Annual report pursuant to Section 13 and 15(d)

INVESTMENTS (Tables)

v3.23.3
INVESTMENTS (Tables)
 12 Months Ended
Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
Schedule of Fair Value, Assets Measured on Recurring Basis
As of September 30, 2023 and 2022, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:
Fair Value Measurements
Fair Value Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
As of September 30, 2023:
Secured first lien debt
 $ 510,701  $ —  $ —  $ 510,701 
Secured second lien debt
127,854  —  —  127,854 
Unsecured debt
 24  —  —  24 
Preferred equity
26,855  —  —  26,855 
Common equity/equivalents
 39,150 
(A)
 —  22 
(B)
 39,128 
Total Investments as of September 30, 2023: $ 704,584  $ —  $ 22  $ 704,562 
Fair Value Fair Value Measurements
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
As of September 30, 2022:
Secured first lien debt
 $ 463,858  $ —  $ —  $ 463,858 
Secured second lien debt
115,928  —  —  115,928 
Unsecured debt
 55  —  —  55 
Preferred equity
27,046  —  —  27,046 
Common equity/equivalents
 36,331 
(A)
 —  58 
(B)
 36,273 
Total Investments as of September 30, 2022: $ 643,218  $ —  $ 58  $ 643,160 
(A)Excludes our investment in Leeds with a fair value of $0.2 million and $6.4 million as of September 30, 2023 and 2022, respectively. Leeds was valued using NAV as a practical expedient.
(B)Fair value was determined based on the closing market price of shares of Funko, Inc. (our units in Funko can be converted into common shares of Funko, Inc.) at the reporting date less a discount for lack of marketability as our investment was subject to certain restrictions.
The following table presents our portfolio investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy and carried at fair value as of September 30, 2023 and 2022 by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:
Total Recurring Fair Value
Measurements Reported in
Consolidated Statements of Assets
and Liabilities
Using Significant
Unobservable Inputs (Level 3)
September 30,
2023		 September 30,
2022
Non-Control/Non-Affiliate Investments
Secured first lien debt $ 491,686  $ 413,631 
Secured second lien debt 120,429  108,263 
Unsecured debt 24  55 
Preferred equity 21,733  17,719 
Common equity/equivalents 29,419 
(A)
 28,688 
(B)
Total Non-Control/Non-Affiliate Investments $ 663,291  $ 568,356 
Affiliate Investments
Secured first lien debt $ 2,895  $ 34,804 
Preferred equity 5,122  3,640 
Common equity/equivalents 2,404  647 
Total Affiliate Investments $ 10,421  $ 39,091 
Control Investments
Secured first lien debt $ 16,120  $ 15,423 
Secured second lien debt 7,425  7,665 
Preferred equity —  5,687 
Common equity/equivalents 7,305  6,938 
Total Control Investments $ 30,850  $ 35,713 
Total Investments at Fair Value Using Level 3 Inputs $ 704,562  $ 643,160 
(A)Excludes our investments in Leeds and Funko with fair values of $0.2 million and $22 thousand, respectively, as of September 30, 2023. Leeds was valued using NAV as a practical expedient, and Funko was valued using Level 2 inputs.
(B)Excludes our investments in Leeds and Funko with fair values of $6.4 million and $58 thousand, respectively, as of September 30, 2022. Leeds was valued using NAV as a practical expedient, and Funko was valued using Level 2 inputs.
Schedule of Fair Value Measurement Inputs and Valuation Techniques The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements. The weighted average calculations in the table below are based on the principal balances for all debt related calculations and on the cost basis for all equity related calculations for the particular input.
Quantitative Information about Level 3 Fair Value Measurements
Range / Weighted Average as of
September 30,
2023		 September 30,
2022		 Valuation
Techniques/
Methodologies		 Unobservable
Input		 September 30,
2023		 September 30,
2022
Secured first lien debt(A)
$ 461,638  $ 423,912  Yield Analysis Discount Rate
11.8%–29.9% / 14.8%
8.0%–29.5% / 11.8%
49,063  39,946  TEV EBITDA multiple
4.7x–6.8x / 6.7x
4.8x–6.7x / 6.2x
EBITDA
$995–$14,002 / $13,624
$800–$10,257 / $7,605
Revenue multiple
0.3x–0.8x / 0.6x
0.3x–0.6x / 0.5x
Revenue
$14,934–$16,283 / $15,361
$11,514–$16,320 / $14,656
Secured second lien debt 110,820  97,472  Yield Analysis Discount Rate
12.5%–15.6% / 14.5%
11.5%—15.4% / 13.8%
9,609  10,791  Market Quote IBP
67.8%–94.0% / 82.2%
82.0%–95.0% / 86.5%
7,425  7,665  TEV EBITDA multiple
5.6x–5.6x / 5.6x
5.6x–5.6x / 5.6x
EBITDA
$3,690–$3,690 / $3,690
$3,299–$3,299 / $3,299
Unsecured debt 24  55  TEV Revenue multiple
1.0x–1.0x / 1.0x
0.3x–1.3x / 1.0x
Revenue
$5,044–$5,044 / $5,044
$764–$11,514 / $4,249
Preferred and common equity / equivalents(B)
65,983  63,319  TEV EBITDA multiple
4.7x–13.0x / 6.9x
4.1x–11.0x / 6.5x
EBITDA
$995–$112,841 / $10,570
$800–$74,512 / $11,742
Revenue multiple
0.3x–3.0x / 1.2x
0.3x–4.4x / 1.4x
Revenue
$4,213–$16,283 / $14,959
$764–$42,926 / $19,963
Total Level 3 Investments, at Fair Value $ 704,562  $ 643,160 

(A)Fair value as of September 30, 2022 includes one proprietary debt investment totaling $18.8 million, which was valued using the expected payoff amount as the unobservable input.
(B)Fair value as of September 30, 2023 excludes our investments in Leeds and Funko with fair values of $0.2 million and $22 thousand, respectively. Fair value as of September 30, 2022 excludes our investments in Leeds and Funko with fair values of $6.4 million and $58 thousand, respectively. Leeds was valued using NAV as a practical expedient and Funko was valued using Level 2 inputs as of both September 30, 2023 and 2022. Fair value as of September 30, 2022 includes one syndicated equity investment totaling $8.0 million, which was valued using the expected payoff amount as the unobservable input.
Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation
The following tables provide the changes in fair value, broken out by security type, during the years ended September 30, 2023 and 2022 for all investments for which we determine fair value using unobservable (Level 3) inputs.
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Year Ended September 30, 2023 Secured First
Lien Debt		 Secured
Second
Lien Debt		 Unsecured
Debt		 Preferred
Equity		 Common
Equity/
Equivalents		 Total
Fair Value as of September 30, 2022 $ 463,858  $ 115,928  $ 55  $ 27,046  $ 36,273  $ 643,160 
Total gains (losses):
Net realized gain (loss)(A)
(107) —  (95) (279) 8,695  8,214 
Net unrealized appreciation (depreciation)(B)
(7,577) 617  (31) (1,829) 10,563  1,743 
Reversal of prior period net depreciation (appreciation) on realization(B)
850  6  95  526  (9,257) (7,780)
New investments, repayments and settlements:(C)
Issuances/originations 154,762  15,421  —  2,045  4,532  176,760 
Settlements/repayments (101,085) (4,118) —  —  —  (105,203)
Net proceeds from sales —  —  —  (654) (11,678) (12,332)
Transfers —  —  —  —  —  — 
Fair Value as of September 30, 2023 $ 510,701  $ 127,854  $ 24  $ 26,855  $ 39,128  $ 704,562 
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Year Ended September 30, 2022 Secured First
Lien Debt		 Secured
Second Lien
Debt		 Unsecured
Debt		 Preferred
Equity		 Common
Equity/
Equivalents		 Total
Fair Value as of September 30, 2021 $ 337,394  $ 135,956  $ 10  $ 29,246  $ 48,441  $ 551,047 
Total gains (losses):
Net realized gain (loss)(A)
(8,471) —  (25) —  13,876  5,380 
Net unrealized appreciation (depreciation)(B)
(693) 267  20  (3,166) (12,968) (16,540)
Reversal of prior period net depreciation (appreciation) on realization(B)
13,967  (1,601) 25  (4,309) (9,113) (1,031)
New investments, repayments and settlements:(C)
Issuances/originations 204,970  62,570  25  6,846  5,019  279,430 
Settlements/repayments (77,898) (81,264) —  (250) —  (159,412)
Net proceeds from sales 1,339  —  —  (1,321) (15,732) (15,714)
Transfers (6,750) —  —  —  6,750  — 
Fair Value as of September 30, 2022 $ 463,858  $ 115,928  $ 55  $ 27,046  $ 36,273  $ 643,160 
(A)Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the corresponding period.
(B)Included in net unrealized appreciation (depreciation) on investments on our accompanying Consolidated Statements of Operations for the corresponding period.
(C)Includes increases in the cost basis of investments resulting from new portfolio investments, accretion of discounts, PIK, and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs and other cost-basis adjustments.
Schedule of Investment Holdings
The following table outlines our investments by security type as of September 30, 2023 and 2022:
September 30, 2023 September 30, 2022
Cost Fair Value Cost Fair Value
Secured first lien debt $ 529,376  73.3  % $ 510,701  72.5  % $ 475,806  72.5  % $ 463,858  71.4  %
Secured second lien debt 130,252  18.1  127,854  18.1  118,949  18.2  115,928  17.8 
Unsecured debt 198  0.0  24  0.0  293  0.0  55  0.0 
Total debt investments 659,826  91.4  638,579  90.6  595,048  90.7  579,841  89.2 
Preferred equity 35,617  4.9  26,855  3.8  34,505  5.3  27,046  4.2 
Common equity/equivalents 26,826  3.7  39,381  5.6  26,500  4.0  42,728  6.6 
Total equity investments 62,443  8.6  66,236  9.4  61,005  9.3  69,774  10.8 
Total Investments $ 722,269  100.0  % $ 704,815  100.0  % $ 656,053  100.0  % $ 649,615  100.0  %
Our investments at fair value consisted of the following industry classifications as of September 30, 2023 and 2022:
Industry Classification September 30, 2023 September 30, 2022
Fair Value Percentage of
Total
Investments		 Fair Value Percentage of
Total
Investments
Diversified/Conglomerate Manufacturing $ 158,061  22.4  % $ 114,105  17.6  %
Healthcare, Education, and Childcare 146,438  20.8  136,401  21.0 
Diversified/Conglomerate Service 135,060  19.2  148,907  22.9 
Aerospace and Defense 97,836  13.9  88,649  13.6 
Beverage, Food, and Tobacco 78,788  11.2  64,283  9.9 
Oil and Gas 27,830  3.9  25,373  3.9 
Automobile 27,571  3.9  20,144  3.1 
Personal and Non-Durable Consumer Products 14,576  2.1  18,583  2.9 
Machinery 6,411  0.9  9,562  1.5 
Telecommunications 5,868  0.8  10,088  1.6 
Textiles and Leather —  —  7,978  1.2 
Other, < 2.0% 6,376  0.9  5,542  0.8 
Total Investments $ 704,815  100.0  % $ 649,615  100.0  %
Our investments at fair value were included in the following U.S. geographic regions as of September 30, 2023 and 2022:
Location September 30, 2023 September 30, 2022
Fair Value Percentage of
Total
Investments		 Fair Value Percentage of
Total
Investments
South $ 273,181  38.8  % $ 326,524  50.3  %
West 224,235  31.8  169,415  26.1 
Midwest 145,122  20.6  118,191  18.2 
Northeast 62,277  8.8  35,485  5.4 
Total Investments $ 704,815  100.0  % $ 649,615  100.0  %
Schedule of Investments Classified by Contractual Maturity Date
The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of September 30, 2023:
Year Ending September 30, Amount
2024(A)
$ 24,385 
2025 90,725 
2026 137,108 
2027 254,660 
2028 146,440 
Thereafter 7,762 
Total contractual repayments $ 661,080 
Adjustments to cost basis of debt investments (1,254)
Investments in equity securities 62,443 
Investments held as of September 30, 2023 at Cost: $ 722,269 
(A)Includes debt investments with contractual principal amounts totaling $0.2 million for which the maturity date has passed as of September 30, 2023.