of fees and discounts) was 12.46%.
As of June 30, 2024, our portfolio at fair value consisted of 85.02% first lien investments and 14.98% equity, warrant or other positions. At June 30, 2024, our weighted average total yield of debt and income producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 12.47%.
Investcorp Holdings and its consolidated subsidiaries, including Investcorp, are referred to as “Investcorp Group”. Investcorp Group is a global provider and manager of alternative investments, offering such investments to its high-net-worth private and institutional clients on a global basis.
Investcorp Group is a global provider and manager of alternative investments, offering such investments to its high-net-worth private and institutional clients on a global basis.
As of June 30, 2023, the Company’s portfolio at fair value consisted of 89.21% first lien investments and 10.79% equity, warrant or other positions. • Costs of Services Provided and Economies of Scale.
As of June 30, 2024, the Company’s portfolio at fair value consisted of 85.02% first lien investments and 14.98% equity, warrant or other positions. • Costs of Services Provided and Economies of Scale.
The Adviser is led by Michael C. Mauer and Suhail A. Shaikh, who together have over 40 years of experience in the leveraged debt markets. Our primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing in debt and related equity of privately held middle-market companies.
The Adviser is led by Suhail A. Shaikh, the Chief Investment Officer of the Adviser, and Michael C. Mauer as a member of the Adviser’s Investment Committee. Our primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing in debt and related equity of privately held middle-market companies.
At June 30, 2023, our weighted average total yield on investments at amortized cost (which includes interest income and amortization of fees and discounts) was 11.32%.
At June 30, 2024, our weighted average total yield on the total portfolio at amortized cost (which includes interest income and amortization of fees and discounts) was 10.60%.
The following table shows the investment rankings of the debt investments in our portfolio: As of June 30, 2023 As of June 30, 2022 Investment Rating Fair Value % of Portfolio Number of Investments Fair Value % of Portfolio Number of Investments 1 $ 16,538,345 7.5 % 3 $ 35,059,097 15.0 % 5 2 114,979,324 52.2 32 172,732,804 73.9 44 3 62,588,392 28.4 19 23,364,583 10.0 4 4 13,067,850 6.0 5 — — — 5 12,937,418 5.9 6 2,527,502 1.1 7 Total $ 220,111,329 100.0 % 65 $ 233,683,986 100.0 % 60 Determination of Net Asset Value and Portfolio Valuation Process The net asset value per share of our outstanding shares of common stock is determined quarterly by dividing total assets minus liabilities by the total number of shares outstanding.
The following table shows the investment rankings of the debt investments in our portfolio: As of June 30, 2024 As of June 30, 2023 Investment Rating Fair Value % of Portfolio Number of Investments Fair Value % of Portfolio Number of Investments 1 $ 18,475,458 10.0 % 3 $ 16,538,345 7.5 % 3 2 116,964,511 63.4 35 114,979,324 52.2 32 3 34,035,340 18.4 13 62,588,392 28.4 19 4 2,621,154 1.4 2 13,067,850 6 5 5 12,473,067 6.8 7 12,937,418 5.9 6 Total $ 184,569,530 100.0 % 60 $ 220,111,329 100.0 % 65 Determination of Net Asset Value and Portfolio Valuation Process The net asset value per share of our outstanding shares of common stock is determined quarterly by dividing total assets minus liabilities by the total number of shares outstanding.
Every follow-on investment decision in an existing portfolio company and every investment disposition require approval by a majority of the Investment Committee. The Investment Committee currently consists of Messrs.
Every follow-on investment decision in an existing portfolio company and every investment disposition require approval by a majority of the Investment Committee. The Investment Committee currently consists of Messrs. Mauer and Shaikh and Andrew Muns, an Investment Partner of Investcorp, Branko Krmpotic, a Managing Director of Investcorp and Timothy Waller, a Director of Investcorp.
Prior to January 19, 2021, except for registered money market funds, we generally were prohibited from acquiring more than 3% of the voting stock of any registered investment company, investing more than 5% of the value of our total assets in the securities of one investment company, or investing more than 10% of the value of our total assets in the securities of more than one investment company without obtaining exemptive relief from the SEC.
We generally are prohibited from acquiring more than 3% of the voting stock of any registered investment company or business development company, investing more than 5% of the value of our total assets in the securities of one registered investment company or business development company, or investing more than 10% of the value of our total assets in the securities of more than one registered investment company or business development company without obtaining exemptive relief from the SEC; however, we are allowed to acquire the securities of other registered investment companies and business development companies in excess of the 3%, 5%, and 10% limitations without obtaining exemptive relief if we comply with certain conditions.
On June 14, 2023, we amended the Capital One Revolving Financing to decrease the facility size from $115 million to $100 million. The Capital One Revolving Financing, which will expire on August 22, 2026 (the “Maturity Date”), features a three-year reinvestment period and a two-year amortization period.
On June 14, 2023, we amended the Capital One Revolving Financing to decrease the facility size from $115 million to $100 million.
According to Pitchbook, a market research firm, private equity firms had approximately $853.8 billion of uncalled capital as of December 31, 2022. They have expanded their focus to include middle-market opportunities due to the lack of opportunities in large capital buyout transactions.
They have expanded their focus to include middle-market opportunities due to the lack of opportunities in large capital buyout transactions.
Shaikh has served as President of Investcorp Credit Management BDC, Inc. since 2023 and as Co-Chief Investment Officer of CM Investment Partners since 2023. On August 30, 2019, Investcorp Credit Management US LLC (“Investcorp”) acquired an approximate 76% ownership interest in the Adviser through the acquisition of the interests held by Stifel Venture Corp.
On August 30, 2019, Investcorp Credit Management US LLC (“Investcorp”) acquired an approximate 76% ownership interest in the Adviser through the acquisition of the interests held by Stifel Venture Corp. (“Stifel”) and certain funds managed Cyrus Capital Partners, L.P. (the “Cyrus Funds”) and through a direct purchase of equity from the Adviser (the “Investcorp Transaction”).
Investcorp manages funds that invest primarily in senior secured corporate debt issued by mid and large-cap corporations in Western Europe and the United States. The Investcorp business has a strong track record of consistent performance and growth, employing approximately 36 investment professionals in London and New York. Investcorp is a subsidiary of Investcorp Holdings B.S.C. (“Investcorp Holdings”).
The Investcorp business has a strong track record of consistent performance and growth, employing approximately 50 investment professionals in London and New York. Investcorp is a subsidiary of Investcorp Holdings B.S.C. (“Investcorp Holdings”). Investcorp Holdings and its consolidated subsidiaries, including Investcorp, are referred to as “Investcorp Group”.
Mauer and Shaikh, have over 100 combined years of structuring strategic capital for business expansion, refinancings, capital restructuring , post-reorganization financing and servicing the general corporate needs of middle-market companies.
Shaikh, have over 100 combined years of structuring strategic capital for business expansion, refinancings, capital restructuring , post-reorganization financing and servicing the general corporate needs of middle-market companies. The Adviser also benefits from its alignment with Investcorp, its parent company, which is the leading global credit investment platform with assets under management of $21.5 billion as of June 30, 2024.
Effective November 18, 2022, borrowings under the Capital One Revolving Financing generally bear interest at a rate per annum equal to Secured Overnight Financing Rate ("SOFR") plus 2.50%. The default interest rate will be equal to the interest rate then in effect plus 2.00%.
The Capital One Revolving Financing, which will expire on January 17, 2029 (the “Maturity Date”), features a three-year reinvestment period and a two-year amortization period. Effective January 17, 2024, borrowings under the Capital One Revolving Financing generally bear interest at a rate per annum equal to Secured Overnight Financing Rate ("SOFR") plus 3.10%.
Removed
(“Stifel”) and certain funds managed Cyrus Capital Partners, L.P. (the “Cyrus Funds”) and through a direct purchase of equity from the Adviser (the “Investcorp Transaction”). Investcorp is a leading global credit investment platform with assets under management of $22.7 billion as of June 30, 2023.
Added
On January 17, 2024, we amended the Capital One Revolving Financing to (i) extend the maturity date to January 17, 2029, (ii) increase the applicable interest spreads under the Capital One Revolving Financing and (iii) extend the Scheduled Revolving Period End Date (as defined in the Capital One Revolving Financing) to January 17, 2027.
Removed
Mauer and Shaikh, is supported by eight additional investment professionals, who, together with Messrs.
Added
The default interest rate will be equal to the interest rate then in effect plus 2.00%.
Removed
Mauer and Shaikh, the Co-Chief Investment Officers of the Adviser, and Andrew Muns, a Director of Investcorp, Zachary Alpern, a Director of Investcorp, Branko Krmpotic, a Managing Director of Investcorp and Timothy Waller, a Director of Investcorp.
Added
Shaikh has served as President of Investcorp Credit Management BDC, Inc. since 2023 and as Co-Chief Investment Officer of CM Investment Partners since 2023. In May 2024, Mr. Shaikh was appointed as our Chief Executive Officer and sole Chief Investment Officer of the CM Investment Partners.
Removed
The Adviser also benefits from its alignment with Investcorp, its parent company, which is the leading global credit investment platform with assets under management of $22.7 billion as of June 30, 2023.
Added
Investcorp is a leading global credit investment platform with assets under management of $21.5 billion as of June 30, 2024. Investcorp manages funds that invest primarily in senior secured corporate debt issued by mid and large-cap corporations in Western Europe and the United States.
Removed
However, the SEC adopted new rules, which became effective on January 19, 2021, that allow us to acquire the securities of other investment companies in excess of the 3%, 5%, and 10% limitations without obtaining exemptive relief if we comply with certain conditions.
Added
As a result, we believe that less competition facilitates higher quality deal flow and allows for greater selectivity throughout the investment process. • Robust Demand for Debt Capital. According to Pitchbook, a market research firm, private equity firms had approximately $965.0 billion of uncalled capital as of March 31, 2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage .” • pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the 2026 Notes, including subordinated indebtedness, in each case other than dividends, purchases, redemptions or payments that would cause a violation of Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions, giving effect to any no-action relief granted by the SEC to another BDC and upon which we may reasonably rely (or to us if we determine to seek such similar SEC no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act in order to maintain the BDC’s status as a RIC under Subchapter M of the Code; • sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets); • enter into transactions with affiliates • create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions; • make investments; or • create restrictions on the payment of dividends or other amounts to us from our subsidiaries. 46 Furthermore, the terms of the Indenture and the 2026 Notes do not protect holders of the 2026 Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow or liquidity.
Biggest changeAs a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage .” • pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the 2026 Notes, including subordinated indebtedness, in each case other than dividends, purchases, redemptions or payments that would cause a violation of Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions, giving effect to any no-action relief granted by the SEC to another BDC and upon which we may reasonably rely (or to us if we determine to seek such similar SEC no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act in order to maintain the BDC’s status as a RIC under Subchapter M of the Code; • sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets); • enter into transactions with affiliates • create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions; • make investments; or • create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
Uncertainty can result in or coincide with, among other things: increased volatility in the financial markets for securities, derivatives, loans, credit and currency; a decrease in the reliability of market prices and difficulty in valuing assets (including portfolio company assets); greater fluctuations in spreads on debt investments and currency exchange rates; increased risk of default (by both government and private obligors and issuers); further social, economic, and political instability; nationalization of private enterprise; greater governmental involvement in the economy or in social factors that impact the economy; changes to governmental regulation and supervision of the loan, securities, derivatives and currency markets and market participants and decreased or revised monitoring of such markets by governments or self-regulatory organizations and reduced enforcement of regulations; limitations on the activities of investors in such markets; controls or restrictions on foreign investment, capital controls and limitations on repatriation of invested capital; the significant loss of liquidity and the inability to purchase, sell and otherwise fund investments or settle transactions (including, but not limited to, a market freeze); unavailability of currency hedging techniques; substantial, and in some periods 49 extremely high, rates of inflation, which can last many years and have substantial negative effects on credit and securities markets as well as the economy as a whole; recessions; and difficulties in obtaining and/or enforcing legal judgments.
Uncertainty can result in or coincide with, among other things: increased volatility in the financial markets for securities, derivatives, loans, credit and currency; a decrease in the reliability of market prices and difficulty in valuing assets (including portfolio company assets); greater fluctuations in spreads on debt investments and currency exchange rates; increased risk of default (by both government and private obligors and issuers); further social, economic, and political instability; nationalization of private enterprise; greater governmental involvement in the economy or in social factors that impact the economy; changes to governmental regulation and supervision of the loan, securities, derivatives and currency markets and market participants and decreased or revised monitoring of such markets by governments or self-regulatory organizations and reduced enforcement of regulations; limitations on the activities of investors in such markets; controls or restrictions on foreign investment, capital controls and limitations on repatriation of invested capital; the significant loss of liquidity and the inability to purchase, sell and otherwise fund investments or settle transactions (including, but not limited to, a market freeze); unavailability of currency hedging techniques; substantial, and in some periods extremely high, rates of inflation, which can last many years and have substantial negative effects on credit and securities markets as well as the economy as a whole; recessions; and difficulties in obtaining and/or enforcing legal judgments.
These factors include: • price and volume fluctuations in the overall stock market from time to time; • investor demand for our shares; • significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which is not necessarily related to the operating performance of these companies; • changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs; • loss of our qualification as a RIC or BDC; • changes in earnings or variations in operating results; • changes in the value of our portfolio of investments; • increases in the interest rates we pay; • changes in accounting guidelines governing valuation of our investments; 44 • any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts; • departure of the Adviser’s key personnel; • change in the Adviser’s relationship with Investcorp under the Investcorp Services Agreement; • operating performance of companies comparable to us; and • general economic trends and other external factors.
These factors include: • price and volume fluctuations in the overall stock market from time to time; • investor demand for our shares; • significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which is not necessarily related to the operating performance of these companies; • changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs; • loss of our qualification as a RIC or BDC; • changes in earnings or variations in operating results; • changes in the value of our portfolio of investments; • increases in the interest rates we pay; • 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 the Adviser’s key personnel; • change in the Adviser’s relationship with Investcorp under the Investcorp Services Agreement; • operating performance of companies comparable to us; and • general economic trends and other external factors.
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: • 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 37 • principal market and enterprise values.
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: • 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 • principal market and enterprise values.
We have entered into a license agreement with the Adviser under which the Adviser has agreed to grant us a non-exclusive, royalty-free license to use the name “Investcorp.” See “Business — Management Agreements — License Agreement.” In addition, we have entered into the Administration Agreement with the Adviser pursuant to which we are required to pay to the Adviser our 36 allocable portion of overhead and other expenses incurred by the Adviser in performing its obligations under such Administration Agreement, such as rent, equipment and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and his respective staff’s compensation and compensation-related expenses.
We have entered into a license agreement with the Adviser under which the Adviser has agreed to grant us a non-exclusive, royalty-free license to use the name “Investcorp.” See “Business — Management Agreements — License Agreement.” In addition, we have entered into the Administration Agreement with the Adviser pursuant to which we are required to pay to the Adviser our allocable portion of overhead and other expenses incurred by the Adviser in performing its obligations under such Administration Agreement, such as rent, equipment and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and his respective staff’s compensation and compensation-related expenses.
If we decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include the full amount of the 43 dividend (whether received in cash, our stock, or combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly designated as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes.
If we decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly designated as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes.
Financial Conduct Authority (“FCA”), which regulates the publisher of LIBOR (ICE Benchmark Administration) has announced that it will require the continued publication of the one-, three- and six-month tenors of U.S.-dollar LIBOR on a non-representative synthetic basis until the end of September 2024, which may result in certain non-U.S. law-governed contracts and U.S. law-governed contracts not covered by the 42 federal legislation remaining on synthetic U.S.-dollar LIBOR until the end of this period.
Financial Conduct Authority (“FCA”), which regulates the publisher of LIBOR (ICE Benchmark Administration) has announced that it will require the continued publication of the one-, three- and six-month tenors of U.S.-dollar LIBOR on a non-representative synthetic basis until the end of September 2024, which may result in certain non-U.S. law-governed contracts and U.S. law-governed contracts not covered by the federal legislation remaining on synthetic U.S.-dollar LIBOR until the end of this period.
In the event that all of our assets are secured at the time of such a borrowing base deficiency, we could be required to repay advances under the Capital One Revolving Financing or any other borrowing facility or make deposits to a collection account, either of which could have a material adverse impact on our ability to fund future investments and to make stockholder distributions.
In the event that all of our assets are secured at the time of such a borrowing base deficiency, we could be required to repay advances under the Capital One Revolving Financing or any other 30 borrowing facility or make deposits to a collection account, either of which could have a material adverse impact on our ability to fund future investments and to make stockholder distributions.
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us, our Adviser, or our portfolio companies to acquire financing on acceptable terms or at all.
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access 54 to credit and liquidity sources, thereby making it more difficult for us, our Adviser, or our portfolio companies to acquire financing on acceptable terms or at all.
Absent further quantitative easing by the Federal Reserve, these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In addition, disagreement over the federal budget has caused the U.S. federal government 50 to shut down for periods of time.
Absent further quantitative easing by the Federal Reserve, these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In addition, disagreement over the federal budget has caused the U.S. federal government to shut down for periods of time.
An inability to extend the maturity of, or refinance, our existing indebtedness or obtain new indebtedness could have a material adverse effect on our business, financial condition or results of operations. 51 General Risks We are subject to risks related to corporate social responsibility. Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities.
An inability to extend the maturity of, or refinance, our existing indebtedness or obtain new indebtedness could have a material adverse effect on our business, financial condition or results of operations. General Risks We are subject to risks related to corporate social responsibility. Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Recent legislation has made many changes to the Code, including significant changes to the taxation of business entities, the deductibility of interest expense, and the tax treatment of capital investment.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. 48 Recent legislation has made many changes to the Code, including significant changes to the taxation of business entities, the deductibility of interest expense, and the tax treatment of capital investment.
Furthermore, we cannot assure you that market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy, and we cannot assure you that assistance packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial crisis.
Furthermore, we cannot assure you that market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy, and we cannot assure you that 50 assistance packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial crisis.
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 we are inhibited by compliance with BDC requirements of the 1940 Act or the desire to maintain our qualification as a RIC.
Even if we have 40 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 we are inhibited by compliance with BDC requirements of the 1940 Act or the desire to maintain our qualification as a RIC.
Any of these events could disrupt our recognition in the market place, damage any goodwill we may have generated and otherwise harm our business. Risks Relating to our Investments Economic recessions or downturns could adversely affect our portfolio companies, leading to defaults on our investments, which would harm our operating results.
Any of these events could disrupt our recognition in the market place, damage any goodwill we may have generated and otherwise harm our business. 36 Risks Relating to our Investments Economic recessions or downturns could adversely affect our portfolio companies, leading to defaults on our investments, which would harm our operating results.
To the extent that we assume large positions in the securities of a small number of issuers or our investments are 39 concentrated in relatively few industries, 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.
To the extent that we assume large positions in the securities of a small number of issuers or our investments are concentrated in relatively few industries, 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.
In addition, individuals with whom the Adviser has relationships are not obligated to provide us with investment opportunities, and we can offer no assurance that these relationships will generate investment opportunities for us in the future. Our relationship with Investcorp may create conflicts of interest. Investcorp has an approximate 76% interest in the Adviser.
In 28 addition, individuals with whom the Adviser has relationships are not obligated to provide us with investment opportunities, and we can offer no assurance that these relationships will generate investment opportunities for us in the future. Our relationship with Investcorp may create conflicts of interest. Investcorp has an approximate 76% interest in the Adviser.
We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated.
We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. 39 Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated.
Any public health emergency or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments and our portfolio companies. Adverse developments in the credit markets may impair our ability to secure debt financing.
Any public health emergency or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments and our portfolio companies. 49 Adverse developments in the credit markets may impair our ability to secure debt financing.
The 53 escalation or continuation of the war between Russia and Ukraine or other hostilities presents heightened risks relating to cyber-attacks, the frequency and volume of failures to settle securities transactions, supply chain disruptions, inflation, as well as the potential for increased volatility in commodity, currency and other financial markets.
The escalation or continuation of the war between Russia and Ukraine or other hostilities presents heightened risks relating to cyber-attacks, the frequency and volume of failures to settle securities transactions, supply chain disruptions, inflation, as well as the potential for increased volatility in commodity, currency and other financial markets.
These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative 54 expectations about the prospects for companies in the financial services industry.
These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.
Upon a Change of Control Repurchase Event, holders of the 2026 Notes may require us to repurchase for cash some or all of the 2026 Notes at a repurchase price equal to 100% of the aggregate principal amount of the 2026 Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date.
Upon a Change of 47 Control Repurchase Event, holders of the 2026 Notes may require us to repurchase for cash some or all of the 2026 Notes at a repurchase price equal to 100% of the aggregate principal amount of the 2026 Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date.
Securities litigation could result in substantial costs and divert management’s attention and resources from our business. 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. Our two largest investors are Investcorp and Stifel.
Securities litigation could result in substantial costs and divert management’s attention and resources from our business. 44 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. Our two largest investors are Investcorp and Stifel.
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.
However, the equity interests we receive may not appreciate in value and may decline in 42 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.
All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment plan may experience dilution over time.
All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment 43 plan may experience dilution over time.
Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors of our subsidiaries will have priority over our equity interests in such entities (and therefore the claims of our creditors, including holders of the 2026 Notes) with respect to the assets of such entities.
Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors of our subsidiaries will have priority over our equity interests in such entities (and therefore the claims of our 45 creditors, including holders of the 2026 Notes) with respect to the assets of such entities.
We depend upon the Adviser to maintain its relationships with private equity sponsors, placement agents, investment banks, management groups and other financial institutions and we expect to rely to a significant extent upon these relationships to provide us 28 with potential investment opportunities.
We depend upon the Adviser to maintain its relationships with private equity sponsors, placement agents, investment banks, management groups and other financial institutions and we expect to rely to a significant extent upon these relationships to provide us with potential investment opportunities.
The extent and duration of the war, sanctions and resulting market disruptions, as well as the potential adverse consequences for our portfolio companies are difficult to predict. The effect of global climate change may impact the operations of our portfolio companies. There may be evidence of global climate change.
The extent and duration of the war, sanctions and resulting market disruptions, as well as the potential adverse consequences for our portfolio companies are difficult to predict. 53 The effect of global climate change may impact the operations of our portfolio companies. There may be evidence of global climate change.
There could be: • sudden electrical or telecommunications outages; • natural disasters such as earthquakes, tornadoes and hurricanes; 52 • disease pandemics; • events arising from local or larger scale political or social matters, including terrorist acts; and • cyber-attacks.
There could be: • sudden electrical or telecommunications outages; • natural disasters such as earthquakes, tornadoes and hurricanes; • disease pandemics; • events arising from local or larger scale political or social matters, including terrorist acts; and • cyber-attacks.
In addition, if our borrowing base under the Capital One Revolving Financing or any other borrowing facility were to decrease, we would be required to secure additional 30 assets in an amount equal to any borrowing base deficiency.
In addition, if our borrowing base under the Capital One Revolving Financing or any other borrowing facility were to decrease, we would be required to secure additional assets in an amount equal to any borrowing base deficiency.
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 41 obligations in full before us.
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.
Generally, little public information exists about these companies, and we will rely on the ability of the Adviser’s investment professionals to obtain adequate information 38 to evaluate the potential returns and risks from investing in these companies.
Generally, little public information exists about these companies, and we will rely on the ability of the Adviser’s investment professionals to obtain adequate information to evaluate the potential returns and risks from investing in these companies.
Lenders of these funds 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. As of June 30, 2023, substantially all of our assets were pledged as collateral under the Capital One Revolving Financing.
Lenders of these funds 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. As of June 30, 2024, substantially all of our assets were pledged as collateral under the Capital One Revolving Financing.
As of June 30, 2023, we are a non-accelerated filer under the Securities Exchange Act of 1934, as amended, and, therefore, we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.
As of June 30, 2024, we are a non-accelerated filer under the Securities Exchange Act of 1934, as amended, and, therefore, we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.
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 investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in portfolio companies. Our investments may include PIK interest.
Middle-market companies also may be parties to litigation and may be engaged in 38 rapidly changing businesses with products subject to a substantial risk of obsolescence. In addition, our executive officers, directors and investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in portfolio companies.
We depend heavily upon computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computers, networks, and data, like those of other companies, could be subject to cyber-attacks and unauthorized access, use, alteration, or destruction, such as from physical and electronic break-ins or unauthorized tampering.
We depend heavily upon computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computers, networks, and data, like those of other companies, could be subject to cyber-attacks and unauthorized access, use, alteration, or destruction, such as from physical and electronic break-ins or unauthorized tampering, employee personation, social engineering or “phishing” attempts.
The occurrence of a disaster such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural catastrophe, an industrial accident, a terrorist attack or war, disease pandemics, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data.
The occurrence of a disaster such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural catastrophe, an industrial accident, a terrorist attack or war, disease pandemics, events unanticipated in our disaster recovery systems, consequential employee error or a support failure from external providers, could have an adverse effect on our ability to communicate or conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or impact the availability, integrity, or confidentiality of our data.
If any of the members of the Investment Team were to resign, we may not be able to hire investment professionals with similar expertise and ability to provide the same or equivalent services on acceptable terms.
In addition, we are dependent on the other members of the Investment Team. If any of the members of the Investment Team were to resign, we may not be able to hire investment professionals with similar expertise and ability to provide the same or equivalent services on acceptable terms.
In total, these general liabilities were $8.6 million as of June 30, 2023. The 2026 Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries. The 2026 Notes are obligations exclusively of Investcorp Credit Management BDC, Inc., and not of any of our subsidiaries.
In total, these general liabilities were $11.0 million as of June 30, 2024. The 2026 Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries. The 2026 Notes are obligations exclusively of Investcorp Credit Management BDC, Inc., and not of any of our subsidiaries.
Because the Capital One Revolving Financing has, and any future borrowing or financing arrangements will likely have, customary cross-default provisions, if we have a default under the terms of the 2026 Notes, the obligations under the Capital One Revolving Financing or any future credit facility may be accelerated and we may be unable to repay or finance the amounts due. 47 We may choose to redeem the 2026 Notes when prevailing interest rates are relatively low.
Because the Capital One Revolving Financing has, and any future borrowing or financing arrangements will likely have, customary cross-default provisions, if we have a default under the terms of the 2026 Notes, the obligations under the Capital One Revolving Financing or any future credit facility may be accelerated and we may be unable to repay or finance the amounts due.
We also may be required to include in income certain other amounts that we will not receive in cash. 48 Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to maintain our qualification as a RIC.
Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to maintain our qualification as a RIC.
Such OID, which could be significant relative to our overall investment activities and increases in loan balances as a result of contracted PIK arrangements will be included in income before we receive any corresponding cash payments.
Such OID, which could be significant relative to our overall investment activities and increases in loan balances as a result of contracted PIK arrangements will be included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.
Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold.
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 loans and debt securities that we hold.
While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss, exposure, destruction, or other cybersecurity incident that affects our data, resulting in increased costs and other consequences as described above.
While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss, exposure, destruction, or other cybersecurity incident that affects our data, resulting in increased costs and other consequences as described above. Substantial costs may be incurred in order to prevent any cyber incidents in the future.
Certain of our debt investments contain provisions providing for the payment of PIK interest. Because PIK interest results in an increase in the size of the loan balance of the underlying loan, the receipt by us of PIK interest will have the effect of increasing our assets under management.
Because PIK interest results in an increase in the size of the loan balance of the underlying loan, the receipt by us of PIK interest will have the effect of increasing our assets under management.
Assumed Return on Our Portfolio (1) (net of expenses) (10.0)% (5.0)% 0.0% 5.0% 10.0% Corresponding net return to common stockholder ( 34.1 )% ( 20.9 )% ( 7.7 )% 5.5 % 18.7 % (1) Assumes $232.1 million in total assets, $135.5 million in debt outstanding, $88.0 million in net assets, and an average cost of funds of 5.00%.
Assumed Return on Our Portfolio (1) (net of expenses) (10.0)% (5.0)% 0.0% 5.0% 10.0% Corresponding net return to common stockholder ( 32.7 )% ( 19.9 )% ( 7.1 )% 5.7 % 18.6 % (1) Assumes $192.2 million in total assets, $106.2 million in debt outstanding, $75.0 million in net assets, and an average cost of funds of 5.00%.
The 2026 Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option. We may choose to redeem the 2026 Notes from time to time, especially if prevailing interest rates are lower than the rate borne by the 2026 Notes.
We may choose to redeem the 2026 Notes when prevailing interest rates are relatively low. The 2026 Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option.
Adverse economic, business, or regulatory developments affecting the professional services sector could have a negative impact on the value of our investments in portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations. Our investments in the IT Services industries face considerable uncertainties including substantial regulatory challenges.
Adverse economic, business, or regulatory developments affecting the professional services sector could have a negative impact on the value of our investments in portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations. Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
Other debt we issue or incur in the future could contain more protections for its holders than the Indenture and the 2026 Notes, including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for trading levels and prices of the 2026 Notes.
Other debt we issue or incur in the future could contain more protections for its holders than the Indenture and the 2026 Notes, including additional covenants and events of default.
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.
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.
Investors are urged to consult with their tax adviser regarding tax legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our securities.
Investors are urged to consult with their tax adviser regarding tax legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our securities. Risks Relating to the Current Environment Political, social and economic uncertainty creates and exacerbates risks.
If we pay an incentive fee of 20% of our realized capital gains (net of all realized capital losses and unrealized capital depreciation on a cumulative basis) and thereafter experience additional realized capital losses or unrealized capital depreciation, we will not be able to recover any portion of the incentive fee previously paid. 35 PIK interest payments we receive will increase our assets under management and, as a result, will increase the amount of Base Management Fees and Incentive Fees payable by us to the Adviser.
If we pay an incentive fee of 20% of our realized capital gains (net of all realized capital losses and unrealized capital depreciation on a cumulative basis) and thereafter experience additional realized capital losses or unrealized capital depreciation, we will not be able to recover any portion of the incentive fee previously paid.
There is no active trading market for the 2026 Notes. If an active trading market does not develop for the 2026 Notes, you may not be able to sell them. The 2026 Notes are not listed on any securities exchange or for quotation on any automated dealer quotation system. As such, there currently is no trading market.
The 2026 Notes are not listed on any securities exchange or for quotation on any automated dealer quotation system. As such, there currently is no trading market.
In addition, cybersecurity has become a top priority for regulators around the world, and some jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data.
In addition, cybersecurity has become a top priority for regulators around the world, and some jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data. There may be substantial financial penalties or fines for breach of privacy laws (which may include insufficient security for personal or other sensitive information).
As a BDC, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 150%.
In addition, our common stockholders will 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 the Adviser. 29 As a BDC, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 150%.
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 secured loan obligations.
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. 41 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 secured loan obligations.
We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.
Additionally, remote working environments may be less secure and more susceptible to cyber-attacks, including phishing and social engineering attempts. We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.
In addition, any such increase in a loan balance due to the receipt of PIK interest will cause such loan to accrue interest on the higher loan balance, which will result in an increase in our pre-incentive fee net investment income and, as a result, an increase in incentive fees that are payable to the Adviser.
In addition, any such increase in a loan balance due to the receipt of PIK interest will cause such loan to accrue interest on the higher loan balance, which will result in an increase in our pre-incentive fee net investment income and, as a result, an increase in incentive fees that are payable to the Adviser. 35 Our incentive fee arrangements with the Adviser may vary from those of other investment funds, account or investment vehicles that the Adviser may manage in the future, which may create an incentive for the Adviser to devote time and resources to a higher fee-paying fund.
Increased geopolitical unrest, terrorist attacks, or acts of war may affect any market for our common stock, impact the businesses in which we invest, and harm our business, operating results, and financial conditions.
These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders. 52 Increased geopolitical unrest, terrorist attacks, or acts of war may affect any market for our common stock, impact the businesses in which we invest, and harm our business, operating results, and financial conditions.
In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our secured indebtedness or secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the 2026 Notes. 45 As of June 30, 2023, we had, through SPV LLC, $71.9 million in outstanding indebtedness under the Capital One Revolving Financing, which are secured by the assets held at SPV LLC.
In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our secured indebtedness or secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the 2026 Notes.
If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed, stored in, and transmitted through our computer systems and networks.
Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these 51 events occurs, it could potentially jeopardize the confidential, proprietary and other information processed, stored in, and transmitted through our computer systems and networks.
Risks Relating to Our Business and Structure We depend upon key personnel of the Adviser for our future success. If the Adviser were to lose any of its key personnel, our ability to achieve our investment objective could be significantly harmed.
If the Adviser were to lose any of its key personnel, our ability to achieve our investment objective could be significantly harmed. We depend on the diligence, skill, experience and network of business contacts of the Investment Team of the Adviser, in particular Mr.
We may hold the loans and debt securities of leveraged companies that may, due to the significant operating volatility typical of such companies, enter into bankruptcy proceedings, and we could lose all or part of our investment, which would harm our operating results. Investment in leveraged companies involves a number of significant risks.
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. 37 We may hold the loans and debt securities of leveraged companies that may, due to the significant operating volatility typical of such companies, enter into bankruptcy proceedings, and we could lose all or part of our investment, which would harm our operating results.
Portfolio companies in the professional services industry must respond quickly to technological changes and understand the impact of these changes on customers’ preferences.
Portfolio companies in the professional services sector are subject to many risks, including the negative impact of regulation, changing technology, a competitive marketplace and difficulty in obtaining financing. Portfolio companies in the professional services industry must respond quickly to technological changes and understand the impact of these changes on customers’ preferences.
We can offer no assurance that Messrs. Mauer and Shaikh will continue to provide investment advice to us. The loss of either Mr. Mauer or Mr. Shaikh could limit our ability to achieve our investment objective and operate as we anticipate. In addition, we are dependent on the other members of the Investment Team.
Shaikh, who is also a member of the Investment Committee and our board of directors, and is our Chief Executive Officer. We can offer no assurance that Mr. Shaikh will continue to provide investment advice to us. The loss of Mr. Shaikh could limit our ability to achieve our investment objective and operate as we anticipate.
Our investments in the professional services industry face considerable uncertainties including significant regulatory challenges. Our investments in portfolio companies that operate in the professional services industry represent approximately 12.83% of our total portfolio as of June 30, 2023.
Our investments in the commercial services and supplies industry face considerable uncertainties including uncertainty related to seasonality and market forces. Our investments in portfolio companies that operate in the commercial services and supplies industry represent approximately 13.50% of our total portfolio as of June 30, 2024.
Risks Relating to the Current Environment • The COVID-19 pandemic has caused severe disruptions in the U.S. economy and has disrupted financial activity in the areas in which we or our portfolio companies operate. • Global economic, regulatory and market conditions may adversely affect our business, results of operations and financial condition, including our revenue growth and profitability.
Risks Relating to the Current Environment • Global economic, regulatory and market conditions may adversely affect our business, results of operations and financial condition, including our revenue growth and profitability. Risks Relating to Our Business and Structure We depend upon key personnel of the Adviser for our future success.
The indebtedness under the Capital One Revolving Financing is effectively senior to the 2026 Notes to the extent of the value of the assets securing such indebtedness.
As of June 30, 2024, we had, through SPV LLC, $43.0 million in outstanding indebtedness under the Capital One Revolving Financing, which are secured by the assets held at SPV LLC. The indebtedness under the Capital One Revolving Financing is effectively senior to the 2026 Notes to the extent of the value of the assets securing such indebtedness.
As of June 30, 2023, our investments in the trading companies & distributors industry represented approximately 15.98% of the fair value of our portfolio, our investments in the professional services industry represented approximately 12.83% of the fair value of our portfolio, and our investments in the IT services industry represented approximately 10.71% of the fair value of our portfolio.
As of June 30, 2024, our investments in the commercial services and supplies industry represented approximately 13.50% of the fair value of our portfolio and our investments in the professional services industry represented approximately 11.22% of the fair value of our portfolio.
Adverse economic, business, or regulatory developments affecting the trading companies & distributors sector, including trade policies, treaties and tariffs between the United States and other countries, could have a negative impact on the value of our investments in portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations.
Any of these factors could have a negative impact on the value of our investments in portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations. Our investments in the professional services industry face considerable uncertainties including significant regulatory challenges.
Our investments in portfolio companies in the professional services sector include those that provide services related to data and information, building, cleaning and maintenance services, and energy efficiency services. Portfolio companies in the professional services sector are subject to many risks, including the negative impact of regulation, changing technology, a competitive marketplace and difficulty in obtaining financing.
Our investments in portfolio companies that operate in the professional services industry represent approximately 11.22% of our total portfolio as of June 30, 2024. Our investments in portfolio companies in the professional services sector include those that provide services related to data and information, building, cleaning and maintenance services, and energy efficiency services.
Removed
We depend on the diligence, skill, experience and network of business contacts of the Investment Team of the Adviser, in particular Messrs. Mauer and Shaikh, who are also members of the Investment Committee, our executive officers and Mr. Mauer is chairman of our board of directors and Mr. Shaikh is a member of our board of directors.
Added
PIK interest payments we receive will increase our assets under management and, as a result, will increase the amount of Base Management Fees and Incentive Fees payable by us to the Adviser. Certain of our debt investments contain provisions providing for the payment of PIK interest.
Removed
In addition, our common 29 stockholders will 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 the Adviser.
Added
There are unique risks in investing in companies in the commercial services and supply industry and a downturn in the industry could significantly impact the aggregate returns we realize.
Removed
Our bylaws exempt from the Maryland Control Share Acquisition Act (“Control Share Acquisition Act”) acquisitions of our stock by any person.
Added
For example, the operating results and financial condition of our portfolio companies in the commercial services and supplies industry could be adversely affected due to a number of factors, including but not limited to a decrease in demand for their services or supplies relating to seasonality or market forces, termination of contracts with, or other disruptions in or decay of relationships with, their customers or other third parties, such as third-party suppliers or manufacturers, and various other factors.
Removed
If we amend our bylaws to repeal the exemption from the Control Share Acquisition Act, the Control Share Acquisition Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such a transaction.
Added
Some market forces that could adversely affect the operating results and financial condition of our portfolio companies in the commercial services and supplies industry may be particular to our specific portfolio companies as a result of direct competition or other factors.
Removed
The SEC staff has rescinded its position that, under the 1940 Act, an investment company may not avail itself of the Control Share Acquisition Act. As a result, we will amend our bylaws to be subject to the Control Share Acquisition Act only if our board of directors determines it would be in our best interest.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. Item 4. Min e Safety Disclosures Not applicable. 55 PA RT II
Biggest changeWhile the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. Item 4. Min e Safety Disclosures Not applicable. 56 PA RT II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table reflects, for the periods indicated, the distributions per share that our board of directors has declared on our common stock: Fiscal Year Ended Distribution Date Declared Record Date Pay Date Amount Per Share June 30, 2024 First Quarter Base September 14, 2023 October 12, 2023 November 2, 2023 $0.12 First Quarter Supplemental September 14, 2023 October 12, 2023 November 2, 2023 $0.03 June 30, 2023 Fourth Quarter Base May 4, 2023 June 16, 2023 July 7, 2023 $0.13 Fourth Quarter Supplemental May 4, 2023 June 16, 2023 July 7, 2023 $0.05 Third Quarter Base February 2, 2023 March 10, 2023 March 30, 2023 $0.13 Third Quarter Supplemental February 2, 2023 March 10, 2023 March 30, 2023 $0.02 Second Quarter Base November 11, 2022 December 16, 2022 January 10, 2023 $0.13 Second Quarter Supplemental November 11, 2022 December 16, 2022 January 10, 2023 $0.02 First Quarter Base August 25, 2022 September 23, 2022 October 14, 2022 $0.15 June 30, 2022 Fourth Quarter Base May 5, 2022 June 17, 2022 July 8, 2022 $0.15 Third Quarter Base February 3, 2022 March 11, 2022 March 31, 2022 $0.15 Second Quarter Base November 3, 2021 December 10, 2021 January 4, 2022 $0.15 First Quarter Base August 25, 2021 September 24, 2021 October 14, 2021 $0.15 June 30, 2021 Fourth Quarter Base May 6, 2021 June 18, 2021 July 9, 2021 $0.15 Third Quarter Base February 3, 2021 March 12, 2021 April 1, 2021 $0.15 Third Quarter Supplemental February 3, 2021 March 12, 2021 April 1, 2021 $0.03 Second Quarter Base November 3, 2020 December 10, 2020 January 4, 2021 $0.15 Second Quarter Supplemental November 3, 2020 December 10, 2020 January 4, 2021 $0.03 First Quarter Base August 26, 2020 September 25, 2020 October 15, 2020 $0.15 First Quarter Supplemental August 26, 2020 September 25, 2020 October 15, 2020 $0.03 Total $2.07 Sales of Unregistered Securities Except as previously reported by the Company on its current reports on Form 8-K, the Company did not engage in any sales of unregistered securities during the fiscal year ended June 30, 2023 .
Biggest changeThe following table reflects, for the periods indicated, the distributions per share that our board of directors has declared on our common stock: Fiscal Year Ended Distribution Date Declared Record Date Pay Date Amount Per Share June 30, 2025 First Quarter Base September 18, 2024 October 16, 2024 November 6, 2024 $0.12 June 30, 2024 Fourth Quarter Base April 12, 2024 May 26, 2024 June 14, 2024 $0.12 Fourth Quarter Supplemental April 12, 2024 May 26, 2024 June 14, 2024 $0.03 Third Quarter Base February 8, 2024 March 15, 2024 April 5, 2024 $0.12 Third Quarter Supplemental February 8, 2024 March 15, 2024 April 5, 2024 $0.03 Second Quarter Base November 9, 2023 December 14, 2023 January 8, 2024 $0.12 Second Quarter Supplemental November 9, 2023 December 14, 2023 January 8, 2024 $0.03 First Quarter Base September 14, 2023 October 12, 2023 November 2, 2023 $0.12 First Quarter Supplemental September 14, 2023 October 12, 2023 November 2, 2023 $0.03 June 30, 2023 Fourth Quarter Base May 4, 2023 June 16, 2023 July 7, 2023 $0.13 Fourth Quarter Supplemental May 4, 2023 June 16, 2023 July 7, 2023 $0.05 Third Quarter Base February 2, 2023 March 10, 2023 March 30, 2023 $0.13 Third Quarter Supplemental February 2, 2023 March 10, 2023 March 30, 2023 $0.02 Second Quarter Base November 11, 2022 December 16, 2022 January 10, 2023 $0.13 Second Quarter Supplemental November 11, 2022 December 16, 2022 January 10, 2023 $0.02 First Quarter Base August 25, 2022 September 23, 2022 October 14, 2022 $0.15 June 30, 2022 Fourth Quarter Base May 5, 2022 June 17, 2022 July 8, 2022 $0.15 Third Quarter Base February 3, 2022 March 11, 2022 March 31, 2022 $0.15 Second Quarter Base November 3, 2021 December 10, 2021 January 4, 2022 $0.15 First Quarter Base August 25, 2021 September 24, 2021 October 14, 2021 $0.15 Total $2.64 Sales of Unregistered Securities Except as previously reported by the Company on its current reports on Form 8-K, the Company did not engage in any sales of unregistered securities during the fiscal year ended June 30, 2024 .
If we qualify as a RIC, we will not be taxed on our investment 56 company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.
If we qualify as a RIC, we will not be taxed on our investment 57 company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.
The stock price performance included in the above graph is not necessarily indicative of future stock price performance. Item 6. [Reserved] 58
The stock price performance included in the above graph is not necessarily indicative of future stock price performance. Item 6. [Reserved] 59
Purchases of Equity Securities None. 57 Stock Performance Graph This graph compares the return on our common stock with that of the NASDAQ Financial Index and a customized peer group of six companies that includes Crescent Capital BDC, Inc., Stellus Capital Investment Corporation, First Eagle Alternative Capital BDC, Inc., Monroe Capital Corporation, CION Investment Corporation, and WhiteHorse Finance Inc., for the period from June 30, 2018 through June 30, 2023.
Purchases of Equity Securities None. 58 Stock Performance Graph This graph compares the return on our common stock with that of the NASDAQ Financial Index and a customized peer group of six companies that includes Crescent Capital BDC, Inc., Stellus Capital Investment Corporation, First Eagle Alternative Capital BDC, Inc., Monroe Capital Corporation, CION Investment Corporation, and WhiteHorse Finance Inc., for the period from June 30, 2019 through June 30, 2024.
Market for Re gistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Price Range of Common Stock Our common stock is traded on the NASDAQ Global Select Market under the symbol “ICMB.” The following table sets forth, for the periods indicated, the range of high and low sales prices of our common stock, as reported on the NASDAQ Global Select Market: NAV Per Share (1) Closing Sales Price (2) Premium or Discount of High Sales to NAV (3) Premium or Discount of Low Sales to NAV (3) Distributions Per Share (4) Fiscal Year Ended High Low June 30, 2024 First quarter (through September 15, 2023) $ * $ 4.35 $ 3.68 * % * % $0.15 June 30, 2023 Fourth quarter 6.12 3.98 3.24 ( 34.97 )% ( 46.99 )% 0.18 Third quarter 6.13 4.23 3.39 ( 31.00 )% ( 44.70 )% 0.15 Second quarter 6.36 4.32 3.42 ( 32.08 )% ( 46.23 )% 0.15 First quarter 6.47 4.85 3.52 ( 25.04 )% ( 45.60 )% 0.15 June 30, 2022 Fourth quarter 6.50 5.35 3.75 ( 17.69 )% ( 42.31 )% 0.15 Third quarter 6.93 5.72 5.08 ( 17.46 )% ( 26.70 )% 0.15 Second quarter 7.09 5.70 4.87 ( 19.61 )% ( 31.38 )% 0.15 First quarter 7.00 6.42 5.30 ( 8.29 )% ( 24.29 )% 0.15 June 30, 2021 Fourth quarter 6.92 6.04 5.40 ( 12.72 )% ( 21.97 )% 0.15 Third quarter 7.93 6.05 4.62 ( 23.71 )% ( 41.74 )% 0.18 Second quarter 7.84 5.45 2.99 ( 30.48 )% ( 61.86 )% 0.18 First quarter 7.81 4.38 3.09 ( 43.92 )% ( 60.44 )% 0.18 (1) NAV is determined as of the last date in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices.
Market for Re gistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Price Range of Common Stock Our common stock is traded on the NASDAQ Global Select Market under the symbol “ICMB.” The following table sets forth, for the periods indicated, the range of high and low sales prices of our common stock, as reported on the NASDAQ Global Select Market: NAV Per Share (1) Closing Sales Price (2) Premium or Discount of High Sales to NAV (3) Premium or Discount of Low Sales to NAV (3) Distributions Per Share (4) Fiscal Year Ended High Low June 30, 2025 First quarter (through September 24, 2024) $ * $ 3.39 $ 3.05 * % * % $0.12 June 30, 2024 Fourth quarter 5.21 3.55 3.12 ( 31.86 )% ( 40.21 )% 0.15 Third quarter 5.49 3.73 2.99 ( 32.06 )% ( 45.54 )% 0.15 Second quarter 5.48 4.09 3.23 ( 25.36 )% ( 41.06 )% 0.15 First quarter 5.83 4.35 3.68 ( 25.47 )% ( 36.88 )% 0.15 June 30, 2023 Fourth quarter 6.09 3.98 3.24 ( 34.97 )% ( 46.99 )% 0.18 Third quarter 6.13 4.23 3.39 ( 31.00 )% ( 44.70 )% 0.15 Second quarter 6.36 4.32 3.42 ( 32.08 )% ( 46.23 )% 0.15 First quarter 6.47 4.85 3.52 ( 25.04 )% ( 45.60 )% 0.15 June 30, 2022 Fourth quarter 6.50 5.35 3.75 ( 17.69 )% ( 42.31 )% 0.15 Third quarter 6.93 5.72 5.08 ( 17.46 )% ( 26.70 )% 0.15 Second quarter 7.09 5.70 4.87 ( 19.61 )% ( 31.38 )% 0.15 First quarter 7.00 6.42 5.30 ( 8.29 )% ( 24.29 )% 0.15 (1) Net asset value (“ NAV”) is determined as of the last date in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices.
See “Dividend Reinvestment Plan.” * The last reported sale price for our common stock on the NASDAQ Global Select Market on September 15, 2023 was $4.05 per share. As of September 15, 2023 , we had 31 stockholders of record, which did not include stockholders for whom shares are held in nominee or “street” name.
See “Dividend Reinvestment Plan.” * The last reported sale price for our common stock on the NASDAQ Global Select Market on September 24, 2024 was $3.16 per share. As of September 24, 2024, we had 30 stockholders of record, which did not include stockholders for whom shares are held in nominee or “street” name.
It assumes that dividends paid are invested in like securities. The graph and other information furnished under this Part II Item 5 of this 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, or to the liabilities of Section 18 of the 1934 Act.
The graph and other information furnished under this Part II Item 5 of this 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, or to the liabilities of Section 18 of the 1934 Act.
The graph assumes that, on June 30, 2018 an investment of $100 (with reinvestment of all dividends) was made in our common stock (at the initial public offering price of $15.00 per share), in each index and in the peer group. The graph measures total stockholder return, which takes into account both changes in stock price and dividends.
The graph assumes that, on June 30, 2019 an investment of $100 (with reinvestment of all dividends) was made in our common stock, in each index and in the peer group. The graph measures total stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.
As of September 15, 2023 , our shares of common stock traded at a discount equal to approximately 33.50 % of the net assets attributable to those shares based upon our $ 6.09 net asset value per share as of June 30, 2023.
As of September 24, 2024 , our shares of common stock traded at a discount equal to approximately 39.35 % of the net assets attributable to those shares based upon our $ 5.21 net asset value per share as of June 30, 2024.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

3 edited+0 added−0 removed0 unchanged
Biggest changeCONTROLS AND PROCEDURES 114 ITEM 9B. OTHER INFORMATION 114 PART III 115 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 115 ITEM 11. EXECUTIVE COMPENSATION 115 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 115 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 115 ITEM 14.
Biggest changeCONTROLS AND PROCEDURES 116 ITEM 9B. OTHER INFORMATION 116 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 116 PART III 117 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 117 ITEM 11. EXECUTIVE COMPENSATION 117 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 117 ITEM 13.
ITEM 6. [RESERVED] 58 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 59 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 74 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 76 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON ACCOUNTING AND FINANCIAL DISCLOSURE 114 ITEM 9A.
ITEM 6. [RESERVED] 59 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 60 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 75 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 77 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON ACCOUNTING AND FINANCIAL DISCLOSURE 116 ITEM 9A.
PRINCIPAL ACCOUNTANT FEES AND SERVICES 115 PART IV 116 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 116 SIGNATURES 119 i PAR T I
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 117 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 117 PART IV 118 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 118 SIGNATURES 121 i PAR T I

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

83 edited+22 added−25 removed99 unchanged
Biggest changeAt June 30, 2023 and June 30, 2022, respectively, the industry composition of our portfolio in accordance with GICS at fair value, as a percentage of our total portfolio, was as follows: Percentage of Total Portfolio at June 30, 2023 2022 Trading Companies & Distributors 15.98 % 6.72 % Professional Services 12.83 11.55 IT Services 10.71 9.25 Commercial Services & Supplies 6.51 6.62 Software 6.26 3.77 Containers & Packaging 5.89 3.10 Machinery 4.36 — Internet & Direct Marketing Retail 4.08 9.02 Entertainment 3.47 3.40 Household Durables 3.46 7.42 Chemicals 3.44 6.00 Diversified Consumer Services 3.30 2.88 Automobile Components 3.30 3.39 Hotels, Restaurants and Leisure 2.85 — Consumer Staples Distribution & Retail 2.75 — Specialty Retail 2.34 2.54 Building Products 2.05 2.02 Food Products 1.95 1.95 Automotive Retail 1.76 — Electronic Equipment, Instruments & Components 1.48 1.26 Energy Equipment & Services 1.23 5.59 Distributors — 5.26 Consumer Finance — 4.87 Food & Staples Retailing — 3.39 100.00 % 100.00 % During the year ended June 30, 2023, we made investments in eight new portfolio companies and four existing portfolio companies.
Biggest changeAt June 30, 2024 and June 30, 2023, respectively, the industry composition of our portfolio in accordance with GICS at fair value, as a percentage of our total portfolio, was as follows: Percentage of Total Portfolio at June 30, 2024 2023 Commercial Services & Supplies 13.50 % 6.51 % Professional Services 11.22 12.83 Trading Companies & Distributors 9.11 15.98 Containers & Packaging 7.34 5.89 Food Products 4.79 1.95 Entertainment 4.77 3.47 IT Services 4.70 10.71 Household Durables 4.13 3.46 Insurance 4.01 0.00 Chemicals 3.90 3.44 Diversified Consumer Services 3.90 3.30 Specialty Retail 3.61 2.34 Automotive Retail 3.08 1.76 Health Care Providers & Services 2.93 0.00 Consumer Staples Distribution & Retail 2.89 2.75 Software 2.73 6.26 Consumer Services 2.67 0.00 Paper Packaging 2.66 0.00 Construction & Engineering 1.99 0.00 Human Resources & Employment Services 1.62 0.00 Hotels, Restaurants and Leisure 1.60 2.85 Electronic Equipment, Instruments & Components 1.43 1.48 Automobile Components 1.42 3.30 Machinery 0.00 4.36 Internet & Direct Marketing Retail 0.00 4.08 Building Products 0.00 2.05 Energy Equipment & Services 0.00 1.23 100.00 % 100.00 % During the year ended June 30, 2024, we made investments in eleven new portfolio companies and four existing portfolio companies.
We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation, those relating to: • our organization and our offering; 65 • valuing our assets and calculating our net asset value per share (including the cost and expenses of any independent valuation firm(s)); • fees and expenses incurred by the Adviser or 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; • interest payable on debt, if any, incurred to finance our investments and 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 our allocable portion of the Adviser’s overhead in performing its obligations under the Administration Agreement, including rent, equipment and the allocable portion of the cost of our chief compliance officer, chief financial officer and his staffs’ compensation and compensation-related expenses); • transfer agent and custody fees and expenses; • federal and state registration fees; • costs of registration and listing our shares on any securities exchange; • 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; • our allocable portion of the costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; • direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and • all other non-investment advisory expenses incurred by us or the Adviser in connection with administering our business.
We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation, those relating to: • our organization and our offering; • valuing our assets and calculating our net asset value per share (including the cost and expenses of any independent valuation firm(s)); • fees and expenses incurred by the Adviser or 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; • interest payable on debt, if any, incurred to finance our investments and 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 our allocable portion of the Adviser’s overhead in performing its obligations under the Administration Agreement, including rent, equipment and the allocable portion of the cost of our chief compliance officer, chief financial officer and his staffs’ compensation and compensation-related expenses); • transfer agent and custody fees and expenses; • federal and state registration fees; • costs of registration and listing our shares on any securities exchange; • 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; • our allocable portion of the costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; • direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and • all other non-investment advisory expenses incurred by us or the Adviser in connection with administering our business.
The 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price (as determined by us) equal to the greater of the following amounts, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date: (1) 100% of the principal amount of the 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) 64 using the applicable Treasury Rate (as defined in the 2026 Notes Indenture (as defined below)) plus 50 basis points; provided, however, that if we redeem any 2026 Notes on or after January 1, 2026 (the date falling three months prior to the maturity date of the 2026 Notes), the redemption price for the 2026 Notes will be equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption; provided, further, that no such partial redemption shall reduce the portion of the principal amount of a 2026 Note not redeemed to less than $2,000.
The 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price (as determined by us) equal to the greater of the following amounts, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date: (1) 100% of the principal amount of the 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate (as defined in the 2026 Notes Indenture (as defined below)) plus 50 basis points; provided, however, that if we redeem any 2026 Notes on or after January 1, 2026 (the date falling three months prior to the maturity date of the 2026 Notes), the redemption price for the 2026 Notes will be equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption; provided, further, that no such partial redemption shall reduce the portion of the principal amount of a 2026 Note not redeemed to less than $2,000.
With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below: • our quarterly valuation process begins with each portfolio company or investment being initially valued by the members of the Investment Team responsible for the portfolio investment; • preliminary valuation conclusions are then documented and discussed by senior management and the Adviser; • on a periodic basis, at least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm engaged by our board of directors; • the valuation committee of our board of directors then reviews these preliminary valuations and makes a recommendation to our board of directors regarding the fair value of each investment; and • the board of directors then reviews and discusses these preliminary valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of the Adviser, the independent valuation firm and the valuation committee.
With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below: • our quarterly valuation process begins with each portfolio company or investment being initially valued by the members of the Adviser’s investment team responsible for the portfolio investment; • preliminary valuation conclusions are then documented and discussed by senior management and the Adviser; • on a periodic basis, at least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm engaged by our board of directors; • the valuation committee of our board of directors then reviews these preliminary valuations and makes a recommendation to our board of directors regarding the fair value of each investment; and • the board of directors then reviews and discusses these preliminary valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of the Adviser, the independent valuation firm and the valuation committee.
In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, 61 information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market (as the reporting entity) and enterprise values.
In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: 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, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market (as the reporting entity) and enterprise values.
Accordingly, the notes to our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the consolidated financial statements. 62 Rule 2a-5 under the 1940 Act was adopted in December 2020 by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act.
Accordingly, the notes to our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the consolidated financial statements. Rule 2a-5 under the 1940 Act was adopted in December 2020 by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act.
The weighted average total yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before payment of all of our fees and expenses, including 66 any sales load paid in connection with an offering of our securities.
The weighted average total yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before payment of all of our fees and expenses, including any sales load paid in connection with an offering of our securities.
Because a readily available market value for many of the investments in our portfolio is often not available, we value many of our portfolio investments at fair value as determined in good faith by our board of directors using a consistently applied valuation process in accordance with a documented valuation policy that has been reviewed and approved by our board of directors.
Because a readily available market value for many of the investments in our portfolio is often not available, we value many of our portfolio investments at fair value as 62 determined in good faith by our board of directors using a consistently applied valuation process in accordance with a documented valuation policy that has been reviewed and approved by our board of directors.
If we qualify as a RIC for a taxable year, we will not be subject to corporate-level U.S. federal income tax on our investment company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.
If we continue to qualify as a RIC for a taxable year, we will not be subject to corporate-level U.S. federal income tax on our investment company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.
Our primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held middle-market companies to help these companies fund 59 acquisitions, growth or refinancing.
Our primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held middle-market companies to help these companies fund acquisitions, growth or refinancing.
If such amount is negative, then no Capital Gains Fee will be payable for such year. Additionally, if the Advisory Agreement is terminated as of a date that is not a fiscal year end, the termination date will be treated as though it were a fiscal year end for purposes of calculating and paying the Capital Gains Fee.
If such amount is negative, then no Capital Gains Fee will be payable for such year. Additionally, if the Advisory Agreement is terminated as of a date that is not a fiscal year 74 end, the termination date will be treated as though it were a fiscal year end for purposes of calculating and paying the Capital Gains Fee.
The 2026 Notes are structurally subordinated to all existing and future indebtedness and other obligations of any of our existing and future subsidiaries and financing vehicles, including, without limitation, borrowings under the Capital One Financing. The 2026 Notes are exclusively our obligations and not of any of our subsidiaries.
The 2026 Notes are structurally subordinated to all existing and future indebtedness and other obligations of any of our existing and future subsidiaries and financing vehicles, including, without limitation, borrowings under the Capital One Financing. 65 The 2026 Notes are exclusively our obligations and not of any of our subsidiaries.
(9) On March 26, 2021, we caused notice to be issued to the holders of the 2023 Notes regarding our exercise of the option to redeem in full all $51,375,000 in aggregate principal amount of the 2023 Notes at 100% of their principal amount ($25 per 71 Note), plus the accrued and unpaid interest thereon from April 1, 2021, through, but excluding, the redemption date, April 25, 2021.
(9) On March 26, 2021, we caused notice to be issued to the holders of the 2023 Notes regarding our exercise of the option to redeem in full all $51,375,000 in aggregate principal amount of the 2023 Notes at 100% of their principal amount ($25 per 72 Note), plus the accrued and unpaid interest thereon from April 1, 2021, through, but excluding, the redemption date, April 25, 2021.
As of June 30, 2023 and June 30, 2022, there were no borrowings outstanding under the Revolving Financing. On August 23, 2021, we, through Investcorp Credit Management BDC SPV, LLC, our wholly-owned subsidiary, entered into a five-year, $115 million senior secured revolving credit facility (the “Capital One Revolving Financing”) with Capital One, N.A.
As of June 30, 2024 and June 30, 2023, there were no borrowings outstanding under the Revolving Financing. On August 23, 2021, we, through Investcorp Credit Management BDC SPV, LLC, our wholly-owned subsidiary, entered into a five-year, $115 million senior secured revolving credit facility (the “Capital One Revolving Financing”) with Capital One, N.A.
We recorded a net change in unrealized appreciation of $8.1 million for the year ended June 30, 2022, primarily due to the restructure of 1888 Industrial Services, LLC –Term B and Fusion Connect Inc. –Take-Back Term Loan offset by the decrease in fair value of Techniplas Foreign Holdco LP common stock.
We recorded a net change in unrealized depreciation of $8.1 million for the year ended June 30, 2022, primarily due to the restructure of 1888 Industrial Services, LLC –Term B and Fusion Connect Inc. –Take-Back Term Loan offset by the decrease in fair value of Techniplas Foreign Holdco LP common stock.
Expenses Total (net) expenses for the year ended June 30, 2023 increased to $17.3 million from $15.5 million for the year ended June 30, 2022, primarily due to the increase in SOFR and LIBOR Rates. 68 Net investment income Net investment income increased to $9.4 million for the year ended June 30, 2023 from $8.9 million for the year ended June 30, 2022, primarily due to an increase in interest and payment-in-kind income offset by an increase in expenses related to an increase in borrowing costs.
Expenses Total expenses for the year ended June 30, 2023 increased to $17.3 million from $15.5 million for the year ended June 30, 2022, primarily due to the increase in SOFR and LIBOR Rates. 70 Net investment income Net investment income increased to $9.4 million for the year ended June 30, 2023 from $8.9 million for the year ended June 30, 2022, primarily due to an increase in interest and payment-in-kind income offset by an increase in expenses related to an increase in borrowing costs.
The “Lookback Period” means (1) through June 30, 2023, the period that commences on the last day of the fiscal quarter in which the Commencement Date occurs and ends on the last day of the fiscal quarter immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated, and (2) after June 30, 2023, the eleven fiscal quarters immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated.
The “Lookback Period” means (1) through June 30, 2024, the period that commences on the last day of the fiscal quarter in which the Commencement Date occurs and ends on the last day of the fiscal quarter immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated, and (2) after June 30, 2024, the eleven fiscal quarters immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated.
If too many stockholders elect to receive cash, each stockholder electing to receive cash must receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20% (or 10% if applicable) of his or her entire distribution in cash.
If too many stockholders elect to receive cash, each stockholder electing to receive cash must receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20% of his or her entire distribution in cash.
On November 19, 2021, the Company repaid the Term Financing in full in accordance with the terms of the Term Financing and the agreement was terminated. As of June 30, 2023 and June 30, 2022, there were no borrowings outstanding under the Term Financing, respectively.
On November 19, 2021, the Company repaid the Term Financing in full in accordance with the terms of the Term Financing and the agreement was terminated. As of June 30, 2024 and June 30, 2023, there were no borrowings outstanding under the Term Financing, respectively.
Investment Rating 2 Investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. All new loans will initially be rated 2. Investment Rating 3 Investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected.
Investment Rating 2 Investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. Generally, all new loans are initially rated 2. Investment Rating 3 Investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected.
As of June 30, 2023, and June 30, 2022 all of our investments were classified as Level 3 investments, determined based on valuations by our board of directors. Determination of fair value involves subjective judgments and estimates.
As of June 30, 2024, and June 30, 2023 all of our investments were classified as Level 3 investments, determined based on valuations by our board of directors. Determination of fair value involves subjective judgments and estimates.
As of June 30, 2023, June 30, 2022 and June 30, 2021, there was no Capital Gains Fee accrued, earned or payable to the Adviser under the Advisory Agreement.
As of June 30, 2024, June 30, 2023 and June 30, 2022, there was no Capital Gains Fee accrued, earned or payable to the Adviser under the Advisory Agreement.
As of June 30, 2023 and June 30, 2022, the outstanding principal balance of the 2026 Notes was approximately $65.0 million and $65.0 million, respectively.
As of June 30, 2024 and June 30, 2023, the outstanding principal balance of the 2026 Notes was approximately $65.0 million and $65.0 million, respectively.
The weighted average total yield was computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, the spot LIBOR or SOFR, as applicable, as of June 30, 2023 of all of our debt investments.
The weighted average total yield was computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, the spot SOFR, as applicable, as of June 30, 2024 of all of our debt investments.
Class and Year Total Amount Outstanding Exclusive of Treasury Securities (1) Asset Coverage per Unit (2) Involuntary Liquidating Preference per Unit (3) Average Market Value per Unit (4) Capital One Revolving Financing Fiscal Year ended June 30, 2023 $ 71,900,000 (5) $ 3,133 — N/A Fiscal Year ended June 30, 2022 $ 84,000,000 (5) $ 2,864 — N/A UBS Financing Facility Fiscal Year ended June 30, 2021 $ 102,000,000 (6) $ 2,567 — N/A Fiscal Year ended June 30, 2020 $ 132,000,000 (6) $ 2,200 — N/A Fiscal Year ended June 30, 2019 $ 133,026,670 (6) $ 2,329 — N/A Fiscal Year ended June 30, 2018 $ 119,823,000 (6) $ 2,431 — N/A Fiscal Year ended June 30, 2017 $ 102,000,000 $ 2,666 — N/A Fiscal Year ended June 30, 2016 $ 132,478,329 (7) $ 2,229 — N/A Fiscal Year ended June 30, 2015 $ 150,847,459 (7) $ 2,306 — N/A Fiscal Year ended June 30, 2014 $ 85,591,314 (7) $ 3,339 — N/A Fiscal Year ended June 30, 2013 $ 76,500,000 $ 1,860 — N/A Citi Revolving Financing (8) Fiscal Year ended June 30, 2021 $ — N/A — N/A Fiscal Year ended June 30, 2020 $ — N/A — N/A Fiscal Year ended June 30, 2019 $ — N/A — N/A Fiscal Year ended June 30, 2018 $ — N/A — N/A Fiscal Year ended June 30, 2017 $ — N/A — N/A 6.125% notes due 2023 (9) Fiscal Year ended June 30, 2021 $ — $ — — $ — Fiscal Year ended June 30, 2020 $ 51,375,000 $ 5,674 — $ 926 Fiscal Year ended June 30, 2019 $ 34,500,000 $ 8,969 — $ 1,012 4.875% notes due 2026 (10) Fiscal Year ended June 30, 2023 $ 65,000,000 $ 3,466 — N/A Fiscal Year ended June 30, 2022 $ 65,000,000 $ 3,701 — N/A Fiscal Year ended June 30, 2021 $ 65,000,000 $ 4,027 — N/A (1) Total amount of senior securities outstanding at the end of the period presented.
Class and Year Total Amount Outstanding Exclusive of Treasury Securities (1) Asset Coverage per Unit (2) Involuntary Liquidating Preference per Unit (3) Average Market Value per Unit (4) Capital One Revolving Financing Fiscal Year ended June 30, 2024 $ 43,000,000 (5) $ 4,383 — N/A Fiscal Year ended June 30, 2023 $ 71,900,000 (5) $ 3,133 — N/A Fiscal Year ended June 30, 2022 $ 84,000,000 (5) $ 2,864 — N/A UBS Financing Facility Fiscal Year ended June 30, 2021 $ 102,000,000 (6) $ 2,567 — N/A Fiscal Year ended June 30, 2020 $ 132,000,000 (6) $ 2,200 — N/A Fiscal Year ended June 30, 2019 $ 133,026,670 (6) $ 2,329 — N/A Fiscal Year ended June 30, 2018 $ 119,823,000 (6) $ 2,431 — N/A Fiscal Year ended June 30, 2017 $ 102,000,000 $ 2,666 — N/A Fiscal Year ended June 30, 2016 $ 132,478,329 (7) $ 2,229 — N/A Fiscal Year ended June 30, 2015 $ 150,847,459 (7) $ 2,306 — N/A Citi Revolving Financing (8) Fiscal Year ended June 30, 2021 $ — N/A — N/A Fiscal Year ended June 30, 2020 $ — N/A — N/A Fiscal Year ended June 30, 2019 $ — N/A — N/A Fiscal Year ended June 30, 2018 $ — N/A — N/A Fiscal Year ended June 30, 2017 $ — N/A — N/A 6.125% notes due 2023 (9) Fiscal Year ended June 30, 2021 $ — $ — — $ — Fiscal Year ended June 30, 2020 $ 51,375,000 $ 5,674 — $ 926 Fiscal Year ended June 30, 2019 $ 34,500,000 $ 8,969 — $ 1,012 4.875% notes due 2026 (10) Fiscal Year ended June 30, 2024 $ 65,000,000 $ 2,900 — N/A Fiscal Year ended June 30, 2023 $ 65,000,000 $ 3,466 — N/A Fiscal Year ended June 30, 2022 $ 65,000,000 $ 3,701 — N/A Fiscal Year ended June 30, 2021 $ 65,000,000 $ 4,027 — N/A (1) Total amount of senior securities outstanding at the end of the period presented.
There can be no assurance that the weighted average total yield will remain at its current level. We use Global Industry Classification Standard (“GICS”) codes to identify the industry groupings.
There can be no assurance that the weighted average total yield will remain at its current level. We use Global Industry Classification Standard (“GICS”) codes to identify the industry groupings of our portfolio companies.
GAAP. 70 Senior Securities Information about our senior securities is shown in the following table as of each of the fiscal years ended June 30, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014 and 2013, respectively.
GAAP. 71 Senior Securities Information about our senior securities is shown in the following table as of each of the fiscal years ended June 30, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015, respectively.
The forward-looking statements contained in this annual report on Form 10-K involve risks and uncertainties, including statements as to: • our, or our portfolio companies’, future business, operations, operating results or prospects; • our business prospects and the prospects of our portfolio companies; • the return or impact of current and future investments; • the impact of global health pandemics, such as the coronavirus pandemic or other large scale events, on our or our portfolio companies’ business and the global economy; • our contractual arrangements and relationships with Investcorp and its affiliates; • our contractual arrangements and relationships with lenders and other third parties; • actual and potential conflicts of interest with the Adviser; • the dependence of our future success on the general economy, interest rates and the effects of each on the industries in which we invest; • the impact of fluctuations in interest rates on our business; • elevating levels of inflation, and its impact on us, on our portfolio companies and on the industries in which we invest; • the ability of our portfolio companies to achieve their objectives or service their debt obligations to us; • 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; • the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments; • the ability of the Adviser to attract and retain highly talented professionals; • our ability to qualify and maintain our qualification as a RIC and as a BDC; • our ability to obtain exemptive relief from the Securities and Exchange Commission (“SEC”); • the effect of changes to tax legislation and our tax position and other legislative and regulatory changes; and • the effect of new or modified laws or regulations governing our operations.
The forward-looking statements contained in this annual report on Form 10-K involve risks and uncertainties, and include statements regarding the following, without limitation: • our, or our portfolio companies’, future business, operations, operating results or prospects; • our business prospects and the prospects of our portfolio companies; • the return or impact of current and future investments; • the impact of global health pandemics, such as the coronavirus pandemic or other large scale events, on our or our portfolio companies’ business and the global economy; • our contractual arrangements and relationships with Investcorp and its affiliates; • our contractual arrangements and relationships with lenders and other third parties; • actual and potential conflicts of interest with the Adviser (as defined below); • the dependence of our future success on the general economy, interest rates and the effects of each on the industries in which we invest; • the impact of fluctuations in interest rates on our business; • the elevating levels of inflation and its impact on our investment activities and the industries in which we invest; • the ability of our portfolio companies to achieve their objectives or service their debt obligations to us; • 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; • the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments; • the ability of the Adviser to attract and retain highly talented professionals; • our ability to qualify and maintain our qualification as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”) and as a business development company (“BDC"); • our ability to obtain exemptive relief from the Securities and Exchange Commission (“SEC”); • the effect of changes to tax legislation and our tax position and other legislative and regulatory changes; and • the effect of new or modified laws or regulations governing our operations.
You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Overview Investcorp Credit Management BDC, Inc.
We have no current intention of paying dividends in shares of our stock in accordance with these Treasury regulations or the revenue procedure. Advisory Agreement The Company is party to the Advisory Agreement with the Adviser.
We have no current intention of paying dividends in shares of our stock in accordance with these Treasury regulations or private letter rulings. Advisory Agreement The Company is party to the Advisory Agreement with the Adviser.
Investcorp is a leading global credit investment platform with assets under management of $48.0 billion as of June 30, 2023. Investcorp manages funds that invest primarily in senior secured corporate debt issued by mid and large-cap corporations in Western Europe and the United States.
Investcorp is a leading global credit investment platform with assets under management of $21.5 billion as of June 30, 2024. Investcorp manages funds which invest primarily in senior secured corporate debt issued by mid and large-cap corporations in Western Europe and the United States.
PIK interest is not accrued if we do not expect the issuer to be able to pay all principal and interest when due. As of June 30, 2023, we had six investments on non-accrual status, which represented approximately 4.08% of our portfolio at fair value.
PIK interest is not accrued if we do not expect the issuer to be able to pay all principal and interest when due. As of June 30, 2024, we had four investments on non-accrual status, which represented approximately 5.00% of our portfolio at fair value.
In each case, the company must be organized in the United States. As of June 30, 2023, approximately 2.23% of our total assets were non-qualifying assets. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements.
In each case, the company must be organized in the United States. As of June 30, 2024, approximately 1.68% of our total assets were non-qualifying assets. To qualify as a RIC, we must, among other things, meet certain source-of-income, asset diversification and annual distribution requirements.
This investment rating system uses a five-level numeric rating scale. The following is a description of the conditions associated with each investment rating: Investment Rating 1 Investments that are performing above expectations, and whose risks remain favorable compared to the expected risk at the time of the original investment.
The following is a description of the conditions associated with each investment rating: Investment Rating 1 Investments that are performing above expectations, and whose risks remain favorable compared to the expected risk at the time of the original investment.
At June 30, 2022, our average and largest portfolio company investment at fair value was $6.7 million and $13.2 million, respectively. As of June 30, 2023, and June 30, 2022, our weighted average total yield of debt and income producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 12.46% and 10.09%, respectively.
At June 30, 2023, our average and largest portfolio company investment at fair value was $6.1 million and $13.0 million, respectively. As of June 30, 2024, and June 30, 2023, our weighted average total yield of debt and income producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 12.47% and 12.46%, respectively.
Off-Balance Sheet Arrangements We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of June 30, 2023, our off-balance sheet arrangements consisted of $6.0 million in unfunded commitments to ten of our portfolio companies.
Off-Balance Sheet Arrangements We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of June 30, 2024, our off-balance sheet arrangements consisted of $1.8 million in unfunded commitments to three of our portfolio companies.
Department of Treasury (“Treasury”) regulations and a revenue procedure issued by the Internal Revenue Service, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder elects to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% (10% for distributions made on or after November 1, 2021, and on or before June 30, 2023) of the aggregate declared distribution.
Department of the Treasury (“Treasury”) regulations and a revenue procedure issued by the Internal Revenue Service, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder elects to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution.
As of June 30, 2022, we had six investments on non-accrual, which represented approximately 1.08% of our portfolio at fair value. Financing Facilities We previously, through CM Finance SPV Ltd.
As of June 30, 2023, we had six investments on non-accrual, which represented approximately 4.08% of our portfolio at fair value. 64 Financing Facility We previously, through CM Finance SPV Ltd.
Level 2 — valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Investments are classified by GAAP into the three broad levels as follows: Level 1 — valuation is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. 63 Level 2 — valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
As of June 30, 2022, our off-balance sheet arrangements consisted of $13.9 million in unfunded commitments to eight of our portfolio companies. We maintain sufficient liquidity (through cash and borrowings under our Capital One Revolving Financing) to fund such unfunded loan commitments should the need arise.
As of June 30, 2023, our off-balance sheet arrangements consisted of $5.7 million in unfunded commitments to nine of our portfolio companies. We maintain sufficient liquidity (through cash on hand and available borrowings under our Capital One Revolving Financing) to fund such unfunded loan commitments should the need arise.
As of June 30, 2023, our investment portfolio of $220.1 million (at fair value) consisted of debt and equity investments in 36 portfolio companies, of which 89.21% were first lien investments, 0% were second lien investments, and 10.79% were in equities, warrants and other positions.
At June 30, 2024, our average and largest portfolio company investment at fair value was $4.6 million and $13.5 million, respectively. 67 As of June 30, 2023, our investment portfolio of 220.1 million (at fair value) consisted of debt and equity investments in 36 portfolio companies, of which 89.21% were first lien investments, 0% were second lien investments, and 10.79% were in equities, warrants and other positions.
Recent Developments The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued. Subsequent to June 30, 2023 and through September 15, 2023, the Company invested a total of $4.1 million, which included investments in one new portfolio company and one existing portfolio company.
Recent Developments The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued. Subsequent to June 30, 2024 and through September 25, 2024, the Company invested a total of $12.9 million, which included investments in three new portfolio companies and two existing portfolio companies.
We invest primarily in middle-market companies in the form of standalone first and second lien, unitranche loans, and mezzanine loans. We may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments.
We invest primarily in middle-market companies in the form of standalone first and second lien loans, unitranche loans, and mezzanine loans. We may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments. CM Investment Partners LLC (the “Adviser”) serves as our investment adviser.
On August 30, 2019, Investcorp Credit Management (“Investcorp”) acquired an approximate 76% ownership interest in the Adviser through the acquisition of the interests held by the Cyrus Funds and Stifel and through a direct purchase of equity from the Adviser (the “Investcorp Transaction”).
On August 30, 2019, Investcorp Credit Management US LLC (“Investcorp”) acquired an approximate 76% ownership interest in the Adviser through the acquisition of the interests held by Stifel Venture Corp. (“Stifel”) and certain funds managed by Cyrus Capital and through a direct purchase of equity from the Adviser.
As of June 30, 2021, $647,885 of Income-Based Fees are currently payable to the Adviser and were generated from deferred interest (i.e. PIK and certain discount accretion) and are not payable until such amounts are received in cash.
As of June 30, 2023, $201,817 of Income-Based Fees are currently payable to the Adviser and $201,817 in incentive fees related to Income-Based Fees incurred by the Company were generated from deferred interest (i.e. PIK and certain discount accretion) and are not payable until such amounts are received in cash.
As of June 30, 2023, and June 30, 2022, our weighted average total yield on investments at amortized cost (which includes interest income and amortization of fees and discounts) was 11.32% and 9.37%, respectively.
As of June 30, 2024, and June 30, 2023, our weighted average total yield on the total portfolio at amortized cost (which includes interest income and amortization of fees and discounts) was 10.60% and 11.32%, respectively.
Our investments are categorized based on the types of inputs used in their valuation. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety.
The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety.
For the year ended June 30, 72 2021, $4,716,233 in Base Management Fees were earned by the Adviser, of which $366,951 was waived and $1,070,580 was payable at June 30, 2021. The Base Management Fee is calculated based on the average value of the Company’s Gross Assets at the end of the two most recently completed fiscal quarters.
For the year ended June 30, 2022, 73 $4,594,588 in Base Management Fees were earned by the Adviser, of which $480,032 was waived and $1,054,063 was payable at June 30, 2022. The Base Management Fee is calculated based on the average value of the Company’s Gross Assets at the end of the two most recently completed fiscal quarters.
The Capital One 63 Revolving Financing, which will expire on August 22, 2026 (the “Maturity Date”), features a three-year reinvestment period and a two-year amortization period. Effective November 18, 2022, borrowings under the Capital One Revolving Financing generally bear interest at a rate per annum equal to Secured Overnight Financing Rate ("SOFR") plus 2.50%.
The Capital One Revolving Financing, which will expire on January 17, 2029 (the “Maturity Date”), features a three-year reinvestment period and a two-year amortization period. Effective January 17, 2024, borrowings under the Capital One Revolving Financing generally bear interest at a rate per annum equal to Secured Overnight Financing Rate ("SOFR") plus 3.10%.
Any voluntary waivers of the incentive fee in no way implies that the Adviser will agree to waive any incentive fee in any future period. Any portion of the incentive fees waived are not subject to recapture.
PIK and certain discount accretion) and are not payable until such amounts are received in cash. Any voluntary waivers of the incentive fee in no way implies that the Adviser will agree to waive any incentive fee in any future period. Any portion of the incentive fees waived are not subject to recapture.
Our investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require us to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements. As of June 30, 2023, we had eleven such investments with aggregate unfunded commitments of $5,990,579.
Our investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require us to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements.
Comparison of the years ended June 30, 2022 and June 30, 2021 Investment income Investment income, attributable primarily to dividends, interest and fees on our debt investments, for the year ended June 30, 2022 decreased to $24.4 million from $26.7 million for the year ended June 30, 2021, primarily due to a decrease in assets under management and decrease in payment-in-kind income from non-accrual investments.
Comparison of the years ended June 30, 2023 and June 30, 2022 Investment income Investment income, attributable primarily to dividends, interest and fees on our debt investments, for the year ended June 30, 2023 increased to $26.7 million from $24.4 million for the year ended June 30, 2022, primarily due to an increase in the SOFR and LIBOR rates and payment-in-kind income.
Expenses Our primary operating expenses include the payment of the base management fee and, depending on our operating results, the incentive fees under the Advisory Agreement, as well as the payment of reimbursable expenses to the Adviser for the costs and expenses incurred by the Adviser in performing its obligations and providing personnel and facilities under the Administration Agreement, such as our allocable portion of overhead expenses, including rent and the allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs.
In addition, we may generate revenue in the form of prepayment fees, commitment, origination, structuring or due diligence fees, fees for providing significant managerial assistance, consulting fees and other investment related income. 66 Expenses Our primary operating expenses include the payment of the base management fee (the “Base Management Fee”) and, depending on our operating results, the incentive fees (the “Incentive Fee”) under the Advisory Agreement, as well as the payment of reimbursable expenses to the Adviser for the costs and expenses incurred by the Adviser in performing its obligations and providing personnel and facilities under the Administration Agreement, such as our allocable portion of overhead expenses, including rent and the allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs.
These investments totaled approximately $41.3 million. Of these new investments, 98.25% consisted of first lien investments and 1.75% were in equity, warrants, and other investments. During the year ended June 30, 2022, we made investments in 14 new portfolio companies and eight existing portfolio companies. These investments totaled approximately $137.1 million.
These investments totaled approximately $60.4 million. Of these new investments, 93.23% consisted of first lien investments and 6.77% were in equity, warrants, and other investments. During the year ended June 30, 2023, we made investments in eight new portfolio companies and four existing portfolio companies. These investments totaled approximately $41.3 million.
Capital Resources As of June 30, 2023, we had $1.1 million of cash as well as $8.1 million in restricted cash and $28.1 million of capacity under the Capital One Revolving Financing. As of June 30, 2023, we had approximately $135.7 million of senior securities outstanding and our asset coverage ratio was 164.1%.
Capital Resources As of June 30, 2024, we had $0.2 million of cash as well as $5.0 million in restricted cash and $57.0 million of capacity under the Capital One Revolving Financing. As of June 30, 2024, we had approximately $106.3 million of senior securities outstanding and our asset coverage ratio was 169.5%.
PIK and certain discount accretion) and are not payable until such amounts are received in cash. For the year ended June 30, 2022, the Company wrote off $348,670 in previously deferred Income-Based incentive fees and incurred no Income-Based Fees.
PIK and certain discount accretion) are not payable until such amounts are received in cash. For the year ended June 30, 2023, the Company incurred $401,597 of Income-Based Fees.
For the year ended June 30, 2023, $4,201,394 in Base Management Fees were earned by the Adviser, of which $387,311 was waived and $906,218 was payable at June 30, 2023. For the year ended June 30, 2022, $4,594,588 in Base Management Fees were earned by the Adviser, of which $480,032 was waived and $1,054,063 was payable at June 30, 2022.
For the year ended June 30, 2024, $3,800,693 in Base Management Fees were earned by the Adviser, of which $365,225 was waived and $816,777 was payable at June 30, 2024. For the year ended June 30, 2023, $4,201,394 in Base Management Fees were earned by the Adviser, of which $387,311 was waived and $906,218 was payable at June 30, 2023.
As of June 30, 2022, our investment portfolio of $233.7 million (at fair value) consisted of debt and equity investments in 35 portfolio companies, of which 91.94% were first lien investments, 0% were second lien investments, and 8.06% were in equities, warrants and other positions.
As of June 30, 2024, our investment portfolio of $184.6 million (at fair value) consisted of debt and equity investments in 41 portfolio companies, of which 85.02% were first lien investments, 0% were second lien investments, and 14.98% were in equities, warrants and other positions.
We have based the forward-looking statements included in this annual report on Form 10-K on information available to us on the date of this report on Form 10-K. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance.
We have based the forward-looking statements included in this annual report on Form 10-K on information available to us on the date of this report on Form 10-K.
We maintain sufficient liquidity to fund such unfunded loan commitments should the need arise. 67 Asset Quality In addition to various risk management and monitoring tools, we use the Adviser’s investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio.
Asset Quality In addition to various risk management and monitoring tools, we use the Adviser’s investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment rating system uses a five-level numeric rating scale.
As of June 30, 2022, $182,095 of Income-Based Fees are currently payable to the Adviser and were generated from deferred interest (i.e. PIK and certain discount accretion) and are not payable until such amounts are received in cash. For the year ended June 30, 2021, we incurred no Income-Based Fees.
For the year ended June 30, 2022, the Company wrote off $348,670 in previously deferred Income-Based incentive fees and incurred no Income-Based Fees. As of June 30, 2022, $182,095 of Income-Based Fees are currently payable to the Adviser and were generated from deferred interest (i.e.
During the same period, cash from financing activities decreased by $20.7 million, resulting primarily from proceeds of $46.9 million from borrowings under the Capital One Revolving Financing, offset by repayments of $59.0 million of borrowing under the Capital One Revolving Financing, and distributions of $8.6 million to our stockholders.
During the same period, cash from financing activities decreased by $41.1 million, resulting primarily from proceeds of $37.1 million from borrowings under the Capital One Revolving Financing, offset by repayments of $66.0 million of borrowings under the Capital One Revolving Financing, distributions of $11.2 million to our stockholders, and payments of $1.0 million for deferred financing costs.
We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation.
You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report on Form 10-K. 60 We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation.
Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.
Valuation of portfolio investments We value our portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by our board of directors. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.
On September 14, 2023, the Company’s board of directors declared a distribution for the quarter ended September 30, 2023 of $0.13 per share payable on November 2, 2023 to stockholders of record as of October 12, 2023 and a supplemental distribution of $0.02 per share payable on November 2, 2023 to stockholders of record as of October 12, 2023.
As of September 25, 2024, the Company had investments in 44 portfolio companies. On September 18, 2024, the Company’s board of directors declared a distribution for the quarter ended September 30, 2024 of $0.12 per share payable on November 6, 2024 to stockholders of record as of October 16, 2024.
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. Management considers the following critical accounting policies important to understanding the financial statements.
Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. Management considers the following critical accounting policies important to understanding the financial statements. In addition to the discussion below, our critical accounting policies are further described in the notes to our consolidated financial statements.
As the provisional Capital Gains Fee is subject to the performance of investments until there is a realization event, the amount of the provisional Capital Gains Fee accrued at a reporting date may vary from the Capital Gains Fee that is ultimately realized and the differences could be material.
There can be no assurance that such unrealized capital appreciation will be realized in the future. Accordingly, the amount of the accrued Capital Gains Fee at a reporting date may vary from the Capital Gains Fee that is ultimately realized, and the differences could be material.
The 2026 Notes will mature on April 1, 2026, unless previously redeemed or repurchased in accordance with their terms, and bear interest at a rate of 4.875%. The 2026 Notes are our direct unsecured obligations and rank pari passu, which means equal in right of payment, with all of our outstanding and future unsecured, unsubordinated indebtedness.
The 2026 Notes are our direct unsecured obligations and rank pari passu, which means equal in right of payment, with all of our outstanding and future unsecured, unsubordinated indebtedness.
For the year ended June 30, 2023, the Company incurred $401,597 of Income-Based Fees. As of June 30, 2023, $576,023 of Income-Based Fees are currently payable to the Adviser and $201,817 in incentive fees related to Income-Based Fees incurred by the Company were generated from deferred interest (i.e.
For the year ended June 30, 2024, the Company wrote off $72,942 in previously deferred Income-Based Fees and incurred no Income-Based Fees. As of June 30, 2024, $128,876 in incentive fees related to Income-Based Fees incurred by the Company were payable to the Adviser, of which fees of $16,929 are payable and fees of $111,947generated from deferred interest (i.e.
The following table shows the investment rankings of the debt investments in our portfolio: As of June 30, 2023 As of June 30, 2022 Investment Rating Fair Value % of Portfolio Number of Investments Fair Value % of Portfolio Number of Investments 1 $ 16,538,345 7.5 % 3 $ 35,059,097 15.0 % 5 2 114,979,324 52.2 32 172,732,804 73.9 44 3 62,588,392 28.4 19 23,364,583 10.0 4 4 13,067,850 6.0 5 — — — 5 12,937,418 5.9 6 2,527,502 1.1 7 Total $ 220,111,329 100.0 % 65 $ 233,683,986 100.0 % 60 Results of Operations Comparison of the years ended June 30, 2023 and June 30, 2022 Investment income Investment income, attributable primarily to dividends, interest and fees on our debt investments, for the year ended June 30, 2023 increased to $26.7 million from $24.4 million for the year ended June 30, 2022, primarily due to an increase in the SOFR and LIBOR rates and payment-in-kind income.
The following table shows the investment rankings of the investments in our portfolio, according to the Adviser’s investment rating system: As of June 30, 2024 As of June 30, 2023 Investment Rating Fair Value % of Portfolio Number of Investments Fair Value % of Portfolio Number of Investments 1 $ 18,475,458 10.0 % 3 $ 16,538,345 7.5 % 3 2 116,964,511 63.4 35 114,979,324 52.2 32 3 34,035,340 18.4 13 62,588,392 28.4 19 4 2,621,154 1.4 2 13,067,850 6 5 5 12,473,067 6.8 7 12,937,418 5.9 6 Total $ 184,569,530 100.0 % 60 $ 220,111,329 100.0 % 65 69 Results of Operations Comparison of the years ended June 30, 2024 and June 30, 2023 Investment income Investment income, attributable primarily to dividends, interest and fees on our debt investments, for the year ended June 30, 2024 decreased to $23.9 million from $26.7 million for the year ended June 30, 2023, primarily due to a decrease in interest income related to the sale of two portfolio companies and the repayment of twelve portfolio companies, and portfolio companies on non-accrual status, partially offset by an increase in payment in-kind interest income earned on Crafty Apes, LLC and American Nuts Holdings, LLC - Term Loan A, which were removed from non-accrual status during the quarter ended December 31, 2023.
Notes due 2026 On March 31, 2021, we closed the public offering of $65 million in aggregate principal amount of 4.875% notes due 2026 (the “2026 Notes”). The total net proceeds to us from the 2026 Notes after deducting underwriting discounts and commissions of approximately $1.3 million and estimated offering expenses of approximately $215,000, were approximately $63.1 million.
The total net proceeds to us from the 2026 Notes after deducting underwriting discounts and commissions of approximately $1.3 million and estimated offering expenses of approximately $215,000, were approximately $63.1 million. The 2026 Notes will mature on April 1, 2026, unless previously redeemed or repurchased in accordance with their terms, and bear interest at a rate of 4.875%.
During that period, $20.7 million in cash was provided by operating activities, primarily due to investments of $51.3 million in portfolio companies, offset by proceeds from repayment and sale of investments in portfolio companies of $61.9 million.
Liquidity and capital resources Cash flows For the year ended June 30, 2024, our cash balance decreased by $4.0 million. During that period, $37.1 million in cash was provided by operating activities, primarily due to investments of $62.5 million in portfolio companies, offset by proceeds from repayment and sale of investments in portfolio companies of $92.3 million.
Overview We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act. In addition, for U.S. federal income tax purposes, we intend to continue to qualify to be treated as a RIC under Subchapter M of the Code.
In addition, for U.S. federal income tax purposes, we have elected to be treated and intend to continue to qualify as a RIC under Subchapter M of the Code. On August 30, 2019, we changed our name from CM Finance Inc. to Investcorp Credit Management BDC, Inc.
At June 30, 2022, 99.6% of our debt investments bore interest based on floating rates based on indices such as LIBOR (in certain cases, subject to interest rate floors), and 0.4% bore interest at fixed rates.
Of these new investments, 98.25% consisted of first lien investments and 1.75% were in equity, warrants, and other investments. 68 At June 30, 2024, 97.4% of our debt investments bore interest based on floating rates based on indices such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate (in certain cases, subject to interest rate floors), and 2.6% bore interest at fixed rates.
Net change in unrealized (depreciation) appreciation on investments We recorded a net change in unrealized appreciation of $8.1 million for the year ended June 30, 2022, primarily due to the restructure of 1888 Industrial Services, LLC –Term B and Fusion Connect Inc. –Take-Back Term Loan offset by the decrease in fair value of Techniplas Foreign Holdco LP common stock. 69 We recorded a net change in unrealized depreciation of $5.6 million for the year ended June 30, 2021, primarily due to a decrease in fair value of our investments in 1888 Industrial Services, LLC and American Teleconferencing Services, Ltd.
Net change in unrealized (depreciation) appreciation on investments We recorded a net change in unrealized appreciation of $3.3 million for the year ended June 30, 2024, primarily due to the decrease in fair value of our investments in ArborWorks, LLC A-1 Preferred, Klein Hersh, LLC, and Techniplas Foreign Holdco LP, partially offset by the increase in fair value of our investment in Discovery Behavioral Health and due to the realization of previously unrealized losses resulting from the sale and write off of our investments in 1888 Industrial Services, LLC and the restructuring or Arborworks Acquisition LLC.
Any outstanding principal amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of prepayment fees, commitment, origination, structuring or due diligence fees, fees for providing significant managerial assistance, consulting fees and other investment related income.
Any outstanding principal amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date.
As of June 30, 2022, we had nine such investments with aggregate unfunded commitments of $13,899,529.
As of June 30, 2024, we had three investments with aggregate unfunded commitments of $1.8 million, and as of June 30, 2023, we had nine investments with aggregate unfunded commitments of $5.7 million.
For additional information, see Part I, Item 1A. Risk Factors in this Annual Report on Form 10-K. Critical accounting policies Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Critical accounting policies Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
Net realized gain or loss The net realized loss on investments totaled $14.4 million for the year ended June 30, 2022, primarily due to the restructure of 1888 Industrial Services, LLC –Term B and Fusion Connect Inc. –Take-Back Term Loan.
Net realized gain or loss The net realized loss on investments totaled $14.0 million for the year ended June 30, 2024, primarily due to the realization of losses from restructurings and loan modifications of our investments in American Nuts Holdings, LLC, Arborworks Acquisition LLC, ArborWorks, LLC, Crafty Apes, LLC, Sandvine Corporation, and Xenon Arc, Inc. and the realization of losses associated with the sale and write off of our investments in 1888 Industrial Services, LLC.
As of June 30, 2023 and June 30, 2022, there were $71.9 million and $84.0 million in borrowings outstanding under the Capital One Revolving Financing, respectively.
As of June 30, 2024 and June 30, 2023, there were $43.0 million and $71.9 million in borrowings outstanding under the Capital One Revolving Financing, respectively. For more information, see "Recent Developments." Notes due 2026 On March 31, 2021, we closed the public offering of $65 million in aggregate principal amount of 4.875% notes due 2026 (the “2026 Notes”).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAlthough management believes that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit markets, the size, credit quality or composition of the assets in our portfolio and other business developments, including borrowing, that could affect the net increase in net assets resulting from operations, or net income.
Biggest changeUnder these loans, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor. 75 Although management believes that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit markets, the size, credit quality or composition of the assets in our portfolio and other business developments, including borrowing, that could affect the net increase in net assets resulting from operations, or net income.
Variable-rate instruments subject to a floor generally reset periodically to the applicable floor and, in the case of investments in our portfolio, quarterly to a floor based on LIBOR or SOFR, as applicable, only if the floor exceeds the index.
Variable-rate instruments subject to a floor generally reset periodically to the applicable floor and, in the case of investments in our portfolio, quarterly to a floor based on SOFR, as applicable, only if the floor exceeds the index.
It also 74 does not adjust for the effect of the time lag between a change in the relevant interest rate index and the rate adjustment under the applicable loan. Accordingly, we can offer no assurances that actual results would not differ materially from the statement above. 75
It also does not adjust for the effect of the time lag between a change in the relevant interest rate index and the rate adjustment under the applicable loan. Accordingly, we can offer no assurances that actual results would not differ materially from the statement above. 76
Item 7A. Quantitative and Qualitative Disclosure about Market Risk We are subject to financial market risks, including changes in interest rates. At June 30, 2023, 99.6% of our debt investments bore interest based on floating rates, such as LIBOR, SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk We are subject to financial market risks, including changes in interest rates. At June 30, 2024, 97.4% of our debt investments bore interest based on floating rates, such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate.
Based on our in-place portfolio with certain interest rate floors and our financing at June 30, 2023, a 1.00% increase in interest rates would increase our net interest income by approximately 5.4% and a 2.00% increase in interest rates would increase our net interest income by approximately 13.4%.
Based on our in-place portfolio with certain interest rate floors and our financing at June 30, 2024, a 1.00% increase or decrease in interest rates would increase or decrease, as applicable, our net interest income by approximately 5.93% and a 2.00% increase or decrease in interest rates would increase or decrease, as applicable, our net interest income by approximately 14.94%.
Removed
Under these loans, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor.

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